10-Q: Agape ATP Reports Q3 Loss Amid Strategic Shift & Investment Risk

Sentiment:

Quarterly Report 13 November 2025 6:21 AM

Agape ATP Corporation reported increased net losses for Q3 and the nine months ended September 30, 2025, despite revenue growth driven by new segments, while facing significant going concern doubts and internal control weaknesses.

Capital raiseThe company issued 46,000,000 shares of common stock on March 20, 2025.Net cash proceeds from this issuance amounted to $23,000,000.

Worse than expectedNet loss increased for both the three-month and nine-month periods, indicating a deterioration in profitability.Cash and cash equivalents decreased significantly, despite a large capital raise, suggesting substantial cash burn.The company explicitly states 'substantial doubt about the Company’s ability to continue as a going concern' due to recurring losses and negative operating cash flow.

Summary

Net loss for the three months ended September 30, 2025, increased to $595,370 from $524,039 in the prior year period.
Net loss for the nine months ended September 30, 2025, increased to $1,931,535 from $1,659,449 in the prior year period.
Total revenue for the three months ended September 30, 2025, increased by 11.9% to $370,593, primarily due to growth in skin care and healthcare products and new green energy operations.
Total revenue for the nine months ended September 30, 2025, increased by 16.8% to $1,125,129, driven by skin care and green energy segments.
The company recorded a $23,000,000 deposit with Bi Cheng Investment Management Limited for future investment opportunities, which remains unallocated as of the reporting date.
Current assets significantly increased to $24,070,306 as of September 30, 2025, from $2,776,695 as of December 31, 2024, largely due to the Bi Cheng deposit.
Cash and cash equivalents decreased substantially to $133,714 as of September 30, 2025, from $2,040,243 as of December 31, 2024.
The company's accumulated deficit grew to $11,420,899 as of September 30, 2025, from $9,518,045 as of December 31, 2024.
Net cash used in operating activities for the nine months ended September 30, 2025, was $2,205,074, an increase from $2,080,879 in the prior year period.
A significant capital raise of $23,000,000 was completed through the issuance of 46,000,000 common shares on March 20, 2025.

Sentiment

Score: 3

Explanation: The sentiment is negative due to increasing net losses, significant cash burn, and explicit going concern warnings. While revenue growth in new segments is positive, it is overshadowed by substantial risks related to an unallocated $23M investment and material weaknesses in internal controls.

Positives

Total revenue increased by 11.9% for the three months and 16.8% for the nine months ended September 30, 2025, indicating overall top-line growth.
Revenue from skin care and healthcare products surged by 392.1% for the three months and 740.5% for the nine months ended September 30, 2025, driven by digital advertisement campaigns and marketing activities.
The new green energy operation generated $1,274 in revenue for the three months and $138,273 for the nine months ended September 30, 2025, diversifying income sources.
Gross profit increased by 29.8% for the three months ended September 30, 2025, with gross margin improving to 64.5% from 55.6%, primarily due to higher margins from skin care and healthcare products.
The company successfully raised $23,000,000 through the issuance of common stock, significantly boosting total equity.

Negatives

Net loss increased by $71,331 for the three months and $272,086 for the nine months ended September 30, 2025, indicating worsening profitability.
Revenue from the network marketing business decreased by 41.0% for the three months and 37.3% for the nine months ended September 30, 2025, due to a strategic shift.
Revenue from complementary health therapies decreased by 7.8% for the three months and 9.0% for the nine months ended September 30, 2025, partly due to no revenue from overseas customers in 2025.
Cash and cash equivalents significantly declined to $133,714 as of September 30, 2025, from $2,040,243 at year-end 2024.
The company continues to incur substantial net cash used in operating activities, totaling $2,205,074 for the nine months ended September 30, 2025.
Accumulated deficit increased to $11,420,899, highlighting ongoing losses.
Gross margin for the nine months ended September 30, 2025, decreased to 53.7% from 60.4%, attributed to inventory write-offs in network marketing and lower margins in green energy.

Risks

Substantial doubt exists about the company's ability to continue as a going concern due to recurring net losses, negative operating cash flows, and accumulated deficit.
The $23,000,000 deposit with Bi Cheng Investment Management Limited for future investment is unallocated, and its financial return is uncertain, posing a significant investment risk.
Credit risk associated with the $23,000,000 entrusted to Bi Cheng in the PRC, including uncertainties in legal, regulatory, and foreign exchange frameworks, may affect fund recoverability and repatriation.
Identified material weaknesses in internal control over financial reporting include insufficient accounting personnel, lack of a functional internal audit department, and inadequate procedures for assessing third-party manager credit risk prior to investment decisions.
Concentration of credit risk in accounts receivable, with two individual customers accounting for 23.8% of balances as of September 30, 2025.
Concentration of vendor risk, with three vendors accounting for significant portions of total purchases (67.0%, 11.6%, and 10.1% for Q3 2025).
Reliance on a single sales distributor for a substantial portion of commission expenses (47.3% for Q3 2025).
Exposure to foreign exchange rate fluctuations (MYR, CNY, HKD to USD) can impact reported profits and asset values.
The company's ability to execute its plans to improve financial position and successfully implement new investment opportunities is uncertain.

Future Outlook

The company is positioning itself for sustainable growth by diversifying operations into renewable energy and developing a comprehensive digital wellness platform for the ASEAN market. Management believes actions to increase revenue, control costs, and obtain financing will improve the financial position, but there is no assurance these plans will be successfully executed, and the outcome of new investments is uncertain.

Management Comments

The decrease in revenue from the network marketing business was due to a strategic shift in focus toward new revenue streams aimed at restoring growth and diversifying income sources.
Revenue from complementary health therapies declined because, in 2025, the company did not generate any revenue from overseas customers.
The increase in revenue from skin care and healthcare products was due to the company's digital advertisement campaign and marketing activities.
The increase in G&A expenses was mainly due to expenses incurred in the operation in wellness and wellbeing lifestyle.
The company believes its actions will improve its financial position, but there can be no assurance that these plans and arrangements can be successfully executed and the outcome of these plans are uncertain.

Industry Context

Agape ATP Corporation is actively diversifying its business beyond its traditional health and wellness products and network marketing model into the renewable energy sector and digital wellness platforms. This strategic pivot aligns with broader industry trends towards sustainability and digital transformation in healthcare. The decline in network marketing and complementary health therapies revenue suggests challenges in its legacy segments, while the significant growth in skin care and the emergence of green energy revenue indicate a response to evolving market demands and a push for new growth engines. The focus on the ASEAN market for its digital wellness platform highlights a regional growth strategy.

Comparison to Industry Standards

No specific comparable companies, projects, or results were mentioned in the filing to assess against global benchmarks. The company's diversification into green energy and digital wellness platforms suggests an attempt to align with broader market trends, but without specific industry data or competitor performance, a direct comparison is not feasible.
The company's gross margin for Q3 2025 (64.5%) is strong, potentially indicating effective product pricing or cost management in its growing segments (skin care, green energy), but the YTD gross margin (53.7%) shows variability.
The significant net losses and negative operating cash flows are below industry standards for healthy, growing companies, raising concerns about operational efficiency and long-term viability without external financing.
The identified material weaknesses in internal control over financial reporting, particularly regarding accounting personnel and risk assessment for large investments, suggest a governance structure that may not meet the robust standards expected of publicly traded companies, especially those with diversified and international operations.

Corporate Governance

Change Type	Description	Effective Date	Impact Assessment
Internal Control Weaknesses	Identified material weaknesses in internal control over financial reporting, including insufficient accounting personnel, lack of a functional internal audit department, and inadequate procedures for assessing third-party manager credit risk prior to investment decisions.	2025-09-30	These weaknesses adversely affect the ability to record, process, summarize, and report financial information, posing a reasonable possibility of material misstatement.

Legal Proceedings

The company is not involved in any material legal proceedings, nor is it involved as a plaintiff in any material proceedings or pending litigation.

Related Party Transactions

Amount due from TH3 Holdings Sdn Bhd (related to CEO How Kok Choong) for prepayment of IT expenses: $2,279 as of September 30, 2025.
Amount due from ATPC Lega Global Sdn Bhd (related to CEO How Kok Choong) for general expenses payment: $0 as of September 30, 2025 ($730 as of Dec 31, 2024).
Accounts payable to CTA Nutriceuticals (Asia) Sdn Bhd (related to director Yap Foo Ching) for product purchases: $28,400 as of September 30, 2025.
Accounts payable to SY Welltech Sdn Bhd (related to director Yap Foo Ching) for beauty product purchases: $186 as of September 30, 2025.
Accounts payable to Cedar Wellness Sdn Bhd (related to directors of Cedar ATPC Sdn Bhd) for skin care and healthcare product purchases: $780 as of September 30, 2025.
Accounts payable to Institute of Complementary and Traditional Medicine (related to director Yap Foo Ching) for rental of diagnostic & medical equipment: $5,698 as of September 30, 2025.
Other payable to Mr. How Kok Choong (CEO and director) for salary, commission expense, and borrowing: $520,633 as of September 30, 2025.
Purchases from CTA Nutriceuticals (Asia) Sdn Bhd for complementary health therapies: $87,347 (Q3 2025) and $260,973 (YTD 2025).
Commission expense paid to Mr. How Kok Choong: $348 (Q3 2025) and $1,114 (YTD 2025).
IT support services fee paid to TH3 Holdings Sdn Bhd: $14,922 (Q3 2025) and $45,627 (YTD 2025).
Office rental expense and facilities paid to DSY Wellness and Longevity Center Sdn Bhd (related to director Yap Foo Ching): $27,886 (Q3 2025) and $83,658 (YTD 2025).

Stakeholder Impact

Shareholders face increased risk due to growing net losses, going concern doubts, and the uncertainty surrounding the $23,000,000 investment deposit.
Employees may experience uncertainty given the company's financial performance and the identified internal control weaknesses, although remediation plans are in place.
Customers in the network marketing and complementary health therapies segments may see shifts in product offerings or service focus as the company strategically diversifies.
Suppliers, particularly major vendors like CTA Nutriceuticals, have significant exposure to the company's purchasing activities.
Creditors may face higher risk given the company's accumulated deficit and negative operating cash flows, which raise questions about long-term solvency.

Next Steps

Engage a consulting firm specializing in compliance and internal controls as a temporary solution.
Initiate a comprehensive training program and development plan for accounting staff regarding internal control and U.S. GAAP financial statements.
Implement remediation initiatives for identified material weaknesses by mid-fiscal year 2026.
Monitor the progress of the $23,000,000 entrusted investment with Bi Cheng Investment Management Limited to identify and manage suitable investment opportunities.

Key Dates

Date	Description
2003-08-08	Agape Superior Living Sdn. Bhd. (ASL) incorporated in Malaysia.
2004-03-04	Agape S.E.A. Sdn. Bhd. (SEA), a Variable Interest Entity (VIE), incorporated in Malaysia.
2016-06-01	Agape ATP Corporation incorporated under the laws of the State of Nevada.
2017-03-06	Agape ATP Corporation (AATP LB) incorporated in Labuan, Malaysia.
2017-06-01	Agape ATP International Holding Limited (AATP HK) incorporated in Hong Kong.
2018-05-17	Company purchased 83,333 shares of common stock in Greenpro Capital Corp. for $500,000.
2018-07-30	Company disposed of 20 shares of common stock in Greenpro Capital Corp. for $125.
2018-10-16	Company purchased 33,333 shares of common stock in Greenpro Capital Corp. for $1,000.
2019-04-03	Company purchased 5% stock (15,000,000 shares) in Phoenix Plus Corp. for $1,500.
2020-05-08	Company entered into a Share Exchange Agreement with Mr. How Kok Choong to acquire 99.99% equity interest in ASL.
2020-09-11	Wellness ATP International Holdings Sdn. Bhd. (WATP) incorporated in Malaysia (later changed to Cedar ATPC Sdn. Bhd.).
2020-11-03	Company received dividend of 6,667 shares of common stock in DSwiss, Inc. from Greenpro Capital Corporation.
2020-12-09	Company received dividend of 16,663 shares of common stock in DSwiss, Inc. from Greenpro Capital Corporation.
2021-09-27	Company received dividend of 11,665 shares of common stock in SEATech Ventures Corp. from Greenpro Capital Corp.
2021-11-11	AATP LB formed DSY Wellness International Sdn. Bhd. (DSY Wellness) with an independent third party, owning 60% equity.
2022-07-19	Greenpro Capital Corp. filed a certificate of change for a 10-for-1 reverse stock split.
2022-07-28	Effective date of Greenpro Capital Corp.'s 10-for-1 reverse stock split.
2023-10-10	Company entered into an underwriting agreement with Network 1 Financial Securities, Inc. for its IPO.
2023-10-13	Company issued Representatives Warrants to purchase up to 115,500 shares of common stock at $4.40 per share to Network 1 Financial Securities, Inc.
2024-01-03	Company formed OIE ATPC Holdings (M) Sdn. Bhd. (later changed to ATPC Green Energy Sdn. Bhd.) as an equity method investment.
2024-01-08	ATPC Green Energy Sdn. Bhd. formed OIE ATPC Exim (M) Sdn. Bhd. (development later discontinued).
2024-03-14	Company acquired 50% of OIE ATPC Holdings (M) Sdn. Bhd. equity interest from OIE, making it a wholly-owned subsidiary.
2024-07-02	Company purchased 5% stock (15,000,000 shares) of Radiance Holdings Corp. in exchange for 15,000,000 shares of Phoenix Plus Corp.
2024-07-04	Wellness ATP International Holdings Sdn. Bhd. changed its name to Cedar ATPC Sdn. Bhd. (CEDAR).
2024-07-11	Company leased a non-commercial vehicle under finance leases with 5-year terms.
2024-09-19	ATPC Green Energy Sdn. Bhd. increased its number of ordinary shares to 1,000,000.
2024-11-25	CEDAR increased its number of ordinary shares to 1,000,000.
2024-12-25	Company incorporated ATPC Technology Private Limited in China.
2025-02-27	Board meeting resolution authorized the issuance of 46,000,000 shares of common stock.
2025-03-11	Company entered into an entrusted investment agreement with Bi Cheng Investment Management Limited.
2025-03-20	Company issued 46,000,000 shares of common stock, receiving $23,000,000 net cash proceeds.
2025-09-30	End of the quarterly reporting period.
2025-11-13	Date of issuance of the unaudited condensed consolidated financial statements.

Recommendation

sell

The company faces severe financial challenges, including increasing net losses, substantial negative operating cash flow, and an explicit 'going concern' warning. The $23 million deposit with an external manager in China, with uncertain returns and significant credit risk, represents a major unmitigated risk. Furthermore, identified material weaknesses in internal controls over financial reporting indicate fundamental governance issues. While there is some revenue growth in new segments, these positives are heavily outweighed by the profound financial instability and operational risks, making the stock a high-risk investment with significant downside potential.

Keywords

Health and Wellness, Renewable Energy, SEC Filing, 10-Q, Financial Results, Net Loss, Revenue Growth, Going Concern, Internal Controls, Investment Risk, Bi Cheng Investment, Malaysia, China, Network Marketing, Skin Care, Complementary Health Therapies

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