ABOUT
THIS PROSPECTUS
This
prospectus is part of a registration statement on Form F-1 that we have filed with the SEC.
You
should read this prospectus and the information and documents incorporated by reference carefully. Such documents contain important
information you should consider when making your investment decision. See “Where You Can Find Additional Information”
and “Incorporation of Information by Reference” in this prospectus.
You
should rely only on the information provided in this prospectus or documents incorporated by reference into this prospectus. We
have not authorized anyone to provide you with different information. This prospectus covers offers and sales of our Ordinary
Shares and Warrants only in jurisdictions in which such offers and sales are permitted. The information contained in this prospectus
is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of our
Ordinary Shares and Warrants. You should not assume that the information contained in this prospectus is accurate as of any date
other than the date on the front cover of this prospectus, or that the information contained in any document incorporated by reference
is accurate as of any date other than the date of the document incorporated by reference, regardless of the time of delivery of
this prospectus or any sale of a security.
In
this prospectus, we refer to ATIF Holdings Limited as “we,” “us,” “our,” the “Company”
or “ATIF.” You should rely only on the information we have provided or incorporated by reference in this prospectus,
applicable supplement, if any, and any related free writing prospectus. We have not authorized anyone to provide you with different
information. No dealer, salesperson or other person is authorized to give any information or to represent anything not contained
in this prospectus, any applicable supplement, if any, or any related free writing prospectus.
ATIF
HOLDINGS LIMITED
Business
We
are a consulting company providing financial consulting services to small and medium-sized enterprises (“SMEs”). Since
our inception in 2015, the main focus of our consulting business has been providing comprehensive going public consulting services
designed to help SMEs become public companies on suitable markets and exchanges. Our goal is to become an international financial
consulting company with clients and offices throughout Asia. We have to date primarily focused on helping clients going public
on the OTC markets and exchanges in the U.S., but we are in the process of expanding our service to listing clients on domestic
exchanges in China as well as the Hong Kong Stock Exchange.
Since
our inception, our revenue has been mainly generated from our going public consulting services. In April 2020, we acquired a 51.2%
equity interest in Leaping Group Co., Ltd. (“LGC”) and our revenue was mainly comprised of going public consulting
services and event execution and planning services for the year ended July 31, 2020. We generated a total revenue of approximately
$5.3 million, $3.1 million and $0.7 million for the fiscal years ended July 31, 2018, 2019, and 2020, respectively. The revenues
generated from going public consulting services were $5.2 million, $3.1 million and $0.6 million for the fiscal years ended July
31, 2018, 2019, and 2020, respectively. Revenue attributed to the LGC acquisition from April 2020 through July 31, 2020 was $40,872.
Beginning
in August 2018, to complement and facilitate the growth of our going public consulting service, we launched AT Consulting Center
to offer financial consulting programs in Shenzhen, and in September 2018, we acquired CNNM, or www.chinacnnm.com, a news and
media website focused on distributing financial news and information. In July 2019, we launched an investment and financing analysis
reporting business. We have not generated any revenue from this financial and news platform since its acquisition, and based on
our current financial condition and operating performance, our management has assessed that the likelihood of future use of the
financial and news platform is remote. As a result, an impairment loss of $384,492 has been applied against this financial and
news platform for the year ended July 31, 2020.
In
China, a fast-growing economy and a positive market environment have created many entrepreneurial and high-growth enterprises,
many of which need assistance in obtaining development funds through financing. China has relatively immature financial systems
compared to developed countries. Due to restrictions imposed by China’s foreign exchange regulations, it is difficult for
foreign capital to enter China’s capital market. Because of the strict listing policies and a relatively closed financial
environment in mainland China, most small to medium sized enterprises in the development stage are unable to list on domestic
exchanges in China. Therefore, many Chinese enterprises strive to enter international capital markets through overseas listing
for equity financing. However, in China, there is a general lack of understanding of the international capital markets, as well
as a lack of professional institutions that provide overseas going public consulting services to these companies, and many of
them may not be familiar with overseas listing requirements.
We
launched our consulting services in 2015. Our aim was to assist these Chinese enterprises by filling the gaps and forming a bridge
between PRC companies and overseas markets and exchanges. We have a team of qualified and experienced personnel with legal, regulatory,
and language expertise in several overseas jurisdictions. Our services are designed to help SMEs in China achieve their goal of
becoming public companies. We create a going public strategy for each client based on many factors, including our assessment of
the client’s financial and operational situations, market conditions, and the client’s business and financing requirements.
Since our inception and up to July 31, 2020, we have successfully helped seven Chinese enterprises to be quoted on the U.S. OTC
markets and are currently assisting our other clients in their respective going public efforts. All of our current and past clients
have been Chinese companies, and we plan to expand our operations to other Asian countries, such as Malaysia, Vietnam, and Singapore,
by as opportunities arises.
On
January 4, 2021, we announced the relocation of our operating headquarter to California, USA, through our wholly owned subsidiary
ATIF Inc., a California corporation, and launched, in addition to our business consulting services, additional service models
consisting of asset management, investment holding and media services to expand our business with a flexible business concept
to achieve a goal of high growth revenue and strong profit growth. Clients located within United States will be serviced by ATIF
Inc., while clients outside United States will be supported by ATIF Inc.’s business centers abroad. Huaya Consultant (Shenzhen)
Co., Ltd. (“Huaya”), a wholly owned subsidiary of ATIF, will serve as ATIF Inc.’s business center in PRC for
clients located in the PRC. As part of this relocation and to streamline the management chain and to improve management control
with a goal of lower costs, we transition the services from our variable interest entity (“VIE”), Qianhai Asia Times
(Shenzhen) International Financial Services Co., Ltd. (“Qianhai”), to ATIF Inc. and Huaya, and terminated the VIE
agreements with Qianhai on January 31, 2021. Before the termination, operating revenue generated through Qianhai VIE amounted
to $645,127, $2,777,618 and $5,341,271, and net income (loss) amounted to $(1,562,037), $697,631 and $2,146,927 for the years
ended July 31, 2020, 2019 and 2018, respectively. The termination of the Qianhai VIE agreements did not cause a material impairment
of our long-lived assets (primarily including fixed assets such as office furniture and equipment and automobile) because such
assets only amounted to $184,740 and $68,375 as of July 31, 2020 and 2019, respectively. All of the fixed assets have been transferred
to our PRC subsidiary Huaya upon termination of the VIE agreement. Currently, we have had discussions with other business organizations
to collaborate with a goal of leveraging their resources to assist us to grow our business centers in other jurisdictions. We
believe that this streamlined management model and strategic partnership strategy is in line with the current fast-changing and
competitive business environment and will provide us with strong growth capability. The termination of the VIE agreement with
Qianhai does not adversely affect Huaya, our business, financial condition, and results of operations.
Due
to the continued impact of COVID-19 in China, the Company believes that it will take longer and additional capital will be required
for traditional entertainment and cinemas businesses like LGC to recover. In light of the Company moving its headquarter to California
and transitioning to a new business model focusing on business consulting, asset management, investment holding and media services,
the Company no longer believes that its business has synergy with LGC’s cinema advertising and cinema operation business.
The Company and LGC’s management also have different views of LGC’s future business direction.
On
January 14, 2021, the Company entered into the Sale and Purchase Agreement with the substantial shareholders of LGC consisting
of Jiang Bo, Jiang Tao and Wang Di (collectively the “Buyers”) to sell all interests in LGC. Pursuant to the Sales
and Purchase Agreement, the Company sold 10,217,230 ordinary shares of LGC in exchange for (i) 5,555,548 ordinary shares of the
Company owned by the Buyers, and (ii) payment by the Buyers in the amount of US$2,300,000 plus interest at an interest rate of
10% per annum on the unpaid amount if the principal amount of US$2,300,000 is not paid by January 14, 2022. All principal and
accrued and unpaid interest shall be due on January 14, 2023. As of the date of this prospectus, the 5,555,548 shares of ordinary
shares owned by the Buyers have been returned to the Company and the $2.3 million cash payment has not yet been received from
the Buyers. The Company recognized an estimated loss of approximately $6.1 million from this transaction, which were reflected
in the pro forma financial information as included in the Company’s form 6-K as filed with SEC on February 4, 2021. After
completion of the transaction, the Company shall no longer hold any shares of LGC and LGC shall no longer be subsidiary of ATIF.
The Sales and Purchase Agreement closed on January 29, 2021.
Corporate
Information
Our
principal executive offices are located at Room 2803, Dachong Business Centre, Dachong 1st Road, Nanshan District, Shenzhen, China.
Our telephone number at this address is +86-0755-8695-0818. We maintain a website at www.atifchina.com. Our website or any other
website does not constitute a part of this prospectus.
THE
OFFERING
Ordinary
Shares Offered by Us
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______
Ordinary Shares.
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Offering
Price
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$_____ per Ordinary
Share.
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Ordinary
Shares to be Outstanding Immediately After this Offering (1)
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_________ Ordinary
Shares assuming the sale of all of the Ordinary Shares offered in this offering but excluding the number of Ordinary Shares
issuable upon exercise of Warrants sold in this offering, and the Placement Agent Warrants to be issued to the Placement Agent.
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Warrants
Offered by Us
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Warrants to purchase
up to ______ Ordinary Shares in the aggregate. Each Ordinary Share will be accompanied by an one-half Warrant with the right
for each whole Warrant to purchase an Ordinary Share at an exercise price of ____. The Warrants will be exercisable immediately
by the holders upon issuance and have a term of ___ years from the initial exercise date.
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Use
of Proceeds
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We expect to use
the net proceeds from this offering of $______ for working capital and other general corporate purposes. See “Use of
Proceeds” on page 7 of this prospectus.
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Risk
Factors
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You should read
the “Risk Factors” sections beginning on page 4 of this prospectus and in the documents incorporated by reference
into this prospectus for a discussion of factors that you should read and consider before investing in our securities.
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Tax
Considerations
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You are urged to
consult your own tax advisers with respect to the U.S. Federal tax consequences of purchasing, owning and disposing of our
Ordinary Shares and Warrants. See “U.S. Federal Income Tax Considerations” on page 19 of this prospectus.
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Listing
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Our
Ordinary Shares are listed on The Nasdaq Capital Market under the symbol “ATIF”
There
is no established public trading market for the Warrants to be sold in this offering and the Placement Agent Warrants
and we do not expect a market to develop. In addition, we do not intend to apply for listing of the Warrants on The Nasdaq
Capital Market, any other national securities exchange or any other trading system.
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(1)
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The
number of Ordinary Shares that will be outstanding after this offering as shown above
is based on ______ Ordinary Shares outstanding as of April __, 2021 and assumes the sale
of all Ordinary Shares being offered pursuant to this prospectus and the following:
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260,000
Ordinary Shares issuable upon the exercise of warrants outstanding at an exercise price
of $6.00 per share; and
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4,739,130
Ordinary Shares issuable upon the exercise of the warrants issued to investors in a private
placement at an exercise price of $1.10 per share.
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Unless
otherwise indicated, all information in this prospectus assumes:
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no
exercise of the outstanding warrants described above; and
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no
exercise of the Warrants sold in this offering or the Placement Agents Warrants.
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RISK
FACTORS
An
investment in our Ordinary Shares involves risks. Prior to making a decision about investing in our Ordinary Shares, you should
consider carefully the following risk together with all of the other information contained or incorporated by reference in this
prospectus, including any risks in the section entitled “Risk Factors” contained in any supplements to this prospectus
and in our Annual Report on Form
20-F for the fiscal year ended July 31, 2020 and in our subsequent filings with the SEC. Each of the referenced risks and
uncertainties could adversely affect our business, operating results and financial condition, as well as adversely affect the
value of an investment in our securities. Additional risks not known to us or that we believe are immaterial may also adversely
affect our business, operating results and financial condition and the value of an investment in our securities.
If
we do not continue to satisfy the Nasdaq Capital Market continued listing requirements, our Ordinary Shares could be delisted.
The
listing of our Ordinary Shares on the Nasdaq Capital Market is contingent on our compliance with the Nasdaq Capital Market’s
conditions for continued listing. On December 16, 2020, we received notice from The Nasdaq Stock Market (“Nasdaq”)
indicating we were not in compliance with the minimum bid price requirement of $1.00 per share under the Nasdaq Listing Rules.
In addition, on December 17, 2020, we received notice from Nasdaq stating that because we had not yet filed our Annual Report
on Form 20-F for the year ended July 31, 2020 (the “Form 20-F”) by its due date, we were no longer in compliance with
Listing Rule which requires listed companies to timely file all required periodic financial reports with the Securities and Exchange
Commission. On December 31, 2020, we filed our Form 20-F with the SEC and on January 28,2021 Nasdaq provide us confirmation that
our closing bid price traded over $1.00 for ten consecutive business days. Accordingly, we are now in compliance with the Nasdaq
Listing Rules.
In
the future, should we fail to meet the Nasdaq Listing Rules, we may be subject to delisting by Nasdaq. In the event our Ordinary
Shares are no longer listed for trading on the Nasdaq Capital Markets, our trading volume and share price may decrease and we
may experience difficulties in raising capital which could materially affect our operations and financial results. Further, delisting
from the Nasdaq Capital Market could also have other negative effects, including potential loss of confidence by partners, lenders,
suppliers and employees. Finally, delisting could make it harder for us to raise capital and sell securities.
We
may lose our foreign private issuer status in the future, which could result in significant additional costs and expenses.
In
order for us to maintain our current status as a foreign private issuer, a majority of our Ordinary Shares must be either directly
or indirectly owned by non-residents of the United States, unless we also satisfy all of the additional requirements necessary
to preserve this status including (i) a majority of our Board of Directors and management are located outside the United States;
(ii) more than 50 percent of our assets are located outside the United States; and (iii) our business is administered principally
outside of the United States. We may in the future lose our foreign private issuer status if a majority of our Ordinary Shares
is held in the United States and we fail to meet the additional requirements necessary to avoid loss of foreign private issuer
status. The regulatory and compliance costs under U.S. federal securities laws as a U.S. domestic issuer may be significantly
more than the costs incurred as a foreign private issuer. If we are no longer deemed to be a foreign private issuer, we will be
required to file periodic and current reports and registration statements on U.S. domestic issuer forms with the SEC, which are
more detailed and extensive than the forms available to a foreign private issuer. In addition, we may lose the ability to rely
upon certain exemptions from the Nasdaq Capital Market’s corporate governance requirements that are available to foreign
private issuers.
The
Warrants we sold in a Private Placement Completed on November 5, 2020 contain repricing features which may have the effect of
limiting our ordinary share price and make it more expensive to raise capital in the future.
In
a November 5, 2020, private placement, we sold warrants to purchase 4,347,826 Ordinary Shares at an exercise of $1.10 per Ordinary
Share. Each warrant 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 we issue certain securities at prices below the then exercise price. Until these warrants all exercised, these
repricing exercise features may have the effect of limiting our ordinary share price and make it more expensive to raise capital
in the future.
Sales
of a significant number of our Ordinary Shares in the public market, or the perception that such sales could occur, could depress
the market price of our Ordinary Shares.
In
connection with a private placement of warrants to purchase 4,347,826 Ordinary Shares that closed on November 5, 2020, we have
filed a registration statement allowing the holders of the warrants to resale the Ordinary Shares that they may acquire upon the
exercise thereof in the public market. The exercise of the warrants and subsequent sales of those Ordinary Shares in the public
market could depress the market price of our Ordinary Shares and impair our ability to raise capital through the sale of additional
equity securities. We cannot predict the effect that future sales of our Ordinary Shares would have on the market price of our
Ordinary Shares.
If
you purchase Ordinary Shares in this offering, you will suffer immediate and substantial dilution of your investment.
Because
the public offering price per Ordinary Share in this offering exceeds the pro forma net tangible book value per share of our Ordinary
Share, you will suffer immediate and substantial dilution in the pro forma as adjusted net tangible book value of the Ordinary
Share you purchase in this offering. Therefore, if you purchase Ordinary Shares in this offering, you will pay a price per share
that substantially exceeds our pro forma as adjusted net tangible book value per share after this offering. See the section entitled
“Dilution” below for a more detailed discussion of the dilution you will incur if you participate in this offering.
The
Warrants may not have value.
The
Warrants being offered by us in this offering expire [___] years from the date of issuance. In the event that our ordinary shares
do not exceed the exercise price of the Warrants during the period when such Warrants are exercisable, such Warrants may not have
any value.
Holders
of our Warrants will have no rights as shareholders until they acquire shares of our ordinary shares, if ever.
If
you acquire the Warrants to purchase shares of our ordinary shares in this Offering, you will have no rights with respect to our
ordinary shares until you acquire such ordinary shares upon exercise of your Warrants. Upon exercise of your Warrants, you will
be entitled to exercise the rights of a holder of ordinary shares only as to matters for which the record date occurs after the
exercise date.
There
is no public market for the Warrants being offered by us in this offering and an active trading market for the Warrants is not
expected to develop.
There
is no established public trading market for the Warrants being offered in this offering, and we do not expect a market to develop.
In addition, we do not intend to apply for any listing of the Warrants offered hereby on the Nasdaq Capital Market or any other
securities exchange or nationally recognized trading system. Without an active market, the liquidity of the Warrants will be severely
limited.
CAPITALIZATION
AND INDEBTEDNESS
The
following table sets forth our cash and capitalization (including indebtedness and stockholders’ equity):
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on an actual basis
as of July 31, 2020;
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on
an adjusted basis to give effect to (i) an aggregate of 4,347,826 Ordinary Shares sold at a public offering price of $0.92
per Ordinary Share for aggregate gross proceeds of approximately $4,000,000, less commissions and estimated aggregate offering
expenses and (ii) the disposition of Leaping Group Co. Ltd. which closed on January 29, 2021; and
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on
a proforma as adjusted basis to give effect to this offering.
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The
amounts shown below are unaudited. The information in this table should be read in conjunction with and is qualified by reference
to our consolidated financial statements and notes thereto and other financial information incorporated by reference into this
prospectus.
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As at
July 31, 2020
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(Unaudited)
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Actual
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Pro
Forma
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Pro
Forma
As Adjusted
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Cash
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$
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428,258
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$
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6,709,656
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Total
Liabilities
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$
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11,167,336
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$
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2,251,354
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Shareholder’s
Equity
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Ordinary shares,
$0.001 par value, 100,000,000 shares authorized, 47,014,674 shares issued and outstanding as of July 31, 2020; 45,806,952
issued and outstanding pro forma; _______ issued and outstanding pro forma as adjusted
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$
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47,015
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45,807
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Additional paid-in
capital
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30,555,757
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28,556,973
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Statutory reserve
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355,912
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355,912
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Accumulated deficit
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(13,491,659
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)
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(19,521,702
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)
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Accumulated other
comprehensive loss
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(63,766
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)
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(148,174
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)
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Total
Stockholders’ Equity
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17,403,259
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$
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9,288,816
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Noncontrolling Interest
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17,214,483
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-
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Total
Capitalization and Indebtedness
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$
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45,785,078
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$
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11,540,170
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The
above table does not include any potential proceeds from the exercise of the Warrants being issued in this offering, the Placement
Agent Warrants, and any outstanding warrants.
USE
OF PROCEEDS
Assuming
gross proceeds of $______ from the sale of _____ Ordinary Shares, we estimate that the net proceeds from this offering, after
deducting commissions and estimated offering expenses payable by us, will be approximately $_____, excluding the proceeds, if
any, from the exercise of Warrants sold in this offering and the exercise of the Placement Agent Warrants.
We
intend to use the remaining net proceeds from this offering for:
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working capital
purposes;
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expanding existing
businesses or acquiring or investing in businesses;
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debt reduction or
debt refinancing;
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capital expenditures;
and
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other general corporate
purposes.
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Although
we intend to use the net proceeds of this offering for the foregoing purposes, the planned expenditures may change significantly
and may not be in the order of priority as indicated above. As a result, our management will have broad discretion in the allocation
of any net proceeds. Pending use of any net proceeds, we would expect to invest any proceeds in a variety of capital preservation
instruments, including short-term, investment-grade, interest-bearing instruments.
DIVIDEND
POLICY
We
do not intend to pay dividends for the foreseeable future. We currently intend to retain any future earnings to finance the operation
and expansion of our business, and we do not expect to declare or pay any dividends in the foreseeable future. As a result, you
may only receive a return on your investment in our Ordinary Shares if the market price of our Ordinary Shares increases.
DILUTION
If
you invest in our Ordinary Shares, you will experience dilution to the extent of the difference between the offering price per
share and the proforma as adjusted net tangible book value per share after giving effect to this offering.
Our
historical net tangible book value on July 31, 2020 was $461,938, or $0.0098 per Ordinary Share. “Net tangible book value”
represents our total assets minus the sum of liabilities and intangible assets. “Net tangible book value per share”
is net tangible book value divided by the total number of Ordinary Shares outstanding.
Our
pro forma net tangible book value as of July 31, 2020 was $8,958,360 or $0.1956 per share. Pro forma net tangible book value represents
the amount of our total tangible assets less total liabilities, after giving effect to (i) an aggregate of 4,347,826 Ordinary
Shares sold at a public offering price of $0.92 per Ordinary Share for aggregate gross proceeds of approximately $4,000,000, less
commissions and estimated aggregate offering expenses that occurred on November 3, 2020; and (ii) the disposition of Leaping Group
Co. Ltd. which closed on January 29, 2021. Pro forma net tangible book value per share represents our pro forma net tangible book
value divided by the total number of shares outstanding as of July 31, 2020, after giving effect to the pro forma adjustment described
above.
After
giving effect to the sale of Ordinary Shares in this offering, and after deducting the after deducting the Placement Agent commission
and our estimated offering expenses payable by us, our pro forma as adjusted net tangible book value as of July 31, 2020, would
have been $[X] or $[X] per Ordinary Share. This represents an immediate increase in the pro forma as adjusted net tangible book
value of $[X] per share to our existing shareholders and immediate dilution in net tangible book value of $[X] per share to the
investors in this offering.
Offering price per
Ordinary Share offered
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$
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Historical
net tangible book value per Ordinary Share as of July 31, 2020
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$
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0.0098
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Pro forma net tangible
book value per Ordinary Share as of July 31, 2020
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$
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0.1956
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Increase in as pro
forma as adjusted net tangible book value per share attributable to this offering
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$
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0.1858
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Pro forma as adjusted
net tangible book value per share after giving effect to this offering
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$
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Dilution
per share to new investors in this offering
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$
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The
above discussion and table are based on 47,014,674 Ordinary Shares outstanding as of July 31, 2020, and does not include:
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260,000 Ordinary
Shares issuable upon the exercise of warrants outstanding at an exercise price of $6.00 per share; and
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4,739,130
Ordinary Shares issuable upon the exercise of the warrants issued to investors in a private placement and placement agent warrants issued
in connection therewith at an exercise price of $1.10 per share.
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The
above illustration of dilution per Ordinary Share to investors participating in this offering assumes no further exercise of outstanding
options and warrants to purchase our Ordinary Shares, and no exercise of the Warrants issued to investors in this offering or
the Placement Agent Warrants. To the extent that any of our outstanding options or warrants are exercised, or we issue additional
Ordinary Shares, equity securities or convertible debt securities in the future, there may be further dilution to the new investors.
DESCRIPTION
OF OUR CAPITAL STOCK
We
are a British Virgin Islands company with limited liability and our affairs are governed by our amended and restated memorandum
and articles of association, as amended and restated from time to time, and the BVI Business Companies Act of 2004, as amended,
which is referred to as the BVI Act below and the common law of the British Virgin Islands.
We
are authorized to issue up to 100,000,000,000 shares with a par value of $0.001 each divided into Ordinary Shares and Class A
preferred shares. As of April __, 2021, there were ____ Ordinary Shares issued and outstanding. There are no Class A preferred
shares outstanding. The following are summaries of material provisions of our current amended and restated memorandum and articles
of association which are currently effective and the BVI Act insofar as they relate to the material terms of our Ordinary Shares.
You should read the forms of our current memorandum and articles of association, which was filed as an exhibit to our 2020 Form
20-F. For information on how to obtain copies of our current memorandum and articles of association, see “Where You Can
Find Additional Information.”
Ordinary
Shares
General
All
of our issued Ordinary Shares are fully paid and non-assessable. Certificates evidencing the Ordinary Shares are issued in registered
form. There are no limitations imposed by our memorandum and articles of association on the rights of non-resident or foreign
shareholders to hold or exercise voting rights on our Ordinary Shares. In addition, there are no provisions in our memorandum
and articles of association governing the ownership threshold above which shareholder ownership must be disclosed.
Under
the BVI Act, the Ordinary Shares are deemed to be issued when the name of the shareholder is entered in our register of members.
If (a) information that is required to be entered in the register of members is omitted from the register or is inaccurately
entered in the register, or (b) there is unreasonable delay in entering information in the register, a shareholder of the company,
or any person who is aggrieved by the omission, inaccuracy or delay, may apply to the British Virgin Islands Courts for an order
that the register be rectified, and the court may either refuse the application or order the rectification of the register, and
may direct the company to pay all costs of the application and any damages the applicant may have sustained.
Distributions
Shareholders
holding Ordinary Shares in the Company are entitled to receive such dividends as may be declared by our board of directors subject
to the BVI Act and the memorandum and articles of association.
Voting
rights
Any
action required or permitted to be taken by the shareholders must be effected at a duly called meeting of the shareholders entitled
to vote on such action or may be effected by a resolution of members in writing, each in accordance with the memorandum and articles
of association. At each meeting of shareholders, each shareholder who is present in person or by proxy (or, in the case of a shareholder
being a corporation, by its duly authorized representative) will have one vote for each share that such shareholder holds.
Election
of directors
BVI
law permits cumulative voting for the election of directors only if expressly authorized in the memorandum and articles of association.
There is nothing under BVI law which specifically prohibits or restricts the creation of cumulative voting rights for the election
of our directors. Our memorandum and articles of association do not provide for cumulative voting for elections of directors.
Meetings
Under
our memorandum and articles of association, a copy of the notice of any meeting of shareholders shall be given not less than seven
(7) days before the date of the proposed meeting to those persons whose names appear as shareholders in the register of members
on the date of the notice and are entitled to vote at the meeting. Our board of directors shall call a meeting of shareholders
upon the written request of shareholders holding at least 30% of our outstanding voting shares. In addition, our board of directors
may call a meeting of shareholders on its own motion. A meeting of shareholders may be called on short notice if at least 90%
of the shares entitled to vote on the matters to be considered at the meeting have agreed to short notice of the meeting, or if
all members holding shares entitled to vote on all or any matters to be considered at the meeting have waived notice and presence
at the meeting shall be deemed to constitute waiver for this purpose.
At
any meeting of shareholders, a quorum will be present if there are shareholders present in person or by proxy representing not
less than one-third of the issued shares entitled to vote on the resolutions to be considered at the meeting. Such quorum may
be represented by only a single shareholder or proxy. If no quorum is present within two hours of the start time of the meeting,
the meeting shall be dissolved if it was requested by shareholders. In any other case, the meeting shall be adjourned to the next
business day, and if shareholders representing not less than one-third of the votes of the Ordinary Shares or each class of shares
entitled to vote on the matters to be considered at the meeting are present within one (1) hour of the start time of the adjourned
meeting, a quorum will be present. If not, the meeting will be dissolved. No business may be transacted at any meeting of shareholders
unless a quorum is present at the commencement of business. If present, the chair of our board of directors shall be the chair
presiding at any meeting of the shareholders. If the chair of our board is not present then the members present shall choose a
shareholder to act to chair the meeting of the shareholders. If the shareholders are unable to choose a chairman for any reason,
then the person representing the greatest number of voting shares present in person or by proxy shall preside as chairman, failing
which the oldest individual member or member representative shall take the chair.
A
corporation that is a shareholder shall be deemed for the purpose of our memorandum and articles of association to be present
in person if represented by its duly authorized representative. This duly authorized representative shall be entitled to exercise
the same powers on behalf of the corporation which he represents as that corporation could exercise if it were our individual
shareholder.
Protection
of minority shareholders
British
Virgin Islands law permits a minority shareholder to commence a derivative action in our name, or an unfair prejudice claim, or
seek a restraining or compliance order, as appropriate, to challenge, for example (1) an act which is ultra vires or illegal,
(2) an act which is likely to be oppressive, unfairly discriminatory or unfairly prejudicial to a shareholder, (3) an act which
constitutes an infringement of individual rights of shareholders, such as the right to vote, (4) conduct of the Company or a director
which contravenes the BVI Act or our memorandum and articles of association or (5) an irregularity in the passing of a resolution
which requires a majority of the shareholders.
Pre-emptive
rights
Our
memorandum and articles of association disapply the pre-emptive rights provisions of the BVI Act and do not provide for any other
pre-emptive rights. Accordingly, there are no pre-emptive rights applicable to the issue by us of new shares.
Transfer
of shares
Subject
to the restrictions in our memorandum and articles of association, and applicable securities laws, any of our shareholders may
transfer all or any of his or her shares by an instrument of transfer in the usual or common form, in the case of listed shares,
in any manner permitted by and in accordance with the rules of the relevant exchange, or in any other form which our directors
may approve.
Liquidation
As
permitted by the BVI Act and our memorandum and articles of association, we may be voluntarily liquidated under Part XII of the
BVI Act by resolution of directors and resolution of shareholders if our assets exceed our liabilities and we are able to pay
our debts as they fall due. We also may be wound up in circumstances where we are insolvent in accordance with the terms of the
BVI Insolvency Act, 2003 (as amended).
If
we are wound up and the assets available for distribution among our shareholders are more than sufficient to repay all amounts
paid to us on account of the issue of shares immediately prior to the winding up, the excess shall be distributable pari passu
among the shareholders. If we are wound up and the assets available for distribution among the shareholders as such are insufficient
to repay the whole of the amounts paid to us on account of the issue of shares, those assets shall be distributed in proportion
to the amounts paid up immediately prior to the winding up on the shares held by them, respectively. If we are wound up, the liquidator
appointed by us may, in accordance with the BVI Act, divide among our shareholders in specie or kind the whole or any part of
our assets (whether they shall consist of property of the same kind or not) and may, for such purpose, set such value as the liquidator
deems fair upon any property to be divided and may determine how such division shall be carried out as between the shareholders
or different classes of shareholders.
Calls
on Ordinary Shares and forfeiture of Ordinary Shares
Our
board of directors may, on the terms established at the time of the issuance of such Ordinary Shares or as otherwise agreed, make
calls upon shareholders for any amounts unpaid on their Ordinary Shares in a notice served to such shareholders at least fourteen
(14) days prior to the specified time of payment. The Ordinary Shares that have been called upon and remain unpaid are subject
to forfeiture.
Redemption
of shares
Subject
to the provisions of the BVI Act, we may issue Ordinary Shares on terms that are subject to redemption, at our option or at the
option of the holders, on such terms and in such manner as may be determined by our memorandum and articles of association and
subject to any applicable requirements imposed from time to time by, the BVI Act, the SEC, the NASDAQ Capital Market, or by any
recognized stock exchange on which our securities may be listed.
Modifications
of class rights
If
at any time, the Company is authorized to issue more than one (1) class of Ordinary Shares, all or any of the rights attached
to any class of Ordinary Shares may be amended only with the consent in writing of or by a resolution passed at a meeting of not
less than fifty percent (50%) of the shares of the class to be affected.
Changes
in the number of Ordinary Shares we are authorized to issue and those in issue
We
may from time to time by resolution of our board of directors, subject to our memorandum and articles of association:
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amend our memorandum
and articles of association to increase or decrease the maximum number of Ordinary Shares we are authorized to issue;
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divide our authorized
and issued Ordinary Shares into a larger number of shares;
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combine our authorized
and issued Ordinary Shares into a smaller number of shares; and
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create new classes
of shares with preferences to be determined by resolution of the board of directors to amend the memorandum and articles of
association to create new classes of shares with such preferences at the time of authorization.
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Inspection
of books and records
Under
the BVI Act, members of the general public, on payment of a nominal fee, can obtain copies of the public records of a company
available at the office of the Registrar of Corporate Affairs which will include the company’s certificate of incorporation,
its memorandum and articles of association (with any amendments) and records of license fees paid to date and will also disclose
any liquidation plan, articles of merger or consolidation and any particulars of charges if either the company or chargee have
elected to file particulars of such charges.
A
member of the Company is also entitled, upon giving written notice to us, to inspect (i) our memorandum and articles of association,
(ii) the register of members, (iii) the register of directors, and (iv) minutes of meetings and resolutions of members and of
those classes of members of which that member is a member, and to make copies and take extracts from the documents and records
referred to in (i) to (iv) above. However, our directors may, if they are satisfied that it would be contrary to the company’s
interests to allow a member to inspect any document, or part of a document specified in (ii) to (iv) above, refuse to permit the
member to inspect the document or limit the inspection of the document, including limiting the making of copies or the taking
of extracts or records. See “Where You Can Find More Information.” Where a company fails or refuses to permit a member
to inspect a document or permits a member to inspect a document subject to limitations, that member may apply to the BVI court
for an order that he should be permitted to inspect the document or to inspect the document without limitation.
Rights
of non-resident or foreign shareholders
There
are no limitations imposed by our memorandum and articles of association on the rights of non-resident or foreign shareholders
to hold or exercise voting rights on our shares. In addition, there are no provisions in our memorandum and articles of association
governing the ownership threshold above which shareholder ownership must be disclosed.
Issuance
of additional shares
Our
memorandum and articles of association authorizes our board of directors to issue additional shares from authorized but unissued
shares, to the extent available, from time to time as our board of directors shall determine.
Preferred
Shares
Our
memorandum and articles of association authorizes the creation and issuance without shareholder approval preferred shares up to
the maximum number of authorized but unissued shares, divided into a single class, Class A preferred shares, with such designation,
rights and preferences as may be determined by a resolution of our board of directors to amend the memorandum and articles of
association to create such designations, rights and preferences. Under BVI law, all shares of a single class must be issued with
the same rights and obligations. No preferred shares are currently issued or outstanding. Accordingly, our board of directors
is empowered, without shareholder approval, to issue preferred shares with dividend, liquidation, redemption, voting or other
rights, which could adversely affect the voting power or other rights of the holders of Ordinary Shares. The preferred shares
could be utilized as a method of discouraging, delaying or preventing a change in control of us. Although we do not currently
intend to issue any preferred shares, we may do so in the future.
The
rights of preferred shareholders, once the preferred shares are in issue, may only be amended by a resolution to amend our memorandum
and articles of association provided such amendment is also approved by a separate resolution of a majority of the votes of preferred
shareholders who being so entitled attend and vote at the class meeting of the relevant preferred class. If our preferred shareholders
want us to hold a meeting of preferred shareholders (or of a class of preferred shareholders), they may requisition the directors
to hold one upon the written request of preferred shareholders entitled to exercise at least thirty percent (30%) of the voting
rights in respect of the matter (or class) for which the meeting is requested. Under British Virgin Islands law, we may not increase
the required percentage to call a meeting above thirty percent (30%).
Differences
in Corporate Law
The
BVI Act and the laws of the British Virgin Islands affecting British Virgin Islands companies like us and our shareholders differ
from laws applicable to U.S. corporations and their shareholders. Set forth below is a summary of the significant differences
between the provisions of the laws of the British Virgin Islands applicable to us and the laws applicable to companies incorporated
in the United States and their shareholders.
Mergers
and similar arrangements
Under
the laws of the British Virgin Islands, two or more companies may merge or consolidate in accordance with Section 170 of the BVI
Act. A merger means the merging of two or more constituent companies into one of the constituent companies (the “surviving
company”) and a consolidation means the uniting of two or more constituent companies into a new company (the “consolidated
company”). The procedure for a merger or consolidation between the company and another company (which need not be a BVI
company, and which may be the company’s parent or subsidiary, but need not be) is set out in the BVI Act. In order to merge
or consolidate, the directors of each constituent company must approve a written plan of merger or consolidation, which with the
exception of a merger between a parent company and its subsidiary, must also be approved by a resolution of a majority of the
shareholders voting at a quorate meeting of shareholders or by written resolution of the shareholders of the BVI company or BVI
companies which are to merge. While a director may vote on the plan of merger or consolidation, or any other matter, even if he
has a financial interest in the plan, the interested director must disclose the interest to all other directors of the company
promptly upon becoming aware of the fact that he is interested in a transaction entered into or to be entered into by the company.
A transaction entered into by our company in respect of which a director is interested (including a merger or consolidation) is
voidable by us unless the director’s interest was (a) disclosed to the board prior to the transaction or (b) the transaction
is (i) between the director and the company and (ii) the transaction is in the ordinary course of the company’s business
and on usual terms and conditions. Notwithstanding the above, a transaction entered into by the company is not voidable if the
material facts of the interest are known to the shareholders and they approve or ratify it or the company received fair value
for the transaction. In any event, all shareholders must be given a copy of the plan of merger or consolidation irrespective of
whether they are entitled to vote at the meeting to approve the plan of merger or consolidation. A foreign company which is able
under the laws of its foreign jurisdiction to participate in the merger or consolidation is required by the BVI Act to comply
with the laws of that foreign jurisdiction in relation to the merger or consolidation. The shareholders of the constituent companies
are not required to receive shares of the surviving or consolidated company but may receive debt obligations or other securities
of the surviving or consolidated company, other assets, or a combination thereof. Further, some or all of the shares of a class
or series may be converted into a kind of asset while the other shares of the same class or series may receive a different kind
of asset. As such, not all the shares of a class or series must receive the same kind of consideration. After the plan of merger
or consolidation has been approved by the directors and authorized, if required, by a resolution of the shareholders, articles
of merger or consolidation are executed by each company and filed with the Registrar of Corporate Affairs in the British Virgin
Islands. The merger or consolidation is effective on the date that the articles of merger or consolidation are registered with
the Registrar or on such subsequent date, not exceeding thirty days, as is stated in the articles of merger or consolidation.
As
soon as a merger or consolidation becomes effective: (a) the surviving company or consolidated company (so far as is consistent
with its memorandum and articles of association, as amended or established by the articles of merger or consolidation) has all
rights, privileges, immunities, powers, objects and purposes of each of the constituent companies; (b) in the case of a merger,
the memorandum and articles of association of any surviving company are automatically amended to the extent, if any, that changes
to its memorandum and articles of association are contained in the articles of merger or, in the case of a consolidation, the
memorandum and articles of association filed with the articles of consolidation are the memorandum and articles of the consolidated
company; (c) assets of every description, including choses-in-action and the business of each of the constituent companies, immediately
vest in the surviving company or consolidated company; (d) the surviving company or consolidated company is liable for all claims,
debts, liabilities and obligations of each of the constituent companies; (e) no conviction, judgment, ruling, order, claim, debt,
liability or obligation due or to become due, and no cause existing, against a constituent company or against any member, director,
officer or agent thereof, is released or impaired by the merger or consolidation; and (f) no proceedings, whether civil or criminal,
pending at the time of a merger or consolidation by or against a constituent company, or against any member, director, officer
or agent thereof, are abated or discontinued by the merger or consolidation; but: (i) the proceedings may be enforced, prosecuted,
settled or compromised by or against the surviving company or consolidated company or against the member, director, officer or
agent thereof; as the case may be; or (ii) the surviving company or consolidated company may be substituted in the proceedings
for a constituent company. The Registrar of Corporate Affairs shall strike off the register of companies each constituent company
that is not the surviving company in the case of a merger and all constituent companies in the case of a consolidation. If the
directors determine it to be in the best interests of the company, it is also possible for a merger or consolidation to be approved
as a Court approved plan of arrangement or scheme of arrangement in accordance with the BVI Act.
A
shareholder may dissent from (a) a merger if the company is a constituent company, unless the company is the surviving company
and the member continues to hold the same or similar shares; (b) a consolidation if the company is a constituent company; (c)
any sale, transfer, lease, exchange or other disposition of more than fifty percent (50%) in value of the assets or business of
the company if not made in the usual or regular course of the business carried on by the company but not including: (i) a disposition
pursuant to an order of the court having jurisdiction in the matter, (ii) a disposition for money on terms requiring all or substantially
all net proceeds to be distributed to the members in accordance with their respective interest within one year after the date
of disposition, or (iii) a transfer pursuant to the power of the directors to transfer assets for the protection thereof; (d)
a compulsory redemption of ten percent (10%), or fewer of the issued shares of the company required by the holders of ninety percent
(90%), or more of the shares of the company pursuant to the terms of the BVI Act; and (e) a plan of arrangement, if permitted
by the British Virgin Islands Court (each, an Action). A shareholder properly exercising his dissent rights is entitled to a cash
payment equal to the fair value of his shares.
A
shareholder dissenting from an Action must object in writing to the Action before the vote by the shareholders on the merger or
consolidation, unless notice of the meeting was not given to the shareholder. If the merger or consolidation is approved by the
shareholders, the company must give notice of this fact to each shareholder within twenty (20) days who gave written objection.
Such objection shall include a statement that the member proposes to demand payment for his or her shares if the Action is taken.
These shareholders then have twenty (20) days to give to the company their written election in the form specified by the BVI Act
to dissent from the Action, provided that in the case of a merger, the twenty (20) days starts when the plan of merger is delivered
to the shareholder. Upon giving notice of his election to dissent, a shareholder ceases to have any shareholder rights except
the right to be paid the fair value of his shares. As such, the merger or consolidation may proceed in the ordinary course notwithstanding
his dissent. Within seven (7) days of the later of the delivery of the notice of election to dissent and the effective date of
the merger or consolidation, the company shall make a written offer to each dissenting shareholder to purchase his shares at a
specified price per share that the company determines to be the fair value of the shares. The company and the shareholder then
have thirty (30) days to agree upon the price. If the company and a shareholder fail to agree on the price within the thirty (30)
days, then the company and the shareholder shall, within twenty (20) days immediately following the expiration of the 30-day period,
each designate an appraiser and these two appraisers shall designate a third appraiser. These three appraisers shall fix the fair
value of the shares as of the close of business on the day prior to the shareholders’ approval of the transaction without
taking into account any change in value as a result of the transaction.
Shareholders’
suits
There
are both statutory and common law remedies available to our shareholders as a matter of British Virgin Islands law. These are
summarized below.
Prejudiced
members
A
shareholder who considers that the affairs of the company have been, are being, or are likely to be, conducted in a manner that
is, or any act or acts of the company have been, or are, likely to be oppressive, unfairly discriminatory or unfairly prejudicial
to him in that capacity, can apply to the court under Section 184I of the BVI Act, inter alia, for an order that his shares be
acquired, that he be provided compensation, that the Court regulate the future conduct of the company, or that any decision of
the company which contravenes the BVI Act or our memorandum and articles of association be set aside.
Derivative
actions
Section
184C of the BVI Act provides that a shareholder of a company may, with the leave of the Court, bring an action in the name of
the company in certain circumstances to redress any wrong done to it. Such actions are known as derivative actions. The BVI Court
may only grant permission to bring a derivative action where the following circumstances apply:
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the company does
not intend to bring, diligently continue or defend or discontinue proceedings; and
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it is in the interests
of the company that the conduct of the proceedings not be left to the directors or to the determination of the shareholders
as a whole.
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When
considering whether to grant leave, the British Virgin Islands Court is also required to have regard to the following matters:
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whether the shareholder
is acting in good faith;
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whether a derivative
action is in the company’s best interests, taking into account the directors’ views on commercial matters;
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whether the action
is likely to proceed;
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the costs of the
proceedings; and
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whether an alternative
remedy is available.
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Restraining
or compliance order
If
a BVI company or a director of a BVI company engages in, proposes to engage in or has engaged in, conduct that contravenes the
BVI Act or the memorandum or articles of the company, the Court may, on the application of a shareholder of the company pursuant
to Section 184B of the BVI Act, make an order directing the company or director to comply with, or restraining the company or
director from engaging in conduct that contravenes, the BVI Act or the company’s memorandum or articles.
Just
and equitable winding up
In
addition to the statutory remedies outlined above, shareholders can also petition the BVI Court for the winding up of a company
under the BVI Insolvency Act, 2003 (as amended), for the appointment of a liquidator to liquidate the company and the court may
appoint a liquidator for the company if it is of the opinion that it is just and equitable for the court to so order. Save in
exceptional circumstances, this remedy is generally only available where the company has been operated as a quasi-partnership
and trust and confidence between the partners has broken down.
Indemnification
of directors and executive officers and limitation of liability
Our
memorandum and articles of association provide that, subject to certain limitations, we indemnify against all expenses, including
legal fees, and against all judgments, fines and amounts paid in settlement and reasonably incurred in connection with legal,
administrative or investigative proceedings for any person who:
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is or was a party
or is threatened to be made a party to any threatened, pending or completed proceedings, whether civil, criminal, administrative
or investigative, by reason of the fact that the person is or was our director; or
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is or was, at our
request, serving as a director or officer of, or in any other capacity is or was acting for, another body corporate or a partnership,
joint venture, trust or other enterprise
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These
indemnities only apply if the person acted honestly and in good faith with a view to our best interests and, in the case of criminal
proceedings, the person had no reasonable cause to believe that his conduct was unlawful. The decision of the directors as to
whether the person acted honestly and in good faith and with a view to the best interests of the company and as to whether the
person had no reasonable cause to believe that his conduct was unlawful and is, in the absence of fraud, sufficient for the purposes
of the memorandum and articles of association, unless a question of law is involved. The termination of any proceedings by any
judgment, order, settlement, conviction or the entering of a nolle prosequi does not, by itself, create a presumption that the
person did not act honestly and in good faith and with a view to the best interests of the company or that the person had reasonable
cause to believe that his conduct was unlawful.
This
standard of conduct is generally the same as permitted under the Delaware General Corporation Law for a Delaware corporation.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers or persons
controlling us under the foregoing provisions, we have been advised that in the opinion of the SEC, such indemnification is against
public policy as expressed in the Securities Act and is therefore unenforceable.
Anti-takeover
provisions in our Memorandum and Articles of Association
Some
provisions of our articles of association may discourage, delay or prevent a change in control of our company or management that
shareholders may consider favorable. Under the BVI Act there are no provisions, which specifically prevent the issuance of preferred
shares or any such other ‘poison pill’ measures. The memorandum and articles of association of the company also do
not contain any express prohibitions on the issuance of any preferred shares. Therefore, the directors without the approval of
the holders of Ordinary Shares may issue preferred shares that have characteristics that may be deemed to be anti-takeover. Additionally,
such a designation of shares may be used in connection with plans that are poison pill plans. However, under British Virgin Islands
law, our directors, in the exercise of their powers granted to them under our memorandum and articles of association and performance
of their duties, are required to act honestly and in good faith in what the director believes to be in the best interests of our
company.
Directors’
fiduciary duties
Under
Delaware corporate law, a director of a Delaware corporation has a fiduciary duty to the corporation and its shareholders. This
duty has two components: the duty of care and the duty of loyalty. The duty of care requires that a director act in good faith,
with the care that an ordinarily prudent person would exercise under similar circumstances. Under this duty, a director must inform
himself of, and disclose to shareholders, all material information reasonably available regarding a significant transaction.
The
duty of loyalty requires that a director act in a manner he reasonably believes to be in the best interests of the corporation.
He must not use his corporate position for personal gain or advantage. This duty prohibits self-dealing by a director and mandates
that the best interest of the corporation and its shareholders take precedence over any interest possessed by a director, officer
or controlling shareholder and not shared by the shareholders generally. In general, actions of a director are presumed to have
been made on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the
corporation. However, this presumption may be rebutted by evidence of a breach of one of the fiduciary duties. Should such evidence
be presented concerning a transaction by a director, a director must prove the procedural fairness of the transaction and that
the transaction was of fair value to the corporation.
Under
British Virgin Islands law, our directors owe fiduciary duties to the company both at common law and under statute including,
among others, a statutory duty to act honestly, in good faith, for a proper purpose and with a view to what the directors believe
to be in the best interests of the company. Our directors are also required, when exercising powers or performing duties as a
director, to exercise the care, diligence and skill that a reasonable director would exercise in comparable circumstances, taking
into account without limitation, the nature of the company, the nature of the decision and the position of the director and the
nature of the responsibilities undertaken. In the exercise of their powers, our directors must ensure neither they nor the company
acts in a manner which contravenes the BVI Act or our memorandum and articles of association. The directors owe their duties to
the company itself as distinct body rather than to the shareholders of the company (either collectively or individually) so, where
there has been a breach of fiduciary duty by a director, it would typically be for the company to raise proceedings against the
director for the breach. Only in special circumstances would the directors of a company become subject to a fiduciary duty to
the shareholders of the company such that a shareholder would be able to raise proceedings against the director.
Pursuant
to the BVI Act and our memorandum and articles of association, a director of a company who has an interest in a transaction and
who has declared such interest to the other directors, may:
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vote on a matter
relating to the transaction;
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(b)
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attend a meeting
of directors at which a matter relating to the transaction arises and be included among the directors present at the meeting
for the purposes of a quorum; and
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(c)
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sign a document
on behalf of the Company, or do any other thing in his capacity as a director, that relates to the transaction.
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Shareholder
action by written consent
Under
the Delaware General Corporation Law, a corporation may eliminate the right of shareholders to act by written consent by amendment
to its certificate of incorporation. British Virgin Islands law provides that, subject to the memorandum and articles of association
of a company, an action that may be taken by members of the company at a meeting may also be taken by a resolution of members
consented to in writing.
Shareholder
proposals
Under
the Delaware General Corporation Law, a shareholder has the right to put any proposal before the annual meeting of shareholders,
provided it complies with the notice provisions in the governing documents. A special meeting may be called by the board of directors
or any other person authorized to do so in the governing documents, but shareholders may be precluded from calling special meetings.
British Virgin Islands law and memorandum and articles of association allow our shareholders holding thirty percent (30%) or more
of the votes of the outstanding voting shares to requisition a shareholders’ meeting. There is no requirement under BVI
law to hold shareholders’ annual general meetings, but our memorandum and articles of association do permit the directors
to call such a meeting. The location of any shareholders’ meeting can be determined by the board of directors and can be
held anywhere in the world.
Cumulative
voting
Under
the Delaware General Corporation Law, cumulative voting for elections of directors is not permitted unless the corporation’s
certificate of incorporation specifically provides for it. Cumulative voting potentially facilitates the representation of minority
shareholders on a board of directors since it permits the minority shareholder to cast all the votes to which the shareholder
is entitled on a single director, which increases the shareholder’s voting power with respect to electing such director.
As permitted under British Virgin Islands law, our memorandum and articles of association do not provide for cumulative voting.
As a result, our shareholders are not afforded any less protections or rights on this issue than shareholders of a Delaware corporation.
Removal
of directors
Under
the Delaware General Corporation Law, a director of a corporation with a classified board may be removed only for cause with the
approval of a majority of the outstanding shares entitled to vote, unless the certificate of incorporation provides otherwise.
Under our memorandum and articles of association, directors can be removed from office, with or without cause, by a resolution
of shareholders. Directors can also be removed by a resolution of directors passed at a meeting of directors called for the purpose
of removing the director or for purposes including the removal of the director.
Transactions
with interested shareholders
The
Delaware General Corporation Law contains a business combination statute applicable to Delaware public corporations whereby, unless
the corporation has specifically elected not to be governed by such statute by amendment to its certificate of incorporation,
it is prohibited from engaging in certain business combinations with an “interested shareholder” for three (3) years
following the date that such person becomes an interested shareholder. An interested shareholder generally is a person or group
who or which owns or owned fifteen percent (15%) or more of the target’s outstanding voting shares within the past three
(3) years. This has the effect of limiting the ability of a potential acquirer to make a two-tiered bid for the target in which
all shareholders would not be treated equally. The statute does not apply if, among other things, prior to the date on which such
shareholder becomes an interested shareholder, the board of directors approves either the business combination or the transaction
which resulted in the person becoming an interested shareholder. This encourages any potential acquirer of a Delaware public corporation
to negotiate the terms of any acquisition transaction with the target’s board of directors. British Virgin Islands law has
no comparable statute and our memorandum and articles of association fails to expressly provide for the same protection afforded
by the Delaware business combination statute.
Dissolution;
Winding Up
Under
the Delaware General Corporation Law, unless the board of directors approves the proposal to dissolve, dissolution must be approved
by shareholders holding one hundred percent (100%) of the total voting power of the corporation. Only if the dissolution is initiated
by the board of directors may it be approved by a simple majority of the corporation’s outstanding shares. Delaware law
allows a Delaware corporation to include in its certificate of incorporation a supermajority voting requirement in connection
with dissolutions initiated by the board. Under the BVI Act and our memorandum and articles of association, we may appoint a voluntary
liquidator by a resolution of the shareholders or a resolution of the directors, provided that the directors have made a declaration
of solvency that the company is able to discharge its debts as they fall due and that the value of the company’s assets
exceed its liabilities.
Variation
of rights of shares
Under
the Delaware General Corporation Law, a corporation may vary the rights of a class of shares with the approval of a majority of
the outstanding shares of such class, unless the certificate of incorporation provides otherwise. Under our memorandum and articles
of association, if at any time our shares are divided into different classes of shares, the rights attached to any class may only
be varied, whether or not our company is in liquidation, with the consent in writing of or by a resolution passed at a meeting
by a majority of the votes cast by those entitled to vote at a meeting of the holders of the issued shares in that class. For
these purposes the creation, designation or issue of preferred shares with rights and privileges ranking in priority to an existing
class of shares is deemed not to be a variation of the rights of such existing class and may in accordance with our memorandum
and articles of association be effected by resolution of directors without shareholder approval.
Amendment
of governing documents
Under
the Delaware General Corporation Law, a corporation’s governing documents may be amended with the approval of a majority
of the outstanding shares entitled to vote, unless the certificate of incorporation provides otherwise. As permitted by British
Virgin Islands law, our memorandum and articles of association may be amended by a resolution of shareholders and, subject to
certain exceptions, by a resolution of directors. An amendment is effective from the date it is registered at the Registry of
Corporate Affairs in the British Virgin Islands.
Anti-Money
Laundering Laws
In
order to comply with legislation or regulations aimed at the prevention of money laundering we are required to adopt and maintain
anti-money laundering procedures, and may require subscribers to provide evidence to verify their identity. Where permitted, and
subject to certain conditions, we also may delegate the maintenance of our anti-money laundering procedures (including the acquisition
of due diligence information) to a suitable person.
We
reserve the right to request such information as is necessary to verify the identity of a subscriber. In the event of delay or
failure on the part of the subscriber in producing any information required for verification purposes, we may refuse to accept
the application, in which case any funds received will be returned without interest to the account from which they were originally
debited.
If
any person resident in the British Virgin Islands knows or suspects that another person is engaged in money laundering or terrorist
financing and the information for that knowledge or suspicion came to their attention in the course of their business the person
will be required to report his belief or suspicion to the Financial Investigation Agency of the British Virgin Islands, pursuant
to the Proceeds of Criminal Conduct Act 1997 (as amended). Such a report shall not be treated as a breach of confidence or of
any restriction upon the disclosure of information imposed by any enactment or otherwise.
Warrants
Each
Ordinary Share sold in this offering will be accompanied by an one-half Warrant with each whole Warrant exercisable to purchase
one Ordinary Share at an initial exercise price of $___ per share. Each Warrant will be exercisable immediately upon issuance
and will have a term of [___] years from the date of issuance. The exercise price and the number of ordinary 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 our ordinary shares, as described in the Warrants. In addition, the Warrant exercise price
may be subject to adjustment in the event that we issue certain securities at a price below the then Warrant exercise price.
Holders
of the Warrants may exercise their Warrants to purchase our Ordinary Shares at any time prior to the expiration date. Subject
to limited exceptions, a holder of Warrants will not have the right to exercise any portion of its Warrants if the holder, together
with its affiliates and any other persons acting as a group together with the holder and any of the holder’s affiliates,
would beneficially own in excess of 4.99% (or 9.99% at the election of the holder prior to issuance) of the number of our Ordinary
Shares outstanding immediately after giving effect to such exercise, provided that the holder may increase or decrease the beneficial
ownership limitation (but in no event shall such limitation exceed 9.99%). Any increase in the beneficial ownership limitation
will not be effective until 61 days following notice of such change to us. If at the time of the exercise of a Warrant a registration
statement and current prospectus covering the resale by the holder of the Ordinary Shares issuable upon exercise of the Warrant
is not available, the holder may exercise its Warrant in whole or in part on a cashless basis.
If,
at any time while the Warrants are outstanding, we issue rights, options or warrants to all holders of our Ordinary Shares entitling
them to purchase our ordinary shares, then the holders of the Warrants will be entitled to acquire those rights, options and warrants
on the basis of the number of Ordinary Shares acquirable upon complete exercise of the then outstanding Warrants.
If,
at any time while the Warrants are outstanding, we make a dividend or distribution of assets or rights to acquire assets to all
holders of our Ordinary Shares, the holders of the Warrants will be entitled to participate in the dividend or distribution of
assets or rights to acquire assets on the basis of the number of ordinary shares acquirable upon complete exercise of the then
outstanding Warrants.
Subject
to any beneficial ownership limitations, at any time the VWAP of our Ordinary Shares listed exceeds $___ per share (as adjusted
for share splits, share dividends, recapitalizations and similar events) for ten (10) consecutive trading days and no Equity Conditions
Failure (as defined in the Warrant) then exists, the Company shall have the right to require the holder to exercise Warrants equal
to the lesser of (i) the aggregate number of Ordinary Shares subject to Warrants then permitted to be issued to the holder subject
to any beneficial limitation, and (ii) the number of Ordinary Shares subject to Warrants then in effect.
Except
as otherwise provided in the Warrants or by virtue of such holder’s ownership of our Ordinary Shares, the holders of Warrants
do not have the rights or privileges of holders of our Ordinary Shares, including any voting rights, until they exercise their
Warrants.
TAXATION
The
following brief description sets forth the material U.S. federal income tax consequences related to the ownership and disposition
of our Ordinary Shares and Warrants and applies only to U.S. Holders (defined below) that hold Ordinary Shares and Warrants as
capital assets and that have the U.S. dollar as their functional currency. This description does not deal with all possible tax
consequences relating to ownership and disposition of our Ordinary Shares and Warrants or U.S. tax laws, other than the U.S. federal
income tax laws, such as the tax consequences under non-U.S. tax laws, state, local and other tax laws. This brief description
is based on the federal income tax laws of the United States in effect as of the date of this prospectus and on U.S. Treasury
regulations in effect or, in some cases, proposed, as of the date of this prospectus, as well as judicial and administrative interpretations
thereof available on or before such date. All of the foregoing authorities are subject to change, which change could apply retroactively
and could affect the tax consequences described below.
The
brief description below of the U.S. federal income tax consequences to “U.S. Holders” will apply to you if you are
a beneficial owner of an Ordinary Share and you are, for U.S. federal income tax purposes,
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an individual who
is a citizen or resident of the United States;
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a corporation (or
other entity taxable as a corporation for U.S. federal income tax purposes) organized under the laws of the United States,
any state thereof or the District of Columbia;
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an estate whose
income is subject to U.S. federal income taxation regardless of its source; or
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a trust that (1)
is subject to the primary supervision of a court within the United States and the control of one or more U.S. persons for
all substantial decisions or (2) has a valid election in effect under applicable U.S. Treasury regulations to be treated as
a U.S. person.
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Investors
are urged to consult their own tax advisors about the application of the U.S. federal income tax rules to their particular circumstances
as well as the state, local, foreign, and other tax consequences to them of the purchase, ownership, and disposition of our Ordinary
Shares.
The
following does not address the tax consequences to any particular investor or to persons in special tax situations such as:
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financial institutions;
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regulated investment
companies;
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consulting investment
trusts;
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persons that elect
to mark their securities to market;
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U.S. expatriates
or former long-term residents of the U.S.;
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governments or agencies
or instrumentalities thereof;
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persons liable for
alternative minimum tax;
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persons holding
our Ordinary Shares as part of a straddle, hedging, conversion or integrated transaction;
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persons that actually
or constructively own 10% or more of our voting power or value (including by reason of owning our Ordinary Shares);
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persons who acquired
our Ordinary Shares pursuant to the exercise of any employee share option or otherwise as compensation; or
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persons holding
our Ordinary Shares through partnerships or other pass-through entities.
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Taxation
of Dividends and Other Distributions on our Ordinary Shares
Subject
to the passive foreign investment company (“PFIC”) rules discussed below, the gross amount of distributions made by
us to you with respect to the Ordinary Shares (including the amount of any taxes withheld therefrom) will generally be includable
in your gross income as dividend income on the date of receipt by you, but only to the extent that the distribution is paid out
of our current or accumulated earnings and profits (as determined under U.S. federal income tax principles). With respect to corporate
U.S. Holders, the dividends will not be eligible for the dividends-received deduction allowed to corporations in respect of dividends
received from other U.S. corporations.
With
respect to non-corporate U.S. Holders, including individual U.S. Holders, dividends will be taxed at the lower capital gains rate
applicable to qualified dividend income, provided that (1) the Ordinary Shares are readily tradable on an established securities
market in the United States, or we are eligible for the benefits of an approved qualifying income tax treaty with the United States
that includes an exchange of information program, (2) we are not a passive foreign investment company (as discussed below) for
either our taxable year in which the dividend is paid or the preceding taxable year, and (3) certain holding period requirements
are met. Because there is no income tax treaty between the United States and the British Virgin Islands, clause (1) above can
be satisfied only if the Ordinary Shares are readily tradable on an established securities market in the United States. Under
U.S. Internal Revenue Service authority, Ordinary Shares are considered for purpose of clause (1) above to be readily tradable
on an established securities market in the United States if they are listed on the Nasdaq Capital Market. You are urged to consult
your tax advisors regarding the availability of the lower rate for dividends paid with respect to our Ordinary Shares, including
the effects of any change in law after the date of this prospectus.
Dividends
will constitute foreign source income for foreign tax credit limitation purposes. If the dividends are taxed as qualified dividend
income (as discussed above), the amount of the dividend taken into account for purposes of calculating the foreign tax credit
limitation will be limited to the gross amount of the dividend, multiplied by the reduced rate divided by the highest rate of
tax normally applicable to dividends. The limitation on foreign taxes eligible for credit is calculated separately with respect
to specific classes of income. For this purpose, dividends distributed by us with respect to our Ordinary Shares will constitute
“passive category income” but could, in the case of certain U.S. Holders, constitute “general category income.”
To
the extent that the amount of the distribution exceeds our current and accumulated earnings and profits (as determined under U.S.
federal income tax principles), it will be treated first as a tax-free return of your tax basis in your Ordinary Shares, and to
the extent the amount of the distribution exceeds your tax basis, the excess will be taxed as capital gain. We do not intend to
calculate our earnings and profits under U.S. federal income tax principles. Therefore, a U.S. Holder should expect that a distribution
will be treated as a dividend even if that distribution would otherwise be treated as a non-taxable return of capital or as capital
gain under the rules described above.
Taxation
of Dispositions of Ordinary Shares
Subject
to the passive foreign investment company rules discussed below, you will recognize taxable gain or loss on any sale, exchange,
or other taxable disposition of a share equal to the difference between the amount realized (in U.S. dollars) for the share and
your tax basis (in U.S. dollars) in the Ordinary Shares. The gain or loss will be capital gain or loss. If you are a non-corporate
U.S. Holder, including an individual U.S. Holder, who has held the Ordinary Shares for more than one year, you will generally
be eligible for reduced tax rates. The deductibility of capital losses is subject to limitations. Any such gain or loss that you
recognize will generally be treated as United States source income or loss for foreign tax credit limitation purposes which will
generally limit the availability of foreign tax credits.
Medicare
Tax
Certain
U.S. Holders that are individuals, estates or trusts and whose income exceeds certain thresholds generally are subject to a 3.8%
tax on all or a portion of their net investment income, which may include their gross dividend income and net gains from the disposition
of our Ordinary Shares.
Disposition
of Warrants
Subject
to the PFIC rules discussed below (see “Passive Foreign Investment Company (“PFIC”)), upon the sale or other
taxable disposition of a Warrant, a U.S. Holder generally will recognize capital gain or loss in an amount equal to the difference
between the amount of cash plus the fair market value of any property received and such U.S. Holder’s tax basis in the Warrant
sold or otherwise disposed of. Such capital gain or loss will be long-term capital gain or loss if, at the time of the sale or
other taxable disposition, the U.S. Holder’s holding period for the Warrant is more than one year. Preferential tax rates
apply to long-term capital gains of non-corporate U.S. Holders. There are currently no preferential tax rates for long-term capital
gains of a U.S. Holder that is taxable as a corporation for U.S. federal income tax purposes. Deductions for capital losses are
subject to significant limitations under the Code.
Expiration
of Warrants Without Exercise
Subject
to the PFIC rules discussed below, upon the lapse or expiration of a Warrant, a U.S. Holder will recognize a loss in an amount
equal to such U.S. Holder’s tax basis in the Warrant. Any such loss generally will be a capital loss and will be a long-term
capital loss if, at the time of the lapse or expiration, the U.S. Holder’s holding period for the warrant is more than one
year. Deductions for capital losses are subject to significant limitations under the Code.
Adjustments
to the Warrants
The
Warrant provides for an adjustment to the number of Ordinary Shares for which a warrant may be exercised or to the exercise price
of a warrant upon certain events. Subject to the PFIC rules discussed below, an adjustment that has the effect of preventing dilution
of the interest of the Warrant holders generally will not be taxable to a U.S. Holder. However, an adjustment may be treated as
a constructive distribution to a U.S. Holder if and to the extent that such adjustment has the effect of increasing such U.S.
Holder’s proportionate interest in our assets or earnings and profits. Subject to the PFIC rules discussed below, any such
constructive distribution would be taxable under the rules described above under the heading “Taxation of Dividends and
Other Distributions on our Ordinary Shares”.
Passive
Foreign Investment Company (“PFIC”)
A
non-U.S. corporation is considered a PFIC, as defined in Section 1297(a) of the US Internal Revenue Code, for any taxable year
if either:
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at least 75% of
its gross income for such taxable year is passive income; or
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at least 50% of
the value of its assets (based on an average of the quarterly values of the assets during a taxable year) is attributable
to assets that produce or are held for the production of passive income (the “asset test”).
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Passive
income generally includes dividends, interest, rents and royalties (other than rents or royalties derived from the active conduct
of a trade or business) and gains from the disposition of passive assets. We will be treated as owning our proportionate share
of the assets and earning our proportionate share of the income of any other corporation in which we own, directly or indirectly,
at least 25% (by value) of the stock. In determining the value and composition of our assets for purposes of the PFIC asset test,
(1) the cash we raised in our IPO will generally be considered to be held for the production of passive income and (2) the value
of our assets must be determined based on the market value of our Ordinary Shares from time to time, which could cause the value
of our non-passive assets to be less than 50% of the value of all of our assets (including the cash raised in our IPO) on any
particular quarterly testing date for purposes of the asset test.
Based
on our operations and the composition of our assets, we do not expect to be treated as a PFIC under the current PFIC rules. However,
we must make a separate determination each year as to whether we are a PFIC, and there can be no assurance with respect to our
status as a PFIC for our current taxable year or any future taxable year. Depending on the amount of assets held for the production
of passive income, it is possible that, for our current taxable year or for any subsequent taxable year, more than 50% of our
assets may be assets held for the production of passive income. We will make this determination following the end of any particular
tax year. Although the law in this regard is unclear, we are treating Qianhai Asia Era (Shenzhen) International Financial Services
Co., Ltd. (“Qianhai”) as being owned by us for United States federal income tax purposes, not only because we control
their management decisions, but also because we are entitled to the economic benefits associated with Qianhai, and as a result,
we are treating Qianhai as our wholly-owned subsidiary for U.S. federal income tax purposes. If we are not treated as owning Qianhai
for United States federal income tax purposes, we would likely be treated as a PFIC. In addition, because the value of our assets
for purposes of the asset test will generally be determined based on the market price of our Ordinary Shares and because cash
is generally considered to be an asset held for the production of passive income, our PFIC status will depend in large part on
the market price of our Ordinary Shares. Accordingly, fluctuations in the market price of the Ordinary Shares may cause us to
become a PFIC. In addition, the application of the PFIC rules is subject to uncertainty in several respects and the composition
of our income and assets will be affected by how, and how quickly, we spend the cash we raised in our IPO. We are under no obligation
to take steps to reduce the risk of our being classified as a PFIC, and as stated above, the determination of the value of our
assets will depend upon material facts (including the market price of our Ordinary Shares from time to time) that may not be within
our control. If we are a PFIC for any year during which you hold Ordinary Shares, we will continue to be treated as a PFIC for
all succeeding years during which you hold Ordinary Shares. However, if we cease to be a PFIC and you did not previously make
a timely “mark-to-market” election as described below, you may avoid some of the adverse effects of the PFIC regime
by making a “purging election” (as described below) with respect to the Ordinary Shares.
If
we are a PFIC for your taxable year(s) during which you hold Ordinary Shares, you will be subject to special tax rules with respect
to any “excess distribution” that you receive and any gain you realize from a sale or other disposition (including
a pledge) of the Ordinary Shares, unless you make a “mark-to-market” election as discussed below. Distributions you
receive in a taxable year that are greater than 125% of the average annual distributions you received during the shorter of the
three preceding taxable years or your holding period for the Ordinary Shares will be treated as an excess distribution. Under
these special tax rules:
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the excess distribution
or gain will be allocated ratably over your holding period for the Ordinary Shares;
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the amount allocated
to your current taxable year, and any amount allocated to any of your taxable year(s) prior to the first taxable year in which
we were a PFIC, will be treated as ordinary income, and
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the amount allocated
to each of your other taxable year(s) will be subject to the highest tax rate in effect for that year and the interest charge
generally applicable to underpayments of tax will be imposed on the resulting tax attributable to each such year.
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The
tax liability for amounts allocated to years prior to the year of disposition or “excess distribution” cannot be offset
by any net operating losses for such years, and gains (but not losses) realized on the sale of the Ordinary Shares cannot be treated
as capital, even if you hold the Ordinary Shares as capital assets.
A
U.S. Holder of “marketable stock” (as defined below) in a PFIC may make a mark-to-market election, under Section
1296 of the US Internal Revenue Code, for such stock to elect out of the tax treatment discussed above. If you make a mark-to-market
election for first taxable year which you hold (or are deemed to hold) Ordinary Shares and for which we are determined to be a
PFIC, you will include in your income each year an amount equal to the excess, if any, of the fair market value of the Ordinary
Shares as of the close of such taxable year over your adjusted basis in such Ordinary Shares, which excess will be treated as
ordinary income and not capital gain. You are allowed an ordinary loss for the excess, if any, of the adjusted basis of the Ordinary
Shares over their fair market value as of the close of the taxable year. However, such ordinary loss is allowable only to the
extent of any net mark-to-market gains on the Ordinary Shares included in your income for prior taxable years. Amounts included
in your income under a mark-to-market election, as well as gain on the actual sale or other disposition of the Ordinary Shares,
are treated as ordinary income. Ordinary loss treatment also applies to any loss realized on the actual sale or disposition of
the Ordinary Shares, to the extent that the amount of such loss does not exceed the net mark-to-market gains previously included
for such Ordinary Shares. Your basis in the Ordinary Shares will be adjusted to reflect any such income or loss amounts. If you
make a valid mark-to-market election, the tax rules that apply to distributions by corporations which are not PFICs would apply
to distributions by us, except that the lower applicable capital gains rate for qualified dividend income discussed above under
“—Taxation of Dividends and Other Distributions on our Ordinary Shares” generally would not apply.
The
mark-to-market election is available only for “marketable stock”, which is stock that is traded in other than de minimis
quantities on at least 15 days during each calendar quarter (“regularly traded”) on a qualified exchange or other
market (as defined in applicable U.S. Treasury regulations), including the Nasdaq Capital Market. If the Ordinary Shares are regularly
traded on the Nasdaq Capital Market and if you are a holder of Ordinary Shares, the mark-to-market election would be available
to you were we to be or become a PFIC.
Alternatively,
a U.S. Holder of stock in a PFIC may make a “qualified electing fund” election, under Section 1295(b) of the US Internal
Revenue Code, with respect to such PFIC to elect out of the tax treatment discussed above. A U.S. Holder who makes a valid qualified
electing fund election with respect to a PFIC will generally include in gross income for a taxable year such holder’s pro
rata share of the corporation’s earnings and profits for the taxable year. However, the qualified electing fund election
is available only if such PFIC provides such U.S. Holder with certain information regarding its earnings and profits as required
under applicable U.S. Treasury regulations. We do not currently intend to prepare or provide the information that would enable
you to make a qualified electing fund election. If you hold Ordinary Shares in any taxable year in which we are a PFIC, you will
be required to file U.S. Internal Revenue Service Form 8621 in each such year and provide certain annual information regarding
such Ordinary Shares, including regarding distributions received on the Ordinary Shares and any gain realized on the disposition
of the Ordinary Shares.
If
you do not make a timely “mark-to-market” election (as described above), and if we were a PFIC at any time during
the period you hold our Ordinary Shares, then such Ordinary Shares will continue to be treated as stock of a PFIC with respect
to you even if we cease to be a PFIC in a future year, unless you make a “purging election” for the year we cease
to be a PFIC. A “purging election” creates a deemed sale of such Ordinary Shares at their fair market value on the
last day of the last year in which we are treated as a PFIC. The gain recognized by the purging election will be subject to the
special tax and interest charge rules treating the gain as an excess distribution, as described above. As a result of the purging
election, you will have a new basis (equal to the fair market value of the Ordinary Shares on the last day of the last year in
which we are treated as a PFIC) and holding period (which new holding period will begin the day after such last day) in your Ordinary
Shares for tax purposes.
You
are urged to consult your tax advisors regarding the application of the PFIC rules to your investment in our Ordinary Shares and
the elections discussed above.
Information
Reporting and Backup Withholding
Dividend
payments with respect to our Ordinary Shares and proceeds from the sale, exchange, or redemption of our Ordinary Shares may be
subject to information reporting to the U.S. Internal Revenue Service and possible U.S. backup withholding, under Section 3406
of the US Internal Revenue Code with, at a current flat rate of 24%. Backup withholding will not apply, however, to a U.S. Holder
who furnishes a correct taxpayer identification number and makes any other required certification on U.S. Internal Revenue Service
Form W-9 or who is otherwise exempt from backup withholding. U.S. Holders who are required to establish their exempt status generally
must provide such certification on U.S. Internal Revenue Service Form W-9. U.S. Holders are urged to consult their tax advisors
regarding the application of the U.S. information reporting and backup withholding rules.
Backup
withholding is not an additional tax. Amounts withheld as backup withholding may be credited against your U.S. federal income
tax liability, and you may obtain a refund of any excess amounts withheld under the backup withholding rules by filing the appropriate
claim for refund with the U.S. Internal Revenue Service and furnishing any required information. We do not intend to withhold
taxes for individual shareholders. However, transactions effected through certain brokers or other intermediaries may be subject
to withholding taxes (including backup withholding), and such brokers or intermediaries may be required by law to withhold such
taxes.
Under
the Hiring Incentives to Restore Employment Act of 2010, certain U.S. Holders are required to report information relating to our
Ordinary Shares, subject to certain exceptions (including an exception for Ordinary Shares held in accounts maintained by certain
financial institutions), by attaching a complete Internal Revenue Service Form 8938, Statement of Specified Foreign Financial
Assets, with their tax return for each year in which they hold Ordinary Shares.
THE
ABOVE SUMMARY IS NOT INTENDED TO CONSTITUTE A COMPLETE ANALYSIS OF ALL U.S. TAX CONSIDERATIONS APPLICABLE TO U.S. HOLDERS WITH
RESPECT TO THE OWNERSHIP, EXERCISE OR DISPOSITION OF ORDINARY SHARES. U.S. HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO
THE TAX CONSIDERATIONS APPLICABLE TO THEM IN THEIR PARTICULAR CIRCUMSTANCES.
PLAN
OF DISTRIBUTION
Engagement Letter with
FT Global Capital
We
have entered into a Engagement Letter dated March 18, 2021 with FT Global Capital, pursuant to which FT Global Capital will act as our
exclusive placement agent in connection with this offering (the “Placement Agent”).
The
Placement Agent is not purchasing any securities offered by this prospectus, nor is it required to arrange the purchase or sale
of any specific number or dollar amount of securities, but the Placement Agent has agreed to use its best efforts to arrange for
the direct sale of all of the securities in this offering pursuant to this prospectus. There is no requirement that any minimum
number of securities be sold in this offering and there can be no assurance that we will sell all or any of the securities being
offered pursuant to this prospectus supplement.
We will enter into a securities
purchase agreement (“Securities Purchase Agreement”) directly with each investor in connection with this offering and we
may not sell the entire amount, or any amount, of securities offered pursuant to this prospectus. Furthermore, pursuant to the Engagement
Letter, the Placement Agent’s obligations are subject to certain conditions, representations and warranties contained in the Engagement
Letter, such as receipt by the Placement Agent of comfort letters and legal opinions.
Until
the first anniversary of the Closing Date, neither we nor any of our subsidiaries shall, directly or indirectly, effect any issuance
of Ordinary Shares, Ordinary Share Equivalents or debt for cash consideration, Indebtedness or a combination of units hereof (a
“Subsequent Placement”) unless we offer the investors in connection with this offering the right to purchase up to
30% of the Subsequent Placement in the aggregate.
The
form of the Securities Purchase Agreement is included as an exhibit to the Registration Statement.
We
have also agreed to indemnify the investors against certain losses resulting from our breach of any of our representations, warranties,
or covenants under agreements with the purchasers as well as under certain other circumstances described in the Securities Purchase
Agreement.
In
connection with this offering, the Placement Agent may distribute this prospectus electronically.
The
Placement Agent may be deemed to be an underwriter within the meaning of Section 2(a)(11) of the Securities Act, and any fees
or commissions received by it and any profit realized on the resale of securities sold by it while acting as principal might be
deemed to be underwriting discounts or commissions under the Securities Act. As an underwriter, the Placement Agent would be required
to comply with the requirements of the Securities Act and the Exchange Act, including, without limitation, Rule 415(a)(4) under
the Securities Act and Rule 10b-5 and Regulation M under the Exchange Act. These rules and regulations may limit the timing of
purchases and sales of shares of common stock and warrants by the Placement Agent. Under these rules and regulations, the Placement
Agent: (i) may not engage in any stabilization activity in connection with our securities; and (ii) may not bid for or purchase
any of our securities or attempt to induce any person to purchase any of our securities, other than as permitted under the Exchange
Act, until it has completed their participation in the distribution.
Fees
and Expenses; Tail Financing
In consideration for the Placement
Agent services, we have agreed to pay the Placement Agent upon the closing of this offering a cash fee equal to 7.0% of the aggregate
purchase price of the Ordinary Shares and Warrants sold under this prospectus. Further, we have agreed to pay the Placement Agent’s
legal fees of approximately $30,000 in connection with the offering. In addition, we agreed to pay additional compensation to the Placement
Agent in the form of the Placement Agent Warrants to purchase that number of shares which equals 3.0% of the aggregate number of the Ordinary
Shares and Warrants sold in this offering.
Under the Engagement Letter,
the Placement Agent is also entitled to additional tail compensation for any financings consummated within the twelve (12) month period
following completion of this offering.
The
Placement Agent Warrants
The Placement Agent Warrants
which we agreed to issue to the Placement Agent upon closing of this offering Agent shall generally be on the same terms and conditions
as the investor warrants, subject to limitations set forth in FINRA Rule 5110, provided that the exercise price of the Placement Agent
Warrants shall be __% of the public offering price of the Ordinary Shares and Warrants and the term of the Placement Agent Warrants shall
expire on the fifth anniversary of the date of commencement of sales in this offering. Pursuant to FINRA Rule 5110(e), with limited exceptions,
any ordinary shares issued upon exercise of the Placement Agent Warrants shall not be sold, transferred, assigned, pledged, or hypothecated,
or be the subject of any hedging, short sale, derivative, put, or call transaction that would result in the effective economic disposition
of the securities by any person for a period of 180 days immediately following the date of effectiveness or commencement of sales of
this offering. The Placement Agent Warrants will contain similar rights as those Warrants sold in this offering.
We
have agreed to indemnify the Placement Agent and purchasers against liabilities under the Securities Act and to contribute to
payments that the Placement Agent may be required to make in respect of such liabilities.
The
following table shows the per Ordinary Share and Warrant and total placement agent fees we will pay to the Placement Agent in
connection with the sale of Ordinary Shares and Warrants offered pursuant to this prospectus assuming the purchase of all of the
Ordinary Shares and Warrants initially offered hereby:
|
|
Total
|
|
Aggregate
Offering Price of Ordinary Shares and Warrants
|
|
$
|
|
|
Placement
agent fees*
|
|
$
|
|
|
|
*
|
Does
not include any Placement Agent Warrants
|
Because
there is no minimum offering amount in this offering, the actual total placement agent fees are not presently determinable and
may be substantially less than the maximum amount set forth above.
We
estimate the total offering expenses of this offering that will be payable by us, excluding the placement agent fees, will be
approximately $____, which include legal and accounting costs and various other fees. At the closing, our transfer agent will
credit the Ordinary Shares to the respective accounts of the purchasers. We will mail the Warrants directly to the purchasers
at their respective addresses set forth in the Securities Purchase Agreement.
Lock-Up
Agreements
Our
officers, directors and principal shareholders (5% or more shareholders) have agreed, subject to certain exceptions, to a “lock-up”
period until ______, 2021 with respect to the ordinary shares that they beneficially own, including the issuance of shares upon
the exercise of convertible securities and options that are currently outstanding or which may be issued. This means that until
____, 2021, such persons may not offer, sell, pledge or otherwise dispose of these securities without the prior written consent
of the representative.
The
Placement Agent has no present intention to waive or shorten the lock-up period; however, the terms of the lock-up agreements
may be waived at its discretion. In determining whether to waive the terms of the lock-up agreements, the representative may base
its decision on its assessment of the relative strengths of the securities markets and companies similar to ours in general, and
the trading pattern of, and demand for, our securities in general. We have agreed that, without the prior written consent of the
Placement Agent and subject to certain exceptions, we will not, during the period ending 90 days after the date of this prospectus,
(i) issue, offer, pledge, sell, contract to sell, offer or issue, contract to purchase or grant any option, right or warrant to
purchase, or otherwise dispose of, any ordinary shares or any securities convertible into or exercisable or exchangeable for such
ordinary shares or enter into a transaction which would have the same effect; (ii) enter into any swap, hedge or other arrangement
that transfers to another, in whole or in part, any of the economic consequences of ownership of the ordinary shares; or (iii)
file any registration statement with the SEC relating to the offering of any ordinary shares or any securities convertible into
or exercisable or exchangeable for ordinary shares, in each case regardless of whether any such transaction described above is
to be settled by delivery of ordinary shares or such other securities, in cash or otherwise.
Each
of our directors and executive officers and current shareholders has agreed that, without the prior written consent of the Placement
Agent and subject to certain exceptions, it will not, during the period ending 90 days after the date of this prospectus, (i)
offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant
any option, right or warrant to purchase, lend or otherwise transfer or dispose of directly or indirectly, any ordinary shares
or any securities convertible into or exercisable or exchangeable for such ordinary shares, (ii) enter into a transaction which
would have the same effect or enter into any swap, hedge or other arrangement that transfers to another, in whole or in part,
any of the economic consequences of ownership of the ordinary shares or any of our securities that are substantially similar to
the ordinary shares or any options or warrants to purchase any of the ordinary shares or any securities convertible into, exchangeable
for or that represent the right to receive the ordinary shares, whether now owned or hereinafter acquired, owned directly by it
or with respect to which it has beneficial ownership within the rules and regulations of the SEC, whether any of these transaction
is to be settled by delivery of ordinary shares or such other securities, in cash or otherwise or (iii) publicly disclose the
intention to make any such offer, sale, pledge or disposition, or enter into any such transaction, swap, hedge or other arrangement.
The
restrictions described in the preceding paragraph are subject to certain exceptions, including the transfer of shares as a bona
fide gift or through will of intestacy.
Listing
Our
Ordinary Shares are listed on the Nasdaq Capital Market under the symbol “ATIF”. The Warrants will not be listed on
any exchange and we do not expect any market for the Warrants to develop. We do not intend to apply for listing the Warrants on
any securities exchange or nationally recognized trading system, and we do not expect a market to develop for Warrants.
Selling
Restrictions
No
action may be taken in any jurisdiction other than the United States that would permit a public offering of the Ordinary Shares
and Warrants or the possession, circulation or distribution of this prospectus or any other material relating to us or the ordinary
shares in any jurisdiction where action for that purpose is required. Accordingly, the securities offered by this prospectus may
not be offered or sold, directly or indirectly, nor may this prospectus or any other material or advertisements in connection
with the ordinary shares be distributed or published in or from any country or jurisdiction, except under circumstances that will
result in compliance with the applicable rules and regulations of that country or jurisdiction. Persons into whose possession
this prospectus comes are advised to inform themselves about and to observe any restrictions relating to the offering and the
distribution of this prospectus. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any
securities offered by this prospectus in any jurisdiction in which such an offer or a solicitation is unlawful.
In
addition to the public offering of the Ordinary Shares and Warrants in the United States, the Placement Agent may, subject to
applicable foreign laws, also offer the Ordinary Shares and Warrants in certain countries.
EXPENSES
RELATING TO THIS OFFERING
Set
forth below is an itemization of the total expenses, excluding commissions of the Placement Agent, that we expect to incur in
connection with this offering. With the exception of the SEC registration fee, listing fee and the FINRA filing fee, all amounts
are estimates.
SEC
Registration Fee
|
|
$
|
1,637
|
|
FINRA
Filing Fee
|
|
|
|
|
Listing
Fee
|
|
|
|
|
Printing
and Engraving Expenses
|
|
|
|
|
Legal
Fees and Expenses
|
|
|
|
|
Accounting
Fees and Expenses
|
|
|
|
|
Miscellaneous
|
|
|
|
|
Total
|
|
|
|
|
MATERIAL
CHANGES
Except
as otherwise described in our Annual
Report on Form 20-F for the fiscal year ended July 31, 2020, and in our Reports on Form 6-K filed or submitted under the Exchange
Act and incorporated by reference herein and as disclosed in this prospectus, no reportable material changes have occurred since
July 31, 2020.
LEGAL
MATTERS
Certain
legal matters related to the Ordinary Shares offered by this prospectus will be passed upon on the Company’s behalf by Ogier,
with respect to matters of British Virgin Islands law, and Lewis Brisbois Bisgaard & Smith LLP, San Francisco, California,
with respect to matters of United States law. Legal matters as to PRC law will be passed upon for us by SD & Partners, Shenzhen,
China. The Placement Agent is being represented by Schiff Hardin LLP, Washington, DC.
EXPERTS
Friedman
LLP, an independent registered public accounting firm, has audited our consolidated financial statements included in our Annual
Report on Form 20-F for the year ended July 31, 2020, which is incorporated by reference in this registration statement. The audit report of Friedman LLP on our consolidated financial statements for the year ended July 31, 2020 contained an uncertainty about our ability to continue as a going concern. Our
financial statements are incorporated by reference in reliance on Friedman LLP’s report, given on the authority of said
firm as experts in accounting and auditing.
On
March 3, 2021, the Company dismissed Friedman LLP as its auditor and effective March 3, 2021, the Company appointed ZH CPA, LLC
as successor auditor of the Company and for the fiscal year ending July 31, 2021. The audit report of Friedman LLP on the financial
statements of the Company as of and for the years ended July 31, 2019 and 2020 did not contain any adverse opinion or disclaimer
of opinion, nor was it qualified or modified as to uncertainty, audit scope, or accounting principles, except that the audit report
on the financial statements of the Company for the year ended July 31, 2020 contained an uncertainty about the Company’s
ability to continue as a going concern. There were no disagreements with Friedman LLP on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedures, from the time of Friedman LLP’s engagement up
to the date of dismissal which disagreements that, if not resolved to Friedman LLP’s satisfaction, would have caused Friedman
LLP to make reference in connection with its opinion to the subject matter of the disagreement.
In addition, the consolidated financial balance sheet of Leaping Group
Co., Ltd. and subsidiaries as of June 30, 2019 and 2018, and the related consolidated statements of income and comprehensive income, change
in shareholders’ equity, and cash flows for each of the three years then ended, and the related notes, have been audited by Friedman
LLP as stated in their report which is filed as an exhibit to this Registration Statement of which this prospectus is a part thereof.
The financial statements and schedules of Leaping Group Co., Ltd. have been incorporated herein
in reliance on the report of such firm given upon their authority as experts in accounting and auditing.
ENFORCEABILITY
OF CIVIL LIABILITIES
We
are incorporated in the British Virgin Islands to take advantage of certain benefits associated with being a British Virgin Islands
business company, such as:
|
●
|
political and economic
stability;
|
|
●
|
an effective judicial
system;
|
|
●
|
a favorable tax
system;
|
|
●
|
the absence of exchange
controls or currency restrictions; and
|
|
●
|
the availability
of professional and support services.
|
However,
certain disadvantages accompany incorporation in the British Virgin Islands. These disadvantages include, but are not limited
to:
|
●
|
the British Virgin
Islands has a less developed body of securities laws as compared to the United States and these securities laws provide significantly
less protection to investors as compared to the United States; and
|
|
●
|
British Virgin Islands
companies may not have standing to sue before the federal courts of the United States.
|
Our
memorandum and articles of association do not contain provisions requiring that disputes, including those arising under the securities
laws of the United States, between us, our officers, directors and shareholders, be arbitrated.
Substantially
all of our assets are located in the PRC. In addition, all of our directors and officers are nationals or residents of the PRC
and all or a substantial portion of their assets are located outside the United States. As a result, it may be difficult for investors
to effect service of process within the United States upon us or these persons, or to enforce against us or them judgments obtained
in United States courts, including judgments predicated upon the civil liability provisions of the securities laws of the United
States or any state in the United States.
Ogier,
our counsel with respect to the laws of BVI, and SD & Partners, our counsel with respect to PRC law, have advised us (privilege
in which advice is not waived) that there is uncertainty as to whether the courts of the BVI or the PRC would (i) recognize or
enforce judgments of United States courts obtained against us or our directors or officers predicated upon the civil liability
provisions of the securities laws of the United States or any state in the United States or (ii) entertain original actions brought
in the BVI or the PRC against us or our directors or officers predicated upon the securities laws of the United States or any
state in the United States.
There
is uncertainty with regard to British Virgin Islands law as to whether a judgment obtained from the United States courts under
civil liability provisions of the securities laws will be determined by the courts of the British Virgin Islands as penal or punitive
in nature. If such a determination is made, the courts of the British Virgin Islands are also unlikely to recognize or enforce
the judgment against a British Virgin Islands company. Because the courts of the British Virgin Islands have yet to rule on whether
such judgments are penal or punitive in nature, it is uncertain whether they would be enforceable in the British Virgin Islands.
Ogier has advised us that although there is no statutory enforcement in the British Virgin Islands of judgments obtained in the
federal or state courts of the United States, in certain circumstances a judgment obtained in such jurisdiction may be recognized
and enforced in the courts of the British Virgin Islands at common law, without any re-examination of the merits of the underlying
dispute, by an action commenced on the foreign judgment debt in the Commercial Division of the Eastern Caribbean Supreme Court
in the British Virgin Islands, provided such judgment:
|
●
|
is given by a foreign
court of competent jurisdiction;
|
|
●
|
imposes on the judgment
debtor a liability to pay a liquidated sum for which the judgment has been given;
|
|
●
|
is not in respect
of taxes, a fine, a penalty or similar fiscal or revenue obligations of the company; and
|
|
●
|
was not obtained
in a fraudulent manner and is not of a kind the enforcement of which is contrary to natural justice or the public policy of
the British Virgin Islands.
|
In
appropriate circumstances, a British Virgin Islands court may give effect in the British Virgin Islands to other kinds of final
foreign judgments such as declaratory orders, orders for performance of contracts and injunctions.
SD
& Partners has further advised us that the recognition and enforcement of foreign judgments are provided for under the PRC
Civil Procedure Law. PRC courts may recognize and enforce foreign judgments in accordance with the requirements of the PRC Civil
Procedure Law based either on treaties between China and the country where the judgment is made or on reciprocity between jurisdictions.
SD & Partners has advised us further that there are no treaties between China and the United States for the mutual recognition
and enforcement of court judgments, thus making the recognition and enforcement of a U.S. court judgment in China difficult.
WHERE
YOU CAN FIND ADDITIONAL INFORMATION
We
have filed with the SEC a registration statement on Form F-1 relating to the Ordinary Shares and Warrants underlying Ordinary
Shares covered by this prospectus. This prospectus is part of the registration statement and does not contain all the information
in the registration statement. Any statement made in this prospectus concerning a contract or other document of ours is not necessarily
complete, and you should read the documents that are filed as exhibits to the registration statement or otherwise filed with the
SEC for a more complete understanding of the document or matter. Each such statement is qualified in all respects by reference
to the document to which it refers.
We
are currently subject to periodic reporting and other informational requirements of the Exchange Act as applicable to foreign
private issuers. Accordingly, we are required to file with or furnish to the SEC reports, including our annual report on Form
20-F, report of foreign private issuer on Form 6-K and other information. All information filed with or furnished to the SEC can
be obtained over the Internet at the SEC’s website at www.sec.gov.
As
a foreign private issuer, we are exempt under the Exchange Act from, among other things, the rules prescribing the furnishing
and content of proxy statements, and our executive officers, directors and principal shareholders are exempt from the reporting
and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. In addition, we will not be required under
the Exchange Act to file periodic reports and financial statements with the SEC as frequently or as promptly as U.S. companies
whose securities are registered under the Exchange Act.
We
also maintain a website at www.ir.atifchina.com, but information contained on our website is not incorporated by reference in
this prospectus. You should not regard any information on our website as a part of this prospectus.
ATIF
HOLDINGS LIMITED
______________
Ordinary Shares
Warrants
to Purchase up to ______________Ordinary Shares
PROSPECTUS
FT
Global Capital, Inc.
The
date of this prospectus is , 2021.
PART
II
INFORMATION
NOT REQUIRED IN PROSPECTUS
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
To
the extent permitted by law, we shall indemnify each existing or former secretary, director (including alternate director), and
any of our other officers (including an investment adviser or an administrator or liquidator) and their personal representatives
against:
|
(a)
|
all actions, proceedings,
costs, charges, expenses, losses, damages or liabilities incurred or sustained by the existing or former secretary or officer
in or about the conduct of our business or affairs or in the execution or discharge of the existing or former secretary’s
or officer’s duties, powers, authorities or discretions; and
|
|
(b)
|
without limitation
to paragraph (a) above, all costs, expenses, losses or liabilities incurred by the existing or former secretary or officer
in defending (whether successfully or otherwise) any civil, criminal, administrative or investigative proceedings (whether
threatened, pending or completed) concerning us or our affairs in any court or tribunal, whether in the BVI or elsewhere.
|
These
indemnities will only apply if the person acted honestly and in good faith with a view to our best interests and, in the case
of criminal proceedings, the person had no reasonable cause to believe that his conduct was unlawful.
To
the extent permitted by law, we may make a payment, or agree to make a payment, whether by way of advance, loan or otherwise,
for any legal costs incurred by an existing or former secretary or any of our officers in respect of any matter identified in
above on condition that the secretary or officer must repay the amount paid by us to the extent that it is ultimately found not
liable to indemnify the secretary or that officer for those legal costs.
Pursuant
to indemnification agreements, the form of which will be filed as Exhibit 10.02 to this Registration Statement, we will agree
to indemnify our directors and officers against certain liabilities and expenses incurred by such persons in connection with claims
made by reason of their being such a director or officer.
Insofar
as indemnification for liabilities arising under the Securities Act of 1933, as amended may be permitted to directors, officers
or persons controlling us pursuant to the foregoing provisions, we have been informed that in the opinion of the SEC such indemnification
is against public policy as expressed in the Securities Act and is therefore unenforceable.
ITEM
7. RECENT SALES OF UNREGISTERED SECURITIES.
In
the three years preceding the filing of this registration statement, we issued the securities described below without registration
under the Securities Act. Unless otherwise indicated below, the securities were issued pursuant to the private placement exemption
provided by Section 4(a)(2) of the Securities Act and Regulation D promulgated thereunder.
In
connection with the Company’s anticipated public offering, the Company undertook a reorganization, cancelled its previously
outstanding shares and issued 50,000,000 ordinary shares as follows:
Date
|
|
Number
of shares issued
|
|
Amount Paid Per Share
|
|
Shareholders
|
|
August 23, 2018
|
|
1,000
|
|
USD0.001
|
|
Qiuli Wang
|
|
September 27, 2018
|
|
2,000
|
|
USD0.001
|
|
Ronghua Liu
|
|
September 27, 2018
|
|
25,500
|
|
USD0.001
|
|
Tianzhen Investments Limited
|
|
September 27, 2018
|
|
13,000
|
|
USD0.001
|
|
Eno Group Limited
|
|
September 27, 2018
|
|
4,000
|
|
USD0.001
|
|
Great State Investments Limited
|
|
September 27, 2018
|
|
2,100
|
|
USD0.001
|
|
Xueqing Liu
|
|
September 27, 2018
|
|
2,400
|
|
USD0.001
|
|
Renyan Ou
|
|
November 2, 2018
|
|
1,998,000
|
|
USD0.001
|
|
Ronghua Liu
|
|
November 2, 2018
|
|
26,473,500
|
|
USD0.001
|
|
Tianzhen Investments Limited
|
|
November 2, 2018
|
|
12,987,000
|
|
USD0.001
|
|
Eno Group Limited
|
|
November 2, 2018
|
|
3,996,000
|
|
USD0.001
|
|
Great State Investments Limited
|
|
November 2, 2018
|
|
2,097,900
|
|
USD0.001
|
|
Xueqing Liu
|
|
November 2, 2018
|
|
2,397,600
|
|
USD0.001
|
|
Renyan Ou
|
|
On
November 6, 2020, in a private placement, we sold to three accredited investors warrants to purchase a total of 4,347,826 Ordinary
Shares at an exercise price of $1.10 per share which are exercisable for five years from the date of issuance. We also issued
to the placement agent warrants to purchase 391,304 ordinary shares at an exercise price equal to $1.10 and are exercisable 180
days after November 3, 2020.
ITEM
8. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
|
(a)
|
Exhibits
See Exhibit Index beginning on page II-7 of this registration statement.
|
|
(b)
|
Financial Statement Schedules
|
Schedules
have been omitted because the information required to be set forth therein is not applicable or is shown in the Consolidated Financial
Statements or the Notes thereto.
ITEM
9. UNDERTAKINGS.
Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the provisions described in Item 6, or otherwise, the registrant has been advised that in the opinion
of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed
in the Securities Act and will be governed by the final adjudication of such issue.
The
undersigned registrant hereby undertakes that:
|
(1)
|
For purposes of
determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant under Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time
it was declared effective.
|
|
(2)
|
For the purpose
of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
|
|
(3)
|
For the purpose
of determining liability under the Securities Act to any purchaser, each prospectus filed pursuant to Rule 424(b) as part
of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than
prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of
the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus
that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the
registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract
of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus
that was part of the registration statement or made in any such document immediately prior to such date of first use.
|
|
(4)
|
For the purpose
of determining any liability of the registrant under the Securities Act to any purchaser in the initial distribution of the
securities, the undersigned registrant undertakes that in an offering of securities of the undersigned registrant pursuant
to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the
securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant
will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
|
|
(i)
|
Any preliminary
prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;
|
|
(ii)
|
Any free writing
prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned
registrant;
|
|
(iii)
|
The portion of any
other free writing prospectus relating to the offering containing material information about the undersigned registrant or
its securities provided by or on behalf of the undersigned registrant; and
|
|
(iv)
|
Any other communication
that is an offer in the offering made by the undersigned registrant to the purchaser.
|
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form F-1 and has duly caused this registration statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Shenzhen, People’s Republic of China, on April 27, 2021.
|
ATIF Holdings Limited
|
|
|
|
By:
|
/s/
Pishan Chi
|
|
Name:
|
Pishan Chi
|
|
|
Chief Executive Officer
|
|
|
(Principal Executive Officer)
|
|
|
|
By:
|
/s/ Fang
Cheng
|
|
Name:
|
Fang Cheng
|
|
|
Chief Financial Officer
|
|
|
(Principal Financial Officer and
Principal Accounting
Officer)
|
SIGNATURES
KNOW
ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Mr. Jun Liu and Mr. Pishan
Chi, and each of them, as his true and lawful attorneys-in-fact and agents, each with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective
amendments) to this registration statement on Form F-1 and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the United States Securities and Exchange Commission, granting unto said attorneys-in-fact and agents,
and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in
connection therewith and about the premises, as fully to all intents and purposes as each such person might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.
Pursuant
to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ Jun
Liu
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Director, Chairman and President
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April
27, 2021
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Jun Liu
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/s/ Pishan
Chi
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Director and Chief Executive Officer
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April
27, 2021
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Pishan Chi
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(Principal Executive Officer)
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/s/ Fang
Cheng
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Chief Financial Officer
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April
27, 2021
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Fang Cheng
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(Principal Financial and Accounting
Officer)
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/s/ Kwong
Sang Liu
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Director
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April
27, 2021
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Kwong Sang Liu
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/s/ Yongyuan
Chen
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Director
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April
27, 2021
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Yongyuan Chen
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/s/ Longdley
Zephirin
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Director
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April
27, 2021
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Longdley Zephirin,
(authorized representative
in the United States)
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SIGNATURE
OF AUTHORIZED U.S. REPRESENTATIVE OF THE REGISTRANT
Pursuant
to the Securities Act of 1933, as amended, the undersigned, the duly authorized representative in the United States of ATIF Holdings
Limited, has signed this registration statement or amendment thereto in Rancho Cucamonga, California, on April 27, 2021.
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By:
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/s/
Lina L. Liu
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Lina L. Liu
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EXHIBIT INDEX
Exhibit No.
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Description
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1.1
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Form of
Amended and Restated Memorandum and Articles of Association of the Registrant (incorporated herein by reference to Exhibit 3.1
to the registration statement on Form F-1 (File No. 333-228750), as amended, initially filed with the Securities
and Exchange Commission on December 11, 2018)
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2.1
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Registrant’s
Specimen Certificate for Ordinary Shares (incorporated herein by reference to Exhibit 4.1 to the registration statement
on Form F-1 (File No. 333-228750), as amended, initially filed with the Securities and Exchange Commission on December 11,
2018)
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4.1
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Agreement
of Website (CNNM) Transfer dated September 20, 2018, between ATIF HK and Shenzhen Shangyuan Electronic Commerce Ltd.
(incorporated herein by reference to Exhibit 10.1 to the registration statement on Form F-1 (File No. 333-228750),
as amended, initially filed with the Securities and Exchange Commission on December 11, 2018)
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4.2
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Voting
Right Proxy Agreement dated September 30, 2018, between Qiuli Wang and Eno Group (incorporated herein by reference to
Exhibit 10.2 to the registration statement on Form F-1 (File No. 333-228750), as amended, initially filed with
the Securities and Exchange Commission on December 11, 2018)
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4.3
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Form of
Employment Agreement by and between executive officers and the Registrant (incorporated herein by reference to Exhibit 10.3
to the registration statement on Form F-1 (File No. 333-228750), as amended, initially filed with the Securities
and Exchange Commission on December 11, 2018)
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4.4
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Form of
Indemnification Agreement between directors and the Registrant (incorporated herein by reference to Exhibit 10.4 to the
registration statement on Form F-1 (File No. 333-228750), as amended, initially filed with the Securities and Exchange
Commission on December 11, 2018)
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4.5
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Exclusive
Service Agreement dated October 9, 2018, between WFOE and VIE (incorporated herein by reference to Exhibit 10.5
to the registration statement on Form F-1 (File No. 333-228750), as amended, initially filed with the Securities
and Exchange Commission on December 11, 2018)
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4.6
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Equity
Pledge Agreement dated October 9, 2018, between WFOE, Beneficial Owners, and VIE (incorporated herein by reference to
Exhibit 10.6 to the registration statement on Form F-1 (File No. 333-228750), as amended, initially filed with
the Securities and Exchange Commission on December 11, 2018)
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4.7
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Exclusive
Call Option Agreement dated October 9, 2018, between WFOE, Beneficial Owners, and VIE (incorporated herein by reference
to Exhibit 10.7 to the registration statement on Form F-1 (File No. 333-228750), as amended, initially filed
with the Securities and Exchange Commission on December 11, 2018)
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4.8
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Shareholders’
Voting Rights Proxy Agreement dated October 9, 2018, between WFOE, Beneficial Owners, and VIE (incorporated herein by
reference to Exhibit 10.8 to the registration statement on Form F-1 (File No. 333228750), as amended, initially
filed with the Securities and Exchange Commission on December 11, 2018)
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4.9
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Equity
Transfer Agreement dated August 13, 2018, by and between WFOE and Yanru Zhou (incorporated herein by reference to Exhibit 10.10
to the registration statement on Form F-1 (File No. 333-228750), as amended, initially filed with the Securities
and Exchange Commission on December 11, 2018)
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4.10
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Equity
Transfer Agreement dated September 19, 2018, by and between WFOE and Zhuorong Cai (incorporated herein by reference to
Exhibit 10.11 to the registration statement on Form F-1 (File No. 333-228750), as amended, initially filed
with the Securities and Exchange Commission on December 11, 2018)
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4.11
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Equity
Transfer Agreement dated September 19, 2018, by and between WFOE and Zehong Lai (incorporated herein by reference to
Exhibit 10.12 to the registration statement on Form F-1 (File No. 333-228750), as amended, initially filed
with the Securities and Exchange Commission on December 11, 2018)
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4.12
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Trust
Deed dated December 11, 2017, by and between Ronghua Liu and Qiuli Wang (incorporated herein by reference to Exhibit 10.13
to the registration statement on Form F-1 (File No. 333-228750), as amended, initially filed with the Securities
and Exchange Commission on December 11, 2018)
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4.13
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Form
of Warrant (incorporated herein by reference to Exhibit 4.1 to Form 6-K filed with the Securities and Exchange Commission
on November 4, 2020)
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4.14
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Form
of Placement Agent Warrant (incorporated herein by reference to Exhibit 4.2 to Form 6-K filed with the Securities and
Exchange Commission on November 4, 2020)
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4.15
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Form
of Securities Purchase Agreement (incorporated herein by reference to Exhibit 10.1 to Form 6-K filed with the Securities
and Exchange Commission on November 4, 2020)
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4.16
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Sale and Purchase Agreement regarding issued shares of Leaping Group Co., Ltd. (incorporated herein by reference to Exhibit 99.1 to Form 6-K filed with the Securities and Exchange Commission on January 19, 2021)
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4.17*
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Form of Securities Purchase Agreement
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4.18*
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Form of Warrant
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4.19*
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Form of Placement Agent Warrant
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5.1*
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Opinion of Ogier, British Virgin Islands counsel to the Company
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23.1*
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Consent of Friedman LLP
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23.2*
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Consent of Ogier, British Virgin Islands counsel to the Company (included in Exhibit 5.1)
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23.3*
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Consent of Friedman LLP (Leaping Group Co., Ltd.)
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24.1*
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Power of Attorney (included on signature page hereof)
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99.1
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Audited Financial Statement as at June 30, 2019 and 2018 and for the three years then ended June 30, 2019 for Leaping Group Co., Ltd. (Incorporation by reference to Exhibit 99.1 to Form F-3 filed with the Securities and Exchange Commission on June 12, 2020).
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99.2
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Unaudited Condensed Consolidated Financial Statements for the six months ended December 31, 2019 for Leaping Group Co., Ltd. (Incorporation by reference to Exhibit 99.2 to Amendment No. 1 to Form F-3 filed with the Securities and Exchange Commission on September 1, 2020).
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