Agape ATP (ATPC) - 2023 Q2 - Quarterly Report

Revenue Performance - For the three months ended June 30, 2023, total revenue decreased by $92,772, or approximately 23.4$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$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$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$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].