Agape ATP Corporation reported its financial results for the three and six months ended June 30, 2025, reflecting a company in strategic transition. Total revenue for Q2 2025 increased by 48.7% to $465,499, and H1 2025 revenue rose by 19.4% to $754,536. This growth was primarily driven by the new Green Energy segment, contributing $135,434 in Q2 and $136,999 in H1, and new skin care/healthcare products, adding $55,446 in Q2 and $64,125 in H1.
Despite top-line growth, the company experienced significant gross margin compression, with Q2 2025 gross margin declining to 44.9% from 61.8% in Q2 2024, and H1 2025 gross margin falling to 48.4% from 62.8% in H1 2024. This reduction is attributed to lower margins in green energy and an inventory write-off. Operating expenses also increased, with Q2 2025 expenses rising by 30.7% to $845,901, leading to an expanded net loss of $623,246 for Q2 and $1.34 million for H1 2025.
The company's liquidity position presents a critical concern, with cash and cash equivalents decreasing to $215,973 as of June 30, 2025, from $2.04 million at December 31, 2024. Working capital of $23.15 million is heavily influenced by a $23.00 million unallocated deposit in the People's Republic of China, which carries significant recovery risks. The recurring net losses and negative operating cash flows of $1.95 million for H1 2025 led to a 'substantial doubt about the Company’s ability to continue as a going concern for the next twelve months.'
Management acknowledged the going concern warning, stating that the company's ability to continue is dependent on increasing revenue, controlling costs, generating positive operating cash flow, and obtaining further external financing. The company also identified material weaknesses in internal controls, including insufficient accounting personnel and inadequate procedures for assessing credit risk, with remediation initiatives planned for completion by the end of fiscal year 2025.
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