Document and Entity Information
Document and Entity Information | 12 Months Ended |
Jul. 31, 2020shares | |
Document and Entity Information | |
Document Type | 20-F |
Document Registration Statement | false |
Document Annual Report | true |
Document Transition Report | false |
Document Shell Company Report | false |
Entity Registrant Name | ATIF Holdings Ltd |
Document Period End Date | Jul. 31, 2020 |
Entity Well Known Seasoned Issuer | No |
Entity Voluntary Filers | No |
Entity Filer Category | Non-accelerated Filer |
Entity Emerging Growth Company | true |
Entity Shell Company | false |
Entity Common Stock, Shares Outstanding | 47,014,674 |
Current Fiscal Year End Date | --07-31 |
Document Fiscal Year Focus | 2020 |
Document Fiscal Period Focus | FY |
Entity Central Index Key | 0001755058 |
Amendment Flag | false |
Entity Ex Transition Period | false |
Title of 12(b) Security | Ordinary Shares |
Trading Symbol | ATIF |
Security Exchange Name | NASDAQ |
Entity Current Reporting Status | Yes |
Entity Interactive Data Current | Yes |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Jul. 31, 2020 | Jul. 31, 2019 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 428,258 | $ 6,459,702 |
Accounts receivable, net | 939,392 | 1,472,258 |
Inventories | 46,778 | |
Deposits | 743,122 | 155,397 |
Investment in trading securities | 918,675 | |
Investment in life insurance contract | 1,290,289 | |
Prepaid expenses and other current assets | 870,951 | 2,499,935 |
Total current assets | 5,237,465 | 10,587,292 |
Property and equipment, net | 2,623,391 | 49,029 |
Investment in life insurance contract | 1,277,514 | |
Intangible assets, net | 7,925,102 | 428,759 |
Deferred film production cost | 328,308 | |
Goodwill | 25,902,394 | 0 |
Right-of- use assets, net | 3,768,418 | |
TOTAL ASSETS | 45,785,078 | 12,342,594 |
CURRENT LIABILITIES | ||
Bank borrowings | 143,248 | |
Accounts payable | 1,069,177 | |
Deferred revenue | 1,063,642 | 415,392 |
Taxes payable | 4,004,164 | 669,069 |
Accrued expenses and other current liabilities | 753,866 | 56,928 |
Operating lease liabilities, current | 750,350 | |
Total current liabilities | 7,784,447 | 1,141,389 |
Operating lease liabilities, noncurrent | 3,382,889 | |
TOTAL LIABILITIES | 11,167,336 | 1,141,389 |
Commitments | ||
EQUITY | ||
Ordinary shares, $0.001 par value, 100,0000,000 shares authorized, 47,014,674 shares and 37,074,672 shares issued and outstanding as of July 31, 2020 and 2019, respectively | 47,015 | 37,075 |
Additional paid-in capital | 30,555,757 | 9,492,893 |
Statutory reserve | 355,912 | 355,912 |
Retained earnings (accumulated deficit) | (13,491,659) | 1,391,040 |
Accumulated other comprehensive loss | (63,766) | (75,715) |
Total ATIF Holdings Limited Stockholders' equity | 17,403,259 | 11,201,205 |
Noncontrolling interest | 17,214,483 | 0 |
TOTAL LIABILITIES AND EQUITY | $ 45,785,078 | $ 12,342,594 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Jul. 31, 2020 | Jul. 31, 2019 | Feb. 28, 2019 | Feb. 27, 2019 | Nov. 02, 2018 | Aug. 21, 2018 | Jan. 05, 2015 |
CONSOLIDATED BALANCE SHEETS | |||||||
Ordinary shares, Par value | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.0004 | |
Ordinary shares, Authorized | 1,000,000,000 | 1,000,000,000 | 100,000,000,000 | 100,000,000 | |||
Ordinary shares, Issued | 47,014,674 | 37,074,672 | |||||
Ordinary shares, Outstanding | 47,014,674 | 37,074,672 | 35,000,000 | 50,000,000 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) - USD ($) | 12 Months Ended | ||
Jul. 31, 2020 | Jul. 31, 2019 | Jul. 31, 2018 | |
Total Revenue | $ 685,999 | $ 3,078,758 | $ 5,307,891 |
Cost of revenues | 227,410 | ||
Gross profits | 458,589 | 3,078,758 | 5,307,891 |
Operating expenses: | |||
Selling expenses | 2,638,972 | 1,096,195 | 1,773,159 |
General and administrative expenses | 6,255,109 | 1,245,169 | 807,053 |
Provision for doubtful accounts | 2,645,239 | 65,790 | |
Goodwill impairment loss | 5,621,467 | ||
Impairment of intangible assets | 384,492 | 0 | 0 |
Impairment of property and equipment | 172,728 | ||
Total operating expenses | 17,718,007 | 2,407,154 | 2,580,212 |
Income (Loss) from operations | (17,259,418) | 671,604 | 2,727,679 |
Other income (expenses): | |||
Interest income (expenses), net | (169) | 1,994 | 16,303 |
Other income (expenses), net | (155,568) | 32,452 | (80,283) |
Gain from investment in trading securities | 201,051 | ||
Total other income (expense), net | 45,314 | 34,446 | (63,980) |
Income (loss) before income taxes | (17,214,104) | 706,050 | 2,663,699 |
Income tax provision | 76,264 | 276,823 | 716,816 |
Net income (loss) | (17,290,368) | 429,227 | 1,946,883 |
Less: Net loss attributable to non-controlling interests | 2,407,669 | 0 | |
Net income (loss) attributable to ATIF Holdings Limited | (14,882,699) | 429,227 | 1,946,883 |
Other comprehensive loss: | |||
Total foreign currency translation adjustment | (30,225) | (17,642) | (113,090) |
Comprehensive income (loss) | (17,320,593) | 411,585 | 1,833,793 |
Less: comprehensive loss attributable to non-controlling interests | 2,449,843 | ||
Comprehensive income (loss) attributable to ATIF Holdings Limited | $ (14,870,750) | $ 411,585 | $ 1,833,793 |
Earnings (Loss) Per share | |||
Basic and diluted | $ (0.37) | $ 0.01 | $ 0.06 |
Weighted Average Shares Outstanding | |||
Basic and diluted | 39,790,520 | 35,522,931 | 35,000,000 |
Consulting services and customer's initial registration services | |||
Total Revenue | $ 645,127 | $ 3,078,758 | $ 5,307,891 |
Multi-channel advertising, event planning and execution | |||
Total Revenue | 40,872 | ||
Cost of revenues | $ 227,410 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - USD ($) | Ordinary share | Additional Paid in Capital | Statutory Reserves | Retained Earnings (accumulated deficit) | Accumulated Other Comprehensive Loss | Noncontrolling interests | Total |
Balance at beginning at Jul. 31, 2017 | $ 35,000 | $ (35,000) | $ 64,111 | $ (693,269) | $ 55,017 | $ 0 | $ (574,141) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Capital contribution | 755,139 | 755,139 | |||||
Appropriation to statutory reserve | 214,725 | (214,725) | |||||
Foreign currency translation adjustment | (113,090) | (113,090) | |||||
Net income (loss) for the year | 0 | 0 | 0 | 1,946,883 | 0 | 0 | 1,946,883 |
Balance at ending at Jul. 31, 2018 | $ 35,000 | 720,139 | 278,836 | 1,038,889 | (58,073) | 0 | 2,014,791 |
Balance at ending (in shares) at Jul. 31, 2018 | 35,000,000 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Proceeds from initial public offering | $ 2,075 | 8,772,754 | 8,774,829 | ||||
Appropriation to statutory reserve | 77,076 | (77,076) | |||||
Foreign currency translation adjustment | (17,642) | (17,642) | |||||
Net income (loss) for the year | 0 | 0 | 0 | 429,227 | 0 | 0 | 429,227 |
Balance at ending at Jul. 31, 2019 | $ 37,075 | 9,492,893 | 355,912 | 1,391,040 | (75,715) | 0 | $ 11,201,205 |
Balance at ending (in shares) at Jul. 31, 2019 | 37,074,672 | 37,074,672 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Proceeds from initial public offering (in shares) | 2,074,672 | ||||||
Foreign currency translation adjustment | 11,949 | (42,174) | $ (30,225) | ||||
Acquisition of 51.2% equity interest in LGC | $ 9,940 | 21,062,864 | 19,664,326 | 40,737,130 | |||
Issuance of ordinary shares to acquire LGC (in shares) | 9,940,002 | ||||||
Net income (loss) for the year | (14,882,699) | (2,407,669) | (17,290,368) | ||||
Balance at ending at Jul. 31, 2020 | $ 47,015 | $ 30,555,757 | $ 355,912 | $ (13,491,659) | $ (63,766) | $ 17,214,483 | $ 34,617,742 |
Balance at ending (in shares) at Jul. 31, 2020 | 47,014,674 | 47,014,674 |
CONSOLIDATED STATEMENTS OF CH_2
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Parenthetical) | Jul. 31, 2020 | Apr. 30, 2020 | Apr. 22, 2020 | Apr. 22, 2019 |
LGC | ||||
Business Acquisition [Line Items] | ||||
Equity interest acquired (as a percent) | 51.20% | 51.20% | 51.20% | 51.20% |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | ||
Jul. 31, 2020 | Jul. 31, 2019 | Jul. 31, 2018 | |
Cash flows from operating activities: | |||
Net income (loss) | $ (17,290,368) | $ 429,227 | $ 1,946,883 |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||
Depreciation and amortization | 968,396 | 50,323 | 16,458 |
Changes in bad debt allowance | 2,645,239 | 65,790 | |
Amortization of right-of-use assets | 639,587 | ||
Goodwill impairment loss | 5,621,467 | ||
Impairment of intangible assets | 384,492 | 0 | 0 |
Impairment of property and equipment | 172,728 | ||
Loss from disposal of property and equipment | 12,388 | ||
Gain from investment in trading securities | (201,051) | ||
Deferred tax expense | 76,264 | ||
Changes in operating assets and liabilities: | |||
Accounts receivable | 27,336 | (1,411,180) | (144,202) |
Deposits | (315,667) | ||
Due from a related party | 14,919 | (7,691) | |
Prepaid expenses and other current assets | 115,128 | (1,686,683) | 329,750 |
Inventories, net | 2,599 | ||
Accounts payable | 1,520,365 | (571,121) | |
Deferred revenue | 640,977 | (61,860) | (472,721) |
Taxes payable | 39,873 | (185,246) | 688,781 |
Accrued expenses and other liabilities | (554,744) | (234,128) | 250,302 |
Lease liabilities | (398,744) | ||
Net cash (used in) provided by operating activities | (5,893,735) | (3,018,838) | 2,036,439 |
Cash flows from investing activities: | |||
Purchase of property and equipment | (525,463) | (20,762) | (26,765) |
Purchase of intangible assets | (458,100) | ||
Prepayment for fixed assets purchase | (247,534) | ||
Loans to a third party | (2,872,151) | ||
Collection of third party loans | 2,741,430 | ||
Cash acquired from business combination | 1,066,617 | ||
Payment for investment in trading securities | (717,624) | ||
Investment deposit for life insurance contract | (1,275,950) | ||
Net cash (used in) provided by investing activities | (176,470) | 739,084 | (2,898,916) |
Cash flows from financing activities: | |||
Capital contribution | 755,139 | ||
Net proceeds from initial public offering | 8,772,754 | ||
Proceeds from bank borrowings | 141,983 | ||
Repayment of related party borrowings | (31,267) | ||
Net cash provided by financing activities | 141,983 | 8,741,487 | 755,139 |
Effect of exchange rate changes on cash | (103,222) | (74,996) | 35,490 |
Net (decrease) increase in cash | (6,031,444) | 6,386,737 | (71,848) |
Cash, beginning of year | 6,459,702 | 72,965 | 144,813 |
Cash, end of year | 428,258 | 6,459,702 | 72,965 |
Supplemental disclosure of cash flow information: | |||
Cash paid for interest expenses | 608 | 0 | 0 |
Cash paid for income tax | $ 490,397 | $ 142,681 | |
Supplemental disclosure of Non-cash investing and financing activities | |||
Common shares issued for acquisition of LGC | 21,072,804 | ||
Debt conversion for acquisition of LGC | 1,851,000 | ||
Net assets acquired from LGC | 3,064,269 | ||
Right-of-use assets obtained in exchange for operating lease obligations | $ 4,103,831 |
ORGANIZATION AND DESCRIPTION OF
ORGANIZATION AND DESCRIPTION OF BUSINESS | 12 Months Ended |
Jul. 31, 2020 | |
ORGANIZATION AND DESCRIPTION OF BUSINESS | |
ORGANIZATION AND DESCRIPTION OF BUSINESS | NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS ATIF Holdings Limited (“ATIF” or the “Company”), formerly known as Eternal Fairy International Limited and Asia Times Holdings Limited, was incorporated under the laws of the British Virgin Islands (“BVI”) on January 5, 2015, as a holding company to develop business opportunities in the People’s Republic of China (the “PRC” or “China”). The Company adopted its current name on March 7, 2019. ATIF owns 100% equity interest of ATIF Limited (“ATIF HK”), formerly known as China Elite International Holdings Limited and Asia Times International Finance Limited, a limited liability company established in Hong Kong on January 6, 2015, and adopted its current name on March 7, 2019. ATIF HK acquired a financial and news media platform www.chinacnnm.com in September 2018. On May 20, 2015, ATIF HK incorporated Huaya Consultant (Shenzhen) Co., Ltd. (“Huaya”) as a Wholly Foreign Owned Enterprise (“WFOE”) in China. On September 5, 2018, Huaya entered into a series of contractual arrangements with the owners of Qianhai Asia Era (Shenzhen) International Financial Service Co., Ltd. (“Qianhai”), a company incorporated on November 3, 2015, under the laws of China with a registered capital of RMB5 million (approximately $0.75 million), which had been fully funded in December 2017. Qianhai is primarily engaged in providing business advisory and financial consulting services to small and medium-sized enterprise customers in the PRC. Qianhai originally owned a 100% controlled subsidiary Qianhai Asia Era (Shenzhen) International Fund Management Co., Ltd. (“Asia Era Fund”), which had limited operation since its inception on December 11, 2015. In connection with the reorganization of the legal structure for the initial public offering (“IPO”) of the Company, Asia Era Fund was spun off. Reorganization A reorganization of the Company’s legal structure was completed on September 19, 2018 (the “Reorganization”). The Reorganization involved the transfer of the ownership interest in ATIF and the spinoff of Asia Era Fund. ATIF became the ultimate holding company of ATIF HK, Huaya, and Qianhai, which were all controlled by the same shareholders before and after the Reorganization. On September 5, 2018, Huaya entered into a series of contractual arrangements with the owners of Qianhai. These agreements include an Exclusive Service Agreement, an Equity Pledge Agreement, a Call Option Agreement, and a Shareholders’ Voting Rights Proxy Agreement (collectively “VIE Agreements”). Pursuant to the above VIE Agreements, Huaya has the exclusive right to provide Qianhai consulting services related to business operations including technical and management consulting services. All the above contractual arrangements obligate Huaya to absorb a majority of the risk of loss from business activities of Qianhai and entitle Huaya to receive a majority of Qianhai’s residual returns. In essence, Huaya has gained effective control over Qianhai. Therefore, the Company believes that Qianhai should be considered as a Variable Interest Entity (“VIE”) under the Statement of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 810 “Consolidation.” Initial Public Offering On April 29, 2019, the Company completed its IPO of 2,074,672 ordinary shares at the price of $5.00 per share. The gross proceeds were approximately $10.4 million before deducting the underwriter's commissions and other offering expenses, resulting in net proceeds of approximately $8.8 million to the Company. In connection with the offering, the Company’s ordinary shares began trading on the NASDAQ Capital Market on May 3, 2019, under the symbol “ATIF.” Acquisition of Leaping Group Co,. Ltd. (“LGC”) On April 22, 2020 , the Company completed an acquisition of 51.2% of the equity interest of Leaping Group Co., Ltd. (“LGC”) from its original shareholders for a total consideration of approximately $22.92 million, including cash consideration of $1.85 million and issuance of 9,940,002 shares of ATIF’s common stock with fair value of approximately $21.07 million (see Note 4). LGC, through its subsidiaries and similar VIE contractual agreements, controls Leaping Media Group Co., Ltd. (“LMG”), an operating entity located in Shenyang, China. LMG, along with its operating subsidiaries, is engaged in the multi-channel advertising business, event planning and execution business, film production business and movie theater operating business (collectively “media business”) in China. LMG used to be one of the Company’s clients that sought business advisory services. Upon closing of the acquisition, ATIF owns 51.2% equity interest of LGC and hereby consolidates operations of LGC. |
LIQUIDITY and GOING CONCERN
LIQUIDITY and GOING CONCERN | 12 Months Ended |
Jul. 31, 2020 | |
LIQUIDITY and GOING CONCERN | |
LIQUIDITY and GOING CONCERN | NOTE 2 - LIQUIDITY and GOING CONCERN As reflected in the Company’s consolidated financial statements, the Company’s revenue decreased from approximately $3.1 million in fiscal year 2019 to approximately $0.7 million in fiscal year 2020 primarily due to decreased number of customers for the Company’s public listing related consulting services. In addition, as a result of the Company’s acquisition of LGC, the Company recorded significant impairment loss on its fixed assets, intangible assets and goodwill and bad debt expense on uncollectible accounts receivable due to change in market conditions and financial health of its customers as affected by the COVID-19 outbreak. Accordingly, for the fiscal year 2020, the Company reported a net loss of approximately $17.3 million. In addition, the Company reported negative cash flows from operations of approximately $5.9 million and a working capital deficit of $2.5 million as of July 31, 2020. Furthermore, due to the tightening of U.S. legislation and new public listing rules that could limit small China-based companies to access the U.S. capital markets, there appears to be a slowing down of business activities for the Company’s consulting services due to these uncertainties. Although the Company acquired a 51.2% equity interest in LGC in April 2020 with the intention to diversify its revenue streams going forward, LGC’s operations were adversely affected by the outbreak of COVID-19. During the period from April to July 2020, all movie theaters in China were temporarily closed and have been struggling to draw crowds afterwards. LGC’s movie theatre operations and multi-channel advertising business were especially hit hard. As of July 31, 2020, the Company had cash of $0.4 million and accounts receivable of approximately $0.9 million of which approximately $0.2 million or 23% has been subsequently collected as of the financial reporting date. As a of July 31, 2020, the Company also had approximately $1.3 million investment in a life insurance contract and approximately $0.9 million short-term investment in trading securities, which are highly liquid at the Company’s discretion. On November 6, 2020, the Company closed a registered direct offering and issued 4,347,826 of its ordinary shares to certain institutional investors and raised net proceeds of $3.5 million (see Note 18). However, the Company does not believe its existing cash and cash resources will be sufficient to fund operations for the next twelve months following the filing of these financial statements. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Currently, the Company intends to finance its future working capital requirements and capital expenditures from cash generated from operating activities and funds raised from equity financings. However, unless the business recovers, additional financing will be required and there is no assurance that such financing, if required, would be available on favorable terms or at all. The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of the uncertainties described above. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Jul. 31, 2020 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities Exchange Commission (“SEC”). The consolidated financial statements of the Company include the accounts of the Company, its subsidiaries, and its VIEs. All intercompany balances and transactions have been eliminated upon consolidation. As of July 31, 2020, the Company’s consolidated financial statements reflect the operating results of the following entities: Date of Place of % of Name of Entity Incorporation Incorporation Ownership Principal Activities Parent company: ATIF January 5, 2015 British Virgin Islands Parent Investment holding Wholly owned subsidiaries of ATIF ATIF HK January 6, 2015 Hong Kong 100% Investment holding Huaya May 20, 2015 PRC 100% WFOE, Consultancy and information technology support Variable interest entity of ATIF Qianhai VIE November 3, 2015 PRC VIE Listing and financial consulting services Majority owned subsidiary of ATIF LGC and its subsidiaries August 21, 2018 Cayman Islands 51.2% Multi-channel advertising, event planning and execution, film production and movie theater operation The VIE contractual arrangements Foreign investments in domestic Chinese companies that engage in private equity investment business and media business are both restricted in China under current PRC laws and regulations. Huaya and LGC's subsidiary Leaping Shenyang are both WFOEs and are subject to such legal restrictions. Therefore, the Company’s main operating entities Qianhai and LMG are controlled through contractual arrangements in lieu of direct equity ownership by the Company or any of its subsidiaries. Risks associated with the VIE structure The Company believes that the contractual arrangements with its VIEs and respective shareholders are in compliance with PRC laws and regulations and are legally enforceable. However, uncertainties in the PRC legal system could limit the Company’s ability to enforce the contractual arrangements. If the legal structure and contractual arrangements were found to be in violation of PRC laws and regulations, the PRC government could: · revoke the business and operating licenses of the Company’s PRC subsidiary and VIEs; · discontinue or restrict the operations of any related-party transactions between the Company’s PRC subsidiary and VIEs; · limit the Company’s business expansion in China by way of entering into contractual arrangements; · impose fines or other requirements with which the Company’s PRC subsidiary and VIEs may not be able to comply; · require the Company or the Company’s PRC subsidiary and VIEs to restructure the relevant ownership structure or operations; or · restrict or prohibit the Company’s use of the proceeds from the IPO to finance the Company’s business and operations in China. The Company’s ability to conduct its consulting services business may be negatively affected if the PRC government were to carry out of any of the aforementioned actions. As a result, the Company may not be able to consolidate its VIEs in its consolidated financial statements as it may lose the ability to exert effective control over the VIEs and its respective shareholders and it may lose the ability to receive economic benefits from its VIEs. The Company, however, does not believe such actions would result in the liquidation or dissolution of the Company, its PRC subsidiary, or its VIEs . The Company has not provided any financial support to the VIEs for the years ended July 31, 2020, 2019, and 2018. The following financial statement amounts and balances of the VIEs were included in the accompanying consolidated financial statements after elimination of intercompany transactions and balances : As of July 31, 2020 2019 Qianhai VIE LMG VIE Total Qianhai VIE LMG VIE Total Current assets $ 2,469,829 $ 1,554,585 $ 4,024,414 $ 3,673,890 $ — $ 3,673,890 Non-current assets 184,740 5,493,284 5,678,024 68,375 — 68,375 Total assets 2,654,569 7,047,869 9,702,438 3,742,265 — 3,742,265 Current liabilities 1,441,148 5,736,358 7,177,506 980,364 — 980,364 Non-current liabilities 65,574 3,179,625 3,245,199 — — — Total liabilities 1,506,722 8,915,983 10,422,705 980,364 — 980,364 Shareholders' equity (deficit) $ 1,147,847 $ (1,868,114) $ (720,267) $ 2,761,901 $ — $ 2,761,901 The summarized operating results of the VIEs are as follows: For the years ended July 31, 2020 2019 2018 Qianhai VIE LMG VIE Total Qianhai VIE Qianhai VIE Operating revenue $ 645,127 $ 40,872 $ 685,999 $ 2,777,618 $ 5,341,271 Income (loss) from operations $ (1,471,095) $ (4,781,593) $ (6,252,688) $ 884,789 $ 2,927,679 Income (loss) before income taxes $ (1,562,037) $ (4,857,484) $ (6,419,521) $ 930,361 $ 2,863,744 Net income (loss) $ (1,562,037) $ (4,933,748) $ (6,495,785) $ 697,631 $ 2,146,927 The summarized cash flow information of the VIEs are as follows: For the years ended July 31, 2020 2019 2018 Qianhai VIE LMG VIE Total Qianhai VIE Qianhai VIE Net cash provided by (used in) operating activities $ 175,530 $ (662,795) $ (487,265) $ (3,380,071) $ 2,036,439 Net cash provided by (used in) investing activities $ 36,412 $ 1,415,579 $ 1,451,991 $ 2,700,687 $ (2,898,916) Net cash provided by (used in) financing activities $ — $ (734,347) $ (734,347) $ (14,626) $ 755,139 Business Combination In April 2020, the Company acquired 51.2% ownership interest in LGC (see Note 4). Business combination is accounted for under the purchase method of accounting. Under the purchase method, assets and liabilities of the business acquired are recorded at their estimated fair values as of the date of acquisition with any excess of the cost of the acquisition over the fair value of the net tangible and intangible assets acquired recorded as goodwill. Results of operations of the acquired business are included in the income statement from the date of acquisition. Noncontrolling Interests Non-controlling interests represent minority shareholders’ 48.8% ownership interest in LGC not acquired by the Company in connection with the Company’s acquisition of LGC. The non-controlling interests are presented in the consolidated balance sheets, separately from equity attributable to the stockholders of the Company. Non-controlling interests in the results of the Company are presented on the face of the consolidated statements of operations and comprehensive loss as an allocation of the total loss for the year between non-controlling interest holders and the stockholders of the Company. Use of Estimates In preparing the consolidated financial statements in conformity with U.S. GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates are based on information as of the date of the consolidated financial statements. Significant estimates required to be made by management include, but are not limited to, the valuation of accounts receivable, useful lives of property and equipment and intangible assets, the recoverability of long-lived assets, impairment of goodwill, revenue recognition ,provision necessary for contingent liabilities and realization of deferred tax assets. Actual results could differ from those estimates. Cash and Cash Equivalents Cash includes cash on hand and demand deposits in accounts maintained with commercial banks. The Company considers all highly liquid investment instruments with an original maturity of three months or less from the date of purchase to be cash equivalents. The Company maintains most of its bank accounts in the PRC. Cash balances in bank accounts in the PRC are not insured by the Federal Deposit Insurance Corporation or other programs. Accounts Receivable, net Accounts receivable are presented net of allowance for doubtful accounts. The Company usually determines the adequacy of reserves for doubtful accounts based on individual account analysis and historical collection trends. The Company establishes a provision for doubtful receivables when there is objective evidence that the Company may not be able to collect amounts due. The allowance is based on management’s best estimates of specific losses on individual exposures, as well as a provision on historical trends of collections. The provision is recorded against accounts receivables balances, with a corresponding charge recorded in the consolidated statements of income and comprehensive income. Delinquent account balances are written off against the allowance for doubtful accounts after management has determined that the likelihood of collection is not probable. Allowance for uncollectible balances amounted to $1,380,161 and $65,335 as of July 31, 2020 and 2019, respectively. Inventories The Company’s subsidiary LGC produces and contracts third parties to produce advertising films and/or television series to be shown in movie theaters and/or on popular online portal. Produced content includes direct production costs, production overhead and acquisition costs and is stated at the lower of unamortized cost or estimated fair value. Produced content also includes cash expenditures made to enter into arrangements with third parties to co-produce certain of its theatrical and television productions. The Company uses the individual-film-forecast-computation method and amortizes the produced content based on the ratio of current period actual revenue (numerator) to estimated remaining unrecognized ultimate revenue as of the beginning of the fiscal year (denominator) in accordance with ASC subtopic 926-20, Entertainment — Films, Other Assets — Film Costs (“ASC 926-20”). Ultimate revenue estimates for the produced content are periodically reviewed and adjustments, if any, will result in prospective changes to amortization rates. When estimates of total revenues and other events or changes in circumstances indicate that a film or television series has a fair value that is less than its unamortized cost, a loss is recognized currently for the amount by which the unamortized cost exceeds the film or television series’ fair value. As of July 31, 2020, 2019, based on management analysis, no inventory impairment was recorded. Investment in Trading Securities Equity securities not accounted for using the equity method are carried at fair value with unrealized gains and losses recorded in the consolidated statements of operations and comprehensive income (loss), according to ASC 321 “Investments — Equity Securities”. During the year ended July 31, 2020, the Company purchased certain publicly-listed equity securities through various open market transactions and accounted for such investments as “investment in trading securities” and subsequently measure the investments at fair value. Gain from investment in trading securities amounted to $201,051 for the year ended July 31, 2020. There was no such transaction for the years ended July 31, 2019 and 2018. Property and Equipment, net Property and equipment are stated at cost. The straight-line depreciation method is used to compute depreciation over the estimated useful lives of the assets, as follows: Useful life Furniture, fixtures and equipment 3-10 years Transportation vehicles 3-5 years Leasehold improvement Lesser of useful life and lease term Expenditures for maintenance and repairs, which do not materially extend the useful lives of the assets, are charged to expense as incurred. Expenditures for major renewals and betterments which substantially extend the useful life of assets are capitalized. The cost and related accumulated depreciation of assets retired or sold are removed from the respective accounts, and any gain or loss is recognized in the consolidated statements of operations and other comprehensive income (loss) in other income or expenses. Intangible Assets, net Intangible assets are stated at cost less accumulated amortization. The straight-line method is used to compute amortization over the estimated useful lives of the intangible assets, as follows: Useful life Trade name 9.6 years Customer relationship 6.2 years Accounting software 4-10 years Financial and news platform 15 years Goodwill Goodwill represents the excess of the consideration paid of an acquisition over the fair value of the net identifiable assets of the acquired subsidiary at the date of acquisition. Goodwill is not amortized and is tested for impairment at least annually, more often when circumstances indicate impairment may have occurred. Goodwill is carried at cost less accumulated impairment losses. If impairment exists, goodwill is immediately written off to its fair value and the loss is recognized in the consolidated statements of operations and comprehensive loss. Impairment losses on goodwill are not reversed. The Company reviews the carrying value of intangible assets not subject to amortization, including goodwill, to determine whether impairment may exist annually or more frequently if events and circumstances indicate that it is more likely than not that an impairment has occurred. The Company has the opinion to access qualitative factors to determine whether it is necessary to perform the two-step in accordance with ASC 350-20. If the Company believes, as a result of the qualitative carrying amount, the two-step quantities impairment test described below is required. The first step compares the fair values of each reporting unit to its carrying amount, including goodwill. If the fair value of each reporting unit exceeds its carrying amount, goodwill is not considered to be impaired and the second step will not be required. If the carrying amount of a reporting unit exceeds its fair value, the second step compares the implied fair value of goodwill to the carrying value of a reporting unit’s goodwill. The implied fair value of goodwill is determined in a manner similar to accounting for a business acquisition with the allocation of the assessed fair value determined in the first step to the assets and liabilities of the reporting unit. The excess of the fair value of the reporting unit over the amounts assigned to the assets and liabilities is the implied fair value of goodwill. Estimating fair value is performed by utilizing various valuation techniques, with the primary technique being a discounted cash flow. If impairment exists, goodwill is immediately written off to its fair value and the loss is recognized in the consolidated statements of operations and comprehensive loss. Impairment losses on goodwill are not reversed. The Company determines the fair values of the reporting unit by preparing a discounted cash flow analysis using forward looking projection of future operating results. Significant estimates and assumptions used in the discounted cash flow analysis included revenue growth rate ranging from 9.0% to 50.0% (which is determined based on LGC’s historical revenue growth rate of 30% to 130% from 2017 to 2019, as conservatively adjusted by taking into considerations of certain metrics such as general economic conditions, market risks associated with the post-COVID 19 recovery of the media business industry, revenue growth of comparable companies, management’s forecast and market expectations of the real long-term growth of its media business and inflation, etc.), terminal growth rate of 3%, and weighted average cost of capital of 20%. The discounted cash flow model indicated that the fair value of the reporting unit was $31,701,250, which was below the carrying value of the report unit of $37,322,717, accordingly, a goodwill impairment of $5,621,467 was recorded for the year ended July 31, 2020 (see Note 9). Impairment of Long-lived Assets Other Than Goodwill Long-lived assets, including plant and equipment and intangible with finite lives are reviewed for impairment whenever events or changes in circumstances (such as a significant adverse change to market conditions that will impact the future use of the assets) indicate that the carrying value of an asset may not be recoverable. The Company assesses the recoverability of the assets based on the undiscounted future cash flows the assets are expected to generate and recognize an impairment loss when estimated undiscounted future cash flows expected to result from the use of the asset plus net proceeds expected from disposition of the asset, if any, are less than the carrying value of the asset. If an impairment is identified, the Company would reduce the carrying amount of the asset to its estimated fair value based on a discounted cash flows approach or, when available and appropriate, to comparable market values. For the years ended July 31, 2020, 2019 and 2018, an impairment of $384,492, $Nil, and $Nil, respectively were recorded for intangible assets (see Note 8), and an impairment of $172,728, $Nil and $Nil, respectively, were recorded for property and equipment (see Note 7 ). Fair Value of Financial Instruments ASC 825‑10 requires certain disclosures regarding the fair value of financial instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: · Level 1 - inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. · Level 2 - inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted market prices for identical or similar assets in markets that are not active, inputs other than quoted prices that are observable and inputs derived from or corroborated by observable market data. · Level 3 - inputs to the valuation methodology are unobservable. Fair value of investment in trading securities are based on quoted prices in active markets. The fair value of the Company’s other financial instruments including cash and cash equivalents, accounts receivable, inventories, deposits, investment in life insurance contract, prepaid expenses and other current assets, short-term borrowings, accounts payable, taxes payable, and accrued expenses and other current liabilities and current portion of lease liabilities approximate their fair values because of the short-term nature of these assets and liabilities. Revenue Recognition The Company recognizes revenue in accordance with ASC 606 Revenue from Contracts with Customers (“ASC 606”). To determine revenue recognition for contracts with customers, the Company performs the following five steps: (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligation. The Company recognizes revenue when it transfers its goods and services to customers in an amount that reflects the consideration to which the Company expects to be entitled in such exchange. The Company currently generates its revenue from the following main sources: (1) Revenue from customer’s initial registration fee In order to engage with the Company for various consulting services, a new customer is required to pay an initial non-refundable registration fee to the Company and the Company will then post the customer’s information and profiles on its website, at which point, the Company’s performance obligations are satisfied and such registration fee is recognized as revenue. The Company does not charge additional customer profile maintenance fee after the initial posting is completed as limited effort is required for the Company to maintain such information on an on-going basis. Revenues of $nil, $nil and $71,695 was generated from customer’s initial registration for the years ended July 31, 2020, and 2019 and 2018. (2) The Company provides various consulting services to its members, especially to those who have the intention to be publicly listed in the stock exchanges in the United States and other countries. The Company categorizes its consulting services into three Phases: Phase I consulting services primarily include due diligence review, market research and feasibility study, business plan drafting, accounting record review, and business analysis and recommendations. Management estimates that Phase I normally takes about three months to complete based on its past experience. Phase II consulting services primarily include reorganization, pre-listing education and tutoring, talent search, legal and audit firm recommendation and coordination, VIE contracts and other public-listing related documents review, merger and acquisition planning, investor referral and pre-listing equity financing source identification and recommendations, and independent directors and audit committee candidate’s recommendation. Management estimates that Phase II normally takes about eight months to complete based on its past experience. Phase III consulting services primarily include shell company identification and recommendation for customers expecting to become publicly listed through reverse merger transaction; assistance in preparation of customers’ public filings for IPO or reverse merger transactions; and assistance in answering comments and questions received from regulatory agencies. Management believes it is very difficult to estimate the timing of this phase of service as the completion of Phase III services is not within the Company’s control. Each phase of consulting services is stand-alone and fees associated with each phase are clearly identified in service agreements. Revenue from providing Phase I and Phase II consulting services to customers is recognized ratably over the estimated completion period of each phase as the Company’s performance obligations related to these services are carried out over the whole duration of each Phase. Revenue from providing Phase III consulting services to customers is recognized upon completion of the reverse merger transaction or IPO transaction when the Company’s promised services are rendered and the Company’s performance obligations are satisfied. Revenue that has been billed and not yet recognized is reflected as deferred revenue on the balance sheet. Depending on the complexity of the underlying service arrangement and related terms and conditions, significant judgments, assumptions, and estimates may be required to determine when substantial delivery of contract elements has occurred, whether any significant ongoing obligations exist subsequent to contract execution, whether amounts due are collectible and the appropriate period or periods in which, or during which, the completion of the earnings process occurs. Depending on the magnitude of s pecific revenue arrangements, adjustment may be made to the judgments, assumptions, and estimates regarding contracts executed in any specific period. (3) The Company’s multi-channel advertising services include pre-movie advertisements display, elevator and supermarket advertising, and brand promotion. Most of the Company’s client contracts are individually negotiated and, accordingly, the service period and prices vary significantly. Service periods typically range from one day to one year. The Company provides advertising services over the contract period. Revenues from advertising services are recognized on straight-line basis over the contract period, which approximates the pattern of when the underlying services are performed. Prepayments for advertising services are deferred and recognized as revenue when the advertising services are rendered and the Company’s performance obligations are satisfied. The Company also provides advertising services through its regional distributors. Pursuant to advertising services distribution agreements, the Company grants the regional distributors the exclusive rights to provide local pre-movie advertising. The advertising services distribution agreements with these regional distributors typically have terms ranging from 11 to 24 months without automatic renewal provisions. Under the advertising services distribution agreements, the Company has the right to set the minimum local pre-movie advertisement prices in the movie theaters, regulate the content and quality of local pre-movie advertisements according to related laws and movie theater rules, and examine the source of local pre-movie advertisements and refuse to display advertisements from any competitors. The receipt of distribution fee is initially recorded as deferred revenue and is recognized as revenue ratably as services are rendered and the Company’s performance obligations are satisfied. (4) The Company’s event planning and execution business includes planning and arrangement of events, and production of related advertising materials. From the preparation of the events to executing it typically takes no more than one week. Revenue is realized when the service is performed in accordance with the client arrangement and upon the completion of the earnings process. (5) The Company’s movie theater operating revenues are generated primarily from box office admissions and theater food and beverage sales. Revenues of this business line are recognized when admissions and food and beverage sales are rendered at the theaters and are reported net of sales tax. The Company defers 100% of the revenue associated with the sales of gift cards and packaged tickets until such time as the items are redeemed. Contract Assets and Liabilities Payment terms are established on the Company’s pre-established credit requirements based upon an evaluation of customers’ credit quality. Contract assets are recognized for in related accounts receivable. Contract liabilities are recognized for contracts where payment has been received in advance of related services are rendered and delivered to the customers. The contract liability balance can vary significantly depending on the timing when the Company’s services are rendered and the Company’s performance obligations are satisfied. As of July 31, 2020 and 2019, other than accounts receivable and deferred revenue, the Company had no other material contract assets, contract liabilities or deferred contract costs recorded on its consolidated balance sheet. Contract liabilities related to going public consulting services amounted to $512,238 and $415,392 as of July 31, 2020 and 2019, respectively. Contract liabilities related to multi-channel advertising and event planning and execution services amounted to $551,404 and $nil as of July 31, 2020 and 2019, respectively. The July 31, 2020 contract liabilities balances are expected to be recognized as revenue within one year when the Company’s performance obligations going public consulting services are satisfied. Disaggregation of Revenues The Company disaggregates its revenue from contracts by service types, as the Company believes it best depicts how the nature, amount, timing and uncertainty of the revenue and cash flows are affected by economic factors. The Company’s disaggregation of revenues for the years ended July 31, 2020, 2019 and 2018 are disclosed in Note 15 of this consolidation financial statements. Cost of revenue Cost of the multi-channel advertising revenues consists primarily of payments to movie theater operators for pre-movie advertising right and the billboards of elevators and supermarkets. Cost of event planning and execution consists primarily of advertising design costs, salary and benefits expenses, leasing costs, and other related expenses. Cost of film production consists primarily of direct production costs and production overhead. Cost of movie theater operating consists primarily of film exhibition costs, which is accrued on the applicable admissions revenues and estimates of the final settlement pursuant to film licenses of the Company. These licenses typically state that rental fees are based on aggregate terms established prior to the opening of the film. Income Taxes The Company accounts for income taxes under ASC 740. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period including the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. An uncertain tax position is recognized only if it is “more likely than not” that the tax position would be sustained in a tax examination. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred. As of July 31, 2020, the Company had large tax payable of approximately $4 million, primarily related to the unpaid income tax in China. Management has discussed with local tax authorities regarding the outstanding tax payable balance and is in the process of negotiating a settlement plan. As of July 31, 2020, the Company recorded a penalty of $77,527 based on the late payment penalty notice received from local tax authorities. The Company believes it is likely that the Company can fully settle its tax liabilities within one year but cannot guarantee such settlement will ultimately occur. As of July 31, 2020, all of the Company’s tax returns of its PRC subsidiaries and VIE operating entities remain open for statutory examination by PRC tax authorities. Value Added Tax (“VAT”) Sales revenue derived from advertising service revenues is subject to VAT. The applicable VAT rates for the Company is 6%. Entities that are VAT general taxpayers are allowed to offset qualified input VAT paid to suppliers against their output VAT liabilities. Net VAT balance between input VAT and output VAT is recorded in the line item of taxes payable on the consolidated balance sheets. All of the VAT returns of the Company have been and remain subject to examination by the tax authorities for five years from the date of filing. Earnings (Loss) per Share The Company computes earnings (loss) per share (“EPS”) in accordance with ASC 260, “Earnings per Share” (“ASC 260”). ASC 260 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured as net income (loss) divided by the weighted average common shares outstanding for the period. Diluted presents the dilutive effect on a per share basis of potential common shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. For the years ended July 31, 2020, 2019 and 2018, there were no dilutive shares. Foreign Currency Translation The functional currency for ATIF and LGC is the U.S Dollar (“US$”). ATIF HK and LGC’s subsidiary Leaping HK uses Hong Kong dollar as their functional currency. However, ATIF, LGC, ATIF HK and Leaping HK currently only serve as the holding companies and did not have active material operations as of the date of this report. The Company operates its business through its VIEs and subsidiaries of the VIEs in the PRC as of July 31, 2020. The functional currency of the Company’s VIEs and VIEs’ subsidiaries is |
BUSINESS COMBINATION
BUSINESS COMBINATION | 12 Months Ended |
Jul. 31, 2020 | |
BUSINESS COMBINATION | |
BUSINESS COMBINATION | NOTE 4 – BUSINESS COMBINATION On April 8, 2020, the Company signed a Share Exchange Agreement and a Debt Conversion and Share Purchase Agreement with the shareholders of Leaping Group Co., Ltd (“LGC”), to acquire 51.2% of the equity interest of LGC. LGC is primarily engaged in multi-channel advertising, event planning and execution, film and TV program production, and movie theater operations in the PRC. On April 22, 2020 (the “Closing Date”), the Company completed the acquisition of approximately 51.2% of the equity interest of LGC for a total consideration of approximately $22.92 million, including cash consideration of $1.85 million in the form of debt forgiveness and issuance of a total of 9,940,002 shares of ATIF’s common stock with the fair value of approximately $21.07 million based on the closing price of the Company’s stock at the Closing Date. Under the terms of the Debt Conversion and Share Purchase Agreement, LGC issued 3,934,029 of its ordinary shares to the Company in exchange for (i) the satisfaction of the outstanding debt owed to the Company in the amount of US$1,851,000, and (ii) the issuance of 2,800,000 the Company’s ordinary shares to LGC. Concurrent with the closing of the Debt Conversion and Share Purchase Agreement, and under the terms of the Share Exchange Agreement, LGC assigned an aggregate of 6,283,001 of its ordinary shares to the Company in exchange for an aggregate of the Company’s 7,140,002 ordinary shares. The transaction was accounted for as a business combination using the purchase method of accounting in accordance with ASC 805-10-20. The purchase price allocation of the transaction was determined by the Company with the assistance of an independent appraisal firm based on the fair value of the assets acquired and liabilities assumed as of the acquisition date. The following table presents the purchase price allocation to assets acquired and liabilities assumed for LGC as of the acquisition date. The non-controlling interest represents the fair value of the 48.8% equity interest not held by the Company: As of April 22, 2020 Cash and cash equivalents $ 1,060,435 Accounts receivable 2,613,970 Prepayment and other current assets 2,219,950 Property and equipment 2,728,000 Intangible assets (trade name and customer relationship) 8,000,000 Deferred film production cost 323,522 Deferred income tax assets 75,822 Taxes payable (3,255,935) Other current liabilities (2,701,495) Fair value of non-controlling interest (19,664,326) Goodwill 31,523,861 Total purchase consideration $ 22,923,804 The intangible assets mainly include LGC’s trade name of $1.3 million and customer relationship of $6.7 million, with definite lives of 9.6 years and 6.2 years, respectively. The goodwill is mainly attributable to the excess of the consideration paid over the fair value of the net assets acquired that cannot be recognized separately as identifiable assets under U.S. GAAP. Goodwill is not amortized and is not deductible for tax purposes. The fair value of the non-controlling interest in LGC was determined based on the purchase price allocation report prepared by an independent third-party appraiser by using discount cash flow model. The amounts of revenue and net loss of LGC included in the Company’s consolidated statement of operations from the acquisition date to July 31, 2020 are as follows: From acquisition date to July 31, 2020 Net Revenue $ 40,872 Net loss $ (4,933,748) The following table presents the Company’s unaudited pro forma results for the years ended July 31, 2020 and 2019, respectively, as if the LGC Acquisition had occurred on August 1, 2018. The unaudited pro forma financial information presented includes the effects of adjustments related to the amortization of acquired intangible assets, and excludes other non-recurring transaction costs directly associated with the acquisition such as legal and other professional service fees. Statutory rates were used to calculate income taxes. For the years ended July 31, 2020 2019 Pro forma revenue $ 6,192,939 $ 14,758,448 Pro forma net income (loss) $ (20,975,818) (1) 4,402,083 (1) Pro forma net income (loss) attributable to ATIF Holdings Limited $ (17,165,275) (1) 1,869,892 (1) Pro forma earnings (loss) per common share - basic and diluted $ (0.37) $ Weighted average shares - basic and diluted 47,014,674 45,462,933 (1) Includes intangibles asset amortization expense of $810,708 and $1,216,062 for the years ended July 31, 2020 and 2019, respectively. |
ACCOUNTS RECEIVABLE, NET
ACCOUNTS RECEIVABLE, NET | 12 Months Ended |
Jul. 31, 2020 | |
ACCOUNTS RECEIVABLE, NET | |
ACCOUNTS RECEIVABLE, NET | NOTE 5 – ACCOUNTS RECEIVABLE, NET As of July 31, 2020 2019 Accounts receivable from business advisory and consulting services $ 425,106 $ 1,537,593 Accounts receivable from multi-channel advertising, event planning and execution 1,894,447 — Total gross accounts receivable 2,319,553 1,537,593 Less: allowances for doubtful accounts (1,380,161) (65,335) Accounts receivables, net $ 939,392 $ 1,472,258 As of July 31, 2020 and 2019, the aging of the Company’s accounts receivable is as follows: As of July 31, Accounts receivable by aging bucket 2020 2019 1-3 months $ 27,027 $ 364,430 4-6 months 67,441 147,722 7-12 months 1,130,348 894,771 More than 1 year 1,094,737 130,670 Total gross accounts receivable $ 2,319,553 $ 1,537,593 As of July 31, 2020, substantial portion of the outstanding accounts receivable resulted from the Company’s acquisition of LGC in April 2020 (see Note 4). Due to the outbreak and spread of COVID-19, some of LGC’s customers experienced financial distress, suffered disruptions in their businesses and delayed or defaulted their payments. In addition, LGC’s movie theater operations was limited during the period from April to July 2020 because most of the movie theaters in China remained closed or struggled to draw crowds as a result of government operating restrictions. Given these uncertainties, approximately $0.96 million bad debt reserve has been accrued. Allowance for doubtful accounts movement is as follows: July 31, 2020 July 31, 2019 Beginning balance $ 65,335 $ — Additions 1,304,108 65,790 Reductions — — Foreign currency translation adjustments 10,718 (455) Ending balance $ 1,380,161 $ 65,335 Approximately 23% of the July 31, 2020 accounts receivable balance has been subsequently collected as of the date of this Report and the remaining balances are expected to be collected by March 31, 2021. |
PREPAID EXPENSES AND OTHER CURR
PREPAID EXPENSES AND OTHER CURRENT ASSETS | 12 Months Ended |
Jul. 31, 2020 | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS | NOTE 6 – PREPAID EXPENSES AND OTHER CURRENT ASSETS Prepaid expenses and other current assets consisted of the following: As of July 31, 2020 2019 Advance to employees for business development purposes (a) $ 131,790 $ 700,940 Prepaid service fees (b) 64,189 891,098 Prepayment for advertising services (c ) 609,763 400,895 Advance to vendors (d) 10,000 428,349 Others (e) 55,209 78,653 Total $ 870,951 $ 2,499,935 (a) (b) Amortization of prepaid consulting expense for the years ended July 31, 2020, 2019 and 2018 was $861,360, $282,434 and $nil, respectively. (c) (d) (e) |
PROPERTY, PLANT AND EQUIPMENT,
PROPERTY, PLANT AND EQUIPMENT, NET | 12 Months Ended |
Jul. 31, 2020 | |
PROPERTY, PLANT AND EQUIPMENT, NET | |
PROPERTY, PLANT AND EQUIPMENT, NET | NOTE 7 – PROPERTY, PLANT AND EQUIPMENT, NET Property and equipment, net, consisted of the following: As of July 31, 2020 2019 Furniture, fixtures and equipment $ 980,188 $ 98,615 Leasehold improvement 1,737,898 — Vehicles 731,782 — Total 3,449,868 98,615 Less: Impairment of fixed assets (173,799) — Less: accumulated depreciation (652,678) (49,586) Property and equipment, net $ 2,623,391 $ 49,029 During the year ended July 31, 2020, the Company disposed certain outdated office equipment and reported a loss of $12,388 from such disposal. In addition, the Company recorded an impairment of $172,728 on its fixed assets for the year ended July 31, 2020 based on its assessment that the expected future cash flows may not cover the carrying value of the Company’s fixed asset. Depreciation expense was $527,497, $20,615, and $16,458 for the years ended July 30, 2020, 2019, and 2018, respectively. |
INTANGIBLE ASSETS, NET
INTANGIBLE ASSETS, NET | 12 Months Ended |
Jul. 31, 2020 | |
INTANGIBLE ASSETS, NET | |
INTANGIBLE ASSETS, NET | NOTE 8 – INTANGIBLE ASSETS, NET Intangible assets, net consisted of the following: As of July 31, 2020 2019 Customer relationship (a) $ 6,700,000 $ — Tradename (a) 1,300,000 — Financial and news platform (b) 443,043 438,657 Software 339,569 19,842 Total 8,782,612 458,499 Less: accumulated amortization (471,078) (29,740) Impairment of intangible assets (386,432) — Intangible assets, net $ 7,925,102 $ 428,759 (a) In connection with the acquisition of 51.2% equity interest of LGC, the Company acquired an aggregate of $8,000,000 of intangible assets, primarily consisted of customer relationships and tradenames, which have an estimated weighted-average amortization period of approximately 6.2 years and 9.6 years, respectively. (b) In order to diversify the Company’s business and revenue source, on September 20, 2018 (the “Acquisition Date”), ATIF HK entered into a purchase agreement with Shenzhen Shangyuan Electronic Commerce Co., Ltd. (“Shangyuan”) to acquire a financial and news media platform, www.chinacnnm.com, from Shangyuan, for a total cash consideration of approximately $0.46 million (or RMB3 million).The purchase price was based on the estimated fair value of this asset as of the Acquisition Date in accordance with the valuation report of an independent appraisal firm. The transaction costs (including title search and legal costs) associated with the news media platform acquisition were immaterial and transaction cost capitalization is not deemed necessary. The Company acquired only the financial and news platform/website from Shangyuan, rather than the equity interest of Shangyuan. Thus, the Company determined that the acquisition constituted as an acquisition of assets for financial statement purposes. The Company originally planned to use this financial and news platform to market its consulting services to potential clients, as well as help its clients distribute corporate news and worldwide press releases, and accordingly charge customer services fees. However, the Company has not generated any revenue from this financial and news platform since its acquisition, and based on the Company’s current financial condition and operating performance, management assessed that the likelihood of future use of the financial and news platform is remote. As a result, a full impairment loss of $384,492 has been applied against this financial and news platform for the year ended July 31, 2020. Amortization expense was $440,899, $29,707, and $Nil for the years ended July 31, 2020, 2019, and 2018, respectively. Estimated future amortization expense for intangible assets is as follows: Year ending July 31, Amortization expense 2021 $ 1,298,019 2022 1,298,019 2023 1,298,019 2024 1,291,352 2025 1,218,019 Thereafter 1,521,674 Total $ 7,925,102 |
GOODWILL
GOODWILL | 12 Months Ended |
Jul. 31, 2020 | |
GOODWILL | |
GOODWILL | NOTE 9 — GOODWILL Goodwill represents the excess of the consideration paid for the acquisition of 51.2% equity interest of LGC over the fair value of the net identifiable assets of LGC at the date of acquisition (see Note 4). As of July 31, 2020, the changes in the Company’s carrying amount of goodwill are presented below: Total Balance as of July 31, 2019 $ — Goodwill 31,523,861 Goodwill impairment (5,621,467) Balance as of July 31, 2020 $ 25,902,394 The Company assesses goodwill for impairment using the two-step process with the assistance of a third-party appraiser. Based on the Company’s assessment, the fair value of the reporting unit fell below its carrying value. As a result, the Company recorded a goodwill impairment of $5,621,467 as reflected in the consolidated statements of operations and comprehensive income (loss) for the year ended July 31, 2020. |
INVESTMENT IN LIFE INSURANCE CO
INVESTMENT IN LIFE INSURANCE CONTRACT | 12 Months Ended |
Jul. 31, 2020 | |
INVESTMENT IN LIFE INSURANCE CONTRACT | |
INVESTMENT IN LIFE INSURANCE CONTRACT | NOTE 10 — INVESTMENT IN LIFE INSURANCE CONTRACT On July 29, 2019, the Company invested $1,290,289 (HKD10 million) to purchase a long-term life insurance investment instrument with Manulife (International) Limited (“Manulife”) in order to earn interest income, with ATIF Limited as the insurance beneficiary. The Company originally expects to hold this investment for five years in order to avoid surrender charge. Early redemption fee applies to subscription less than five years. The insurance company Manulife will invest the funds in certain portfolio of financial instruments, including money market funds, private fund, bonds or mutual funds, with variable rates of return on the investment. Historically, the rates of return on similar investment products with Manulife ranged from 8.69% to 11.49%, with an average of 9.48% per annum. Interest income is to be paid to the Company on a monthly basis. The interest earned will be recognized in the consolidated statements of operations over the contractual term of this investment, unless the Company elects to early terminate the contract. The life insurance policy became effective on August 3, 2019. In order to support the Company’s working capital need, on September 22, 2020, the Company early terminated the life insurance investment instrument (Note 18). Accordingly, the Company reclassified such investment as a current asset as of July 31, 2020. Interest income earned from this investment amounted to $95,797 for the years ended July 31, 2020. |
OPERATING LEASES
OPERATING LEASES | 12 Months Ended |
Jul. 31, 2020 | |
OPERATING LEASES | |
OPERATING LEASES | NOTE 11 — OPERATING LEASES The Company leases offices space and movie theatres under non-cancelable operating leases, with lease terms ranging between 2 to 15 years. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. Rent expense for the years ended July 31, 2020, 2019 and 2018 was $1,071,822, $515,010, $400,151, respectively. Effective August 1, 2019, the Company adopted the new lease accounting standard using a modified retrospective transition method, which allows the Company not to recast comparative periods presented in its consolidated financial statements. In addition, the Company elected the package of practical expedients, which allows the Company to not reassess whether any existing contracts contain a lease, to not reassess historical lease classification as operating or finance leases, and to not reassess initial direct costs. The Company has not elected the practical expedient to use hindsight to determine the lease term for its leases at transition. The Company combines the lease and non-lease components in determining the ROU assets and related lease obligation. Adoption of this standard resulted in the recording of operating lease ROU assets and corresponding operating lease liabilities as disclosed below. ROU assets and related lease obligations are recognized at commencement date based on the present value of remaining lease payments over the lease term. The following table presents the operating lease related assets and liabilities recorded on the balance sheets as of July 31, 2020. July 31, 2020 Rights of use lease assets $ 3,768,418 Operating lease liabilities, current 750,350 Operating lease liabilities, noncurrent 3,382,889 Total operating lease liabilities $ 4,133,239 The weighted average remaining lease terms and discount rates for all of operating leases were as follows as of July 31, 2020: July 31, 2020 Remaining lease term and discount rate $ Weighted average remaining lease term (years) 8.78 Weighted average discount rate 4.90 % The following is a schedule of maturities of lease liabilities as of July 31, 2020 2021 $ 942,360 2022 667,392 2023 477,151 2024 481,817 2025 396,682 2025 and thereafter 2,169,094 Total lease payments 5,134,496 Less: imputed interest (1,001,257) Present value of lease liabilities $ 4,133,239 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Jul. 31, 2020 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | NOTE 12 – RELATED PARTY TRANSACTIONS During the year ended July 31, 2020, the Company leased office space in Hong Kong from Asia Time (HK) International Finance Service Limited (“Asia Time HK”), an entity controlled by the Company’s controlling shareholder. The Company paid office lease expense of $79,875 to Asia Time HK for the year ended July 31, 2020. |
TAXES
TAXES | 12 Months Ended |
Jul. 31, 2020 | |
TAXES | |
TAXES | NOTE 13 – TAXES (a) VAT, Business Tax and related surcharges Effective on September 1, 2012, a pilot program (the “Pilot Program”) for transition from the imposition of PRC business tax (“Business Tax”) to the imposition of VAT for revenues from certain industries and certain cities. On May 1, 2016, the transition from the imposition of Business Tax to the imposition of VAT, was expanded to all industries in China, and as a result all of the Company’s revenues have been subject to a 6% VAT and related surcharges on VAT payable at a rate of 12% since that date. To record VAT payable, the Company adopted the net presentation method, which presents the difference between the output VAT (at a rate of 6%) and the available input VAT amount (at the rate applicable to the supplier). In addition, LGC’s multi-channel advertising business is also subject to a culture construction fee surcharge of 3% based on its gross revenue amount. (b) Corporate Income Taxes (“CIT”) The Company is subject to income taxes on an entity basis on income arising in or derived from the tax jurisdiction in which each entity is domiciled. British Virgin Islands Under the current laws of the British Virgin Islands, the Company is not subject to tax on income or capital gain. Additionally, upon payments of dividends to the shareholders, no British Virgin Islands withholding tax will be imposed. Cayman Islands Under the current and applicable laws of the Cayman Islands, LGC is not subject to tax on income or capital gain. Additionally, upon payments of dividends by the Company to its shareholders, no Cayman Islands withholding tax will be imposed. Hong Kong ATIF HK and Leaping HK are subject to Hong Kong profits tax at a rate of 16.5%. However, ATIF HK and Leaping HK did not generate any assessable profits arising in or derived from Hong Kong for the fiscal years ended July 31, 2020, 2019, and 2018, and accordingly no provision for Hong Kong profits tax has been made in these periods. PRC Huaya, Qianhai, Leaping Shenyang, LMG and its subsidiaries were incorporated in the PRC. Under the Income Tax Laws of the PRC, these companies are subject to income tax rate of 25% The following table reconciles the statutory rate to the Company’s effective tax rate: For the years ended July 31, 2020 2019 2018 % % % China income tax rate 25.0 25.0 25.0 Rate differential (12.6) 15.8 — Permanent difference on non-deductible expenses (0.1) 0.1 1.9 Utilization of the VIE’s Net Operating Loss (“NOL”) from prior years — (1.7) — Change in valuation allowance (12.7) — — Effective tax rate (0.4) 39.2 26.9 The income tax expenses consists of the following: For the years ended July 31, 2020 2019 2018 Current income tax provision BVI $ — $ — $ — Hong Kong — — — China — 276,823 716,816 Subtotal — 276,823 716,816 Deferred income tax provision BVI — — — Hong Kong — — — China 76,264 — — Total income tax provision $ 76,264 $ 276,823 $ 716,816 Deferred tax assets The Company’s deferred tax assets are comprised of the following: July 31, 2020 July 31, 2019 ATIF LGC Total ATIF Deferred tax assets: Net operating loss carry forwards $ 746,024 $ 816,747 $ 1,562,771 $ — Allowance for doubtful account 212,010 438,350 650,360 — Deferred tax assets before valuation allowance 958,034 1,255,097 2,213,131 — Less: valuation allowance (958,034) (1,255,097) (2,213,131) — Net deferred tax assets $ — $ — $ — $ — The Company follows ASC 740, “Income Taxes”, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates, applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The Company’s deferred tax assets primarily derived from the net operating loss (“NOL”) and allowance for doubtful accounts. For the year ended July 31, 2020, both ATIF and LGC suffered net operating losses due to reduced number of customers for ATIF’s consulting services and for LGC’s pre-movie adverting display services, event planning and execution services and movie theater operation service as affected by the COVID-19 outbreak and spread. In addition, some of the Company’s existing customers have experienced financial distress and disruption of business due to COVID-19, which resulted in delay or default on their payments and increased allowance for doubtful accounts. The Company periodically evaluates the likelihood of the realization of deferred tax assets, and reduces the carrying amount of the deferred tax assets by a valuation allowance to the extent it believes a portion or all of the deferred tax assets will not be realized. The Company considers many factors when assessing the likelihood of future realization of the deferred tax assets, including its recent cumulative earnings experience, expectation of future income, the carry forward periods available for tax reporting purposes, and other relevant factors. For the year ended July 31, 2020, management believes that the realization of the deferred tax assets appears to be uncertain and may not be realizable in the near future. Therefore, a 100% valuation allowance has been provided against the deferred tax assets at July 31, 2020. (c) Taxes Payable The Company’s taxes payable consists of the following: July 31, 2020 July 31, 2019 ATIF LGC Total ATIF Value added tax payable $ 73,031 $ 186,028 $ 259,059 $ 91,978 Income tax payable 584,503 3,001,124 3,585,627 574,778 Other tax payable 2,582 156,896 159,478 2,313 Total taxes payable $ 660,116 $ 3,344,048 $ 4,004,164 $ 669,069 In connection with the acquisition of LGC on April 22, 2020, the Company assumed LGC’s tax liabilities of approximately $3.3 million (see Note 4). As of July 31, 2020, approximately 84% of the Company’s total tax liabilities were related to LGC’s accumulated unpaid tax. Uncertain tax positions As of July 31, 2020, the Company had accrued tax liabilities of approximately $4.0 million, mostly related to LGC’s accumulated unpaid corporate income tax in China. According to PRC taxation regulation, if tax has not been fully paid, tax authorities may impose tax and late payment penalties within three years. In practice, since all of the taxes owed are local taxes, the local tax authority is typically more flexible and willing to provide incentives or settlements with local small and medium-size businesses to relieve their burden and to stimulate the local economy. During the year ended July 31, 2020, the Company received a late payment penalty notice from local tax authorities and recorded a penalty of $77,527 as reflected in the consolidated statements of operations. Management has discussed with local tax authorities regarding the outstanding tax payable balance and is in the process of negotiating a settlement plan. The Company believes it is likely that LGC can fully settle its tax liabilities and tax penalties within one year but cannot guarantee such settlement will ultimately occur. |
EQUITY
EQUITY | 12 Months Ended |
Jul. 31, 2020 | |
EQUITY | |
EQUITY | NOTE 14 – EQUITY Ordinary Shares The Company was established under the laws of the British Virgin Islands on January 5, 2015. Prior to the Reorganization, the authorized capital was 100,000,000 ordinary shares with par value of $0.0004 per share and 50,000,000 shares were issued at par value. On August 21, 2018, the Company amended its Memorandum of Association to cancel the 50,000,000 issued shared and simultaneously increased the number of the authorized shares to 100,000,000,000 and increase the par value of each share to $0.001. In connection with the cancellation of the 50,000,000 shares, the Company issued 50,000 new shares to the controlling shareholders at $0.001 per share. On November 2, 2018, the Company issued additional 49,950,000 ordinary shares, at par value of $0.001 per share, to its beneficial owners, in private transactions, for a total consideration of $49,950. On February 27, 2019, the Company’s pre-IPO shareholders surrendered an aggregated 15,000,000 ordinary shares, which were subsequently cancelled, for no consideration, and resulted in a reduction in outstanding issued shares from 50,000,000 ordinary shares to 35,000,000 ordinary shares with a par value of $0.001 per share (the “Surrender”). The above-mentioned transactions were considered as a part of the Reorganization of the Company, which was retroactively applied as if the transaction occurred at the beginning of the period presented. Initial Public Offering On April 29, 2019, the Company completed its IPO of 2,074,672 ordinary shares at a public offering price of $5.00 per share. The gross proceeds were approximately $10.4 million before deducting the underwriter's commissions and other offering expenses, resulting in net proceeds of approximately $8.8 million to the Company. In connection with the offering, the Company’s ordinary shares began trading on the NASDAQ Capital Market on May 3, 2019, under the symbol “ATIF.” Shares issued for acquisition of LGC As disclosed in Note 4 above, on April 22, 2020, the Company completed an acquisition of approximately 51.2% of the equity interest of LGC. In connection with the acquisition, the Company issued a total of 9,940,002 shares of its common stock to LGC’s shareholders with fair value of approximately $21.07 million based on the closing price of the Company’s stocks at the Closing Date. As of July 31, 2020 and 2019, the Company had a total of 47,014,674 and 37,074,672 ordinary shares issued and outstanding, respectively. Noncontrolling interest Non-controlling interests represent minority shareholders’ 48.8% ownership interest in LGC not acquired by the Company in connection with the Company’s acquisition of equity interest in LGC. The following table reconciles the non-controlling interest as of July 31, 2020 and 2019: Total As of July 31, 2018 $ — Net income (loss) attributable to non-controlling interest — Foreign currency translation adjustment — As of July 31, 2019 $ — Acquisition of noncontrolling interest 19,664,326 Net loss attributable to non-controlling interest (2,407,669) Foreign currency translation adjustment (42,174) As of July 31, 2020 $ 17,214,483 Statutory reserve and restricted net assets The Company’s VIE operating entities are required to make appropriations to certain reserve funds, comprising the statutory surplus reserve and the discretionary surplus reserve, based on after-tax net income determined in accordance with generally accepted accounting principles of the PRC (“PRC GAAP”). Appropriations to the statutory surplus reserve are required to be at least 10% of the after-tax net income determined in accordance with PRC GAAP until the reserve is equal to 50% of the entity’s registered capital. Appropriations to the discretionary surplus reserve are made at the discretion of the Board of Directors. The statutory reserve may be applied against prior year losses, if any, and may be used for general business expansion and production or increase in registered capital, but are not distributable as cash dividends. The payment of dividends by entities organized in China is subject to limitations, procedures and formalities. Regulations in the PRC currently permit payment of dividends only out of accumulated profits as determined in accordance with accounting standards and regulations in China. The results of operations reflected in the consolidated financial statements prepared in accordance with U.S GAAP may differ from those in the statutory financial statements of the WFOEs and VIEs. Remittance of dividends by a wholly foreign-owned company out of China is subject to examination by the banks designated by State Administration of Foreign Exchange. In light of the foregoing restrictions, the Company’s WFOEs, Huaya and LMG, and their respective VIEs and VIEs’ subsidiaries are restricted in their ability to transfer their net assets to the Company. Foreign exchange and other regulations in the PRC may further restrict the WFOEs, VIEs and VIE’s subsidiaries from transferring funds to the Company in the form of dividends, loans and advances. As of July 31, 2020 and 2019, the restricted amounts as determined pursuant to PRC statutory laws totaled $355,912 and $355,912, respectively, and total restricted net assets amounted to $2,268,330 and $962,374, respectively. |
SEGMENT REPORTING
SEGMENT REPORTING | 12 Months Ended |
Jul. 31, 2020 | |
SEGMENT REPORTING | |
SEGMENT REPORTING | NOTE 15 — SEGMENT REPORTING An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, and is identified on the basis of the internal financial reports that are provided to and regularly reviewed by the Company’s chief operating decision maker in order to allocate resources and assess performance of the segment. In accordance with ASC 280, Segment Reporting, operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”), or decision making group, in deciding how to allocate resources and in assessing performance. The Company uses the “management approach” in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker for making operating decisions and assessing performance as the source for determining the Company’s reportable segments. Management, including the chief operating decision maker, reviews operation results by the revenue of different services. Based on management’s assessment, the Company has determined that it has four operating segments as defined by ASC 280, including Business Advisory and Consulting Services, Multi-channel Advertising Services, Event Planning and Execution Services and Movie Theater Operation Services. The following tables present summary information by segment for the years ended July 2020, 2019 and 2018, respectively: For the year ended July 31, 2020 Business advisory and consulting Multi-Channel Event planning Movie theatre services Advertising and execution operation Total Revenue $ 645,127 $ — $ 40,872 $ — $ 685,999 Cost of revenue and related taxes $ (4,068) $ — $ (223,342) $ — $ (227,410) Gross profit (loss) $ 641,059 $ — $ (182,470) $ — $ 458,589 Operating expenses $ (7,092,062) $ (3,951,015) $ (4,331,370) $ (2,343,560) $ (17,718,007) Loss from operations $ (6,451,003) $ (3,951,015) $ (4,513,840) $ (2,343,560) $ (17,259,418) Net loss $ (6,329,798) $ (3,951,015) $ (4,665,995) $ (2,343,560) $ (17,290,368) For the year ended July 31, 2019 Go public Multi- Event consulting Channel planning Movie theatre services Advertising and execution operation Total Revenue $ 3,078,758 $ — $ — $ — $ 3,078,758 Gross profit $ 3,078,758 $ — $ — $ — $ 3,078,758 Operating expenses $ (2,407,154) $ — $ — $ — $ (2,407,154) Income from operations $ 671,604 $ — $ — $ — $ 671,604 Net income $ 429,227 $ — $ — $ — $ 429,227 For the year ended July 31, 2018 Go public consulting services Event planning and customer initial Multi-Channel and Movie theatre registration services Advertising execution operation Total Revenue $ 5,307,891 $ — $ — $ — $ 5,307,891 Gross profit $ 5,307,891 $ — $ — $ — $ 5,307,891 Operating expenses $ (2,580,212) $ — $ — $ — $ (2,580,212) Income from operations $ 2,727,679 $ — $ — $ — $ 2,727,679 Net income $ 1,946,883 $ — $ — $ — $ 1,946,883 The following tables present total assets by segment for as of July 31, 2020 and 2019: As of July 31, 2020 2019 Total assets: Business Advisory and Consulting Services $ 5,240,172 $ 12,342,594 Multi-Channel Advertising Services 4,854,583 — Event Planning and Execution Services 4,088,225 — Movie Theater Operation Services 31,602,098 — $ 45,785,078 $ 12,342,594 |
CONTIGENCIES
CONTIGENCIES | 12 Months Ended |
Jul. 31, 2020 | |
CONTIGENCIES | |
CONTIGENCIES | NOTE 16 – CONTIGENCIES From time to time, the Company is a party to various legal actions arising in the ordinary course of business. The Company accrues costs associated with these matters when they become probable and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. As of July 31, 2020, the Company had two pending arbitration and legal proceeding cases as follows: (a) Arbitration with Huale Group Co., Limited (“Huale”) On November 4, 2019, the Company received an arbitration notice from Shenzhen Court of International Arbitration (the “Court”), pursuant to which, the Company’s former customer Huale Group Co., Limited (“Huale”) filed the arbitration with the Court against the Company and requested a refund of $300,000 consulting service fee that Huale paid to the Company in 2017. Huale suspended its original plan after the Company already provided certain consukting services outlined in their consulting agreement. Both parties were in dispute over whether or not the initial payment of $300,000 should be refunded. On September 25, 2020, the Court issued a final judgment ruling in favor of Huale and required the Company to return a deposit of $250,000 to Huale and pay arbitration fee and counterclaim fee of $11,724 (RMB 81,844). Based on the Court ruling, the Company accrued legal liabilities of $261,724 as of and for the year ended July 31, 2020. (b) Pending Legal Proceeding with Boustead Securities, LLC (“Boustead”) On May 14, 2020, Boustead filed a lawsuit against the Company and LGC for breaching the underwriting agreement Boustead had with each of the Company and LGC, in which Boustead was separately engaged as the exclusive financial advisor to provide financial advisory services to the Company and LGC. In April 2020, the Company acquired 51.2% equity interest in LGC after LGC terminated its efforts to launch an IPO on its own. Boustead alleged that the acquisition transaction between the Company and LGC was entered into during the lockup period of the exclusive agreement between Boustead and LGC, and therefore deprived Boustead of compensation that Boustead would otherwise have been entitled to receive under its exclusive agreement with LGC. Therefore, Boustead is attempting to recover from the Company an amount equal to a percentage of the value of the transaction it conducted with LGC. Boustead’s Complaint alleges four causes of action against the Company, including breach of contract; breach of the implied covenant of good faith and fair dealing; tortious interference with business relationships and quantum meruit. On October 6, 2020, ATIF filed a motion to dismiss Boustead’s Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) and 12(b)(5). On October 9, 2020, the United States District Court for the Southern District of New York directed Boustead to respond to the motion or amend its Complaint by November 10, 2020. Boustead opted to amend its complaint and filed the amended complaint on November 10, 2020. Boustead’s amended complaint asserts the same four causes of action against ATIF and LGC as its original complaint. The Company filed another motion to dismiss Boustead’s amended complaint on December 8, 2020. Boustead’s opposition to the Company’s motion to dismiss is due by January 13. The Company’s reply is due January 27, 2021. As such, the Boustead litigation is currently in the pleadings stage. Because Boustead’s amended complaint does not adequately allege any causes of action, the Court may completely dismiss all causes of action, some, or none at all. Once the Court rules on the motion to dismiss, the Company can begin developing its defenses to claims. Therefore, the Company’s management believes it is premature to assess and predict the outcome of this pending litigation. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Jul. 31, 2020 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | NOTE 17 – SUBSEQUENT EVENTS (a) Early Termination of a Life Insurance Investment Instrument On July 29, 2019, the Company invested $1,290,289 (HKD10 million) to purchase a long-term life insurance investment instrument with Manulife (International) Limited (“Manulife”) in order to earn interest income, with ATIF as the insurance beneficiary (see Note 10). In order to support the Company’s working capital need, on September 22, 2020, the Company early terminated this life insurance investment contract and received a refund of $1,219,128 (HKD 9.5 million) after deducting an early redemption penalty of $64,684. (b) Direct Registered Offering On November 6, 2020, the Company completed a registered direct offering and issued 4,347,826 of its ordinary shares at $0.92 per share to certain investors. The gross proceeds were $4.0 million before deducting the underwriter’s commissions and other offering expenses, resulting in net proceeds of approximately $3.5 million to the Company. The Company has issued to the investors warrants to purchase up to an aggregate of 4,347,826 of its ordinary shares. The exercise price of each warrant is $1.10 per share, and each warrant is exercisable immediately and will expire five years from the date of issuance. After one-year, the exercise price may reset to the closing bid price if it is lower than the exercise price then in effect. In addition, the warrant exercise price may be subject to adjustment in the event that the Company issues certain securities at prices below the then exercise price. Further, the exercise price and the number of warrant shares issuable upon exercise of the warrants are subject to adjustment upon the occurrence of specified events, including stock dividends, stock splits, combinations and reclassifications of the ordinary shares.. The Company plans to use the proceeds to acquire another target company in the near future. (c) Pending NASDAQ Compliance Issue On December 16, 2020, the Company received a letter from the Listing Qualifications staff of The Nasdaq Stock Market (“Nasdaq”) notifying the Company that it was no longer in compliance with the minimum bid price requirement for continued listing on the Nasdaq Capital Market. Nasdaq Listing Rule 5550(a)(2) requires listed companies to maintain a minimum bid price of $1.00 per share. NASDAQ provided the Company with 180 days, or until June 14, 2021, to regain compliance with the minimum bid price requirement by having a closing bid price of at least $1.00 per share for a minimum of 10 consecutive business days. The Company intends to monitor the closing bid price of its ordinary shares between now and June 14, 2021, and to evaluate its available options to regain compliance within the compliance period. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Jul. 31, 2020 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities Exchange Commission (“SEC”). The consolidated financial statements of the Company include the accounts of the Company, its subsidiaries, and its VIEs. All intercompany balances and transactions have been eliminated upon consolidation. As of July 31, 2020, the Company’s consolidated financial statements reflect the operating results of the following entities: Date of Place of % of Name of Entity Incorporation Incorporation Ownership Principal Activities Parent company: ATIF January 5, 2015 British Virgin Islands Parent Investment holding Wholly owned subsidiaries of ATIF ATIF HK January 6, 2015 Hong Kong 100% Investment holding Huaya May 20, 2015 PRC 100% WFOE, Consultancy and information technology support Variable interest entity of ATIF Qianhai VIE November 3, 2015 PRC VIE Listing and financial consulting services Majority owned subsidiary of ATIF LGC and its subsidiaries August 21, 2018 Cayman Islands 51.2% Multi-channel advertising, event planning and execution, film production and movie theater operation The VIE contractual arrangements Foreign investments in domestic Chinese companies that engage in private equity investment business and media business are both restricted in China under current PRC laws and regulations. Huaya and LGC's subsidiary Leaping Shenyang are both WFOEs and are subject to such legal restrictions. Therefore, the Company’s main operating entities Qianhai and LMG are controlled through contractual arrangements in lieu of direct equity ownership by the Company or any of its subsidiaries. Risks associated with the VIE structure The Company believes that the contractual arrangements with its VIEs and respective shareholders are in compliance with PRC laws and regulations and are legally enforceable. However, uncertainties in the PRC legal system could limit the Company’s ability to enforce the contractual arrangements. If the legal structure and contractual arrangements were found to be in violation of PRC laws and regulations, the PRC government could: · revoke the business and operating licenses of the Company’s PRC subsidiary and VIEs; · discontinue or restrict the operations of any related-party transactions between the Company’s PRC subsidiary and VIEs; · limit the Company’s business expansion in China by way of entering into contractual arrangements; · impose fines or other requirements with which the Company’s PRC subsidiary and VIEs may not be able to comply; · require the Company or the Company’s PRC subsidiary and VIEs to restructure the relevant ownership structure or operations; or · restrict or prohibit the Company’s use of the proceeds from the IPO to finance the Company’s business and operations in China. The Company’s ability to conduct its consulting services business may be negatively affected if the PRC government were to carry out of any of the aforementioned actions. As a result, the Company may not be able to consolidate its VIEs in its consolidated financial statements as it may lose the ability to exert effective control over the VIEs and its respective shareholders and it may lose the ability to receive economic benefits from its VIEs. The Company, however, does not believe such actions would result in the liquidation or dissolution of the Company, its PRC subsidiary, or its VIEs . The Company has not provided any financial support to the VIEs for the years ended July 31, 2020, 2019, and 2018. The following financial statement amounts and balances of the VIEs were included in the accompanying consolidated financial statements after elimination of intercompany transactions and balances : As of July 31, 2020 2019 Qianhai VIE LMG VIE Total Qianhai VIE LMG VIE Total Current assets $ 2,469,829 $ 1,554,585 $ 4,024,414 $ 3,673,890 $ — $ 3,673,890 Non-current assets 184,740 5,493,284 5,678,024 68,375 — 68,375 Total assets 2,654,569 7,047,869 9,702,438 3,742,265 — 3,742,265 Current liabilities 1,441,148 5,736,358 7,177,506 980,364 — 980,364 Non-current liabilities 65,574 3,179,625 3,245,199 — — — Total liabilities 1,506,722 8,915,983 10,422,705 980,364 — 980,364 Shareholders' equity (deficit) $ 1,147,847 $ (1,868,114) $ (720,267) $ 2,761,901 $ — $ 2,761,901 The summarized operating results of the VIEs are as follows: For the years ended July 31, 2020 2019 2018 Qianhai VIE LMG VIE Total Qianhai VIE Qianhai VIE Operating revenue $ 645,127 $ 40,872 $ 685,999 $ 2,777,618 $ 5,341,271 Income (loss) from operations $ (1,471,095) $ (4,781,593) $ (6,252,688) $ 884,789 $ 2,927,679 Income (loss) before income taxes $ (1,562,037) $ (4,857,484) $ (6,419,521) $ 930,361 $ 2,863,744 Net income (loss) $ (1,562,037) $ (4,933,748) $ (6,495,785) $ 697,631 $ 2,146,927 The summarized cash flow information of the VIEs are as follows: For the years ended July 31, 2020 2019 2018 Qianhai VIE LMG VIE Total Qianhai VIE Qianhai VIE Net cash provided by (used in) operating activities $ 175,530 $ (662,795) $ (487,265) $ (3,380,071) $ 2,036,439 Net cash provided by (used in) investing activities $ 36,412 $ 1,415,579 $ 1,451,991 $ 2,700,687 $ (2,898,916) Net cash provided by (used in) financing activities $ — $ (734,347) $ (734,347) $ (14,626) $ 755,139 |
Business Combination | Business Combination In April 2020, the Company acquired 51.2% ownership interest in LGC (see Note 4). Business combination is accounted for under the purchase method of accounting. Under the purchase method, assets and liabilities of the business acquired are recorded at their estimated fair values as of the date of acquisition with any excess of the cost of the acquisition over the fair value of the net tangible and intangible assets acquired recorded as goodwill. Results of operations of the acquired business are included in the income statement from the date of acquisition. |
Noncontrolling Interests | Noncontrolling Interests Non-controlling interests represent minority shareholders’ 48.8% ownership interest in LGC not acquired by the Company in connection with the Company’s acquisition of LGC. The non-controlling interests are presented in the consolidated balance sheets, separately from equity attributable to the stockholders of the Company. Non-controlling interests in the results of the Company are presented on the face of the consolidated statements of operations and comprehensive loss as an allocation of the total loss for the year between non-controlling interest holders and the stockholders of the Company. |
Use of Estimates | Use of Estimates In preparing the consolidated financial statements in conformity with U.S. GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates are based on information as of the date of the consolidated financial statements. Significant estimates required to be made by management include, but are not limited to, the valuation of accounts receivable, useful lives of property and equipment and intangible assets, the recoverability of long-lived assets, impairment of goodwill, revenue recognition ,provision necessary for contingent liabilities and realization of deferred tax assets. Actual results could differ from those estimates. |
Cash and cash equivalents | Cash and Cash Equivalents Cash includes cash on hand and demand deposits in accounts maintained with commercial banks. The Company considers all highly liquid investment instruments with an original maturity of three months or less from the date of purchase to be cash equivalents. The Company maintains most of its bank accounts in the PRC. Cash balances in bank accounts in the PRC are not insured by the Federal Deposit Insurance Corporation or other programs. |
Accounts Receivable, net | Accounts Receivable, net Accounts receivable are presented net of allowance for doubtful accounts. The Company usually determines the adequacy of reserves for doubtful accounts based on individual account analysis and historical collection trends. The Company establishes a provision for doubtful receivables when there is objective evidence that the Company may not be able to collect amounts due. The allowance is based on management’s best estimates of specific losses on individual exposures, as well as a provision on historical trends of collections. The provision is recorded against accounts receivables balances, with a corresponding charge recorded in the consolidated statements of income and comprehensive income. Delinquent account balances are written off against the allowance for doubtful accounts after management has determined that the likelihood of collection is not probable. Allowance for uncollectible balances amounted to $1,380,161 and $65,335 as of July 31, 2020 and 2019, respectively. |
Inventories | Inventories The Company’s subsidiary LGC produces and contracts third parties to produce advertising films and/or television series to be shown in movie theaters and/or on popular online portal. Produced content includes direct production costs, production overhead and acquisition costs and is stated at the lower of unamortized cost or estimated fair value. Produced content also includes cash expenditures made to enter into arrangements with third parties to co-produce certain of its theatrical and television productions. The Company uses the individual-film-forecast-computation method and amortizes the produced content based on the ratio of current period actual revenue (numerator) to estimated remaining unrecognized ultimate revenue as of the beginning of the fiscal year (denominator) in accordance with ASC subtopic 926-20, Entertainment — Films, Other Assets — Film Costs (“ASC 926-20”). Ultimate revenue estimates for the produced content are periodically reviewed and adjustments, if any, will result in prospective changes to amortization rates. When estimates of total revenues and other events or changes in circumstances indicate that a film or television series has a fair value that is less than its unamortized cost, a loss is recognized currently for the amount by which the unamortized cost exceeds the film or television series’ fair value. As of July 31, 2020, 2019, based on management analysis, no inventory impairment was recorded. |
Investment in Trading Securities | Investment in Trading Securities Equity securities not accounted for using the equity method are carried at fair value with unrealized gains and losses recorded in the consolidated statements of operations and comprehensive income (loss), according to ASC 321 “Investments — Equity Securities”. During the year ended July 31, 2020, the Company purchased certain publicly-listed equity securities through various open market transactions and accounted for such investments as “investment in trading securities” and subsequently measure the investments at fair value. Gain from investment in trading securities amounted to $201,051 for the year ended July 31, 2020. There was no such transaction for the years ended July 31, 2019 and 2018. |
Property and Equipment, net | Property and Equipment, net Property and equipment are stated at cost. The straight-line depreciation method is used to compute depreciation over the estimated useful lives of the assets, as follows: Useful life Furniture, fixtures and equipment 3-10 years Transportation vehicles 3-5 years Leasehold improvement Lesser of useful life and lease term Expenditures for maintenance and repairs, which do not materially extend the useful lives of the assets, are charged to expense as incurred. Expenditures for major renewals and betterments which substantially extend the useful life of assets are capitalized. The cost and related accumulated depreciation of assets retired or sold are removed from the respective accounts, and any gain or loss is recognized in the consolidated statements of operations and other comprehensive income (loss) in other income or expenses. |
Intangible Assets, net | Intangible Assets, net Intangible assets are stated at cost less accumulated amortization. The straight-line method is used to compute amortization over the estimated useful lives of the intangible assets, as follows: Useful life Trade name 9.6 years Customer relationship 6.2 years Accounting software 4-10 years Financial and news platform 15 years |
Goodwill | Goodwill Goodwill represents the excess of the consideration paid of an acquisition over the fair value of the net identifiable assets of the acquired subsidiary at the date of acquisition. Goodwill is not amortized and is tested for impairment at least annually, more often when circumstances indicate impairment may have occurred. Goodwill is carried at cost less accumulated impairment losses. If impairment exists, goodwill is immediately written off to its fair value and the loss is recognized in the consolidated statements of operations and comprehensive loss. Impairment losses on goodwill are not reversed. The Company reviews the carrying value of intangible assets not subject to amortization, including goodwill, to determine whether impairment may exist annually or more frequently if events and circumstances indicate that it is more likely than not that an impairment has occurred. The Company has the opinion to access qualitative factors to determine whether it is necessary to perform the two-step in accordance with ASC 350-20. If the Company believes, as a result of the qualitative carrying amount, the two-step quantities impairment test described below is required. The first step compares the fair values of each reporting unit to its carrying amount, including goodwill. If the fair value of each reporting unit exceeds its carrying amount, goodwill is not considered to be impaired and the second step will not be required. If the carrying amount of a reporting unit exceeds its fair value, the second step compares the implied fair value of goodwill to the carrying value of a reporting unit’s goodwill. The implied fair value of goodwill is determined in a manner similar to accounting for a business acquisition with the allocation of the assessed fair value determined in the first step to the assets and liabilities of the reporting unit. The excess of the fair value of the reporting unit over the amounts assigned to the assets and liabilities is the implied fair value of goodwill. Estimating fair value is performed by utilizing various valuation techniques, with the primary technique being a discounted cash flow. If impairment exists, goodwill is immediately written off to its fair value and the loss is recognized in the consolidated statements of operations and comprehensive loss. Impairment losses on goodwill are not reversed. The Company determines the fair values of the reporting unit by preparing a discounted cash flow analysis using forward looking projection of future operating results. Significant estimates and assumptions used in the discounted cash flow analysis included revenue growth rate ranging from 9.0% to 50.0% (which is determined based on LGC’s historical revenue growth rate of 30% to 130% from 2017 to 2019, as conservatively adjusted by taking into considerations of certain metrics such as general economic conditions, market risks associated with the post-COVID 19 recovery of the media business industry, revenue growth of comparable companies, management’s forecast and market expectations of the real long-term growth of its media business and inflation, etc.), terminal growth rate of 3%, and weighted average cost of capital of 20%. The discounted cash flow model indicated that the fair value of the reporting unit was $31,701,250, which was below the carrying value of the report unit of $37,322,717, accordingly, a goodwill impairment of $5,621,467 was recorded for the year ended July 31, 2020 (see Note 9). |
Impairment of Long-lived Assets Other Than Goodwill | Impairment of Long-lived Assets Other Than Goodwill Long-lived assets, including plant and equipment and intangible with finite lives are reviewed for impairment whenever events or changes in circumstances (such as a significant adverse change to market conditions that will impact the future use of the assets) indicate that the carrying value of an asset may not be recoverable. The Company assesses the recoverability of the assets based on the undiscounted future cash flows the assets are expected to generate and recognize an impairment loss when estimated undiscounted future cash flows expected to result from the use of the asset plus net proceeds expected from disposition of the asset, if any, are less than the carrying value of the asset. If an impairment is identified, the Company would reduce the carrying amount of the asset to its estimated fair value based on a discounted cash flows approach or, when available and appropriate, to comparable market values. For the years ended July 31, 2020, 2019 and 2018, an impairment of $384,492, $Nil, and $Nil, respectively were recorded for intangible assets (see Note 8), and an impairment of $172,728, $Nil and $Nil, respectively, were recorded for property and equipment (see Note 7 ). |
Fair Value of Financial Instruments | Fair Value of Financial Instruments ASC 825‑10 requires certain disclosures regarding the fair value of financial instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: · Level 1 - inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. · Level 2 - inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted market prices for identical or similar assets in markets that are not active, inputs other than quoted prices that are observable and inputs derived from or corroborated by observable market data. · Level 3 - inputs to the valuation methodology are unobservable. Fair value of investment in trading securities are based on quoted prices in active markets. The fair value of the Company’s other financial instruments including cash and cash equivalents, accounts receivable, inventories, deposits, investment in life insurance contract, prepaid expenses and other current assets, short-term borrowings, accounts payable, taxes payable, and accrued expenses and other current liabilities and current portion of lease liabilities approximate their fair values because of the short-term nature of these assets and liabilities. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue in accordance with ASC 606 Revenue from Contracts with Customers (“ASC 606”). To determine revenue recognition for contracts with customers, the Company performs the following five steps: (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligation. The Company recognizes revenue when it transfers its goods and services to customers in an amount that reflects the consideration to which the Company expects to be entitled in such exchange. The Company currently generates its revenue from the following main sources: (1) Revenue from customer’s initial registration fee In order to engage with the Company for various consulting services, a new customer is required to pay an initial non-refundable registration fee to the Company and the Company will then post the customer’s information and profiles on its website, at which point, the Company’s performance obligations are satisfied and such registration fee is recognized as revenue. The Company does not charge additional customer profile maintenance fee after the initial posting is completed as limited effort is required for the Company to maintain such information on an on-going basis. Revenues of $nil, $nil and $71,695 was generated from customer’s initial registration for the years ended July 31, 2020, and 2019 and 2018. (2) The Company provides various consulting services to its members, especially to those who have the intention to be publicly listed in the stock exchanges in the United States and other countries. The Company categorizes its consulting services into three Phases: Phase I consulting services primarily include due diligence review, market research and feasibility study, business plan drafting, accounting record review, and business analysis and recommendations. Management estimates that Phase I normally takes about three months to complete based on its past experience. Phase II consulting services primarily include reorganization, pre-listing education and tutoring, talent search, legal and audit firm recommendation and coordination, VIE contracts and other public-listing related documents review, merger and acquisition planning, investor referral and pre-listing equity financing source identification and recommendations, and independent directors and audit committee candidate’s recommendation. Management estimates that Phase II normally takes about eight months to complete based on its past experience. Phase III consulting services primarily include shell company identification and recommendation for customers expecting to become publicly listed through reverse merger transaction; assistance in preparation of customers’ public filings for IPO or reverse merger transactions; and assistance in answering comments and questions received from regulatory agencies. Management believes it is very difficult to estimate the timing of this phase of service as the completion of Phase III services is not within the Company’s control. Each phase of consulting services is stand-alone and fees associated with each phase are clearly identified in service agreements. Revenue from providing Phase I and Phase II consulting services to customers is recognized ratably over the estimated completion period of each phase as the Company’s performance obligations related to these services are carried out over the whole duration of each Phase. Revenue from providing Phase III consulting services to customers is recognized upon completion of the reverse merger transaction or IPO transaction when the Company’s promised services are rendered and the Company’s performance obligations are satisfied. Revenue that has been billed and not yet recognized is reflected as deferred revenue on the balance sheet. Depending on the complexity of the underlying service arrangement and related terms and conditions, significant judgments, assumptions, and estimates may be required to determine when substantial delivery of contract elements has occurred, whether any significant ongoing obligations exist subsequent to contract execution, whether amounts due are collectible and the appropriate period or periods in which, or during which, the completion of the earnings process occurs. Depending on the magnitude of s pecific revenue arrangements, adjustment may be made to the judgments, assumptions, and estimates regarding contracts executed in any specific period. (3) The Company’s multi-channel advertising services include pre-movie advertisements display, elevator and supermarket advertising, and brand promotion. Most of the Company’s client contracts are individually negotiated and, accordingly, the service period and prices vary significantly. Service periods typically range from one day to one year. The Company provides advertising services over the contract period. Revenues from advertising services are recognized on straight-line basis over the contract period, which approximates the pattern of when the underlying services are performed. Prepayments for advertising services are deferred and recognized as revenue when the advertising services are rendered and the Company’s performance obligations are satisfied. The Company also provides advertising services through its regional distributors. Pursuant to advertising services distribution agreements, the Company grants the regional distributors the exclusive rights to provide local pre-movie advertising. The advertising services distribution agreements with these regional distributors typically have terms ranging from 11 to 24 months without automatic renewal provisions. Under the advertising services distribution agreements, the Company has the right to set the minimum local pre-movie advertisement prices in the movie theaters, regulate the content and quality of local pre-movie advertisements according to related laws and movie theater rules, and examine the source of local pre-movie advertisements and refuse to display advertisements from any competitors. The receipt of distribution fee is initially recorded as deferred revenue and is recognized as revenue ratably as services are rendered and the Company’s performance obligations are satisfied. (4) The Company’s event planning and execution business includes planning and arrangement of events, and production of related advertising materials. From the preparation of the events to executing it typically takes no more than one week. Revenue is realized when the service is performed in accordance with the client arrangement and upon the completion of the earnings process. (5) The Company’s movie theater operating revenues are generated primarily from box office admissions and theater food and beverage sales. Revenues of this business line are recognized when admissions and food and beverage sales are rendered at the theaters and are reported net of sales tax. The Company defers 100% of the revenue associated with the sales of gift cards and packaged tickets until such time as the items are redeemed. Contract Assets and Liabilities Payment terms are established on the Company’s pre-established credit requirements based upon an evaluation of customers’ credit quality. Contract assets are recognized for in related accounts receivable. Contract liabilities are recognized for contracts where payment has been received in advance of related services are rendered and delivered to the customers. The contract liability balance can vary significantly depending on the timing when the Company’s services are rendered and the Company’s performance obligations are satisfied. As of July 31, 2020 and 2019, other than accounts receivable and deferred revenue, the Company had no other material contract assets, contract liabilities or deferred contract costs recorded on its consolidated balance sheet. Contract liabilities related to going public consulting services amounted to $512,238 and $415,392 as of July 31, 2020 and 2019, respectively. Contract liabilities related to multi-channel advertising and event planning and execution services amounted to $551,404 and $nil as of July 31, 2020 and 2019, respectively. The July 31, 2020 contract liabilities balances are expected to be recognized as revenue within one year when the Company’s performance obligations going public consulting services are satisfied. Disaggregation of Revenues The Company disaggregates its revenue from contracts by service types, as the Company believes it best depicts how the nature, amount, timing and uncertainty of the revenue and cash flows are affected by economic factors. The Company’s disaggregation of revenues for the years ended July 31, 2020, 2019 and 2018 are disclosed in Note 15 of this consolidation financial statements. Cost of revenue Cost of the multi-channel advertising revenues consists primarily of payments to movie theater operators for pre-movie advertising right and the billboards of elevators and supermarkets. Cost of event planning and execution consists primarily of advertising design costs, salary and benefits expenses, leasing costs, and other related expenses. Cost of film production consists primarily of direct production costs and production overhead. Cost of movie theater operating consists primarily of film exhibition costs, which is accrued on the applicable admissions revenues and estimates of the final settlement pursuant to film licenses of the Company. These licenses typically state that rental fees are based on aggregate terms established prior to the opening of the film. |
Income Taxes | Income Taxes The Company accounts for income taxes under ASC 740. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period including the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. An uncertain tax position is recognized only if it is “more likely than not” that the tax position would be sustained in a tax examination. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred. As of July 31, 2020, the Company had large tax payable of approximately $4 million, primarily related to the unpaid income tax in China. Management has discussed with local tax authorities regarding the outstanding tax payable balance and is in the process of negotiating a settlement plan. As of July 31, 2020, the Company recorded a penalty of $77,527 based on the late payment penalty notice received from local tax authorities. The Company believes it is likely that the Company can fully settle its tax liabilities within one year but cannot guarantee such settlement will ultimately occur. As of July 31, 2020, all of the Company’s tax returns of its PRC subsidiaries and VIE operating entities remain open for statutory examination by PRC tax authorities. |
Value Added Tax ("VAT") | Value Added Tax (“VAT”) Sales revenue derived from advertising service revenues is subject to VAT. The applicable VAT rates for the Company is 6%. Entities that are VAT general taxpayers are allowed to offset qualified input VAT paid to suppliers against their output VAT liabilities. Net VAT balance between input VAT and output VAT is recorded in the line item of taxes payable on the consolidated balance sheets. All of the VAT returns of the Company have been and remain subject to examination by the tax authorities for five years from the date of filing. |
Earnings per Share | Earnings (Loss) per Share The Company computes earnings (loss) per share (“EPS”) in accordance with ASC 260, “Earnings per Share” (“ASC 260”). ASC 260 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured as net income (loss) divided by the weighted average common shares outstanding for the period. Diluted presents the dilutive effect on a per share basis of potential common shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. For the years ended July 31, 2020, 2019 and 2018, there were no dilutive shares. |
Foreign Currency Translation | Foreign Currency Translation The functional currency for ATIF and LGC is the U.S Dollar (“US$”). ATIF HK and LGC’s subsidiary Leaping HK uses Hong Kong dollar as their functional currency. However, ATIF, LGC, ATIF HK and Leaping HK currently only serve as the holding companies and did not have active material operations as of the date of this report. The Company operates its business through its VIEs and subsidiaries of the VIEs in the PRC as of July 31, 2020. The functional currency of the Company’s VIEs and VIEs’ subsidiaries is the Chinese Yuan (“RMB”). The Company’s consolidated financial statements have been translated into US$. Assets and liabilities accounts are translated using the exchange rate at each reporting period end date. Equity accounts are translated at historical rates. Income and expense accounts are translated at the average rate of exchange during the reporting period. The resulting translation adjustments are reported under other comprehensive income (loss). Gains and losses resulting from the translations of foreign currency transactions and balances are reflected in the results of operations. The RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into US$ at the rates used in translation. The following table outlines the currency exchange rates that were used in creating the consolidated financial statements in this report: July 31, 2020 July 31, 2019 July 31, 2018 Foreign currency Period-end Average rate Period-end Average rate Period-end Average rate RMB: 1USD 0.1432 0.1420 0.1453 0.1463 0.1467 0.1538 HKD: 1USD 0.1290 0.1284 0.1278 0.1276 0.1274 0.1278 |
Comprehensive income | Comprehensive income (loss) Comprehensive income consists of two components, net income (loss) and other comprehensive income (loss). The foreign currency translation gain or loss resulting from translation of the financial statements expressed in RMB to US$ is reported in other comprehensive income (loss) in the consolidated statements of comprehensive income (loss). |
Operating Leases | Operating Leases The Company adopted ASU No. 2016-02—Leases (Topic 842) since August 1, 2019, using a modified retrospective transition method permitted under ASU No. 2018-11. This transition approach provides a method for recording existing leases only at the date of adoption and does not require previously reported balances to be adjusted. In addition, we elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed us to carry forward the historical lease classification. Adoption of the new standard resulted in the recording of additional lease assets and lease liabilities of approximately $3.29 million and $3.50 million, respectively, as of August 1, 2019. The standard did not materially impact our consolidated net earnings and cash flows. |
Statement of Cash Flows | Statement of Cash Flows In accordance with ASC 230, “Statement of Cash Flows,” cash flows from the Company’s operations are formulated based upon the local currencies. As a result, amounts related to assets and liabilities reported on the statements of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheets. |
Commitments and Contingencies | Commitments and Contingencies In the normal course of business, the Company is subject to contingencies, such as legal proceedings and claims arising out of its business, which cover a wide range of matters. Liabilities for contingencies are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated. If the assessment of a contingency indicates that it is probable that a material loss is incurred and the amount of the liability can be estimated, then the estimated liability is accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss, if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the nature of the guarantee would be disclosed. |
Risks and Uncertainty | Risks and Uncertainty The Company’s major operations are conducted in the PRC. Accordingly, the political, economic, and legal environments in the PRC, as well as the general state of the PRC’s economy may influence the Company’s business, financial condition, and results of operations. The Company’s major operations in the PRC are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic, and legal environment. The Company’s results may be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, and rates and methods of taxation, among other things. Although the Company has not experienced losses from these situations and believes that it is in compliance with existing laws and regulations including its organization and structure disclosed in Note 1, this may not be indicative of future results. (a) Substantially all of the Company’s operating activities are transacted in RMB, which is not freely convertible into foreign currencies. All foreign exchange transactions take place either through the People’s Bank of China or other banks authorized to buy and sell foreign currencies at the exchange rates quoted by the People’s Bank of China. Approval of foreign currency payments by the People’s Bank of China or other regulatory institutions requires submitting a payment application form together with suppliers’ invoices, shipping documents and signed contracts. The Company maintains certain bank accounts in the PRC, Hong Kong, and British Virgin Islands, which are not insured by Federal Deposit Insurance Corporation (“FDIC”) insurance or other insurance. As of July 31, 2020 and 2019, $234,653 and $409,037 of the Company’s cash were on deposit at financial institutions in the PRC where there currently is no rule or regulation requiring such financial institutions to maintain insurance to cover bank deposits in the event of bank failure. (b) Accounts receivable are typically unsecured and derived from revenue earned from customers, thereby exposed to credit risk. The risk is mitigated by the Company’s assessment of its customers’ creditworthiness and its ongoing monitoring of outstanding balances. The Company’s sales are made to customers that are located primarily in China. The Company has a concentration of its revenues and receivables with specific customers. For the year ended July 31, 2020, one customer accounted for 91% of the Company’s consolidated revenue, respectively. For the year ended July 31, 2019, three customers accounted for approximately 44%, 29%, and 19% of the Company’s total revenue. For the year ended July 31, 2018, two customers accounted for approximately 33% and 21% of the Company’s total revenue. As of July 31, 2020, two customers accounted for 40% and 26% of the Company’s total accounts receivable balance, respectively. As of July 31, 2019, four customers accounted for approximately 61%, 15%, 14%, and 11% of the Company’s outstanding accounts receivable. For the year ended July 31, 2020, the Company purchased 22%, 21%, and 15% of its services from three suppliers, respectively. For the year ended July 31, 2019 and 2018, the Company purchased 50% and 48% from one supplier, respectively. (c) The Company’s business, financial condition and results of operations may also be negatively impacted by risks related to natural disasters, extreme weather conditions, health epidemics and other catastrophic incidents, which could significantly disrupt the Company’s operations. |
Coronavirus ("COVID-19") Impact | The Company’s operations have been affected by the outbreak and spread of the coronavirus disease 2019 (COVID-19), which in March 2020, was declared a pandemic by the World Health Organization. The COVID-19 outbreak is causing lockdowns, travel restrictions, and closures of businesses. The Company’s businesses have been negatively impacted by the COVID-19 coronavirus outbreak to a certain extent. Due to the outbreak of COVID-19, in early February 2020, the Chinese government required the nationwide closure of many business activities in the PRC to prevent the spread of COVID-19 and protect public health. As a result, the Company temporarily suspended its consulting services for the period from February to March 2020. In addition, the Company acquired a 51.2% equity interest in LGC in April 2020 which was expected to diversify its revenue streams into multi-channel advertising, event planning and execution, film and TV program production, and movie theater operations going forward. However, due to the outbreak and spread of COVID-19, LGC’s movie theater operations was limited during the period from April to July 2020 because most of the movie theaters in China remained closed or struggled to draw crowds as a result of government operating restrictions and customer health and safety concerns. Furthermore, some of the Company’s existing customers have experienced financial distress and disruption of business, which resulted in delay or default on their payments. During the period from February to July 2020, revenues from the Company’s business advisory and consulting services were approximately 92% lower as compared to the same period of last year while LGC’s operating entities in China did not generate any revenues from multi-channel advertising services and movie theater operation services from the date of acquisition through July 31, 2020. As of the date of this filing, the spread of COVID-19 in China appears to have slowed down and most provinces and cities have resumed business activities under the guidance and support of the local government. The Company’s movie theater operation, pre-movie advertising displays and event planning and execution business has gradually resumed during the subsequent period from August to December 2020. In addition, the Company also signed eight consulting service agreements with customers for going public consulting services. Nevertheless, the continued uncertainties associated with COVID 19 may cause the Company’s revenue and cash flows to underperform in the next 12 months. A resurgence could negatively affect the execution of the going public consulting service agreements, the collection of the payments from customers, and the disruption of the Company’s ability to regain market share of LGC’s media business to pre-COVID 19 levels. The extent of the future impact of COVID-19 is still highly uncertain and cannot be predicted as of the financial statement reporting date. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements On March 6, 2019, the FASB issued ASU 2019-02, Entertainment — Films — Other Assets — Film Costs (Subtopic 926-20) and Entertainment — Broadcasters — Intangibles — Goodwill and Other (Subtopic 920-350): Improvements to Accounting for Costs of Films and License Agreements for Program Materials . ASU 2019-02 helps organizations align their accounting for production costs for films and episodic content produced for television and streaming services. For public business entities, the amendments in ASU 2019-02 are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. Early adoption is permitted, including early adoption in an interim period. The amendments in this ASU should be applied prospectively. Under a prospective transition, an entity should apply the amendments at the beginning of the period that includes the adoption date. The Company is now assessing the impact of the new guidance and does not expects that the adoption of this ASU will not have a material impact on the Company’s consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326), which requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost. ASU 2016-13 was subsequently amended by Accounting Standards Update 2018-19, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Accounting Standards Update 2019-04 Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments , and Accounting Standards Update 2019-05, Targeted Transition Relief. For public entities, ASU 2016-13 and its amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. For all other entities, this guidance and its amendments will be effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early application will be permitted for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. As an emerging growth company, the Company plans to adopt this guidance effective August 1, 2023. The Company is currently evaluating the impact of its pending adoption of ASU 2016-13 on its consolidated financial statements. In August 2018, the FASB Accounting Standards Board issued ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU 2018-13”). ASU 2018-13 modifies the disclosure requirements on fair value measurements. ASU 2018-13 is effective for all entities for fiscal years and interim periods within those fiscal years beginning after December 15, 2019, with early adoption permitted for any removed or modified disclosures. The removed and modified disclosures will be adopted on a retrospective basis and the new disclosures will be adopted on a prospective basis. The Company does not expect this guidance will have a material impact on its consolidated financial statements. In November 2019, the FASB issued ASU 2019-10, “Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842)” (“ASU 2019-10”). ASU 2019-10 (i) provides a framework to stagger effective dates for future major accounting standards and (ii) amends the effective dates for certain major new accounting standards to give implementation relief to certain types of entities. Specifically, ASU 2019-10 changes some effective dates for certain new standards on the following topics in the FASB Accounting Standards Codification (ASC): (a) Derivatives and Hedging (ASC 815) – now effective for fiscal years beginning after December 15, 2020 and interim periods within fiscal years beginning after December 15, 2021; (b) Leases (ASC 842) - now effective for fiscal years beginning after December 15, 2020 and interim periods within fiscal years beginning after December 15, 2021; (c) Financial Instruments — Credit Losses (ASC 326) - now effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years; and (d) Intangibles — Goodwill and Other (ASC 350) - now effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company does not expect the cumulative effect resulting from the adoption of this guidance will have a material impact on its consolidated financial statements. In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740)—Simplifying the Accounting for Income Taxes. ASU 2019-12 is intended to simplify accounting for income taxes. It removes certain exceptions to the general principles in Topic 740 and amends existing guidance to improve consistent application. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020 and interim periods within those fiscal years, which is 2022 fiscal year for us, with early adoption permitted. The Company does not expect adoption of the new guidance to have a significant impact on its consolidated financial statements. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Jul. 31, 2020 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of subsidiaries and variable interest entities | As of July 31, 2020, the Company’s consolidated financial statements reflect the operating results of the following entities: Date of Place of % of Name of Entity Incorporation Incorporation Ownership Principal Activities Parent company: ATIF January 5, 2015 British Virgin Islands Parent Investment holding Wholly owned subsidiaries of ATIF ATIF HK January 6, 2015 Hong Kong 100% Investment holding Huaya May 20, 2015 PRC 100% WFOE, Consultancy and information technology support Variable interest entity of ATIF Qianhai VIE November 3, 2015 PRC VIE Listing and financial consulting services Majority owned subsidiary of ATIF LGC and its subsidiaries August 21, 2018 Cayman Islands 51.2% Multi-channel advertising, event planning and execution, film production and movie theater operation |
Schedule of financial statement amounts and balances of the VIE were included in the accompanying consolidated financial statements after elimination of intercompany transactions and balances | The following financial statement amounts and balances of the VIEs were included in the accompanying consolidated financial statements after elimination of intercompany transactions and balances : As of July 31, 2020 2019 Qianhai VIE LMG VIE Total Qianhai VIE LMG VIE Total Current assets $ 2,469,829 $ 1,554,585 $ 4,024,414 $ 3,673,890 $ — $ 3,673,890 Non-current assets 184,740 5,493,284 5,678,024 68,375 — 68,375 Total assets 2,654,569 7,047,869 9,702,438 3,742,265 — 3,742,265 Current liabilities 1,441,148 5,736,358 7,177,506 980,364 — 980,364 Non-current liabilities 65,574 3,179,625 3,245,199 — — — Total liabilities 1,506,722 8,915,983 10,422,705 980,364 — 980,364 Shareholders' equity (deficit) $ 1,147,847 $ (1,868,114) $ (720,267) $ 2,761,901 $ — $ 2,761,901 The summarized operating results of the VIEs are as follows: For the years ended July 31, 2020 2019 2018 Qianhai VIE LMG VIE Total Qianhai VIE Qianhai VIE Operating revenue $ 645,127 $ 40,872 $ 685,999 $ 2,777,618 $ 5,341,271 Income (loss) from operations $ (1,471,095) $ (4,781,593) $ (6,252,688) $ 884,789 $ 2,927,679 Income (loss) before income taxes $ (1,562,037) $ (4,857,484) $ (6,419,521) $ 930,361 $ 2,863,744 Net income (loss) $ (1,562,037) $ (4,933,748) $ (6,495,785) $ 697,631 $ 2,146,927 The summarized cash flow information of the VIEs are as follows: For the years ended July 31, 2020 2019 2018 Qianhai VIE LMG VIE Total Qianhai VIE Qianhai VIE Net cash provided by (used in) operating activities $ 175,530 $ (662,795) $ (487,265) $ (3,380,071) $ 2,036,439 Net cash provided by (used in) investing activities $ 36,412 $ 1,415,579 $ 1,451,991 $ 2,700,687 $ (2,898,916) Net cash provided by (used in) financing activities $ — $ (734,347) $ (734,347) $ (14,626) $ 755,139 |
Schedule of estimated useful lives of assets | Property and equipment are stated at cost. The straight-line depreciation method is used to compute depreciation over the estimated useful lives of the assets, as follows: Useful life Furniture, fixtures and equipment 3-10 years Transportation vehicles 3-5 years Leasehold improvement Lesser of useful life and lease term |
Schedule of estimated useful lives of intangible assets | Intangible assets are stated at cost less accumulated amortization. The straight-line method is used to compute amortization over the estimated useful lives of the intangible assets, as follows: Useful life Trade name 9.6 years Customer relationship 6.2 years Accounting software 4-10 years Financial and news platform 15 years |
Schedule of currency exchange rates | The following table outlines the currency exchange rates that were used in creating the consolidated financial statements in this report: July 31, 2020 July 31, 2019 July 31, 2018 Foreign currency Period-end Average rate Period-end Average rate Period-end Average rate RMB: 1USD 0.1432 0.1420 0.1453 0.1463 0.1467 0.1538 HKD: 1USD 0.1290 0.1284 0.1278 0.1276 0.1274 0.1278 |
BUSINESS COMBINATION (Tables)
BUSINESS COMBINATION (Tables) | 12 Months Ended |
Jul. 31, 2020 | |
BUSINESS COMBINATION | |
Schedule of purchase price allocation to assets acquired and liabilities assumed in a business combination | The following table presents the purchase price allocation to assets acquired and liabilities assumed for LGC as of the acquisition date. The non-controlling interest represents the fair value of the 48.8% equity interest not held by the Company: As of April 22, 2020 Cash and cash equivalents $ 1,060,435 Accounts receivable 2,613,970 Prepayment and other current assets 2,219,950 Property and equipment 2,728,000 Intangible assets (trade name and customer relationship) 8,000,000 Deferred film production cost 323,522 Deferred income tax assets 75,822 Taxes payable (3,255,935) Other current liabilities (2,701,495) Fair value of non-controlling interest (19,664,326) Goodwill 31,523,861 Total purchase consideration $ 22,923,804 |
Schedule of the amounts of revenue and net loss of LGC included in the Company's consolidated statement of operations and the Company's unaudited pro forma results | From acquisition date to July 31, 2020 Net Revenue $ 40,872 Net loss $ (4,933,748) For the years ended July 31, 2020 2019 Pro forma revenue $ 6,192,939 $ 14,758,448 Pro forma net income (loss) $ (20,975,818) (1) 4,402,083 (1) Pro forma net income (loss) attributable to ATIF Holdings Limited $ (17,165,275) (1) 1,869,892 (1) Pro forma earnings (loss) per common share - basic and diluted $ (0.37) $ Weighted average shares - basic and diluted 47,014,674 45,462,933 Includes intangibles asset amortization expense of $810,708 and $1,216,062 for the years ended July 31, 2020 and 2019, respectively. |
ACCOUNTS RECEIVABLE, NET (Table
ACCOUNTS RECEIVABLE, NET (Tables) | 12 Months Ended |
Jul. 31, 2020 | |
ACCOUNTS RECEIVABLE, NET | |
Schedule of accounts receivable and allowance for doubtful accounts | As of July 31, 2020 2019 Accounts receivable from business advisory and consulting services $ 425,106 $ 1,537,593 Accounts receivable from multi-channel advertising, event planning and execution 1,894,447 — Total gross accounts receivable 2,319,553 1,537,593 Less: allowances for doubtful accounts (1,380,161) (65,335) Accounts receivables, net $ 939,392 $ 1,472,258 |
Schedule of aging of the accounts receivable | As of July 31, Accounts receivable by aging bucket 2020 2019 1-3 months $ 27,027 $ 364,430 4-6 months 67,441 147,722 7-12 months 1,130,348 894,771 More than 1 year 1,094,737 130,670 Total gross accounts receivable $ 2,319,553 $ 1,537,593 |
Schedule of movement in allowance for doubtful accounts for accounts receivable, net | July 31, 2020 July 31, 2019 Beginning balance $ 65,335 $ — Additions 1,304,108 65,790 Reductions — — Foreign currency translation adjustments 10,718 (455) Ending balance $ 1,380,161 $ 65,335 |
PREPAID EXPENSES AND OTHER CU_2
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Tables) | 12 Months Ended |
Jul. 31, 2020 | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS | |
Summary of prepaid expenses and other current assets | As of July 31, 2020 2019 Advance to employees for business development purposes (a) $ 131,790 $ 700,940 Prepaid service fees (b) 64,189 891,098 Prepayment for advertising services (c ) 609,763 400,895 Advance to vendors (d) 10,000 428,349 Others (e) 55,209 78,653 Total $ 870,951 $ 2,499,935 (a) (b) Amortization of prepaid consulting expense for the years ended July 31, 2020, 2019 and 2018 was $861,360, $282,434 and $nil, respectively. (c) (d) (e) |
PROPERTY, PLANT AND EQUIPMENT_2
PROPERTY, PLANT AND EQUIPMENT, NET (Tables) | 12 Months Ended |
Jul. 31, 2020 | |
PROPERTY, PLANT AND EQUIPMENT, NET | |
Summary of property and equipment stated at cost less accumulated depreciation | Property and equipment, net, consisted of the following: As of July 31, 2020 2019 Furniture, fixtures and equipment $ 980,188 $ 98,615 Leasehold improvement 1,737,898 — Vehicles 731,782 — Total 3,449,868 98,615 Less: Impairment of fixed assets (173,799) — Less: accumulated depreciation (652,678) (49,586) Property and equipment, net $ 2,623,391 $ 49,029 |
INTANGIBLE ASSETS, NET (Tables)
INTANGIBLE ASSETS, NET (Tables) | 12 Months Ended |
Jul. 31, 2020 | |
INTANGIBLE ASSETS, NET | |
Summary of intangible assets, net | Intangible assets, net consisted of the following: As of July 31, 2020 2019 Customer relationship (a) $ 6,700,000 $ — Tradename (a) 1,300,000 — Financial and news platform (b) 443,043 438,657 Software 339,569 19,842 Total 8,782,612 458,499 Less: accumulated amortization (471,078) (29,740) Impairment of intangible assets (386,432) — Intangible assets, net $ 7,925,102 $ 428,759 (a) In connection with the acquisition of 51.2% equity interest of LGC, the Company acquired an aggregate of $8,000,000 of intangible assets, primarily consisted of customer relationships and tradenames, which have an estimated weighted-average amortization period of approximately 6.2 years and 9.6 years, respectively. (b) In order to diversify the Company’s business and revenue source, on September 20, 2018 (the “Acquisition Date”), ATIF HK entered into a purchase agreement with Shenzhen Shangyuan Electronic Commerce Co., Ltd. (“Shangyuan”) to acquire a financial and news media platform, www.chinacnnm.com, from Shangyuan, for a total cash consideration of approximately $0.46 million (or RMB3 million).The purchase price was based on the estimated fair value of this asset as of the Acquisition Date in accordance with the valuation report of an independent appraisal firm. The transaction costs (including title search and legal costs) associated with the news media platform acquisition were immaterial and transaction cost capitalization is not deemed necessary. The Company acquired only the financial and news platform/website from Shangyuan, rather than the equity interest of Shangyuan. Thus, the Company determined that the acquisition constituted as an acquisition of assets for financial statement purposes. |
Summary of estimated future amortization expense | Estimated future amortization expense for intangible assets is as follows: Year ending July 31, Amortization expense 2021 $ 1,298,019 2022 1,298,019 2023 1,298,019 2024 1,291,352 2025 1,218,019 Thereafter 1,521,674 Total $ 7,925,102 |
GOODWILL (Tables)
GOODWILL (Tables) | 12 Months Ended |
Jul. 31, 2020 | |
GOODWILL | |
Schedule of changes in the Company's carrying amount of goodwill | Total Balance as of July 31, 2019 $ — Goodwill 31,523,861 Goodwill impairment (5,621,467) Balance as of July 31, 2020 $ 25,902,394 |
OPERATING LEASES (Tables)
OPERATING LEASES (Tables) | 12 Months Ended |
Jul. 31, 2020 | |
OPERATING LEASES | |
Schedule of operating lease related assets and liabilities recorded on the balance sheets | The following table presents the operating lease related assets and liabilities recorded on the balance sheets as of July 31, 2020. July 31, 2020 Rights of use lease assets $ 3,768,418 Operating lease liabilities, current 750,350 Operating lease liabilities, noncurrent 3,382,889 Total operating lease liabilities $ 4,133,239 |
Schedule of weighted average remaining lease terms and discount rates for all of operating leases | The weighted average remaining lease terms and discount rates for all of operating leases were as follows as of July 31, 2020: July 31, 2020 Remaining lease term and discount rate $ Weighted average remaining lease term (years) 8.78 Weighted average discount rate 4.90 % |
Schedule of maturities of lease liabilities | The following is a schedule of maturities of lease liabilities as of July 31, 2020 2021 $ 942,360 2022 667,392 2023 477,151 2024 481,817 2025 396,682 2025 and thereafter 2,169,094 Total lease payments 5,134,496 Less: imputed interest (1,001,257) Present value of lease liabilities $ 4,133,239 |
TAXES (Tables)
TAXES (Tables) | 12 Months Ended |
Jul. 31, 2020 | |
TAXES | |
Schedule of reconciliation of statutory rate to effective tax rate | The following table reconciles the statutory rate to the Company’s effective tax rate: For the years ended July 31, 2020 2019 2018 % % % China income tax rate 25.0 25.0 25.0 Rate differential (12.6) 15.8 — Permanent difference on non-deductible expenses (0.1) 0.1 1.9 Utilization of the VIE’s Net Operating Loss (“NOL”) from prior years — (1.7) — Change in valuation allowance (12.7) — — Effective tax rate (0.4) 39.2 26.9 |
Schedule of income tax excepses | The income tax expenses consists of the following: For the years ended July 31, 2020 2019 2018 Current income tax provision BVI $ — $ — $ — Hong Kong — — — China — 276,823 716,816 Subtotal — 276,823 716,816 Deferred income tax provision BVI — — — Hong Kong — — — China 76,264 — — Total income tax provision $ 76,264 $ 276,823 $ 716,816 |
Schedule of components of company's deferred tax assets | The Company’s deferred tax assets are comprised of the following: July 31, 2020 July 31, 2019 ATIF LGC Total ATIF Deferred tax assets: Net operating loss carry forwards $ 746,024 $ 816,747 $ 1,562,771 $ — Allowance for doubtful account 212,010 438,350 650,360 — Deferred tax assets before valuation allowance 958,034 1,255,097 2,213,131 — Less: valuation allowance (958,034) (1,255,097) (2,213,131) — Net deferred tax assets $ — $ — $ — $ — |
Schedule of taxes payable | The Company’s taxes payable consists of the following: July 31, 2020 July 31, 2019 ATIF LGC Total ATIF Value added tax payable $ 73,031 $ 186,028 $ 259,059 $ 91,978 Income tax payable 584,503 3,001,124 3,585,627 574,778 Other tax payable 2,582 156,896 159,478 2,313 Total taxes payable $ 660,116 $ 3,344,048 $ 4,004,164 $ 669,069 |
EQUITY (Tables)
EQUITY (Tables) | 12 Months Ended |
Jul. 31, 2020 | |
EQUITY | |
Schedule of reconciliation of noncontrolling interest | The following table reconciles the non-controlling interest as of July 31, 2020 and 2019: Total As of July 31, 2018 $ — Net income (loss) attributable to non-controlling interest — Foreign currency translation adjustment — As of July 31, 2019 $ — Acquisition of noncontrolling interest 19,664,326 Net loss attributable to non-controlling interest (2,407,669) Foreign currency translation adjustment (42,174) As of July 31, 2020 $ 17,214,483 |
SEGMENT REPORTING (Tables)
SEGMENT REPORTING (Tables) | 12 Months Ended |
Jul. 31, 2020 | |
SEGMENT REPORTING | |
Summary of information by segment | The following tables present summary information by segment for the years ended July 2020, 2019 and 2018, respectively: For the year ended July 31, 2020 Business advisory and consulting Multi-Channel Event planning Movie theatre services Advertising and execution operation Total Revenue $ 645,127 $ — $ 40,872 $ — $ 685,999 Cost of revenue and related taxes $ (4,068) $ — $ (223,342) $ — $ (227,410) Gross profit (loss) $ 641,059 $ — $ (182,470) $ — $ 458,589 Operating expenses $ (7,092,062) $ (3,951,015) $ (4,331,370) $ (2,343,560) $ (17,718,007) Loss from operations $ (6,451,003) $ (3,951,015) $ (4,513,840) $ (2,343,560) $ (17,259,418) Net loss $ (6,329,798) $ (3,951,015) $ (4,665,995) $ (2,343,560) $ (17,290,368) For the year ended July 31, 2019 Go public Multi- Event consulting Channel planning Movie theatre services Advertising and execution operation Total Revenue $ 3,078,758 $ — $ — $ — $ 3,078,758 Gross profit $ 3,078,758 $ — $ — $ — $ 3,078,758 Operating expenses $ (2,407,154) $ — $ — $ — $ (2,407,154) Income from operations $ 671,604 $ — $ — $ — $ 671,604 Net income $ 429,227 $ — $ — $ — $ 429,227 For the year ended July 31, 2018 Go public consulting services Event planning and customer initial Multi-Channel and Movie theatre registration services Advertising execution operation Total Revenue $ 5,307,891 $ — $ — $ — $ 5,307,891 Gross profit $ 5,307,891 $ — $ — $ — $ 5,307,891 Operating expenses $ (2,580,212) $ — $ — $ — $ (2,580,212) Income from operations $ 2,727,679 $ — $ — $ — $ 2,727,679 Net income $ 1,946,883 $ — $ — $ — $ 1,946,883 The following tables present total assets by segment for as of July 31, 2020 and 2019: As of July 31, 2020 2019 Total assets: Business Advisory and Consulting Services $ 5,240,172 $ 12,342,594 Multi-Channel Advertising Services 4,854,583 — Event Planning and Execution Services 4,088,225 — Movie Theater Operation Services 31,602,098 — $ 45,785,078 $ 12,342,594 |
ORGANIZATION AND DESCRIPTION _2
ORGANIZATION AND DESCRIPTION OF BUSINESS - ATIF HK AND QIANHAI (Details) $ in Thousands, ¥ in Millions | Jul. 31, 2020 | Nov. 03, 2015CNY (¥) | Nov. 03, 2015USD ($) |
Qianhai | |||
Organization, Consolidation And Presentation Of Financial Statements [Line Items] | |||
Registered Capital | ¥ 5 | $ 750 | |
ATIF | |||
Organization, Consolidation And Presentation Of Financial Statements [Line Items] | |||
Equity interest held (as a percent) | 100.00% | ||
Asia Era Fund | Qianhai | |||
Organization, Consolidation And Presentation Of Financial Statements [Line Items] | |||
Equity interest held (as a percent) | 100.00% |
ORGANIZATION AND DESCRIPTION _3
ORGANIZATION AND DESCRIPTION OF BUSINESS - INITIAL PUBLIC OFFERING (Details) - USD ($) | Apr. 29, 2019 | Nov. 02, 2018 | Aug. 21, 2018 | Jan. 05, 2015 | Jul. 31, 2019 |
Subsidiary, Sale of Stock [Line Items] | |||||
Number of shares issued | 49,950,000 | 50,000 | 50,000,000 | ||
Net proceeds from initial public offering | $ 8,772,754 | ||||
IPO | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Number of shares issued | 2,074,672 | ||||
Public offering price | $ 5 | ||||
Gross proceeds | $ 10,400,000 | ||||
Net proceeds from initial public offering | $ 8,800,000 |
ORGANIZATION AND DESCRIPTION _4
ORGANIZATION AND DESCRIPTION OF BUSINESS - Acquisition of Leaping Group Co,. Ltd. ("LGC") (Details) - USD ($) $ in Thousands | Apr. 22, 2020 | Apr. 22, 2019 | Jul. 31, 2020 | Apr. 30, 2020 |
Business Acquisition [Line Items] | ||||
Shares issued as consideration (in shares) | 9,940,002 | |||
Fair value of shares issued | $ 21,070 | |||
LGC | ||||
Business Acquisition [Line Items] | ||||
Equity interest held (as a percent) | 51.20% | |||
LGC | ||||
Business Acquisition [Line Items] | ||||
Equity interest acquired (as a percent) | 51.20% | 51.20% | 51.20% | 51.20% |
Total consideration | $ 22,920 | |||
Cash consideration | $ 1,850 | |||
Shares issued as consideration (in shares) | 9,940,002 | 9,940,002 | ||
Fair value of shares issued | $ 21,070 | $ 21,070 |
LIQUIDITY and GOING CONCERN (De
LIQUIDITY and GOING CONCERN (Details) - USD ($) | Nov. 06, 2020 | Nov. 02, 2018 | Aug. 21, 2018 | Jan. 05, 2015 | Jul. 31, 2020 | Jul. 31, 2019 | Jul. 31, 2018 | Apr. 30, 2020 | Apr. 22, 2020 | Apr. 22, 2019 |
Going Concern, Disclosure [Line Items] | ||||||||||
Revenues | $ 685,999 | $ 3,078,758 | $ 5,307,891 | |||||||
Net loss | (17,290,368) | 429,227 | 1,946,883 | |||||||
Net cash provided by (used in) operating activities | (5,893,735) | (3,018,838) | 2,036,439 | |||||||
Working capital deficit | 2,500,000 | |||||||||
Cash | 428,258 | 6,459,702 | ||||||||
Accounts Receivable, after Allowance for Credit Loss, Current | 939,392 | $ 1,472,258 | ||||||||
Accounts receivable collected | $ 200,000 | |||||||||
Accounts receivable collected (as a percent) | 23.00% | |||||||||
Investment in life insurance contract | $ 1,290,289 | |||||||||
Investment in trading securities | $ 918,675 | |||||||||
Number of shares issued | 49,950,000 | 50,000 | 50,000,000 | |||||||
Gross proceeds | $ 755,139 | |||||||||
Subsequent events | Registered direct offering | ||||||||||
Going Concern, Disclosure [Line Items] | ||||||||||
Number of shares issued | 4,347,826 | |||||||||
Gross proceeds | $ 4,000,000 | |||||||||
Net Proceeds | $ 3,500,000 | |||||||||
LGC | ||||||||||
Going Concern, Disclosure [Line Items] | ||||||||||
Equity interest acquired (as a percent) | 51.20% | 51.20% | 51.20% | 51.20% |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Subsidiaries and Variable Interest Entities (Details) | Jul. 31, 2020 |
ATIF HK | |
Significant Accounting Policies [Line Items] | |
Percentage of ownership in subsidiary | 100.00% |
Huaya | |
Significant Accounting Policies [Line Items] | |
Percentage of ownership in subsidiary | 100.00% |
LGC and its subsidiaries | |
Significant Accounting Policies [Line Items] | |
Percentage of ownership in subsidiary | 51.20% |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Financial statement amounts and balances of the VIE (Details) - USD ($) | 12 Months Ended | ||
Jul. 31, 2020 | Jul. 31, 2019 | Jul. 31, 2018 | |
Variable Interest Entity [Line Items] | |||
Current assets | $ 5,237,465 | $ 10,587,292 | |
TOTAL ASSETS | 45,785,078 | 12,342,594 | |
Current liabilities | 7,784,447 | 1,141,389 | |
TOTAL LIABILITIES | 11,167,336 | 1,141,389 | |
Shareholders' equity (deficit) | 17,403,259 | 11,201,205 | |
Operating revenue | 685,999 | 3,078,758 | $ 5,307,891 |
Income (loss) from operations | (17,259,418) | 671,604 | 2,727,679 |
Income (loss) before income taxes | (17,214,104) | 706,050 | 2,663,699 |
Net income (loss) | (14,882,699) | 429,227 | 1,946,883 |
Net cash provided by (used in) operating activities | (5,893,735) | (3,018,838) | 2,036,439 |
Net cash provided by (used in) investing activities | (176,470) | 739,084 | (2,898,916) |
Net cash provided by (used in) financing activities | 141,983 | 8,741,487 | 755,139 |
VIE | |||
Variable Interest Entity [Line Items] | |||
Current assets | 4,024,414 | 3,673,890 | |
Non-current assets | 5,678,024 | 68,375 | |
TOTAL ASSETS | 9,702,438 | 3,742,265 | |
Current liabilities | 7,177,506 | 980,364 | |
Non-current liabilities | 3,245,199 | ||
TOTAL LIABILITIES | 10,422,705 | 980,364 | |
Shareholders' equity (deficit) | (720,267) | 2,761,901 | |
Operating revenue | 685,999 | ||
Income (loss) from operations | (6,252,688) | ||
Income (loss) before income taxes | (6,419,521) | ||
Net income (loss) | (6,495,785) | ||
Net cash provided by (used in) operating activities | (487,265) | ||
Net cash provided by (used in) investing activities | 1,451,991 | ||
Net cash provided by (used in) financing activities | (734,347) | ||
Qianhai VIE | |||
Variable Interest Entity [Line Items] | |||
Current assets | 2,469,829 | 3,673,890 | |
Non-current assets | 184,740 | 68,375 | |
TOTAL ASSETS | 2,654,569 | 3,742,265 | |
Current liabilities | 1,441,148 | 980,364 | |
Non-current liabilities | 65,574 | ||
TOTAL LIABILITIES | 1,506,722 | 980,364 | |
Shareholders' equity (deficit) | 1,147,847 | 2,761,901 | |
Operating revenue | 645,127 | 2,777,618 | 5,341,271 |
Income (loss) from operations | (1,471,095) | 884,789 | 2,927,679 |
Income (loss) before income taxes | (1,562,037) | 930,361 | 2,863,744 |
Net income (loss) | (1,562,037) | 697,631 | 2,146,927 |
Net cash provided by (used in) operating activities | 175,530 | (3,380,071) | 2,036,439 |
Net cash provided by (used in) investing activities | 36,412 | 2,700,687 | (2,898,916) |
Net cash provided by (used in) financing activities | $ (14,626) | $ 755,139 | |
LMG VIE | |||
Variable Interest Entity [Line Items] | |||
Current assets | 1,554,585 | ||
Non-current assets | 5,493,284 | ||
TOTAL ASSETS | 7,047,869 | ||
Current liabilities | 5,736,358 | ||
Non-current liabilities | 3,179,625 | ||
TOTAL LIABILITIES | 8,915,983 | ||
Shareholders' equity (deficit) | (1,868,114) | ||
Operating revenue | 40,872 | ||
Income (loss) from operations | (4,781,593) | ||
Income (loss) before income taxes | (4,857,484) | ||
Net income (loss) | (4,933,748) | ||
Net cash provided by (used in) operating activities | (662,795) | ||
Net cash provided by (used in) investing activities | 1,415,579 | ||
Net cash provided by (used in) financing activities | $ (734,347) |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Business Combination and Noncontrolling Interests (Details) | Jul. 31, 2020 | Apr. 30, 2020 | Apr. 22, 2020 | Apr. 22, 2019 |
LGC | ||||
Significant Accounting Policies [Line Items] | ||||
Equity interest held by noncontrolling interest (as a percent) | 48.80% | 48.80% | 48.80% | |
LGC | ||||
Significant Accounting Policies [Line Items] | ||||
Equity interest acquired (as a percent) | 51.20% | 51.20% | 51.20% | 51.20% |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Accounts Receivable, Net, Estimated Useful life of assets, Goodwill and impairment of long-lived assets other than goodwill,Inventories & Investment in Trading Securities (Details) - USD ($) | 12 Months Ended | ||
Jul. 31, 2020 | Jul. 31, 2019 | Jul. 31, 2018 | |
Significant Accounting Policies [Line Items] | |||
Allowance for uncollectible balances amounted | $ 1,380,161 | $ 65,335 | |
Impairment on inventory | 0 | 0 | |
Gain from investment in trading securities | 201,051 | ||
Goodwill impairment | 5,621,467 | ||
Impairment of intangible assets | 384,492 | 0 | $ 0 |
Impairment of fixed assets | $ 173,799 | $ 0 | $ 0 |
Terminal Growth Rate | 3.00% | ||
Weighted average cost of capital | 20.00% | ||
Fair value of Estimated Future Development Costs | $ 31,701,250 | ||
Carrying Value For Development Cost | $ 37,322,717 | ||
Minimum | |||
Significant Accounting Policies [Line Items] | |||
Revenue Growth Rate | 9.00% | 30.00% | |
Maximum | |||
Significant Accounting Policies [Line Items] | |||
Revenue Growth Rate | 50.00% | 130.00% | |
Trade name | |||
Significant Accounting Policies [Line Items] | |||
Estimated useful life | 9 years 7 months 6 days | ||
Customer relationship | |||
Significant Accounting Policies [Line Items] | |||
Estimated useful life | 6 years 2 months 12 days | ||
Accounting software | Minimum | |||
Significant Accounting Policies [Line Items] | |||
Estimated useful life | 4 years | ||
Accounting software | Maximum | |||
Significant Accounting Policies [Line Items] | |||
Estimated useful life | 10 years | ||
Financial and news platform | |||
Significant Accounting Policies [Line Items] | |||
Estimated useful life | 15 years | ||
Impairment of intangible assets | $ 384,492 | ||
Furniture, fixtures and equipment | Minimum | |||
Significant Accounting Policies [Line Items] | |||
Estimated useful life | 3 years | ||
Furniture, fixtures and equipment | Maximum | |||
Significant Accounting Policies [Line Items] | |||
Estimated useful life | 10 years | ||
Transportation vehicles | Minimum | |||
Significant Accounting Policies [Line Items] | |||
Estimated useful life | 3 years | ||
Transportation vehicles | Maximum | |||
Significant Accounting Policies [Line Items] | |||
Estimated useful life | 5 years |
SUMMARY OF SIGNIFICANT ACCOUN_8
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Revenue Recognition (Details) | 12 Months Ended | ||
Jul. 31, 2020USD ($)item | Jul. 31, 2019USD ($) | Jul. 31, 2018USD ($) | |
Disaggregation of Revenue [Line Items] | |||
Accounts receivables, net | $ 939,392 | $ 1,472,258 | |
Contract liabilities | 1,063,642 | 415,392 | |
Revenues | $ 685,999 | 3,078,758 | $ 5,307,891 |
Consulting services | |||
Disaggregation of Revenue [Line Items] | |||
Number of phases of consulting services | item | 3 | ||
Contract liabilities | $ 512,238 | 415,392 | |
Phase I consulting services | |||
Disaggregation of Revenue [Line Items] | |||
Period of completion | 3 months | ||
Phase II consulting services | |||
Disaggregation of Revenue [Line Items] | |||
Period of completion | 8 months | ||
Customer's initial registration fee | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | $ 0 | 0 | $ 0 |
Movie Theater Operating | |||
Disaggregation of Revenue [Line Items] | |||
Percentage of revenue deferred until the gift cards and packaged tickets are redeemed | 100.00% | ||
Multi-channel advertising, event planning and execution | |||
Disaggregation of Revenue [Line Items] | |||
Contract liabilities | $ 551,404 | $ 0 | |
Revenues | $ 40,872 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-07-31 | |||
Disaggregation of Revenue [Line Items] | |||
Contract liabilities recognition period | 1 year |
SUMMARY OF SIGNIFICANT ACCOUN_9
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Income Taxes & Value Added Tax (Details) - USD ($) | May 01, 2016 | Jul. 31, 2020 | Jul. 31, 2019 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||
Tax payable | $ 4,004,164 | $ 669,069 | |
Penalty expense | $ 77,527 | ||
Value Added Tax rate | 6.00% | 6.00% |
SUMMARY OF SIGNIFICANT ACCOU_10
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Earnings per Share and Foreign Currency Translation (Details) | 12 Months Ended | ||||||
Jul. 31, 2019$ / $shares | Jul. 31, 2018$ / $shares | Jul. 31, 2017shares | Jul. 31, 2020$ / $ | Jul. 31, 2020¥ / $ | Jul. 31, 2019¥ / $ | Jul. 31, 2018¥ / $ | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||||
Number of dilutive shares | 1 | 1 | 1 | ||||
Period-end spot rate | 0.1278 | 0.1274 | 0.1290 | 0.1432 | 0.1453 | 0.1467 | |
Average rate | 0.1276 | 0.1278 | 0.1284 | 0.1420 | 0.1463 | 0.1538 |
SUMMARY OF SIGNIFICANT ACCOU_11
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Operating Leases (Details) - USD ($) | 12 Months Ended | |
Jul. 31, 2020 | Aug. 01, 2019 | |
Significant Accounting Policies [Line Items] | ||
Lease, Practical Expedients, Package [true false] | true | |
Rights of use lease assets | $ 3,768,418 | |
Lease liabilities | $ 4,133,239 | |
ASU No. 2016-02 | Cumulative Effect, Period of Adoption, Adjustment | ||
Significant Accounting Policies [Line Items] | ||
Rights of use lease assets | $ 3,290,000 | |
Lease liabilities | $ 3,500,000 |
SUMMARY OF SIGNIFICANT ACCOU_12
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Risks and Uncertainty (Details) | 12 Months Ended | ||
Jul. 31, 2020USD ($)customeritem | Jul. 31, 2019USD ($)customer | Jul. 31, 2018customer | |
Significant Accounting Policies [Line Items] | |||
Cash on deposit at financial institutions | $ | $ 428,258 | $ 6,459,702 | |
Customer concentration risk | Revenue from Contract with Customer Benchmark [Member] | |||
Significant Accounting Policies [Line Items] | |||
Number of customers | customer | 1 | 3 | 2 |
Customer concentration risk | Revenue from Contract with Customer Benchmark [Member] | Customer one | |||
Significant Accounting Policies [Line Items] | |||
Concentration risk (as a percent) | 91.00% | 44.00% | 33.00% |
Customer concentration risk | Revenue from Contract with Customer Benchmark [Member] | Customer two | |||
Significant Accounting Policies [Line Items] | |||
Concentration risk (as a percent) | 29.00% | 21.00% | |
Customer concentration risk | Revenue from Contract with Customer Benchmark [Member] | Customer three | |||
Significant Accounting Policies [Line Items] | |||
Concentration risk (as a percent) | 19.00% | ||
Customer concentration risk | Accounts receivable | |||
Significant Accounting Policies [Line Items] | |||
Number of customers | customer | 2 | 4 | |
Customer concentration risk | Accounts receivable | Customer one | |||
Significant Accounting Policies [Line Items] | |||
Concentration risk (as a percent) | 40.00% | 61.00% | |
Customer concentration risk | Accounts receivable | Customer two | |||
Significant Accounting Policies [Line Items] | |||
Concentration risk (as a percent) | 26.00% | 15.00% | |
Customer concentration risk | Accounts receivable | Customer three | |||
Significant Accounting Policies [Line Items] | |||
Concentration risk (as a percent) | 14.00% | ||
Customer concentration risk | Accounts receivable | Customer four | |||
Significant Accounting Policies [Line Items] | |||
Concentration risk (as a percent) | 11.00% | ||
Supplier concentration risk | Cost of Goods and Service Benchmark [Member] | |||
Significant Accounting Policies [Line Items] | |||
Number of suppliers | item | 3 | ||
Supplier concentration risk | Cost of Goods and Service Benchmark [Member] | Supplier one | |||
Significant Accounting Policies [Line Items] | |||
Concentration risk (as a percent) | 22.00% | 50.00% | 48.00% |
Supplier concentration risk | Cost of Goods and Service Benchmark [Member] | Supplier two | |||
Significant Accounting Policies [Line Items] | |||
Concentration risk (as a percent) | 21.00% | ||
Supplier concentration risk | Cost of Goods and Service Benchmark [Member] | Supplier three | |||
Significant Accounting Policies [Line Items] | |||
Concentration risk (as a percent) | 15.00% | ||
PRC | |||
Significant Accounting Policies [Line Items] | |||
Cash on deposit at financial institutions | $ | $ 234,653 | $ 409,037 |
SUMMARY OF SIGNIFICANT ACCOU_13
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Coranavirus ("COVID-19") Impact - (Details) - LGC | 6 Months Ended | |
Jul. 31, 2020 | Apr. 30, 2020 | |
Equity Method Investment, Ownership Percentage | 51.20% | |
Revenue from Contract with Customer, Advisory And Consulting Services | ||
Concentration Risk, Percentage | 92.00% |
BUSINESS COMBINATION (Details)
BUSINESS COMBINATION (Details) - USD ($) | Apr. 22, 2020 | Apr. 08, 2020 | Apr. 22, 2019 | Jul. 31, 2020 | Apr. 30, 2020 |
Business Acquisition [Line Items] | |||||
Shares issued as consideration (in shares) | 9,940,002 | ||||
Fair value of shares issued | $ 21,070,000 | ||||
LGC | |||||
Business Acquisition [Line Items] | |||||
Equity interest to be acquired (as a percent) | 51.20% | ||||
Equity interest acquired (as a percent) | 51.20% | 51.20% | 51.20% | 51.20% | |
Total purchase consideration | $ 22,920,000 | ||||
Cash consideration | $ 1,850,000 | ||||
Shares issued as consideration (in shares) | 9,940,002 | 9,940,002 | |||
Fair value of shares issued | $ 21,070,000 | $ 21,070,000 | |||
Shares issued by the acquiree in exchange for satisfaction of debt and issuance of company's shares | 3,934,029 | ||||
Outstanding debt owed to the company | $ 1,851,000 | ||||
Shares issued to the acquiree | 2,800,000 | ||||
Number of shares assigned by the acquiree | 6,283,001 | ||||
Number of shares exchanged | 7,140,002 | ||||
LGC | |||||
Business Acquisition [Line Items] | |||||
Equity interest held by noncontrolling interest (as a percent) | 48.80% | 48.80% | 48.80% |
BUSINESS COMBINATION - Purchase
BUSINESS COMBINATION - Purchase Price Allocation (Details) - USD ($) | Apr. 22, 2020 | Jul. 31, 2020 | Jul. 31, 2019 |
Business Acquisition [Line Items] | |||
Goodwill | $ 25,902,394 | $ 0 | |
LGC | |||
Business Acquisition [Line Items] | |||
Cash and cash equivalents | $ 1,060,435 | ||
Accounts receivable | 2,613,970 | ||
Prepayment and other current assets | 2,219,950 | ||
Property and equipment | 2,728,000 | ||
Intangible assets (trade name and customer relationship) | 8,000,000 | ||
Deferred film production cost | 323,522 | ||
Deferred income tax assets | 75,822 | ||
Taxes payable | 3,255,935 | ||
Other current liabilities | 2,701,495 | ||
Fair value of non-controlling interest | 19,664,326 | ||
Goodwill | 31,523,861 | ||
Total purchase consideration | $ 22,923,804 | ||
Trade name | LGC | |||
Business Acquisition [Line Items] | |||
Intangible assets (trade name and customer relationship) | $ 1,300,000 | ||
Definite lives (in years) | 9 years 7 months 6 days | 9 years 7 months 6 days | |
Customer relationship | LGC | |||
Business Acquisition [Line Items] | |||
Intangible assets (trade name and customer relationship) | $ 6,700,000 | ||
Definite lives (in years) | 6 years 2 months 12 days | 6 years 2 months 12 days |
BUSINESS COMBINATION - Amounts
BUSINESS COMBINATION - Amounts of revenue and net loss of LGC included in the Company's consolidated statement of operations and Proforma information (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Jul. 31, 2020 | Jul. 31, 2020 | Jul. 31, 2019 | Jul. 31, 2018 | |
BusinessAcquisitionLineItems | ||||
Intangibles asset amortization expense | $ 440,899 | $ 29,707 | $ 0 | |
LGC | ||||
BusinessAcquisitionLineItems | ||||
Net Revenue | $ 40,872 | |||
Net loss | $ (4,933,748) | |||
Pro forma revenue | 6,192,939 | 14,758,448 | ||
Pro forma net income (loss) | (20,975,818) | 4,402,083 | ||
Pro forma net income (loss) attributable to ATIF Holdings Limited | $ (17,165,275) | $ 1,869,892 | ||
Pro forma earnings (loss) per common share - basic and diluted | $ (0.37) | $ 0.04 | ||
Weighted average shares - basic and diluted | 47,014,674 | 45,462,933 | ||
Intangibles asset amortization expense | $ 810,708 | $ 1,216,062 |
ACCOUNTS RECEIVABLE, NET (Detai
ACCOUNTS RECEIVABLE, NET (Details) - USD ($) | Jul. 31, 2020 | Jul. 31, 2019 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable | $ 2,319,553 | $ 1,537,593 |
Less: allowances for doubtful accounts | (1,380,161) | (65,335) |
Accounts receivables, net | 939,392 | 1,472,258 |
Business advisory and consulting services | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable | 425,106 | $ 1,537,593 |
Multi-channel advertising, event planning and execution | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable | $ 1,894,447 |
ACCOUNTS RECEIVABLE, NET - Agin
ACCOUNTS RECEIVABLE, NET - Aging Analysis (Details) - USD ($) | Jul. 31, 2020 | Jul. 31, 2019 |
ACCOUNTS RECEIVABLE, NET | ||
1-3 months | $ 27,027 | $ 364,430 |
4-6 months | 67,441 | 147,722 |
7-12 months | 1,130,348 | 894,771 |
More than 1 year | 1,094,737 | 130,670 |
Total gross accounts receivable | $ 2,319,553 | $ 1,537,593 |
ACCOUNTS RECEIVABLE, NET - Move
ACCOUNTS RECEIVABLE, NET - Movement in allowance for doubtful accounts (Details) - USD ($) | 12 Months Ended | |
Jul. 31, 2020 | Jul. 31, 2019 | |
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | ||
Beginning Balance | $ 65,335 | |
Additions | 1,304,108 | $ 65,790 |
Foreign currency translation adjustments | 10,718 | (455) |
Ending balance | $ 1,380,161 | $ 65,335 |
ACCOUNTS RECEIVABLE, NET - Addi
ACCOUNTS RECEIVABLE, NET - Additional Information (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Jul. 31, 2020 |
ACCOUNTS RECEIVABLE, NET | ||
Bad debt reserve accrued | $ 960 | |
Subsequent events | ||
ACCOUNTS RECEIVABLE, NET | ||
Accounts receivable balance collected (as a percent) | 23.00% |
PREPAID EXPENSES AND OTHER CU_3
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Details) - USD ($) | Jul. 31, 2020 | Jul. 31, 2019 |
PREPAID EXPENSES AND OTHER CURRENT ASSETS | ||
Advance to employees for business development purposes (a) | $ 131,790 | $ 700,940 |
Prepaid service fees (b) | 64,189 | 891,098 |
Prepayment for advertising services (c ) | 609,763 | 400,895 |
Advance to vendors (d) | 10,000 | 428,349 |
Others (e) | 55,209 | 78,653 |
Total | $ 870,951 | $ 2,499,935 |
PREPAID EXPENSES AND OTHER CU_4
PREPAID EXPENSES AND OTHER CURRENT ASSETS - Additional Information (Details) - USD ($) | 12 Months Ended | ||
Jul. 31, 2020 | Jul. 31, 2019 | Jul. 31, 2018 | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS | |||
Advance to employees for business development purposes, allowance for doubtful accounts | $ 1,350,615 | ||
Amortization of prepaid consulting expense | $ 861,360 | $ 282,434 | $ 0 |
Prepaid advertising service fee collected back | $ 400,895 |
PROPERTY, PLANT AND EQUIPMENT_3
PROPERTY, PLANT AND EQUIPMENT, NET (Details) - USD ($) | 12 Months Ended | ||
Jul. 31, 2020 | Jul. 31, 2019 | Jul. 31, 2018 | |
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | $ 3,449,868 | $ 98,615 | |
Less: Impairment of fixed assets | (173,799) | 0 | $ 0 |
Less: accumulated depreciation | (652,678) | (49,586) | |
Property, Plant and Equipment, net | 2,623,391 | 49,029 | |
Loss from disposal of certain outdated office equipment | (12,388) | ||
Depreciation expense | 527,497 | 20,615 | $ 16,458 |
Furniture, fixtures and equipment | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 980,188 | $ 98,615 | |
Leasehold improvement | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 1,737,898 | ||
Transportation vehicles | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | $ 731,782 |
INTANGIBLE ASSETS, NET (Details
INTANGIBLE ASSETS, NET (Details) ¥ in Millions | Apr. 22, 2020USD ($) | Jul. 31, 2020USD ($) | Jul. 31, 2019USD ($) | Jul. 31, 2018USD ($) | Apr. 30, 2020 | Apr. 22, 2019 | Sep. 30, 2018CNY (¥) | Sep. 30, 2018USD ($) |
Intangible assets, net | ||||||||
Intangible assets, gross | $ 8,782,612 | $ 458,499 | ||||||
Less: accumulated amortization | (471,078) | (29,740) | ||||||
Impairment of intangible assets | (384,492) | 0 | $ 0 | |||||
Intangible assets, net | 7,925,102 | 428,759 | ||||||
Impairment of intangible assets | 386,432 | |||||||
Amortization expense | 440,899 | 29,707 | $ 0 | |||||
Customer relationship | ||||||||
Intangible assets, net | ||||||||
Intangible assets, gross | 6,700,000 | |||||||
Trade name | ||||||||
Intangible assets, net | ||||||||
Intangible assets, gross | 1,300,000 | |||||||
Financial and news platform | ||||||||
Intangible assets, net | ||||||||
Intangible assets, gross | 443,043 | 438,657 | ||||||
Impairment of intangible assets | (384,492) | |||||||
Accounting software | ||||||||
Intangible assets, net | ||||||||
Intangible assets, gross | $ 339,569 | 19,842 | ||||||
Shenzhen Shangyuan Electronic Commerce Co., Ltd | ||||||||
Intangible assets, net | ||||||||
Intangible assets, net | ¥ 3 | $ 460,000 | ||||||
LGC | ||||||||
Intangible assets, net | ||||||||
Equity interest acquired (as a percent) | 51.20% | 51.20% | 51.20% | 51.20% | ||||
Intangible assets acquired | $ 8,000,000 | |||||||
Amortization expense | $ 810,708 | $ 1,216,062 | ||||||
LGC | Customer relationship | ||||||||
Intangible assets, net | ||||||||
Intangible assets acquired | $ 6,700,000 | |||||||
Estimated weighted average amortization period (in years) | 6 years 2 months 12 days | 6 years 2 months 12 days | ||||||
LGC | Trade name | ||||||||
Intangible assets, net | ||||||||
Intangible assets acquired | $ 1,300,000 | |||||||
Estimated weighted average amortization period (in years) | 9 years 7 months 6 days | 9 years 7 months 6 days |
INTANGIBLE ASSETS, NET - Estima
INTANGIBLE ASSETS, NET - Estimated future amortization expense (Details) - USD ($) | Jul. 31, 2020 | Jul. 31, 2019 |
Estimated future amortization expense | ||
2021 | $ 1,298,019 | |
2022 | 1,298,019 | |
2023 | 1,298,019 | |
2024 | 1,291,352 | |
2025 | 1,218,019 | |
Thereafter | 1,521,674 | |
Total | $ 7,925,102 | $ 428,759 |
GOODWILL (Details)
GOODWILL (Details) - USD ($) | 12 Months Ended | |||
Jul. 31, 2020 | Apr. 30, 2020 | Apr. 22, 2020 | Apr. 22, 2019 | |
Goodwill [Roll Forward] | ||||
Balance as of July 31, 2019 | $ 0 | |||
Goodwill | 31,523,861 | |||
Goodwill impairment | (5,621,467) | |||
Balance as of July 31, 2020 | $ 25,902,394 | |||
LGC | ||||
Goodwill [Line Items] | ||||
Equity interest acquired (as a percent) | 51.20% | 51.20% | 51.20% | 51.20% |
INVESTMENT IN LIFE INSURANCE _2
INVESTMENT IN LIFE INSURANCE CONTRACT (Details) $ in Millions | Jul. 29, 2019HKD ($) | Jul. 31, 2020USD ($) | Jul. 31, 2019USD ($) | Jul. 29, 2019USD ($) |
INVESTMENT IN LIFE INSURANCE CONTRACT | ||||
Investment deposit | $ 1,277,514 | |||
Interest income on investment in life insurance contract | $ 95,797 | |||
Manulife (International) Limited ("Manulife") | ||||
INVESTMENT IN LIFE INSURANCE CONTRACT | ||||
Investment deposit | $ 10 | $ 1,290,289 | ||
Investment holding period | 5 years | |||
Minimum | Manulife (International) Limited ("Manulife") | ||||
INVESTMENT IN LIFE INSURANCE CONTRACT | ||||
Rates of return (as a percent) | 8.69% | |||
Maximum | Manulife (International) Limited ("Manulife") | ||||
INVESTMENT IN LIFE INSURANCE CONTRACT | ||||
Rates of return (as a percent) | 11.49% | |||
Average | Manulife (International) Limited ("Manulife") | ||||
INVESTMENT IN LIFE INSURANCE CONTRACT | ||||
Rates of return (as a percent) | 9.48% |
OPERATING LEASES (Details)
OPERATING LEASES (Details) - USD ($) | 12 Months Ended | ||
Jul. 31, 2020 | Jul. 31, 2019 | Jul. 31, 2018 | |
Lessee, Lease, Description [Line Items] | |||
Rent expense | $ 1,071,822 | $ 515,010 | $ 400,151 |
Minimum | |||
Lessee, Lease, Description [Line Items] | |||
Term of the lease | 2 years | ||
Maximum | |||
Lessee, Lease, Description [Line Items] | |||
Term of the lease | 15 years |
OPERATING LEASES - Assets and l
OPERATING LEASES - Assets and liabilities recorded on the balance sheets (Details) | Jul. 31, 2020USD ($) |
OPERATING LEASES | |
Rights of use lease assets | $ 3,768,418 |
Operating lease liabilities, current | 750,350 |
Operating lease liabilities, noncurrent | 3,382,889 |
Present value of lease liabilities | $ 4,133,239 |
OPERATING LEASES - Weighted ave
OPERATING LEASES - Weighted average remaining lease terms and discount rates (Details) | Jul. 31, 2020 |
Remaining lease term and discount rate | |
Weighted average remaining lease term (years) | 8 years 9 months 11 days |
Weighted average discount rate | 4.90% |
OPERATING LEASES - Schedule of
OPERATING LEASES - Schedule of maturities of lease liabilities (Details) | Jul. 31, 2020USD ($) |
OPERATING LEASES | |
2021 | $ 942,360 |
2022 | 667,392 |
2023 | 477,151 |
2024 | 481,817 |
2025 | 396,682 |
2025 and thereafter | 2,169,094 |
Total lease payments | 5,134,496 |
Less: imputed interest | (1,001,257) |
Present value of lease liabilities | $ 4,133,239 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) | 12 Months Ended |
Jul. 31, 2020USD ($) | |
RELATED PARTY TRANSACTIONS | |
Office lease expense for lease arrangement with Asia Time HK | $ 79,875 |
TAXES (Details)
TAXES (Details) - USD ($) | May 01, 2016 | Jul. 31, 2020 | Jul. 31, 2019 | Jul. 31, 2018 |
Reconciliation of statutory rate to effective tax rate | ||||
Value Added Tax rate (as a percent) | 6.00% | 6.00% | ||
Surcharges on VAT payable (as a percent) | 12.00% | |||
Provision for income taxes | $ 76,264 | $ 276,823 | $ 716,816 | |
Statutory income tax rate | 25.00% | 25.00% | 25.00% | |
Rate differential | (12.60%) | 15.80% | ||
Permanent difference on non-deductible expenses | (0.10%) | 0.10% | 1.90% | |
Utilization of the VIE's Net Operating Loss ("NOL") from prior years | (1.70%) | |||
Change in valuation allowance | (12.70%) | |||
Effective tax rate | (0.40%) | 39.20% | 26.90% | |
Multi-Channel Advertising services | ||||
Reconciliation of statutory rate to effective tax rate | ||||
Culture construction fee surcharge (as a percent) | 3.00% | |||
Hong kong | ||||
Reconciliation of statutory rate to effective tax rate | ||||
Provision for income taxes | $ 0 | $ 0 | $ 0 | |
Statutory income tax rate | 16.50% |
TAXES - Income Tax Expenses (De
TAXES - Income Tax Expenses (Details) - USD ($) | 12 Months Ended | ||
Jul. 31, 2020 | Jul. 31, 2019 | Jul. 31, 2018 | |
Current income tax provision | |||
China | $ 276,823 | $ 716,816 | |
Subtotal | 276,823 | 716,816 | |
Deferred income tax provision | |||
China | $ 76,264 | ||
Total income tax provision | 76,264 | 276,823 | 716,816 |
Hong kong | |||
Deferred income tax provision | |||
Total income tax provision | $ 0 | $ 0 | $ 0 |
TAXES - Components Of Deferred
TAXES - Components Of Deferred Tax Assets (Details) | 12 Months Ended |
Jul. 31, 2020USD ($) | |
Deferred tax assets: | |
Net operating loss carry forwards | $ 1,562,771 |
Allowance for doubtful account | 650,360 |
Deferred tax assets before valuation allowance | 2,213,131 |
Less: valuation allowance | 2,213,131 |
Net deferred tax assets | $ 0 |
Percentage of valuation allowance provided | 100.00% |
Penalty expense | $ 77,527 |
ATIF | |
Deferred tax assets: | |
Net operating loss carry forwards | 746,024 |
Allowance for doubtful account | 212,010 |
Deferred tax assets before valuation allowance | 958,034 |
Less: valuation allowance | 958,034 |
LGC | |
Deferred tax assets: | |
Net operating loss carry forwards | 816,747 |
Allowance for doubtful account | 438,350 |
Deferred tax assets before valuation allowance | 1,255,097 |
Less: valuation allowance | $ 1,255,097 |
TAXES - Taxes Payable (Details)
TAXES - Taxes Payable (Details) - USD ($) | Jul. 31, 2020 | Apr. 22, 2020 | Jul. 31, 2019 |
Taxes Payable, Current [Abstract] | |||
Value added tax payable | $ 259,059 | ||
Income tax payable | 3,585,627 | ||
Other tax payable | 159,478 | ||
Total taxes payable | 4,004,164 | $ 669,069 | |
ATIF | |||
Taxes Payable, Current [Abstract] | |||
Value added tax payable | 73,031 | 91,978 | |
Income tax payable | 584,503 | 574,778 | |
Other tax payable | 2,582 | 2,313 | |
Total taxes payable | 660,116 | $ 669,069 | |
LGC | |||
Taxes Payable, Current [Abstract] | |||
Value added tax payable | 186,028 | ||
Income tax payable | 3,001,124 | ||
Other tax payable | 156,896 | ||
Total taxes payable | $ 3,344,048 | ||
Taxes payable | $ 3,255,935 | ||
Total tax liabilities of accumulated unpaid tax | 84.00% |
EQUITY (Details)
EQUITY (Details) - USD ($) | Nov. 02, 2018 | Aug. 21, 2018 | Jan. 05, 2015 | Jul. 31, 2019 | Jul. 31, 2020 | Feb. 28, 2019 | Feb. 27, 2019 |
EQUITY | |||||||
Authorized capital | 100,000,000,000 | 100,000,000 | 1,000,000,000 | 1,000,000,000 | |||
Par value (per share) | $ 0.001 | $ 0.001 | $ 0.0004 | $ 0.001 | $ 0.001 | $ 0.001 | |
Number of shares issued (in shares) | 49,950,000 | 50,000 | 50,000,000 | ||||
Number of shares to be cancelled | 50,000,000 | ||||||
Shares issued | $ 49,950 | $ 8,774,829 | |||||
Shares surrendered (in shares) | 15,000,000 | ||||||
Shares outstanding (in shares) | 37,074,672 | 47,014,674 | 35,000,000 | 50,000,000 |
EQUITY - Initial Public Offerin
EQUITY - Initial Public Offering (Details) - USD ($) | Apr. 29, 2019 | Nov. 02, 2018 | Aug. 21, 2018 | Jan. 05, 2015 | Jul. 31, 2019 |
EQUITY | |||||
Number of shares issued (in shares) | 49,950,000 | 50,000 | 50,000,000 | ||
Net proceeds from initial public offering | $ 8,772,754 | ||||
IPO | |||||
EQUITY | |||||
Number of shares issued (in shares) | 2,074,672 | ||||
Public offering price | $ 5 | ||||
Gross proceeds | $ 10,400,000 | ||||
Net proceeds from initial public offering | $ 8,800,000 |
EQUITY - Shares issued for acqu
EQUITY - Shares issued for acquisition of LGC (Details) - USD ($) $ in Thousands | Apr. 22, 2020 | Apr. 22, 2019 | Jul. 31, 2020 | Apr. 30, 2020 | Jul. 31, 2019 | Feb. 28, 2019 | Feb. 27, 2019 |
EQUITY | |||||||
Shares issued as consideration (in shares) | 9,940,002 | ||||||
Fair value of shares issued | $ 21,070 | ||||||
Ordinary shares, Issued | 47,014,674 | 37,074,672 | |||||
Ordinary shares, Outstanding | 47,014,674 | 37,074,672 | 35,000,000 | 50,000,000 | |||
LGC | |||||||
EQUITY | |||||||
Equity interest acquired (as a percent) | 51.20% | 51.20% | 51.20% | 51.20% | |||
Shares issued as consideration (in shares) | 9,940,002 | 9,940,002 | |||||
Fair value of shares issued | $ 21,070 | $ 21,070 | |||||
Ordinary shares, Issued | 47,014,674 | 37,074,672 | |||||
Ordinary shares, Outstanding | 47,014,674 | 37,074,672 |
EQUITY - Noncontrolling interes
EQUITY - Noncontrolling interest (Details) - USD ($) | 12 Months Ended | |||
Jul. 31, 2020 | Jul. 31, 2019 | Apr. 30, 2020 | Apr. 22, 2020 | |
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward] | ||||
Beginning balance | $ 0 | $ 0 | ||
Acquisition of noncontrolling interest | 19,664,326 | |||
Net income (loss) attributable to non-controlling interest | (2,407,669) | 0 | ||
Foreign currency translation adjustment | (42,174) | 0 | ||
Ending balance | 17,214,483 | 0 | ||
Restricted amounts as determined pursuant to PRC statutory laws | 355,912 | 355,912 | ||
Total restricted net assets | $ 2,268,330 | $ 962,374 | ||
LGC | ||||
Noncontrolling Interest [Line Items] | ||||
Equity interest held by noncontrolling interest (as a percent) | 48.80% | 48.80% | 48.80% |
SEGMENT REPORTING (Details)
SEGMENT REPORTING (Details) | 12 Months Ended | ||
Jul. 31, 2020USD ($)segment | Jul. 31, 2019USD ($) | Jul. 31, 2018USD ($) | |
Segment Reporting Information [Line Items] | |||
Number of operating segments | segment | 4 | ||
Revenues | $ 685,999 | $ 3,078,758 | $ 5,307,891 |
Cost of revenue and related taxes | 227,410 | ||
Gross profit (loss) | 458,589 | 3,078,758 | 5,307,891 |
Operating expenses | (17,718,007) | (2,407,154) | (2,580,212) |
Income (loss) from operations | (17,259,418) | 671,604 | 2,727,679 |
Net income (loss) | (17,290,368) | 429,227 | 1,946,883 |
Business advisory and consulting services | |||
Segment Reporting Information [Line Items] | |||
Revenues | 645,127 | ||
Cost of revenue and related taxes | 4,068 | ||
Gross profit (loss) | 641,059 | ||
Operating expenses | (7,092,062) | ||
Income (loss) from operations | (6,451,003) | ||
Net income (loss) | (6,329,798) | ||
Multi-Channel Advertising services | |||
Segment Reporting Information [Line Items] | |||
Operating expenses | (3,951,015) | ||
Income (loss) from operations | (3,951,015) | ||
Net income (loss) | (3,951,015) | ||
Event planning and execution services | |||
Segment Reporting Information [Line Items] | |||
Revenues | 40,872 | ||
Cost of revenue and related taxes | 223,342 | ||
Gross profit (loss) | (182,470) | ||
Operating expenses | (4,331,370) | ||
Income (loss) from operations | (4,513,840) | ||
Net income (loss) | (4,665,995) | ||
Movie theatre operation services | |||
Segment Reporting Information [Line Items] | |||
Operating expenses | (2,343,560) | ||
Income (loss) from operations | (2,343,560) | ||
Net income (loss) | $ (2,343,560) | ||
Go public consulting services | |||
Segment Reporting Information [Line Items] | |||
Revenues | 3,078,758 | ||
Gross profit (loss) | 3,078,758 | ||
Operating expenses | (2,407,154) | ||
Income (loss) from operations | 671,604 | ||
Net income (loss) | $ 429,227 | ||
Go public consulting services and customer initial registration services | |||
Segment Reporting Information [Line Items] | |||
Revenues | 5,307,891 | ||
Gross profit (loss) | 5,307,891 | ||
Operating expenses | (2,580,212) | ||
Income (loss) from operations | 2,727,679 | ||
Net income (loss) | $ 1,946,883 |
SEGMENT REPORTING - Total Asset
SEGMENT REPORTING - Total Assets (Details) - USD ($) | Jul. 31, 2020 | Jul. 31, 2019 |
Segment Reporting Information [Line Items] | ||
Total assets | $ 45,785,078 | $ 12,342,594 |
Business advisory and consulting services | ||
Segment Reporting Information [Line Items] | ||
Total assets | 5,240,172 | $ 12,342,594 |
Multi-Channel Advertising services | ||
Segment Reporting Information [Line Items] | ||
Total assets | 4,854,583 | |
Event planning and execution services | ||
Segment Reporting Information [Line Items] | ||
Total assets | 4,088,225 | |
Movie theatre operation services | ||
Segment Reporting Information [Line Items] | ||
Total assets | $ 31,602,098 |
CONTIGENCIES (Details)
CONTIGENCIES (Details) | Nov. 04, 2019USD ($) | Jul. 31, 2020USD ($)item | Jul. 31, 2019USD ($) | Jul. 31, 2018USD ($) | Sep. 25, 2020CNY (¥) | Sep. 25, 2020USD ($) | Apr. 30, 2020 | Apr. 22, 2020 | Apr. 22, 2019 |
CONTIGENCIES | |||||||||
Number of arbitration and legal proceeding cases pending | item | 2 | ||||||||
Operating lease expense | $ 1,071,822 | $ 515,010 | $ 400,151 | ||||||
LGC | |||||||||
CONTIGENCIES | |||||||||
Equity interest acquired (as a percent) | 51.20% | 51.20% | 51.20% | 51.20% | |||||
Arbitration with Huale Group Co., Limited | |||||||||
CONTIGENCIES | |||||||||
Damage sought value | $ 300,000 | ||||||||
Accrued liability | $ 261,724 | ||||||||
Arbitration with Huale Group Co., Limited | Subsequent events | |||||||||
CONTIGENCIES | |||||||||
Amount of deposit to be returned by court order | $ 250,000 | ||||||||
Arbitration fee and counterclaim fee to be paid by court order | ¥ 81,844 | $ 11,724 | |||||||
Pending Legal Proceeding with Boustead Securities, LLC | |||||||||
CONTIGENCIES | |||||||||
Number of causes of action alleged against the company | item | 4 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) $ / shares in Units, $ in Millions | Nov. 06, 2020USD ($)$ / sharesshares | Sep. 22, 2020HKD ($) | Sep. 22, 2020USD ($) | Nov. 02, 2018shares | Aug. 21, 2018shares | Jan. 05, 2015shares | Jul. 31, 2018USD ($) | Jul. 31, 2020 | Apr. 30, 2020 | Apr. 22, 2020 | Jul. 31, 2019USD ($) | Jul. 29, 2019HKD ($) | Jul. 29, 2019USD ($) | Apr. 22, 2019 |
SUBSEQUENT EVENTS | ||||||||||||||
Investment in life insurance contract | $ 1,277,514 | |||||||||||||
Number of shares issued (in shares) | shares | 49,950,000 | 50,000 | 50,000,000 | |||||||||||
Gross proceeds | $ 755,139 | |||||||||||||
Subsequent events | Registered direct offering | ||||||||||||||
SUBSEQUENT EVENTS | ||||||||||||||
Number of shares issued (in shares) | shares | 4,347,826 | |||||||||||||
Price of shares issued (in dollars per share) | $ / shares | $ 0.92 | |||||||||||||
Gross proceeds | $ 4,000,000 | |||||||||||||
Net Proceeds | $ 3,500,000 | |||||||||||||
Number of shares called by warrants issued (in shares) | shares | 4,347,826 | |||||||||||||
Exercise price of warrants (in dollars per share) | $ / shares | $ 1.10 | |||||||||||||
Term of warrants | 5 years | |||||||||||||
Period after which the exercise price of warrants may reset to the closing bid price | 1 year | |||||||||||||
Manulife (International) Limited ("Manulife") | ||||||||||||||
SUBSEQUENT EVENTS | ||||||||||||||
Investment in life insurance contract | $ 10 | $ 1,290,289 | ||||||||||||
Manulife (International) Limited ("Manulife") | Subsequent events | ||||||||||||||
SUBSEQUENT EVENTS | ||||||||||||||
Refund received upon early termination | $ 9.5 | $ 1,219,128 | ||||||||||||
Early redemption penalty | $ 64,684 | |||||||||||||
LGC | ||||||||||||||
SUBSEQUENT EVENTS | ||||||||||||||
Equity interest acquired (as a percent) | 51.20% | 51.20% | 51.20% | 51.20% |