10-Q 1 form10-q.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 December 31, 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 filer, 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 February 14, 2019
Common Stock, $.0001 par value  376,275,500

 

 

 

 
 

 

TABLE OF CONTENTS

 

    Page
PART I FINANCIAL INFORMATION  
ITEM 1. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS: F-1
  Condensed Consolidated Balance Sheets as of December 31, 2018 (unaudited) and June 30, 2018 (audited) F-2
  Condensed Consolidated Statements of Operations and Comprehensive Losses for the Three and Six Months Ended December 31, 2018 and 2017 (unaudited) F-3
  Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Six Months Ended December 31,2018 (unaudited) F-4
  Condensed Consolidated Statements of Cash Flows for the Six Months Ended December 31, 2018 and 2017 (unaudited) F-5
  Notes to the Condensed Consolidated Financial Statements F-6 - F-15
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 3
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 5
ITEM 4. CONTROLS AND PROCEDURES 5
PART II OTHER INFORMATION  
ITEM 1 LEGAL PROCEEDINGS 6
ITEM 2 UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 6
ITEM 3 DEFAULTS UPON SENIOR SECURITIES 6
ITEM 4 MINE SAFETY DISCLOSURES 6
ITEM 5 OTHER INFORMATION 6
ITEM 6 EXHIBITS 7
  SIGNATURES 8

 

2
 

 

PART I FINANCIAL INFORMATION

 

ITEM 1. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:

 

AGAPE ATP CORPORATION

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

  Page
Condensed Consolidated Financial Statements  
   
Condensed Consolidated Balance Sheets as of December 31, 2018 (unaudited) and June 30, 2018 (audited) F-2
Condensed Consolidated Statements of Operations and Comprehensive Losses for the Three and Six Months Ended December 31, 2018 and 2017 (unaudited) F-3
Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Six Months Ended December 31,2018 (unaudited) F-4
Condensed Consolidated Statements of Cash Flows for the Six Months Ended December 31, 2018 and 2017 (unaudited) F-5
Notes to the Condensed Consolidated Financial Statements F-6 - F-15

 

F-1
 

 

AGAPE ATP CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31, 2018 AND JUNE 30, 2018

(Currency expressed in United States Dollars (“US$”), except for number of shares)

(Unaudited)

 

   As of   As of 
   December 31, 2018   June 30, 2018 
   Unaudited   Audited 
ASSETS          
NON-CURRENT ASSETS          
Investment in investee company  $734,195   $832,335 
Investment in marketable securities   501,000    500,000 
Total Non-Current Assets  $1,235,195   $1,332,335 
           
CURRENT ASSETS          
Cash and cash equivalents  $3,452,917   $3,531,255 
Prepayments and deposits   510,069    264,941 
Total Current Assets  $3,962,986   $3,796,196 
           
TOTAL ASSETS  $5,198,181   $5,128,531 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY          
CURRENT LIABILITIES          
Other payables and accrued liabilities   7,884    19,749 
Deposit received   217,743    - 
Income tax provision   12,299    5,334 
Amount due to a director   3,921    3,922 
Amount due to a related party   -    745 
Total Current Liabilities  $241,847   $29,750 
           
TOTAL LIABILITIES  $241,847   $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 December 31, 2018 and June 30, 2018  $37,628   $37,628 
Additional paid in capital   5,293,082    5,293,082 
Accumulated other comprehensive losses   (1,294)   (1,293)
Accumulated losses   (373,082)   (230,636)
TOTAL STOCKHOLDERS’ EQUITY  $4,956,334   $5,098,781 
           
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY  $5,198,181   $5,128,531 

 

See accompanying notes to condensed consolidated financial statements.

 

F-2
 

 

AGAPE ATP CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSSES

FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2018 and 2017

(Currency expressed in United States Dollars (“US$”), except for number of shares)

(Unaudited)

 

   Three Months Ended
December 31,		   Six Months Ended
December 31,		 
   2018   2017   2018   2017 
REVENUE  $269,921   $-   $685,288   $489,499 
                     
COST OF REVENUE   (240,932)   -    (619,355)   (443,670)
                     
GROSS PROFIT  $28,989   $-   $65,933   $45,829 
                     
REALISED GAIN ON FOREIGN EXCHANGE   1,794    -    3,391    - 
                     
UNREALISED LOSS ON FOREIGN EXCHANGE   (1,455)   -    (81,484)   - 
                     
OTHER INCOME   37,863    441    37,887    445 
                     
SELLING, GENERAL AND ADMINISTRATIVE AND OPERATING EXPENSES   (24,479)   (124,419)   (63,068)   (217,766)
                     
PROFIT/(LOSS) BEFORE INCOME TAX  $42,712   $(123,978)  $(37,341)  $(171,492)
                     
SHARE OF RESULT OF INVESTEE COMPANY   (46,031)   -    (98,140)   - 
    (3,319)   (123,978)   (135,481)   (171,492)
                     
TAXATION   (3,261)   -    (6,965)   (7,186)
                     
NET LOSS  $(6,580)  $(123,978)  $(142,446)  $(178,678)
Other comprehensive income:                    
- Foreign currency translation adjustment   (1)   4,129    (1)   3,744 
                     
TOTAL COMPREHENSIVE LOSS  $(6,581)  $(119,849)  $(142,447)   (174,934)
                     
Net loss per share- Basic and diluted   (0.00)   (0.00)   (0.00)   (0.00)
                     
Weighted average number of common shares outstanding - Basic and diluted   376,275,500    371,476,826    376,275,500    371,413,413 

 

See accompanying notes to condensed consolidated financial statements.

 

F-3
 

 

AGAPE ATP CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE SIX MONTHS ENDED DECEMBER 31, 2018

(Currency expressed in United States Dollars (“US$”), except for number of shares)

(Unaudited)

 

   COMMON STOCK   ADDITIONAL   ACCUMULATED OTHER         
   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 
Foreign currency translation adjustment   -    -    -    (1)   -    (1)
Net loss   -    -    -    -   (142,446)   (142,446)
Balance as of December 31, 2018 (unaudited)   376,275,600   $37,628   $5,293,082   $(1,294)  $(373,082)  $4,956,334 

 

See accompanying notes to condensed consolidated financial statements

 

F-4
 

 

AGAPE ATP CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED DECMEBER 31, 2018 and 2017

(Currency expressed in United States Dollars (“US$”), except for number of shares)

(Unaudited)

 

   Six months ended
December 31,		 
   2018   2017 
CASH FLOWS FROM OPERATING ACTIVITIES:          
Net loss  $(142,447)  $(178,678)
Adjustments to reconcile net loss to net cash used in operating activities:          
Share of result of investee company   98,140    - 
Changes in operating assets and liabilities:          
Accounts receivables   -    (489,838)
Prepayments and deposits   (245,128)   

(360,506

)
Accounts payables   -    131,161 
Other payables and accrued liabilities   (11,865)   (6,000)
Deposit received   217,743    -
Income tax provision   6,965    7,187 
Amount due to related party   (745)   - 
Amount due to director   -    3,841 
           
Net cash used in operating activities   (77,337)   (892,833)
           
CASH FLOWS FROM FINANCING ACTIVITIES:          
Investment in financial assets   (1,000)   - 
Proceeds from issuance of stock   -    434,500 
           
Net cash (used in)/ provided by financing activities   (1,000)   434,500 
           
Effect of exchange rate changes on cash and cash equivalents   (1)   3,744 
           
Net change in cash and cash equivalents   (78,338)   (454,589)
Cash and cash equivalents, beginning of period   3,531,255    2,312,748 
CASH AND CASH EQUIVALENTS, END OF PERIOD  $3,452,917   $1,858,159 
           
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 SIX MONTHS ENDED DECEMBER 31, 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 SIX MONTHS ENDED DECEMBER 31, 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 six months ended December 31, 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 SIX MONTHS ENDED DECEMBER 31, 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 SIX MONTHS ENDED DECEMBER 31, 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
six months ended December 31		 
   2018   2017 
Period-end MYR : US$1 exchange rate   4.14    4.06 
Period-average MYR : US$1 exchange rate   4.13    4.21 
Period-end HKD$ : US$1 exchange rate   7.83    7.81 
Period-average HKD$ : US$1 exchange rate   7.84    7.81 

 

F-9
 

 

AGAPE ATP CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED DECEMBER 31, 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.

 

In February 2018, the FASB has issued ASU No. 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220), which allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. Consequently, the amendments eliminate the stranded tax effects resulting from the Tax Cuts and Jobs Act and will improve the usefulness of information in financial statement. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. The Company has analyzed the consequences of such adoption and has not determined the effect of this standard on its ongoing financial reporting.

 

In August 2018, the FASB has issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements of Fair Value Measurement. This amendment modifies the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement, based on the concepts in the Concepts Statement, including the consideration of costs and benefits, with the primary purpose to improve the effectiveness of disclosures in the notes to financial statements by facilitating clear communication of the information required by US GAAP. The amendments in this update are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019.

 

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 SIX MONTHS ENDED DECEMBER 31, 2018

(Currency expressed in United States Dollars (“US$”), except for number of shares)

(UNAUDITED)

 

3. COMMON STOCK

 

As of December 31, 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 December 31, 2018.

 

There were no stock options, warrants or other potentially dilutive securities outstanding as of December 31, 2018.

 

F-11
 

 

AGAPE ATP CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED DECEMBER 31, 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 December 31, 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
December 31, 2018		   As of
June 30, 2018		 
Cost of investment  $832,335   $862,490 
Less: share of result of investee company   (98,140)   (30,155)
Investment in investee company  $734,195   $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.

 

At October 16, 2018, the Company had an investment in Greenpro Capital Corp. of $1,000. The Company purchased the shares of Greenpro Capital Corp. at a price of $0.03 per share.

 

   As of
December 31, 2018		   As of
June 30, 2018		 
Cost of investment  $501,000   $500,000 
Investment in marketable securities  $501,000   $500,000 

 

6. CASH AND CASH EQUIVALENTS

 

As at December 31, 2018, the Company recorded $3,452,917 of cash and cash equivalents which consists of $990,323 of cash on hand and $2,462,594 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. PREPAYMENTS AND DEPOSITS

 

Prepayments and deposits consisted of the following at December 31, 2018 and June 30, 2018:

 

   As of
December 31, 2018		   As of
June 30, 2018		 
Prepaid expenses  $2,702   $11,018 
Deposits to supplier   507,367    253,923 
Total Prepayment and Deposits  $510,069   $264,941 

 

F-12
 

 

AGAPE ATP CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED DECEMBER 31, 2018

(Currency expressed in United States Dollars (“US$”), except for number of shares)

(UNAUDITED)

 

8. OTHER PAYABLES AND ACCRUED LIABILITIES

 

Other payables and accrued liabilities consisted of the following at December 31, 2018 and June 30, 2018:

 

   As of
December 31, 2018		   As of
June 30, 2018		 
Accrued audit fees  $7,000   $19,000 
Accrued professional fees   884    749 
Total payables and accrued liabilities  $7,884   $19,749 

 

9. DEPOSIT RECEIVED

 

Deposit received consisted of the following at December 31, 2018 and June 30, 2018:

 

   As of
December 31, 2018		   As of
June 30, 2018		 
Deposit received from customer  $217,743   $- 
Total deposit received  $217,743   $- 

 

10. RELATED PARTY TRANSACTIONS

 

   Six Months
Ended
December 31, 2018		   Six Months
Ended
December 31, 2017		 
Revenue:          
- Related Party A  $685,288   $489,499 
           
Professional Fee:          
- Related Party B  $4,500   $210,000 
           
Trademark Application Fee:          
- Related Party B  $-   $512 

 

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.

 

11. AMOUNT DUE TO A DIRECTOR

 

As of December 31, 2018 and June 30, 2018, a director of the Company advanced $3,921 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 SIX MONTHS ENDED DECEMBER 31, 2018

(Currency expressed in United States Dollars (“US$”), except for number of shares)

(UNAUDITED)

 

12. INCOME TAXES

 

For the six months ended December 31, 2018 and 2017, the local (United States) and foreign components of income/(loss) before income taxes were comprised of the following:

 

   Six Months Ended December 31 
   2018   2017 
         
Tax jurisdictions from:          
- Local  $(33,977)  $(214,918)
- Foreign, representing          
Labuan, Malaysia   (45,576)   (130)
Hong Kong   (55,928)   43,556 
           
Loss before income tax  $(135,481)  $(171,492)

 

The provision for income taxes consisted of the following:

 

   Six Months Ended December 31 
   2018   2017 
Current:          
- Local  $-   $- 
- Foreign   6,965    7,186 
           
Deferred:          
- Local   -    - 
- Foreign   -    - 
           
Income tax expense  $6,965   $7,186 

 

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 December 31, 2018, the operations in the United States of America incurred $395,095 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 December 31, 2018 and June 30, 2018 are $83,184 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.

 

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 December 31, 2018 and June 30, 2018:

 

   As of
December 31, 2018		   As of
June 30, 2018		 
   (unaudited)   (audited) 
Deferred tax assets:          
Net operating loss carry forwards          
- United States of America  $82,970   $76,045 
- Hong Kong   -    - 
Less: valuation allowance  $(82,970)  $(76,045)
Deferred tax assets  $-   $- 

 

F-14
 

 

AGAPE ATP CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED DECEMBER 31, 2018

(Currency expressed in United States Dollars (“US$”), except for number of shares)

(UNAUDITED)

 

13. CONCENTRATIONS OF RISK

 

The Company is exposed to the following concentrations of risk:

 

(a) Major customers

 

For three months ended December 31, 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:

 

   For three months ended December 31 
   2018   2017   2018   2017   2018   2017 
   Revenues   Percentage of
revenues		   Accounts receivable,
trade		 
                         
Customer A  $269,921   $       -    100%   -%  $          -   $489,499 
   $269,921   $-    100%   -%  $-   $489,499 

 

For six months ended December 31, 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:

 

   For six months ended December 31 
   2018   2017   2018   2017   2018   2017 
   Revenues   Percentage of
revenues		   Accounts receivable,
trade		 
                         
Customer A  $685,288   $489,499    100%   100%  $         -   $489,499 
   $685,288   $489,499    100%   100%  $-   $489,499 

 

(b) Major vendors

 

For three months ended December 31, 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:

 

   For three months ended December 31 
   2018   2017   2018   2017   2018   2017 
   Purchases   Percentage of
purchases		   Accounts payable,
trade		 
                         
Vendor A  $240,932   $          -    100%            -%  $-   $131,161 
   $240,932   $-    100%   -%  $-   $131,161 

 

For six months ended December 31, 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:

 

   For six months ended December 31 
   2018   2017   2018   2017   2018   2017 
   Purchases   Percentage of
purchases		   Accounts payable,
trade		 
                         
Vendor A  $555,192   $443,670    89%   100%  $         -   $131,161 
Vendor B   64,163    -    11%   -    -    - 
   $619,355   $443,670    100%   100%  $-   $131,161 

 

14. SUBSEQUENT EVENTS

 

The Company has evaluated subsequent events from the balance sheet date through February 14, 2019, 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 December 31, 2018 and 2017

 

Revenues

 

For three months ended December 31, 2018, the Company has generated revenue of $269,921. The revenue mainly derived from the sale of healthy food products. For three month ended December 31, 2017, the Company has generated no revenue.

 

Net Loss

 

Our net loss for three months ended December 31, 2018 were $6,580, while for three months ended December 31, 2017 were $123,978. We attribute the net loss in 2018 due to loss of investee company while in 2017 due to zero revenue.

 

For the six months ended December 31, 2018 and 2017

 

Revenues

 

For six months ended December 31, 2018 and 2017, the Company has generated revenue of $685,288 and $489,499 respectively. The revenue mainly derived from the sale of healthy food products.

 

Our gross profits for the six months ended December 31, 2018 were $65,933, which is more than $45,829 for six months ended December 31, 2017. We attribute the increase in revenue and gross profit to increase 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 six months ended December 31, 2018 were $142,446, while for six months ended December 31, 2017 were $178,678. We attribute the net loss decreased due to lower selling, administrative and general expenses and the increasing revenue which resulted in higher gross profit.

 

3
 

 

Liquidity and Capital Resources

 

As at December 31, 2018, we had working capital surplus of $3,721,139 consisting of cash and cash equivalents of $3,452,917 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 six months ended December 31, 2018, net cash used in operating activities was $77,337. The operating cash flow performance primarily reflects the deposits received from customer of the Company.

 

For the six months ended December 31, 2017, net cash used in operating activities was $892,833. The operating cash flow performance primarily reflects the prepayment and deposits as well as increasing account receivables of the Company.

 

Cash Provided by/Used in Financing Activities

 

For the six months ended December 31, 2018, net cash used in financing activities was $1,000 for the additional of investment in financial asset.

 

For the six months ended December 31, 2017, net cash provided by financing activities was $434,500 which is the proceed from the issuance of stock.

 

Cash Provided by/Used in Investing Activities

 

For the six months ended December 31, 2018 and 2017, 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 December 31, 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.

 

4
 

 

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 December 31, 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 December 31, 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 December 31, 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 December 31, 2018, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

5
 

 

PART II — OTHER INFORMATION

 

Item 1. Legal Proceedings

 

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.

 

Item 5. Other Information.

 

None

 

6
 

 

ITEM 6. Exhibits

 

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
 

 

SIGNATURES

 

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: February 15, 2019    
  By: /s/ How Kok Choong
  Title:

Chief Executive Officer,

President, Director, Secretary and Treasurer

    (Principal Executive Officer)

 

8