Agape ATP Corp

Previous wording

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

Current wording

Via ASL, the Company offers two series of programs which consist of different services and products: ATP Zeta Health Program and E.A.T.S.

Previous wording

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 WATP. Upon its establishment, WATP started collaborating with ASL to carry out various wellness programs.

Current wording

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.

Previous wording

To further its reach in the Health and Wellness Industry, on November 11, 2021, Agape ATP Corporation (Labuan) formed a joint-venture entity, DSY Wellness International Sdn. Bhd. (“DSY Wellness”) with an independent third party which Agape ATP Corporation (Labuan) owns 60% of the equity interest, to pursue the business of providing complementary health therapies.

Current wording

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

Previous wording

We generated revenue of $1,431,088, which mainly comprised of revenue from the Company’s network marketing business of $396,122 (approximately 27.7%); and revenue from the Company’s operations in the provision of complementary health therapies of $1,033,221 (approximately 72.2%) for the year ended December 31, 2023 as compared to $1,137,763 (approximately 61.3%), which the amount was mainly attributed to revenue from the Company’s network marketing business, and $715,333 (approximately 38.5%) from the Company’s operations in the provision of complementary health therapies for the year ended December 31, 2022.

Current wording

We generated revenue of $1,322,747, which comprised of revenue from the Company’s network marketing business of $137,050 (approximately 10.4%); revenue from the Company’s operations in the provision of complementary health therapies of $1,120,843 (approximately 84.7%); $22,091 from skin care and healthcare products, a new revenue stream from the Company’s operations in wellness and wellbeing lifestyle and $42,763 from the operation in green energy for the year ended December 31, 2024 as compared to revenue of $1,431,088, which the amount was mainly attributed from the Company’s network marketing business of $396,122 (approximately 27.7%); and $1,033,221 (approximately 72.2%) from the Company’s operations in the provision of complementary health therapies for the year ended December 31, 2023.

Previous wording

Total revenue for the year ended December 31, 2023 decreased by $425,476, or approximately 22.9% from the year ended December 31, 2022. Revenue from the Company’s network marketing business decreased significantly by $741,641, or approximately 65.2%, whereas the revenue from the provision of complementary health therapies increased by $317,888, or approximately 44.4%. The decreased revenue from the Company’s network marketing business due to limited product range available as compared to the previous years, it limited the potential development of this revenue stream. We did not offer as many categories of the health products in our network marketing business during fiscal year 2023 which we had during prior years as a strategical shifting of our business focus to development of new health products for both networking marketing business as well as complementary health therapies business. Existed distributors therefore may seek alternative companies in the market with a more extensive product range than the Company could offer to fulfill the needs of ultimate customers. During the year ended December 31, 2023, we launched a few new products in the market. However, the increased revenue of approximately $0.2 million from sales of these new products was less than the significant decrease of revenue related to the sales of existing products related to network marketing business. The revenue increase in provision of complementary health therapies business was due to after COVID-19 pandemic, more individual turned to complementary health therapies as preventive care and wellness to maintain good health, prevent illness and promote overall well-being, more service orders were processed during the year ended December 31, 2023 compared with previous year, also led the increase of related products sold. Health and wellness service revenue from our provision of complementary health therapies business increased approximately $0.1 million and product sales revenue from our provision of complementary health therapies business increased by approximately $0.2 million compared with previous year.

Current wording

Total revenue for the year ended December 31, 2024 decreased by $108,341, or approximately 7.6% from the year ended December 31, 2023. Revenue from the Company’s network marketing business decreased significantly by $259,072, or approximately 65.4%, whereas the revenue from the provision of complementary health therapies increased by $87,622, or approximately 8.5%, new revenue streams $22,091 from the Company’s operations in wellness and wellbeing lifestyle and $42,763 from the operation in green energy. The decreased revenue from the Company’s network marketing business due to limited product range available as compared to the previous years, it limited the potential development of this revenue stream. We did not offer as many categories of the health products in our network marketing business during fiscal year 2024 as compared to prior years due to the company strategically shifting the business focus from company’s network marketing business to new revenue streams that can help restore growth and diversify income streams. During the year ended December 31, 2024, we launched new revenue streams from the Company’s operations in wellness and wellbeing lifestyle and ventured into green energy industry by providing products, technical knowledge and solutions for sustainability and energy savings. However, the increased of approximately $64,854 from new revenue streams was less than the significant decrease of revenue related to the sales of existing products related to network marketing business. The revenue increase in provision of complementary health therapies business was due to the increase in public awareness about the importance of physical and mental health, more individual turned to complementary health therapies as preventive care and wellness to maintain good health, prevent illness and promote overall well-being, more service orders were processed during the year ended December 31, 2024 compared with previous year, also led the increase of related products sold.

Previous wording

Gross profit for the year ended December 31, 2023 amounted to $936,572, represented a gross margin of approximately 65.4%, as compared to $1,190,522 for the year ended December 31, 2022, which was equivalent to a gross margin of approximately 64.1%. The marginally increase in gross profit margin in year ended December 31, 2023 was mainly due to the same reason as explained in the above. Although the gross profit margin related to our network marketing business was approximately 84.1% for the year ended December 31, 2023, increased from previous year, the related revenue only accounted approximately 27.7% of the total revenue for the year, decreased from approximately 61.3% for previous year. The gross profit margin for both years therefore stayed at the similar level.

Current wording

Gross profit for the year ended December 31, 2024 amounted to $759,148, represented a gross margin of approximately 57.4%, as compared to $936,572 for the year ended December 31, 2023, which was equivalent to a gross margin of approximately 65.4%. The decrease in gross profit margin in year ended December 31, 2024 was due to low gross profit margin in Company’s operations in wellness and wellbeing lifestyle and green energy.

Previous wording

Cost of revenue for the year ended December 31, 2023 amounted to $494,516 (approximately 34.6% of revenue) as compared to $666,042 (approximately 35.9% of revenue) for the year ended December 31, 2022, representing a decrease of $171,526, or approximately 25.8%. The fluctuation in cost of revenue was in the same trend as decrease in revenue. Significant decreased product sales revenue in network marketing business led the decreased cost of products sold. The proportional decrease in cost of revenue was more than the of the proportional decrease in revenue for year ended December 31, 2023 was due to that the products sold in its network marketing business during the year were mainly the existing slow moving products developed in prior years with very high gross profit margin. The gross profit margin related to our network marketing business was approximately 84.1% and 67.4% for the years ended December 31, 2023 and 2022, respectively; the gross profit margin related to our provision of complementary heath therapies business was approximately 58.5% and 59.1%, respectively. In addition to that, there was no inventory write-downs during the year ended December 31, 2023, whereas inventory write-downs of $5,307 were recorded for the year ended December 31, 2022.

Current wording

The gross profit margin related to our network marketing business was approximately 69.6% and 84.1% for the years ended December 31, 2024 and 2023, respectively; the gross profit margin related to our provision of complementary heath therapies business was approximately 59.1% and 58.5%, respectively; the gross profit margin related to the new revenue streams, Company’s operations in wellness and wellbeing lifestyle and green energy was approximately 2.3% and 2.9% respectively, for the year ended December 31, 2024. In addition to that, there was $7,081 inventory write-downs during the year ended December 31, 2024, whereas no inventory write-downs were recorded for the year ended December 31, 2023.

Previous wording

Selling expenses for the year ended December 31, 2023 amounted to $629,003 as compared to $361,414 for the year ended December 31, 2022, a significant increase of $267,589, or approximately 74.0%. The Company’s selling expenses typically comprise salaries and benefits expenses, credit card processing fees and promotional expenses. The significant increase in selling expenses was predominantly due to significant increase of promotional expenses which included the travelling expenses incurred for Nasdaq uplisting bell ringing ceremony as an incentive to the Company’s distributors and members for their contribution to the Company’s networking marketing business for the past years.

Current wording

Selling expenses for the year ended December 31, 2024 amounted to $162,712 as compared to $629,003 for the year ended December 31, 2023, a significant decrease of $466,291, or approximately 74.1%. The Company’s selling expenses typically comprise salaries and benefits expenses, credit card processing fees and promotional expenses. The significant decrease in selling expenses was due to the decrease in promotional expenses incurred in the network marketing business.

Previous wording

Commission expenses were $88,132 and $405,351 for the years ended December 31, 2023 and 2022, respectively, representing a significant decrease of $317,219, or approximately 78.3%. The significant decrease in commission expenses was due to the decrease in revenue from the Company’s network marketing business. The proportional decrease in commission expenses was more than the decrease in revenue was due to our multi-tiers compensation plan structure. Distributors earn commissions not only with a fixed percentage on their own sales but also depending on the sales of the new recruiting distributors as well as other factors. Distributors who reach certain levels of achievement may qualify for additional commissions. The revenue generated in the year ended December 31, 2023 were more on distributors’ own sales, not much of recruiting new distributors and the distributors did not qualify for the additional commissions due to the decrease in revenue.

Current wording

Commission expenses were $34,905 and $88,132 for the years ended December 31, 2024 and 2023, respectively, representing a significant decrease of $53,227, or approximately 60.4%. The significant decrease in commission expenses was due to the decrease in revenue from the Company’s network marketing business.

Previous wording

G&A expenses for the year ended December 31, 2023 amounted to $2,366,016, as compared to $1,957,023 for the year ended December 31, 2022, representing an increase of $408,993, or approximately 20.9%. The Company’s G&A expenses typically comprise of salaries and benefits expenses, rental expenses, professional expenses, depreciation expenses and provision for credit losses. The salaries increased due to the Company’s operations in the provision of complementary health therapies are growing, the Company increase the employee workforce to support the growth in this division. The Company increased the director salary of this division as a reward to recognize the performance in developing such business line during the current year. Upon uplisted in Nasdaq capital market, the Company appointed one executive director and three independent directors, which also led the increase of executive salaries for the year ended December 31, 2023 compared to previous year.

Current wording

G&A expenses for the year ended December 31, 2024 amounted to $3,134,874, as compared to $2,366,016 for the year ended December 31, 2023, representing an increase of $768,858, or approximately 32.4%. The Company’s G&A expenses typically comprise of salaries and benefits expenses, rental expenses, professional expenses, depreciation expenses and provision for credit losses. Upon uplisted in Nasdaq capital market, the Company incurred Nasdaq annual listing fees, and the Company also appointed two executive directors and three independent directors, which led the increase of executive salaries for the year ended December 31, 2024 compared to previous year.

Previous wording

For the year ended December 31, 2023, we recorded an amount of $40,219 as other income, net as compared to $136,868 other expenses, net for the year ended December 31, 2022, representing a significant change of $177,086. The net other income of $40,219 incurred during the year ended December 31, 2023 comprised of other income, net of $5,724, interest income of $29,249, unrealized holding gain on marketable securities of $3,493, gain on disposal of property and equipment of $1,753. The net other expenses of $136,868 incurred during the year ended December 31, 2022 comprised of other expense, net of $79,539, interest income of $16,190, unrealized holding loss on marketable securities of $73,519. The significant change was mainly due to unrealized holding gain on marketable securities recorded during the year compared to that of unrealized holding loss for the previous year as a result of market price changes during the year of those investments held by the Company. In addition, foreign transaction loss decreased significantly this year as the Company mainly purchased from local suppliers settled with local currencies.

Current wording

For the year ended December 31, 2024, we recorded an amount of $92,233 as other income, net as compared to $40,219 other income, net for the year ended December 31, 2023, representing a significant change of $52,014. The net other income of $92,233 incurred during the year ended December 31, 2024 comprised of other income, net of $29,209, interest income of $67,930, unrealized holding loss on marketable securities of $5,018, gain on disposal of property and equipment of $112. The net other income of $40,219 incurred during the year ended December 31, 2023 comprised of other income, net of $5,724, interest income of $29,249, unrealized holding gain on marketable securities of $3,493, gain on disposal of property and equipment of $1,753. The significant change was due to the interest income from time deposit.

Previous wording

We incurred provision for income taxes of $3,575 for the year ended December 31, 2023 as compared to benefit of income taxes of $4,055 for the year ended December 31 2022. During the year ended December 31, 2023, our operations in Malaysia incurred income taxes expenses as a result of provision assessment made by local tax authority for prior year tax obligations as compared to overprovision in taxes for year ended December 31, 2022.

Current wording

We incurred income tax expense of $4,934 for the year ended December 31, 2024 as compared to $3,575 for the year ended December 31 2023. During the year ended December 31, 2024 and 2023, our operations in Malaysia incurred income taxes expenses as a result of provision assessment made by local tax authority for prior year tax.

Previous wording

We incurred a net loss of $2,109,935 for the year ended December 31, 2023, as compared to $1,666,079 for the year ended December 31, 2022, an increase of $443,856, or approximately 26.6%, predominately due to reasons as discussed above.

Current wording

We incurred a net loss of $2,486,044 for the year ended December 31, 2024, as compared to $2,109,935 for the year ended December 31, 2023, an increase of $376,109, or approximately 17.8%, predominately due to reasons as discussed above.

Previous wording

As of December 31, 2023, we had working capital of $4,113,614 consisting of cash and cash in bank of $510,019 and time deposits of $4,322,441 as compared to working capital of $799,239 consisting of cash and cash in bank of $523,619 and time deposits of $914,811 as of December 31, 2022. The Company had a net loss of $2,109,935 for the year ended December 31, 2023 and accumulated deficits of $7,047,571 as of December 31, 2023 as compared to net loss of $1,666,079 for the year ended December 31, 2022 and accumulated deficits of $4,945,586 as of December 31, 2022.

Current wording

As of December 31, 2024, we had working capital of $1,656,571 consisting of cash and cash in bank of $240,243 and time deposits of $1,800,000 as compared to working capital of $$4,113,614 consisting of cash and cash in bank of $494,771 and time deposits of $4,322,441 as of December 31, 2023. The Company had a net loss of $2,486,044 for the year ended December 31, 2024 and accumulated deficits of $9,518,045 as of December 31, 2024 as compared to net loss of $2,109,935 for the year ended December 31, 2023 and accumulated deficits of $7,047,571 as of December 31, 2023.

Previous wording

Net cash used in operating activities for the year ended December 31, 2022 was $811,683 and were mainly comprised of the net loss of $1,666,079, the non-cash deferred tax benefit of $14,751, the increase in accounts receivables of $2,824, the increase in amount due from related parties of $3,786, the payment of operating lease liabilities of $145,197 and the decrease in other payables (including related parties) and accrued liabilities of $115,085. The net cash used in operating activities was mainly offset by the non-cash depreciation and amortization expense of $73,876, amortization of operating right-of-use assets of $144,064, the unrealized holding loss on marketable securities of $73,519, inventory write-downs of $5,307, the decrease in inventories of $343,483, the refund in prepaid taxes of $263,404, the decrease in prepayments and deposits of $89,113, the increase in accounts payable (including related parties) of $41,422, increase in customer deposits of $94,877 and increase in income tax payables of $6,974.

Current wording

Net cash used in operating activities for the year ended December 31, 2024 was $2,726,215 and were mainly comprised of the net loss of $2,486,044, gain on disposal of office equipment of $112, the increase in accounts receivables of $28,295, the increase in inventories of $4,225, the increase in prepaid taxes $22,322, the increase in prepayments and deposits of $434,447, the increase in other receivables of $2,105, the decrease in accounts payables (related parties) of $5,107, the decrease in customer deposits of $7,340, the payment of operating lease liabilities of $139,476, the decrease in other payables (related parties) of $7,065. The net cash used in operating activities was mainly offset by non-cash depreciation and amortization expense of $57,340, amortization of operating right-of-use assets of $139,867, amortization of finance assets of $29,445, unrealized holding loss on marketable securities of $5,018, allowance for expected credit loss of $98,705, deferred tax expense of $220, inventory write-down of $7,081, decrease in amount due from related parties of $8,889, increase in accounts payables of $44,657, the increase in other payables and accrued liabilities of $14,761 and the increase of income tax payable of $4,340.

Previous wording

Net cash used in investing activities for the year ended December 31, 2022 was $32,119, the amount entirely for the purchase of equipment and intangible assets.

Current wording

Net cash used in investing activities for the year ended December 31, 2024 was $50,050, the amount resulted from the purchase property and equipment of $50,162 and proceeds from disposal of office equipment $112.

Previous wording

Net cash used in financing activities for the year ended December 31, 2022 was $234,466, the amount entirely payment of deferred offering cost.

Current wording

Net cash used in financing activities for the year ended December 31, 2024 was $11,856, the amount mainly for the reduction of finance lease liability.

Previous wording

The preparation of 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 consolidated financial statements and the reported amounts of revenues and expenses during the periods presented. Significant accounting estimates reflected in the Company’s consolidated financial statements include allowance for inventories obsolescence, impairment of long-lived assets, allowance for deferred tax assets. Following are the methods and assumptions used in determining our estimates.

Current wording

The preparation of 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 consolidated financial statements and the reported amounts of revenues and expenses during the periods presented. Significant accounting estimates reflected in the Company’s consolidated financial statements include allowance for inventories obsolescence, impairment of long-lived assets, allowance for deferred tax assets, allowance for estimation of coupon redemption and the assumptions used in the valuation of the derivative financial instruments. Following are the methods and assumptions used in determining our estimates.

Previous wording

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 years ended December 31, 2023 and 2022, the Company recognize an inventory write-downs of $0 and $5,307, respectively.

Current wording

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 years ended December 31, 2024 and 2023, the Company recognize an inventory write-downs of $7,081 and $0, respectively.

Previous wording

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.

Current wording

The ASU 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 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.

Previous wording

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

Current wording

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

Previous wording

The Company carries out its Wellness program, where the Company’s products are bundled with health screening test and a health camp program. The health screening test and the health camp programs are considered as separate performance obligations. The promises to deliver the health screening test report and the attendance at the health camp are separately identifiable, which are evidenced by the fact that the Company provides separate services of delivering the health screening test report and allowing admission of the customers to attend the health camp. The Company based on the health screening test contracts with customers, establishes the selling price for the health screening test and place order to the health screening center. The Company obtains control of the test report before they are delivered to the customers. The Company analyze the test report, provides consultations to the customers, bundle it with the Company’s products and services depending on the customer’s needs. The Company derives its revenues from sales contracts with its customers with revenues being recognized when the test reports are completed and delivered to its customers during the consultation section in person. The Company also separately derives its revenues from sales contracts with its customers with revenues being recognized when the health camp program was completed in the final day of the health camp.

Current wording

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

Previous wording

In March 2023, the FASB issued ASU No. 2023-01 “Leases (Topic 842) Common Control Arrangements”. This ASU provides guidance in ASC Topic 842 that Leasehold improvements associated with common control leases should be (i) amortized by the lessee over the useful life of the leasehold improvements to the common control group, regardless of the lease term, as long as the lessee controls the use of the underlying asset through a lease, and (ii) accounted for as a transfer between entities under common control through an adjustment to equity if and when the lessee no longer controls the use of the underlying asset. The ASU 2023-01 is effective for reporting periods beginning after December 15, 2023. Early adoption is permitted for both interim and annual financial statements that have not yet been issued. When adopted in an interim period, it must be adopted from the beginning of the year that includes that interim period. The Company is currently evaluating the impact of this ASU may have on its consolidated financial statements.

Current wording

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

Previous wording

In November, 2023, the FASB issued ASU 2023-07 “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures”. The ASU 2023-07 is intended to improve reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. The ASU 2023-07 is effective for annual reporting periods beginning after December 15, 2023 and interim periods in fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the impact of this ASU may have on its consolidated financial statements.

Current wording

In November 2023, the FASB issued ASU 2023-07 “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures”. The ASU 2023-07 is intended to improve reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. The ASU 2023-07 is effective for annual reporting periods beginning after December 15, 2023 and interim periods in fiscal years beginning after December 15, 2024.

Previous wording

In November 2019, the FASB issued ASU No. 2019-10, which to update the effective date of ASU No. 2016-13 for private companies, not-for-profit organizations and certain smaller reporting companies applying for credit losses, leases, and hedging standard. The new effective date for these preparers is for fiscal years beginning after December 15, 2022. ASU 2019-05 is effective for the Company for annual and interim reporting periods beginning January 1, 2023 as the Company is qualified as a smaller reporting company. The Company has accordingly adopted ASUs 2016-13 and 2019-05 in the preparation of its consolidated financial statements. The adoption of the accounting standards has no material impact on the consolidated financial statements for the year ended December 31, 2023.

Current wording

The adoption of the accounting standards has no material impact on the consolidated financial statements for the year ended December 31, 2024.