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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
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TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
| for the transition period from _______ to __________ |
Commission file number:
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(Former name, former address and former fiscal year, if changed since last report)
Securities Registered pursuant to Section 12(b) of the Act:
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| Name of each exchange on which registered |
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Securities Registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes ☐
Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
⌧ | Smaller reporting company | ||
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| Emerging Growth Company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter.
As of June 30, 2023, because the Company’s common stock did not trade in the public markets, the aggregate market value of the voting and non-voting common equity held by non-affiliates, computed based on the average bid and asked price of the common stock, was $
State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: As of April 3, 2024, the issuer had
DOCUMENTS INCORPORATED BY REFERENCE
None.
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QMIS TBS CAPITAL GROUP CORP.
FISCAL YEAR ENDED DECEMBER 31, 2022
ANNUAL REPORT ON FORM 10-K
TABLE OF CONTENTS
PART I |
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ITEM 1. | 3 | |
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ITEM 1A. | 37 | |
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ITEM 1B. | 37 | |
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ITEM 2. | 38 | |
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ITEM 3. | 38 | |
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ITEM 4. | 38 | |
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PART II |
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ITEM 5. | 38 | |
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ITEM 6. | 41 | |
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ITEM 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 41 |
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ITEM 7A. | 58 | |
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ITEM 8. | 58 | |
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ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE | 59 |
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ITEM 9A. | 59 | |
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ITEM 9B. | 60 | |
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ITEM 9C. | DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS | 60 |
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PART III |
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ITEM 10. | 61 | |
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ITEM 11. | 64 | |
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ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS | 65 |
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ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE | 65 |
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ITEM 14. | 69 | |
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PART IV |
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ITEM 15. | 70 | |
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PART I
Special Note Regarding Forward-Looking Statements
This Annual Report contains forward-looking statements, including, without limitation, in the sections captioned “Management’s Discussion and Analysis of Financial Condition and Plan of Operations,” and “Business.” Known and unknown risks, uncertainties and other factors may cause our actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements.
You can identify some of these forward-looking statements by words or phrases such as “may,” “will,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “is/are likely to,” “potential,” “continue” or other similar expressions. We have based these forward-looking statements largely on our current expectations and projections about future events that we believe may affect our financial condition, results of operations, business strategy and financial needs. These forward-looking statements include statements relating to:
●Our goals and strategies;
●Our future business development, financial conditions and results of operations;
●Our expectations regarding demand for and market acceptance of our products and services;
●Our ability to attract and retain management;
●Our ability to raise capital when needed and on acceptable terms and conditions;
●The intensity of competition;
●General economic conditions;
●Changes in regulations;
●Relevant government policies and regulations relating to our industry;
●Whether the market for healthcare services continues to grow, and, if it does, the pace at which it may grow;
●Our ability to compete against large competitors in a rapidly changing market; and
●Our ability to comply with the continued listing standards on the exchange or trading market on which our common stock is listed for trading; and
●The impact of COVID-19 on business environment and consumer preference.
These forward-looking statements involve various risks and uncertainties. Although we believe that our expectations expressed in these forward-looking statements are reasonable, our expectations may later be found to be incorrect. Our actual results could be materially different from our expectations. Important risks and factors that could cause our actual results to be materially different from our expectations are generally set forth in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Business,” and other sections in this Report. You should thoroughly read this Report and the documents that we refer to with the understanding that our actual future results may be materially different from and worse than what we expect. We qualify all of our forward-looking statements by these cautionary statements.
This Report contains certain data and information that we obtained from private publications. Statistical data in these publications also include projections based on a number of assumptions. Our industry may not grow at the rate projected by market data, or at all. Failure of this market to grow at the projected rate may have a material and adverse effect on our business and the market price of our common stock. In addition, the rapidly changing nature of the health and wellness industry results in significant uncertainties for any projections or estimates relating to the growth prospects or future condition of our market. Furthermore, if any one or more of the assumptions underlying the market data are later found to be incorrect, actual results may differ from the projections based on these assumptions. You should not place undue reliance on these forward-looking statements.
The forward-looking statements made in this Report relate only to events or information as of the date on which the statements are made in this Report. Except as required by law, we expressly disclaim any obligation or intention to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. You should read this Report and the documents that we refer to in this Report and have filed as exhibits to this Report completely and with the understanding that our actual future results may be materially different from what we expect.
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We file reports with the Securities and Exchange Commission ("SEC"). You can read and copy any materials we file with the SEC at the SEC's Public Reference Room, 100 F. Street, NE, Washington, D.C. 20549. You can obtain additional information about the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an Internet site (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including us.
We disclaim any obligation or intention to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this Annual Report on Form 10-K. Readers are urged to carefully review and consider the various disclosures made throughout the entirety of this Annual Report, which attempt to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations and prospects.
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ITEM 1. BUSINESS.
Organization and Business Overview
QMIS TBS Capital Group Corp., a Delaware corporation (“we,” “our,” “us,” “the Company,” or "QMIS USA"), was incorporated on November 21, 2019, under the name TBS Capital Management Group Corp. As a holding company with no material operations of its own, the Company conducts its operations primarily through its wholly owned subsidiaries in Hong Kong and Malaysia.
The Company is an investment holding company which is involved, through its operating subsidiaries, in independent advisory, software development, and e-wallet services. We have a diversified corporate structure through our direct and indirect subsidiaries including QMIS Securities Capital (M) Sdn. Bhd. (“QSC”), QMIS TBS Capital Group Corp. (HK) (“QTBS”), QMIS Finance Limited (“QFL”), QMIS Investment Bank Limited (“QIB”) and QMIS Richwood Blacktech Sdn. Bhd. (“QR”), QMIS Capital Venture Sdn Bhd (“QCV”), QMIS World Trade International Sdn. Bhd. (“QWT”), QMIS Biotech Group Berhad (“QBT”), and QMIS Green Energy Berhad (“QGE”). As of the date of this Annual Report, QFL, QTBS, and QSC were working together to provide consultant services, and QR was engaged in the business of software development and e-wallet services. The establishment of QIB investment banking infrastructure is currently underway, and this significant development is expected to lay the foundation for the realization of our ambitious plans, fortifying our position in the financial services landscape.
For the years ended December 31, 2023 and 2022, our total revenue amounted to approximately U.S. $2,487,531, and approximately U.S. $1,261,771, respectively. We derive our revenue mainly from our corporate consultancy services in Hong Kong. Our financial results are significantly dependent on a single customer, Hew & Associates. For the year ended December 31, 2023, this customer accounted for 96% of our total revenues, while for the same period in 2022, the customer contributed 92%.
In 2023, following the acquisition of QSC and its subsidiaries, we commenced our corporate advisory services which includes incubating fintech and high growth companies in Malaysia and Hong Kong. In January 2023, the Company entered into negotiations to acquire QSC. On February 13, 2023, the Company closed a share exchange (the “Share Exchange”) pursuant to which the shareholders of QSC sold all of their capital stock in QSC to the Company in exchange for an aggregate of 1,000,100 shares of the Company’s common stock, $0.001 par value per share. As a result, QSC and each of QSC’s subsidiaries became wholly owned subsidiaries of the Company.
The following diagram illustrates our current corporate structure and existing shareholders of each corporate entity listed herein as of the date of this Annual Report:
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Corporate History and Structure
The Company was incorporated on November 21, 2019, under the name TBS Capital Management Group Corp. As a holding company with no material operations of its own, the Company primarily conducts its operations through wholly owned subsidiaries in Hong Kong and Malaysia.
On February 13, 2023, the Company entered into a Share Exchange Agreement (the “Exchange Agreement”) with the shareholders of QSC. Pursuant to this agreement, the shareholders of QSC sold all of their capital stock in QSC to the Company in exchange for an aggregate of 1,000,100 shares of the Company’s common stock, with a par value of $0.001 per share (the “Share Exchange”). Following the closing of the Share Exchange, Dr. Yung Kong Chin owned approximately 52.72% of the Company’s outstanding common stock.
Pursuant to the Share Exchange Agreements, the Company now owns 100% of QSC, which in turn owns 100% of QTBS, 100% of QFL, 99.9% of QCV, QWT, 20% of QBT, and 20% of QMIS Waste Management Group Berhad (“QWM”).
QMIS Securities Capital (M) Sdn. Bhd. (“QSC”). initially incorporated as Multi Securities Capital (M) Sdn. Bhd in Malaysia on January 13, 2015, and later renamed to QMIS Securities Capital (M) Sdn. Bhd. on March 19, 2015, is involved in providing corporate advisory services, including nurturing FinTech and high-growth companies. Due to a Share Exchange and QMIS's expansion plans into new markets, QSC decided to restructure its legal organization. This led to QSC acquiring full ownership of QMIS TBS (HK) and QMIS Finance Limited on December 31, 2021. Consequently, QFL and QTBS became wholly owned subsidiaries of QSC. As of the date of this Annual Report, QSC serves as the operational entity for the company's activities in Malaysia. QSC's ownership percentages in various entities are as follows:
a.QMIS TBS Capital Group Corp. (“QTBS”) -QTBS is a limited liability company incorporated and domiciled in Hong Kong. QTBS primarily engages in offering corporate advisory services, which encompasses the nurturing of high-tech and rapidly expanding enterprises. As of December 31, 2022, QTBS did not have any subsidiaries or associated companies under its umbrella.
b.QMIS Finance Limited (“QFL”) -QFL is an investment holding company incorporated in Hong Kong and has the following subsidiaries: (1) QMIS Investment Bank Limited (“QIB”) (wholly owned); and (2) QMIS-Richwood Blacktech Sdn Bhd (“QR”) (majority owned).
c.QMIS Capital Venture Sdn Bhd (“QCV”). QCV was incorporated in Malaysia on January 14, 2015, under the name of Diversified Multi Capital Venture (M) Sdn. Bhd, which was subsequently changed to its present name on March 19, 2015. On November 16, 2015, QSC acquired 99.9% equity ownership interest of QCV. As of the date of this Annual Report, QCV does not possess any subsidiary or affiliated companies. Additionally, QCV has not initiated its business operations since its incorporation.
d.QMIS World Trade International Sdn. Bhd. (“QWT”). QWT was incorporated in Malaysia on October 15, 2014, under the name of Santubong Business Trading Sdn. Bhd., which was subsequently changed to its present name on August 7, 2015. On October 15, 2015, QSC acquired 69.99% equity ownership interest of QWT, and subsequently on November 27, 2015, QSC acquired anther 0.01% equity ownership interest in QWT, for a total of 70.00% ownership by QSC. As of the date of this Annual Report, QWT does not possess any subsidiary or affiliated companies. Additionally, QWT has not initiated its business operations since its incorporation.
e.QMIS Biotech Group Berhad (“QBT”). QBT was incorporated in Malaysia on May 8, 2020 under name QMIS Biotechs Group Berhad, which was subsequently changed to its current name on May 29, 2020. On May 8, 2020, QFL, QSC, and QWT acquired 60%, 20%, and 20%, respectively, equity ownership interest in QBT. As of the date of this Annual Report, QBT does not possess any subsidiary or affiliated companies. Additionally, QBT has not initiated its business operations since its incorporation.
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f.QMIS Green Energy Berhad (“QGE”). QGE was incorporated in Malaysia on May 27, 2020, under the name QMIS Waste Management Group Berhad, which was subsequently changed to QMIS Green Energy Berhad on September 13, 2022. On May 27, 2020, QFL, QSC, and QWT acquired 60%, 20%, and 20%, respectively, equity ownership interest in QGE. As of the date of this Annual Report, QGE does not possess any subsidiary or affiliated companies. Additionally, QQGE has not initiated its business operations since its incorporation.
QMIS TBS Capital Group Corporation Limited, Hong Kong (“QTBS”).
Business Overview
QTBS primarily focuses on small to middle-market companies in China, Malaysia, and Southeast Asia. QTBS boasts an extensive network of international, national, and local consultants, business advisors, and directors. In addition to offering support for Hong Kong-licensed stock brokerage and asset management services, QTBS can leverage its substantial pool of business contacts to assist clients with business incubation services. These services include raising capital, private equity, conducting due diligence, performing business valuation, facilitating mergers and acquisitions, offering accounting services, and providing market research services.
QTBS provides a wide range of corporate advisory services to its clients, including:
Management and Strategy Consulting
oStrategy & Research Strategic & Business Partnership
oBusiness & Strategic Planning
oMarket Entry & Feasibility Studies
oMarketing Strategy
oNew Product Development
oTransformation
-Operations
oOperation Consulting
oProject Management
oStrategic Sourcing & Supply Chain Management
Corporate Advisory
-Transactions
oCorporate and Capital Structuring
oMergers and Acquisitions
oDivestments and Fund Raising
-Evaluation & Corporate Advisory
oInvestment Due Diligence and Review
oPrivatization and Public-Private Partnership
oValuation Consulting
oEntrepreneur Coaching and Executive Training
QTBS operates a diverse range of businesses spanning various alternative asset classes and investment strategies on a global scale. This diversification offers QTBS significant benefits, including the ability to capitalize on synergies between these businesses and leverage the extensive intellectual resources within the company. Driven by the potential to utilize its financial and intellectual assets, resulting in strong investment returns, attractive net income margins, and substantial cash flow, QTBS has expanded its investments into complementary sectors including the establishment of a Family Business Office by QTBS in Hong Kong. This office targets a discerning clientele hailing from mainland China, Hong Kong, and Macao. It is a strategic move that capitalizes on the growing demand for specialized family office services in the region. The Family Business Office's focus on serving clients from mainland China, Hong Kong, and Macao. QTBS’s management believes that its ability to identify and effectively enter new growth areas is a crucial competitive edge, and QTBS will continue to seek new opportunities to expand its asset management franchise and advisory business.
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The expansion of the QMIS TBS group is strengthened by the synergies among its diverse businesses, creating a comprehensive ecosystem that boosts overall performance. The Family Business Office benefits from this synergy by tapping into the expertise and resources of other group entities, such as financial insights and investment expertise, leading to significant growth potential. Positioned strategically in Hong Kong, the office is well-placed to meet the increasing demand for family office services in the region, catering to high-net-worth families and businesses with tailored services.
QTBS actively nurtures relationships with major investment banking firms and other financial intermediaries. QTBS’s management believes that its strong network of relationships with these firms provides QTBS with a significant advantage in identifying transactions, securing investment opportunities, and generating exceptional returns. This advantage includes access to a substantial number of exclusive investment opportunities that are available to only a limited number of other private equity firms.
Business Incubator Model
QTBS collaborates with clients across a wide spectrum of industries on projects that yield substantial value, encompassing fundraising, deal structuring, market research, and strategy development. QTBS distinguishes itself as a boutique firm not only in size but also in the caliber of service it delivers to its clients. This translates to profound, hands-on engagement by QTBS’s senior management in each project, complemented by closely-knit teams of proficient consultants and analysts. Consequently, QTBS ensures that its clients fully benefit from the collective expertise and skills within the organization.
Services Provided During the Incubation Program
In addition to providing financial capital, QTBS offers extensive guidance and advice to its clients through its investment and incubation program. This program encompasses all the key elements and tools necessary for successfully incubating a company.
Investee companies and clients participating in QTBS’s investment and incubation program receive advice and assistance in critical areas such as strategic guidance, strengthening the management team, staff recruitment, product commercialization, sales and marketing strategy, establishing business alliances and partnerships, as well as corporate strategy. These efforts accelerate the growth of the investee companies.
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(a)Strategic Guidance
QTBS assesses the business model, competitive edge, and management team of the investee companies, as well as the current market opportunities for the products and services they offer. This assessment aids in formulating a business strategy, creating an implementation plan for the investee company, and establishing key milestones for its future development. Some of the key guidance that QTBS provides includes:
·Charting the vision and mission of the investee companies.
·Formulating product rollout plans and establishing key milestones to ensure the investee companies are on track for product development and future growth.
·Further enhance the business development plan of the investee companies based on the revised business strategy.
(b)Product Commercialization
QTBS assists investee companies in commercializing their products and services, either leveraging its own experience or consulting with business partners. This optimization aims to unlock the full potential of their products and services. QTBS provides advice on addressing business demands, exploring additional commercial application possibilities, and improving cost efficiency. Key areas where QTBS adds value for its investee companies include:
·Realigning and repositioning the products and services to address the demands of the target customers of the investee companies.
·Exploring other potential applications of the products and services of the investee companies.
·Enhancing manufacturing or production cost efficiency through strategies such as relocating to more cost-effective locations, outsourcing non-core processes, and hiring cost-effective foreign human resources.
·Reducing the expenses for the products and services commercialization through government incentives and grants (e.g., MSC Malaysia status and MGS grants to small and medium business enterprise).
(c)Sales and Marketing
Once the investee companies are prepared to launch their products and services, QTBS assists in formulating sales and marketing strategies to penetrate the target market, sustain newly acquired market share, and expand into other regional markets. In addition, QTBS generates business leads to facilitate the introduction of new products and services. QTBS's assistance in sales and marketing includes:
·Formulating sales and marketing strategies targeting potential customers identified by the investee companies.
·Advising on branding strategies to resonate with the target customer group.
·Enhancing the investee companies' visibility and positioning within their respective fields through media engagement, event participation, and pursuit of enterprise performance awards.
·Providing investee companies with business leads through QTBS’s extensive business networks and partnerships.
·Assisting in improving sales by enabling cross selling of products and services within the customer base of other QTBS investee companies.
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(d)Management Team Strengthening and Staff Recruitment
Recognizing the pivotal role of the management team in the success of an investee company, QTBS collaborates closely to identify key positions lacking within the team. QTBS supports the sourcing, selection, and recruitment of management personnel to enhance team capabilities and functionality.
Furthermore, QTBS assists investee companies in staff recruitment, turnover management, and staff welfare administration, fostering a competent workforce that can effectively contribute to the investee companies' objectives.
(e)Business Alliances and Partnership Establishments
QTBS will introduce the investee company to prospective business partners and strategic alliances in order to further expand the marketing network of the investee company, enhancing its chances of securing projects for its products and services.
In addition, QTBS will also allow the investee company to cross sell its products and services to customers of other investee companies of QFL. QTBS will also introduce potential business leads directly to the investee companies as and when opportunities arise.
(f)Corporate Strategies
QTBS will work closely with the investee company on corporate strategies. This may include accelerating the growth of the investee companies through mergers and acquisitions. QTBS will advise the investee company on merger and acquisition issues such as the valuation and structure of the acquisition, should QTBS find that the acquisition would create synergy to the investee company’s existing business.
In addition, QTBS will also assist the investee companies in raising additional funds for the business expansion from potential investors. QTBS will assist the investee company to negotiate with the potential investors and to arrive at a fair valuation of the investee company as well as structure the terms and conditions of a proposed fund-raising transaction for potential investors.
When the investee companies are ready to go for an initial public offering, QTBS will assist the investee companies in the process of selecting an Advisor for the initial public offering exercise of the investee company. QTBS will ensure that the valuation of the investee company is fairly reflected and the proceeds raised from initial public offering exercise are sufficient to meet the investee company’s future needs.
QMIS INVESTMENT BANK LIMITED (“QIB”)
On June 22, 2020, QMIS Investment Bank Limited (LL16863) ("QIB") was established under the Labuan Financial Services Authority Labuan Companies Act 1990 (Subsection 22(2)/Section 130R) and registered with the Labuan Financial Services Authority (Labuan FSA), formerly known as Labuan Offshore Financial Services Authority (LOFSA).
On March 5, 2021, QIB was granted an Investment Bank license by the Labuan Financial Services Authority (LFSA) to engage in Investment Banking Business in Labuan under Section 86 of The Labuan Financial Service and Securities Act 2010 (LFSSA), pursuant to Section 92(1) of the LFSSA. Subsequently, the name was changed to QMIS Labuan Investment Bank Limited on March 24, 2021, and later to QMIS Investment Bank Limited on July 28, 2022.
As of the date of this Registration Statement, QIB has not yet commenced business operations. The establishment of its investment banking infrastructure is currently in progress, and when completed, management anticipates that the infrastructure will a significant milestone that is expected to serve as the cornerstone for the realization of our ambitious plans, thereby strengthening our position in the financial services sector.
Looking forward, QIB is poised to embark on a strategic journey of diversification, intending to enter Equities Capital Markets, Corporate Finance and Advisory Services, Private Placement, transaction banking, private banking, and digital banking. QIB is actively exploring opportunities to leverage cutting-edge technology, adopt innovative business models in FinTech, and venture into the realm of a digital banking model. These aspirations are contingent upon securing adequate financial resources and will be implemented in a phased manner, reflecting a deliberate and strategic approach. The term 'digital banking' broadly encompasses financial services utilizing digital technologies to improve customer experiences, streamline operations, and offer innovative financial solutions. In the context of QIB,
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digital banking primarily refers to online banking services, including electronic and internet-based financial activities like account management and fund transfers. QIB extends its digital banking services to Labuan, enabling customers in this jurisdiction to manage financial activities online in compliance with local regulations.
For clarification QIB currently does not offer, nor does it have any plans to offer, cryptocurrency or crypto asset investments or services. After careful consideration of the risks and challenges associated with the crypto asset market, including the potential for fraud, manipulation, and non-compliance with relevant laws and regulations, the company has decided to withdraw from this business segment. QIB's management believes that offering crypto asset investments or services poses risks that are not in the best interests of clients or the company. Due to the highly volatile nature of the crypto asset market and the potential for significant losses, QIB will not provide any investment advice, recommendations, or services related to cryptocurrencies or crypto assets.
Investment Bank Infrastructure
Investment bank infrastructure encompasses the foundational technology and systems supporting QIB's operations. This includes the hardware, software, and network infrastructure enabling the bank to deliver its financial services efficiently and securely. Key components of QIB's investment bank infrastructure shall include:
1. Investment Analysis Tools or Software:
Programs facilitating comprehensive analysis and evaluation of extensive financial data, empowering investors and financial analysts to make well-informed investment decisions. These tools offer features for data analysis and visualization, trend and pattern charting, various analytical functions, and predictive modeling for future market movements.
2. Fund Management Software:
Utilized to oversee the operations of investment funds, managing fund performance, portfolio operations, risk assessments through complex calculations, and delivering reports to investors.
3. SWIFT Code System:
The secure transmission of financial messages and instructions, essential for international transactions, facilitated through the use of SWIFT codes to identify banks and financial institutions.
4. Disaster Recovery Systems:
Comprehensive systems ensuring operational continuity in the face of disasters or system failures. This encompasses backup systems, redundant infrastructure, and business continuity plans, including secure off-site data storage in cloud storage or data centers.
5. Security Systems / Network Infrastructure:
Robust security systems protecting against cyber threats and safeguarding the confidentiality and integrity of client data. This includes firewalls, intrusion detection systems, and encryption technologies, all reliant on high-speed network infrastructure connecting offices and data centers through routers, switches, and fiber optic cables.
6. Product Launching Preparation:
Utilization of product launching roadshows for introducing new financial products, such as private equity funds. This involves preparing product information memorandums ('IM'), submitting product IM to regulatory authorities, and managing product distribution to clients.
QIB has implemented a comprehensive internal policy and manual to manage cyber risks. This internal framework provides additional guidelines and procedures specific to QIB's operations, ensuring a tailored approach to cybersecurity. The internal policy aligns with the overarching principles outlined in this document and reflects QIB's commitment to maintaining a robust cybersecurity posture.
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This cybersecurity risk management policy outlines the mandatory requirements for QIB, including Marketing Offices, to manage cyber risks effectively. It covers the purpose, scope, and reporting obligations, emphasizing the protection of QIB's valuable information and systems. The policy sets risk limits, outlines prevention, detection, and recovery strategies, and details emergency procedures for cyber threats. It includes requirements for outsourcing, communication procedures, compliance reporting, and an annual attestation.
Responsibilities are defined for the Board, Board Audit Committee, Responsible Person, IT, Business Units, Individual Users, Risk Management/Compliance, Business Continuity Management, and Internal Audit. This multi-layered approach ensures that every stakeholder within QIB is actively involved in and accountable for maintaining the integrity and security of the institution's information and systems.
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Investment Banking - Products and Services
Capital Markets
QIB’s Capital Markets segment will focus on Equities, Fixed Income (including futures, foreign exchange and commodities activities) and Investment Banking. QIB primarily will serve institutional investors, corporations and government entities.
Equities
Equities Research, Sales and Trading
QIB plans to offer its clients full-service equities research, sales, and trading capabilities across global securities markets. QIB plans to earn commissions or spread revenue by executing, settling, and clearing transactions for clients in various equity and equity-related products, including common stock, American depository receipts, global depository receipts, exchange-traded funds, exchange-traded and over-the-counter ("OTC") equity, convertible and other equity-linked products, and closed-end funds. QIB will be able to act as an agent or principal (including as a market-maker) when executing client transactions through both traditional "high-touch" and electronic "low-touch" channels. To facilitate client transactions, QIB may act as a principal to provide liquidity, which involves committing its capital and maintaining dealer inventory.
QIB's equity research, sales, and trading efforts will be organized across three geographical regions: the Americas; Asia Pacific; and Southeast Asia. The main product lines within these regions include cash equities, electronic trading, derivatives, and convertibles. QIB primarily plans to serve institutional market participants such as mutual funds, hedge funds, investment advisors, pension and profit-sharing plans, and insurance companies. Through its global research team and sales force, QIB plans to maintain relationships with clients; distribute investment research and strategy trading ideas, and market information; and analyze across a wide range of industries. QIB's equity research is anticipated to cover over 1,800 companies worldwide, and it plans to collaborate with leading local firms in the Asia Pacific, covering up to approximately 600 additional companies through alliances.
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Equity Finance
QIB's Equity Finance business will offer a range of services, including financing, securities lending, and other prime brokerage services. In the U.S., QIB shall provide prime brokerage services to hedge funds, money managers, and registered investment advisors. These services will encompass execution, financing, clearing, reporting, and administrative support. QIB plans to generate revenue through an interest spread, which will be the difference between the cost of funds it pays and the income it receives from its clients.
Additionally, QIB will operate a matched book in equity and corporate bond securities. In this operation, QIB plans to borrow and lend securities against cash or liquid collateral, earning a net interest spread. Customer assets, both securities and funds, held by QIB will adhere to regulatory customer protection rules and will be segregated accordingly.
QIB also plans to offer select prime brokerage clients the option to custody their assets at an unaffiliated U.S. broker-dealer, which likely will be a subsidiary of a bank holding company. Under this arrangement, QIB shall provide its clients with all customary prime brokerage services directly.
Wealth Management
QIB plans to offer customized wealth management services specifically designed to meet the unique needs of high-net-worth individuals, their families, businesses, private equity and venture funds, as well as small institutions. QIB's dedicated advisors will provide clients with access to all of the institution's institutional execution capabilities and a wide range of additional financial services.
Management anticipates that QIB's open architecture platform will allow clients to access products and services not only from QIB's own offerings but also from a diverse array of other major financial services institutions. This approach will offer clients a broad spectrum of choices to effectively manage and grow their wealth.
Fixed Income Sales and Trading
QIB plans to offer its clients sales and trading services for a wide range of fixed income products, including investment-grade and high-yield corporate bonds, U.S. and European government and agency securities, municipal bonds, mortgage- and asset-backed securities, whole loans, leveraged loans, distressed securities, emerging markets debt, and derivative products.
Additionally, through the use of repurchase agreements, QIB plans to act as an intermediary between borrowers and lenders of short-term funds, facilitating funding for various inventory positions. QIB will actively trade and make markets globally in both cleared and un-cleared swaps and forwards, referencing various factors such as interest rates, investment-grade and non-investment-grade corporate credits, credit indexes, and asset-backed security indexes.
Furthermore, management anticipates that QIB's strategists and economists will provide ongoing commentary and analysis of the global fixed income markets. QIB's fixed income research professionals, including research and desk analysts, will offer investment ideas and analysis across a diverse range of fixed income products, enhancing the value it provides to its clients.
Futures, Foreign Exchange and Commodities
QIB shall provide its clients 24-hour global coverage, with direct access to major commodity and financial futures exchanges including the CME, CBOT, NYMEX, ICE, NYSE Euronext, LME and Eurex, and provides 24-hour global coverage, execution, clearing and market making in futures, options and derivatives on industrial metals including aluminum, copper, nickel, zinc, tin and lead. Products provided to clients include LME and CME futures and over-the-counter metals swaps and options.
QIB plans to operate a full-service trading desk in all precious metals, cash, futures and exchange-for-physicals markets, and to be a market maker providing execution and clearing services as well as market analysis. QIB also plans to provide prime brokerage services and to be a market-maker in foreign exchange spot, forward, swap and option contracts across major currencies and emerging markets globally and conduct these activities through QIB’s futures commission merchant and its swap dealer each registered with the CFTC.
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Investment Banking
QIB shall provide its clients around the world with a full range of equity capital markets, debt capital markets and financial advisory services. QIB’s services will be enhanced by its industry sector expertise, its global distribution capabilities, and its senior level commitment to its clients.
Management anticipates that QIB’s sector coverage groups will include Consumer & Retailing; Financial Institutions; Skin Care and Cosmetic Industrials; Healthcare; Bio-Technology; Solar Energy; Internet of Think; Applied Data Science; Waste Management; Green-Tech Properties; Media & Telecommunications; Financial Sponsors and State & Local Governments.
QIB’s product coverage groups will include equity capital markets; debt capital markets; financial advisory, which includes both mergers and acquisitions and restructuring and recapitalization and U.S. corporate brokering. QIB’s geographic coverage groups will include coverage teams based in major cities in the United States, the United Kingdom, Sweden, China, Malaysia, Singapore and Cambodia.
Equity Capital Markets
QIB shall provide a broad range of equity financing capabilities to companies and financial sponsors. These capabilities include private equity placements, initial public offerings, follow-on offerings, block trades and equity-linked convertible securities.
Debt Capital Markets
QIB shall provide a wide range of debt financing capabilities for companies, financial sponsors and government entities. QIB plans to focus on structuring, underwriting and distributing public and private debt, including investment grade and non-investment grade corporate debt, leveraged loans, mortgage and other asset-backed securities, and liability management solutions.
Advisory Services
QIB shall provide mergers and acquisition and restructuring and recapitalization services to companies, financial sponsors and government entities. In the mergers and acquisition area, QIB plans to advise sellers and buyers on corporate sales and divestitures, acquisitions, mergers, tender offers, spinoffs, joint ventures, strategic alliances and takeover and proxy fight defense. QIB also plans to provide a broad range of acquisition financing capabilities to assist our clients. In the restructuring and recapitalization area, QIB shall provide to companies, bondholders and lenders a full range of restructuring advisory capabilities as well as expertise in the structuring, valuation and placement of securities issued in recapitalizations.
Asset Management
QIB shall provide investment management services to pension funds, insurance companies and other institutional investors. QIB’s primary asset management programs will be strategic investment and focus on high growth sectors. The anticipated expertise of Asset Management team is widely recognized, with proven track records, with a focus on identifying market trends and fulfilling unique investor needs.
QIB’s strategic investment programs, including our Artificial Intelligence Trading Software, will be provided through the FinTech Investments Division of Investment Advisers, which is registered as an investment adviser with the U.S. Securities and Exchange Commission (“SEC”). These programs are systematic, multi-strategy, cross-border and multi-asset class programs with the objective of generating a steady stream of absolute returns irrespective of the direction of major market indices or phase of the economic cycle. These strategies are provided through both long-short equity private funds and separately managed accounts.
QMIS-RICHWOOD BLACKTECH SDN. BHD. (“QR”)
QMIS-Richwood Blacktech Sdn. Bhd. ("QR") is a recently established enterprise specializing in the Electronic Payment and Transaction Enabling business. The company's core offerings include a centralized platform facilitating various payment transactions for service providers, along with software development and maintenance services.
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QR has successfully developed and currently owns the e-wallet app known commercially as QMIS Richwood Pay (QRPay). This application is accessible on:
-Google Play Store for Android phones running Android 7.0 and above.
-Apple App Store for iPhones running iOS 10.0 and above.
-Huawei AppGallery for Huawei phones running Android 7.0 and above.
Functioning as a Payment System Enabler, QR is committed to furnishing the requisite payment infrastructure and processor for Card Payment Scheme owners and QRPay e-wallet users. This involves the implementation of Q-R Electronic Payment Solutions, encompassing International Card Payment Scheme options like ATM/Debit cards, Credit cards, and Prepaid cards, thereby making them viable at merchant establishments. This initiative aims to facilitate a comprehensive shift towards cashless transactions, spanning various consumer retail sectors. QR's current revenue streams predominantly arise from software development, system maintenance services, and e-wallet services.
QR harbors ambitious plans to develop banking, acquiring, issuing, voucher, remittance, and e-wallet management systems tailored for iPhone and Android integration into the existing QRPay app. QR envisions an all-modern, flat design optimized for smartphones and smart QR codes. The primary goal is to create comprehensive payment products and services, complemented by a broad spectrum of international payment capabilities and operation certifications to tap into emerging opportunities in the FinTech space. Building upon QR's technology partner's extensive experience in the Payment System industry, QR plans to enhance its Payment System Infrastructure, introduce online delivery services, facilitate online movie purchases, and explore insurance offerings.
QR intends to develop a proprietary Super App, integrating services such as credit offerings and insurance collaborations. It is essential to highlight that the QRPay e-wallet Super App project is currently in its early developmental stage, and QR has not yet engaged an app developer or external marketing agency for its promotion. The broader vision encompasses embracing cutting-edge technology, adopting new business models in FinTech, and exploring a Virtual Banker Advisor model. QR is also in the process of finalizing a technology collaboration partnership with Tencent Cloud International Pte Ltd. to establish an innovative Financial Cloud System. For more detailed information, please refer to the specific subsections within this section.
Technology Platform
On August 13, 2021, QR entered into a partnership with ManagePay Services Sdn. Bhd. (“MPay”) for the issuance of MPay, QR Pay e-wallet, Mastercard Prepaid Card, Smartlink Pay eWallet whereby MPay acted as the technology provider for QR’s payment solutions.
ManagePay Systems Bhd (MPay) is an investment holding company. The group’s operating segment is classified into two: FinTech Services and Non-FinTech services. The FinTech services segment is involved in POS terminal services, third party acquiring, payment services, e-money and Mastercard card issuing, alternative financing business outsourcing services, and loyalty management services. The Non-FinTech services segment is involved in the software and digital security, information communications, e-commerce, and technology services. Management anticipates that payment services will be the major contributor to the Company’s total turnover and revenue.
MPay is currently listed on the ACE Market of Bursa Malaysia with market capitalization in excess of RM120 million. Many people are familiar with MPay as the leading payment service provider in some of the large retail chains in Malaysia like KFC, Pizza Hut, Giant, Guardian, Mercato, Cold Storage, Sunway Group, and Hero Market.
QRPay e-wallet Super App
QRPay e-wallet is powered by MPay and is licensed by Malaysia Central Bank (BNM). QRPay e-wallet is an online e-wallet account that a potential user can open online via QRPay e-wallet Super App, anytime and anywhere without going into a physical office, giving you immediate usage of the account. Once a user has loaded funds into the account, QRPay e-wallet immediately allows the user to perform in-store purchases and, make P2P fund transfer, and make investments, among other financial transactions. QR Pay provides services such as e-wallet reloads, bill payments, funds transfer, perform payment, shopping e-commerce, viewing property, receive reward benefit within a single app.
The Pay Bills feature is ready for Domestic Utility Bill Payments, Telco Prepaid/ Postpaid, Insurance & Road Tax Renewal, Council Bill, International Utility Bill Payments, International Reloads, Content Subscriptions, Gaming Points such as Gerena, TNB, Unifi, Astro, Maxis, Digi (Prepaid & Postpaid), PTPTN, etc.
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O2O Property is a platform that will let you find your dream home with ease. We have a one stop solution for potential home buyers: from finding the house of your dreams, to buying the house, owning it, furnishing it, and moving in without any hassle or worry.
QR Pay has its own E-commerce platform known as QR Mart - QMIS Richwood Mart. We also have collaboration with a few other E-commerce platform such as Panpaymart and Ezymart. The uniqueness of these E-commerce platforms is our referral programs where users can get bonus by referring their friends to purchase on the platform.
QR Pay also recently launched the referral program which provides an introducer-affiliate bonus, available for inviting new users to register and spend with QR Pay e-wallet and Mastercard. This program is different from other competitor e-wallet companies, because other e-wallet companies typically give away one-time introducer bonuses for every new user when inviting. However, for the QR Pay referral program, the affiliate bonuses are given for every introduced user spending transaction. In other words, a QR e-wallet customer who introduces affiliates who spend using the QR e-wallet or Mastercard will be eligible to receive ongoing affiliate bonuses, rather than just for the initial introduction.
QMIS Richwood Blacktech Mastercard Prepaid Card
In addition to opening a QRPay Account, cardholders can apply to receive a physical QMIS Richwood Blacktech Mastercard Prepaid Card. This Mastercard can be linked to the QR Pay e-wallet, allowing the user to instantly transfer money from the QR Pay e-wallet to Mastercard. Afterwards, users can make payment for goods and services at Mastercard merchants store domestically, worldwide and online purchase. Cardholders can withdraw cash at worldwide Bank ATMs with their Mastercard and a secure PIN. Users are also able to check the card’s balance via QRPay at any time and from any location.
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Revenue Model
QR Management anticipates that revenue streams will be derived from core business areas. QR Pay e-wallet will provide a variety of services in a single mobile interface. The ultimate aims will be to provide users with access to multiple services in a single location. The services include payment and financial transactions processing (e-wallet), e-Commerce and communication online platform. There are two main sources of revenue of the e-wallet, which are as follows:
1. E-Commerce; and
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2. E-wallet
REVENUE | COST OF SERVICES |
·Fixed Rate Commission (From Seller) ·Customer Loyalty Program (Coins) ·Cost-Per-Click Advertising Services (Bid for Keywords) ·Commission for Trans-shipments ·Logistics ·Gross Merchandize Value (GMV) ·Monthly Active Users (MAUs) ·No. of Transactions per Active Buyer | ·Server Costs ·Hosting Costs ·Sales & Marketing Expenses (Customer Acquisition & Retention Expenses) ·Staff Compensation & Welfare Costs ·Other Fixed Costs |
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Future Business Prospects
Super Apps
Super Apps are basically apps with aggregated services or functions. As opposed to single-purpose apps like Skype, Super Apps will offer a unified and centralized experience. Super Apps are the current trend, as consumers are looking for convenience and efficiency in managing their day-to-day activities and entertainment. Companies which develop Super Apps are also on the rise, especially with Grab being listed via SPAC (Special Purpose Acquisition Company) on Nasdaq recently.
Super Apps in general are a digital ecosystem that can serve to connect all merchants (Ecosystems) registered on the Super App (Mobile Platform) to their Users (Value Partners). Super Apps integrate multiple services and functions (including in-house services and services provided by third party merchants) within a mobile app. The following value chain illustrates the main stakeholders (i.e. super app owner, merchants and users) involved in the digital ecosystem of super app and the relationships between all parties.
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Digital Ecosystem of Super App
The growing preference of consumers for Super Apps is mainly driven by convenience and simplicity. With a one-time login to a Super App, users are able to fulfil many of their daily life needs through the functions integrated in a Super App. Such integration of functions delivers the users convenience, ease of use and a seamless experience without the hassle of resorting to different apps for multiple activities. Examples of some functions that can be integrated within a Super App area as follows:
Overview of Services / Functions under a Super App
In addition to the above functions that can be integrated within a Super App, QR Management anticipates that QR Pay Super Apps may also offer services related to financial services and other related services. Further, QR Pay Super Apps will be able to enable integrations with third party mobile apps to expand the range of services available to users. Examples of third-party mobile apps that can be integrated into a Super App include third-party e-commerce platforms, third party social media sites and third-party reward platforms. The diagram below provides an overview of services/functions that QR is working to or plans to integrate with Super Apps.
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The figure above illustrates a range of services and functions that QR management is working or plans to work to integrate in QRPay.
Financial and other Related Services
E-wallet
An e-wallet includes online payment and transfer, credit services (i.e., micro loan) and insurance products. The usage of an e-wallet saves users the hassle and avoids security issues arising from cash withdrawal and cash handling. Payment through an e-wallet is a key ‘enabler’ to the success of a Super App as it facilitates payments for products and services sold through the Super App. Therefore, e-wallets have become an indispensable element in many Super Apps. It is also a convenient method of performing transactions and was especially widely used during the COVID-19 pandemic due to its contactless nature which avoided the risk of virus infection from handling cash.
Credit Services
QR Management believes that Super Apps may also offer credit services by partnering with financial institutions to provide credit facilities, especially support ‘BUY NOW PAY LATER’ payment schemes offered by e-commerce merchants for high-priced items such as furniture and electronic devices. ‘BUY NOW PAY LATER’ is a payment scheme offered to customers which can spread out their online shopping bill into several monthly instalments.
Insurance
Further, QR Management believes that Super App owners also may collaborate with insurance companies to offer a range of insurance plans such as travel and car insurance to users. The users will have easier access to the insurance plans as they will be able to browse and complete payment for the insurance plans directly through the App without the need of going through an agent.
Along with the proliferation of mobile phone usage and increasing convenience of performing tasks using mobile phones (particularly using mobile apps), there have been increasing mobile apps introduced in the market with interesting and sophisticated functions to cater to the needs of consumers from all aspects of daily life, including transportation, food services, entertainment and financial services.
Over the last decade, several Super Apps have been introduced into the Asia-Pacific market, including WeChat, Grab, Gojek, Alipay, Kakao and Paytm, which are among the popular Super Apps used by consumers in the Asia Pacific region.
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Examples of Super Apps in Asia
The QR Super App project is currently in its early development stage. QR is in the midst of engaging an app developer and marketing agency to develop a marketing plan for a proprietary Super App.
Roadmap
QR Management anticipates the development and deployment of the proprietary Super App will include several key steps and goals, including the following:
1. To be the integrated e-payment enabler of choice for consumer sector in the South East Asia Region.
2. Position as an integrated e-payment enabler for Malaysian Retail Outlet, Transit and Parking.
·Pilot launch at the key targeted sites
· Deliver compelling value to Service providers and relevant authorities
3. Expansion of the services to all Service Providers for Southeast Asian and beyond.
4. Strengthening the position as integrated e-payment enabler of ‘CHOICE’ for local and regional market.
·Open the services to other local and international payment scheme i.e., TouchnGo, UnionPay, Paypal, Grabpay, etc.
·Replicate and enable the services at other countries.
5. Promote cross-sector usage through bundling and targeted promotions with International Card Brands and Banks.
The Company’s Management believes that disruption is hitting businesses of all kinds, and the investment banking and financial services industry is no exception. With the Covid-19 crisis having resulted in the deepest recession since the Second World War, financial services providers will need to adapt to the data, digital and strategy needs of clients if they are to survive amid the chaos.
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Financial services in 2020 was defined by a sudden acceleration in digitization and digital engagement-pushed by the impacts of the COVID-19 pandemic. Mobile banking transactions spiked, personal trading apps saw record transaction volumes, and call center personnel kept customer support going by working from their living rooms.
While the financial services industry was able to weather the digital tsunami and continue its operations, it has become clear that the winds of change are not transient. Financial institutions are now thinking strategically about their technical setup and questioning whether the tools that they have previously relied on are the right ones to use going forward.
Here are a few major themes that the Company’s Management has identified as being likely to dominate financial industry conversations and technology roadmaps in 2022 and beyond:
·Modernizing dated core systems will be imperative;
·Banking goes beyond cash with digital engagement;
·Institutional and wholesale trading moves off trading floors;
·Work-from-home must work across financial services;
·Embedded innovation is the new status quo;
·Financial products and services are tailored to the specific needs of the customers; and
·Online financial products have become increasingly popular among global consumers.
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To emerge from the COVID-19 crisis, the Company’s Management believes that the business should focus on the fundamentals of agility, technology, innovation, resilient and visionary leadership. On the flip side, we will see the emergence of new business opportunities. The world of connected devices - internet of things - cloud computing - AI, including machine learning, will provide the stepping stones for business and their own survival.
In line with the business objectives of QMIS TBS Group, the Company will continue to conduct strategic reviews for its existing core business and search for potential new investments. The proposed activities are detailed in the following sections:
(a)Creating an Integrated and Sustainable Financial Ecosystem
Technology’s Innovation
Technology innovation will make the greatest impact on business and the initial survival of business will depend on how rapidly business embrace technology to drive their own operations and also link up with others to build upon possible synergies. Cohesive Collaboration will be a key.
Emerging Business Model – FinTech Aggregating Financial Services
The Company would turn itself into a FinTech company distributor of financial services products. That is, the Company would not dependent on internal resources to create financial products and services but instead source them from an ecosystem of partners. In this way, the Company does not have to incur heavy expenditure and long period of time in products development or compliance and can also provide customers with access to a broader range of products than if the bank tried to produce everything itself.
Sustainable FinTech Business Models for the Digital Age
(i) Virtual Banker Advisor
In order to make this model successful, the bank would need to become a virtual advisor, using customers’ data to help them make better financial and operational decisions - effectively providing a customer with the right advice and/or other service at the right time and across the right channel to enable the customer to make more informed decisions.
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The Company plans to monetize this service, inter alia, by taking a small fee on all of the products and services the customer uses.
(ii) Economies of Scale Intelligence Solution
Operating such a model, management believes that the Company can generate massive economies of scale by potentially servicing millions of customers from the same software platform. Also, as a platform, there would be the potential for the Company to generate network effects that could lead to increasing returns to scale.
First, there are the two-sided network effects whereby larger customer numbers lead to a larger number of ecosystem partners which then, by offering the widest choice, attracts more customers and so. However, there are also the data network effects, whereby the Company learns more about how best to serve customers the more data it captures meaning it gives better and better services, attracting more data and so on.
If the group also opens up its platform for customer interactions with each other - with peers giving advice to each other, for example - then there are also interaction network effects enjoyed by the social network platforms.
(b)Expansion of QMIS TBS’s Core Investment and Business Activities
In light of the competitive and dynamic environment, the Company intends to intensify its involvement in the ICT, App developer and Biotechnology and Life sciences areas by exploiting new technologies and to optimize risk-reward profiles of its investments.
(c)Geographical Expansion
The Company intends to expand its geographical coverage and increase its investment and incubation activities across the Asia Pacific region. In the medium term, the Company plans to pursue the markets in China, Singapore and Taiwan. The Company plans to form strategic alliances with foreign technology incubators and venture capitalists to establish its market presence in these countries. Management anticipates that the modes of investments will include, inter-alia, direct investments in technology companies, acquisition of established technology incubators and formation of co-managed fund management companies. In the long term, the Company intends to pursue its business beyond the Asia Pacific region.
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(d)Continuous Development of Expertise
The Company has identified the following strategies to develop the expertise of its investment personnel:
i. Increase the scope of financial expertise via direct employment and/or outsourced technical services in line with the expansion of the investment and consultancy business;
ii. Expand the staff training and development programs to enhance its professional personnel’s technical skills, knowledge and capabilities; and
iii. Increase the exposure and create “shared experience” education programs via strategic alliance with other local higher learning institutions and other technology incubators either through direct investment in investee companies or through co-managed fund basis.
(e)Business Alliances and Partnership Establishments
The Company plans to introduce the investee company to prospective business partners and strategic alliances in order to further expand the marketing network of the investee company and therefore enhance the investee company’s chances of securing projects for its product and services.
While 2020 was bleak from many perspectives, one of the rare positives is that it helped prove that agility and innovation, done right, is a game changer. The speed at which the financial services industry transformed to help their customers through the pandemic is the speed at which they want to continue operating. And that requires a culture of innovation that is embedded into the corporate culture of an institution.
From financial services institutions to vendors, regulators, and supervisors, the Company’s management believes that 2024 and beyond are likely to be years of deliberate cultural transformation to find new ways of working together to create safer, cheaper, more inclusive, and more equitable financial markets.
Financial Cloud
As of the date of this Annual Report, QR was in the process of finalizing the partnership with Tencent Holdings Ltd. (“Tencent”), a top-ranking Chinese conglomerate. Tencent, with a historic market cap surpassing HKD3 trillion, and QR will work in establishing an innovative Financial Cloud System, through which QR plans to further expand its micro lending operations. Management anticipates that QR’s collaboration with Tencent Cloud will extend beyond a conventional partnership, and that it will be a strategic alignment that underscores QR’s commitment to empowering users. This partnership will form the bedrock of a finance and investment platform that will not only enhance our
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clients’ financial literacy but also will provide the necessary resources and tools for individuals and businesses to make informed decisions. Management anticipates that QR and Tencent will enter into a white-labelling agreement, pursuant to which Tencent will assume the pivotal role of a technology provider, while QR will spearhead the operational facets of the system as the business operator, thus leveraging Tencent's Infrastructure as a Service (IAAS) Platform: Tencent Cloud. For clarification, the Company has decided not to engage, either directly or through its subsidiaries, in cryptocurrency or any related activities.
Management believes that the financial sector is a linchpin of economic activity, and in the face of technological advancements, it is imperative to be prepared for the future. Tencent Cloud, with its sterling track record, has emerged as the preeminent partner for our foray into the Malaysian financial industry. QR Management believes that the robustness and versatility of Tencent Cloud's offerings position us uniquely to address the evolving needs of the financial landscape. Management believes that the Financial Cloud Ecosystem, operating on a SaaS model, shall ensure secure, efficient, and interconnected financial solutions.
QR faces several risks and challenges in its collaboration with Tencent, primarily centered around network congestion, protocol changes, operational impact, security concerns, regulatory changes, and scalability issues. The high transaction volumes on Tencent's platform pose a risk of network congestion, potentially causing delays and increased transaction fees, necessitating proactive measures to optimize network capacity. Protocol changes implemented by Tencent for security or functionality improvements may create compatibility issues for QR's existing applications and algorithms, requiring a robust communication channel and timely adaptation. Unforeseen issues within Tencent's platform, like outages or glitches, could disrupt QR's operations, emphasizing the need for contingency plans and redundancies. Security concerns arise from shared responsibility, where vulnerabilities in Tencent's platform may impact the integrity of QR's financial transactions, demanding collaborative security measures.
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A Comprehensive Financial Cloud Ecosystem:
Management anticipates that QR and Tencent will jointly envisage an encompassing Financial Cloud System, integrating an array of sophisticated financial services and state-of-the-art technology:
1. Big Data Analytics: Through the consolidation of financial data, the collaboration between QR and Tencent Cloud will seek to empower Big Data Analysts. This initiative will be structured to catalyze progress in the financial industry, offering crucial insights that can enhance economies and empower citizens to make well-informed decisions when navigating intricate financial challenges.
2. Micro-loan Platform: A crucial facet of economic empowerment, the Financial Cloud will introduce a micro-loan platform, providing individuals and small businesses with access to credit to seize opportunities and navigate financial challenges.
3. Cloud-Based Financial Services: Expanding beyond core components, QR management anticipates that the Financial Cloud ecosystem will encompasses an array of cloud-based financial services, including insurance, unit trust funds, and trustee services, simplifying and enhancing clients' financial experiences with added convenience and security..
4. Finance and Investment Education Platform: Aligned with QR's mission to empower users, QR management anticipates that the partnership with Tencent Cloud will establishes a finance and investment platform, providing education, resources, and tools to enhance financial literacy, enabling users to make informed decisions. This commitment underscores the transformative initiative's cornerstone, positioning financial literacy as pivotal. QR and Tencent plan to collectively shape a future where knowledge and access to innovative financial solutions empower individuals and businesses, fostering global economic growth and personal prosperity..
To ensure a seamless transition and optimal resource allocation, QR management anticipates that the implementation of services within the Financial Cloud Ecosystem will occur in stages. This strategic approach reflects QR's commitment to delivering world-class financial solutions while upholding operational excellence.
The Significance of Big Data:
It is anticipated that the power of Big Data will be central to the Financial Cloud Ecosystem. With vast amounts of financial data flowing through the system, QR management believes that it is possible to harness this data to gain insights, improve financial decision-making, and enhance the user experience. Big Data analytics drive personalized recommendations, risk assessments, and predictive modeling, enabling QR to better serve the client’s financial needs.
A Global Impact:
QR management believes that the Financial Cloud Ecosystem is not limited by borders, but rather that it is a global solution. The Financial Cloud Ecosystem has the potential to transcend geographical boundaries, contributing to financial inclusion and empowerment worldwide. From enabling entrepreneurs in emerging markets to providing secure financial services to remote areas, QR management anticipates that the impact will reaches far and wide.
Security and Compliance at the Core:
The backbone of Financial Cloud Ecosystem will be the robust security and adherence to regulatory standards. User data and transactions are safeguarded with the utmost care, ensuring trust and reliability.
Reaching the Software as a Service (SaaS) Platform:
QR management anticipates that Tencent, as QR’s technology provider, will operate on a robust SaaS (Software as a Service) model. In this collaborative partnership, QR management anticipates that Tencent will develop and maintain cloud application software within the SaaS framework, ensuring seamless access to innovative financial solutions for QR’s our users. Additionally, under this model, QR management anticipates that Tencent will offer automatic software updates, making the latest financial tools readily available to our customers via the internet. QR management believes that the partnership between QR and Tencent Group will be nothing short of revolutionary in the financial industry. It reflects a shared belief that the fusion of technology, innovation, and a user-centric approach can redefine the way financial services are delivered.
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QR management anticipates that the Financial Cloud Ecosystem will go beyond the present, and that its essence lies in influencing the future of the financial industry. QR management believes that the Financial Cloud Ecosystem will revolve around empowering individuals and businesses with knowledge and access to cutting-edge financial solutions, ultimately fostering global economic growth and personal prosperity.
Competition
The Major Industry Competitors in Southeast Asia
In Southeast Asia, the e-payment industry is dominated by a few major players. These include:
Grab: A ride-hailing and e-payment platform that offers a range of services including food delivery, mobile payments and more.
Gojek: A multi-service platform that offers ride-hailing, food delivery, and mobile payments.
Razer: A Singapore-based gaming and financial technology company that offers e-payment solutions and a digital wallet.
Sea Limited: A Singapore-based company that operates the e-commerce platform Shopee and digital wallet AirPay.
Singtel: A Singapore-based telecommunications company that offers mobile payments and digital financial services through its subsidiary, Dash.
These companies have established themselves as key players in the Southeast Asian e-payment market, offering a range of services that cater to the region's growing demand for mobile and online payment solutions. Other notable players include Liquid Pay, Akulaku, and Touch 'n Go.
Employees
As of the date of this Annual Report, we employed a total of 16 full-time and no part-time employees. In general, we maintain a good working relationship with our employees and we have not experienced any material labor disputes. We value our employees and insurance agents the most and are constantly encouraging innovation, efficiency, and teamwork at the Company.
Description Of Properties
The Company’s principal executive offices are located at 55-6, The Boulevard Office, Lingkaran Syed Putra, Mid Valley City, 59200, Kuala Lumpur, Malaysia. We signed a total of four written leases, which included one lease for the Company’s headquarters and three leases for its subsidiaries. On April 22, 2021, the Company and the JKC Resources Sdn. Bhd. signed the lease contract for its headquarter office spaces of consist of 2,000 square feet of office space. The initial term of the lease for our headquarters was from July 1, 2018 to June 30, 2023, with an extension to
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June 30, 2024. The address of each of the subsidiaries, except for the Hong Kong subsidiaries, is C/O the Company at the address listed above.
Legal Proceedings
From time to time, we are involved in litigation or other legal proceedings incidental to our business. We are not currently a party to any litigation the outcome of which, if determined adversely to us, would individually or in the aggregate be reasonably expected to have a material adverse effect on our business, operating results, cash flows or financial condition.
Regulations Related to our Business Operations Hong Kong
Regulation of limited liability companies in Hong Kong
All private company limited by shares have to be duly incorporated and registered under the Companies Ordinance (Chapter 622 of the Laws of Hong Kong). After successful incorporation, the company must comply with the various provisions in the Companies Ordinance. These obligations include the timely disclosure and reporting of specified information about the company, its officers and shareholders, etc. and any changes in such information to the Registrar of Companies so that members of the public can have ready access to the latest information of the company kept by the Registrar of Companies.
Regulation of the securities and futures market in Hong Kong
The Securities and Futures Ordinance (the “SFO”) (Chapter 571 of the Laws of Hong Kong) is the primary legislation regulating the securities and futures industry in Hong Kong, including the regulation of securities, futures, leveraged foreign exchange and derivative markets as well as credit ratings, intermediaries and their conduct of regulated activities and the offering of investments to the public in Hong Kong.
The Securities and Futures Commission (the “SFC”) is an independent statutory body set up in May 1989, the power of which is derived from the SFO and other subsidiary rules and regulations. The SFC administers the SFO and is responsible for regulating the securities and futures market in Hong Kong. The SFC strives to strengthen and safeguard the integrity and soundness of Hong Kong’s securities and futures markets for the benefit of investors and the industry.
The regulatory objectives of the SFC as set out in the SFO are:
·to maintain and promote the fairness, efficiency, competitiveness, transparency and orderliness of the securities and futures industry;
·to promote understanding by the public of financial services including the operation and functioning of the securities and futures industry;
·to provide protection for members of the public investing in or holding financial products;
·to minimize crime and misconduct in the securities and futures industry;
·to reduce systemic risks in the securities and futures industry; and
·to assist the Financial Secretary of Hong Kong in maintaining the financial stability of Hong Kong by taking appropriate steps in relation to the securities and futures industry.
Parties and products regulated by the SFC include, but are not limited to, licensed corporations and individuals carrying on Type 1 to Type 10 regulated activities under the SFO, investment products offered to the public, listed companies, the Stock Exchange of Hong Kong Limited (the “Stock Exchange”), approved share registrars and all participants in trading activities.
Securities and Futures Ordinance
The SFC operates a system of authorizing corporations and individuals (through licenses) to act as financial intermediaries.
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Under the SFO, a person who:
(a)carries on a business in a regulated activity; or
(b)holds itself out as carrying on a business in a regulated activity,
must be licensed under the relevant provisions of the SFO to carry on that regulated activity, unless one of the exceptions under the SFO applies.
Furthermore, under the SFO, only a company incorporated in Hong Kong or an overseas company registered under Part 16 of the Companies Ordinance as a non-Hong Kong company can be licensed to carry out a regulated activity.
Further, if a person actively markets (whether in Hong Kong or from a place outside Hong Kong) to the public in Hong Kong any services it provides and such services, if provided in Hong Kong, would constitute a regulated activity, then that person will also be subject to the licensing requirements under the SFO.
In addition to the licensing requirements on corporations, any individual who:
(a)performs any regulated function in relation to a regulated activity carried on as a business; or
(b)holds himself or herself out as performing such regulated function, must separately be licensed under the SFO as a licensed representative accredited to his or her principal.
Through licensing, the SFC regulates the financial intermediaries of licensed corporations and individuals that are carrying out the following regulated activities:
Type 1: Dealing in securities
Type 2: Dealing in futures contracts
Type 3: Leveraged foreign exchange trading
Type 4: Advising on securities
Type 5: Advising on futures contracts
Type 6: Advising on corporate finance
Type 7: Providing automated trading services
Type 8: Securities margin financing
Type 9: Asset management
Type 10: Providing credit rating services
The SFO provides a single licensing regime where a person needs only one license to carry on different types of regulated activities.
According to the above, QTBS would require Type 4 license for carrying out its corporate advisory services in Hong Kong and QFL would require Type 1, Type 4 and Type 9 license for its subsidiaries carrying out the investment banking, digital banking, private banking, and asset management services businesses in Hong Kong.
For licensed corporations regulated by the SFO, they are required to comply with the requirements such as hiring responsible officers to supervise the regulated activities, maintain at all times paid-up share capital and liquid capital not less than the specified amounts, and comply with all applicable provisions of the SFO and its subsidiary rules and regulations as well as the codes and guidelines issued by the SFC.
Implementation of anti-money laundering and terrorist financing policies and procedures
Money laundering covers a wide range of activities and processes intended to alter the identity of the source of criminal proceeds in a manner which disguises their illegal origin. Terrorist financing is a term which includes the financing of terrorist acts, and of terrorists and terrorist organizations. It extends to any property, including any funds, whether from a legitimate or illegitimate source.
Corporations are required to comply with applicable anti-money laundering laws and regulations in Hong Kong. The four main pieces of legislation that apply to licensed corporations in Hong Kong that are concerned with anti-money laundering and counterterrorist financing (“AML/CTF”) are the AMLO, the Drug Trafficking (Recovery of Proceeds) Ordinance (Chapter 405 of the Laws of Hong Kong) (“DTROP”), the Organised and Serious Crimes
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Ordinance (Chapter 455 of the Laws of Hong Kong) (“OSCO”) and the United Nations (Anti-Terrorism Measures) Ordinance (Chapter 575 of the Laws of Hong Kong). (“UNATMO”).
The AML/CTF regime for financial institutions comprises two tiers of regulation: (a) legislation, being the AMLO; and (b) supplementary guidance issued by each respective financial institutions’ regulator, which includes guidelines that apply to all types of financial institutions (as defined in the AMLO) and sector-specific guidelines. The SFC has published the Guideline on Anti-Money Laundering and Counter-Terrorist Financing which applies to licensed corporations for this purpose (“SFC Guidelines”).
Broadly speaking, the AMLO and the SFC Guidelines require licensed corporations to, among other things, adopt and enforce set of due diligence measures to their direct “customers”, each customer’s ultimate “beneficial owners” and any persons who purport to act on behalf of the customer. It also imposes ongoing monitoring and record keeping requirements on licensed corporations. The SFC Guidelines also provides sector-specific guidance for AML/CTF requirements under DTROP, OSCO and UNATMO such as, staff of licensed corporations who knows, suspects or has reasonable grounds to believe that a customer might have engaged in money laundering or terrorist financing activities must immediately report to the Money Laundering Report Officer of its organization which, in turn, will report to the Joint Financial Intelligence Unit (“JFIU”) if necessary.
DTROP
The DTROP provides for the tracing, freezing and confiscation of the proceeds of drug trafficking and creates a criminal offence in relation to dealing with such proceeds. Where a person knows or suspects that any property is the proceeds of drug trafficking, the person shall disclose to a police officer, a member of the Customs and Excise Service, a member of the Immigration Service, or an officer of the Independent Commission Against Corruption (an “Authorised Officer”) the information or other matter on which the knowledge or suspicion is based, as soon as is practicable after that information or other matter comes to the person’s attention. It is an offence to fail to disclose to an Authorised Officer such information. It is also an offence for any person knowing or suspecting such a disclosure has been made to disclose any matter to another person which is likely to prejudice any investigation. This is commonly referred to as “tipping off”.
OSCO
The OSCO extends the dealing offence under DTROP to cover the proceeds of indictable offences. It also creates a similar offence in relation to failing to disclose knowledge or suspicion of the proceeds of an indictable offence and tipping off.
UNATMO
The UNATMO implements the mandatory elements of the United Nations Security Council resolutions aimed at combating international terrorism on various fronts. The UNATMO relates to “Terrorist Property”, which refers to property of a terrorist or terrorist associate, or any other property that is intended to be used to finance or otherwise assist the commission of a terrorist act; or was used to finance or otherwise assist the commission of a terrorist act.
The UNATMO prohibits a person from providing any property knowing that the property will be used, in whole or in part, to commit one or more terrorist acts. It also prohibits a person from making any property or financial services available to or for the benefit of a person knowing that, or being reckless as to whether, the person is a terrorist or terrorist associate, except under the authority of a license granted by the Secretary for Security of Hong Kong.
The UNATMO regulates the disclosure of knowledge or suspicion that property is Terrorist Property, similar to the requirements of DTROP and OSCO. It also creates a similar tipping off offence.
Hong Kong Exchanges and Clearing Limited (the “HKEx”)
Apart from the SFC, the HKEx also plays a leading role in regulating companies which seek admission to the Hong Kong markets and supervising those companies once they are listed.
The HKEx is a recognized exchange controller under the SFO. It owns and operates the only stock and futures exchanges in Hong Kong, namely the Stock Exchange and The Hong Kong Futures Exchange Limited and their related clearing houses. The duty of HKEx is to ensure orderly and fair markets and that the risks are prudently managed, being consistent with the public interest, particularly the interests of the investing public.
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As the operator and frontline regulator of the central securities and derivatives marketplace in Hong Kong, the HKEx regulates listed issuers; administers listing, trading and clearing rules; and provides services, primarily at the wholesale level, to participants and users of the exchanges and clearing houses, including issuers and intermediaries - such as investment banks or sponsors, securities and derivatives brokers, custodian banks and information vendors - who service the investors directly. These services comprise of trading, clearing and settlement, depository and nominee services, and information services.
Regulations Related to our Business Operations Malaysia
Labuan Investment Banking
BNM, or Bank Negara Malaysia, is the authority responsible for various important functions in Malaysia's financial sector. These responsibilities include acting as the financial adviser, banker, and financial agent of the Malaysian government. BNM also regulates the banking and financial services industry to ensure the stability of the country's financial system. Another crucial role of BNM is to ensure the prudent conduct of monetary policy and manage domestic liquidity and exchange rates.
In Malaysia, there is a dual banking system consisting of conventional and Islamic banking. BNM acts as the key regulator for most, if not all, financial institutions in the country. They have the power to issue general guidelines to all financial institutions and specific directions to individual entities in order to maintain the stability of the financial system.
Islamic finance has developed into a comprehensive and sophisticated marketplace in Malaysia, characterized by a robust regulatory framework, a deep primary market, and an active secondary sukuk market. To further promote Islamic finance, Malaysia established the Malaysia International Islamic Financial Centre, offering a wide range of Islamic financial products and services.
To develop Labuan as an international center for business and financial services, the Labuan Financial Services Authority (Labuan FSA) was established. It is responsible for the development and administration of the Labuan International Business and Financial Centre (Labuan IBFC). Banks operating in Labuan IBFC are subject to the Labuan Financial Services and Securities Act 2010 (LFSSA) and the Labuan Islamic Financial Services and Securities Act 2010 (LIFSSA).
The rest of the banks in Malaysia are governed by the Financial Services Act 2013 (FSA) and the Islamic Financial Services Act 2013 (IFSA). Under these acts, BNM has the authority to issue guidelines, standards, and notices on various matters related to banks and the banking and financial services industry. These include prudential limits, liquidity frameworks, financial reporting, and credit risk management.
BNM recently issued a policy document called the Code of Conduct for Malaysia Wholesale Financial Markets. This document sets out principles and standards to be observed by market participants in the wholesale financial markets, including the money market, foreign exchange market, and over-the-counter derivatives market. The Code covers areas such as eligibility requirements for dealers and brokers, prohibited conduct, best market practices, handling of confidential information, and internal risk management controls.
In response to the 2008 global financial crisis, Malaysia enacted the Financial Services Act 2013 (FSA) and the Islamic Financial Services Act 2013 (IFSA) to enhance financial sector regulation and supervision. While Malaysia does not currently have a formal recovery and resolution framework, BNM and the Malaysia Deposit Insurance Corporation (PIDM) have powers to intervene and undertake recovery and resolution measures. PIDM provides protection to bank deposits and insurance and takaful benefits in the event of a licensed member bank's failure.
BNM also has the responsibility to safeguard the balance of payments position and the value of Malaysia's currency. The Foreign Exchange Administration Notices issued by BNM specify restrictions on certain international and domestic transactions, such as borrowing or lending of foreign currency and ringgit transactions between non-residents or between a resident and a non-resident.
Banks in Malaysia are required to comply with the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (AMLA). This law makes money laundering and terrorism financing offenses and stipulates measures for their prevention. Reporting institutions, including banks, must take measures to prevent their institutions from being used for money laundering and terrorism financing activities.
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E-Wallet
In Malaysia, e-wallet operations are regulated by Bank Negara Malaysia (BNM), the central bank of Malaysia. BNM has issued guidelines and regulations to govern e-wallet providers and ensure the safety and integrity of e-wallet services. Here are some key regulations related to e-wallet operations in Malaysia:
Licensing: E-wallet providers must obtain a license from BNM to operate in Malaysia. The license is issued under the Financial Services Act 2013 (FSA) or the Islamic Financial Services Act 2013 (IFSA), depending on whether the e-wallet service is conventional or Islamic. The licensing requirements include criteria related to capital, governance, risk management, consumer protection, and compliance with anti-money laundering and counter-terrorism financing regulations.
Capital Requirements: E-wallet providers are required to meet minimum capital requirements specified by BNM. The specific capital requirements may vary depending on the type and scale of the e-wallet operations.
Customer Due Diligence (CDD): E-wallet providers must implement robust customer due diligence procedures to verify the identity of their users. This is to prevent money laundering, fraud, and other illicit activities. The CDD requirements include obtaining and verifying customer information, conducting risk assessments, and monitoring transactions for suspicious activities.
Transaction Limits: BNM has set transaction limits for e-wallet accounts to mitigate risks and protect consumers. The limits may vary based on factors such as customer identification, account authentication, and transaction types. E-wallet providers must ensure compliance with these transaction limits.
Security and Risk Management: E-wallet providers are required to implement appropriate security measures and risk management frameworks to safeguard customer funds and data. This includes employing encryption, authentication protocols, and other security technologies to protect against unauthorized access, fraud, and data breaches.
Consumer Protection: E-wallet providers must have mechanisms in place to address customer complaints and disputes. They are also required to provide clear and transparent information to customers regarding fees, terms, and conditions, and any risks associated with e-wallet usage.
Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF): E-wallet providers need to adhere to AML/CTF regulations to prevent their platforms from being misused for illicit activities. This involves implementing policies, procedures, and systems to detect and report suspicious transactions to the relevant authorities.
Interoperability: In an effort to promote interoperability among e-wallet providers, BNM has introduced guidelines to ensure seamless fund transfers between different e-wallet systems. This initiative aims to enhance convenience for users and encourage competition and innovation in the e-wallet industry.
E-Money Issuance: E-wallet providers in Malaysia are considered issuers of electronic money (e-money). As such, they must comply with the regulations governing e-money issuance, including maintaining the necessary reserves, ensuring the fungibility of e-money, and establishing proper redemption mechanisms.
Agent Networks: E-wallet providers often rely on agent networks to facilitate cash-in and cash-out transactions. BNM has established guidelines for managing agent networks, including requirements for due diligence, training, and monitoring of agents to ensure compliance with regulations and mitigate the risks associated with agent-based transactions.
Data Protection and Privacy: E-wallet providers are required to adhere to data protection and privacy laws in Malaysia. They must implement measures to safeguard customer data and ensure that the collection, storage, processing, and sharing of personal information comply with applicable laws and regulations.
Financial Consumer Protection: BNM places a strong emphasis on protecting the interests of financial consumers. E-wallet providers are expected to have clear and transparent terms and conditions, provide accurate and timely information to users, and handle customer complaints and disputes effectively. BNM periodically issues guidelines and directives to enhance consumer protection in the e-wallet sector.
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Regulatory Sandbox: BNM has introduced a regulatory sandbox framework to facilitate innovation in the financial industry, including e-wallet services. This allows eligible e-wallet providers to test their innovative products and services in a controlled environment with regulatory support and oversight.
Ongoing Supervision and Reporting: E-wallet providers are subject to ongoing supervision by BNM. They are required to submit periodic reports and financial statements to demonstrate compliance with regulatory requirements. BNM conducts regular assessments and audits to ensure that e-wallet providers maintain the necessary standards and safeguards.
Consumer Protection: E-wallet providers must have mechanisms in place to address customer complaints and disputes. They are also required to provide clear and transparent information to customers regarding fees, terms, and conditions, and any risks associated with e-wallet usage.
Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF): E-wallet providers need to adhere to AML/CTF regulations to prevent their platforms from being misused for illicit activities. This involves implementing policies, procedures, and systems to detect and report suspicious transactions to the relevant authorities.
The Material Regulations and Regulatory Entities that Govern the Digital Banking Activities
BNM issued the Policy Document on the Licensing Framework for Digital Banks in December 2020, marking the beginning of digital banking in Malaysia. According to BNM, digital banks must comply with the requirements under the Financial Services Act 2013 or Islamic Financial Services Act 2013, including standards on anti-money laundering and terrorism financing.
AML Challenges in Digital Banking
Digital banking faces several AML challenges due to the increased risk of financial crime and evolving cybercrime techniques. These challenges include:
1. Increased risk of money laundering and terrorist financing:
The growth of digital payments and banking services has elevated the risk of financial crimes, such as money laundering and terrorist financing. Criminals may exploit digital channels to launder illicit funds or finance terrorist activities. Financial institutions must be vigilant in detecting and preventing these activities to protect their customers and maintain the financial system's integrity. Robust AML/CFT frameworks and risk mitigants are essential to prevent the illicit exploitation of access to their services.
2. Evolving cybercrime techniques:
As digital banking becomes more popular, financial institutions face escalating threats due to technological developments in cybercrime. Cybercriminals constantly adapt their techniques to exploit vulnerabilities in digital banking systems, making it crucial for financial institutions to stay ahead of these threats and invest in advanced cybersecurity measures. Common tactics include phishing, malware attacks, and social engineering, all of which can be used to gain unauthorized access to customer accounts or manipulate transactions. Cybercrime and money laundering are correlated, as the former can be a predicate offence.
3. Expanding volumes of data:
Financial institutions face challenges in handling the volume and breadth of data associated with AML compliance. Harnessing the value of this data is crucial for identifying and mitigating risks, requiring the adoption of advanced technologies and analytics.
4. Balancing customer experience with compliance:
Striking the right balance between providing a seamless customer experience and maintaining robust AML/CFT controls is a key challenge in digital banking. While customers expect fast, convenient, and secure access to their accounts and services, financial institutions must also ensure they meet regulatory requirements and mitigate risks associated with money laundering and terrorist financing. To achieve this balance, financial institutions should consider adopting innovative technologies and solutions that enhance their AML/CFT capabilities without compromising the customer experience. This may include using artificial intelligence, machine learning, and data analytics to identify suspicious activities and patterns more effectively and efficiently. By staying proactive in addressing AML/CFT challenges, digital banks can maintain customer trust and contribute to a safer financial ecosystem.
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Aligning with Malaysia's AML Regulations and International Standards
1.Adhering to BNM's guidelines:
BNM is the central authority responsible for issuing AML/CFT regulations in the country. Digital banks must strictly adhere to these guidelines to maintain their license and operate legally. This includes implementing robust AML/CFT frameworks, customer due diligence measures, risk assessments, and ongoing transaction monitoring. By complying with BNM's guidelines, digital banks can contribute to Malaysia's financial system's overall stability and integrity while protecting themselves from legal and reputational risks.
2.Complying with FATF recommendations:
The Financial Action Task Force (FATF) is an international organization that sets global standards for combating money laundering, terrorist financing, and other related threats. Digital banks in Malaysia must comply with the FATF's 40 Recommendations, which provide a comprehensive and consistent framework for AML/CFT compliance. By aligning with these recommendations, digital banks can demonstrate their commitment to international best practices, enhancing their credibility and reputation among customers, regulators, and other stakeholders.
3.Supporting global initiatives for AML/CFT:
In addition to complying with local and international regulations, digital banks should actively support and participate in global initiatives to combat money laundering and terrorist financing. This may involve collaborating with other financial institutions, regulators, law enforcement agencies, and international organizations to share information, develop best practices, and coordinate efforts to tackle financial crime. By contributing to global AML/CFT initiatives, digital banks can play a vital role in strengthening the resilience of the global financial system and fostering a safer, more transparent environment for digital banking customers.
4.Guidelines on Electronic Know Your Customer (e-KYC):
BNM has issued guidelines on Electronic Know Your Customer (e-KYC) to facilitate customer onboarding and verification processes for digital financial services.
5.Payment Services Act 2019 (PSA):
The PSA regulates payment systems and payment service providers in Malaysia. It provides a framework for licensing and supervising various payment services, including electronic money and digital payment services.
6.Personal Data Protection Act 2010 (PDPA):
The PDPA governs the processing of personal data by businesses, including digital banks. Compliance with data protection regulations is crucial in the digital banking sector.
7.National Cyber Security Policy (NCSP):
The government's National Cyber Security Policy aims to strengthen the country's cybersecurity framework. Digital banks are expected to adhere to cybersecurity best practices to protect customer data and maintain the integrity of financial systems.
Intellectual Property
Presently, we do not possess any intellectual property; however, we recognize its future significance as a pivotal component of our business strategy. While our previous trademark application in Intellectual Property Corporation of Malaysia faced rejection, we are actively pursuing an appeal. Underscoring the critical role of intellectual property in our business strategy and operations, we align with industry standards to protect our proprietary products, technology, and competitive advantages through a robust framework. This encompasses the utilization of contractual provisions, safeguarding trade secrets, and compliance with patents, copyright, and trademark laws in Malaysia, Hong Kong, and other key jurisdictions where we operate. This commitment ensures the resilience and competitiveness of our business in the global marketplace, positioning us for sustained growth and success.
License
QR has entered into a white-label partnership with MPay, wherein MPay provides the technology and licenses for payment solutions, while QR acts as a payment system enabler, offering payment infrastructure and card processing services for card payment scheme owners.
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ITEM 1A. RISK FACTORS
The Company is exempt from furnishing the information mandated by this item due to its classification as a smaller reporting entity.
ITEM 1B. UNRESOLVED STAFF COMMENTS.
Not applicable to Smaller Reporting Companies.
ITEM 1C. CYBERSECURITY
We have established policies and processes for assessing, identifying, and managing material risk from cybersecurity threats, and have integrated these processes into our overall risk management systems and processes. We routinely assess material risks from cybersecurity threats, including any potential unauthorized occurrence on or conducted through our information systems that may result in adverse effects on the confidentiality, integrity, or availability of our information systems or any information residing therein.
We conduct periodic risk assessments to identify cybersecurity threats, as well as assessments in the event of a material change in our business practices that may affect information systems that are vulnerable to such cybersecurity threats. These risk assessments include identification of reasonably foreseeable internal and external risks, the likelihood and potential damage that could result from such risks, and the sufficiency of existing policies, procedures, systems, and safeguards in place to manage such risks.
Following these risk assessments, we re-design, implement, and maintain reasonable safeguards to minimize identified risks; reasonably address any identified gaps in existing safeguards; and regularly monitor the effectiveness of our safeguards. Primary responsibility for assessing, monitoring and managing our cybersecurity risks rests with our designated team of IT professionals that reports to our Board of Directors, to manage the risk assessment and mitigation process. The IT team is tasked with monitoring system performance, identifying potential cybersecurity vulnerabilities, and implementing timely mitigation strategies.
Additionally, we work closely with the Chief Technology Officer of our subsidiary QR to oversee all aspects of cybersecurity risk management for the QRPay system.
We engage consultants, or other third parties in connection with our risk assessment processes. These service providers assist us to design and implement our cybersecurity policies and procedures, as well as to monitor and test our safeguards. We require each third-party service provider to certify that it has the ability to implement and maintain appropriate security measures, consistent with all applicable laws, to implement and maintain reasonable security measures in connection with their work with us, and to promptly report any suspected breach of its security measures that may affect our company.
We have not encountered cybersecurity challenges that have materially impaired our operations or financial standing.
Governance
Our board of directors addresses the Company’s cybersecurity risk management as part of its general oversight function. The board of directors’ audit committee is responsible for overseeing Company’s cybersecurity risk management processes, including oversight and mitigation of risks from cybersecurity threats.
Our cybersecurity risk assessment and management processes are implemented and maintained by certain Company management, including the information technology team at the direction of our Board of Directors. Our executive team including our Chief Executive Officer, and Chief Financial Officer are responsible for hiring appropriate personnel, helping to integrate cybersecurity risk considerations into the Company’s overall risk management strategy, and communicating key priorities to relevant personnel. This executive team is responsible for approving budgets, helping prepare for cybersecurity incidents, approving cybersecurity processes, and reviewing security assessments and other security-related reports.
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Our cybersecurity incident response and vulnerability management policies are designed to escalate certain cybersecurity incidents to members of management depending on the circumstances, including our Chief Executive Officer, and Chief Financial Officer. In addition, the Company’s incident response and vulnerability management policies include reporting to the audit committee of the board of directors for certain cybersecurity incidents including significant breaches to the Company’s networks or systems. The audit committee receives regular reports from the information technology team concerning the Company’s significant cybersecurity threats and risk and the processes the Company has implemented to address them. The audit committee also has access to various reports, summaries or presentations related to cybersecurity threats, risk and mitigation.
ITEM 2. PROPERTIES.
The Company’s principal executive offices are located at 55-6, The Boulevard Office, Lingkaran Syed Putra, Mid Valley City, 59200, Kuala Lumpur, Malaysia. We signed a total of four written leases, which included one lease for the Company’s headquarters and three leases for its subsidiaries. On April 22, 2021, the Company and the JKC Resources Sdn. Bhd. signed the lease contract for its headquarter office spaces of consist of 2,000 square feet of office space. The initial term of the lease for our headquarters was from July 1, 2018 to June 30, 2023, with an extension to June 30, 2024. The address of each of the subsidiaries, except for the Hong Kong subsidiaries, is C/O the Company at the address listed above.
ITEM 3. LEGAL PROCEEDINGS.
From time to time, claims may be made against us in the ordinary course of business, which could result in litigation. Claims and associated litigation are subject to inherent uncertainties and unfavorable outcomes could occur, such as monetary damages, fines, penalties, or injunctions prohibiting us from selling one or more products or engaging in other activities. The occurrence of an unfavorable outcome in any specific period could have a material adverse effect on our results of operations for that period or future periods.
However, as of the date of this Annual Report, neither the Company nor any of our subsidiaries were a party to, nor are any of our property subject to, any legal proceedings which require disclosure pursuant to this item.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
MARKET PRICES AND DIVIDEND DATA
Market Information
As of the date of this Report, there was no established public trading market for the Company’s common stock, and a regular trading market may not develop, or if developed, may not be sustained. As such, Stockholders may have difficulty reselling their securities should they desire to do so when eligible for public resale. The Company plans to work with a market maker and other professionals with a view to having the Company’s common stock accepted for trading on the OTC Markets and eventually a national market such as the Nasdaq or NYSE when Management deems it to be advisable and in the best interest of the Company and its shareholders.
Shareholders
As of April 3, 2024, the Company had 19 shareholders of record.
Dividends
The Company has not declared any cash dividends on its common stock since inception and does not anticipate paying such dividends in the foreseeable future. Any decisions as to future payments of dividends will depend on the Company’s earnings and financial position and such other facts, as the Board of Directors deems relevant.
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Securities Authorized for Issuance under Equity Compensation Plans
None.
Recent Sales of Unregistered Securities
Sale of shares
On August 30, 2023, the Company entered into stock subscription agreements with an individual investor, pursuant to which the Company would issue 43,000 shares of common stock, $10.00 per share, for a total consideration of $430,000. The funds were received in October 2023, and the 430,000 shares of common stock were issued accordingly.
On December 27, the Company entered into stock subscription agreements with two individual investors pursuant to which the Company issued a total of 10,000 shares of common stock, $9.00 per share, for total consideration of $90,000.
On February 27, 2024, the Company entered into a stock subscription agreement with an individual investor pursuant to which the Company issued a total of 20,000 shares of common stock, $9.00 per share, for total consideration of $180,000.
The issuances and sales of the shares to the shareholders in the transactions listed above were made in reliance on the private offering exemption of Section 4(a)(2) of the Securities Act and the rules and regulations promulgated thereunder, based on the following factors: (i) the number of offerees or purchasers, as applicable; (ii) the absence of general solicitation; (iii) investment representations obtained from the investors; (iv) the provision of appropriate disclosure; and (v) the placement of restrictive legends on the certificates reflecting the securities.
Broad Capital
On July 12, 2022, the Company entered into a Going Public Consultant Agreement (the “Consulting Agreement”) with Broad Capital Assets Management Ltd. (“Broad Capital”), an unrelated third party and a company incorporated in the State of New York, pursuant to which the Company agreed to issue a total of 12% of its issued and outstanding common stocks, as well as up to 8,160,000 additional shares (the “Future Allocation Shares”) of its common stock to Broad Capital or its assignees for services to be provided in connection with a transaction relating to QMIS Finance Securities Corp. (“QMIS Finance”), an entity of which Dr. Chin is also a director and majority shareholder.
Pursuant to the Consulting Agreement, the Company had agreed to issue a total of 36,360,012 shares of the Company’s common stock to Broad Capital’s assignees, which shares were eventually issued in November 2023, and which were allocated between two entities which are Broad Capital’s assignees as follows: 14,544,005 shares to Hong Kong Kazi International Group Co. Limited (“Kazi”), and 21,816,007 shares to Hong Kong Hanxin Holdings Limited (“Hanxin”).
Subsequently, following discussions and negotiations, the Company and Broad Capital have acknowledged and agreed that the services stipulated under the Consulting Agreement had not been provided to the satisfaction of the Company as of the date the shares were issued to Kazi and Hanxin. As such, after friendly and constructive discussions, the Company and Broad Capital, along with Kazi and Hanxin, mutually agreed to terminate the Consulting Agreement and the related issuance of shares due to the unsatisfactory provision of the agreed services.
On January 5, 2024, Hong Kong Kazi International Group Co. Limited agreed to cancel the 14,544,005 shares issued to it, and Hong Kong Hanxin Holdings limited agreed to cancel the 21,816,007 shares issued to it. On February 6, 2024, the Company cancelled the 36,360,012 shares issued to Kazi and Hanxin.
Since the Future Allocation Shares compensate for the services provided to QMIS Finance, which is not a subsidiary of the Company, the Company, Broad Capital, and Dr. Chin entered in a Replacement Agreement on March 14, 2024. Pursuant to the Replacement Agreement, the parties further acknowledged and agreed that Dr. Chin had previously transferred 1,000,000 shares of common stock of QMIS Finance (the “QFS Shares”) to Broad Capital and its assignees, and that on November 9, 2023, Dr. Chin transferred 2,000,000 shares of QMIS TBS common stock from his personal holdings to YiKim International Limited (the “YiKim Shares”), another assignee of Broad Capital. In the Replacement Agreement, Broad Capital has agreed to substitute 3,000,00 shares previously sent by Dr. Chin, consisting of 1,000,000 shares of QMIS Finance common stock, and 2,000,000 shares of the Company’s common stock, for 3,000,000 of the Future Allocation Shares. Broad Capital also agreed to accept 5,160,000 additional shares of QMIS
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TBS common stock from Dr. Chin, in addition to the 1,000,000 QFS Shares and the 2,000,000 YiKim Shares previously transferred from Dr. Chin as full settlement of the Future Allocation Shares obligations.
Dalian QMIS Software Technology Development Co., Ltd.
On December 12, 2021, QMIS Securities Limited ("QSL"), a stock brokerage firm based in Hong Kong with which Dr. Chin is a director (but which is not a subsidiary of the Company), entered into a Technical Consulting Agreement (the "Technical Consulting Agreement") with Dalian QMIS Software Technology Development Co., Ltd (“Dalian QMIS”), a company incorporated in Dalian City of the PRC. Ms. Ting Ting Gu, a former director of the Company is a major shareholder of Dalian QMIS. The Technical Consulting Agreement does not clearly outline the compensation for the services.
Despite the Technical Consulting Agreement being with QSL and not with the Company (i.e. the Company was not a party to the Technical Consulting Agreement), purportedly in connection with the Technical Consulting Agreement, the Company erroneously issued 2,000,000 shares of its common stock to Dalian QMIS for the services provided to QSL pursuant to the Technical Consulting Agreement.
As noted, QSL is not a subsidiary of the Company, and the Company had no duty or obligation under the Technical Consulting Agreement to issue shares. As such, the Company deemed it to be necessary and appropriate to cancel the erroneously issued 2,000,000 shares of common stock to rectify the mistake.
On December 27, 2023, Dalian QMIS agreed to cancel the 2,000,000 shares issued to it. On February 6, 2024, the Company cancelled the 2,000,000 shares issued to Dalian QMIS.
Private Investors
In the third quarter of 2022, four individual investors (collectively, the "Investors") intended to purchase shares directly from Dr. Chin, and not from the Company. Unfortunately, due to an initial misunderstanding and miscommunication, the Investors entered into agreements with the Company for the purchase and sale of an aggregate of 578,000 shares of common stock, $1.00 per share, for a total consideration of $578,000.
In November 2023, the Company's transfer agent, ClearTrust LLC (the "Transfer Agent"), erroneously issued 625,400 new shares, which included an extra 47,400 shares for delay in the issuance of the shares, from the Company to the Investors, per the original 2022 agreements, instead of transferring shares from Dr. Chin's holdings.
Subsequently, upon realization of the Investors’ original intent, the agreements with the Investors were amended accordingly to reflect the purchase of shares from Dr. Chin rather than from the Company. As such, the Company deemed it to be necessary and appropriate to terminate the agreements with the Investors and to cancel the erroneously issued shares and effectuate the transfer of shares from Dr. Chin to the Investors in accordance with the amended agreements.
On February 26, 2024, the Company cancelled the 625,400 shares of common stock issued in November 2023 to the Investors. On March 14, 2024, Dr. Chin transferred 625,400 shares of common stock from his account to the Investors. The full consideration of $578,000 paid by the Investors was retained by the Company and recorded as an advance from Dr. Chin. The Investors directly received an equivalent number of shares from Dr. Chin.
Purchases of Equity Securities by the Company and Affiliated Purchasers
During the fourth quarter of 2023, there were no purchases of the Company’s equity securities by the Company or affiliated purchasers.
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ITEM 6. [RESERVED].
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following discussion provides information which management believes is relevant to an assessment and understanding of our results of operations and financial condition. The discussion should be read along with our financial statements and notes thereto included elsewhere in this Annual Report. This section includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our predictions including those set forth under the heading "Risk Factors" and elsewhere in this Annual Report. Our actual results and the timing of selected events discussed below could differ materially from those expressed in, or implied by, these forward-looking statements.
The following discussion highlights the results of operations of the Company and subsidiaries and the principal factors that have affected our financial condition as well as our liquidity and capital resources for the periods described and provides information that management believes is relevant for an assessment and understanding of the statements of financial condition and results of operations presented herein. The following discussion and analysis are based on the Company’s audited financial statements contained in this Current Report, which we have prepared in accordance with United States generally accepted accounting principles. You should read this discussion and analysis together with such financial statements and the related notes thereto.
Basis of Presentation
The share exchanges were treated as a capitalization between entities under common control, with Dr. Chin holding the position of a controlling shareholder in both the Company and QSC before and after the transaction. The consolidation of the Company and its subsidiary was accounted for at historical cost, and the consolidated financial statements were prepared as if the transaction had become effective as of the beginning of the earliest period presented.
The audited financial statements for our fiscal years ended December 31, 2023 and 2022, include a summary of our significant accounting policies and should be read in conjunction with the discussion below. In the opinion of management, all material adjustments necessary to present fairly the results of operations for such periods have been included in these audited financial statements. All such adjustments are of a normal recurring nature.
Corporate History and Organization
QMIS TBS Capital Group Corp. (“we”, “our,” “us,” “the Company,” or “QMIS USA”) was incorporated in the state of Delaware on November 21, 2019, under the name TBS Capital Management Group Corp. The name was changed to QMIS TBS Capital Group Corp. on February 10, 2020.
On February 13, 2023, the Company entered into certain share exchange agreements (the “Share Exchange Agreements”) with the shareholders of all 1,000,100 outstanding shares of common stock of QMIS Securities Capital SDN BHD (“QSC”), which was incorporated by the Companies Commission of Malaysia on January 13, 2015 under the Companies Act 1965 as a private limited company with the name Multi Securities Capital (M) SDN BHD, which was subsequently changed to QMIS Securities Capital (M) SDN BHD on March 19, 2015. The two QSC shareholders were Dr. Chin Yung Kong, the Company’s Chief Executive Officer, and Chin Hua Fung, Dr. Chin’s son.
Pursuant to the Share Exchange Agreements, Dr. Chin exchanged 700,070 shares of QSC common stock for 700,070 shares of the Company’s common stock. Dr. Chin exchanged 300,030 shares of QSC common stock for 300,030 shares of the Company’s common stock. Accordingly, the Company became the sole shareholder of QSC after the share exchanges.
The share exchanges have been accounted for as a recapitalization between entities under common control since the same controlling shareholders controlled these two entities before and after the transaction. The consolidation of the Company and its subsidiary has been accounted for at historical cost and prepared on the basis as if the transaction had become effective as of the beginning of the earliest period presented in the accompanying consolidated financial statements.
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On November 16, 2015, QSC acquired 99.9% equity ownership interest of QMIS Capital Venture SDN BHD (“QCV”), which was incorporated by the Companies Commission of Malaysia on January 14, 2015, under the private limited company act with the name Diversified Multi Capital Venture (M) SDN BHD. Subsequently, the name was changed to QMIS Capital Venture SDN BHD on March 19, 2015.
On October 15, 2015, QSC acquired 69.99% equity ownership interest of QMIS World Trade International SDN BHD (“QWT”), and subsequently on November 27, 2015, QSC acquired anther 0.01% equity ownership interest in QWT, which was incorporated by the Companies Commission of Malaysia on 15 October 2014 under the private limited company act with the name of Santubong Business Trading SDN BHD. Subsequently, the name was changed to QMIS World Trade International SDN BHD on August 7, 2015.
On December 31, 2021, QSC acquired 100% equity ownership interest of QMIS TBS Capital Group Corporation Limited (“QTBS”), which was incorporated in Hong Kong on September 9, 2013, under the Companies Ordinance as a limited liability company under the name QMIS Huayin Finance Credit Limited. Subsequently, the name was changed to QMIS Ample Luck Financial Group Limited on July 19, 2018, and finally QMIS TBS Capital Group Corporation Limited on June 16, 2020.
On December 31, 2021, QSC acquired 100% equity ownership interest of QMIS Finance Limited (“QFL”), which was incorporated in Hong Kong on July 20, 2007, under the Companies Ordinance as a limited liability company with the name of Hua Xia Syndicate Financial Credit Limit. Subsequently, the name is changed to QMIS Syndicate Financial Credit Limited on February 21, 2014, and finally to QMIS Finance Limited on March 31, 2016.
On May 27, 2020, QFL, QSC, and QWT acquired 60%, 20% and 20%, respectively, equity ownership interest in QMIS Green Energy Berhad (“QGE”), which was incorporated by the Companies Commission of Malaysia on May 27, 2020, under the private limited company act with the name of QMIS Waste Management Group Berhad. Subsequently, the name was changed to QMIS Green Energy Berhad on September 13, 2022.
On May 8, 2020, QFL, QSC, and QWT acquired 60%, 20%, and 20%, respectively, equity ownership interest in QMIS Biotech Group Berhad (“QBT”), which was incorporated by the Companies Commission of Malaysia on 8 May 2020 under the private limited company act with the name of QMIS Biotech Group Berhad. Subsequently, the name was changed to QMIS Biotech Group Berhad on May 29, 2020.
On June 22, 2020, QFL incorporated QMIS Investment Bank Limited (“QIB”) by the Labuan Financial Services Authority (LFSA) in Malaysia under the Company limited by shares act with the name of QMIS Finance (L) Limited. Subsequently, the name was changed to QMIS Labuan Investment Bank Limited on March 24, 2021, and finally to QMIS Investment Bank Limited on 28 July 2022. QFL owns 100% equity ownership interest in QIB.
On June 21, 2021, QFL and four other shareholders incorporated QMIS Richwood Blacktech Sdn. Bhd. (“QR”) by the Companies Commission of Malaysia under the private limited company act. QFL owns 51% equity ownership interest in QR.
On August 3, 2023, QIB and Dr. Chin incorporated a company, QMIS Micropay Berhad, in Kuala Lumpur, Malaysia. QIB and Dr. Chin own 60% and 40% of the ownership equity interests of QMIS Micropay Berhad, respectively. QMIS Micropay Berhad plans to carry on the business of electronic payments and transactions but had not engaged in any business operation as of the date of this Annual Report.
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A schematic of the Company’s current corporate structure, in operation, is set forth below.
Overview
The current structure and operations of the Company is comprised of QMIS TBS Capital Group Corp as the holding company, along with its subsidiaries QSC, QFL, QTBS, QR, QIB, QGE, QBT, QWT and QCV.
QSC, QFL and QTBS collaborate to provide consultant services, while QR is focused on software development. Starting from early 2023, QR generates revenue from its online payment software. At present, the other companies are not engaged in any business operations.
For the purposes of this Annual Report, QMIS TBS Capital Group Corp, QSC, QFL, QTBS, QR, QIB, QGE, QBT, QWT and QCV will be referred to as the “Company.”
QSC is an investment holding company and involved in providing investment banking and other financial services in Hong Kong and Malaysia through its direct and indirect subsidiaries shown below:
·QMIS Securities Capital (M) Sdn. Bhd. (“QSC”),
·QMIS TBS Capital Group Corp. (HK) (“QTBS”),
·QMIS Finance Limited (“QFL”),
·QMIS Investment Bank Limited (“QIB”), and
·QMIS Richwood Blacktech Sdn. Bhd. (“QR”).
QMIS Securities Capital (M) Sdn. Bhd. (“QSC”)
QSC is a professional firm geared to support and provide advisory services which includes the incubations of high tech and high growth companies.
The Company owns 100% of QSC, which owns:
·100% of QTBS;
·100% of QFL;
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·99.9% of QCV;
·70% of QWT;
·20% of QBT; and
·20% of QWM.
QMIS TBS Capital Group Corp. (HK) (“QTBS”)
QTBS is a limited liability company incorporated and domiciled in Hong Kong. QMIS TBS Group perpetually generates ideas to grow and add value to its people, clients, shareholders and the communities it serves. It aims to excel in dimensions such as client service and support with effective risk management and decision making.
The principal activity of QTBS is the provision of corporate advisory services which includes incubating FinTech and high growth companies. QTBS focuses on the small to middle market companies in China, Malaysia and Southeast Asia. It has an extensive international, national and local network of consultants, business advisors and directors to assist clients with business incubators: raising capital, private equity, due diligence, business valuation, merger and acquisition, accounting and market research services.
QTBS provides a wide range of corporate advisory services to its clients as follows:
·Management and Strategy Consulting;
·Corporate Advisory;
·Market Research and Survey; and
·Business Incubation.
QMIS Finance Limited (“QFL”)
QFL is an Investment Holding Company and had two subsidiaries as of December 31, 2023:
·QIB, wholly owned; and
·QR, majority owned.
QMIS Investment Bank Limited (“QIB”)
QIB is set to offer a full range of financial products and services covering investment banking, digital banking, private banking and asset management services licensed by Labuan Financial Services Authority (LFSA), Malaysia.
Furthermore, QIB will also provide conventional investment banking services such as private placement, wealth management and corporate finance advisory and solutions in working capital management, fund raising, initial public offering, and merger and acquisition consulting services to its clients.
QMIS Richwood Blacktech Sdn. Bhd. (“QR”)
QR is a new company established in Malaysia involved in the Electronic Payment and Transaction Enabler services with a centralized platform for various payment transactions and value-added services. QR has entered into a partnership with ManagePay Services Sdn. Bhd. (“MPay”) for the issuance of e-wallet and prepaid card services. MPay will act as the underlying technology provider and licensing for QR’s payment solutions, while QR acts as a payment system enabler, providing payment infrastructure and card processing for card payment scheme owners with QR’s mobile e-wallet tied up with an international prepaid card as an addition payment option can be used by consumers at merchants for cashless transactions in various retail sectors. QR’s goal is to develop comprehensive payment products and services with international payment capability and security compliance to tap into the FinTech market. We are partnering with experienced players in the payment system industry and plan to develop a Super App to upgrade the payment system infrastructure and solutions.
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As of the date of this Annual Report, QFL, QTBS and QSC were working together to provide consultant services, while QR was engaged in the business of electronic payment solution. The other companies, QCV, QWT, QBT and QGE were not engaged in business as of the date of this Annual Report.
Key Factors Affecting Our Results of Operations
Our results of operations have been and will continue to be affected by a number of factors, including those set out below:
Corporate Consultant Services
Corporate consultant professional firms play a critical role in providing strategic, operational and organizational advice to businesses. Their success is influenced by a variety of internal and external factors that can positively or negatively impact their operations.
Market and Competitive Environment
The market and competitive environment are among the most significant drivers of success for a corporate consultant professional firm. Firms must be aware of the current trends in their respective industries and the competitive landscape to remain relevant and competitive. To address this challenge, QSC must continuously innovate their services and develop new, more effective solutions to meet their clients’ evolving needs. Additionally, they must maintain strong relationships with clients and establish a reputation as a trusted advisor in their industry.
Talent Management
The quality of talent and the ability to attract, retain and develop top-performing employees is critical to the success of a corporate consultant professional firm. To address this challenge, firms must have a robust human resource management strategy in place that prioritizes talent management, career development and diversity and inclusion. QSC must also provide competitive compensation and benefits packages and cultivate a positive, supportive work environment to retain top talent and attract new hires.
Industry Knowledge
Keeping up with the latest industry knowledge is important for staying competitive and meeting the evolving needs of customers and users. Firms must continuously invest in training and professional development programs that support the delivery of effective solutions and services to clients. To address this challenge, QSC must have a clear human resources development strategy in place that aligns with our business goals and supports its operations.
Additionally, firms must invest in training and development programs for their employees to ensure that they have the skills and knowledge necessary to effectively use technology in their work.
Research Methodology, Data Analysis, and Interpretation
The quality of the research methodology used by a market research firm affects its results. Firms that use rigorous and reliable research methods are more likely to deliver accurate and relevant insights to their clients.
The ability to analyze and interpret data effectively is a key factor in the success of a market research firm. A firm that can turn raw data into meaningful insights and recommendations is more likely to deliver value to its clients. Market research firms that have a deep understanding of specific industries are more likely to deliver relevant and accurate insights. This requires a combination of knowledge and experience in the industry and an understanding of the current market trends and dynamics.
Client Relationships
A strong client relationship is essential for the success of a consulting firm. Firms that build strong relationships with our clients are more likely to receive repeat business and positive word-of-mouth referrals.
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Electronic Payment Solution
Regulation and Compliance
In Malaysia, the regulation and compliance for operating an e-wallet, a payment gateway business activity is governed by the Central Bank of Malaysia, Bank Negara Malaysia (“BNM”). BNM oversees and regulates the payment system in Malaysia to ensure its safety, efficiency and stability. To operate an e-wallet payment gateway business, the service provider needs to obtain an e-money issuer (“EMI”) license from BNM. In addition, the operator must comply with Anti-Money Laundering (“AML”) and Counter Financing of Terrorism (“CFT”) regulations set by BNM to prevent illegal activities such as money laundering and terrorism financing. The operator will also need to comply with Personal Data Protection Act to ensure the security and privacy of your customers’ personal and financial information.
As of the date of this Annual Report, QR did not hold an e-money issuer (EMI) license, but instead uses the license held by ManagePay Services Sdn. Bhd. (“MPay”). QR operates as a white-label partner of MPay, utilizing MPay’s EMI license, which is regulated by BNM. This partnership enables QR to provide e-wallet services to its customers under its own brand, while ensuring compliance with applicable regulations through MPay’s license.
Other General Market Conditions Affecting the Performance of the Company
Technical expertise
QR’s success in the e-wallet payment solution business is dependent on its technical expertise. QR must have a deep understanding of the technology used in the payment solutions industry, and continually invest in its people and technology to remain at the forefront of the industry.
Compliance with Regulations
The e-wallet payment solution business is subject to strict regulations, and QR must comply with these regulations to operate successfully. QR employed a strong compliance program in place to ensure that its solutions are secure, transparent and compliant with all relevant regulations.
User Adoption
QR’s success in the e-wallet payment solution business is dependent on the adoption of its solutions by users. We are committed to develop payment solutions that are user-friendly, secure and accessible to a wide range of users.
Market Competition
The e-wallet payment solution market is highly competitive, and QR must be able to compete effectively against other solutions providers. QR must differentiate itself from its competitors through its expertise, quality of service and pricing strategy.
Data Security
The security of user data is a critical factor in the success of QR’s e-wallet payment solution business. We are committed to invest in robust security measures to ensure that user data is protected against cyber threats.
Market Demand
The demand for the services is constantly evolving, and QR must be able to adapt to changing market conditions. QR must be able to respond to changes in technology and the needs of its clients to remain competitive.
Client Satisfaction
QR’s success is dependent on the satisfaction of its clients. QR must deliver high-quality software development solutions that meet the needs of its clients and provide ongoing support to ensure their continued success.
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Financial Resources
QR’s financial stability is a key factor in its success. QR must have the resources to invest in its people and technology, and maintain a healthy balance sheet to support its growth.
Cost Management
QR’s ability to manage costs is also important to its success. QR must balance the cost of delivering high-quality software development services with the need to remain profitable.
Challenges of Geographic Concentration
QR may only be able to serve a smaller portion of the overall market. Additionally, geographic concentration can also lead to increased competition in a particular area, which can drive down prices and make it more difficult for us to differentiate our services from those of our competitors.
Marketing and Brand Awareness
Marketing and brand awareness can greatly impact the success of an e-wallet service provider. Firms that are able to effectively market their services and build a strong brand are more likely to attract and retain users.
QR is committed to continually evaluate these factors and implement strategies to overcome any risk factors that may affect its success. This may include:
User Experience
A user-friendly interface and seamless transaction process are crucial for attracting and retaining users.
Security
Ensuring the security of users’ funds and personal information is paramount.
Partnership and Integration
Establishing partnerships and integrating with merchants, banks and other financial institutions is crucial for providing a comprehensive service and increasing adoption.
Marketing and User Acquisition
Effective marketing and user acquisition strategies are important to reach and onboard a large user base.
Regulation Compliance
Ensuring compliance with regulatory requirements and obtaining necessary licenses is critical for operating legally and building trust with users.
Scalability
The ability to scale the platform and handle increasing transaction volumes is crucial for long-term success.
Regional Market Expanding
The Company needs to adopt a more diversified approach to its service offerings and consider expanding into new geographic areas. This could include investing in new infrastructure and resources, as well as developing new partnerships and strategic alliances with local businesses and organizations.
Continuous Innovation
Keeping up with the latest technologies and continuously improving the platform is important for staying competitive and meeting the evolving needs of users.
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Investment Banking Services
Regulation and Compliance
Operating an LFSA-licensed investment bank in Malaysia requires strict adherence to the regulations and guidelines set by the LFSA and international regulatory bodies. A strong commitment to compliance and a robust risk management framework are essential for the success and sustainability of the business. The regulatory authority responsible for overseeing and regulating the financial services industry in the Labuan International Business and Financial Centre (the “Labuan IBFC”). The Labuan IBFC is a special economic zone in Malaysia established to promote and develop the offshore financial services industry.
As a licensed investment bank in Labuan, Malaysia, QIB must comply with the licensing requirements set by the LFSA. This includes submitting an application for a license, providing evidence of financial stability and operational readiness, and demonstrating a strong commitment to compliance with regulatory requirements and ethical standards. In terms of ongoing compliance, QIB must adhere to the regulations and guidelines set by the LFSA, including those related to financial reporting, risk management and consumer protection. QIB will also be required to conduct periodic internal audits to ensure compliance with regulations and to identify any potential risks or areas for improvement.
Additionally, QIB must comply with international regulations and standards, such as the Basel Accords and the Financial Action Task Force recommendations, to prevent money laundering, terrorism financing and other illegal activities. This includes implementing and maintaining robust Anti-money Laundering (“AML”) and Counter Financing of Terrorism (“CFT”) policies and procedures, as well as performing customer due diligence and monitoring transactions for suspicious activities.
Other General Market Conditions Affecting the Performance of the Company
LFSA-licensed investment banks operate in a highly competitive and regulated financial services market. The results of these banks are impacted by a variety of factors, including economic conditions, competition, regulatory environment and technology advancements.
Economic Conditions
The performance of investment banks is closely tied to the state of the economy. A strong economy generally leads to increased demand for investment banking services, while a weak economy can result in decreased demand. The impact of economic conditions is particularly pronounced in the investment banking industry due to its reliance on capital markets, which are subject to fluctuations based on economic performance.
Competition
The investment banking industry is highly competitive, with many players vying for a share of the market. Competition can impact the results of investment banks in several ways, including pricing pressure, increased marketing and advertising expenses, and the need to invest in technology and other resources to remain competitive. In addition, new entrants into the market can disrupt existing players by offering new products and services.
Regulatory Environment
The investment banking industry is heavily regulated, with regulations affecting virtually every aspect of the business. Changes in regulations, particularly in response to economic or market conditions, can have a significant impact on the results of investment banks. For example, increased regulatory requirements may result in increased compliance costs, while changes to existing regulations may impact QIB’s ability to generate revenue from certain products and services.
Technology Advancements
Investment banks that fail to keep up with technology advancements may find themselves at a disadvantage compared to their competitors, while those that embrace new technologies may reap significant benefits in terms of efficiency and profitability.
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The success of our business operation is impacted by a variety of factors, including economic conditions, competition, regulatory environment and technology advancements. The management strategies that are able to effectively navigate these factors and adapt to changing conditions are likely to be more successful than those that do not. To remain competitive, business model and decision must be proactive in their approach, continuously monitoring changes in the market and adapting their strategies as needed to stay ahead of the competition.
Industry
The Market Size of E-payment Industry in Southeast Asia
The e-payment industry in Southeast Asia is growing rapidly, driven by the region’s large and growing population, increasing smartphone adoption and favorable demographic and economic trends. According to a recent report by Google, Temasek and Bain & Company, the e-payment market in Southeast Asia is expected to reach $300 billion by 2025, representing a significant opportunity for companies operating in this space. Southeast Asia has a young and tech-savvy population, with a large proportion of the population having access to smartphones and internet services. This has led to the growth of online commerce and digital financial services, including e-payments, in the region. According to the same report, e-commerce sales in Southeast Asia are projected to reach $300 billion by 2025, representing a significant portion of the overall e-payment market.
The e-payment industry in Southeast Asia is highly competitive, with several major players vying for market share. Some of the key players in the region include Grab, Gojek, Razer, Sea Limited and Singtel. These companies offer a range of services, including ride-hailing, food delivery, mobile payments and digital wallets. In terms of growth, the e-payment market in Southeast Asia is expected to grow at a rapid pace over the next few years, driven by increasing adoption of digital financial services, the expansion of e-commerce and the growth of the region’s young and tech-savvy population.
Overall, the e-payment industry in Southeast Asia presents a significant opportunity for companies looking to enter this market. With a large and growing population, increasing smartphone adoption and favorable demographic and economic trends, the region is poised for continued growth in the e-payment space.
Impact of the COVID-19 Pandemic on Our Business and Operations
The COVID-19 pandemic has resulted in widespread economic disruption and uncertainty, which has caused many organizations to reduce their budgets and spending on consulting services. Additionally, the shift to remote work and the need to rapidly adapt to changing circumstances has created new challenges and opportunities for consulting and investment banking firms.
The COVID-19 pandemic has had a negative impact on our consulting business segment, primarily due to our main client base and revenue being generated from Malaysia and Hong Kong. The uncertain economic conditions, travel restrictions and quarantines have impeded our ability to contact clients and build trust, leading to a decrease in demand for our services. The operations of our clients have also been negatively impacted, further exacerbating the situation. Although the full impact of the pandemic is difficult to predict, the prolonged nature of the pandemic and potential mutations of the virus poses significant uncertainties that may materially and adversely affect our business, results of operations and financial condition.
To mitigate these impacts, we have adapted our operations to a virtual or remote-based model, while also finding ways to help clients address the unique challenges posed by the pandemic. Despite these challenges, the investment banking and consulting industry is likely to remain an important source of support and expertise for organizations as they navigate this crisis and beyond.
The lockdowns, quarantines and travel restrictions have led to a shift towards digital and online transactions, resulting in increased adoption of e-wallet services as people opt for contactless and cashless payment options. This has created new opportunities for e-wallet providers to grow their market share and attract new users. On the retail side, the pandemic has led to store closures and reduced foot traffic, causing many brick-and-mortar retailers to shift their focus towards online sales and e-commerce. This has put pressure on retailers to enhance their digital capabilities and develop new strategies to reach customers through online channels. However, any resurgence of the pandemic could have a negative impact on consumer spending and lead to further reductions in retail sales and e-wallet transaction volume as well.
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Geopolitical Conditions
In February 2022, Russia initiated significant military action against Ukraine. In response, the U.S. and certain other countries imposed significant sanctions and export controls against Russia, Belarus and certain individuals and entities connected to Russian or Belarusian political, business, and financial organizations, and the U.S. and certain other countries could impose further sanctions, trade restrictions and other retaliatory actions should the conflict continue or worsen. It is not possible to predict the broader consequences of these conflicts, including related geopolitical tensions, and the measures and retaliatory actions taken by the U.S. and other countries in respect thereof as well as whether any counter measures or retaliatory actions in response, including, for example, potential cyberattacks or the disruption of energy exports, are likely to cause regional instability and geopolitical shifts, which could materially adversely affect global trade, currency exchange rates, regional economies and the global economy. These situations remain uncertain, and while it is difficult to predict the impact of any of the foregoing, the conflicts and actions taken in response to these conflicts could increase our costs, reduce our sales and earnings, impair our ability to raise additional capital when needed on acceptable terms, if at all, or otherwise adversely affect our business, financial condition, and results of operations.
In addition, while we do not have any operations in the Middle East nor Africa, geopolitical tensions and ongoing conflicts in these regions, particularly between Israel and Palestine as well as within Sudan, may lead to further global economic instability and fluctuating energy prices that could materially affect our business. It is not possible to predict the broader consequences of these conflicts, including related geopolitical tensions, and the measures and actions taken by other countries in respect thereof, which could materially adversely affect global trade, currency exchange rates, regional economies and the global economy. While it is difficult to predict the impact of any of the foregoing, these conflicts may increase our costs, disrupt our supply chain, reduce our sales and earnings, impair our ability to raise additional capital when needed on acceptable terms, if at all, or otherwise adversely affect our business, financial condition and results of operations.
Revenue Recognition
QSC adopted Accounting Standards Codification (“ASC”) 606 upon inception. Under ASC 606, revenue is recognized when a customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, QSC performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation.
During the current reporting period, we did not make any significant changes to our revenue recognition policies and practices. However, we continue to monitor changes in accounting principles and regulations to ensure that our policies and practices are up-to-date and in compliance with current accounting standards.
QSC currently generates its revenue from the following main sources:
Revenue from Consultant Services
QSC, QFL and QTBS work together to provide business consultant services to customers. The revenue is recognized at the point in time when the consultant services promised are performed and accepted by the customers, which is generally when the consultant project is delivered and accepted by the customer. Our services include management and strategic planning, organizational development and implementation support, merger and acquisition, valuation report, industry and market survey and business incubation.
The consulting services are generally provided over a period of several months, and QSC, QFL, and QTBS perform the services specified in the contracts with clients. QSC, QFL, and QTBS monitor the progress of the consulting projects on an ongoing basis to ensure that they are on track to meet the obligations under the contracts. If QSC, QFL, and QTBS determine that they will not be able to meet the requirements of a contract, QSC, QFL, and QTBS will take the necessary steps to renegotiate the terms of the contract with the client or make other arrangements to ensure that they can meet the obligations.
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Revenue from Software Development
QR provides customers with software development and support service pursuant to their specific requirements, which primarily compose of custom application development, supporting and training. QSC generally recognized revenue at a point in time when control is transferred to the customers and QSC is entitled to the payment, or when the promised services are delivered and accepted by the customers.
Payments for services received in advance in accordance to the contract is recognized as deferred revenues when received.
Cost of Revenues
Cost of revenues primarily consists of salaries and related expenses (e.g. bonuses, employee benefits, statutory pension contribution and payroll taxes) for personnel directly involved in the delivery of services and products to customers. In addition, other costs directly involved in the delivery of services and products to customers, such as outside consulting, legal services, and supporting overhead costs, are included in the costs of revenue.
Comprehensive Income (Loss)
ASC 220 “Comprehensive Income” established standards for reporting and display of comprehensive income/loss, its components and accumulated balances. Components of comprehensive income/loss include net income/loss and foreign currency translation adjustments. The component of accumulated other comprehensive income (loss) consisted of foreign currency translation adjustments.
Credit Risk
Customer accounts typically are collected within a short to medium period of time, and based on its assessment of current conditions and its experience collecting such receivables, management believes it has no significant risk related to accounts receivable.
Research and Development Expenses
Research and development expenses consist primarily of fees we are being charged for developing the source code of the software platform enabling us to build new products as well as improve existing products. We expense substantially all of our research and development costs as they are incurred.
Financial Overview
For the twelve months ended December 31, 2023 and 2022, we generated revenues of $2,487,531 and $1,261,771, respectively, and reported net losses of $1,027,158 and $2,248,932 respectively, with cash inflow from operating activities of $108,195 compared to cash used in operating activities of $1,707,595, respectively. As noted in our audited consolidated financial statements, as of December 31, 2023, we had an accumulated deficit of $4,043,012.
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Results of Operations for the Year Ended December 31, 2023, Compared to the Year Ended December 31, 2022.
The following table summarizes the results of our operations during the years ended December 31, 2023 and 2022, respectively, and provides information regarding the dollar and percentage increase or (decrease) during such years:
|
| For the Twelve Months Ended December 31, | |||||||||
|
| 2023 |
| 2022 |
| Variance | |||||
|
| Amount | % of Revenue |
| Amount |
| % of Revenue |
| Amount |
| % |
|
|
|
|
|
|
|
|
|
|
|
|
REVENUE | $ | 2,487,531 | 100% | $ | 1,261,771 |
| 100% | $ | 1,225,760 |
| 97% |
COST OF REVENUES |
| 1,136,502 | 46% |
| 1,604,013 |
| 127% |
| (467,511) |
| -29% |
GROSS PROFIT |
| 1,351,029 | 54% |
| (342,242) |
| -27% |
| 1,693,271 |
| 495% |
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
General Administrative Expenses |
| 1,629,981 | 66% |
| 1,653,468 |
| 131% |
| (23,487) |
| -1% |
Total operating expenses |
| 1,629,981 | 66% |
| 1,653,468 |
| 131% |
| (23,487) |
| -1% |
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) from Operation |
| (278,952) | -11% |
| (1,995,710) |
| -158% |
| 1,716,758 |
| -86% |
|
|
|
|
|
|
|
|
|
|
|
|
Total Other Income (Expense) |
| (253) | 0% |
| (3,581) |
| 0% |
| 3,328 |
| -93% |
|
|
|
|
|
|
|
|
|
|
|
|
Loss before Provision of Income Tax |
| (279,205) | -11% |
| (1,999,291) |
| -158% |
| 1,720,086 |
| -86% |
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income tax |
| 747,953 | 30% |
| 249,641 |
| 20% |
| 498,312 |
| 200% |
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) | $ | (1,027,158) | -41% | $ | (2,248,932) |
| -178% | $ | 1,221,774 |
| -54% |
Less: Income attributable to non-controlling interests |
| 2,618 | 0% |
| (22,647) |
| -2% |
| 25,265 |
| -112% |
Net Income (Loss) attributable to QMIS TBS Capital Group Corp. |
| (1,029,776) | -41% |
| (2,226,285) |
| -176% |
| 1,196,509 |
| -54% |
|
|
|
|
|
|
|
|
|
|
|
|
This reduction in net loss by $1,221,774, or 54.3%, is attributed to a combination of increased revenue and decreased cost of revenue. Specifically, our revenue saw a substantial increase of $1,225,760, or 97.1%, from $1,261,771 in 2022 to $2,487,531 in 2023.
Revenues
Our different revenue sources for the years ended December 31, 2023 and 2022, were as follows:
|
| For the Twelve Months Ended December 31, | ||||||||||
|
| 2023 |
| 2022 |
| Variance | ||||||
|
| Amount |
| % |
| Amount |
| % |
| Amount |
| % |
Consultant Services | $ | 2,395,944 |
| 96% | $ | 1,154,912 |
| 92% | $ | 1,241,032 |
| 107% |
Software-development & maintenance-related parties |
| 84,692 |
|
3% |
| 106,859 |
|
8% |
| (22,167) |
|
-21% |
Software-development & maintenance |
| 6,895 |
|
0% |
| - |
|
0% |
| 6,895 |
| 100% |
Total Revenue | $ | 2,487,531 |
| 100% | $ | 1,261,771 |
| 100% | $ | 1,225,760 |
| 97% |
|
|
|
|
|
|
|
|
|
|
|
|
|
52
During the fiscal year ended December 31, 2023, the Company’s total revenues increased by $1,225,760, or 97%, to $2,487,531, compared to $1,261,771 in the prior year. This growth is primarily due to a significant increase in our consultant services, which constitute the bulk of our revenue.
Consultant services: In the twelve months ended December 31, 2023, revenue from consultant services amounted to $2,395,944, accounting for 96% of our total revenue. This represents an increase from $1,154,912 in 2022, accounting for 92% of that year’s total revenue. The significant surge of $1,241,032 or a 108% increase in revenue in 2023 was primarily driven by increased demand for our consultancy activities, indicating a recovery in our consultancy activities.
Software Development & Maintenance (Related Parties): Revenue from software development and maintenance services provided to related parties decreased by 20.7% to $84,692, primarily due to the decrease in sale of software development services. In the previous year, this segment had contributed $106,859, which was 8.5% of the total revenue.
Software Development & Maintenance: A new addition to our revenue streams was the introduction of software development and maintenance services, generating $6,895, which is 0.3% of our total revenue.
Cost of Sales
The following table sets forth the breakdown of our total cost of sales for the years ended December 31, 2023 and 2022:
|
| For the Twelve Months Ended December 31, | ||||||||||
|
| 2023 |
| 2022 |
| Variance | ||||||
|
| Amount |
| % |
| Amount |
| % |
| Amount |
| % |
Cost of Consultant Services | $ | 1,101,857 |
| 97% | $ | 1,529,693 |
| 95% | $ | (427,836) |
| -28% |
Cost of Software development |
| 34,645 |
|
3% |
| 74,320 |
|
5% |
| (39,675) |
|
-53% |
Total Cost of Revenue | $ | 1,136,502 |
| 100% | $ | 1,604,013 |
| 100% | $ | (467,511) |
| -29% |
|
|
|
|
|
|
|
|
|
|
|
|
|
During the twelve months ended December 31, 2023, our total cost of revenue was notably reduced by $467,511, representing a 29% decrease to $1,136,502 from $1,604,013 in 2022. This significant reduction in costs has been a critical factor in improving our gross profit margin.
The cost associated with consultant services amounted to $1,101,857, accounting for 97% of the total cost of revenue in 2023. In comparison, for the corresponding period in 2022, the cost of consultant services was $1,529,693, representing 95% of the total cost of sales. The decreased costs of $427,836 was primarily due to the decrease in outside consulting services fees.
The cost of providing software development and maintenance services to related parties also saw a decrease of 53.4%, with costs amounting to $34,645, down from $74,320 in the prior year, in light of the decrease in sale.
Gross Profit
The following table sets forth the breakdown of our total gross profit for the years ended December 31, 2023 and 2022:
|
| For the Twelve Months Ended December 31, | ||||||||||
|
| 2023 |
| 2022 |
| Variance | ||||||
|
| Amount |
| % |
| Amount |
| % |
| Amount |
| % |
Consultant Services | $ | 1,294,087 |
| 96% | $ | (374,781) |
| 110% | $ | 1,668,868 |
| 445% |
Software-development & Maintenance |
| 56,942 |
| 4% |
| 32,539 |
| -10% |
| 24,403 |
| 75% |
Total Gross Profit | $ | 1,351,029 |
| 100% | $ | (342,242) |
| 100% | $ | 1,693,271 |
| 495% |
53
Our gross profit increased by $1,693,271 or an increase of 495% to $1,351,029 in the twelve months ended December 31, 2023, from a net deficit of $342,242 in the twelve months ended December 31, 2022, primarily due to the increases of $1,668,868 in gross profit from consultant services, as a result of recovery of our consultancy activities.
Operating Expenses
The following table sets forth the breakdown of our total operating expenses for the years ended December 31, 2023 and 2022:
|
| For the Twelve Months Ended December 31, | ||||||||||
|
| 2023 |
| 2022 |
| Variance | ||||||
|
| Amount |
| % |
| Amount |
| % |
| Amount |
| % |
General Administrative Expenses | $ |
|
|
| $ |
|
|
| $ |
|
|
|
Payroll and Employee Benefits |
| 45,987 |
| 3% |
| 29,982 |
| 2% |
| 16,005 |
| 53% |
Depreciation Expenses |
| 2,990 |
| 0% |
| 4,606 |
| 0% |
| (1,616) |
| -35% |
Office Expenses |
| 74,849 |
| 5% |
| 72,657 |
| 4% |
| 2,192 |
| 3% |
Rental Expenses |
| 37,819 |
| 2% |
| 38,638 |
| 2% |
| (819) |
| -2% |
Due and Subscription |
| 39,157 |
| 2% |
| 34,579 |
| 2% |
| 4,578 |
| 13% |
Taxes Expenses |
| 1,394 |
| 0% |
| 77,452 |
| 5% |
| (76,058) |
| -98% |
Professional Fees |
| 606,505 |
| 37% |
| 223,518 |
| 14% |
| 382,987 |
| 171% |
Consultation Fees |
| 23,520 |
| 1% |
| 137,000 |
| 8% |
| (113,480) |
| -83% |
Travel & Lodging |
| 107,639 |
| 7% |
| - |
| 0% |
| 107,639 |
| 100% |
Management Fees |
| - |
| 0% |
| 45,000 |
| 3% |
| (45,000) |
| -100% |
Management-Related Party |
| 675,679 |
| 41% |
| 990,036 |
| 60% |
| (314,357) |
| -32% |
Advisory Fee-Related Party |
| 14,442 |
| 1% |
| - |
| 0% |
| 14,442 |
| 100% |
Total Operating Expenses | $ | 1,629,981 |
| 100% | $ | 1,653,468 |
| 100% | $ | (23,487) |
| -1% |
|
|
|
|
|
|
|
|
|
|
|
|
|
General and Administrative Expenses
Our general and administrative expenses primarily consist of professional fees, office expenses, employee salaries and welfare, rental expenses, travel and lodging, and management fees.
The total general and administrative expenses for the twelve months ended December 31, 2023, amounted to $1,629,981, which represents a marginal decrease of $23,487 or 1% compared to the $1,653,468 incurred in the twelve months ended December 31, 2022.
(i)Management Fees-Related Party: We reduced these expenses by 31.8%, bringing the amount down to $675,679, as we needed less business advice and administrative services from the related party in for the twelve months ended December 31, 2023.
(ii)Consultant Fees: A notable decrease in consultant fees by 82.8%, which is attributed to the one-time costs associated with the establishment and development of QIB.
(iii)Management fees paid to a former subsidiary then to-be-acquired reduced by $45,000 as we terminated the acquisition in November 2022.
(iv)Offset by increase of Professional fees by $382,987 or 171%. The significant increase in professional fees is mainly attributable to our effort to become publicly traded on a national exchange, involving legal and financial advisory services.
As a percentage of revenues, general and administrative expenses were 66% and 131% of our revenues for the twelve months ended December 31, 2023 and 2022, respectively.
54
Other Income (Expenses), Net
The following table sets forth the breakdown of our total other income (expenses) for the years ended December 31, 2023 and 2022:
|
| For the Twelve Months Ended December 31, | ||||||||||
|
| 2023 |
| 2022 |
| Variance | ||||||
|
| Amount |
| % |
| Amount |
| % |
| Amount |
| % |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Income | $ | 642 |
| -254% | $ | 102 |
| -3% | $ | 540 |
| 529% |
Gain (Loss) on Foreign Currency Transaction |
| (895) |
| 354% |
| 6,317 |
| -176% |
| (7,212) |
| -114% |
Other Income (Loss) |
| - |
| 0% |
| (10,000) |
| 279% |
| 10,000 |
| -100% |
Total Other Income (Expenses) | $ | (253) |
| 100% | $ | (3,581) |
| 100% | $ | 3,328 |
| -93% |
Our other income (expenses) primarily consists of interest income generated from bank deposits and gains and losses on foreign currency transactions. Net interest income increased by $540 to $642 during the twelve months ended December 31, 2023. Additionally, during the same period, we experienced a reversal in foreign currency transactions, incurring a net loss of $895, compared to the net gain of $6,317 we recorded in 2022, underscoring the volatility of currency exchange rates. Total other income for the period decreased by 100% to $0, compared to $10,000 in the previous year.
Income Tax Expense
Our income tax expense was $747,953 in the twelve months ended December 31, 2023, compared to $249,641 in the same period of 2022, representing increased by $498,312 or 200%. This change is mainly attributable to the interest, surcharge and provision of 2023 that QTBS recorded as income tax expenses for the year ended December 31, 2023, following a notice from the local tax authority.
Net Income (Loss)
As a result of the foregoing, we reported a net loss of $1,027,158 for the year ended December 31, 2023, representing a substantial decrease of $1,221,774, or 54%, compared to the net loss of $2,248,932 reported for the year ended December 31, 2022.
Net Loss Attributable to Non-controlling Interest
As referenced in the discussion of our company structure, we have non-controlling interest in our equity, meaning the portion of the equity in the subsidiaries of the Company not attributable, directly or indirectly to the Company. Accordingly, we recorded net income attributable to non-controlling interest increased by $25,265 or 112% from a net loss attributable to non-controlling interest of $22,647 in the fiscal year 2022 to a net income attributable to non-controlling interest of $2,618 in the fiscal year 2023.
Net income (loss) attributable to QMIS TBS Capital Group Corp.
As a result of the foregoing, we reported a net loss attributable to QMIS TBS Capital Group Corp. of $1,029,776 for the fiscal year ended December 31, 2023, representing a $1,196,509 or 54% decrease from a net loss of $2,226,285 for the fiscal year ended December 31, 2022.
Liquidity and Capital Resources
As of December 31, 2023, we had $1,121,580 in cash as compared to $187,437 as of December 31, 2022. We also had $167,344 in project advance primarily for a digital platform and $48,337 in prepaid expenses as of December 31, 2023.
55
As of December 31, 2023, our working capital deficit was $2,095,110. In assessing our liquidity, management monitors and analyzes our cash, our ability to generate sufficient revenue in the future, and our operating and capital expenditure commitments. We believe that our current cash and cash flows provided by operating activities, borrowings from our principal shareholders will not be sufficient to meet our working capital needs in the next 12 months from the date the audited financial statements were issued. Our future capital needs are expected to vary, influenced by the outcomes of our business activities and software development expenditure.
In order to continue as a going concern, the Company will need to secure additional capital resources. Management’s plan is to obtain such resources by obtaining capital from directors/shareholders sufficient to meet its minimal operating expenses and seeking third-party equity and/or debt financing. However, it should be noted that management cannot provide any assurance that the Company will be successful in accomplishing any of its plans. These financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
The following table sets forth summary of our cash flows as of December 31, 2023 and 2022:
|
| For the Twelve Months Ended | ||
|
| December 31, |
| December 31, |
|
| 2023 |
| 2022 |
|
|
|
|
|
Net cash provided (used) by operating activities | $ | 108,195 | $ | (1,707,595) |
Net cash provided (used) by investing activities |
| (1,198) |
| (352) |
Net cash provided (used) by financing activities |
| 860,061 |
| 439,923 |
Effect on changes in foreign exchange rate |
| (32,915) |
| 45,667 |
NET CHANGE IN CASH |
| 934,143 |
| (1,222,357) |
CASH BEGINNING OF YEAR |
| 187,437 |
| 1,409,794 |
CASH END OF YEAR | $ | 1,121,580 | $ | 187,437 |
|
|
|
|
|
Operating Activities
For the twelve months ended December 31, 2023, the net cash provided by operating activities amounted to $108,195. This performance can be primarily attributed to the following factors:
·A net loss of $1,027,158, for the twelve months ended December 31, 2023.
·An increase in accrued expenses by $222,296, as the accrued professional fees increased,
·An increase in taxes payable by $672,231, as the penalty and interest of income tax incurred in the current period,
·A substantial increase in deferred revenue of $448,551, as we received upfront payment for service to-be provided in 2024.
·Partially offset by an increase in prepaid expenses of $48,361, as we paid in advance of a service not delivered yet.
·Partially offset by an advance for a project of $167,344, paid pursuant to the Software License Agreement.
Net cash used in operating activities was $1,702,724 for the twelve months ended December 31, 2022, primarily consisting of the following:
·A net loss of $2,248,932 for the twelve months ended December 31, 2022.
·Offset by an increase of $225,930 in accounts receivable, mainly because the Company subsequently received a payment of $240,178 for an account receivable recorded in December 2021.
·Offset by an increase of $267,574 in taxes payment, as the Company recorded income tax expense for prior periods in 2022.
·Offset by a decrease of prepaid expenses of $51,359.
56
Investing Activities
The company spent a modest amount on the purchase of equipment, totaling $1,198 during the year ended December 31, 2023, while such purchase amount was $352 in year ended December 31, 2022.
Financing Activities
There was a substantial net inflow of $860,061 from financing activities, driven by shareholder capital contributions amounting to $654,750 and proceeds from related parties amounting to $205,311. There were no repayments to related parties in 2023, in contrast to the significant outflows for repayments in 2022.
Net cash provided by financing activities amounted to $439,923 for the year ended December 31, 2022, primarily consisting of proceeds from capital contribution of $999,975 and proceeds from related party loans of $480,882, offset by repayment of related party loans of $1,040,934.
Contractual obligations
Lease commitment
The Company has operating leases for corporate offices, employees’ accommodation, and office equipment. These leases have initial lease terms of 12 months to 5 years. The Company has elected not to recognize lease assets and liabilities for leases with an initial term of 12 months or less.
As of December 31, 2023, future minimum lease payments under the non-cancellable lease agreements were as follows:
|
| For the Year Ended December 31, | ||
|
| 2023 |
| 2022 |
|
|
|
|
|
Operating lease cost | $ | 25,035 | $ | 25,035 |
|
| December 31, |
| December 31, |
|
| 2023 |
| 2022 |
|
|
|
|
|
Weighted Average Remaining Lease Term - Operating leases |
| 0.58 years |
| 0.58 years |
|
|
|
|
|
Weighted Average Discount Rate - Operating leases |
| 8.00% |
| 8.00% |
As of December 31, 2023, future minimum lease payments under the non-cancellable lease agreements were as follows:
|
| December 31, |
|
| 2023 |
|
|
|
Lease payments in Year 2024 | $ | 353 |
Less: imputed interest |
| (11) |
Total lease liabilities-current |
| 342 |
57
Foreign Currency Translation
The accompanying consolidated financial statements are presented in United States dollar (“USD”), which is the reporting currency of the Company. The functional currency of QSC, QWT, QCV, QGE, QBT, and QR are Malaysian Ringgit (“MYR”). The functional currency of QFL and QTBS are Hong Kong dollar (“HKD”). The functional currency of QMIS USA and QIB is USD.
The Company maintains the books and record in the functional currency. 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. The resulting exchange differences are recorded in the statements of operations.
The reporting currency of the Company is the United States Dollars (“USD”), and the accompanying consolidated financial statements have been expressed in US$. In accordance with Accounting Standards Classification (“ASC”) Topic 830-30, “Translation of Financial Statements,” assets and liabilities of the Company whose functional currency is not USD are translated into USD, 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 the translation of financial statements are recorded as a separate component of accumulated other comprehensive gain (loss) within the statements of changes in shareholders’ deficit.
The exchange rates used for foreign currency translation were as follows:
USD$1 = HKD
Period Covered |
| Balance Sheet Date Rates |
| Average Rates |
|
|
|
|
|
Year ended December 31, 2023 |
| 7.8109 |
| 7.8292 |
Year ended December 31, 2022 |
| 7.8015 |
| 7.8306 |
USD$1 = MYR
Period Covered |
| Balance Sheet Date Rates |
| Average Rates | |
|
|
|
|
|
|
Year ended December 31, 2023 |
| 4.5903 |
| 4.5577 | |
Year ended December 31, 2022 |
| 4.4002 |
| 4.3982 | |
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not required for Smaller Reporting Companies.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Our consolidated financial statements and footnotes thereto are set forth beginning on page F-1 of this Report.
58
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
(a)Dismissal of independent registered public accounting firm.
On April 12, 2023, the Company dismissed Keith K. Zhen, CPA (“Zhen CPA”), the independent registered public accounting firm of the Company.
Zhen CPA was appointed as the Company’s independent registered public accounting firm on May 17, 2020, and continued to serve as the Company’s independent registered public accounting firm through April 12, 2023.
On April 12, 2023, at the recommendation of the Company’s Board of Directors, Zhen CPA was dismissed as the Company’s independent registered public accounting firm.
Zhen CPA’s reports on the Company’s financial statements for the fiscal year ended December 31, 2019, 2020, and 2021, did not contain an adverse opinion or a disclaimer of opinion and it was not qualified or modified as to uncertainty, audit scope, or accounting principles, except for the explanatory paragraph included in the report, which noted that there was substantial doubt as to the Company’s ability to continue as a going concern.
During the period from May 17, 2020, through December 31, 2022, and the subsequent interim period through April 12, 2023, there were no disagreements with Zhen CPA on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which, if not resolved to the satisfaction of Zhen CPA, would have caused Zhen CPA to make reference to the subject matter of the disagreements in connection with their report, and there were no “reportable events” as that term is defined in Item 304(a)(1)(v) of Regulation S-K, except for the material weaknesses described in Item 9A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.
(b)Newly Appointed Independent Registered Public Accountant
On April 12, 2023, upon the recommendation of the Company’s Board of Directors, the Company engaged KG CPA LLP as the Company’s independent registered public accounting firm.
The Company has not consulted with KG CPA LLP during the Company’s two most recent fiscal years or during any subsequent interim period prior to KG CPA LLP’s appointment as the Company’s independent registered public accounting firm with respect to the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on Registrant's consolidated financial statements, or any other matter that was either the subject of a disagreement or reportable event, as defined in Items 304(a)(2)(i) and (ii) of Regulation S-K.
ITEM 9A. CONTROLS AND PROCEDURES
1. Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Exchange Act, as of December 31, 2023. Based on this evaluation, our principal executive officer and principal financial officer concluded that as of the end of the period covered by this Report, our disclosure controls and procedures were not effective.
2. Changes in Internal Control Over Financial Reporting
None.
3. Management's Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Exchange Act. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Internal control over financial reporting includes those policies and procedures that:
59
·pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;
·provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles;
·provide reasonable assurance that our receipts and expenditures are being made only in accordance with authorization of our management and directors; and
·provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on our financial statements.
Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in "Internal Control—Integrated Framework" issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Based on this evaluation, our management determined that our internal controls over financial reporting were not effective as of December 31, 2023.
Areas of material weakness include:
·inadequate controls and monitoring processes over financial reporting.
4. Inherent Limitations on Effectiveness of Controls
Generally, disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives. Nevertheless, an internal control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system reflects the fact that there are resource constraints, and the benefits of controls are considered relative to their costs. As noted above, we have determined that our disclosure controls and procedures and our internal controls over financial reporting were not effective as of December 31, 2023. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the internal control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.
ITEM 9B. OTHER INFORMATION
None.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
60
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
Executive Officers and Directors
The table below sets forth information about our directors and executive officers as of the date of this Annual Report.
Name |
| Age |
| Position |
Dr. Chin Yung Kong |
| 70 |
| Chief Executive Officer, Director, Chairman |
Ong Kar Yee |
| 59 |
| Chief Financial Officer, Director |
The following is a summary of the biographical information about our officers and directors.
Dr. Chin Yung Kong, Chief Executive Officer, Director, Chairman
Dr. Chin Yung Kong, age 70, is a Malaysian citizen and currently resides in Dalian, China. Dr. Chin is the Managing Director of QMIS Capital Finance. Since 2002, Dr. Chin has devoting most of his time advising Chinese clients on financial restructuring, pre-audit evaluation before going public, pre-IPO investment strategies, and on the process of going public in the United States. From 1995 to 2002, Dr. Chin was financial controller for the Kwok Group Company in China. Prior to 1995, Dr. Chin was a practicing auditor and Certified Public Accountant (CPA) with Foo Kon & Tan in Singapore. Dr. Chin graduated from University of Hull in the United Kingdom with a Master in Finance Degree. In 1994, Dr. Chin earned a Master of Business Administration (MBA) Degree from the Irish Business School. In 2020, Dr. Chin was awarded a Doctor of Philosophy in Financial Management by the North Borneo University College. On July 17, 2014, Dr. Chin was awarded the title of Dato’Sri from the Sultan of Pahang, Kuala Lumpur, Malaysia, which is the highest state title conferred by the Ruler of Malaysia on the most deserving recipients who have contributed greatly to the nation or state.
In the past five years, Dr. Chin has not been involved in any negative legal proceedings as enumerated in Item 401(f) of Regulation S-K.
The Board believes that Dr. Chin’s extensive background in business and finance, as well as his professional and business connections make him well suited to serve as a member of the Company’s Board of Directors and as Chairman of the Board.
Ong Kar Yee, Chief Financial Officer, Director
Mr. Ong Kar Yee is a professional accountant by profession with more than 29 years of experience in finance and capital market industries across various fields, including audit and accounting, fund management, stock brokerage operation, stock analysis, and securities/futures trading. As of the date of this Annual Report, Mr. Ong was serving as the General Manager of the Malaysian office of QMIS Financial Group, where he has served since 2015. Prior to joining QMIS, Mr. Ong was a Financial Controller at Buraq Oil Sdn. Bhd, a Malaysian oil and gas company. Mr. Ong obtained a Master’s Degree from the Manchester Metropolitan University in the United Kingdom in 2015. He also graduated from the Tunku Abdul Rahman College in Malaysia with a higher diploma in accountancy in 1989, and in 2003 became a Certified Financial Planner. He is an associate member of the Chartered Institute of Management Accountants, United Kingdom (ACMA), and an associate member of the Chartered Global Management Accountants (CGMA).
The Board believes that Mr. Ong’s experience in the accounting and financial sectors make him well suited to serve as a member of the Company’s Board of Directors.
61
Family relationships.
There are no family relationships between or among the directors, executive officers or persons nominated or chosen by us to become directors or executive officers.
Director or officer involvement in certain legal proceedings.
To the best of our knowledge, except as described below, during the past five years, none of the following occurred with respect to a present or former director or executive officer of the Company: (1) any 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 any competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; and (4) being found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission or the Commodities Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.
As of the date of this Report, we did not have a standing audit, compensation, or nominating committee of the Board of Directors. The Company has determined that the Board of Directors does not have an "Audit Committee Financial Expert" as that term is defined in Item 407(d)(5) of SEC Regulation S-K.
Delinquent Section 16(a) Reports.
As of the date of this Report, none of the Directors or Executive Officers of the Company had filed any Section 16(a) Reports.
Corporate Governance
Our current corporate governance practices and policies are designed to promote shareholder value and we are committed to the highest standards of corporate ethics and diligent compliance with financial accounting and reporting rules. Our Board provides independent leadership in the exercise of its responsibilities. Our management oversees a system of internal controls and compliance with corporate policies and applicable laws and regulations, and our employees operate in a climate of responsibility, candor and integrity.
Corporate Governance Guidelines
We and our Board are committed to high standards of corporate governance as an important component in building and maintaining shareholder value. To this end, we regularly review our corporate governance policies and practices to ensure that they are consistent with the high standards of other companies. We also closely monitor guidance issued or proposed by the SEC and the provisions of the Sarbanes-Oxley Act, as well as the emerging best practices of other companies.
The Board and Committees of the Board
The Company is governed by the Board that currently consists of two members: Dr. Yung Kong Chin and Ong Kar Yee. As of the date of this Annual Report, the Board had not yet established separate audit, compensation, or governance committees and was working on creating these committees and their governing charters. From time to time, the Board may establish other committees.
Governance Structure
Our Board of Directors is responsible for corporate governance in compliance with reporting laws and for representing the interests of our shareholders. As of the date of this Annual report, the Board was composed of two (2) members, none of whom are considered independent, non-executive directors. Details on Board membership, oversight and activity are reported below.
62
The Board’s Role in Risk Oversight
The Board oversees that the assets of the Company are properly safeguarded, that the appropriate financial and other controls are maintained, and that the Company’s business is conducted wisely and in compliance with applicable laws and regulations and proper governance. Included in these responsibilities is the Board of Directors’ oversight of the various risks facing the Company. In this regard, the Board seeks to understand and oversee critical business risks. The Board does not view risk in isolation. Risks are considered in virtually every business decision and as part of the Company’s business strategy. The Board recognizes that it is neither possible nor prudent to eliminate all risk. Indeed, purposeful and appropriate risk-taking is essential for the Company to be competitive on a global basis and to achieve its objectives.
The Board implements its risk oversight function both as a whole and plans to also do so in the near future through Committees. The Board anticipates that much of the work will be delegated to various Committees, which will meet regularly and report back to the full Board. The Board anticipates that these Committees will play significant roles in carrying out the risk oversight function. In particular:
·The Board anticipates that the Audit Committee will oversee risks related to the Company’s financial statements, the financial reporting process, accounting and legal matters. The Audit Committee members will meet separately with representatives of the independent auditing firm.
·The Board anticipates that the Compensation Committee will evaluate the risks and rewards associated with the Company’s compensation philosophy and programs. The Compensation Committee will review and approve compensation programs with features that mitigate risk without diminishing the incentive nature of the compensation. The Board anticipates that management will discuss with the Compensation Committee the procedures that have been put in place to identify and mitigate potential risks in compensation.
Independent Directors
As of the date of this Annual Report, we were not required by any outside organization (such as a stock exchange or trading facility) to have independent directors.
63
ITEM 11. EXECUTIVE COMPENSATION.
The following table sets forth information regarding each element of compensation that we paid or awarded to our executive officers for fiscal years 2023 and 2022.
Name and |
| Year |
| Salary |
|
| Bonus |
|
| Stock |
|
| Option |
|
| Non- |
|
| All Other |
|
| Totals |
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dr. Yung Kong Chin, |
| 2023 |
| $ | 0 |
|
| $ | 855,432* |
|
| $ | 0 |
|
|
| 0 |
|
| $ | 0 |
|
| $ | 0 |
|
| $ | 0 |
|
Chief Executive Officer, Chairman |
| 2022 |
| $ | 0 |
|
| $ | 770,707* |
|
| $ | 0 |
|
|
| 0 |
|
| $ | 0 |
|
| $ | 0 |
|
| $ | 0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TingTing Gu, |
| 2023 |
| $ | 0 |
|
| $ | 0 |
|
| $ | 0 |
|
|
| 0 |
|
| $ | 0 |
|
| $ | 0 |
|
| $ | 0 |
|
Former Chief Operating Officer** |
| 2022 |
| $ | 0 |
|
| $ | 0 |
|
| $ | 0 |
|
|
| 0 |
|
| $ | 0 |
|
| $ | 0 |
|
| $ | 0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Teck Sheng Ting, |
| 2023 |
| $ | 0 |
|
| $ | 0 |
|
| $ | 0 |
|
|
| 0 |
|
| $ | 0 |
|
| $ | 0 |
|
| $ | 0 |
|
Former Chief Strategy Officer*** |
| 2022 |
| $ | 0 |
|
| $ | 0 |
|
| $ | 0 |
|
|
| 0 |
|
| $ | 0 |
|
| $ | 0 |
|
| $ | 0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ong Kar Yee |
| 2023 |
| $ | 73,322 |
|
| $ | 0 |
|
| $ | 0 |
|
|
| 0 |
|
| $ | 0 |
|
| $ | 0 |
|
| $ | 0 |
|
Chief Financial Officer |
| 2022 |
| $ | 42,667 |
|
| $ | 0 |
|
| $ | 0 |
|
|
| 0 |
|
| $ | 0 |
|
| $ | 0 |
|
| $ | 0 |
|
* The compensation comprises the combined remuneration for his roles as the CEO and Chairman of the company.
** Ms. Gu resigned as the Company’s Chief Operating Officer on February 29, 2024.
*** Mr. Ting resigned as the Company’s Chief Operating Officer on April 9, 2024.
Director Compensation
We have provided no compensation to our directors for their services provided as directors.
Employment Agreements
We do not have any employment agreements with any of our officers.
Compensation Committee Interlocks and Insider Participation
Our Board of Directors does not have a compensation committee and the entire Board of Directors performs the functions of a compensation committee. No member of our Board of Directors has a relationship that would constitute an interlocking relationship with our executive officers or directors or another entity.
64
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
The following table sets forth certain information furnished by current management and others, concerning the beneficial ownership of our common stock as of April 3, 2024, of (i) each person who is known to us to be the beneficial owner of more than five percent of our common stock; (ii) all directors and named executive officers; and (iii) our directors and executive officers as a group. The percentages below are based on a total of 301,088,600 shares outstanding as April 3, 2024.
|
| Amount of Beneficial Ownership (1) |
| Percent of Class(1) |
Directors and Executive Officers |
|
|
|
|
|
|
|
|
|
Dr. Chin Yung Kong, Director, CEO(2) |
| 142,914,670 |
| 47.47% |
|
|
|
|
|
Kar Yee Ong, CFO and Director |
| 13,000,000 |
| 4.32% |
|
|
|
|
|
Named Executive Officers, Executive Officers, and Directors as a Group (2 Persons) |
| 155,914,670 |
| 51.78% |
|
|
|
|
|
5% Principal Shareholders: |
|
|
|
|
Richwood Ventures Berhad (3) |
| 27,000,000 |
| 8.97% |
|
|
|
|
|
TingTing Gu, Former Director, Former COO |
| 100,000,000 |
| 33.21% |
(1)This table is based upon information supplied by officers, directors and principal stockholders and is believed to be accurate. Unless otherwise indicated in the footnotes to this table, we believe that each of the stockholders named in this table has sole voting and investment power with respect to the shares indicated as beneficially owned. 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. Shares of common stock subject to options, warrants, or other conversion privileges currently exercisable or convertible, or exercisable or convertible within 60 days of the date of this table, are deemed outstanding for computing the percentage of the person holding such option, warrant, or other convertible instrument but are not deemed outstanding for computing the percentage of any other person. Where more than one person has a beneficial ownership interest in the same shares, the sharing of beneficial ownership of these shares is designated in the footnotes to this table. As of April 3, 2024, the Company had 339,985,512 shares of common stock outstanding.
(2)Dr. Chin owns 138,700,070 shares directly and an additional 10,000,000 shares are owned by an indirect subsidiary of the Company that is controlled by Dr. Chin.
(3)Richwood Ventures Berhad is an entity controlled by Teck Sheng Ting, a former director and officer of the Company.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
In addition to the executive officer compensation arrangements discussed in “Executive Compensation,” below we describe the transactions during the year ended December 31, 2023, to which we have been a participant, in which the amount involved in the transaction is material to the Company and in which any of the following is a party: (a) enterprises that directly or indirectly through one or more intermediaries, control or are controlled by, or are under common control with, the Company; (b) associates; (c) individuals owning, directly or indirectly, an interest in the voting power of the Company that gives them significant influence over the Company, and close members of any such individual’s family; (d) key management personnel, that is, those persons having authority and responsibility for planning, directing and controlling the activities of the Company, including directors and senior management of companies and close members of such individuals’ families; and (e) enterprises in which a substantial interest in the voting power is owned, directly or indirectly, by any person described in (c) or (d) or over which such a person is able to exercise significant influence.
65
Review and Approval of Related Party Transactions
We have adopted a written policy with respect to the review, approval and ratification of related person transactions. The Board of Directors has primary responsibility for reviewing all related party transactions involving the Company’s directors, officers and directors’ and officers’ immediate family members. The Board may determine whether to permit or prohibit the Related Party Transaction. For any ongoing relationships, the Board shall annually review and assess the relationships with the Related Party and whether the Related Party Transaction should continue.
Under the policy, a “related party transaction” means any transaction directly or indirectly involving any Related Party that would need to be disclosed under Item 404 of Regulation S-K. Under Item 404, the Company is required to disclose any transaction occurring since the beginning of the Company’s last fiscal year, or any currently proposed transaction, in which the Company was or is a participant and the amount involved exceeds $120,000, and in which any related party had or will have a direct or indirect material interest. “Related Party Transaction” also includes any material amendment or modification to an existing Related Party Transaction. For the purposes of this policy, a “Related Party” means (A) a director, including any director nominee, (B) an executive officer; (C) a person known by the Company to be the beneficial owner of more than 5% of the Company’s common stock; or (D) a person known by the Company to be an immediate family member of any of the foregoing. “Immediate family member” means a child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law of such director, executive officer, nominee for director, or beneficial owner, and any person (other than a tenant or employee) sharing the household of such director, executive officer, nominee for director, or beneficial owner.
The following is a summary of transactions since the beginning of the 2023 fiscal year, or any currently proposed transaction, in which we were or are to be a participant and the amount involved exceeded or exceeds the lesser of $120,000 or one percent of the average of our total assets at year-end for the last two completed years, and in which any related person had or will have a direct or indirect material interest (other than compensation described under “Executive Compensation”). We believe the terms obtained or consideration that we paid or received, as applicable, in connection with the transactions described below were comparable to terms available or the amounts that would be paid or received, as applicable, in arm’s-length transactions.
Transactions with Related Parties
The balance with related parties consisted of the following at the year ended December 31, 2023
|
| As of |
| As of | ||||
|
| December 31, 2023 |
| December 31, 2022 | ||||
|
| US$ |
| US$ | ||||
Accounts Payable to related party |
|
|
|
|
|
|
|
|
Pantop Millennium SDN BHD |
|
| 41,392 |
|
|
| 22,726 |
|
QMIS Asset Management Limited |
|
| 3,621 |
|
|
| - |
|
|
|
| 45,013 |
|
|
| 22,726 |
|
Due to related parties |
|
|
|
|
|
|
|
|
Dr. Yung Kong Chin |
|
| 625,185 |
|
|
| 610,557 |
|
Pantop Venture Capital SDN BHD |
|
| 62,445 |
|
|
| 64,817 |
|
Richwood Ventures Berhad |
|
| 158,848 |
|
|
| - |
|
Mr. Kar Yee Ong |
|
| 25,606 |
|
|
| - |
|
|
|
| 872,084 |
|
|
| 675,374 |
|
66
The Company had transactions with the following related parties:
|
|
|
Name of Related Party |
| Nature of Relationship |
|
|
|
Mr. Yung Kong Chin |
| CEO, and a director of the Company. |
Mr. Hua Fung Chin |
| A former director of the Company, and son of Mr. Yung Kong Chin. |
Mr. Ting Teck Sheng |
| A former director of the Company. |
Ms. Tingting Gu |
| A former director of the Company. |
Richwood Ventures Berhad |
| A Malaysia company, Mr. Ting Teck Sheng is a director. |
Panpay Holdings SDN BHD |
| A Malaysia company Mr. Ting Teck Sheng is a director. |
Pantop Venture Capital SDN BHD |
| A Malaysia company owns 40% of QMIS Richwood Blacktech SDN BHD |
Pantop Millennium SDN BHD |
| A Malaysia company owns 3% of QMIS Richwood Blacktech SDN BHD |
QMIS Financial Group Limited |
| A Hong Kong company, Mr. Yung Kong Chin is a director. |
QMIS Asset Management Limited |
| A Hong Kong company, Ms. Tingting Gu is a director. |
(1) Software development and maintenance services provided to Richwood Ventures Berhad and Panpay Holdings SDN BHD
QMIS Richwood Blacktech SDN BHD (“QR”) provides software development and maintenance servicers to Richwood Ventures Berhad and Panpay Holdings SDN BHD. In the year ended December 31, 2023, QR generated revenue of $45,198 and $39,484 from Richwood Ventures Berhad and Panpay Holdings SDN BHD, respectively, and there was no outstanding balance due to/from these two related parties as of December 31, 2023. In the year ended December 31, 2022, QR generated revenue of $32,058 and $74,801 from Richwood Ventures Berhad and Panpay Holdings SDN BHD, respectively. As of December 31, 2022, accounts receivable from Richwood Ventures Berhad was $2,054, and deferred revenue from Panpay Holdings SDN BHD amounted to $1,500.
(2) Management fees paid to QMIS Financial Group Limited
QMIS Finance Limited (“QFL”) and QMIS TBS Capital Group Corp. (“QTBS”) paid management fees to QMIS Financial Group Limited for general and administrative services, such as office space and bookkeeping. The management fees amounted to $675,679 and $990,036 in the years ended December 31, 2023 and 2022, respectively. There was no outstanding balance for account payable to QMIS Finance Group Limited as of December 31, 2023 and 2022.
(3) Advisory fees paid to QMIS Asset Management Limited
QMIS Finance Limited (“QFL”) and QMIS TBS Capital Group Corp. (“QTBS”) paid advisory fees to QMIS Asset Management Limited for assistances in operating strategy design and the consultant services. The advisory fees amounted to $14,442 and $nil in the year ended December 31, 2023 and 2022, respectively. The accrued expenses for QMIS Asset Management Limited amounted to $3,621 and $nil as of December 31, 2023 and December 31, 2022, respectively.
(4) Accounts payable to Pantop Millennium SDN BHD
Pantop Millennium SDN BHD has provided general and administrative services, such as office space and bookkeeping, to QMIS Richwood Blacktech SDN BHD (“QR”) since its inception in June 2021. The amount of the services was $39,494 and $31,831 for the year ended December 30, 2023 and 2022, respectively. The account payable to Pantop Millennium SDN BHD amounted to $41,392 and $22,726 as of December 31, 2023 and 2022, respectively.
(5) Due to related parties
Since QMIS Richwood Blacktech SDN BHD (“QR”) did not have a bank account until November 2022, Pantop Venture Capital SDN BHD has traditionally paid QR’s expenses for its operation. These advanced payments are unsecured, non-interest bearing and payable on demand. There are no written agreements for these advances.
As disclosed in Note 5, Richwood Ventures Berhad paid the project advance of $167,344 on behalf of QMIS Richwood Blacktech SDN BHD in November 2023. These advanced payments are unsecured, non-interest bearing and payable on demand. There are no written agreements for these advances.
67
Due to lack of cash resource, Mr. Yung Kong Chin has financed the Company’s operation. Whenever the Company needs cash resource, he loans money to the Company to support its operation. These loans are unsecured, non-interest bearing and payable on demand. There are no written agreements for these advances.
Dr. Yung Kong Chin, Mr. Hua Fung Chin, Mr. Kar Yee Ong, and Ms. Tingting Gu lead the consultant service team which provides consultant services to customers. Their compensation was included in the costs of consultant services, and was accrued if they were not paid as of the balance sheet date.
On October 30, 2020, the Company entered into an agreement to issue a convertible promissory note (the "Note") in the principal amount of one million five hundred thousand dollars ($1,500,000), to the Chairman of the Board and CEO, Dr. Yung Kong Chin. The Company will pay interest from the date of issuance of the Note on the unpaid principal balance at the annual rate of interest equal to eight percentage (8%) per six months, such principal and interest to be payable on demand. The Note is a general unsecured obligation of the Company. At any time, the unpaid principal amount of the Note and any unpaid interest accrued thereon can be converted into the Company's common stock at $1.50 per share. However, the Note has not been issued and no fund has been made to the Company at the date of this Annual Report. The Company and Dr. Chin anticipate that the Note will be issued in the second quarter of 2024.
Director Independence
As of the date of this Annual Report, the Company’s common stock was not traded on any stock exchange, and was not required to have any independent directors.
Nevertheless, the Board evaluates the independence of each nominee for election as a director of our Company in accordance with the Listing Rules (the “Nasdaq Listing Rules”) of the Nasdaq Stock Market LLC (“Nasdaq”). Pursuant to these rules, a majority of our Board must be “independent directors” within the meaning of the Nasdaq Listing Rules, and all directors who sit on our Audit Committee, Nominating and Corporate Governance Committee and Compensation Committee must also be independent directors.
The Nasdaq definition of “independence” includes a series of objective tests, such as the director or director nominee is not, and was not during the last three years, an employee of Glimpse or our Subsidiaries and has not received certain payments from, or engaged in various types of business dealings with us. In addition, as further required by the Nasdaq Listing Rules, the Board has made a subjective determination as to each independent director that no relationships exist, which, in the opinion of the Board, would interfere with such individual’s exercise of independent judgment in carrying out his or her responsibilities as a director. In making these determinations, the Board reviewed and discussed information provided by the directors with regard to each director’s business and personal activities as they may relate to Company and its management.
As a result, the Board has affirmatively determined that none of the current Directors are independent in accordance with the Nasdaq listing rules.
68
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
KG CPA LLP
Set below are aggregate fees billed by KG CPA LLP for professional services rendered for the year ended December 31, 2023.
Audit Fees
The fees for the audit and review services billed by KG CPA LLP for the period from January 1, 2023, to December 31, 2023, were $_____110,000______.
Audit Related Fees
The fees for the audit related services billed by KG CPA LLP for the period from January 1, 2023, to December 31, 2023, were $___0___.
Tax Fees
The fees for the tax related services billed by KG CPA LLP for the period from January 1, 2023, to December 31, 2023, were $__0___.
Keith K. Zhen, CPA
Set below are aggregate fees billed by Keith K. Zhen, CPA, for professional services rendered for the year ended December 31, 2023.
Audit Fees
The fees for the audit and review services billed by Keith K. Zhen, CPA, for the period from January 1, 2023, to December 31, 2023, were $____0_______.
Audit Related Fees
The fees for the audit related services billed by Keith K. Zhen, CPA, for the period from January 1, 2023, to December 31, 2023, were $__0____.
Tax Fees
The fees for the tax related services billed by Keith K. Zhen, CPA, for the period from January 1, 2023, to December 31, 2023, were $__0___.
Set below are aggregate fees billed by Keith K. Zhen, CPA, for professional services rendered for the year ended December 31, 2022.
Audit Fees
The fees for the audit and review services billed by Keith K. Zhen, CPA, for the period from January 1, 2022, to December 31, 2022, were $20,000.
Audit Related Fees
The fees for the audit related services billed by Keith K. Zhen, CPA, for the period from January 1, 2022, to December 31, 2022, were $0.
Tax Fees
The fees for the tax related services billed by Keith K. Zhen, CPA, for the period from January 1, 2022, to December 31, 2022, were $0.
69
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
15(a)(1). Financial Statements.
The following consolidated financial statements, and related notes and Report of Independent Registered Public Accounting Firm are filed as part of this Annual Report:
70
QMIS TBS CAPITAL GROUP CORP. AND SUBSIDIARIES
FINANCIAL REPORT
At December 31, 2023, and 2022, and
for the years ended December 31, 2023 and 2022
71
INDEX
|
| PAGE |
| F-1 | |
|
|
|
| F-3 | |
|
|
|
| F-4 | |
|
|
|
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT) |
| F-5 |
|
|
|
| F-6 | |
|
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| F-7 - F22 |
72
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
QMIS TBS Capital Group Corp.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of QMIS TBS Capital Group Corp. and subsidiaries (the Company) as of December 31, 2023 and 2022, and the related consolidated statements of income, comprehensive income, stockholders’ equity (deficit), and cash flows for the years then ended, 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, 2023 and 2022, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
Going Concern Matter
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has suffered recurring losses from operations and has a significant accumulated deficit. These factors 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 3. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.
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.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Related Parties Transactions
The Company has significant transactions with related parties. The evaluation of the Company’s identification of related parties and related party transactions required a high degree of auditor judgment and an increased extent of effort when performing audit procedures to evaluate the reasonableness of management’s procedures performed to identify related parties and related party transactions of the Company.
F-1
Our audit procedures related to the Company’s identification of related parties and related party transactions included the following, among others:
• Inquired with executive officers, key members of management, the Board of Directors and others within the Company regarding related party relationships and transactions;
• Read agreements and contracts with and between related parties and, in certain cases third parties, and evaluated whether authorization and approvals were obtained and the terms and other information about transactions are consistent with explanations from inquiries and other audit evidence obtained about the business purpose of the transactions;
• Analyzed the general ledger detail and inspected journal entries to identify potential additional transactions with related parties;
• Compared the Company’s reconciliation of applicable accounts to related parties’ records of transactions and balances;
• Received confirmations from related parties, and, in certain cases third parties, and compared responses to the Company’s records;
• Performed the following procedures to identify information related to potential additional transactions between the Company and related parties that may also include third parties:
• Read the Company’s minutes from meetings of the Board of Directors;
• Inspected annual questionnaires completed by the Company’s directors and officers;
• Read and inspected the Company’s significant contracts, such as sales agreements and leases;
• Read publicly available sources including the Company’s public filings.
/S/ KG CPA LLP |
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PCAOB ID
We have served as the Company’s auditor since 2022
April 15, 2024
F-2
QMIS TBS CAPITAL GROUP CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
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| December 31, |
| December 31, |
| 2023 |
| 2022 | |
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ASSETS |
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Current Assets: |
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Cash and cash equivalents | $ | $ | ||
Accounts receivable, net (Note 4) |
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Prepaid expenses |
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Contract security deposit |
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Project advance (Note 5) |
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Total Current Assets |
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Property, plant and equipment, net (Note 6) |
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Operating lease right of use asset, net (Note 10) |
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Total Assets | $ | $ | ||
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LIABILITIES AND SHAREHOLDERS' EQUITY |
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Current Liabilities: |
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Accounts payable (Note 7) | $ | $ | ||
Accrued expenses (Note 8) |
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Accrued expenses-related party (Note 10 (3)) |
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Deferred revenue |
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Deferred revenue-related parties (Note 10 (1)) |
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Service taxes payable (Note 9) |
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Income taxes payable (Note 12) |
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Operating lease liabilities – current (Note 11) |
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Due to related parties (Note 10 (4)) |
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Total Current Liabilities |
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Operating lease liabilities – noncurrent (Note 10) |
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Total Liabilities |
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Commitments and Contingencies (Note 14) |
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Shareholders' Equity: |
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Preferred stock, par value $ |
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Common stock, par value $ |
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Common stock to-be issued |
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Additional paid-in capital |
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Retained Earnings (Accumulated deficit) |
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Accumulated other comprehensive income |
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Total QMIS TBS Capital Group Corp. shareholders' equity |
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Non-controlling interest |
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Total Shareholders' Equity (Deficit) |
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Total Liabilities and Shareholders' Equity (Deficit) | $ | $ |
* Retrospectively restated for effect of share issuances on February 13, 2023.
The accompanying notes are an integral part of these consolidated financial statements.
F-3
QMIS TBS CAPITAL GROUP CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
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| December 31, |
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| December 31, |
| 2023 |
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| 2022 | |
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Revenue |
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Consultant services | $ |
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Software development and maintenance services-related parties (Note 10 (1)) |
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Software development and maintenance services |
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Total revenue |
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Costs of Revenue |
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Costs of consultant services |
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Costs of software development and maintenance services |
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Total of costs of revenue |
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Gross Profit |
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Operating Expenses |
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General and administrative expenses |
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Payroll and employee benefit |
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Depreciation expenses |
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Office expenses |
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Rental expenses |
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Due and subscription |
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Taxes expenses |
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Professional fees |
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Consultant fees |
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Travel and log |
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Management fees-related party (Note 9 (2)) |
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Advisory Fee-related party (Note 9 (3)) |
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Management fees |
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Total general and administrative expenses |
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Total Operating Expenses |
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Income (Loss) from Operation |
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Other Income (Expenses) |
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Interest income |
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Gain (loss) on foreign currency transaction |
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Other income (expenses) |
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Total Other Income (Expenses) |
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Lose before Provision for Income Tax |
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Provision for Income Tax |
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Net Income (Loss) |
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Less: net income attributable to non-controlling interest |
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Net income (loss) attributable to |
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QMIS TBS Capital Group Corp. | $ | ( |
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Other comprehensive income (loss) |
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Effects of foreign currency conversion |
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Total comprehensive income (loss) |
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Less: comprehensive income attributable to non-controlling interest |
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Comprehensive income (loss) attributable to |
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QMIS TBS Capital Group Corp. | $ | ( |
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Basic and Fully Diluted Loss per Share | $ | ( |
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Weighted average shares outstanding |
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The accompanying notes are an integral part of these consolidated financial statements.
F-4
