NOTES
TO CONDENSED FINANCIAL STATEMENTS
FOR
THE NINE MONTHS ENDED SEPTEMBER 30, 2019
(Currency
expressed in United States Dollars (“US$”), except for number of shares)
(UNAUDITED)
1.
DESCRIPTION OF BUSINESS AND ORGANIZATION
DSwiss,
Inc. is organized as a Nevada limited liability company, incorporated on May 28, 2015. For the purposes of financial statement
presentation, DSwiss, Inc. and its subsidiaries are herein referred to as “the Company” or “we”. The principal
activity of the Company and its subsidiaries is to supply high quality beauty products directly to clients through wholly owned
subsidiaries. Our beauty supplies include, but are not limited to, beverages to assist in weight loss, anti-aging cream, and products
designed to improve the overall health and wellness of clients.
The
accompanying unaudited condensed consolidated financial statements of DSwiss, Inc. at September 30, 2019 and 2018 have been prepared
in accordance with generally accepted accounting principles (“GAAP”) for interim financial statements, instructions
to Form 10-Q, and Regulation S-X. Accordingly, certain information and footnote disclosures normally included in financial statements
prepared in accordance with GAAP have been condensed or omitted. These condensed consolidated financial statements should be read
in conjunction with the financial statements and notes thereto included in our annual report on Form 10-K for the year ended December
31, 2018. In management’s opinion, all adjustments (consisting only of normal recurring adjustments) considered necessary
for a fair presentation to make our financial statements not misleading have been included. The results of operations for the
periods ended September 30, 2019 and 2018 presented are not necessarily indicative of the results to be expected for the full
year. The December 31, 2018 balance sheet has been derived from our audited financial statements included in our annual report
on Form 10-K for the year ended December 31, 2018.
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 and associates:
|
|
|
Company
name
|
|
Place
and date of incorporation
|
|
Particulars of
issued capital
|
|
Principal
activities
|
|
Proportional
of ownership interest and voting power held
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.
|
|
DSwiss
Holding Limited
|
|
Seychelles,
May 28, 2015
|
|
1
share of ordinary share of US$1 each
|
|
Investment
holding
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2.
|
|
DSwiss
(HK) Limited
|
|
Hong
Kong,
May 28, 2015
|
|
1
share of ordinary share of HK$1 each
|
|
Supply
of beauty products
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.
|
|
DSwiss
Sdn Bhd
|
|
Malaysia,
June 10, 2011
|
|
2
shares of ordinary share of RM 1 each
|
|
Supply
of beauty products
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.
|
|
DSwiss
Biotech Sdn Bhd(1)
|
|
Malaysia,
March 17, 2016
|
|
250,000
shares of ordinary share of RM 1 each
|
|
Supply
of biotech products
|
|
|
40
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5.
|
|
DS
Asia Co., Ltd(1) (2)
|
|
Thailand,
April 27, 2016
|
|
20,000
shares of ordinary share of THB 25 each
|
|
Trading
Beauty products
|
|
|
49
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6.
|
|
DSwiss
International Trading (Shenzhen) Limited 德瑞絲國際貿易(深圳)有限公司
|
|
PRC,
June 21, 2016
|
|
413,392
shares of ordinary share of RMB 1 each
|
|
Trading
Beauty products
|
|
|
100
|
%
|
(1)
Based on the contractual arrangements between the Company and other investors, the Company has the power to direct the relevant
activities of these entities unilaterally, and hence the Company has control over these entities.
(2)
DS Asia Co., Ltd was being officially de-registered on April 5, 2019.
DSWISS,
INC.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
FOR
THE NINE MONTHS ENDED SEPTEMBER 30, 2019
(Currency
expressed in United States Dollars (“US$”), except for number of shares)
(UNAUDITED)
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of presentation
The
accompanying condensed consolidated financial statements are prepared in accordance with generally accepted accounting principles
in the United States of America (“US GAAP”).
The
Company has adopted its fiscal year-end to be December 31.
Basis
of consolidation
The
condensed consolidated financial statements include the accounts of the Company, its subsidiaries and its VIEs in which the Company
is the primary beneficiary. All inter-company accounts and transactions have been eliminated upon consolidation.
Use
of estimates
Management
uses estimates and assumptions in preparing these financial statements in accordance with US GAAP. Those estimates and assumptions
affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities in the balance sheets,
and the reported revenue and expenses during the periods reported. Actual results may differ from these estimates.
Revenue
recognition
In
accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”)
Topic 605,“Revenue Recognition”, the Company recognizes revenue from sales of goods when the following four revenue
criteria are met: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) selling price is fixed or determinable;
and (4) collectability is reasonably assured.
Revenue
from supplies of beauty products is recognized when title and risk of loss are transferred and there are no continuing obligations
to the customer. Title and the risks and rewards of ownership transfer to and accepted by the customer when the products are collected
by the customer at the Company’s office. Revenue is recorded net of sales discounts, returns, allowances, and other adjustments
that are based upon management’s best estimates and historical experience and are provided for in the same period as the
related revenues are recorded. Based on limited operating history, management estimates that there was no sales return for the
period reported.
Cost
of revenue
Cost
of revenue includes the purchase cost of retail goods for re-sale to customers and packing materials (such as boxes). It excludes
purchasing and receiving costs, inspection costs, warehousing costs, internal transfer costs and other costs of distribution network
in cost of revenues.
Shipping
and handling fees
Shipping
and handling fees, if billed to customers, are included in revenue. Shipping and handling fees associated with inbound and outbound
freight are expensed as incurred and included in selling and distribution expenses. Shipping and handling fees are expensed as
incurred for the nine months ended September 30, 2019 were $12,917, while for the nine months ended September 30, 2018 were $2,555.
DSWISS,
INC.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
FOR
THE NINE MONTHS ENDED SEPTEMBER 30, 2019
(Currency
expressed in United States Dollars (“US$”), except for number of shares)
(UNAUDITED)
Selling
and distribution expenses
Selling
and distribution expenses are primarily comprised of travelling and accommodation, transportation fees such as petrol, toll and
parking and shipping and handling fees.
Cash
and cash equivalents
The
Company consider all highly liquid instruments with a maturity of nine months or less at the time of issuance to be cash equivalent.
Inventories
Inventories
consisting of products available for sell, are stated at the lower of cost or market value. Cost of inventory is determined using
the first-in, first-out (FIFO) method. Inventory reserve is recorded to write down the cost of inventory to the estimated market
value due to slow-moving merchandise and damaged goods, which is dependent upon factors such as historical and forecasted consumer
demand, and promotional environment. The Company takes ownership, risks and rewards of the products purchased. Write downs are
recorded in cost of revenues in the Condensed Consolidated Statements of Operations and Comprehensive Income.
Property
and equipment
Property
and equipment are stated at cost less accumulated depreciation and impairment. Depreciation of plant, equipment and software are
calculated on the straight-line method over their estimated useful lives or lease terms generally as follows:
|
Classification
|
|
Estimated
useful lives
|
|
Computer
and software
|
|
5
years
|
|
Furniture
and fittings
|
|
5
years
|
|
Office
equipment
|
|
10
years
|
|
Motor
vehicle
|
|
5
years
|
|
Renovation
|
|
5
years
|
Expenditures
for maintenance and repairs are expensed as incurred.
Intangible
assets
Intangible
assets are stated at cost less accumulated amortization. Intangible assets represented the registration costs of trademarks in
Hong Kong, China, and Malaysia, which are amortized on a straight-line basis over a useful life of five years.
The
Company follows ASC Topic 350 in accounting for intangible assets, which requires impairment losses to be recorded when indicators
of impairment are present and the undiscounted cash flows estimated to be generated by the assets are less than the assets’
carrying amounts. There was no impairment losses recorded on intangible assets for the nine months ended September 30, 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 and Hong Kong, and is expanding to China and Thailand. 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.
DSWISS,
INC.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
FOR
THE NINE MONTHS ENDED SEPTEMBER 30, 2019
(Currency
expressed in United States Dollars (“US$”), except for number of shares)
(UNAUDITED)
Net
income/(loss) per share
The
Company calculates net income/(loss) per share in accordance with ASC Topic 260, “Earnings per Share.” Basic
income/(loss) per share is computed by dividing the net income/(loss) by the weighted-average number of common shares outstanding
during the period. Diluted income per share is computed similar to basic income/(loss) per share except that the denominator is
increased to include the number of additional common shares that would have been outstanding if the potential common stock equivalents
had been issued and if the additional common shares were dilutive.
Foreign
currencies translation
Transactions
denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates
prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional
currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting
exchange differences are recorded in the Condensed Consolidated Statements of Operations and Comprehensive Income.
The
reporting currency of the Company is United States Dollars (“US$”) and the accompanying financial statements have
been expressed in US$. In addition, the Company’s subsidiaries and VIEs in Malaysia, Hong Kong, China and Thailand maintains
their books and record in their local currency, Ringgits Malaysia (“RM”), Hong Kong Dollars (“HK$”), Chinese
Renminbi (“RMB”) and Thai Baht (“THB”) respectively, which is functional currency as being the primary
currency of the economic environment in which the entity operates.
In
general, for consolidation purposes, assets and liabilities of its subsidiaries whose functional currency is not US$ are translated
into US$, in accordance with ASC Topic 830-30, “Translation of Financial Statement”, using the exchange rate
on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses
resulting from translation of financial statements of foreign subsidiary are recorded as a separate component of accumulated other
comprehensive income within the statements of stockholders’ equity.
Translation
of amounts from RM into US$1, HK$ into US$1, RMB into US$1 and THB into US$1 has been made at the following exchange rates for
the respective periods:
|
|
|
As of and for the nine months ended September
30,
|
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
Period-end RM : US$1 exchange rate
|
|
|
4.18
|
|
|
|
4.14
|
|
|
Period-average RM : US$1 exchange rate
|
|
|
4.13
|
|
|
|
4.09
|
|
|
Period-end HK$ : US$1 exchange rate
|
|
|
7.84
|
|
|
|
7.83
|
|
|
Period-average HK$ : US$1 exchange rate
|
|
|
7.84
|
|
|
|
7.85
|
|
|
Period-end RMB : US$1 exchange rate
|
|
|
7.11
|
|
|
|
6.87
|
|
|
Period-average RMB : US$1 exchange rate
|
|
|
6.86
|
|
|
|
6.80
|
|
|
Period-end THB : US$1 exchange rate
|
|
|
30.55
|
|
|
|
32.33
|
|
|
Period-average THB : US$1 exchange rate
|
|
|
31.31
|
|
|
|
33.01
|
|
DSWISS,
INC.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
FOR
THE NINE MONTHS ENDED SEPTEMBER 30, 2019
(Currency
expressed in United States Dollars (“US$”), except for number of shares)
(UNAUDITED)
Fair
value of financial instruments:
The
carrying value of the Company’s financial instruments: cash and cash equivalents, trade receivables, deposits, trade payable,
other payables, and accounts payable approximate at their fair values because of the short-term nature of these financial instruments.
The
Company also follows the guidance of the ASC Topic 820-10, “Fair Value Measurements and Disclosures” (“ASC
820-10”), with respect to financial assets and liabilities that are measured at fair value. ASC 820-10 establishes a three-tier
fair value hierarchy that prioritizes the inputs used in measuring fair value as follows:
Level
1: Observable inputs such as quoted prices in active markets;
Level
2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
Level
3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
Segment
reporting
ASC
Topic 280, “Segment Reporting” establishes standards for reporting information about operating segments on
a basis consistent with the Company’s internal organization structure as well as information about geographical areas, business
segments and major customers in financial statements. For the nine months ended September 30, 2019, the Company operates in four
reportable operating segment in Malaysia, Thailand, China and Hong Kong.
Recent
accounting pronouncements
The
Company has reviewed all recently issued, but not yet effective, accounting pronouncements and do not believe the future adoption
of 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 CONDENSED FINANCIAL STATEMENTS
FOR
THE NINE MONTHS ENDED September 30, 2019
(Currency
expressed in United States Dollars (“US$”), except for number of shares)
(UNAUDITED)
3.
VIE STRUCTURE AND ARRANGEMENTS
On
September 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 CONDENSED FINANCIAL STATEMENTS
FOR
THE NINE MONTHS ENDED September 30, 2019
(Currency
expressed in United States Dollars (“US$”), except for number of shares)
(UNAUDITED)
4.
STOCKHOLDERS’ EQUITY
As of September
30, 2019, and 31 December, 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.
5.
PROPERTY AND EQUIPMENT
|
|
|
September 30, 2019
|
|
|
December 31, 2018
|
|
|
Computers and software
|
|
$
|
92,419
|
|
|
$
|
90,931
|
|
|
Furniture and fittings
|
|
|
6,144
|
|
|
|
6,144
|
|
|
Office equipment
|
|
|
9,586
|
|
|
|
9,586
|
|
|
Motor vehicles
|
|
|
79,054
|
|
|
|
79,054
|
|
|
Renovation
|
|
|
18,843
|
|
|
|
18,843
|
|
|
Total
|
|
$
|
206,046
|
|
|
$
|
204,558
|
|
|
Accumulated depreciation
|
|
|
(129,139
|
)
|
|
|
(110,844
|
)
|
|
Effect of translation exchange
|
|
|
(1,361
|
)
|
|
|
(758
|
)
|
|
Property and equipment, net
|
|
$
|
75,546
|
|
|
$
|
92,956
|
|
Depreciation expense
for the three and nine months and ended September 30, 2019 were $6,885 and $18,295.
Depreciation expense
for the three and nine months ended September 30, 2018 were $4,571 and $18,334.
6.
INTANGIBLE ASSETS
|
|
|
September 30, 2019
|
|
|
December 31, 2018
|
|
|
Trademarks
|
|
$
|
12,077
|
|
|
$
|
12,077
|
|
|
Amortization
|
|
|
(3,126
|
)
|
|
|
(2,194
|
)
|
|
Effect of translation exchange
|
|
|
(224
|
)
|
|
|
-
|
|
|
Intangible assets, net
|
|
$
|
8,727
|
|
|
$
|
9,883
|
|
Amortization for
the three and nine months ended September 30, 2019 was $149 and $932.
Amortization for
the three and nine months ended September 30, 2018 ended was $256 and $127.
7.
PREPAID EXPENSES AND DEPOSITS
|
|
|
September 30, 2019
|
|
|
December 31, 2018
|
|
|
Prepaid expenses
|
|
$
|
823
|
|
|
$
|
5,400
|
|
|
Deposits
|
|
|
36,214
|
|
|
|
35,353
|
|
|
Other receivable
|
|
|
46,043
|
|
|
|
20,150
|
|
|
Total prepaid expenses and deposits
|
|
$
|
83,080
|
|
|
$
|
60,903
|
|
8.
INVENTORIES
|
|
|
September 30, 2019
|
|
|
December 31, 2018
|
|
|
Finished goods, at cost
|
|
$
|
31,829
|
|
|
$
|
15,137
|
|
|
Total inventories
|
|
$
|
31,829
|
|
|
$
|
15,137
|
|
9.
OTHER PAYABLES AND ACCRUED LIABILITIES
|
|
|
September 30, 2019
|
|
|
December 31, 2018
|
|
|
Other payables
|
|
$
|
189,850
|
|
|
$
|
22,368
|
|
|
Accrued audit fees
|
|
|
3,030
|
|
|
|
16,500
|
|
|
Accrued other expenses
|
|
|
11,911
|
|
|
|
13,575
|
|
|
Accrued professional fees
|
|
|
1,500
|
|
|
|
532
|
|
|
Total payables and accrued liabilities
|
|
$
|
206,291
|
|
|
$
|
52,975
|
|
DSWISS,
INC.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
FOR
THE NINE MONTHS ENDED SEPTEMBER 30, 2019
(Currency
expressed in United States Dollars (“US$”), except for number of shares)
(UNAUDITED)
10.
HIRE PURCHASE CREDITOR
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 September 30,
2019
|
|
|
December 31, 2018
|
|
|
Finance lease
|
|
$
|
58,590
|
|
|
$
|
64,952
|
|
|
Less: interest expense
|
|
|
(9,004
|
)
|
|
|
(8,621
|
)
|
|
Net present value of finance lease
|
|
|
49,586
|
|
|
|
56,331
|
|
|
|
|
|
|
|
|
|
|
|
|
Current portion
|
|
|
6,524
|
|
|
|
7,561
|
|
|
Non-current portion
|
|
|
43,062
|
|
|
|
48,770
|
|
|
Total
|
|
$
|
49,586
|
|
|
$
|
56,331
|
|
As
of September 30, 2019 the maturities of the finance lease for each of the years are as follows:
|
2019
|
|
$
|
1,886
|
|
|
2020
|
|
|
7,790
|
|
|
2021
|
|
|
8,184
|
|
|
2022
|
|
|
8,578
|
|
|
2023
|
|
|
8,835
|
|
|
2024
|
|
|
9,132
|
|
|
2025
|
|
|
5,181
|
|
|
Total
|
|
$
|
49,586
|
|
11.
INCOME TAXES
For
the nine months ended September 2019 and 2018, the local (United States) and foreign components of income/(loss) before income
taxes were comprised of the following:
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
Tax jurisdictions from:
|
|
|
|
|
|
|
|
|
|
- Local
|
|
$
|
(24,103
|
)
|
|
$
|
(22,337
|
)
|
|
- Foreign, representing
|
|
|
|
|
|
|
|
|
|
Seychelles
|
|
|
(1,902
|
)
|
|
|
(1,775
|
)
|
|
Hong Kong
|
|
|
(131,294
|
)
|
|
|
(98,682
|
)
|
|
Malaysia
|
|
|
(69,590
|
)
|
|
|
(145,316
|
)
|
|
PRC
|
|
|
(16,545
|
)
|
|
|
(17,352
|
)
|
|
Thailand
|
|
|
9,398
|
|
|
|
(171
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income tax
|
|
$
|
(234,036
|
)
|
|
$
|
(285,633
|
)
|
The
provision for income taxes consisted of the following:
|
|
|
|
2019
|
|
|
|
2018
|
|
|
Current:
|
|
|
|
|
|
|
|
|
|
- Local
|
|
$
|
-
|
|
|
$
|
-
|
|
|
- Foreign
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred:
|
|
|
|
|
|
|
|
|
|
- Local
|
|
|
-
|
|
|
|
-
|
|
|
- Foreign
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
$
|
-
|
|
|
$
|
-
|
|
The
effective tax rate in the periods presented is the result of the mix of income earned in various tax jurisdictions that apply
a broad range of income tax rates. The Company has subsidiaries that operate in various countries: United States, Seychelles,
Hong Kong, Malaysia, PRC and Thailand that are subject to taxes in the jurisdictions in which they operate, as follows:
United
States of America
The
Company is registered in the State of Nevada and is subject to the tax laws of the United States of America.
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 rate of 16.5% on its assessable income.
Malaysia
DSwiss
Sdn Bhd and DSwiss Biotech Sdn Bhd are subject to Malaysia Corporate Tax, which is charged at the statutory income rate range
from 17% to 24% on its assessable income.
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%.
Thailand
DS
Asia Co., Ltd is subject to the Corporate Income Tax governed by the Thailand Revenue Department. Companies and juristic partnerships
with a paid-in capital not exceeding 5 million Thai baht (THB) at the end of any accounting period and income from the sale of
goods and/or the provision of services not exceeding THB 30 million in any accounting period will be subject to tax range from
0% - 20%.
DSWISS,
INC.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
FOR
THE NINE MONTHS ENDED SEPTEMBER 30, 2019
(Currency
expressed in United States Dollars (“US$”), except for number of shares)
(UNAUDITED)
12.
CONCENTRATIONS OF RISK
The
Company is exposed to the following concentrations of risk:
(a)
Major customers
For
three months ended September 30, 2019 and 2018, the customers who accounted for 10% or more of the Company’s revenues and
its accounts receivable balance at period-end are presented as follows:
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
|
|
|
Revenues
|
|
|
Percentage
of revenues
|
|
|
Accounts
receivable, trade
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer
A
|
|
$
|
-
|
|
|
$
|
9,675
|
|
|
|
|
%
|
|
|
60
|
%
|
|
$
|
-
|
|
|
|
-
|
|
|
Customer
B
|
|
$
|
21,345
|
|
|
$
|
5,886
|
|
|
|
55
|
%
|
|
|
36
|
%
|
|
$
|
-
|
|
|
|
-
|
|
|
Customer
D
|
|
$
|
7,704
|
|
|
$
|
-
|
|
|
|
20
|
%
|
|
|
-
|
%
|
|
$
|
-
|
|
|
|
-
|
|
|
|
|
$
|
29,049
|
|
|
$
|
15,561
|
|
|
|
75
|
%
|
|
|
96
|
%
|
|
$
|
-
|
|
|
|
-
|
|
For nine months ended September 30, 2019
and 2018, the customers who accounted for 10% or more of the Company’s revenues and its accounts receivable balance at period-end
are presented as follows:
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
|
|
|
Revenues
|
|
|
Percentage of revenues
|
|
|
Accounts receivable,
trade
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer A
|
|
$
|
-
|
|
|
$
|
94,237
|
|
|
|
-
|
%
|
|
|
56
|
%
|
|
$
|
-
|
|
|
|
-
|
|
|
Customer B
|
|
$
|
25,645
|
|
|
$
|
-
|
|
|
|
31
|
%
|
|
|
-
|
%
|
|
$
|
-
|
|
|
|
-
|
|
|
Customer C
|
|
$
|
13,523
|
|
|
$
|
-
|
|
|
|
17
|
%
|
|
|
-
|
%
|
|
$
|
-
|
|
|
|
-
|
|
|
|
|
$
|
39,168
|
|
|
$
|
94,237
|
|
|
|
48
|
%
|
|
|
56
|
%
|
|
$
|
-
|
|
|
|
-
|
|
(b)
Major vendors
For
three months ended September 30, 2019 and 2018, the vendors who accounted for 10% or more of the Company’s purchases and
its accounts payable balance at period-end are presented as follows:
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
|
|
|
Purchase
|
|
|
Percentage of purchases
|
|
|
Accounts payable, trade
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vendor A
|
|
$
|
4,312
|
|
|
$
|
28,996
|
|
|
|
21
|
%
|
|
|
86
|
%
|
|
$
|
-
|
|
|
|
-
|
|
|
Vendor B
|
|
$
|
-
|
|
|
$
|
4,560
|
|
|
|
-
|
%
|
|
|
14
|
%
|
|
$
|
-
|
|
|
|
-
|
|
|
Vendor C
|
|
$
|
11,461
|
|
|
$
|
-
|
|
|
|
55
|
%
|
|
|
-
|
%
|
|
$
|
-
|
|
|
|
-
|
|
|
Vendor D
|
|
$
|
3,805
|
|
|
$
|
-
|
|
|
|
18
|
%
|
|
|
-
|
%
|
|
$
|
-
|
|
|
|
-
|
|
|
|
|
$
|
19,578
|
|
|
$
|
33,356
|
|
|
|
94
|
%
|
|
|
100
|
%
|
|
$
|
-
|
|
|
|
-
|
|
For
nine months ended September 30, 2019 and 2018, the vendors who accounted for 10% or more of the Company’s purchases and
its outstanding payable balance at period-end are presented as follows:
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
|
|
|
Purchase
|
|
|
Percentage of purchases
|
|
|
Accounts payable, trade
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vendor A
|
|
$
|
10,483
|
|
|
$
|
46,394
|
|
|
|
33
|
%
|
|
|
57
|
%
|
|
$
|
-
|
|
|
|
-
|
|
|
Vendor B
|
|
$
|
-
|
|
|
$
|
16,846
|
|
|
|
-
|
%
|
|
|
21
|
%
|
|
$
|
-
|
|
|
|
-
|
|
|
Vendor C
|
|
$
|
11,461
|
|
|
$
|
-
|
|
|
|
37
|
%
|
|
|
-
|
%
|
|
$
|
-
|
|
|
|
-
|
|
|
Vendor D
|
|
$
|
3,805
|
|
|
$
|
-
|
|
|
|
12
|
%
|
|
|
-
|
%
|
|
$
|
-
|
|
|
|
-
|
|
|
|
|
$
|
25,749
|
|
|
$
|
63,240
|
|
|
|
82
|
%
|
|
|
78
|
%
|
|
$
|
-
|
|
|
|
-
|
|
All
vendors are located in Malaysia.
(c)
Exchange rate risk
The
Company cannot guarantee that the current exchange rate will remain stable, therefore there is a possibility that the Company
could post the same amount of income for two comparable periods and because of the fluctuating exchange rate actually post higher
or lower income depending on exchange rate of RM converted to US$, HK$ converted into US$, RMB converted into US$ and THB converted
into US$ on that date. The exchange rate could fluctuate depending on changes in political and economic environments without notice.
DSWISS,
INC.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
FOR
THE NINE MONTHS ENDED SEPTEMBER 30, 2019
(Currency
expressed in United States Dollars (“US$”), except for number of shares)
(UNAUDITED)
13.
COMMITMENTS AND CONTINGENCIES
(a) Rent expenses
For
nine months ended September 30, 2019 and 2018, the Company has incurred rent expenses solely for the office premises in Malaysia
on a monthly basis as follows:
|
|
|
Nine months ended
|
|
|
Nine months ended
|
|
|
|
|
September 30, 2019
|
|
|
September 30, 2018
|
|
|
Rent Expenses
|
|
$
|
36,061
|
|
|
$
|
11,531
|
|
|
|
|
$
|
36,061
|
|
|
$
|
11,531
|
|
(b)
Rent prepayment and deposit
|
|
|
As at
|
|
|
As at
|
|
|
|
|
September 30, 2019
|
|
|
Dec 31, 2018
|
|
|
Rent Prepayment (1)
|
|
$
|
-
|
|
|
$
|
665
|
|
|
Rent Deposit (2)
|
|
|
16,027
|
|
|
|
16,418
|
|
|
|
|
$
|
16,027
|
|
|
$
|
17,083
|
|
(1)
Rent prepayment solely for the office premises in Malaysia and due under a cancellable operating lease in the next twelve months
for Malaysia office premises.
(2)
Rent deposit is refundable upon maturity of tenancy agreement and pre-maturity cancellation will be forfeited.
14.
SUBSEQUENT EVENTS
In accordance with ASC Topic 855, “Subsequent
Events “, which establishes general standards of accounting for and disclosure of events that occur after the balance sheet
date but before financial statements are issued, the Company has evaluated all events or transactions that occurred after September
30, 2019 up through the date was the Company presented these unaudited condensed financial statements.
