PROSPECTUS FILED PURSUANT TO RULE 424(b)(4)

 

REGISTRATION NO. 333-239951

 

 

 

 

AGAPE ATP CORPORATION

 

 

 

1,650,000 of Shares of Common Stock

 

This is a firm commitment initial public offering of 1,650,000 of our shares of common stock, $0.0001 par value per share. The initial public offering price of our shares is US$4.00 per share. The Underwriter is obligated to take and pay for all of the shares if any such shares are taken. We have granted the Underwriter a 15% over-allotment option, exercisable one or more times in whole or in part, to purchase up to 247,500 additional common stock from us at the public offering price, less the underwriting discounts, for 45 days from the closing of this offering to cover over-allotments, if any. If the Underwriter exercises the option in full, the total underwriting discounts payable will be $607,200, and the total proceeds to us, before expenses, will be $6,982,800.

 

We are a reporting company under Section 15(d) of the Securities Exchange Act of 1934, as amended. Our common stock started trading on the NASDAQ Capital Market (“NASDAQ”) under the symbol “ATPC” on October 11, 2023.

 

Investing in our common stock is highly speculative and involves a significant degree of risk. See “Risk Factors” beginning on page 8 of this prospectus for a discussion of information that should be considered before making a decision to purchase our common stock.

 

Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

 

  

Price to

Public

   Underwriting Discount(1)  

Proceeds to us

(before expenses)

 
             
Per Share of Common Stock  $4.00   $0.32   $3.68 
                
Total(2)  $7,590,000   $607,200   $6,982,800 

  

(1) See “Underwriting” for additional disclosure regarding underwriting compensation payable by us.
(2) Assuming over-allotment option granted to the Underwriter is exercised in full. We have granted the Underwriter a 15% over-allotment option, exercisable one or more times in whole or in part, to purchase up to 247,500 additional common stock from us at the public offering price, less the underwriting discounts, for 45 days from the closing of this offering to cover over-allotments, if any. See “Underwriting” for more information.

 

Delivery of the shares of common stock is expected to be made on or about October 13, 2023.

 

 

 

 

The date of this prospectus is October 10, 2023.

 

 
 

 

TABLE OF CONTENTS

 

  PAGE
PROSPECTUS SUMMARY 3
RISK FACTORS 8
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS 21
USE OF PROCEEDS 22
DIVIDEND POLICY 23
CAPITALIZATION 24
DILUTION 25
SELECTED CONSOLIDATED FINANCIAL DATA 26
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 27
BUSINESS 42
REGULATIONS 63
MANAGEMENT 70
EXECUTIVE AND DIRECTOR COMPENSATION 75
CERTAIN RELATIONSHIPS AND RELATED-PARTY TRANSACTIONS 78
PRINCIPAL STOCKHOLDERS 88
DESCRIPTION OF CAPITAL STOCK 89
SHARES ELIGIBLE FOR FUTURE SALE 90
TAXATION 91
UNDERWRITING 96
LEGAL MATTERS 101
EXPERTS 101
WHERE YOU CAN FIND MORE INFORMATION 101
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS F-1

 

 

You should rely only on the information contained in this prospectus or contained in any free writing prospectus prepared by or on behalf of us or to which we have referred you. We have not, and the Underwriter has not, authorized anyone to provide you with information that is different from that contained in such prospectuses. We are offering to sell shares of our common stock, and seeking offers to buy shares of our common stock, only in jurisdictions where such offers and sales are permitted. The information in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of our common stock. Our business, financial condition, results of operations and prospects may have changed since that date.

 

In this prospectus, we rely on and refer to information and statistics regarding our industry. We obtained this statistical, market and other industry data and forecasts from publicly available information. While we believe that the statistical data, market data and other industry data and forecasts are reliable, we have not independently verified the data.

 

For investors outside of the United States: neither we nor the Underwriter have done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. You are required to inform yourselves about and to observe any restrictions relating to this offering and the distribution of this prospectus.

 

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PROSPECTUS SUMMARY

 

This summary highlights information contained elsewhere in this prospectus. Because this is only a summary, it does not contain all of the information that may be important to you. You should read this entire prospectus and should consider, among other things, the matters set forth under “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, and our consolidated financial statements and related notes thereto appearing elsewhere in this prospectus before making your investment decision.

 

Overview

 

Agape ATP Corporation provides health solution advisory services to its clients. We primarily focus our efforts on attracting customers in Malaysia. We have an advisory services center called the “ATP Zeta Health Program”, which is a health program designed to effectively prevent diseases caused by polluted environments, unhealthy dietary intake and unhealthy lifestyles, and the promotion of health. The program aims to promote improved health and longevity through a combination of modern health supplements, proper nutrition and advice from skilled nutritionists and/or dieticians. For the six months ended June 30, 2023 and 2022, our revenue was approximately $0.7 million and $0.8 million, respectively, and our gross profit was approximately $0.4 million and $0.6 million, respectively. For the years ended December 31, 2022 and 2021, our revenue was approximately $1.9 million and $1.0 million, respectively, and our gross profit was approximately $1.2 million and $0.7 million, respectively.

 

In order to strengthen the Company’s supply chain, on May 8, 2020, the Company acquired approximately 99.99% of Agape Superior Living Sdn Bhd, a Malaysia company (“ASL”), with the goal of securing an established network marketing sales channel that has been established in Malaysia for the past 18 years. ASL has been offering the Company’s ATP Zeta Health Program as part of its product lineup. As such, the acquisition creates synergy in the Company’s operation by boosting the Company’s retail and marketing capabilities. The acquired subsidiary allows the Company to fulfill its mission of “helping people to create health and wealth” by providing a financially rewarding business opportunity to distributors and quality products to distributors and customers who seek a healthy lifestyle.

 

The Company deems creating public awareness on wellness and wellbeing lifestyle as essential to enhance the provision of its health solution advisory services; and therefore, on September 11, 2020, incorporated Wellness ATP International Holdings Sdn, Bhd. (“WATP”). Upon its establishment, WATP started collaborating with ASL to carry out various wellness programs.

 

On November 11, 2021, Agape ATP Corporation (Labuan) formed a joint-venture entity, DSY Wellness International Sdn. Bhd. (“DSY Wellness”) with Mr. Steve Yap following which Agape ATP Corporation (Labuan) owns 60% of the equity interest of DSY Wellness, to pursue the business of providing complementary health therapies. The establishment of DSY Wellness is a further expansion of our business into the health and wellness industry. Mr. Steve Yap owns 33 proprietary formulas (the “Proprietary Formulas”) for treating non-communicable disease and the Company is currently in discussion with Mr. Steve Yap to bring the Proprietary Formulas into the company for joint commercialization. Mr. Steve Yap also has existing clients receiving traditional complimentary medicine or “TCM” in Indonesia and China.

 

Our Products

 

We offer three series of programs which consist of different services and products: ATP Zeta Health Program, ÉNERGÉTIQUE and BEAUNIQUE.

 

Our ATP Zeta Health Program is a health program designed to promote health and general wellbeing designed to prevent health diseases caused by polluted environments, unhealthy dietary intake and unhealthy lifestyles. The program aims to promote improved health and longevity through a combination of modern health supplements, proper nutrition and advice from skilled dieticians as well as trained members and distributors.

 

Our ÉNERGÉTIQUE series aims to provide a total dermal solution for a healthy skin beginning from the cellular level. The series is comprised of the Energy Mask series, Hyaluronic Acid Serum and Mousse Facial Cleanser.

 

Our BEAUNIQUE product series focuses on the research of our diet’s impact on modifying gene expressions in order to address genetic variations and deliver a nutrigenomic solution for every individual.

 

The newly established subsidiary DSY Wellness is a further expansion of our business into the health and wellness industry and aims to pursue the business of providing traditional and complementary health therapies.

 

Our Strategies

 

We intend to pursue the following strategies in order to further develop and expand our business:

 

  Expand our product range in each of our ATP Zeta Health Program, ÉNERGÉTIQUE and BEAUNIQUE series;
     
  Further penetrate existing markets;
     
  Deepen our relationship with existing distributors and members;

 

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  Further investment into information technology such as the establishment of an e-commerce platform;
     
  Expand into other geographies outside of Malaysia; and
     
 

Pursue growth through acquisitions of other health and wellness service provides.

 

Our Competitive Strengths

 

We believe the following competitive strengths contribute to our success and differentiate us from our competitors:

 

  Well established reputation;
     
  Well-established product portfolio;
     
  Large, highly-motivated distributor base, supported by a successful training methodology;
     
  Scalable business model; and
     
  Founder-led and deeply experienced management team.

 

Our Challenges

 

Our ability to realize our mission and execute our strategies is subject to risks and uncertainties, including those relating to our ability to:

 

  Respond to a highly competitive market;
     
  Respond to concentration risk of heavy reliance on our largest supplier for the supply of products;
     
  Maintain quality product and value;
     
  Create brand influence;
     
  Expand our product offerings; and
     
  Expand our business in Malaysia and globally.

 

Please see “Risk Factors” and other information included in this prospectus for a discussion of these and other risks and uncertainties that we face.

 

Risk Factors

 

An investment in our common stock involves a high degree of risk. You should consider and read carefully all of the risks and uncertainties described in “Risk Factors” beginning on page 8, together with all of the other information contained in this prospectus, including our consolidated financial statements and related notes thereto appearing elsewhere in this prospectus, before investing in our common stock. These risks could materially affect our business, financial condition and results of operations and cause the trading price of our common stock to decline. You could lose part or all of your investment. You should bear in mind, in reviewing this prospectus, that past experience is no indication of future performance. You should read “Special Note Regarding Forward-Looking Statements” for a discussion of what types of statements are forward-looking statements, as well as the significance of such statements in the context of this prospectus.

 

Corporate Information

 

Our principal executive offices are located at 1705 – 1708, Level 17, Tower 2, Faber Towers, Jalan Desa Bahagia, Taman Desa, Kuala Lumpur, Malaysia (Post Code: 58100). Our telephone number at this address is +(60) 327325716. Our registered office in Nevada is located at 1645 Village Center Circle, Suite 170, Las Vegas, Nevada, United States, 89134.

 

Our website is http://agapeatpgroup.com/. The information contained on our website or any third-party websites is not a part of this prospectus.

 

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Corporate Structure

 

The following diagram illustrates our corporate structure as of the date of this prospectus and upon closing of this offering:

 

 

*As of the date of this prospectus.

** Upon closing of this offering and assuming no exercise of the Underwriter’s Warrants and full exercise of the over-allotment option.

 

Note:

 

1.

Represent 19,608,998 shares of common stock held by How Kok Choong as of the date of this prospectus and immediately after this offering, representing 25.99% and 25.35% of the common stock outstanding, respectively.

   
2.

Agape Superior Living Sdn. Bhd. was incorporated in Kuala Lumpur, Malaysia on August 8, 2003. The remaining 0.01% was collectively held by Lim Ah Yew@Lim Soo Yew, Lor Keat Yoon and Teng Woei Wei (wife of How Kok Choong).

   
3.

Agape S.E.A. Sdn. Bhd. was incorporated in Kuala Lumpur, Malaysia on March 4, 2004. 100% of the company’s business is transacted with Agape Superior Living Sdn. Bhd.. The company is considered a VIE of Agape Superior Living Sdn. Bhd. as the latter is the primary beneficiary since it has the following characteristics:

 

  a. The power to direct the activities of the VIE that most significantly impact the VIE’s economic performance; and
     
  b. The obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE.

 

However, Agape S.E.A.’s impact to our consolidated financial statements constitutes less than 1% of our total consolidated assets and Agape S.E.A. did not contribute any revenues for us as of December 31, 2020.

 

4. Agape ATP Corporation was incorporated in Labuan, Malaysia on March 6, 2017.
   
5. Agape ATP International Holding Limited was incorporated in Hong Kong on June 1, 2017.
   
6.

Wellness ATP International Holdings Sdn. Bhd. was incorporated in Kuala Lumpur, Malaysia on September 11, 2020.

   
7. DSY Wellness International Sdn. Bhd. was incorporated in Kuala Lumpur, Malaysia on November 11, 2021, as a joint-venture entity between Agape ATP Corporation (Labuan) and Mr. Steve Yap.

 

Conventions That Apply to This Prospectus

 

Unless otherwise indicated or the context otherwise requires, references in this prospectus to:

 

  “dollar,” “USD,” “US$,” or “$” are to U.S. dollars;
     
  “RM” and “Ringgit” are to the legal currency of Malaysia; and
     
  “we,” “us,” “Company,” “Agape”, “Agape ATP” and “our” are to Agape ATP Corporation, the Nevada holding company, and its subsidiaries, and its consolidated affiliated entities.
     
  “ASL” are to Agape Superior Living Sdn Bhd, a Malaysia company and a 99.99% owned subsidiary of Agape ATP;

 

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The Offering

 

Offering Price   The initial public offering price is US$4.00 per share.
     
Common stock offered by us  

1,650,000 of shares of common stock (or 1,897,500 shares of common stock if the Underwriter exercises its over-allotment option in full) on a firm commitment basis.

     
Common stock outstanding prior to this offering  

75,452,012 shares of common stock.

 

Common stock outstanding immediately after this offering  

77,102,012 shares of common stock, assuming the sale of all the shares offered in this prospectus, 77,349,512 shares of common stock if the underwriter exercise the over-allotment in full.

 

Gross proceeds to us, net of underwriting discount but before expenses:  

$6,982,800 assuming no exercise of the underwriter warrant and full exercise of the over-allotment option.

 

Over-allotment option:   We have granted to the Underwriter a 15% over-allotment option, exercisable within 45 days from the closing of this offering, to purchase up to an aggregate of 247,500 additional shares of common stock.
     
Underwriter Warrant  

We have agreed to grant to the Underwriter a warrant covering a number shares of common stock equal to 7% of the shares of common stock sold by the Underwriter in this public offering (the “Underwriter Warrant”). The Underwriter Warrant will be exercisable upon issuance and will expire on the fifth year anniversary of the date of the commencement of sales of this offering. The Underwriter Warrant and the underlying securities may not be sold, transferred, assigned, pledged, or hypothecated, or the subject of any hedging, short sale, derivative, put, or call transaction that would result in the effective economic disposition of the securities by any person for a period of 180 days beginning on the date of commencement of sales of this offering (in accordance with FINRA Rule 5110), except that they may be assigned, in whole or in part, to any officer or partner of the Underwriter, and to members of the syndicate or selling group and their respective officers or partners. The Underwriter Warrant will be exercisable at a price equal to 110% of the initial public offering price per share set forth on the cover price of this prospectus.

     
Use of proceeds  

We plan to use the net proceeds of this offering primarily for general corporate purposes. For more information on the use of proceeds, see “Use of Proceeds” on page 22.

     
Lock-up   We and each of, our officers, directors, our affiliate shareholders and 10% or more stockholders, have agreed with the underwriters, subject to certain exceptions, not to sell, transfer or otherwise dispose of any shares of common stock or similar securities for a period of 180 days after the date of this prospectus. See “Shares Eligible for Future Sale” and “Underwriting” for more information.
     
Trading Market  

Our common stock started trading on the Nasdaq Capital Market under the new symbol “ATPC” on October 11, 2023.

 

Concentration of Ownership  

Prior to this offering, our executive officers and directors beneficially own, in the aggregate, approximately 25.99% of the outstanding shares of our common stock, which will become approximately 25.35% upon completion of this offering assuming the sale of all the shares offered in this prospectus, no exercise of the Underwriter’s Warrants and full exercise of the over-allotment option.

 

Trading Symbol

 

  “ATPC”
Risk factors   You should read the “Risk Factors” section of this prospectus for a discussion of factors to consider carefully before deciding to invest in shares of our common stock.

 

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Summary Consolidated Financial Data

 

AGAPE ATP CORPORATION

 

The following tables summarize our historical consolidated financial data. We have derived the historical consolidated statements of operations data for the three and six months ended June 30, 2023 and 2022 from our unaudited condensed consolidated financial statements, and for the years ended December 31, 2022 and 2021 from our audited consolidated financial statements included elsewhere in this prospectus. The following summary consolidated financial data should be read in conjunction with the respective section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our condensed consolidated financial statements and related notes, and consolidated financial statements and related notes included elsewhere in this prospectus. Our historical results are not necessarily indicative of the results that may be expected in the future, and our results for any interim period are not necessarily indicative of the results to be expected for a full fiscal year.

 

Consolidated Statements of Operations Data for the:

 

   Three Months Ended June 30, 
   2023   2022 
Revenue  $303,935   $396,707 
Net loss  $(379,449)  $(404,344)
Net loss per share – (basic and diluted)  $(0.00)  $(0.01)

 

   Six Months Ended June 30, 
   2023   2022 
Revenue  $684,703   $805,667 
Net loss  $(813,524)  $(702,790)
Net loss per share – (basic and diluted)  $(0.01)  $(0.01)

 

   Years Ended December 31, 
   2022   2021 
Revenue  $1,856,564   $1,016,962 
Net loss  $(1,666,079)  $(2,524,680)
Net loss per share – (basic and diluted)  $(0.02)  $(0.01)

 

Consolidated Balance Sheet Data as of:

 

   As of 
  

June 30, 2023

   December 31, 2022   December 31, 2021 
             
Total assets  $1,905,283   $2,791,749   $4,724,535 
Total liabilities  $1,154,629   $1,229,295   $1,411,899 

 

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RISK FACTORS

 

Any investment in our securities involves a high degree of risk. You should carefully consider the risks described below, which we believe represent certain of the material risks to our business, together with the information contained elsewhere in this prospectus, before you make a decision to invest in our shares of common stock. Please note that the risks highlighted here are not the only ones that we may face. For example, additional risks presently unknown to us or that we currently consider immaterial or unlikely to occur could also impair our operations. If any of the following events occur or any additional risks presently unknown to us actually occur, our business, financial condition and operating results may be materially adversely affected. In that event, the trading price of our securities could decline and you could lose all or part of your investment.

 

Risks Related to Our Business and Industry

 

Our business and reputation may be affected by product liability claims, litigation, customer complaints, product tampering, food safety issues, food-borne illnesses, health threats, quality control concerns or adverse publicity relating to our products. Product liability insurance of our supplier may not cover our liability sufficiently or at all.

 

Like other consumer product manufacturers, the sale of our products involves an inherent risk of our products being found to be unfit for consumption or cause illness. Products may be rendered unfit for consumption due to raw materials or product contamination or degeneration, presence of microbials, illegal tampering of products by unauthorized third parties or other problems arising during the various stages of the procurement, production, transportation and storage processes. The occurrence of such problems may result in customer complaints, fines, penalties or adverse publicity causing serious damage to our reputation and brand, as well as product liability claims, other legal disputes and loss of revenues. Under certain circumstances, we may be required to recall our products. Even if a situation does not necessitate a product recall, we cannot assure you that product liability claims or other legal disputes will not be asserted against us as a result. Product liability insurance of our supplier may not cover our liability sufficiently or at all and will not cover liability that arises out of our default such as mishandling, poor storage condition and/or contamination of the products by us. As a result, a product liability or other judgment against us, or a product recall, could have a material adverse effect on our business, financial condition or results of operations.

 

Our business is susceptible to food-borne illnesses. We cannot assure you that we are able to effectively prevent all diseases or illnesses caused by our products or contamination of our products. Furthermore, our reliance on third-party product suppliers means that food-borne illness incidents could be caused by our suppliers outside of our control. New illnesses may develop in the future, or diseases with long incubation periods could arise that could give rise to claims or allegations on a retroactive basis. Reports in the media of instances of food-borne illnesses or health threats of our products or any of their major ingredients could adversely and significantly affect our sales, and have significant negative impact on our results of operations. This risk exists even if it were later determined that the illness or health threat in fact was not caused by our products.

 

In addition, adverse publicity about health and safety concerns, whether unfounded or not, may discourage consumers from buying our products. Even if a product liability claim is unsuccessful or is not fully pursued, the negative publicity surrounding any assertion that our products caused personal injury or illness could adversely affect our reputation and our corporate and brand image. If consumers were to lose confidence in our brand and reputation, we could suffer long-term or even permanent declines in our sales and results of operation. The amount of negative news, customers complaints and claims against us may also be very costly and may divert our management’s attention from our business operation.

 

We operate in a highly competitive market. If we do not compete effectively, our prospects, operating results, and financial condition could be materially and adversely affected.

 

The health and wellness market in Malaysia is a mature and a highly competitive market, with companies offering a variety of competitive products and services. We expect competition in our market to intensify in the future as new and existing competitors introduce new or enhanced products and services that are potentially more competitive than our products and services. The health and wellness market has a multitude of participants in the domestic market, including, but not limited, to retail health supplement providers, pharmaceutical companies, and network marketing company which supply health supplement products, such as Elken Group, USANA Group, NHF Group, Young Living, Jeunesse Global Holdings LLC, USA, Shaklee Corporation, VASAYO LLC, Amway Corporation, Sami Direct, Kyäni, Inc., Melaleuca, Inc.

 

We believe many of our competitors and potential competitors may have significant competitive advantages, including but not limited to, longer operating histories, ability to leverage their sales efforts and marketing expenditures across a broader portfolio of products and services, larger and broader customer bases, more established relationships with a larger number of suppliers, greater brand recognition, ability to leverage stores which they may operate, and greater financial, research and development, marketing, distribution, and other capabilities and resources than we do. Our competitors and potential competitors may also be able to develop products and services that are equal or more superior to ours, achieve greater market acceptance of their products and services, and increase sales by utilizing different distribution channels than we do. Some of our competitors may aggressively discount their products in order to gain market share, which could result in pricing pressures, reduced profit margins, lost market share, or a failure to grow market share for us. If we are not able to compete effectively against our current or potential competitors, our prospects, operating results, and financial condition could be materially and adversely affected.

 

We are exposed to concentration risk of heavy reliance on our three largest suppliers for the supply of our products, and any shortage of, or delay in, the supply may significantly impact on our business and results of operation.

 

For the six months ended June 30, 2023, we purchased $116,269, $65,338 and $33,507 from three of our major suppliers, one of them being a related party, which represented approximately 47.2%, 26.5% and 13.6%, respectively, of our total purchases for such period. For the year ended December 31, 2022, we purchased $198,376, $82,434 and $79,365 from three of our major suppliers, one of them being a related party, which represented approximately 53.3%, 22.1% and 21.3%, respectively, of our total purchases for such period. For the year ended December 31, 2021, we purchased $28,969 and $27,707 from two of our major suppliers, represented approximately 47.3% and 45.2%, respectively, of our total purchases. Our business, financial condition and operating results depend on the continuous supply of products from our major suppliers and our continuous supplier-customer relationships with them. Our heavy reliance on our major suppliers for the supply of our products will have a significant impact on our business and results of operation in the event of any shortage of, or delay in the supply.

 

We currently do not have long term supply agreements with our three largest suppliers for the six months ended June 30, 2023, and we typically make ad hoc purchases through submission of purchase order forms. There is no assurance that our major suppliers will continue to supply their products in the quantities and timeframes required by us to meet the needs of our customers or comply with their supply agreements with us. Our product supply may also be disrupted by potential labor disputes, strike action, natural disasters or other accidents, epidemic and pandemic affecting the supplier. If our major suppliers do not supply products to us in a timely manner or in sufficient quantities, our business, financial condition and operating results may be materially and adversely affected.

 

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Furthermore, in the event of any delay in delivery of the products to us, our cash flow or working capital may be materially and adversely affected as a result of the corresponding delay in delivery of our products to our customers, and hence the delay in our receipt of payment from our customers.

 

Our major suppliers may change their existing sales or marketing strategy in respect of the products supplied to us by changing their export strategy, reducing its sales or production volume or changing its selling prices. Consequently, there are no assurances that our major suppliers will not appoint other dealers or distributors which may compete with us in the market where we operate. Furthermore, any significant increase in the selling prices of the products which we source from our suppliers will increase our costs and may adversely affect our profit margin if we are not able to pass the increased costs on to our customers.

 

There are no assurances that there will be no deterioration in our relationships with our major suppliers which could affect our ability to secure sufficient supply of products for our business. In the event that our major suppliers change their sales or marketing strategy or otherwise appoint other dealers or distributors who may compete with us, our business, financial condition and operating results may be materially and adversely affected.

 

We could be adversely affected by a change in consumer preferences, perception and spending habits and failure to develop or enrich our product offering or gain market acceptance of our new products could have a negative effect on our business.

 

The market we operate is subject to changes in consumer preference, perception and spending habits. Our performance depends significantly on factors which may affect the level and pattern of consumer spending in the market we operate. Such factors include consumer preference, consumer confidence, consumer income and consumer perception of the safety and quality of our products. Media coverage regarding the safety or quality of, or diet or health issues relating to, our products or the raw materials, ingredients or processes involved in their manufacturing, may damage consumer confidence in our products. A general decline in the consumption of our products could occur as a result of change in consumer preference, perception and spending habits at any time.

 

Any failure to adapt our product offering to respond to such changes may result in a decrease in our sales if such changes are related to certain of our products. Any changes in consumer preference could result in lower sales of our products, put pressure on pricing or lead to increased levels of selling and promotional expenses. In any event a decrease in customer demand on our products may also result in lower sales and slow down the consumption of our inventory to a low inventory turnover level. Any of these changes could result in a material adverse effect on our business, financial conditions or results of operations.

 

The success of our products depends on a number of factors including our ability to accurately anticipate changes in market demand and consumer preferences, our ability to differentiate the quality of our products from those of our competitors, and the effectiveness of our marketing and advertising campaigns for our products. We may not be successful in identifying trends in consumer preferences and developing products that respond to such trends in a timely manner. We also may not be able to effectively promote our products by our marketing and advertising campaigns and gain market acceptance. If our products fail to gain market acceptance, are restricted by regulatory requirements, or have quality problems, we may not be able to fully recover our costs and expenses incurred in our operation, and our business prospects, financial condition or results of operations may be materially and adversely affected.

 

If we fail to maintain quality products and value, our sales are likely to be negatively affected.

 

Our success depends on the safety and quality of products that we obtain from our suppliers for our customers. Our future customers will identify our brand name with a certain level of quality and value. If we cannot meet this perceived value or level of quality, we may be negatively affected and our operating results may suffer. In addition, any failure on the part of our suppliers to maintain the quality of their products, will in turn substantially harm the results of our business operations, potentially forcing us to identify other suppliers or alter our business strategy significantly.

 

If we are unable to create brand influence, we may not be able to maintain current or attract new users and customers for our products.

 

Our operational and financial performance is highly dependent on the strength of our brand. We believe brand familiarity and preference will continue to have a significant role in winning customers as the decision to buy our products and services. In order to further expand our customer base, we may need to substantially increase our marketing expenditures to enhance brand awareness through various online and offline means. Moreover, negative coverage in the media of our company could threaten the perception of our brand, and we cannot assure you that we will be able to defuse negative press coverage about our company to the satisfaction of our investors, customers and suppliers. If we are unable to defuse negative press coverage about our company, our brand may suffer in the marketplace, our operational and financial performance may be negatively impacted and the price of our shares may decline.

 

Currently, we sell our products, with or without customization, under our brand name “ATP”, to domestic customers in Malaysia and to overseas customers. However, if our competitors initiate a lawsuit against us for infringing their trademark, we may be forced to adopt a new brand name for our products. As a result, we may incur additional marketing cost to raise awareness of such new brand name. We may also be ordered to pay a significant amount of damages, and our business, results of operations and financial condition could be materially and adversely affected.

 

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We may be unable to protect our intellectual property rights.

 

We rely on intellectual property laws in Malaysia and other jurisdictions to protect our trademarks. We are the registered owner of two trademarks. We have recently applied to register an additional three trademarks in Malaysia. We cannot assure you that counterfeiting or imitation of our products will not occur in the future or, if it does occur, that we will be able to address the problem in a timely and effective manner. Any occurrence of counterfeiting or imitation of our products or other infringement of our intellectual property rights could negatively affect our brand and our reputation, which in turn adversely affects the results of our operations.

 

Litigation to prosecute infringement of our intellectual property rights could be costly and lengthy and will divert our managerial and financial resources. We will have to bear costs of the intellectual property litigation and may be unable to recover such costs from our opposite parties. Protracted litigation could also result in our customers deferring or limiting their purchase or use of or products until such litigation is resolved. The occurrence of any of the foregoing will have a material adverse effect on our business, financial condition and results of operations.

 

We may incur losses resulting from product liability claims or product recalls or adverse publicity relating to our products.

 

We may incur losses resulting from product liability claims with respect to our products supplied by our supplier. We may face claims or liabilities which may arise if there exist any defects in quality of these products or any of these products are deemed or proven to be unsafe, defective or contaminated. In the event that the use or misuse of any product distributed by us results in personal injury or death, product liability and/or indemnity claims may be brought against us, in addition to our product recalls, and the relevant regulatory authorities in the market we operate may close down some of our related operations and take administrative actions against us. If we experience any business disruption and litigation, we may incur additional costs and have to divert our management’s attention and resources on such matters, which may adversely affect our business, financial condition and results of operations.

 

If we are unable to successfully develop and timely introduce new products or services or enhance existing products or services, our business, financial condition and results of operations may be materially and adversely affected.

 

We must continually source, develop and introduce new products and services as well as improve and enhance our existing products and services to maintain or increase our sales. The success of new or enhanced products or services may depend on a number of factors including, anticipating and effectively addressing user preferences and demand, the success of our sales and marketing efforts, effective forecasting and management of products and services demands, purchase commitments, and the quality of or defects in our products. The risk of not meeting our customers’ preferences and demands through our products and services may result in a shift in market shares, as customers instead choose products and services offered by our competitors. This may result in lower sales revenue, materially and adversely affecting our business, financial condition and results of operations.

 

We may not be able to manage the growth of our business and our expansion plans and operations or implement our business strategies on schedule or within our budget, or at all.

 

We are continually executing a number of growth initiatives, strategies and operating plans designed to enhance our business. In 2023, we plan to increase our revenue stream from health solution advisory services from our “ATP Zeta Health Program”, “ENERGETIQUE” and “BEAUNIQUE” series to align with our growth strategies. The company expects the initiative to materialize in the second half of 2023, despite competition from other health and wellness brands, and challenge in recruiting due to expanding employment market. Any expansion may increase the complexity of our operations and place a significant strain on our managerial, operational, financial and human resources. Our current and planned personnel, systems, procedures and controls may not be adequate to support our future operations. We cannot assure you that we will be able to effectively manage our growth or to implement all these systems, procedures and control measures successfully. Furthermore, the anticipated benefits from these growth initiatives, strategies and operating plans are based on assumptions that may prove to be inaccurate. Moreover, we may not be able to successfully complete these growth initiatives, strategies and operating plans and realize all of the benefits that we expect to achieve or it may be more costly to do so than we anticipate. If, for any reason, we are not able to manage our growth effectively, the benefits we realize are less than our estimates or the implementation of these growth initiatives, strategies and operating plans adversely affects our operations or costs more or takes longer to effectuate than we expect, and/or if our assumptions prove to be inaccurate, our business and prospects may be materially and adversely affected.

 

In addition, we may seek and pursue opportunities through joint ventures or strategic partnerships for expansion from time to time, and we may face similar risks and uncertainties as listed above. Failure to properly address these risks and uncertainties may materially and adversely affect our ability to carry out acquisitions and other expansion plans, integrate and consolidate newly acquired or newly formed businesses, and realize all or any of the anticipated benefits of such expansion, which may have a material adverse effect on our business, financial condition, results of operations and prospects.

 

We have a limited operating history in the Malaysia health and wellness industry, which makes it difficult to evaluate our future prospects.

 

We launched our ATP Zeta Super Health Program business in June 2016, the same month in which our Company was incorporated, followed by our ENERGETIQUE” and “BEAUNIQUE” series in July 2018 and March 2019, respectively, and thus, we have a limited operating history. We have limited experience in most aspects of our business operation, such as sourcing products for and offering advisory services on all the three programs. As our business develops and as we respond to competition, we may continue to introduce new product and services offerings and make adjustments to our existing product line and services and to our business operation in general. Any significant change to our business model that does not achieve expected results may have a material and adverse impact on our financial condition and results of operations. It is therefore difficult to effectively assess our future prospects.

 

The Malaysia health and wellness industry may not develop as expected. Prospective retail and corporate customers may not be familiar with the development of the market and may have difficulties distinguishing our products from those of our competitors. Convincing prospective customers or distributors of the value of our products or services is important to the success of our business. The risk of failing to convince potential customers or distributors to purchase products or services from us may result in the failure of our business plan. Many customers or distributors may not be interested in purchasing products and services we sell because there is no certainty that our business will succeed.

 

You should consider our business and prospects in light of the risks and challenges we encounter or may encounter given the rapidly evolving market in which we operate and our limited operating history. These risks and challenges include our ability to, among other things:

 

  manage our future growth;
     
  increase the utilization of our products by existing and new customers;
     
  maintain and enhance our relationships with customers and distributors;
     
  improve our operational efficiency;
     
  attract, retain and motivate talented employees;
     
  cope with economic fluctuations;
     
  navigate the evolving regulatory environment; and
     
  defend ourselves against legal and regulatory actions.

 

 

Our historical growth rates may not be indicative of our future growth. If we are unable to manage the growth and increased complexity of our business, fail to control our costs and expenses, or fail to execute our strategies effectively, our business and business prospects may be materially and adversely affected.

 

Our historical growth rates may not be indicative of our future growth, and we may not be able to generate similar growth rates in future periods. Our revenue growth may slow, or our total revenues may decline for a number of possible reasons, including change in consumers’ preferences, changes in regulations and government policies, increasing competition, emergence of alternative business models, and general economic conditions.

 

10
 

 

Our total revenues decreased by approximately 15.0% from approximately 0.8 million for the six months ended June 30, 2022 to approximately 0.7 million for the six months ended June 30, 2023. Our total revenues increased by approximately 82.6% from approximately 1.0 million for the year ended December 31, 2021 to approximately 1.9 million for the year ended December 31, 2022. Our gross profits decreased by approximately 28.0% from approximately $0.6 million for the six months ended June 30, 2022 to approximately $0.4 million for the six months ended June 30, 2023.

 

If our growth rate declines, investors’ perceptions of our business and business prospects may be materially and adversely affected and the market price of our shares could decline.

 

Our lack of insurance could expose us to significant costs and business disruption.

 

The health and wellness industry in Malaysia is a mature market. We currently do not have any product liability or disruption insurance to cover our operations in Malaysia or overseas, which, based on public information available to us relating to Malaysia-based health and wellness companies, is consistent with customary industry practice in Malaysia. We have determined that the costs of insuring for these risks and the difficulties associated with acquiring such insurance on commercially reasonable terms make it impractical for us to have such insurance. If we suffer any losses, damages or liabilities in the course of our business operations, we may not have adequate insurance coverage to provide sufficient funds to cover any such losses, damages or product claim liabilities. Therefore, there may be instances when we will sustain losses, damages and liabilities because of our lack of insurance coverage, which may in turn materially and adversely affect our financial condition and results of operations.

 

A decline in general economic condition could lead to reduced consumer demand and could negatively impact our business operation and financial condition, which in turn could have a material adverse effect on our business, financial condition and results of operations.

 

Our operating and financial performance may be adversely affected by a variety of factors that influence the general economy. Consumer spending habits, including spending for health related products and services we sell, are affected by, among other things, prevailing economic conditions, levels of unemployment, salaries and wage rates, prevailing interest rates, income tax rates and policies, consumer confidence and consumer perception of economic conditions. In addition, consumer purchasing patterns may be influenced by consumers’ disposable income. In the event of an economic slowdown, consumer spending habits could be adversely affected and we could experience lower net sales than expected on a quarterly or annual basis which could have a material adverse effect on our business, financial condition and results of operations.

 

We operate in a heavily regulated industry.

 

Our business is principally regulated by various laws and regulations in the market we operate, such as in Malaysia the Food Act 1983 (ACT 281) and Regulations, Control of Drugs and Cosmetics Regulations 1984 mandate authorization from the Food Safety and Quality Division and National Pharmaceutical Regulatory Agency of the Ministry of Health for our Company’s products to be sold in the country. Various registrations, certificates and/or licenses for the conduct of our business are required under the above laws, which also contain provisions for requirements on the storage, labelling, advertising and importation of some of our products.

 

Based on our experience, some of the laws and regulations of the place where we operate our business are subject to amendments, uncertainty in interpretation and administrative actions from time to time. Therefore, we cannot assure you that, for the implementation of our business plans and the introduction of any new product, we will be able to obtain all the necessary registrations, certificates and/or licenses. Any failure to comply with the above laws and regulations may give rise to fines, administrative penalties and/or prosecution against us, which may adversely affect our reputation, financial condition or results of operation.

 

11
 

 

We may be adversely affected by the performance of third-party contractors.

 

We engaged third-party contractors to carry out logistics services. We endeavor to engage third-party companies with a strong reputation and track record, high performance reliability and adequate financial resources. However, any such third-party contractor may still fail to provide satisfactory logistics services at the level of quality or within the timeframe required by us or our customers. While we generally require our logistics contractors to fully reimburse us for any losses arising from delay in delivery or non-delivery, our results of operation and financial condition may be adversely affected if any of the losses are not borne by them. If the performance of any third-party contractor is not satisfactory, we may need to replace such contractor or take other remedial actions, which could adversely affect the cost structure and delivery schedule of our products and services and thus have a negative impact on our reputation, financial position and business operations. In addition, as we expand our business into overseas markets, there may be a shortage of third-party contractors that meet our quality standards and other selection criteria in such locations and, as a result, we may not be able to engage a sufficient number of high-quality third-party contractors in a timely manner, which may adversely affect our delivery schedules and delivery costs and hence our business, results of operations and financial conditions.

 

We may need additional capital, and financing may not be available on terms acceptable to us, or at all.

 

There is no guarantee that in the future we will generate enough profits to support our business. Although we believe that our anticipated cash flows from operating activities together with cash on hand will be sufficient to meet our anticipated working capital requirements and capital expenditures in the ordinary course of business for the next twelve months, we cannot assure you this will be the case. We may need additional cash resources in the future if we experience changes in business conditions or other developments. We may also need additional cash resources in the future if we find and wish to pursue opportunities for investment, acquisition, capital expenditure or similar actions. If we determine that our cash requirements exceed the amount of cash and cash equivalents we have on hand at the time, we may seek to issue equity or debt securities or obtain credit facilities. The issuance and sale of additional equity would result in further dilution to our stockholders. The incurrence of indebtedness would result in increased fixed obligations and could result in operating covenants that would restrict our operations. We cannot assure you that financing will be available in amounts or on terms acceptable to us, if at all.

 

Adverse developments in our existing areas of operation could adversely impact our results of business, results of operations and financial condition.

 

Our operations are focused on utilizing our sales efforts which are principally located in Malaysia. As a result, our results of operations, cash flows and financial condition depend upon the demand for our products in Malaysia. Due to the lack of broad diversification in industry type and geographic location, adverse developments in our current segment of the industry, or our existing areas of operation, could have a significantly greater impact on our business, results of operations and financial condition than if our operations were more diversified.

 

Our internal controls may be inadequate, which could cause our financial reporting to be unreliable and lead to misinformation being disseminated to the public.

 

Our management is responsible for establishing and maintaining adequate internal control over our financial reporting. As defined in Exchange Act Rule 13a-15(f), internal control over financial reporting is a process designed by, or under the supervision of, the principal executive and principal financial officer and effected by the board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: pertain to the maintenance of records in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and/or directors of the Company; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

 

12
 

 

In connection with the audit of our consolidated financial statements as of December 31, 2022 and the review of our unaudited condensed consolidated financial statements as of June 30, 2023, we identified three “material weaknesses”, and other control deficiencies including significant deficiencies in our 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. The material weaknesses identified related to the Company were: (i) insufficient full-time personnel with appropriate levels of accounting knowledge and experience to monitor the daily recording of transactions, address complex U.S. GAAP accounting issues and to prepare and review financial statements and related disclosures under U.S. GAAP; (ii) lack of a functional internal audit department or personnel that monitors the consistencies of the preventive internal control procedures and lack of adequate policies and procedures in internal audit function to ensure that the Company’s policies and procedures have been carried out as planned; (iii) lack of proper IT policies and procedures developed for system change management, user access management, backup management and service organization management.

 

The plans for the Company’s implementation of remediation of the material weaknesses are as follows:

 

  (a) With respect to Material Weakness i, the Company has employed a full-time Chief Financial Officer (“CFO”), Mr. Lee Kam Fan, with relevant U.S. GAAP and SEC reporting experience and qualifications since January 12, 2021.
     
  (b) With respect to Material Weakness ii, we intend to form an internal audit function and have plans to hire internal auditors to strengthen our overall governance. All internal auditors will be independent of our operations and will report directly to the audit committee. We intended to form the internal audit function within the next 12 months.
     
  (c) With respect to Material Weakness iii, we intend to hire several dedicated personnel for different roles such as AP, OS and DB. This procedure would improve the segregation of duties in AP, OS and DB. Any changes to the system will require approval by a higher level of IT management. We expect to adopt the above measures within the next 12 months.

 

As a public company, we will become subject to the Sarbanes-Oxley Act of 2002. Section 404 of the Sarbanes-Oxley Act, or SOX 404, will require that we include a report from management on the effectiveness of our internal control over financial reporting in our annual report on Form 10-K and in our quarterly report on Form 10-Q if we are qualified as an accelerated filer. Our management may conclude that our internal control over financial reporting is not effective. Moreover, even if our management concludes that our internal control over financial reporting is effective, our independent registered public accounting firm, after conducting its own independent testing, may issue a report that is qualified if it is not satisfied with our internal controls or the level at which our controls are documented, designed, operated or reviewed, or if it interprets the relevant requirements differently from us. In addition, after we become a public company, our reporting obligations may place a significant strain on our management, operational and financial resources and systems for the foreseeable future. We may be unable to timely complete our evaluation testing and any required remediation.

 

During the course of documenting and testing our internal control procedures, in order to satisfy the requirements of SOX 404, we may identify other weaknesses and deficiencies in our internal control over financial reporting. In addition, if we fail to maintain the adequacy of our internal control over financial reporting, as these standards are modified, supplemented or amended from time to time, we may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with SOX 404. If we fail to achieve and maintain an effective internal control environment, we could suffer material misstatements in our financial statements and fail to meet our reporting obligations, which would likely cause investors to lose confidence in our reported financial information. This could in turn limit our access to capital markets, harm our results of operations, and lead to a decline in the trading price of our shares. Additionally, ineffective internal control over financial reporting could expose us to increased risk of fraud or misuse of corporate assets and subject us to potential delisting from the stock exchange on which we list, regulatory investigations and civil or criminal sanctions. We may also be required to restate our financial statements from prior periods.

 

13
 

 

Legal disputes or proceedings could expose us to liability, divert our management’s attention and negatively impact our reputation.

 

We may at times be involved in potential legal disputes or proceedings during the ordinary course of business operations relating to product or other types of liability, employees’ claims, labor disputes or contract disputes that could have a material and adverse effect on our reputation, operation and financial condition. If we become involved in material or protracted legal proceedings or other legal disputes in the future, the outcome of such proceedings could be uncertain and could result in settlements or outcomes which materially and adversely affect our financial condition. In addition, any litigation or legal proceedings could incur substantial legal expenses as well as significant time and attention of our management, diverting their attention from our business and operations.

 

Our failure to comply with anti-corruption laws and regulations, or effectively manage our employees, customers and business partners, could severely damage our reputation, and materially and adversely affect our business, financial condition, results of operations and prospects.

 

We are subject to risks in relation to actions taken by us, our employees, third-party customers or third-party suppliers that constitute violations of the anti-corruption laws and regulations. While we adopt strict internal procedures and work closely with relevant government agencies to ensure compliance of our business operations with relevant laws and regulations, our efforts may not be sufficient to ensure that we comply with relevant laws and regulations at all times. If we, our employees, third-party customers or third-party suppliers violate these laws, rules or regulations, we could be subject to fines and/or other penalties. Actions by Malaysia regulatory authorities or the courts to provide an alternative interpretation of the laws and regulations or to adopt additional anti-bribery or anti-corruption related regulations could also require us to make changes to our operations. Our reputation, corporate image, and business operations may be materially and adversely affected if we fail to comply with these measures or become the target of any negative publicity as a result of actions taken by us, our employees, third-party customers or third-party suppliers.

 

An overall decline in the health of the economy and other factors impacting consumer spending, such as natural disasters, outbreak of viruses, illnesses, infectious diseases, contagions and the occurrence of unforeseen epidemics may affect consumer purchases, reduce demand for our products and materially harm our business, results of operations and financial condition.

 

Our business depends on consumer demand for our products and, consequently, is sensitive to a number of factors that influence consumer confidence and spending, including but not limited to, general current and future economic and political conditions, consumer disposable income, recession and fears of recession, unemployment, minimum wages, availability of consumer credit, consumer debt levels, interest rates, tax rates and policies, inflation, war and fears of war, inclement weather, natural disasters, terrorism, active shooter situations, outbreak of viruses, illnesses, infectious diseases, contagions and the occurrence of unforeseen epidemics (including the outbreak of the coronavirus and its potential impact on our financial results) and consumer perceptions of personal well-being and security. For example, in recent years, there have been outbreaks of epidemics in various countries, including Malaysia. Recently, there was an outbreak of a novel strain of coronavirus (COVID-19), which has spread rapidly to many parts of the world, including Malaysia. In March 2020, the World Health Organization declared the COVID-19 a pandemic. The epidemic has resulted in intermittent quarantines, travel restrictions, and the temporary closure of stores and facilities in Malaysia.

 

Substantially all of our revenues are concentrated in Malaysia. Consequently, our results of operations were adversely affected as a result of the implementation of Movement Control Order (MCO) by the Malaysian government. The impact on the company as a result of the MCO includes:

 

  temporary closure of offices and travel restrictions prevented the company and our distributors from organizing offline events, which in turn stalled our marketing effort;
     
  temporary suspension of product supplies to our distributors and members due supply chain disruption as our suppliers and logistics providers faced disruption and delay in their operation; and

 

14
 

 

  the COVID-19 outbreak has resulted in a decline in overall economic environment, which in turn lower the spending power of the consumer and consequently, the revenue of the company.

 

Because of the uncertainty surrounding the COVID-19 outbreak, the financial impact related to the outbreak of and response to the coronavirus cannot be reasonably estimated at this time. There is no guarantee that our total revenues will grow or remain at the similar level year over year in the fiscal year 2023. We may have to record downward adjustments or impairment in the fair value of investments in the fiscal year 2023, if conditions have not been significantly improved and global stock markets have not recovered from recent declines.

 

In general, our business could be adversely affected by the effects of epidemics, pandemic or, including, but not limited to, the COVID-19, avian influenza, severe acute respiratory syndrome (SARS), the influenza A virus, Ebola virus, severe weather conditions such as flood or hazardous air pollution, or other outbreaks. In response to an epidemic, severe weather conditions, or other outbreaks, government and other organizations may adopt regulations and policies that could lead to severe disruption to our daily operations, including temporary closure of our offices and other facilities. These severe conditions may cause us and/or our partners to make internal adjustments, including but not limited to, temporarily closing down business, limiting business hours, and setting restrictions on travel and/or visits with clients and partners for a prolonged period of time. Various impact arising from a severe condition may cause business disruption, resulting in material, adverse impact to our financial condition and results of operations.

 

We face risks related to health epidemics, severe weather conditions and other outbreaks.

 

In recent years, there have been outbreaks of epidemics in various countries, including Malaysia. Recently, there was an outbreak of a novel strain of coronavirus (COVID-19), which has spread rapidly to many parts of the world, including Malaysia. In March 2020, the World Health Organization declared the COVID-19 a pandemic. The epidemic has resulted in quarantines, travel restrictions, and the temporary closure of stores and facilities in Malaysia for prolong periods.

 

Substantially all of our revenues are concentrated in Malaysia. Consequently, our results of operations will likely be adversely, and may be materially, affected, to the extent that the COVID-19 or any other epidemic harms the Malaysia and global economy in general. Any potential impact to our results will depend on, to a large extent, future developments and new information that may emerge regarding the duration and severity of the COVID-19 and the actions taken by government authorities and other entities to contain the COVID-19 or treat its impact, almost all of which are beyond our control. Potential impacts include, but are not limited to, the following:

 

  temporary closure of offices, travel restrictions, financial impact of our customers or suspension supplies may negatively affect, and could continue to negatively affect, the demand for our products;
     
  our customer may require additional time to pay us or fail to pay us at all, which could significantly increase the amount of accounts receivable and require us to record additional allowances for doubtful accounts. We may have to provide significant sales incentives to our sole customer during the outbreak, which may in turn materially adversely affect our financial condition and operating results;
     
  any disruption of our supply chain, logistics providers or customers could adversely impact our business and results of operations, including causing us or our suppliers to cease manufacturing for a period of time or materially delay delivery to our customers, which may also lead to loss of our customers; and
     
  the global stock markets have experienced, and may continue to experience, significant decline from the COVID-19 outbreak and the marketable securities that we have invested in could be materially adversely affected, which may lead to significant impairment in the fair values of our investments and in turn materially adversely affect our financial condition and operating results.

 

Fluctuations in foreign currency exchange rates could have a material adverse effect on our financial results.

 

We earn revenues, pay expenses, own assets and incur liabilities in countries using currencies other than the U.S. dollar, including Australian Dollars, Malaysian Ringgit and Hong Kong Dollars. Since our consolidated financial statements are presented in U.S. dollars, we must translate revenues, income and expenses, as well as assets and liabilities, into U.S. dollars at exchange rates in effect during or at the end of each reporting period. Therefore, increases or decreases in the value of the U.S. dollar against other currencies affect our net operating revenues, operating income and the value of balance sheet items denominated in foreign currencies. We cannot assure you that fluctuations in foreign currency exchange rates, particularly the strengthening or weakening of the U.S. dollar against major currencies would not materially affect our financial results.

 

Our business depends on the continued contributions made by Dr. How Kok Choong, as our founder, chief executive officer, chief operating officer, chairman of the board of Directors, Director and secretary, the loss of who may result in a severe impediment to our business.,

 

Our success is dependent upon the continued contributions made by our CEO and President, Dr. How Kok Choong. We rely on his expertise in business operations when we are developing our business. We have no “Key Man” insurance to cover the resulting losses in the event that any of our officer or directors should die or resign.

If Dr. How Kok Choong cannot serve the Company or is no longer willing to do so, the Company may not be able to find alternatives in a timely manner or at all. This would likely result in a severe damage to our business operations and would have an adverse material impact on our financial position and operating results. To continue as a viable operation, the Company may have to recruit and train replacement personnel at a higher cost. Additionally, if Dr. How Kok Choong joins our competitors or develops similar businesses that are in competition with our Company, our business may also be negatively impacted.

 

Our future success depends on our ability to attract and retain qualified long-term staff to fill management, technology, sales, marketing, and customer services positions. We have a great need for qualified talent, but we may not be successful in attracting, hiring, developing, and retaining the talent required for our success.

 

15
 

 

If we are not able to achieve our overall long-term growth objectives, the value of an investment in our Company could be negatively affected.

 

We have established and publicly announced certain long-term growth objectives. These objectives were based on, among other things, our evaluation of our growth prospects, which are generally driven by the sales potential of many product types, some of which are more profitable than others, and on an assessment of the potential price and product mix. There can be no assurance that we will realize the sales potential and the price and product mix necessary to achieve our long-term growth objectives.

 

We may incur losses resulting from product liability claims or product recalls or adverse publicity relating to our products.

 

We may incur losses resulting from product liability claims with respect to our products supplied by our suppliers. We may face claims or liabilities which may arise if there exist any defects in quality of these products or any of these products are deemed or proven to be unsafe, defective or contaminated. In the event that the use or misuse of any product distributed by us results in personal injury or death, product liability and/or indemnity claims may be brought against us, in addition to our product recalls, and the relevant regulatory authorities in the market we operate may close down some of our related operations and take administrative actions against us. If we experience any business disruption and litigation, we may incur additional costs and have to divert our management’s attention and resources on such matters, which may materially and adversely affect our business, financial condition and results of operations.

 

We had previously relied on the variable interest entity, Agape S.E.A. Sdn Bhd, in Malaysia for our business operations, which may not be as effective in providing operational control or enabling us to derive economic benefits as through ownership of controlling equity interests. While we no longer rely on Agape S.E.A. Sdn Bhd for our operations, we may do so in the future.

 

Agape S.E.A. Sdn Bhd’s equity at risk was insufficient to finance its business activities and it provided all of the Company’s purchases during the fiscal years ended December 31, 2020 and 2019. For the six months ended June 30, 2023, Agape S.E.A. Sdn Bhd did not provide any purchase to the Company. As a result, it is considered to be a variable interest entity (“VIE”) and the Company is the primary beneficiary since it has both of the following characteristics, (a) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance; and (b) the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. However, the Company no longer relied on the VIE after the fiscal year ended December 31, 2020. For the years ended December 31, 2022 and 2021, Agape S.E.A. Sdn Bhd did not provide any purchase to the Company. In addition, Agape S.E.A.’s impact to our consolidated financial statements constitutes less than 1% of our total consolidated assets. While the Company have not made any purchases from the VIE for the six month ended June 30, 2023, we may expect to continue to rely on ASL’s beneficiary ownership structure with Agape S.E.A. to operate our business. If we fail to continue our beneficiary ownership structure with Agape S.E.A. in the future, it could have a material adverse effect on our financial condition and results of operations.

 

16
 

 

Risks Related to Doing Business in Malaysia

 

Developments in the social, political, regulatory and economic environment in Malaysia may have a material adverse impact on us.

 

Our business, prospects, financial condition and results of operations may be adversely affected by social, political, regulatory and economic developments in Malaysia. Such political and economic uncertainties include, but are not limited to, the risks of war, terrorism, nationalism, nullification of contract, changes in interest rates, imposition of capital controls and methods of taxation.

 

Negative developments in Malaysia’s socio-political environment may adversely affect our business, financial condition, results of operations and prospects. The Malaysian economy registered modest growth of approximately 8.7% and 3.1% in 2022 and 2021 respectively, according to the Department of Statistics Malaysia. Although the overall Malaysian economic environment (in which we predominantly operate) appears to be positive, there can be no assurance that this will continue to prevail in the future. Economic growth is determined by countless factors, and it is extremely difficult to predict with any level of absolute certainty.

 

Furthermore, on March 11, 2020, the World Health Organization or WHO declared the corona virus or COVID-19 a pandemic. To help counter the transmission of COVID-19, from March 18, 2020 to April 26, 2022, the government of Malaysia initiated (i) Movement control orders (“MCO”). The MCO had resulted in quarantines, travel restrictions, and the temporary closure of stores and facilities in Malaysia. (ii) Conditional Movement Control Order (“CMCO”) where most business sectors were allowed to operate under strict rules and Standard Operating Procedures mandated by the government of Malaysia. (iii) Recovery Movement Control Order (“RMCO”). At the height of the pandemic, on January 12, 2021, the Malaysian government even declared a state of emergency nationwide to combat COVID-19. On April 27, 2022, the Malaysian government announced the country had entered into the endemic phase with further easing of restrictions. We are witnessing the adverse impact on the purchasing power of consumers in Malaysia, where our products are mainly sold as a direct result of the prolonged pandemic. As such, the extent to which the coronavirus may continue to adversely impact the Malaysian economy is uncertain. In the event that the Malaysia economy suffers, demand for our products may diminish, which would in turn result in our profitability. This could in turn result in a substantial need for restructuring of our business objectives and could result in a partial or entire loss of an investment in our Company.

 

We are subject to foreign exchange control policies in Malaysia.

 

The ability of our subsidiaries to pay dividends or make other payments to us may be restricted by the foreign exchange control policies in the countries where we operate. For example, there are foreign exchange policies in Malaysia which support the monitoring of capital flows into and out of the country in order to preserve its financial and economic stability. The foreign exchange policies are administered by the Foreign Exchange Administration, an arm of Bank Negara Malaysia (“BNM”), the central bank of Malaysia. The foreign exchange policies monitor and regulate both residents and non-residents. Under the current Foreign Exchange Administration rules issued by BNM, non-residents are free to repatriate any amount of funds from Malaysia in foreign currency other than the currency of Israel at any time (subject to limited exceptions), including capital, divestment proceeds, profits, dividends, rental, fees and interest arising from investment in Malaysia, subject to any withholding tax. In the event BNM or any other country where we operate introduces any restrictions in the future, we may be affected in our ability to repatriate dividends or other payments from our subsidiaries in Malaysia or in such other countries. Since we are a holding company and rely principally on dividends and other payments from our subsidiaries for our cash requirements, any restrictions on such dividends or other payments could materially and adversely affect our liquidity, financial condition and results of operations.

 

Economic, market and political developments in the countries where we operate could have a material and adverse effect on our business.

 

As with all organizations that seek to reduce business risks via geographical expansion, the economic, market and political conditions in other countries, particularly emerging market conditions in Southeast Asia, could have an influence on our business. Any widespread global financial instability or a significant loss of investor confidence in emerging market economies may materially and adversely affect our business, financial condition, results of operations, prospects or reputation.

 

Examples of such external factors or conditions that are outside our control include, but are not limited to the following:

 

  general economic, political and social conditions in Southeast Asian markets;

 

17
 

  

  consumer spending patterns in our key markets;
     
  currency and interest rate fluctuations;
     
  international events and circumstances such as wars, terrorist attacks, natural disasters and political instability; and
     
  changes in legal regimes and governmental regulations, such as licensing and approvals, taxation, duties and tariffs, in key markets and abroad.

 

For example, the global financial markets experienced significant disruptions in 2008 and the United States, Europe and other economies went into recession. The recovery from the lows of 2008 and 2009 was uneven and the global economy has continued to face new challenges. There is considerable uncertainty over the long-term effects of the expansionary monetary and fiscal policies that have been adopted by the central banks and financial authorities of some of the world’s leading economies, including the United States. For example, in 2013, the Federal Reserve Bank in the United States announced the tapering of its bond-buying program which led to a high degree of volatility in equity markets and substantial devaluations in the currencies of many emerging economies, including markets where we operate. Economic conditions in the countries where we operate might be sensitive to global economic conditions, as well as changes in domestic economic and political policies and the expected or perceived overall economic growth rate in emerging markets. We are witnessing the adverse impact on the purchasing power of consumers in Malaysia, where our products are mainly sold, as a direct result of these worldwide developments.

 

Management and Governance Risks

 

Risks Related to our Common Stock and this Offering

 

Volatility in our shares price may subject us to securities litigation.

 

The market for our shares may have, when compared to seasoned issuers, significant price volatility and we expect that our share price may continue to be more volatile than that of a seasoned issuer for the indefinite future. In the past, plaintiffs have often initiated securities class action litigation against a company following periods of volatility in the market price of its securities. We may, in the future, be the target of similar litigation. Securities litigation could result in substantial costs and liabilities and could divert management’s attention and resources.

 

We may never be able to pay dividends and are unlikely to do so.

 

To date, we have not paid, nor do we intend to pay in the foreseeable future, dividends on our common stock, even if we become profitable. Earnings, if any, are expected to be used to advance our activities and for working capital and general corporate purposes, rather than to make distributions to stockholders. Since we are not in a financial position to pay dividends on our common stock and future dividends are not presently being contemplated, investors are advised that return on investment in our common stock is restricted to an appreciation in the share price. The potential or likelihood of an increase in share price is uncertain.

 

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In addition, under Nevada law, we may only pay dividends subject to our ability to service our debts as they become due and provided that our assets will exceed our liabilities after the dividend. Our ability to pay dividends will therefore depend on our ability to generate sufficient profits. Furthermore, because of the various rules applicable to our operations in Malaysia and the regulations on foreign investments as well as the applicable tax law, we may be subject to further limitations on our ability to declare and pay dividends to our stockholders.

 

Stockholders may be diluted significantly through our efforts to obtain financing and satisfy obligations through the issuance of securities.

 

Wherever possible, our board of directors will attempt to use non-cash consideration to satisfy obligations. In many instances, we believe that the non-cash consideration will consist of shares of our common stock, warrants to purchase shares of our common stock or other securities. In the future, we may issue our authorized but previously unissued equity securities, resulting in the dilution of the ownership interests of our stockholders. We are authorized to issue an aggregate of 1,000,000,000 shares of common stock and 200,000,000 shares of preferred stock. We may issue additional shares of common stock or other securities that are convertible into or exercisable for our common stock in connection with hiring or retaining employees, future acquisitions, future sales of our securities for capital raising purposes, or for other business purposes. The future issuance of any such additional shares of our common stock may create downward pressure on the trading price of the common stock. We expect we will need to raise additional capital in the near future to meet our working capital needs, and there can be no assurance that we will not be required to issue additional shares, warrants or other convertible securities in the future in conjunction with these capital raising efforts, including at a price (or exercise prices) below the price you paid for your stock.

 

We are a “smaller reporting company,” and we cannot be certain if the reduced disclosure requirements applicable to smaller reporting companies will make our common stock less attractive to investors.

 

We are currently a “smaller reporting company”, meaning that we are not an investment company, an asset- backed issuer, or a majority-owned subsidiary of a parent company that is not a smaller reporting company and annual revenues of less than $50.0 million during the most recently completed fiscal year. In the event that we are still considered a “smaller reporting company,” at such time as we cease being an “emerging growth company,” we will be required to provide additional disclosure in our SEC filings. However, similar to an “emerging growth companies”, “smaller reporting companies” are able to provide simplified executive compensation disclosures in their filings; are exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that independent registered public accounting firms provide an attestation report on the effectiveness of internal control over financial reporting; and have certain other decreased disclosure obligations in their SEC filings, including, among other things, only being required to provide two years of audited financial statements in annual reports. Decreased disclosures in our SEC filings due to our status as a “smaller reporting company” may make it harder for investors to analyze our results of operations and financial prospects.

 

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The offering price of our shares of common stock offered in the Resale Prospectus Resale is fixed.

 

The selling stockholders of the Resale Prospectus will offer and sell their shares of common stock being offered under the Resale Prospectus at $4.00 per share for the duration of the offering or until the shares are listed on a national securities exchange at which time the shares offered under the Resale Prospectus may be sold at prevailing market prices or privately negotiated prices or in transactions that are not in the public market.

 

Our common stock have started trading on the NASDAQ Capital Market (“NASDAQ”) under the symbol “ATPC” on October 11, 2023.

 

We plan to list our common stock on NASDAQ. We may not be able to maintain our listing on NASDAQ which could limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions.

 

Our common stock have started trading on the NASDAQ Capital Market (“NASDAQ”) under the symbol “ATPC” on October 11, 2023. Even if our common stock is approved to be listed on NASDAQ, we cannot assure you that our common stock will continue to be listed on NASDAQ in the future. In order to continue listing our securities on NASDAQ, we must maintain certain financial, distribution and share price levels. Moreover, we must comply with certain listing standards regarding the independence of our board of directors and members of our audit committee. We intend to fully comply with these requirements, but we may not continue to be able to meet these requirements in the future.

 

If NASDAQ delists our securities from trading on its exchange and we are not able to list our securities on another national securities exchange, we expect our securities could be quoted on an over-the-counter market. If this were to occur, we could face significant material adverse consequences, including:

 

  a limited availability of market quotations for our securities;
     
  reduced liquidity for our securities;
     
  a determination that our common stock is a “penny stock” which will require brokers trading in our common stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities;
     
  a limited amount of news and analyst coverage; and
     
  a decreased ability to issue additional securities or obtain additional financing in the future.

 

The National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which are referred to as “covered securities.” Because we expect that our common stock will be listed on NASDAQ, such securities will be covered securities. Although the states are preempted from regulating the sale of our securities, the federal statute does allow the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered securities in a particular case. Furthermore, if we were no longer listed on NASDAQ, our securities would not be covered securities and we would be subject to regulations in each state in which we offer our securities.

 

The price of our common stock may rapidly fluctuate or may decline regardless of our operating performance, resulting in substantial losses for investors.

 

The trading price of our common stock following this offering may be subject to instances of extreme stock price run-ups followed by rapid price declines and stock price volatility unrelated to both our actual and expected operating performance and financial condition or prospects, making it difficult for prospective investors to assess the rapidly changing value of our stock. Further, the trading price of our common stock following this offering is likely to be highly volatile and could be subject to wide fluctuations in response to various factors, some of which are beyond our control, including limited trading volume, actual or anticipated fluctuations in our results of operations; the financial projections we may provide to the public, any changes in these projections or our failure to meet these projections; failure of securities analysts to initiate or maintain coverage of our Company, changes in financial estimates or ratings by any securities analysts who follow our Company or our failure to meet these estimates or the expectations of investors; announcements by us or our competitors of significant innovations, acquisitions, strategic partnerships, joint ventures, operating results or capital commitments; changes in operating performance and stock market valuations of other companies in our industry; price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole; changes in our Board or management; sales of large blocks of our common stock, including sales by our executive officers, directors and significant stockholders; lawsuits threatened or filed against us; changes in laws or regulations applicable to our business; the expiration of lock-up agreements; changes in our capital structure, such as future issuances of debt or equity securities; short sales, hedging and other derivative transactions involving our capital stock; general economic and geopolitical conditions, including the current or anticipated impact of military conflict and related sanctions imposed on Russia by the United States and other countries due to Russia’s recent invasion of Ukraine; and the other factors described in this section of the prospectus captioned “Risk Factors.”

 

Certain recent initial public offerings of companies with relatively small public floats have experienced extreme volatility that was seemingly unrelated to the underlying performance of the respective company. Our common stock may potentially experience rapid and substantial price volatility, which may make it difficult for prospective investors to assess the value of our common stock.

 

In addition to the risks addressed above under “the price of our common stock may rapidly fluctuate or may decline regardless of our operating performance, resulting in substantial losses for investors,” our common stock may be subject to rapid and substantial price volatility. We may experience extreme stock price volatility unrelated to our actual or expected operating performance, financial condition or prospects, making it difficult for prospective investors to assess the rapidly changing value of our common stock. Recently, there have been instances of extreme stock price run-ups followed by rapid price declines and strong stock price volatility with a number of recent initial public offerings, especially among companies with relatively smaller public floats. As a relatively small-capitalization company, we may experience greater stock price volatility, extreme price run-ups, lower trading volume and less liquidity than large-capitalization companies. In particular, our common stock may be subject to rapid and substantial price volatility, low volumes of trades and large spreads in bid and ask prices. Such volatility, including any stock-run up, may be unrelated to our actual or expected operating performance, financial condition or prospects, making it difficult for prospective investors to assess the rapidly changing value of our common stock.

 

In addition, if the trading volumes of our common stock are low, persons buying or selling in relatively small quantities may easily influence prices of our common stock. This low volume of trades could also cause the price of our common stock to fluctuate greatly, with large percentage changes in price occurring in any trading day session. Holders of our common stock may also not be able to readily liquidate their investment or may be forced to sell at depressed prices due to low volume trading. Broad market fluctuations and general economic and political conditions may also adversely affect the market price of our common stock. As a result of this volatility, investors may experience losses on their investment in our common stock. A decline in the market price of our common stock also could adversely affect our ability to issue additional common stock or other securities and our ability to obtain additional financing in the future. No assurance can be given that an active market in our common stock will develop or be sustained. If an active market does not develop, holders of our common stock may be unable to readily sell the shares they hold or may not be able to sell their shares at all.

 

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This prospectus contains forward-looking statements, including, without limitation, in the sections captioned “Risk Factors”, “Management’s Discussion and Analysis of Financial Condition and Plan of Operations”, and “Business”. Known and unknown risks, uncertainties and other factors, including those listed under “Risk Factors,” may cause our actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements.

 

You can identify some of these forward-looking statements by words or phrases such as “may,” “will,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “is/are likely to,” “potential,” “continue” or other similar expressions. We have based these forward-looking statements largely on our current expectations and projections about future events that we believe may affect our financial condition, results of operations, business strategy and financial needs. These forward-looking statements include statements relating to:

 

  Our goals and strategies;
     
  Our future business development, financial conditions and results of operations;
     
  Our expectations regarding demand for and market acceptance of our products and services;
     
  Our ability to attract and retain management;
     
  Our ability to raise capital when needed and on acceptable terms and conditions;
     
  The intensity of competition;
     
  General economic conditions;
     
  Changes in regulations;
     
  Relevant government policies and regulations relating to our industry;
     
  Whether the market for healthcare services continues to grow, and, if it does, the pace at which it may grow;
     
  Our ability to compete against large competitors in a rapidly changing market; and
     
  Our ability to comply with the continued listing standards on the exchange or trading market on which our common stock is listed for trading; and
     
  The impact of COVID-19 on business environment and consumer preference.

 

These forward-looking statements involve various risks and uncertainties. Although we believe that our expectations expressed in these forward-looking statements are reasonable, our expectations may later be found to be incorrect. Our actual results could be materially different from our expectations. Important risks and factors that could cause our actual results to be materially different from our expectations are generally set forth in “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Business” and other sections in this prospectus. You should thoroughly read this prospectus and the documents that we refer to with the understanding that our actual future results may be materially different from and worse than what we expect. We qualify all of our forward-looking statements by these cautionary statements.

 

This prospectus contains certain data and information that we obtained from private publications. Statistical data in these publications also include projections based on a number of assumptions. Our industry may not grow at the rate projected by market data, or at all. Failure of this market to grow at the projected rate may have a material and adverse effect on our business and the market price of our common stock. In addition, the rapidly changing nature of the health and wellness industry results in significant uncertainties for any projections or estimates relating to the growth prospects or future condition of our market. Furthermore, if any one or more of the assumptions underlying the market data are later found to be incorrect, actual results may differ from the projections based on these assumptions. You should not place undue reliance on these forward-looking statements.

 

The forward-looking statements made in this prospectus relate only to events or information as of the date on which the statements are made in this prospectus. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. You should read this prospectus and the documents that we refer to in this prospectus and have filed as exhibits to the registration statement, of which this prospectus is a part, completely and with the understanding that our actual future results may be materially different from what we expect.

 

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USE OF PROCEEDS

 

We estimate that we will receive net proceeds from this offering of approximately $5.76 million, or approximately $6.66 million if the Underwriter exercises its over-allotment option in full, after deducting underwriting discounts, non-accountable expense allowance and the estimated offering expenses payable by us.

 

The primary purposes of this offering are to create a public market of our shares for the benefit of all stockholders, retain talented employees, and obtain additional capital. We plan to use the net proceeds of this offering as follows:

 

  approximately 15% for strengthening sales and marketing of our products, services and branding, including further development and promotion of our e-trading platform;
     
  approximately 40% for research and development (“R&D”) and technological development, including further research on enhancements of components in our current product and service offerings and the construction of a e-trading platform;
     
  approximately 20% for expanding operations into ASEAN and US markets, including expansion of our market share in Indonesia, Singapore and Thailand, collaborations with US companies in terms of product R&D and expansion of e-commerce operations to target US consumers;
     
 

approximately 20% for future vertical and horizontal integrations, including strategic collaborations, mergers & acquisitions of insurance and health care service providers. We will further invest into production resources allowing us to produce our own products, ensuring supply and quality while reducing costs. In relation to the mergers and acquisitions, it will be mainly for our development as a comprehensive wellness ecosystem company. We have identified targets companies matching the following criteria: (i) with profitability and customer base comprising customers from the health care industry; and (ii) with established knowledge base of empirical/holistic skills, knowledge and technologies which are applicable to transform our company into a wellness ecosystem company such as skin care, cosmetic bio lab production, wellness center or complementary medical therapies for chronic health problems, manufacturers of water filtration system, etc.; and

     
  the remainder for working capital and general corporate purposes, including legal, accounting and other professional fees associated with becoming a public company, general and administrative expenses associated with increased operations, and recruitment of talent associated with increase operations.

 

The amounts and timing of our actual expenditures will depend on numerous factors, including the factors described under “Risk Factors.” The foregoing represents our current intentions based upon our present plans and business conditions to use and allocate the net proceeds of this offering. Our management, however, will have significant flexibility and discretion to apply the net proceeds of this offering. If an unforeseen event occurs or business conditions change, we may use the proceeds of this offering differently than as described in this prospectus.

 

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DIVIDEND POLICY

 

We have never declared or paid any cash dividends on our common stock. We currently intend to retain all of our future earnings, if any, to finance the growth and development of our business. We do not intend to pay cash dividends to holders of our common stock in the foreseeable future.

 

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CAPITALIZATION

 

The following table describes our capitalization as of June 30, 2023:

 

  on an actual basis; and
     
  on an as adjusted basis to reflect our receipt of the net proceeds from this offering after deducting the underwriting discounts, non-accountable expense allowance and estimated offering expenses payable by us.

 

The as adjusted information below is illustrative only and our capitalization following the completion of this offering is subject to adjustment based on the public offering price of our common stock and other terms of this offering determined at pricing. In addition, except for the last column in the first table below, the tables below assume that the Underwriter over-allotment option has not been exercised. You should read this capitalization table together with our consolidated financial statements and the related notes appearing elsewhere in this prospectus and the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section and other financial information included elsewhere in this prospectus.

 

   Actual   Pro Forma Adjusted for IPO(1) (2)    Pro Forma Adjusted for IPO including Over- allotment(3) 
Equity:               
Preferred stock, $0.0001 par value; 200,000,000 shares authorized; no shares issued and outstanding, actual and as adjusted  $-   $-   $- 
Common stock, $0.0001 par value; 1,000,000,000 shares authorized; 75,452,012, 77,102,012 and 77,349,512 shares issued and outstanding – actual, pro forma adjusted for IPO and pro forma adjusted for IPO including over-allotment   7,545    7,710    7,735 
Additional paid in capital   6,470,716    11,707,717    12,608,592 
Accumulated deficit   (5,746,112)   (5,746,112)   (5,746,112)
Accumulated other comprehensive income   11,612    11,612    11,612 
Non-controlling interests   6,893    6,893    6,893 
Total stockholders’ equity  $750,654   $5,987,820   $6,888,720 

 

(1) Gives effect to the sale of common stock at a public offering price of $4.00 per share and to reflect the application of the proceeds after deducting our estimated offering expenses.

 

(2) Pro forma adjusted for IPO additional paid in capital reflects the net proceeds we expect to receive, after deducting the Underwriter discount of 8%, non-accountable expense allowance of 1% and other expenses (all the accountable expenses). We expect to receive net proceeds of $5,759,228 ($6,600,000 offering, less underwriting fee of $528,000, non-accountable expenses of $66,000 and other offering expenses of $768,834, including $522,062 which has already been paid by the Company). For an itemization of an estimation of the total offering expenses, see “Item 13. Other Expenses of issuance and Distribution” beginning on page II-1 of this prospectus.

 

(3) Pro forma adjusted for IPO additional paid in capital including the Underwriter’s over-allotment option reflects the net proceeds we expect to receive after the under exercise the over-allotment option in full and after deducting the underwriting discount of 8%, non-accountable expense allowance of 1% and other expenses (all the accountable expenses). We expect to receive net proceeds of $6,660,128 ($7,590,000 offering, less underwriting fee of $607,200, non-accountable expenses of $75,900 and other offering expenses of $768,834, including $522,062 which has already been paid by the Company). For an itemization of an estimation of the total offering expenses, see “Item 13. Other Expenses of issuance and Distribution” beginning on page II-1 of this prospectus.

 

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DILUTION

 

If you invest in our common stock in this offering, your ownership interest will be diluted immediately to the extent of the difference between the public offering price per share of our common stock and the as adjusted net tangible book value per share of our common stock immediately after this offering.

 

Dilution results from the fact that the per share offering price is substantially in excess of the book value per share of common stock attributable to the existing stockholders for our presently outstanding shares of common stock. Net tangible book value per share is determined by dividing our total tangible assets less our total liabilities by the number of shares of our common stock outstanding. Our historical net tangible book value as of June 30, 2023, was $(82,699) or $(0.00) per share.

 

Our post offering as adjusted net tangible book value, which gives effect to receipt of the net proceeds from the offering and issuance of additional shares in the offering but does not take into consideration any other changes in our net tangible book value after June 30, 2023, will be approximately $5,676,529 or approximately $0.07 per share. This would result in dilution to investors in this offering of approximately $3.93 per share or approximately 98.16% from the assumed offering price of $4.00 per share. Net tangible book value per share would increase to the benefit of present stockholders by $0.07 per share attributable to the purchase of the shares by investors in this offering.

 

The following table sets forth the estimated net tangible book value per share after the offering and the dilution to persons purchasing shares.

 

    Offering(1)     Full Over-
allotment
Post-offering(2)
 
Assumed offering price per common stock   $ 4.00     $ 4.00  
Net tangible book value per common stock as of June 30, 2023   $ (0.00 )   $ (0.00 )
Increase in net tangible book value per share after this offering   $ 0.07     $ 0.09  
Net tangible book value per common stock after the offering   $ 0.07     $ 0.09  
Dilution per common stock to new investors   $ 3.93     $ 3.91  
Dilution per common stock to new investors (%)     98.16 %     97.87 %

 

(1) Assumes gross proceeds from offering of 1,650,000 shares of common stock.
(2) Assumes gross proceeds from offering of 1,897,500 shares of common stock, if over-allotment option is exercised in full.

 

The following chart illustrates our pro forma proportionate ownership, upon completion of the offering, by present stockholders and investors in this offering, compared to the relative amounts paid by each. The charts reflect payment by present stockholders as of the date the consideration was received and by investors in this offering at the offering price without deduction of the estimated underwriting discount, non-accountable expense allowance and our estimated offering expenses. The charts further assume no changes in net tangible book value other than those resulting from the offering.

 

   Shares Purchased   Total Consideration  

Average

Price

 
   Number   Percentage   Amount   Percentage   Per Share 
New investors(1)   1,650,000    2.14%  $6,600,000    50.47%  $4.00 
Existing stockholders   75,452,012    97.86%  $6,478,261    49.53%  $0.09 
Total   77,102,012    100.00%  $13,078,261    100.00%  $0.17 

 

(1) Assuming the offering is fully subscribed.

 

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SELECTED CONSOLIDATED FINANCIAL DATA

 

AGAPE ATP CORPORATION

 

The following table presents selected consolidated financial data for the periods and at the dates indicated. The selected condensed consolidated statements of operations data for the three and six months ended June 30, 2023 and 2022, and the selected condensed consolidated balance sheet data as of June 30, 2023 and December 31, 2022 have been derived from our condensed consolidated financial statements, included elsewhere in this prospectus. The selected consolidated statements of operations data for the years ended December 31, 2022 and 2021, and the selected consolidated balance sheet data as of December 31, 2022 and 2021 have been derived from our consolidated financial statements, included elsewhere in this prospectus. Our historical results for any prior period are not necessarily indicative of results to be expected in any future period, and our results for any interim period are not necessarily indicative of the results expected for a full fiscal year.

 

You should read the following financial information together with the information under “Agape ATP Corporation Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes included elsewhere in this prospectus.

 

Consolidated Statements of Operations Data:

 

   For the
Three Months Ended June 30,
 
   2023   2022 
Revenue  $303,935   $396,707 
Cost of revenue   (107,931)   (109,383)
Gross profit   196,004    287,324 
Selling, general and administrative expenses   (555,537)   (593,507)
Loss from operations   (359,533)   (306,183)
Other expenses, net   (22,355)   (97,769)
Benefit of (Provision for) income taxes   2,439    (392)
Net loss   (379,449)   (404,344)
Net (loss) income attributable to non-controlling interests   (4,763)   10,556 
Net loss attributable to Agape ATP Corporation  $(374,686)  $(414,900)
Net loss  $(379,449)  $(404,344)
Other comprehensive income (loss)   269    (61,156)
Comprehensive loss  $(379,180)  $(465,500)
Less: Comprehensive loss attributable to non-controlling interests   (5,401)   (271)
Comprehensive loss attributable to Agape ATP Corporation  $(373,779)  $(465,229)
Loss per share – (basic and diluted)  $(0.00)  $(0.01)
Weighted average number of common shares outstanding (basic and diluted)   75,452,012    75,452,012 

 

    For the
Six Months Ended June 30,
 
    2023     2022  
Revenue   $ 684,703     $ 805,667  
Cost of revenue     (236,289 )     (182,814 )
Gross profit     448,414       622,853  
Selling, general and administrative expenses     (1,261,831 )     (1,201,268 )
Loss from operations     (813,417 )     (578,415 )
Other expenses, net     (6,762     (115,695 )
Benefit of (Provision for) income taxes     6,655       (8,680 )
Net loss     (813,524 )     (702,790 )
Net (loss) income attributable to non-controlling interests     (12,998 )     11,207  
Net loss attributable to Agape ATP Corporation   $ (800,526 )   $ (713,997 )
Net loss   $ (813,524 )   $ (702,790 )
Other comprehensive income (loss)     2,346       (73,179 )
Comprehensive loss   $ (811,178 )   $ (775,969 )
Less: Comprehensive loss attributable to non-controlling interests     (13,619 )     (270
Comprehensive loss attributable to Agape ATP Corporation   $ (797,559 )   $ (775,699 )
Loss per share – (basic and diluted)   $ (0.01 )   $ (0.01 )
Weighted average number of common shares outstanding (basic and diluted)     75,452,012       100,397,696  

 

   For the
Years Ended December 31,
 
   2022   2021 
Revenue  $1,856,564   $1,016,962 
Cost of revenue   (666,042)   (297,333)
Gross profit   1,190,522    719,629 
Selling, general and administrative expenses   (2,723,788)   (2,578,197)
Loss from operations   (1,533,266)   (1,858,568)
Other expenses, net   (136,868)   (529,045)
Benefit of (Provision) for income taxes   4,055    (137,067)
Net loss   (1,666,079)   (2,524,680)
Net (income) loss attributable to non-controlling interests   (20,820)   436 
Net loss attributable to Agape ATP Corporation  $(1,686,899)  $(2,524,244)
Net loss  $(1,666,079)  $(2,524,680)
Other comprehensive loss   (84,132)   (87,615)
Comprehensive loss  $(1,750,211)  $(2,612,295)
Less: Comprehensive income (loss) attributable to non-controlling interests   20,849    (433)
Comprehensive loss attributable to Agape ATP Corporation  $(1,771,060)  $(2,611,862)
Net loss per share – (basic and diluted)  $(0.02)  $(0.01)
Weighted average number of common shares outstanding (basic and diluted)   87,822,337    376,216,452 

 

Consolidated Balance Sheets Data:

 

    As of  
    June 30,
2023
    December 31,
2022
    December 31,
2021
 
                     
Current assets   $ 941,436     $ 2,028,534     $ 3,912,122  
Total assets   $ 1,905,283     $ 2,791,749     $ 4,724,535  
Current liabilities   $ 968,329     $ 1,229,295     $ 1,312,841  
Total liabilities   $ 1,154,629     $ 1,229,295     $ 1,411,899  
Total equity   $ 750,654     $ 1,562,454     $ 3,312,636  

 

26
 

 

AGAPE ATP CORPORATION

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND

RESULTS OF OPERATIONS

 

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with the section headed “Selected Consolidated Financial and Operating Data” and our consolidated financial statements and the related notes included elsewhere in this prospectus. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors” and elsewhere in this prospectus.

 

Company Overview

 

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

 

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

 

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

 

Agape ATP Corporation is an investment holding company that holds 100% of the equity interest in Agape ATP International Holding Limited, a company incorporated in Hong Kong.

 

On May 8, 2020, the Company entered into a Share Exchange Agreement with Dr. How Kok Choong, CEO and director of the Company to acquire 9,590,596 ordinary shares, no par value, equivalent to approximately 99.99% of the equity interest in ASL.

 

On September 11, 2020, the Company incorporated WATP, a wholly owned subsidiary under the laws of Malaysia, to pursue the business of promoting wellness and wellbeing lifestyle of the community by providing services that includes online editorials, programs, events and campaigns on how to achieve positive wellness and lifestyle. On September 15, 2020, WATP entered into a business collaboration agreement with ASL to carry out certain wellness programs.

 

On November 11, 2021, Agape ATP Corporation (Labuan) formed a joint-venture entity, DSY Wellness International Sdn. Bhd. (“DSY Wellness”) with Mr. Steve Yap. to pursue the business of providing complementary health therapies. Agape ATP Corporation (Labuan) owns 60% of the equity interests in DSY Wellness.

 

Agape ATP Corporation is a company that provides health and wellness products and health solution advisory services to our clients. The Company primarily focuses its efforts on attracting customers in Malaysia. Its advisory services center on the “ATP Zeta Health Program”, which is a health program designed to prevent diseases caused by polluted environments, unhealthy dietary intake and unhealthy lifestyles, and the promotion of health. The program aims to promote improved health and longevity through a combination of modern medicine, proper nutrition and advice from skilled nutritionists and/or dieticians.

 

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In order to strengthen the Company’s supply chain, on May 8, 2020, the Company successfully acquired approximately 99.99% of ASL, with the goal of securing an established network marketing sales channel that has been established in Malaysia for the past 18 years. ASL has been offering the Company’s ATP Zeta Health Program as part of its product lineup. As such, the acquisition creates synergy in the Company’s operation by boosting the Company’s retail and marketing capabilities. The acquired subsidiary allows the Company to fulfill its mission of “helping people to create health and wealth” by providing a financially rewarding business opportunity to distributors and quality products to distributors and customers who seek a healthy lifestyle.

 

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

 

The ATP Zeta Health Program is a health program designed to promote health and general wellbeing designed to prevent health diseases caused by polluted environments, unhealthy dietary intake and unhealthy lifestyles. The program aims to promote improved health and longevity through a combination of modern health supplements, proper nutrition and advice from skilled dieticians as well as trained members and distributors.

 

The ÉNERGÉTIQUE series aims to provide a total dermal solution for a healthy skin beginning from the cellular level. The series is comprised of the Energy Mask series, Hyaluronic Acid Serum and Mousse Facial Cleanser.

 

The BEAUNIQUE product series focuses on the research of our diet’s impact on modifying gene expressions in order to address genetic variations and deliver a nutrigenomic solution for every individual. 

 

The Company deems creating public awareness on wellness and wellbeing lifestyle as essential to enhance the provision of its health solution advisory services; and therefore incorporated WATP in September 2020. Upon its establishment, WATP started collaborating with ASL to carry out various wellness programs.

 

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

 

Results of Operation

 

For the three months ended June 30, 2023 and 2022

 

Revenue

 

We generated revenue of $303,935, which comprised revenue from the Company’s network marketing business of $90,662 (approximately 29.8%); and revenue from the Company’s operations in the provision of complementary health therapies of $213,273 (approximately 70.2%) for the three months ended June 30, 2023 as compared to $396,707, which comprised revenue from the Company’s network marketing business of $184,534 (approximately 46.5%); and revenue from the Company’s operations in the provision of complementary health therapies of $212,173 (approximately 53.5%) for the three months ended June 30, 2022. Revenue from the Company’s network marketing business decreased significantly by $93,872, or approximately 50.9%. Revenue from the Company’s operations in the provision of complementary health therapies increased marginally by $1,100, or approximately 0.5%. Total revenue decreased by $92,772, or approximately 23.4%. The decrease was predominately due to the anticipated poor performance from the Company’s network marketing business. The Company is in the process of introducing a new range of products for its networking marketing business. Distributors and members curtailed the purchases of the Company’s existing products, awaiting the Company’s new products range. The launch of the Company’s new products was delayed and is expected to take place in Q2 2024.

 

Cost of Revenue

 

Cost of revenue for the three months ended June 30, 2023 amounted to $107,931 as compared to $109,383 for the three months ended June 30, 2022, a marginal decrease of $1,452, or approximately 1.3%. Cost of revenue did not decrease in tandem with decrease in revenue for the period due to the varying gross profit margins associated with the provision of complementary health therapies.

 

Cost of revenue typically comprise of freight-in, cost of goods purchased, packing materials and services acquired.

 

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Gross Profit

 

Gross profit for the three months ended June 30, 2023 amounted to $196,004 and represented a gross margin of approximately 64.5% as compared to $287,324 for the three months ended June 30, 2022, equivalent to a gross margin of approximately 72.4%. The decrease in gross margin was predominantly due to lower gross margin associated with the provision of complementary health therapies as compared to the Company’s network marketing business.

 

Operating Expenses

 

Our operating expenses consist of selling expenses, commission expenses and G&A expenses (as defined below). Total operating expenses were $555,537 for the three months ended June 30, 2023, increased by $37,970 or approximately 6.4% from $593,507 for the three months ended June 30, 2022.

 

Selling expenses

 

Selling expenses for the three months ended June 30, 2023 amounted to $64,126 as compared to $79,587 for the three months ended June 30, 2022, a decrease of $15,461, or approximately 19.4%. The Company’s selling expenses are comprised of salaries and benefits expenses which represented approximately 70% to 85% of total selling expenses, credit card processing fees and promotional expenses.

 

Commission expenses

 

Commission expenses were $21,942 and $62,557 for the three months ended June 30, 2023 and 2022, respectively. The decrease in commission expenses was in line with the decrease in revenue.

 

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

 

G&A expenses for the three months ended June 30, 2023 amounted to $469,469, as compared to $451,363 for the three months ended June 30, 2022, an increase of $18,106, or approximately 4.0%. The Company’s G&A expenses are comprised of salaries and benefits expenses, rental expenses, professional expenses and depreciation expenses.

 

Other Expenses, Net

 

For the three months ended June 30, 2023, we recorded an amount of $22,355 as other expenses, net, as compared to $97,769 other expenses, net, for the three months ended June 30, 2022, which represented a decrease of $75,414, or approximately 77.1%.

 

The net other expenses of $22,355 incurred during the three months ended June 30, 2023 comprised foreign currency exchange loss of $33,700, unrealized holding gain on marketable securities of $3,790, other income, net of $4,134, interest income of $1,634 and gain on disposal of property and equipment of $1,787. The net other expenses of $97,769 incurred during the three months ended June 30, 2022 comprised foreign currency exchange loss of $67,417, unrealized holding loss on marketable securities of $35,219, other income, net of $1,341 and interest income of $3,526.

 

Benefit of (Provision for) Income Taxes

 

The Company recorded benefit of income taxes of $2,439 and provision for income taxes of $392 for the three months ended June 30, 2023 and 2022, respectively. Both the benefit of income taxes as well as the provision for income taxes were in respect of the Company’s operations in Malaysia.

 

29
 

 

Net Loss

 

Net loss decreased by $24,895 from net loss of $404,344 for the three months ended June 30, 2022 to net loss of $379,449 for the three months ended June 30, 2023, mainly due to the reasons discussed above.

 

For the six months ended June 30, 2023 and 2022

 

Revenue

 

We generated revenue of $684,703, which is comprised of revenue from the Company’s network marketing business of $229,521 (approximately 33.5%); and revenue from the Company’s operations in the provision of complementary health therapies of $455,182 (approximately 66.5%) for the six months ended June 30, 2023 as compared to $805,667, which is comprised of revenue from the Company’s network marketing business of $558,340 (approximately 69.3%); and revenue from the Company’s operations in the provision of complementary health therapies of $247,327 (approximately 30.7%) for the six months ended June 30, 2022. Revenue from the Company’s network marketing business decreased significantly by $329,819, or approximately 58.9%. Revenue from the Company’s operations in the provision of complementary health therapies increased significantly by $207,855, or approximately 84.0%. Total revenue decreased by $120,964, or approximately 15.0%. The decrease was predominately due to the anticipated poor performance from the Company’s network marketing business. The Company is in the process of introducing a whole new range of products for its networking marketing business. Distributors and members curtailed the purchases of the Company’s existing products, awaiting the Company’s new products range. The shortfall in revenue of the Company’s network marketing business was significantly compensated by the significant increase in revenue in the Company’s operations in the provision of complementary health therapies. This new division which commenced in February 2022 is witnessing modest growth.

 

Cost of Revenue

 

Cost of revenue for the six months ended June 30, 2023 amounted to $236,289 as compared to $182,814 for the six months ended June 30, 2022, an increase of $53,475, or approximately 29.3%. The increase was due to the varying gross profit margins in the Company’s operations in the provision of complementary health therapies.

 

Cost of revenue typically comprise of freight-in, cost of goods purchased, packing materials and services acquired.

 

Gross Profit

 

Gross profit for the six months ended June 30, 2023, amounted to $448,414, which represented a gross margin of approximately 65.5% as compared to $622,853 for the six months ended June 30, 2022, equivalent to a gross margin of approximately 77.3%. The decrease in gross margin was predominantly due to lower gross margin associated with the provision of complementary health therapies as compared to the Company’s network marketing business.

 

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Operating Expenses

 

Our operating expenses consist of selling expenses, commission expenses, general and administrative expenses. Total operating expenses were $1,261,831 for the six months ended June 30, 2023, increased by $60,563 or approximately 5.0% from $1,201,268 for the six months ended June 30, 2022.

 

Selling expenses

 

Selling expenses for the six months ended June 30, 2023 amounted to $140,224 as compared to $194,198 for the six months ended June 30, 2022, a decrease of $53,974, or approximately 27.8%, predominantly due to decrease in promotional expenses. Promotional activities on the Company’s network marketing business were scaled back during the time lag between phasing out of the old products range awaiting the upcoming new range of products. The Company’s selling expenses are typically comprised of salaries and benefits expenses which represented approximately 70% to 85% of total selling expenses, credit card processing fees and promotional expenses. There was also a small reduction in the number of headcounts in the recent six months ended June 30, 2023.

 

Commission expenses

 

Commission expenses were $55,884 and $176,666 for the six months ended June 30, 2023 and 2022, respectively. The decrease in commission expenses was in line with the decrease in revenue.

 

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

 

G&A expenses for the six months ended June 30, 2023 amounted to $1,065,723, as compared to $830,404 for the six months ended June 30, 2022, an increase of $235,319, or approximately 28.3%. The increase in G&A expenses was mainly due to G&A expenses associated with the provision of complementary health therapies and expenses incurred by the Company on its on-going uplisting exercise to Nasdaq. The Company’s G&A expenses are typically comprised of salaries and benefits expenses, rental expenses, professional expenses and depreciation expenses.

 

Other Expenses, Net

 

For the six months ended June 30, 2023, we recorded an amount of $6,762 as other expenses, net, as compared to $115,695 other expenses, net, for the six months ended June 30, 2022, represented a decrease of $108,933 or approximately 94.2%.

 

The net other expenses of $6,762 incurred during the six months ended June 30, 2023 comprised foreign currency exchange loss of $34,576, unrealized holding gain on marketable securities of $8,710, other income, net of $12,500, interest income of $4,817 and gain on disposal of property and equipment of $1,787. The net other expenses of $115,695 incurred during the six months ended June 30, 2022 comprised foreign currency exchange loss of $83,883, unrealized holding loss on marketable securities of $52,889, other income, net of $12,826 and interest income of $8,251.

 

Benefit of (Provision for) Income Taxes

 

The Company recorded benefit of income taxes of $6,655 and provision for income taxes of $8,680 for the six months ended June 30, 2023 and 2022, respectively. Both the benefit of income taxes as well as the provision for income taxes were in respect of the Company’s operations in Malaysia.

 

Net Loss

 

Net loss increased by $110,734 from net loss of $702,790 for the six months ended June 30, 2022 to net loss of $813,524 for the six months ended June 30, 2023, mainly due to reasons as discussed above.

 

Liquidity and Capital Resources

 

Malaysia, where the operations of the Company predominantly reside, officially transitioned to the endemic phase of COVID-19 effective April 1, 2022.

 

Substantially all of our revenues are concentrated in Malaysia. Consequently, our results of operations will likely be adversely, and may be materially, affected, to the extent that the COVID-19 or any other epidemic harms the Malaysia and global economy in general. Any potential impact to our results will depend on, to a large extent, future developments and new information that may emerge regarding the duration and severity of the COVID-19 and the actions taken by government authorities and other entities to contain the COVID-19 or treat its impact, almost all of which are beyond our control. Potential impacts include, but are not limited to, the following:

 

  temporary closure of offices, travel restrictions, disruption or suspension of supplies, our customers may be negatively impacted financially resulting in which the demand for our products may be adversely affected;
  we may have to provide significant sales incentives to our customers during the outbreak, which may in turn materially adversely affect our financial condition and operating results; and
  any disruption of our supply chain, logistics providers or customers could adversely impact our business and results of operations, including causing us or our suppliers to cease manufacturing for a period of time or materially delay delivery to our customers, which may also lead to loss of our customers.

 

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There could still be supply chain disruptions. From our experiences operating under the much-restricted COVID-19 environment, we have modified our methods of operations, to build in sufficient buffer in the management of inventories. We may experience slight delay in products delivery lead time but barring unforeseen circumstances, the setback should be temporary.

 

We are currently operating primarily in Malaysia and anticipate expanding into the Asian markets in the future, with a particular focus, at least initially, on expanding into Thailand, Indonesia and Taiwan. We will explore expansion via e-commerce. Now that most nations are living alongside COVID-19, we will re-assess our plans to set up offices in the countries in which we operate to better service our customers.

 

There is no guarantee that the Company’s total revenues will grow or remain at similar levels year over year in 2023 and beyond.

 

As of June 30, 2023, we had working capital deficit of $26,893, consisting of cash and cash in bank of $332,431 and time deposits of $321,323 as compared to working capital of $799,239 consisting of cash and cash in bank of $523,619 and time deposits of $914,811 as of December 31, 2022. The Company had a net loss of $813,524 for the six months ended June 30, 2023 and accumulated deficits of $5,746,112 as of June 30, 2023 as compared to net loss of $1,666,079 for the year ended December 31, 2022 and accumulated deficits of $4,945,586 as of December 31, 2022.

 

In assessing our liquidity and going concern, management is projecting that the company’s revenue will revert to pre-pandemic level by Q2 2024, generating sufficient cash therefrom to cover our operating expenses. The timeline is subject to the availability of talents for sales and marketing and product development personnel as the recruitment market has become increasingly competitive post COVID-19 as many companies are ramping up to increase their workforce.

 

If our Company is unable to generate sufficient cash flow within the normal operating cycle of a twelve-month period to pay for its future payment obligations, we may have to consider supplementing our available sources of funds through the following sources, however, there is no assurance that management will be successful in its plans:

 

  Equity financing from the Company’s second listing on NASDAQ to support its working capital and future growth;
     
  Other available sources of financing (including debt) from banks and other financial institutions; and
     
  Financial support and credit guarantee commitments from the Company’s related parties.

 

Based on the above measures, management is of the opinion that the Company will probably not have sufficient funds to meet its working capital requirements and debt obligations as they become due one year from the filing date of these unaudited condensed consolidated financial statements..

 

The following summarizes the key components of our cash flows for the six months ended June 30, 2023 and 2022:

 

   For the six months ended
June 30,
 
   2023   2022 
         
Net cash used in operating activities  $(742,175)  $(495,727)
Net cash used in investing activities   (6,499)   (750)
Net cash used in financing activities   (22,861)   (178,926)
Effect of exchange rate on cash and cash equivalents   (13,141)   (115,008)
Net change in cash and cash equivalents  $(784,676)  $(790,411)

 

32
 

 

Operating activities

 

Net cash used in operating activities for the six months ended June 30, 2023 was $742,175, comprised of net loss of $813,524, increase in accounts receivables of $2,751, increase in amount due from related parties of $209, increase in inventories of $23,013, decrease in accounts payable – related parties of $4,758, decrease in customer deposits of $31,655, decrease in other payables and accrued liabilities of $228,812, payment of operating lease liabilities of $79,551, decrease in other payable –related parties of $3,457, the non-cash expenses on unrealized holding gain on marketable securities of $8,710, deferred tax benefit of $6,655, offset by the non-cash depreciation and amortization expense of $39,264, amortization of operating right-of-use assets of $78,333, decrease in prepaid taxes of $238,064, decrease in prepayments and deposits of $80,651 and increase in accounts payable of $24,608.

 

Net cash used in operating activities for the six months ended June 30, 2022 was $495,727 and were mainly comprised of the net loss of $702,790, increase in accounts receivables of $214, decrease in customer deposits of $175,936, payment of operating lease liabilities of $75,200 and decrease in other payables and accrued liabilities (including related party) of $164,056. The net cash used in operating activities was mainly offset by the non-cash depreciation and amortization expense of $37,558, amortization of operating right-of-use assets of $75,241, unrealized holding loss on marketable securities of $52,889, decrease in amount due from related parties of $2,201, the decrease in inventories of $28,790, refund in prepaid taxes of $296,219, decrease in prepayments and deposits of $102,099, increase in accounts payable (including related party) of $22,211 and increase in income tax payables of $5,261.

 

Investing activities

 

Net cash used in investing activities for the six months ended June 30, 2023 was $6,499, which was in respect of purchase of equipment.

 

Net cash used in investing activities for the six months ended June 30, 2022 was $750, which was in respect of purchase of equipment.

 

Financing activities

 

Deferred offering cost made up the entire net cash used in financing activities for the six months ended June 30, 2023 and 2022 of $22,861 and $178,926, respectively.

 

Credit Facilities

 

We do not have any credit facilities or other access to bank credit.

 

Off-Balance Sheet Arrangements

 

As of June 30, 2023, 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.

 

Critical Accounting Estimates

 

The preparation of unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the periods presented. Significant accounting estimates reflected in the Company’s unaudited condensed consolidated financial statements include allowance for inventories obsolescence, impairment of long-lived assets and allowance for deferred tax assets. Following are the methods and assumptions used in determining our estimates.

 

Estimated allowance for inventories obsolescence

 

Management reviews inventory on hand for estimated obsolescence or unmarketable items, as compared to future demand requirements and the shelf life of the various products. Based on the review, the Company records inventory write-downs, when necessary, when costs exceed expected net realizable value. The Company did not recognize any inventory write-downs nor inventory write-off for the six months ended June 30, 2023 and 2022.

 

Impairment of long-lived assets

 

Operating right-of-use assets and property and equipment are stated at costs less accumulated depreciation and impairment, if any. In determining whether an asset is impaired, the Company has to exercise judgment and make estimation, particularly in assessing: (1) whether an event has occurred or any indicators that may affect the asset value; (2) whether the carrying value of an asset is not recoverable that is its carrying amount exceeds the amount of expected undiscounted future cash flows result from the use of the asset. Once it is established that impairment has occurred, the amount of impairment expense is determined as the difference between the carrying value of the asset and its estimated fair value based on a discounted cash flows approach.

 

As of June 30, 2023 and December 31, 2022, the carrying amounts of operating right-of-use assets and property and equipment amounted to $284,670 and $105,674 (December 31, 2022: $81,133 and $142,149), respectively. No impairment losses on operating right-of-use assets and property and equipment were recognized as of June 30, 2023 and 2022.

 

33
 

 

Allowance for deferred tax assets

 

The Company conducts much of its business activities in Malaysia and Hong Kong and is subject to tax in each of these jurisdictions. Significant estimates are required in determining the provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.

 

Deferred tax assets relating to certain temporary differences and tax losses are recognized as management considers it is probable that future taxable profit will be available against which the temporary differences or tax losses can be utilized. Where the expectation is different from the original estimate, such differences will impact the recognition of deferred taxation assets and taxation in the periods in which such estimate is changed.

 

Critical Accounting Policies

 

Revenue recognition

 

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

 

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

 

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

 

Sales of Health and Wellness products

 

- Performance obligations satisfied at a point in time

 

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

 

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

 

Provision of Health and Wellness services

 

- Performance obligations satisfied at a point in time

 

The Company carries out its Wellness program, where the Company’s products are bundled with health screening test and a health camp program. The health screening test and the health camp programs are considered as separate performance obligations. The promises to deliver the health screening test report and the attendance at the health camp are separately identifiable, which are evidenced by the fact that the Company provides separate services of delivering the health screening test report and allowing admission of the customers to attend the health camp. The Company derives its revenues from sales contracts with its customers with revenues being recognized when the test reports are completed and delivered to its customers during the consultation section in person. The Company also separately derives its revenues from sales contracts with its customers with revenues being recognized when the health camp program was completed in the final day of the health camp.

 

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Fair value of financial instruments

 

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

 

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

 

  Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
  Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments.
  Level 3 inputs to the valuation methodology are unobservable and significant to the fair value.

 

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

 

Accounting Standards Adopted in 2023

 

On January 1, 2023, the Company adopted Accounting Standards Update (“ASU”) 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASC 326”). This standard replaced the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss (“CECL”) methodology.

 

In addition, CECL made changes to the accounting for available-for-sale debt securities. One such change is to require credit losses to be presented as an allowance rather than as a write-down on available-for-sale debt securities if management does not intend to sell and does not believe that it is more likely than not, they will be required to sell.

 

As ASU 2016-13 has been adopted from January 1, 2023, the Company adopted ASU 2019-05, Financial instruments – Credit Losses (Topic 326) Targeted Transition Relief at the same time.

 

The AUS 2019-05 provides entities that have certain instruments with an option to irrevocably elect the fair value option applied on an instrument-by-instrument basis for eligible instruments. The fair value option election does not apply to held-to-maturity debt securities.

 

The adoption of these ASUs did not have a material impact on the unaudited condensed consolidated financial statements for the six months ended and as at June 30, 2023.

 

Recent accounting pronouncements

 

The Company has reviewed all recently issued, but not yet effective, considers the applicability and impact of all accounting standards updates (“ASUs”). Management periodically reviews new accounting standards that are issued.

 

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

 

Except for the above-mentioned pronouncements, there are no other new recent issued accounting standards that will have a material impact on the consolidated financial position, statements of operations and cash flows.

 

For the years ended December 31, 2022 and 2021

 

Revenue

 

We generated revenue of $1,856,564, which comprised revenue from the Company’s network marketing business of $1,141,307 (approximately 61.5%); and revenue from the Company’s operations in the provision of complementary health therapies of $715,257 (approximately 38.5%) for the year ended December 31, 2022 as compared to $1,016,962, which amount was solely attributable to revenue from the Company’s network marketing business for the year ended December 31, 2021. Revenue from the Company’s network marketing business increased marginally by $124,345 or approximately 12.2%. Total revenue increased by a $839,602 or approximately 82.6%. The increase was predominately due to: (i) the recovery from COVID-19 in Malaysia after April 2022. The Company made progress in revenue generating as Malaysia, where the Company’s operations predominantly reside, has moved to a COVID-19 endemic phase with minimal restrictions on businesses and people movements in the country; and (ii) the Company’s operations in the provision of complementary health therapies since February 2022.

 

Cost of Revenue

 

Cost of revenue for the year ended December 31, 2022 amounted to $666,042 as compared to $297,333 for the year ended December 31, 2021, representing an increase of $368,709 or approximately 124.0%. The increase was in line with the increase in revenue as explained in the above.

 

Cost of revenue typically comprise of freight-in, cost of goods purchased, packing materials and services acquired.

 

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Gross Profit

 

Gross profit for the year ended December 31, 2022 amounted to $1,190,522, represented a gross margin of, approximately 64.1%, as compared to $719,629 for the year ended December 31, 2021, which was equivalent to a gross margin of approximately 70.8%. The decrease in gross margin was predominantly due to a lower gross margin associated with the provision of complementary health therapies as compared to the Company’s network marketing business; and promotional activities undertaken by the Company to increase revenue from its network marketing business.

 

Operating Expenses

 

Our operating expenses consist of selling expenses, commission expenses, general and administrative expenses and provision for doubtful accounts.

 

Selling expenses

 

Selling expenses for the year ended December 31, 2022 amounted to $361,414 as compared to $394,682 for the year ended December 31, 2021, a decrease of $33,268 or approximately 8.4%. The Company’s selling expenses typically comprise salaries and benefits expenses, credit card processing fees and promotional expenses. The decrease in selling expenses was predominantly due to decrease in salaries and benefits expenses.

 

Commission expenses

 

Commission expenses were $405,351 and $316,267 for the years ended December 31, 2022 and 2021, respectively, representing an increase of $89,084 or approximately 28.2%. The increase in commission expenses was in line with the increase in revenue.

 

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

 

G&A expenses for the year ended December 31, 2022 amounted to $1,957,023, as compared to $1,745,734 for the year ended December 31, 2021, representing an increase of $211,289, or approximately 12.1%. The increase in G&A expenses was mainly due to G&A expenses associated with the provision of complementary health therapies. The Company’s G&A expenses typically comprise of salaries and benefits expenses, rental expenses, professional expenses and depreciation expenses.

 

Provision for doubtful accounts

 

Provision for doubtful accounts were $0 and $121,514 for the years ended December 31, 2022 and 2021 respectively. The provision for doubtful accounts brought forward was in respect of prepayments to a supplier. As the Company’s attempts to recover the prepayments were futile, the entire provision for doubtful accounts of $121,514 was written-off during the year ended December 31, 2022.

 

Other (Expenses) Income

 

For the year ended December 31, 2022, we recorded an amount of $136,868 as other expenses, net as compared to $529,045 other expenses, net for the year ended December 31, 2021, representing a significant decrease of $392,177, or approximately 74.1%, in other expenses, net. The net other expenses of $136,868 incurred during the year ended December 31, 2022 comprised of other expenses of $79,539, interest income of $16,190 and unrealized holding loss on marketable securities of $73,519. The net other expenses of $529,405 incurred during the year ended December 31, 2021 comprised of other expense of $68,323, interest income of $25,570, unrealized holding loss on marketable securities of $505,231 and dividend income from marketable securities of $18,939. The significant decrease of other expenses, net was mainly due to the decrease of unrealized holding loss on marketable securities as a result of market price changes during the year of those investments held by the Company.

 

Benefit of (Provision for) Income Taxes

 

We had benefits of income taxes of $4,055 and provision for income taxes of $137,067 for the years ended December 31, 2022 and 2021, respectively. During the year ended December 31, 2022, our operations in Malaysia recorded benefits of income taxes due to overprovision of taxes in prior years.

 

During the year ended December 31, 2021, we had provision for income taxes of $114,862 due to certain permanent items required for the income taxes provision in Malaysia jurisdiction after our Malaysia local tax audit and had provision for income taxes of $22,205 on U.S. GILTI taxes provision.

 

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Net Loss

 

We generated a net loss of $1,666,079 for the year ended December 31, 2022, as compared to $2,524,680 for the year ended December 31, 2021, a decrease of $858,601 or approximately 34.0%, predominately due to reasons as discussed above.

 

Liquidity and Capital Resources

 

Malaysia, where the operations of the Company predominantly reside, officially transitioned to the endemic phase of COVID-19 effective April 1, 2022. Restrictions on businesses and people are minimal.

 

Meanwhile, the government continues to encourage inoculation for those between the ages of 5 to 11 years and its adolescent group which comprised those between the ages 12 and 17. Adults who have been fully vaccinated, i.e. received two doses of the COVID-19 vaccine are encouraged to take booster shots.

 

Substantially all of our revenues are concentrated in Malaysia. Consequently, our results of operations will likely be adversely, and may be materially, affected, to the extent that the COVID-19 or any other epidemic harms the Malaysia and global economy in general. Any potential impact to our results will depend on, to a large extent, future developments and new information that may emerge regarding the duration and severity of the COVID-19 and the actions taken by government authorities and other entities to contain the COVID-19 or treat its impact, almost all of which are beyond our control. Potential impacts include, but are not limited to, the following:

 

  temporary closure of offices, travel restrictions, disruption or suspension of supplies, our customers may be negatively impacted financially resulting in which the demand for our products may be adversely affected ;
  we may have to provide significant sales incentives to our customers during the outbreak, which may in turn materially adversely affect our financial condition and operating results ; and
  any disruption of our supply chain, logistics providers or customers could adversely impact our business and results of operations, including causing us or our suppliers to cease manufacturing for a period of time or materially delay delivery to our customers, which may also lead to loss of our customers.

 

From our experiences operating under the much-restricted COVID-19 environment, we have modified our methods of operations, to build in sufficient buffer in the management of inventories. We may experience slight delay in products delivery lead time but barring unforeseen circumstances, the setback should be temporary.

 

We are currently operating primarily in Malaysia and anticipate expanding into the Asian markets in the future, with a particular focus, at least initially, on expanding into Thailand, Indonesia and Taiwan. We will explore expansion via e-commerce. Now that most nations are living alongside COVID-19, we will re-assess our plans to set up offices in the countries in which we operate to better service our customers.

 

Because of the uncertainty surrounding the COVID-19 outbreak, the financial impact related to the outbreak of and response to the COVID-19 cannot be reasonably estimated at this time. There is no guarantee that the Company’s total revenues will grow or remain at similar levels year over year in 2023 and beyond.

 

As of December 31, 2022, we had working capital of $799,239 consisting of cash and cash in bank of $523,619 and time deposits of $914,811 as compared to working capital of $2,599,281 consisting of cash and cash in bank of $622,501 and time deposits of $1,975,347 as of December 31, 2021. The Company had a net loss of $1,666,079 for the year ended December 31, 2022 and accumulated deficits of $4,945,586 as of December 31, 2022 as compared to net loss of $2,524,680 for the year ended December 31, 2021 and accumulated deficits of $3,258,687 as of December 31, 2021.

 

In assessing our liquidity and going concern, management is projecting that the company’s revenue will revert to pre-pandemic level, generating sufficient cash therefrom to cover our operating expenses.

 

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If our Company is unable to generate sufficient cash flow within the normal operating cycle of a twelve-month period to pay for its future payment obligations, we may have to consider supplementing our available sources of funds through the following sources:

 

  other available sources of financing from Malaysia banks and other financial institutions; and
     
  financial support from our related parties and shareholders.

 

Based on the above initiatives, management is of the opinion that the Company shall have sufficient funds to meet its working capital requirements and debt obligations as they become due in the foreseeable future twelve months from the date of issuance of this Annual Report. However, there is no assurance that management will be successful in its plans.

 

The following summarizes the key components of our cash flows for the years ended December 31, 2022 and 2021:

 

  

For the years ended December 31,

 
   2022   2021 
         
Net cash used in operating activities  $(811,683)  $(845,842)
Net cash used in investing activities   (32,119)   (3,959)
Net cash used in financing activities   (234,466)   (19,061)
Effect of exchange rate on cash and cash equivalents   (81,150)   (50,890)
Net change in cash and cash equivalents  $(1,159,418)  $(919,752)

 

Operating activities

 

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

 

Net cash used in operating activities for the year ended December 31, 2021 was $845,842 and were mainly comprised of the net loss of $2,524,680, dividend income from marketable securities of $18,939, the increase in prepayments and deposits of $128,363, and the payment of operating lease liabilities of $138,143. The net cash used in operating activities was mainly offset by the non-cash depreciation and amortization expense of $77,758, amortization of operating right-of-use assets of $139,451, the unrealized holding loss on marketable securities of $505,231, the non-cash deferred tax expense of $10,127, inventories write-down of $36,241, provision for doubtful accounts of $121,514, the decrease of accounts receivables of $167,566, the decrease in inventories of $192,713, the refund in prepaid taxes of $430,062, the increase in customer deposits of $52,981, the increase in income tax payables of $3,988, and the increase in other payables and accrued liabilities of $226,651.

 

Investing activities

 

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

 

Net cash used in investing activities for the year ended December 31, 2021 was $3,959, the amount entirely for the purchase of equipment.

 

Financing activities

 

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

 

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Net cash used in financing activities for the year ended December 31, 2021 was $19,061, mainly comprised of payment of deferred offering cost of $15,210 and advances to related parties of $3,851.

 

Credit Facilities

 

We do not have any credit facilities or other access to bank credit.

 

Off-Balance Sheet Arrangements

 

As of December 31, 2022, 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.

 

Critical Accounting Estimates

 

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the periods presented. Significant accounting estimates reflected in the Company’s consolidated financial statements include allowance for inventories obsolescence, impairment of long-lived assets, allowance for deferred tax assets. Following are the methods and assumptions used in determining our estimates.

 

Estimated allowance for inventories obsolescence

 

Management reviews inventory on hand for estimated obsolescence or unmarketable items, as compared to future demand requirements and the shelf life of the various products. Based on the review, the Company records inventory write-downs, when necessary, when costs exceed expected net realizable value. For the years ended December 31, 2022 and 2021, the Company recognize an inventory write-downs of $5,307 and $36,241 respectively.

 

Impairment of long-lived assets

 

Operating right-of-use assets and property, plant and equipment are stated at costs less accumulated depreciation and impairment, if any. In determining whether an asset is impaired, the Company has to exercise judgment and make estimation, particularly in assessing: (1) whether an event has occurred or any indicators that may affect the asset value; (2) whether the carrying value of an asset can be supported by the recoverable amount, in the case of value in use, the present value of future cash flows which are estimating the recoverable amounts including cash flow projections and an appropriate discount rate. Changing the assumptions and estimates, including the discount rates or the growth rate in the cash flow projections, could materially affect the net present value used in the impairment test.

 

As of December 31, 2022 and 2021, the carrying amounts of operating right-of-use assets and property, plant and equipment amounted to $81,133 and $142,149 (December 31, 2021: $237,718 and $215,799), respectively. No impairment losses on operating right-of-use assets and property, plant and equipment were recognized as of December 31, 2022 and 2021.

 

Allowance for deferred tax asset

 

The Company conducts much of its business activities in Malaysia and Hong Kong and is subject to tax in each of these jurisdictions. Significant estimates are required in determining the provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.

 

Deferred tax assets relating to certain temporary differences and tax losses are recognized as management considers it is probable that future taxable profit will be available against which the temporary differences or tax losses can be utilized. Where the expectation is different from the original estimate, such differences will impact the recognition of deferred taxation assets and taxation in the periods in which such estimate is changed.

 

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Critical Accounting Policies

 

Revenue recognition

 

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

 

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

 

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

 

Sales of Health and Wellness products

 

- Performance obligations satisfied at a point in time

 

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

 

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

 

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Provision of Health and Wellness services

 

- Performance obligations satisfied at a point in time

 

The Company carries out its Wellness program, where the Company’s products are bundled with health screening test and a health camp program. The health screening test and the health camp programs are considered as separate performance obligations. The promises to deliver the health screening test report and the attendance at the health camp are separately identifiable, which are evidenced by the fact that the Company provides separate services of delivering the health screening test report and allowing admission of the customers to attend the health camp. The Company derives its revenues from sales contracts with its customers with revenues being recognized when the test reports are completed and delivered to its customers during the consultation section in person. The Company also separately derives its revenues from sales contracts with its customers with revenues being recognized when the health camp program was completed in the final day of the health camp.

 

Fair value of financial instruments

 

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

 

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

 

  Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
  Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments.
  Level 3 inputs to the valuation methodology are unobservable and significant to the fair value.

 

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

 

Recent accounting pronouncements

 

The Company has reviewed all recently issued, but not yet effective, considers the applicability and impact of all accounting standards updates (“ASUs”). Management periodically reviews new accounting standards that are issued.

 

In November 2019, the FASB issued ASU No. 2019-10, which to update the effective date of ASU No. 2016-13 for private companies, not-for-profit organizations and certain smaller reporting companies applying for credit losses, leases, and hedging standard. The new effective date for these preparers is for fiscal years beginning after December 15, 2022. ASU 2019-05 is effective for the Company for annual and interim reporting periods beginning January 1, 2023 as the Company is qualified as a smaller reporting company. The Company is currently evaluating the impact ASUs 2016-13 and 2019-05 may have on its consolidated financial statements.

 

Except for the above-mentioned pronouncements, there are no new recent issued accounting standards that will have a material impact on the consolidated financial position, statements of operations and cash flows.

 

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BUSINESS

 

Overview

 

We are a provider of health and wellness products and advisory services in the Malaysian market. We pursue our mission of helping people to create health and wealth by providing quality products to distributors and customers who seek a healthy lifestyle. We believe the quality of our products coupled with the effectiveness of our distribution network have been the primary reasons for our success and will allow us to pursue future business expansion. In order to further our supply chain, on May 8, 2020, we acquired 99.99% of Agape Superior Living Sdn Bhd, with the goal of securing an established network marketing sales channel that has been in existence in Malaysia for the past 18 years. On September 11, 2020, the Company incorporated Wellness ATP International Holdings Sdn. Bhd., a wholly owned subsidiary in Malaysia, with the aim to pursue the business of promoting wellness and wellbeing lifestyle of the community through the provision of services including online editorials, programs, events and campaigns on how to achieve positive wellness and lifestyle. On September 15, 2020, Wellness ATP International Holdings Sdn. Bhd. Entered into a business collaboration agreement with ASL to carry out certain wellness programs.

 

We currently offer three series of products: ATP Zeta Health Program, ÉNERGÉTIQUE and BEAUNIQUE. Our ATP Zeta Health Program is a health program designed to assist in the elimination of various diseases caused by environmental pollutants, unhealthy dietary intake and unhealthy lifestyles. The program aims to promote improved health and longevity through a combination of modern health supplements, proper nutrition and advice from skilled dieticians. Our ÉNERGÉTIQUE series aims to provide a total dermal solution for healthy skin beginning from the cellular level. The series is comprised of the Energy Mask series, Hyaluronic Acid and Mousse Facial Cleanser. Our BEAUNIQUE product series focuses on the research of our diet’s impact on modifying gene expressions to address genetic variations and deliver a personalized nutrigenomic solution for every individual.

 

On November 11, 2021, Agape ATP Corporation (Labuan) formed a joint-venture entity, DSY Wellness International Sdn. Bhd. (“DSY Wellness”) with Mr. Steve Yap, following which Agape ATP Corporation (Labuan) owns 60% of the equity interests in DSY Wellness, to pursue the business of providing complementary health therapies. The establishment of DSY Wellness is a further expansion of our business into the health and wellness industry. Mr. Steve Yap owns 33 proprietary formulas (the “Proprietary Formulas”) for treating non-communicable disease and the Company is currently in discussion with Mr. Steve Yap to bring the Proprietary Formulas into the company for joint commercialization. Mr. Steve Yap also has existing clients receiving traditional complimentary medicine or “TCM” in Indonesia and China.

 

Industry and Market Opportunities 

 

Increasing demand in Dietary Supplement products in the Association of Southeast Asian Nations (“ASEAN”) region.

 

ASEAN markets have seen increasing demand for dietary supplement products since 2016 and we believe will continue to do for the foreseeable future. We believe that the ASEAN market for health supplements hold great potential for growth. According to a report published by Zion Market Research entitled “Dietary Supplements Market by Ingredients (Botanicals, Vitamins, Minerals, Amino Acids, Enzymes) for Additional Supplements, Medicinal Supplements, and Sports Nutrition Applications – Global Industry Perspective, Comprehensive Analysis and Forecast, 2020 – 2028” issued in March 2023, it is estimated that while the global dietary supplements market stood at US$191.1 billion in 2020, it is set to reach US$307.8 billion by 2028, representing a compounded annual growth rate (CAGR) of 5.9% between 2021-2028.

 

 

Source: Zion Market Research

 

According to an article published by Janio, a cross-border platform providing integrated logistics solutions to e-commerce brands, logistics service providers and marketplaces in Southeast Asia, in December 2019, the nutritional and dietary supplements in the ASEAN region are being prioritized by individuals in order to maintain a balanced diet and lifestyle. (Source: https://www.janio.asia/resources/articles/health-supplement-trends-in-southeast-asia-and-how-cross-border-ecommerce-plays-a-role) Consumers believe that they can make up for certain vitamin deficiencies or dietary deficiencies by consuming nutritional and dietary supplements. Many consumers also use nutritional and dietary supplements for cosmetics purposes, namely, skincare, hair strengthening, and fat burning, particularly in countries such as Malaysia and Vietnam.

 

For example, in Indonesia, the nutritional and dietary supplements market has recorded strong growth due to changes in consumers’ lifestyle habits and increasing awareness of preventive health measures. This is prevalent among the middle-class that has grown from approximately 37.7% of the population in 2003 to approximately 50% the population in 2020. Similarly, according to Siam Commercial Bank (SCB) Economic Intelligence Center, the prospects for the dietary supplements market in Thailand has been growing since 2015 and is predicted to grow at an average of approximately 7% per year until 2030. (source: https://www.scbeic.com/en/detail/file/product/3218/emyjfdtqlc/Note_EN_Supplement_20170209.pdf) In the Philippines, a stable economy has also been contributing to increased financial capability and the desire of Filipino consumers to improve both their mental and physical health through supplements. Conversely, Malaysia is ranked as the top country within ASEAN for both obesity and diabetes. Obesity and diabetes have been connected to heart disease and hypertension. As a result, consumers in Malaysia are increasingly aware of such potential health issues associated with eating habits and have become more proactive in searching for consumer health products to prevent such chronic diseases like diabetes and hypertension.

 

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Continued Growth in the Skincare products in regions such as Asia-Pacific.

 

We believe that skincare products will remain highly lucrative with further potential for growth. According to Euromonitor, a global strategic market research company based in London, Asia generates approximately 51% of the world’s skin care sales, surpassing Western Europe and North America. In June 2023, Fortune Business Insights, a global market study and consulting services provider, puts the Asia-Pacific skincare sector as the largest market in the world. (source: https://www.fortunebusinessinsights.com/skin-care-market-102544) According to them, the global skincare market was valued at approximately US$104.24. billion in 2022, with the Asia-Pacific region accounted for US$54 billion, or 51.8%. The global skincare market is expected to grow from approximately US$109.71 billion to US$167.22 billion by 2030, representing a compound annual growth rate (“CAGR”) of approximately 6.21%. In terms of volume, according to Fortune Business Insights, the Asia-Pacific region is expected to grow from approximately 8.4 billion units in 2019 to approximately 9.5 billion units in 2024, representing a CAGR of approximately 2.5%.

 

Growth Drivers in the ASEAN Region

 

We believe that the market for the health and wellness industry will continue to see rapid growth, in part due to the rising wealth in the ASEAN region resulting in increased purchase power. According to an article by the Boston Consulting Group (BCG) published in May 2023, the trade in ASEAN grew by 33% between 2017 to 2021, outpaced the global trade at 24% during this period. BCG also forecasts exports from ASEAN will surge by 90% to US$3.2 trillion annually by 2031, and ASEAN’s combined GDP is projected to grow by a CAGR of 4.6% till 2030, becoming the world’s fourth largest market if viewed as single economy. (source: https://www.bcg.com/publications/2023/asean-free-trade-advantage-to-power-ahead) ASEAN countries have established six Free Trade Agreements with seven of the region’s main trading partners – Australia and New Zealand, China, India, South Korea, Japan, and Hong Kong. The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is one of the largest Free Trade Agreements in the world and accounts for almost 13.5% of global GDP. The agreement brings together Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam, offering these countries investment access and free trade. For example, a study by the World Bank in 2018 pointed out that, conservatively, CPTPP will increase Vietnam’s GDP by 1.1% by 2030. (source: https://www.worldbank.org/en/news/press-release/2018/03/09/cptpp-brings-vietnam-direct-economic-benefits-and-stimulate-domestic-reforms-wb-report-says#:~:text=%E2%80%9CEven%20under%20conservative%20assumptions%2C%20the,Bank%20Country%20Director%20for%20V.) Furthermore, in January 2022 the Regional Comprehensive Economic Partnership (RCEP) took effect and the bloc accounts for roughly 30% of the world GDP. According to a report by Asian Development Bank, RCEP is expected to increase the income of member economies by 0.6% while adding US$245 billion to the regional economy. (source: https://blogs.adb.org/blog/three-areas-where-rcep-may-help-region-s-post-pandemic-recovery) Economic wealth has allowed for social development with more than 100 million people estimated to have joined ASEAN’s workforce over the past 20 years and another 59 million people are projected to be added by 2030. (source: https://www.sydney.edu.au/sydney-southeast-asia-centre/news/5-facts-about-asean.html#:~:text=More%20than%20100%20million%20people,third%2Dlargest%20labour%20force%20worldwide.) We believe a direct advantage of such economic growth is a fast-emerging middle class that will be attracted to our company and its products.

 

We believe that generally unhealthy lifestyles in the ASEAN population continues to form a basis for the growth in the health and wellness industry in the region. In a MarketWatch article citing Astute Analytica in June 2023, it was noted that the ASEAN Nutritonal Supplement market size is set to reach US$14.85 billion by 2031 from US$7.37 billion representing a CAGR of 8.40% during the forecast period. Increasing prevalence of lifestyle-induced disorders, or Non-Communicable Diseases (NCDs), such as diabetes and cancer, will be a key factor driving food supplements market growth. (source: https://www.marketwatch.com/press-release/asean-nutritional-supplements-market-research-uncovering-insights-for-strategic-decision-making-forecast-2023-to-2031-2023-06-08) Estimates computed by the World Health Organization (WHO) state that close to 8 million people die every year in Southeast Asia due to NCDs, amounting to 55% of the total deaths in the region in a given year. According to the WHO, four risk factors tobacco, alcohol, lack of exercise, and poor diets are primarily responsible for the spread of NCDs in the region. For instance, the WHO found that at least 25% of boys in Malaysia and Thailand are obese and a large number of school children across Southeast Asia are largely physically inactive. Such conditions will contribute to a growth in demand for dietary supplement products, in order to promote a healthier lifestyle.

 

A rapidly aging population in the ASEAN region also promotes the need for preventive measures to mitigate against rising healthcare costs. An International Monetary Fund publication in April 2017 found that in East Asia, the population is projected to be the world’s fastest-aging region with its old-age dependency ratio roughly tripling by current rends by 2050. According to an article by Fortune Business Insights published in April 2020, the aging population in Southeast Asia has led to a significant rise in incidences of lifestyle-related diseases. As a result, healthcare costs will inevitably rise, leading to increased demand in the use of supplements in preventing deteriorative health conditions.

 

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Industry Challenges

 

In spite of its high growth, the health and wellness industry also faces certain challenges. We believe the following are some key challenges to the industry:

 

Price sensitivity - health and wellness products such as dietary supplements and skincare products typically have premium prices which may only be affordable to certain segments of the population. Price conscious consumers with low purchasing power may not be able to purchase such products.
   
Consumer awareness – although COVID-19 has driven the increased consumption of immunity-related health supplements, consumer awareness on the benefits of dietary supplements may be relatively low in ASEAN region, leading to slower update of products. According to an article published by Nutri Avenue in November 2022, the consumption areas of global dietary supplements are mainly distributed in countries and regions like the United States, the EU, Canada, Australia, and Japan, as those countries have the highest penetration rate of nutritional supplements. (source: https://www.nutriavenue.com/key-country-dietary-supplement-market-2022/)

 

Competitive Landscape

 

The health and wellness industry in ASEAN remains highly competitive and fragmented. Key entry barriers of the industry include the following:

 

Capital requirements – Market participants are required to possess sufficient amount of capital and human resources to sustain their businesses, particularly the product research and development (R&D) process, daily operation costs and maintaining personnel knowledgeable in the products such as dietary consultants.
   
Reputation and relationship with suppliers and customers – In general, current market participants have already established an extensive business network with their upstream product suppliers, as well as established reputable products that attract customers. New market entrants without a prior supply chain and reputable products may find it difficult to build credible relationships with other suppliers or gain the trust of customers.

 

Our Strategies

 

We intend to pursue the following strategies to further develop and expand our business:

 

Expand the product range in each of our ATP Zeta Health Program, ÉNERGÉTIQUE and BEAUNIQUE series

 

We intend to continue to expand the product range in each of our product lines, namely, ATP Zeta Health Program, ÉNERGÉTIQUE and BEAUNIQUE series.

 

Further Penetrate Existing Markets.

 

We believe that there are several opportunities to further penetrate our existing markets. For example, besides offering dietary products and services through our ATP Zeta Health Program, we have also expanded our products and services to include beauty and wellness products via the introduction of ÉNERGÉTIQUE and BEAUNIQUE series in July 2018 and March 2019, respectively, with the goal of diversifying our product offerings and catering to broader market demands. Currently we maintain three sales branches in different locations in Malaysia, namely, Kuala Lumpur, Johor Bahru and Ipoh, and appointed three stockists, to whom the Company can assign its products, at two other locations in Malaysia to further cater to our distributors, members and customers.

 

Currently, the Company’s distributors and members mainly consists of the ethnic Chinese community. As a multi-racial country, the majority of the population in Malaysia is comprised of Bumiputera, which is comprised of Malays and other indigenous peoples, accounting for 62% of the entire Malaysia population, with an estimated population at approximately 33.9 million (as compared to the ethnic Chinese community which accounts for less than 22.8%). (source: https://www.igi-global.com/dictionary/innovation-culture-as-a-mediator-between-specific-human-capital-and-innovation-performance-among-bumiputera-smes-in-malaysia/58789). We believe there is opportunity for further penetration of our products into other ethnicity group within the existing Malaysian market.

 

As we further grow our business, we may further expand our local sales centers to additional locations with the aim to further distribute our products and appeal to local demand.

 

On November 11, 2021, Agape ATP Corporation (Labuan) formed a joint-venture entity, DSY Wellness with Mr. Steve Yap following which Agape ATP Corporation (Labuan) owns 60% of the equity interests in DSY Wellness, to pursue the business of providing complementary health therapies. The establishment of DSY Wellness is a further expansion of our business into the health and wellness industry, with target customers including patients with chronic health disorder, chronic health issues and non-communicable diseases. We will also promote the prevention of chronic health disorder through lifestyle and nutrition programs supported by the health therapies of DSY Wellness.

 

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Deepening our Relationships with Existing Members.

 

We offer membership and distributor discounts on all our product offerings. Customers are able to become lifetime members by paying a one-time membership fee with the purchase of specific products. Members who reach a predetermined amount of purchases per year are automatically promoted to become a distributor who also enjoys bonuses for products that they sell to other customers, as well as bonuses from the collective performance of their network group. As our members and distributors recognize the value of our platform and the quality of our products, they typically purchase additional products utilizing their membership and discount entitlements. Our sales strategy is focused on expanding our revenue per member. We believe there is significant opportunity for existing members to become distributers, as well as for distributors to further recruit new distributors under their network.

 

Further Investment into Information Technology such the Establishment of an E-Commerce platform.

 

In 2019, we embarked upon a strategic initiative to sell our products on an existing Malaysian e-trading platform to increase the efficiency of our supply chain, to better support and service our distributors and members, and to establish a global reach.

 

In 2022, we launched our e-trading website (https://www.agapeatp.com/index.php/en/) to provide better customer experience. We will continue to actively promote our e-trading platform for online recruitment of new members by existing distributors, as well as to provide direct sales to customers.

 

Once the e-trading platform has provided tangible results in the Malaysia market, we intend to expand the platform to other geographic markets in order to duplicate its success.

 

In line with the current popularity of using social influencers to boost product demand, the Company is also exploring the future appointment of key social influencers with significant numbers of followers as ambassadors for the Company’s products.

 

Geographic Expansion.

 

A key component of our strategy is to enter into and expand into new markets with similar cultures and a high demand for health and nutrition products. For example, the majority of our product information sessions and training seminars for distributors are currently conducted in Mandarin, which is the common language spoken amongst the majority of our distributors. We intend to invest into other Asian markets such as Taiwan, where Mandarin is also widely used and understood, allowing for the seamless transition in distributor training and membership recruitment.

 

With a view to facilitate geographical expansion, our future e-trading platform will also increase efficiency of our supply chain to better support and service our distributors and members as well as to provide online recruitment of new members by existing distributors and to provide direct sales to customers.

 

In 2022, we had launched our e-trading website (https://www.agapeatp.com/index.php/en/) to entice and provide better customer experience. We will continue to actively promote our e-trading platform for online recruitment of new members by existing distributors, as well as to provide direct sales to customers. Upon our e-trading platform having reached tangible results in the Malaysia market, we intend to expand the platform to other geographic markets in order to duplicate its success.

 

Pursue Growth Through the Acquisition of Other Health and Wellness Services Providers

 

The health and wellness industry is highly fragmented, and we intends to pursue growth through the acquisitions of services providers in the ASEAN with a strong brand presence in their area of operations. In reviewing potential targets, we identified target companies matching the following criterial (i) with profitability and customer base comprising customers from health care industry; and (ii) with established knowledge base of empirical/holistic skills, knowledge and technologies which are applicable to transform our company into a wellness ecosystem company such as skin care, cosmetic biological lab production, wellness center or complementary medicine therapies for chronic health problems, manufacturers of water filtration system, etc.

 

Our Competitive Strengths

 

We believe the following competitive strengths contribute to our success and differentiate us from our competitors:

 

Well Established Reputation.

 

We have a well-established reputation in the Malaysia market, where our newly acquired subsidiary, Agape Superior Living Sdn Bhd has been operating as a reputable provider of our ATP Zeta Health Program for over 18 years.

 

Well-Established Product Portfolio.

 

We are committed to building our brand, and distributor and customer loyalty by providing quality health-oriented and wellness products. We have no expenditures or expenses relating to research and development of our products as all of our products are acquired from unrelated third parties and rebranded by us. Due to the high costs associated with research and development of nutrition and health products, we do not maintain any facilities to produce our products. We leverage our team of in-house nutritional consultants with rich experience gained in the area of nutritionist work, in collaborating with our customers and clients to understand the health and wellness market via a process of consultative review. We then communicate our findings and proposals to third-party suppliers to improve formulations, and to bring about new products for distributors and members who are ready to market to end-users.

 

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Large, Highly-Motivated Distributor Base, Supported By Successful Training Methodology.

 

We had over 128,652 members, including 56,462 distributors, as of June 30, 2023. Because we believe the direct sales model is the most effective way to sell our products, we devote significant resources and management attention to assist our distributors in recruiting and retaining our members. We provide our distributors with successful training methodology, which includes meetings, workshops and activities to create social connections among distributors to develop proficiency of knowledge, confidence and skills to build recruitment strength. We structured our compensation system to encourage distributors to remain active in the business and to build a distributor network of their own, which can serve to increase their income and to increase our product sales. In order to encourage entrepreneurship within our distributors, we also maintain six service centers, including three operated by our stockists, to better service our distributors and members.

 

Scalable Business Model.

 

Our business model enables us to grow our business with minimal investment in our infrastructure and other fixed costs. We do not require a company-employed sales force to market and sell our products. As a result, we do not incur direct incremental cost to add a new distributor. Our distributor compensation varies directly with sales. In addition, our distributors bear the majority of our consumer marketing expenses. Furthermore, we can readily increase inventory and distribution of our products as a result of our partnerships with our third-party suppliers.

 

Deeply Experienced Founder-led Management Team.

 

Our founder, Dr. How Kok Choong, has led our company for over 18 years. In Malaysia, Dr. How Kok Choong was recognized by the Junior Chamber Malaysia (JCM) as an Outstanding Young Malaysian 2003, and was awarded the title of Justice of Peace of Malaysia since 2005. Dr. How received the Outstanding Asian Community Contribution Award in 2011, Malaysia Top Team 50 Enterprise Award in 2011 and 2016, The Contributor Award (Medical and Health Research) in 2012, “Man of The Year” in Worldwide Excellence Award in 2015, “Man of The Year” in McMillan Global Award in 2016, The Distinguished Asia Pacific Outstanding Entrepreneur Lifetime Achievement Award in 2019, World Outstanding Chinese Entrepreneur Lifetime Award in 2019 and Certified Professional Trainer of The International Professional Managers Association in 2019. In 2023, Dr. How was awarded the Global Business Icon Leadership Lifetime Achievement Award by KSI Strategic Institute for Asia Pacific in Kiala Lumpur, Malaysia. In the same year, he was awarded the ASEAN Outstanding Entrepreneur Lifetime Achievement Award in Jakarta, Indonesia.

 

Mr. Lee Kam Fan, Andrew has served as our chief financial officer since January 2021. Prior to joining the Company in January 2021, Mr. Lee had approximately 38 years of accounting and finance related experience. Since July 2014, Mr. Lee has been the proprietor of Andrew Lee & Company, a Certified Public Accountants Firm in Hong Kong that provides audit and taxation services. Mr. Lee is an associate member of the Institute of Chartered Accountants in England and Wales since April 2019, a certified public accountant (practicing) of the Hong Kong Institute of Certified Public Accountants since May 2010, a fellow member of the Association of International Accountants since December 2006, and an associate member and certified tax advisor of the Tax Institute of Hong Kong since July 2010. Mr. Lee received his bachelor’s degree in business administration at the Open University of Hong Kong in June 2004 and his master’s degree in professional accounting from the Hong Kong Polytechnic University in November 2010.

 

Mr. Steve Yap serves as the director since 2021 and is responsible for the operation of DSY Wellness International Sdn Bhd. Mr. Steve Yap is a well-respected figure in the field of nutritional, metabolic and anti-ageing medicine in Malaysia, and is a certified nutritional practitioner. Mr. Steve Yap is committed to developing and promoting self-empowering health preventive programs for the public to cope with chronic health disorders. Over the years, Mr. Steve Yap has served in various technical committees within the Ministry of Health Malaysia. Currently, he is a member of the traditional & complementary medicine council, which involved in the drafting of the Traditional and Complementary Medicine (T&CM) Act 2016 in Malaysia. Mr. Steve Yap is also president for the Association of Nutritional Medicine Practitioners. With Mr. Steve Yap’s involvement, we believe he will significantly enhance the technical capability of the company and accelerate the development of the group in the field of wellness.

 

Collectively, our senior leadership team has extensive management skills, accounting, financial and nutritional knowledge and expertise.

 

Product Overview

 

We offer three series of products: (i) ATP Zeta Health Program, (ii) ÉNERGÉTIQUE and (iii) BEAUNIQUE.

 

Our ATP Zeta Health Program is a health program designed to promote health and general wellbeing, as well as to prevent diseases caused by polluted environments, unhealthy dietary intake and unhealthy lifestyles. 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 an individual’s metabolic rate in order to promote and maintain normal and healthy functioning of the body’s systems. Our program emphasizes nutrient absorption through the membrane ion channel in order to provide complete and balanced nutrients to improve cellular health. Thus, ATP Zeta Super Health Program provides ionized and high zeta potential (high bioavailability) nutrients to enhance the absorption at the cellular level.

 

Our ÉNERGÉTIQUE product series is comprised of the ÉNERGÉTIQUE Mask series, Hyaluronic Acid Serum and Mousse Facial Cleanser.

 

The ÉNERGÉTIQUE Mask series is formulated with triple action natural ingredients and advanced technology. The innovative combination of award-winning liposome encapsulating the customized fast acting essence, produces micro-particle liposome which, when combined with collagen peptide Tencel film, creates a formulation designed to benefit the skin at the cellular level. The ÉNERGÉTIQUE series aims to provide a total dermal solution for healthy skin beginning at the cellular level. There are three types of face masks in the ÉNERGÉTIQUE Mask Series, each addressing a specific skin condition Med-Hydration, Med-Whitening and Med-Firming. The ÉNERGÉTIQUE Mask Series has clinically shown deep penetration of liposomal essence into deep skin layers within 5 minutes of application, in order to deliver immediate, deep-reaching and long-lasting benefits of skin hydration, whitening, and firming.

 

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The ÉNERGÉTIQUE Hyaluronic Acid Serum is formulated with four functional hyaluronic acids and a unique peptide. It is a scientifically advanced and intensive quintuple action serum designed to promote skin hydration, reparation and regeneration to enhance skin viscoelasticity for improved skin firmness.

 

The ÉNERGÉTIQUE Mousse Facial Cleanser is formulated with the mildest surface-active agents available on the market. It takes the form of a unique mousse like-foam that delivers a comfortable and soft feeling to the skin during and after use without compromising the moisturizing level and viscoelastic properties of the skin. Its PH-balanced formula is suitable for all skin types for an effortless cleansing routine.

 

Our BEAUNIQUE product series focuses on the research of our diet’s impact on modifying gene expressions in order to address genetic variations and deliver a personalized nutrigenomic solution for every individual.

 

ATP Zeta Health Program

 

The following is a list of our ATP Zeta Health Program products:

 

ATP1s Survivor Select

 

ATP1s Survivor Select contains various essential nutrients required by the human body to maintain normal metabolism, which includes production of biological energy (ATP). Effective production of ATP enhances both physical and mental health and helps the body build resistance to diseases.

 

 

ATP2 Energized Mineral Concentrate

 

ATP2 is a nutritional supplement made from the finest plant substances and also is a proprietary formulation of a super-energized colloidal concentrate developed from a dibase solution. Its formula supports and enhances nutritional biochemical activities.

 

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ATP3 Ionized Cal-Mag 

 

ATP3 Ionized Cal-Mag is a specialized calcium and magnesium minerals supplement that is designed to transform into an ionic form completely before entering the body. This is compatible to the cellular ion channel theory, that all cellular metabolisms are dependent on ionic transmission, in order to achieve the highest absorption rate. This product was tested for its nanoparticle by the National Measurement Institute of Australian Government, with proven content of nanosized calcium and magnesium that has better absorption and bio-availability.

 

 

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ATP4 Omega Blend

 

ATP4 Omega Blend is a proprietary oil blend that is rich in undamaged polyunsaturated essential fatty acid, which is fully extracted from plant-based ingredients. It provides a bio-effective balance of both essential fatty acids, Omega 3 and Omega 6 which are the important structural components of cell membranes that cannot be synthesized by humans.

 

 

ATP5 BetaMaxx

 

ATP5 BetaMaxx is derived from the cell wall of premium food-grade baker’s yeast and is a medical breakthrough result of more than 50 years of intensive research and studies by scientists and physicians. This product combines the immunostimulatory properties of molecularly structured beta 1-3, 1-6-D-glucan with other immunomodulating compounds that work to make ATP5 a unique and effective natural product.

 

 

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AGN-Vege Fruit Fiber

 

AGN-Vege Fruit Fiber is a special nutrition-based formula for intestines and the stomach. It consists of four essential components for gastrointestinal health effects - fiber, probiotic the “friendly bacteria,”, prebiotic fructooligosaccharides (FOS) and digestive enzymes.

 

 

AGP1-Iron

 

AGP1-Iron is the purest and most advanced Colloidal Iron that is sourced from the remains of an ancient rainforest which contains the most active plant-based element from nature. The colloidal nanosized iron provides high zeta potential that promotes better absorption and cellular iron uptake through the ion channel.

 

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YFA-Young Formula

 

YFA-Young Formula is a 100% natural unique formula, a combination of amino acid, vitamins, and minerals. It is an anti-aging and youthful maintenance supplement. It stimulates the pituitary gland to release endocrine hormones such as human growth hormone (HGH) to stimulate synergies, thus achieving the efficacy of anti-ageing through the promotion of cells vitality and strengthening of organ functionality.

 

 

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BEAUNIQUE Mito+ and Mitogize

 

We discontinued ATP Regal Mitogize on October 1, 2019. In its stead, an enhanced formula, the BEAUNIQUE Mito+ was introduced in November 2019. As a strong antioxidant drink with great flavor and taste, the preeminence of BEAUNIQUE Mito+ is its ability to further protect and stimulate mitochondria (the membrane-bound organelles which produces energy for cells) in cellular energy (ATP) production with the added advantage of fewer total sugars and calories. The new formula is comprised of 11 food groups, including potent mangosteen skin extract. Backed by advanced scientific research and tested on 88 nutrigenomic profiles, the new formulation revealed enhanced antioxidant properties. 96.34% DPPH Radical Scavenging activity, an approximate 22% increase compared to Mitogize.

 

DSY Wellness

 

On November 11, 2021, Agape ATP Corporation (Labuan) formed a joint-venture entity, DSY Wellness with Mr. Steve Yap following which Agape ATP Corporation (Labuan) owns 60% of the equity interest, to pursue the business of providing complementary health therapies. The establishment of DSY Wellness is a further expansion of our business into the health and wellness industry. DSY Wellness offers health consultancy and advice, as well as nutritional supplements at medical dosages, as prescribed by in-house nutritional practitioners.

 

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ORYC-Organic Youth Care Cleansing Bar

 

ORYC-Organic Youth Care Cleansing Bar is a natural, organic cleansing soap for skin. It contains pure Australian-accredited natural and organic plant oils acting as a high quality and natural skin lubricant. It maintains the softness of the skin while promoting skin beauty and radiance.

 

 

ÉNERGÉTIQUE

 

The following is a list of our ÉNERGÉTIQUE products:

 

N°1 Med-Hydration

 

Formulated with a Sea Grape (Caulerpa lentillifera) extract, the N°1 Med-Hydration enhances skin moisture and luminosity. This treatment effectively improves the moisture content of the inner skin layer and rejuvenate the skin barrier function in order to avoid moisture loss.

 

 

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N°2 Med-Whitening

 

Formulated with Peach Blossom Stem Cell Extract, N°2 Med-Whitening has clinically shown its efficacy in inhibiting the melanin synthesis, down-regulating the melanin synthesis gene, boosting skin moisture level and protecting skin against UV radiation.

 

 

N°3 Med-Firming

 

Formulated with the Djulis (Chenopodium formosanum Koidz) Seed Extract, the native cereal plant in Taiwan is traditionally called “ruby of cereals.” The formulation is clinically proven to be effective in stimulation of collagen secretion and anti-advances glycation end-products (AGEs) reducing the glycation of skin collagen, providing protection and maintenance of the basal skin collagen production.

 

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BEAUNIQUE

 

The Company’s BEAUNIQUE product series focuses on the research of our diet’s impact on modifying gene expressions in order to address genetic variations and deliver personalized nutrigenomic solutions for every individual.

 

Trim+

 

Trim+ is the first product launched under this series, which utilizes advanced technology to extract active ingredients in foods. Trim+ has been scientifically proven to be effective in inhibiting the activities of carbohydrates digestive enzymes, which results in a reduction of the breakdown and absorption of sugars.

 

 

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ÉNERGÉTIQUE

 

On November 3, 2019, the Company expanded its beauty products under the ÉNERGÉTIQUE series, to include beauty essentials of the skincare routine, i.e. the ÉNERGÉTIQUE Hyaluronic Acid Serum and ÉNERGÉTIQUE Mousse Facial Cleanser. These products have extended the ÉNERGÉTIQUE brand vision in offering a total dermal solution for a healthy skin beginning from the cellular level.

 

ÉNERGÉTIQUE Hyaluronic Acid (HA) Serum

 

Formulated with four functional hyaluronic acids and a unique peptide, this scientifically advanced and intensive quintuple action serum has been proven to deliver 5Rs dermal benefits. Filled in an innovative yet convenient and hygienics syringe packaging, this HA serum also ensures consumer benefits for every skin type.

 

 

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ÉNERGÉTIQUE Mousse Facial Cleanser

 

Formulated with mild surface-active agents available on the market, this facial cleanser is designed to deliver a distinct cleansing benefits to consumers. The unique mousse like-foam delivers a comfortable and soft feeling of the skin during and after use without compromising the moisturizing level and viscoelastic properties of the skin.

 

 

Our Business Model

 

We believe that the direct-selling channel is ideally suited to market our products, because sales of health solution and personal care products are strengthened by ongoing personal contact between retail consumers and distributors. This personal contact may enhance consumers’ nutritional and health education and motivate consumers to begin and maintain wellness and weight management programs. In addition, by using our products themselves, distributors can provide first-hand testimonials of product effectiveness, which can serve as a powerful sales tool.

 

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We are focused on building and maintaining our distributor network by offering financially rewarding and flexible career opportunities through the sale of quality, innovative products to health conscious consumers. We believe the income opportunity provided by our bonus program appeals to a broad cross-section of our members, particularly those seeking to supplement family income, start a home business or pursue entrepreneurial, full and part-time, employment opportunities. Our distributors, who are all independent third parties, profit from selling our products and also earning bonuses through performance of their network group, the establishment of their own network group and the performance of distributors recruited under their own network group. Top performing distributors with their own physical stores may also become stockists of the company, whereby they enjoy benefits such as maintaining a certain amount of the Company’s inventory in their store premises, with the requirement that all product sales are monitored through our centralized stock tracking system and accounted back to us. The stockists have the option of returning or exchanging any unsold inventory consigned to them.

 

We enable distributors to maximize their potential by providing a broad array of motivational, educational and support services. We motivate our distributors through our performance-based compensation plan, product-training seminars, workshops and participation in routine promotional activities.

 

We are committed to providing professionally designed educational training materials that our distributors can use to enhance recruitment and to maximize their sales. We conduct several training sessions per year to motivate our distributors. These training events teach our distributors not only how to develop invaluable business-building and leadership skills, but also how to differentiate our products with their consumers, including information sessions presented by in-house nutritional consultants.

 

Our corporate-sponsored training events provide a forum for distributors, who otherwise operate independently, to share ideas with us and each other. In addition we are also developing an e-marketing and e-trading platform allowing for marketing and trading of products to members, as well as online recruitment of new members and to provide direct sales to customers.

 

We are committed to providing our distributors with quality products to help them increase sales and recruit additional distributors. We leverage our team of in-house nutritional consultants with rich experience gained in the area of nutrition, in collaborating with our customers and clients to understand the health and wellness market via a process of consultative review. This review team is headed by the Head of Product Development. We then communicate our findings and proposals to third-party suppliers to improve formulations, to bring about new products for distributors and members who are ready to market to end-users.

 

We place a strong emphasis on the science of nutrition. We have obtained the appropriate authorizations from the Food Safety and Quality Division, and/or registered with the National Pharmaceutical Regulatory Agency (NPRA) of the Ministry of Health, Malaysia for our products. Whenever products are purchased for inventory replenishment, samples are randomly selected from every batch for testing at laboratories registered with the Ministry of Health Malaysia.

 

Our Customers

 

General

 

We provide health and wellness products and advisory services to health-conscious customers in the Malaysian market. Such customers are able to enjoy membership discounts across all our products by becoming members.

 

Our distributors enjoy further discounts on all of our products. Besides our three sales branches that are located in Kuala Lumpur, Johor Bahru and Ipoh, our products are also distributed to customers and members by our network of three stockists who are also independent distributors, whose store premises are located in two other locations in Malaysia.

 

We believe that our products are particularly well-suited for direct distribution because the sale of health and nutrition products are strengthened by ongoing personal contact between retail customers and distributors. We believe our continued commitment to sourcing quality science-based products will enhance our ability to attract new customer, as well as increase the productivity and retention of our distributors.

 

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Structure of the membership program

 

Our customers are able to become lifetime members by paying a one-time membership fee with the purchase of specific products. Doing so allows the customer to enjoy membership discounts on all our products.

 

Members who accumulate a predetermined number of purchases are automatically promoted to become a distributor of the Company. Other than helping distributors achieve physical health and wellness through the use of our products, we offer our distributors, who are independent third parties, bonuses based on various performance factors. Distributors are required to maintain a predetermined number of purchases per year in order to maintain their distributor status.

 

Top performing distributors with their own physical stores may also become stockists of the Company, whereby they enjoy benefits such as maintaining a certain amount of the Company’s inventory in their store premises. The stockists shall account to the Company for all products sales from their store premises as monitored through the Company’s centralized stock tracking system. The stockists shall have the option to either return or exchange the Company’s inventory consigned to them that are unsold.

 

The following table sets forth the number of members and distributors at the dates indicated:

 

   Number of Distributors   Number of Members   Total Number of Distributors and Members 
As at June 30, 2023    56,462    72,190    128,652 

 

Distributors’ and members’ earnings

 

Distributors and members earn profits from the sales of our products to customers. Distributors enjoy additional discounts compared to members, allowing them to earn higher direct profits through the differences in pricing when selling products they bought at distributors’ prices which are more favorable than member’s prices to customers.

 

Members are encouraged to build their respective network group. Members are promoted to distributors if they manage to recruit the requisite number of members; and the network group is able to achieve set sales targets. Other than preferential distributor pricing for the purchase of the Company’s products, distributors enjoy bonuses from the collective performance of their network group. There are several levels of distributors depending on the size and the collective sales performance of their respective network group. Each level affords bonus benefits in a different form in ascending order. A higher-level distributor will be compensated with higher returns in the form of bonus entitlements.

 

Distributors and members motivation and training

 

We believe that motivation, inspiration and training are key elements in the success of sales via network group marketing. Together with our distributors and members, we have established a consistent schedule of gatherings to support those needs. We conduct several training sessions per year to educate and motivate our distributors and members. The training sessions are typically presented by in-house staff with suitable background in nutrition, in order to provide key nutrition information about our products, as well as providing workshops to promote presentation skills to attending participants.

 

Our Suppliers

 

Currently, all of our products are acquired from unrelated third parties located in Australia, the United States, Germany and Malaysia, and rebranded by us. Due to the high costs associated with research and development of nutrition and health products, we do not maintain any facilities to produce our products. We have no expenditures or expenses relating to research and development of our product. We leverage our team of in-house nutritional consultants with rich experience gained in the area of nutritionist work, in collaborating with our customers and clients to understand the health and wellness market via a process of consultative review. We then communicate our findings and proposals to third-party suppliers to improve formulations and to bring about new products for distributors and members who are ready to market to end-users.

 

Up to the year ended December 31, 2020, we purchased from Agape S.E.A. Sdn Bhd, one of our largest suppliers, through the SEA Supply Agreement. For more information, please see “The SEA Supply Agreement” below. For the year ended December 31, 2022, we purchased from our three largest suppliers through purchase order forms which included customary terms including unit price, quantity, total price of the orders, and order lead times. We did not enter into any long-term supply agreements with our major suppliers for the six months ended June 30, 2023.

 

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The SEA Supply Agreement

 

Agape S.E.A Sdn Bhd is a dietary supplement company founded in Malaysia. We originally entered into the SEA Supply Agreement with Agape S.E.A. Sdn Bhd, which was one of our largest suppliers at the time, in May 2018. Under the SEA Supply Agreement we purchased dietary supplement products and skincare products from Agape S.E.A.

 

However, the Company no longer relied on the VIE after the fiscal year ended December 31, 2020. For the six months ended June 30, 2023, and the years ended December 31, 2022 and 2021, we did not purchase any products from Agape S.E.A. Sdn Bhd.

 

The following summarizes the major terms of the SEA Supply Agreement:

 

Sales of Goods:   The agreement stipulates the type of goods sold, transported and delivered, with a minimum quantity per order between 5,000 to 10,000 units per order.
     
Purchase price:   The agreement stipulates that the Company shall place order for goods using a purchase order. The purchase prices under the SEA Supply Agreement are based on and in accordance with each purchase order. Agape S.E.A shall be responsible for all taxes in connection with the purchase of goods under the SEA Supply Agreement.
     
Payment:   Payment for goods is due within seven days of the date of the Agape S.E.A’s invoice, which date will not be before the date of delivery of goods.
     
Delivery:   The delivery date and delivery destination of each purchase shall be determined by both parties in a purchase order. Agape S.E.A. shall deliver the goods in accordance with the terms and conditions specified separately in each purchase order, including without limitation the quantity and delivery date. The Company is responsible for freight insurance arising from shipment to a single delivery destination. For destinations outside of Malaysia, the Company is also responsible for freight, freight insurance, tariffs and custom clearance fees.
     
Risk of Loss:   Title to and risk of loss of the goods shall pass to the Company upon shipment of the goods.
     
Right of Inspection   The Company shall be allowed to examine the goods once received and shall do so within fourteen days after the receipt of the goods. In the event the Company discovers any damages, shortages or other non-conformance of the goods, the Company shall notify Agape S.E.A within fourteen days specifying the basis of the claim. In the event of non-conformance, the Company has the following options:
     
    -retuning the goods for a replacement at Agape S.E.A’s expense;-returning the goods at Agape S.E.A’s expense for a credit of the full purchase price on future transactions; or-returning the goods at Agape S.E.A’s expense for a full refund of the purchase price.
     
Warranties:   The buyer acknowledges that it has not relied on, and that Agape S.E.A has not made any representations or warranties with respect to the quality or condition of the goods, and is purchasing the goods on an “as is” basis.
     
Security Interest:   The Company grants Agape S.E.A a security interest in the goods, until the Company has paid the seller in full for the goods.

 

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Seller Representations and Warranties:   Agape S.E.A warrants that the goods are free, and at the time of delivery will be free, from any security interest or other liens or encumbrances, and there are no outstanding titles or claims of title hostile to the rights of Agape S.E.A in the goods.
     
Limitation of Liability:   Agape S.E.A will not be liable for any indirect, special, consequential or punitive damages (including lost profits) arising out of or relating to this agreement or the transactions contemplated by it contemplates.
     
Assignment:   Neither party may assign any of its rights or delegate any performance under the agreement, except with prior consent from the other party
     
Governing Law:   The terms of the agreement shall be governed by and construed in accordance with the laws of England.
     
Breach/ Termination:   Each party has an obligation to notify the other party of any breach, and where the breach is rectifiable, the breaching party has 21 days from the date of notification of its breach to rectify.

 

Quality Control

 

At present, our products are predominately sold in Malaysia. As the contents and combination of the main ingredients in our ATP Zeta Health Program and BEAUNIQUE series are categorized as health food rather than medicines or drugs, all of our products require authorization from the Food Safety and Quality Division of the Ministry of Health, Malaysia according to the Food Act 1983 (ACT 281) & Regulations in order to be sold in the country. Accordingly, we have obtained the appropriate authorizations from the Food Safety and Quality Division of the Ministry of Health, Malaysia for all products in our ATP Zeta Health Program and BEAUNIQUE series.

 

Our ÉNERGÉTIQUE series is regulated under the Control of Drugs and Cosmetics Regulations 1984, the Ministry of Health, Malaysia. We have also obtained the appropriate authorizations for distribution and sale of the products.

 

Inventory

 

The Company operates a central warehouse at its head office in Kuala Lumpur, Malaysia, which typically maintains an inventory reserve of up to 6 months per product. Inventory is transferred to the Company’s sales branches via ordering through the Company’s centralized stock tracking system. Stockists of the Company are required to have physical stores, and enjoys the benefit of being able to store certain amount of inventory in their stores for convenience. The stockists shall account to the Company for all products sales from their store premises as monitored through the Company’s centralized stock tracking system. The stockists shall have the option to either return or exchange the Company’s inventory consigned to them that are unsold.

 

Seasonality

 

The Company’s business is generally not subject to any seasonality factors.

 

Warranty

 

Our products include a customer satisfaction guarantee. Under this guarantee, within 90 days of purchase, any customer who is not satisfied with our product for any reason may return it or any unused portion of it to the distributor from whom it was purchased for a full refund from the Company or credit toward the purchase of another product.

 

Historically, product returns have not been significant.

 

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E-commerce system

 

In order to facilitate our continued growth and to support distributor activities, we continually invest and upgrade our platforms. In 2019, we invested in an initiative to establish e-commerce through the setup of e-trading of our products on an existing Malaysian e-commerce trading platform. Our e-trading initiative will be actively promoted for online recruitment of new members by existing distributors and to provide direct sales to customers. Once the E-trading platform has provided tangible results in the Malaysia market, we intend to expand the platform to other geographic markets in order to duplicate its success. We also intend to approach online social influencers as part of our marketing strategy to promote our products and our e-commerce platform.

 

Intellectual Property

 

We consider trademarks, patents and copyrights to protect our intellectual property rights critical to our success. We are the registered owner of five registered trademarks and with 1 trademark pending registration in Malaysia. We have one applied to register an additional one trademarks in Malaysia. We are also the registered owner of five domain names, namely “agapeatpgroup.com”, “agapeatpcorporation.com”, “atpsummit.com”, “agapeatpgroup.my” and “agapeatpgroup.com.my.”

 

Category   Registration Number   Trade Marks Logo   Ownership   Country   Effective Date and Duration
Trademark   06010456  

 

 

[Class 30]

  Agape Superior Living Sdn. Bhd.   Malaysia  

May 20, 2016

For 10 Years

                     
Trademark   2017005364       Agape ATP Corporation   Malaysia   May 05, 2017
For 10 Years
                     
        [Class 35]            
                     
Trademark   2019023588  

 

[Class 3]

  Agape ATP Corporation   Malaysia  

July 03, 2019

For 10 Years

                     
Trademark   2019023590     Agape ATP Corporation   Malaysia  

July 03, 2019

For 10 Years

                     
        [Class 5]            
                     
Trademark   2019023589     Agape ATP Corporation   Malaysia   July 03, 2019
For 10 Years
                     
        [Class 16]            
                     
Trademark   2019036886     Agape Superior Living Sdn. Bhd.   Malaysia   June 03, 2019
For 10 Years
                     
        [Class 5]            

 

Employees

 

As at June 30, 2023 we had 30 employees (excluding our Directors). The following table sets forth the number of employees by function:

 

Function 

Number of

employees

 
     
Senior Management   

1

 
Business Development Department   2 
Finance Department   5 
Human Resources Department   5 
Operations Department   8 
Product Development Department   3 
Marketing Department   3 
Corporate Affairs Department   3 
Total   30 

 

Properties

 

We currently lease 6 properties ranging from approximately 2,500 to 11,900 square feet in Kuala Lumpur, Johor Bahru and Ipoh which primarily carry out the functions of a staff accommodation, warehouse, office, service centers and sales branches in different regions of Malaysia.

 

Insurance

 

The Employees’ Social Security Act, 1969, Malaysia mandates employers and employees to make a monthly contribution to the Social Security Organisation, Malaysia, (“SOCSO”) for any employee who is employed for wages paid under a contract of service or apprenticeship with an employer for the purpose of providing social security protection to employees and their dependents against occupational injuries, including industrial accident, accident during emergency at the employers’ premises, occupational diseases and commuting accidents. Depending on the monthly wages earned by the employee, employers shall cause to be deducted from the respective employee’s wages, amounts that ranges between RM0.10 to RM19.75 for monthly wages between RM30 to RM4,000. The employers’ contribution correspond to the said rates are between RM0.4 to RM69.05. Rates applicable to both the employee and employer are fixed at the maximum rate of RM19.75 and RM69.05 respectively. Employees who have attained 60 years of age are not required to contribute to the scheme. The employer’s responsibility towards this group shall be at a reduced rate which ranges between MYR0.30 to RM49.40 for the said wage band.

 

Other than SOCSO, effective January 1, 2018, employees and employers in the private sector are mandated to contribute to an employment insurance system, (“EIS”) under the Employment Insurance System Act, 2017. Both the employee and employer shall contribute at an equal rate at 0.2% of the employee’s wages under the scheme, subject to a maximum monthly wage rate of RM4,000. No further contribution to the scheme is required from the employee or the employer for employees who have attained 60 years of age; and employees aged 57 and above who have no prior contributions are exempted.

 

We do not have any third-party liability insurance to cover claims in respect of personal injury or property or environmental damage arising from accidents on our property or relating to our operations. Such insurance is not mandatory according to the laws and regulations of Malaysia. We typically do not require our distributors to purchase insurance regarding their operations. We believe this practice is consistent with customary industry standards.

 

Legal Proceeding

 

We are not subjected to nor engaged in any litigation, arbitration or claim of material importance, and no litigation, arbitration or claim of material importance is known to us to be pending or threatened by or against our Company that would have a material adverse effect on our Company’s results of operations or financial condition.

 

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REGULATIONS

 

This section sets forth a summary of the most significant rules and regulations that affect our business activities in Malaysia or the rights of our stockholders to receive dividends and other distributions from us.

 

Regulations Related to Health and Wellness

 

The Food Act 1983 (Act 281) and the Food Regulations 1985

 

The primary legislations governing the various aspects of food safety and quality control in Malaysia are (i) the Food Act 1983 (Act 281) (“the 1983 Act”); and (ii) the Food Regulations 1985 (“the 1985 Regulations”), both under the purview of the Food Safety and Quality Division (FSQD) of the Ministry of Health, Malaysia. The ministry also oversees the implementation and enforcement of the legislations. The objective of the 1983 Act is to ensure that the public is protected from health hazards and fraud in the preparation, sale and use of foods and for matters incidental thereto or connected therewith.

 

The 1983 Act and the 1985 Regulations are applicable to all foods sold in the country either locally produced or imported, covers a broad spectrum from compositional standards to food additives, nutrient supplements, contaminants, packages and containers, food labelling, procedure for taking samples, food irradiation, and penalty.

 

The 1983 Act strictly prohibits food adulteration, food containing substances injurious to health and food unfit for human consumption. The legislation also ensures that consumer gets the right information from product labels; and that claims on food labels are legitimate.

 

Food as defined under the 1983 Act, includes every article manufactured, sold or represented for use as food or drink for human consumption or which enters into or is used in the composition, preparation, preservation, of any food or drink and includes confectionery, chewing substances and any ingredient of such food, drink, confectionery or chewing substances. This includes food for special dietary use for persons with specific diseases, disorders or medical conditions, and food which contain quantities of added nutrients allowable under the 1983 Act and the 1985 Regulations.

 

The general requirements on product labelling for food on sale provided under the 1985 Regulations are as follows:

 

(i) All labels shall be durably marked on the material of the package or on material firmly attached to the package.
   
(ii) All text should be in Bahasa Malaysia, i.e. the official language of Malaysia, if the food is produced, prepared or packaged in Malaysia. If the food is imported, all text should be in Bahasa Malaysia or English. In either case, translation into other languages may be included.
   
(iii) Important particulars required on product labels are:

 

  A description of the food containing the common name of its principal ingredients. In the case of mixed and blended food, the appropriate description that the contents are mixed or blended. Where the food contains beef or pork, or its derivatives, or lard, a statement to that effect. Alcohol where presence in the food should be clearly marked in capital bold-faced lettering of a non-serif character not smaller than 6 point, in the form, “CONTAINS ALCOHOL”. Where the food consists of two or more ingredients, other than water, food additives and added nutrient, the appropriate designation of each of those ingredients in descending order of proportion by weight, and wherever required by the 198s Regulations, a declaration of the proportion of such ingredient. Any ingredients known to cause hypersensitivity shall be declared on the label.
     
  Quantity of the food package.

 

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  The name and address of the manufacturer and packer, or the owner of the rights of manufacture or packing or the agent of any of them, for food manufactured or packed in Malaysia; and the additional information of the name and address of the importer in Malaysia and country of origin for imported food.
     
  Depending on its composition, words such as “genetically modified (name of ingredient)”, “produced from genetically modified (name of ingredient)”, or “gene derived from (common name of such animal”) shall appear on the label.
     
  Marked with the expiry date or the date of minimum durability of that food.
     
  If the validity of date marking of food is dependent on its storage, then the storage direction of that food shall also be required on its label.

 

Further, based on the Guide to Nutrition Labelling and Claims, the nutritional information that must be declared on a product label are energy, protein, carbohydrate and fat. In addition, total sugars must also be declared for ready-to-drink beverages. Information on energy value is to be expressed as kcal (kilocalories) per 100 g or per 100 ml of the food or per package if the package contains only a single portion. In addition, the energy value should also be given for each serving of the food as quantified on the label. Besides kcal, energy value may also be expressed as kilojoule (kJ). The amount of protein, carbohydrate and fat should be expressed as g per 100 g or per 100 ml of the food or per package if the package contains only a single portion. In addition, the amount of these nutrients in the food should also be given for each serving of the food as quantified on the label.

 

Other than the mandatory nutrients, other nutrients may also be displayed on the nutrition label. These include vitamins and minerals, dietary fibre, sodium, cholesterol, fatty acids, amino acid, nucleotide and other food components.

 

Both ATP Zeta Health Program and BEAUNIQUE product series are regulated under the 1983 Act and the 1985 Regulation. ASL, the product owner of these product series are subject to 1983 Act and the 1985 Regulation.

 

Traditional and Complementary Medicine (T&CM) Act 2016 [Act 775]

 

The Traditional and Complementary Medicine (T&CM) Act 2016 [Act 775] (the “TCM Act”) is an act to provide for the establishment of the T&CM Council to regulate the T&CM services in Malaysia and to provide for matters connected therewith. The TCM Act received Royal Assent on 2 March 2016 and was published in the Federal Government Gazette on 10 March 2016.

 

The enforcement of the TCM Act is implemented in phases. Phase 1 begun operation on August 1, 2016 with the establishment of the T&CM Council, identification of recognized practice areas, setting up the registration criteria for recognized practice areas, designation of practitioner body under section 42 of the TCM Act and enforcement of the various sections under Phase 1 in the TCM Act.

 

Phase 2 of the TCM Act begun operation on March 1, 2021 and include the registration of T&CM practitioners in recognized practice areas with the T&CM Council, the enforcement of various sections under the TCM Act and the operation of T&CM Regulations 2021. The transitional period of Phase 2 of the TCM Act began on March 1, 2021 and will last until February 29, 2024.

 

The business activities of DSY Wellness International Sdn Bhd, our complementary health therapies are regulated under TCM Act. DSY Wellness International Sdn Bhd complementary health therapies are subject to TCM Act.

 

Control of Drugs and Cosmetics Regulations 1984

 

The Malaysian government enacted the Control of Drugs and Cosmetics Regulations 1984 (“the 1984 Regulations”) to regulate the manufacture, sell, supply, import, possess or administer of cosmetics. The authority that oversee the 1984 Regulations is the National Pharmaceutical Regulatory Agency (“NPRA”) under the Ministry of Health, Malaysia. All cosmetics industry players who intend to manufacture or import any cosmetic, must apply the notification of cosmetics (“NOC”) through NPRA.

 

Pursuant to Regulation 18A of the 1984 Regulations, cosmetics cannot be manufactured or sold if:

 

(i) The cosmetic has not been notified with the NPRA;
   
(ii) The person is a not person who has been designated to place the notified cosmetics in the market;
   
(iii) The cosmetic is a notified cosmetic but it has been mixed with poison (as defined by the Poisons Act 1952);
   
(iv) The notified cosmetic has been mixed with a registered product;
   
(v) The cosmetic is labelled with another name other than the name notified by the Director of Pharmaceutical Services;
   
(vi) The cosmetic has been labelled in a way that does not comply with any directives/guidelines issued by the Director of Pharmaceutical Services;
   
(vii) The cosmetic’s notification has been cancelled by the Director of Pharmaceutical Services; or
   
(viii) The cosmetic is labelled with words, symbols or safety features that claim to be true but is otherwise.

 

ÉNERGÉTIQUE product series are regulated under the 1984 regulation. ASL, the product owner of these product series is subject to the 1984 Regulations and relevant regulation.

 

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Regulations Related to Consumer Protection

 

Consumer Protection Act 1999 (Act 599)

 

The principal law for consumer protection in Malaysia is the Consumer Protection Act 1999 (Act 599) (“the 1999 Act”). The 1999 Act establishes various consumer protection mechanisms in Malaysia, and bridge gaps that may occur in other major laws, which may be inadequate in protecting consumers. The government agency which is primarily responsible for policy-making and law enforcement on consumer protection in Malaysia is the Ministry of Domestic Trade and Consumer Affairs (MDTCA). The MDTCA is also responsible for receiving consumer complaints and acts as a secretariat to the National Consumer Advisory Council (NCAC) – an institution established by the Minister of Domestic Trade and Consumer Affairs to advise him on any relevant consumer issues and the implementation of the 1999 Act.

 

The 1999 Act has undergone several amendments since its enactment to cover various emerging issues relating to consumers, including the inclusion unfair contract terms, inclusion of credit sale agreements of goods and the most recent amendment on July 23, 2019 related to Tribunal for Consumer Claims Malaysia. Amendments to this Act are to increase the jurisdiction limit of claim hearing from RM25,000.00 to RM50,000.00 and the increase of maximum penalty for non-compliance with the Tribunal’s award.

 

The 1999 Act covers almost every aspects of consumer protection; ranging from misleading and deceptive conducts, false representation and unfair practices; safety of goods and services; unfair contract terms; guarantees in respect of the supply of goods and services; and product liability; to the establishment, structure and functions of the National Consumer Advisory Council; the Committee on Advertisement; the Tribunals for Consumer Claims; and other matters related to enforcement, offences, remedies, and compensation.

 

All series products produced by us in Malaysia are subject to Consumer Protection Act 1999 (Act 599).

 

Direct Sales and Anti-Pyramid Scheme Act 1993 (Act 500) and Regulations.

 

In Malaysia, network marketing is regulated by the Direct Sales and Anti-Pyramid Scheme Act 1993 (Act 500) (“the 1993 Act) and Regulations. The 1993 Act provides for the licensing of persons carrying on direct sales business, for the regulation of direct selling, for prohibiting pyramid scheme or arrangement, chain distribution scheme or arrangement, or any similar scheme or arrangement, and for other matters connected therewith. The implementation and enforcement of the 1993 Act is governed by the Ministry of Domestic Trade and Consumer Affairs.

 

Under the 1993 Act, subject to section 14 and 42 no person shall carry on any direct sales business unless it is a company incorporated under the Companies Act 1965 and holds a valid licence granted under Section 6. The Controller may grant licence under Section 6 of the 1993 Act with conditions and licensee shall comply with the any conditions of the licence imposed by the Controller. By virtue of Section 8 of the 1983 Act, the Controller has the power to revoke a licence granted if he is satisfied that there are grounds on which his power to revoke a licence is exercisable under subsection 8(1). In lieu of revocation of licence, the Controller may restrict the licence by:

 

(a) Imposing limits on the duration of the licence;
   
(b) Imposing conditions as he thinks desirable or expedient for the protection of the purchasers; or
   
(c) Imposing both limits and conditions on the licence.

 

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We have the responsibility to ensure that our marketing plan is in compliance with the Direct Sales (Scheme and Conduct) Regulations 2001, not promoting pyramid scheme and have the following characteristics:

 

(a) In the presentation of the direct sales scheme, a person who carries on any direct sales business shall not mislead participants by overemphasizing on disproportionately high bonus or bonus payout. Each participant shall be provided with sales kit that includes the marketing plan and code of conduct of the company.
   
(b) Any person who carries on a direct sales business shall provide an incentive based on the volume or quantity of goods or services sold or distributed by each participant and not based on recruitment of persons into the scheme.
   
(c) Participants not to purchase goods or services in an unreasonable amount. Each participant is required to purchase goods or service in an amount that can be expected to be resold or consumed within a reasonable period of time.

 

Regulations Related to Intellectual Property Rights

 

Intellectual property system in Malaysia is administered by the Intellectual Property Corporation of Malaysia (MyIPO), an agency under the Ministry of Domestic Trade and Consumer Affairs.

 

Trademarks Act 2019 (Act 815)

 

The Trademarks Act 2019 (Act 815) (“the 2019 Act”) officially came into force in Malaysia on 27 December 2019. The Act repealed the Trade Marks Act 1976 and is seen as opportune in enabling Malaysia to adhere not only to commercial demands and sophistication of the current era, but also to international standards and procedures. The Trademarks Regulations 2019 is also now in force having been gazetted in the Government Gazette on 27 December 2019.

 

Malaysia is also a member of various trademark-related treating, including:

 

(i) Protocol relating to the Madrid Agreement concerning the International Registration of Marks since 27 December 2019;
   
(ii) Nice Agreement concerning the International Classification of Goods and Services since 28 September 2007;
   
(iii) Paris Convention for the Protection of Industrial Property since 1 January 1989; and
   
(iv) Agreement on Trade-related Aspects of Intellectual Property Rights (TRIPS) since 1 January 1995.

 

The 2019 Act provides that any person who claims to be the bona fide proprietor of a trademark may apply for the registration of the trademark if:

 

(i) the person is using or intends to use the trademark in the course of trade; or
   
(ii) the person has authorised or intends to authorise another person to use the trademark in the course of trade.

 

The 2019 Act has also expanded the types of trademark recognized for registration to be more than just word, logo, numbers, name. signature, letter and to include shape of goods or their packaging, colour, sound, scent, hologram, positioning marks and sequence of motion of any combination thereof; provided that they must be signs capable of being represented graphically. ​

 

In general, Malaysia provides for protection for both registered and unregistered trademarks. Unregistered trademarks are protected under common law rights, particularly in the tort of passing off. In fact even during the examination of trademark, the Registrar shall refuse, under relative grounds of Section 24(4) of the 2019 Act, to register it if the mark’s use in Malaysia is prevented by virtue of any rule of law protecting an unregistered trademark or other sign used in the course of trade including the law of passing of.

 

The scope of trademark infringement and its exemptions has been substantially expanded by the 2019 Act. There could now be infringement even in the use of a similar mark on similar goods or services (as opposed to being identical). Liability will stick to secondary users who know or have reasons to believe that such use is without authorization of the trademark proprietor.

 

The 2019 Act and relevant regulation are applicable own our brand, word, logo, numbers, name. signature, letter and to include shape of goods or their packaging, color, sound, scent, hologram, positioning marks and/or sequence of motion of any combination.

 

Copyright Act 1987 (Act 332)

 

Copyright protection in Malaysia is governed by the Copyright Act 1987 (Act 332) (“the 1987 Act) which provides comprehensive protection for copyrightable works. The 1987 Act outlines the nature of works eligible for copyright (which includes computer software), the scope of protection, and the manner in which the protection is accorded. A unique feature of the 1987 Act is the inclusion of provisions for enforcing the Act, which include such powers to enter premises suspected of having infringing copies and to search and seize infringing copies and contrivances. Malaysia is a signatory of the Berne Convention. Foreign works of non-Berne member countries are also protected if they are made in Malaysia and are published in Malaysia within thirty days of their first publication in the country of origin.

 

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Unlike trademarks, designs and patents (other intellectual property rights), there is no specific system of registration for copyright in Malaysia. Although copyright is a non-registrable right in Malaysia and enjoys automatic protection, ownership of copyright is difficult to establish. As such, proper documentation can be prepared to prove ownership. Copyright owners can claim ownership by way of a Statutory Declaration or by filing a Voluntary Notification at the MyIPO.

 

The definition of a literary work now includes table or compilations “whether or not expressed in words, figures or symbols and whether or not in a visible form”. The owner of copyright in a work including a derivative work, will have the exclusive right to control “the transmission of a work through wire or wireless means to the public, including the making available of a work to the public in such a way that members of the public may access the work from a place and at a time individually chosen by them”.

 

It is also an infringement of copyright to circumvent any effective technological measures aimed at restricting access to works, removal or alteration of any electronic rights management information without authority, or distribution, importation for distribution or communication to the public, without authority, works or copies of works in respect of which electronic rights management information has been removed or altered without authority.

 

The 1987 Act and the relevant regulations are benefited us which we are eligible to claim ownership by compiling proper documentation to prove ownership via a Statutory Declaration or by filing a Voluntary Notification at the MyIPO.

 

Regulations Related to Employment and Social Security

 

Employment Act 1955 (Act 265)

 

The Employment Act 1955 (Act 265) (“the 1955 Act) is the primary legislation on labour matters in Malaysia. The 1955 Act provides for minimum work requirements and benefits of employment, such as maximum working hours, overtime entitlement, leave entitlement, maternity protection and termination benefits. The 1955 Act applies only to employees earning a monthly wages of not more than RM2,000.00 or to employees, irrespective of their monthly wages, who are engaged in manual labour, including artisan or apprentice, or who are engaged in the operation of maintenance of mechanically propelled vehicles operated for the transport of passengers or goods or for commercial purposes, or who supervise or oversee other employees engaged in manual labour or who are engaged in any capacity in any vessel registered in Malaysia or who are engaged as domestic servant.

 

Children and Young Persons (Employment) Act 1966 (Act 350)

 

Children and Young Person (Employment) Act 1996 (Act 350) (“the 1996 Act”) prohibits children from working near hazardous and poisonous material. The 1996 Act defines a “child” is a person who is under the age of fifteen years and a “young person” is a person who is fifteen or older, but below the age of eighteen years. The 1996 Act goes on to provide the minimum working hours for a child and young person. Further, under 1996 Act no child or young person shall be, or be required or permitted to be, engaged in any employment contrary to the provisions of the Factories and Machinery Act 1967 (Act 139), the Occupational Safety and Health Act 1994 (Act 514) or the Electricity Supply Act 1990 (Act 447) or in any employment requiring him to work underground. Any person contravening the provisions under the 1996 Act shall be guilty of an offense and shall be liable on conviction to imprisonment of not exceeding 2 years or to fine not exceeding RM50,000 or to both; and for repeat offenders, shall be liable on conviction to imprisonment of not exceeding 5 years or to fine not exceeding RM100,000 or to both.

 

Employees’ Provident Fund Act 1991 (Act 452)

 

The Employees’ Provident Fund Act 1991 (Act 452) (“the 1991 Act”) imposes the statutory obligations on employers and employees to make contribution towards the Employees Provident Fund, which is essentially a fund established as a scheme of savings for employees’ retirement and the management of savings for the retirement purposes. Under the 1991 Act, any employer who fails to pay the necessary contributions shall be liable to imprisonment for a term not exceeding three years or to a fine not exceeding ten thousand ringgit or to both.

 

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Employee’ Social Security Act 1969 (Act 4)

 

The Employee’s Social Security Act 1969 (Act 4) (“the 1969 Act’) was implemented to provide protection for employees and their families against economic and social distress in situations where the employees sustain injury or death. The schemes of social security under the 1969 Act are administered by Social Security Organization (“SOCSO”) and are financed by compulsory contributions made by the employers and the employees. Under the 1969 Act, any person who fails to make contribution shall be all be punishable with imprisonment for a term which may extend to two years, or with fine not exceeding ten thousand ringgit, or with both.

 

Employment Insurance System Act 2017 (Act 800)

 

SOCSO reached a milestone when the Employment Insurance System Act 2017 (Act 800) was introduced and enforced from 28 December 2017 with the aim to provide protection and assist workers who have lost employment through two (2) main components namely, the Employment Insurance and Active Labour Market Policies. The Employment Insurance System (EIS) provides protection to workers who have lost their employment through income replacement, reskilling and upskilling training to enhance their employability as well as employment services so that they can secure other suitable jobs fast.

 

Our all employees which under definition of the Employment Act 1955 (Act 265) (“the 1955 Act) are subject to the provision of Employees’ Provident Fund Act 1991 (Act 452), Employee’ Social Security Act 1969 (Act 4), and Employment Insurance System Act 2017 (Act 800).

 

Regulation Related to Taxation

 

Income Tax Act 1967 (Act 53)

 

The Income Tax Act 1967 (Act 53) (“the 1967 Act”) imposes a tax, known as income tax, for each year of assessment upon the income accruing in or derived from Malaysia, or received in Malaysia from other countries. A company is a tax resident in Malaysia if its management or control is exercised in Malaysia and generally, the place where directors’ meetings are held concerning management and control of the company are considered in determining where the management and control of the company is exercised.

 

Under the 1967 Act, any person who makes an incorrect tax return by omitting or understating income or gives incorrect information affecting chargeability to tax otherwise than in good faith shall be guilty of an offence and shall upon conviction be liable to a fine not less than RM1,000.00 and not more than RM10,000.00 and shall pay a special penalty of double the amount of tax which had been undercharged.

 

The Company which is incorporated under Companies Act 2016 (Act 777) is subject to Income Tax Act The Company which is incorporated under Companies Act 2016 (Act 777) is subject to Income Tax Act.

 

Regulation Related to Foreign Exchange Control

 

Financial Services Act 2013 (Act 758)

 

The Financial Services Act 2013 (Act 758) provides regulation and supervision of financial institutions, payment systems and other relevant entities and the oversight of the money market and foreign exchange market to promote financial stability and for related, consequential or incidental matters.

 

Pursuant to the Foreign Exchange Administration Rules, a resident entity with domestic ringgit is only allowed to invest abroad up to RM50 million per calendar year (“the Maximum Foreign Investment”). For the avoidance of doubt, the limit of such Maximum Foreign Investment applies to the resident entities within the group of companies.

 

Notwithstanding the above, the Foreign Exchange Administration Rules allows non-residents to remit out divestment proceeds, profits, dividends or any income arising from investments in Malaysia. Repatriation, however, must be made in foreign currency.

 

As such, if our operating subsidiaries intend to invest exceeding the Maximum Foreign Investment, we are required to seek approval from the controller of Foreign Exchange, Central Bank of Malaysia

 

Regulation Related to Competition Law

 

Competition Act 2010 (Act 712)

 

In Malaysia, under the Competition Act 2010 (Act 712) (“the 2010 Act), such provisions may be considered to be anti-competitive if they are found to significantly prevent, restrict or distort competition in any market for goods or services. The 2010 Act is regulated by the Malaysia Competition Commission (“MyCC”), an independent body established under the Competition Commission Act 2010 (Act 713) to enforce the 2010 Act. The Competition Commission Act 2010 empowers MyCC to carry out functions such as implement and enforce the provisions of the 2010 Act, issue guidelines in relation to the implementation and enforcement of the competition laws, act as advocate for competition matters; carry out general studies in relation to issues connected with competition in the Malaysian economy or particular sectors of the Malaysian economy; inform and educate the public regarding the ways in which competition may benefit consumers in and the economy of Malaysia.

 

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The 2010 Act prohibits horizontal or vertical agreements between enterprises that either the object or effect of significantly preventing, restricting or distorting competition in Malaysia. This is referred to as “Chapter One Prohibition”. MyCC has indicated in its “Guidelines on Chapter 1 Prohibition” that in general, anti-competitive agreements will not be considered “significant” if:

 

(i) the parties to the agreement are competitors who are in the same market and their combined market share of the relevant market does not exceed 20%’ or
(ii) the parties to the agreement are not competitors and their individual market share in relevant market is not more than 25%.

 

Further, the 2010 Act also prohibits enterprises from abusing their “dominant position” in a market. This is referred to as the “Chapter Two Prohibition”. The term “dominant position “refers to one or more enterprises possessing such significant power in a market that they are able to adjust prices, outputs, or trading terms without effective constraint from competitors or potential competitors. There are no specific thresholds for abuse of a dominant position However, the following are the types of abuses prohibited under the 2010 Act; (i) predatory behaviour (for example, margin squeeze, and predatory pricing); (ii) refusal to supply; (iii) buying up scarce supply; and (iv) limiting output.

 

Pursuant to MyCC “Guidelines on Chapter 2 Prohibition”, market share above 60% would be indicative that an enterprise is dominant. Nevertheless, market share shall not by itself be regarded as conclusive of dominance and other factors will be taken into account is assessing whether an enterprise is dominant.

 

In there is any infringement with the 2010 Act, MyCC may (i) require that the infringement be ceased immediately; (ii) specify steps which are required to be taken by the infringing enterprise(s) to bring the infringement to an end; (iii) impose financial penalties which could, for example, be 10% of the worldwide turnover of the relevant enterprise over the period during which an infringement occurred; or (iv) take any number of other actions, including imposing sanctions and penalties, as they deem appropriate.

 

We shall ensure there is any infringement with the 2010 Act, which we shall not:

 

(a) Be the parties to the agreement are competitors who are in the same market and their combined market share of the relevant market exceed 20%; or

 

(b) Be the parties to the agreement are not competitors and their individual market share in relevant market is more than 25%.

 

Regulation Related to Establishment, Operation and Management of Malaysia Subsidiaries

 

Companies Act 2016 (Act 777)

 

The Companies Act 2016 (Act 777) (“the 2016 Act”) stipulates that a company must be registered with the Companies Commission Malaysia in order to engage in any business activity. Under the 2016 Act, a company shall have - (a) a name; (b) one or more members, having limited or unlimited liability for the obligations of the company; (c) in the case of a company limited by shares, one or more shares; and (d) one or more directors. With the liberalization in Malaysia equity policy, foreign companies/investors generally could hold 100% equity in majority industries except for strategic sectors of national interest such as water, telecommunications, ports, and energy. For every industry, there are specific sector regulations issued by the relevant governmental departments. These include regulations that could impose restrictions on the foreign ownership of equity of a company, require higher paid up capital requirements and also prior regulatory approval before the commencement of business operations. However, limits on foreign ownership do remain in place across many sectors such as telecommunications, oil & gas, tourism, wholesale and retail distributive trade, and financial services. A corporation is a “wholly-owned subsidiary” of another corporation if it has no members except— (a) that other corporation or its nominee; or (b) a wholly-owned subsidiary of that other corporation or its nominee. Private companies require a minimum of one director. A director shall ordinarily reside in Malaysia by having a principal place of residence in Malaysia.

 

Pursuant to the 2016 Act, appointment of an auditor is mandatory. However, the Registrar may exempt private companies from appointing an auditor where the Company is dormant, a zero-revenue company or a threshold-qualified company. Companies that elect to be exempted from audit must still lodge unaudited financial statements and the required statutory certificates with the Registrar of Companies. Since the coming into effect of the 2016 Act, private companies are no longer obligated to convene annual general meetings. However, stockholders have the right to request for the directors of the company to convene a general meeting. This right is however subject to the requirements in Section 311 of the 2016 Act.

 

For all companies incorporated in Malaysia (except in Labuan, Malaysia) are subject to the Companies Act 2016 (Act 777).

 

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MANAGEMENT

 

Directors and Executive Officers

 

The following table sets forth information regarding our executive officers and directors as of the date of this prospectus:

 

Directors and Executive Officers (Last Name, First Name)   Age   Position/ Title
How Kok Choong   59   Chief Executive Officer, President, Director, Chief Operating Officer, Chairman of the board of Directors and Secretary

Lee Kam Fan Andrew

  61   Chief Financial Officer

Ramesh Ruben Louis

  46   Independent Director

Vong John Hing

  70   Independent Director
Chee Chin Aik   43   Independent Director

 

Dr. How Kok Choong is our founder and serves as our Chief Executive Officer, President, Director Chief Operating Officer, Chairman of the Board of Directors and Secretary since 2016. Dr. How is primarily responsible for overall development and business strategies, financial, administrative and human resources affairs of the Company. Dr. How has more than 20 years of experience in the senior management roles in the health and wellness industry. From 1987 to 2016, Dr. How was with the San Hin Group of Companies and his last position held was the group chief executive officer for the group. Since August 2003, Dr. How began to work for AGAPE Superior Living International Group as the global president and continues to hold this position. Further, since September 2009, Dr. How has worked for TH3 Holdings Sdn Bhd as president. Dr. How obtained a master’s degree and a doctorate degree in Business Administrative from Newport University, USA in December 1997 and December 2000, respectively. In Malaysia, Dr. How Kok Choong was recognized by the Junior Chamber Malaysia (JCM) as an Outstanding Young Malaysian 2003, and was awarded the title of Justice of Peace of Malaysia since 2005. Dr. How Kok Choong received the Outstanding Asian Community Contribution Award in 2011, Malaysia Top Team 50 Enterprise Award in 2011 and 2016, The Contributor Award (Medical and Health Research) in 2012, “Man of The Year” in Worldwide Excellence Award in 2015, “Man of The Year” in McMillan Global Award in 2016, The Distinguished Asia Pacific Outstanding Entrepreneur Lifetime Achievement Award in 2019, World Outstanding Chinese Entrepreneur Lifetime Award in 2019 and Certified Professional Trainer of The International Professional Managers Association in 2019.

 

Mr. Lee Kam Fan, Andrew serves as our chief financial officer of the Company. Prior to joining the Company in January 2021, Mr. Lee has approximately 38 years of accounting and finance related experience. Since July 2014, Mr. Lee has been the proprietor of Andrew Lee & Company. Since June 2010, Mr. Lee served as an adjunct lecturer of the HKICPA Processional Examinations Preparatory Programme at HKU Space. From January 2011 to October 2015, Mr. Lee served as the managing director at ANSA CPA Limited. From September 2010 to October 2012, Mr. Lee served as an independent non-executive director at Sunrise (China) Technology Group Limited (currently referred to as KOALA Financial Group Limited (Hong Kong stock code: 08226)). From March 2006 to April 2017, Mr. Lee was in cooperation with Friedman LLP to oversee financial statements are prepared in accordance with U.S. GAAP. From October 2000 to December 2010, Mr. Lee served as an audit manager and subsequently a partner at Clodick & Company. From April 1998 to September 2000, Mr. Lee served as a director at Nitwell Business Services Limited. From August 1994 to April 1998, Mr. Lee was an assistant audit manager at Cheng, Kwok & Chang. From July 1990 to July 1994, Mr. Lee served as an accountant at K.C. Manufacturing Company. From April 1989 to July 1990, Mr. Lee served as an accountant at Haldane, Midgley & Booth. From January 1987 to April 1989, Mr. Lee served as an audit senior at RSM Nelson Wheeler. From October 1985 to December 1986, Mr. Lee served as an audit assistant at Andrew Ma & Company. From April 1983 to September 1985, Mr. Lee served as an audit Clerk at Anthony Y.T. Tse & Company. Mr. Lee is an associate member of the Institute of Chartered Accountants in England and Wales since April 2019, a certified public accountant (practicing) of the Hong Kong Institute of Certified Public Accountants since May 2010, a fellow member of the Association of International Accountants since December 2006, and an associate member and certified tax advisor of the Tax Institute of Hong Kong since July 2010. Mr. Lee received his bachelor’s degree in business administration at the Open University of Hong Kong (currently referred to as Hong Kong Metropolitan University) in June 2004 and his master’s degree in professional accounting from the Hong Kong Polytechnic University in November 2010.

 

Mr. Ramesh Ruben Louis, PhD is our independent director. Prior to joining the Company, Mr. Louis, PhD has approximately 25 years of accounting and finance related experience. Since January 2011, Mr. Louis, PhD has been an executive director and principal consultant of Assurance Threesixty Consulting. Since November 2009, Mr. Louis, PhD has been a professional freelance trainer and consultant at My Learning Training Resources, where he conducted various training courses including training for MIA, ACCA, CPA Australia ISCA Singapore. From May 2006 to October 2009, Mr. Louis, PhD was an executive director at Anuarul Azizan Chew Group, where he was involved in internal audit, risk management and review/assessment of internal controls assignments of various organisations including public listed companies in Malaysia. From 2000 to 2006, Mr. Louis, PhD worked in BDO Binder, where he worked in areas including corporate finance and assurance advisory, his last role being assistant audit manager. From 1997 to 1998, Mr. Louis, PhD was an audit assistant at Arthur Andersen & Co. Mr. Louis, PhD graduated with a bachelor of accounting from the National University of Malaysia in 2000, and graduated with a master of business administration from the University of Strathclyde, United Kingdom in 2012. Mr. Louis, PhD obtained a doctorate of philosophy from the University of Malaya in September, 2021. Mr. Louis, PhD became a member of CPA Malaysia in 2005, a member of the Institute of Internal Auditors Malaysia in 2010 and a member of the Association of Chartered Certified Accountants in 2011. Mr. Louis, PhD is also a director of Greenpro Capital Corp., Seatech Ventures Corp. and Fortune Valley Treasures, Inc.

 

Dr. Vong John Hing, PhD is our independent director. Prior to joining the Company, Dr. Vong, PhD has over 44 years of fintech and education experience. Dr. Vong, Phd is currently the lead of sustainable finance at ClimateWorks Australia since September 2021, a non-executive independent council member of Regional Bank since June 2013, and a senior technical specialist of the United Nations since May 2003. Dr. Vong, PhD has been a senior technical specialist at Asian Development Bank from January 2019 to February 2022, and a senior technical consultant at World Bank Group from September 2006 to June 2021. Dr. Vong, PhD has been a professor at the National University of Singapore from May 2015 to April 2017, foundation director of the Fintech Academy at the Singapore Management University from June 2013 to December 2014 and associate professor at James Cook University Singapore from February 2012 to June 2013. From October 2008 to October 2011, Dr. Vong, PhD was a deputy chief executive officer at Sacombank in Vietnam. In 2002 Dr. Vong, PhD was a senior consultant at PAGF- DFAT  Australia in the Philippines. From February 1999 to February 2001, Dr. Vong, PhD was a team leader at Deloitte Australia. From 1994 to 1998 Dr. Vong, PhD was a regional director- lecturer of the Massachusetts Institute Technology and Nanyang Fellows Program at Nanyang Technological University. From May 1978 to August 1993, Dr. Vong, PhD was a senior executive at HSBC Holdings plc in various offices in Australia and Asia. Dr. Vong, PhD completed the public disputes program in advanced negotiation at MIT-Harvard University Consensus Building Institute in 2006. Dr. Vong, PhD graduated with a BA in economics at Birmingham City University, and a MBA in economics strategy and finance at University of Bradford. He received his PhD from the University of Bradford in MIS business intelligence. Dr. Vong, PhD is currently a member of CPA Australia.  

 

Mr. Chee Chin Aik is our independent director. Prior to joining the Company, Mr. Chee has approximately 20 years of finance related experience. Mr. Chee is currently the head of South East Asia, cash and non-cash equity sales, global markets at HSBC Singapore. From October 2020 to May 2022, Mr. Chee was an executive director, head of Malaysia equity distribution and board member of JPMorgan Chase & Co. Mr. Chee has also worked at Credit Suisse for various periods, as director in institutional equity sales for Malaysia and Singapore from January 2019 to September 2020, as vice president in institutional equity sales in Singapore from January 2015 to December 2018, and associate in institutional equity sales in Singapore from April 2013 to December 2014. From January 2009 to August 2011, Mr. Chee worked as analyst and trader in equity derivatives and proprietary trading at Aminvestment Bank Berhad in Malaysia. From October 2007 to September 2008, Mr. Chee worked as equity research analyst at Credit Lyonnais Securities Asia Pacific Markets in Malaysia. From October 2006 to July 2007, Mr. Chee worked as associate in fixed income currencies and commodities at Goldman Sachs in USA. From July 2004 to October 2006, Mr. Chee worked as analyst for fixed income, corporate advisory division at Lehman Brothers Holdings Inc in USA. From Jun 2002 to July 2004, Mr. Chee worked as associate in financial regulatory and cycle examination group at National Association of Securities Dealers (FINRA) in USA. Mr. Chee graduated with a bachelor of arts from Franklin & Marshall College and MBA in finance from the University of Chicago Booth School of Business.

 

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Employment Agreements

 

We have entered into employment agreements with all of our executive officers. Under these agreements, each of our executive officers is employed for a specified time period. We may terminate employment for cause, at any time, without advance notice or remuneration, for certain acts of the executive officer, such as conviction or plea of guilty to a felony or any crime involving moral turpitude, negligent or dishonest acts to our detriment, or misconduct or a failure to perform agreed duties. We may also terminate an executive officer’s employment without cause upon advance written notice or payment in-lieu of notice. In such case of termination by us, we will provide severance payments to the executive officer as expressly required by applicable law of the jurisdiction where the executive officer is based. The executive officer may resign at any time upon advance written notice.

 

Each executive officer has agreed to hold, both during and after the termination or expiry of his or her employment agreement, in strict confidence and not to use, except as required in the performance of his or her duties in connection with the employment or pursuant to applicable law, any of our confidential information or trade secrets, any confidential information or trade secrets of our clients or prospective clients, or the confidential or proprietary information of any third party received by us and for which we have confidential obligations.

 

Terms of Directors and Officers

 

Our officers are elected by and serve at the discretion of the board of directors and the stockholders voting by ordinary resolution.

 

Compensation of Directors and Executive Officers

 

For the years ended December 31, 2022 and 2021, we paid an aggregate of approximately $289,957 and $275,210, respectively, in cash and benefits to our executive officers. We do not have a share incentive program to provide for grants of awards to our directors and executive officers. We have not set aside or accrued any amount to provide pension, retirement or other similar benefits to our executive officers and directors. We have no service contracts with any of our directors providing for benefits upon termination of employment.

 

Board of Directors and Committees

 

Our board of directors consists of four directors, including three independent directors. We established three committees under the board of directors immediately upon the effectiveness of our registration statement on Form S-1, of which this prospectus is a part: an audit committee, a compensation committee and a nominating and corporate governance committee. We intend to adopt and approve a charter for each of the three committees prior to consummation of this offering. Each of the committees of the board of directors shall have the composition and responsibilities described below.

 

Audit Committee

 

Mr. Louis, PhD, Dr. Vong, PhD, and Mr. Chee are the members of our Audit Committee where Mr. Louis, PhD is the chairman. All members of our Audit Committee satisfies the independence standards promulgated by the SEC and by NASDAQ as such standards apply specifically to members of audit committees.

 

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We adopted and approved a charter for the Audit Committee prior to consummation of this offering. In accordance with our Audit Committee’s Charter, our Audit Committee shall perform several functions, including:

 

  evaluate the independence and performance of, and assess the qualifications of, our independent auditor, and engage such independent auditor;
     
  approve the plan and fees for the annual audit, quarterly reviews, tax and other audit-related services, and approve in advance any non-audit service to be provided by the independent auditor;
     
  monitor the independence of the independent auditor and the rotation of partners of the independent auditor on our engagement team as required by law;
     
  reviewing our financial statements and our management’s discussion and analysis of financial condition and results of operations to be included in our annual and quarterly reports to be filed with the SEC;
     
  oversee all aspects our systems of internal accounting control and corporate governance functions on behalf of the board;
     
  review and approve in advance any proposed related-party transactions and report to the full board of directors on any approved transactions; and
     
  provide oversight assistance in connection with legal, ethical and risk management compliance programs established by management and the board of directors, including Sarbanes-Oxley Act implementation, and make recommendations to the board of directors regarding corporate governance issues and policy decisions.

 

It is determined that Mr. Louis, PhD possesses accounting or related financial management experience that qualifies him as an “audit committee financial expert” as defined by the rules and regulations of the SEC.

 

Compensation Committee

 

Mr. Louis, PhD, Dr. Vong, PhD and Mr. Chee are the members of our Compensation Committee where Dr. Vong, PhD is the chairman. All members of our Compensation Committee are qualified as independent under the current definition promulgated by NASDAQ. We adopted and approved a charter for the Compensation Committee prior to consummation of this offering. In accordance with the Compensation Committee’s Charter, the Compensation Committee shall be responsible for overseeing and making recommendations to the board of directors regarding the salaries and other compensation of our executive officers and general employees and providing assistance and recommendations with respect to our compensation policies and practices.

 

Nominating and Governance Committee

 

Mr. Louis, PhD, Dr. Vong, PhD, and Mr. Chee are the members of our Nominating and Governance Committee where Mr. Chee is the chairman. All members of our Nominating and Governance Committee is qualified as independent under the current definition promulgated by NASDAQ. The board of directors adopted and approved a charter for the Nominating and Governance Committee prior to consummation of this offering. In accordance with the Nominating and Governance Committee’s Charter, the Nominating and Corporate Governance Committee shall be responsible for identifying and proposing new potential director nominees to the board of directors for consideration and reviewing our corporate governance policies.

 

Director Independence

 

Our board of directors reviewed the materiality of any relationship that each of our proposed directors has with us, either directly or indirectly. Based on this review, it is determined that Mr. Louis, PhD, Dr. Vong, PhD and Mr. Chee are “independent directors” as defined by NASDAQ. In addition, as required by Nasdaq rules, our board of directors has made a subjective determination as to each independent director that no relationships exist, which, in the opinion of our board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. In making these determinations, our board of directors reviewed and discussed information provided by the directors and us with regard to each director’s business and personal activities and relationships as they may relate to us and our management.

 

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Family Relationships

 

There is no family relationship among any of our directors or executive officers.

 

Board Leadership Structure and Role in Risk Oversight

 

Our Board of Directors, or the Board, is primarily responsible for overseeing our risk management processes on behalf of our company. The Board receives and reviews periodic reports from management, auditors, legal counsel, and others, as considered appropriate regarding our company’s assessment of risks. In addition, the Board focuses on the most significant risks facing our company and our company’s general risk management strategy, and also ensures that risks undertaken by our company are consistent with the board’s appetite for risk. While the Board oversees our company’s risk management, management is responsible for day-to-day risk management processes. We believe this division of responsibilities is the most effective approach for addressing the risks facing our company and that our board leadership structure supports this approach.

 

Compensation Committee Interlocks and Insider Participation

 

None of our executive officers currently serves, or in the past year has served, as a member of the board of directors or compensation committee of any entity that has one or more executive officers on our board of directors or compensation committee.

 

Code of Ethical Business Conduct

 

We have a code of ethical business conduct that applies to all of our employees, including our principal executive officer, principal financial officer and principal accounting officer, and the Board. A copy of this code is available in our employee handbook and under the “About Us – Code of Conduct” section of our website at www.agapeatpgroup.com. In addition, we intend to post on our website all disclosures that are required by law or the listing standards of our applicable trading market concerning any amendments to, or waivers from, any provision of the code. The reference to our website address does not constitute incorporation by reference of the information contained at or available through our website, and you should not consider it to be a part of this prospectus.

 

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Involvement in Certain Legal Proceedings

 

To our knowledge, our directors and executive officers have not been involved in any of the following events during the past ten years:

 

  any bankruptcy petition filed by or against such person or any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;
     
  any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);
     
  being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from or otherwise limiting his involvement in any type of business, securities or banking activities or to be associated with any person practicing in banking or securities activities;
     
  being found by a court of competent jurisdiction in a civil action, the SEC or the Commodity Futures Trading Commission to have violated a Federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;
     
  being subject of, or a party to, any Federal or state judicial or administrative order, judgment decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of any Federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
     
  being subject of or party to any sanction or order, not subsequently reversed, suspended, or vacated, of any self-regulatory organization, any registered entity or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

 

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EXECUTIVE AND DIRECTOR COMPENSATION

 

Executive Officers’ Compensation

 

The following table sets forth information concerning the annual and long-term compensation earned by or paid to our Chief Executive Officer and to other persons who served as executive officers as at fiscal years ended December 31, 2022 and 2021, or the named executive officers, for services as executive officers for the said fiscal year.

 

Summary Compensation Table

 

Name and
Principal
Position
  Fiscal
Year
  Salary   Stock
Award
  Option
Awards
  Non-Equity
Incentive Plan
Compensation
  Change in
Pension Value
and Non-
Qualified
Deferred
Compensation
Earnings