Agape ATP Corp

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND BUSINESS BACKGROUND

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

Agape ATP Corporation operates through its subsidiaries, namely, Agape ATP Corporation (“AATP LB”), a company incorporated in Labuan, Malaysia, and Agape Superior Living Sdn. Bhd. (“ASL”), a company incorporated in Malaysia on August 8, 2003.

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

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

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

On November 25, 2024, CEDAR increased its number of ordinary shares to 1,000,000 shares at RM 0.01 per share.

On November 11, 2021, AATP LB formed an entity, DSY Wellness International Sdn. Bhd. (“DSY Wellness”) with an independent third party which AATP LB owns 60% of the equity interest, to pursue the business of providing complementary health therapies. On June 11, 2026, AATP LB disposed its 60% equity interest in DSY Wellness to the same independent third party pursuant to the board resolution.

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

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

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

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

On December 25, 2024, the Company incorporated ATPC Technology Private Limited (“ATPC Tech”) in China, a wholly owned subsidiary of AATP HK to collaborate with local IT expertise to develop comprehensive digital wellness platform that integrates e-commerce, online consultations, chronic disease management, and robust supply chain services catering to ASEAN market.

1. ORGANIZATION AND BUSINESS BACKGROUND (Continued)

Details of the Company’s subsidiaries and VIE:

1. ORGANIZATION AND BUSINESS BACKGROUND (Continued)

Business Overview

The Company is a provider of health and wellness products and advisory services in the Malaysian market. The Company pursue the mission of helping people to create health and wealth by providing a financially rewarding business opportunity to distributors and quality products to distributors and customers who seek a healthy lifestyle. The Company believe the quality of the products coupled with the effectiveness of 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 99.99% of Agape Superior Living Sdn Bhd, with the goal of securing an established network marketing sales channel that has been in existence in Malaysia for the past 15 years. On September 11, 2020, the Company incorporated Wellness ATP International Holdings Sdn. Bhd., a wholly owned subsidiary in Malaysia, with the aim to pursue the business of promoting wellness and wellbeing lifestyle of the community through the provision of services including online editorials, programs, events and campaigns on how to achieve positive wellness and lifestyle.

ASL offers two series of products: ATP Zeta Health Program and E.A.T.S. The ATP Zeta Health Program is a health program designed to assist in the elimination of various diseases caused by environmental pollutants, unhealthy dietary intake and unhealthy lifestyles. The program aims to promote improved health and longevity through a combination of modern health supplements, proper nutrition and advice from skilled dieticians. The Easy and Tasty Series (“E.A.T.S”) is crafted to bring nutritious lifestyle in convenient approach to maintain healthy living.

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

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

ATPC Technology Private Limited (“ATPC Tech”) intend to collaborate with local IT expertise to develop comprehensive digital wellness platform that integrates e-commerce, online consultations, chronic disease management, and robust supply chain services catering to ASEAN market.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

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

The interim unaudited financial information as of June 30, 2026 and for the three and six months ended June 30, 2026 have been prepared without audit, pursuant to the rules and regulations of the SEC and pursuant to Regulation S-X. Certain information and footnote disclosures, which are normally included in annual financial statements prepared in accordance with U. S. GAAP, have been omitted pursuant to those rules and regulations. The interim unaudited financial information should be read in conjunction with the audited financial statements and the notes thereto, included in the Form 10-K for the fiscal year ended December 31, 2025, which was filed with the SEC on April 13, 2026.

In the opinion of management, all adjustments (including normal recurring adjustments) necessary to present a fair statement of the Company’s unaudited financial position as of June 30, 2026, its unaudited results of operations for the three and six months ended June 30, 2026, and its unaudited cash flows for the six months ended June 30, 2026, as applicable, have been made. The unaudited interim results of operations are not necessarily indicative of the operating results for the full fiscal year or any future periods.

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

Going Concern

As disclosed in the Company’s unaudited condensed consolidated financial statements, the Company incurred a net loss of $191,469 and $1,336,165, and net cash used in operating activities of $505,088 and $1,948,332 for the six months ended June 30, 2026 and 2025. As of June 30, 2026 and December 31, 2025, the Company had accumulated a deficit of $11,972,452 and $11,797,836.

The Company had current assets of $24,834,565 which comprised $24,531,431 deposit paid to Bi Cheng Investment Management Limited to identify and manage investment opportunities on behalf of the Company. As of reporting date, the investment has yet to be identified and the financial return of the investment is uncertain.

These conditions raised substantial doubt about the Company’s ability to continue as a going concern for the next twelve months.

The Company’s liquidity is based on its ability to generate cash from operating activities and obtain financing from investors to fund its general operations and capital expansion needs. The Company’s ability to continue as a going concern is dependent on management’s ability to increase its revenue while controlling operating cost and expense to generate positive operating cash flow and obtain financing from outside sources and invest in new opportunities to generate financial return to the Company.

The Company believes these actions will improve the Company’s financial position, However, there can be no assurance that these plans and arrangements can be successfully executed and the outcome of these plans are uncertain.

Principles of consolidation

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

A VIE is an entity that has either a total equity investment that is insufficient to permit the entity to finance its activities without additional subordinated financial support, or whose equity investors lack the characteristics of a controlling financial interest, such as through voting rights, right to receive the expected residual returns of the entity or obligation to absorb the expected losses of the entity. The variable interest holder, if any, that has a controlling financial interest in a VIE is deemed to be the primary beneficiary and must consolidate the VIE. As of and for the three months ended June 30, 2026, Agape S.E.A., the only VIE of the Company has no significant operations.

Use of estimates

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

Cash and cash equivalents

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

Accounts receivable, net

Accounts receivable are recorded at the invoiced amount less an allowance for any uncollectible accounts and do not bear interest, which are due on credit term. The carrying value of accounts receivable is reduced by an allowance that reflects the Company’s best estimate of the amounts that will not be collected. An allowance for credit loss is recorded in the period when a loss is probable based on an assessment of collectivity by reviewing accounts receivable on a collective basis where similar characteristics exist, primarily base on similar business line, service or product offerings and on an individual basis when the Company identifies specific customers with known disputes or collectivity issues. In determining the amount of the allowance for credit loss, the Company considers historical collectivity based on past due status, the age of the accounts receivable balances, credit quality of the Company’s customers based on ongoing credit evaluations, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect the Company’s ability to collect from customers. Accounts receivable balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company’s management continues to evaluate the reasonableness of the valuation allowance policy and update it if necessary. As of June 30, 2026 and December 31, 2025, no allowance for credit loss were recorded.

Inventories

Inventories consist of raw materials and finished goods and are stated at the lower of cost or net realizable value using the first-in first-out method. Management reviews inventory on hand for estimated obsolescence or unmarketable items, as compared to future demand requirements and the shelf life of the various products. Based on the review, the Company records inventory write-downs, when necessary, when costs exceed expected net realizable value. For the three months ended June 30, 2026 and 2025, the Company didnot recognize any inventory write-downs nor write-off. For the six months ended June 30, 2026 and 2025, there were no inventory write-down, however, there were inventory write-off amounted to $2,087 and $6,897, respectively.

Prepaid taxes

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

Prepayments and deposits, net

Prepayments and deposits are mainly cash deposited or advanced to suppliers for future inventory purchases or service providers for future services. This amount is refundable and bears no interest. For any prepayments and deposits determined by management that such advances will not be in receipts of inventories, services, or refundable, the Company will recognize an allowance account to reserve such balances. Management reviews its prepayments and deposits on a regular basis to determine if the allowance is adequate, and adjusts the allowance when necessary. Delinquent account balances are written-off against allowance for credit loss after management has determined that the likelihood of collection is not probable. The Company’s management continues to evaluate the reasonableness of the allowance policy and update it if necessary. There were no allowance for credit loss written-off during the three and six months ended June 30, 2026 and 2025. There were $509,994 and $510,310 allowance for credit loss recorded as of June 30, 2026 and December 31, 2025.

Property and equipment, net

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

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

Intangible assets, net

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

Impairment for long-lived assets

Long-lived assets, including property and equipment, and intangible assets with finite lives are reviewed for impairment whenever events or changes in circumstances (such as a significant adverse change to market conditions that will impact the future use of the assets) indicate that the carrying value of an asset may not be recoverable. The Company assesses the recoverability of the assets based on the undiscounted future cash flows the assets are expected to generate and recognize an impairment loss when estimated undiscounted future cash flows expected to result from the use of the asset plus net proceeds expected from disposition of the asset, if any, are less than the carrying value of the asset. If an impairment is identified, the Company would reduce the carrying amount of the asset to its estimated fair value based on a discounted cash flows approach or, when available and appropriate, to comparable market values. As of June 30, 2026 and December 31, 2025, no impairment of long-lived assets was recognized.

Investment in marketable equity securities

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

Investment in non-marketable equity securities

The Company follows the provisions of ASU 2016-01,Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Asset and Financial Liabilities. Due to the Company’s non-marketable equity securities (non-current) does not qualify for the practical expedient to estimate fair value in accordance with ASC 820-10-35-59, the Company has selected to record its investments in non-marketable equity securities (non-current) at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issue.

At each reporting period, the Company will make a qualitative assessment considering impairment indicators to evaluated whether the investment is 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, or technological environment of the investee; (iii) A significant adverse change in the general market condition of either the geographical area or the industry in which the investee operates; (iv) A bona fide offer to purchase, an offer by the investee to sell, or a completed auction process for the same or similar investment for an amount less than the carrying amount of that investment; and (v) Factors that raise 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 indicators indicated that the non-marketable equity securities (non-current) is deemed to be impaired, the Company would recognize the impairment loss equal to the difference between the fair value of the investment and its carrying amount.

Customer deposits

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

Revenue recognition

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

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

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

Sales of Skin Care and Health products

-Performance obligations satisfied at a point in time

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

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

For the three months ended June 30, 2026 and 2025, revenues from products for the skin care and health products were $13,693 and $71,595 respectively. For the six months ended June 30, 2026 and 2025, revenues from products for the skin care and health products were $35,281 and $106,821 respectively.

For the three months ended June 30, 2026 and 2025, the Company recognized $751 and $3,948, as forfeited coupon income, respectively. For the six months ended June 30, 2026 and 2025, the Company recognized $1,511 and $4,593, as forfeited coupon income, respectively.

The Company had contracts for the sales of health products amounting to $1,928 which it is expected to fulfill within 12 months from June 30, 2026.

Sales of products for the provision of complementary health therapies

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

The Company prescribes the products for complementary health therapies based on health screening test reports and delivers the products to the customers during the consultation session.

For the three months ended June 30, 2026 and 2025, revenues from products for the provision of complementary health therapies were $15,844 and $218,651 respectively. For the six months ended June 30, 2026 and 2025, revenues from products for the provision of complementary health therapies were $54,174 and $428,197 respectively.

For the three months ended June 30, 2026 and 2025, revenues from health and wellness services were $79,561 and $39,819 respectively. For the six months ended June 30, 2026 and 2025, revenues from health and wellness services were $293,300 and $82,519 respectively.

Sales of products and services for the operations in green energy

-Performance obligations satisfied over time

The Company provides products, technical knowledge and solutions for sustainability and energy savings. The Company delivers the products to the customers and enhances the products that the customer controls. The products that the Company creates have no alternative use to the Company. The Company has an enforceable right to receive payment for performance completed to date, the Company recognized revenue based on the percentage of cost incurred.

For the three months ended June 30, 2026 and 2025, revenues from operation in green energy were $0 and $135,434 respectively. For the six months ended June 30, 2026 and 2025, revenues from operation in green energy were $0 and $136,999 respectively.

Disaggregated information of revenues by products are as follows:

Cost of revenue

Cost of revenue comprised freight-in, the purchase cost of manufactured goods for sale to customers. For the three and six months ended June 30, 2026, cost of revenue were $1,923 and $7,218, respectively. For the three and six months ended June 30, 2025, cost of revenue were $141,661 and $156,670, respectively.

Commission expenses

As with all companies in the network marketing industry, the Company’s sales channel is external to the Company. The Company’s “external sales force” is stratified into two levels based on priority recruitment. First, there are sales distributors. Second, all members recruited by a sales distributor, directly or indirectly, are referred to as “sales network members”. The Company pays commission to every sales distributor based on purchases made by its sales network members which includes the independent direct sales members. Top performing distributors with their own physical stores may also become stockists of the Company, whereby they enjoy benefits such as maintaining a certain amount of the Company’s inventory on their store premises. The stockists shall account to the Company for all products sales from their store premises as monitored through the Company’s centralized stock tracking system. The Company pays a separate commission to stockists based on revenue generated from the stockists’ physical stores. Commission expenses amounted to $3,397 and $16,019 for the three months ended June 30, 2026 and 2025, respectively. Commission expenses amounted to $7,845 and $23,964 for the six months ended June 30, 2026 and 2025, respectively.

Selling expenses

The Company’s selling expenses typically comprise salaries and benefits expenses, credit card processing fees, shipping and handling fees, advertisement costs and promotional expenses. Selling expenses amounted to $30,315 and $59,863 for the three months ended June 30, 2026 and 2025, respectively. Selling expenses amounted to $65,087 and $120,399 for the six months ended June 30, 2026 and 2025, respectively.

Shipping and handling

Shipping and handling charges amounted to $16 and $49 for the three months ended June 30, 2026 and 2025, respectively. Shipping and handling charges amounted to $211 and $495 for the six months ended June 30, 2026 and 2025, respectively. Shipping and handling charges are expensed as incurred and included in selling expenses.

Advertising costs

There wereno advertising costs for the three and six months ended June 30, 2026. Advertising costs amounted to $8,551 and $28,215 for the three and six months ended June 30, 2025. Advertising costs are expensed as incurred and included in selling expenses.

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

The Company’s G&A expenses typically comprise of salaries and benefits expenses, rental expenses, professional expenses, depreciation expenses and allowance for credit loss. G&A expenses amounted to $529,033 and $611,020 for the three months ended June 30, 2026 and 2025, respectively. G&A expenses amounted to $1,150,240 and $1,249,800 for the six months ended June 30, 2026 and 2025, respectively.

Defined contribution plan

The full-time employees of the Company are entitled to the government mandated defined contribution plan. The Company is required to accrue and pay for these benefits based on certain percentages of the employees’ respective salaries, subject to certain ceilings, in accordance with the relevant government regulations, and make cash contributions to the government mandated defined contribution plan. Total expenses for the plans were $9,030 and $8,423 for the three months ended June 30, 2026 and 2025, respectively. Total expenses for the plans were $18,931 and $17,533 for the six months ended June 30, 2026 and 2025, respectively.

The related contribution plans include:

Income taxes

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

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

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

An uncertain tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that isgreater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred. No penalties and interest incurred related to underpayment of income taxes for the three and six months ended June 30, 2026 and 2025.

The Company 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 tax authorities.

Comprehensive income (loss)

Comprehensive income (loss) consists of two components, net income (loss) and other comprehensive income (loss). Net income (loss) refers to revenue, expenses, gains and losses that under GAAP are recorded as an element of stockholders’ equity 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-controlling interest

Non-controlling interest consists of 40% of the equity interests of DSY Wellness held by an individual. Following the disposal of DSY Wellness on June 11, 2026, the related non-controlling interest was derecognized upon deconsolidation. As of June 30, 2026, non-controlling interest consists solely of approximately 0.01% (3 ordinary shares out of 9,590,599 shares) of the equity interests of ASL held by three individuals.

The non-controlling interests are presented in the consolidated balance sheets, separately from equity attributable to the shareholders of the Company. Non-controlling interests in the results of the Company are presented on the face of the consolidated statements of operations as an allocation of the total income or loss for the periods between non-controlling interest holders and the shareholders of the Company.

Earnings (loss) per share

The Company computes earnings (loss) per share (“EPS”) in accordance with ASC 260, “Earnings per Share”. ASC 260 requires companies to present basic and diluted EPS. Basic EPS is measured as net income (loss) divided by the weighted average ordinary share outstanding for the period. Diluted EPS presents the dilutive effect on a per share basis of the potential common stocks (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential common stocks that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. For the three and six months ended June 30, 2026 and 2025, there were no dilutive shares.

The following table presents a reconciliation of basic and diluted loss per share for the six and three months ended June 30, 2026 and 2025:

Foreign currencies translation and transaction

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

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

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

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

Related parties

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

Fair value of financial instruments

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

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

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

Leases

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

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

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

Derivative financial instruments

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

Recent accounting pronouncements

Recently issued but not yet adopted

The FASB issued ASU 2024-03 and ASU 2025-01 “Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, and Clarifying the Effective Date” in November 2024 and January 2025 respectively. This new guidance requires disclosures of additional information of the nature of expenses included in the income statement as well as disclosures about specific expense categories in the notes to the financial statements. The requirements of the new guidance are effective for annual periods beginning after December 15, 2026, and for interim periods beginning after December 15, 2027, with early adoption permitted. This new guidance can be applied either retrospectively to any or all prior periods presented in the consolidated financial statements or prospectively to financial statements issued for reporting period after the effective date of this new guidance. The Company is currently evaluating the effect of adopting this guidance.

In September 2025, the FASB issued ASU 2025-06 “Intangibles – Goodwill and Other-Internal-Use Software (Subtopic 350-40). This ASU updates the accounting for internal-use software by replacing former stage-based rules with a principles-based framework. Entities will now capitalize costs associated with internal-use software only when management has authorized and committed funding and it is probable that the project will be completed and the software will be used to perform the intended function. It also supersedes website development cost guidance, moving it to ASC 350-40. This ASU is effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. Early adoption is permitted. The Company is currently evaluating the effect of adopting of this ASU.

In December 2025, the FASB issued ASU 2025-11 “Interim Reporting (Topic 270): Narrow-Scope Improvements”. This ASU provides a comprehensive list of required interim disclosures and introduces a disclosure principle requiring entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. This ASU is effective for interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the effect of adopting of this ASU.

In December 2025, the FASB issued ASU 2025-12 “Codification Improvements”. This ASU represents changes to the Codification that (1) clarify, (2) correct errors, or (3) make minor improvements. This ASU is effective for annual reporting periods beginning after December 15, 2026, and interim periods within those annual reporting periods. Early adoption is permitted. The Company is currently evaluating the effect of adopting of this ASU.

In May 2026, the FASB issued ASU 2026-02 “Environmental Credits and Environmental Credit Obligations (Topic 818)”. This ASU creates ASC Topic 818 to establish a comprehensive framework for accounting and reporting related to environmental credits (such as emissions allowances, renewable energy certificates, and carbon offsets) and environmental credit obligations (ECO). Under ASC Topic 818, environmental credits are recognized as assets at cost based on their intended use, while costs for non-qualifying or voluntary credits are expensed as incurred. ECO liabilities are recognized when probable and measured on a gross basis using the carrying amount of credits held for the funded portion and fair value (or expected settlement cost) for the unfunded portion. This ASU is effective for annual reporting periods beginning after December 15, 2027, and interim periods within those annual reporting periods. Early adoption is permitted. The Company is currently evaluating the effect of adopting of this ASU.

Recently adopted Accounting Pronouncements

In November 2024, the FASB issued ASU 2024-04 “Debt – Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments”. This ASU clarifies the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion. The clarification is effective for annual reporting periods beginning after December 15, 2025, and interim periods within those fiscal years. Early adoption is permitted. The adoption of ASU 2024-04 has no material impact on the Company’s consolidated financial statements.

In July 2025, the FASB issued ASU 2025-05 “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets”. This ASU provides a practical expedient that allows companies to assume that current conditions as of the balance sheet date do not change for the remaining life of the asset. This ASU is effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within annual reporting periods. Early adoption is permitted. The adoption of ASU 2025-05 has no material impact on the Company’s consolidated financial statements.

3. VARIABLE INTEREST ENTITY (“VIE”)

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

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

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

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

**4. DISCONTINUED OPERATIONS **

On June 11, 2026, AATP LB disposed of its entire 60% equity interest in DSY Wellness to an independent third party pursuant to the board resolution obtained. Upon completion of the transaction, AATP LB ceased to have a controlling financial interest in DSY Wellness, and DSY Wellness was deconsolidated from the Company’s consolidated financial statements effective June 11, 2026. Following the disposal, the independent third party owns 100% of the equity interests in DSY Wellness.

The disposal of DSY Wellness met the criteria for discontinued operations under ASC 205-20. Accordingly, the operating results of DSY Wellness through June 11, 2026, together with the gain on disposal, have been presented as discontinued operations in the unaudited condensed consolidated financial statements of operations for the period ended June 30, 2026.

The carrying amount of the assets and liabilities of discontinued operations as of June 30, 2026 and December 31, 2025 consist of the following:

4. DISCONTINUED OPERATIONS (Continued)

The summarized operating result of discontinued operations included in the Company’s unaudited condensed consolidated statements of operations and comprehensive loss consist of the following:

4. DISCONTINUED OPERATIONS (Continued)

The summarized operating cash flows of discontinued operations included in the Company unaudited condensed consolidated statements of cash flows consist of the following:

5. CASH AND CASH EQUIVALENTS

As of June 30, 2026 and December 31, 2025, the Company has $45,480 and $89,651, respectively, of cash on hand and cash in banks placed with banks or other financial institutions. As of June 30, 2026 and December 31, 2025, $0 and$297 of these balances were not covered by deposit insurance, respectively.

6. ACCOUNTS RECEIVABLE, NET

7. INVENTORIES

Inventories consist of the following:

For the three months ended June 30, 2026 and 2025, there wereno inventory write-down nor write-off respectively. For the six months ended June 30, 2026 and 2025, there wereno inventory write-down, however, there were inventory write-off amounted to $2,087 and $6,897, respectively.

8. PREPAYMENTS AND DEPOSITS, NET

Pursuant to the agreement, the Company remitted a deposit of CNY 166,752,302, equivalent to $23,000,000 to Bi Cheng to be applied toward the cost of future investment, upon successful identification and execution of such an opportunity. As of the reporting date, due to the appreciation of the CNY, the deposit is valued at $24,531,431, and no investment has been finalized; hence, the funds remain unallocated to a specific investee.

The Company continues to monitor the progress of the investment activities and will reclassify the deposit as an investment asset once a definitive transaction has been completed and the associated rights and obligations have been transferred.

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

8. PREPAYMENTS AND DEPOSITS, NET (Continued)

Movements of allowance for credit loss are as follows:

9. PROPERTY AND EQUIPMENT, NET

Property and equipment, net consist of the following:

Depreciation expense for the three months ended June 30, 2026 and 2025 amounted to $494 and $3,097, respectively. Depreciation expense for the six months ended June 30, 2026 and 2025 amounted to $1,069 and $14,883, respectively.

10. INTANGIBLE ASSETS, NET

Intangible assets, net, consist of the following:

Amortization expense for the three months ended June 30, 2026 and 2025 amounted to $1 and $9, respectively. Amortization expense for the six months ended June 30, 2026 and 2025 amounted to $1 and $17, respectively.

11. INVESTMENT IN MARKETABLE SECURITIES

**12. INVESTMENT IN NON-MARKETABLE SECURITIES **

13. CUSTOMER DEPOSITS

Customer deposits represent amounts advanced by customers on product orders and unexpired product coupons issued to the Company’s members and distributors of its network marketing business.

14. OTHER PAYABLES AND ACCRUED LIABILITIES

The Company requires all members and distributors of its network marketing business to maintain an electronic wallet (eWallet) account with the Company. The eWallet is primarily for the crediting of any commission payment that falls below RM 100 (or $22.20) and for members or distributors without bank account. Commission payment exceeding the RM 100 threshold shall only be credited into the member’s or distributor’s bank upon request. The eWallet functionality allows the members to place new product orders utilizing eWallet available balance and/or request commission payout via multiple payment methods provided that each of the withdrawal amount exceeds RM 100. Amounts held in eWallets are reflected on the balance sheet as a current liability.

15. RELATED PARTY BALANCES AND TRANSACTIONS

Related party balances

Amount due from related parties of continuing operations

Amount due from related parties of discontinued operations

Accounts payable – related parties of discontinued operations

Related party balances

Other payable - related parties of continuing operations

Other payable - related parties of discontinued operations

Purchases from continuing operations

Purchases from discontinued operations

Purchases from continuing operations

Purchases from discontinued operations

Other purchases from discontinued operations

Other purchases from discontinued operations

Commission from continuing operations

Commission from continuing operations

Other income from continuing operations

Other income from continuing operations

Other expenses from continuing operations

Other expenses from discontinued operations

Other expenses from continuing operations

Other expenses from discontinued operations

16. STOCKHOLDERS’ EQUITY

Preferred stock

As of June 30, 2026 and December 31, 2025, there were 200,000,000 preferred stocks authorized butnone were issued and outstanding.

Common stock

Pursuant to the resolution passed at the board meeting on February 27, 2025, the Company is authorized to issue 46,000,000 shares of common stock at $0.0001 per share. On March 20, 2025, the Company issued 46,000,000 shares of common stock and received net cash proceeds of $23,000,000.

Pursuant to the approval obtained at the annual meeting on January 30, 2026, the Company is authorized to increase the common stock from 500,000,000 shares to 30,000,000,000 shares.

As of June 30, 2026 and December 31, 2025, there were 30,000,000,000 and 500,000,000 common stocks authorized;1,000,626 shares issued and outstanding, respectively.

Share-based compensation

The Company has share-based compensation to the executive director. The share-based compensation expense is recorded in general and administrative expenses. The value of the share is $5,000 a month and the number of share to issue is based on the average market price of the month. The Company will issue the share on half yearly basis.

As of June 30, 2026 and December 31, 2025, there were 0 and 759 shares issued respectively.

Warrants

On October 10, 2023, the Company entered into an underwriting agreement with Network 1 Financial Securities, Inc., as underwriter named thereof, in connection with its initial public offering (“IPO”) of 1,650,000 shares of common stock, par value $0.0001 per share (the “Shares”) at a price of $4.00 per share. The Company issued Representative’s Warrants to purchase up to 115,500 shares of common stock at $4.40 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, 180 days after October 13, 2023 (i.e. the date of issuance) and expiring on October 10, 2028.

The warrants are classified as equity instruments, the contracts are initially measured at fair value and no subsequent measurement is need for 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 $38,580 with the following assumptions.

As of June 30, 2025, there were 115,500 warrants outstanding.

17. NON-CONTROLLING INTEREST

The Company’s non-controlling interest consists of the following:

18. INCOME TAXES EXPENSES

The United States and foreign components of income (loss) before income taxes were comprised of the following:

Income tax expense consisted of the following:

The effective tax rate in the periods presented is the result of the mix of income earned in various tax jurisdictions that apply a broad range 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:

18. INCOME TAXES EXPENSES (Continued)

United States of America

Agape ATP Corporation was incorporated in the State of Nevada and is subject to the tax laws of the United States of America with a corporate tax rate of 21% on its taxable income. Agape ATP Corporation also subject to controlled foreign corporations Subpart F income (“Subpart F”) tax, which is a tax primarily on passive income from controlled foreign corporations with a tax rate of 21%. In addition, the Tax Cuts and Jobs Act imposed a global intangible low-taxed income(“GILTI”) tax, which is a tax on certain off-shore earnings at an effective rate of 10.5% for tax years (50% deduction of the current enacted tax rate of 21%) with a partial offset for 80% foreign tax credits. If the foreign tax rate is 13.125% or higher, there will be no U.S. corporate tax after the 80% foreign tax credits are applied. The Company’s net operating loss carryforwards may be used to offset future taxable income; however, under current U.S. federal tax law, utilization is limited to 80% of taxable income in any given year.

For the three and six months ended June 30, 2026 and 2025, the Company’s foreign subsidiaries did not generate any income that are subject to Subpart F tax and GILTI tax.

As of June 30, 2026 and December 31, 2025, the operations in the United States of America incurred approximately $5,364,000 and $5,303,000, respectively, of cumulative net operating losses (“NOL”) which can be carried forward to offset future taxable income or Subpart F and GILTI taxes. These balances can be carried forward indefinitely. The deferred tax valuation allowance as of June 30, 2026 and December 31, 2025 were approximately $901,000 and $1,120,000, respectively.

Malaysia

Agape ATP Corporation, Agape Superior Living Sdn Bhd, Agape S.E.A Sdn Bhd., Cedar ATPC Sdn Bhd., ATPC Green Energy Sdn Bhd and OIE ATPC Exim (M) Sdn Bhd. are governed by the income taxes laws of Malaysia and the income taxes provision in respect of operations in Malaysia is calculated at the applicable tax rates on the taxable income for the periods based on existing legislation, interpretations and practices in respect thereof. Under the Income Tax Act of Malaysia, enterprises that incorporated in Malaysia are usually subject to a unified 24% enterprise income taxes rate while preferential tax rates, tax holidays and even tax exemption may be granted on case-by-case basis. The tax rate for small and medium sized companies (generally companies incorporated in Malaysia with paid-in capital of RM 2,500,000 or less) is 15% for the first RM 150,000 (or approximately $37,500),17% for the subsequent RM 150,000 to RM 600,000 (or approximately $37,500 to $150,000) and 24% for the remaining balance for three months ended June 30, 2026 and 2025.

As of June 30, 2026 and December 31, 2025, the operations in Malaysia incurred approximately $4,644,000 and $4,513,000, respectively, of cumulative net operating losses (“NOL”) which can be carried forward to offset future taxable income. Approximately $865,000, $967,000, $1,378,000, $647,000, $655,000 and $131,000 of the net operating loss carry forwards will expire in 2031, 2032, 2033, 2034, 2035 and 2036, respectively, if unutilized. The deferred tax valuation allowance as of June 30, 2026 and December 31, 2025 were approximately $1,085,000 and $1,062,000, respectively.

Hong Kong

Agape ATP International Holding (HK) Limited is subject to Hong Kong Profits Tax, which is charged at the statutory income rate of 16.5% on its assessable income derived from Hong Kong. Business income derived or business expenses incurred outside the Special Administrative Region is not subject to Hong Kong Profits Tax or deduction.

China

ATPC Technology Private Limited is subject to the Corporate Income Tax governed by the Income Tax Law of the People’s Republic of China with a unified statutory income tax rate of 25%.

18. INCOME TAXES EXPENSES (Continued)

The following table sets forth the significant components of the aggregate deferred tax assets of the Company:

Uncertain tax positions

The Company evaluates each uncertain tax position (including the potential application of interest and penalties) based on the technical merits, and measure the unrecognized benefits associated with the tax positions. As of June 30, 2026 and December 31, 2025, the Company did not have any significant unrecognized uncertain tax positions. The Company did not incur any interest and penalties tax for the three and six months ended June 30, 2065 and 2025.

19. CONCENTRATIONS OF RISKS

(a) Major customers

For the three months ended June 30, 2026, three individuals accounted for approximately 12.9%,14.7% and 14.7% and of the Company’s total revenues and one company accounted for approximately 65.4% of the Company’s total revenues for the three months ended June 30, 2025.

For the six months ended June 30, 2026, no customer accounted for 10% or more of the Company’s total revenues and one company accounted for 55.5% of the Company’s total revenues for the six months ended June 30, 2025.

As of June 30, 2026, the Company hadno accounts receivable. As of December 31, 2025, two customers accounted for 40.0% and 23.3% of the Company’s balance of accounts receivable.

(b) Major vendors

For the three months ended June 30, 2026, two vendors accounted for 47.1% and 52.9% of the Company’s total purchases. For the three months ended June 30, 2025, one vendor accounted for approximately 95.7% of the Company’s total purchases.

For the six months ended June 30, 2026, two vendors accounted for 38.0% and 62.0% of the Company’s total purchases. For the six months ended June 30, 2025, one vendor accounted for approximately 92.1% of the Company’s total purchases.

As of June 30, 2026 and December 31, 2025, the Company hadno accounts payable.

19. CONCENTRATIONS OF RISKS (Continued)

(c) Commission Expenses to Sales Distributors and Stockists

Three sales distributors accounted for 25.8%,17.8% and 13.6% of the Company’s commission expense for the three months ended June 30, 2026. Two sales distributors accounted for 35.7% and 22.3% of the Company’s commission expense for the three months ended June 30, 2025

For the six months ended June 30, 2026, three sales distributors accounted for 23.5%,16.9% and 12.7% of the Company’s commission expense. For the six months ended June 30, 2025, two sales distributors accounted for 26.2% and 14.9% of the Company’s commission expense.

(d) Credit risk

As of June 30, 2026, the Company has entrusted Bi Cheng Investment Limited (“Bi Cheng”), a company incorporated and based in the People’s Republic of China (“PRC”) to manage a significant portion of its liquid assets, totaling approximately $24,531,431 (approximately 98.0% of total assets). These funds are maintained in accounts controlled by Bi Cheng in the PRC.

The Company is subject to credit risk arising from the possibility that Bi Cheng may fail to fulfill its contractual obligations, including the safekeeping and liquidity of the entrusted funds. In assessing the risk, management considers the financial condition and reputation of Bi Cheng.

While the Company has contractual rights to recover the entrusted funds and conducts periodic monitoring, there can be no assurance that such funds will be fully recoverable in a timely manner due to uncertainties in the legal, regulatory, and foreign exchange frameworks in the PRC. These uncertainties may affect the Company’s ability to access or repatriate the funds, particularly in adverse economic or political conditions.

No allowance for credit loss was recorded as of June 30, 2026, as management believes that the risk of loss is not probable based on current information. However, the Company continues to monitor developments and may revise its assessment should conditions materially change.

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash. As of June 30, 2026, and December 31, 2025, $45,480 and $89,651 were deposited with financial institutions, respectively and $0 and $297 of these balances were not covered by deposit insurance, respectively. While management believes that these financial institutions are of high credit quality, it also continually monitors their credit worthiness.

Financial instruments that are potentially subject to credit risk consist of accounts receivable, cash, prepayments and deposits and amount due from related parties. The Company believes the concentration of credit risk in its account receivable is substantially mitigated by its ongoing credit evaluation process and relatively short collection terms. The Company does not generally require collateral from customers. The Company evaluates the need for an allowance for credit loss based upon factors surrounding the credit risk of specific customers, historical trends and other information. Historically, the Company did not have any bad debt on its account receivable. The Company maintains its cash with financial institutions and, as such, believes the credit risk associated with cash deposits is minimal. Prepayments and deposits are mainly cash deposited or advanced to suppliers for future inventory purchases or service providers for future services. For any prepayments and deposits determined by management that such advances will not be in receipts of inventories, services, or refundable, the Company will recognize an allowance for 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, and adjusts the allowance when necessary. Delinquent account balances are written-off against allowance for credit losses after management has determined that the likelihood of collection is not probable. The amount due from related parties represents payment made by the Company on behalf of related parties, the management considers the credit risk to be low due to the related parties made repayments within reasonable timeframe.

(e) Exchange rate risk

The Company cannot guarantee that the current exchange rate will remain steady; therefore, there is a possibility that the Company could post the same amount of profit for two comparable periods and because of the fluctuating exchange rate actually post higher or lower profit depending on exchange rate of RM, CNY and HK$ converted to US$ on that date. The exchange rate could fluctuate depending on changes in political and economic environments without notice.

20. LEASE

Lease commitments

On July 11, 2024, the Company leased non-commercial vehicle as lessee under finance leases with 5 years lease terms. The Company recognized finance lease liabilities of approximately $72,772, using an effective interest rate of 4.42%, which was determined using the incremental borrowing rate.

The five-year maturity of the Company’s operating lease liabilities is as follow:

The Company also leases one shophouse with an expiring term of twelve months or less, which were classified as operation leases. Since the lease terms for these leases were twelve months or less, a lessee is permitted to elect not to recognize lease assets and liabilities. The Company has elected not to recognize lease assets and liabilities on these leases. As of June 30, 2026, the Company’s commitment for minimum lease payment under these operating leases within the next twelve months were $23,616.

Short term lease cost for the three months ended June 30, 2026 and 2025 was $12,368 and $2,241, respectively. For the six months ended June 30, 2026 and 2025, the short term lease cost was $14,800 and $4,006, respectively.

21. COMMITMENTS AND CONTINGENCIES

The Company has no material commitments or contingencies that are required to be disclosed. The Company has evaluated its obligations and contingencies and determined that no material commitments or contingencies exist at this time.

The Company will continue to monitor and evaluate any potential future commitments or contingencies and will disclose any material items as required.

Legal

The Company is not involved in any material legal proceedings and there are no legal matters that are required to be disclosed.

22. SEGMENT REPORTING

ASC 280 “Segment Reporting” establishes standards for reporting information about operating segments on a basis consistent with the Group’s internal organizational management structure as well as information about geographical areas, business segments, and major customers in the financial statements.

Our Chief Executive Officer, who is considered to be our chief operating decision maker, or CODM, reviews financial information presented on an operating segment basis for purposes of making decisions and assessing financial performance.

Skin care and health segment includes skin care and health products.

Green energy segment includes providing renewable energy products, technical solutions, installations and maintenance services.

Wellness segment includes the provision of wellness products and health solution advisory services, has been discontinued and is classified as discontinued operations.

Operating results by segment include costs or expenses that are directly attributable to each segment, and costs or expenses that are leveraged across our unified architecture and therefore allocated between thetwo segments.

The table below presents details of our reporting segments – Continuing Operations:

The table below presents details of our wellness reporting segments – Discontinued operations

The “Unallocated Expenses” category comprises corporate headquarter operations and one minor business components.

23. SUBSEQUENT EVENTS

The Company has evaluated subsequent events through the date of issuance of this unaudited condensed consolidated financial statements, and did not identify any events with material financial impact on the Company’s unaudited condensed consolidated financial statements.