Agape ATP (ATPC) - 2024 Q2 - Quarterly Report

Revenue Performance - Total revenue for Q2 2024 was $313,039, a 3.0$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$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$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$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$555,537 in Q2 2023[222] - General and administrative expenses for Q2 2024 were $601,804, up 28.2$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$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]