ATPC Agape ATP Corporation

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

 

For The Quarterly Period Ended September 30, 2024

 

or

 

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from _______________ to _______________

 

Commission File Number 001-41835

 

AGAPE ATP CORPORATION

(Exact name of registrant issuer as specified in its charter)

 

Nevada		36-4838886
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

 

1705 - 1708, Level 17, Tower 2, Faber Tower, Jalan Desa Bahagia,

Taman Desa, 58100 Kuala Lumpur, Malaysia.

(Address of principal executive offices, including zip code)

 

Registrant’s phone number, including area code (60) 192230099

 

Securities registered pursuant to Section 12(b) of the Securities Exchange Act:

 

Common Stock, $0.0001 par value

(Title of Class)

 

Nasdaq Capital Market

(Name of exchange on which registered)

 

ATPC

(Ticker Symbol)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

 

Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (section 232.405 of this chapter) during the preceding twelve months (or shorter period that the registrant was required to submit and post such files).

 

Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large Accelerated Filer ☐ Accelerated Filer ☐ Non-accelerated Filer ☒ Smaller reporting company ☒

Emerging growth company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

 

Yes ☐ No ☒

 

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

 

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

 

Yes ☐ No ☐

 

APPLICABLE ONLY TO CORPORATE ISSUERS:

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

Class		Outstanding at November 11, 2024
Common Stock, $0.0001 par value		3,989,056

 

 

 

TABLE OF CONTENTS

 

		Page
PART I	FINANCIAL INFORMATION
ITEM 1.	UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:
	Unaudited Condensed Consolidated Balance Sheets	F-1
	Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss	F-2
	Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity	F-3
	Unaudited Condensed Consolidated Statements of Cash Flows	F-4
	Notes to Unaudited Condensed Consolidated Financial Statements	F-5 - F-36
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	3
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	13
ITEM 4.	CONTROLS AND PROCEDURES	13
PART II	OTHER INFORMATION
ITEM 1	LEGAL PROCEEDINGS	15
ITEM 2	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	15
ITEM 3	DEFAULTS UPON SENIOR SECURITIES	15
ITEM 4	MINE SAFETY DISCLOSURES	15
ITEM 5	OTHER INFORMATION	15
ITEM 6	EXHIBITS	15
	SIGNATURES	16

 

 

PART I FINANCIAL INFORMATION

 

ITEM 1. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:

 

AGAPE ATP CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(Currency expressed in United States Dollars (“US$”), except for number of shares)

 

		September 30, 2024 (Unaudited)				December 31, 2023 (Audited)
		As of
		September 30, 2024 (Unaudited)				December 31, 2023 (Audited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents (Included $1,294 and $122 in the consolidated VIE that can be used only to settle obligations of the consolidated VIE as of September 30, 2024 and December 31, 2023, respectively.)		$	2,719,033			$	4,832,460
Accounts receivable, net			41,944				55,458
Other receivable			1,432				435
Amount due from related parties			2,460				11,093
Amount due from related parties			2,460				11,093
Inventories			60,564				47,907
Prepaid taxes (Included $0 and $1,670 in the consolidated VIE that can be used only to settle obligations of the consolidated VIE as of September 30, 2024 and December 31, 2023, respectively.)			34,101				21,993
Prepayments and deposits, net (Included $20 and $7 in the consolidated VIE that can be used only to settle obligations of the consolidated VIE as of September 30, 2024 and December 31, 2023, respectively.)			539,701				215,806
Total Current Assets			3,399,235				5,185,152
NON-CURRENT ASSETS
Property and equipment, net			47,508				77,858
Intangible assets, net			15,413				17,458
Finance lease assets			205,220				86,335
Operating right-of-use assets			282,734				357,301
Investment in marketable securities			12,084				20,171
Investment in non-marketable securities			1,500				-
Deferred tax assets			-				219
Total Non-Current Assets			564,459				559,342
TOTAL ASSETS		$	3,963,694			$	5,744,494
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable			83,309				55,585
Accounts payable – related parties			27,183				34,848
Accounts payable			27,183				34,848
Customer deposits			94,887				101,575
Operating lease liabilities, current			161,999				138,548
Other payables and accrued liabilities ($1,153 and $899 are included in the consolidated VIE that are without recourse to the credit of Agape ATP Corporation as of September 30, 2024 and December 31, 2023, respectively.)			540,896				726,061
Other payable – related parties			769				7,846
Finance lease liabilities, current			23,085				7,075
Income tax payable			14,764				-
Total Current Liabilities			946,892				1,071,538
NON-CURRENT LIABILITIES
Operating lease liabilities, non-current			122,250				219,530
Finance lease liabilities, non-current			130,927				72,563
Total Non-Current Liabilities			253,177				292,093
TOTAL LIABILITIES		$	1,200,069			$	1,363,631
COMMITMENTS AND CONTINGENCIES (Note 21)			-				-
STOCKHOLDERS’ EQUITY
Preferred stock, $0.0001 par value; 200,000,000 shares authorized; Nil issued and outstanding			-				-
Common Stock, par value $0.0001; 50,000,000 shares authorized, 3,989,056 and 3,855,126 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively.*			399				386
Additional paid in capital			11,422,708				11,386,055
Treasury Stock, par value $0.0001; 0 and 6,765 shares as of September 30, 2024 and December 31, 2023, respectively.*			-				(1	)
Accumulated deficit			(8,709,605	)			(7,047,571	)
Accumulated other comprehensive income			34,111				30,215
TOTAL AGAPE ATP CORPORATION STOCKHOLDERS’ EQUITY			2,747,613				4,369,084
NON-CONTROLLING INTERESTS			16,012				11,779
TOTAL EQUITY			2,763,625				4,380,863
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	3,963,694			$	5,744,494

 

*

Issued and outstanding shares of common stock and treasury stock have been adjusted on a retroactive basis to reflect 1-for-20 reverse stock split effective on August 30, 2024.

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

 

AGAPE ATP CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(UNAUDITED)

(Currency expressed in United States Dollars (“US$”), except for number of shares)

 

		2024				2023				2024				2023
		For the three months ended								For the nine months ended
		September 30,								September 30,
		2024				2023				2024				2023
REVENUE		$	331,289			$	355,314			$	962,971			$	1,040,017
COST OF REVENUE			(147,104	)			(120,586	)			(381,805	)			(356,875	)
GROSS PROFIT			184,185				234,728				581,166				683,142
SELLING			(41,582	)			(49,285	)			(129,938	)			(189,509	)
COMMISSION			(6,894	)			(14,002	)			(23,573	)			(69,886	)
GENERAL AND ADMINISTRATIVE			(683,819	)			(488,519	)			(2,152,889	)			(1,554,242	)
TOTAL OPERATING EXPENSES			(732,295	)			(551,806	)			(2,306,400	)			(1,813,637	)
LOSS FROM OPERATIONS			(548,110	)			(317,078	)			(1,725,234	)			(1,130,495	)
OTHER INCOME (EXPENSES)
Other income (loss), net			3,445				(98	)			25,942				12,402
Interest income			16,291				658				58,432				5,475
Unrealized holding (loss) gain on marketable securities			(1,176	)			(3,872	)			(6,642	)			4,838
Gain (loss) on disposal of property and equipment			111				(20	)			111				1,767
Exchange gain (loss), net			2,525				(382	)			1,745				(34,958	)
TOTAL OTHER INCOME (EXPENSES), NET			21,196				(3,714	)			79,588				(10,476	)
LOSS BEFORE INCOME TAXES			(526,914	)			(320,792	)			(1,645,646	)			(1,140,971	)
INCOME TAX CREDIT (EXPENSE)			2,875				(3,943	)			(13,803	)			2,712
NET LOSS			(524,039	)			(324,735	)			(1,659,449	)			(1,138,259	)
LESS: NET (LOSS) INCOME ATTRIBUTABLE TO NON-CONTROLLING INTERESTS			(14,411	)			2,294				2,586				(10,704	)
NET LOSS ATTRIBUTABLE TO AGAPE ATP CORPORATION		$	(509,628	)		$	(327,029	)		$	(1,662,035	)		$	(1,127,555	)
NET LOSS		$	(524,039	)		$	(324,735	)		$	(1,659,449	)		$	(1,138,259	)
OTHER COMPREHENSIVE INCOME
Foreign currency translation adjustment			7,224				6,367				3,896				8,713
TOTAL COMPREHENSIVE LOSS			(516,815	)			(318,368	)			(1,655,553	)			(1,129,546	)
Less: Comprehensive (loss) income attributable to non-controlling interests			(12,522	)			2,039				4,233				(11,580	)
COMPREHENSIVE LOSS ATTRIBUTABLE TO AGAPE ATP CORPORATION		$	(504,293	)		$	(320,407	)		$	(1,659,786	)		$	(1,117,966	)
LOSS PER SHARE
Basic and diluted		$	(0.13	)		$	(0.09	)		$	(0.43	)		$	(0.30	)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING*
Basic and diluted			3,881,074				3,772,601				3,859,393				3,772,601

 

*

Weighted average number of common shares outstanding have been adjusted on a retroactive basis to reflect 1-for-20 reverse stock split effective on August 30, 2024.

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

 

AGAPE ATP CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF

CHANGES IN STOCKHOLDERS’ EQUITY

(UNAUDITED)

(Currency expressed in United States Dollars (“US$”), except for number of shares)

 

		Number of shares				Par value				PAID IN CAPITAL				ACCUMULATED DEFICIT				COMPREHENSIVE INCOME				CONTROLLING INTERESTS				STOCKHOLDERS’ EQUITY
		COMMON STOCK*								ADDITIONAL								ACCUMULATED OTHER				NON-				TOTAL
		Number of shares				Par value				PAID IN CAPITAL				ACCUMULATED DEFICIT				COMPREHENSIVE INCOME				CONTROLLING INTERESTS				STOCKHOLDERS’ EQUITY
Balance as of December 31, 2022			3,772,601			$	377		-	$	6,477,884			$	(4,945,586	)		$	9,266			$	20,513			$	1,562,454
Net loss			-				-				-				(425,840	)			-				(8,235	)			(434,075	)
Foreign currency translation adjustment			-				-		-		-				-				2,077				17				2,094
Balance as of March 31, 2023			3,772,601			$	377		-	$	6,477,884			$	(5,371,426	)		$	11,343			$	12,295			$	1,130,473
Net loss			-				-				-				(374,686	)			-				(4,763	)			(379,449	)
Foreign currency translation adjustment			-				-		-		-				-				269				(639	)			(370	)
Balance as of June 30, 2023			3,772,601			$	377		-	$	6,477,884			$	(5,746,112	)		$	11,612			$	6,893			$	750,654
Net income (loss)			-				-		-		-				(327,029	)			-				2,294				(324,735	)
Foreign currency translation adjustment			-				-		-		-				-				6,367				(255	)			6,112
Balance as of September 30, 2023			3,772,601			$	377		-	$	6,477,884			$	(6,073,141	)		$	17,979			$	8,932			$	432,031

 

		Number of shares (1)				Par value				Number of shares				Par value				PAID IN CAPITAL				ACCUMULATED DEFICIT				COMPREHENSIVE INCOME				CONTROLLING INTERESTS				STOCKHOLDERS’ EQUITY
		COMMON STOCK*								TREASURY STOCK*								ADDITIONAL								ACCUMULATED OTHER				NON-				TOTAL
		Number of shares				Par value				Number of shares				Par value				PAID IN CAPITAL				ACCUMULATED DEFICIT				COMPREHENSIVE INCOME				CONTROLLING INTERESTS				STOCKHOLDERS’ EQUITY
Balance as of December 31, 2023			3,855,126			$	386				(6,765)			$	(1	)		$	11,386,055			$	(7,047,571	)		$	30,215			$	11,779			$	4,380,863
Redemption of shares			(6,765	)			(1	)			6,765				1				-				-				-				-				-
Net loss			-				-				-				-				-				(709,707	)			-				6,613				(703,094	)
Foreign currency translation adjustment			-				-				-				-				-				-				(1,551	)			(302	)			(1,853	)
Balance as of March 31, 2024			3,848,361			$	385				-			$	-			$	11,386,055			$	(7,757,278	)		$	28,664			$	18,090			$	3,675,916
Share based compensation			423				-				-				-				6,667				-				-				-				6,667
Net loss			-				-				-				-				-				(442,699	)			-				10,384				(432,315	)
Foreign currency translation adjustment			-				-				-				-				-				-				(1,777	)			60				(1,717	)
Balance as of June 30, 2024			3,848,784			$	385				-			$	-			$	11,392,722			$	(8,199,977	)		$	26,887			$	28,534			$	3,248,551
Balance			3,848,784			$	385				-			$	-			$	11,392,722			$	(8,199,977	)		$	26,887			$	28,534			$	3,248,551
Share based compensation			4,720				-				-				-				30,000				-				-				-				30,000
Roundup of fractional shares upon reverse stock split			135,552				14				-				-				(14	)			-				-				-				-
Net income (loss)			-				-				-				-				-				(509,628	)			-				(14,411	)			(524,039	)
Foreign currency translation adjustment			-				-				-				-				-				-				7,224				1,889				9,113
Balance as of September 30, 2024			3,989,056			$	399				-			$	-			$	11,422,708			$	(8,709,605	)		$	34,111			$	16,012			$	2,763,625
Balance			3,989,056				399				-				-				11,422,708				(8,709,605	)			34,111				16,012				2,763,625

 

*

Common stock and treasury stock have been adjusted on a retroactive basis to reflect 1-for-20 reverse stock split effective on August 30, 2024.

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

 

AGAPE ATP CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(Currency expressed in United States Dollars (“US$”)

 

		2024				2023
		For the nine months ended September 30,
		2024				2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss		$	(1,659,449	)		$	(1,138,259	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation of property and equipment			32,411				54,993
Gain on disposal of property and equipment			(111	)			-
Amortization of intangible assets			3,611				4,431
Amortization of finance lease assets			18,956				-
Amortization of operating right-of-use assets			103,187				113,804
Unrealized holding loss (gain) on marketable securities			6,642				(4,838	)
Deferred tax provision (benefit)			218				(6,537	)
Allowance for expected credit loss			28,359				-
Changes in operating assets and liabilities:
Accounts receivables			6,353				(20,800	)
Amount due from related parties			8,858				(782	)
Inventories			(6,473	)			(13,484	)
Prepaid taxes			(8,592	)			307,967
Prepayments and deposits			(329,898	)			84,978
Other receivables			(949	)			-
Accounts payable			19,139				11,365
Accounts payable – related parties			(10,415	)			3,791
Customer deposits			(16,349	)			(45,083	)
Operating lease liabilities			(102,605	)			(114,943	)
Other payables and accrued liabilities			(179,853	)			(219,676	)
Other payables – related parties			(7,133	)			(1,959	)
Income tax payable			13,213				(10,674	)
Net cash used in operating activities			(2,080,880	)			(995,706	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment			(48,722	)			(7,200	)
Proceeds from disposal of property and equipment			111
Net cash used in investing activities			(48,611	)			(7,200	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Deferred offering costs			-				(113,911	)
Payment of finance lease liabilities			(6,691	)			-
Net cash used in financing activities			(6,691	)			(113,911	)
EFFECT OF EXCHANGE RATE ON CASH AND CASH EQUIVALENTS			22,755				(9,954	)
DECREASE IN CASH AND CASH EQUIVALENTS			(2,113,427	)			(1,126,771	)
CASH AND CASH EQUIVALENTS, beginning of period			4,832,460				1,438,430
CASH AND CASH EQUIVALENTS, end of period		$	2,719,033			$	311,659
SUPPLEMENTAL CASH FLOWS INFORMATION
Income taxes paid		$	10,257			$	20,617
Refund of prepaid taxes			1,665				-
SUPPLEMENTAL NON-CASH FLOWS INFORMATION
Increase in right-of-use assets and lease liabilities due to lease renewal		$	-			$	422,819

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

 

AGAPE ATP CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(Currency expressed in United States Dollars (“US$”), except for number of shares)

 

1. ORGANIZATION AND BUSINESS BACKGROUND

 

Agape ATP Corporation, a Nevada corporation (“the Company”) was incorporated under the laws of the State of Nevada on June 1, 2016.

 

Agape ATP Corporation operates through its subsidiaries, namely, Agape ATP Corporation (“AATP LB”), a company incorporated in Labuan, Malaysia, and Agape Superior Living Sdn. Bhd. (“ASL”), a company incorporated in Malaysia.

 

AATP LB, incorporated in Labuan, Malaysia, is an investment holding company with 100% equity interest in Agape ATP International Holding Limited (“AATP HK”), a company incorporated in Hong Kong.

 

On May 8, 2020, the Company entered into a Share Exchange Agreement with Mr. How Kok Choong, CEO and director of the Company to acquire 9,590,596 ordinary shares, no par value, equivalent to approximately 99.99% of the equity interest in Agape Superior Living Sdn. Bhd., a network marketing entity incorporated in Malaysia.

 

ASL is a limited company incorporated on August 8, 2003, under the laws of Malaysia.

 

On September 11, 2020, the Company incorporated Wellness ATP International Holdings Sdn. Bhd. (“WATP”), a wholly owned subsidiary under the laws of Malaysia, to pursue the business of promoting wellness and wellbeing lifestyle of the community by providing services that includes online editorials, programs, events and campaigns on how to achieve positive wellness and lifestyle. On July 4, 2024, the entity changed its name to Cedar ATPC Sdn. Bhd. (“CEDAR”).

 

On November 11, 2021, AATP LB formed an entity, DSY Wellness International Sdn. Bhd. (“DSY Wellness”) with an independent third party which AATP LB owns 60% of the equity interest, to pursue the business of providing complementary health therapies.

 

The Company and its subsidiaries are principally engaged in the Health and Wellness Industry. The principal activity of the Company is to supply high-quality health and wellness products, including supplements to assist in cell metabolism, detoxification, blood circulation, anti-aging and products designed to improve the overall health system of the human body and various wellness programs.

 

The Company is positioning itself for sustainable growth by diversifying its operations into the domain of renewable energy. This initiative is founded upon our commitment to environmental responsibility, long-term value creation, and proactive adaptation to global energy trends. On January 3, 2024, the Company formed an equity method investment entity, OIE ATPC Holdings (M) Sdn. Bhd. with Oriental Industries Enterprise (M) Sdn. Bhd. (“OIE”), which the Company and OIE each own 50% of the equity interest. On March 14, 2024, the Company acquired 50% of OIE ATPC Holdings (M) Sdn. Bhd. equity interest from OIE, subsequently the entity becomes a wholly owned subsidiary of the Company. On June 7, 2024, the entity changed its name to ATPC Green Energy Sdn. Bhd (“AGE”).

 

On September 19, 2024, AGE increased its number of ordinary shares to 1,000,000 shares at RM 0.01 per share.

 

On January 8, 2024, AGE formed a wholly own entity, OIE ATPC Exim (M) Sdn. Bhd (“ATPC Exim”). However, the Company had decided not to proceed with the continued development of ATPC Exim. There is no impact to the Group’s operation.

 

The accompanying consolidated financial statements reflect the activities of the Company, AATP LB, AATP HK, CEDAR, ASL, DSY Wellness, AGE, ATPC Exim and its variable interest entity (“VIE”), Agape S.E.A. Sdn. Bhd. (“SEA”) (See Note 4).

 

Details of the Company’s subsidiaries:

 SCHEDULE OF SUBSIDIARIES AND ASSOCIATES

Subsidiary company name

Place and date of incorporation

Particulars of issued capital

Principal activities

Proportional of ownership interest and voting power held

1.

Agape ATP Corporation

Labuan, March 6, 2017

100 shares of ordinary share of US$1 each

Investment holding

100

%

2.

Agape ATP International Holding Limited

Hong Kong, June 1, 2017

1,000,000 shares of ordinary share of HK$1 each

Wholesaling of health and wellness products; and health solution advisory services

100

%

3.

Agape Superior Living Sdn. Bhd.

Malaysia, August 8, 2003

9,590,598 shares of ordinary share of RM1 each

Health and wellness products and health solution advisory services via network marketing

99.99

%

4.

Agape S.E.A. Sdn. Bhd.

Malaysia, March 4, 2004

2 shares of ordinary share of RM1 each

VIE of Agape Superior Living Sdn. Bhd.

VIE

5.

Cedar ATPC Sdn. Bhd. (formerly known as Wellness ATP International Holdings Sdn. Bhd.

Malaysia, September 11, 2020

100 shares of ordinary share of RM1 each

The promotion of wellness and wellbeing lifestyle of the community by providing services that includes online editorials, programs, events and campaigns

100

%

6.

DSY Wellness International Sdn. Bhd.

Malaysia, November 11, 2021

1,000 shares of ordinary share of RM1 each

Provision of complementary health therapies

60

%

7.

ATPC Green Energy Sdn. Bhd. (Formerly known as OIE ATPC Holdings (M) Sdn. Bhd.)

Malaysia, March 14, 2024

1,000,000 shares of ordinary share of RM0.01 each

Renewable energy

100

%

8.

OIE ATPC Exim (M) Sdn. Bhd.

Malaysia, March 14, 2024

1,000 shares of ordinary share of RM1 each

Renewable energy

100

%

 

F-5

 

AGAPE ATP CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(Currency expressed in United States Dollars (“US$”), except for number of shares)

 

1. ORGANIZATION AND BUSINESS BACKGROUND (Continued)

 

Business Overview

 

Agape ATP Corporation is a company that provides health and wellness products and health solution advisory services to our clients. The Company primarily focus its efforts on attracting customers in Malaysia. Its advisory services center on the “ATP Zeta Health Program”, which is a health program designed to effectively prevent diseases caused by polluted environments, unhealthy dietary intake and unhealthy lifestyles, and promotion of health. The program aims to promote improved health and longevity in our clients through a combination of modern medicine, proper nutrition and advice from skilled nutritionists and/or dieticians.

 

In order to strengthen the Company’s supply chain, on May 8, 2020, the Company has successfully acquired approximately 99.99% of ASL, with the goal of securing an established network marketing sales channel that has been established in Malaysia for the past 15 years. ASL has been offering the Company’s ATP Zeta Health Program as part of its product lineup. As such, the acquisition creates synergy in the Company’s operation by boosting the Company’s retail and marketing capabilities. The newly acquired subsidiary allows the Company to fulfill its mission of “helping people to create health and wealth” by providing a financially rewarding business opportunity to distributors and quality products to distributors and customers who seek a healthy lifestyle.

 

Via ASL, the Company offers three series of programs which consist of different services and products: ATP Zeta Health Program, ÉNERGÉTIQUE and BEAUNIQUE.

 

The ATP Zeta Health Program is a health program designed to promote health and general wellbeing designed to prevent health diseases caused by polluted environments, unhealthy dietary intake and unhealthy lifestyles. The program aims to promote improved health and longevity through a combination of modern health supplements, proper nutrition and advice from skilled dieticians as well as trained members and distributors.

 

The ÉNERGÉTIQUE series aims to provide a total dermal solution for a healthy skin beginning from the cellular level. The series is comprised of the Energy Mask series, Hyaluronic Acid Serum and Mousse Facial Cleanser.

 

The BEAUNIQUE product series focuses on the research of our diet’s impact on modifying gene expressions in order to address genetic variations and deliver a nutrigenomic solution for every individual.

 

The Company deems creating public awareness on wellness and wellbeing lifestyle as essential to enhance the provision of its health solution advisory services; and therefore, incorporated CEDAR. Upon its establishment, CEDAR started collaborating with ASL to carry out various wellness programs.

 

To further its reach in the Health and Wellness Industry, on November 11, 2021, AATP LB formed an entity, DSY Wellness with an independent third party which AATP LB owns 60% of the equity interest, to pursue the business of providing complementary health therapies.

 

AGE delivers innovative solutions for sustainability, energy savings and promoting environmental stewardship to achieves energy efficiency and carbon neutrality for a healthier environment.

 

F-6

 

AGAPE ATP CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(Currency expressed in United States Dollars (“US$”), except for number of shares)

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of presentation

 

The accompanying interim unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

 

The interim unaudited financial information as of September 30, 2024 and for the three and nine months ended September 30, 2024 and 2023 have been prepared without audit, pursuant to the rules and regulations of the SEC and pursuant to Regulation S-X. Certain information and footnote disclosures, which are normally included in annual consolidated financial statements prepared in accordance with U. S. GAAP, have been omitted pursuant to those rules and regulations. The interim unaudited financial information should be read in conjunction with the audited financial statements and the notes thereto, included in the Form 10-K for the fiscal year ended December 31, 2023, which was filed with the SEC on April 1, 2024.

 

In the opinion of management, all adjustments (including normal recurring adjustments) necessary to present a fair statement of the Company’s unaudited financial position as of September 30, 2024, its unaudited results of operations for the three and nine months ended September 30, 2024 and 2023, and its unaudited cash flows for the nine months ended September 30, 2024 and 2023, as applicable, have been made. The unaudited interim results of operations are not necessarily indicative of the operating results for the full fiscal year or any future periods.

 

The unaudited condensed consolidated financial statements include the financial statements of the Company, its subsidiaries and its variable interest entity (“VIE”) over which the Company exercises control and, where applicable, entities for which the Company has a controlling financial interest or is the primary beneficiary. All transactions and balances among the Company, its subsidiaries and its VIE have been eliminated upon consolidation.

 

Principles of consolidation

 

Subsidiaries are those entities in which the Company, directly or indirectly, controls more than one half of the voting power; or has the power to govern the financial and operating policies, to appoint or remove the majority of the members of the board of directors, or to cast a majority of votes at the meeting of directors.

 

A VIE is an entity that has either a total equity investment that is insufficient to permit the entity to finance its activities without additional subordinated financial support, or whose equity investors lack the characteristics of a controlling financial interest, such as through voting rights, right to receive the expected residual returns of the entity or obligation to absorb the expected losses of the entity. The variable interest holder, if any, that has a controlling financial interest in a VIE is deemed to be the primary beneficiary and must consolidate the VIE. As of and for the three and nine months ended September 30, 2024, SEA, the only VIE of the Company has no significant operations.

 

Certain effects of reverse stock split

 

On August 15, 2024, the Company filed a Certificate of Change with the Secretary of State of the State of Nevada (the “Certificate of Change”) to effect a reverse split of the Company’s Common Stock at a ratio of 1-for-20 (the “Reverse Stock Split”), effective as of August 30, 2024. On that date, every 20 issued and outstanding shares of the Company’s Common Stock were automatically converted into one outstanding share of Common Stock. As a result of the Reverse Stock Split, the number of the outstanding shares of Common Stock decreased from 77,069,575 (pre-split) shares to 3,853,504 (post-split) shares. In addition, by reducing the number of outstanding shares, the Company’s loss per share in all prior periods increased by a factor of 20. The Reverse Stock Split affected all shares of Common Stock outstanding immediately prior to the effective time of the Reverse Stock Split.

 

Stockholders who hold a number of pre-reverse stock split shares of the Company’s Common Stock not evenly divisible by 20 are entitled the number of shares rounded up to the nearest whole share. The Company will issue share of the post-Reverse Stock Split Common Stock to any stockholder who would have received a fractional share as a result of the Reverse Stock Split.

 

The Reverse Stock Split affected all holders of Common Stock uniformly and did not affect any stockholder’s percentage of ownership interest. The par value of the Company’s Common Stock remained unchanged at $0.0001 per share and the number of authorized shares of Common Stock reduced from 1,000,000,000 shares to 50,000,000 shares after the Reverse Stock Split.

 

As the par value per share of the Company’s Common Stock remained unchanged at $0.0001 per share, the change in the Common Stock recorded at par value has been reclassified to additional paid-in-capital. All references to shares of Common Stock and per share data for all periods presented in the accompanying condensed consolidated financial statements and notes thereto have been adjusted to reflect the Reverse Stock Split on a retroactive basis.

 

Use of estimates

 

The preparation of unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the periods presented. Significant accounting estimates reflected in the Company’s unaudited condensed consolidated financial statements include allowance for inventories obsolescence, allowance for expected credit loss, impairment of long-lived assets and allowance for deferred tax assets. Actual results could differ from these estimates.

 

Cash and cash equivalents

 

Cash and cash equivalents represent cash on hand, time deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of three months or less.

 

F-7

 

AGAPE ATP CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(Currency expressed in United States Dollars (“US$”), except for number of shares)

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

 

Accounts receivable, net

 

Accounts receivable are recorded at the invoiced amount less an allowance for any uncollectible accounts and do not bear interest, which are due on credit term. The carrying value of accounts receivable is reduced by an allowance that reflects the Company’s best estimate of the amounts that will not be collected. An allowance for expected credit loss is recorded in the period when a loss is probable based on an assessment of collectivity by reviewing accounts receivable on a collective basis where similar characteristics exist, primarily base on similar business line, service or product offerings and on an individual basis when the Company identifies specific customers with known disputes or collectivity issues. In determining the amount of the allowance for expected credit loss, the Company considers historical collectivity based on past due status, the age of the accounts receivable balances, credit quality of the Company’s customers based on ongoing credit evaluations, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect the Company’s ability to collect from customers. Accounts receivable balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company’s management continues to evaluate the reasonableness of the valuation allowance policy and update it if necessary. As of September 30, 2024 and December 31, 2023, $13,342 and $542 allowance for expected credit loss were recorded.

 

Inventories

 

Inventories consist of raw materials, work in process and finished goods. Raw materials are valued at cost and work in process are valued at cost of raw materials consumed, both using periodic inventory system in which physical count is performed in monthly basis. Finished goods are valued at the lower of cost or net realizable value using the first-in first-out method. Management reviews inventory on hand for estimated obsolescence or unmarketable items, as compared to future demand requirements and the shelf life of the various products. Based on the review, the Company records inventory write-downs, when necessary, when costs exceed expected net realizable value. For the three and nine months ended September 30, 2024 and 2023, the Company did not recognize any inventory write-downs nor write-off.

 

Prepaid taxes

 

Prepaid taxes include prepaid income taxes that will either be refunded or utilized to offset future income tax.

 

Prepayments and deposits, net

 

Prepayments and deposits are mainly cash deposited or advanced to suppliers for future inventory purchases or service providers for future services. This amount is refundable and bears no interest. For any prepayments and deposits determined by management that such advances will not be in receipts of inventories, services, or refundable, the Company will recognize an allowance account to reserve such balances. Management reviews its prepayments and deposits on a regular basis to determine if the allowance is adequate, and adjusts the allowance when necessary. Delinquent account balances are written-off against allowance for expected credit loss after management has determined that the likelihood of collection is not probable. The Company’s management continues to evaluate the reasonableness of the allowance policy and update it if necessary. There was no allowance for expected credit loss written-off during the three and nine months ended September 30, 2024 and 2023. There was $16,960 and $0 allowance for expected credit loss recorded as of September 30, 2024 and December 31, 2023.

 

F-8

 

AGAPE ATP CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(Currency expressed in United States Dollars (“US$”), except for number of shares)

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

 

Property and equipment, net

 

Property and equipment are stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets with no residual value. The estimated useful lives are as follows:

 SCHEDULE OF ESTIMATED USEFUL LIVES OF PROPERTY AND EQUIPMENT

		Useful Life
Computer and office equipment		5-7 years
Furniture & fixtures		6-7 years
Leasehold improvements		Shorter of the remaining lease terms or the estimated useful lives
Vehicle		5 years

 

The cost and related accumulated depreciation of assets sold or otherwise retired are eliminated from the accounts and any gain or loss is included in the unaudited condensed consolidated statements of operations and comprehensive loss. Expenditures for maintenance and repairs are charged to earnings as incurred, while additions, renewals and betterments, which are expected to extend the useful life of assets, are capitalized. The Company also re-evaluates the periods of depreciation to determine whether subsequent events and circumstances warrant revised estimates of useful lives.

 

Intangible assets, net

 

Intangible assets, net, are stated at cost, less accumulated amortization. Amortization expense is recognized on the straight-line basis over the estimated useful lives of the assets as follows:

 SCHEDULE OF ESTIMATED USEFUL LIVES OF INTANGIBLE ASSETS, NET

Classification		Useful Life
Computer software		5 years

 

Impairment for long-lived assets

 

Long-lived assets, including property and equipment, and intangible assets with finite lives are reviewed for impairment whenever events or changes in circumstances (such as a significant adverse change to market conditions that will impact the future use of the assets) indicate that the carrying value of an asset may not be recoverable. The Company assesses the recoverability of the assets based on the undiscounted future cash flows the assets are expected to generate and recognize an impairment loss when estimated undiscounted future cash flows expected to result from the use of the asset plus net proceeds expected from disposition of the asset, if any, are less than the carrying value of the asset. If an impairment is identified, the Company would reduce the carrying amount of the asset to its estimated fair value based on a discounted cash flows approach or, when available and appropriate, to comparable market values. As of September 30, 2024 and December 31, 2023, no impairment of long-lived assets was recognized.

 

Investment in marketable equity securities

 

The Company follows the provisions of ASU 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. Investments in marketable equity securities (non-current) are reported at fair value with changes in fair value recognized in the Company’s unaudited condensed consolidated statements of operations and comprehensive loss in the caption of “unrealized holding gain (loss) on marketable securities” in each reporting period.

 

F-9

 

AGAPE ATP CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(Currency expressed in United States Dollars (“US$”), except for number of shares)

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

 

Customer deposits

 

Customer deposits represent amounts advanced by customers on product orders and unapplied unexpired coupons. Customer deposits are reduced when the related sale is recognized in accordance with the Company’s revenue recognition policy.

 

Revenue recognition

 

The Company adopted Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (ASC Topic 606). The core principle underlying the revenue recognition of this ASU allows the Company to recognize revenue that represents the transfer of goods and services to customers in an amount that reflects the consideration to which the Company expects to be entitled in such exchange. This will require the Company to identify contractual performance obligations and determine whether revenue should be recognized at a point in time or over time, based on when control of goods and services transfers to a customer. The Company’s revenue streams are recognized at a point in time for the Company’s sale of health and wellness products.

 

The ASU requires the use of a five-step model to recognize revenue from customer contracts. The five-step model requires that the Company (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligation.

 

The Company accounts for a contract with a customer when the contract is committed in writing, the rights of the parties, including payment terms, are identified, the contract has commercial substance and consideration is probable of substantially collection.

 

F-10

 

AGAPE ATP CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(Currency expressed in United States Dollars (“US$”), except for number of shares)

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

 

Sales of Skin Care, Health and Wellness products

 

- Performance obligations satisfied at a point in time

 

The Company derives its revenues from sales contracts with its customers with revenues being recognized when control of the health and wellness products are transferred to its customer at the Company’s office or shipment of the goods. The revenue is recorded net of estimated discounts and return allowances. Products are given 60 days for returns or exchanges from the date of purchase. Historically, there were insignificant sales returns.

 

Under the Company’s network marketing business, the Company issues product coupons to members and distributors when these customers made purchases above certain thresholds set by the Company. Depending on the type of product coupons issued, the coupons carry varying values and can be used by the customers for reduction in the transaction price of product purchases within the coupon validity period. The value of the product coupons issued is recorded as a reduction of the Company’s revenue account upon issuance; the corresponding amount credited to the customer deposits account. Amounts in customer deposits will be reversed when the coupons are used. The Company’s coupons have a validity period of between six and twelve months. If the Company’s customers did not utilize the coupons after the validity period, the Company would recognize the forfeiture of the originated sales value of the coupons as net revenues.

 

For the three months ended September 30, 2024 and 2023, the Company recognized $565 and $53,690, as forfeited coupon income, respectively. For the nine months ended September 30, 2024 and 2023, the Company recognized $2,952 and $82,562, as forfeited coupon income, respectively.

 

The Company had contracts for the sales of health and wellness products amounting to $10,258 which it is expected to fulfill within 12 months from September 30, 2024.

 

Sales of products for the provision of complementary health therapies

 

- Performance obligations satisfied at a point in time

 

Products for the provision of complementary health therapies are predominantly Chinese herbs in different forms, processed or otherwise, for prescriptions for treating non-communicable diseases.

 

The Company based on the health screening test report to prescribe the products for the provision of complementary health therapies, the Company deliver the products to the customers during the consultation session.

 

For the three months ended September 30, 2024 and 2023, revenues from products for the provision of complementary health therapies were $227,249 and $208,323 respectively. For the nine months ended September 30, 2024 and 2023, revenues from products for the provision of complementary health therapies were $688,415 and $539,291 respectively.

 

Provision of Health and Wellness services

 

- Performance obligations satisfied at a point in time

 

The Company carries out its Wellness program, where the Company’s products are bundled with health screening test. The health screening test is considered as separate performance obligations. The promises to deliver the health screening test report is separately identifiable, which is evidenced by the fact that the Company provides separate services of delivering the health screening test report.

 

The Company based on the health screening test contracts with customers, establishes the selling price for the health screening test and place order to the health screening center. The Company obtains control of the test report before they are delivered to the customers. The Company analyze the test report, provides consultations to the customers, bundle it with the Company’s products and services depending on the customer’s needs.

 

The Company derives its revenues from sales contracts with its customers with revenues being recognized when the test reports are completed and delivered to its customers during the consultation session in person.

 

For the three months ended September 30, 2024 and 2023, revenues from health and wellness services were $56,503 and $57,783 respectively. For the nine months ended September 30, 2024 and 2023, revenues from health and wellness services were $160,694 and $181,997 respectively.

 

F-11

 

AGAPE ATP CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(Currency expressed in United States Dollars (“US$”), except for number of shares)

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

 

Disaggregated information of revenues by products are as follows:

 SCHEDULE OF DISAGGREGATED INFORMATION OF REVENUES

		2024				2023				2024				2023
		For the three months ended								For the nine months ended
		September 30,								September 30,
		2024				2023				2024				2023
Survivor Select		$	-			$	-			$	-			$	28,210
Energized Mineral Concentrate			1,097				-				1,097				-
Ionized Cal-Mag			-				29,777				374				114,579
Omega Blend			-				-				-				22,471
Beta Maxx			-				-				-				21,206
Iron			-				-				-				21,617
Trim+			-				-				-				9,587
LIVO 5			24,103				46,057				78,478				67,869
Soy Protein Isolate Powder			2,292				6,931				8,616				17,384
Mix Soy Protein Isolate Powder with Black Sesame			1,641				6,443				6,893				14,047
Others – Products for the provision of complementary health therapies			227,249				208,323				688,415				539,291
Skin care and healthcare products			18,404				-				18,404				1,759
Total revenues - products			274,786				297,531				802,277				858,020
Health and Wellness services			56,503				57,783				160,694				181,997
Total revenues - products and services		$	331,289			$	355,314			$	962,971			$	1,040,017

 

Cost of revenue

 

Cost of revenue comprised freight-in, the purchase cost of manufactured goods for sale to customers and purchase cost of products and services for the provision of complementary health therapies. For the three and nine months ended September 30, 2024, cost of revenue were $147,104 and $381,805, respectively. For the three and nine months ended September 30, 2023 were $120,586 and $356,875.

 

Shipping and handling

 

Shipping and handling charges amounted to $817 and $1,395 for the three months ended September 30, 2024 and 2023, respectively. Shipping and handling charges amounted to $2,577 and $4,050 for the nine months ended September 30, 2024 and 2023, respectively. Shipping and handling charges are expensed as incurred and included in selling expenses.

 

Advertising costs

 

Advertising costs amounted to $17,250 and $36,945 for the three and nine months ended September 30, 2024. There were no advertising costs incurred for the three and nine months ended September 30, 2023. Advertising costs are expensed as incurred and included in selling expenses.

 

F-12

 

AGAPE ATP CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(Currency expressed in United States Dollars (“US$”), except for number of shares)

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

 

Selling expenses

 

The Company’s selling expenses typically comprise salaries and benefits expenses, credit card processing fees and promotional expenses. Selling expenses amounted to $41,582 and $49,285 for the three months ended September 30, 2024 and 2023, respectively. Selling expenses amounted to $129,938 and $189,509 for the nine months ended September 30, 2024 and 2023, respectively.

 

Commission expenses

 

As with all companies in the network marketing industry, the Company’s sales channel is external to the Company. The Company’s “external sales force” is stratified into two levels based on priority recruitment. First, there are sales distributors. Second, all members recruited by a sales distributor, directly or indirectly, are referred to as “sales network members”. The Company pays commission to every sales distributor based on purchases made by its sales network members which includes the independent direct sales members. Top performing distributors with their own physical stores may also become stockists of the Company, whereby they enjoy benefits such as maintaining a certain amount of the Company’s inventory on their store premises. The stockists shall account to the Company for all products sales from their store premises as monitored through the Company’s centralized stock tracking system. The Company pays a separate commission to stockists based on revenue generated from the stockists’ physical stores. Commission expenses amounted to $6,894 and $14,002 for the three months ended September 30, 2024 and 2023, respectively. Commission expenses amounted to $23,573 and $69,886 for the nine months ended September 30, 2024 and 2023, respectively.

 

General and administrative expenses (“G&A expenses”)

 

The Company’s G&A expenses typically comprise of salaries and benefits expenses, rental expenses, professional expenses, depreciation expenses and allowance for expected credit loss. G&A expenses amounted to $683,819 and $488,519 for the three months ended September 30, 2024 and 2023, respectively. G&A expenses amounted to $2,152,889 and $1,554,242 for the nine months ended September 30, 2024 and 2023, respectively.

 

Defined contribution plan

 

The full-time employees of the Company are entitled to the government mandated defined contribution plan. The Company is required to accrue and pay for these benefits based on certain percentages of the employees’ respective salaries, subject to certain ceilings, in accordance with the relevant government regulations, and make cash contributions to the government mandated defined contribution plan. Total expenses for the plans were $57,304 and $37,187 for the three months ended September 30, 2024 and 2023, respectively. Total expenses for the plans were $87,391 and $116,660 for the nine months ended September 30, 2024 and 2023, respectively.

 

The related contribution plans include:

 

	-	Social Security Organization (“SOSCO”) – 1.75% based on employee’s monthly salary capped of RM 5,000;
	-	Employees Provident Fund (“EPF”) –based on employee’s monthly salary, 13% for employee earning RM5,000 and below; and 12% for employee earning RM5,001 and above.
	-	Employment Insurance System (“EIS”) – 0.2% based on employee’s monthly salary capped of RM 5,000;
	-	Human Resource Development Fund (“HRDF”) – 1% based on employee’s monthly salary

 

Income taxes

 

The Company accounts for income taxes in accordance with U.S. GAAP for income taxes. The charge for taxation is based on the results for the fiscal year as adjusted for items, which are non-assessable or disallowed. It is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

 

Deferred taxes is accounted for using the asset and liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the consolidated financial statements and the corresponding tax basis used in the computation of assessable tax profit. In principle, deferred tax liabilities are recognized for all taxable temporary differences. Deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which deductible temporary differences can be utilized. Deferred tax is calculated using tax rates that are expected to apply to the period when the asset is realized or the liability is settled.

 

F-13

 

AGAPE ATP CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(Currency expressed in United States Dollars (“US$”), except for number of shares)

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

 

Deferred tax is charged or credited in the income statement, except when it is related to items credited or charged directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Current income taxes are provided for in accordance with the laws of the relevant taxing authorities.

 

An uncertain tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred. No penalties and interest incurred related to underpayment of income taxes for the three and nine months ended September 30, 2024 and 2023.

 

The Company conducts much of its business activities in Hong Kong and Malaysia and is subject to tax in each of these jurisdictions. As a result of its business activities, the Company will file separate tax returns that are subject to examination by the foreign tax authorities.

 

Comprehensive income (loss)

 

Comprehensive income (loss) consists of two components, net income (loss) and other comprehensive income (loss). Net income (loss) refers to revenue, expenses, gains and losses that under GAAP are recorded as an element of stockholders’ equity. Other comprehensive income (loss) consists of a foreign currency translation adjustment resulting from the Company not using the U.S. dollar as its functional currencies.

 

Non-controlling interest

 

Non-controlling interest consists of 40% of the equity interests of DSY Wellness held by an individual and approximately 0.01% (3 ordinary shares out of 9,590,599 shares) of the equity interests of ASL held by three individuals. The non-controlling interests are presented in the consolidated balance sheets, separately from equity attributable to the shareholders of the Company. Non-controlling interests in the results of the Company are presented on the face of the consolidated statements of operations as an allocation of the total income or loss for the periods between non-controlling interest holders and the shareholders of the Company.

 

Earnings (loss) per share

 

The Company computes earnings (loss) per share (“EPS”) in accordance with ASC 260, “Earnings per Share”. ASC 260 requires companies to present basic and diluted EPS. Basic EPS is measured as net income (loss) divided by the weighted average ordinary share outstanding for the period. Diluted EPS presents the dilutive effect on a per share basis of the potential common stocks (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential common stocks that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. For the three and nine months ended September 30, 2024 and 2023, there were no dilutive shares.

 

F-14

 

AGAPE ATP CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(Currency expressed in United States Dollars (“US$”), except for number of shares)

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

 

Foreign currencies translation and transaction

 

Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the consolidated statements of operations and comprehensive loss.

 

The reporting currency of the Company is United States Dollars (“US$”) and the accompanying financial statements have been expressed in US$. The Company’s subsidiary in Labuan maintains its books and record in United States Dollars (“US$”) albeit its functional currency being the primary currency of the economic environment in which the entity operates, which is the Malaysian Ringgit (“MYR” or “RM”). The Company’s subsidiary in Hong Kong maintains its books and record in Hong Kong Dollars (“HK$”), similar to its functional currency. The Company’s subsidiary and VIE in Malaysia conducts its businesses and maintains its books and record in the local currency, Malaysian Ringgit (“MYR” or “RM”), as its functional currency.

 

In general, for consolidation purposes, assets and liabilities of its subsidiaries whose functional currency is not US$ are translated into US$, in accordance with ASC Topic 830-30, “Translation of Financial Statement”, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of foreign subsidiary are recorded as a separate component of accumulated other comprehensive income within the statements of stockholders’ equity. Cash flows are also translated at average translation rates for the periods, therefore, amounts reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the consolidated balance sheets.

 

Translation of foreign currencies into US$1 have been made at the following exchange rates for the respective periods:

 SCHEDULE OF FOREIGN CURRENCIES TRANSLATION EXCHANGE RATES

		September 30, 2024				December 31, 2023
		As of
		September 30, 2024				December 31, 2023
Period-end MYR : US$1 exchange rate			4.12				4.59
Period-end HKD : US$1 exchange rate			7.77				7.81
Foreign currency exchange rate, translation			7.77				7.81

 

		2024				2023				2024				2023
		For the three months ended September 30,								For the nine months ended September 30,
		2024				2023				2024				2023
Period-average MYR : US$1 exchange rate			4.35				4.63				4.61				4.53
Period-average HKD : US$1 exchange rate			7.79				7.82				7.81				7.84
Foreign currency exchange rate period average			7.79				7.82				7.81				7.84

 

F-15

 

AGAPE ATP CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(Currency expressed in United States Dollars (“US$”), except for number of shares)

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

 

Related parties

 

Parties, which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Companies are also considered to be related if they are subject to common control or common significant influence.

 

Fair value of financial instruments

 

The accounting standard regarding fair value of financial instruments and related fair value measurements defines financial instruments and requires disclosure of the fair value of financial instruments held by the Company.

 

The accounting standards define fair value, establish a three-level valuation hierarchy for disclosures of fair value measurement and enhance disclosure requirements for fair value measures. The three levels are defined as follow:

 

	●	Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
	●	Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments.
	●	Level 3 inputs to the valuation methodology are unobservable and significant to the fair value.

 

Financial instruments included in current assets and current liabilities are reported in the consolidated balance sheets at face value or cost, which approximate fair value because of the short period of time between the origination of such instruments and their expected realization and their current market rates of interest.

 

Leases

 

The Company adopted ASU 2016-02, “Leases” (Topic 842), and elected the practical expedients that does not require the Company to reassess: (1) whether any expired or existing contracts are, or contain, leases, (2) lease classification for any expired or existing leases and (3) initial direct costs for any expired or existing leases. For lease terms of twelve months or fewer, a lessee is permitted to make an accounting policy election not to recognize lease assets and liabilities. The Company also adopts the practical expedient that allows lessees to treat the lease and non-lease components of a lease as a single lease component. Some of the Company’s leases include one or more options to renew, which is typically at the Company’s sole discretion. The Company regularly evaluates the renewal options, and, when it is reasonably certain of exercise, it will include the renewal period in its lease term. New lease modifications result in re-measurement of the right of use (“ROU”) assets and lease liabilities. Operating ROU assets and lease liabilities are recognized at the commencement date, based on the present value of lease payments over the lease term. Since the implicit rate for the Company’s leases is not readily determinable, the Company use its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The incremental borrowing rate is the rate of interest that the Company would have to pay to borrow, on a collateralized basis, an amount equal to the lease payments, in a similar economic environment and over a similar term.

 

F-16

 

AGAPE ATP CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(Currency expressed in United States Dollars (“US$”), except for number of shares)

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

 

Lease terms used to calculate the present value of lease payments generally do not include any options to extend, renew, or terminate the lease, as the Company does not have reasonable certainty at lease inception that these options will be exercised. The Company generally considers the economic life of its operating lease ROU assets to be comparable to the useful life of similar owned assets. The Company has elected the short-term lease exception, therefore operating lease ROU assets and liabilities do not include leases with a lease term of twelve months or less. Its leases generally do not provide a residual guarantee. The operating lease ROU asset also excludes lease incentives. Lease expense is recognized on a straight-line basis over the lease term.

 

The Company reviews the impairment of its ROU assets consistent with the approach applied for its other long-lived assets. The Company reviews the recoverability of its long-lived assets when events or changes in circumstances occur that indicate that the carrying value of the asset may not be recoverable. The assessment of possible impairment is based on its ability to recover the carrying value of the asset from the expected undiscounted future pre-tax cash flows of the related operations. The Company has elected to include the carrying amount of operating lease liabilities in any tested asset group and includes the associated operating lease payments in the undiscounted future pre-tax cash flows.

 

Derivative financial instruments

 

Derivative financial instruments consist of financial instruments that contain a notional amount and one or more underlying variables such as interest rate, security price, variable conversion rate or other variables, require no initial new investment and permit net settlement. The derivative financial instruments may be free-standing or embedded in other financial instruments. The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. The Company based on the terms of the warrant agreement to determine the warrants as equity instruments or derivative liabilities. The Company follows the provision of ASC 815, Derivatives and Hedging for derivative financial instruments that are classified as equity instruments, the contracts are initially measured at fair value and no subsequent measurement is required for equity instruments. The Company uses Black-Scholes Model to calculate the fair value of the warrant.

 

Recent accounting pronouncements

 

The Company has reviewed all recently issued, but not yet effective, considers the applicability and impact of all accounting standards updates (“ASUs”). Management periodically reviews new accounting standards that are issued.

 

In November 2023, the FASB issued ASU 2023-07 “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures”. The ASU 2023-07 is intended to improve reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. The ASU 2023-07 is effective for annual reporting periods beginning after December 15, 2023 and interim periods in fiscal years beginning after December 15, 2024. Early adoption is permitted. The ASU No. 2023-07 is not expected to have a significant impact on its unaudited condensed consolidated financial statements

 

In December 2023, the FASB issued ASU 2023-09 “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”. The ASU 2023-09 requires companies to disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income or loss by the applicable statutory income tax rate). The ASU 2023-09 is effective for annual reporting periods beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the impact of this ASU may have on its unaudited condensed consolidated financial statements.

 

F-17

 

AGAPE ATP CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(Currency expressed in United States Dollars (“US$”), except for number of shares)

 

In March 2024, the FASB issued ASU 2024-01 “Compensation – Stock Compensation (Topic 718): Scope Application of Profits Interest and Similar Awards”. The ASU clarify how an entity determines whether a profits interest or similar award is within the scope of Accounting Standards Codification (“ASC”) 718, Compensation – Stock Compensation, by adding illustrative guidance. The guidance in ASU 2024-01 is effective for annual reporting periods beginning after December 15, 2024, and can be applied either retrospectively to all prior periods presented in the consolidated financial statements or prospectively to profits interest and similar awards granted or modified on or after the date at which the entity first applies the amendments. Early adoption is permitted. The adoption of ASU 2024-01 is not expected to have any impact on the Company’s consolidated financial statements.

 

In March 2024, the FASB issued ASU 2024-02 “Codification Improvements – Amendments to Remove References to the Concepts Statements”. The amendments apply to all reporting entities within the scope of the affected accounting guidance, but in most instances the references removed are extraneous and not required to understand or apply the guidance. Generally, the amendments in ASU 2024-02 are not intended to result in significant accounting changes for most entities. The amendments in this update are effective for annual reporting periods beginning after December 15, 2024 and are not expected to have a significant impact on our financial statements.

 

Recently adopted Accounting Pronouncements

 

In March 2023, the FASB issued ASU No. 2023-01 “Leases (Topic 842) Common Control Arrangements”. This ASU provides guidance in ASC Topic 842 that Leasehold improvements associated with common control leases should be (i) amortized by the lessee over the useful life of the leasehold improvements to the common control group, regardless of the lease term, as long as the lessee controls the use of the underlying asset through a lease, and (ii) accounted for as a transfer between entities under common control through an adjustment to equity if and when the lessee no longer controls the use of the underlying asset. The ASU 2023-01 is effective for reporting periods beginning after December 15, 2023. The adoption of this accounting standard has no material impact on the unaudited condensed consolidated financial statements for the nine months ended and as at September 30, 2024.

 

Except for the above-mentioned pronouncements, there are no new recent issued accounting standards that will have a material impact on the unaudited condensed consolidated financial position, statements of operations and cash flows.

 

3. ACQUISITION OF OIE ATPC HOLDINGS (M) SDN. BHD.

 

On January 3, 2024, the Company together with Oriental Industries Enterprise (M) Sdn. Bhd. (“OIE”) formed an equity method investment entity, OIE ATPC Holdings (M) Sdn. Bhd. (“OIE ATPC”) in which the Company and OIE each owns 50% equity interest at the cost of $108. On March 14, 2024, the Company acquired the remainder 50% of equity at cost of $107 from OIE. On June 7, 2024, the entity changed its name to ATPC Green Energy Sdn Bhd (“AGE”).

 

On January 8, 2024, ATPC Green Energy (“AGE”) formed a wholly own entity, OIE ATPC Exim (M) Sdn. Bhd. (“ATPC Exim”).

 

As both AGE and ATPC Exim are newly formed, the Company considered the cost of investment is the fair value of the assets acquired.

 

4. VARIABLE INTEREST ENTITY (“VIE”)

 

SEA is a trading company incorporated on March 4, 2004, under the laws of Malaysia. SEA provided majority of ASL’s purchases. The income generated was insufficient to finance its activities and 100% of its business is transacted with ASL. Therefore, it was considered to be a VIE and ASL is the primary beneficiary since it has both of the following characteristics:

 

	a.	The power to direct the activities of the VIE that most significantly impact the VIE’s economic performance; and
	b.	The obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE.

 

Accordingly, the accounts of SEA is consolidated in the accompanying financial statements.

 

F-18

 

AGAPE ATP CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(Currency expressed in United States Dollars (“US$”), except for number of shares)

 

4. VARIABLE INTEREST ENTITY (“VIE”) (Continued)

 

The carrying amount of the VIE’s assets and liabilities were as follows:

 SCHEDULE OF VARIABLE INTEREST ENTITY

		September 30, 2024				December 31, 2023
		As of
		September 30, 2024				December 31, 2023
Current assets		$	1,314			$	1,799
Current liabilities			(1,153	)			(899	)
Net asset		$	161			$	900

 

		September 30, 2024				December 31, 2023
		As of
		September 30, 2024				December 31, 2023
Current assets:
Cash		$	1,294			$	122
Prepayment and deposits			20				7
Prepaid taxes			-				1,670
Total current assets		$	1,314			$	1,799
Current liabilities:
Other payables and accrued liabilities			1,153				899
Total current liabilities		$	1,153			$	899
Net asset		$	161			$	900

 

The summarized operating results of the VIE’s are as follows:

 

		2024				2023				2024				2023
		For the three months ended September 30,								For the nine months ended September 30,
		2024				2023				2024				2023
Operating revenues		$	-			$	-			$	-			$	-
Gross profit		$	-			$	-			$	-			$	-
Profit (loss) from operations		$	(490	)		$	41,014			$	(754	)		$	40,654
Net profit (loss)		$	(490	)		$	41,014			$	(754	)		$	40,654

 

F-19

 

AGAPE ATP CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(Currency expressed in United States Dollars (“US$”), except for number of shares)

 

5. CASH AND CASH EQUIVALENTS

 

As of September 30, 2024 and December 31, 2023 the Company has $2,719,033 and $4,832,460, respectively, of cash and cash equivalents, which consists of $266,173 and $510,019, respectively, of cash and cash in banks and $2,452,860 and $4,322,441, respectively, of time deposits placed with banks or other financial institutions and are all highly liquid investments with an original maturity of three months or less. The effective interest rate for the time deposits ranged between 2.06% to 2.55% per annum for the three and nine months ended September 30, 2024. The effective interest rate ranged between 1.22% to 1.88% per annum for the three and nine months ended September 30, 2023. As of September 30, 2024 and December 31, 2023, $2,492,285 and $4,630,476 of these balances are not covered by deposit insurance, respectively.

 

6. ACCOUNTS RECEIVABLE, NET

 SCHEDULE OF ACCOUNTS RECEIVABLES

		September 30, 2024				December 31, 2023
		As of
		September 30, 2024				December 31, 2023
Accounts receivable		$	55,286			$	56,000
Allowance for expected credit loss			(13,342	)			(542	)
Total accounts receivable, net		$	41,944			$	55,458

 

Movements of allowance for expected credit loss are as follows:

 SCHEDULE OF ALLOWANCE FOR CREDIT LOSSES

		September 30, 2024				December 31, 2023
		As of
		September 30, 2024				December 31, 2023
Beginning balance		$	542			$	-
Addition			12,738				546
Exchange rate effect			62				(4	)
Ending balance		$	13,342			$	542

 

7. INVENTORIES

 

Inventories consist of the following:

 SCHEDULE OF INVENTORIES

		September 30, 2024				December 31, 2023
		As of
		September 30, 2024				December 31, 2023
Finished goods			60,564				47,907
Total inventories		$	60,564			$	47,907

 

There were no inventory write-downs nor write-off for the three and nine months ended September 30, 2024 and 2023, respectively.

 

8. PREPAYMENTS AND DEPOSITS, NET

 SCHEDULE OF PREPAID EXPENSES AND DEPOSITS

		September 30, 2024				December 31, 2023
		As of
		September 30, 2024				December 31, 2023
Prepaid expenses		$	451,242			$	123,809
Deposits to suppliers			105,419				91,997
Subtotal			556,661				215,806
Allowance for expected credit loss – Prepaid expenses			(16,960	)			-
Total prepayments and deposits, net		$	539,701			$	215,806

 

Prepayments and deposits are mainly cash deposited or advanced to suppliers for future inventory purchases or service providers for future services. For any prepayments and deposits determined by management that such advances will not be in receipts of inventories, services, or refundable, the Company will recognize an allowance for expected credit loss for such balances. Management reviews its prepayments and deposits on a regular basis to determine if the allowance is adequate, and adjusts the allowance when necessary. Delinquent account balances are written-off against allowance for credit losses after management has determined that the likelihood of collection is not probable.

 

F-20

 

AGAPE ATP CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(Currency expressed in United States Dollars (“US$”), except for number of shares)

 

8. PREPAYMENTS AND DEPOSITS, NET (Continued)

 

Movements of allowance for expected credit loss are as follows:

 SCHEDULE OF CHANGES IN ALLOWANCE FOR CREDIT LOSSES

		For the nine months ended September 30, 2024				For the year ended December 31, 2023
Beginning balance		$	-			$	-
Addition			16,960				-
Ending balance		$	16,960			$	-

 

9. PROPERTY AND EQUIPMENT, NET

 

Property and equipment, net consist of the following:

 SCHEDULE OF PROPERTY AND EQUIPMENT, NET

		September 30, 2024				December 31, 2023
		As of
		September 30, 2024				December 31, 2023
Computer and office equipment		$	99,082			$	91,947