The information contained in this quarter report on Form 10-Q is intended to
update the information contained in our Annual Report on Form 10-K for the year
ended December 31, 2020 and presumes that readers have access to, and will have
read, the "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and other information contained in such Form 10-K. The
following discussion and analysis also should be read together with our
consolidated financial statements and the notes to the consolidated financial
statements included elsewhere in this Form 10-Q.
The following discussion contains certain statements that may be deemed
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such statements appear in a number of places in
this Report, including, without limitation, "Management's Discussion and
Analysis of Financial Condition and Results of Operations." These statements are
not guarantees of future performance and involve risks, uncertainties and
requirements that are difficult to predict or are beyond our control.
Forward-looking statements speak only as of the date of this quarterly report.
You should not put undue reliance on any forward-looking statements. We strongly
encourage investors to carefully read the factors described in our Form S-1
Amendment No.8, dated July 20, 2016 in the section entitled "Risk Factors" for a
description of certain risks that could, among other things, cause actual
results to differ from these forward-looking statements. We assume no
responsibility to update the forward-looking statements contained in this
transition report on Form 10-Q. The following should also be read in conjunction
with the unaudited Condensed Consolidated Financial Statements and notes thereto
that appear elsewhere in this report.
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 is the leading corporation for premier nutraceutical biotechnology in
USA, and has gone into Asian countries such as China, Hong Kong, Singapore,
Thailand, and Malaysia with our high quality functional health supplement, skin
care solution, wellness products and private labelled supplies turnkey provider
(OEM/ODM). Our unique and innovative patented biotechnology, natural ingredients
into products & services that has been proven to give better, faster and visible
positive results to the end user including health improvement, slimming,
anti-aging and beauty effects.
Currently, we are fulfilling in Talent Development, product research and
development, and providing Original Equipment Manufacturer (OEM) and Original
Design Manufacturer (ODM) services into functional food and beauty product of
which is currently under research and development with Malaysia biotech and
research professionals. 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. In 2020,
with our experience and expertise, we have successfully expanded our client base
in OEM/ODM services and developed products and Business-to-business (B2B) DNA
genotyping private label services that exceed the clients' expectation.
DSwiss has continuously expanding through launching health and beauty projects
to provide premier experiences to the customers. DSwiss has shown a solid growth
and is set to advance the biotechnology industry to drive nutraceutical and
skincare biotechnology growth.
At this time, we operate exclusively online through our website:
Products which meet the definition of a functional food and cosmetics related
products need to be registered or notified 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.
Our expected growth is planned to occur primarily through the implementation of
our social media marketing strategy. DSwiss already has a strong relationship
with new retail tech company (eg. Facebook, E-Marketplace). 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
Results of Operation
For the Three Months Ended March 31, 2021 and March 31, 2020.
For the three months ended March 31, 2021 and 2020, we realized revenue in the
amount of $289,878 and $527,542 respectively. Our gross profits for the three
months ended March 31, 2021 and 2020 were $116,799 and $120,006 respectively,
which is less than $3,207 for the three months ended March 31, 2020. We believe
that in order to retain and maintain more customers in the future we must
increase our marketing efforts and or develop new products.
*Our gross margins may not be comparable to those of other entities, since some
entities include all the costs related to their distribution network in cost of
revenue. Our cost of revenue includes only the purchase cost of products and
packing materials, and does not include any allocation of inbound freight
charges, purchasing and receiving costs, inspection costs, warehousing costs,
internal transfer costs, and the other costs associated with the distribution
Our net profit for the three months ended March 31, 2021 and 2020 were $32,788
and $2,982 respectively. We attribute this increase in profit due to decrease in
Liquidity and Capital Resources
For the three months ended March 31, 2021 and 2020, we had cash and cash
equivalents of $127,428 and $126,598 respectively. We have positive operating
cash flow and our working capital has been and will continue to be significant.
As a result, we have increased our sales resulting an increase in our overall
revenue. We need to meet our working capital requirements and to make capital
investments in connection with ongoing operations. The Company expects its
current capital resources to meet our basic operating requirements for
approximately twelve months.
For the three months ended March 31, 2021, net cash used in operating activities
was $20,195, compared to net cash generated from operating activities was
$84,058 in the prior period. The operating cash flow performance primarily
reflects increase in accounts receivable to the prior period.
For the three months ended March 31, 2021 and 2020, net cash used in investing
activities were $0 and $2,199 respectively, reflecting the cost in purchase of
plant and equipment.
For the three months ended March 31, 2021 and 2020, net cash used in financing
activities were $1,708 and $1,796 respectively resulted from the repayment of
finance lease and advance from related parties.
Our capital expenditures primarily relate to the acquisition of plant and
equipment. There were $0 and $2,199 used to purchase the computer and software
and office equipment for the three months periods ended March 31, 2021 and 2020
We do not have any credit facilities or other access to bank credit.
Contractual Obligations, Commitments and Contingencies
We currently have a lease agreement in place with respect to office premises in
Malaysia to commence our business operations.
Off-balance Sheet Arrangements
We have no significant off-balance sheet arrangements that have or are
reasonably likely to have a current or future effect on our financial condition,
changes in our financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources that are material to our
stockholders as of March 31, 2021.
Recent accounting pronouncements
The Company has reviewed all recently issued, but not yet effective, accounting
pronouncements and do not believe the future adoption of any such pronouncements
may be expected to cause a material impact on its financial condition or the
results of its operations.
VIE STRUCTURE AND ARRANGEMENTS
On June 27, 2016, DSwiss (HK) Limited ("DSHK") entered into a Management
Services Agreement (the "Management Services Agreement I") which entitles DSHK
to substantially entitled to all of the economic benefits of DSwiss Biotech Sdn
Bhd ("DSBT") in consideration of services provided by DSHK to DSBT. Pursuant to
the Management Services Agreement I, DSHK has the exclusive right to provide to
DSBT management, financial and other services related to the operation of DSBT's
business, and DSBT is required to take all commercially reasonable efforts to
permit and facilitate the provision of the services provided by DSHK. As
compensation for providing the services, DSHK is entitled to receive a fee from
DSBT, upon demand, equal to 100% of the annual net profits of DSBT during the
term of the Management Services Agreement I. DSHK may also request ad hoc
quarterly payments of the aggregate fee, which payments will be credited against
DSBT's future payment obligations.
The Management Services Agreement I also provides DSHK, or its designee, with a
right of first refusal to acquire all or any portion of the equity of DSBT upon
any proposal by the sole shareholder of DSBT to transfer such equity. In
addition, at the sole discretion of DSHK, DSBT is obligated to transfer to DSHK,
or its designee, any part or all of the business, personnel, assets and
operations of DSBT which may be lawfully conducted, employed, owned or operated
by DSHK, including:
(a) business opportunities presented to, or available to DSBT may be pursued and
contracted for in the name of DSHK rather than DSBT, and at its discretion, DSHK
may employ the resources of DSBT to secure such opportunities;
(b) any tangible or intangible property of DSBT, any contractual rights, any
personnel, and any other items or things of value held by DSBT may be
transferred to DSHK at book value;
(c) real property, personal or intangible property, personnel, services,
equipment, supplies and any other items useful for the conduct of the business
may be obtained by DSHK by acquisition, lease, license or otherwise, and made
available to DSBT on terms to be determined by agreement between DSHK and DSBT;
(d) contracts entered into in the name of DSBT may be transferred to DSHK, or
the work under such contracts may be subcontracted, in whole or in part, to
DSHK, on terms to be determined by agreement between DSHK and DSBT; and
(e) any changes to, or any expansion or contraction of, the business may be
carried out in the exercise of the sole discretion of DSHK, and in the name of
and at the expense of, DSHK; provided, however, that none of the foregoing may
cause or have the effect of terminating (without being substantially replaced
under the name of DSHK) or adversely affecting any license, permit or regulatory
status of DSBT.
In addition, DSHK entered into certain agreements with Jervey Choon, (the "DSBT
(i) a Call Option Agreement allowing DSHK to acquire the shares of DSBT as
permitted by Malaysia laws;
(ii) a Shareholders' Voting Rights Proxy Agreement that provides DSHK with the
voting rights of the DSBT; and
(iii) an Equity Pledge Agreement that pledges the shares in DSBT.
This VIE structure provides DSHK, a wholly-owned subsidiary of DSwiss Holding
Limited, which is the wholly-owned subsidiary of DSwiss Inc, with control over
the operations and benefits of DSBT without having a direct equity ownership in
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