ITEM 1. BUSINESS
Corporate History
DSwiss, Inc., a Nevada corporation (“the Company”) was incorporated under the laws of the State of Nevada on May 28, 2015.
DSwiss, Inc. operates through its wholly-owned subsidiary, DSwiss Holding Limited, a Company organized under the laws of Seychelles.
The principal activity of the Company and its subsidiaries is to supply high-quality health and beauty products, including beverages to assist in weight management, anti-aging products, and immune system products designed to improve the overall health system in our body.
We have currently 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. We have invested in DSwiss Biotech Sdn. Bhd., a Company incorporated in Malaysia and owned a 40% equity interest. We have invested in DS Asia Co., Ltd, incorporated in Thailand, and owned 49% equity interest. On April 5, 2019, DS Asia Co.,Ltd has deregistered. The Company has incorporated DSwiss International Trading (Shenzhen) Limited in China, with a 100% equity interest on June 21, 2016.
The Company, through its subsidiaries and its variable interest entities (“VIEs”), mainly supplies high quality beauty products. Details of the Company’s subsidiaries:
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
share of ordinary share of US$1 each
Investment holding
100%
2. DSwiss (HK) Limited
Hong Kong,
May 28, 2015
share of ordinary share of HK$1 each
Supply of beauty products
100%
3. DSwiss Sdn Bhd
Malaysia,
June 10, 2011
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. DS Asia Co., Ltd
(2)
Thailand,
April 27,2016
20,000 shares of ordinary share of THB 25 each
Trading beauty products
49%
6. 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.
(2) DS Asia Co., Ltd was being officially de-registered on April 5, 2019.
Business Overview
DSwiss is 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 bodies.
Since our establishment, our growth has been tremendous in Malaysia. From a mere selection of two (2) products, the company had expanded to twelve (12) products by 2019. With the strong leadership of our company’s Chief Executive Officer; Vincent Leong, our products are now consumed around the world, such as Malaysia, Singapore, Indonesia, Hong Kong, Macau, and China. To date, we had expanded across ASEAN regions through the support of our distributors and determined to expand our geographical presence to markets that we have yet to explore.
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 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 continuous commitment to providing quality products.
Talent Development in Product Research and Development
The company hired food science professional and herbal science professional as our product specialists to involve in developing new product research and development. Such development will require clinical studies, market research and testing of physical products for overall effectiveness, and comply with the Ministry of Health Malaysia & JAKIM Halal standards. Currently, the company is undergoing research on the benefit of functional foods enhancing our human body immune system.
Currently, we are fulfilling last year future plan as in Talent Development, product research and development, and providing Original Equipment Manufacturer (OEM) and Original Design Manufacturer (ODM) services into functioning food and beauty product of which is currently under research and development with Taiwan Biotech and Malaysia biotech professionals. At the same time, we also upgraded to globally recognized Turnkey Private Label Manufacturing Services for nutraceutical, skin care, personal care, eye care, and equipment OEM/ODM products. Our professionals manage from custom formulation of scientifically-proven and naturally-effective, sourcing raw materials, production, quality control, stability and safety test, clinical testing by third-party labs, packaging and shipping including import and export, all licenses needed so customer can concentrate on what they should do.
Moving forward, we plan to form certain alliances and business partnerships with a few selected local companies from various countries. We strongly believe a healthy business relationship is vital for one’s business expansion, and more importantly; growth. While DSwiss has always been focused on pursuing operations within ASEAN, we certainly hope to expand our brand across the world in the future.
Our Products
DSwiss Coffee
DSwiss Coffee is a combination of Citrus Extract and eight other natural ingredients for digestive health. Apart from burning the fats, the drink provides a soothing and refreshing sensation.
It helps to:
● Reduce fat - reduces extra calories from your body fat and turn it into energy and inhibit the formation of fat
● Suppress appetite and increase satiety - gives a fullness feeling to overcome hunger pangs
● Digestive cleansing - detox toxins from the body
● Natural & safe for consumption - lose weight the natural & healthy way
● Alleviate constipation
● Eliminate edema
DSwiss Kiwi
Kiwi helps to strengthen the body’s immune system, improves skin complexion, reduces blood pressure and prevents heart disease and stroke. DSwiss Kiwi helps to reduce the risk of getting gastrointestinal diseases such as irritable stomach disorders and dermatitis.
It helps to:
● Detoxify and dispose waste and toxins
● Neutralize stomach excessive acid
● Remove waste on the intestinal wall
● Lose weight
● Protect intestinal mucosa
DSwiss Triple SC
DSwiss Triple SC focuses on stem cell and consists of three (3) types of cell’s combination which includes Apple Stem Cells, Argan Stem Cells and Grape Stem Cells.
Apple Stem Cells are extracted from the rare “Uttwiler Spatlauber” apples. It contains rich nutrients, protein, and amazing vitality of plant stem cells. It helps to protect and renew skin cells.
Argan Stem Cells help maintain functions of dermis to provide elasticity to the skin. In order to maintain elasticity, healthy skin undergoes constant cell turnover, which renews and repairs the dermal connective tissue. It helps to rejuvenate skin cells and reduce wrinkles.
Grape Stem Cells protect the skin from chronological and light-induced aging, extending skin cells’ vitality and keeping the skin’s appearance young and beautiful longer. It helps improve the skin’s resistance.
It helps to improve:
● Deoxyribonucleic Acid (“DNA”) Repair
i. Repair cellular DNA
ii. Stimulate skin stem cells regeneration
● Skin
i. Enhance collagen production in the body.
ii. Promote skin injury recovery
iii. Recondition dry or rough skin
iv. Reduce wrinkles
v. Skin repair & rejuvenation.
vi. “Oral Ultra Violet (“UV”) Protection”, to enhance whitening & moisturizes skin.
vii. Promote glowing skin
viii. Control melanin production which causes dull skin tone or pigmentation
ix. Reduce pores
x. Enhance skin flexibility
● Breast Firming
● Promote the growth of hairs and nails
● Blood Circulation
i. Blood detoxification
ii. Strengthen blood vessel flexibility
● Enhance brain cells for better memory
● Renal
i. Better renal function
ii. Reduce Edema for better weight loss result
● Hormone
i. Hormone balancing
ii. Regulate menstrual cycle and reduce menstrual pain
DSwiss Silk Mask
The mask is made by natural silk which contains a structure that is similar to human skin. DSwiss Silk Mask best suits for customers who have dry, damaged and sensitive skin. Silk contains 18 types of amino acids to moisturize the skin, strengthens the skin elasticity as well as repairs skin cells. Also, it brightens the skin tone and restores the skin health of users.
Unique Characteristics:
● Safe and highly compatible with skin cell
● Modulates moisture
● Absorbs oil and sebum at the skin
● Protect from UV rays
● Anti-inflammation & hypoallergenic
● Accelerates the regeneration of skin cells
● Anti-oxidants & antibacterial effects
● Stabilizes pigments and colorants
It helps to:
● Replenish elastin and collagen tissue in our skin
● A superb moisturizing ability which can eliminate fine lines and rejuvenates skin cell
● Prevent the formation of melanin which helps skin whitening
DSwiss Coffee Slimming Scrub
DSwiss Coffee Slimming Scrub is a natural body scrub containing fine uniform particles, mainly used to remove dirt on the skin layers, through a gentle friction with skin. It is also used to exfoliate the skin to remove dead skin, smoothen the skin and promote skin metabolism.
This is a physical method to remove dead skin layer, so one must be gentle in the course of action. It is recommended to use a moisturizer after exfoliating to nourish the skin.
The product can be used as face scrub or body scrub. Alternatively, we can use this product to remove dead skin on our joints. The product also helps to eliminate excess fats and may apply to therapeutic use.
It helps to:
● Full body detoxification
● Relieves rheumatic pains or colds during confinement
● Reduces scars and stretch marks
● Minimize the appearance of cellulite
● Exfoliate rough skin to smoother skin
DSwiss Peppermint Slimming Gel
DSwiss Peppermint Slimming Gel is an effective cooling agent which brings a cooling and refreshing feeling to the body. Peppermint is one of a commonly used Chinese herb to reduce symptoms of influenza, sore throat, and even weight loss! It helps to provide the slimming effect of silhouette and soothing skin.
DSwiss Peppermint Slimming Gel contains ingredients such as purified menthol (active thermo agent) to help activate cellular micro-circulation. It is also formulated with avant-garde plant extract that aids in reducing stretch mark and scars.
It helps to :
● Reduce body fat - peppermint is rich in menthol which could accelerate body circulation, reduce lipid, relieve bloating, and break down body fat for weight loss
● Skincare - peppermint essential oil can be used in aromatherapy or to produce perfumes and cosmetics. It helps to protect the skin
● Inhibition of body hair growth - Turkish scientists had researched that people who drink two (2) cups of mint tea continuously for five days a week will reduce the level of male hormones and inhibit the growth of body hair
● Reduce heat - Chinese medicine believes that mint has a pleasant smell, with wind-dispersing heat effect and clears throat ailments
● Relieve stress - peppermint contains essential oil, menthol, tannin and other substances, which can help to reduce anger, frustration and other negative emotions. It also helps to eliminate fatigue, relieve and stress
DSwiss New Age Essence
For younger and healthy-looking skin.
The multi-action DSwiss New Age Essence delivers skin-loving nutrients to moisten, brighten and revive tired looking skin. It brings a youthful vitality to your delicate skin and convenient to be used at anytime, anywhere and whenever you need.
The key active ingredient of the product, RoyalEpigen P5 which inspired by epigenetic science, this peptide mimics royal jelly to maximize its positive effects on the skin. It is a new and biologically-active peptide that activates skin regeneration and glow. Scientists discovered that epigenetic modification may passed down from one generation to the next by the technology of epigenetic science.
Additionally, PhytoCellTec™ is the technology used to generate and cultivate the key active ingredients, Nunatak® stem cell and apple stem cell. PhytoCellTec™ has used the auto-repair function of plant stem cell to replicate a large number of new cells, and then continue to grow into stem cells. This stem cell is filled with regeneration growth factor and metabolic factor, which can enhance DNA repair and slow down aging process. This is one of the remarkable anti-aging discoveries for this century.
It helps to:
● Accelerates epidermal regeneration for a smooth skin
● Activates the cellular cleaning process
● Reveals a more even toned skin
● Delays cell aging by applying new discoveries in epigenetic sciences
● Reduces aging signs (fine lines / wrinkles)
● Restores skin firmness / lifting effect
● Replenishes skin moisture
● Brightening effect
● Restores skin luminosity
● Skin refining & moisture retention
DSwiss Enlighten Essence (“EE”) Cream
Brightened, Flawless, Even- toned.
This extraordinary Luminous White Cream is effective to cover skin imperfection, yet providing a natural look on skin throughout the day. It is a light and nourishing cream adapted to all skin types, to protect, conceal, and enlivens, dull looking complexions for a luminous complexion.
PhytoCellTec™ is the technology used to generate and cultivate the key active ingredients, Nunatak® stem cell and apple stem cell. PhytoCellTec™ has used the auto-repair function of plant stem cell to replicate a large number of new cells, and then continue to grow into stem cells. This stem cell is filled with regeneration growth factor and metabolic factor, which can enhance DNA repairing and slow down aging process. This is one of the remarkable anti-aging discoveries for this century.
It helps to:
● Improves the skin barrier functions and skin protection
● Prevents premature skin aging
● Preserves lipid balance
● Skin softening
● Restores skin luminosity/ skin radiance
● Visible improvement of skin texture
● Refines and reveals a brighter and even more translucent skin tone
● Prevents skin imperfection
● Minimizes pores
DSwiss BioSpec
DSwiss BioSpec is a medical eye-wear which provides health benefits to our eyes.
(1) Frame
The main components of the DSwiss BioSpec frame are Negative Ions, Far Infra Ray, Nano Silver, and Germanium.
●Negative Ions are known as “air vitamins”, which can release negative ions and facilitate blood oxygen transport, absorption and utilization, which can effectively increase the oxygen content in the blood, help regulate blood pressure and eliminate static electricity.
●Far Infra Ray can promote blood circulation, strengthen metabolism and activate cells.
●NanoSilver has antibacterial and anti-inflammatory properties, hence it can effectively kill 650 kinds of bacteria.
●Germanium is beneficial to anti-cancer, anti-aging and anti-oxidation.
(2) Lens
The main components of DSwiss BioSpec lenses are UV 400 filters, Anti-blue Light, and Far Infrared.
●UV 400 Filter blocks for UVA & UVB shorter than 400 nm and 99.9% UVA and UVB protections.
●Anti-blue Light is a yellow-adjusting filter that reduces harmful blue light to the eyes.
●Far Infra Ray can promote blood circulation, strengthen metabolism, and activate cells.
Major Features:
●Patented production
●Better micro blood circulation
●Antibacterial and anti-inflammatory
●Durable and safe
●Economical and practical
Genmune-Pro
Genmune-Pro is a product that helps to boost up the human’s immunity system through enhancing the digestive health. It is uniquely formulated with probiotic strains Bifidobacterium longum BB536, Lactobacillus rhamnosus GG, prebiotic galacto-oligosaccharides and Wellmune® Baker’s Yeast Beta Glucan. Genmune-Pro helps to replenish beneficial bacteria in the gut to support digestive and immune health.
Scientifically proven by more than 150 clinical studies, Bifidobacterium longum BB536 promotes intestinal health, supports a healthy immune system, relieves constipation and enhances bone strength.
Scientifically proven by more than 800 clinical studies, Lactobacillus rhamnosus GG promotes digestive health, protects against upper respiratory tract infections and cavities and improves skin condition.
Wellmune® is a proprietary baker’s yeast beta glucan. It uses a unique mechanism to boost immune system by priming the immune cells to kill foreign bacteria faster. Galacto-oligosaccharides stimulate the growth of probiotic bacteria and retard the growth of harmful bacteria.
It helps to:
● Improve digestive health
● Restore the intestinal microbial balance
● Boosts the immune system
● Strengthen the recognition ability of immune cells
● Enhance resistances to infections
● Reduce symptoms of allergy
● Promote skin health
● Reduce occurrences of cold and flu
● Improve emotional well-being
Yumeka Hair Shampoo and Conditioner
Yumeka Hair Shampoo and Conditoner are all- natural hair care products that serve 5R functions: Repair, Refresh, Restore, Reinforce and Revitalize. They are effective in reducing itchy scalp, dandruff and oil production as well as moisturize hair scalp and strengthening the hair roots, resulting in lustrous silky smooth hair. The mild formulation in Yumeka makes it free of SLS, SLES, parabens, sillicone and thus user- friendly.
The key ingredient of this product, Cleomilk®, is a plant- based phytomilk that reduces moisure loss from skin, improves re-lipidation effect and reinforces the skin’s natural water storage. Multiple in-vivo tests conducted have shown that the long-chain polysaccharides will form a protective film on the skin to reduce trans-epidermal water loss. Then, the lamellar lipid matrix and natural moisturizing factors within our skin or scalp structure can be supported and reinforced well enough.
The microbiota on our hair lives a delicate balance and our daily activities might easily disturb it. The prebiotic in the product serves as a food supplement for the protective skin biota which cannot be digested by the harmful ones. It forms a protective anti-microbial shield against hostile organisms and important changes such as UV light, pollutants and cleansing products, promoting healthy hair growth and scalp.
It helps:
● Reduce itching scalp
● Prevent dandruff
● Control oil production on scalp
● Activate functioning of hair follicles
● Promote healthy scalp microbiata
● Moisturize scalp layers
● Strengthen hair roots
● Improve silky smooth hair
● Promote lustrous hair
● Promote hair growth
GenCell Biotech New Age Essence
This GenCell Biotech New Age Essences is a convenient, ready-to-use multi-effect skin care product. It nourishes the skin with nutrients to moist, brighten and restore tired skin. To this end, it brings youthful vitality to your delicate skin.
The RoyalEpigen P5, is the main active ingredient of this product. It is a peptide that mimics royal jelly to maximize its positive effects on the skin. This inspiration comes from epigenetics. Scientists have found that epigenetic modification techniques can be passed on from generation to generation through epigenetic techniques. This new bioactive peptide activates our skin regeneration and luminescence.
Another technology is PhytoCellTec™, which is used to generate and cultivate two key active ingredients, Nunatak® Stem Cells and Apple Stem Cells. PhytoCellTec™ utilizes the automatic repair system of plant stem cells to replicate large numbers of new cells. These stem cells have enhanced the DNA repair and delay the aging process because they are filled with regenerative growth factors and metabolic factors. This technology is one of the most significant anti-aging discoveries of this century.
Furthermore, RedSnow® is the natural extract from Camellia Japonica flower which provide strong anti-oxidation efficacy. RedSnow® has the anti-inflammation effect and showed its anti-wrinkle effect by promoting the collagen boosting in our skin. With the RedSnow®, it helps to increase the collagen synthesis, and enhance our skin hydration with no significant evidence of primary irritation on human skin. RedSnow® is also specialized for anti-pollution where it presents a quite a good anti-aging activity in relation to a pollutant stress. It is also reasonable stability under heat and UV radiation.
It’s helps:
● Accelerates epidermal regeneration for a smooth skin
● Activates the cellular cleaning process
● Reveals a more even toned skin
● Delays cell aging by applying new discoveries in epigenetic sciences
● Reduces aging signs (fine lines / wrinkles)
● Restores skin firmness / lifting effect
● Replenishes skin moisture
● Brightening effect
● Restores skin luminosity
● Skin refining & moisture retention
GenCell Biotech EE Cream
This unique Luminous White Cream contains ingredients effective for covering skin imperfections, and help the skin achieve a great natural look for all day long. Its texture is quite light, nourishing, and is compatible with all types of skin. It also has the protective and conceal effects that improves dull skin tone and brightens our skin tone.
Also, the key active ingredient of this product is the RoyalEpigen P5, a peptide that provide good skin benefits. This inspiration comes from epigenetics where it mimics the royal jelly to maximize its positive effects on the skin. According to scientists, epigenetic modification techniques can be passed on to the next generation through epigenetics techniques. This new bioactive peptide activates our skin through promotes regeneration cell. It also revive dull skin and make our skin look more radiant.
The PhytoCellTec™, this technology has become one of the biggest breakthroughs in the field of anti-aging. It forth putting the self-healing ability of the plant stem cells, to replicate and regenerate new cells in large quantities. These PhytoCellTec™ stem cells are filled with regenerative growth factors and metabolic factors. It’s can assist in strengthening the DNA repair and delay the aging process in human.
One of other main ingredients contained in Luminous White Cream is the Inca Inchi Oil. It comes from the cultivation of the Plukenetia Volubilis in the Amazon region of Peru. Inca Inchi Oil rich in omega-3, -6 and -9. It is the most abundant omega-3 (Ω3) oil in all known natural resources such as olive, sweet almond, evening primrose and etc. Inca fruit oil is effective for eliminating inflamed, swollen, dry and damaged cell tissue. It also contains high levels of antioxidants including vitamin A and vitamin E. Inca Inchi Oil helps to improve skin barrier function, protect the skin, maintain lipid balance, and improve the texture of the epidermis.
It’s helps:
● Improves the skin barrier functions and skin protection
● Prevents premature skin aging
● Preserves lipid balance
● Skin softening
● Restores skin luminosity/ skin radiance
● Visible improvement of skin texture
● Refines and reveals a brighter and even more translucent skin tone
● Prevents skin imperfection
● Minimizes pores
GenCell Skin Care Travel Pack
An easy carry travel pack, the mini-sized GenCell Biotech New Age Essence and EE Cream is extremely convenient, light and suitable for travelers. Now everyone can replenish and rejuvenate the skin anytime, anywhere.
Our Equipment
DSwiss Quantum Magnetic Analyzer
In year 2017, DSwiss launched Quantum Magnetic Analyzer, an equipment that rapidly reads and analyze body energy field to test the health status and suggest recommendations. Simply by holding sensors in your palm, health data from multiple body systems will be collected and analysed within minutes.
The DSwiss Quantum Magnetic Analyzer offers new high-tech innovation to collect data from the magnetic field of human cells for scientific analysis. This provides the user with a guide to determining their health status and potential problematic areas with solution recommendations.
DSwiss Quantum Magnetic Analyzer provides more than 30 types of test analysis. A complete health screening will help you to assess your overall health and identify the risk factors for disease.
AI Skin Analyzer Machine
The intelligent facial camera is one of the recognized statistical instruments for facial skin image data. Capable of capturing high-definition facial images in RGB+UV+PL three-spectrum, it uses artificial intelligence (AI) algorithms to analyze skin features for the beauty industry. It also provides a data reference for tailored skincare solutions in the beauty industry.
By running the smart camera software in the tablet, the controller receives the tablet software command. This allows for change of the constant current source to control the corresponding LED light. The tablet is connected to the camera through the USB port to collect image analysis.
Major Functions:
It analyses the conditions of skin through different aspects:
1)Pores
2)Stains
3)Roughness
4)Texture
5)Acne
6)Color
7)Moisture
8)Skin Tone Uniformity
9)Brown Area
10)Black and White Area
Unique Characteristics:
●High stability
●Connected to tablet
●Wireless data
●Easy to carry
●Fast data transfer speed
International Turnkey Private Label Manufacturing Service
Our professionals manage from custom formulation of scientifically-proven and naturally-effective, sourcing raw materials, production, quality control, stability and safety test, clinical testing by third-party labs, packaging and shipping including import and export, all licenses needed so customer can concentrate on what they should do. We have export and import experience in dealing with both overseas and domestic customers.
Trademark
The Company owned several trademark register under its subsidiaries in respective jurisdiction of which the subsidiary is operates.
●Cambodia
●Malaysia
●Singapore
●China
●Hong Kong
●India
●Myanmar
●Vietnam
●EUIPO
Future Plan
Marketing Campaign and Publicity Enhancement
The Company is actively seeking opportunity to increase the market share of beauty and health industry locally and overseas, which requires continuous spending on marketing campaign primarily via social media and other online e-commerce platform which already in place currently to ensure the company product exposure and brand awareness.
Future marketing campaign and publicity enhancement will be conduct thru but not limited to following:
1. Revamp of current website and hiring of IT experts to perform Search Engine Optimization (SEO) to exponentially increase the company’s brand image and product awareness.
2. Appointment of celebrities as DSwiss Charity Ambassadors who will serve as DSwiss products spokeperson. DSwiss will also sponsor a large sum of products to potential charities.
3. Utilizing existing customer database to promote biotechnology in turnkey private label manufacturing services.
Campaign are customized based on the regions, countries, genders and cultures. Currently our products are available in China, Hong Kong, Malaysia, Thailand, Singapore, Taiwan and Indonesia.
Product Research and Development
The company also intended to conduct research and development on the benefits of Bioflavonoids, oil blend, mineral supplements such as Calcium, Magnesium, Iron, and Antioxidant Drinks towards the human body and Multi-Lamellar Emulsion (MLE) towards human skin. Besides, the company also acquiring Triple Emulsification Technology which can improve spreadability and uniformity of sunscreen, improve sun protection, increase skin cell survival and increase sunscreen efficiency in sun protection.
Medical Consumable Supplies
The Company intended to venture into medical consumable supplies like medical surgical gown, sanitizer, and diabetes wound care spray and so on.
Human Resources and Talent Development
Taking into consideration of the aforementioned development, the company is well aware that with existing manpower is far from sufficient to the materialization of future plan, thus spending on human resources and talent development is inevitable, including but not limited to internal admin and operation, sales and marketing, accounting and finance as well as top management.
Merger and Acquisition
The Company is actively seeking opportunity to merge and acquire potential target company to derive extraordinary synergies in multiple segments but limited to healthcare, bio-technology, beauty slimming and wellness, food science and related industries. The management believe that organic growth itself is incapable of coping with the expectation of shareholders in the current dynamic business environment, thus via merger and acquisition the Company can create greater value to every stakeholder not limited to shareholders.
Marketing
We recognize the growing trend of social media and because of that, the management had decided to place a higher priority on social media for our marketing strategy. Coupled with the extensive networks we had built since our inception, the nature of our job has become easier and efficient to reach out to our clients. But, perhaps the most imperative to our success is the ability to connect with our customers and receive their feedback directly. From the feedback we received, we can understand our customer’s demands better and make further improvements. As a result, our customers’ base has been growing exponentially and resulted in a robust brand image of our company.
Competition
The beauty and healthcare industry is highly competitive, we might be in disadvantage competing with competitor who greater reserve or access to capital than we do to carry out operations and marketing efforts. We hope to maintain our competitive advantage by utilizing the experience, knowledge, and expertise of our current staff as well as offering exemplary our customer service.
Customers
For the year ended December 31, 2019, the Company has generated $273,659 revenue from clients under the ordinary course of business of the Company. The revenue mainly represented sales to agent and direct sales to clients on social media.
Employees
As of December 31, 2019, the Company has seven (7) full time employees including Mr. Leong Ming Chia who is our Chief Executive Officer, director, secretary and treasurer that works full time.
Currently, both of our directors all have the flexibility to work on our business up to 25 to 30 hours per week, but are prepared to devote more time if necessary.
We do not presently have pension, health, annuity, insurance, stock options, profit sharing, or similar benefit plans; however, we may adopt plans in the future. There are presently no personal benefits available to our Officers, Directors or employees.
Government Regulation
We are subject to the laws and regulations of the jurisdictions in which we operate, which may include business licensing requirements, income taxes and payroll taxes. In general, the development and operation of our business is not subject to special regulatory and supervisory requirements.
ITEM 1A.
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 1B.
ITEM 1B. UNRESOLVED STAFF COMMENTS
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.
ITEM 2. PROPERTIES
Our principal executive office is located at Unit 18-11, 18-12 & 18-01, Tower A, Vertical Business Suite Jalan Kerinchi, 59200, Kuala Lumpur, Malaysia.
In July 2018, the Company obtained a loan in the principal amount of MYR250,000 (approximately $60,479) from Public Bank Berhad, a financial institution in Malaysia, to finance the acquisition of a motor vehicle. The loan bears interest at the base lending rate less 2.38% per annum, is payable in 83 monthly instalments of MYR3,473 (approximately $840) each and a final monthly instalment of MYR3,391 (approximately $820) and matures in June 2025.
As of December 31, 2019, the Company has an outstanding loan to be settle for aforementioned acquisition of motor vehicle of MYR203,341 (approximately $49,448), of which MYR33,206 (approximately $8,075) to be settled in 12 instalments in year 2020 and MYR170,135 (approximately $41,373) to be settle in 54 instalments after year 2020.
Loan acquired for the acquisition of motor vehicle mentioned above are denominated in MYR, of which subjected to the fluctuation in reporting currency.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. There are currently no pending legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition or operating results. None of our directors, officers or affiliates is involved in a proceeding adverse to our business or has a material interest adverse to our business.
ITEM 4.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
PART II
ITEM 5.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Our common stock is currently quoted on the OTC Pink under the trading symbol “DQWS.”
Trading in stocks quoted on the OTC Pink is often thin and is characterized by wide fluctuations in trading prices due to many factors that may have little to do with a company’s operations or business prospects. We cannot assure you that there will be a market for our common stock in the future.
For the periods indicated, the following table sets forth the high and low bid prices per share of common stock based on inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.
Holders
As of December 31, 2019, we had 206,904,600 shares of our Common Stock par value, $.0001 issued and outstanding. There were 158 beneficial owners of our Common Stock.
Transfer Agent and Registrar
The transfer agent for our capital stock is VStock Transfer, LLC, with an address at 18, Lafayette Place, Woodmere, New York 11598 and telephone number is +1 (212)828-843.
Penny Stock Regulations
The Securities and Exchange Commission has adopted regulations which generally define “penny stock” to be an equity security that has a market price of less than $5.00 per share. Our Common Stock, when and if a trading market develops, may fall within the definition of penny stock and be subject to rules that impose additional sales practice requirements on broker-dealers who sell such securities to persons other than established customers and accredited investors (generally those with assets in excess of $1,000,000, or annual incomes exceeding $200,000 individually, or $300,000, together with their spouse).
For transactions covered by these rules, the broker-dealer must make a special suitability determination for the purchase of such securities and have received the purchaser’s prior written consent to the transaction. Additionally, for any transaction, other than exempt transactions, involving a penny stock, the rules require the delivery, prior to the transaction, of a risk disclosure document mandated by the Securities and Exchange Commission relating to the penny stock market. The broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and, if the broker-dealer is the sole market-maker, the broker-dealer must disclose this fact and the broker-dealer’s presumed control over the market. Finally, monthly statements must be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. Consequently, the “penny stock” rules may restrict the ability of broker-dealers to sell our Common Stock and may affect the ability of investors to sell their Common Stock in the secondary market.
In addition to the “penny stock” rules promulgated by the Securities and Exchange Commission, the Financial Industry Regulatory Authority (“FINRA”) has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low-priced securities will not be suitable for at least some customers. The FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit the investors’ ability to buy and sell our stock.
Dividend Policy
Any future determination as to the declaration and payment of dividends on shares of our Common Stock will be made at the discretion of our board of directors out of funds legally available for such purpose. We are under no contractual obligations or restrictions to declare or pay dividends on our shares of Common Stock. In addition, we currently have no plans to pay such dividends. Our board of directors currently intends to retain all earnings for use in the business for the foreseeable future.
Equity Compensation Plan Information
Currently, there is no equity compensation plan in place.
Unregistered Sales of Equity Securities
Currently, there is no unregistered sales of equity securities.
Purchases of Equity Securities by the Registrant and Affiliated Purchasers
We have not repurchased any shares of our common stock during the fiscal year ended December 31, 2018.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
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 7.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of our financial condition and results of operations should be read in conjunction with our audited consolidated financial statements and the notes to those financial statements appearing elsewhere in this Report.
Certain statements in this Report constitute forward-looking statements. These forward-looking statements include statements, which involve risks and uncertainties, regarding, among other things, (a) our projected sales, profitability, and cash flows, (b) our growth strategy, (c) anticipated trends in our industry, (d) our future financing plans, and (e) our anticipated needs for, and use of, working capital. They are generally identifiable by use of the words “may,” “will,” “should,” “anticipate,” “estimate,” “plan,” “potential,” “project,” “continuing,” “ongoing,” “expects,” “management believes,” “we believe,” “we intend,” or the negative of these words or other variations on these words or comparable terminology. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this filing will in fact occur. You should not place undue reliance on these forward-looking statements.
The forward-looking statements speak only as of the date on which they are made, and, except to the extent required by federal securities laws, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date on which the statements are made or to reflect the occurrence of unanticipated events.
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.
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 Operations
Revenues for the year ended December 31, 2019 and 2018
The Company generated revenue of $273,659 and $220,119 for the year ended December 31, 2019 and 2018 respectively. Revenue has increased by $53,540 which is a 24.32% increase comparatively. The revenue mainly represented the supplies of beauty products to the customers. We contribute our increase in revenue towards the success in local and oversea marketing effort.
Cost of Revenue and Gross Margin
Cost of revenue for the Company year ended December 31, 2019 amounted to $181,925 as compared to $178,287 for the year ended December 31, 2018. Increase of $3,638 in cost of revenue was contributed by increasing packing material cost and product purchase price. As a result, the gross profit has increase from $41,832 for the year ended December 31, 2018 to $91,734 for the year ended December 31, 2019, while the gross margin of the Company increase from 19.00% in year ended December 31, 2018 to 33.52% in year ended December 31, 2019, which is a net increase of 14.52%.
Operating Expenses
Selling, general and administrative expenses for the year ended December 31, 2019 and 2018 amounted to $242,157 and $236,653 respectively, the increase of $5,504 which is 2.33% higher comparatively which was contributed by the increase of expense in the Dswiss Sdn Bhd.
Operating expenses for the year ended December 31, 2019 and 2018 amounted to $94,769 and $138,137 respectively, the decrease of $43,368 which is 31.39% lower comparatively, such decrease was associated with the Company stringent cost control.
Other operating expenses for the year ended December 31, 2019 and 2018 amounted to $56,315 and $46,445 respectively, the increase of $9,870 which is 21.25% higher comparatively, such increase was depreciation of fixed assets.
Other Income
The Company recorded an amount of $63,592 and $8,058 as other income for the year ended December 31, 2019 and 2018 respectively. This income is derived from the interest income earned and also the reversal of expenditure.
Net Loss and Net Loss Margin
The net loss for the year was $295,463 for the year ended December 31, 2019 as compared to $371,345 for the year ended December 31, 2018. The decrease in net loss of $75,882 which is a 20.43% lower comparatively due to higher contribution on gross profit. Taking into the loss for the year ended December 31, 2019, the accumulated loss for the Company has increased from $1,218,833 to $1,490,845.
Liquidity and Capital Resources
As of December 31, 2019, we had working capital deficit of $182,311 consisting of cash and cash equivalent of $48,353 as compared to working capital surplus of $147,662 and our cash and cash equivalent of $188,754 as of December 31, 2018.
Net cash used in operating activities for the year ended December 31, 2019 was $179,671 as compared to net cash used in operating activities of $250,463 for the year ended December 31, 2018. The cash used in operating activities are mainly for filing fees, professional fees, and business operation expenses.
Net cash used in investing activities for the year ended December 31, 2019 was $2,082 as compared to net cash of investing activities for the year ended, 2018 were $64,930. The cash used in investing activities are mainly for purchase of plant and equipment.
Net cash provided by financing activities for the year ended December 31, 2019 was $78,475 as compared to $42,097 for the year ended December 31, 2018. The cash provided by financing activities is advance from directors.
The revenues generated from our current business operations alone may not be sufficient to fund our operations or planned growth. We will likely require additional capital to continue to operate our business, and to further expand our business. Sources of additional capital through various financing transactions or arrangements with third parties may include equity or debt financing, bank loans or revolving credit facilities. We may not be successful in locating suitable financing transactions in the time period required or at all, and we may not obtain the capital we require by other means. Our inability to raise additional funds when required may have a negative impact on our operations, business development and financial results.
Critical Accounting Policies and Estimates
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.
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”.
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.
Cash and cash equivalents
Cash and cash equivalents are carried at cost and represent cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of three months or less as of the purchase date of such investments.
Revenue recognition
In accordance with the Accounting Standard Codification Topic 605 “Revenue Recognition” (“ASC 605”), the Company recognizes revenue when the following four criteria are met: (1) delivery has occurred or services rendered; (2) persuasive evidence of an arrangement exists; (3) there are no continuing obligations to the customer; and (4) the collection of related accounts receivable is probable.
Revenue is measured at the fair value of the consideration received or receivable, net of discounts and taxes applicable to the revenue.
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 sale return for the period reported.
Cost of revenues
Cost of revenues includes the purchase cost of retail goods for re-sale to customers and the 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 year ended December 31, 2019 were $2,214, while for the year ended December 31, 2018 were $2,983.
Selling, general and administrative expenses
Selling, general and administrative expenses are primarily comprised of travelling and accommodation fees such as petrol, toll and parking and shipping and handling fees.
Cash and cash equivalents
Cash and cash equivalents are carried at cost and represent cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of three months or less as of the purchase date of such investments.
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:
Intangible assets
Intangible assets are stated at cost less accumulated amortization. Intangible assets represented the registration costs of trademarks in Malaysia and Hong Kong which are amortized on a straight-line basis over a useful life of ten 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 were no impairment losses recorded on intangible assets for the year ended December 31, 2019.
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, Thailand, Hong Kong and China. The Company is subject to tax in these jurisdictions. As a result of its business activities, the Company will file tax returns that are subject to examination by the foreign tax authority.
The Company did not have any unrecognized tax positions or benefits and there was no effect on the financial conditions or results of operations for the year ended December 31, 2019 and year ended December 31, 2018. The Company and its subsidiary are subject to local and various foreign tax jurisdictions. The Company’s tax returns remain open subject to examination by major tax jurisdictions.
Net loss per share
The Company calculates net loss per share in accordance with ASC Topic 260 “Earnings per share”. Basic loss per share is computed by dividing the net loss by the weighted average number of common shares outstanding during the period. Diluted loss per share is computed similar to basic 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$. In addition, the Company’s subsidiaries and VIEs in Malaysia, Hong Kong, China and Thailand maintains their books and record in their local currency, Ringgits Malaysia (“MYR”), Hong Kong Dollars (“HK$”), 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 MYR 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:
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, accounts payable and accrued liabilities, and amount due to a director 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.
Fair value estimates are made at a specific point in time based on relevant market information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.
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.
The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does 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.
Off-Balance Sheet Arrangements
As of December 31, 2019, 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.
ITEM 7A.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
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 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements required by this item are located in PART IV of this Annual Report.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A.
ITEM 9A. CONTROLS AND PROCEDURES
Disclosures Control and Procedures
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, the company’s principal executive and principal financial officers and effected by the company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America and includes those policies and procedures that:
● Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company;
● Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and
● Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Because of the inherent limitations of internal control, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.
As of December 31, 2019, management assessed the effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial reporting established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and SEC guidance on conducting such assessments. Based on such evaluation, the Company’s management concluded that, during the period covered by this Report, internal controls and procedures over were not effective. This was due to deficiencies that existed in the design or operation of our internal controls over financial reporting that adversely affected our internal controls and that may be considered to be material weaknesses.
Identified Material Weakness
A material weakness in internal control over financial reporting is a control deficiency, or combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected.
Management identified the following material weakness during its assessment of internal controls over financial reporting as of December 31, 2019.
1. We do not have Written Policies & Procedures - Due to lack of written policies and procedures for accounting and financial reporting with respect to the requirements and application of both US GAAP and SEC guidelines, the Company did not establish a formal process to close our books monthly and account for all transactions and thus failed to properly record the Private Placement or disclose such transactions in its SEC filings in a timely manner.
2. We do not have adequate segregation of duties and effective risk assessment - Lack of segregation of duties and effective risk assessment may cause the Company to face the likelihood of fraud or theft, due to poor oversight, governance and review to detect errors.
Accordingly, the Company concluded that these control deficiencies resulted in a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis by the company’s internal controls.
As a result of the material weaknesses described above, management has concluded that the Company did not maintain effective internal control over financial reporting as of December 31, 2019 based on criteria established in Internal Control-Integrated Framework issued by COSO.
Management’s Remediation Initiatives
In an effort to remediate the identified material weaknesses and other deficiencies and enhance our internal controls, we have initiated, or plan to initiate, the following series of measures:
1. We plan to create a position to segregate duties consistent with control objectives and will increase our personnel resources and technical accounting expertise within the accounting function when funds are available to us. The accounting personnel is responsible for reviewing the financing activities, facilitate the approval of the financing, record the information regarding the financing, and submit SEC filing related documents to our legal counsel in order to comply with the filing requirements of SEC.
2. We plan to prepare written policies and procedures for accounting and financial reporting to establish a formal process to close our books monthly on an accrual basis and account for all transactions, including equity and debt transactions.
3. We intend to add staff members to our management team for making sure that information required to be disclosed in our reports filed and submitted under the Exchange Act is recorded, processed, summarized and reported as and when required and will the staff members will have segregated responsibilities with regard to these responsibilities.
We anticipate that these initiatives will be at least partially, if not fully, implemented by the end of fiscal year 2019.
Changes in internal controls over financial reporting
There was no change in our internal controls over financial reporting that occurred during the period covered by this Report, which has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting:
This annual report does not include an attestation report of the Company’s registered independent public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered independent public accounting firm pursuant to rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this Annual Report on Form 10-K.
ITEM 9B.
ITEM 9B. OTHER INFORMATION
None.
PART III
ITEM 10.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Our executive officer’s and director’s and their respective ages as of the date hereof are as follows:
NAME
AGE
POSITION
Leong Ming Chia
Chief Executive Officer, President, Secretary, Treasurer, Director
Wong Sui Ting
Director
Set forth below is a brief description of the background and business experience of our executive officer and director for the past five years.
Leong Ming Chia - President, Chief Executive Officer, Chief Financial Officer, Secretary, Treasurer, Director
Mr. Leong achieved an Advanced Diploma of Microelectronics & Physics from TAR College in 2003 as well as a Bachelor’s Degree of Microelectronics & Physics from Campbell University in 2005. In 2007 Mr. Leong joined Tradenex, which is a subsidiary of the Federation of Malaysian Manufacturers, as part of their sales and marketing department. Mr Leong was responsible for developing a marketing plan, overseeing the execution and evaluating the results across B2B, B2C and retail sales channels in order to enable inter-enterprise connectivity, communication and collaboration along the business value chain. From March 2009 onward Mr. Leong was appointed as a committee member of Cross Border Business Association in Hong Kong, promoting cross border trade and opportunities. Since January 2012 Mr. Leong joined DSwiss Sdn Bhd as a Business Development Advisor where Mr Leong developed a set of marketing tool and is bringing the company from traditional sales model to e-commerce model. In September 2015, Mr. Leong was also appointed as the chief executive officer and director of the Company.
On May 31, 2017, upon the resignation of Mr. Chua Lee Yee resignation as a Chief Financial Officer, Secretary, Treasurer and Director, Mr. Leong has took over the position as a Chief Financial Officer, Secretary and treasurer along with existing position as the Chief Executive Officer, President and Director.
Mr. Leong’s experience in the marketing and business development have led the Board of Director to reach the conclusion that he should serve as a Director of the Company.
Wong Sui Ting - Director
Mr. Wong serves as a Director in the Company. Mr. Wong holds a Bachelor of Business (Accounting) from Monash University since year 1995. Also, he is an Associate Member of Malaysia Institute of Accountancy (MIA, Chartered Accountant) since 1999 and CPA Australia since 1998. Mr. Wong co-founded Qinetics Solutions Sdn Bhd in 2000 and acts as Chief Financial Officer since the establishment. He was tasked with overseeing and managing the overall financial affairs and operations of Qinetics, playing an active role in corporate decisions and strategies. In 2011, Mr. Wong co-founded and acts as Chief Executive Officer of Forum Digital Sdn Bhd. His responsibility in the company is to oversee the operation and in charge of business development of the company.
Mr. Wong’s experience in accounting and the financial industry, as well as his knowledge of business development, has led the Board of director to reach the conclusion that he should serve as the director of the Company. On May 31, 2017, Mr. Wong was appointed as the director of the Company.
Corporate Governance
The Company promotes accountability for adherence to honest and ethical conduct; endeavors to provide full, fair, accurate, timely and understandable disclosure in reports and documents that the Company files with the Securities and Exchange Commission (the “SEC”) and in other public communications made by the Company; and strives to be compliant with applicable governmental laws, rules and regulations. The Company has not formally adopted a written code of business conduct and ethics that governs the Company’s employees, officers and Directors as the Company is not required to do so.
In lieu of an Audit Committee, the Company’s Board of Directors, is responsible for reviewing and making recommendations concerning the selection of outside auditors, reviewing the scope, results and effectiveness of the annual audit of the Company’s financial statements and other services provided by the Company’s independent public accountants. The Board of Directors, the Chief Executive Officer and the Chief Financial Officer of the Company review the Company’s internal accounting controls, practices and policies.
Committees of the Board
Our Company currently does not have nominating, compensation, or audit committees or committees performing similar functions nor does our Company have a written nominating, compensation or audit committee charter. Our Directors believes that it is not necessary to have such committees, at this time, because the Director(s) can adequately perform the functions of such committees.
Audit Committee Financial Expert
Our Board of Directors has determined that we do not have a board member that qualifies as an “audit committee financial expert” as defined in Item 407(D)(5) of Regulation S-K, nor do we have a Board member that qualifies as “independent” as the term is used in Item 7(d)(3)(iv)(B) of Schedule 14A under the Securities Exchange Act of 1934, as amended, and as defined by Rule 4200(a)(14) of the FINRA Rules.
We believe that our Director(s) are capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting. The Director(s) of our Company does not believe that it is necessary to have an audit committee because management believes that the Board of Directors can adequately perform the functions of an audit committee. In addition, we believe that retaining an independent Director who would qualify as an “audit committee financial expert” would be overly costly and burdensome and is not warranted in our circumstances given the stage of our development and the fact that we have not generated any positive cash flows from operations to date.
Involvement in Certain Legal Proceedings
Our Directors and our Executive officers have not been involved in any of the following events during the past ten years:
1. bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;
2. any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);
3. being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his/her involvement in any type of business, securities or banking activities; or
4. being found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.
5. Such person was found by a court of competent jurisdiction in a civil action or by the Commission to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated;
6. Such person was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated;
7. Such person was the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of:(i) Any Federal or State securities or commodities law or regulation; or(ii) Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or(iii) Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
8. Such person was the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
Code of Ethics
We have not adopted a formal Code of Ethics. The Board of Directors evaluated the business of the Company and the number of employees and determined that since the business is operated by a small number of persons, general rules of fiduciary duty and federal and state criminal, business conduct and securities laws are adequate ethical guidelines. In the event our operations, employees and/or Directors expand in the future, we may take actions to adopt a formal Code of Ethics.
Shareholder Proposals
Our Company does not have any defined policy or procedural requirements for shareholders to submit recommendations or nominations for Directors. The Board of Directors believes that, given the stage of our development, a specific nominating policy would be premature and of little assistance until our business operations develop to a more advanced level. Our Company does not currently have any specific or minimum criteria for the election of nominees to the Board of Directors and we do not have any specific process or procedure for evaluating such nominees. The Board of Directors will assess all candidates, whether submitted by management or shareholders, and make recommendations for election or appointment.
A shareholder who wishes to communicate with our Board of Directors may do so by directing a written request addressed to our President, at the address appearing on the first page of this Information Statement.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth information concerning the compensation of our Chief Executive Officer, and the executive officers who served at the end of the period December 31, 2019, for services rendered in all capacities to us.
Summary Compensation Table:
(1) On September 8, 2015 Leong Ming Chia was appointed Chief Executive Officer, President and a member of our Board of Directors. On May 31, 2017, upon the resignation of Chua Lee Yee from the position of Chief Financial Officer, Treasurer, Secretary and Director, Leong Ming Chia replaced Chua Lee Yee as the Chief Financial Officer, Treasurer and Secretary of the company.
(2) On May 31, 2015 Wong Sui Ting was appointed as a member of our Board of Director.
Narrative Disclosure to Summary Compensation Table
There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers. Our directors and executive officers may receive stock options at the discretion of our board of directors in the future. We do not have any material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at the discretion of our board of directors from time to time. We have no plans or arrangements in respect of remuneration received or that may be received by our executive officers to compensate such officers in the event of termination of employment (as a result of resignation, retirement, change of control) or a change of responsibilities following a change of control.
Stock Option Grants
We have not granted any stock options to our executive officers since our incorporation.
Compensation of Directors
The table below summarizes all compensation of our directors as of December 31, 2019.
(1) On September 8, 2015 Leong Ming Chia was appointed Chief Executive Officer, President and a member of our Board of Directors. On May 31, 2017, upon the resignation of Chua Lee Yee from the position of Chief Financial Officer, Treasurer, Secretary and Director, Leong Ming Chia replaced Chua Lee Yee as the Chief Financial Officer, Treasurer and Secretary of the company.
(2) On May 31, 2015 Wong Sui Ting was appointed as a member of our Board of Director.
Employment Agreements
We do not have an employment or consulting agreement with any officers or Directors.
Compensation Discussion and Analysis
Director Compensation
Presently only Leong Ming Chia receives fee for his service as a member of the Board of Directors. The Board of Directors reserves the right in the future to award the members of the Board of Directors cash or stock based consideration for their services to the Company, which awards, if granted shall be in the sole determination of the Board of Directors.
Executive Compensation Philosophy
Our Board of Directors determines the compensation given to our executive officers in their sole determination. Our Board of Directors reserves the right to pay our executive or any future executives a salary, and/or issue them shares of common stock in consideration for services rendered and/or to award incentive bonuses which are linked to our performance, as well as to the individual executive officer’s performance. This package may also include long-term stock based compensation to certain executives, which is intended to align the performance of our executives with our long-term business strategies. Additionally, while our Board of Directors has not granted any performance base stock options to date, the Board of Directors reserves the right to grant such options in the future, if the Board in its sole determination believes such grants would be in the best interests of the Company.
Incentive Bonus
The Board of Directors may grant incentive bonuses to our executive officer and/or future executive officers in its sole discretion, if the Board of Directors believes such bonuses are in the Company’s best interest, after analyzing our current business objectives and growth, if any, and the amount of revenue we are able to generate each month, which revenue is a direct result of the actions and ability of such executives.
Long-term, Stock Based Compensation
In order to attract, retain and motivate executive talent necessary to support the Company’s long-term business strategy we may award our executive and any future executives with long-term, stock-based compensation in the future, at the sole discretion of our Board of Directors, which we do not currently have any immediate plans to award.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
As of December 31, 2019, the Company has 206,904,600 shares of common stock issued and outstanding, which number of issued and outstanding shares of common stock have been used throughout this report.
The following table sets forth, as of December 31, 2019 certain information with regard to the record and beneficial ownership of the Company’s common stock by (i) each person known to the Company to be the record or beneficial owner of more than 5% of the Company’s common stock, (ii) each director of the Company, (iii) each of the named executive officers, and (iv) all executive officers and directors of the Company as a group:
Beneficial ownership has been determined in accordance with Rule 13d-3 under the Exchange Act. Under this rule, certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire shares (for example, upon exercise of an option or warrant) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares is deemed to include the amount of shares beneficially owned by such person by reason of such acquisition rights. As a result, the percentage of outstanding shares of any person as shown in the following table does not necessarily reflect the person’s actual voting power at any particular date.
(1) Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. Beneficial ownership also includes shares of stock subject to options and warrants currently exercisable or exercisable within 60 days of the date of this table. In determining the percent of common stock owned by a person or entity as of the date of this Report, (a) the numerator is the number of shares of the class beneficially owned by such person or entity, including shares which may be acquired within 60 days on exercise of warrants or options and conversion of convertible securities, and (b) the denominator is the sum of (i) the total shares of common stock outstanding on as of the date of this Annual Report (206,904,600 shares), and (ii) the total number of shares that the beneficial owner may acquire upon exercise of the derivative securities. Unless otherwise stated, each beneficial owner has sole power to vote and dispose of its shares.
(2) Based on the total issued and outstanding shares of 206,904,600 as of the date of this Annual Report.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, DIRECTOR INDEPENDENCE
Related Party Transactions
Related party transaction amounted of $13,816 and $20,456 for the year ended December 31, 2019 and December 31, 2018 respectively for professional services provided by a subsidiary of the holding company of our corporate shareholder, Greenpro Venture Capital Limited.
The related party transaction for the year ended December 31, 2019 was amounted to $153,328 and $39,942 for sales of our products to Agape ATP International Holding Limited and Agape Superior Living Sdn Bhd. The director for both Agape ATP International Holding Limited and Agape Superior Living Sdn Bhd is a corporate shareholder of our holding company.
The related party transaction is generally transacted in an arm-length basis at the current market value in the normal course of business.
Review, Approval and Ratification of Related Party Transactions
Given our small size and limited financial resources, we have not adopted formal policies and procedures for the review, approval or ratification of transactions, such as those described above, with our executive officer(s), Director(s) and significant stockholders. We intend to establish formal policies and procedures in the future, once we have sufficient resources and have appointed additional Directors, so that such transactions will be subject to the review, approval or ratification of our Board of Directors, or an appropriate committee thereof. On a moving forward basis, our Directors will continue to approve any related party transaction.
ITEM 14.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Below is the aggregate amount of fees billed for professional services rendered by our principal accountants with respect to our last two fiscal years.
The category of “Audit fees” includes fees for our annual audit, quarterly reviews and services rendered in connection with regulatory filings with the SEC, such as the issuance of comfort letters and consents.
The category of “Audit-related fees” includes employee benefit plan audits, internal control reviews and accounting consultation.
All of the professional services rendered by principal accountants for the audit of our annual financial statements that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for last two fiscal years were approved by our board of directors.
PART IV
ITEM 15.
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Financial Statements
The following are filed as part of this report:
Financial Statements
The following financial statements of DSwiss, Inc. and Report of Independent Registered Public Accounting Firm are presented in the “F” pages of this Report:
(b) Exhibits
The following exhibits are filed or “furnished” herewith:
3.1 Articles of Incorporation**
3.2 Bylaws**
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*
* Filed herewith.
** As filed in the Registrant’s Registration Statement on Form S-1 Amendment No.8 (File No. 333-208083) on July 20, 2016.
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.
TOTAL ASIA ASSOCIATES PLT (LLP0016837-LCA & AF002128)
Firm registered with US PCAOB and Malaysian MIA
Block C-3-1, Megan Avenue 1,
Off Jalan Tun Razak,
Kuala Lumpur,
Malaysia.
Tel : (603) 2733 9989
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Stockholders of DSwiss, Inc.
Unit 18-11, 18-12 & 18-01, Tower A,
Vertical Business Suite,
Jalan Kerinchi, 59200, Kuala Lumpur,
Malaysia.
Opinion on the Financial Statements
We have audited the accompanying balance sheets of DSwiss, Inc. (“the Company”) as of December 31, 2019 and 2018, and the related statements of operations and comprehensive loss, stockholders’ equity, and cash flows for the year ended of December 31, 2019 and 2018, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for the year ended of December 31, 2019 and 2018, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statements presentation. We believe that our audit provides a reasonable basis for our opinion.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company’s losses from operations and no operation raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ TOTAL ASIA ASSOCIATE PLT
TOTAL ASIA ASSOCIATES PLT
We have served as the Company’s auditor since 2017.
Kuala Lumpur, Malaysia
Date: March 30, 2020
Kuala Lumpur, Malaysia
DSWISS, INC.
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2019, and 2018
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Audited)
See accompanying notes to consolidated financial statements.
DSWISS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
FOR YEARS ENDED DECEMBER 31, 2019 AND 2018
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Audited)
See accompanying notes to consolidated financial statements.
DSWISS, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR YEARS ENDED DECEMBER 31, 2019 AND 2018
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Audited)
See accompanying notes to consolidated financial statements
DSWISS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR YEARS ENDED DECEMBER 31, 2019 AND 2018
(Currency expressed in United States Dollars (“US$”))
(Audited)
See accompanying notes to consolidated financial statements.
DSWISS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018
(Currency expressed in United States Dollars (“US$”), except for number of shares)
1. ORGANIZATION AND BUSINESS BACKGROUND
DSwiss, Inc., a Nevada corporation (“the Company”) was incorporated under the laws of the State of Nevada on May 28, 2015.
DSwiss, Inc. operates through its wholly owned subsidiary, DSwiss Holding Limited, a Company organized under the laws of Seychelles.
The principal activity of the Company and its subsidiaries is to supply 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.
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 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.
The Company, through its subsidiaries and its variable interest entities (“VIEs”), mainly supplies high quality beauty products. Details of the Company’s subsidiaries:
(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.
(2) DS Asia Co., Ltd was being officially de-registered on April 5, 2019.
DSWISS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018
(Currency expressed in United States Dollars (“US$”), except for number of shares)
Business Overview
DSwiss is a premier biotech-nutraceutical company, supplying high-quality health and beauty products, including beverages to assist in weight management, anti-aging products, and immune system products designed to improve the overall health system in our body.
Since our establishment, our growth has been tremendous in Malaysia. From a mere selection of two (2) products, the company had expanded to nine (9) products and two (2) equipments by 2018. With the strong leadership of our company’s Chief Executive Officer; Vincent Leong, our products are now consumed around the world, such Malaysia, Singapore, Indonesia, Hong Kong, Macau, Taiwan and China. To date, we had expanded across ASEAN regions through the support of our distributors and determined to expand our geographical presence to markets that we have yet to explore.
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 classified 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 continuous commitment to providing quality products.
We recognize the growing trend of social media and because of that, the management had decided to place a higher priority in social media for our marketing strategy. Coupled with the extensive networks we had built since our inception, the nature of our job has become easier and efficient to reach out to our clients. But, perhaps the most imperative to our success is the ability to connect with our customers and receive their feedback directly. From the feedback we received, we are able to understand better of our customer’s demand and make further improvements. As a result, our customers’ base has been growing exponentially and resulted in a robust brand image of our company.
Moving forward, we plan to form certain alliances and business partnerships with few selected local companies from various countries. We strongly believe a healthy business relationship is vital for one’s business expansion, and more importantly; growth. While DSwiss has always been focused on pursuing operations within ASEAN, we certainly hope to expand our brand across the world in the future.
At the same time, we also expanded to globally recognised Turnkey Private Label Manufacturing Services for nutraceutical, skin care, personal care, eyecare and equipment OEM/ODM products. Our professionals manage from custom formulation of scientifically-proven and naturally-effective, sourcing raw materials, production, quality control, stability and safety test, clinical testing by third-party labs, packaging and shipping including import and export, all licenses needed so customer can concentrate on what they should do.
2. GOING CONCERN UNCERTAINTIES
The accompanying financial statements have been prepared using the going concern basis of accounting, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.
As of December 31, 2019, the Company suffered an accumulated deficit of $1,490,845 and continuously incurred a net operating loss of $295,463 for year ended December 31, 2019. The continuation of the Company as a going concern through December 31, 2019 is dependent upon improving the profitability and the continuing financial support from its stockholders. Management believes the existing shareholders or external financing will provide the additional cash to meet the Company’s obligations as they become due.
These and other factors raise substantial doubt about the Company’s ability to continue as a going concern. These financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result in the Company not being able to continue as a going concern.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying consolidated financial statements reflect the application of certain significant accounting policies as described in this note and elsewhere in the accompanying consolidated financial statements and notes.
Basis of presentation
These accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”).
Basis of consolidation
The condensed consolidated financial statements include the accounts of the Company and its subsidiaries in which the Company is the primary beneficiary. All inter-company accounts and transactions have been eliminated upon consolidation.
DSWISS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018
(Currency expressed in United States Dollars (“US$”), except for number of shares)
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.
Cash and cash equivalents
Cash and cash equivalents are carried at cost and represent cash on hand, time deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of six months or less as of the purchase date of such investments.
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:
Intangible assets
Intangible assets are stated at cost less accumulated amortization. Intangible assets represented the registration costs of trademarks in Malaysia and Hong Kong which are amortized on a straight-line basis over a useful life of ten 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 were no impairment losses recorded on intangible assets for the year ended December 31, 2019.
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.
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”.
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.
Revenue recognition
In accordance with 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 trading of retail goods 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 sale 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.
DSWISS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018
(Currency expressed in United States Dollars (“US$”), except for number of shares)
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.
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.
Income taxes
The provision of income taxes is determined in accordance with the provisions of ASC Topic 740, “Income Taxes” (“ASC 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 much of its businesses activities in Hong Kong and is subject to tax in this jurisdiction. As a result of its business activities, the Company will file separate tax returns that are subject to examination by the foreign tax authorities.
Net loss per share
The Company calculates net loss per share in accordance with ASC Topic 260 “Earnings per share”. Basic loss per share is computed by dividing the net loss by the weighted average number of common shares outstanding during the period. Diluted loss per share is computed similar to basic 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.
DSWISS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018
(Currency expressed in United States Dollars (“US$”), except for number of shares)
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 (“MYR”), 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 MYR into US$1, HK$ into US$1, RMB into US$1 and THB into US$1 has been made at the following exchange rates for the respective periods:
Related parties
Parties, which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Companies are also considered to be related if they are subject to common control or common significant influence.
Fair value of financial instruments:
The carrying value of the Company’s financial instruments: cash and cash equivalents, subscription receivables, prepayment and deposits, accounts payable, and other payables and accrued liabilities approximate at their fair values because of the short-term nature of these financial instruments.
DSWISS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018
(Currency expressed in United States Dollars (“US$”), except for number of shares)
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.
Fair value estimates are made at a specific point in time based on relevant market information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.
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.
The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does 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.
DSWISS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018
(Currency expressed in United States Dollars (“US$”), except for number of shares)
4. 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.
DSWISS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018
(Currency expressed in United States Dollars (“US$”), except for number of shares)
5. STOCKHOLDERS’ EQUITY
As of December 31, 2019 and 2018, 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.
DSWISS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018
(Currency expressed in United States Dollars (“US$”), except for number of shares)
6. PROPERTY AND EQUIPMENT
Depreciation expense for the year ended December 31, 2019 and December 31, 2018 were $19,571 and $24,041, respectively. As of December 31, 2019, the company has write-off the renovation with an carrying amount of $8,839.
7. INTANGIBLE ASSETS
Amortization for the year ended December 31, 2019 and December 31, 2018 were $2,867 and $777, respectively.
8. PREPAID EXPENSES AND DEPOSITS
9. INVENTORIES
10. OTHER PAYABLES AND ACCRUED LIABILITIES
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.
11. 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 December 31, 2019, the maturities of the finance lease for each of the years are as follows:
12. AMOUNT DUE TO A DIRECTOR
As of December 31, 2019, and December 31, 2018, a director of the Company advanced $125,834 and $40,476, respectively to the Company, which is unsecured, interest-free with no fixed repayment term, for working capital purpose. Imputed interest is considered insignificant.
DSWISS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018
(Currency expressed in United States Dollars (“US$”), except for number of shares)
13. INCOME TAXES
For the year ended December 31, 2019 and year ended December 31, 2018, the local (United States) and foreign components of loss before income taxes were comprised of the following:
The provision for income taxes consisted of the following:
The following table sets forth the significant components of the aggregate deferred tax assets of the Company for the period ended December 31, 2019 and 2018.
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 and its subsidiary 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, 2019, the operations in the United States of America incurred $332,098 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 $69,741 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 December 31, 2019, the operations in the Hong Kong incurred $509,914 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 $84,136 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 December 31, 2019, the operations in the Malaysia incurred $560,586 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 $100,905 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.
The 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 December 31, 2019, the operations in the PRC incurred $116,657 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 $29,164 against the deferred tax assets on the expected future tax benefits from the net operating loss carry forwards as the management believes it is more likely than not that these assets will not be realized in the future
DSWISS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018
(Currency expressed in United States Dollars (“US$”), except for number of shares)
14. CONCENTRATIONS OF RISKS
(a) Major customers
For the year ended December 31, 2019, the customers who accounted for 10% or more of the Company’s revenues and its accounts receivable balance at year-end are presented as follows:
(b) Major vendors
For the year ended December 31, 2019, the vendors who accounted for 10% or more of the Company’s purchases and its accounts payable balance at year-end are presented as follows:
(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 steady; therefore, there is a possibility that the Company could post the same amount of profit for two comparable periods and because of the fluctuating exchange rate actually post higher or lower profit depending on exchange rate of MYR, HK$, RMB, and THB converted to US$ on that date. The exchange rate could fluctuate depending on changes in political and economic environments without notice.
DSWISS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018
(Currency expressed in United States Dollars (“US$”), except for number of shares)
15. 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 December 31, 2019, operating lease right of use asset as follow:
As of December 31, 2019, operating lease liability as follow:
For the year ended December 31, 2019, the amortization of the operating lease right of use asset are $43,092. As the Company adopt ASC 842 on and after January 1, 2019, the Company did not incur nor accrued any amortization of operating lease right for the year ended December 31, 2018.
Maturities of operating lease obligation as follow:
DSWISS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018
(Currency expressed in United States Dollars (“US$”), except for number of shares)
Other information:
Lease expenses were $44,009 ended December 31, 2019, respectively. As the Company adopt ASC 842 on and after January 1, 2019, the Company did not incur nor accrued any lease expenses for the year ended December 31, 2018.
16. LOSS OF LIQUIDATION
17. RELATED PARTY TRANSACTIONS
Related party transaction amounted of $13,816 and $20,456 for the year ended December 31, 2019 and December 31, 2018 respectively for professional services provided by a subsidiary of the holding company of our corporate shareholder, Greenpro Venture Capital Limited.
The related party transaction for the year ended December 31, 2019 was amounted to $153,328 and $39,942 for sales of our products to Agape ATP International Holding Limited and Agape Superior Living Sdn Bhd. The director for both Agape ATP International Holding Limited and Agape Superior Living Sdn Bhd is a corporate shareholder of our holding company.
The related party transaction is generally transacted in an arm-length basis at the current market value in the normal course of business.
18. 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 December 31, 2019 up through the date the Company issued the audited consolidated financial statements.