UNITEDSTATES
SECURITIESAND EXCHANGE COMMISSION
Washington,D.C. 20549
FORM
OFTHE SECURITIES EXCHANGE ACT OF 1934
ForThe Quarterly Period Ended
or
OFTHE SECURITIES EXCHANGE ACT OF 1934
Forthe transition period from _______________ to _______________
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(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
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Securitiesregistered pursuant to Section 12(b) of the Securities Exchange Act:
(Titleof Class)
(Nameof exchange on which registered)
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Securitiesregistered pursuant to Section 12(g) of the Securities Exchange Act: None
Indicateby check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities ExchangeAct 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.
Indicateby check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive DataFile required to be submitted and posted pursuant to Rule 405 of Regulation S-T (section 232.405 of this chapter) during the precedingtwelve months (or shorter period that the registrant was required to submit and post such files).
Indicateby check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reportingcompany, 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.
LargeAccelerated Filer ☐ Accelerated Filer ☐
Emerginggrowth company
Ifan emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complyingwith any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicateby check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes☐ No
APPLICABLEONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGSDURING THE PRECEDING FIVE YEARS:
Indicateby check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the SecuritiesExchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.
Yes☐ No ☐
APPLICABLEONLY TO CORPORATE ISSUERS:
Indicatethe number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
| Class | Outstanding at August 13, 2025 | |
| Common Stock, $ par value |
TABLEOF CONTENTS
| 2 |
PARTI FINANCIAL INFORMATION
ITEM1. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:
AGAPEATP CORPORATION
CONDENSEDCONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(Currencyexpressed in United States Dollars (“US$”), except for number of shares)
| As of | ||||||||
June 30, 2025 (Unaudited) | December 31, 2024 (Audited) | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents (Included $ | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Other receivable | ||||||||
| Amount due from related parties | ||||||||
| Inventories | ||||||||
| Prepaid taxes | ||||||||
| Prepayments and deposits (Included $ and $ | ||||||||
| Total Current Assets | ||||||||
| NON-CURRENT ASSETS | ||||||||
| Property and equipment, net | ||||||||
| Intangible assets, net | ||||||||
| Finance lease assets | ||||||||
| Operating right-of-use assets | ||||||||
| Investment in marketable securities | ||||||||
| Investment in non-marketable securities | ||||||||
| Total Non-Current Assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable | ||||||||
| Accounts payable – related parties | ||||||||
| Customer deposits | ||||||||
| Operating lease liabilities, current | ||||||||
| Other payables and accrued liabilities ($ | ||||||||
| Other payable – related parties | ||||||||
| Finance lease liabilities, current | ||||||||
| Income tax payable | ||||||||
| Total Current Liabilities | ||||||||
| NON-CURRENT LIABILITIES | ||||||||
| Operating lease liabilities, non-current | ||||||||
| Finance lease liabilities, non-current | ||||||||
| Total Non-Current Liabilities | ||||||||
| TOTAL LIABILITIES | $ | $ | ||||||
| COMMITMENTS AND CONTINGENCIES (Note 20) | ||||||||
| STOCKHOLDERS’ EQUITY | ||||||||
| Preferred stock, $ par value; shares authorized; issued and outstanding | ||||||||
| Common Stock, par value $; shares authorized, and shares issued and outstanding as of June 30, 2025 and December 31, 2024, respectively. | ||||||||
| Additional paid in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive income | ||||||||
| TOTAL AGAPE ATP CORPORATION STOCKHOLDERS’ EQUITY | ||||||||
| NON-CONTROLLING INTERESTS | ( | ) | ( | ) | ||||
| TOTAL EQUITY | ||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Theaccompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| F-1 |
AGAPEATP CORPORATION
CONDENSEDCONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(UNAUDITED)
(Currencyexpressed in United States Dollars (“US$”), except for number of shares)
| For the three months ended | For the six months ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| REVENUE | $ | $ | $ | $ | ||||||||||||
| COST OF REVENUE | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| GROSS PROFIT | ||||||||||||||||
| SELLING | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| COMMISSION | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| GENERAL AND ADMINISTRATIVE | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| TOTAL OPERATING EXPENSES | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| LOSS FROM OPERATIONS | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| OTHER INCOME (EXPENSES) | ||||||||||||||||
| Other income, net | ||||||||||||||||
| Interest income | ||||||||||||||||
| Unrealized holding gain (loss) on marketable securities | ( | ) | ( | ) | ||||||||||||
| Exchange (loss) gain, net | ( | ) | ( | ) | ( | ) | ||||||||||
| TOTAL OTHER INCOME, NET | ||||||||||||||||
| LOSS BEFORE INCOME TAXES | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| INCOME TAX EXPENSE | ( | ) | ( | ) | ||||||||||||
| NET LOSS | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| LESS: NET (LOSS) INCOME ATTRIBUTABLE TO NON-CONTROLLING INTERESTS | ( | ) | ( | ) | ||||||||||||
| NET LOSS ATTRIBUTABLE TO AGAPE ATP CORPORATION | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| NET LOSS | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| OTHER COMPREHENSIVE LOSS | ||||||||||||||||
| Foreign currency translation adjustment | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| TOTAL COMPREHENSIVE LOSS | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Less: Comprehensive (loss) income attributable to non-controlling interests | ( | ) | ( | ) | ||||||||||||
| COMPREHENSIVE LOSS ATTRIBUTABLE TO AGAPE ATP CORPORATION | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| LOSS PER SHARE* | ||||||||||||||||
| Basic and diluted | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING* | ||||||||||||||||
| Basic and diluted | ||||||||||||||||
| * |
Theaccompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| F-2 |
AGAPEATP CORPORATION
CONDENSEDCONSOLIDATED STATEMENTS OF
CHANGESIN STOCKHOLDERS’ EQUITY
(UNAUDITED)
(Currencyexpressed in United States Dollars (“US$”), except for number of shares)
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 | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||
| Redemption of shares | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Balance as of March 31, 2024 | $ | $ | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||||||
| Share based compensation | - | |||||||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Balance as of June 30, 2024 | $ | $ | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||||||
| 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, 2024 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||
| Share based compensation | - | |||||||||||||||||||||||||||||||||||
| Issuance of common stock | - | |||||||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Balance as of March 31, 2025 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Balance as of June 30, 2025 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||||||||||||||||
| * |
Theaccompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| F-3 |
AGAPEATP CORPORATION
CONDENSEDCONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(Currencyexpressed in United States Dollars (“US$”)
For the six months ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation of property and equipment | ||||||||
| Amortization of intangible assets | ||||||||
| Amortization of finance lease assets | ||||||||
| Amortization of operating right-of-use assets | ||||||||
| Unrealized holding (gain) loss on marketable securities | ( | ) | ||||||
| Deferred tax provision | ||||||||
| Inventory write-off | ||||||||
| Allowance for credit loss | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivables | ||||||||
| Amount due from related parties | ||||||||
| Inventories | ( | ) | ||||||
| Prepaid taxes | ( | ) | ( | ) | ||||
| Prepayments and deposits | ( | ) | ( | ) | ||||
| Other receivables | ( | ) | ||||||
| Accounts payable | ( | ) | ( | ) | ||||
| Accounts payable – related parties | ( | ) | ( | ) | ||||
| Customer deposits | ( | ) | ( | ) | ||||
| Operating lease liabilities | ( | ) | ( | ) | ||||
| Other payables and accrued liabilities | ( | ) | ( | ) | ||||
| Other payables – related parties | ( | ) | ||||||
Amount due to directors | ||||||||
| Income tax payable | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchase of property and equipment | ( | ) | ( | ) | ||||
| Advances for investment | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from issuance of common stock | ||||||||
| Payment of finance lease liabilities | ( | ) | ( | ) | ||||
| Advance from director | ||||||||
| Net cash provided by (used in) financing activities | ( | ) | ||||||
| EFFECT OF EXCHANGE RATE ON CASH AND CASH EQUIVALENTS | ( | ) | ||||||
| DECREASE IN CASH AND CASH EQUIVALENTS | ( | ) | ( | ) | ||||
| CASH AND CASH EQUIVALENTS, beginning of period | ||||||||
| CASH AND CASH EQUIVALENTS, end of period | $ | $ | ||||||
| SUPPLEMENTAL CASH FLOWS INFORMATION | ||||||||
| Income taxes paid | $ | $ | ||||||
| Refund of prepaid taxes | ||||||||
Theaccompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| F-4 |
AGAPEATP CORPORATION
NOTESTO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Currencyexpressed in United States Dollars (“US$”), except for number of shares)
1.ORGANIZATION AND BUSINESS BACKGROUND
AgapeATP Corporation, a Nevada corporation (“the Company”) was incorporated under the laws of the State of Nevada on June 1, 2016.
AgapeATP 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 on August 8, 2003.
AATPLB is an investment holding company with
OnMay 8, 2020, the Company entered into a Share Exchange Agreement with Mr. How Kok Choong, CEO and director of the Company to acquire ordinary shares, no par value, equivalent to approximately
OnSeptember 11, 2020, the Company incorporated Wellness ATP International Holdings Sdn. Bhd. (“WATP”), a wholly owned subsidiaryunder the laws of Malaysia, to pursue the business of promoting wellness and wellbeing lifestyle of the community by providing servicesthat includes online editorials, programs, events and campaigns on how to achieve positive wellness and lifestyle. On July 4, 2024, theentity changed its name to Cedar ATPC Sdn. Bhd. (“CEDAR”).
OnNovember 25, 2024, CEDAR increased its number of ordinary shares to shares at RM per share.
OnNovember 11, 2021, AATP LB formed an entity, DSY Wellness International Sdn. Bhd. (“DSY Wellness”) with an independent thirdparty which AATP LB owns
TheCompany and its subsidiaries are principally engaged in the Health and Wellness Industry. The principal activity of the Company is tosupply 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.
TheCompany is positioning itself for sustainable growth by diversifying its operations into the domain of renewable energy. This initiativeis 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
OnSeptember 19, 2024, AGE increased its number of ordinary shares to shares at RM per share.
OnJanuary 8, 2024, AGE formed a wholly own entity, OIE ATPC Exim (M) Sdn. Bhd (“ATPC Exim”). However, the Company had decidednot to proceed with the continued development of ATPC Exim. There is no impact to the Group’s operation.
OnDecember 25, 2024, the Company incorporated ATPC Technology Private Limited (“ATPC Tech”) in China, a wholly owned subsidiaryin AATP HK to collaborate with local IT expertise to develop comprehensive digital wellness platform that integrates e-commerce, onlineconsultations, chronic disease management, and robust supply chain services catering to ASEAN market.
| F-5 |
AGAPEATP CORPORATION
NOTESTO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Currencyexpressed in United States Dollars (“US$”), except for number of shares)
1.ORGANIZATION AND BUSINESS BACKGROUND (Continued)
Detailsof the Company’s subsidiaries and VIE:
| 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 | ||||||||||
| 2. | Agape ATP International Holding Limited | ||||||||||
| 3. | Agape Superior Living Sdn. Bhd. | ||||||||||
| 4. | Agape S.E.A. Sdn. Bhd. | VIE
| |||||||||
| 5. | Cedar ATPC Sdn. Bhd. (formerly known as Wellness ATP International Holdings Sdn. Bhd.) | September 11, 2020 | |||||||||
| 6. | DSY Wellness International Sdn Bhd. | November 11, 2021 | |||||||||
| 7. | ATPC Green Energy Sdn. Bhd. (Formerly known as OIE ATPC Holdings (M) Sdn. Bhd.) | March 14, 2024 | |||||||||
| 8. | OIE ATPC Exim (M) Sdn. Bhd. | March 14, 2024 | |||||||||
| 9. | ATPC Technology Private Limited |
| F-6 |
AGAPEATP CORPORATION
NOTESTO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Currencyexpressed in United States Dollars (“US$”), except for number of shares)
1.ORGANIZATION AND BUSINESS BACKGROUND (Continued)
BusinessOverview
TheCompany is a provider of health and wellness products and advisory services in the Malaysian market. The Company pursue the mission ofhelping people to create health and wealth by providing a financially rewarding business opportunity to distributors and quality productsto distributors and customers who seek a healthy lifestyle. The Company believe the quality of the products coupled with the effectivenessof the distribution network have been the primary reasons for the success and will allow the Company to pursue future business expansion.In order to further the supply chain, on May 8, 2020, the Company acquired
ASLoffers two series of products: ATP Zeta Health Program and E.A.T.S. The ATP Zeta Health Program is a health program designed to assistin the elimination of various diseases caused by environmental pollutants, unhealthy dietary intake and unhealthy lifestyles. The programaims to promote improved health and longevity through a combination of modern health supplements, proper nutrition and advice from skilleddieticians. The Easy and Tasty Series (“E.A.T.S”) is crafted to bring nutritious lifestyle in convenient approach to maintainhealthy living.
Theestablishment of DSY Wellness is a further expansion of the business into the health and wellness industry. Mr. Steve Yap readily owns33 proprietary formulas for treating non-communicable disease which he has agreed to bring into the company for joint commercialization.Mr. Steve Yap also has existing clients receiving traditional complimentary medicine or “TCM” in Indonesia and China.
TheCompany deems creating public awareness on wellness and wellbeing lifestyle as essential to enhance the provision of its health solutionadvisory services; and therefore, incorporated CEDAR. Upon its establishment, CEDAR started collaborating with ASL to carry out variouswellness programs.
AGEdelivers innovative solutions for sustainability, energy savings and promoting environmental stewardship to achieve energy efficiencyand carbon neutrality for a healthier environment.
ATPCTechnology Private Limited (“ATPC Tech”) intend to collaborate with local IT expertise to develop comprehensive digital wellnessplatform that integrates e-commerce, online consultations, chronic disease management, and robust supply chain services catering to ASEANmarket.
| F-7 |
AGAPEATP CORPORATION
NOTESTO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Currencyexpressed in United States Dollars (“US$”), except for number of shares)
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basisof presentation
Theaccompanying interim unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accountingprinciples generally accepted in the United States of America (“U.S. GAAP”).
Theinterim unaudited financial information as of June 30, 2025 and for the three and six months ended June 30, 2025 and 2024 have been preparedwithout 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 financial statements prepared in accordance with U. S. GAAP, have been omitted pursuant to thoserules and regulations. The interim unaudited financial information should be read in conjunction with the audited financial statementsand the notes thereto, included in the Form 10-K for the fiscal year ended December 31, 2024, which was filed with the SEC on March 31,2025.
Inthe opinion of management, all adjustments (including normal recurring adjustments) necessary to present a fair statement of the Company’sunaudited financial position as of June 30, 2025, its unaudited results of operations for the three and six months ended June 30, 2025and 2024, and its unaudited cash flows for the six months ended June 30, 2025 and 2024, as applicable, have been made. The unauditedinterim results of operations are not necessarily indicative of the operating results for the full fiscal year or any future periods.
Theunaudited condensed consolidated financial statements include the financial statements of the Company, its subsidiaries and its variableinterest entity (“VIE”) over which the Company exercises control and, where applicable, entities for which the Company hasa controlling financial interest or is the primary beneficiary. All transactions and balances among the Company, its subsidiaries andits VIE have been eliminated upon consolidation.
GoingConcern
Asdisclosed in the Company’s unaudited condensed consolidated financial statements, the Company incurred a net loss of $
TheCompany had current assets of $
Theseconditions raised substantial doubt about the Company’s ability to continue as a going concern for the next twelve months.
TheCompany’s liquidity is based on its ability to generate cash from operating activities and obtain financing from investors to fundits general operations and capital expansion needs. The Company’s ability to continue as a going concern is dependent on management’sability to increase its revenue while controlling operating cost and expense to generate positive operating cash flow and obtain financingfrom outside sources and invest in new opportunities to generate financial return to the Company.
TheCompany believes these actions will improve the Company’s financial position, However, there can be no assurance that these plansand arrangements can be successfully executed and the outcome of these plans are uncertain.
Principlesof consolidation
Subsidiariesare those entities in which the Company, directly or indirectly, controls more than one half of the voting power; or has the power togovern the financial and operating policies, to appoint or remove the majority of the members of the board of directors, or to cast amajority of votes at the meeting of directors.
AVIE is an entity that has either a total equity investment that is insufficient to permit the entity to finance its activities withoutadditional subordinated financial support, or whose equity investors lack the characteristics of a controlling financial interest, suchas through voting rights, right to receive the expected residual returns of the entity or obligation to absorb the expected losses ofthe entity. The variable interest holder, if any, that has a controlling financial interest in a VIE is deemed to be the primary beneficiaryand must consolidate the VIE. As of and for the three and six months ended June 30, 2025, SEA, the only VIE of the Company has no significantoperations.
Useof estimates
Thepreparation of unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimatesand assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as ofthe date of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the periodspresented. Significant accounting estimates reflected in the Company’s unaudited condensed consolidated financial statements includeallowance for inventories obsolescence, impairment of long-lived assets, valuation allowance for deferred tax assets, allowancefor credit loss, allowance for estimation of coupon redemption and the assumptions used in the valuation of the derivative financialinstruments. Actual results could differ from these estimates.
Cashand cash equivalents
Cashand cash equivalents represent cash on hand, time deposits placed with banks or other financial institutions and all highly liquid investmentswith an original maturity of three months or less.
| F-8 |
AGAPEATP CORPORATION
NOTESTO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Currencyexpressed in United States Dollars (“US$”), except for number of shares)
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Accountsreceivable, net
Accountsreceivable are recorded at the invoiced amount less an allowance for any uncollectible accounts and do not bear interest, which are dueon credit term. The carrying value of accounts receivable is reduced by an allowance that reflects the Company’s best estimateof the amounts that will not be collected. An allowance for credit loss is recorded in the period when a loss is probable based on anassessment of collectivity by reviewing accounts receivable on a collective basis where similar characteristics exist, primarily baseon similar business line, service or product offerings and on an individual basis when the Company identifies specific customers withknown disputes or collectivity issues. In determining the amount of the allowance for credit loss, the Company considers historical collectivitybased on past due status, the age of the accounts receivable balances, credit quality of the Company’s customers based on ongoingcredit evaluations, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factorsthat may affect the Company’s ability to collect from customers. Accounts receivable balances are charged off against the allowanceafter all means of collection have been exhausted and the potential for recovery is considered remote. The Company’s managementcontinues to evaluate the reasonableness of the valuation allowance policy and update it if necessary. As of June 30, 2025 and December31, 2024, $
Inventories
Inventoriesconsist of raw materials and finished goods and are stated at the lower of cost or net realizable value using the first-in first-outmethod. Management reviews inventory on hand for estimated obsolescence or unmarketable items, as compared to future demand requirementsand the shelf life of the various products. Based on the review, the Company records inventory write-downs, when necessary, when costsexceed expected net realizable value. For the three months ended June 30, 2025 and 2024, the Company did
Prepaidtaxes
Prepaidtaxes include prepaid income taxes that will either be refunded or utilized to offset future income tax.
Prepaymentsand deposits, net
Prepaymentsand 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 notbe in receipts of inventories, services, or refundable, the Company will recognize an allowance account to reserve such balances. Managementreviews 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 loss after management has determined that the likelihood ofcollection is not probable. The Company’s management continues to evaluate the reasonableness of the allowance policy and updateit if necessary. There were
Propertyand equipment, net
Propertyand equipment are stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimateduseful lives of the assets with no residual value. The estimated useful lives are as follows:
| F-9 |
AGAPEATP CORPORATION
NOTESTO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Currencyexpressed in United States Dollars (“US$”), except for number of shares)
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
| Classification | Useful Life | |
| Computer and office equipment | ||
| Furniture & fixtures | ||
| Motor vehicle | ||
| Leasehold improvements |
Thecost and related accumulated depreciation of assets sold or otherwise retired are eliminated from the accounts and any gain or loss isincluded in the consolidated statements of income and comprehensive income. Expenditures for maintenance and repairs are charged to earningsas incurred, while additions, renewals and betterments, which are expected to extend the useful life of assets, are capitalized. TheCompany also re-evaluates the periods of depreciation to determine whether subsequent events and circumstances warrant revised estimatesof useful lives.
Intangibleassets, net
Intangibleassets, net, are stated at cost, less accumulated amortization. Amortization expense is recognized on the straight-line basis over theestimated useful lives of the assets as follows:
| Classification | Useful Life | |
| Computer software |
Impairmentfor long-lived assets
Long-livedassets, including property and equipment, and intangible assets with finite lives are reviewed for impairment whenever events or changesin circumstances (such as a significant adverse change to market conditions that will impact the future use of the assets) indicate thatthe carrying value of an asset may not be recoverable. The Company assesses the recoverability of the assets based on the undiscountedfuture cash flows the assets are expected to generate and recognize an impairment loss when estimated undiscounted future cash flowsexpected to result from the use of the asset plus net proceeds expected from disposition of the asset, if any, are less than the carryingvalue of the asset. If an impairment is identified, the Company would reduce the carrying amount of the asset to its estimated fair valuebased on a discounted cash flows approach or, when available and appropriate, to comparable market values. As of June 30, 2025 and December31, 2024, no impairment of long-lived assets was recognized.
Investmentin marketable equity securities
TheCompany follows the provisions of ASU 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurementof Financial Assets and Financial Liabilities. Investments in marketable equity securities (non-current) are reported at fair valuewith changes in fair value recognized in the Company’s unaudited condensed consolidated statements of operations and comprehensiveloss in the caption of “unrealized holding gain (loss) on marketable securities” in each reporting period.
Investmentin non-marketable equity securities
TheCompany follows the provisions of ASU 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurementof Financial Asset and Financial Liabilities. Due to the Company’s non-marketable equity securities (non-current) does notqualify for the practical expedient to estimate fair value in accordance with ASC 820-10-35-59, the Company has selected to record itsinvestments in non-marketable equity securities (non-current) at cost minus impairment, if any, plus or minus changes resulting fromobservable price changes in orderly transactions for the identical or a similar investment of the same issue.
| F-10 |
AGAPEATP CORPORATION
NOTESTO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Currencyexpressed in United States Dollars (“US$”), except for number of shares)
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Ateach reporting period, the Company will make a qualitative assessment considering impairment indicators to evaluated whether the investmentis impaired. The qualitative assessment indicators include, but are not limited to: (i) A significant deterioration in the earnings performance,credit rating, asset quality, or business prospects of the investee; (ii) A significant adverse change in the regulatory, economic, ortechnological environment of the investee; (iii) A significant adverse change in the general market condition of either the geographicalarea or the industry in which the investee operates; (iv) A bona fide offer to purchase, an offer by the investee to sell, or a completedauction process for the same or similar investment for an amount less than the carrying amount of that investment; and (v) Factors thatraise significant concerns about the investee’s ability to continue as a going concern, such as negative cash flows from operations,working capital deficiencies, or noncompliance with statutory capital requirements or debt covenants. If the qualitative assessment indicatorsindicated that the non-marketable equity securities (non-current) is deemed to be impaired, the Company would recognize the impairmentloss equal to the difference between the fair value of the investment and its carrying amount.
Customerdeposits
Customerdeposits represent amounts advanced by customers on product orders and unapplied unexpired coupons. Customer deposits are reduced whenthe related sale is recognized in accordance with the Company’s revenue recognition policy.
Revenuerecognition
TheCompany adopted Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (ASC Topic 606). The coreprinciple underlying the revenue recognition of this ASU allows the Company to recognize revenue that represents the transfer of goodsand 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 apoint in time or over time, based on when control of goods and services transfers to a customer. The Company’s revenue streamsare recognized at a point in time for the Company’s sale of health and wellness products.
TheASU 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 transactionprice, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocatethe transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfiesthe performance obligation.
TheCompany accounts for a contract with a customer when the contract is committed in writing, the rights of the parties, including paymentterms, are identified, the contract has commercial substance and consideration is probable of substantially collection.
| F-11 |
AGAPEATP CORPORATION
NOTESTO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Currencyexpressed in United States Dollars (“US$”), except for number of shares)
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Salesof Skin Care, Health and Wellness products
-Performance obligations satisfied at a point in time
TheCompany derives its revenues from sales contracts with its customers with revenues being recognized when control of the skin care, healthand wellness products are transferred to its customer at the Company’s office or shipment of the goods. The revenue is recordednet 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.
Underthe Company’s network marketing business, the Company issues product coupons to members and distributors when these customers madepurchases above certain thresholds set by the Company. Depending on the type of product coupons issued, the coupons carry varying valuesand can be used by the customers for reduction in the transaction price of product purchases within the coupon validity period. The valueof the product coupons issued is recorded as a reduction of the Company’s revenue account upon issuance; the corresponding amountcredited to the customer deposits account. Amounts in customer deposits will be reversed when the coupons are used. The Company’scoupons have a validity period of between six and twelve months. If the Company’s customers did not utilize the coupons after thevalidity period, the Company would recognize the forfeiture of the originated sales value of the coupons as net revenues.
Forthe three months ended June 30, 2025 and 2024, the Company recognized $
TheCompany had contracts for the sales of health and wellness products amounting to $
Salesof products for the provision of complementary health therapies
-Performance obligations satisfied at a point in time
Productsfor the provision of complementary health therapies are predominantly Chinese herbs in different forms, processed or otherwise, for prescriptionsfor treating non-communicable diseases.
TheCompany prescribes the products for complementary health therapies based on health screening test reports and delivers the products tothe customers during the consultation session.
Forthe three months ended June 30, 2025 and 2024, revenues from products for the provision of complementary health therapies were $
Provisionof Health and Wellness services
-Performance obligations satisfied at a point in time
TheCompany carries out its Wellness program, where the Company’s products are bundled with health screening test. The health screeningtest 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.
TheCompany based on the health screening test contracts with customers, establishes the selling price for the health screening test andplace 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 servicesdepending on the customer’s needs.
TheCompany derives its revenues from sales contracts with its customers with revenues being recognized when the test reports are completedand delivered to its customers during the consultation session in person.
Forthe three months ended June 30, 2025 and 2024, revenues from health and wellness services were $
Salesof products and services for the operations in green energy
-Performance obligations satisfied over time
TheCompany provides products, technical knowledge and solutions for sustainability and energy savings. The Company delivers the productsto the customers and enhances the products that the customer controls. The products that the Company creates have no alternative useto the Company. The Company has an enforceable right to receive payment for performance completed to date, the Company recognizedrevenue based on the percentage of cost incurred.
Forthe three months ended June 30, 2025 and 2024, revenues from operation in green energy were $
| F-12 |
AGAPEATP CORPORATION
NOTESTO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Currencyexpressed in United States Dollars (“US$”), except for number of shares)
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Disaggregatedinformation of revenues by products are as follows:
| For the three months ended | For the six months ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Energized Mineral Concentrate | $ | $ | $ | $ | ||||||||||||
| Ionized Cal-Mag | ||||||||||||||||
| LIVO 5 | ||||||||||||||||
| Soy Protein Isolate Powder | ||||||||||||||||
| Mix Soy Protein Isolate Powder with Black Sesame | ||||||||||||||||
| Others – Products for the provision of complementary health therapies | ||||||||||||||||
| Skin care and healthcare products | ||||||||||||||||
| Green Energy | ||||||||||||||||
| Total revenues - products | ||||||||||||||||
| Health and Wellness services | ||||||||||||||||
| Total revenues - products and services | $ | $ | $ | $ | ||||||||||||
Costof revenue
Costof revenue comprised freight-in, the purchase cost of manufactured goods for sale to customers,purchase cost of products and services for the provision of complementary health therapies and purchase cost of products and servicesfor green energy. For the three and six months ended June 30, 2025, cost of revenue were $
Shippingand handling
Shippingand handling charges amounted to $
Advertisingcosts
Advertisingcosts amounted to $
| F-13 |
AGAPEATP CORPORATION
NOTESTO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Currencyexpressed in United States Dollars (“US$”), except for number of shares)
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Commissionexpenses
Aswith 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 independentdirect sales members. Top performing distributors with their own physical stores may also become stockists of the Company, whereby theyenjoy benefits such as maintaining a certain amount of the Company’s inventory on their store premises. The stockists shall accountto 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. Commissionexpenses amounted to $
Sellingexpenses
TheCompany’s selling expenses typically comprise salaries and benefits expenses, credit card processing fees and promotional expenses.Selling expenses amounted to $
Generaland administrative expenses (“G&A expenses”)
TheCompany’s G&A expenses typically comprise of salaries and benefits expenses, rental expenses, professional expenses, depreciationexpenses and allowance for credit loss. G&A expenses amounted to $
Definedcontribution plan
Thefull-time employees of the Company are entitled to the government mandated defined contribution plan. The Company is required to accrueand pay for these benefits based on certain percentages of the employees’ respective salaries, subject to certain ceilings, inaccordance with the relevant government regulations, and make cash contributions to the government mandated defined contribution plan.Total expenses for the plans were $
Therelated contribution plans include:
| - | Social Security Organization (“PERKESO”) – | |
| - | Employees Provident Fund (“EPF”) –based on employee’s monthly salary, | |
| - | Employment Insurance System (“EIS”) – | |
| - | Human Resource Development Fund (“HRDF”) – |
Incometaxes
TheCompany accounts for income taxes in accordance with U.S. GAAP for income taxes. The charge for taxation is based on the results forthe fiscal year as adjusted for items, which are non-assessable or disallowed. It is calculated using tax rates that have been enactedor substantively enacted by the balance sheet date.
Deferredtax is accounted for using the asset and liability method in respect of temporary differences arising from differences between the carryingamount of assets and liabilities in the consolidated financial statements and the corresponding tax basis used in the computation ofassessable tax profit. In principle, deferred tax liabilities are recognized for all taxable temporary differences. Deferred tax assetsare recognized to the extent that it is probable that taxable profit will be available against which deductible temporary differencescan be utilized. Deferred tax is calculated using tax rates that are expected to apply to the period when the asset is realized or theliability is settled.
| F-14 |
AGAPEATP CORPORATION
NOTESTO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Currencyexpressed in United States Dollars (“US$”), except for number of shares)
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Deferredtax is charged or credited in the income statement, except when it is related to items credited or charged directly to equity, in whichcase the deferred tax is also dealt with in equity. Deferred tax assets are reduced by a valuation allowance when, in the opinion ofmanagement, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Current income taxesare provided for in accordance with the laws of the relevant taxing authorities.
Anuncertain tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustainedin a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit thatis
TheCompany conducts much of its business activities in Hong Kong, Malaysia and China 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 taxauthorities.
Comprehensiveincome (loss)
Comprehensiveincome (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 but are excluded from net income.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-controllinginterest
TheCompany computes earnings (loss) per share (“EPS”) in accordance with ASC 260, “Earnings per Share”. ASC 260requires companies to present basic and diluted EPS. Basic EPS is measured as net income (loss) divided by the weighted average ordinaryshare 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 pershare) are excluded from the calculation of diluted EPS.For the three and six months ended June 30, 2025 and 2024, there were dilutive shares.
| F-15 |
AGAPEATP CORPORATION
NOTESTO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Currencyexpressed in United States Dollars (“US$”), except for number of shares)
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Foreigncurrencies translation and transaction
Transactionsdenominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailingat the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translatedinto the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recordedin the consolidated statements of operations and comprehensive loss.
Thereporting currency of the Company is United States Dollars (“US$”) and the accompanying financial statements have been expressedin US$. The Company’s subsidiary in Labuan maintains its books and record in United States Dollars (“US$”) albeit itsfunctional currency being the primary currency of the economic environment in which the entity operates, which is the Malaysian Ringgit(“MYR” or “RM”). The Company’s subsidiary in Hong Kong maintains its books and record in Hong Kong Dollars(“HK$”), similar to its functional currency. The Company’s subsidiary in China maintains its books and record in ChineseYuan (“CNY”), similar to its functional currency. The Company’s subsidiary and VIE in Malaysia conducts its businessesand maintains its books and record in the local currency, Malaysian Ringgit (“MYR” or “RM”), as its functionalcurrency.
Ingeneral, for consolidation purposes, assets and liabilities of its subsidiaries whose functional currency is not US$ are translated intoUS$, in accordance with ASC Topic 830-30, “Translation of Financial Statement”, using the exchange rate on the balancesheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translationof financial statements of foreign subsidiary are recorded as a separate component of accumulated other comprehensive income within thestatements of stockholders’ equity. Cash flows are also translated at average translation rates for the periods, therefore, amountsreported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the consolidated balancesheets.
Translationof foreign currencies into US$1 have been made at the following exchange rates for the respective periods:
| As of | ||||||||
June 30, 2025 | December 31, 2024 | |||||||
| Period-end MYR : US$1 exchange rate | ||||||||
| Period-end HKD : US$1 exchange rate | ||||||||
| Period-end CNY : US$1 exchange rate | ||||||||
For the three months ended June 30, | For the six months ended June 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Period-average MYR : US$1 exchange rate | ||||||||||||||||
| Period-average HKD : US$1 exchange rate | ||||||||||||||||
| Period-average CNY : US$1 exchange rate | ||||||||||||||||
| F-16 |
AGAPEATP CORPORATION
NOTESTO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Currencyexpressed in United States Dollars (“US$”), except for number of shares)
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Relatedparties
Parties,which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly, to controlthe other party or exercise significant influence over the other party in making financial and operating decisions. Companies are alsoconsidered to be related if they are subject to common control or common significant influence.
Fairvalue of financial instruments
Theaccounting standard regarding fair value of financial instruments and related fair value measurements defines financial instruments andrequires disclosure of the fair value of financial instruments held by the Company.
Theaccounting standards define fair value, establish a three-level valuation hierarchy for disclosures of fair value measurement and enhancedisclosure 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. |
Financialinstruments 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 realizationand their current market rates of interest.
Leases
TheCompany adopted ASU 2016-02, “Leases” (Topic 842), and elected the practical expedients that does not require the Companyto reassess: (1) whether any expired or existing contracts are, or contain, leases, (2) lease classification for any expired or existingleases and (3) initial direct costs for any expired or existing leases. For lease terms of twelve months or fewer, a lessee is permittedto make an accounting policy election not to recognize lease assets and liabilities. The Company also adopts the practical expedientthat allows lessees to treat the lease and non-lease components of a lease as a single lease component. Some of the Company’s leasesinclude one or more options to renew, which is typically at the Company’s sole discretion. The Company regularly evaluates therenewal options, and, when it is reasonably certain of exercise, it will include the renewal period in its lease term. New lease modificationsresult in re-measurement of the right of use (“ROU”) assets and lease liabilities. Operating ROU assets and lease liabilitiesare recognized at the commencement date, based on the present value of lease payments over the lease term. Since the implicit rate forthe Company’s leases is not readily determinable, the Company use its incremental borrowing rate based on the information availableat the commencement date in determining the present value of lease payments. The incremental borrowing rate is the rate of interest thatthe Company would have to pay to borrow, on a collateralized basis, an amount equal to the lease payments, in a similar economic environmentand over a similar term.
| F-17 |
AGAPEATP CORPORATION
NOTESTO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Currencyexpressed in United States Dollars (“US$”), except for number of shares)
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Leaseterms 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 considersthe economic life of its operating lease ROU assets to be comparable to the useful life of similar owned assets. The Company has electedthe short-term lease exception, therefore operating lease ROU assets and liabilities do not include leases with a lease term of twelvemonths 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.
TheCompany reviews the impairment of its ROU assets consistent with the approach applied for its other long-lived assets. The Company reviewsthe recoverability of its long-lived assets when events or changes in circumstances occur that indicate that the carrying value of theasset may not be recoverable. The assessment of possible impairment is based on its ability to recover the carrying value of the assetfrom the expected undiscounted future pre-tax cash flows of the related operations. The Company has elected to include the carrying amountof operating lease liabilities in any tested asset group and includes the associated operating lease payments in the undiscounted futurepre-tax cash flows.
Derivativefinancial instruments
Derivativefinancial instruments consist of financial instruments that contain a notional amount and one or more underlying variables such as interestrate, security price, variable conversion rate or other variables, require no initial new investment and permit net settlement. The derivativefinancial instruments may be free-standing or embedded in other financial instruments. The Company evaluates its financial instrumentsto determine if such instruments are derivatives or contain features that qualify as embedded derivatives. The Company based on the termsof the warrant agreement to determine the warrants as equity instruments or derivative liabilities. The Company follows the provisionof ASC 815, Derivatives and Hedging for derivative financial instruments that are classified as equity instruments, the contracts areinitially measured at fair value and no subsequent measurement is required for equity instruments. The Company uses Black-Scholes Modelto calculate the fair value of the warrant.
Recentaccounting pronouncements
TheCompany 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.
InDecember 2023, the FASB issued ASU 2023-09 “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”. The ASU 2023-09requires companies to disclose specific categories in the rate reconciliation and provide additional information for reconciling itemsthat meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computedby multiplying pretax income or loss by the applicable statutory income tax rate). The ASU 2023-09 is effective for annual reportingperiods beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the impact of this ASU mayhave on its consolidated financial statements.
TheFASB issued ASU 2024-03 and ASU 2025-01 “Income Statement – Reporting Comprehensive Income – Expense DisaggregationDisclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, and Clarifying the Effective Date” in November 2024and January 2025 respectively. This new guidance requires disclosures of additional information of the nature of expenses included inthe income statement as well as disclosures about specific expense categories in the notes to the financial statements. The requirementsof the new guidance are effective for annual periods beginning after December 15, 2026, and for interim periods beginning after December15, 2027, which early adoption permitted. This new guidance can be applied either retrospectively to any or all prior periods presentedin the consolidated financial statements or prospectively to financial statements issued for reporting period after the effective dateof this new guidance. The Company is currently evaluating the effect of adopting this guidance.
InNovember 2024, the FASB issued ASU 2024-04 “Debt – Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversionsof Convertible Debt Instruments”. This ASU clarifies the requirements for determining whether certain settlements of convertibledebt instruments should be accounted for as an induced conversion. The clarification is effective for annual reporting periods beginningafter December 15, 2025, and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluatingthe effect of adopting of this ASU.
InJuly 2025, the FASB issued ASU 2025-05 “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses forAccounts Receivable and Contract Assets”. This ASU provides a practical expedient that allows companies to assume that currentconditions as of the balance sheet date do not change for the remaining life of the asset. This ASU is effective for annual reportingperiods beginning after December 15, 2025, and interim reporting periods within annual reporting periods. Early adoption is permitted.The Company is currently evaluating the effect of adopting of this ASU.
Exceptfor the above-mentioned pronouncements, there are no new recent issued accounting standards that will have a material impact on the unauditedconsolidated financial position, statements of operations and cash flows.
| F-18 |
AGAPEATP CORPORATION
NOTESTO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Currencyexpressed in United States Dollars (“US$”), except for number of shares)
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Recentlyadopted Accounting Pronouncements
InNovember 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 significantsegment expenses. The ASU 2023-07 is effective for annual reporting periods beginning after December 15, 2023 and interim periods infiscal years beginning after December 15, 2024. The adoption of this accounting standard has no material impact on the consolidated financialstatements.
InMarch 2024, the FASB issued ASU 2024-01 “Compensation – Stock Compensation (Topic 718): Scope Application of Profits Interestand Similar Awards”. The ASU clarify how an entity determines whether a profits interest or similar award is within the scope ofAccounting 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 retrospectivelyto all prior periods presented in the consolidated financial statements or prospectively to profits interest and similar awards grantedor modified on or after the date at which the entity first applies the amendments. Early adoption is permitted. The adoption of ASU 2024-01has no material impact on the Company’s consolidated financial statements.
InMarch 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 referencesremoved are extraneous and not required to understand or apply the guidance. Generally, the amendments in ASU 2024-02 are not intendedto result in significant accounting changes for most entities. The amendments in this update are effective for annual reporting periodsbeginning after December 15, 2024 and has no significant impact on our financial statements.
Exceptfor the above-mentioned pronouncements, there are no new recent issued accounting standards that will have a material impact on the unauditedcondensed consolidated financial position, statements of operations and cash flows.
3.VARIABLE INTEREST ENTITY (“VIE”)
SEAis a trading company incorporated on March 4, 2004, under the laws of Malaysia. SEA provided majority of ASL’s purchases. The incomegenerated was insufficient to finance its activities and
| 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-19 |
AGAPEATP CORPORATION
NOTESTO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Currencyexpressed in United States Dollars (“US$”), except for number of shares)
3.VARIABLE INTEREST ENTITY (“VIE”) (Continued)
Thecarrying amount of the VIE’s assets and liabilities were as follows:
| As of | ||||||||
June 30, 2025 | December31, 2024 | |||||||
| Current assets: | ||||||||
| Cash | $ | $ | ||||||
| Prepayment and deposits | ||||||||
| Total current assets | $ | $ | ||||||
| Current liabilities: | ||||||||
| Other payables and accrued liabilities | $ | $ | ||||||
| Total current liabilities | $ | $ | ||||||
| Net deficit | $ | ( | ) | $ | ( | ) | ||
Thesummarized operating results of the VIE’s are as follows:
| For the three months ended June 30, | For the six months ended June 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Operating revenues | $ | $ | $ | $ | ||||||||||||
| Gross profit | $ | $ | $ | $ | ||||||||||||
| Loss from operations | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
4.CASH AND CASH EQUIVALENTS
Asof June 30, 2025 and December 31, 2024,the Company has $
| F-20 |
AGAPEATP CORPORATION
NOTESTO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Currencyexpressed in United States Dollars (“US$”), except for number of shares)
5.ACCOUNTS RECEIVABLE, NET
| As of | ||||||||
June 30, 2025 | December31, 2024 | |||||||
| Accounts receivable | $ | $ | ||||||
| Allowance for credit loss | ( | ) | ( | ) | ||||
| Total accounts receivable, net | $ | $ | ||||||
Movementsof allowance for credit loss are as follows:
| As of | ||||||||
June 30, 2025 | December 31, 2024 | |||||||
| Beginning balance | $ | $ | ||||||
| Addition | ||||||||
| Exchange rate effect | ||||||||
| Ending balance | $ | $ | ||||||
6.INVENTORIES
Inventoriesconsist of the following:
| As of | ||||||||
June 30, 2025 | December 31, 2024 | |||||||
| Finished goods | $ | $ | ||||||
| Raw material | ||||||||
Forthe three months ended June 30, 2025 and 2024, there were
7.PREPAYMENTS AND DEPOSITS, NET
| As of | ||||||||
June 30, 2025 | December 31, 2024 | |||||||
| Prepaid expenses | $ | $ | ||||||
| Deposit for investment (1) | ||||||||
| Deposits to suppliers | ||||||||
| Allowance for credit loss | ( | ) | ( | ) | ||||
| Total | $ | $ | ||||||
| (1) |
Pursuantto the agreement, the Company remitted a deposit of $
TheCompany continues to monitor the progress of the investment activities and will reclassify the deposit as an investment asset once adefinitive transaction has been completed and the associated rights and obligations have been transferred.
Otherprepayments and deposits are mainly cash deposited or advanced to suppliers for future inventory purchases or service providers for futureservices. 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 credit loss for such balances. Management reviews its prepayments and depositson a regular basis to determine if the allowance is adequate, and adjusts the allowance when necessary. Delinquent account balances arewritten-off against allowance for credit loss after management has determined that the likelihood of collection is not probable.
| F-21 |
AGAPEATP CORPORATION
NOTESTO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Currencyexpressed in United States Dollars (“US$”), except for number of shares)
7.PREPAYMENTS AND DEPOSITS, NET (Continued)
Movementsof allowance for credit loss are as follows:
| As of | ||||||||
June 30, 2025 | December 31, 2024 | |||||||
| Beginning balance | $ | $ | ||||||
| Addition | ||||||||
| Exchange rate effect | ||||||||
| Ending balance | $ | $ | ||||||
8.PROPERTY AND EQUIPMENT, NET
Propertyand equipment, net consist of the following:
| As of | ||||||||
June 30, 2025 | December 31, 2024 | |||||||
| Computer and office equipment | $ | $ | ||||||
| Furniture & fixtures | ||||||||
| Motor vehicle | ||||||||
| Leasehold improvements | ||||||||
| Subtotal | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Total | $ | $ | ||||||
Depreciationexpense for the three months ended June 30, 2025 and 2024 amounted to $
9.INTANGIBLE ASSETS, NET
Intangibleassets, net, consist of the following:
| As of | ||||||||
June 30, 2025 | December 31, 2024 | |||||||
| Computer software | $ | $ | ||||||
| Less: accumulated amortization | ( | ) | ( | ) | ||||
| Total | $ | $ | ||||||
Amortizationexpense for the three months ended June 30, 2025 and 2024 amounted to $
| F-22 |
AGAPEATP CORPORATION
NOTESTO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Currencyexpressed in United States Dollars (“US$”), except for number of shares)
10.INVESTMENT IN MARKETABLE SECURITIES
| (i) | On May 17, 2018, the Company purchased shares of common stock in Greenpro Capital Corp. for $ | |
| (ii) | On July 30, 2018, the Company disposed shares of common stock in Greenpro Capital Corp. for $ at a purchase price of $ per share. | |
| (iii) | On October 16, 2018, the Company purchased shares of common stock in Greenpro Capital Corp. for $ | |
| (iv) | On July 19, 2022, Greenpro Capital Corp. filed a certificate of change with the Secretary of State of Nevada to | |
| (v) | On November 3, 2020, the Company received dividend of shares of common stock in DSwiss, Inc. for $ | |
| (vi) | On December 9, 2020, the Company received dividend of shares of common stock in DSwiss, Inc. for $ | |
| (vii) | On September 27, 2021, the Company received dividend of shares of common stock in SEATech Ventures Corp. for $ |
| As of | ||||||||
June 30, 2025 | December 31, 2024 | |||||||
| Fair value of investment in marketable securities at the beginning of period / year | $ | $ | ||||||
| Transfer to non-marketable security | ( | ) | ||||||
| Unrealized holding gain (loss) | ( | ) | ||||||
| Exchange rate effect | ( | ) | ||||||
| Fair value of investment in marketable securities at the end of period / year | $ | $ | ||||||
11.INVESTMENT IN NON-MARKETABLE SECURITIES
| (i) | On April 3, 2019, the Company purchased a | |
| (ii) | On July 2, 2024, the Company purchased |
| As of | ||||||||
| Radiance Holdings Corp. | June 30, 2025 | December 31, 2024 | ||||||
| Cost of investment at the beginning of the period / year | $ | $ | ||||||
| Transfer from investment in marketable securities | ||||||||
| Cost of investment at the end of the period / year | ||||||||
| F-23 |
AGAPEATP CORPORATION
NOTESTO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Currencyexpressed in United States Dollars (“US$”), except for number of shares)
12.CUSTOMER DEPOSITS
| As of | ||||||||
June 30, 2025 | December 31, 2024 | |||||||
| Customer deposits – Non-Refundable | $ | $ | ||||||
| Unexpired product coupons | ||||||||
| Total | $ | $ | ||||||
Customerdeposits represent amounts advanced by customers on product orders and unexpired product coupons issued to the Company’smembers and distributors of its network marketing business.
13.OTHER PAYABLES AND ACCRUED LIABILITIES
| As of | ||||||||
June 30, 2025 | December 31, 2024 | |||||||
| Professional fees | $ | $ | ||||||
| Promotion expenses | ||||||||
| Payroll | ||||||||
| Amounts held in eWallets | ||||||||
| Tax penalty | ||||||||
| Others | ||||||||
| Total | $ | $ | ||||||
TheCompany requires all members and distributors of its network marketing business to maintain an electronic wallet (eWallet) account withthe Company.
| F-24 |
AGAPEATP CORPORATION
NOTESTO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Currencyexpressed in United States Dollars (“US$”), except for number of shares)
14.RELATED PARTY BALANCES AND TRANSACTIONS
Relatedparty balances
Amountdue from related parties
| As of | ||||||||||||
| Name of Related Party | Relationship | Nature | June 30, 2025 | December 31, 2024 | ||||||||
| TH3 Holdings Sdn Bhd (“TH3”) | $ | $ | ||||||||||
| ATPC Lega Global Sdn Bhd (“Lega”) | ||||||||||||
| Total | $ | $ | ||||||||||
Accountspayable – related parties
| As of | ||||||||||||
| Name of Related Party | Relationship | Nature | June 30, 2025 | December 31, 2024 | ||||||||
| CTA Nutriceuticals (Asia) Sdn Bhd (“CTA”) | $ | $ | ||||||||||
| SY Welltech Sdn Bhd (“Welltech”) (formerly known as DSY Beauty Sdn Bhd) | ||||||||||||
| Cedar Wellness Sdn Bhd (“CW”) | ||||||||||||
| Total | $ | $ | ||||||||||
| F-25 |
AGAPEATP CORPORATION
NOTESTO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Currencyexpressed in United States Dollars (“US$”), except for number of shares)
14.RELATED PARTY BALANCES AND TRANSACTIONS (Continued)
Relatedparty balances
Otherpayable - related parties
| As of | ||||||||||||
| Name of Related Party | Relationship | Nature | June 30, 2025 | December 31, 2024 | ||||||||
| CTA Nutriceuticals (Asia) Sdn Bhd (“CTA”) | $ | $ | ||||||||||
| Cedar Wellness Sdn Bhd (“CW”) | ||||||||||||
| Ms. Low Mui Chin | ||||||||||||
| Mr. How Kok Choong | ||||||||||||
| Total | $ | $ | ||||||||||
Relatedparty transactions
Purchases
For the three months ended June 30, | ||||||||||||
| Name of Related Party | Relationship | Nature | 2025 | 2024 | ||||||||
| CTA Nutriceuticals (Asia) Sdn Bhd (“CTA”) | $ | $ | ||||||||||
| SY Welltech Sdn Bhd (“Welltech”) (formerly known as DSY Beauty Sdn Bhd) | ||||||||||||
| Cedar Wellness Sdn Bhd (“CW”) | ||||||||||||
| Total purchases | $ | $ | ||||||||||
| F-26 |
AGAPEATP CORPORATION
NOTESTO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Currencyexpressed in United States Dollars (“US$”), except for number of shares)
14.RELATED PARTY BALANCES AND TRANSACTIONS (Continued)
Purchases
Relatedparty transactions
For the six months ended June 30 , | ||||||||||||
| Name of Related Party | Relationship | Nature | 2025 | 2024 | ||||||||
| CTA Nutriceuticals (Asia) Sdn Bhd (“CTA”) | $ | $ | ||||||||||
| SY Welltech Sdn Bhd (“Welltech”) (formerly known as DSY Beauty Sdn Bhd) | ||||||||||||
| Cedar Wellness Sdn Bhd (“CW”) | ||||||||||||
| Total purchases | $ | $ | ||||||||||
Otherpurchases
For the three months ended June 30, | ||||||||||||
| Name of Related Party | Relationship | Nature | 2025 | 2024 | ||||||||
| CTA Nutriceuticals (Asia) Sdn Bhd (“CTA”) | $ | $ | ||||||||||
| SY Welltech Sdn Bhd (“Welltech”) (formerly known as DSY Beauty Sdn Bhd) | ||||||||||||
| Total other purchases | $ | $ | ||||||||||
| F-27 |
AGAPEATP CORPORATION
NOTESTO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Currencyexpressed in United States Dollars (“US$”), except for number of shares)
14.RELATED PARTY BALANCES AND TRANSACTIONS (Continued)
Relatedparty transactions
Otherpurchases
For the six months ended June 30, | ||||||||||||
| Name of Related Party | Relationship | Nature | 2025 | 2024 | ||||||||
| CTA Nutriceuticals (Asia) Sdn Bhd (“CTA”) | $ | $ | ||||||||||
| SY Welltech Sdn Bhd (“Welltech”) (formerly known as DSY Beauty Sdn Bhd) | ||||||||||||
| Total other purchases | $ | $ | ||||||||||
Commission
For the three months ended June 30, | ||||||||||||
| Name of Related Party | Relationship | Nature | 2025 | 2024 | ||||||||
| Mr. How Kok Choong | $ | $ | ||||||||||
| Total commission | $ | $ | ||||||||||
| F-28 |
AGAPEATP CORPORATION
NOTESTO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Currencyexpressed in United States Dollars (“US$”), except for number of shares)
14.RELATED PARTY BALANCES AND TRANSACTIONS (Continued)
Relatedparty transactions
Commission
For the six months ended June 30, | ||||||||||||
| Name of Related Party | Relationship | Nature | 2025 | 2024 | ||||||||
| Mr. How Kok Choong | $ | $ | ||||||||||
| Total commission | $ | $ | ||||||||||
Otherincome
For the three months ended June 30, | ||||||||||||
| Name of Related Party | Relationship | Nature | 2025 | 2024 | ||||||||
| Ando Design Sdn Bhd (“Ando”) | $ | $ | ||||||||||
| TH3 Holdings Sdn Bhd (“TH3”) | ||||||||||||
| Total other income | $ | $ | ||||||||||
Otherincome
For the six months ended June 30, | ||||||||||||
| Name of Related Party | Relationship | Nature | 2025 | 2024 | ||||||||
| Ando Design Sdn Bhd (“Ando”) | $ | $ | ||||||||||
| TH3 Holdings Sdn Bhd (“TH3”) | ||||||||||||
| Total other income | $ | $ | ||||||||||
| F-29 |
AGAPEATP CORPORATION
NOTESTO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Currencyexpressed in United States Dollars (“US$”), except for number of shares)
14.RELATED PARTY BALANCES AND TRANSACTIONS (Continued)
Relatedparty transactions
Otherexpenses
For the three months ended June 30, | ||||||||||||
| Name of Related Party | Relationship | Nature | 2025 | 2024 | ||||||||
| TH3 Holdings Sdn Bhd (“TH3”) | $ | $ | ||||||||||
| DSY Wellness and Longevity Center Sdn Bhd (“DSYWLC”) | ||||||||||||
| Ando Design Sdn Bhd (“Ando”) | ||||||||||||
| Cedar Wellness Sdn Bhd (“CW”) | ||||||||||||
| Total other expenses | $ | $ | ||||||||||
Otherexpenses
For the six months ended June 30, | ||||||||||||
| Name of Related Party | Relationship | Nature | 2025 | 2024 | ||||||||
| TH3 Holdings Sdn Bhd (“TH3”) | $ | $ | ||||||||||
| SY Welltech Sdn Bhd (“Welltech”) (formerly known as DSY Beauty Sdn Bhd) | ||||||||||||
| DSY Wellness and Longevity Center Sdn Bhd (“DSYWLC”) | ||||||||||||
| Ando Design Sdn Bhd (“Ando”) | ||||||||||||
| Cedar Wellness Sdn Bhd (“CW”) | ||||||||||||
| Total other expenses | $ | $ | ||||||||||
| F-30 |
AGAPEATP CORPORATION
NOTESTO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Currencyexpressed in United States Dollars (“US$”), except for number of shares)
15.STOCKHOLDERS’ EQUITY
Preferredstock
Asof June 30, 2025 and December 31, 2024, there were preferred stocks authorized but were issued and outstanding.
Commonstock
Asof June 30, 2025 and December 31, 2024, there were common stocks authorized; and shares issued and outstanding,respectively.
Pursuantto the resolution passed at the board meeting on February 27, 2025, the Company is authorized to issue shares of common stockat $ per share. On March 20, 2025, the Company issued shares of common stock and received net cash proceeds of $
Share-basedcompensation
TheCompany has share-based compensation to the executive director. The share-based compensation expense is recorded in general and administrativeexpenses. The value of the share is $
Asof June 30, 2025 and December 31, 2024, there were and shares issued respectively.
Warrants
OnOctober 10, 2023, the Company entered into an underwriting agreement with Network 1 Financial Securities, Inc., as underwriter namedthereof, in connection with its initial public offering (“IPO”) of
Thewarrants are classified as equity instruments, the contracts are initially measured at fair value and no subsequent measurement is needfor equity instruments. The Company uses Black-Scholes Model to calculate the fair value of the warrant. As of October 13, 2023 (the“Grant Date”) the warrant was valued at $
| As of | ||||
| October 13, 2023 | ||||
| Risk-free interest rate | % | |||
| Expected volatility | % | |||
| Expected life (in years) | years | |||
| Expected dividend yield | % | |||
| Fair value of warrants | $ | |||
Asof June 30, 2025, there were
| F-31 |
AGAPEATP CORPORATION
NOTESTO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Currencyexpressed in United States Dollars (“US$”), except for number of shares)
16.NON-CONTROLLING INTEREST
TheCompany’s non-controlling interest consists of the following:
| As of | ||||||||
June 30, 2025 | December 31, 2024 | |||||||
| DSY Wellness: | ||||||||
| Paid-in capital | $ | $ | ||||||
| Retained loss | ( | ) | ( | ) | ||||
| Accumulated other comprehensive expense | ( | ) | ( | ) | ||||
| Total | $ | ( | ) | $ | ( | ) | ||
17.INCOME TAXES EXPENSES
TheUnited States and foreign components of income (loss) before income taxes were comprised of the following:
| For the three months ended June 30, | For the six months ended June 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Tax jurisdictions from: | ||||||||||||||||
| Local – United States | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Foreign – Malaysia | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Foreign – China | ( | ) | ( | ) | ||||||||||||
| Foreign – Hong Kong | ( | ) | ||||||||||||||
| Loss before income tax | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
Incometax expense consisted of the following:
| For the three months ended June 30, | For the six months ended June 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Current: | ||||||||||||||||
| - Local | $ | $ | $ | $ | ||||||||||||
| - Foreign | ( | ) | ( | ) | ||||||||||||
| Deferred: | ||||||||||||||||
| - Local | ||||||||||||||||
| - Foreign | ||||||||||||||||
| Income tax expense | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
Theeffective tax rate in the periods presented is the result of the mix of income earned in various tax jurisdictions that apply a broadrange of income tax rates. The Company and its subsidiaries that operate in various countries: United States, Malaysia (including Labuan),Hong Kong and China that are subject to taxes in the jurisdictions in which they operate, as follows:
| F-32 |
AGAPEATP CORPORATION
NOTESTO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Currencyexpressed in United States Dollars (“US$”), except for number of shares)
17.INCOME TAXES EXPENSES (Continued)
UnitedStates of America
AgapeATP Corporation was incorporated in the State of Nevada and is subject to the tax laws of the United States of America with a corporatetax rate of
Forthe three and six months ended June 30, 2025 and 2024, the Company’s foreign subsidiaries did not generate any income that aresubject to Subpart F tax and GILTI tax.
Asof June 30, 2025 and December 31, 2024, the operations in the United States of America incurred approximately $
Malaysia
AgapeATP Corporation, Agape Superior Living Sdn Bhd, Agape S.E.A Sdn Bhd., Cedar ATPC Sdn Bhd., DSY Wellness International Sdn. Bhd. ATPCGreen Energy Sdn Bhd and OIE ATPC Exim (M) Sdn Bhd. are governed by the income taxes laws of Malaysia and the income taxes provisionin respect of operations in Malaysia is calculated at the applicable tax rates on the taxable income for the periods based on existinglegislation, interpretations and practices in respect thereof. Under the Income Tax Act of Malaysia, enterprises that incorporated inMalaysia are usually subject to a unified
Asof June 30, 2025 and December 31, 2024, the operations in Malaysia incurred approximately $
HongKong
AgapeATP International Holding (HK) Limited is subject to Hong Kong Profits Tax, which is charged at the statutory income rate of
China
ATPCTechnology Private Limited is subject to the Corporate Income Tax governed by the Income Tax Law of the People’s Republic of Chinawith a unified statutory income tax rate of
| F-33 |
AGAPEATP CORPORATION
NOTESTO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Currencyexpressed in United States Dollars (“US$”), except for number of shares)
17.INCOME TAXES EXPENSES (Continued)
Thefollowing table sets forth the significant components of the aggregate deferred tax assets of the Company:
| As of | ||||||||
June 30, 2025 | December 31, 2024 | |||||||
| Deferred tax assets: | ||||||||
| Net operating loss carry forwards in U.S. | $ | $ | ||||||
| Net operating loss carry forwards in Malaysia | ||||||||
| Unabsorbed capital allowance carry forward in Malaysia | ||||||||
| Less: valuation allowance | ( | ) | ( | ) | ||||
| Deferred tax assets, net | $ | $ | ||||||
Uncertaintax positions
TheCompany evaluates each uncertain tax position (including the potential application of interest and penalties) based on the technicalmerits, and measure the unrecognized benefits associated with the tax positions. As of June 30, 2025 and December 31, 2024, the Companydid not have any significant unrecognized uncertain tax positions. The Company did not incur any interest and penalties tax for the threeand six months ended June 30, 2025 and 2024.
18.CONCENTRATIONS OF RISKS
(a)Major customers
Forthe three months ended June 30, 2025, one company accounted for approximately
Forthe six months ended June 30, 2025, the same company accounted for approximately
Asof June 30, 2025, one company accounted for approximately
(b)Major vendors
Forthe three months ended June 30, 2025, two vendors accounted for approximately
Forthe six months ended June 30, 2025, three vendors accounted for approximately
Asof June 30, 2025, two vendors accounted for approximately % and % of the Company’s total balance of accounts payable, respectively.As of December 31, 2024, three vendors accounted for approximately %, % and % of the Company’s total balance of accountspayable, respectively.
CTANutriceuticals (Asia) Sdn Bhd, a related company, accounted for approximately % and % of the Company’s total balance ofaccounts payable as of June 30, 2025 and December 31, 2024, respectively.
| F-34 |
AGAPEATP CORPORATION
NOTESTO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Currencyexpressed in United States Dollars (“US$”), except for number of shares)
18.CONCENTRATIONS OF RISKS (Continued)
(c)Commission Expenses to Sales Distributors and Stockists
Twosales distributors accounted for % and % of the Company’s commission expense for the three months ended June 30, 2025.One sales distributor accounted for % of the Company’s commission expense for the three months ended June 30, 2024.
Forthe six months ended June 30, 2025, two sales distributors accounted for % and % of the Company’s commission expense. Forthe six months ended June 30, 2024, one sales distributor accounted for % of the Company’s commission expense.
(d)Credit risk
Asof June 30, 2025, the Company has entrusted Bi Cheng Investment Limited (“Bi Cheng”), a company incorporated and based inthe People’s Republic of China (“PRC”) to manage a significant portion of its liquid assets, totaling approximately$
TheCompany is subject to credit risk arising from the possibility that Bi Cheng may fail to fulfill its contractual obligations, includingthe safekeeping and liquidity of the entrusted funds. In assessing the risk, management considers the financial condition and reputationof Bi Cheng.
Whilethe Company has contractual rights to recover the entrusted funds and conducts periodic monitoring, there can be no assurance that suchfunds will be fully recoverable in a timely manner due to uncertainties in the legal, regulatory, and foreign exchange frameworks inthe PRC. These uncertainties may affect the Company’s ability to access or repatriate the funds, particularly in adverse economicor political conditions.
Noallowance for credit loss was recorded as of June 30, 2025, as management believes that the risk of loss is not probable based on currentinformation. However, the Company continues to monitor developments and may revise its assessment should conditions materially change.
Financialinstruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash. As of June 30,2025, and December 31, 2024, $
Financialinstruments that are potentially subject to credit risk consist of accounts receivable, cash, prepayments and deposits and amountdue from related parties. The Company believes the concentration of credit risk in its account receivable is substantially mitigatedby its ongoing credit evaluation process and relatively short collection terms. The Company does not generally require collateralfrom customers. The Company evaluates the need for an allowance for credit loss based upon factors surrounding the credit risk ofspecific customers, historical trends and other information. Historically, the Company did not have any bad debt on its accountreceivable. The Company maintains its cash with financial institutions and, as such, believes the credit risk associated with cashdeposits is minimal. Prepayments and deposits are mainly cash deposited or advanced to suppliers for future inventory purchases orservice providers for future services. For any prepayments and deposits determined by management that such advances will not be inreceipts of inventories, services, or refundable, the Company will recognize an allowance for credit loss for such advances.Management reviews its prepayments and deposits on a regular basis to determine if the allowance for credit loss is adequate, andadjusts the allowance when necessary. Delinquent account balances are written-off against allowance for credit losses aftermanagement has determined that the likelihood of collection is not probable. The amount due from related parties represents paymentmade by the Company on behalf of related parties, the management considers the credit risk to be low due to the related parties maderepayments within reasonable timeframe.
(e)Exchange rate risk
TheCompany cannot guarantee that the current exchange rate will remain steady; therefore, there is a possibility that the Company couldpost the same amount of profit for two comparable periods and because of the fluctuating exchange rate actually post higher or lowerprofit depending on exchange rate of RM, CNY and HK$ converted to US$ on that date. The exchange rate could fluctuate depending on changesin political and economic environments without notice.
| F-35 |
AGAPEATP CORPORATION
NOTESTO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Currencyexpressed in United States Dollars (“US$”), except for number of shares)
19.LEASE
Leasecommitments
OnJuly 11, 2024, the Company leased non-commercial vehicle as lessee under finance leases with
| Components of Leases | For the three months ended June 30, | For the six months ended June 30, | ||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Operating lease cost | $ | $ | $ | $ | ||||||||||||
| Amortization of finance lease asset | $ | $ | $ | $ | ||||||||||||
| Interest on finance lease liabilities | $ | $ | $ | $ | ||||||||||||
| Components of leases | As of June 30, 2025 | As of December 31, 2024 | ||||||
| Weighted average remaining lease term (years) | ||||||||
| Operating lease | ||||||||
| Finance lease | ||||||||
| Weighted average discount rate | ||||||||
| Operating lease | % | % | ||||||
| Finance lease | % | % | ||||||
Thefive-year maturity of the Company’s operating lease liabilities is as follow:
| Twelve Months Ending June 30, | Operating lease liabilities | Finance lease liabilities | ||||||
| 2026 | $ | $ | ||||||
| 2027 | ||||||||
| 2028 | ||||||||
| 2029 | ||||||||
| Thereafter | ||||||||
| Total lease payments | ||||||||
| Less: interest | ( | ) | ( | ) | ||||
| Present value of lease liabilities | $ | $ | ||||||
TheCompany also leases one office and operation center, and one shophouse with an expiring term of twelve months or less, which were classifiedas operation leases. Since the lease terms for these leases were twelve months or less, a lessee is permitted to elect not to recognizelease assets and liabilities. The Company has elected not to recognize lease assets and liabilities on these leases. As of June 30, 2025,the Company’s commitment for minimum lease payment under these operating leases within the next twelve months were $
Shortterm lease cost for the three months ended June 30, 2025 and 2024 was $
20.COMMITMENTS AND CONTINGENCIES
TheCompany has no material commitments or contingencies that are required to be disclosed. The Company has evaluated its obligations andcontingencies and determined that no material commitments or contingencies exist at this time.
TheCompany will continue to monitor and evaluate any potential future commitments or contingencies and will disclose any material itemsas required.
Legal
TheCompany is not involved in any material legal proceedings and there are no legal matters that are required to be disclosed.
| F-36 |
AGAPEATP CORPORATION
NOTESTO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Currencyexpressed in United States Dollars (“US$”), except for number of shares)
21.SEGMENT REPORTING
ASC280 “Segment Reporting” establishes standards for reporting information about operating segments on a basis consistent withthe Group’s internal organizational management structure as well as information about geographical areas, business segments, andmajor customers in the financial statements.
OurChief Executive Officer, who is considered to be our chief operating decision maker, or CODM, reviews financial information presentedon an operating segment basis for purposes of making decisions and assessing financial performance.
Skincare, health and wellness segment includes the provision of health and wellness products and health solution advisory services.
Greenenergy segment includes providing renewable energy products, technical solutions, installations and maintenance services.
Operatingresults by segment include costs or expenses that are directly attributable to each segment, and costs or expenses that are leveragedacross our unified architecture and therefore allocated between the two segments.
Thetable below presents details of our reporting segments:
| For the three months ended June 30, 2025 | ||||||||||||||||
| Skin care, Health and Wellness | Green Energy | Unallocated Expenses | Total | |||||||||||||
| Revenues | $ | $ | $ | |||||||||||||
| Operating (loss) gain | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||
| Total assets | $ | $ | $ | $ | ||||||||||||
| For the three months ended June 30, 2024 | ||||||||||||||||
| Skin care, Health and Wellness | Green Energy | Unallocated Expenses | Total | |||||||||||||
| Revenues | $ | |||||||||||||||
| Operating loss | $ | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
| Total assets | $ | $ | $ | $ | ||||||||||||
| For the six months ended June 30, 2025 | ||||||||||||||||
| Skin care, Health and Wellness | Green Energy | Unallocated Expenses | Total | |||||||||||||
| Revenues | $ | $ | $ | $ | ||||||||||||
| Operating (loss) gain | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | ||||||
| Total assets | $ | $ | $ | $ | ||||||||||||
| For the six months ended June 30, 2024 | ||||||||||||||||
| Skin care, Health and Wellness | Green Energy | Unallocated Expenses | Total | |||||||||||||
| Revenues | $ | $ | $ | $ | ||||||||||||
| Operating loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Total assets | $ | $ | $ | $ | ||||||||||||
The“Unallocated Expenses” category comprises corporate headquarter operations and one minor business components.
22.SUBSEQUENT EVENTS
TheCompany has evaluated subsequent events through the date of issuance of this unaudited condensed consolidated financial statements, anddid not identify any events with material financial impact on the Company’s unaudited condensed consolidated financial statements.
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ITEM2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Theinformation contained in this quarter report on Form 10-Q is intended to update the information contained in our Form 10-K, dated March31, 2025, for the year ended December 31, 2024 and presumes that readers have access to, and will have read, the “Management’sDiscussion and Analysis of Financial Condition and Results of Operations” and other information contained in such Form 10-K. Thefollowing discussion and analysis also should be read together with our unaudited condensed consolidated financial statements and thenotes to the unaudited condensed consolidated financial statements included elsewhere in this Form 10-Q.
Thefollowing discussion contains certain statements that may be deemed “forward-looking statements” within the meaning of thePrivate Securities Litigation Reform Act of 1995. Such statements appear in a number of places in this Report, including, without limitation,“Management’s Discussion and Analysis of Financial Condition and Results of Operations.” These statements are not guaranteesof future performance and involve risks, uncertainties and requirements that are difficult to predict or are beyond our control. Forward-lookingstatements speak only as of the date of this quarterly report. You should not put undue reliance on any forward-looking statements. Weassume no responsibility to update the forward-looking statements contained in this transition report on Form 10-Q. The following shouldalso be read in conjunction with the unaudited condensed Consolidated Financial Statements and notes thereto that appear elsewhere inthis report.
CompanyOverview
AgapeATP Corporation, a Nevada corporation (“the Company”) was incorporated under the laws of the State of Nevada on June 1, 2016.
AgapeATP 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 on August 8, 2003.
AATPLB is an investment holding company with 100% equity interest in Agape ATP International Holding Limited (“AATP HK”), a companyincorporated in Hong Kong.
OnMay 8, 2020, the Company entered into a Share Exchange Agreement with Mr. How Kok Choong, CEO and director of the Company to acquire9,590,596 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.
OnSeptember 11, 2020, the Company incorporated Wellness ATP International Holdings Sdn. Bhd. (“WATP”), a wholly owned subsidiaryunder the laws of Malaysia, to pursue the business of promoting wellness and wellbeing lifestyle of the community by providing servicesthat includes online editorials, programs, events and campaigns on how to achieve positive wellness and lifestyle. On July 4, 2024, theentity changed its name to Cedar ATPC Sdn. Bhd. (“CEDAR”).
OnNovember 25, 2024, CEDAR increased its number of ordinary shares to 1,000,000 shares at RM 0.01 per share.
OnNovember 11, 2021, AATP LB formed an entity, DSY Wellness International Sdn. Bhd. (“DSY Wellness”) with an independent thirdparty which AATP LB owns 60% of the equity interest, to pursue the business of providing complementary health therapies.
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TheCompany and its subsidiaries are principally engaged in the Health and Wellness Industry. The principal activity of the Company is tosupply 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.
TheCompany is positioning itself for sustainable growth by diversifying its operations into the domain of renewable energy. This initiativeis 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 acquired50% 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”).
OnSeptember 19, 2024, AGE increased its number of ordinary shares to 1,000,000 shares at RM 0.01 per share.
OnJanuary 8, 2024, AGE formed a wholly own entity, OIE ATPC Exim (M) Sdn. Bhd (“ATPC Exim”). However, the Company had decidednot to proceed with the continued development of ATPC Exim. There is no impact to the Group’s operation.
OnDecember 25, 2024, the Company incorporated ATPC Technology Private Limited (“ATPC Tech”) in China, a wholly owned subsidiaryin AATP HK to collaborate with local IT expertise to develop comprehensive digital wellness platform that integrates e-commerce, onlineconsultations, chronic disease management, and robust supply chain services catering to ASEAN market.
Resultsof Operation
Forthe three months ended June 30, 2025 and 2024
Revenue
Wegenerated revenue of $465,499, which comprised revenue from the Company’s network marketing business of $16,149 (approximately3.5% of revenue); revenue from the Company’s operations in the provision of complementary health therapies of $258,470 (approximately55.5% of revenue); $55,446 from skin care and healthcare products (approximately 11.9% of revenue) and $135,434 from the operation ingreen energy (approximately 29.1% of revenue) for the three months ended June 30, 2025 as compared to $313,039, which comprised revenuefrom the Company’s network marketing business of $29,246 (approximately 9.3% of revenue); and revenue from the Company’soperations in the provision of complementary health therapies of $283,793 (approximately 90.7% of revenue) for the three months endedJune 30, 2024. Revenue from the Company’s network marketing business decreased by $13,097, or approximately 44.8%. Revenue fromthe Company’s operations in the provision of complementary health therapies decreased by $25,323, or approximately 8.9%, new revenuestreams $55,446 from the Company’s operations in wellness and wellbeing lifestyle and $135,434 from the operation in green energy.Total revenue increased by $152,460, or approximately 48.7%.
Thedecrease in revenue from the Company’s network marketing business was due to a strategic shift in focus toward new revenue streamsaimed at restoring growth and diversifying income sources. Additionally, revenue from the Company’s operations in the provisionof complementary health therapies declined because, in 2025, the Company did not generate any revenue from overseas customers.
Costof Revenue
Costof revenue for the three months ended June 30, 2025 amounted to $256,559 as compared to $119,478 for the three months ended June 30,2024, an increase of $137,081, or approximately 114.7%. The increase was due to the varying gross profit margins in the Company’soperations in the provision of complementary health therapies; and the cost from the new revenue stream, the Company’s operationin wellness and wellbeing lifestyle and the operation in green energy.
Costof revenue typically comprise of freight-in, cost of goods purchased, packing materials and services acquired.
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GrossProfit
Grossprofit for the three months ended June 30, 2025 amounted to $208,940, represented a gross margin of approximately 44.9% as compared to$193,561 for the three months ended June 30, 2024, equivalent to a gross margin of approximately 61.8%. The decrease in gross marginwas due to the varying type of health therapies offered, gross margin associated with the provision of complementary health therapiesand low gross margin in the new revenue stream, the operation in green energy.
OperatingExpenses
Ouroperating expenses consist of selling expenses, commission expenses and general and administrative expenses (as defined below). Totaloperating expenses were $845,901 for the three months ended June 30, 2025, increased by $198,755 or approximately 30.7% from $647,146for the three months ended June 30, 2024.
Sellingexpenses
Sellingexpenses for the three months ended June 30, 2025 amounted to $62,539 as compared to $38,008 for the three months ended June 30, 2024,an increase of $24,531, or approximately 64.5%. The Company’s selling expenses typically comprise of salariesand benefits expenses, credit card processing fees, advertisement and promotional expenses.
Commissionexpenses
Commissionexpenses were $16,019 and $7,335 for the three months ended June 30, 2025 and 2024, respectively, an increase of $8,684, or approximately118.4%. The increase in commission expenses was due to the Company pays commission in Company’s network marketing business and thenew revenue stream, the operation in wellness and wellbeing lifestyle.
Generaland administrative expenses (“G&A Expenses”)
G&Aexpenses for the three months ended June 30, 2025 amounted to $767,343, as compared to $601,803 for the three months ended June 30, 2024,an increase of $165,540, or approximately 27.5%. The Company’s G&A expenses typically comprise of salariesand benefits expenses, rental expenses, professional expenses, depreciation expenses and other expenses. The increase in G&Aexpenses was mainly due to the expenses incurred in the new revenue stream, the operation in wellness and wellbeing lifestyle.
OtherIncome (Expenses), Net
Forthe three months ended June 30, 2025, the Company recorded an amount of $13,715 as other income, net, as compared to $31,110 other income,net, for the three months ended June 30, 2024, represented a decrease of $17,395, or approximately 55.9%.
Thenet other income of $13,715 generated during the three months ended June 30, 2025 comprised of other income, net of $6,387, interestincome of $153, unrealized holding gain on marketable securities of $7,748 and foreign currency exchange loss of $573.
Thenet other income of $31,110 generated during the three months ended June 30, 2024 comprised of other income, net of $18,355, interestincome of $19,332, unrealized holding loss on marketable securities of $6,639 and foreign currency exchange gain of $62.
IncomeTax (Expense) Credit
TheCompany recorded provision for income taxes of $0 and $9,840 for the three months ended June 30, 2025 and 2024, respectively. The provisionfor income taxes were in respect of the Company’s operations in Malaysia.
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NetLoss
Netloss increased by $190,931 from net loss of $432,315 for the three months ended June 30, 2024 to net loss of $623,246 for the three monthsended June 30, 2025, mainly due to reasons as discussed above.
Forthe six months ended June 30, 2025 and 2024
Revenue
Wegenerated revenue of $754,536, which comprised revenue from the Company’s network marketing business of $42,696 (approximately5.7% of revenue); and revenue from the Company’s operations in the provision of complementary health therapies of $510,716 (approximately67.7% of revenue); $64,125 from skin care and healthcare products (approximately 8.5% of revenue) and $136,999 from the operation ingreen energy (approximately 18.1% of revenue) for the six months ended June 30, 2025 as compared to $631,682, which comprised revenuefrom the Company’s network marketing business of $66,325 (approximately 10.5% of revenue); and revenue from the Company’soperations in the provision of complementary health therapies of $565,357 (approximately 89.5% of revenue) for the six months ended June30, 2024. Revenue from the Company’s network marketing business decreased by $23,629, or approximately 35.6%. Revenue from theCompany’s operations in the provision of complementary health therapies decreased by $54,641, or approximately 9.7%, new revenuestreams $64,125 from the Company’s operations in wellness and wellbeing lifestyle and $136,999 from the operation in green energy.Total revenue increased by $122,854, or approximately 19.4%.
Thedecrease in revenue from the Company’s network marketing business was due to a strategic shift in focus toward new revenue streamsaimed at restoring growth and diversifying income sources. Additionally, revenue from the Company’s operations in the provisionof complementary health therapies declined because, in 2025, the Company did not generate any revenue from overseas customers.
Costof Revenue
Costof revenue for the six months ended June 30, 2025 amounted to $389,310 as compared to $234,701 for the six months ended June 30, 2024,an increase of $154,609, or approximately 65.9%.
Theincrease was due to the inventory write off in the Company’s network marketing business; the varying gross profit margins in theCompany’s operations in the provision of complementary health therapies; and the cost from the new revenue stream, the Company’soperation in wellness and wellbeing lifestyle and the operation in green energy.
Costof revenue typically comprise of freight-in, cost of goods purchased, packing materials and services acquired.
GrossProfit
Grossprofit for the six months ended June 30, 2025, amounted to $365,226, represented a gross margin of approximately 48.4% as compared to$396,981 for the six months ended June 30, 2024, equivalent to a gross margin of approximately 62.8%. The decrease in gross margin wasdue to the inventory write off in the Company’s network marketing business, the varying type of health therapies offered, grossmargin associated with the provision of complementary health therapies and low gross margin in the new revenue stream, the operationin green energy.
OperatingExpenses
Ouroperating expenses consist of selling expenses, commission expenses, general and administrative expenses. Total operating expenses were$1,722,591 for the six months ended June 30, 2025, increased by $148,486 or approximately 9.4% from $1,574,105 for the six months endedJune 30, 2024.
Sellingexpenses
Sellingexpenses for the six months ended June 30, 2025 amounted to $125,591 as compared to $88,356 for the six months ended June 30, 2024, anincrease of $37,235, or approximately 42.1%, mainly due to the increase in advertisement cost and marketing event related expenses. TheCompany’s selling expenses typically comprise of salaries and benefits expenses, credit cardprocessing fees, advertisement and promotional expenses.
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Commissionexpenses
Commissionexpenses were $23,964 and $16,679 for the six months ended June 30, 2025 and 2024, respectively, an increase of $7,285, or approximately43.7%. The increase in commission expenses was due to the Company pays commission in Company’s network marketing business and thenew revenue stream, the operation in wellness and wellbeing lifestyle.
Generaland administrative expenses (“G&A expenses”)
G&Aexpenses for the six months ended June 30, 2025 amounted to $1,573,036, as compared to $1,469,070 for the six months ended June 30, 2024,an increase of $103,966, or approximately 7.1%. The increase in G&A expenses was mainly due to the increase in G&A expenses inthe new revenue stream, the operation in wellness and wellbeing lifestyle. The Company’s G&A expenses typically comprise ofsalaries and benefits expenses, rental expenses, professional expenses, depreciation expensesand other expenses.
OtherIncome (Expenses), Net
Forthe six months ended June 30, 2025, the Company recorded an amount of $21,200 as other income, net, as compared to $58,392 for the sixmonths ended June 30, 2024, represented a decrease of $37,192 or approximately 63.7%.
Thenet other income of $21,200 generated during the six months ended June 30, 2025 comprised of other income, net of $12,002, interest incomeof $3,416, unrealized holding gain on marketable securities of $6,652 and foreign currency exchange loss of $870. The net other incomeof $58,392 generated during the six months ended June 30, 2024 comprised of other income, net of $22,497, interest income of $42,141,unrealized holding loss on marketable securities of $5,466 and foreign currency exchange loss of $780.
IncomeTax Expense (Credit)
TheCompany recorded provision for income taxes of $0 and $16,678 for the six months ended June 30, 2025 and 2024, respectively. The provisionfor income taxes were in respect of the Company’s operations in Malaysia.
NetLoss
Netloss increased by $200,755 from net loss of $1,135,410 for the six months ended June 30, 2024 to net loss of $1,336,165 for the six monthsended June 30, 2025, mainly due to reasons as discussed above.
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Liquidityand Capital Resources
Asof June 30, 2025, the Company had working capital of $23,149,202 consisting of cash and cash in bank of $215,973 and $0 of time depositas compared to working capital of $1,656,571 consisted of cash and cash in bank of $240,243 and time deposits of $1,800,000 as of December31, 2024. The Company had a net loss of $1,336,165 for the six months ended June 30, 2025 and accumulated deficits of $10,834,072 asof June 30, 2025 as compared to net loss of $2,486,044 for the year ended December 31, 2024 and accumulated deficits of $9,518,045 asof December 31, 2024.
Thefollowing summarizes the key components of our cash flows for the six months ended June 30, 2025 and 2024:
| For the six months ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| Net cash used in operating activities | $ | (1,948,332 | ) | $ | (1,656,000 | ) | ||
| Net cash used in investing activities | (23,000,660 | ) | (3,567 | ) | ||||
| Net cash provided by (used in) financing activities | 23,115,678 | (2,847 | ) | |||||
| Effect of exchange rate on cash and cash equivalents | 9,044 | (9,062 | ) | |||||
| Net change in cash and cash equivalents | $ | (1,824,270 | ) | $ | (1,671,476 | ) | ||
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Operatingactivities
Net cash used in operating activities for thesix months ended June 30, 2025 was $1,948,332, comprised of net loss of $1,336,165, unrealized holding gain on marketable securities of$6,652, the increase in prepaid taxes of $8,122, the increase in prepayments and deposits of $629,458, the decrease in account payable(including related parties) $24,194, the decrease in customer deposits of $7,492, the payment of operating lease liabilities of $76,876,the decrease in other payables (including related parties) and accrued liabilities of $126,373. The net cash used in operating activitieswas mainly offset by non-cash depreciation and amortization expense of $18,796, amortization of finance assets of $21,644, amortizationof operating right-of-use assets of $76,465, inventory write off of $6,897 and allowance for credit loss $7,903, the decrease in accountsreceivables of $25,479, the decrease in other receivables from related parties of $1,626, the decrease in inventories of $5,086, the decreasein other receivables of $1,812, and the increase in amount due to directors of $101,292.
Netcash used in operating activities for the six months ended June 30, 2024 was $1,656,000, comprised of net loss of $1,135,410, the increasein inventories of $6,747, the increase in prepaid taxes of $3,979, the increase in prepayments and deposits of $344,434, the increasein other receivables $1,470, the decrease in account payable (including related parties) $35,488, the decrease in customer deposits of$12,683, the payment of operating lease liabilities of $65,880, the decrease in other payables (including related parties) and accruedliabilities of $210,524. The net cash used in operating activities was mainly offset by non-cash depreciation and amortization expenseof $27,683, amortization of finance assets of $8,519, amortization of operating right-of-use assets of $66,509, unrealized holding losson marketable securities of $5,466, deferred tax benefit of $212, allowance for credit loss $16,960, the decrease in accounts receivablesof $12,312, the decrease in other receivables (including related parties) of $6,723 and the increase of income tax payable of $16,231.
Investingactivities
Netcash used in investing activities for the six months ended June 30, 2025 was $23,000,660, which was mainly from advances for investment.
Netcash used in investing activities for the six months ended June 30, 2024 was $3,567, which was due to purchase of equipment.
Financingactivities
Net cash provided by financing activities forthe six months ended June 30, 2025 was $23,115,678, consisted of the proceeds from issuance of common stock for $23,000,000, reductionof finance lease liability of $10,955 and advance from director of $126,633.
Netcash used in financing activities for the six months ended June 30, 2024 was $2,847, which was the reduction of finance lease liability.
CreditFacilities
Wedo not have any credit facilities or other access to bank credit.
Off-BalanceSheet Arrangements
Asof June 30, 2025, we have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or futureeffect on our financial condition, changes in our financial condition, revenues or expenses, results of operations, liquidity, capitalexpenditures or capital resources that are material to our stockholders.
CriticalAccounting Estimates
Thepreparation of unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimatesand assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as ofthe date of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the periodspresented. Significant accounting estimates reflected in the Company’s unaudited condensed consolidated financial statements includeallowance for inventories obsolescence, impairment of long-lived assets, allowance for deferred tax assets, allowance for credit loss,allowance for estimation of coupon redemption and the assumptions used in the valuation of the derivative financial instruments. Followingare the methods and assumptions used in determining our estimates.
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Estimatedallowance for inventories obsolescence
Managementreviews inventory on hand for estimated obsolescence or unmarketable items, as compared to future demand requirements and the shelf lifeof the various products. Based on the review, the Company records inventory write-downs, when necessary, when costs exceed expected netrealizable value. For the six months ended June 30, 2025 and 2024, there were no inventory write-down; and $6,897 and $0 inventory write-offrespectively.
Impairmentof long-lived assets
Operatingright-of-use assets and property, plant and equipment are stated at costs less accumulated depreciation and impairment, if any. In determiningwhether an asset is impaired, the Company has to exercise judgment and make estimation, particularly in assessing: (1) whether an eventhas occurred or any indicators that may affect the asset value; (2) whether the carrying value of an asset is not recoverable that isits carrying amount exceeds the amount of expected undiscounted future cash flows result from the use of the asset. Once it is establishedthat impairment has occurred, the amount of impairment expense is determined as the difference between the carrying value of the assetand its estimated fair value based on a discounted cash flows approach.
Asof June 30, 2025 and December 31, 2024, the carrying amounts of operating right-of-use assets amounted to $158,715 and $224,595,respectively, and property, plant and equipment amounted to $16,988 and $31,463, receptively. No impairment losses on operating right-of-useassets and property, plant and equipment were recognized as of June 30, 2025 and December 31, 2024.
Allowancefor deferred tax assets
TheCompany conducts much of its business activities in Malaysia, Hong Kong and China and is subject to tax in each of these jurisdictions.Significant estimates are required in determining the provision for income taxes. There are many transactions and calculations for whichthe ultimate tax determination is uncertain during the ordinary course of business. Where the final tax outcome of these matters is differentfrom the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the periodin which such determination is made.
Deferredtax assets relating to certain temporary differences and tax losses are recognized as management considers it is more likely than notthat future taxable profit will be available against which the temporary differences or tax losses can be utilized. Where the expectationis different from the original estimate, such differences will impact the recognition of deferred tax assets and taxation in the periodsin which such estimate is changed.
Allowancefor credit loss
TheCompany estimates and records an allowance for credit loss related to its accounts receivable. Credit losses are determined by CurrentEstimate of Expected Credit Losses model in accordance with Topic 326 – Financial Instruments – Credit Losses. For accountsreceivable, the Company considers the age of the accounts receivable balances, credit quality of the Company’s customers basedon ongoing credit evaluations, current economic conditions, reasonable and supportable forecasts of future economic conditions, and otherfactors that may affect the Company’s ability to collect from customers. As of June 30, 2025 and December 31, 2024, the Companyrecognize an allowance for credit loss of $42,838 and $32,857, respectively.
Allowancefor estimation of coupon redemption
TheCompany offers various coupon programs to customers, which result in the potential redemption of coupons against future purchases. Theestimation of coupon redemption requires assumptions. This estimate is based on historical redemption patterns, customer behavior trends,and the terms and conditions of the coupon programs. Management considers factors such as the type of coupon, the period of validitythat could influence redemption rates. The Company makes estimates about the likelihood and timing of coupon redemptions, which may varybased on changing customer behavior and economic conditions. If the actual redemption rate differs from the estimated rate, it couldimpact the redemption liability and related expenses in future periods. The allowance for coupon redemption is regularly reviewed andadjusted as more information becomes available to ensure that it reflects the expected redemption accurately.
Assumptionsused in the valuation of the derivative financial instruments
TheCompany issued Representative’s Warrants to purchase up to 115,500 shares of common stock at $4.4 per share, dated October 13,2023, to Network 1 Financial Securities, Inc. The warrants shall be exercisable at any time, and from time to time, in whole or in part,commencing from October 13, 2023 (i.e. the date of issuance) and expiring on October 10, 2028. The Company used Black-Scholes-MertonModel to estimate the fair value of the Warrants and recognized as equity. No subsequent measurement has been performed as the Warrantsare classified as equity.
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CriticalAccounting Policies
Revenuerecognition
TheCompany adopted Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (ASC Topic 606). The coreprinciple underlying the revenue recognition of this ASU allows the Company to recognize revenue that represents the transfer of goodsand 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 apoint in time or over time, based on when control of goods and services transfers to a customer. The Company’s revenue streamsare recognized at a point in time for the Company’s sale of health and wellness products.
TheASU requires the use of a new 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 transactionprice, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocatethe transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfiesthe performance obligation.
TheCompany accounts for a contract with a customer when the contract is committed in writing, the rights of the parties, including paymentterms, are identified, the contract has commercial substance and consideration is probable of substantially collection.
Salesof Skin Care, Health and Wellness products
-Performance obligations satisfied at a point in time
TheCompany derives its revenues from sales contracts with its customers with revenues being recognized when control of the skin care, healthand wellness products are transferred to its customer at the Company’s office or shipment of the goods. The revenue is recordednet 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.
Underthe Company’s network marketing business, the Company issues product coupons to members and distributors when these customers madepurchases above certain thresholds set by the Company. Depending on the type of product coupons issued, the coupons carry varying valuesand can be used by the customers for reduction in the transaction price of product purchases within the coupon validity period. The valueof the product coupons issued is recorded as a reduction of the Company’s revenue account upon issuance; the corresponding amountcredited to the customer deposits account. Amounts in customer deposits will be reversed when the coupons are used. The Company’scoupons have a validity period of between six and twelve months. If the Company’s customers did not utilize the coupons after thevalidity period, the Company would recognize the forfeiture of the originated sales value of the coupons as net revenues.
Salesof products for the provision of complementary health therapies
-Performance obligations satisfied at a point in time
Productsfor the provision of complementary health therapies are predominantly Chinese herbs in different forms, processed or otherwise, for prescriptionsfor treating non-communicable diseases.
TheCompany based on the health screening test report to prescribe the products for the provision of complementary health therapies, theCompany deliver the products to the customers during the consultation session.
Provisionof Health and Wellness services
-Performance obligations satisfied at a point in time
TheCompany carries out its Wellness program, where the Company’s products are bundled with health screening test. The health screeningtest 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.
TheCompany based on the health screening test contracts with customers, establishes the selling price for the health screening test andplace 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 servicesdepending on the customer’s needs.
TheCompany derives its revenues from sales contracts with its customers with revenues being recognized when the test reports are completedand delivered to its customers during the consultation session in person.
Salesof products and services for the operations in green energy
-Performance obligations satisfied over time
TheCompany provides products, technical knowledge and solutions for sustainability and energy savings. The Company delivered the productsto the customers and enhances the products that the customer controls. The products that the Company created has no alternative use tothe Company. The Company has an enforceable right to receive payment for performance completed to date, the Company recognized revenuebased on the percentage of cost incurred.
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Fairvalue of financial instruments
Theaccounting standard regarding fair value of financial instruments and related fair value measurements defines financial instruments andrequires disclosure of the fair value of financial instruments held by the Company.
Theaccounting standards define fair value, establish a three-level valuation hierarchy for disclosures of fair value measurement and enhancedisclosure 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. |
Financialinstruments 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 realizationand their current market rates of interest.
AccountingStandards Adopted in 2025
InNovember 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 significantsegment expenses. The ASU 2023-07 is effective for annual reporting periods beginning after December 15, 2023 and interim periods infiscal years beginning after December 15, 2024. The adoption of this accounting standard has no material impact on the consolidated financialstatements.
InMarch 2024, the FASB issued ASU 2024-01 “Compensation – Stock Compensation (Topic 718): Scope Application of Profits Interestand Similar Awards”. The ASU clarify how an entity determines whether a profits interest or similar award is within the scope ofAccounting 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 retrospectivelyto all prior periods presented in the consolidated financial statements or prospectively to profits interest and similar awards grantedor modified on or after the date at which the entity first applies the amendments. Early adoption is permitted. The adoption of ASU 2024-01has no material impact on the Company’s consolidated financial statements.
InMarch 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 referencesremoved are extraneous and not required to understand or apply the guidance. Generally, the amendments in ASU 2024-02 are not intendedto result in significant accounting changes for most entities. The amendments in this update are effective for annual reporting periodsbeginning after December 15, 2024 and has no significant impact on our financial statements.
Exceptfor the above-mentioned pronouncements, there are no new recent issued accounting standards that will have a material impact on the unauditedcondensed consolidated financial position, statements of operations and cash flows.
Recentaccounting pronouncements
TheCompany 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.
InDecember 2023, the FASB issued ASU 2023-09 “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”. The ASU 2023-09requires companies to disclose specific categories in the rate reconciliation and provide additional information for reconciling itemsthat meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computedby multiplying pretax income or loss by the applicable statutory income tax rate). The ASU 2023-09 is effective for annual reportingperiods beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the impact of this ASU mayhave on its consolidated financial statements.
TheFASB issued ASU 2024-03 and ASU 2025-01 “Income Statement – Reporting Comprehensive Income – Expense DisaggregationDisclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, and Clarifying the Effective Date” in November 2024and January 2025 respectively. This new guidance requires disclosures of additional information of the nature of expenses included inthe income statement as well as disclosures about specific expense categories in the notes to the financial statements. The requirementsof the new guidance are effective for annual periods beginning after December 15, 2026, and for interim periods beginning after December15, 2027, which early adoption permitted. This new guidance can be applied either retrospectively to any or all prior periods presentedin the consolidated financial statements or prospectively to financial statements issued for reporting period after the effective dateof this new guidance. The Company is currently evaluating the effect of adopting this guidance.
InNovember 2024, the FASB issued ASU 2024-04 “Debt – Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversionsof Convertible Debt Instruments”. This ASU clarifies the requirements for determining whether certain settlements of convertibledebt instruments should be accounted for as an induced conversion. The clarification is effective for annual reporting periods beginningafter December 15, 2025, and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluatingthe effect of adopting of this ASU.
InJuly 2025, the FASB issued ASU 2025-05 “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses forAccounts Receivable and Contract Assets”. This ASU provides a practical expedient that allows companies to assume that currentconditions as of the balance sheet date do not change for the remaining life of the asset. This ASU is effective for annual reportingperiods beginning after December 15, 2025, and interim reporting periods within annual reporting periods. Early adoption is permitted.The Company is currently evaluating the effect of adopting of this ASU.
Exceptfor the above-mentioned pronouncements, there are no other new recent issued accounting standards that will have a material impact onthe consolidated financial position, statements of operations and cash flows.
| 12 |
ITEM3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Foreignexchange risk. Substantially most of our revenues are denominated in the Malaysian Ringgit while most of our expenses are denominatedin Malaysian Ringgit, U.S. dollar, Chinese Yuan and Hong Kong Dollar. We do not believe that we currently have any significant directforeign exchange risk and have not hedged exposures denominated in foreign currencies or any other derivative financial instruments.Although in general, our exposure to foreign exchange risks should be limited, the value of an investment in our Common Stock may beaffected by the foreign exchange rate between U.S. dollar and Malaysian Ringgit; U.S. dollar and Chinese Yuan, and U.S. dollar and HongKong Dollar because the value of our business is effectively denominated in Malaysian Ringgit, Chinese Yuan and Hong Kong Dollar, whilethe Common Stock is traded in U.S. dollars.
Creditrisk. Financial instruments that are potentially subject to credit risk consist principally of accounts receivable. The Company believesthe concentration of credit risk in its trade receivables is substantially mitigated by its ongoing credit evaluation process and relativelyshort collection terms. The Company does not generally require collateral from customers. The Company evaluates the need for an allowancefor credit loss based upon factors surrounding the credit risk of specific customers, historical trends and other information.
ITEM4 CONTROLS AND PROCEDURES
Evaluationof Disclosure Controls and Procedures
Asof the end of the period covered by this Report, we carried out an evaluation, under the supervision and with the participation of ourmanagement, including our chief executive officer and chief financial officer, of the effectiveness of the design and operation of ourdisclosure controls and procedures (as defined in the Exchange Act Rules 13a-15(e) and 15d-15(e)). Based on the foregoing evaluation,our chief executive officer and chief financial officer concluded that, as of June 30, 2025, our disclosure controls and procedures werenot effective at the reasonable assurance level due to the material weaknesses described below.
InternalControl Over Financial Reporting
Ourmanagement, including our chief executive officer and chief financial officer, is responsible for establishing and maintaining adequateinternal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgatedunder the Exchange Act as a process designed by, or under the supervision of, the company’s chief executive officer and chief financialofficer and effected by the company’s board of directors, management and other personnel, to provide reasonable assurance regardingthe reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accountingprinciples generally accepted in the United States of America and includes those policies and procedures that:
| ● | Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company; | |
| ● | Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and | |
| ● | Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements. |
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Becauseof its inherent limitations, internal control over financial reporting may not prevent or detect all misstatements. Projections of anyevaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions,or that the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed,have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respectto financial statement preparation and presentation. Because of the inherent limitations of internal control, there is a risk that materialmisstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherentlimitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards toreduce, though not eliminate, this risk.
Asof June 30, 2025, our management, including our chief executive officer and chief financial officer, assessed the effectiveness of ourinternal control over financial reporting based on the criteria for effective internal control over financial reporting established inInternal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”)and SEC guidance on conducting such assessments. Based on such evaluation, the Company’s management, including our chief executiveofficer and chief financial officer, concluded that, during the period covered by this Report, internal controls and procedures overfinancial reporting were not effective. This was due to deficiencies that existed in the design or operation of our internal controlsover financial reporting that adversely affected our internal controls and that may be considered to be material weaknesses.
IdentifiedMaterial Weakness
Amaterial weakness in internal control over financial reporting is a control deficiency, or combination of control deficiencies, thatresults in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected.
Management,including our chief executive officer and chief financial officer, identified the following material weaknesses during its assessmentof internal controls over financial reporting as of June 30, 2025:
(i)insufficient full-time personnel with appropriate levels of accounting knowledge and experience to monitor the daily recording of transactions,address complex U.S. GAAP accounting issues and to prepare and review financial statements and related disclosures under U.S. GAAP; (ii)lack of a functional internal audit department or personnel that monitors the consistencies of the preventive internal control proceduresand lack of adequate policies and procedures in internal audit function to ensure that the Company’s policies and procedures havebeen carried out as planned; and (iii) insufficient procedures and policies were in place to assess the credit risk and capabilitiesof the third-party manager prior to the investment decision.
Accordingly,the Company concluded that these control deficiencies resulted in a reasonable possibility that a material misstatement of the annualor interim financial statements will not be prevented or detected on a timely basis by the company’s internal controls.
Management’sRemediation Initiatives
Inan effort to remediate the identified material weaknesses and other deficiencies and enhance our internal controls, we will prepare writtenpolicies and procedures for accounting and financial reporting with respect to the requirements and application of both US GAAP and SECguidelines, to establish a formal process to close our books monthly on an accrual basis and account for all transactions, includingequity and debt transactions.
Tofurther strengthen the Company’s internal controls, we plan to initiate the following measures going forward:
| 1. | We plan to engage a consulting firm that specializes in compliance and internal controls as a temporary solution to improve the internal control. |
| 2. | Once we hire additional employees, we intend to initiate a comprehensive training program and development plan to provide ongoing company-wide trainings regarding internal control and requirements of U.S. GAAP financial statements and related disclosures, with particular emphasis on our accounting staff. |
Weanticipate that these initiatives will be at least partially, if not fully, implemented by the end of fiscal year 2025.
Changesin Internal Control over Financial Reporting:
Therewere no significant changes in our internal controls over financial reporting that occurred during the period ended June 30, 2025 whichhas materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting:
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PARTII — OTHER INFORMATION
Item1. Legal Proceedings
Weknow of no materials, active or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceedingsor pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any beneficial shareholderare an adverse party or has a material interest averse to us.
Item2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item3. Defaults Upon Senior Securities
None.
Item4. Mine Safety Disclosures
Notapplicable.
Item5. Other Information.
None.
ITEM6. Exhibits
| Exhibit No. | Description | |
| 31.1 | Rule 13(a)-14(a)/15(d)-14(a) Certification of principal executive officer* | |
| 31.2 | Rule 13(a)-14(a)/15(d)-14(a) Certification of principal financial officer* | |
| 32.1 | Section 1350 Certification of principal executive officer * | |
| 32.2 | Section 1350 Certification of principal financial officer * | |
| 101.INS | Inline XBRL Instance Document* | |
| 101.SCH | Inline XBRL Schema Document* | |
| 101.CAL | Inline XBRL Calculation Linkbase Document* | |
| 101.DEF | Inline XBRL Definition Linkbase Document* | |
| 101.LAB | Inline XBRL Label Linkbase Document* | |
| 101.PRE | Inline XBRL Presentation Linkbase Document* | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
*Filed herewith.
| 15 |
SIGNATURES
Pursuantto the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf bythe undersigned, thereunto duly authorized.
| AGAPE ATP CORPORATION | ||
| (Name of Registrant) | ||
| Date: August 13, 2025 | ||
| By: | /s/ How Kok Choong | |
| Title: | Chief Executive Officer, President, Director, Secretary and Treasurer | |
| (Principal Executive Officer and Principal Financial Officer) | ||
SIGNATURES
Pursuantto the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf bythe undersigned, thereunto duly authorized.
| AGAPE ATP CORPORATION | ||
| (Name of Registrant) | ||
| Date: August 13, 2025 | ||
| By: | /s/ LEE Kam-Fan, Andrew | |
| Title: | Chief Financial Officer, | |
| 16 |
EXHIBIT31.1
CERTIFICATION
I,HOW KOK CHOONG, certify that:
1.I have reviewed this quarterly report on Form 10-Q of Agape ATP Corporation (the “Company”) for the quarter ended June 30,2025;
2.Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material factnecessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respectto the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all materialrespects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in thisreport;
4.I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrantand have:
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| b. | Designed such internal control over financial reporting, or caused such internal control to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. | |
| c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5.I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditorsand the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: August 13, 2025 | By: | /s/ How Kok Choong |
| HOW KOK CHOONG | ||
Chief Executive Officer, President, Director, Secretary, Treasurer | ||
| (Principal Executive Officer and Principal Financial Officer) |
EXHIBIT31.2
CERTIFICATION
I,LEE KAM-FAN, ANDREW, certify that:
1.I have reviewed this quarterly report on Form 10-Q of Agape ATP Corporation (the “Company”) for the quarter ended June 30,2025;
2.Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material factnecessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respectto the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all materialrespects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in thisreport;
4.I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrantand have:
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| b. | Designed such internal control over financial reporting, or caused such internal control to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. | |
| c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5.I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditorsand the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: August 13, 2025 | By: | /s/ LEE Kam-fan, Andrew |
| LEE KAM-FAN, ANDREW | ||
| Chief Financial Officer, |
EXHIBIT32.1
CERTIFICATIONPURSUANT TO
18U.S.C. SECTION 1350,
ASADOPTED PURSUANT TO
SECTION906 OF THE SARBANES-OXLEY ACT OF 2002
Inconnection with the Quarterly Report of Agape ATP Corporation (the “Company”) on Form 10-Q for the quarter ended June 30,2025 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), The undersigned hereby certifies,pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledgeand belief:
(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations ofthe Company.
| Date: August 13, 2025 | By: | /s/ How Kok Choong |
| HOW KOK CHOONG | ||
| Chief Executive Officer, President, Director, Secretary, Treasurer | ||
| (Principal Executive Officer and Principal Financial Officer) |
Asigned original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adoptingthe signature that appears in typed form within the electronic version of this written statement has been provided to the Company andwill be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
EXHIBIT32.2
CERTIFICATIONPURSUANT TO
18U.S.C. SECTION 1350,
ASADOPTED PURSUANT TO
SECTION906 OF THE SARBANES-OXLEY ACT OF 2002
Inconnection with the Quarterly Report of Agape ATP Corporation (the “Company”) on Form 10-Q for the quarter ended June 30,2025 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), The undersigned hereby certifies,pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledgeand belief:
(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations ofthe Company.
| Date: August 13, 2025 | By: | /s/ LEE Kam-fan, Andrew |
| LEE KAM-FAN, ANDREW | ||
| Chief Financial Officer |
Asigned original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adoptingthe signature that appears in typed form within the electronic version of this written statement has been provided to the Company andwill be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.