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ATIF Holdings Limited to Acquire Controlling Interest in Leaping Group Co., Ltd. to Expand its Advertising Related Business

2020-04-08

Shenzhen, ChinaApril 08, 2020 (GLOBE NEWSWIRE) -- ATIF Holdings Limited (the “Company” or Nasdaq: ATIF), a company providing financial consulting services to small and medium-sized enterprises in Asia, today announced that the Company has entered into (i) a debt conversion and share purchase agreement (the “Debt Conversion and Share Purchase Agreement”) with Leaping Group Co., Ltd. (“Leaping Group”), and (ii) a share exchange agreement (the “Share Exchange Agreement”) with the shareholders of Leaping Group (“Sellers”) to acquire shares of Leaping Group. Leaping Group is a private company mainly focusing on multi-channel advertising, event planning and execution, film and TV program production, and movie theater operation. The Leaping Group operates the largest pre-movie advertising network in three northeast Chinese provinces, namely HeilongjiangJilin, and Liaoning. After the completion of the transactions pursuant to the Debt Conversion and Share Purchase Agreement and the Share Exchange Agreement (the “Acquisition”), ATIF shall be the controlling shareholder of Leaping Group, holding approximately 51.2% of the total outstanding shares of Leaping Group.

On January 14, 2020ATIF provided a loan to Leaping and its subsidiary, Yuezhong Media Co. in the amount of US$950,000 (“Loan”). On December 10, 2018, pursuant to a Consulting Agreement (“Consulting Agreement”) between Leaping and Qianhai Asia Times (Shenzhen) International Financial Services Co., Ltd. (“QAT”), a company controlled by the ATIF’s subsidiary via a VIE structure, Leaping agreed to pay QAT US$1,500,000 in consulting fees of which US$901,000 still remains outstanding (“Unpaid Consulting Fees”). As a result of the Loan and the Unpaid Consulting Fees, Leaping owes to ATIF, directly or indirectly, an aggregate amount of US$1,851,000 (“Debt”). Pursuant to the Debt Conversion and Share Purchase Agreement, ATIF agreed to purchase, and Leaping Group agreed to issue 3,934,029 new shares of Leaping Group in exchange for (i) the satisfaction of the Debt under the Loan and the Consulting Agreement, and (ii) the issuance of 2,800,000 shares of ATIF.

To induce ATIF to convert the Debt into shares of the Leaping Group, Sellers and ATIF have entered into the Share Exchange Agreement, pursuant to which the Company shall issue 7,140,002 new shares in exchange for 6,283,001 issued shares held by the Sellers.

It is a condition to the closing of the Debt Conversion and Share Purchase Agreement and the intent of the parties that the closing of the share exchange in the Share Exchange Agreement is substantially concurrent with the closing of the Debt Conversion and Share Purchase Agreement. After the completion of the Acquisition, the Company will hold 51.2% of the total outstanding shares of Leaping Group, and Leaping Group will become a controlled subsidiary of the Company. In fiscal year of 2019, Leaping Group’s revenue reached US$11,679,690, 90% of which was generated from advertising associated business. The rest of the revenue was generated from movie associated business.

Mr. BO Jiang, Chairman of Leaping Group, commented, “We are enthusiastic about partnering with ATIF Holdings Limited to continue accelerating the growth of Leaping Group and begin the next chapter for rapid expansion. We can benefit from ATIF’s industry insights and connections, and we believe the Acquisition will achieve a win-win situation for both parties.”

Mr. Jun Liu, CEO and Director of ATIF, commented, “This Acquisition represents a partnership with a dedicated team of owners who have been successful in developing businesses including multi-media advertising, event planning, and pre-movie advertising network as well as building a strong brand in the industry. The Company will expand its capacity to meet increasing market demand for multimedia and diversify our portfolios. This Acquisition will be our largest acquisition to date and is expected to make a meaningful and immediate contribution to our revenues and earnings. After the Acquisition, we will see more growth points and the Company will benefits from a diversified stream of earnings. While the world is combating COVID-19, we believe this is a good opportunity to acquire shares of Leaping Group to expand our advertising related business; as we believe this Acquisition is low-cost and cost effective, and is for the best interest of the Company and its shareholders. We further believe this Acquisition will boost the Company’s competitiveness, and position our company for a high growth potential in our revenue when the Chinese economy and the world economy took a recovery from the impact of the COVID-19.”

For further information regarding all terms and conditions contained in the Share Exchange Agreement and Debt Conversion, please see the Company’s current report on Form 6-K, which will be furnished in connection with this transaction.