ATIF HOLDINGS LIMITED The following discussion and analysis should be read together with the Company's annual report on Form 10-K for the fiscal year endedJuly 31, 2022 and the audited consolidated financial statements and notes included therein (collectively, the "2022 Annual Report"), as well as the Company's unaudited condensed consolidated financial statements and the related notes included in this report. Pursuant to Instruction 2 to paragraph (b) of Item 303 of Regulation S-K promulgated by theSEC , in preparing this discussion and analysis, the Company has presumed that readers have access to and have read the disclosure under the same heading contained in the 2022 Annual Report. This discussion and analysis contains forward-looking statements. Please see the cautionary note regarding these statements at the beginning of this report.
Business Overview
We offer financial consulting services to small and medium-sized enterprise
customers in
OnJanuary 4, 2021 , we established an office inCalifornia, USA , through our wholly owned subsidiaryATIF Inc. , aCalifornia 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. Reverse Split OnAugust 12, 2021 , our Board of Directors approved a reverse stock split (the "Reverse Split") of our issued and outstanding ordinary shares, par value$0.001 per share, at a ratio of 1 -for-5so that every five (5) shares issued and outstanding on the date of the Reverse Split was combined into one (1) ordinary share,US$0.005 par value. Shareholders otherwise entitled to receive a fractional share as a result of the reverse stock split will receive a whole share in lieu of such factional share, as relevant. Both before and after completion of the Reverse Split, the Company is and will be authorized to issue 100,000,000,000 ordinary shares ofUS$0.001 par value each. As a result of the Reverse Split, the Company's issued and outstanding ordinary shares was reduced from 45,806,952 ordinary shares ofUS$0.001 par value each to approximately 9,161,390 ordinary shares of par value$0.005 per share. OnAugust 23, 2021 , we amended our Memorandum of Association and Articles of Association in connection with our one -for- five reverse stock split to amend the par value back to$0.001 per ordinary share. Our ordinary shares, as adjusted per the Reverse Split, began trading on the Nasdaq Capital Market onAugust 30, 2021 . Recent Updates OnOctober 3, 2022 ,ATIF establishedATIF Southern LLC under the laws ofCalifornia ofthe United States . OnOctober 6 andOctober 7, 2022 ,ATIF Inc. , a wholly owned subsidiary ofATIF , establishedATIF Business Consulting LLC ("ATIF BC") andATIF Business Management LLC ("ATIF BM") under the laws ofCalifornia ofthe United States , respectively. OnAugust 1, 2022 ,ATIF USA entered into and closed a Sale and Purchase Agreement (the "Agreement") withAsia Time (HK) International Finance Service Limited (the "Buyer"), pursuant to which the Company sold all of its equity interest in ATIF GP for cash consideration ofUS$50,000 (the "Agreement"). The management believed the disposition does not represent a strategic shift because it is not changing the way it is running its business. The Company has not shifted the nature of its operations. The termination is not accounted as discontinued operations in accordance with ASC 205-20. Upon the closing of the Agreement, ATIF GP is no longer our subsidiary andATIF USA ceased to be the investment manager ofATIF LP .
As of
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Our financial consulting services
Currently we provide consulting services to the companies based inNorth America seeking listing inU.S. . We launched our consulting services in 2015. Our aim was to assist Chinese enterprises by filling the gaps and forming a bridge between PRC companies and overseas stock markets and exchanges. We have a team of qualified and experienced personnel with legal, regulatory, and language expertise in several jurisdictions outside theU.S. Our services were designed to help SMEs inChina achieve their goal of becoming public companies. InMay 2022 , we shifted our geographic focus fromChina toNorth America emphasizing on helping mid and small companies inNorth America become public companies on theU.S. capital markets. We would create a going public strategy for each client based on many factors of such client, 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 the date of this report, we have successfully helped three Chinese enterprises to be quoted on theU.S. OTC markets and are currently assisting our other clients in their respective going public efforts. Most of our current and past clients have been Chinese,U.S. and Mexican companies, and we plan to expand our operations to other Asian countries, such asMalaysia ,Vietnam , andSingapore with continuing focus on the North American market in the coming years. For the six months endedJanuary 31, 2023 and 2022, we provided consulting services to four and one customer, respectively, which primarily engaged the Company to provide consulting services relating to going public in the US through IPO and reverse merger. OnMay 31, 2022 , we completed the transfer of our equity interest in ATIF HK and Huaya, through which we provided consulting services to Chinese companies We plan to focus on providing consulting services to customers based inNorth America and other areas and intend to continue cooperating with Huaya in connection with the expansion and provision of our business services inChina . FromApril 2022 through the date of this report, the Company entered into consulting agreements with five customers, among which four are based in theNorth America . Our total revenue generated from consulting services amounted to$1.9 million and minimal for the three months endedJanuary 31, 2023 and 2022, respectively. Our total revenue generated from consulting services amounted to$2.2 million and$0.5 million for the six months endedJanuary 31, 2023 and 2022, respectively.
Key Factors that Affect our Business
We believe the following key factors may affect our consulting services:
Our business success depends on our ability to acquire customers effectively.
Our customer acquisition channels primarily include our sales and marketing campaigns and existing customer referrals. In order to acquire customers, we have made significant efforts in building mutually beneficial long-term relationships with local government, academic institutions, and local business associations. In addition, we also market our consulting services through social media, such as WeChat and Weibo. If any of our current customer acquisition channels becomes less effective, we are unable to continue to use any of these channels or we are not successful in using new channels, we may not be able to attract new customers in a cost-effective manner or convert potential customers into active customers or even lose our existing customers to our competitors. To the extent that our current customer acquisition and retention efforts become less effective, our service revenue may be significantly impacted, which would have a significant adverse effect on our revenues, financial condition, and results of operations.
Our consulting business faces strong market competition.
We are currently facing intense market competition. Some of our current or potential competitors have significantly more financial, technical, marketing, and other resources than we do and may be able to devote greater resources to the development, promotion, and support of their customer acquisition and retention channels. In light of the low barriers to entry in the financial consulting industry, we expect more players to enter this market and increase the level of competition. Our ability to differentiate our services from other competitors will have significant impact on our business growth in the future.
Our business depends on our ability to attract and retain key personnel.
We rely heavily on the expertise and leadership of our directors and officers to
maintain our core competence. Under their leadership, we have been able to
achieve rapid expansion and significant growth since our inception in 2015. As
our business scope increases, we expect to continue to invest significant
resources in hiring and retaining a deep talent pool of financial consultancy
professionals. Our ability to sustain our growth will depend on our ability to
attract qualified personnel and retain our current staff.
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Results of Operations
Comparison of Operation Results for the Three Months ended
The following table summarizes the results of our operations for the three
months ended
For the Three Months ended Changes
Amount Percentage
January 31, January 31, Increase Increase
2023 2022 (Decrease) (Decrease)
(unaudited) (unaudited)
Revenues $ 1,900,000 $ 7,680 $ 1,892,320 24,640 %
Operating expenses:
Selling expenses (48,000 ) - (48,000 ) 100 %
General and administrative expenses (581,112 ) (827,100 ) 308,988 (37 )%
Total operating expenses (566,112 ) (827,100 ) 260,988 (32 )%
Income (loss) from operations 1,333,888 (819,420 ) 2,153,308 (263 )%
Other income (expenses):
Interest (expenses) income, net (57,973 ) 25 (57,998 ) (231,992 )%
Other income (expenses), net 62,903 (80,219 ) 143,122 (178 )%
Income (loss) from investment in trading
securities 39,120 (454,555 ) 493,675 (109 )%
Total other income (expenses), net 44,050 (534,749 ) 578,799 (108 )%
Income (loss) before income taxes 1,377,938 (1,354,169) 2,732,107 (202 )% Income tax provision (566,957 ) - (566,957 ) 100 % Net income (loss)$ 810,981 $ (1,354,169 ) $ 2,165,150 (160 )% Revenues. Our total revenue increased by$1.9 million from$7,680 in the quarter endedJanuary 31, 2022 , to$1.9 million in quarter endedJanuary 31, 2023 . During the three months endedJanuary 31, 2023 , we provided consulting services to four customers, while during the same period endedJanuary 31, 2022 , we earned securities management fee income. Selling expenses. Selling expenses increased from $nil in the quarter endedJanuary 31, 2022 to$48,000 in the quarter endedJanuary 31, 2023 . Our selling expenses primarily consisted of outsourced service fees charged by third-party service providers, business development expenses, potential customer referral commissions, salary and welfare expenses of our business development team, and business travel expenses. The increase in our selling expenses was primarily due to a reversal of consulting service fees because we over accrued the outsourced professionals service fees for the quarter endedJanuary 31, 2022 . As a percentage of sales, our absolute amount of selling expenses were negative 3% and 0% of our total revenues for the three months endedJanuary 31, 2023
and 2022, respectively. General and administrative expenses. Our general and administrative expenses decreased by$0.3 million , or 37%, from$0.8 million in the quarter endedJanuary 31, 2022 to$0.5 million in the same period of 2023. Our general and administrative expenses primarily consisted of salary and welfare expenses of management and administrative team, office expenses, operating lease expenses, and professional fees such as audit and legal fees. The increase was mainly due to the decrease of expenses as a result of disposal of ATIF HK and termination of Qianhai VIE Agreement. 4
As a percentage of sales, our general and administrative expenses were 27% and 10,770% of our total revenues for the three months endedJanuary 31, 2023 and 2022, respectively. Gain (loss) from investment in trading securities. Gain (loss) from investments in trading securities represented unrealized gains or losses from investment in trading securities, which was measured at market price. For the three months endedJanuary 31, 2023 and 2022, the Company recorded a gain from investment in trading securities of$39,120 and a loss from investment in trading securities of$0.5 million , respectively. Income taxes. We are incorporated in theBritish Virgin Islands . Under the current laws of theBritish Virgin Islands , we are not subject to tax on income or capital gains in theBritish Virgin Islands . Additionally, upon payments of dividends to the shareholders, noBritish Virgin Islands withholding tax will be imposed. ATIF HK is subject toHong Kong profits tax at a rate of 16.5%. However, ATIF HK did not have any assessable profits arising in or derived fromHong Kong for the three months endedJanuary 31, 2022 , and accordingly no provision forHong Kong profits tax had been made in these periods. Huaya was incorporated in the PRC. Under the Income Tax Laws of the PRC, Huaya is subject to income tax at a rate of 10% under the preferential tax treatment to Smaller-scale Taxpayers.ATIF Inc , ATIF GP,ATIF LP , ATIF BD, ATIF BC and ATIF BM were established in theU.S and are subject to federal and state income taxes on its business operations. The federal tax rate is 21% and state tax rate is 8.84%. We also evaluated the impact from the recent tax reforms inthe United States , including the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") and Health and Economic Recovery Omnibus Emergency Solutions Act ("HERO Act"), which were both passed in 2020, No material impact on the ATIF US is expected based on our analysis. We will continue to monitor the potential impact going forward. Income tax expense was$566,957 for the three months endedJanuary 31, 2023 , which arose from net income earned by ATIF BC. Income tax expense was $nil for the three months endedJanuary 31, 2022 due to significant net operating loss in fiscal year 2022 which resulted in taxable losses. Net income (loss). As a result of foregoing, net income was$0.7 million for the six months endedJanuary 31, 2023 , a change of$3.0 million from net loss of$2.3 million for the six months endedJanuary 31, 2022 . 5
Comparison of Operation Results for the Six Months ended
The following table summarizes the results of our operations for the six months
ended
For the Six Months ended Changes
Amount Percentage
January 31, January 31, Increase Increase
2023 2022 (Decrease) (Decrease)
(unaudited) (unaudited)
Revenues $ 2,200,000 $ 524,155 $ 1,675,845 320 %
Operating expenses:
Selling expenses (53,000 ) (225,113 ) 172,113 (76 )%
General and administrative expenses (1,081,008 ) (1,705,255 ) 624,247 (37 )%
Total operating expenses (1,134,008 ) (1,930,368 ) 796,360 (41 )%
Income (loss) from operations 1,065,992 (1,406,213 ) 2,472,205 (176 )%
Other income (expenses):
Interest income, net 1,874 52 1,822 3,504 %
Other income (expenses), net 122,403 (53,604 ) 176,007 (328 )%
Income (loss) from investment in trading
securities 19,116 (793,929 ) 813,045 (102 )%
Gain from disposal of subsidiaries 56,038 - 56,038 100 %
Total other income (expenses), net 199,431 (847,481 ) 1,046,912 (124 )%
Income (loss) before income taxes 1,265,423 (2,253,694 ) 3,519,117 (156 )% Income tax provision (566,957 ) - (566,957 ) 100 % Net income (loss)$ 698,466 $ (2,253,694 ) $ 2,952,160 (131 )%
Revenues. Our total revenue increased by$1.7 million from$0.5 million in the six months endedJanuary 31, 2022 , to$2.2 million in six months endedJanuary 31, 2023 . During the six months endedJanuary 31, 2023 and 2022, we provided consulting services to four and one customer, respectively, leading to higher consulting service fees earned. Selling expenses. Selling expenses decreased by$0.2 million , or 76%, from$0.2 million in the six months endedJanuary 31, 2022 to$53,000 in the six months endedJanuary 31, 2023 . Our selling expenses primarily consisted of outsourced service fees charged by third-party service providers, business development expenses, potential customer referral commissions, salary and welfare expenses of our business development team, and business travel expenses. The decrease was mainly because of disposal of ATIF HK and termination of Qianhai VIE Agreement. As a percentage of sales, our absolute amount of selling expenses were 2% and 43% of our total revenues for the six months endedJanuary 31, 2023 and 2022, respectively. General and administrative expenses. Our general and administrative expenses decreased by$0.6 million , or 37%, from$1.7 million in the quarter endedJanuary 31, 2022 to$1.1 million in the same period of 2023. Our general and administrative expenses primarily consisted of salary and welfare expenses of management and administrative team, office expenses, operating lease expenses, and professional fees such as audit and legal fees. The decrease was mainly due to the decrease of expenses as a result of disposal of ATIF HK and termination of Qianhai VIE Agreement. As a percentage of sales, our general and administrative expenses were 49% and 325% of our total revenues for the six months endedJanuary 31, 2023 and 2022, respectively. 6 Gain (loss) from investment in trading securities. Gain (loss) from investments in trading securities represented unrealized gains or losses from investment in trading securities, which was measured at market price. For the six months endedJanuary 31, 2023 and 2022, the Company recorded a gain from investment in trading securities of$19,116 and a loss from investment int trading securities of$0.8 million , respectively. Gain from disposal of subsidiaries. For the six months endedJanuary 31, 2023 , the Company reported a gain of$0.05 million from disposal of ATIF GP. For six months endedJanuary 31, 2022 , the Company did not record gain or loss from disposal of subsidiaries. Income taxes. We are incorporated in theBritish Virgin Islands . Under the current laws of theBritish Virgin Islands , we are not subject to tax on income or capital gains in theBritish Virgin Islands . Additionally, upon payments of dividends to the shareholders, noBritish Virgin Islands withholding tax will be imposed. ATIF HK is subject toHong Kong profits tax at a rate of 16.5%. However, ATIF HK did not have any assessable profits arising in or derived fromHong Kong for the six months endedJanuary 31, 2022 , and accordingly no provision forHong Kong profits tax had been made in these periods. Huaya was incorporated in the PRC. Under the Income Tax Laws of the PRC, Huaya is subject to income tax at a rate of 10% under the preferential tax treatment to Smaller-scale Taxpayers.ATIF Inc , ATIF GP,ATIF LP , ATIF BD, ATIF BC and ATIF BM were established in theU.S and are subject to federal and state income taxes on its business operations. The federal tax rate is 21% and state tax rate is 8.84%. We also evaluated the impact from the recent tax reforms inthe United States , including the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") and Health and Economic Recovery Omnibus Emergency Solutions Act ("HERO Act"), which were both passed in 2020, No material impact on the ATIF US is expected based on our analysis. We will continue to monitor the potential impact going forward. Income tax expense was$566,957 for the six months endedJanuary 31, 2023 , which arose from net income earned by ATIF BC. Income tax expense was $nil for the six months endedJanuary 31, 2022 due to significant net operating loss in fiscal year 2022 which resulted in taxable losses. Net income (loss). As a result of foregoing, net income was$0.7 million for the six months endedJanuary 31, 2023 , a change of$3.0 million from net loss of$2.3 million for the six months endedJanuary 31, 2022 .
Capital Commitments and Contingencies
We had no material capital commitments as of
From time to time, we are a party to various legal actions arising in the ordinary course of business. We accrue costs associated with these matters when they become probable and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred.
Pending Legal Proceeding with
OnMay 14, 2020 , Boustead filed a lawsuit against the us and LGC for breaching the underwriting agreement Boustead had with each of us and LGC, in which Boustead was separately engaged as the exclusive financial advisor to provide financial advisory services to us and LGC. InApril 2020 , we 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 us and LGC was entered into during the lockup period of the exclusive agreement between Boustead and LGC, and therefore deprived Boustead of compensation that Boustead would otherwise have been entitled to receive under its exclusive agreement with LGC. Therefore, Boustead is attempting to recover from us 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 us, including breach of contract; breach of the implied covenant of good faith and fair dealing; tortious interference with business relationships and quantum meruit.
7
On October 6, 2020 , ATIF filed a motion to dismiss Boustead's Complaint pursuant
to Federal Rule of Civil Procedure 12(b)(6) and 12(b)(5). On October 9, 2020 ,
the United States District Court for the Southern District of New York directed
Boustead to respond to the motion or amend its Complaint by November 10, 2020 .
Boustead opted to amend its complaint and filed the amended complaint on
November 10, 2020 . Boustead's amended complaint asserts the same four causes of
action against ATIF and LGC as its original complaint. 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.
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 , we filed a motion to dismiss Boustead's
second amended complaint. Boustead filed its opposition on February 1, 2022 and
we replied on February 8, 2022 .
On July 6, 2022 , the Court denied our motion to dismiss the second amended
complaint. Thereafter, on August 3, 2022 , we filed a motion to compel
arbitration of Boustead's claims in California . Briefing on our motion to compel
concluded on August 23, 2022 . The Court has yet to rule on that motion. Boustead
is also seeking a default judgment against LGC and recently filed an order to
show cause for default judgment against LGC. The Court has not ruled on
Boustead's request for entry of default judgment against LGC.
We are currently evaluating how it will respond to Boustead's motion for leave.
In sum, the Boustead litigation is currently in the pleadings stage. Our
management believes it is premature to assess and predict the outcome of this
pending litigation.
Off-Balance Sheet Commitments and Arrangements
We have not entered into any financial guarantees or other commitments to guarantee the payment obligations of any third parties. In addition, we have not entered into any derivative contracts that are indexed to our shares and classified as shareholder's equity or that are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in product development services with us.
Liquidity and Capital Resources
To date, we have financed our operations primarily through cash flows from operations, working capital loans from our major shareholders, proceeds from our initial public offering, and equity financing through public offerings of our securities. We plan to support our future operations primarily from cash generated from our operations and cash on hand.
Liquidity and Going concern
For the three and six months endedJanuary 31, 2023 , the Company reported a net income of$0.8 million and$0.7 million , respectively. For the three and six months endedJanuary 31, 2022 , the Company reported a net loss of$1.4 million and$2.3 million , respectively. For the six months endedJanuary 31, 2023 and 2022, the Company reported operating cash outflows of$0.7 million and cash inflows of$0.3 million , respectively. 8 In assessing the Company's ability to continue as a going concern, the Company monitors and analyzes its cash and its ability to generate sufficient cash flow in the future to support its operating and capital expenditure commitments. As ofJanuary 31, 2023 , the Company had cash of$0.8 million . On the other hand, the Company had current liabilities of$2.5 million . Currently the Company had four service-in-progress agreements, and expected to collect consulting service fees of$2.4 million for the next 12 months. Due to the impact of COVID-19, some of our existing customers may experience financial distress or business disruptions, which could lead to potential delay or default on their payments. Any increased difficulty in collecting accounts receivable, or early termination of our existing consulting service agreements due to deterioration in economic conditions could further negatively impact our cash flows. Given these factors, our potential customers' perception and confidence to go public inthe United States has been negatively impacted and our operating revenue and cash flows may continue to underperform in the near terms. Although we had cash of$0.8 million as ofJanuary 31, 2023 , given the above mentioned uncertainties, the management believes that the Company will continue as a going concern in the following 12 months from the date the Company's unaudited condensed consolidated financial statements are issued.
Currently, the Company intends to finance its future working capital requirements and capital expenditures from cash generated from operating activities and funds raised from equity financings.
The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of the uncertainties described above.
We have not declared nor paid any cash dividends to our shareholders. We do not plan to pay any dividends out of our restricted net assets in the near future.
We have limited financial obligations denominated in
The following table sets forth summary of our cash flows for the years
indicated:
For the Six Months Ended
January 31,
2023 2022
(unaudited) (unaudited)
Net cash (used in) provided by operating activities
(166,036 ) (2,094,308 )
Net cash used in financing activities - (39,642 )
Effect of exchange rate changes on cash - (71,672 ) Net decrease in cash (920,750 ) (1,877,462 ) Cash, beginning of period 1,750,137 5,596,740 Cash, end of period$ 829,387 $ 3,719,278 9 Operating Activities Net cash used in operating activities was$0.8 million in the six months endedJanuary 31, 2023 . Net cash used in operating activities was primarily comprised of net income of$0.7 million , adjusted for amortization of right of use assets of$0.2 million , and net changes in our operating assets and liabilities, principally comprising of an increase of accounts receivable of$1.7 million as we provided financial consulting services to more customers during the six months endedJanuary 31, 2023 . Net cash provided by operating activities was$0.3 million for the six months endedJanuary 31, 2022 were all from continuing operations. Net cash used in operating activities from continuing operations mainly derived from (i) net loss of$2.2 million for the six months endedJanuary 31, 2022 , adjusted for noncash depreciation and amortization expenses of$0.1 million and loss from investments in trading securities of$0.8 million , and (ii) net changes in our operating assets and liabilities, principally comprising of an increase of$1.4 million in accrued expenses and other current liabilities as we ordered investments in trading securities through security accounts but the broker cleared our accounts inFebruary 2022 , and an increase of$0.2 million in prepaid expenses and other current assets as a result of collections. Investing Activities Net cash used in investing activities was$0.2 million in the six months endedJanuary 31, 2023 , primarily used in loans of$0.1 million to a related party, and investment in trading securities of$0.1 million . Net cash used in investing activities amounted to$2.0 million for the six months endedJanuary 31, 2022 , which primarily included the investments of$2.4 million in trading securities, partially offset by proceeds of$0.3 million
from disposal of two vehicles. Financing Activities
For the six months ended
Net cash used in financing activities was$39,642 the six months endedJanuary 31, 2022 , attributable to payment of$1.0 million and$0.1 million to a limited partner ofATIF LP , as withdrawal of investment and investment gain, partially offset by proceeds of$1.1 million in relation to exercise of warrants by investors who subscribed for ordinary shares offered in registered direct offering which closed inNovember 2020 . Critical Accounting Estimate The preparation of financial statements in conformity withU.S. GAAP requires management to make estimates and assumptions that affect the reported amount of assets, liabilities and contingencies at the date of the condensed consolidated financial statements as well as the reported amounts of expenses during the reporting period. As a result, management is required to routinely make judgments and estimates about the effects of matters that are inherently uncertain. Actual results may differ from these estimates under different conditions or assumptions. Management determined there were no critical accounting policies or accounting estimates. 10
Recently Issued Accounting Pronouncements
A list of recently issued accounting pronouncements that are relevant to us is included in note 3 to our unaudited condensed consolidated financial statements included elsewhere in this report.
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