10-Q: DSwiss Q3 Revenue Plunges, Net Loss Widens Amid Going Concern Doubt

DSwiss, Inc. reported a significant decline in Q3 2025 revenue and an increased net loss, alongside negative operating cash flow and material weaknesses in internal controls, raising substantial doubt about its ability to continue as a going concern.

Summary

• Revenue for the three months ended September 30, 2025, decreased significantly to $441,618 from $1,027,198 in the prior year period.
• Net loss for the three months ended September 30, 2025, increased to $97,891 from a net loss of $61,468 in the prior year period.
• For the nine months ended September 30, 2025, revenue increased to $2,464,144 from $2,077,942 in the prior year period.
• Gross profit for the nine months ended September 30, 2025, decreased to $470,224 from $515,271 in the prior year period.
• Net profit for the nine months ended September 30, 2025, decreased to $72,973 from $137,343 in the prior year period.
• The company reported negative operating cash flow of $18,597 for the nine months ended September 30, 2025, a significant decline from $217,204 generated in the prior year period.
• An accumulated deficit of $1,314,957 and negative operating cash flow raise substantial doubt about the company's ability to continue as a going concern.
• Material weaknesses in internal control over financial reporting were identified, including inadequate segregation of duties and insufficient written policies and procedures.
• Total assets increased to $800,748 as of September 30, 2025, from $635,830 as of December 31, 2024, primarily due to the recognition of operating lease right-of-use assets.
• Total stockholders' equity increased to $148,593 as of September 30, 2025, from $74,036 as of December 31, 2024.

Sentiment

Score: 2

Explanation: The sentiment is negative due to significant declines in Q3 revenue and gross profit, an increased net loss, negative operating cash flow, and a stated 'going concern' doubt. Material weaknesses in internal controls further contribute to the negative outlook, despite some positive balance sheet movements.

Positives

• Revenue for the nine months ended September 30, 2025, increased to $2,464,144 compared to $2,077,942 in the same period last year.
• Total assets increased to $800,748 as of September 30, 2025, from $635,830 at December 31, 2024.
• Total stockholders' equity increased to $148,593 as of September 30, 2025, from $74,036 at December 31, 2024.
• The accumulated deficit decreased to $1,314,957 as of September 30, 2025, from $1,387,930 at December 31, 2024.

Negatives

• Revenue for the three months ended September 30, 2025, decreased significantly to $441,618 from $1,027,198 in the prior year period.
• Net loss for the three months ended September 30, 2025, increased to $97,891 from a net loss of $61,468 in the prior year period.
• Gross profit for the three months ended September 30, 2025, decreased to $58,569 from $113,201 in the prior year period.
• Gross profit for the nine months ended September 30, 2025, decreased to $470,224 from $515,271 in the prior year period.
• Net profit for the nine months ended September 30, 2025, decreased to $72,973 from $137,343 in the prior year period.
• Net cash used in operating activities was $18,597 for the nine months ended September 30, 2025, compared to net cash generated of $217,204 in the prior year period.
• The company has an accumulated deficit of $1,314,957 and negative operating cash flow, raising substantial doubt about its ability to continue as a going concern.

Risks

• The company's accumulated deficit of $1,314,957 and negative operating cash flow of $18,597 for the nine months ended September 30, 2025, raise substantial doubt about its ability to continue as a going concern within one year.
• The company's ability to continue as a going concern is dependent upon improving profitability and continuing financial support from shareholders.
• No assurance can be given that future financing, if needed, will be available or on satisfactory terms, potentially leading to undue restrictions or substantial dilution.
• Material weaknesses exist in internal control over financial reporting, specifically inadequate segregation of duties and effective risk assessment, and insufficient written policies and procedures for accounting and financial reporting.
• The company is exposed to credit risk from accounts receivable, although mitigated by ongoing credit evaluation and short collection terms.
• The company is exposed to exchange rate risk due to operations in Malaysia (Ringgits Malaysia) and Hong Kong (Hong Kong Dollars), which can cause fluctuations in reported income when translated to US Dollars.

Future Outlook

Management believes that to retain and maintain more customers, the company must increase its marketing efforts and/or develop new products. Expected growth is planned primarily through the implementation of a social media marketing strategy and forming partnerships with local companies for global expansion.

Management Comments

• "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 expected growth is planned to occur primarily through the implementation of our social media marketing strategy."
• "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."

Industry Context

The company operates in the biotech-nutraceutical, beauty supplies, and medical consumables sectors, primarily in Malaysia and the ASEAN region, with aspirations for global expansion. Its focus on OEM/ODM services and B2B DNA genotyping private label services indicates a strategy to leverage its manufacturing and R&D capabilities. The emphasis on social media marketing and strategic partnerships aligns with broader industry trends for market penetration and brand building in consumer-facing health and beauty sectors.

Comparison to Industry Standards

• NA

Management Changes

Corporate Governance

Legal Proceedings

• No material, active or pending legal proceedings against the company were reported.
• No involvement as a plaintiff in any material proceedings or pending litigation.
• No proceedings where directors, officers, affiliates, or beneficial shareholders are adverse parties or have a material interest adverse to the company.

Related Party Transactions

• Professional fees of $5,617 were paid to Related Party A (a wholly-owned subsidiary of a 7.33% shareholder) for the nine months ended September 30, 2025, down from $6,700 in the prior year period.
• Sales to Related Party B (whose director is the founder of the Company) amounted to $12,498 for the nine months ended September 30, 2025, up from $5,834 in the prior year period.
• Revenue from a related party was $4,215 for the three months ended September 30, 2025, and $12,498 for the nine months ended September 30, 2025.
• General and administrative expenses to a related party were $1,674 for the three months ended September 30, 2025, and $5,617 for the nine months ended September 30, 2025.

Stakeholder Impact

• **Shareholders**: Face significant risk due to the 'going concern' doubt, negative operating cash flow, and declining profitability in the most recent quarter. Potential for dilution if external financing is sought.
• **Employees**: The company's financial instability and need to improve profitability could impact job security or future growth opportunities.
• **Customers**: The company's stated need to increase marketing and develop new products suggests an effort to maintain and grow its customer base, which could lead to new offerings or improved engagement.
• **Creditors**: Increased finance lease liabilities and overall liabilities, coupled with negative operating cash flow and going concern issues, indicate elevated credit risk.
• **Suppliers**: Concentration of purchases with major vendors (Vendor A and B accounted for 66% of purchases for nine months ended Sep 30, 2025) suggests reliance, but also potential risk if the company's financial health deteriorates further.

Next Steps

• Increase marketing efforts to retain and maintain customers.
• Develop new products to enhance customer retention.
• Implement a social media marketing strategy for expected growth.
• Form partnerships with local companies in various countries for global expansion.

Key Dates

Recommendation

The company's Q3 2025 results show a severe deterioration in performance, with revenue plunging by 57% and net loss widening by 59% compared to the prior year. While nine-month revenue increased, gross profit and net income declined, and operating cash flow turned significantly negative. The explicit 'going concern' warning, coupled with identified material weaknesses in internal controls, indicates fundamental operational and financial instability. These factors present substantial risks to investors, suggesting a high likelihood of further share price depreciation and significant uncertainty regarding the company's long-term viability. A seasoned investor would likely divest to mitigate exposure to these severe risks.

Keywords

biotech-nutraceutical, beauty supplies, medical consumables, OEM/ODM, Malaysia, ASEAN, financial results, 10-Q, quarterly report, going concern, internal controls, revenue, net loss, operating cash flow