Attached files
| file | filename |
|---|---|
| EX-32.1 - Agape ATP Corp | ex32-1.htm |
| EX-31.1 - Agape ATP Corp | ex31-1.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X]
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For The Quarterly Period Ended September 30, 2018
or
[ ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________
Commission File Number 333-220144
AGAPE ATP CORPORATION
(Exact name of registrant issuer as specified in its charter)
| Nevada | 36-4838886 | |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
1705
- 1708, Level 17, Tower 2, Faber Tower, Jalan Desa Bahagia,
Taman Desa, 58100 Kuala Lumpur, Malaysia.
(Address of principal executive offices, including zip code)
Registrant’s phone number, including area code (60) 192230099
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
YES [X] NO [ ]
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (section 232.405 of this chapter) during the preceding twelve months (or shorter period that the registrant was required to submit and post such files).
YES [ ] NO [X]
Indicate by check mark whether the registrant is a large accelerated fler, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer [ ] Accelerated Filer [ ] Non-accelerated Filer [ ] Smaller reporting company [X]
Emerging growth company [X]
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes [ ] No [X]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.
Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
| Class | Outstanding at November 13, 2018 | |
| Common Stock, $.0001 par value | 376,275,500 |
TABLE OF CONTENTS
| 2 |
ITEM 1. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:
AGAPE ATP CORPORATION
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
| F-1 |
AGAPE ATP CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2018 AND JUNE 30, 2018
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
| As of | As of | |||||||
| September 30, 2018 | June 30, 2018 | |||||||
| Unaudited | Audited | |||||||
| ASSETS | ||||||||
NON-CURRENT ASSETS | ||||||||
| Investment in investee company | $ | 780,226 | $ | 832,335 | ||||
| Investment in marketable securities | 500,000 | 500,000 | ||||||
| Total Non-Current Assets | $ | 1,280,226 | $ | 1,332,335 | ||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | 3,838,260 | $ | 3,531,255 | ||||
| Account receivables | 13,264 | - | ||||||
| Prepayments and deposits | 372,191 | 264,941 | ||||||
| Total Current Assets | $ | 4,223,715 | $ | 3,796,196 | ||||
| TOTAL ASSETS | $ | 5,503,941 | $ | 5,128,531 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Trade payable | $ | 47,641 | $ | - | ||||
| Other payables and accrued liabilities | 7,749 | 19,749 | ||||||
| Deposit received | 471,931 | - | ||||||
| Income tax provision | 9,038 | 5,334 | ||||||
| Amount due to a director | 3,922 | 3,922 | ||||||
| Amount due to a related party | 745 | 745 | ||||||
| Total Current Liabilities | $ | 541,026 | $ | 29,750 | ||||
| TOTAL LIABILITIES | $ | 541,026 | $ | 29,750 | ||||
| STOCKHOLDERS’ EQUITY | ||||||||
| Preferred stock, $0.0001 par value; 200,000,000 shares authorized; None issued and outstanding | - | - | ||||||
| Common Stock, par value $0.0001; 1,000,000,000 shares authorized, 376,275,500 and 376,275,500 issued and outstanding as of September 30, 2018 and June 30, 2018 | $ | 37,628 | $ | 37,628 | ||||
| Additional paid in capital | 5,293,082 | 5,293,082 | ||||||
| Accumulated other comprehensive losses | (1,293 | ) | (1,293 | ) | ||||
| Accumulated losses | (366,502 | ) | (230,636 | ) | ||||
| TOTAL STOCKHOLDERS’ EQUITY | $ | 4,962,915 | $ | 5,098,781 | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 5,503,941 | $ | 5,128,531 | ||||
See accompanying notes to condensed consolidated financial statements.
| F-2 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSSES
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2018 and 2017
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
| Three Months Ended September 30, | ||||||||
| 2018 | 2017 | |||||||
| REVENUE | $ | 415,367 | $ | 490,126 | ||||
| COST OF REVENUE | (378,423 | ) | (444,238 | ) | ||||
| GROSS PROFIT | $ | 36,944 | $ | 45,888 | ||||
| REALISED GAIN ON FOREIGN EXCHANGE | 1,597 | - | ||||||
| UNREALISED LOSS ON FOREIGN EXCHANGE | (80,029 | ) | - | |||||
| OTHER INCOME | 24 | 5 | ||||||
| SELLING, GENERAL AND ADMINISTRATIVE AND OPERATING EXPENSES | (38,589 | ) | (93,350 | ) | ||||
| LOSS BEFORE INCOME TAX | $ | (80,053 | ) | $ | (47,457 | ) | ||
| SHARE OF RESULT OF INVESTEE COMPANY | (52,109 | ) | - | |||||
| (132,162 | ) | (47,457 | ) | |||||
| TAXATION | (3,704 | ) | (7,152 | ) | ||||
| NET LOSS | $ | (135,866 | ) | $ | (54,609 | ) | ||
| Other comprehensive income: | ||||||||
| - Foreign currency translation adjustment | - | - | ||||||
| TOTAL COMPREHENSIVE LOSS | $ | (135,866 | ) | $ | (54,609 | ) | ||
| Net loss per share- Basic and diluted | (0.00 | ) | (0.00 | ) | ||||
| Weighted average number of common shares outstanding - Basic and diluted | 376,275,500 | 371,350,000 | ||||||
See accompanying notes to condensed consolidated financial statements.
| F-3 |
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2018
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
| COMMON STOCK | ADDITIONAL | ACCUMULATED | ||||||||||||||||||||||
| Number of shares | Amount | PAID-IN CAPITAL | COMPREHENSIVE LOSS | ACCUMULATED LOSSES | TOTAL EQUITY | |||||||||||||||||||
| Balance as of June 30, 2018 (audited) | 376,275,600 | $ | 37,628 | $ | 5,293,082 | $ | (1,293 | ) | $ | (230,636 | ) | $ | 5,098,781 | |||||||||||
| Net loss | - | - | - | - | (135,866 | ) | (135,866 | ) | ||||||||||||||||
| Balance as of September 30, 2018 (unaudited) | 376,275,600 | $ | 37,628 | $ | 5,293,082 | $ | (1,293 | ) | $ | (366,502 | ) | $ | 4,962,915 | |||||||||||
See accompanying notes to condensed consolidated financial statements
| F-4 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2018 and 2017
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
| Three months ended September 30, | ||||||||
| 2018 | 2017 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | (135,866 | ) | $ | (54,609 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Share of result of investee company | 52,109 | - | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivables | (13,264 | ) | (490,466 | ) | ||||
| Prepayments and deposits | (107,250 | ) | - | |||||
| Accounts payables | 47,641 | 387,052 | ||||||
| Other payables and accrued liabilities | (12,000 | ) | (8,000 | ) | ||||
| Deposit received | 471,931 | - | ||||||
| Income tax provision | 3,704 | 7,152 | ||||||
| Amount due to director | - | 3,846 | ||||||
| Net cash provided by/(used in) operating activities | 307,005 | (155,025 | ) | |||||
| Net change in cash and cash equivalents | 307,005 | (155,025 | ) | |||||
| Cash and cash equivalents, beginning of period | 3,531,255 | 2,312,748 | ||||||
| CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 3,838,260 | $ | 2,157,723 | ||||
| SUPPLEMENTAL CASH FLOWS INFORMATION | ||||||||
| Income taxes paid | $ | - | $ | - | ||||
| Interest paid | $ | - | $ | - | ||||
See accompanying notes to condensed consolidated financial statements.
| F-5 |
AGAPE ATP CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2018
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(UNAUDITED)
1. DESCRIPTION OF BUSINESS AND ORGANIZATION
Agape ATP Corporation was incorporated on June 1, 2016 under the laws of the state of Nevada.
Agape ATP Corporation operates through its wholly owned subsidiary, Agape ATP Corporation, a Company organized in Labuan, Malaysia.
Agape ATP Corporation, incorporated in Labuan, Malaysia, is an investment holding company with 100% equity interest in Agape ATP International Holding Limited, a company incorporated in Hong Kong.
The Company and its subsidiaries are engaged in providing services in the Health and Wellness Industry. The principal activity of the Company and its subsidiaries is to supply high-quality health and wellness products, including supplement to assist in cell metabolism, detoxification, blood circulation, anti-aging and products designed to improve the overall health system in our body.
The Company, through its subsidiaries, mainly supplies high quality beauty products. Details of the Company’s subsidiaries and investee company:
| Subsidiary company name | Place and date of incorporation | Particulars of issued capital | Principal activities | Proportional of ownership interest and voting power held | ||||||||
| 1. | Agape ATP Corporation | Labuan, March 6, 2017 | 1 share of ordinary share of US$1 each | Investment holding | 100 | % | ||||||
| 2. | Agape ATP International Holding Limited | Hong Kong, June 1, 2017 | 1 share of ordinary share of HK$1 each | Health and wellness products and health solution advisory services | 100 | % | ||||||
| Investee company name | Place and date of incorporation | Particulars of issued capital | Principal activities | Proportional of ownership interest and voting power held | ||||||||
| 1. | Unreserved Sdn Bhd | Malaysia, August 25, 2008 | 500,000 shares of ordinary share of RM7 each | Magazines publication and advertising | 20 | % | ||||||
| (1) Based on the contractual arrangements between the Company and other investors, the Company has the power to direct the relevant activities of these entities unilaterally, and hence the Company has control over these entities. |
| F-6 |
AGAPE ATP CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2018
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(UNAUDITED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The consolidated financial statements for Agape ATP Corporation and its subsidiaries for the year ended September 30, 2018 and 2017 are prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and include the accounts of Agape ATP Corporation and its wholly owned subsidiaries, Agape ATP Corporation and Agape ATP International Holding Limited. Intercompany accounts and transactions have been eliminated in consolidation. The Company has adopted June 30 as its fiscal year end.
Basis of consolidation
The condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All inter-company accounts and transactions have been eliminated upon consolidation.
Use of estimates
Management uses estimates and assumptions in preparing these financial statements in accordance with US GAAP. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities in the balance sheets, and the reported revenue and expenses during the periods reported. Actual results may differ from these estimates.
Cash and cash equivalents
The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents.
Accounts receivable
Accounts receivable are recorded at the invoiced amount less an allowance for any uncollectible accounts and do not bear interest, which are due on demand. Management reviews the adequacy of the allowance for doubtful accounts on an ongoing basis, using historical collection trends and aging of receivables. Management also periodically evaluates individual customer’s financial condition, credit history, and the current economic conditions to make adjustments in the allowance when it is considered necessary. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.
| F-7 |
AGAPE ATP CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2018
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(UNAUDITED)
Investment in investee company
The Company evaluates investment in investee company as it holds an equity interest based on the amount of control it exercises over the operations of the investee, exposure to losses in excess of its investment, the ability to significantly influence the investee and whether the Company is the primary beneficiary of the investee.
Investment in marketable securities
Marketable securities included in marketable securities (current) and other investments (non-current) are stated at the lower of cost or market in the aggregate. Other marketable securities included in marketable securities (current) are stated at the lower of cost or market in the aggregate and investments other than marketable equity securities in other investments (non-current) are stated at cost less any significant decline in fair value assessed to be other than temporary. Realized gains and losses on the sale of securities are based on the average cost of all the units of a particular security held at the time of sale.
Deposit received
Deposit received refers to payment received in advance for products which have not yet been delivered. Deposits received is classified on the consolidated balance sheet as current liability.
Revenue recognition
In accordance with Accounting Standards Codification (“ASC”) Topic 605, “Revenue Recognition”, the Company recognizes revenue from sales of goods when the following four revenue criteria are met: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) selling price is fixed or determinable; and (4) collectability is reasonably assured.
Revenue from supplies of healthy food products is recognized when title and risk of loss are transferred and there are no continuing obligations to the customer. Title and the risks and rewards of ownership transfer to and accepted by the customer when the products are collected by the customer at the Company’s office. Revenue is recorded net of sales discounts, returns, allowances, and other adjustments that are based upon management’s best estimates and historical experience and are provided for in the same period as the related revenues are recorded. Based on limited operating history, management estimates that there were no sales return for the three months September 30, 2018.
Cost of revenue
Cost of revenue includes the purchase cost of manufactured goods for sale to customers. It excludes purchasing and receiving costs, inspection costs, warehousing costs, internal transfer costs and other costs of distribution network in cost of revenues.
Selling, general, administrative and operating expenses
Selling, general, administrative and operating expenses are primarily comprised of travelling and accommodation fees such as petrol, toll and parking.
Income taxes
Income taxes are determined in accordance with the provisions of ASC Topic 740, “Income Taxes” (“ASC Topic 740”). Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the periods in which those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts.
| F-8 |
AGAPE ATP CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2018
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(UNAUDITED)
Net income/(loss) per share
The Company calculates net income/(loss) per share in accordance with ASC Topic 260, “Earnings per Share.” Basic income/(loss) per share is computed by dividing the net income/(loss) by the weighted-average number of common shares outstanding during the period. Diluted income per share is computed similar to basic income/(loss) per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common stock equivalents had been issued and if the additional common shares were dilutive.
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.
Foreign currencies translation
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 Condensed Consolidated Statements of Operations and Comprehensive Income.
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$”). In addition, the Company’s subsidiaries in Hong Kong maintain its books and record in its local currency, Hong Kong Dollars (“HKD$”) and Malaysian Ringgit (“MYR”) is the functional currency as being the primary currency of the economic environment in which the entity operates.
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.
Translation of amounts from MYR into US$1 and HKD$ into US$1 have been made at the following exchange rates for the respective periods:
| As of and for the three months ended September 30 | ||||||||
| 2018 | 2017 | |||||||
| Period-end MYR : US$1 exchange rate | 4.14 | 4.22 | ||||||
| Period-average MYR : US$1 exchange rate | 4.09 | 4.26 | ||||||
| Period-end HKD$ : US$1 exchange rate | 7.83 | 7.81 | ||||||
| Period-average HKD$ : US$1 exchange rate | 7.85 | 7.81 | ||||||
| F-9 |
AGAPE ATP CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2018
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(UNAUDITED)
Fair value of financial instruments:
The carrying value of the Company’s financial instruments: cash and cash equivalents, account receivables, deposits and prepayment, amount due to a director, and accounts payable and approximate at their fair values because of the short-term nature of these financial instruments.
The Company also follows the guidance of the ASC Topic 820-10, “Fair Value Measurements and Disclosures” (“ASC 820-10”), with respect to financial assets and liabilities that are measured at fair value. ASC 820-10 establishes a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair value as follows:
Level 1: Observable inputs such as quoted prices in active markets;
Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
Recent accounting pronouncements
In May 2014, the FASB issued Accounting Standards Update No. 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”). ASU 2014-09 supersedes the revenue recognition requirements in “Revenue Recognition (Topic 605)”, and requires entities to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early adoption is not permitted. In August 2015, the FASB issued an Accounting Standards Update to defer by one year the effective dates of its new revenue recognition standard until annual reporting periods beginning after December 15, 2017 (2018 for calendar-year public entities) and interim periods therein. Management is currently assessing the impact of the adoption of ASU 2014-09 and has not determined the effect of the standard on our ongoing financial reporting.
In February 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842). Under the new guidance, lessees will be required recognize the following for all leases (with the exception of short-term leases) at the commencement date: 1) A lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and 2) A right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. The new lease guidance simplified the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and lease liabilities. Lessees will no longer be provided with a source of off-balance sheet financing. The amendments in this ASU are effective for fiscal years beginning after December 15, 2019, including interim periods within those years. The Company is evaluating this ASU and has not determined the effect of this standard on its ongoing financial reporting.
In January 2017, the FASB issued ASU No. 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business”, which clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. This amendment was effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The adoption of ASU No. 2017-01 did not have a material impact on the Company’s financial position, results of operations and liquidity.
In September 2017, the FASB has issued ASU No. 2017-13, Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842): Amendments to SEC Paragraphs Pursuant to the Staff Announcement at the July 20, 2017 EITF Meeting and Rescission of Prior SEC Staff Announcements and Observer Comments.” The amendments in ASU No. 2017-13 amends the early adoption date option for certain companies related to the adoption of ASU No. 2014-09 and ASU No. 2016-02. Both of the below entities may still adopt using the public company adoption guidance in the related ASUs, as amended. The effective date is the same as the effective date and transition requirements for the amendments for ASU 2014-09 and ASU 2016-02.
The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations.
| F-10 |
AGAPE ATP CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2018
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(UNAUDITED)
3. COMMON STOCK
As of September 30, 2018 and June 30, 2018, there are 376,275,500 shares with par value of $0.0001 each of common stock issued and outstanding. There was no common stock issued and outstanding from initial public offering in the period as of September 30, 2018.
There were no stock options, warrants or other potentially dilutive securities outstanding as of September 30, 2018.
| F-11 |
AGAPE ATP CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2018
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(UNAUDITED)
4. INVESTMENT IN INVESTEE COMPANY
The Company invested in Unreserved Sdn Bhd with the investment amount of $863,592 (MYR3,500,000), approximated 20% of equity interest of Unreserved Sdn Bhd and is accounted for under the equity method of accounting. The investment is stated at cost plus profit share in the investee company as at September 30, 2018. Unreserved Sdn Bhd is incorporated in Malaysia with 2,500,000 ordinary shares authorized, issued and outstanding. Mr Lim Hun Soon @ David Lim, Ms Aniza Helina Akmi Karim, and Mr How Kok Choong are the directors of Unreserved Sdn Bhd. Mr How Kok Choong is the common director of Unreserved Sdn Bhd and the Company.
| As of September 30, 2018 | As of | |||||||
| Cost of investment | $ | 862,490 | $ | 862,490 | ||||
| Less: share of result of investee company | (82,264 | ) | (30,155 | ) | ||||
| Investment in investee company | $ | 780,226 | $ | 832,335 | ||||
5. INVESTMENT IN MARKETABLE SECURITIES
At May 17, 2018, the Company had an investment in Greenpro Capital Corp. of $500,000. The Company purchased the shares of Greenpro Capital Corp. at a price of $6 per share.
| As of September 30, 2018 | As of June 30, 2018 | |||||||
| Cost of investment | $ | 500,000 | $ | 500,000 | ||||
| Investment in marketable securities | $ | 500,000 | $ | 500,000 | ||||
6. CASH AND CASH EQUIVALENTS
As at September 30, 2018, the Company recorded $3,838,260 of cash and cash equivalents which consists of $1,413,947 of cash on hand and $2,424,313 of time deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of six months or less as of the purchase date of such investments. The effective interest rate for the time deposits is 2.95% per annum.
7. ACCOUNT RECEIVABLES
Account receivables consisted of the following at September 30, 2018 and June 30, 2018:
| As of September 30, 2018 | As of June 30, 2018 | |||||||
| Account receivables | $ | 13,264 | $ | - | ||||
| Total account receivables | $ | 13,264 | $ | - | ||||
8. PREPAYMENTS AND DEPOSITS
Prepayments and deposits consisted of the following at September 30, 2018 and June 30, 2018:
| As of September 30, 2018 | As of June 30, 2018 | |||||||
| Prepaid expenses | $ | 7,217 | $ | 11,018 | ||||
| Deposits to supplier | 364,974 | 253,923 | ||||||
| Total prepaid expenses and deposits | $ | 372,191 | $ | 264,941 | ||||
| F-12 |
AGAPE ATP CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2018
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(UNAUDITED)
9. TRADE PAYABLE
Trade payable consisted of the following at September 30, 2018 and June 30, 2018:
| As of September 30, 2018 | As of June 30, 2018 | |||||||
| Trade payable | $ | 47,641 | $ | - | ||||
| Total trade payable | $ | 47,641 | $ | - | ||||
10. OTHER PAYABLES AND ACCRUED LIABILITIES
Other payables and accrued liabilities consisted of the following at September 30, 2018 and June 30, 2017:
| As of September 30, 2018 | As of June 30, 2018 | |||||||
| Accrued audit fees | $ | 7,000 | $ | 19,000 | ||||
| Accrued professional fees | 749 | 749 | ||||||
| Total payables and accrued liabilities | $ | 7,749 | $ | 19,749 | ||||
11. DEPOSIT RECEIVED
Deposit received consisted of the following at September 30, 2018 and June 30, 2017:
| As of September 30, 2018 | As of June 30, 2018 | |||||||
| Deposit received from customer | $ | 471,931 | $ | - | ||||
| Total deposit received | $ | 471,931 | $ | - | ||||
12. RELATED PARTY TRANSACTIONS
| Three Months Ended September 30, 2018 | Three Months Ended September 30, 2017 | |||||||
| Revenue: | ||||||||
| - Related Party A | $ | 415,367 | $ | 490,126 | ||||
| Amount due to related party: | ||||||||
| - Related Party A | $ | 745 | $ | - | ||||
| Company Secretary Fee: | ||||||||
| - Related Party B | $ | 802 | $ | - | ||||
The director of related party A is the CEO and the Director of the Company.
Related party B is a 4.7% shareholder of the Company.
13. AMOUNT DUE TO A DIRECTOR
As of September 30, 2018 and June 30, 2017, a director of the Company advanced $3,922 to the Company, which is unsecured, interest-free with no fixed repayment term, for working capital purpose. Imputed interest is considered insignificant.
| F-13 |
AGAPE ATP CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2018
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(UNAUDITED)
14. INCOME TAXES
For the three months ended September 30, 2018 and 2017, the local (United States) and foreign components of income/(loss) before income taxes were comprised of the following:
| Three Months Ended September 30 | ||||||||
| 2018 | 2017 | |||||||
| Tax jurisdictions from: | ||||||||
| - Local | $ | (21,497 | ) | $ | (90,745 | ) | ||
| - Foreign, representing | ||||||||
| Labuan, Malaysia | (81,004 | ) | (58 | ) | ||||
| Hong Kong | (29,661 | ) | 43,346 | |||||
| Loss before income tax | $ | (132,162 | ) | $ | (47,457 | ) | ||
The provision for income taxes consisted of the following:
| Three Months Ended September 30 | ||||||||
| 2018 | 2017 | |||||||
| Current: | ||||||||
| - Local | $ | - | $ | - | ||||
| - Foreign | 3,704 | 7,152 | ||||||
| Deferred: | ||||||||
| - Local | - | - | ||||||
| - Foreign | - | - | ||||||
| Income tax expense | $ | 3,704 | $ | 7,152 | ||||
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 subsidiary that operate in various countries: United States, Labuan and Hong Kong that are subject to taxes in the jurisdictions in which they operate, as follows:
United States of America
Agape ATP Corporation is registered in the State of Nevada and is subject to the tax laws of the United States of America. As of September 30, 2018, the operations in the United States of America incurred $383,615 of cumulative net operating losses which can be carried forward to offset future taxable income. The net operating loss carry forwards begin to expire in 2038, if unutilized. The tax valuation allowance for September 30, 2018 and June 30, 2018 are $76,559 and $76,045 respectively.
Labuan
Under the current laws of the Labuan, Agape ATP Corporation is governed under the Labuan Business Activity Act, 1990. The tax charge for such company is based on 3% of net audited profit or at a fixed rate of RM20,000.
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. The following table sets forth the significant components of the aggregate deferred tax assets of the Company as of September 30, 2018 and June 30, 2018:
As of September 30, 2018 | As of June 30, 2018 | |||||||
| (unaudited) | (audited) | |||||||
| Deferred tax assets: | ||||||||
| Net operating loss carry forwards | ||||||||
| - United States of America | $ | 76,559 | $ | 76,045 | ||||
| - Hong Kong | - | - | ||||||
| Less: valuation allowance | $ | (76,559 | ) | $ | (76,045 | ) | ||
| Deferred tax assets | $ | - | $ | - | ||||
| F-14 |
AGAPE ATP CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2018
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(UNAUDITED)
15. CONCENTRATIONS OF RISK
The Company is exposed to the following concentrations of risk:
(a) Major customers
For three months ended September 30, 2018 and 2017, the customers who accounted for 10% or more of the Company’s sales and its outstanding receivable balance at period-end are presented as follows:
| 2018 | 2017 | 2018 | 2017 | 2018 | 2017 | |||||||||||||||||||
| Revenues | Percentage
of revenues | Accounts
receivable, trade | ||||||||||||||||||||||
| Customer A | $ | 415,367 | $ | 490,126 | 100 | % | 100 | % | $ | 13,264 | $ | 490,466 | ||||||||||||
| $ | 415,367 | $ | 490,126 | 100 | % | 100 | % | $ | 13,264 | $ | 490,466 | |||||||||||||
(b) Major vendors
For three months ended September 30, 2018 and 2017, the vendors who accounted for 10% or more of the Company’s purchases and its outstanding payable balance at period-end are presented as follows:
| 2018 | 2017 | 2018 | 2017 | 2018 | 2017 | |||||||||||||||||||
| Purchases | Percentage
of purchases | Accounts
payable, trade | ||||||||||||||||||||||
| Vendor A | $ | 314,423 | $ | 444,238 | 83 | % | 100 | % | $ | 47,641 | $ | 387,052 | ||||||||||||
| Vendor B | $ | 64,000 | $ | - | 17 | % | - | % | $ | - | $ | - | ||||||||||||
| $ | 378,423 | $ | 444,238 | 100 | % | 100 | % | $ | 47,641 | $ | 387,052 | |||||||||||||
16. SUBSEQUENT EVENTS
The Company has evaluated subsequent events from the balance sheet date through November 13, 2018, the date the Company issued unaudited consolidated financial statements in accordance with ASC Topic 855, “Subsequent Events”, which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued. During this period, there was no subsequent event that required recognition or disclosure.
| F-15 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The information contained in this quarter report on Form 10-Q is intended to update the information contained in our Form 10-K, dated September 27, 2018, for the year ended June 30, 2018 and presumes that readers have access to, and will have read, the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other information contained in such Form 10-K. The following discussion and analysis also should be read together with our consolidated financial statements and the notes to the consolidated financial statements included elsewhere in this Form 10-Q.
The following discussion contains certain statements that may be deemed “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements appear in a number of places in this Report, including, without limitation, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” These statements are not guarantees of future performance and involve risks, uncertainties and requirements that are difficult to predict or are beyond our control. Forward-looking statements speak only as of the date of this quarterly report. You should not put undue reliance on any forward-looking statements. We strongly encourage investors to carefully read the factors described in our Form S-1 Amendment No.2, dated October 26, 2017, in the section entitled “Risk Factors” for a description of certain risks that could, among other things, cause actual results to differ from these forward-looking statements. We assume no responsibility to update the forward-looking statements contained in this transition report on Form 10-Q. The following should also be read in conjunction with the unaudited Condensed Consolidated Financial Statements and notes thereto that appear elsewhere in this report.
Company Overview
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 is a company that operates through its wholly owned subsidiary, Agape ATP Corporation, a company incorporated in Labuan, Malaysia. Our wholly owned subsidiary, Agape ATP Corporation owns 100% of Agape ATP International Holding Limited, the operating Hong Kong company.
Agape ATP Corporation is a company which plans to develop and provide health solution advisory services to our future clients. We will, at least initially, primarily focus our efforts on attracting customers in Malaysia. Our advisory services will center around the “ATP Zeta Health Program”, which is a health program designed to assist in the elimination of various diseases caused by polluted environments, unhealthy dietary intake and unhealthy lifestyles. The program aims to promote improved health and longevity in our clients through a combination of modern medicine, proper nutrition, and advice from skilled dieticians.
At its core, the ATP Zeta Super Health Program is focused upon biological energy, Adenosine Triphosphate (ATP), at the cellular level. The stimulation of ATP production at the cellular level can increase the metabolism and service to promote and maintain normal and healthy functioning of the body’s systems. Our program emphasizes nutrient absorption through the membrane ion channel to provide complete and balanced nutrients to improve cell health. Thus, ATP Zeta Super Health Program provides ionized and high zeta potential (high bioavailability) nutrients to enhance the absorption at the cellular level.
Results of Operation
For the three months ended September 30, 2018 and 2017
Revenues
For three months ended September 30, 2018 and 2017, the Company has generated revenue of $415,367 and $490,126 respectively. The revenue mainly derived from the sale of healthy food products.
Our gross profits for the three months ended September 30, 2018 were $36,944, which is less than $45,888 for three months ended September 30, 2017. We attribute the decrease in revenue and gross profit to decrease of market exposure and the introduction of other new products in 2018. We believe that in order to retain and maintain more customers in the future we must increase our marketing efforts and or develop new products.
Net Loss
Our net loss for three months ended September 30, 2018 were $135,866, while for three months ended September 30, 2017 were $54,609. We attribute the net loss due to unrealized loss in foreign exchange and the increasing cost of goods sold.
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Liquidity and Capital Resources
For the three months ended September 30, 2018, we had working capital surplus of $3,682,689 consisting of cash and cash equivalents of $3,838,260 as compared to working capital surplus of $3,766,446 and cash and cash equivalents of $3,531,255 as of June 30, 2018.
Cash Provided by/Used in Operating Activities
For the three months ended September 30, 2018, net cash provided by operating activities was $307,005. The operating cash flow performance primarily reflects the deposits received from customer of the Company.
Cash Provided by/Used in Financing Activities
For the three months ended September 30, 2018, there is no net cash provided by or used in financing activities.
Cash Provided by/Used in Investing Activities
For the three months ended September 30, 2018, there is no net cash provided by or used in investing activities.
Credit Facilities
We do not have any credit facilities or other access to bank credit.
Off-balance Sheet Arrangements
We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to our stockholders as of September 30, 2018.
Recent Accounting Pronouncements
The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
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ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.
ITEM 4 CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures:
We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of September 30, 2018. This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2018, our disclosure controls and procedures were not effective due to the presence of material weaknesses in internal control over financial reporting.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. Management has identified the following material weaknesses which have caused management to conclude that, as of September 30, 2018, our disclosure controls and procedures were not effective: (i) inadequate segregation of duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both US GAAP and SEC guidelines.
Changes in Internal Control over Financial Reporting:
There were no changes in our internal control over financial reporting during the quarter ended September 30, 2018, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
| 5 |
We know of no materials, active or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceedings or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any beneficial shareholder are an adverse party or has a material interest averse to us.
Item 1A. Risk Factors.
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None
Item 4. Mine Safety Disclosures
Not applicable.
None
| 6 |
| Exhibit No. | Description | |
| 31.1 | Rule 13(a)-14(a)/15(d)-14(a) Certification of principal executive officer* | |
| 32.1 | Section 1350 Certification of principal executive officer * | |
| 101.INS | XBRL Instance Document* | |
| 101.SCH | XBRL Schema Document* | |
| 101.CAL | XBRL Calculation Linkbase Document* | |
| 101.DEF | XBRL Definition Linkbase Document* | |
| 101.LAB | XBRL Label Linkbase Document* | |
| 101.PRE | XBRL Presentation Linkbase Document* |
* Filed herewith.
| 7 |
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| AGAPE ATP CORPORATION | ||
| (Name of Registrant) | ||
| Date: November 13, 2018 | ||
| By: | /s/ How Kok Choong | |
| Title: | Chief Executive Officer, President, Director, Secretary and Treasurer | |
| (Principal Executive Officer) | ||
| 8 |