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]
Agape ATP (ATPC) - 2023 Q3 - Quarterly Report