Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The information contained in this quarter report on Form 10-Q is intended to update the information contained in our Form 10-K, dated March 31, 2025, for the year ended December 31, 2024 and presumes that readers have access to, and will have read, the "Management's Discussion and Analysis of Financial Condition and Results of Operations" and other information contained in such Form 10-K. The following discussion and analysis also should be read together with our unaudited condensed consolidated financial statements and the notes to the unaudited condensed consolidated financial statements included elsewhere in this Form 10-Q.

The following discussion contains certain statements that may be deemed "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements appear in a number of places in this Report, including, without limitation, "Management's Discussion and Analysis of Financial Condition and Results of Operations." These statements are not guarantees of future performance and involve risks, uncertainties and requirements that are difficult to predict or are beyond our control. Forward-looking statements speak only as of the date of this quarterly report. You should not put undue reliance on any forward-looking statements. We assume no responsibility to update the forward-looking statements contained in this transition report on Form 10-Q. The following should also be read in conjunction with the unaudited condensed Consolidated Financial Statements and notes thereto that appear elsewhere in this report.

Company Overview

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

Agape ATP Corporation operates through its subsidiaries, namely, Agape ATP Corporation ("AATP LB"), a company incorporated in Labuan, Malaysia, and Agape Superior Living Sdn. Bhd. ("ASL"), a company incorporated in Malaysia on August 8, 2003.

AATP LB is an investment holding company with 100% equity interest in Agape ATP International Holding Limited ("AATP HK"), a company incorporated in Hong Kong.

On May 8, 2020, the Company entered into a Share Exchange Agreement with Mr. 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 Agape Superior Living Sdn. Bhd., a network marketing entity incorporated in Malaysia.

On September 11, 2020, the Company incorporated Wellness ATP International Holdings Sdn. Bhd. ("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 July 4, 2024, the entity changed its name to Cedar ATPC Sdn. Bhd. ("CEDAR").

On November 25, 2024, CEDAR increased its number of ordinary shares to 1,000,000 shares at RM 0.01 per share.

On November 11, 2021, AATP LB formed an entity, DSY Wellness International Sdn. Bhd. ("DSY Wellness") with an independent third party which AATP LB owns 60% of the equity interest, to pursue the business of providing complementary health therapies.

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.

The Company is positioning itself for sustainable growth by diversifying its operations into the domain of renewable energy. This initiative is founded upon our commitment to environmental responsibility, long-term value creation, and proactive adaptation to global energy trends. On January 3, 2024, the Company formed an equity method investment entity, OIE ATPC Holdings (M) Sdn. Bhd. with Oriental Industries Enterprise (M) Sdn. Bhd. ("OIE"), which the Company and OIE each own 50% of the equity interest. On March 14, 2024, the Company acquired 50% of OIE ATPC Holdings (M) Sdn. Bhd. equity interest from OIE, subsequently the entity becomes a wholly owned subsidiary of the Company. On June 7, 2024, the entity changed its name to ATPC Green Energy Sdn. Bhd ("AGE").

On September 19, 2024, AGE increased its number of ordinary shares to 1,000,000 shares at RM 0.01 per share.

On January 8, 2024, AGE formed a wholly own entity, OIE ATPC Exim (M) Sdn. Bhd ("ATPC Exim"). However, the Company had decided not to proceed with the continued development of ATPC Exim. There is no impact to the Group's operation.

On December 25, 2024, the Company incorporated ATPC Technology Private Limited ("ATPC Tech") in China, a wholly owned subsidiary in AATP HK to collaborate with local IT expertise to develop comprehensive digital wellness platform that integrates e-commerce, online consultations, chronic disease management, and robust supply chain services catering to ASEAN market.

Results of Operation

For the three months ended September 30, 2025 and 2024

Revenue

We generated revenue of $370,593, which comprised revenue from the Company's network marketing business of $17,186 (approximately 4.6% of total revenue); revenue from the Company's operations in the provision of complementary health therapies of $261,569 (approximately 70.6% of total revenue); $90,564 from skin care and healthcare products (approximately 24.4% of total revenue) and $1,274 from the operation in green energy (approximately 0.4% of total revenue) for the three months ended September 30, 2025 as compared to $331,289, which comprised revenue from the Company's network marketing business of $29,133 (approximately 8.8% of total revenue); revenue from the Company's operations in the provision of complementary health therapies of $283,752 (approximately 85.7% of total revenue) and revenue from Company's operation in wellness and wellbeing lifestyle of $18,404 (approximately 5.5% of total revenue) for the three months ended September 30, 2024.

Revenue from the Company's network marketing business decreased by $11,947, or approximately 41.0%. Revenue from the Company's operations in the provision of complementary health therapies decreased by $22,183, or approximately 7.8%. Revenue from skin care and healthcare products increased by $72,160 or approximately 392.1% and revenue of $1,274 was generated from the new operation in green energy. Total revenue increased by $39,304, or approximately 11.9%.

The decrease in revenue from the Company's network marketing business was due to a strategic shift in focus toward new revenue streams aimed at restoring growth and diversifying income sources. Additionally, revenue from the Company's operations in the provision of 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 to promote the skin care and healthcare products.

Cost of Revenue

Cost of revenue for the three months ended September 30, 2025 amounted to $131,490 as compared to $147,104 for the three months ended September 30, 2024, a decrease of $15,614, or approximately 10.6%. The decrease was due to the decrease in revenue in the Company's network marketing business, the varying gross profit margins in the Company's operations in the provision of complementary health therapies and the low cost of revenue in the skin care and health care products as compared to the operation in the Company's network marketing business and the provision of complementary health therapies.

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

Gross Profit

Gross profit for the three months ended September 30, 2025 amounted to $239,103, represented a gross margin of approximately 64.5% as compared to $184,185 for the three months ended September 30, 2024, equivalent to a gross margin of approximately 55.6%. The increase in gross margin was due to higher gross margin contributed by the skin care and health care products as compared to the Company's network marketing business operations and the provision of complementary health therapies

Operating Expenses

Our operating expenses consist of selling expenses, commission expenses and general and administrative expenses (as defined below). Total operating expenses were $840,424 for the three months ended September 30, 2025, increased by $108,129 or approximately 14.8% from $732,295 for the three months ended September 30, 2024.

Selling expenses

Selling expenses for the three months ended September 30, 2025 amounted to $61,623 as compared to $41,582 for the three months ended September 30, 2024, an increase of $20,041, or approximately 48.2%. The Company's selling expenses typically comprise of salaries and benefits expenses, credit card processing fees, advertisement and promotional expenses.

Commission expenses

Commission expenses were $27,386 and $6,894 for the three months ended September 30, 2025 and 2024, respectively. The Company pays commission in Company's network marketing business and the operation in wellness and wellbeing lifestyle. The increase in commission expenses was due to the increase in revenue from the operation in wellness and wellbeing lifestyle.

General and administrative expenses ("G&A Expenses")

G&A expenses for the three months ended September 30, 2025 amounted to $751,415, as compared to $683,819 for the three months ended September 30, 2024, an increase of $67,596, or approximately 9.9%. The Company's G&A expenses typically comprise of salaries and benefits expenses, rental expenses, professional expenses, depreciation expenses and other expenses. The increase in G&A expenses was mainly due to the expenses incurred in the operation in wellness and wellbeing lifestyle.

Other Income (Expenses), Net

For the three months ended September 30, 2025, the Company recorded an amount of $7,147 as other income, net, as compared to $21,196 as other income, net, for the three months ended September 30, 2024, represented a decrease of $14,049 in other income, net, or approximately 66.3%.

The other income, net of $7,147 generated during the three months ended September 30, 2025 comprised of foreign currency exchange gain of $7,860, unrealized holding loss on marketable securities of $3,487, other income, net of $2,774. The other income, net of $21,196 generated during the three months ended September 30, 2024 comprised of foreign currency exchange gain of $2,525, unrealized holding loss on marketable securities of $1,176, other income, net of $3,445, gain on disposal of property and equipment of $111 and interest income of $16,291.

Income Tax (Expense) Credit

The Company recorded provision for income taxes of $1,196 and benefit of income taxes of $2,875 for the three months ended September 30, 2025 and 2024, respectively. Both the provision for income taxes as well as the benefit of income taxes were in respect of the Company's operations in Malaysia.

Net Loss

Net loss increased by $71,331 from a net loss of $524,039 for the three months ended September 30, 2024 to a net loss of $595,370 for the three months ended September 30, 2025, mainly due to reasons as discussed above.

For the nine months ended September 30, 2025 and 2024

Revenue

We generated revenue of $1,125,129 which comprised revenue from the Company's network marketing business of $59,882 (approximately 5.3% of total revenue); and revenue from the Company's operations in the provision of complementary health therapies of $772,285 (approximately 68.6% of total revenue); $154,689 from skin care and healthcare products (approximately 13.8% of total revenue) and $138,273 from the operation in green energy (approximately 12.3% of total revenue) for the nine months ended September 30, 2025 as compared to $962,971, which comprised revenue from the Company's network marketing business of $95,458 (approximately 9.9% of total revenue); revenue from the Company's operations in the provision of complementary health therapies of $849,109 (approximately 88.2% of total revenue) and revenue from Company's operation in wellness and wellbeing lifestyle of $18,404 (approximately 1.9% of total revenue) for the nine months ended September 30, 2024.

Revenue from the Company's network marketing business decreased by $35,576, or approximately 37.3%. Revenue from the Company's operations in the provision of complementary health therapies decreased by $76,824, or approximately 9.0%. Revenue from skin care and healthcare products increased by $136,285 or approximately 740.5% and revenue of $138,273 was generated from the new operation in green energy. Total revenue increased by $162,158, or approximately 16.8%.

The decrease in revenue from the Company's network marketing business was due to a strategic shift in focus toward new revenue streams aimed at restoring growth and diversifying income sources. Additionally, revenue from the Company's operations in the provision of 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 to promote the skin care and healthcare products.

Cost of Revenue

Cost of revenue for the nine months ended September 30, 2025 amounted to $520,800 as compared to $381,805 for the nine months ended September 30, 2024, an increase of $138,995, or approximately 36.4%.

The increase was due to the inventory write off in the Company's network marketing business; the varying gross profit margins in the Company's operations in the provision of complementary health therapies; and the cost from the new operation in green energy.

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

Gross Profit

Gross profit for the nine months ended September 30, 2025, amounted to $604,329, represented a gross margin of approximately 53.7% as compared to $581,166 for the nine months ended September 30, 2024, equivalent to a gross margin of approximately 60.4%. The decrease in gross margin was due to the inventory write off in the Company's network marketing business, the varying type of health therapies offered, gross margin associated with the provision of complementary health therapies and low gross margin in the new operation in green energy.

Operating Expenses

Our operating expenses consist of selling expenses, commission expenses, general and administrative expenses. Total operating expenses were $2,563,015 for the nine months ended September 30, 2025, increased by $256,615 or approximately 11.1% from $2,306,400 for the nine months ended September 30, 2024.

Selling expenses

Selling expenses for the nine months ended September 30, 2025 amounted to $187,214 as compared to $129,938 for the nine months ended September 30, 2024, an increase of $57,276, or approximately 44.1%, mainly due to the increase in advertisement cost and marketing event related expenses. The Company's selling expenses typically comprise of salaries and benefits expenses, credit card processing fees, advertisement and promotional expenses.

Commission expenses

Commission expenses were $51,350 and $23,573 for the nine months ended September 30, 2025 and 2024, respectively, an increase of $27,777, or approximately 117.8%. The Company pays commission in Company's network marketing business and the operation in wellness and wellbeing lifestyle. The increase in commission expenses was due to the increase in revenue from the operation in wellness and wellbeing lifestyle.

General and administrative expenses

G&A expenses for the nine months ended September 30, 2025 amounted to $2,324,451, as compared to $2,152,889 for the nine months ended September 30, 2024, an increase of $171,562, or approximately 8.0%. The increase in G&A expenses was due to the increase in rental expenses and the operation in wellness and wellbeing lifestyle. The Company's G&A expenses typically comprise of salaries and benefits expenses, rental expenses, professional expenses, depreciation expenses and other expenses.

Other Income (Expenses), Net

For the nine months ended September 30, 2025, the Company recorded an amount of $28,347 as other income, net, as compared to $79,588 other income, net, for the nine months ended September 30, 2024, represented a decrease of $51,241 in other income, net, or approximately 64.4%.

The other income, net of $28,347 generated during the nine months ended September 30, 2025 comprised foreign currency exchange gain of $6,990, unrealized holding gain on marketable securities of $3,165, other income, net of $14,776, and interest income of $3,416. The other income, net of $79,588 generated during the nine months ended September 30, 2024 comprised foreign currency exchange gain of $1,745, unrealized holding loss on marketable securities of $6,642, other income, net of $25,942, gain on disposal of property and equipment of $111 and interest income of $58,432.

Income Tax (Expense) Credit

The Company recorded provision for income taxes of $1,196 and $13,803 for the nine months ended September 30, 2025 and 2024, respectively. The provision for income taxes were in respect of the Company's operations in Malaysia.

Net Loss

Net loss increased by $272,086 from net loss of $1,659,449 for the nine months ended September 30, 2024 to net loss of $1,931,535 for the nine months ended September 30, 2025, mainly due to reasons as discussed above.

Liquidity and Capital Resources

As of September 30, 2025, the Company had working capital of $22,585,047 consisting of cash and cash in bank of $133,714 and $0 of time deposit as compared to working capital of $1,656,571 consisted of cash and cash in bank of $240,243 and time deposits of $1,800,000 as of December 31, 2024. The Company had a net loss of $1,931,535 for the nine months ended September 30, 2025 and accumulated deficits of $11,420,899 as of September 30, 2025 as compared to net loss of $2,486,044 for the year ended December 31, 2024 and accumulated deficits of $9,518,045 as of December 31, 2024.

The following summarizes the key components of our cash flows for the nine months ended September 30, 2025 and 2024:

		For the nine months ended September 30,
		2025				2024
Net cash used in operating activities		$	(2,205,074	)		$	(2,080,879	)
Net cash used in investing activities			(23,000,667	)			(48,611	)
Net cash provided by (used in) financing activities			23,297,009				(6,691	)
Effect of exchange rate on cash and cash equivalents			2,203				22,754
Decrease in cash and cash equivalents		$	(1,906,529	)		$	(2,113,427	)

Operating activities

Net cash used in operating activities for the nine months ended September 30, 2025 was $2,205,074, comprised of net loss of $1,931,535, unrealized holding gain on marketable securities of $3,165, the increase in prepaid taxes of $3,767, the increase in prepayments and deposits of $452,749, the decrease in account payable (including related parties) of $20,785, the decrease in customer deposits of $4,211, the payment of operating lease liabilities of $117,172, the decrease in other payables (including related parties) and accrued liabilities of $98,348, the decrease of income tax payable of $4,601. The net cash used in operating activities was mainly offset by non-cash depreciation and amortization expense of $22,015, amortization of finance assets of $32,768, amortization of operating right-of-use assets of $116,549, inventory write off of $6,961 and allowance for credit loss $11,106, the decrease in accounts receivables of $37,284, the decrease in other receivables from related parties of $141, the decrease in inventories of $1,742, the decrease in other receivables of $2,517 and the increase in amount due to directors of $200,176.

Net cash used in operating activities for the nine months ended September 30, 2024 was $2,080,879, comprised of net loss of $1,659,449, gain on disposal of office equipment of $111, the increase in inventories of $6,473, the increase in prepaid taxes of $8,592, the increase in prepayments and deposits of $329,898, the increase in other receivables $949, the decrease in customer deposits of $16,349, the payment of operating lease liabilities of $102,605, the decrease in other payables (including related parties) and accrued liabilities of $186,986. The net cash used in operating activities was mainly offset by non-cash depreciation and amortization expense of $36,022, amortization of finance assets of $18,956, amortization of operating right-of-use assets of $103,187, unrealized holding loss on marketable securities of $6,642, deferred tax benefit of $218, allowance for credit loss $28,359, the decrease in accounts receivables of $6,353, the decrease in other receivables (including related parties) of $8,858, the increase in account payable (including related parties) $8,724, and the increase of income tax payable of $13,213.

Investing activities

Net cash used in investing activities for the nine months ended September 30, 2025 was $23,000,667, which was mainly from advances for investment.

Net cash used in investing activities for the nine months ended September 30, 2024 was $48,611, which was due to purchase of property and equipment of $48,722 and proceeds from disposal of office equipment $111.

Financing activities

Net cash provided by financing activities for the nine months ended September 30, 2025 was $23,297,009, consisted of the proceeds from issuance of common stock for $23,000,000, reduction of finance lease liability of $16,710 and advance from director of $313,719.

Net cash used in financing activities for the nine months ended September 30, 2024 was $6,691, which was the reduction of finance lease liability.

Credit Facilities

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

Off-Balance Sheet Arrangements

As of September 30, 2025, 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, allowance for deferred tax assets, allowance for credit loss, allowance for estimation of coupon redemption and the assumptions used in the valuation of the derivative financial instruments. 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 nine months ended September 30, 2025 and 2024, there were no inventory write-down, however, there were $6,961 and $0 inventory write-off 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 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 September 30, 2025 and December 31, 2024, the carrying amounts of operating right-of-use assets amounted to $119,021 and $224,595, respectively, and property, plant and equipment amounted to $15,122 and $31,463, receptively. No impairment losses on operating right-of-use assets and property, plant and equipment were recognized as of September 30, 2025 and December 31, 2024.

Allowance for deferred tax assets

The Company conducts much of its business activities in Malaysia, Hong Kong and China 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 more likely than not 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 tax assets and taxation in the periods in which such estimate is changed.

Allowance for credit loss

The Company estimates and records an allowance for credit loss related to its accounts receivable. Credit losses are determined by Current Estimate of Expected Credit Losses model in accordance with Topic 326 - Financial Instruments - Credit Losses. For accounts receivable, the Company considers the age of the accounts receivable balances, credit quality of the Company's customers based on ongoing credit evaluations, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect the Company's ability to collect from customers. As of September 30, 2025 and December 31, 2024, the Company recognize an allowance for credit loss of $6,559 and $32,857, respectively.

Allowance for estimation of coupon redemption

The Company offers various coupon programs to customers, which result in the potential redemption of coupons against future purchases. The estimation of coupon redemption requires assumptions. This estimate is based on historical redemption patterns, customer behavior trends, and the terms and conditions of the coupon programs. Management considers factors such as the type of coupon, the period of validity that could influence redemption rates. The Company makes estimates about the likelihood and timing of coupon redemptions, which may vary based on changing customer behavior and economic conditions. If the actual redemption rate differs from the estimated rate, it could impact the redemption liability and related expenses in future periods. The allowance for coupon redemption is regularly reviewed and adjusted as more information becomes available to ensure that it reflects the expected redemption accurately.

Assumptions used in the valuation of the derivative financial instruments

The Company issued Representative's Warrants to purchase up to 115,500 shares of common stock at $4.4 per share, dated October 13, 2023, to Network 1 Financial Securities, Inc. The warrants shall be exercisable at any time, and from time to time, in whole or in part, commencing from October 13, 2023 (i.e. the date of issuance) and expiring on October 10, 2028. The Company used Black-Scholes-Merton Model to estimate the fair value of the Warrants and recognized as equity. No subsequent measurement has been performed as the Warrants are classified as equity.

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 Skin Care, 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 skin care, 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.

Sales of products for the provision of complementary health therapies

- Performance obligations satisfied at a point in time

Products for the provision of complementary health therapies are predominantly Chinese herbs in different forms, processed or otherwise, for prescriptions for treating non-communicable diseases.

The Company based on the health screening test report to prescribe the products for the provision of complementary health therapies, the Company deliver the products to the customers during the consultation session.

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. The health screening test is considered as separate performance obligations. The promises to deliver the health screening test report is separately identifiable, which is evidenced by the fact that the Company provides separate services of delivering the health screening test report.

The Company based on the health screening test contracts with customers, establishes the selling price for the health screening test and place order to the health screening center. The Company obtains control of the test report before they are delivered to the customers. The Company analyze the test report, provides consultations to the customers, bundle it with the Company's products and services depending on the customer's needs.

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 session in person.

Sales of products and services for the operations in green energy

- Performance obligations satisfied over time

The Company provides products, technical knowledge and solutions for sustainability and energy savings. The Company delivered the products to the customers and enhances the products that the customer controls. The products that the Company created has no alternative use to the Company. The Company has an enforceable right to receive payment for performance completed to date, the Company recognized revenue based on the percentage of cost incurred.

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 2025

In November 2023, the FASB issued ASU 2023-07 "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures". The ASU 2023-07 is intended to improve reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. The ASU 2023-07 is effective for annual reporting periods beginning after December 15, 2023 and interim periods in fiscal years beginning after December 15, 2024. The adoption of this accounting standard has no material impact on the consolidated financial statements.

In March 2024, the FASB issued ASU 2024-01 "Compensation - Stock Compensation (Topic 718): Scope Application of Profits Interest and Similar Awards". The ASU clarify how an entity determines whether a profits interest or similar award is within the scope of Accounting Standards Codification ("ASC") 718, Compensation - Stock Compensation, by adding illustrative guidance. The guidance in ASU 2024-01 is effective for annual reporting periods beginning after December 15, 2024, and can be applied either retrospectively to all prior periods presented in the consolidated financial statements or prospectively to profits interest and similar awards granted or modified on or after the date at which the entity first applies the amendments. Early adoption is permitted. The adoption of ASU 2024-01 has no material impact on the Company's consolidated financial statements.

In March 2024, the FASB issued ASU 2024-02 "Codification Improvements - Amendments to Remove References to the Concepts Statements". The amendments apply to all reporting entities within the scope of the affected accounting guidance, but in most instances the references removed are extraneous and not required to understand or apply the guidance. Generally, the amendments in ASU 2024-02 are not intended to result in significant accounting changes for most entities. The amendments in this update are effective for annual reporting periods beginning after December 15, 2024 and has no significant impact on our financial statements.

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 December 2023, the FASB issued ASU 2023-09 "Income Taxes (Topic 740): Improvements to Income Tax Disclosures". The ASU 2023-09 requires companies to disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income or loss by the applicable statutory income tax rate). The ASU 2023-09 is effective for annual reporting periods beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the impact of this ASU may have on its consolidated financial statements.

The FASB issued ASU 2024-03 and ASU 2025-01 "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, and Clarifying the Effective Date" in November 2024 and January 2025 respectively. This new guidance requires disclosures of additional information of the nature of expenses included in the income statement as well as disclosures about specific expense categories in the notes to the financial statements. The requirements of the new guidance are effective for annual periods beginning after December 15, 2026, and for interim periods beginning after December 15, 2027, which early adoption permitted. This new guidance can be applied either retrospectively to any or all prior periods presented in the consolidated financial statements or prospectively to financial statements issued for reporting period after the effective date of this new guidance. The Company is currently evaluating the effect of adopting this guidance.

In November 2024, the FASB issued ASU 2024-04 "Debt - Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments". This ASU clarifies the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion. The clarification is effective for annual reporting periods beginning after December 15, 2025, and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the effect of adopting of this ASU.

In July 2025, the FASB issued ASU 2025-05 "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets". This ASU provides a practical expedient that allows companies to assume that current conditions as of the balance sheet date do not change for the remaining life of the asset. This ASU is effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within annual reporting periods. Early adoption is permitted. The Company is currently evaluating the effect of adopting of this ASU.

In September 2025, the FASB issued ASU 2025-06 "Intangibles - Goodwill and Other-Internal-Use Software (Subtopic 350-40). This ASU updates the accounting for internal-use software by replacing former stage-based rules with a principles-based framework. Entities will now capitalize costs associated with internal-use software only when management has authorized and committed funding and it is probable that the project will be completed and the software will be used to perform the intended function. It also supersedes website development cost guidance, moving it to ASC 350-40. This ASU is effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. Early adoption is permitted. The Company is currently evaluating the effect of adopting of this ASU.

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.