ATIF Holdings Ltd Leases Disclosure
NOTE 8 – OPERATING LEASES
As of July 31, 2024, the Company leases offices space under one non-cancelable operating lease with a related party lessor (Note 11). During the year ended July 31, 2024, the Company modified the office lease arrangement, pursuant to which the remaining lease term was modified from 38 months to 24 months, and the office space is reduced.
During the year ended July 31, 2024, the Company early terminated a car lease arrangement, and recognized losses of $62,282 arising from early termination in the consolidated statements of operations comprehensive loss. The losses of $62,282 was comprised of $7,690 arising from the derecognition of operating right-of-use assets and operating lease liabilities, and $54,592 arising from penalties. During the year ended July 31, 2023, the Company entered into a car lease arrangement with a third party lessor with lease term of 48 months.
The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. Rent expenses for the years ended July 31, 2024 and 2023 were $240,771 and $497,746, respectively.
Effective August 1, 2019, the Company adopted the new lease accounting standard using a modified retrospective transition method, which allows the Company not to recast comparative periods presented in its consolidated financial statements. In addition, the Company elected the package of practical expedients, which allows the Company to not reassess whether any existing contracts contain a lease, to not reassess historical lease classification as operating or finance leases, and to not reassess initial direct costs. The Company has not elected the practical expedient to use hindsight to determine the lease term for its leases at transition. The Company combines the lease and non-lease components in determining the ROU assets and related lease obligation. Adoption of this standard resulted in the recording of operating lease ROU assets and corresponding operating lease liabilities as disclosed below. ROU assets and related lease obligations are recognized at commencement date based on the present value of remaining lease payments over the lease term.
The following table presents the operating lease related assets and liabilities recorded on the balance sheets as of July 31, 2024 and 2023.
| As of July 31, | ||||||||
| 2024 | 2023 | |||||||
| Right-of- use assets, net | $ | 53,793 | $ | 1,058,822 | ||||
| Operating lease liabilities, current | $ | 11,375 | $ | 415,411 | ||||
| Operating lease liabilities, noncurrent | 20,417 | 689,498 | ||||||
| Total operating lease liabilities | $ | 31,792 | $ | 1,104,909 | ||||
The weighted average remaining lease terms and discount rates for all of operating leases were as follows as of July 31, 2024 and 2023:
| As of July 31, | ||||||||
| 2024 | 2023 | |||||||
| Remaining lease term and discount rate | ||||||||
| Weighted average remaining lease term (years) | 1.58 | 3.35 | ||||||
| Weighted average discount rate | 8.50 | % | 4.90 | % | ||||
The following is a schedule of maturities of lease liabilities as of July 31, 2024 and 2023:
| As of July 31, | ||||||||
| 2024 | 2023 | |||||||
| 2024 | $ | $ | 457,708 | |||||
| 2025 | 14,000 | 267,239 | ||||||
| 2026 | 21,000 | 267,239 | ||||||
| 2027 and thereafter | 204,540 | |||||||
| Total lease payments | 35,000 | 1,196,726 | ||||||
| Less: imputed interest | (3,208 | ) | (91,817 | ) | ||||
| Present value of lease liabilities | $ | 31,792 | $ | 1,104,909 | ||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2024 | Nov 13, 2024 | Showing above |
| 2023 | Nov 13, 2023 | |
| 2022 | Nov 2, 2022 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.