10-K: DSwiss, Inc. Reports Increased Revenue in 2024 Annual Report, Despite Internal Control Weaknesses

DSwiss, Inc.'s 2024 annual report reveals a significant revenue increase but also identifies material weaknesses in internal control over financial reporting.

Summary

• DSwiss, Inc., a Nevada corporation, primarily engages in supplying high-quality health and beauty products through its subsidiaries.
• The company's revenue increased by 111.8% from $1,470,071 in 2023 to $3,112,887 in 2024, mainly from OEM/ODM sales of nutraceutical and skincare supplies.
• Despite the revenue growth, the gross margin decreased from 24.44% in 2023 to 20.02% in 2024.
• The company reported a net profit of $22,223 for 2024, a significant improvement from the net loss of $49,535 in 2023.
• Management identified material weaknesses in internal control over financial reporting, including a lack of written policies and procedures and inadequate segregation of duties.
• The company is taking steps to remediate these weaknesses, including creating positions to segregate duties and preparing written policies and procedures.
• DSwiss is actively expanding its market presence through social media campaigns and e-commerce platforms, aiming for a 100% increase in social media engagement by the end of 2025.
• The company plans to participate in international trade shows and is pursuing strategic mergers and acquisitions to drive growth.
• As of December 31, 2024, DSwiss had thirteen full-time employees, including CEO Leong Ming Chia.
• The company acknowledges the importance of cybersecurity and is implementing measures to protect its information systems.

Sentiment

Score: 6

Explanation: The document presents a mixed sentiment. While there's positive revenue growth and a return to profitability, the identified material weaknesses in internal control and going concern uncertainties temper the overall outlook.

Positives

• Significant revenue increase of 111.8% year-over-year, reaching $3,112,887 in 2024.
• Turned a net loss of $49,535 in 2023 into a net profit of $22,223 in 2024.
• Actively expanding market presence through social media and e-commerce.
• Pursuing strategic mergers and acquisitions to drive growth.
• Expanding workforce and establishing internship partnerships to foster talent development.
• The company is actively expanding its market presence in the beauty and health industries, both locally and internationally.

Negatives

• Decrease in gross margin from 24.44% to 20.02%.
• Material weaknesses in internal control over financial reporting were identified.
• The company does not have Written Policies & Procedures.
• The company does not have adequate segregation of duties and effective risk assessment.

Risks

• Material weaknesses in internal control over financial reporting could lead to misstatements in financial statements.
• Fluctuations in exchange rates could impact profitability.
• Competition in the beauty and healthcare industries is dynamic and rapidly evolving.
• The company's ability to continue as a going concern is dependent on improving profitability and continued financial support from major stockholders.
• The company is subject to the laws and regulations of the jurisdictions in which it operates, which may include business licensing requirements, income taxes and payroll taxes.

Future Outlook

The company plans to expand its market presence through social media and e-commerce, participate in international trade shows, and pursue strategic mergers and acquisitions to drive growth. They aim for a 100% increase in social media engagement by the end of 2025 and to expand their workforce by 50%.

Management Comments

• Driven by a team of industry experts, DSwiss remains dedicated to delivering superior products and customized solutions that cater to diverse client needs.
• Guided by our philosophy, Creating Beauty, Health, and the Ecosystem, our cutting-edge R&D team pioneers new product lines and integrates the latest scientific advancements.
• With innovation at the core of our growth strategy, we are shaping the future of the health and beauty industry on a global scale, ensuring our products and services meet the evolving needs of consumers worldwide.

Industry Context

The beauty and healthcare industries are dynamic and rapidly evolving, presenting exciting opportunities for growth and innovation. DSwiss is strategically expanding into functional medicine and homeopathic supplements to meet the growing demand in the complementary and integrative health markets.

Comparison to Industry Standards

• The document does not contain enough information to make a detailed comparison to industry standards.
• Without specific competitor data or industry benchmarks, it is difficult to assess DSwiss's performance relative to its peers.
• A more comprehensive analysis would require comparing DSwiss's financial metrics (e.g., revenue growth, gross margin, profitability) to those of similar companies in the biotech nutraceutical and skincare/personal care manufacturing sectors.
• Companies like Amway, Herbalife, and Nu Skin could be considered as comparables in the nutraceutical space, while companies like Estee Lauder, L'Oreal, and Unilever could be considered as comparables in the skincare/personal care space.
• However, a direct comparison would need to account for differences in business models, geographic focus, and product portfolios.

Related Party Transactions

• Professional fees paid to a related party (a wholly-owned subsidiary of a 7.33% shareholder) amounted to $12,600 in 2024 and $13,001 in 2023.
• Sales to a related party (whose director is the founder of the Company) were $7,725 in 2024 and $48,366 in 2023.
• Purchases from a related party (whose director is the founder of the Company) were $8,236 in 2024.

Stakeholder Impact

• Shareholders: Potential for increased value due to revenue growth and profitability, but risk due to internal control weaknesses.
• Employees: Potential for increased job opportunities due to expansion plans.
• Customers: Continued access to high-quality health and beauty products.
• Suppliers: Increased business opportunities due to company growth.

Next Steps

• Remediate identified material weaknesses in internal control over financial reporting.
• Continue expanding market presence through social media and e-commerce.
• Participate in international trade shows.
• Pursue strategic mergers and acquisitions.
• Expand workforce and establish internship partnerships.

Key Dates

Keywords

health, beauty, nutraceutical, skincare, OEM, ODM, revenue, profit, internal control, DSwiss