Company Overview - Agape ATP Corporation (ATPC) focuses on enhancing quality of life and promoting sustainable development through health and wellness products and energy-saving solutions [2][3] - The company aims to cater to diverse customer needs, ensuring well-being and vitality while empowering businesses to achieve sustainability goals [2][3] Recent Developments - Agape ATP Corporation announced a 1-for-20 reverse stock split effective August 30, 2024, reducing the number of authorized shares from 1,000,000,000 to 50,000,000 [1] - The reverse stock split is intended to increase the market price per share to comply with NASDAQ's continued listing standards [1]

Revenue Performance - Total revenue for Q2 2024 was $313,039, a 3.0% increase from $303,935 in Q2 2023, with network marketing revenue decreasing by 67.7% and complementary health therapies revenue increasing by 33.1%[218] - For the six months ended June 30, 2024, total revenue was $631,682, a 7.7% decrease from $684,703 in the same period of 2023, driven by a 71.1% decline in network marketing revenue[228] Profitability - Gross profit for Q2 2024 was $193,561, with a gross margin of approximately 61.8%, down from $196,004 and 64.5% in Q2 2023[221] - For the six months ended June 30, 2024, gross profit was $396,981, with a gross margin of approximately 62.8%, down from 65.5% in the same period of 2023[230] - Net loss for Q2 2024 increased to $432,315 from $379,449 in Q2 2023, reflecting ongoing challenges in the network marketing segment[227] - Net loss increased by $321,886 from $813,524 for the six months ended June 30, 2023, to $1,135,410 for the six months ended June 30, 2024[237] Expenses - Operating expenses for Q2 2024 totaled $647,146, an increase of 16.5% from $555,537 in Q2 2023[222] - General and administrative expenses for Q2 2024 were $601,804, up 28.2% from $469,469 in Q2 2023, primarily due to increased salaries and professional fees[224] - Cost of revenue for Q2 2024 was $119,478, a 10.7% increase from $107,931 in Q2 2023, attributed to higher product costs[219] Cash Flow and Working Capital - Net cash used in operating activities for the six months ended June 30, 2024, was $1,656,000, compared to $742,175 for the same period in 2023, representing an increase of 123%[239][240] - Net cash used in investing activities for the six months ended June 30, 2024, was $3,567, a decrease from $6,499 in the same period in 2023[242] - Net cash used in financing activities for the six months ended June 30, 2024, was $2,847, significantly lower than $22,861 for the same period in 2023[242] - As of June 30, 2024, the working capital deficit was $3,017,911, compared to a working capital of $4,113,614 as of December 31, 2023[238] Accumulated Deficits and Assets - Accumulated deficits increased to $8,199,977 as of June 30, 2024, from $7,047,571 as of December 31, 2023[238] - The carrying amounts of operating right-of-use assets and property and equipment as of June 30, 2024, were $281,256 and $53,990, respectively, down from $357,301 and $77,858 as of December 31, 2023[246] - No inventory write-downs were recognized for the six months ended June 30, 2024, and 2023[244] Accounting Standards and Risks - The adoption of ASU 2023-01 has no material impact on the unaudited condensed consolidated financial statements for the six months ended June 30, 2024[260][261] - The FASB issued ASU 2024-01 regarding stock compensation, effective for annual reporting periods beginning after December 15, 2024, with no expected impact on the Company's consolidated financial statements[264] - ASU 2024-02 was issued to remove extraneous references in accounting guidance, effective for annual reporting periods beginning after December 15, 2024, and is not expected to significantly impact financial statements[265] - There are no other new accounting standards expected to materially impact the consolidated financial position or cash flows[266] Currency and Credit Risk - The Company primarily generates revenue in Malaysian Ringgit, with expenses also in Malaysian Ringgit, U.S. dollars, and Hong Kong dollars, indicating limited direct foreign exchange risk[267] - The Company does not hedge foreign currency exposures and believes its foreign exchange risk is limited, although the value of its Common Stock may be affected by exchange rates[267] - Credit risk is primarily associated with accounts receivable, which is mitigated by an ongoing credit evaluation process and short collection terms[268] - The Company does not generally require collateral from customers and assesses the need for credit loss allowances based on specific customer credit risk and historical trends[268] Business Diversification - The company is diversifying into renewable energy, having formed a wholly owned subsidiary, ATPC Green Energy Sdn Bhd, to align with global energy trends[217]

Revenue Performance - Revenue for Q1 2024 was $318,643, a decrease of $62,124 or approximately 16.3% compared to $380,767 in Q1 2023, primarily due to a significant decline in network marketing revenue [191]. - Network marketing revenue decreased by $101,780 or approximately 73.3%, while revenue from complementary health therapies increased by $39,656 or approximately 16.4% [191]. Profitability - Gross profit for Q1 2024 was $203,420, with a gross margin of 63.8%, down from $252,408 and a gross margin of 66.3% in Q1 2023 [193]. - Net loss for Q1 2024 was $703,094, an increase of $269,019 from a net loss of $434,075 in Q1 2023 [200]. Expenses - General and administrative expenses increased by $271,013 or approximately 45.5%, totaling $867,266 in Q1 2024, mainly due to salaries and professional fees [197]. - Cost of revenue for Q1 2024 was $115,223, a decrease of $13,136 or approximately 10.2% from $128,359 in Q1 2023 [192]. Cash Flow - Net cash used in operating activities for Q1 2024 was $1,243,460, compared to $272,555 in Q1 2023 [203]. - Net cash used in financing activities for Q1 2024 was $899, a significant reduction from $6,961 in Q1 2023 due to the payment of deferred offering costs [206]. Working Capital and Assets - The company had working capital of $3,428,530 as of March 31, 2024, down from $4,113,614 as of December 31, 2023 [201]. - As of March 31, 2024, the carrying amounts of operating right-of-use assets and property, plant and equipment were $314,390 and $63,080, respectively, compared to $41,593 and $160,480 as of March 31, 2023 [210]. Other Income and Financial Condition - Net other income for Q1 2024 was $27,282, a significant increase of $11,689 or approximately 75.0% compared to $15,593 in Q1 2023 [198]. - The Company has no significant off-balance sheet arrangements that could materially affect its financial condition as of March 31, 2024 [206]. - The Company does not have any credit facilities or access to bank credit [206]. Revenue Recognition and Accounting Policies - The Company recognizes revenue from sales of health and wellness products at the point of transfer to customers, net of estimated discounts and returns [215]. - The Company has adopted ASU No. 2023-01 regarding leases, effective for reporting periods beginning after December 15, 2023, with no material impact on financial statements for Q1 2024 [221]. - The Company is currently evaluating the impact of ASU 2023-07 on its consolidated financial statements, effective after December 15, 2023 [222]. Risk Management - The Company has not hedged exposures denominated in foreign currencies, limiting direct foreign exchange risk [227]. - The Company evaluates the need for an allowance for doubtful accounts based on credit risk factors, historical trends, and other information [228]. - No inventory write-downs or write-offs were recognized for the three months ended March 31, 2024 and 2023 [208]. Future Outlook - The company is in the process of introducing a new range of products for its network marketing business to enhance revenue potential [191].

Financial Performance - Total revenue for the year ended December 31, 2023 was $1,431,088, a decrease of $425,476 or approximately 22.9% from $1,856,564 in 2022[169] - Revenue from the network marketing business decreased significantly by $741,641 or approximately 65.2%, while revenue from complementary health therapies increased by $317,888 or approximately 44.4%[170] - Cost of revenue for 2023 was $494,516, approximately 34.6% of revenue, down from $666,042 or 35.9% in 2022, representing a decrease of $171,526 or approximately 25.8%[171] - Gross profit for 2023 was $936,572, with a gross margin of approximately 65.4%, compared to $1,190,522 and a gross margin of approximately 64.1% in 2022[173] - The company recorded a net loss of $2,109,935 for the year ended December 31, 2023, an increase of $443,856 or approximately 26.6% from the net loss of $1,666,079 in 2022[180] - Other income for 2023 was $40,219, a significant change from net other expenses of $136,868 in 2022, mainly due to unrealized holding gains on marketable securities[178] Expenses - Selling expenses increased by $267,589 or approximately 74.0% to $629,003 in 2023, primarily due to increased promotional expenses[174] - Commission expenses decreased significantly by $317,219 or approximately 78.3% to $88,132 in 2023, due to reduced revenue from the network marketing business[175] - General and administrative expenses increased by $408,993 or approximately 20.9% to $2,366,016 in 2023, driven by increased salaries and operational growth in complementary health therapies[176] Cash Flow and Working Capital - Net cash used in operating activities for 2023 was $2,001,823, significantly higher than $811,683 in 2022[188] - The company reported a net change in cash and cash equivalents of $3,394,030 for 2023, a significant improvement from a decrease of $1,159,418 in 2022[187] - As of December 31, 2023, the company reported working capital of $4,113,614, an increase from $799,239 as of December 31, 2022[186] - The company had net cash provided by financing activities of $5,398,037 in 2023, compared to a net cash used of $234,466 in 2022[191] Market and Operational Strategy - The company plans to expand into Asian markets, focusing on Thailand, Indonesia, and Taiwan, leveraging e-commerce for growth[185] - The company has modified its operations to manage inventory effectively amid potential supply chain disruptions due to COVID-19[183] - There is uncertainty regarding the financial impact of COVID-19, with no guarantee of revenue growth in 2024 and beyond[185] - The company recognized no inventory write-downs for 2023, compared to $5,307 in 2022[194] Regulatory and Accounting Updates - In July 2023, the FASB issued ASU No. 2023-03, which amends various SEC paragraphs but did not significantly impact the company's consolidated financial statements[208] - In October 2023, the FASB issued ASU No. 2023-06, aimed at improving disclosure requirements, with no expected significant impact on the company's consolidated financial statements[209] - In November 2023, the FASB issued ASU 2023-07 to enhance reportable segment disclosures, effective for annual reporting periods beginning after December 15, 2023[211] - In December 2023, the FASB issued ASU 2023-09, requiring specific disclosures in rate reconciliation, effective for annual reporting periods beginning after December 15, 2024[212] - The company adopted ASU No. 2019-10, effective January 1, 2023, with no material impact on consolidated financial statements for the year ended December 31, 2023[213] Risk Management - The company does not believe it has significant direct foreign exchange risk, as most revenues and expenses are denominated in Malaysian Ringgit[214] - Credit risk is mitigated by the company's ongoing credit evaluation process and relatively short collection terms, with no general requirement for collateral from customers[215]

Core Points - Agape ATP (NASDAQ:ATPC) stock is experiencing a significant increase in trading volume, with over 13 million shares traded on Tuesday morning, compared to its daily average of approximately 112,000 shares [1] - The stock price has risen by 98% as of Tuesday morning, despite no new press releases or analyst coverage explaining the surge [2] - Agape ATP is classified as a penny stock, with a low closing price of 51 cents and a market capitalization of around $39.322 million [1][2] Trading Dynamics - The heavy trading activity may be attributed to the stock's penny status, which often attracts retail and day traders for potential pump and dump schemes [2] - The current trading environment suggests that while the stock is up, there is a risk of losing gains as traders may start to sell off [2] Market Context - The article highlights the general caution surrounding penny stocks, which are often targeted by market manipulators and can be volatile [3]

Revenue Performance - For the three months ended September 30, 2023, total revenue decreased by $308,575 or approximately 46.5% to $355,314, primarily due to a significant decline in the network marketing business revenue, which dropped by $373,817 or approximately 80.7%[223] - Revenue from the provision of complementary health therapies increased by $65,242 or approximately 32.5%, contributing $266,106, which accounted for approximately 74.9% of total revenue for the same period[223] - For the nine months ended September 30, 2023, total revenue decreased by $429,539 or approximately 29.2% to $1,040,017, with network marketing revenue declining by $702,636 or approximately 68.8%[233] Gross Profit and Margin - Gross profit for the three months ended September 30, 2023, was $234,728, representing a gross margin of approximately 66.1%, down from $506,144 and a gross margin of approximately 76.2% in the same period of 2022[225] - Gross profit for the nine months ended September 30, 2023, was $683,142, with a gross margin of approximately 65.7%, down from $1,128,997 and a gross margin of approximately 76.8% in the same period of 2022[234] Operating Expenses - Total operating expenses for the three months ended September 30, 2023, were $551,806, a decrease of $147,646 or approximately 21.1% from $699,452 in the prior year[226] - Commission expenses for the three months ended September 30, 2023, were $14,002, a significant decrease of $153,393 or approximately 91.6% compared to $167,395 in the same period of 2022[228] - General and administrative expenses for the nine months ended September 30, 2023, increased by $267,811 or approximately 20.8% to $1,554,242, primarily due to expenses related to complementary health therapies and ongoing uplisting efforts to Nasdaq[237] Net Loss - Net loss for the three months ended September 30, 2023, increased to $324,735, up by $84,518 from $240,217 in the same period of 2022[232] - Net loss for the nine months ended September 30, 2023, rose to $1,138,259, an increase of $195,522 from $943,007 in the same period of 2022[240] - The company experienced a net loss of $1,138,259 for the nine months ended September 30, 2023, compared to a net loss of $943,007 for the same period in 2022[247] Working Capital and Cash Flow - As of September 30, 2023, the company reported a working capital deficit of $445,245, down from a positive working capital of $799,239 as of December 31, 2022[247] - Net cash used in operating activities for the nine months ended September 30, 2023 was $995,706, an increase from $737,456 in the same period of 2022[249][250] Future Plans and Market Expansion - The company anticipates expanding into Asian markets, focusing on Thailand, Indonesia, and Taiwan, and will explore e-commerce for this expansion[245] - The company plans to reassess its office setup in the countries it operates to better service customers now that COVID-19 has subsided[245] Accounting Standards and Risks - The company adopted ASU 2016-13 on January 1, 2023, which changes the methodology for measuring credit losses on financial instruments[267] - The adoption of recent accounting standards did not have a material impact on the unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2023[269] - The Company adopted ASUs 2016-13 and 2019-05 effective January 1, 2023, with no material impact on the financial statements for the three and nine months ended September 30, 2023[278] - The Company does not currently have significant direct foreign exchange risk, as most revenues and expenses are denominated in Malaysian Ringgit[281] - Credit risk is mitigated by an ongoing credit evaluation process and relatively short collection terms, with no general requirement for collateral from customers[282] - The Company has reviewed all recently issued accounting standards updates for applicability and impact[272] - There are no new accounting standards expected to materially impact the consolidated financial position or cash flows[279] - The FASB issued ASU No. 2023-01, effective for reporting periods beginning after December 15, 2023, which provides guidance on leasehold improvements associated with common control leases[273] - The FASB's ASU No. 2023-06 clarifies disclosure requirements but is not expected to have a significant impact on the financial statements[271] - The Company is currently evaluating the impact of ASU No. 2023-01 on its financial statements[273]

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]

Revenue and Growth - For the year ended December 31, 2022, the company generated revenue of $1,856,564, a significant increase of approximately 82.6% compared to $1,016,962 in 2021, primarily due to recovery from COVID-19 and expansion in complementary health therapies [205]. - Revenue from the network marketing business was $1,141,307, accounting for approximately 61.5% of total revenue, while revenue from complementary health therapies was $715,257, representing approximately 38.5% [205]. - Management projects that the company's revenue will revert to pre-pandemic levels, generating sufficient cash to cover operating expenses [220]. Costs and Expenses - The cost of revenue for 2022 was $666,042, reflecting a 124.0% increase from $297,333 in 2021, in line with the revenue growth [207]. - Gross profit for 2022 was $1,190,522, with a gross margin of approximately 64.1%, down from 70.8% in 2021, attributed to lower margins in complementary health therapies [208]. - Commission expenses increased by approximately 28.2% to $405,351 in 2022, compared to $316,267 in 2021, aligning with revenue growth [211]. - General and administrative expenses rose by approximately 12.1% to $1,957,023 in 2022, up from $1,745,734 in 2021, mainly due to costs associated with complementary health therapies [211]. Net Loss and Financial Position - The company recorded a net loss of $1,666,079 for the year ended December 31, 2022, a decrease of approximately 34.0% from a net loss of $2,524,680 in 2021 [216]. - As of December 31, 2022, the company had working capital of $799,239, a decrease from $2,599,281 in 2021, with cash and cash equivalents of $523,619 [220]. - The total net change in cash and cash equivalents for 2022 was $(1,159,418), compared to $(919,752) in 2021, indicating a worsening liquidity position [222]. Cash Flow Activities - Net cash used in operating activities for 2022 was $811,683, a decrease from $845,842 in 2021, primarily due to a net loss of $1,666,079 [223]. - The company incurred a net cash used in investing activities of $32,119 in 2022, significantly higher than $3,959 in 2021, entirely for the purchase of equipment and intangible assets [225]. - Net cash used in financing activities for 2022 was $234,466, compared to $19,061 in 2021, primarily for the payment of deferred offering costs [226]. Inventory and Assets - The company recognized inventory write-downs of $5,307 in 2022, a decrease from $36,241 in 2021, reflecting improved inventory management [231]. - The carrying amounts of operating right-of-use assets and property, plant, and equipment as of December 31, 2022, were $81,133 and $142,149, respectively [233]. Liquidity and Credit Risk - The company does not have any credit facilities or access to bank credit, indicating potential liquidity constraints [227]. - The company has no significant off-balance sheet arrangements that could materially affect its financial condition as of December 31, 2022 [228]. - The company evaluates the need for an allowance for doubtful accounts based on credit risk factors and historical trends, mitigating credit risk in trade receivables [248]. Market Expansion - The company plans to expand into Asian markets, focusing on Thailand, Indonesia, and Taiwan, leveraging e-commerce for growth [219]. Foreign Exchange and Risk Management - The company operates primarily in Malaysian Ringgit, with no significant direct foreign exchange risk identified [247].

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)