What changed in this filing

/stocks — the workspaceLOADING

Item 3. Legal Proceedings

2024-11-13 compared with 2023-11-13 · 86 added, 61 removed, 9 unchanged (94% of the section changed)

LEGAL PROCEEDINGS

From time to time, we may become involved in various

lawsuits and legal proceedings which arise in the ordinary course of business.

However, litigation is subject to inherent uncertainties

and an adverse result in these or other matters may arise from time to time that may harm our business.

Except for the litigation disclosed

below, we are not currently a party to any legal or arbitration proceeding the outcome of which, if ‘determined adversely to us,

would individually or in the aggregate be reasonably expected to have a material adverse effect on our business, operating results, cash

flows, or financial condition.

On May 14, 2020, Boustead filed a lawsuit against

the Company and Leaping Group Co., Ltd.

a limited liability organized under the laws of Cayman Islands (“LGC”) for breaching

the underwriting agreement Boustead had with each of the Company and LGC, in which Boustead was separately engaged as the exclusive financial

advisor to provide financial advisory services to the Company and LGC.

In April 2020, the Company acquired 51.2% equity

interest in LGC after LGC terminated its efforts to launch an IPO on its own.

Boustead alleged that the acquisition transaction between

the Company and LGC was entered into during the lockup period of the exclusive agreement between Boustead and LGC, and therefore deprived

Boustead of compensation that Boustead would otherwise have been entitled to receive under its exclusive agreement with LGC.

Boustead is attempting to recover from the Company an amount equal to a percentage of the value of the transaction it conducted with LGC.

Boustead’s Complaint alleged four causes

of action against the Company, including breach of contract;

breach of the implied covenant of good faith and fair dealing;

tortious interference

with business relationships and quantum meruit.

On October 6, 2020, we filed a motion to dismiss

Boustead’s Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) and 12(b)(5).

On October 9, 2020, the United States District

Court for the Southern District of New York directed Boustead to respond to the motion or amend its Complaint by November 10, 2020.

opted to amend its complaint and filed the amended complaint on November 10, 2020.

Boustead’s first amended complaint asserted the

same four causes of action against LGC and us as its original complaint.

We filed another motion to dismiss Boustead’s amended complaint

on December 8, 2020.

On August 25, 2021, the United States District

Court for the Southern District of New York granted ATIF’s motion to dismiss Boustead’s first amended complaint.

and opinion, the United States District Court for the Southern District of New York allowed Boustead to move for leave to amend its causes

of action against us as to breach of contract and tortious interference with business relationships, but not breach of the implied covenant

of good faith and fair dealing and quantum meruit.

On November 4, 2021, Boustead filed a motion seeking leave to file a second amended

complaint to amend its cause of action for Breach of Contract.

The Court granted Boustead’s motion for leave and Boustead filed

the second amended complaint on December 28, 2021 alleging only breach of contract and dropping all other causes of action alleged in

the original complaint.

On January 18, 2022, the Company filed a motion to dismiss Boustead’s second amended complaint.

filed its opposition on February 1, 2022 and the Company replied on February 8, 2022.

From time to time, we may

become involved in various lawsuits and legal proceedings which arise in the ordinary course of business.

However, litigation is subject

to inherent uncertainties and an adverse result in these or other matters may arise from time to time that may harm our business.

for the litigation disclosed below, we are not currently a party to any legal or arbitration proceeding the outcome of which, if ‘determined

adversely to us, would individually or in the aggregate be reasonably expected to have a material adverse effect on our business, operating

results, cash flows, or financial condition.

Legal Proceeding

with Boustead Securities, LLC (“Boustead”)

On May 14, 2020, Boustead

filed a lawsuit against the Company and LGC for breaching the underwriting agreement Boustead had with each of the Company and LGC, in

which Boustead was separately engaged as the exclusive financial advisor to provide financial advisory services to the Company and LGC.

In April 2020, the Company

acquired 51.2% equity interest in LGC after LGC terminated its efforts to launch an IPO on its own.

Boustead alleged that the acquisition

transaction between the Company and LGC was entered into during the tail period of the exclusive agreement between Boustead and the Company,

and therefore deprived Boustead of compensation that Boustead would otherwise have been entitled to receive under its exclusive agreement

with the Company and LGC.

Therefore, Boustead is attempting to recover from the Company an amount equal to a percentage of the value of

the transaction it conducted with LGC.

Boustead’s Complaint

alleges four causes of action against the Company, including breach of contract;

breach of the implied covenant of good faith and fair

tortious interference with business relationships and quantum meruit.

On October 6, 2020, ATIF filed

a motion to dismiss Boustead’s Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) and 12(b)(5).

On October 9, 2020,

the United States District Court for the Southern District of New York directed Boustead to respond to the motion or amend its Complaint

by November 10, 2020.

Boustead opted to amend its complaint and filed the amended complaint on November 10, 2020.

amended complaint asserts the same four causes of action against ATIF and LGC as its original complaint.

The Company filed another motion

to dismiss Boustead’s amended complaint on December 8, 2020.

On August 25, 2021, the United

States District Court for the Southern District of New York granted ATIF’s motion to dismiss Boustead’s first amended complaint.

In its order and opinion, the United States District Court for the Southern District of New York allowed Boustead to move for leave to

amend its causes of action against ATIF as to breach of contract and tortious interference with business relationships, but not breach

of the implied covenant of good faith and fair dealing and quantum meruit.

On November 4, 2021, Boustead filed a motion seeking leave

to file a second amended complaint to amend its cause of action for Breach of Contract.

The Court granted Boustead’s motion for

leave and Boustead filed the second amended complaint on December 28, 2021 alleging only breach of contract and dropping all other causes

of action alleged in the original complaint.

On January 18, 2022, the Company filed a motion to dismiss Boustead’s second amended

Boustead filed its opposition on February 1, 2022 and the Company replied on February 8, 2022.

On July 6, 2022, the Court

1 unchanged sentence

Thereafter, on August 3, 2022, the Company filed a motion to compel arbitration

Briefing on the Company’s motion to compel concluded on August 23, 2022 Since the agreement between ATIF and Boustead contains a

valid arbitration clause that applies to Boustead’s breach of contract claim, and the parties have not engaged in discovery, on

February 14, 2023, the Court ordered that ATIF’s motion to compel arbitration is granted and this case is stayed pending arbitration.

of Boustead’s claims in California.

Briefing on the Company’s motion to compel concluded on August 23, 2022.

Since the agreement

between ATIF and Boustead contains a valid arbitration clause that applies to Boustead’s breach of contract claim, and the parties

have not engaged in discovery, on February 14, 2023, the Court ordered that ATIF’s motion to compel arbitration is granted and this

case is stayed pending arbitration.

On March 10, 2023, Boustead,

filed Demand for Arbitration against ATIF (the Respondent) before JAMS in California and JAMS case Ref.

filed Demand for Arbitration against ATIF (the Respondent) before JAMS in California and the assigned JAMS case Ref.

is 5220002783.

2023, ATIF filed its answer to deny Boustead’s Demand for Arbitration, which was unsuccessful and the arbitration process was initiated.

The arbitrator ordered a motion to be filed by Boustead for a determination of contact interpretation, prior to extensive discovery into

issues such as the alleged merits and damages, and to determine whether the contract interpretation should allow the matter to further

On May 25, 2023, ATIF filed its answer to deny Boustead’s Demand for Arbitration, which was unsuccessful and the arbitration process

was initiated.

The arbitrator ordered a motion to be filed by Boustead for a determination of contact interpretation, prior to extensive

discovery into issues such as the alleged merits and damages, and to determine whether the contract interpretation should allow the matter

to further proceed.

Boustead had filed the Motion for Contract Interpretation Determination.

ATIF filed its opposition to that Motion on October

The hearing on the motion was held on November 8, 2023, during which

the arbitrator extended the hearing to February 29, 2024.

The arbitrator also established December 15, 2023, as the deadline for Boustead

to submit its reply regarding the contract interpretation issues raised by the Company.

Simultaneously, the Company was granted until

February 12, 2024, to present its response brief.

Our management believes it

is premature to assess and predict the outcome of this pending arbitration.

ATIF filed its opposition to that Motion

on October 16, 2023.

The hearing on the motion was held on November 8, 2023, during which the arbitrator extended the hearing to February

The arbitrator also established December 15, 2023, as the deadline for Boustead to submit its reply regarding the contract interpretation

issues raised by the Company.

Simultaneously, the Company was granted until February 12, 2024, to present its response brief.

On September 24, 2024, the Company and Boustead entered into a settlement

agreement, pursuant to which the Company shall pay a total amount of $1,000,000 to Boustead.

The payment is made in three instalments,

the first instalment of $250,000 is payable upon execution of the settlement agreement, the second instalment of $500,000 is payable before

March 1, 2025, and the final instalment of $250,000 is payable before December 31, 2025.

Pending Legal Proceeding

with J.P Morgan Securities LLC (“JPMS”)

On December 22, 2023, J.P

Morgan Securities LLC (“JPMS”) filed a lawsuit in the Superior Court of California, County of Orange, bearing Case Number

30-2023-01369978-CU-FR-CJC against ATIF Holdings Limited (“Holdings”), ATIF Inc., ATIF-1 GP, LLC (ATIF-1 GP”), and two

officers of Holdings and ATIF Inc., Jun Liu and Zhiliang “Ian” Zhou, alleging and asserting that it is entitled to recover

$5,064,160 in damages plus interest and attorneys’ fees relating to a stock transaction by ATIF-1 GP.

The parties have agreed to

attempt to mediate the dispute before proceeding to litigation.

A mediation was held on May 6, 2024, but the parties could not come

to a resolution.

The Defendants’ time to respond to the lawsuit was May 20, 2024.

On May 15, 2024, the Defendants filed a Petition

with the Superior Court of California seeking to compel arbitration under the operative agreements and stay the underlying State Court

On or about August 16, 2024, the parties agreed that JPMS and ATIF-1 GP, LLC would submit any disputes between the two of them

only, to FINRA arbitration, and stay the California state court case pending such arbitration.

At this time, the management is still in

the process of evaluating the claims and defenses.

MINE SAFETY DISCLOSURES

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 3. Legal Proceedings