Revenue Performance - For the three months ended June 30, 2023, total revenue decreased by $92,772, or approximately 23.4%, to $303,935 compared to $396,707 for the same period in 2022[214]. - Revenue from the network marketing business decreased significantly by $93,872, or approximately 50.9%, while revenue from complementary health therapies increased marginally by $1,100, or approximately 0.5%[214]. - For the six months ended June 30, 2023, total revenue decreased by $120,964, or approximately 15.0%, to $684,703 compared to $805,667 for the same period in 2022[223]. Profitability and Expenses - Gross profit for the three months ended June 30, 2023, was $196,004, representing a gross margin of approximately 64.5%, down from $287,324 and a gross margin of approximately 72.4% in the same period of 2022[216]. - Operating expenses for the three months ended June 30, 2023, increased by $37,970, or approximately 6.4%, to $555,537 compared to $593,507 for the same period in 2022[217]. - General and administrative expenses for the six months ended June 30, 2023, increased by $235,319, or approximately 28.3%, to $1,065,723 compared to $830,404 for the same period in 2022[229]. - Net loss for the three months ended June 30, 2023, was $379,449, a reduction of $24,895 from a net loss of $404,344 for the same period in 2022[222]. - The company experienced a net loss of $813,524 for the six months ended June 30, 2023, with accumulated deficits reaching $5,746,112, compared to a net loss of $1,666,079 for the year ended December 31, 2022[237]. Cash Flow and Working Capital - As of June 30, 2023, the company reported a working capital deficit of $26,893, with cash and cash equivalents totaling $332,431 and time deposits of $321,323, compared to a working capital of $799,239 as of December 31, 2022[237]. - Net cash used in operating activities for the six months ended June 30, 2023 was $742,175, an increase from $495,727 for the same period in 2022[240][241]. - The company may need to consider financial support from related parties due to insufficient funds to meet working capital requirements and debt obligations[238]. Strategic Initiatives - The company is in the process of introducing a new range of products for its network marketing business, which has delayed the launch of existing products[214]. - The establishment of DSY Wellness aims to expand the company's business into traditional and complementary health therapies[213]. - The company anticipates expanding into Asian markets, focusing on Thailand, Indonesia, and Taiwan, and will explore e-commerce as a means of expansion[236]. - The company plans to reassess its office setup in countries of operation to better service customers as most nations adapt to living alongside COVID-19[236]. Financial Reporting and Risk Management - The company adopted ASU 2016-13 on January 1, 2023, which changes the methodology for measuring credit losses on financial instruments[259]. - The adoption of recent accounting standards did not have a material impact on the unaudited condensed consolidated financial statements for the six months ended June 30, 2023[260]. - The Company is currently evaluating the impact of ASU No. 2023-01 on its unaudited condensed consolidated financial statements, which is effective for reporting periods beginning after December 15, 2023[261]. - The Company does not believe it currently has any significant direct foreign exchange risk, as most revenues and expenses are denominated in Malaysian Ringgit[263]. - The Company has not hedged exposures denominated in foreign currencies or any other derivative financial instruments[263]. - Credit risk is primarily associated with accounts receivable, but is mitigated by an ongoing credit evaluation process and relatively short collection terms[264]. - The Company does not generally require collateral from customers, evaluating the need for an allowance for doubtful accounts based on specific customer credit risk[264]. Other Financial Metrics - The company recorded a decrease in net other expenses from $97,769 for the three months ended June 30, 2022, to $22,355 for the same period in 2023, a reduction of approximately 77.1%[220]. - The company had net cash used in investing activities of $6,499 for the six months ended June 30, 2023, compared to $750 for the same period in 2022[242]. - The company projects that revenue will revert to pre-pandemic levels, generating sufficient cash to cover operating expenses[237]. - The company did not recognize any inventory write-downs for the six months ended June 30, 2023 and 2022[245].

Revenue and Profitability - Revenue for Q1 2023 was $380,767, with network marketing contributing $138,859 (36.5%) and complementary health therapies contributing $241,908 (63.5%)[192] - Revenue from network marketing decreased by $235,169 (62.9%) compared to Q1 2022, while revenue from complementary health therapies increased by $206,976 (592.5%)[192] - Gross profit for Q1 2023 was $252,408, with a gross margin of 66.3%, down from 82.0% in Q1 2022 due to lower margins in network marketing[194] - Net loss for Q1 2023 was $434,075, an increase of $135,629 compared to Q1 2022[200] Operating Expenses and Administrative Costs - Operating expenses decreased by $38,513 (33.6%) in Q1 2023, primarily due to reduced promotional activities for existing products[195] - General and administrative expenses increased by $217,212 (57.3%) in Q1 2023, driven by expenses related to complementary health therapies and Nasdaq uplisting efforts[197] Financial Position and Liquidity - The company had working capital of $374,149 as of March 31, 2023, down from $799,239 at the end of 2022[204] - Accumulated deficit reached $5,371,426 as of March 31, 2023, up from $4,945,586 at the end of 2022[204] - Management expressed substantial doubt about the company's ability to continue as a going concern due to net losses, low working capital, and slow recovery in sales[205] Expansion Plans - The company plans to expand into Thailand, Indonesia, and Taiwan, focusing on e-commerce and potential office setups in these markets[203] Cash Flow Activities - Net cash used in operating activities for Q1 2023 was $272,555, a significant increase from $151,122 in Q1 2022, primarily due to a higher net loss of $434,075 compared to $298,446 in the previous year[209][210] - Net cash used in investing activities for Q1 2023 was $38,768, attributed to equipment purchases, with no investing activities recorded in Q1 2022[211] - Net cash used in financing activities for Q1 2023 was $6,961, related to deferred offering costs, with no financing activities in Q1 2022[212] Assets and Impairment - The company's operating right-of-use assets and property, plant, and equipment had carrying amounts of $41,593 and $160,480 as of March 31, 2023, with no impairment losses recognized[216] Revenue Recognition and Accounting Policies - Revenue recognition for health and wellness products is based on the transfer of control to customers, with revenues recorded net of estimated discounts and return allowances[221] - The company issues product coupons to members and distributors, which are recorded as a reduction in revenue upon issuance and reversed when used or forfeited after the validity period[222] - The company's Wellness program includes health screening tests and health camp programs, with revenues recognized upon completion of these services[224] - The company adopted Accounting Standards Update (ASU) 2016-13, Financial Instruments – Credit Losses (Topic 326), effective January 1, 2023, which introduced the current expected credit loss (CECL) methodology[226] Risk Management - The company's exposure to foreign exchange risk is limited, as most revenues and expenses are denominated in Malaysian Ringgit, U.S. dollar, and Hong Kong Dollar, with no hedging activities in place[229] - Credit risk is primarily associated with accounts receivable, mitigated by the company's credit evaluation process and short collection terms, with no collateral generally required from customers[230]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For The Fiscal Year Ended December 31, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____________________________ Commission File Number 333-220144 AGAPE ATP CORPORATION (Exact name of registrant issuer as specified in its charter) | --- | --- | --- | --- | ...

PART I [Unaudited Condensed Consolidated Financial Statements](index=4&type=section&id=ITEM%201.%20UNAUDITED%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) Presents Agape ATP Corporation's unaudited consolidated financial statements for Q3 2022, covering balance sheets, operations, equity, and cash flows [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased from $4.72 million to $3.10 million, primarily due to reduced cash, reflecting declines in both liabilities and equity Condensed Consolidated Balance Sheet Highlights (As of Sep 30, 2022 vs. Dec 31, 2021) | Metric | September 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Total Assets** | **$3,095,006** | **$4,724,535** | | Cash and cash equivalents | $1,584,869 | $2,597,848 | | **Total Liabilities** | **$850,429** | **$1,411,899** | | **Total Equity** | **$2,244,577** | **$3,312,636** | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Revenue increased to $1.47 million for the nine months ended September 30, 2022, with net loss improving to $943,007 from $1.55 million Statement of Operations Summary (Nine Months Ended Sep 30) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | **Revenue** | **$1,469,556** | **$806,850** | | Gross Profit | $1,128,997 | $656,973 | | Loss from Operations | ($771,723) | ($1,116,503) | | **Net Loss** | **($943,007)** | **($1,547,140)** | | Loss Per Share (Basic & Diluted) | ($0.01) | $0.00 | Statement of Operations Summary (Three Months Ended Sep 30) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | **Revenue** | **$663,889** | **$201,284** | | Gross Profit | $506,144 | $164,621 | | Loss from Operations | ($193,308) | ($364,996) | | **Net Loss** | **($240,217)** | **($571,265)** | | Loss Per Share (Basic & Diluted) | $0.00 | $0.00 | [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity) Total stockholders' equity decreased from $3.31 million to $2.24 million, driven by net loss and foreign currency adjustments, alongside a significant share forfeiture - A share forfeiture agreement dated January 20, 2022, resulted in the forfeiture of **215,008,035 shares** of common stock by the CEO, Mr. How Kok Choong[17](index=17&type=chunk)[147](index=147&type=chunk) Changes in Stockholders' Equity (Nine Months Ended Sep 30, 2022) | Metric | Amount | | :--- | :--- | | Balance as of Dec 31, 2021 | $3,312,636 | | Net Loss | ($943,007) | | Foreign currency translation adjustment | ($51,603) | | **Balance as of Sep 30, 2022** | **$2,244,577** | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities increased to $737,456, contributing to a $1.01 million decrease in cash and an ending balance of $1.58 million Cash Flow Summary (Nine Months Ended Sep 30) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | ($737,456) | ($541,440) | | Net cash used in investing activities | ($5,777) | ($3,970) | | Net cash used in financing activities | ($184,466) | ($23,280) | | **Decrease in Cash and Cash Equivalents** | **($1,012,979)** | **($636,923)** | | Cash and Cash Equivalents, end of period | $1,584,869 | $2,880,677 | [Notes to Unaudited Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the company's organization, accounting policies, and financial accounts, including its health and wellness focus and VIE structure - The Company and its subsidiaries are principally engaged in the **Health and Wellness Industry**, supplying products for cell metabolism, detoxification, anti-aging, and overall health, primarily in Malaysia[23](index=23&type=chunk)[28](index=28&type=chunk) - The company's main product and service lines include the **ATP Zeta Health Program**, **ÉNERGÉTIQUE** (dermal solutions), and **BEAUNIQUE** (nutrigenomic solutions)[29](index=29&type=chunk)[30](index=30&type=chunk) - The financial statements are prepared in accordance with **U.S. GAAP** and consolidate the Company, its subsidiaries, and its **variable interest entity (VIE)**, Agape S.E.A. Sdn. Bhd. ("SEA")[34](index=34&type=chunk)[36](index=36&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=40&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses the company's financial performance for the three and nine months ended September 30, 2022, analyzing key financial metrics, liquidity, and critical accounting policies [Results of Operation](index=41&type=section&id=Results%20of%20Operation) Revenue grew 82.1% to $1.47 million for the nine months ended September 30, 2022, driven by recovery and new business, with net loss decreasing to $0.95 million Financial Performance (Nine Months Ended Sep 30, 2022 vs 2021) | Metric | 2022 | 2021 | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | $1,469,556 | $806,850 | +82.1% | | Gross Profit | $1,128,997 | $656,973 | +71.9% | | Gross Margin | 76.8% | 81.4% | -4.6 p.p. | | Net Loss | ($954,711) | ($1,547,140) | -38.3% | - Revenue growth was primarily due to recovery from COVID-19 in Malaysia and the introduction of a **complementary health therapies business**, which contributed approximately **30% of total revenue**[208](index=208&type=chunk) - The decrease in gross margin was attributed to the **lower margin profile** of the new complementary health therapies business compared to the company's traditional network marketing business[210](index=210&type=chunk) [Liquidity and Capital Resources](index=45&type=section&id=Liquidity%20and%20Capital%20Resources) Working capital decreased to $1.51 million as of September 30, 2022, with accumulated deficit growing to $4.21 million, though management expects sufficient cash from operations Liquidity Position | Metric | Sep 30, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Working Capital | $1,505,169 | $2,599,281 | | Cash & Time Deposits | $1,545,527 | $2,530,211 | | Accumulated Deficit | ($4,213,396) | ($3,258,687) | - The company's operations are primarily in Malaysia, which officially transitioned to an **endemic phase of COVID-19** on April 1, 2022, with minimal restrictions, aiding business recovery[220](index=220&type=chunk) - Net cash used in operating activities increased to **$737,456** for the first nine months of 2022, compared to $541,440 in the same period of 2021[227](index=227&type=chunk)[228](index=228&type=chunk) [Critical Accounting Estimates and Policies](index=47&type=section&id=Critical%20Accounting%20Estimates%20and%20Policies) Management outlines significant accounting estimates, such as allowances and asset impairment, and critical policies including revenue recognition and fair value measurement - Significant accounting estimates include allowances for doubtful accounts, inventory obsolescence, useful lives of assets, impairment assessments, and deferred tax assets[232](index=232&type=chunk) - The company recognizes revenue from the sale of health and wellness products at a point in time when control is transferred to the customer, and from wellness services when delivered or completed[248](index=248&type=chunk)[249](index=249&type=chunk) - For the nine months ended September 30, 2021, the company recognized an inventory write-down of **$36,636**; no write-down was recognized in the same period of 2022[235](index=235&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=52&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company identifies foreign exchange risk from multi-currency operations and credit risk from accounts receivable, mitigated by credit evaluation - The company is exposed to **foreign exchange risk** as most revenues are in Malaysian Ringgit, while the common stock is traded in U.S. dollars[254](index=254&type=chunk) - Credit risk from accounts receivable is considered mitigated through credit evaluation processes; the company does not generally require collateral from customers[255](index=255&type=chunk) [Controls and Procedures](index=52&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management concluded disclosure controls and procedures were ineffective due to material weaknesses, including insufficient personnel, lack of internal audit, and inadequate segregation of duties - Management concluded that disclosure controls and procedures were **not effective** as of September 30, 2022[256](index=256&type=chunk) - Several material weaknesses were identified, including: (i) insufficient personnel with U.S. GAAP experience, (ii) lack of an internal audit department, (iii) inadequate segregation of duties, and (iv) deficiencies in IT controls and vendor management[261](index=261&type=chunk) - Remediation efforts include engaging a **full-time CFO** with U.S. GAAP experience and plans to form an **internal audit function** within the next 12 months[263](index=263&type=chunk)[264](index=264&type=chunk) PART II [Legal Proceedings](index=55&type=section&id=Item%201.%20Legal%20Proceedings) The company reports that it is not aware of any material, active, or pending legal proceedings against it - There are no material active or pending legal proceedings against the company[267](index=267&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=55&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities during the period - None reported[267](index=267&type=chunk) [Defaults Upon Senior Securities](index=55&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities - None reported[267](index=267&type=chunk) [Exhibits](index=55&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including officer certifications and Inline XBRL documents - Exhibits filed include certifications by the principal executive officer and principal financial officer, as well as Inline XBRL data files[268](index=268&type=chunk)

Part I [Business](index=5&type=section&id=Item%201.%20Business) Agape ATP Corporation operates in the Health and Wellness industry in Malaysia, offering health supplements and wellness programs via its network marketing subsidiary ASL and DSY Wellness joint venture - The company is principally engaged in the Health and Wellness Industry, supplying high-quality health products and wellness programs[12](index=12&type=chunk) - On May 8, 2020, the Company acquired approximately **99.99%** of Agape Superior Living Sdn Bhd (ASL), an established network marketing entity in Malaysia, to strengthen its supply chain and retail capabilities[10](index=10&type=chunk)[16](index=16&type=chunk) - The company offers three main program series: ATP Zeta Health Program (general wellbeing), ÉNERGÉTIQUE (dermal solutions), and BEAUNIQUE (nutrigenomics)[16](index=16&type=chunk) - In November 2021, the company formed a **60%**-owned joint venture, DSY Wellness International Sdn Bhd, to provide complementary health therapies, expanding its business scope[11](index=11&type=chunk)[18](index=18&type=chunk) - Future plans include restoring ASL's operations to pre-pandemic levels, capitalizing on e-commerce platforms, activating its wellness promotion subsidiary WATP, and expanding DSY Wellness's complementary health therapy business in Malaysia, with potential for wellness tourism in Indonesia and Thailand[53](index=53&type=chunk)[54](index=54&type=chunk)[55](index=55&type=chunk) - As of December 31, 2021, the company's network marketing channel had a customer base of **128,235** members[62](index=62&type=chunk) Employee Distribution by Function | Function | Number of employees | | :--- | :--- | | Senior Management | 3 | | Business Development Department | 3 | | Corporate Affairs Department | 3 | | Finance Department | 6 | | Human Resources Department | 4 | | Operations Department | 9 | | Product Development Department | 5 | | Sales & Marketing Department | 3 | | **Total** | **36** | [Risk Factors](index=22&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks from supplier concentration, internal control weaknesses, COVID-19 impacts, and high dependence on its CEO - The company has a significant concentration risk with its suppliers, with two major suppliers accounting for approximately **47.3%** and **45.2%** of total purchases for the year ended December 31, 2021[67](index=67&type=chunk) - Management identified **eight material weaknesses** in internal controls over financial reporting as of December 31, 2021, including insufficient U.S. GAAP accounting personnel and inadequate segregation of duties[85](index=85&type=chunk)[189](index=189&type=chunk) - The business is highly dependent on its CEO and President, Mr How Kok Choong, whose loss could severely impede operations[96](index=96&type=chunk) - The COVID-19 pandemic has adversely affected the company's primary market, Malaysia, leading to operational disruptions and potential material impact on results[99](index=99&type=chunk)[100](index=100&type=chunk) - Operating in a heavily regulated industry in Malaysia, the company requires Ministry of Health authorizations, with non-compliance risking fines or penalties[81](index=81&type=chunk) [Unresolved Staff Comments](index=30&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments - None[115](index=115&type=chunk) [Properties](index=30&type=section&id=Item%202.%20Properties) The company's principal executive office is located in Kuala Lumpur, Malaysia - The principal executive office is located at 1705 – 1708, Level 17, Tower 2, Faber Towers, Jalan Desa Bahagia, Taman Desa, 58100 Kuala Lumpur, Malaysia[115](index=115&type=chunk) [Legal Proceedings](index=30&type=section&id=Item%203.%20Legal%20Proceedings) The company reports no pending legal proceedings expected to materially adversely affect its business - There are currently no pending legal proceedings or claims that the company believes will have a material adverse effect on its business, financial condition, or operating results[116](index=116&type=chunk) [Mine Safety Disclosure](index=30&type=section&id=Item%204.%20Mine%20Safety%20Disclosure) This section is not applicable to the company - Not applicable[116](index=116&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=31&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on OTC Markets - Pink Sheets with no active market, no dividends planned, and no recent share repurchases - The company's Common Stock is listed on the OTC Markets – Pink Sheets under the trading symbol '**ATTP**', but there is no active trading market[118](index=118&type=chunk) - As of December 31, 2021, there were **290,460,047** shares of Common Stock issued and outstanding, with **1,220** record holders[119](index=119&type=chunk) - The company has no plans to pay dividends and intends to retain all earnings for business use[121](index=121&type=chunk) - The company did not repurchase any of its common stock during the twelve months ended December 31, 2021[122](index=122&type=chunk) [Selected Financial Data](index=31&type=section&id=Item%206.%20Selected%20Financial%20Data) The company experienced a significant financial downturn in FY2021, with revenue dropping by **70.5%** to **$1.02 million** and a swing to a net loss of over **$2.5 million** Selected Financial Data (Years Ended December 31) | Metric | 2021 | 2020 | | :--- | :--- | :--- | | Revenue | $1,016,962 | $3,452,621 | | Net income (loss) attributable to Agape ATP Corporation | $(2,524,244) | $354,766 | | Net income (loss) per share – (basic and diluted) | $(0.01) | $0.00 | | Total assets (as of Dec 31) | $4,724,535 | $7,210,607 | | Total liabilities (as of Dec 31) | $1,312,841 | $1,285,773 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=32&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the **70.5%** revenue decrease in FY2021 to COVID-19, resulting in a **$2.5 million** net loss and reduced working capital, with future liquidity dependent on revenue recovery and potential financing [Results of Operation](index=33&type=section&id=Item%207.%20Results%20of%20Operation) FY2021 revenue decreased **70.5%** to **$1,016,962** due to COVID-19, leading to a **$2,524,680** net loss, a decline in gross margin, and a significant swing in other income/expenses Financial Performance Comparison (2021 vs. 2020) | Metric | 2021 | 2020 | Change | Change (%) | | :--- | :--- | :--- | :--- | :--- | | **Total Revenue** | **$1,016,962** | **$3,452,621** | **$(2,435,659)** | **(70.5%)** | | Cost of Revenue | $297,333 | $775,855 | $(478,522) | (61.7%) | | **Gross Profit** | **$719,629** | **$2,676,766** | **$(1,957,137)** | **(73.1%)** | | Gross Margin | 70.8% | 77.5% | - | - | | Total Operating Expenses | $2,578,197 | $2,834,901 | $(256,704) | (9.1%) | | **Net (Loss) Income** | **$(2,524,680)** | **$354,766** | **$(2,879,446)** | **(811.7%)** | - The significant decrease in revenue was attributed to the COVID-19 situation in Malaysia, where intermittent lockdowns disrupted operational activities and adversely affected consumer purchasing power[139](index=139&type=chunk)[140](index=140&type=chunk) - Other (Expenses) Income changed by **$1,203,527**, from a net income of **$674,482** in 2020 to a net expense of **$529,045** in 2021, primarily due to an unrealized loss on marketable securities[148](index=148&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Item%207.%20Liquidity%20and%20Capital%20Resources) Working capital decreased to **$2.6 million** in 2021, with a **$2.5 million** net loss and **$3.3 million** accumulated deficit, requiring revenue recovery or external financing for liquidity Working Capital and Liquidity (as of Dec 31) | Metric | 2021 | 2020 | | :--- | :--- | :--- | | Working Capital | $2,599,281 | $4,645,729 | | Cash in Bank | $554,864 | $1,112,147 | | Time Deposits | $1,975,347 | $2,391,182 | | Accumulated Deficit | $(3,258,687) | $(734,443) | Summary of Cash Flows (Years Ended Dec 31) | Cash Flow Activity | 2021 | 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | $(845,842) | $(557,951) | | Net cash (used in) provided by investing activities | $(3,959) | $1,276,200 | | Net cash used in financing activities | $(19,061) | $(22,091) | | **Net change in cash and cash equivalents** | **$(919,752)** | **$773,143** | - Management projects that the company's revenue will revert to pre-pandemic levels, generating sufficient cash, or will consider seeking financing from banks or related parties if needed[157](index=157&type=chunk)[159](index=159&type=chunk) [Critical Accounting Policies](index=38&type=section&id=Item%207.%20Critical%20Accounting%20Polices) The company's critical accounting policies involve significant estimates, revenue recognition under ASC Topic 606 for product sales and coupon redemptions, and fair value measurement of financial instruments using a three-level hierarchy - Revenue from health and wellness product sales is recognized at a point in time when control transfers to the customer, in accordance with **ASC Topic 606**[169](index=169&type=chunk)[172](index=172&type=chunk) - Coupon sales are initially recorded as customer deposits, with revenue recognized from forfeited coupons (unused after six months) as net revenues[173](index=173&type=chunk) - Financial statement preparation requires significant management estimates for doubtful accounts, inventory obsolescence, asset useful lives, and impairment[167](index=167&type=chunk) - Fair value of financial instruments is determined using a **three-level hierarchy** (Level 1: quoted prices, Level 2: observable inputs, Level 3: unobservable inputs)[174](index=174&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=41&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces foreign exchange risk due to currency mismatches between revenues (USD) and expenses (MYR, HKD), and manages credit risk through evaluation and short collection terms - The company faces foreign exchange risk as revenues are mostly denominated in **USD**, while expenses are in **Malaysian Ringgit (MYR)** and **Hong Kong Dollars (HKD)**[182](index=182&type=chunk) - Credit risk is concentrated in accounts receivable, mitigated by credit evaluation processes and short collection terms[183](index=183&type=chunk) [Controls and Procedures](index=41&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded internal controls over financial reporting were ineffective as of December 31, 2021, due to **eight material weaknesses**, with remediation plans targeting fiscal year 2022 implementation - Management concluded that internal controls and procedures over financial reporting were **not effective** as of December 31, 2021[188](index=188&type=chunk) - **Eight material weaknesses** were identified, including insufficient U.S. GAAP accounting personnel, lack of an internal audit function, inadequate segregation of duties, and various IT control deficiencies[189](index=189&type=chunk) - Management's remediation plans include establishing an internal audit function, hiring more qualified accounting staff, implementing comprehensive training, and seeking a U.S. tax professional[192](index=192&type=chunk)[193](index=193&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=44&type=section&id=Item%2010.%20Directors,%20Executive%20Officers%20and%20Corporate%20Governance) The company's executive team includes CEO How Kok Choong and CFO Andrew Lee Kam Fan, with plans to establish nominating, compensation, and audit committees to enhance corporate governance - The key executive officers are **How Kok Choong** (CEO, President, etc.), **Mohd Shaharuddin Bin Abdullah** (Director), and **Andrew Lee Kam Fan** (CFO)[195](index=195&type=chunk) - The company currently lacks nominating, compensation, or audit committees, and does not have an audit committee financial expert on its board[203](index=203&type=chunk) - The company plans to establish a full board with nominating, compensation, and audit committees during the year to enhance corporate governance[203](index=203&type=chunk) - A formal Code of Ethics has not been adopted, with the Board citing the small number of employees and reliance on existing fiduciary duties and laws as sufficient for now[207](index=207&type=chunk) [Executive Compensation](index=47&type=section&id=Item%2011.%20Executive%20Compensation) Executive compensation for FY2021 primarily comprised salaries, with CEO How Kok Choong receiving **$275,210**, and no stock options or formal long-term incentive plans currently in place Executive Salaries for Year Ended Dec 31 | Executive | Position | 2021 Salary | 2020 Salary | | :--- | :--- | :--- | :--- | | How Kok Choong | CEO, President, etc. | $275,210 | $203,431 | | Andrew Lee Kam Fan | CFO | $46,988 | N/A | - CEO How Kok Choong is paid a monthly salary of **$22,934** (RM 95,000)[212](index=212&type=chunk) - Director Mohd Shaharuddin Bin Abdullah's employment agreement stipulates a monthly salary of **$3,000** and **$60,000** in annual stock-based compensation, effective upon listing on NASDAQ or NYSE[213](index=213&type=chunk) - The company has not granted any stock options to its executive officers since incorporation[211](index=211&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=48&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) As of December 31, 2021, CEO How Kok Choong beneficially owned **243,216,637** shares, representing **83.73%** of the company's total voting power Beneficial Ownership of Executive Officers and Directors (as of Dec 31, 2021) | Name of Beneficial Owner | Common Stock Beneficially Owned | Voting Percentage | | :--- | :--- | :--- | | How Kok Choong (CEO, Director, etc.) | 243,216,637 | 83.73% | | Mohd Shaharuddin Bin Abdullah | - | - | | Andrew Lee Kam Fan | - | - | - The total number of common stock shares issued and outstanding as of December 31, 2021, was **290,460,047**[219](index=219&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=49&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions,%20and%20Director%20Independence) The company has engaged in significant related-party transactions, primarily with CEO How Kok Choong, including the ASL acquisition and share forfeitures, and has a relationship with e-commerce partner Vettons Sdn Bhd - The company acquired **99.99%** of ASL from its CEO, Mr How Kok Choong, with consideration including the issuance of **176,547** shares of restricted common stock[222](index=222&type=chunk) - Vettons Sdn Bhd became a related party when CEO Mr How Kok Choong was appointed its non-executive Chairman in February 2021, accounting for **100%** of accounts receivable (**$172,757**) as of December 31, 2020[222](index=222&type=chunk) - In December 2021, a total of **85,992,000** shares were forfeited by various shareholders, including **11,242,000** shares from a holding company controlled by CEO Mr How[222](index=222&type=chunk) - Subsequent to the reporting period, on January 20, 2022, CEO Mr How Kok Choong agreed to forfeit an additional **215,008,035** shares of common stock[223](index=223&type=chunk)[434](index=434&type=chunk) Related Party Transactions - Revenue (Years Ended Dec 31) | Name of Related Party | 2021 | 2020 | | :--- | :--- | :--- | | Agape Superior Living Pty Ltd | - | $18,060 | | Vettons Sdn Bhd* | $6,625 | - | | **Total** | **$6,625** | **$18,060** | [Principal Accounting Fees and Services](index=52&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) The company incurred total fees of **$411,500** in 2021 and **$273,000** in 2020 from its independent auditor, Friedman LLP, primarily for audit and tax services Accountant Fees (Friedman LLP) | Fee Category | For the year ended Dec 31, 2021 | For the year ended Dec 31, 2020 | | :--- | :--- | :--- | | Audit fees | $395,000 | $245,000 | | Tax fees | $16,500 | $28,000 | | **Total** | **$411,500** | **$273,000** | Part IV [Exhibits and Financial Statement Schedules](index=53&type=section&id=Item%2015.%20Exhibits,%20Financial%20Statement%20Schedules) This section presents the company's consolidated financial statements for FY2021 and FY2020, including balance sheets, statements of operations, changes in equity, and cash flows, along with the independent auditor's report - The independent auditor, Friedman LLP, issued an opinion stating that the consolidated financial statements present fairly, in all material respects, the financial position and results of operations for the years ended December 31, 2021 and 2020, in conformity with **U.S. GAAP**[248](index=248&type=chunk) Consolidated Balance Sheet Summary (as of Dec 31) | | 2021 | 2020 | | :--- | :--- | :--- | | **Total Assets** | **$4,724,535** | **$7,210,607** | | Total Current Assets | $3,912,122 | $5,684,271 | | **Total Liabilities** | **$1,411,899** | **$1,285,773** | | Total Current Liabilities | $1,312,841 | $1,038,542 | | **Total Equity** | **$3,312,636** | **$5,924,834** | Consolidated Statement of Operations Summary (Years Ended Dec 31) | | 2021 | 2020 | | :--- | :--- | :--- | | Total Revenue | $1,016,962 | $3,452,621 | | Gross Profit | $719,629 | $2,676,766 | | Loss from Operations | $(1,858,568) | $(158,135) | | **Net (Loss) Income** | **$(2,524,680)** | **$354,766** | | Basic and Diluted (Loss) Earnings Per Share | $(0.01) | $0.00 | Consolidated Statement of Cash Flows Summary (Years Ended Dec 31) | | 2021 | 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | $(845,842) | $(557,951) | | Net cash (used in) provided by investing activities | $(3,959) | $1,276,200 | | Net cash used in financing activities | $(19,061) | $(22,091) | | **(Decrease) Increase in Cash and Cash Equivalents** | **$(919,752)** | **$773,143** | | Cash and Cash Equivalents, end of year | $2,597,848 | $3,517,600 |

[PART I FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) This section presents the unaudited condensed consolidated financial statements and related management discussion for the period ended March 31, 2021 [Unaudited Condensed Consolidated Financial Statements](index=4&type=section&id=ITEM%201.%20UNAUDITED%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS%3A) This section presents the unaudited condensed consolidated financial statements for Agape ATP Corporation, including balance sheets, statements of operations, equity changes, and cash flows, showing a net loss and asset decrease for the quarter ended March 31, 2021 [Unaudited Condensed Consolidated Balance Sheets](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased to **$6.67 million** from **$7.21 million** as of March 31, 2021, primarily due to reduced current assets, alongside decreases in total liabilities and stockholders' equity Condensed Consolidated Balance Sheet Data (Unaudited) | Account | March 31, 2021 | December 31, 2020 | | :--- | :--- | :--- | | **Total Current Assets** | $5,122,995 | $5,684,271 | | **Total Assets** | **$6,666,027** | **$7,210,607** | | **Total Current Liabilities** | $916,983 | $1,038,542 | | **Total Liabilities** | **$1,113,127** | **$1,285,773** | | **Total Stockholders' Equity** | **$5,552,900** | **$5,924,834** | [Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) The company reported **$301,780** in revenue for Q1 2021, a significant increase from zero in Q1 2020, yet incurred a higher net loss of **$333,650** due to increased operating expenses Statement of Operations Highlights (Unaudited) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | **Revenue** | $301,780 | $0 | | **Gross Profit** | $224,189 | $0 | | **Total Operating Expenses** | ($566,699) | ($159,516) | | **Loss from Operations** | ($342,510) | ($159,516) | | **Net Loss** | **($333,650)** | **($231,750)** | | **Net Loss Per Share (Basic and Diluted)** | $0.00 | $0.00 | [Unaudited Condensed Consolidated Statements of Changes in Stockholders' Equity](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) Total stockholders' equity decreased to **$5.55 million** from **$5.92 million** by March 31, 2021, primarily due to the net loss and foreign currency translation adjustments - The accumulated deficit increased to **$1,068,093** as of March 31, 2021, from **$734,443** at December 31, 2020, reflecting the net loss for the quarter[16](index=16&type=chunk) [Unaudited Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities improved to **$129,297** in Q1 2021, with no investing activities and minimal financing cash usage, resulting in an overall decrease of **$163,042** in cash and cash equivalents Cash Flow Summary (Unaudited) | Cash Flow Activity | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | **Net cash used in operating activities** | ($129,297) | ($230,431) | | **Net cash provided by investing activities** | $0 | $70,173 | | **Net cash used in financing activities** | ($6,423) | $0 | | **Net change in cash and cash equivalents** | **($163,042)** | **($156,250)** | [Notes to Unaudited Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) These notes detail the company's Health and Wellness business in Malaysia, including the ASL acquisition, VIE consolidation, accounting policies, and significant risks such as those related to COVID-19 - The company is principally engaged in the Health and Wellness Industry, supplying products and programs like the 'ATP Zeta Health Program' and operates mainly in Malaysia[22](index=22&type=chunk)[26](index=26&type=chunk) - On May 8, 2020, the Company acquired approximately **99.99%** of Agape Superior Living Sdn Bhd (ASL) to secure an established network marketing sales channel in Malaysia[21](index=21&type=chunk)[27](index=27&type=chunk) - The company consolidates a Variable Interest Entity (VIE), Agape S.E.A. Sdn Bhd (SEA), which serves as a trading company for ASL's purchases[102](index=102&type=chunk) - The company faces significant risks from the COVID-19 pandemic, as substantially all revenues are concentrated in Malaysia, which has been subject to various movement control orders, potentially affecting demand, supply chains, and overall results[172](index=172&type=chunk)[173](index=173&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=37&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses the Q1 2021 financial results, highlighting revenue generation from the ASL acquisition, an increased net loss due to higher operating expenses, and sufficient liquidity despite COVID-19 challenges, while also addressing critical accounting policies and internal control weaknesses [Results of Operation](index=39&type=section&id=Results%20of%20Operation) Q1 2021 revenue of **$301,780** from ASL operations led to a gross profit of **$224,189**, but a surge in operating expenses, particularly G&A, resulted in a wider net loss of **$333,650** Q1 2021 vs Q1 2020 Performance | Metric | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | | Revenue | $301,780 | $0 | | Gross Profit | $224,189 | $0 | | G&A Expenses | $362,146 | $159,516 | | Net Loss | ($333,650) | ($231,750) | - The increase in G&A expenses by **$202,630** (**127%**) was predominantly due to increased salary and employee benefit expenses from the ASL acquisition[190](index=190&type=chunk) [Liquidity and Capital Resources](index=40&type=section&id=Liquidity%20and%20Capital%20Resources) Working capital decreased to **$4.2 million** by March 31, 2021, yet management deems resources sufficient for the next 12 months, despite ongoing COVID-19 impacts in Malaysia and plans for e-commerce expansion into other Asian markets - Working capital was **$4,206,012** as of March 31, 2021, and management believes cash resources are sufficient for the next **12** months[198](index=198&type=chunk) - The company's operations are significantly impacted by COVID-19 related movement control orders in Malaysia, its primary revenue source[194](index=194&type=chunk)[196](index=196&type=chunk) - Net cash used in operating activities improved to **$129,297** in Q1 2021 from **$230,431** in Q1 2020[201](index=201&type=chunk)[202](index=202&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=46&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company faces unhedged foreign exchange risk between the U.S. dollar, Malaysian Ringgit, and Hong Kong Dollar, while managing credit risk from accounts receivable through evaluation and short collection terms - The company faces foreign exchange risk between the U.S. dollar, Malaysian Ringgit, and Hong Kong Dollar, but does not currently hedge this risk[220](index=220&type=chunk) - Credit risk from accounts receivable is managed through credit evaluations and short collection terms, and the company does not generally require collateral[221](index=221&type=chunk) [Controls and Procedures](index=46&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management identified material weaknesses in internal controls over financial reporting as of March 31, 2021, including insufficient U.S. GAAP expertise and inadequate segregation of duties, with remediation efforts underway including a new CFO appointment and plans for an internal audit function - Management concluded that internal controls over financial reporting were not effective as of March 31, 2021[225](index=225&type=chunk) - Identified material weaknesses include: (i) lack of sufficient U.S. GAAP accounting expertise, (ii) lack of an internal audit function, (iii) inadequate segregation of duties, (iv) poor system change management, (v) weak data security access controls, and (vi) lack of qualified personnel for U.S. tax provisions (Subpart F and GILTI)[227](index=227&type=chunk) - Remediation efforts include the appointment of a CFO on January 12, 2021, and plans to establish an internal audit function, engage consultants, and hire a U.S. tax professional[229](index=229&type=chunk)[230](index=230&type=chunk)[231](index=231&type=chunk) [PART II OTHER INFORMATION](index=49&type=section&id=PART%20II%20OTHER%20INFORMATION) This section provides additional information not covered in the financial statements, including legal proceedings, equity sales, and exhibits [Legal Proceedings](index=49&type=section&id=ITEM%201%20Legal%20PROCEEDINGS) The company reports no material, active, or pending legal proceedings against it - There are no known material, active, or pending legal proceedings against the company[233](index=233&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=49&type=section&id=ITEM%202%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) There were no unregistered sales of equity securities during the reporting period - None[233](index=233&type=chunk) [Other Information](index=49&type=section&id=ITEM%205%20OTHER%20INFORMATION) The company reported no other information required to be disclosed in this item - None[233](index=233&type=chunk) [Exhibits](index=50&type=section&id=ITEM%206%20EXHIBITS) This section lists the exhibits filed with the Form 10-Q, including officer certifications (31.1, 32.1) and XBRL data files - Exhibits filed include Rule 13(a)-14(a)/15(d)-14(a) Certification, Section 1350 Certification, and various XBRL documents[234](index=234&type=chunk)