Agape ATP Corporation — Form 10-K Summary
Reporting period: Fiscal year ended June 30, 2019, with comparison to fiscal 2018. Although the request identifies 2018 Q4, this filing reports annual results and does not provide a clear standalone fourth-quarter value.
Business context
Agape sells rebranded health and wellness products and provides related advisory services, primarily in Malaysia. Products are sourced from third parties; the company does not own or manufacture them. It introduced the ENERGETIQUE skincare line in July 2018 and BEAUNIQUE/Trim+ in March 2019. The filing says its ATP Zeta products had the required Malaysian authorizations.
Financial results and liquidity
| Metric (US$) | FY2019 | FY2018 |
|---|---|---|
| Revenue | 1,546,057 | 487,005 |
| Cost of revenue | 1,436,705 | 441,409 |
| Gross profit | 109,352 | 45,596 |
| Gross margin | 7.1% | 9.4% |
| Net loss | (519,642) | (130,274) |
| Operating cash flow | (667,064) | (347,977) |
- Revenue increased about 218% year over year, but the gross margin declined. Net loss widened substantially; FY2019 loss included a $366,834 impairment of marketable securities and a $124,225 share of investee losses.
- Other income was $86,078 in FY2019, primarily time-deposit interest, versus $139,301 in FY2018, primarily unrealized foreign-currency gains.
- At June 30, 2019, cash and cash equivalents were $2,857,587, including $2,504,373 in time deposits. Working capital was $3,720,068. Trade receivables were $511,610, and prepayments and deposits were $498,335.
- Total assets were $4,730,027; total liabilities were $149,674, all current. The filing reports no long-term liabilities. Stockholders’ equity was $4,580,353, down from $5,098,781.
- Cash used in investing activities was $2,500; financing activities used $5,318. Cash and cash equivalents fell by $673,668 during the year. Management said operating revenue alone may not fund operations or planned growth and additional capital may be needed.
Material changes, outlook and risks
- Customer concentration is acute: a related-party customer controlled by the CEO accounted for $1,524,596, or 99%, of FY2019 revenue; $511,610 remained receivable at year-end. The same customer accounted for all reported FY2018 revenue.
- Purchases were concentrated: one vendor represented 71% ($1,016,983) and a second 26% ($370,056) of FY2019 purchases. The company warns that supply interruption, agreement termination, or higher supplier prices could hurt results.
- Management discussed hiring staff, developing products, marketing online, and possible expansion into Thailand, Indonesia and Taiwan, but provided no firm timetable, budget, or financial guidance. The company reported no employees other than its sole officer and director as of the report date.
- Management identified ineffective internal control over financial reporting, citing inadequate segregation of duties and risk assessment as material weaknesses. Remediation measures were planned, with implementation anticipated by the end of fiscal 2020. The auditor did not attest to internal controls.
- Other disclosed risks include product liability and regulatory compliance, foreign-exchange exposure, reliance on the CEO, and potential dilution from future securities issuance. No material pending legal proceeding was reported. The common stock trades on the OTC Pink Sheets, where the company said there was no active trading market.
- The independent auditor issued an unqualified opinion on the financial statements. The company reported no dividends and no significant off-balance-sheet arrangements.
Important facts for investors to verify
- Whether the related-party customer has paid the $511,610 receivable and whether revenue can be diversified beyond this customer.
- Supplier identities, continuity of supply, and the terms and termination provisions of the key supply arrangement.
- Support and valuation for the $366,834 investment impairment and the remaining investment balances.
- Progress in remediating the material weaknesses, given the company’s limited staffing and governance structure.
- Actual funding needs and whether planned expansion and product initiatives have defined budgets, operating capacity, and regulatory approvals.