BioNexus Gene Lab Corp 10-Q for FY2022 Q3
BioNexus Gene Lab Corp (BGLC)
About this 10-Q
BioNexus Gene Lab Corp filed this 10-Q on November 14, 2022, covering the quarter ended September 30, 2022 (FY2022 Q3).
Headline figures
Quarter ended September 30, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $2.58M
- down 28.0% from $3.58M a year earlier
- Net loss
- $77.4K
- compared with net income of $295.32K a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _____________
Commission File Number:
(Exact name of registrant as specified in its charter) |
| ||
(State or Other Jurisdiction of Incorporation or Organization) |
| (I.R.S. Employer Identification No.) |
|
|
|
| ||
(Address of Principal Executive Offices) |
| (Zip Code) |
+
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer, “ “ accelerated filer, “ “non-accelerated filer ,” “ smaller reporting company, “ and “ emerging growth company “ in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer | ☐ | Accelerated filer | ☐ |
☒ | Smaller reporting company | ||
|
| 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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of November 11, 2022, there were
TABLE OF CONTENTS
|
|
|
| Page |
|
|
|
|
| ||
|
| 4 |
| ||
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
|
| 23 |
| |
|
| 31 |
| ||
|
| 31 |
| ||
|
| 32 |
| ||
|
|
|
|
|
|
|
|
|
| ||
|
| 33 |
| ||
|
| 33 |
| ||
|
| 33 |
| ||
|
| 33 |
| ||
|
| 33 |
| ||
|
| 34 |
| ||
|
|
|
|
|
|
|
| 35 |
| ||
| 2 |
| Table of Contents |
CAUTIONARY NOTE REGARDING
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains statements that may be deemed to be “forward-looking statements” within the meaning of the federal securities laws. These statements relate to anticipated future events, future results of operations and or future financial performance. In some cases, you can identify forward-looking statements by their use of terminology such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “future,” “intend,” “may,” “ought to,” “plan,” “possible,” “potentially,” “predicts,” “project,” “should,” “will,” “would,” negatives of such terms or other similar terms. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. The forward-looking statements in this Quarterly Report on Form 10-Q include, without limitation, statements relating to:
| ● | our goals and strategies; |
|
|
|
| ● | our future business development, results of operations and financial condition; |
|
|
|
| ● | our estimates regarding expenses, future revenues, capital requirements and our need for additional financing; |
|
|
|
| ● | our estimates regarding the market opportunity for our services; |
|
|
|
| ● | the impact of government laws and regulations; |
|
|
|
| ● | our ability to recruit and retain qualified personnel; |
|
|
|
| ● | our failure to comply with regulatory guidelines; |
|
|
|
| ● | uncertainty in industry demand; |
|
|
|
| ● | general economic conditions and market conditions in the financial services industry; |
|
|
|
| ● | future sales of large blocks or our securities, which may adversely impact our share price; and |
|
|
|
| ● | depth of the trading market in our securities. |
The preceding list is not intended to be an exhaustive list of all of our forward-looking statements. Forward-looking statements reflect our current views with respect to future events and are based on assumptions and subject to risks and uncertainties, including those described in Item 1A “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 and elsewhere in this Quarterly Report on Form 10-Q.
You should not unduly rely on any forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that future results, levels of activity, performance and events and circumstances reflected in the forward-looking statements will be achieved or will occur. Except as required by law, we undertake no obligation to update publicly any forward-looking statements for any reason after the date of this Quarterly Report on Form 10-Q, to conform these statements to actual results or to changes in our expectations.
| 3 |
| Table of Contents |
PART I — FINANCIAL INFORMATION
ITEM 1. Financial Statements
BIONEXUS GENE LAB CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2022 AND DECEMBER 31, 2021
(Currency expressed in United States Dollars (“US$”))
|
|
|
| As of |
| |||||||
|
|
|
| September 30, |
|
| December 31, |
| ||||
|
| Note |
|
| 2022 |
|
| 2021 |
| |||
|
|
|
| (Unaudited) |
|
| (Audited) |
| ||||
ASSETS |
|
|
|
|
|
|
|
|
| |||
CURRENT ASSETS |
|
|
|
|
|
|
|
|
| |||
Cash and bank balances |
|
|
|
|
|
|
|
|
| |||
Fixed deposits placed with financial institutions |
|
|
|
|
|
|
|
|
| |||
Trade receivables |
|
| 4 |
|
|
|
|
|
|
| ||
Other receivables, deposits and prepayments |
|
|
|
|
|
|
|
|
|
| ||
Deferred cost of revenue |
|
|
|
|
|
|
|
|
|
| ||
Tax recoverable |
|
| 5 |
|
|
|
|
|
|
| ||
Inventories |
|
|
|
|
|
|
|
|
|
| ||
Total current assets |
|
|
|
|
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-CURRENT ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
Lease right of use asset, net |
|
| 6 |
|
|
|
|
|
|
| ||
Property, plant and equipment, net |
|
| 7 |
|
|
|
|
|
|
| ||
Other investments |
|
| 8 |
|
|
|
|
|
|
| ||
Total non-current assets |
|
|
|
|
|
|
|
|
|
| ||
TOTAL ASSETS |
|
|
|
|
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
|
Trade payables |
|
| 9 |
|
|
|
|
|
|
| ||
Other payables and accrued liabilities |
|
|
|
|
|
|
|
|
|
| ||
Current portion of obligation under finance lease |
|
|
|
|
|
|
|
|
|
| ||
Current portion of operating lease liabilities |
|
| 6 |
|
|
|
|
|
|
| ||
Advance payment from customer |
|
|
|
|
|
|
|
|
|
| ||
Deferred revenue |
|
|
|
|
|
|
|
|
|
| ||
Tax payables |
|
| 5 |
|
|
|
|
|
|
| ||
Total current liabilities |
|
|
|
|
|
|
|
|
|
| ||
See accompanying notes to the condensed consolidated financial statements.
| 4 |
| Table of Contents |
ITEM 1. FINANCIAL STATEMENTS (CONT’D)
BIONEXUS GENE LAB CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2022 AND DECEMBER 31, 2021
(Currency expressed in United States Dollars (“US$”))
|
|
|
| As of |
| |||||||
|
|
|
| September 30, |
|
| December 31, |
| ||||
|
| Note |
|
| 2022 |
|
| 2021 |
| |||
|
|
|
| (Unaudited) |
|
| (Audited) |
| ||||
|
|
|
|
|
|
|
|
|
| |||
NON-CURRENT LIABILITIES |
|
|
|
|
|
|
|
|
| |||
Non-current portion of obligation under finance lease |
|
|
|
|
|
|
|
|
| |||
Non-current portion of operating lease liabilities |
|
| 6 |
|
|
|
|
|
|
| ||
Deferred tax liabilities |
|
| 5 |
|
|
|
|
|
|
| ||
Total non-current liabilities |
|
|
|
|
|
|
|
|
|
| ||
TOTAL LIABILITIES |
|
|
|
|
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
As at September 30, 2022, common stock, no par value; |
|
| 10 |
|
|
|
|
|
|
| ||
Additional paid in capital |
|
|
|
|
|
| ( | ) |
|
| ( | ) |
Accumulated surplus |
|
|
|
|
|
|
|
|
|
| ||
Other comprehensive losses |
|
|
|
|
|
| ( | ) |
|
| ( | ) |
TOTAL STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
| $ |
|
| $ |
| ||
See accompanying notes to the condensed consolidated financial statements.
| 5 |
| Table of Contents |
BIONEXUS GENE LAB CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021
(Currency expressed in United States Dollars (“US$”))
(Unaudited)
|
| Three months ended |
|
| Nine months ended |
| ||||||||||
|
| September 30, |
|
| September 30, |
| ||||||||||
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| ||||
REVENUE |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COST OF REVENUE |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS PROFIT |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(LOSS)/PROFIT FROM OPERATIONS |
|
| ( | ) |
|
|
|
|
| ( | ) |
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCE COSTS |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(LOSS)/PROFIT BEFORE TAX |
|
| ( | ) |
|
|
|
|
| ( | ) |
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax expense |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET (LOSS)/PROFIT |
| $ | ( | ) |
| $ |
|
| $ | ( | ) |
| $ |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation loss |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
COMPREHENSIVE (LOSS)/INCOME |
| $ | ( | ) |
| $ |
|
| $ | ( | ) |
| $ |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share - Basic and diluted |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Weighted average number of common shares outstanding – Basic and diluted |
|
|
|
|
|
|
|
|
|
|
|
| ||||
See accompanying notes to the condensed consolidated financial statements.
| 6 |
| Table of Contents |
BIONEXUS GENE LAB CORP
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
AS OF SEPTEMBER 30, 2022 AND 2021
(Amount expressed in United States Dollars (“US$))
|
|
|
|
|
|
|
| Accumulated |
|
|
| |||||||||||||
|
|
|
| Additional |
|
|
|
| other |
|
|
| ||||||||||||
|
| Common stock |
|
| paid in |
|
| Accumulated |
|
| comprehensive |
|
| Total |
| |||||||||
|
| Number of shares |
|
| Amount |
|
| capital |
|
| surplus |
|
| income/(loss) |
|
| Equity |
| ||||||
Balance as of December 31, 2020 |
|
|
|
| $ |
|
| $ | ( |
| $ |
|
| $ |
|
| $ |
| ||||||
Net profit for the period |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Foreign currency translation loss |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| ( |
|
| ( | |||||
Balance as of March 31, 2021 |
|
|
|
| $ |
|
| $ | ( |
| $ |
|
| $ | ( |
| $ |
| ||||||
Net profit for the period |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Foreign currency translation loss |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| ( |
|
| ( | |||||
Balance as of June 30, 2021 |
|
|
|
| $ |
|
| $ | ( |
| $ |
|
| $ | ( |
| $ |
| ||||||
Net profit for the period |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Foreign currency translation loss |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| ( |
|
| ( | |||||
Balance as of September 30, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021 |
|
|
|
| $ |
|
| $ | ( |
| $ |
|
| $ | ( |
| $ |
| ||||||
|
|
|
|
|
|
|
| Accumulated |
|
|
| |||||||||||||
|
|
|
| Additional |
|
| Accumulated |
|
| other |
|
|
| |||||||||||
|
| Common stock |
|
| paid in |
|
| surplus/ |
|
| comprehensive |
|
| Total |
| |||||||||
|
| Number of shares |
|
| Amount |
|
| capital |
|
| (loss) |
|
| loss |
|
| Equity |
| ||||||
Balance as of December 31, 2021 |
|
|
|
| $ |
|
| $ | ( | ) |
| $ |
|
| $ | ( | ) |
| $ |
| ||||
Net profit for the period |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Foreign currency translation loss |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | |||
Balance as of March 31, 2022 |
|
|
|
| $ |
|
| $ | ( | ) |
| $ |
|
| $ | ( | ) |
| $ |
| ||||
Net loss for the period |
|
| - |
|
|
|
|
|
|
|
|
| ( | ) |
|
|
|
|
| ( | ) | |||
Issuance of shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Foreign currency translation loss |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | |||
Balance as of June 30, 2022 |
|
|
|
| $ |
|
| $ | ( | ) |
| $ |
|
| $ | ( | ) |
| $ |
| ||||
Net loss for the period |
|
| - |
|
|
|
|
|
|
|
|
| ( | ) |
|
|
|
|
| ( | ) | |||
Foreign currency translation loss |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | |||
Balance as of September 30, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2022 |
|
|
|
| $ |
|
| $ | ( | ) |
| $ |
|
| $ | ( | ) |
| $ |
| ||||
See accompanying notes to the condensed consolidated financial statements.
| 7 |
| Table of Contents |
BIONEXUS GENE LAB CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021
(Currency expressed in United States Dollars (“US$”))
(Unaudited)
|
| Nine months ended September 30, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
Cash flows from operating activities: |
|
|
|
|
|
| ||
Net (loss)/profit |
| $ | ( | ) |
| $ |
| |
|
|
|
|
|
|
|
|
|
Adjustments to reconcile net (loss)/profit to net cash (used in)/generated from operating activities: |
|
|
|
|
|
|
|
|
Amortization of right of use asset |
|
|
|
|
|
| ||
Depreciation of property, plant and equipment |
|
|
|
|
|
| ||
Dividend income |
|
| ( | ) |
|
| ( | ) |
Fair value loss on other investments |
|
|
|
|
|
| ||
Loss on disposal of other investments |
|
|
|
|
|
| ||
Operating (loss)/profit before working capital changes |
|
| ( | ) |
|
|
| |
|
|
|
|
|
|
|
|
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Inventories |
|
|
|
|
| ( | ) | |
Trade and other receivables |
|
|
|
|
| ( | ) | |
Deferred cost of revenue |
|
|
|
|
|
| ||
Trade and other payables |
|
| ( | ) |
|
| ( | ) |
Advance payment from customer |
|
| ( | ) |
|
|
| |
Deferred revenue |
|
| ( | ) |
|
|
| |
Operating lease liabilities |
|
| ( | ) |
|
| ( | ) |
Tax recoverable |
|
| ( | ) |
|
|
| |
Net cash generated from/(used in) operating activities |
|
|
|
|
| ( | ) | |
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
Acquisition of other investment |
|
| ( | ) |
|
| ( | ) |
Dividend income |
|
|
|
|
|
| ||
Purchase of plant and equipment |
|
| ( | ) |
|
| ( | ) |
Proceeds from disposal of other investments |
|
|
|
|
|
| ||
Net cash used in investing activities |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
Repayment of finance lease |
|
| ( | ) |
|
| ( | ) |
Repayments from Directors |
|
|
|
|
| ( | ) | |
Shares subscriptions |
|
|
|
|
|
| ||
Net cash generated from/(used in) financing activities |
|
|
|
|
| ( | ) | |
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment |
|
| ( | ) |
|
| ( | ) |
NET CHANGE IN CASH AND CASH EQUIVALENTS |
|
| ( | ) |
|
| ( | ) |
CASH AND CASH EQUIVALENTS, BEGINNING OF FINANCIAL YEAR |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS, END OF FINANCIAL YEAR |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS INFORMATION: |
|
|
|
|
|
|
|
|
Fixed deposits placed with financial institutions |
| $ |
|
| $ |
| ||
Cash at bank |
|
|
|
|
|
| ||
Cash and cash equivalents, end of financial year |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Supplementary cash flow information: |
|
|
|
|
|
|
|
|
Interest paid |
| $ | ( | ) |
| $ | ( | ) |
Income taxes paid |
|
| ( | ) |
|
| ( | ) |
See accompanying notes to the condensed consolidated financial statements.
| 8 |
| Table of Contents |
BIONEXUS GENE LAB CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022
(Currency expressed in United States Dollars (“US$”))
(Unaudited)
NOTE 1 - BASIS OF PREPARATION
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial reporting and the rules and regulations of the Securities and Exchange Commission that permit reduced disclosure for interim periods. Therefore, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted.
In the opinion of management, the consolidated balance sheet as of September 30, 2022 which has been derived from unaudited financial statements and these unaudited condensed consolidated financial statements reflect all normal and recurring adjustments considered necessary to state fairly the results for the periods presented. The results for the nine months ended September 30, 2022 are not necessarily indicative of the results to be expected for the entire fiscal year ending December 31, 2022 or for any future period.
These unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the Management’s Discussion and the audited financial statements and notes thereto included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2021.
NOTE 2 - ORGANIZATION AND BUSINESS BACKGROUND
BioNexus Gene Lab Corp. was incorporated in the State of Wyoming on May 12, 2017. On
On December 31, 2020, the Company consummated a Share Exchange Agreement with Chemrex Corporation Sdn. Bhd. (“Chemrex”) and the Chemrex shareholders pursuant to which we acquired all of the issued and outstanding shares of capital stock of Chemrex from the Chemrex shareholders in exchange for
The acquisition of Chemrex has been accounted for as a common control transaction as there is no change in the control over the assets acquired and liabilities assumed. The net assets are derecognized by the transferring entity i.e., Chemrex and recognized by the receiving entity i.e., the Company. The difference between the consideration transferred and the carrying amounts of the net assets is recognized in equity.
| 9 |
| Table of Contents |
BIONEXUS GENE LAB CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022
(Currency expressed in United States Dollars (“US$”))
(Unaudited)
The corporate structure as at September 30, 2022 is depicted below:
|
|
| BioNexus Gene Lab Corp., a Wyoming company |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
| ||||
| Bionexus Gene Lab Sdn. Bhd., a Malaysian company |
|
| Chemrex Corporation Sdn. Bhd., a Malaysian company |
| ||
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited condensed consolidated financial statements reflect the application of certain significant accounting policies as described in this note and elsewhere in the accompanying consolidated financial statements and notes.
· | Basis of presentation |
The accompanying condensed consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”).
· | Basis of consolidation |
The condensed consolidated financial statements include the accounts of Bionexus Gene Lab Corp. and its subsidiaries. All significant inter-company balances and transactions within the Company have been eliminated upon consolidation.
· | Use of estimates |
In preparing these condensed consolidated financial statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheets and revenues and expenses during the periods reported. Actual results may differ from these estimates. |
| 10 |
| Table of Contents |
BIONEXUS GENE LAB CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022
(Currency expressed in United States Dollars (“US$”))
(Unaudited)
· | Cash and cash equivalents |
Cash and cash equivalents represent cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of Nine months or less as of the purchase date of such investments.
· | Trade receivables |
Trade receivables are recorded at the invoiced amount and interest bearing at a rate of 6% per annum on a case to case basis for customers that exceeded credit term. The normal trade credit term is generally on 30 days to 90 days term.. Management reviews the adequacy of the allowance for doubtful debts on an ongoing basis, using historical collection trends and aging of receivables. Management also periodically evaluates individual customer’s financial condition, credit history, and the current economic conditions to make adjustments in the allowance when it is considered necessary. Trade balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.
· | Inventories |
Inventories consisting of products available for sell, are stated at a lower cost or market value. Cost of inventory is determined using the first-in, first-out (FIFO) method. Inventory reserve is recorded to write down the cost of inventory to the estimated market value due to slow-moving merchandise and damaged goods, which is dependent upon factors such as historical and forecasted consumer demand, and promotional environment. The Company takes ownership, risks and rewards of the products purchased. Write downs are recorded in cost of revenues in the Statement of Operations and Comprehensive Income
· | Leases |
In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-02, Leases, which was subsequently amended in 2018 by ASU 2018-10, ASU 2018-11 and ASU 2018-20 (collectively, Topic 842). Topic 842 will require the recognition of a right-of-use asset and a corresponding lease liability, initially measured at the present value of the lease payments, for all leases with terms longer than 12 months. For operating leases, the asset and liability will be expensed over the lease term on a straight-line basis, with all cash flows included in the operating section of the statement of cash flows. For finance leases, interest on the lease liability will be recognized separately from the amortization of the right-of-use asset in the statement of comprehensive income and the repayment of the principal portion of the lease liability will be classified as a financing activity while the interest component will be included in the operating section of the statement of cash flows. Topic 842 is effective for annual and interim reporting periods beginning after December 15, 2018. Early adoption is permitted. Upon adoption, leases will be recognized and measured at the beginning of the earliest period presented using a modified retrospective approach. Topic 842 allows for a cumulative-effect adjustment in the period the new lease standard is adopted and will not require restatement of prior periods.
| 11 |
| Table of Contents |
BIONEXUS GENE LAB CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022
(Currency expressed in United States Dollars (“US$”))
(Unaudited)
Prior to January 1, 2019, the Company accounted for leases under ASC 840, Accounting for Leases. Effective January 1, 2019, the Company adopted the guidance of ASC 842, Leases, which requires an entity to recognize a right-of-use asset and a lease liability for virtually all leases. The Company adopted ASC 842 using a modified retrospective approach. As a result, the comparative financial information has not been updated and the required disclosures prior to the date of adoption have not been updated and continue to be reported under the accounting standards in effect for those periods.
· | Property, plant and equipment |
Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Depreciation is calculated on the straight-line basis to write off the cost over the following expected useful lives of the assets concerned.
The principal annual rates used are as follows:
Categories |
| Principal Annual Rates |
| |
Air conditioner |
|
| % | |
Buildings |
|
| % | |
Computer and software |
|
| % | |
Equipment |
|
| % | |
Furniture and fittings |
| % | ||
Lab Equipment |
|
| % | |
Motor vehicle |
| % | ||
Office equipment |
|
| % | |
Renovation |
| % | ||
Signboard |
|
| % | |
Leasehold lands are depreciated over the period of lease term. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Company will obtain ownership by the end of the lease term. Freehold land is not depreciated. Property, plant and equipment under construction are not depreciated until the assets are ready for their intended use
Maintenance and repairs are charged to operations as incurred. Expenditures which substantially increase the useful lives of the related assets are capitalized. When properties are disposed off, the related costs and accumulated depreciation are removed from the accounts and any gain or loss is reported in the period the transaction takes place.
Fully depreciated plant and equipment are retained in the financial statements until they are no longer in use.
| 12 |
| Table of Contents |
BIONEXUS GENE LAB CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022
(Currency expressed in United States Dollars (“US$”))
(Unaudited)
· | Impairment of long-lived assets |
Long-lived assets primarily include goodwill, intangible assets and property, plant and equipment. In accordance with the provision of ASC Topic 360, “Impairment or Disposal of Long-Lived Assets”, the Company generally conducts its annual impairment evaluation to its long-lived assets, usually in the fourth quarter of each fiscal year, or more frequently if indicators of impairment exist, such as a significant sustained change in the business climate. The recoverability of long-lived assets is measured at the lowest level group. If the total of the expected undiscounted future net cash flows is less than the carrying amount of the asset, a loss is recognized for the difference between the fair value and carrying amount of the asset. There has been no impairment charge for the years presented.
· | Revenue recognition |
Revenues are recognized when control of the promised goods or services are transferred to a customer, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services.
The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements:
Revenues are recognized when control of the promised goods or services are transferred to a customer, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services.
The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements:
· | identify the contract with a customer; |
· | identify the performance obligations in the contract; |
· | determine the transaction price; |
· | allocate the transaction price to performance obligations in the contract; and |
· | recognize revenue as the performance obligation is satisfied. |
The Company records revenue at point in time which is recognized upon goods delivered or services rendered.
· | Cost of revenues |
Cost of revenue includes the purchase cost of retail goods for re-sale to customers and packing materials (such as boxes). It excludes purchasing and receiving costs, inspection costs, warehousing costs, internal transfer costs and other costs of distribution network in cost of revenues.
| 13 |
| Table of Contents |
BIONEXUS GENE LAB CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022
(Currency expressed in United States Dollars (“US$”))
(Unaudited)
· | Comprehensive income |
ASC Topic 220, “Comprehensive Income” establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive income as defined includes all changes in equity during a period from non-owner sources. Accumulated other comprehensive income, as presented in the accompanying statements of stockholders’ equity consists of changes in unrealized gains and losses on foreign currency translation and cumulative net change in the fair value of available-for-sale investments held at the balance sheet date. This comprehensive income is not included in the computation of income tax expense or benefit.
· | Income taxes |
Income taxes are determined in accordance with the provisions of ASC Topic 740, “Income Taxes” (“ASC Topic 740”). Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclosed in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts.
The Company conducts major businesses in Malaysia and is subject to tax in their own jurisdictions. As a result of its business activities, the Company will file separate tax returns that are subject to examination by the foreign tax authorities.
· | Net earnings or loss per share |
The Company calculates net earnings or loss per share in accordance with ASC Topic 260 “Earnings per share”. Basic earnings or loss per share is computed by dividing the net earnings or loss by the weighted average number of common shares outstanding during the period. Diluted earnings or loss per share is computed similar to basic earnings or loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common stock equivalents had been issued and if the additional common shares were dilutive.
| 14 |
| Table of Contents |
BIONEXUS GENE LAB CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022
(Currency expressed in United States Dollars (“US$”))
(Unaudited)
· | Foreign currencies translation |
Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the statement of operations.
The functional currency of the Company is the United States Dollars (“US$”) and the accompanying financial statements have been expressed in US$. In addition, the subsidiaries maintain its books and record in a local currency, Malaysian Ringgit (“MYR” or “RM”), which is functional currency as being the primary currency of the economic environment in which the subsidiaries operate.
In general, for consolidation purposes, assets and liabilities of its subsidiaries whose functional currency is not US$ are translated into US$, in accordance with ASC Topic 830-30, “Translation of Financial Statement”, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of foreign subsidiary are recorded as a separate component of accumulated other comprehensive income.
Translation of amounts from MYR into US$1.00 has been made at the following exchange rates for the respective period and year:
|
| September 30, |
|
| December 31, |
| ||
|
| 2022 |
|
| 2021 |
| ||
Period ended September 30, 2022 /Year-ended December 31, 2021 US$1: MYR exchange rate |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
| January 1, 2022 to September 30, 2022 |
|
| January 1, 2021 to September 30, 2021 |
| ||
9 months average US$1: MYR exchange rate |
|
|
|
|
|
| ||
· | Related parties |
Parties, which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Companies are also considered to be related if they are subject to common control or common significant influence.
| 15 |
| Table of Contents |
BIONEXUS GENE LAB CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022
(Currency expressed in United States Dollars (“US$”))
(Unaudited)
· | Fair value of financial instruments |
The carrying value of the Company’s financial instruments: cash and cash equivalents, trade receivable, deposits and other receivables, amount due to related parties and other payables approximate at their fair values because of the short-term nature of these financial instruments.
The Company also follows the guidance of the ASC Topic 820-10, “Fair Value Measurements and Disclosures” (“ASC 820-10”), with respect to financial assets and liabilities that are measured at fair value. ASC 820-10 establishes a six-tier fair value hierarchy that prioritizes the inputs used in measuring fair value as follows:
· | Level 1 : Observable inputs such as quoted prices in active markets; |
|
|
· | Level 2 : Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and |
· | Level 3 : Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions |
As of September 30, 2022, and December 31, 2021, the Company did not have any nonfinancial assets and liabilities that are recognized or disclosed at fair value in the financial statements, at least annually, on a recurring basis, nor did the Company have any assets or liabilities measured at fair value on a non-recurring basis.
· | Recent accounting pronouncements |
The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations.
NOTE 4 - TRADE RECEIVABLES
The Company has performed an analysis on all its trade receivables and determined that all amounts are collectible by the Company. As such, trade receivables are reflected as a current asset and no allowance for doubtful debts has been recorded as of September 30, 2022 and December, 31, 2021. The Company’s trade receivables consist of receivable from customers which are unrelated to the Company. The account receivables are interest bearing at a rate of
| 16 |
| Table of Contents |
BIONEXUS GENE LAB CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022
(Currency expressed in United States Dollars (“US$”))
(Unaudited)
NOTE 5 - INCOME TAXES
The Company provides for income taxes under ASC 740, “Income Taxes. ASC 740 requires the use of an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statements and tax basis of assets and liabilities and the tax rates in effect when these differences are expected to reverse. It also requires the reduction of deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.
Provision for income taxes consisted of the following:
United States of America, The Company is registered in the State of Wyoming and is subject to the tax laws of the United States of America.
|
| As of |
| |||||
|
| September 30, |
|
| December 31, |
| ||
|
| 2022 |
|
| 2021 |
| ||
Tax Recoverable |
|
|
|
|
|
| ||
Local |
| $ |
|
| $ |
| ||
Foreign, representing Malaysia |
|
| ( | ) |
|
|
| |
Tax Recoverable |
|
| ( | ) |
|
|
| |
|
|
|
|
|
|
|
|
|
Income tax liabilities: |
|
|
|
|
|
|
|
|
Local |
| $ |
|
| $ |
| ||
Foreign, representing Malaysia |
|
|
|
|
|
| ||
Income tax payables |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Deferred tax liabilities: |
|
|
|
|
|
|
|
|
Local |
| $ |
|
| $ |
| ||
Foreign, representing Malaysia |
|
|
|
|
|
| ||
Deferred tax liabilities |
|
|
|
|
|
| ||
Total |
|
| ( | ) |
|
|
| |
| 17 |
| Table of Contents |
BIONEXUS GENE LAB CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022
(Currency expressed in United States Dollars (“US$”))
(Unaudited)
NOTE 6 - LEASE RIGHT OF USE ASSET AND LEASE LIABILITIES
Operating lease right of use as follow: |
| As of |
| |||||
|
| September 30, |
|
| December 31, |
| ||
|
| 2022 |
|
| 2021 |
| ||
Balance as of beginning of the year |
| $ |
|
| $ |
| ||
Reduction due to discount on rental |
|
|
|
|
| ( | ) | |
Less: Amortization |
|
| ( | ) |
|
| ( | ) |
Foreign translation differences |
|
| ( | ) |
|
| ( | ) |
Balance |
| $ |
|
| $ |
| ||
Operating lease liability as follow: |
|
|
| |||||
|
| September 30, |
|
| December 31, |
| ||
|
| 2022 |
|
| 2021 |
| ||
Balance as of beginning of the year |
| $ |
|
| $ |
| ||
Add: Addition of lease liabilities |
|
| |
|
|
| ( | ) |
Less: gross repayment |
|
| ( | ) |
|
| ( | ) |
Add: imputed interest |
|
|
|
|
|
| ||
Foreign translation differences |
|
| ( | ) |
|
| ( | ) |
Balance as of end of the year |
|
|
|
|
|
| ||
Less: lease liability current portion |
|
| ( | ) |
|
| ( | ) |
Lease liability non-current portion |
| $ |
|
| $ |
| ||
The amortization of the right of use asset for the nine months’ period ended September 30, 2022 and the year ended September 30, 2021 were $
Other information: |
| As of |
| |||||
|
| September 30, 2022 |
|
| December 31, 2021 |
| ||
Cash paid for amounts included in the measurement of lease liabilities: |
|
|
|
|
|
| ||
Operating cash flow from operating lease |
| $ |
|
| $ |
| ||
Right of use assets obtained in exchange for operating lease liabilities |
|
|
|
|
|
| ||
Remaining lease term for operating lease (years) |
|
|
|
|
|
| ||
Weighted average discount rate for operating lease |
| $ | % |
| $ | % | ||
Lease expenses for the nine months’ period ended September 30, 2022 and the year ended December 31, 2021 were $
| 18 |
| Table of Contents |
BIONEXUS GENE LAB CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022
(Currency expressed in United States Dollars (“US$”))
(Unaudited)
NOTE 7 - PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of the following:
|
| As of |
| |||||
|
| September 30, |
|
| December 31, |
| ||
|
| 2022 |
|
| 2021 |
| ||
Air conditioner |
| $ |
|
| $ |
| ||
Computer and software |
|
|
|
|
|
| ||
Equipment |
|
|
|
|
|
| ||
Furniture and fittings |
|
|
|
|
|
| ||
Lab equipment |
|
|
|
|
|
| ||
Land and buildings |
|
|
|
|
|
| ||
Motor vehicle |
|
|
|
|
|
| ||
Office equipment |
|
|
|
|
|
| ||
Renovation |
|
|
|
|
|
| ||
Signboard |
|
|
|
|
|
| ||
|
|
|
|
|
|
| ||
(Less): Accumulated depreciation |
|
| ( | ) |
|
| ( | ) |
Add: Foreign translation differences |
|
| ( | ) |
|
| ( | ) |
Property, plant and equipment, net |
| $ |
|
| $ |
| ||
Depreciation expense for the nine months’ period ended September 30, 2022 and 2021 were $
NOTE 8 - OTHER INVESTMENTS
|
| As of |
| |||||
|
| September 30, |
|
| December 31, |
| ||
|
| 2022 |
|
| 2021 |
| ||
As of beginning of the year |
| $ |
|
| $ |
| ||
Addition during the year |
|
|
|
|
|
| ||
Disposal during the year |
|
| ( | ) |
|
| ( | ) |
Fair value loss |
|
| ( | ) |
|
| ( | ) |
Foreign exchange translation |
|
| ( | ) |
|
| ( | ) |
As of end of the year |
| $ |
|
| $ |
| ||
| 19 |
| Table of Contents |
BIONEXUS GENE LAB CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022
(Currency expressed in United States Dollars (“US$”))
(Unaudited)
The other investments consist of the following shares:
|
| As of |
| |||||
|
| September 30, |
|
| December 31, |
| ||
|
| 2022 |
|
| 2021 |
| ||
Investment in quoted shares: |
|
|
|
|
|
| ||
Malaysia |
|
|
|
|
|
| ||
Singapore |
|
|
|
|
|
| ||
Hong Kong |
|
|
|
|
|
| ||
|
| $ |
|
| $ |
| ||
Investment in unquoted shares: |
|
|
|
|
|
|
|
|
Malaysia |
|
|
|
|
|
| ||
|
| $ |
|
| $ |
| ||
NOTE 9 - TRADE PAYABLES
Trade payables are amounts billed to the Company by suppliers for goods and services in the ordinary course of business. All amounts have short-term repayment terms and vary by supplier.
NOTE 10 - STOCK HOLDERS’ EQUITY
As at September 30, 2022, the Company issued and outstanding common stock is
NOTE 11 - SEGMENTED INFORMATION
At September 30, 2022, the Company (“BGLC”) operates in the biochemical industry segment through its two Malaysian subsidiaries, BioNexus Malaysia and Chemrex.
|
|
| BioNexus Gene Lab Corp., a Wyoming company |
|
|
| |
|
|
|
|
|
|
|
|
| 100% owned |
|
| 100% owned |
| ||
| Bionexus Gene Lab Sdn. Bhd., a Malaysian company |
|
| Chemrex Corporation Sdn. Bhd., a Malaysian company |
| ||
| 20 |
| Table of Contents |
BIONEXUS GENE LAB CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022
(Currency expressed in United States Dollars (“US$”))
(Unaudited)
At September 30, 2022, the Company (“BGLC”) operates in the biochemical industry segment through its two Malaysian subsidiaries, BioNexus Malaysia and Chemrex.
For the quarter ended September 30, 2022, segmented (unaudited) revenue and net profit/(loss) (Currency expressed in United States Dollars (“US$”) are as follows:
|
| BioNexus Malaysia |
|
| Chemrex |
|
| BGLC |
|
| Total |
| ||||
|
| Nine months ended September 30, 2022 |
| |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
REVENUE |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COST OF REVENUE |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
| ( | ) | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS (LOSS)/PROFIT |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCE COSTS |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
| ( | ) | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(LOSS)/PROFIT BEFORE TAX |
|
| ( | ) |
|
|
|
|
| ( | ) |
|
| ( | ) | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax expense |
|
|
|
|
| ( | ) |
|
|
|
|
| ( | ) | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET (LOSS)/PROFIT |
| $ | ( | ) |
| $ |
|
| $ | ( | ) |
| $ | ( | ) | |
| 21 |
| Table of Contents |
BIONEXUS GENE LAB CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022
(Currency expressed in United States Dollars (“US$”))
(Unaudited)
|
| BioNexus Malaysia |
|
| Chemrex |
|
| BGLC |
|
| Total |
| ||||
|
| Nine months ended September 30, 2021 |
| |||||||||||||
REVENUE |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COST OF REVENUE |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
| ( | ) | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS PROFIT |
|
|
|
|
|
|
|
| - |
|
|
|
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCE COSTS |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
| ( | ) | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PROFIT/(LOSS) BEFORE TAX |
|
|
|
|
|
|
|
| ( | ) |
|
|
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax expense |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
| ( | ) | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET PROFIT/(LOSS) |
| $ |
|
| $ |
|
| $ | ( | ) |
| $ |
| |||
|
| As of September 30, 2022 and December 31, 2021 |
| |||||||||||||
|
| Total Assets |
|
| Total Liabilities |
| ||||||||||
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
BGLC & Bionexus |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Chemrex |
|
|
|
|
|
|
|
|
|
|
|
| ||||
TOTAL |
|
|
|
|
|
|
|
|
|
|
|
| ||||
21 |
BIONEXUS GENE LAB CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022
(Currency expressed in United States Dollars (“US$”))
(Unaudited)
NOTE 12 - SUBSEQUENT EVENTS
In accordance with ASC Topic 855, “Subsequent Events”, which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued, the Company has evaluated all events or transactions that occurred after September 30, 2022 up through November 7, 2022 of these consolidated financial statements.
NOTE 13 - CONCENTRATION OF RISKS
a) Major customers
During the period, the Company did not have any material recognizable major customers accounted for
b) Major suppliers
During the period, the Company did not have any material recognizable major suppliers accounted for
| 22 |
| Table of Contents |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Description of Business
As used herein, unless the context otherwise indicates, references to the “Company,” “we,” “our,” “us,” “BioNexus” refer to BioNexus Gene Lab Corp., a Wyoming company (BGLC), and its wholly owned subsidiaries, Bionexus Gene Lab Sdn. Bhd. (“Bionexus Malaysia”), and Chemrex Corporation Sdn. Bhd. (“Chemrex”), both are Malaysian companies.
BGLC is an emerging molecular lab focused on the application of functional genomics to enable early detection of infectious diseases and cancers. On August 23, 2017, we acquired all of the outstanding capital stock of BioNexus Malaysia, which was incorporated in Malaysia on April 7, 2015. BioNexus Malaysia owns algorithm software, technology and know-how related to the detection of common diseases through blood analysis which we use in our business. Our non-invasive blood screening tests analyze changes in ribonucleic acid (or RNA) to detect Covid-19, Dengue, HIV, HPV and the risk potentiality of cancers diseases. This unique blood genomic biomarker approach is based on the scientific observation that circulating blood reflects, in a detectable way, what is occurring throughout the body currently.
The corporate and principal office address of the Company and BioNexus Malaysia is Unit 02, Level 10, Tower B, Avenue 3, The Vertical Business Suite II, Bangsar South, No. 8 Jalan Kerinchi, Kuala Lumpur, Malaysia., our lab is located at Lab 353, Chemical Science Centre, University Science Malaysia, George Town, Penang, Malaysia. Another lab focuses on Covid-19 and Colon cancer screening is located at 4th floor, Lifecare Diagnostic Centre, Kuala Lumpur, Malaysia. Our telephone number is (+60) 1221-26512 and our web-site is www.bionexusgenelab.com.
Chemrex is a wholesaler of industrial chemicals for the manufacture of industrial, medical, appliance, aero, automotive, mechanical and electronic industries in Asean region. On December 31, 2020, we acquired all of the outstanding capital stock of Chemrex, which was incorporated in Malaysia on September 29, 2004.
Chemrex’s corporate office and distribution and storage center is located at 4 Jalan CJ 1/6 Kawasan Perusahaan Cheras Jaya, Selangor, Malaysia. Its phone number is (+60) 1922-23815 and website is www.chemrex.com.my.
| 23 |
| Table of Contents |
The results of operations of our subsidiary, BioNexus-Malaysia, with respect to its RNA screening process have been adversely impacted by the onset of the Covid-19 pandemic, which commenced in late December 2019 in Malaysia. We believe that most people have been and will continue to be reluctant to visit hospitals and clinics during the Covid-19 pandemic for fear of transmission from other patients or medical staff. Since our RNA screening is administered at a diagnostic center, our business has been adversely affected as a result. Furthermore, on March 18, 2020, the Malaysian government first imposed its Movement Control Order (MCO) which lasted through June 9, 2020 to control the spread of COVID-19. The MCO restricted movement of all people except for those who were working for essential services. The MCOs were enhanced and relaxed at different phases in 2020 and 2021, including the Enhanced Movement Control Order (EMCO), Conditional Movement Control Order (CMCO) and Recovery Movement Control Order (RMCO). This Enhanced Movement Control Orders were implemented whenever there was a surge of Covid-19 cases. During these EMCOs, only companies classified under essential service were allowed to operate. This EMCO ended on July 16, 2021 and the government allowed more companies and factories to operate with strict Standard Operating Procedures. However, as discussed below, during fiscal 2021, BioNexus-Malaysia implemented the sale of its Covid19 qPCR test procedure through the Malaysian government. Our Covid testing generates substantially lower per ticket charges at $30-38 per test compared with $975 per customer for our RNA testing. Our Covid tests also generate lower margins than our RNA tests.
The results of operations for Chremrex were adversely impacted during the fiscal years of 2020 and 2021 due to the MCO’s and Covid-19.
Recent Developments. As previously reported, we submitted to the Malaysian Ministry of Health (HHS) our Reverse Transcription Polymerase Chain Reaction (RT PCR) Covid-19 screening for approval, which occurred in June 2020. On April 30, 2021, BioNexus entered into an Agreement with HHS to outsource our Covid19 qPCR test for its public hospitals and clinics within Malaysia. The use of our testing protocol began on May 6, 2021. We expect that our testing protocol would be continued to be used by the HHS’ public hospitals and clinics through August 2021, when the pandemic curve is expected to flatten in 2022.
Translation of amounts from MYR into US$1.00 has been made at the following exchange rates for the respective period and year:
|
| September 30, |
|
| December 31, |
| ||
|
| 2022 |
|
| 2021 |
| ||
Period ended September 30, 2022 /Year-ended December 31, 2021 US$1: MYR exchange rate |
|
| 4.6340 |
|
|
| 4.1650 |
|
|
|
|
|
|
|
|
|
|
|
| January 1, 2022 to September 30, 2022 |
|
| January 1, 2021 to September 30, 2021 |
| ||
9 months average US$1: MYR exchange rate |
|
| 4.3442 |
|
|
| 4,1315 |
|
| 24 |
| Table of Contents |
Results of Operations
Three Months Ended September 30, 2022 Compared with the Three Months Ended September 30, 2021.
The following table sets forth key selected financial data for the three months ended September 30, 2022 and 2021.
BIONEXUS GENE LAB CORP.
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021
(Currency expressed in United States Dollars (“US$”))
(Unaudited)
|
| Three months ended |
| |||||
|
| September 30, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
REVENUE |
| $ | 2,575,086 |
|
| $ | 3,575,966 |
|
|
|
|
|
|
|
|
|
|
COST OF REVENUE |
|
| (2,275,587 | ) |
|
| (2,866,772 | ) |
|
|
|
|
|
|
|
|
|
GROSS PROFIT |
|
| 299,499 |
|
|
| 709,194 |
|
|
|
|
|
|
|
|
|
|
OTHER INCOME |
|
| 54,110 |
|
|
| 46,848 |
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES |
|
|
|
|
|
|
|
|
General and administrative |
|
| (418,824 | ) |
|
| (383,401 | ) |
|
|
|
|
|
|
|
|
|
(LOSS)/PROFIT FROM OPERATIONS |
|
| (65,215 | ) |
|
| 372,641 |
|
|
|
|
|
|
|
|
|
|
FINANCE COSTS |
|
| (2,072 | ) |
|
| (2,150 | ) |
|
|
|
|
|
|
|
|
|
(LOSS)/PROFIT BEFORE TAX |
|
| (67,287 | ) |
|
| 370,491 |
|
|
|
|
|
|
|
|
|
|
Tax expense |
|
| (10,114 | ) |
|
| (75,169 | ) |
|
|
|
|
|
|
|
|
|
NET (LOSS)/PROFIT |
| $ | (77,401 | ) |
| $ | 295,322 |
|
Other comprehensive income: |
|
|
|
|
|
|
|
|
Foreign currency loss |
|
| (320,592 | ) |
|
| (56,940 | ) |
|
|
|
|
|
|
|
|
|
COMPREHENSIVE (LOSS)/ INCOME |
| $ | (397,993 | ) |
| $ | 238,382 |
|
| 25 |
| Table of Contents |
Segmented Information
|
| BioNexus Malaysia |
|
| Chemrex |
|
| BioNexus Malaysia |
|
| Chemrex |
| ||||
|
| Three months ended September 30, 2022 |
|
| Three months ended September 30, 2021 |
| ||||||||||
REVENUE |
| $ | 5,942 |
|
| $ | 2,569,144 |
|
| $ | 1,038,594 |
|
| $ | 2,537,372 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COST OF REVENUE |
|
| (4,244 | ) |
|
| (2,271,343 | ) |
|
| (729,194 | ) |
|
| (2,137,578 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS (LOSS)/PROFIT |
|
| 1,698 |
|
|
| 297,801 |
|
|
| 309,400 |
|
|
| 399,794 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME |
|
| 2,332 |
|
|
| 51,775 |
|
|
| 1,488 |
|
|
| 45,360 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative |
|
| (63,005 | ) |
|
| (288,350 | ) |
|
| (41,222 | ) |
|
| (287,002 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCE COSTS |
|
| (336 | ) |
|
| (1,736 | ) |
|
| (962 | ) |
|
| (1,188 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(LOSS)/PROFIT BEFORE TAX |
|
| (59,311 | ) |
|
| 59,490 |
|
|
| 268,704 |
|
|
| 156,964 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax expense |
|
| - |
|
|
| (10,114 | ) |
|
| (37,414 | ) |
|
| (37,755 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET (LOSS)/PROFIT |
| $ | (59,311 | ) |
| $ | 49,376 |
|
| $ | 231,290 |
|
| $ | 119,209 |
|
Revenue. For the quarterly period ended September 30, 2022, we had total revenue of $2,575,086 as compared to total revenue of $3,575,966 for the same period in 2021, decreased by 28% from the prior period.
Chemrex contributed $2,569,144 (99.8%) of the total revenue for the current quarterly period as compared to $2,537,372 (71%) of the total revenue for the same quarter last year. Chemrex’s revenues had increased by $31,772 from prior quarter of $2,537,372 a 1.3% increase. The revenue increased in three months 2022 was due to customer demanding has gone up.
BioNexus-Malaysia contributed $5,942 (0.2%) of the total revenue for the current quarter as compared to revenue of $1,038,594 (29%) of the total revenue from the same quarter last year. Revenues had decreased by $1,032,652 from prior quarter of $1,038,594, a 99.4% decrease. A substantial decrease for the current period was due to Covid19 PCR test no longer require for air passengers traveling to several countries. By comparison, during last year three-month period, revenue from the outsource of Covid19 PCR test from MOH which began on May 2021. Currently this three months revenue for RNA test is lesser due to our resource focusing to complete the research/clinical test for cardiovascular diseases with INSTITUT JANTUNG NEGARA (IJM).
Cost of Revenue. For the quarterly period ended September 30, 2022, we incurred $2,275,587 in cost of revenues, as compared to $2,866,772 for the same quarter in 2021, a decrease of approximately 20.6% was due to reason as stated above.
Chemrex had incurred $2,271,343 (99.8%) of the total cost of revenue during the current quarter as compared to the same period last year wherein Chemrex had incurred $2,137,578 (74.6%) of the total cost of revenue. The increase in Chemrex’s cost of revenues by 6.3% for the current period was due to its increased revenues and reason as stated above.
BioNexus had incurred $4,244 (0.2%) of the total cost of revenues during the current quarter as compared to $729,194 (25.4 %) for the same period in 2021. Cost of revenue had decreased by $724,950 from prior quarter of $729,194 a 99.4% decrease was due to its decreased revenues and reason as stated above.
| 26 |
| Table of Contents |
Gross Profit. For the quarterly period ended September 30, 2022, we had total gross profit of $299,499 as compared to gross profit of $709,194 for the same period in 2021, a decrease by approximately 57.8% from the prior period.
Chemrex contributed $297,801 (99.4%) of the total gross profit for the current quarterly period as compared to $399,794 (56.4%) of the total gross profit for the same quarter last year. Chemrex’s gross profit decreased by $101,993 from prior quarter of $399,794, approximately 25.5% decrease. The gross profit decrease for Chemrex in current quarter was due to increase of material costs, international shipping freight costs plus foreign exchange rate and reason as stated above.
BioNexus-Malaysia contributed $1,698 (0.6%) of the total gross profit of $299,499 for the current quarter as compared to gross profit of $309,400 (43.6%) of the total gross profit from the same quarter last year. The substantial decrease by approximately 99.5% from the prior period due to its decreased revenues for the same reason stated above.
Other Income. For the quarterly period ended September 30, 2022, we had of $54,110, as compared to of $46,848 for the same quarter in 2021, an increase of approximately15.5%.
Chemrex contributed $51,775 (95.7%) of other income for the current quarterly period as compared to $45,360 (96.8%) of the other income for the same quarter last year. Chemrex’s other income increased by 14.1% due to dividends received from blue chip public companies listed on Malaysian Stock Exchange.
BioNexus-Malaysia contributed $2,332 (4.3%) of other income for the current quarter as compared to $1,488 (3.2%) of the other income for the same quarter last year. The increase by $844, approximately 56.70% due to an increased in bank interest earning.
Operating Expenses. For the quarterly period ended September 30, 2022, we had total operating expense of $418,824 as compared to total operating expenses of $383,401 for the same quarter in 2021, an increase by approximately 9.2%. It was due to general and administrative expenses which includes depreciation of fixed assets, employee compensation and benefits, professional fees and marketing and travel expenses.
Chemrex had incurred $288,350 (68.8%) of the total operating expenses for the current quarter as compared to $287,002 (74.9%) of the total operating expenses for the same quarter last year, an increase by 0.5%. The slight increase in operating expenses was due to insurances cost and loss on fair value of investment for current the period.
BioNexus-Malaysia had incurred $63,005 (15%) of the total operating expenses for the current quarter as compared to $41,222 (10.8%) of the total operating expenses for the same quarter last year, an increase by approximately 52.8%. The increase in operating costs of the current quarter was due to extra cost incurred for IJM Research/clinical test project including travelling expenses to USM Penang Lab and investment written off for company Genenews Diagnostic including debts.
BGLC, the holding company had incurred $67,469 (16.1%) of total operating expenses for the current quarter as compared to $55,177 (14.4%) of the total operating expenses for the same quarter last year. The increase of $12,292, approximately 22.3% in operating costs of the current quarter was due to the expenses incurred consultant fees for a vice president overlooking North America matters, director fees for three independent directors had hired and additional fees for SEC compliance services.
Loss/Profit from Operations. We had a loss from operations of $65,215 quarterly period ended September 30, 2022 as compared to a profit of $372,641 for the same period in 2021, a decrease by approximately 117.5% from the prior period, for the reasons discussed above.
Income tax expense. For the three-month period ended September 30, 2022, we had estimated income tax expenses of $10,114 from Chemrex as compared to $75,169 for the same quarter last year which is $37,755 (50.2%) for Chemrex and $37,414 (49.8%) for Bio-Nexus.
Foreign currency exchange loss. We are exposed to fluctuations in foreign exchange rates on the revaluation of monetary assets and liabilities denominated in currencies other than the US Dollar. Therefore, any change in the relevant exchange rate would require us to recognize a transaction gain or loss on revaluation. For the three-month period ended September 30, 2022, we experienced a foreign currency loss of $320,592 as compared with a foreign currency loss of $56,940 for the same period in 2021.
| 27 |
| Table of Contents |
Nine Months Ended September 30, 2022 Compared with the Nine Months Ended September 30, 2021.
The following table sets forth key selected financial data for the nine months ended September 30, 2022 and 2021.
BIONEXUS GENE LAB CORP.
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021
(Currency expressed in United States Dollars (“US$”))
(Unaudited)
|
| Nine months ended |
| |||||
|
| September 30, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
REVENUE |
| $ | 8,089,132 |
|
| $ | 10,117,296 |
|
|
|
|
|
|
|
|
|
|
COST OF REVENUE |
|
| (7,169,329 | ) |
|
| (8,327,522 | ) |
|
|
|
|
|
|
|
|
|
GROSS PROFIT |
|
| 919,803 |
|
|
| 1,789,774 |
|
|
|
|
|
|
|
|
|
|
OTHER INCOME |
|
| 153,340 |
|
|
| 159,764 |
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES |
|
|
|
|
|
|
|
|
General and administrative |
|
| (1,241,631 | ) |
|
| (1,094,774 | ) |
|
|
|
|
|
|
|
|
|
(LOSS)/PROFIT FROM OPERATIONS |
|
| (168,488 | ) |
|
| 854,764 |
|
|
|
|
|
|
|
|
|
|
FINANCE COSTS |
|
| (7,717 | ) |
|
| (8,987 | ) |
|
|
|
|
|
|
|
|
|
(LOSS)/PROFIT BEFORE TAX |
|
| (176,205 | ) |
|
| 845,777 |
|
|
|
|
|
|
|
|
|
|
Tax expense |
|
| (22,792 | ) |
|
| (183,449 | ) |
|
|
|
|
|
|
|
|
|
NET (LOSS)/PROFIT |
| $ | (198,997 | ) |
| $ | 662,328 |
|
|
|
|
|
|
|
|
|
|
Other comprehensive income: |
|
|
|
|
|
|
|
|
Foreign currency loss |
|
| (707,128 | ) |
|
| (272,876 | ) |
|
|
|
|
|
|
|
|
|
COMPREHENSIVE (LOSS)/ INCOME |
| $ | (906,125 | ) |
| $ | 389,452 |
|
| 28 |
| Table of Contents |
Segmented Information
|
| BioNexus Malaysia |
|
| Chemrex |
|
| BioNexus Malaysia |
|
| Chemrex |
| ||||
|
| Nine months ended September 30, 2022 |
|
| Nine months ended September 30, 2021 |
| ||||||||||
REVENUE |
| $ | 39,409 |
|
| $ | 8,049,723 |
|
| $ | 1,504,064 |
|
| $ | 8,613,232 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COST OF REVENUE |
|
| (19,173 | ) |
|
| (7,150,156 | ) |
|
| (1,057,314 | ) |
|
| (7,270,208 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS (LOSS)/PROFIT |
|
| 20,236 |
|
|
| 899,567 |
|
|
| 446,750 |
|
|
| 1,343,024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME |
|
| 6,617 |
|
|
| 146,720 |
|
|
| 5,335 |
|
|
| 154,429 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative |
|
| (157,686 | ) |
|
| (906,698 | ) |
|
| (115,758 | ) |
|
| (843,620 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCE COSTS |
|
| (2,196 | ) |
|
| (5,521 | ) |
|
| (3,265 | ) |
|
| (5,722 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(LOSS)/PROFIT BEFORE TAX |
|
| (133,029 | ) |
|
| 134,068 |
|
|
| 333,062 |
|
|
| 648,111 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax expense |
|
| - |
|
|
| (22,792 | ) |
|
| (38,068 | ) |
|
| (145,381 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET (LOSS)/PROFIT |
| $ | (133,029 | ) |
| $ | 111,276 |
|
| $ | 294,994 |
|
| $ | 502,730 |
|
Revenue. For the nine months period ended September 30, 2022, we had total revenue of $8,089,132 as compared to total revenue of $10,117,296 for the same period in 2021, had decreased by $2,028,164 from prior period, approximately 20% decrease.
Chemrex contributed $8,049,723 (99.5%) of the total revenue for the current nine months period as compared to $8,613,232(85.1%) of the total revenue for the same period last year. Chemrex’s revenues had decreased by $563,509 from prior period, approximately 6.54% decrease. The revenue decreased in 2022 was due to lower of selling price for competitors.
BioNexus-Malaysia contributed $39,409 (0.5%) of the total revenue for the current nine months period as compared to revenue of $1,504,064 (14.9%) of the total revenue from the same period last year. BioNexus’s revenue had decreased by $1,464,655 from prior quarter, approximately 97.4% decrease. The revenue decreased in 2022 was due to the outsource contract for Covid19 PCR test from Ministry of Health (HHS) has ended since last year December 2021, currently, Covid19 PCR test and ART test had reduced due to the discontinuation on movement control by Malaysia Government and air passengers traveling were not required to have Covid-19 test.
Cost of Revenue. For the nine months period ended September 30, 2022, we incurred $7,169,329 in cost of revenues, as compared to $8,327,522 for the same period in 2021, decreased by $1,158,193 approximately 13.9% decrease was due to the same reason stated above.
Chemrex had incurred $7,150,156 (99.7%) of the total cost of revenue during the current period as compared to the same period last year wherein Chemrex had incurred $7,270,208 (87.3%) of the total in cost of revenue, decreased by $120,052, approximately 1.65% was due to the same reason stated above.
| 29 |
| Table of Contents |
BioNexus had incurred $19,173 (0.3%) of the total cost of revenues during the current period as compared to $1,057,314 (12.7%) for the same period in 2022, decreased by $1,038,141 approximately 98.2% in cost of revenues for the current period was due to the same reason stated above.
Gross Profit. For the nine months period ended September 30, 2022, we had total gross profit of $919,803 as compared to gross profit of $1,789,774 for the same period in 2022, decreased by $869,971, approximately 48.6% from the prior period.
Chemrex contributed $899,567 (97.8%) of the total gross profit for the current nine months period as compared to $1,343,024 (75%) of the total gross profit for the same period last year. The gross profit decreased by $443,457, approximately 33% for current period was due to rising of material cost, increased international shipping freight costs and foreign exchange rate.
BioNexus-Malaysia contributed $20,236 (2.2%) of the total gross profit of $919,803 for the current nine months period as compared to $446,750 (25%) of the total gross profit of $1,789,774 from the same period last year. The gross profit decreased by 95.5% was due to its decreased revenues for the current period as according to reason stated above.
Other Income. For the nine months period ended September 30, 2022, we had $153,340 as compared to $159,764 for the same period in 2021, decreased by $6,424, approximately 4%.
Chemrex contributed $146,720 (95.7%) of other income for the current nine months period as compared to $154,429 (96.7%) of the other income for the same period last year. Chemrex’s other income decreased by $7,709, approximately 4.99% was due to losses on unrealized forex and bank interest.
BioNexus Malaysia had $6,617 (4.3%) for nine months period ended September 30, 2022 as compared to $5,335 (3.3%) for the same period in 2021, increased by $1,282, approximately 24% was due to last year higher bank interest gathered from the revenue generated by Covid-19 tests.
BGLC, had a gain on foreign exchange rate of $3 for the current nine months period.
Operating Expenses. For the nine months period ended September 30, 2022, we had a total operating expense of $1,241,631 as compared to total operating expenses of $1,094,774 for the same period in 2021. The increase of $146,857 approximately 13.4% was due to general and administrative expenses which includes depreciation of fixed assets, employee compensation and benefits, professional fees and marketing and travel expenses.
Chemrex had incurred $906,698 (73%) of the total operating expenses for the current nine months period as compared to $843,620 (77.1%) of the total operating expenses for the same period last year, increased by $63,078, approximately 7.48% due to the increased commission payout, fair value loss on investment and loss on realized forex.
BioNexus-Malaysia had incurred $157,686 (12.7%) of the total operating expenses for the current nine months period as compared to $115,758 (10.6%) of the total operating expenses for the same period last year. The increase of $41,928 approximately 36.2% in operating costs for the nine months period was due to increase of traveling expenses for marketing, increased of staff remuneration for hired new lab staffs, written off of investment and debtor of Genenews Diagnostic because company has been strike off and additional cost incurred for IJM Research/clinical test project.
BGLC, the holding company had incurred $177,247 (14.3%) of total operating expenses for the current nine months period as compared to $135,396 (12.4%) of the total operating expenses for the same period last year. The increase of $41,851, approximately 30.91% in operating costs of the current period was due to the increased expenses in travelling, consultant fees, independent director fee, expenses incurred on VC International club Membership for an opportunity to capture equity investment from VC International network and additional fee incurred for SEC Compliance services.
Loss/Profit from Operations. We had a loss from operations of $168,488 for nine months period ended September 30, 2022 as compared to profit of $854,764 for the same period in 2021. The decrease of $1,023,252, approximately 119.7% was due to the reasons discussed above.
Income tax expense. For the nine-months period ended September 30, 2022, we had $22,792 income tax which is a tax estimated for Chemrex and for Bionexus no tax provided as compared to $183,449 for the same period last year which was a tax estimated $145,381 (79.2%) from Chemrex and $38,068 (20.8%) from Bionexus.
Foreign currency exchange gain/(loss). We are exposed to fluctuations in foreign exchange rates on the revaluation of monetary assets and liabilities denominated in currencies other than the US Dollar. Therefore, any change in the relevant exchange rate would require us to recognize a transaction gain or loss on revaluation. For the nine-months period ended September 30, 2022, we experienced a foreign currency loss of $707,128 as compared with a foreign currency loss of $272,876 for the same period in 2021.
| 30 |
| Table of Contents |
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 2022, we had working capital of $4,074,052 compared with working capital of $4,821,100 as of December 31, 2021. The decrease in working capital as of September 30, 2022 from December 31, 2021 was due principally to the decrease in cash used in our operations.
Our primary uses of cash have been for operations. The main sources of cash have been from operational revenues and the private placement of our common stock. The following trends are reasonably likely to result in a material decrease in our liquidity over the near to long term:
| · | Addition of administrative and marketing personnel as the business grows, |
| · | Development of a Company website, |
| · | Increases in advertising and marketing in order to attempt to generate more revenues, and |
| · | The cost of being a public company. |
The Company believes that cash flow from operations together will be sufficient to sustain its current level of operations for at least the next 12 months of operations.
The following is a summary of the Company’s cash flows provided by (used in) / generated from operating, investing, and financing activities for the nine months ended September 30, 2022 and 2021:
|
| Nine months ended |
| |||||
|
| September 30, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
Net cash generated from/(used in) Operating Activities |
| $ | 69,562 |
|
| $ | (473,846 | ) |
Net cash used in investing activities |
|
| (400,595 | ) |
|
| (414,285 | ) |
Net cash generated from/(used in) financing activities |
|
| 115,962 |
|
|
| (23,263 | ) |
Foreign currency translation adjustment |
|
| (446,579 | ) |
|
| (175,902 | ) |
Net Change in Cash and Cash Equivalents |
| $ | (661,650 | ) |
| $ | (1,087,296 | ) |
Operating Activities
During the nine months ended September 30, 2022, the Company incurred a net loss of $198,997 which, after adjusting for amortization, depreciation, dividend income, fair value loss on share investment, a decrease in inventories and a substantial reduction in trade receivables, deposits, trade payables, advance payment from customer, deferred revenue, operating lease liabilities, resulted in net cash of $69,562 being generated from operating activities during the period. By comparison, during the nine months ended September 30, 2021, the Company had a net profit of $662,328 after adjusting for amortization, depreciation, dividend income, fair value loss on share investments, an increase in inventories, receivables and deposits, a substantial reduction in trade payables, operating lease liabilities, resulted in net cash of $473,846 being used in operating activities during the period.
Investing Activities
During the nine months ended September 30, 2022, the Company had net cash of $400,595 used in investment activities from acquisition of share investment of $397,974 and purchase of plant & equipment of $34,523 During the nine months ended September 30, 2021, the Company had net cash from acquisition of share investment of $432,293, purchase of plant and equipment and disposal of other investments, resulting in net cash used in financing activities of $414,285
Financing Activities
During the nine months ended September 30, 2022, Company had net cash of $115,962 generated from financing activities for 2.5 million shares subscriptions of $150,000 and fully repayment of a finance lease of $34,038. By comparison, during the nine months ended September 30, 2021, we had net cash of $23,263 used in financing activities for continued the repayment of a finance lease and repayment of director.
Item 3. Certain Relationships and Related Transactions.
Keith Wong had on April 1, 2022 entered into a Consultancy Agreement with the Company for eighteen (18) months with a monthly fee of eight thousand dollars ($8,000).
Item 4. Quantitative and Qualitative Disclosures about Market Risk.
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.
| 31 |
| Table of Contents |
Item 5. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
In connection with the preparation of this quarterly report, an evaluation was carried out by the Company’s management, with the participation of the principal executive officer and the principal financial officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act (“Exchange Act”) as of September 30, 2022. Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Commission’s rules and forms, and that such information is accumulated and communicated to management, including the principal executive officer and the principal financial officer, to allow timely decisions regarding required disclosures.
Based on that evaluation, the Company’s management concluded, as of the end of the period covered by this report, that the Company’s disclosure controls and procedures were capable in recording, processing, summarizing, and reporting information required to be disclosed, within the time periods specified in the Commission’s rules and forms, and that such information was accumulated and communicated to management, including the principal executive officer and the principal financial officer, to allow timely decisions regarding required disclosures.
Management’s Report on Internal Control over Financial Reporting
The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is a process, under the supervision of the principal executive officer and the principal financial officer, designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external purposes in accordance with United States generally accepted accounting principles (GAAP). Internal control over financial reporting includes those policies and procedures that:
| i) | Pertain to the maintenance of records that is in reasonable detail accurately and fairly reflect the transactions and dispositions of the Company’s assets; |
| ii) | Provide reasonable assurance that transactions are recorded as necessary to permit preparation of the financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with the authorizations of management and the board of directors; and |
| iii) | Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements. |
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.
The Company’s management conducted an assessment of the effectiveness of our internal control over financial reporting as of September 30, 2022, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, which assessment identified material weaknesses in internal control over financial reporting. A material weakness is a control deficiency, or a combination of deficiencies in internal control over financial reporting that creates a reasonable possibility that a material misstatement in annual or interim financial statements will not be prevented or detected on a timely basis. Since the assessment of the effectiveness of our internal control over financial reporting did identify a material weakness, management considers its internal control over financial reporting required improvement.
Management has concluded that our internal control over financial reporting had the material deficiencies. A majority of independent members and a majority of outside directors on our Board of Directors is only happened in May 2022, meanwhile there is an inadequacy in the monitoring of required internal controls and procedures.
While these control deficiencies did not result in any audit adjustments to our 2022 or 2021 interim or annual financial statements, it could have resulted in a material misstatement that might have been prevented or detected by a segregation of duties. Accordingly, we have determined that this control deficiency constitutes a material weakness.
To the extent reasonably possible, given our limited resources, upon consummation of a merger with a private operating company, the Company has separated the responsibilities of principal executive officer and principal financial officer, and relying on two or more individuals. We are expanding our current board of directors to include additional individuals willing to perform directorial functions. Since the recited remedial actions and we will hire or engage additional personnel, this material weakness may be overcome in the near term. Until such remedial actions can be realized, we will continue to rely on the advice of outside professionals and consultants.
This quarterly report does not include an attestation report of our registered public accounting firm regarding our internal controls over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to Section 404(c) of the Sarbanes-Oxley Act that permit us to provide only management’s report in this annual report.
Changes in Internal Controls over Financial Reporting
During the period ended September 30, 2022, there has been no change in internal control over financial reporting that has materially affected or is reasonably likely to materially affect our internal control over financial reporting.
| 32 |
| Table of Contents |
PART II OTHER INFORMATION
Item 1. Legal Proceedings.
There are presently no pending legal proceedings to which the Company or any of its property is subject, or any material proceedings to which any director, officer or affiliate of the Company, any owner of record or beneficially of more than five percent of any class of voting securities is a party or has a material interest adverse to the Company, and no such proceedings are known to the Company to be threatened or contemplated against it.
Item 2. Unregistered Sale of Equity Securities.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable to our Company.
Item 5. Other Information.
None
| 33 |
| Table of Contents |
Item 6. Exhibits.
Exhibit |
| Description |
|
|
|
| ||
|
|
|
| ||
|
|
|
| ||
|
|
|
| ||
|
|
|
101.INS |
| Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).* |
|
|
|
101.SCH |
| Inline XBRL Taxonomy Extension Schema Document.* |
|
|
|
101.CAL |
| Inline XBRL Taxonomy Extension Calculation Linkbase Document.* |
|
|
|
101.DEF |
| Inline XBRL Taxonomy Extension Definition Linkbase Document.* |
|
|
|
101.LAB |
| Inline XBRL Taxonomy Extension Labels Linkbase Document.* |
|
|
|
101.PRE |
| Inline XBRL Taxonomy Extension Presentation Linkbase Document.* |
|
|
|
104 |
| Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101). |
__________
+ | In accordance with SEC Release 33-8238, Exhibit 32.1 and 32.2 are being furnished and not filed. |
|
|
* | Filed herewith. |
| 34 |
| Table of Contents |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
BIONEXUS GENE LAB CORPORATION |
|
|
|
/s/ Sook Keng Yeoh |
|
Sook Keng Yeoh |
|
Chief Executive Officer and Director |
|
(Principal Executive Officer) |
|
|
|
/s/ Wei Li Leong |
|
Wei Li Leong |
|
Chief Financial Officer |
|
(Principal Financial and Accounting Officer) |
|
|
|
November 14, 2022 | |
| 35 |
EXHIBIT 31.1
CERTIFICATION
I, Chief Executive Officer of Bionexus Gene Lab Corporation (the “Registrant”), certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of the Registrant for the fiscal quarter ended September 30, 2022; |
|
|
|
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
|
|
|
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report; |
|
|
|
| 4. | The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have: |
|
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
|
|
|
|
|
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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; |
|
|
|
|
|
| (c) | Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
|
|
|
|
|
| (d) | Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and |
| 5. | The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions): |
|
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and |
|
|
|
|
|
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting. |
November 14, 2022
| /s/ Sook Keng Yeoh |
|
| Sook Keng Yeoh |
|
| Chief Executive Officer and Director |
|
| (Principal Executive Officer) |
|
EXHIBIT 31.2
CERTIFICATION
I, Chief Financial Officer of Bionexus Gene Lab Corporation (the “Registrant”), certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of the Registrant for the fiscal quarter ended September 30, 2022; |
|
|
|
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
|
|
|
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report; |
|
|
|
| 4. | The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have: |
|
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
|
|
|
|
|
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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; |
|
|
|
|
|
| (c) | Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
|
|
|
|
|
| (d) | Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and |
| 5. | The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions): |
|
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
|
|
|
|
|
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting. |
November 14, 2022
| /s/ Wei Li Leong |
|
| Wei Li Leong |
|
| Chief Financial Officer |
|
| (Principal Financial and Accounting Officer) |
|
EXHIBIT 32.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officers of the registrant certify, to the best of their knowledge, that the registrant’s Quarterly Report on Form 10-Q for the period ended September 30, 2022 (the “Form 10-Q”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in the Form 10-Q, fairly presents, in all material respects, the financial condition and results of operations of the registrant.
| Bionexus Gene Lab Corporation |
|
|
|
|
| Dated: November 14, 2022 |
|
|
|
|
| /s/ Sook Keng Yeoh |
|
| Sook Keng Yeoh Chief Executive Officer |
|
| (Principal Executive Officer) |
|
EXHIBIT 32.2
CERTIFICATION OF PRINCIPAL ACCOUNTING OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officers of the registrant certify, to the best of their knowledge, that the registrant’s Quarterly Report on Form 10-Q for the period ended September 30, 2022 (the “Form 10-Q”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in the Form 10-Q, fairly presents, in all material respects, the financial condition and results of operations of the registrant.
| Bionexus Gene Lab Corporation |
|
|
|
|
| Dated: November 14, 2022 |
|
|
|
|
| /s/ Wei Li Leong |
|
| Wei Li Leong Chief Financial Officer |
|
| (Principal Accounting Officer) |
|