AGAPE ATP CORPORATION The following discussion of our financial condition and results of operations should be read in conjunction with our audited consolidated financial statements and the notes to those financial statements appearing elsewhere in this Report.
Certain statements in this Report constitute forward-looking statements. These forward-looking statements include statements, which involve risks and uncertainties, regarding, among other things, (a) our projected sales, profitability, and cash flows, (b) our growth strategy, (c) anticipated trends in our industry, (d) our future financing plans, and (e) our anticipated needs for, and use of, working capital. They are generally identifiable by use of the words "may," "will," "should," "anticipate," "estimate," "plan," "potential," "project," "continuing," "ongoing," "expects," "management believes," "we believe," "we intend," or the negative of these words or other variations on these words or comparable terminology. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this filing will in fact occur. You should not place undue reliance on these forward-looking statements.
The forward-looking statements speak only as of the date on which they are made, and, except to the extent required by federal securities laws, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date on which the statements are made or to reflect the occurrence of unanticipated events.
Overview
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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.
In order to strengthen the Company's supply chain, on
Via ASL, the Company offers three series of programs which consist of different services and products: ATP Zeta Health Program, ÉNERGÉTIQUE and BEAUNIQUE.
The ATP Zeta Health Program is a health program designed to promote health and general wellbeing designed to prevent health diseases caused by polluted environments, unhealthy dietary intake and unhealthy lifestyles. The program aims to promote improved health and longevity through a combination of modern health supplements, proper nutrition and advice from skilled dieticians as well as trained members and distributors.
The ÉNERGÉTIQUE series aims to provide a total dermal solution for a healthy skin beginning from the cellular level. The series is comprised of the Energy Mask series, Hyaluronic Acid Serum and Mousse Facial Cleanser.
The BEAUNIQUE product series focuses on the research of our diet's impact on modifying gene expressions in order to address genetic variations and deliver a nutrigenomic solution for every individual.
The Company deems creating public awareness on wellness and wellbeing lifestyle as essential to enhance the provision of its health solution advisory services; and therefore, incorporated WATP. Upon its establishment, WATP started collaborating with ASL to carry out various wellness programs.
To further its reach in the Health and Wellness Industry, on
Results of Operation
For the years ended
Revenue
We generated revenue of
43 Cost of Revenue
Cost of revenue for the year ended
Cost of revenue typically comprise of freight-in, cost of goods purchased, packing materials and services acquired.
Gross Profit
Gross profit for the year ended
Operating Expenses
Our operating expenses consist of selling expenses, commission expenses, general and administrative expenses and provision for doubtful accounts.
Selling expenses
Selling expenses for the year ended
Commission expenses
Commission expenses were
General and administrative expenses ("G&A expenses")
G&A expenses for the year ended
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Provision for doubtful accounts
Provision for doubtful accounts were
Other (Expenses) Income
For the year ended
Benefit of (Provision for) Income Taxes
We had benefits of income taxes of
During the year ended
Net Loss
We generated a net loss of
Liquidity and Capital Resources
Substantially all of our revenues are concentrated in
? temporary closure of offices, travel restrictions, disruption or
suspension of supplies, our customers may be negatively impacted
financially resulting in which the demand for our products may be
adversely affected;
? we may have to provide significant sales incentives to our customers
during the outbreak, which may in turn materially adversely affect our
financial condition and operating results; and
? any disruption of our supply chain, logistics providers or customers could
adversely impact our business and results of operations, including causing
us or our suppliers to cease manufacturing for a period of time or
materially delay delivery to our customers, which may also lead to loss of
our customers.
Albeit a lengthy 3 years in the COVID-19 pandemic and living alongside COVID-19, there could still be supply chain disruptions. From our experiences operating under the much-restricted COVID-19 environment, we have modified our methods of operations, to build in sufficient buffer in the management of inventories. We may experience slight delay in products delivery lead time but barring unforeseen circumstances, the setback should be temporary.
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We are currently operating primarily in
Because of the uncertainty surrounding the COVID-19 outbreak, the financial impact related to the outbreak of and response to the COVID-19 cannot be reasonably estimated at this time. There is no guarantee that the Company's total revenues will grow or remain at similar levels year over year in 2023 and beyond.
As of
In assessing our liquidity and going concern, management is projecting that the company's revenue will revert to pre-pandemic level, generating sufficient cash therefrom to cover our operating expenses.
If our Company is unable to generate sufficient cash flow within the normal operating cycle of a twelve-month period to pay for its future payment obligations, we may have to consider supplementing our available sources of funds through the following sources:
? other available sources of financing from Malaysia banks and other
financial institutions; and
? financial support from our related parties and shareholders.
Based on the above initiatives, management is of the opinion that the Company shall have sufficient funds to meet its working capital requirements and debt obligations as they become due in the foreseeable future twelve months from the date of issuance of this Annual Report. However, there is no assurance that management will be successful in its plans.
The following summarizes the key components of our cash flows for the years
ended
For the years ended December 31,
2022 2021
Net cash used in operating activities $ (811,683 ) $ (845,842 )
Net cash used in investing activities (32,119 ) (3,959 )
Net cash used in financing activities (234,466 ) (19,061 )
Effect of exchange rate on cash and cash equivalents (81,150 ) (50,890 )
Net change in cash and cash equivalents $ (1,159,418 ) $ (919,752 )
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Operating activities
Net cash used in operating activities for the year ended
Net cash used in operating activities for the year ended
Investing activities
Net cash used in investing activities for the year ended
Net cash used in investing activities for the year ended
Financing activities
Net cash used in financing activities for the year ended
Net cash used in financing activities for the year ended
Credit Facilities
We do not have any credit facilities or other access to bank credit.
Off-Balance Sheet Arrangements
As of
Critical Accounting Estimates
The preparation of consolidated financial statements in conformity with
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Estimated allowance for inventories obsolescence
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
Impairment of long-lived assets
Operating right-of-use assets and property, plant and equipment are stated at costs less accumulated depreciation and impairment, if any. In determining whether an asset is impaired, the Company has to exercise judgment and make estimation, particularly in assessing: (1) whether an event has occurred or any indicators that may affect the asset value; (2) whether the carrying value of an asset can be supported by the recoverable amount, in the case of value in use, the present value of future cash flows which are estimating the recoverable amounts including cash flow projections and an appropriate discount rate. Changing the assumptions and estimates, including the discount rates or the growth rate in the cash flow projections, could materially affect the net present value used in the impairment test.
As of
Recognition of income taxes and allowance for deferred tax assets/liabilities
The Company conducts much of its business activities in
Deferred tax assets relating to certain temporary differences and tax losses are recognized as management considers it is probable that future taxable profit will be available against which the temporary differences or tax losses can be utilized. Where the expectation is different from the original estimate, such differences will impact the recognition of deferred taxation assets and taxation in the periods in which such estimate is changed.
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Critical Accounting Policies
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 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.
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 Health and Wellness products
- Performance obligations satisfied at a point in time
The Company derives its revenues from sales contracts with its customers with revenues being recognized when control of the health and wellness products are transferred to its customer at the Company's office or shipment of the goods. The revenue is recorded net of estimated discounts and return allowances. Products are given 60 days for returns or exchanges from the date of purchase. Historically, there were insignificant sales returns.
Under the Company's network marketing business, the Company issues product coupons to members and distributors when these customers made purchases above certain thresholds set by the Company. Depending on the type of product coupons issued, the coupons carry varying values and can be used by the customers for reduction in the transaction price of product purchases within the coupon validity period. The value of the product coupons issued is recorded as a reduction of the Company's revenue account upon issuance; the corresponding amount credited to the customer deposits account. Amounts in customer deposits will be reversed when the coupons are used. The Company's coupons have a validity period of between six and twelve months. If the Company's customers did not utilize the coupons after the validity period, the Company would recognize the forfeiture of the originated sales value of the coupons as net revenues.
Provision of Health and Wellness services
- Performance obligations satisfied at a point in time
The Company carries out its Wellness program, where the Company's products are bundled with health screening test 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 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.
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Fair value of financial instruments
The accounting standard regarding fair value of financial instruments and related fair value measurements defines financial instruments and requires disclosure of the fair value of financial instruments held by the Company.
The accounting standards define fair value, establish a three-level valuation hierarchy for disclosures of fair value measurement and enhance disclosure requirements for fair value measures. The three levels are defined as follow:
? Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for
identical assets or liabilities in active markets.
? Level 2 inputs to the valuation methodology include quoted prices for similar
assets and liabilities in active markets, and inputs that are observable for
the assets or liability, either directly or indirectly, for substantially the
full term of the financial instruments.
? Level 3 inputs to the valuation methodology are unobservable and significant
to the fair value.
Financial instruments included in current assets and current liabilities are reported in the consolidated balance sheets at face value or cost, which approximate fair value because of the short period of time between the origination of such instruments and their expected realization and their current market rates of interest.
Recent accounting pronouncements
The Company has reviewed all recently issued, but not yet effective, considers the applicability and impact of all accounting standards updates ("ASUs"). Management periodically reviews new accounting standards that are issued.
In
Except for the above-mentioned pronouncements, there are no new recent issued accounting standards that will have a material impact on the consolidated financial position, statements of operations and cash flows.
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