Company Quick10K Filing
DSwiss
Price-0.00 EPS-0
Shares207 P/E0
MCap-0 P/FCF0
Net Debt-0 EBIT-0
TEV-0 TEV/EBIT0
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-03-31 Filed 2020-05-15
10-K 2019-12-31 Filed 2020-03-30
10-Q 2019-09-30 Filed 2019-11-14
10-Q 2019-06-30 Filed 2019-08-14
10-Q 2019-03-31 Filed 2019-05-14
10-K 2018-12-31 Filed 2019-04-10
10-Q 2018-09-30 Filed 2018-11-13
10-Q 2018-06-30 Filed 2018-08-14
10-Q 2018-03-31 Filed 2018-05-18
10-K 2017-12-31 Filed 2018-04-02
10-Q 2017-09-30 Filed 2017-11-14
10-Q 2017-06-30 Filed 2017-08-14
10-Q 2017-03-31 Filed 2017-05-15
10-K 2016-12-31 Filed 2017-03-30
10-Q 2016-09-30 Filed 2016-11-14
10-Q 2016-06-30 Filed 2016-08-15
8-K 2019-02-27

DQWS 10Q Quarterly Report

Part I Financial Information
Item 1. Unaudited Condensed Consolidated Financial Statements:
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3 Quantitative and Qualitative Disclosures About Market Risk.
Item 4 Controls and Procedures.
Part II &Mdash; Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information.
Item 6. Exhibits
EX-31.1 ex31-1.htm
EX-32.1 ex32-1.htm

DSwiss Earnings 2020-03-31

Balance SheetIncome StatementCash Flow
922230716714511198305682100166-1053502015201620182020
Assets, Equity
11549558176857-56462-113781-1711002015201620182020
Rev, G Profit, Net Income
50765037044823324696044-41158-1783602015201620182020
Ops, Inv, Fin

10-Q 1 form10-q.htm

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

 

For The Quarterly Period Ended March 31, 2020

 

or

 

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from _______________to _______________

 

Commission File Number 333-208083

 

DSwiss, Inc.

(Exact name of registrant issuer as specified in its charter)

 

Nevada   47-4215595
(State or other jurisdiction   (I.R.S. Employer
of incorporation or organization)   Identification No.)

 

Unit 18-11, 18-12 & 18-01, Tower A, Vertical Business Suite,

Avenue 3, Bangsar South, No.8 Jalan Kerinchi, 59200, Kuala Lumpur, Malaysia

(Address of principal executive offices, including zip code)

 

Registrant’s phone number, including area code (603) 2770-4032

 

 Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class:   Trading Symbol(s)   Name of each exchange on which registered:
Common Stock   DQWS   The OTC Market – Pink Sheets

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

 

YES [X] NO [  ]

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (section 232.405 of this chapter) during the preceding twelve months (or shorter period that the registrant was required to submit and post such files).

 

YES [  ] NO [X]

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large Accelerated Filer [  ] Accelerated Filer [  ] Non-accelerated Filer [  ] Smaller reporting company [X]

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

 

Yes [  ] No [X]

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

Class   Outstanding at May 15, 2020
Common Stock, $.0001 par value   206,904,600

 

 

 

 
 

 

TABLE OF CONTENTS

 

    Page
PART I FINANCIAL INFORMATION  
ITEM 1. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:  
  Condensed Consolidated Balance Sheets as of March 31, 2020 and December 31, 2019 F-2
  Condensed Consolidated Statements of Operations and Comprehensive Income for the Three Months Ended March 31, 2020 and 2019 F-3
  Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended March 31, 2020 F-4
  Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2020and 2019 F-5
  Notes to the Condensed Consolidated Financial Statements F-6 - F-17
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 2-6
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 7
ITEM 4. CONTROLS AND PROCEDURES 7
PART II OTHER INFORMATION  
ITEM 1 LEGAL PROCEEDINGS 8
ITEM 2 UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 8
ITEM 3 DEFAULTS UPON SENIOR SECURITIES 8
ITEM 4 MINE SAFETY DISCLOSURES 8
ITEM 5 OTHER INFORMATION 8
ITEM 6 EXHIBITS 9
SIGNATURES 10

 

1
 

 

DSWISS, INC.

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

 

F-1
 

 

PART I FINANCIAL INFORMATION

 

Item 1. Unaudited condensed consolidated financial statements:

 

DSWISS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

As of March 31, 2020, and December 31, 2019

(Currency expressed in United States Dollars (“US$”), except for number of shares)

 

   March 31, 2020   December 31, 2019 
   Unaudited   Audited 
ASSETS          
CURRENT ASSETS          
Cash and cash equivalents  $126,598   $48.353 
Accounts receivable   1,516    8,342 
Other Receivable, prepaid expenses and deposit   59,641    

124,380

 
Income tax receivables   1,352    1,301 
Inventories   23,716    17,199 
Total Current Assets   212,823    199,575 
           
NON-CURRENT ASSETS          
Property and equipment, net   61,335     66,963  
Intangible assets, net   6,345    6,575 
Operating lease right -of-use, net   77,941    92,883 
Total Non-Current Assets   145,621    166,421 
           
TOTAL ASSETS  $358,444   $365,996 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY          
CURRENT LIABILITIES          
Account payable  $20,188   $458 
Other payables and accrued liabilities   149,300    202,399 
Finance lease liability   7,799    8,075 
Amounts due to a director   167,889    125,834 
Amount due to related party   369    - 
Operating lease liability   43,517    45,120 
Total Current Liabilities   389,062    381,886 
           
NON- CURRENT LIABILITIES          
Finance lease liability   37,475    41,373 
Operating lease liability   33,936    47,179 
Total non-current liabilities   71,411    88,552 
           
TOTAL LIABILITIES  $460,473   $470,438 
           
STOCKHOLDERS’ EQUITY          
Preferred stock, $0.0001 par value, 200,000,000 shares authorized, None issued and outstanding   -    - 
Common stock, $0.0001 par value, 600,000,000 shares authorized, 206,904,600 and 206,904,600 shares issued and outstanding as of March 31, 2020 and December 31, 2019 respectively  $20,690   $20,690 
Additional paid-in capital   1,395,426    1,395,426 
Accumulated other comprehensive losses   (35,132)   (34,564)
Accumulated deficit   (1,499,810)   (1,490,845)
           
TOTAL DSWISS, INC. STOCKHOLDERS’ EQUITY  $(118,826)  $(109,293)
NON-CONTROLLING INTEREST   16,797    4,851 
TOTAL STOCKHOLDERS’ EQUITY   (102,029)   (104,442)
           
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY  $358,444   $365,996 

 

See accompanying notes to condensed consolidated financial statements.

 

F-2
 

 

DSWISS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME

FOR THE THREE MONTHS ENDED MARCH 31, 2020 AND 2019

(Currency expressed in United States Dollars (“US$”), except for number of shares)

(Unaudited)

 

   Three months ended March 31, 
   2020   2019 
REVENUE  $527,542   $18,812 
           
COST OF REVENUE   (407,536)   (7,976)
           
GROSS PROFIT   120,006    10,836 
           
OTHER INCOME   1,204    4,030 
           
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES   (76,879)   (79,529)
           
OPERATING EXPENSES   (21,412)   (43,250)
           
FINANCE EXPENSES   (541)   - 
           
LEASE EXPENSES   (11,849)   - 
           
OTHER OPERATING EXPENSES   (7,547)   (11,790)
           
PROFIT/(LOSS) BEFORE INCOME TAX   2,982    (119,703)
           
TAXATION   -    (78)
           
NET PROFIT/(LOSS)  $2,982    (119,781)
Non-Controlling Interest   (11,947)   7,765 
Other comprehensive income/(loss):          
- Foreign currency translation adjustment   (568)   (339)
           
Comprehensive loss   (9,533)   (112,355)
           
Net income/(loss) per share- Basic and diluted   (0.00)   (0.00)
           
Weighted average number of common shares outstanding – Basic and diluted   206,904,600    206,904,600 

 

See accompanying notes to condensed consolidated financial statements.

 

F-3
 

 

DSWISS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED MARCH 31, 2020

(Currency expressed in United States Dollars (“US$”))

(unaudited)

 

   COMMON STOCK                     
   Number of shares   Amount   ADDITIONAL
PAID-IN
CAPITAL
   ACCUMULATED
COMPREHENSIVE
INCOME/(LOSS)
  

ACCUMULATED

(DEFICIT)

   NON-
CONTROLLING INTEREST
   TOTAL
EQUITY
 
Balance as of December 31, 2019 (audited)   206,904,600    20,690    1,395,426     (34,564 )    (1,490,845)   4,851    (104,442)
Foreign currency translation adjustment   -    -    -    (568)   -    -    (568)
Net loss   -    -    -    -    (8,965)   11,947    2,982 
Balance as of March 31, 2020 (unaudited)   206,904,600    20,690    1,395,426    (35,132)   (1,499,810)   16,797    (102,029)

 

See accompanying notes to condensed consolidated financial statements

 

F-4
 

 

DSWISS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2020 AND 2019

(Currency expressed in United States Dollars (“US$”), except for number of shares)

(Unaudited)

 

   Three months ended March 31, 
   2020   2019 
CASH FLOWS FROM OPERATING ACTIVITIES:          
Net profit/(loss)  $2,982   $(119,703)
Adjustments to reconcile net loss to net cash used in operating activities:          
Depreciation and amortization   15,791    7,266 
Amortization for intangible assets   259    200 
Changes in operating assets and liabilities:          
Account payable   19,751    - 
Accounts receivable   11,145    1,444 
Other payables and accrued liabilities    (9,540 )     (266 )
Inventories   (7,311)   (12,191)
Prepaid expenses and deposits   61,675    23,867 
Reduction in lease liability   (10,579)   - 
Cash generated from/(used in)  operations   

84,173

    (99,383)
Tax paid   (115)   (1,431)
           
Net cash generated from/ (used in)  operating activities    84,058     (100,814)
           
CASH FLOWS FROM INVESTING ACTIVITY :          
Purchase of property and equipment   (2,199)   - 
           

Net cash used in investing activity

   (2,199)   - 
           
CASH FLOWS FROM FINANCING ACTIVITIES:          
Advance from directors   93    58 
Repayment of hire purchase   (1,889)   (1,889)
           
Net cash used in financing activities   (1,796)   (1,831)
           
Effect of exchange rate changes on cash and cash equivalent    (1,818 )    593 
           
Net increase/(decrease) in cash and cash equivalents    78,245     (102,052)
Cash and cash equivalents, beginning of period    48,353     188,754 
CASH AND CASH EQUIVALENTS, END OF PERIOD  $126,598   $86,702 
SUPPLEMENTAL CASH FLOWS INFORMATION          
Income taxes paid  $(115)  $- 
Interest paid  $-   $659 
Cash received for income tax refund  $-   $659 

 

See accompanying notes to condensed consolidated financial statements.

 

F-5
 

 

DSWISS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2020

(Currency expressed in United States Dollars (“US$”), except for number of shares)

(UNAUDITED)

 

1. DESCRIPTION OF BUSINESS AND ORGANIZATION

 

DSwiss, Inc. is organized as a Nevada limited liability company, incorporated on May 28, 2015. For the purposes of financial statement presentation, DSwiss, Inc. and its subsidiaries are herein referred to as “the Company” or “we”. The principal activity of the Company and its subsidiaries is to supply high quality beauty products directly to clients through wholly owned subsidiaries. Our beauty supplies include, but are not limited to, beverages to assist in weight loss, anti-aging cream, and products designed to improve the overall health and wellness of clients.

 

The accompanying unaudited condensed consolidated financial statements of DSwiss, Inc. at March 31, 2020 and 2019 have been prepared in accordance with generally accepted accounting principles (“GAAP”) for interim financial statements, instructions to Form 10-Q, and Regulation S-X. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in our annual report on Form 10-K for the year ended December 31, 2019. In management’s opinion, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation to make our financial statements not misleading have been included. The results of operations for the periods ended March 31, 2020 and 2019 presented are not necessarily indicative of the results to be expected for the full year. The December 31, 2019 balance sheet has been derived from our audited financial statements included in our annual report on Form 10-K for the year ended December 31, 2019.

 

We have historically conducted our business through DSwiss Sdn Bhd, a private limited liability company, incorporated in Malaysia. DSwiss Holding Limited, incorporated in Seychelles, is an investment holding company with 100% equity interest in DSwiss (HK) Limited, a company incorporated in Hong Kong, which subsequent hold 100% equity interest in DSwiss Sdn. Bhd. On August 31, 2015, DSwiss, Inc. was restructured to be the holding company parent to, and succeed to the operations of, DSwiss Holding Limited. The former unit holder of DSwiss Holding Limited became the unit holder of DSwiss, Inc. and DSwiss Holding Limited became a wholly-owned subsidiary of DSwiss, Inc. This transaction was accounted for as a transaction among entities under common control and the assets, liabilities, revenues and expenses of DSwiss Holding Limited were carried over to and combined with DSwiss, Inc. at historical cost, and as if the transfer occurred at the beginning of the period. Prior periods have been retrospectively adjusted for comparative purposes.

 

We have invested in DSwiss Biotech Sdn Bhd, a Company incorporated in Malaysia, and owned 40% equity interest. We have incorporated a new company namely DSwiss International Trading (Shenzhen) Limited in China, with 100% equity interest.

 

The Company, through its subsidiaries and its variable interest entities (“VIEs”), mainly supplies high quality beauty products. Details of the Company’s subsidiaries and associates:

 

    Company name   Place and date of incorporation   Particulars of issued
capital
  Principal activities   Proportional of ownership interest
and voting power
held
 
                       
1.   DSwiss Holding Limited   Seychelles,
May 28, 2015
  1 share of ordinary share of US$1 each   Investment holding     100 %
                         
2.   DSwiss (HK) Limited   Hong Kong,
May 28, 2015
  1 share of ordinary share of HK$1 each   Supply of beauty products     100 %
                         
3.   DSwiss Sdn Bhd   Malaysia,
June 10, 2011
  2 shares of ordinary share of RM 1 each   Supply of beauty products     100 %
                         
4.   DSwiss Biotech Sdn Bhd(1)   Malaysia,
March 17, 2016
  250,000 shares of ordinary share of RM 1 each   Supply of biotech products     40 %
                         
5.   DSwiss International Trading (Shenzhen) Limited 德瑞絲國際貿易(深圳)有限公司   PRC,
June 21, 2016
  413,392 shares of ordinary share of RMB 1 each   Trading Beauty products     100 %

 

(1) Based on the contractual arrangements between the Company and other investors, the Company has the power to direct the relevant activities of these entities unilaterally, and hence the Company has control over these entities.

 

F-6
 

 

DSWISS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2020

(Currency expressed in United States Dollars (“US$”), except for number of shares)

(UNAUDITED)

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of presentation

 

The accompanying condensed consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”).

 

Basis of consolidation

 

The condensed consolidated financial statements include the accounts of the Company and its subsidiaries in which the Company is the primary beneficiary. All inter-company accounts and transactions have been eliminated upon consolidation.

 

Use of estimates

 

In preparing these consolidated financial statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheets, and revenues and expenses during the periods reported. Actual results may differ from these estimates.

 

Revenue recognition

 

In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 605, “Revenue Recognition”, the Company recognizes revenue from sales of goods when the following four revenue criteria are met: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) selling price is fixed or determinable; and (4) collectability is reasonably assured.

 

Revenue from supplies of beauty products is recognized when title and risk of loss are transferred and there are no continuing obligations to the customer. Title and the risks and rewards of ownership transfer to and accepted by the customer when the products are collected by the customer at the Company’s office. Revenue is recorded net of sales discounts, returns, allowances, and other adjustments that are based upon management’s best estimates and historical experience and are provided for in the same period as the related revenues are recorded. Based on limited operating history, management estimates that there was no sales return for the period reported.


The Company mainly derives its revenue from the sale of healthy food products. Generally, the Company recognizes revenue when products are sold and accepted by the customers and there are no continuing obligations to the customer.

 

Cost of revenue

 

Cost of revenue includes the purchase cost of retail goods for re-sale to customers and packing materials (such as boxes). It excludes purchasing and receiving costs, inspection costs, warehousing costs, internal transfer costs and other costs of distribution network in cost of revenues.

 

Shipping and handling fees

 

Shipping and handling fees, if billed to customers, are included in revenue. Shipping and handling fees associated with inbound and outbound freight are expensed as incurred and included in selling and distribution expenses. Shipping and handling fees are expensed as incurred for the three months ended March 31, 2020 were $5,015, while for the three months ended March 31, 2019 were $277.  

 

F-7
 

 

DSWISS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2020

(Currency expressed in United States Dollars (“US$”), except for number of shares)

(UNAUDITED)

 

Selling and distribution expenses

 

Selling and distribution expenses are primarily comprised of travelling and accommodation, transportation fees such as petrol, toll and parking and shipping and handling fees.

 

Cash and cash equivalents

 

The Company consider all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalent.

 

Inventories

 

Inventories consisting of products available for sell, are stated at the lower of cost or market value. Cost of inventory is determined using the first-in, first-out (FIFO) method. Inventory reserve is recorded to write down the cost of inventory to the estimated market value due to slow-moving merchandise and damaged goods, which is dependent upon factors such as historical and forecasted consumer demand, and promotional environment. The Company takes ownership, risks and rewards of the products purchased. Write downs are recorded in cost of revenues in the Condensed Consolidated Statements of Operations and Comprehensive Income.

 

Property and equipment

 

Property and equipment are stated at cost less accumulated depreciation and impairment. Depreciation of plant, equipment and software are calculated on the straight-line method over their estimated useful lives or lease terms generally as follows:

 

Classification   Estimated useful lives
Computer and software   5 years
Furniture and fittings   5 years
Office equipment   10 years
Motor vehicle   5 years

 

Intangible assets

 

Intangible assets are stated at cost less accumulated amortization. Intangible assets represented the registration costs of trademarks in Hong Kong, China, and Malaysia, which are amortized on a straight-line basis over a useful life of five years.

 

The Company follows ASC Topic 350 in accounting for intangible assets, which requires impairment losses to be recorded when indicators of impairment are present and the undiscounted cash flows estimated to be generated by the assets are less than the assets’ carrying amounts. There was no impairment losses recorded on intangible assets for the three months ended March 31, 2020.

 

Leases

 

The company determines if an arrangement is a lease at inception. Operating leases are included in operating in operating lease right-of-use (“ROU”) as assets, operating lease non-current liabilities, and operating lease current liabilities in our consolidated balance sheet. Finance leases are property and equipment, other current liabilities, and other non-current liabilities in the consolidated balance sheet.

 

F-8
 

 

DSWISS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2020

(Currency expressed in United States Dollars (“US$”), except for number of shares)

(UNAUDITED)

 

ROU assets represent the right to use an asset for the lease term and lease liability represent the obligation to make lease payment arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over lease term. As most of the leases doesn’t provide an implicit rate. The company generally use the incremental borrowing rate on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date. The operating ROU asset also includes any lease payments made and exclude lease incentives. Lease expense for lease payment is recognized on a straight -line basis over lease term. The Company adopted Public Bank Berhad’s base rate lending rate as a reference for discount rate.

 

Leases that transfer substantially all the rewards and risks of ownership to the lessee, other than legal title, are accounted for as finance leases. Substantially all of the risks or benefits of ownership are deemed to have been transferred if any one of the four criteria is met: (i) transfer of ownership to the lessee at the end of the lease term, (ii) the lease containing a bargain purchase option, (iii) the lease term exceeding 75% of the estimated economic life of the leased asset, (iv) the present value of the minimum lease payments exceeding 90% of the fair value. At the inception of a finance lease, the Company as the lessee records an asset and an obligation at an amount equal to the present value of the minimum lease payments. The leased asset is amortized over the shorter of the lease term or its estimated useful life if title does not transfer to the Company, while the leased asset is depreciated in accordance with the Company’s depreciation policy if the title is to eventually transfer to the Company. The periodic rent payments made during the lease term are allocated between a reduction in the obligation and interest element using the effective interest method in accordance with the provisions of ASC Topic 835-30, “Imputation of Interest”.

 

Income taxes

 

Income taxes are determined in accordance with the provisions of ASC Topic 740, “Income Taxes” (“ASC Topic 740”). Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the periods in which those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

 

ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts.

 

The Company conducts major businesses in Malaysia and Hong Kong, and is expanding to China. The Company is subject to tax in these jurisdiction. As a result of its business activities, the Company will file tax returns that are subject to examination by the foreign tax authority.

 

F-9
 

 

DSWISS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2020

(Currency expressed in United States Dollars (“US$”), except for number of shares)

(UNAUDITED)

 

Net income/(loss) per share

 

The Company calculates net income/(loss) per share in accordance with ASC Topic 260, “Earnings per Share.” Basic income/(loss) per share is computed by dividing the net income/(loss) by the weighted-average number of common shares outstanding during the period. Diluted income per share is computed similar to basic income/(loss) per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common stock equivalents had been issued and if the additional common shares were dilutive.

 

Foreign currencies translation

 

Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the Condensed Consolidated Statements of Operations and Comprehensive Income.

 

The reporting currency of the Company is United States Dollars (“US$”) and the accompanying financial statements have been expressed in US$. In addition, the Company’s subsidiaries and VIEs in Malaysia, Hong Kong, China and Thailand maintains their books and record in their local currency, Ringgits Malaysia (“RM”), Hong Kong Dollars (“HK$”), Chinese Renminbi (“RMB”) and Thai Baht (“THB”) respectively, which is functional currency as being the primary currency of the economic environment in which the entity operates.

 

In general, for consolidation purposes, assets and liabilities of its subsidiaries whose functional currency is not US$ are translated into US$, in accordance with ASC Topic 830-30, “Translation of Financial Statement”, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of foreign subsidiary are recorded as a separate component of accumulated other comprehensive income within the statements of stockholders’ equity.

 

Translation of amounts from RM into US$1, HK$ into US$1, RMB into US$1 and THB into US$1 has been made at the following exchange rates for the respective periods:

 

   As of and for the three months ended
March 31,
 
   2020   2019 
         
Period-end RM : US$1 exchange rate   4.31    4.08 
Period-average RM : US$1 exchange rate   4.41    4.09 
Period-end HK$ : US$1 exchange rate   7.75    7.85 
Period-average HK$ : US$1 exchange rate   7.77    7.85 
Period-end RMB : US$1 exchange rate   7.08    6.71 
Period-average RMB : US$1 exchange rate   6.98    6.75 
Period-end THB : US$1 exchange rate   32.71    31.59 
Period-average THB : US$1 exchange rate   31.24    31.56 

 

F-10
 

 

DSWISS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

FOR THE THREEMONTHS ENDED MARCH 31, 2020

(Currency expressed in United States Dollars (“US$”), except for number of shares)

(UNAUDITED)

 

Related parties

 

Parties, which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Companies are also considered to be related if they are subject to common control or common significant influence.

 

Fair value of financial instruments:

 

The carrying value of the Company’s financial instruments: cash and cash equivalents, trade receivables, deposits, trade payable, other payables, and accounts payable approximate at their fair values because of the short-term nature of these financial instruments.

 

The Company also follows the guidance of the ASC Topic 820-10, “Fair Value Measurements and Disclosures” (“ASC 820-10”), with respect to financial assets and liabilities that are measured at fair value. ASC 820-10 establishes a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair value as follows:

 

Level 1: Observable inputs such as quoted prices in active markets;

 

Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

 

Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

 

Segment reporting

 

ASC Topic 280, “Segment Reporting” establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organization structure as well as information about geographical areas, business segments and major customers in financial statements. For the three months ended March 31, 2020, the Company operates in four reportable operating segment in Malaysia, China and Hong Kong.

 

Recent accounting pronouncements

 

The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and do not believe the future adoption of such any pronouncements may be expected to cause a material impact on its financial condition or the results of its operations, as follow:

 

In February 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842). Under the new guidance, lessees will be required recognize the following for all leases (with the exception of short-term leases) at the commencement date: 1) A lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and 2) A right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. The new lease guidance simplified the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and lease liabilities. Lessees will no longer be provided with a source of off-balance sheet financing. The amendments in this ASU are effective for fiscal years beginning after December 15, 2019, including interim periods within those years. The Company is evaluating this ASU and has not determined the effect of this standard on its ongoing financial reporting.

 

In September 2017, the FASB has issued ASU No. 2017-13, Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842): Amendments to SEC Paragraphs Pursuant to the Staff Announcement at the July 20, 2017 EITF Meeting and Rescission of Prior SEC Staff Announcements and Observer Comments.” The amendments in ASU No. 2017-13 amends the early adoption date option for certain companies related to the adoption of ASU No. 2014-09 and ASU No. 2016-02. Both of the below entities may still adopt using the public company adoption guidance in the related ASUs, as amended. The effective date is the same as the effective date and transition requirements for the amendments for ASU 2014-09 and ASU 2016-02.

 

In August 2018, the FASB has issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements of Fair Value Measurement. This amendment modifies the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement, based on the concepts in the Concepts Statement, including the consideration of costs and benefits, with the primary purpose to improve the effectiveness of disclosures in the notes to financial statements by facilitating clear communication of the information required by US GAAP. The amendments in this update are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019.

 

F-11
 

 

DSWISS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2020

(Currency expressed in United States Dollars (“US$”), except for number of shares)

(UNAUDITED)

 

3. VIE STRUCTURE AND ARRANGEMENTS

 

On June 27, 2016, DSwiss (HK) Limited (“DSHK”) entered into a Management Services Agreement (the “Management Services Agreement I”) which entitles DSHK to substantially entitled to all of the economic benefits of DSwiss Biotech Sdn Bhd (“DSBT”) in consideration of services provided by DSHK to DSBT. Pursuant to the Management Services Agreement I, DSHK has the exclusive right to provide to DSBT management, financial and other services related to the operation of DSBT’s business, and DSBT is required to take all commercially reasonable efforts to permit and facilitate the provision of the services provided by DSHK. As compensation for providing the services, DSHK is entitled to receive a fee from DSBT, upon demand, equal to 100% of the annual net profits of DSBT during the term of the Management Services Agreement I. DSHK may also request, on ad hoc basis, quarterly payments of the aggregate fee, which payments will be credited against DSBT’s future payment obligations.

 

The Management Services Agreement I also provides DSHK, or its designee, with a right of first refusal to acquire all or any portion of the equity of DSBT upon any proposal by the sole shareholder of DSBT to transfer such equity. In addition, at the sole discretion of DSHK, DSBT is obligated to transfer to DSHK, or its designee, any part or all of the business, personnel, assets and operations of DSBT which may be lawfully conducted, employed, owned or operated by DSHK, including:

 

(a) business opportunities presented to, or available to DSBT may be pursued and contracted for in the name of DSHK rather than DSBT, and at its discretion, DSHK may employ the resources of DSBT to secure such opportunities;

 

(b) any tangible or intangible property of DSBT, any contractual rights, any personnel, and any other items or things of value held by DSBT may be transferred to DSHK at book value;

 

(c) real property, personal or intangible property, personnel, services, equipment, supplies and any other items useful for the conduct of the business may be obtained by DSHK by acquisition, lease, license or otherwise, and made available to DSBT on terms to be determined by agreement between DSHK and DSBT;

 

(d) contracts entered into in the name of DSBT may be transferred to DSHK, or the work under such contracts may be subcontracted, in whole or in part, to DSHK, on terms to be determined by agreement between DSHK and DSBT; and

 

(e) any changes to, or any expansion or contraction of, the business may be carried out in the exercise of the sole discretion of DSHK, and in the name of and at the expense of, DSHK; provided, however, that none of the foregoing may cause or have the effect of terminating (without being substantially replaced under the name of DSHK) or adversely affecting any license, permit or regulatory status of DSBT.

 

In addition, DSHK entered into certain agreements with Jervey Choon, (the “DSBT shareholder”), including

 

(i) a Call Option Agreement allowing DSHK to acquire the shares of DSBT as permitted by Malaysia laws;
   
(ii) a Shareholders’ Voting Rights Proxy Agreement that provides DSHK with the voting rights of the DSBT; and
   
(ii) an Equity Pledge Agreement that pledges the shares in DSBT.

 

This VIE structure provides DSHK, a wholly-owned subsidiary of DSwiss Holding Limited, which is the wholly-owned subsidiary of DSwiss Inc, with control over the operations and benefits of DSBT without having a direct equity ownership in DSBT.

 

F-12
 

 

DSWISS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2020

(Currency expressed in United States Dollars (“US$”), except for number of shares)

(UNAUDITED)

 

4. STOCKHOLDERS’ EQUITY

 

As of March 31, 2020, the Company had a total of 206,904,600 of its common stock issued and outstanding. There are no shares of preferred stock issued and outstanding.

 

5. PROPERTY AND EQUIPMENT

 

   March 31, 2020   December 31, 2019 
Computers and software  $94,374   $92,462 
Furniture and fittings   6,144    6,144 
Office equipment   9,939    9,646 
Motor vehicles   79,054    79,054 
Total property and equipment  $189,511   $ 187,306  
Accumulated depreciation   (124,587)   (119,720)
Effect of translation exchange   (3,589)   (623)
Property and equipment, net  $61,335   $66,963 

 

Depreciation expense for the three months ended March 31, 2020 were $4,867.

 

Depreciation expense for the three months ended March 31, 2019 were $7,266.

 

6. INTANGIBLE ASSETS

 

   March 31, 2020   December 31, 2019 
Trademarks  $12,077   $12,077 
Amortization   (5,320)   (5,061)
Effect of translation exchange   (412)   (441)
Intangible assets, net  $6,345   $6,575 

 

Amortization for the three months ended March 31, 2020 was $259.

 

Amortization for the three months ended March 31, 2019 was $200.

 

7. PREPAID EXPENSES AND DEPOSITS

 

   March 31, 2020   December 31, 2019 
Prepaid expenses  $6,340   $6,629 
Deposits   53,301    117,711 
Total prepaid expenses and deposits  $59,641   $124,380 

 

8. INVENTORIES

 

   March 31, 2020   December 31, 2019 
Finished goods, at cost  $23,716   $17,199 
Total inventories  $23,716   $17,199 

 

9. OTHER PAYABLES AND ACCRUED LIABILITIES

 

   March 31, 2020   December 31, 2019 
Other payables  $112,482   $168,876 
Accrued audit fees   19,158    19,873 
Accrued other expenses   12,466    10,787 
Accrued professional fees   5,194    2,863 
Total payables and accrued liabilities  $ 149,300    $202,399 

 

As at March 31, 2020 included in other payable is an amount of $73,293 to the Agape Superior Living Sdn Bhd. As at December 31, 2019, included in other payable is an amount of $132,085 to the Agape Superior Living Sdn Bhd. The director of Agape Superior Living Sdn Bhd is a corporate shareholder of our holding company. The amount is unsecured, interest free and is repayable on demand.

 

F-13
 

 

DSWISS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2020

(Currency expressed in United States Dollars (“US$”), except for number of shares)

(UNAUDITED)

 

10. FINANCE LEASE LIABILITY

 

The Company purchased a motor vehicle under a finance lease agreement with the effective interest rate of 2.38% per annum, due through June, 2025, with principal and interest payable monthly. The obligation under the finance lease is as follows:

 

   As of March 31,   As of December 31, 
   2020   2019 
Finance lease  $51,032   $55,721 
Less: interest expense   (5,488)   (6,273)
Net present value of finance lease   45,544    49,448 
           
Current portion   7,799    8,075 
Non-current portion   37,745    41,373 
Total  $45,544   $49,448 

 

As of March 31, 2020 the maturities of the finance lease for each of the years are as follows:

 

2020   5,848 
2021   8,140 
2022   8,532 
2023   8,923 
2024   9,315 
2025   4,786 
Total  $45,544 

 

11. INCOME TAXES

 

For the three months ended March 2020 and 2019, the local (United States) and foreign components of income/(loss) before income taxes were comprised of the following:

 

   2020   2019 
         
Tax jurisdictions from:          
- Local  $(6,761)  $(4,038)
- Foreign, representing          
Seychelles   (93)   (72)
Hong Kong   702    (55,509)
Malaysia   15,197    (53,043)
PRC   (6,063)   (6,451)
Thailand   -    (590)
           

Profit/(loss) before income tax

  $2,982   $(119,703)

 

The provision for income taxes consisted of the following:

 

    2020    2019 
Current:          
- Local  $-   $- 
- Foreign   -    - 
           
Deferred:          
- Local   -    - 
- Foreign   -    - 
           
Income tax expense  $-   $- 

 

F-14
 

 

DSWISS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2020

(Currency expressed in United States Dollars (“US$”), except for number of shares)

(UNAUDITED)

 

The effective tax rate in the periods presented is the result of the mix of income earned in various tax jurisdictions that apply a broad range of income tax rates. The Company has subsidiaries that operate in various countries: United States, Seychelles, Hong Kong, Malaysia, PRC and Thailand that are subject to taxes in the jurisdictions in which they operate, as follows:

 

United States of America

 

The Company is registered in the State of Nevada and is subject to the tax laws of the United States of America. As of 31 December, 2020, the operations in the United States of America incurred $338,859 of cumulative net operating losses which can be carried forward to offset future taxable income, at the tax rate of 21%. The net operating loss carry forwards begin to expire in 2038, if unutilized. The Company has provided for a full valuation allowance of $70,530 against the deferred tax assets on the expected future tax benefits from the net operating loss carry forwards as the management believes it is more likely than not that these assets will not be realized in the future.

 

Seychelles

 

Under the current laws of the Seychelles, DSwiss Holding Limited is registered as an international business company which governs by the International Business Companies Act of Seychelles and there is no income tax charged in Seychelles.

 

Hong Kong

 

DSwiss (HK) Limited is subject to Hong Kong Profits Tax, which is charged at the statutory income tax rate of 16.5% on its assessable income. As of March 31, 2020, the operations in the Hong Kong incurred $509,212 of cumulative net operating losses which can be carried forward to offset future taxable income, at the tax rate of 16.5%. The Company has provided for a full valuation allowance of $84,120 against the deferred tax assets on the expected future tax benefits from the net operating loss carry forwards as the management believes it is more likely than not that these assets will not be realized in the future.

 

Malaysia

 

DSwiss Sdn Bhd and DSwiss Biotech Sdn Bhd are subject to Malaysia Corporate Tax, which is charged at the statutory income tax rate range from 17% to 24% on its assessable income. As of March 31, 2020, the operations in the Malaysia incurred $545,389 of cumulative net operating losses which can be carried forward to offset future taxable income, at the tax rate of 18%. The Company has provided for a full valuation allowance of $98,170 against the deferred tax assets on the expected future tax benefits from the net operating loss carry forwards as the management believes it is more likely than not that these assets will not be realized in the future.

 

PRC

 

DSwiss International Trading (Shenzhen) Limited is operating in the PRC subject to the Corporate Income Tax governed by the Income Tax Law of the People’s Republic of China with a unified statutory income tax rate of 25%. As of March 31, 2020, the operations in the PRC incurred $117,720 of cumulative net operating losses which can be carried forward to offset future taxable income, at the tax rate of 25%. The Company has provided for a full valuation allowance of $29,430 against the deferred tax assets on the expected future tax benefits from the net operating loss carry forwards as the management believes it is more likely than not that these assets will not be realized in the future.

 

F-15
 

 

DSWISS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2020

(Currency expressed in United States Dollars (“US$”), except for number of shares)

(UNAUDITED)

 

12. CONCENTRATIONS OF RISK

 

The Company is exposed to the following concentrations of risk:

 

(a) Major customers

 

For three months ended March 31, 2020 and 2019, the customers who accounted for 10% or more of the Company’s revenues and its accounts receivable balance at period-end are presented as follows:

 

   2020   2019   2020   2019   2020   2019 
   Revenues   Percentage of
revenues
   Accounts receivable,
trade
 
                         
Customer B  $57,106   $-    11%   -%  $-    - 
Customer F  $115,639   $-    22%   -   $-    - 
   $172,745   $-    33%   -%  $-    - 

 

(b) Major vendors

 

For three months ended March 31, 2020 and 2019, the vendors who accounted for 10% or more of the Company’s purchases and its accounts payable balance at period-end are presented as follows:

 

   2020   2019   2020   2019   2020   2019 
   Purchase   Percentage of
purchases
   Accounts payable,
trade
 
                         
Vendor B  $44,733   $-    12%   -%  $-    - 
Vendor F  $821,713   $-    52    -   $-    - 
   $866,466   $-    64%   -%  $-    - 

 

All vendors are located in Malaysia.

 

(c) Credit risk

 

Financial instruments that are potentially subject to credit risk consist principally of accounts receivable. The Company believes the concentration of credit risk in its trade receivables is substantially mitigated by its ongoing credit evaluation process and relatively short collection terms. The Company does not generally require collateral from customers. The Company evaluates the need for an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends and other information.

 

 

(d) Exchange rate risk

 

The Company cannot guarantee that the current exchange rate will remain stable, therefore there is a possibility that the Company could post the same amount of income for two comparable periods and because of the fluctuating exchange rate actually post higher or lower income depending on exchange rate of RM converted to US$, HK$ converted into US$, RMB converted into US$ and THB converted into US$ on that date. The exchange rate could fluctuate depending on changes in political and economic environments without notice.

 

F-16
 

 

DSWISS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2020

(Currency expressed in United States Dollars (“US$”), except for number of shares)

(UNAUDITED)

 

13. LEASE RIGHT-OF-USE ASSET AND LEASE LIABILITIES

 

The Company officially adopted ASC 842 for the period on and after January 1, 2019 as permitted by ASU 2016-02. ASC 842 originally required all entities to use a “modified retrospective” transition approach that is intended to maximize comparability and be less complex than a full retrospective approach. On July 30, 2018, the FASB issued ASU 2018-11 to provide entities with relief from the costs of implementing certain aspects of the new leasing standard, ASU 2016-02 of which permits entities may elect not to recast the comparative periods presented when transitioning to ASC 842. As permitted by ASU 2018-11, the Company elect not to recast comparative periods, thusly.

 

As of January 1, 2019, the Company recognized approximately US$136,308, lease liability as well as right-of-use asset for all leases (with the exception of short-term leases) at the commencement date. Lease liabilities are measured at present value of the sum of remaining rental payments as of January 1, 2019, with discounted rate of 4.47% adopted from Public Bank Berhad’s base lending rate as a reference for discount rate.

 

A single lease cost is recognized over the lease term on a generally straight-line basis. All cash payments of operating lease cost are classified within operating activities in the statement of cash flows.

 

The initial recognition of operating lease right and lease liability as follow:

 

As of March 31, 2020, operating lease right of use asset as follow:

 

Initial recognition as of January 1, 2020  $136,308 
Accumulated amortization   (53,783)
Effect of translation exchange   (4,584)
Balance as of March 31, 2020   $77,941 

 

As of March 31, 2020, operating lease liability as follow:

 

Initial recognition as of April 1, 2019  $136,308 
Less: gross repayment   (57,022)
Add: imputed interest   5,906 
Effect of translation exchange   (7,739)
Balance as of March 31, 2020  $77,453 
Less: lease liability current portion   (43,517)
Lease liability non-current portion   33,936 

 

For the year ended March 31, 2020, the amortization of the operating lease right of use asset are $10,691. As the Company adopt ASC 842 on and after January 1, 2019, the Company did not incur nor accrued any amortization of operating lease right for the year ended December 31, 2018.

 

Maturities of operating lease obligation as follow:

 

Year ending      
December 31, 2020   $ 43,517  
December 31, 2021     33,936  
Total   $ 77,453  

 

Other information:

 

  

Year ended

March 31, 2020

  

Year ended

December 31, 2019

 
    (unaudited)    (unaudited) 
Cash paid for amounts included in the measurement of lease liabilities:        - 
Operating cash flow from operating lease  $(10,690)  $43,092 
Right-of-use assets obtained in exchange for operating lease liabilities   77,941    92,883 
Remaining lease term for operating lease (years)   2    2 
Weighted average discount rate for operating lease   4.47%   4.47 

 

Lease expenses were $7,094 for the period ended March 31, 2020, respectively while lease expenses were $44,009 for the year ended December 31, 2019

 

14. SUBSEQUENT EVENTS

 

In accordance with ASC Topic 855, “Subsequent Events”, which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued, the Company has evaluated all events or transactions that occurred after January 31, 2020 up through the date April 16, 2020 was the Company presented these audited consolidated financial statements. The director, Mr Vincent Leong will not declare his director fee as of the year of 2019 nor draw the director remuneration from DSwiss (HK) Limited starting from April 2020 until further notice. This is an effort on reducing the overhead cost of the company to ensure the company would have a healthy financial to combat against the Co-vid 19 pandemic regardless the sales of the company have increased magnificently this quarter.

 

F-17
 

 

Item 2. 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 Annual Report on Form 10-K for the year ended December 31, 2019 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 consolidated financial statements and the notes to the 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 strongly encourage investors to carefully read the factors described in our Form S-1 Amendment No.8, dated July 20, 2016 in the section entitled “Risk Factors” for a description of certain risks that could, among other things, cause actual results to differ from these 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

 

DSwiss, Inc., a Nevada corporation (“the Company”) was incorporated under the laws of the State of Nevada on May 28, 2015. DSwiss Holding Limited owns 100% of DSwiss (HK) Limited, a Hong Kong Company, which owns 100% of DSwiss Sdn Bhd, the operating Malaysia Company of which is described below. In 2016, DSwiss (HK) Limited invested in DSwiss Biotech Sdn Bhd, incorporated in Malaysia, and owned 40% equity interest. DSwiss (HK) Limited also invested in DS Asia Co., Ltd, incorporated in Thailand, and owned 49% equity interest. We have incorporated a new company namely DSwiss International Trading (Shenzhen) Limited in China, with 100% equity interest owned by DSwiss (HK) Limited. On April 5, 2019, DSwiss Asia Co., Ltd was officially deregistered.

 

 

Our Company is a beauty supply company formed with the goal of supplying high quality beauty products directly to our clients. Our beauty supplies include, but are not limited to, beverages to assist in burning and reducing fat, anti-aging creams, and products designed to improve the overall health and physical appearance of our clients. Currently we supply our products in Malaysia, Singapore, Thailand, Indonesia, Hong Kong and China. However, we have intentions to expand to Myanmar, Macau, Vietnam and Cambodia, and subsequent to that we will make efforts to expand throughout the world a premier biotech-nutraceutical company, supplying high-quality health and beauty products, including beverages to assist in weight management, anti-aging creams, and products designed to improve the overall health system in our body.

 

2
 

 

At this time, we operate exclusively online through our website: http://www.dswissbeauty.com/

 

Our Company continuously strives to improve the already high standard of our goods and services through ongoing research and market development. We are going to penetrate into South East Asia markets through the recruitment of distributors and via the social media like Facebook and Instagram. We foresee to spend a substantial amount in marketing and advertising in the coming year. At DSwiss we are determined to bring new products to markets that we have not yet explored.

 

Products which meet the definition of a medicinal scope need to be registered with the Drug Control Authority (DCA), Ministry of Health Malaysia. Manufacturing, marketing, importation and the sale of unregistered products is a violation of the Drug Control Regulations and Cosmetics Act 1984 of Malaysia and enforcement action can be taken.

 

At DSwiss, research and development is an ongoing effort whose purpose is to ensure our products on the forefront of quality and effectiveness. Equipped with state of the art machinery, our innovative research and development team are constantly exploring on new development and product lines that will enable us to provide the highest quality standard and remain competitive in the industry.

 

DSwiss’s products are certified and approved by the Ministry of Health (“MOH”) Malaysia. Due to the stringent requirements from MOH Malaysia, we strive to upkeep the highest possible standard in our products to provide assurance and as a prove of our continuing commitment to providing quality products.

 

We always strive to offer products as high quality as possible, and hope that this assurance from an esteemed regulatory body will also serve to prove our continuing commitment to providing quality goods.

DSwiss have own brand Quantum Resonant Magnetic Analyzer which is DSwiss Quantum Resonant Magnetic Analyzer. DSwiss Quantum Resonant Magnetic Analyzer is a Hi-tech innovation project, which is related to medical, bio-informatics, electronic engineering, etc. It is based on quantum medical, and scientifically analyzes the human cell’s weak magnetic field collected by advanced electronic device. The analyzer can work out the customer’s health situation and main problem. According to the checking result, the analyzer can figure out the reasonable treatment recommendation. The quantum resonant magnetic analyzer is the individualized guide of comprehensive healthy consulting and updated healthy sciences, and its characteristics and advantages are comprehensive, non-invasive, practical, simple, quick, economical and easy to popularize. We can see DSwiss Quantum Resonant Magnetic Analyzer can help our customers to more concern about their health and skin condition.

Our expected growth is planned to occur primarily through the implementation of our social media marketing strategy. DSwiss already has a strong relationship with social media (eg. Facebook, Instagram and Wechat). The global presence social media has helped provide to us has been an invaluable resource, and as we continue to expand our business operations and spread our brand awareness, we intend to primarily utilize social media to reach our customers. The benefits of social media are countless, but perhaps the most imperative to our future success is our ability to connect with customers directly, to receive their feedback almost instantaneously. On that note, the feedback we have received from our clients has been overwhelmingly positive, which has helped us to create a robust brand image.

 

While DSwiss has been focused almost exclusively upon pursuing operations within Asia, we do have plans to expand outward and become a household name across the world. Our strategy to do so going forward is by forming partnerships with local companies in various countries that may be willing to stock our products or promote them to their own customers. We believe that by forging strategic relationships and partnerships we can expand our operations across the globe at a greater pace and with greater certainty than we would if we tried to expand on our own.

 

Results of Operation

 

For the Three Months Ended March 31, 2020 and March 31, 2019.

 

For the three months ended March 31, 2020, we realized revenue in the amount of $527,542, while for the three months ended March 31, 2019, we realized revenues in the amount of $18,812. Our gross profits for the three months ended March 31, 2020 were $120,006, which is more than $10,836 for the three months ended March 31, 2019. We believe that in order to retain and maintain more customers in the future we must increase our marketing efforts and or develop new products.

 

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*Our gross margins may not be comparable to those of other entities, since some entities include all the costs related to their distribution network in cost of revenue. Our cost of revenue includes only the purchase cost of products and packing materials, and does not include any allocation of inbound freight charges, purchasing and receiving costs, inspection costs, warehousing costs, internal transfer costs, and the other costs associated with the distribution network.

 

Our net profit for the three months ended March 31, 2020 were $2,982, while the net loss for the three ended March 31, 2019 were $119,781. We attribute this increase in profit due to increase product sales and market share.

 

The increases in general and administrative expenses are a result of advertising and compliance costs as a public company.

 

Liquidity and Capital Resources

 

For the three months ended March 31, 2020, we had cash and cash equivalents of $126,598. We have positive operating cash flows and our working capital has been and will continue to be significant. As a result, we have increase our sales resulting an increase in our overall revenue . We need to meet our working capital requirements and to make capital investments in connection with ongoing operations. The Company expects its current capital resources to meet our basic operating requirements for approximately twelve months. 

 

Operating Activities

 

For the three months ended March 31, 2020, net cash gain in operating activities was $84,058 , compared to net cash used of $100,814 in the prior year. The operating cash flow performance primarily reflects decrease in prepaid expenses and deposits compared and increase in account payable to the prior year.

 

Investing Activities

 

For the three months ended March 31, 2020, net cash used in investing activities was $2,199, reflecting the cost in purchase of property, plant and equipment. For the three months ended March 31, 2019, net cash used in investing activities was $0.

 

Financing Activities

 

For the three months ended March 31, 2020, net cash used for financing activities was $1,796 resulted from the repayment of hire purchase and advance from directors . For the three months ended March 31, 2019, net cash used for financing activities was $1,831 resulted from the repayment of hire purchase and advance from director . 

 

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Capital Expenditures

 

Our capital expenditures primarily relate to the acquisition of property and equipment. There is a $2,199 used to purchase the computer and software and office equipment for the three months periods ended March 31, 2020 . There is no capital expenditure for the three months periods ended March 31, 2019.

 

Credit Facilities

 

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

 

Contractual Obligations, Commitments and Contingencies

 

We currently have a lease agreement in place with respect to office premises in Malaysia to commence our business operations.

 

Off-balance Sheet Arrangements

 

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 as of March 31, 2020.

 

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Recent accounting pronouncements

 

The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and do not believe the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations

 

Additional Information

 

VIE STRUCTURE AND ARRANGEMENTS

 

On June 27, 2016, DSwiss (HK) Limited (“DSHK”) entered into a Management Services Agreement (the “Management Services Agreement I”) which entitles DSHK to substantially entitled to all of the economic benefits of DSwiss Biotech Sdn Bhd (“DSBT”) in consideration of services provided by DSHK to DSBT. Pursuant to the Management Services Agreement I, DSHK has the exclusive right to provide to DSBT management, financial and other services related to the operation of DSBT’s business, and DSBT is required to take all commercially reasonable efforts to permit and facilitate the provision of the services provided by DSHK. As compensation for providing the services, DSHK is entitled to receive a fee from DSBT, upon demand, equal to 100% of the annual net profits of DSBT during the term of the Management Services Agreement I. DSHK may also request ad hoc quarterly payments of the aggregate fee, which payments will be credited against DSBT’s future payment obligations.

 

The Management Services Agreement I also provides DSHK, or its designee, with a right of first refusal to acquire all or any portion of the equity of DSBT upon any proposal by the sole shareholder of DSBT to transfer such equity. In addition, at the sole discretion of DSHK, DSBT is obligated to transfer to DSHK, or its designee, any part or all of the business, personnel, assets and operations of DSBT which may be lawfully conducted, employed, owned or operated by DSHK, including:

 

(a) business opportunities presented to, or available to DSBT may be pursued and contracted for in the name of DSHK rather than DSBT, and at its discretion, DSHK may employ the resources of DSBT to secure such opportunities;

 

(b) any tangible or intangible property of DSBT, any contractual rights, any personnel, and any other items or things of value held by DSBT may be transferred to DSHK at book value;

 

(c) real property, personal or intangible property, personnel, services, equipment, supplies and any other items useful for the conduct of the business may be obtained by DSHK by acquisition, lease, license or otherwise, and made available to DSBT on terms to be determined by agreement between DSHK and DSBT;

 

(d) contracts entered into in the name of DSBT may be transferred to DSHK, or the work under such contracts may be subcontracted, in whole or in part, to DSHK, on terms to be determined by agreement between DSHK and DSBT; and

 

(e) any changes to, or any expansion or contraction of, the business may be carried out in the exercise of the sole discretion of DSHK, and in the name of and at the expense of, DSHK; provided, however, that none of the foregoing may cause or have the effect of terminating (without being substantially replaced under the name of DSHK) or adversely affecting any license, permit or regulatory status of DSBT.

 

In addition, DSHK entered into certain agreements with Jervey Choon, (the “DSBT shareholder”), including

 

(i) a Call Option Agreement allowing DSHK to acquire the shares of DSBT as permitted by Malaysia laws;
   
(ii) a Shareholders’ Voting Rights Proxy Agreement that provides DSHK with the voting rights of the DSBT; and
   
(iii) an Equity Pledge Agreement that pledges the shares in DSBT.

 

This VIE structure provides DSHK, a wholly-owned subsidiary of DSwiss Holding Limited, which is the wholly-owned subsidiary of DSwiss Inc, with control over the operations and benefits of DSBT without having a direct equity ownership in DSBT.

 

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Item 3 Quantitative and Qualitative Disclosures About Market Risk.

 

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.

 

Item 4 Controls and Procedures.

 

Evaluation of Disclosure Controls and Procedures:

 

We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of June 30, 2016. This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2020, our disclosure controls and procedures were not effective due to the presence of material weaknesses in 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. Management has identified the following material weaknesses which have caused management to conclude that, as of March 31, 2018, our disclosure controls and procedures were not effective: (i) inadequate segregation of duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both US GAAP and SEC guidelines.

 

Changes in Internal Control over Financial Reporting:

 

There were no changes in our internal control over financial reporting during the quarter ending March 31, 2020, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

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PART II — OTHER INFORMATION

 

Item 1. Legal Proceedings

 

We know of no material, active or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceedings or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any beneficial shareholder are an adverse party or has a material interest adverse to us.

 

Item 1A. Risk Factors.

 

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

None.

 

Item 3. Defaults Upon Senior Securities

 

None

 

Item 4. Mine Safety Disclosures

 

Not applicable.

 

Item 5. Other Information.

 

None.

 

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ITEM 6. Exhibits

 

Exhibit No.   Description
31.1   Rule 13(a)-14(a)/15(d)-14(a) Certification of principal executive officer*
32.1   Section 1350 Certification of principal executive officer *
101.INS   XBRL Instance Document*
101.SCH   XBRL Schema Document*
101.CAL   XBRL Calculation Linkbase Document*
101.DEF   XBRL Definition Linkbase Document*
101.LAB   XBRL Label Linkbase Document*
101.PRE   XBRL Presentation Linkbase Document*

 

* Filed herewith.

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  DSWISS, INC.
  (Name of Registrant)
     
Date: May 15, 2020    
     
  By: /s/ Leong Ming Chia
  Title: President, Chief Executive Officer,
Chief Financial Officer, Treasurer, Secretary and Director
    (Principal Executive Officer, Principal Financial Officer)

 

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