BioNexus Gene Lab Corp 10-Q/A for FY2023 Q3
BioNexus Gene Lab Corp (BGLC)
About this 10-Q/A
BioNexus Gene Lab Corp filed this 10-Q/A on March 26, 2024, covering the quarter ended September 30, 2023 (FY2023 Q3).
Headline figures
Quarter ended September 30, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $2.55M
- down 0.8% from $2.58M a year earlier
- Net loss
- $2.61M
- compared with a net loss of $77.4K a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
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) |
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(State or Other Jurisdiction of Incorporation or Organization) |
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(Address of Principal Executive Offices) |
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(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
| Trading Symbol(s) |
| Name of each exchange on which registered |
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| The |
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 | ||
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| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of November 20, 2023, there were
TABLE OF CONTENTS
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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| Table of Contents |
CAUTIONARY NOTE REGARDING
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q/A 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/A include, without limitation, statements relating to:
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| ● | our future business development, results of operations and financial condition; |
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| ● | our estimates regarding expenses, future revenues, capital requirements and our need for additional financing; |
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| ● | our estimates regarding the market opportunity for our services; |
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| ● | the impact of government laws and regulations; |
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| ● | our ability to recruit and retain qualified personnel; |
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| ● | our failure to comply with regulatory guidelines; |
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| ● | uncertainty in industry demand; |
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| ● | general economic conditions and market conditions in the financial services industry; |
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| ● | future sales of large blocks or our securities, which may adversely impact our share price; and |
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| ● | 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, 2022 and elsewhere in this Quarterly Report on Form 10-Q/A.
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/A, to conform these statements to actual results or to changes in our expectations.
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| Table of Contents |
ITEM 1. Financial Statements
BIONEXUS GENE LAB CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2023 AND DECEMBER 31, 2022
(Currency expressed in United States Dollars (“US$”))
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ASSETS |
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CURRENT ASSETS |
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Cash and bank balances |
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Fixed deposits placed with financial institutions |
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Trade receivables |
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Other receivables, deposits and prepayments |
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Tax recoverable |
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Inventories |
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Total current assets |
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NON-CURRENT ASSETS |
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Operating lease right of use assets |
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Property, plant and equipment, net |
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Other investments |
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Total non-current assets |
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TOTAL ASSETS |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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CURRENT LIABILITIES |
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Trade payables |
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Other payables and accrued liabilities |
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Current portion of operating lease liabilities |
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Advance payment from customer |
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Tax payables |
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Total current liabilities |
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NON-CURRENT LIABILITIES |
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Non-current portion of operating lease liabilities |
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Deferred tax liabilities |
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Total non-current liabilities |
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TOTAL LIABILITIES |
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STOCKHOLDERS’ EQUITY |
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As at September 30, 2023, common stock, no par value; |
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Additional paid in capital |
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Accumulated (losses)/surplus |
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Accumulated other comprehensive losses |
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TOTAL STOCKHOLDERS’ EQUITY |
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TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
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* Issued and outstanding shares of common stock have been adjusted for the periods prior to July 20, 2023, to reflect the 12-for-1 reverse stock split effected on that date on a retroactive basis as described in Note 10.
See accompanying notes to the condensed consolidated financial statements.
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| Table of Contents |
BIONEXUS GENE LAB CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022
(Currency expressed in United States Dollars (“US$”))
(Unaudited)
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REVENUE |
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COST OF REVENUE |
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GROSS PROFIT |
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OTHER INCOME |
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OPERATING EXPENSES |
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General and administrative |
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LOSS FROM OPERATIONS |
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FINANCE COSTS |
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LOSS BEFORE TAX |
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Tax expense |
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NET LOSS |
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Other comprehensive income: |
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Foreign currency translation loss |
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COMPREHENSIVE LOSS |
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Earnings per share - Basic and diluted |
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Weighted average shares outstanding and per share amount have been adjusted for the periods shown to reflect the 12-for-1 reverse stock split effected on July 20, 2023, on a retroactive basis as described in Note 10. |
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See accompanying notes to the condensed consolidated financial statements.
| 5 |
| Table of Contents |
BIONEXUS GENE LAB CORP
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
AS OF SEPTEMBER 30, 2023 AND 2022
(Amount expressed in United States Dollars (“US$))
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| Total |
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| Number of shares |
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| capital |
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| surplus |
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| loss |
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Balance as of December 31, 2021 |
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Net profit for the period |
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Foreign currency translation loss |
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Balance as of March 31, 2022 |
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Net loss for the period |
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Issuance of shares |
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Foreign currency translation loss |
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Balance as of June 30, 2022 |
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Net loss for the period |
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Foreign currency translation loss |
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Balance as of September 30, 2022 |
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Balance as of December 31, 2022 |
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Net loss for the period |
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Foreign currency translation loss |
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Balance as of March 31, 2023 |
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Net loss for the period |
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Foreign currency translation loss |
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Balance as of June 30, 2023 |
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Net loss for the period |
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Round up shares |
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Issuance of shares* |
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Issuance of shares# |
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Foreign currency translation loss |
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Balance as of September 30, 2023 |
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Share activity (number of shares or both number and amount of shares) has been adjusted for the periods shown to reflect the 12-for-1 reverse stock split effected on July 20, 2023, on a retroactive basis as described in Note 10.
* 1,437,500 shares of common stock were issued to underwriter.
# 834,299 shares of common stock were issued to professional parties and board member.
See accompanying notes to the condensed consolidated financial statements.
| 6 |
| Table of Contents |
BIONEXUS GENE LAB CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022
(Currency expressed in United States Dollars (“US$”))
(Unaudited)
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Cash flows from operating activities: |
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Net loss |
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Adjustments to reconcile net loss to net cash used in from operating activities: |
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Amortization of right of use asset |
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Allowances for expected credit losses |
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Bad debts |
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Depreciation of property, plant and equipment |
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Dividend income |
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Fair value (gain)/loss on other investments |
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Loss on disposal of other investments |
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Interest |
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Property, plant and equipment written off |
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Share-base compensation |
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Stock written off |
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Operating loss before working capital changes |
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Changes in operating assets and liabilities: |
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Inventories |
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Trade and other receivables |
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Deferred cost of revenue |
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Trade and other payables |
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Advance payment from customer |
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Deferred revenue |
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Operating lease liabilities |
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Tax recoverable |
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Net cash (used in)/generated from operating activities |
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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: |
|
|
|
|
|
| ||
Interest |
|
| ( | ) |
|
| ( | ) |
Repayment of finance lease |
|
|
|
|
| ( | ) | |
Shares subscriptions |
|
|
|
|
|
| ||
Net cash generated from financing activities |
|
|
|
|
|
| ||
Foreign currency translation adjustment |
|
| ( | ) |
|
| ( | ) |
NET CHANGE IN CASH AND CASH EQUIVALENTS |
|
|
|
|
| ( | ) | |
CASH AND CASH EQUIVALENTS, BEGINNING OF FINANCIAL PERIOD |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS, END OF FINANCIAL PERIOD |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS INFORMATION: |
|
|
|
|
|
|
|
|
Fixed deposits placed with financial institutions |
| $ |
|
| $ |
| ||
Cash at bank |
|
|
|
|
|
| ||
Cash and cash equivalents, end of financial period |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Supplementary cash flow information: |
|
|
|
|
|
|
|
|
Interest paid |
| $ | ( | ) |
| $ | ( | ) |
Income tax refunded |
|
|
|
|
|
| ||
Income taxes paid |
|
| ( | ) |
|
| ( | ) |
See accompanying notes to the condensed consolidated financial statements.
| 7 |
| Table of Contents |
BIONEXUS GENE LAB CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022
(Currency expressed in United States Dollars (“US$”))
(Unaudited)
NOTE 1 – ORGANIZATION AND BUSINESS BACKGROUND
BioNexus Gene Lab Corp. (the “Company”) was incorporated in the State of Wyoming on May 12, 2017. On
On December 31, 2020, the Company consummated its acquisition of Chemrex Corporation Sdn. Bhd. (“Chemrex”), pursuant to a Share Exchange Agreement by and among the Company, Chemrex and the Chemrex shareholders wherein the Company acquired all 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.
The financial statements of the receiving entity report the results of operations for the period in which the transfer occurs as though the transfer of net assets or exchange of equity interests had occurred at the beginning of the period. Results of operations for that period will thus comprise those of the previously separate entities combined from the beginning of the period to the date the transfer is completed and those of the combined operations from that date to the end of the period. The comparative financial statements were not adjusted retrospectively as Chemrex was not under common control during the comparative period.
The corporate structure as at September 30, 2023 is depicted below:
|
|
| BioNexus Gene Lab Corp., a Wyoming company |
|
|
| |
|
|
|
|
|
|
|
|
| 100% owned |
|
| 100% owned |
| ||
| MRNA Scientific Sdn. Bhd. (formerly “Bionexus Gene Lab Sdn. Bhd.”), a Malaysian company |
|
| Chemrex Corporation Sdn. Bhd., a Malaysian company |
| ||
| 8 |
| Table of Contents |
BIONEXUS GENE LAB CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022
(Currency expressed in United States Dollars (“US$”))
(Unaudited)
NOTE 2 - 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. |
· | 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 Three months or less as of the purchase date of such investments.
· | Trade receivables |
Trade receivables were recorded at the invoiced amount and Chemrex did charge interest to certain debtors with overdue outstanding. Management reviews the adequacy of the allowance for impairment on an ongoing basis, using historical collection trends and aging of receivables. Management also periodically evaluates individual customer’s financial condition, credit history, and current economic conditions to adjust 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 the lower of cost or market value. Cost of inventory is determined using the first-in, first-out (FIFO) method. Inventory reserve is recorded to write down the cost of inventory to the estimated market value due to slow-moving merchandise and damaged goods, which is dependent upon factors such as historical and forecasted consumer demand, and promotional environment. The Company takes ownership, risks, and rewards of the products purchased. Write downs are recorded in cost of revenues in the Statement of Operations and Comprehensive Income.
· | Leases |
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.
| 9 |
| Table of Contents |
BIONEXUS GENE LAB CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022
(Currency expressed in United States Dollars (“US$”))
(Unaudited)
· | Property, plant and equipment |
Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Depreciation is calculated on a straight-line basis to write off the cost over the following expected useful lives of the assets concerned.
The principal annual rates used are as follows:
Categories |
| Principal Annual Rates |
| |
Air conditioner |
|
| % | |
Buildings |
|
| % | |
Computer and software |
|
| % | |
Equipment |
|
| % | |
Furniture and fittings |
|
| ||
Lab Equipment |
|
| % | |
Motor vehicle |
|
| ||
Office equipment |
|
| % | |
Renovation |
|
| ||
Signboard |
|
| % | |
Leasehold lands are depreciated over the period of the lease term. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Company will obtain ownership by the end of the lease term. Freehold land is not depreciated. Property, plant and equipment under construction are not depreciated until the assets are ready for their intended use
Maintenance and repairs are charged to operations as incurred. Expenditures which substantially increase the useful lives of the related assets are capitalized. When properties are disposed, the related costs and accumulated depreciation are removed from the accounts and any gain or loss is reported in the period the transaction takes place.
Fully depreciated plant and equipment are retained in the financial statements until they are no longer in use.
| 10 |
| Table of Contents |
BIONEXUS GENE LAB CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022
(Currency expressed in United States Dollars (“US$”))
(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:
· | 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.
· | Shipping and handling fees |
Shipping and handling fees, if billed to customers, are included in revenue. Shipping and handling fees associated with inbound and outbound freight are expensed as incurred and included in selling and distribution expenses.
| 11 |
| Table of Contents |
BIONEXUS GENE LAB CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 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.
| 12 |
| Table of Contents |
BIONEXUS GENE LAB CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 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 their books and records 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 the translation of financial statements of foreign subsidiaries 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, |
| ||
|
| 2023 |
|
| 2022 |
| ||
Period ended September 30, 2023 /Year-ended December 31, 2022 US$1: MYR exchange rate |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
| January 1, 2023 to September 30, 2023 |
|
| January 1, 2022 to September 30, 2022 |
| ||
9 months average US$1: MYR exchange rate |
|
|
|
|
|
| ||
· | Related parties |
Parties, which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Companies are also considered to be related if they are subject to common control or common significant influence.
| 13 |
| Table of Contents |
BIONEXUS GENE LAB CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022
(Currency expressed in United States Dollars (“US$”))
(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, 2023, and December 31, 2022, 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 do not believe the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations.
☐ | Recently Adopted Accounting Standards |
In June 2016, the FASB issued Accounting Standards Update No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which introduced the expected credit losses methodology for the measurement of credit losses on financial assets measured at amortized cost basis, replacing the previous incurred loss methodology. In November 2019, the FASB issued ASU 2019-10 highlighted the adoption timeline. For smaller reporting entities, Topic 326 is effective for annual periods beginning after December 15, 2022, including interim periods within those fiscal years, of which is effective for the Company on January 1, 2023
Credit loss rate is determined by historical collection based on aging schedule, adjusted for current conditions using reasonable and supportable forecasts. Based on the aging categorization and the adjusted loss rate per category, an allowance for credit losses is calculated by multiplying the adjusted loss rate with the amortized cost in the respective age category.
NOTE 3 - TRADE RECEIVABLES
The Company has performed an analysis on all its trade receivables. As such, trade receivables are recognized and carried at the original invoice amount less an allowance for any uncollectible amounts. An estimate for doubtful debts and expected credit losses is made when collection of the full amount is no longer probable. Bad debts are written off as identified for the quarter ended September 30, 2023. 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
|
| As of |
| |||||
|
| September 30, |
|
| December 31, |
| ||
|
| 2023 |
|
| 2022 |
| ||
|
|
|
|
|
|
| ||
Trade receivables |
|
|
|
|
|
| ||
Allowances for expected credit losses |
|
| ( | ) |
|
|
| |
|
| $ |
|
| $ |
| ||
| 14 |
| Table of Contents |
BIONEXUS GENE LAB CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022
(Currency expressed in United States Dollars (“US$”))
(Unaudited)
NOTE 4 - 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.
Malaysia
MRNA Scientific Malaysia and Chemrex are both subject to Malaysia Corporate Tax, which is charged at the statutory income tax rate range of
|
| As of |
| |||||
|
| September 30, |
|
| December 31, |
| ||
|
| 2023 |
|
| 2022 |
| ||
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 |
|
|
|
|
| ( | ) | |
| 15 |
| Table of Contents |
BIONEXUS GENE LAB CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022
(Currency expressed in United States Dollars (“US$”))
(Unaudited)
NOTE 5 – OPERATING LEASE RIGHT OF USE ASSET AND LEASE LIABILITIES
Right-of-use assets and lease liabilities are measured at present value of the lease payment over the lease term as of recognition with discount rate of
A single lease cost is recognized over the lease term on a generally straight-line basis. All cash payments of operating lease costs are classified within operating activities in the statement of cash flows.
Operating lease right of use assets as follows: |
| As of |
| |||||
|
| September 30, |
|
| December 31, |
| ||
|
| 2023 |
|
| 2022 |
| ||
Balance as of beginning of the period/year |
| $ |
|
| $ |
| ||
Add: Addition of lease liabilities |
|
|
|
|
|
| ||
Less: Amortization |
|
| ( | ) |
|
| ( | ) |
Foreign translation differences |
|
| ( | ) |
|
| ( | ) |
Balance as of end of the period/year |
| $ |
|
| $ |
| ||
Operating lease liabilities as follows: |
|
| ||||||
|
| September 30, |
|
| December 31, |
| ||
|
| 2023 |
|
| 2022 |
| ||
Balance as of beginning of the period/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, 2023 and nine months’ period ended September 30, 2022 were $
Other information: |
| As of |
| |||||
|
| September 30, 2023 |
|
| December 31, 2022 |
| ||
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, 2023 and nine months’ period ended September 30, 2022 were $
| 16 |
| Table of Contents |
BIONEXUS GENE LAB CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022
(Currency expressed in United States Dollars (“US$”))
(Unaudited)
NOTE 6 - PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of the following:
|
| As of |
| |||||
|
| September 30, |
|
| December 31, |
| ||
|
| 2023 |
|
| 2022 |
| ||
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, 2023 and 2022 were $
NOTE 7 - OTHER INVESTMENTS
|
| As of |
| |||||
|
| September 30, |
|
| December 31, |
| ||
|
| 2023 |
|
| 2022 |
| ||
As of beginning of the period/year |
| $ |
|
| $ |
| ||
Addition during the period/year |
|
|
|
|
|
| ||
Disposal during the period/year |
|
| ( | ) |
|
|
| |
Written off during the period/year |
|
|
|
|
| ( | ) | |
Fair value gain/(loss) |
|
|
|
|
| ( | ) | |
Foreign exchange translation |
|
| ( | ) |
|
| ( | ) |
As of end of the period/year |
| $ |
|
| $ |
| ||
The other investments consist of the following shares: | ||||||||
|
| As of |
| |||||
|
| September 30, |
|
| December 31, |
| ||
|
| 2023 |
|
| 2022 |
| ||
Investment in quoted shares: |
|
|
|
|
|
| ||
Malaysia |
|
|
|
|
|
| ||
Singapore |
|
|
|
|
|
| ||
Hong Kong |
|
|
|
|
|
| ||
|
| $ |
|
| $ |
| ||
NOTE 8 - 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.
| 17 |
| Table of Contents |
BIONEXUS GENE LAB CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022
(Currency expressed in United States Dollars (“US$”))
(Unaudited)
NOTE 9 - CONCENTRATION OF RISKS
a) Major customers
During the three months and nine months ended September 30, 2023 and 2022, the Company did not have any material recognizable major customers accounted for 10% or more of the Company’s revenue.
b) Major suppliers
For three months ended September 30, 2023 and 2022, the suppliers who accounted for 10% or more of the Company’s cost of sales and their balances at year ended are presented as follows:
|
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||||
|
| Purchase |
|
| Percentage of purchases |
|
| Accounts payable trade |
| |||||||||||||||
Vendor A |
| $ |
|
| $ |
|
|
| % |
|
| % |
| $ |
|
| $ |
| ||||||
Vendor B |
| $ |
|
| $ |
|
|
| % |
|
| % |
| $ |
|
| $ |
| ||||||
Vendor C |
| $ |
|
| $ |
|
|
| % |
|
| % |
| $ |
|
| $ |
| ||||||
|
| $ |
|
| $ |
|
|
| % |
|
| % |
| $ |
|
| $ |
| ||||||
For nine months ended September 30, 2023 and 2022, the suppliers who accounted for 10% or more of the Company’s cost of sales and their balances at year ended are presented as follows:
|
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||||
|
| Purchase |
|
| Percentage of purchases |
|
| Accounts payable trade |
| |||||||||||||||
Vendor A |
| $ |
|
| $ |
|
|
| % |
|
| % |
| $ |
|
| $ |
| ||||||
Vendor B |
| $ |
|
| $ |
|
|
| % |
|
| % |
| $ |
|
| $ |
| ||||||
Vendor C |
| $ |
|
| $ |
|
|
| % |
|
| % |
| $ |
|
| $ |
| ||||||
|
| $ |
|
| $ |
|
|
| % |
|
| % |
| $ |
|
| $ |
| ||||||
NOTE 10 - STOCK HOLDERS’ EQUITY
Reverse Stock Split
On June 5, 2023, the Company filed an Article of Amendment to the Articles of Incorporation with the Wyoming Secretary of State to modify the ratio of the Reverse Stock Split from one-for-ten (10) to one-for-twelve (12) (the “Revised Reverse Stock Split”). Upon effectiveness of the Revised Reverse Stock Split, every twelve (12) outstanding shares of common stock were combined into and automatically became one share of common stock. No fractional shares was issued in connection with the Revised Reverse Stock Split and all such fractional shares or odd lots (less than 100 shares to any record or beneficial holder) issuable in the Revised Reverse Stock Split were rounded up to 100 shares. An aggregate of
The Revised Reverse Stock Split was approved and authorized by a majority of the Company’s stockholder on May 8, 2023 and by the Board of Directors of the Company on May 8, 2023.
Public Offering & Nasdaq Listing
On July 20, 2023, the Company entered into an underwriting agreement (the "Underwriting Agreement") with Network 1 Financial Securities, Inc., as underwriter (the "Underwriter") pursuant to which the Company agreed to issue and sell, in a firm commitment underwritten public offering by the Company (the "Offering") of
In addition, pursuant to the Underwriting Agreement, the Underwriter was granted a 45-day option (the "Over-Allotment Option") to
The securities were offered by the Company pursuant to the registration statement on Form S-1 (File No. 333-269753), which was originally filed with the U.S. Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended, on February 14, 2023, and declared effective by the Commission on July 19, 2023.
On July 24, 2023, the Offering closed, and the Company issued and sold
In August, 2023, an aggregate of
In August, 2023, an aggregate of
From July 20, 2023 to August 4, 2023, an aggregate total of
| 18 |
| Table of Contents |
BIONEXUS GENE LAB CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022
(Currency expressed in United States Dollars (“US$”))
(Unaudited)
NOTE 11 – SEGMENTED INFORMATION
At September 30, 2023, the Company (“BGLC”) operates in the biochemical industry segment through its two Malaysian subsidiaries, MRNA Scientific Malaysia (formerly known as Bionexus Gene Lab Sdn. Bhd.) and Chemrex.
|
|
| BioNexus Gene Lab Corp., a Wyoming company |
|
|
| |
|
|
|
|
|
|
|
|
| 100% owned |
|
| 100% owned |
| ||
| MRNA Scientific Sdn. Bhd. (formerly “Bionexus Gene Lab Sdn. Bhd.”), a Malaysian company |
|
| Chemrex Corporation Sdn. Bhd., a Malaysian company |
| ||
At September 30, 2023, the Company (“BGLC”) operates in the biochemical industry segment through its two Malaysian subsidiaries, MRNA Scientific Malaysia and Chemrex.
For the nine months ended September 30, 2023, segmented (unaudited) revenue and net profit/(loss) (Currency expressed in United States Dollars (“US$”) are as follows:
|
| MRNA Scientific Malaysia |
|
| Chemrex |
|
| BGLC |
|
| Total |
| ||||
|
| Nine months ended September 30, 2023 |
| |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
REVENUE |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COST OF REVENUE |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
| ( | ) | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS PROFIT |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
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|
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|
|
|
|
|
|
OTHER INCOME |
|
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|
|
|
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|
|
| ||||
|
|
|
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|
OPERATING EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOSS FROM OPERATIONS |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCE COSTS |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
| ( | ) | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOSS BEFORE TAX |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax expense |
|
|
|
|
| ( | ) |
|
|
|
|
| ( | ) | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET LOSS |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| 19 |
| Table of Contents |
BIONEXUS GENE LAB CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022
(Currency expressed in United States Dollars (“US$”))
(Unaudited)
|
| MRNA Scientific Malaysia |
|
| Chemrex |
|
| BGLC |
|
| Total |
| ||||
|
| Nine months ended September 30, 2022 |
| |||||||||||||
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 |
|
|
|
|
| ( | ) |
|
|
|
|
| ( | ) | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(LOSS)/PROFIT AFTER TAX |
| $ | ( | ) |
| $ |
|
| $ | ( | ) |
| $ | ( | ) | |
| 20 |
| Table of Contents |
BIONEXUS GENE LAB CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022
(Currency expressed in United States Dollars (“US$”))
(Unaudited)
|
| As of September 30, 2023 and December 31, 2022 |
| |||||||||||||
|
| Total Assets |
|
| Total Liabilities |
| ||||||||||
|
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
BGLC & MRNA Scientific |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Chemrex |
|
|
|
|
|
|
|
|
|
|
|
| ||||
TOTAL |
|
|
|
|
|
|
|
|
|
|
|
| ||||
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, 2023 up through November 20, 2023 of these consolidated financial statements.
On August 1, 2023, Mr. Liong Tai Tan, the Chief Operating Officer and a member of the Board of Directors, notified the Company of his desire to resign from his position at the Company. The Company and Mr. Liong Tai Tan agreed that the resignations would be effective August 31, 2023. Mr. Liong Tai Tan’s resignation is not due to any disagreement with the Company, the Company’s management or the Board on any matter relating to the Company’s operations, policies, or practices (financial or otherwise), Mr. Liong Tai Tan informed the Company that he is leaving the Company and the Board of Directors to pursue other commitments. On August 2, 2023, the Board of Directors of the Company approved the appointment of Mr. Su-Leng Tan Lee as the Chief Operating Officer and not a director, effective September 1, 2023.
On October 4, 2023, Mr. Sook Keng Yeoh, the Chief Executive Officer and a member of the Board of Directors, tendered his resignation letter to the Company from his positions at the Company. The Company and Mr. Sook Keng Yeoh agreed that the resignations would be effective October 4, 2023. Mr. Sook Keng Yeoh’s resignation is not due to any disagreement with the Company, the Company’s management, or the Board on any matter relating to the Company’s operations, policies, or practices (financial or otherwise). On October 12, 2023, the board of directors of the Bionexus Gene Lab Corp. (“the Company”) approved the appointment of Mr. Chi Yuen Leong as the Chief Executive Officer and a director, effective October 12, 2023. Mr. Leong has a family relationship with the Company’s outgoing CFO, Wei Li Leong. Ms. Wei Li Leong is the daughter of Mr. Leong.
On October 30, 2023, Ms. Wei Li Leong, the Chief Financial Officer (“CFO”), tendered her resignation letter to the Company from her position at the Company. The Company and Ms. Leong agreed that the resignation would be effective October 30, 2023 (“Resignation Date”), and Ms. Leong agreed to continue serving for one additional month from the Resignation Date. Ms. Leong’s resignation is not due to any disagreement with the Company, the Company’s management, or the Board on any matter relating to the Company’s operations, policies, or practices (financial or otherwise). The Company will actively identify a replacement personnel. The Company believes that it will be able to appoint a new CFO in the near future.
On December 11, 2023, a majority of shareholders executed a Written Consent to Action Without Meeting of the Shareholders (the “Written Consent”) removing the certain Board members and appointing three new board members of the shareholders’ choosing. This was subsequently notified via a Schedule 14C mailer to all eligible shareholders, on or about 5th March 2024.
The New Directors began serving their term on December 11, 2023, and their terms shall expire at our annual meeting of stockholders to be held in 2024.
Additionally, by unanimous written consent effective December 11, 2023, the Board appointed Su-Leng Tan Lee and Chee Keong Yap to the Board, and Mr. Su-Leng Tan Lee to serve as Chief Executive Officer and Secretary to the Board, effective December 11, 2023.
| 21 |
| 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, MRNA Scientific Sdn. Bhd. (“MRNA Scientific 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 MRNA Scientific Malaysia, which was incorporated in Malaysia on April 7, 2015. MRNA Scientific 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 Coronavirus, 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 MRNA Scientific 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) 18-2218762 and our website 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.
| 22 |
| Table of Contents |
The results of operations of our subsidiary, MRNA Scientific-Malaysia , with respect to its RNA screening process have been adversely impacted by the onset of the Covid-19 pandemic followed by a number of prominent variants, including Alpha, Beta, Delta, and Omicron. Although new variants are an expected part of the evolution of viruses, new variant is more aggressive, highly transmissible, vaccine-resistant, able to cause more severe disease in Malaysia. We believe that most people were reluctant to visit hospitals and clinics in view of the post Covid-19 Omicron and its subvariants 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.
The results of operations for Chemrex were adversely impacted during fiscal year 2023 and the 1st quarter of 2023 as businesses of Chemrex customers especially the manufacturers had suffered significant impact. Many of them across the country saw their supply chains interrupted, demand for their products and services decline, shortages in supplies and inputs.
Recent Developments.
(i) Public Offering and Nasdaq Listing
On July 20, 2023, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Network 1 Financial Securities, Inc., as underwriter (the “Underwriter”) pursuant to which the Company agreed to issue and sell, in a firm commitment underwritten public offering by the Company (the “Offering”) of 1,250,000 shares of common stock, no par value, priced at a public offering price of $4.00 per share.
In addition, pursuant to the Underwriting Agreement, the Underwriter was granted a 45-day option (the “Over-Allotment Option”) to purchase up to an additional 187,500 shares of common stock at the public offering price of $4.00 per share. The Underwriter fully exercised the Over-Allotment Option on July 24, 2023.
The securities were offered by the Company pursuant to the registration statement on Form S-1 (File No. 333-269753), which was originally filed with the U.S. Securities and Exchange Commission (the “Commission”) under the Securities Act of 1933, as amended, on February 14, 2023, and declared effective by the Commission on July 19, 2023.
On July 24, 2023, the Offering closed, and the Company issued and sold 1,437,500 shares of common stock, including 187,500 shares sold pursuant to the exercise of the Over-Allotment Option. The Offering was priced at $4.00 per share for total gross proceeds of $5.75 million before deducting underwriting discounts, commissions, and offering expenses. Pursuant to the Underwriting Agreement, the Underwriter received an 8% underwriting discount on the public offering price for the shares common stock. The Company will therefore receive net proceeds, before expenses, of $5,290,000 from the sale of the common stocks. In addition, the Company issued to the Underwriter warrants to purchase up to an aggregate of 115,000 shares of the Company’s common stock (the “Underwriter’s Warrants”) at an exercise price of $4.40 per share. The Underwriter’s Warrants are exercisable from July 24, 2023 until July 24, 2028.
On August 2023, there was an issuance of shares of 759,299 and 75,000 respectively as part of Contractual Agreements relating to the uplisting of our Common Stock onto the NASDAQ stock exchange, subsequently followed by the cancellation of 125,000 shares. Please see Note 10.
(b) Reverse stock split
On June 5, 2023, the Company filed an Article of Amendment to the Articles of Incorporation with the Wyoming Secretary of State to modify the ratio of the Reverse Stock Split from one-for-ten (10) to one-for-twelve (12) (the “Revised Reverse Stock Split”). Upon effectiveness of the Revised Reverse Stock Split, every twelve (12) outstanding shares of common stock were combined into and automatically become one share of common stock. No fractional shares were issued in connection with the Revised Reverse Stock Split and all such fractional shares or odd lots (less than 100 shares to any record or beneficial holder) issuable in the Revised Reverse Stock Split were rounded up to 100 shares.
The Revised Reverse Stock Split was approved and authorized by a majority of the Company’s stockholder on May 8, 2023 and by the Board of Directors of the Company on May 8, 2023.
On July 19, 2023, the Financial Industry Regulatory Authority announced the Revised Reverse Stock Split.in conjunction with the aforementioned Nasdaq listing.
An total of 1,044,351 round-up shares issued after reversal of stock split exercised. Please refer Note 10.
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, |
| ||
|
| 2023 |
|
| 2022 |
| ||
Period ended September 30, 2023 /Year-ended December 31, 2022 US$1: MYR exchange rate |
|
| 4.6920 |
|
|
| 4.3900 |
|
|
|
|
|
|
|
|
|
|
|
| January 1, 2023 to September 30, 2023 |
|
| January 1, 2022 to September 30, 2022 |
| ||
9 months average US$1: MYR exchange rate |
|
| 4.5192 |
|
|
| 4.3442 |
|
| 23 |
| Table of Contents |
Results of Operations
Three Months Ended September 30, 2023 Compared with the Three Months Ended September 30, 2022.
The following table sets forth key selected financial data for the three months ended September 30, 2023 and 2022.
Consolidated
|
| Three months ended |
| |||||
|
| September 30, |
| |||||
|
| 2023 |
|
| 2022 |
| ||
REVENUE |
| $ | 2,553,686 |
|
| $ | 2,575,086 |
|
|
|
|
|
|
|
|
|
|
COST OF REVENUE |
|
| (2,199,354 | ) |
|
| (2,275,587 | ) |
|
|
|
|
|
|
|
|
|
GROSS PROFIT |
|
| 354,332 |
|
|
| 299,499 |
|
|
|
|
|
|
|
|
|
|
OTHER INCOME |
|
| 199,284 |
|
|
| 54,110 |
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES |
|
|
|
|
|
|
|
|
General and administrative |
|
| (3,082,128 | ) |
|
| (418,824 | ) |
|
|
|
|
|
|
|
|
|
LOSS FROM OPERATIONS |
|
| (2,528,512 | ) |
|
| (65,215 | ) |
|
|
|
|
|
|
|
|
|
FINANCE COSTS |
|
| (4,259 | ) |
|
| (2,072 | ) |
|
|
|
|
|
|
|
|
|
LOSS BEFORE TAX |
|
| (2,532,771 | ) |
|
| (67,287 | ) |
|
|
|
|
|
|
|
|
|
Tax expense |
|
| (76,418 | ) |
|
| (10,114 | ) |
|
|
|
|
|
|
|
|
|
NET LOSS |
| $ | (2,609,189 | ) |
| $ | (77,401 | ) |
Other comprehensive income: |
|
|
|
|
|
|
|
|
Foreign currency loss |
|
| (18,603 | ) |
|
| (320,592 | ) |
|
|
|
|
|
|
|
|
|
COMPREHENSIVE LOSS |
| $ | (2,627,792 | ) |
| $ | (397,993 | ) |
| 24 |
| Table of Contents |
Segmented Information
|
| MRNA Scientific Malaysia |
|
| Chemrex |
|
| MRNA Scientific Malaysia |
|
| Chemrex |
| ||||
|
| Three months ended September 30, 2023 |
|
| Three months ended September 30, 2022 |
| ||||||||||
REVENUE |
| $ | 16,536 |
|
| $ | 2,537,150 |
|
| $ | 5,942 |
|
| $ | 2,569,144 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COST OF REVENUE |
|
| (7,301 | ) |
|
| (2,192,053 | ) |
|
| (4,244 | ) |
|
| (2,271,343 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS PROFIT |
|
| 9,235 |
|
|
| 345,097 |
|
|
| 1,698 |
|
|
| 297,801 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME |
|
| 1,757 |
|
|
| 197,527 |
|
|
| 2,332 |
|
|
| 51,775 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative |
|
| (71,870 | ) |
|
| (1,322,231 | ) |
|
| (63,005 | ) |
|
| (288,350 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(LOSS)/PROFIT FROM OPERATIONS |
|
| (60,878 | ) |
|
| (779,607 | ) |
|
| (58,975 | ) |
|
| 61,226 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCE COSTS |
|
| (1,677 | ) |
|
| (2,582 | ) |
|
| (336 | ) |
|
| (1,736 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(LOSS)/PROFIT BEFORE TAX |
|
| (62,555 | ) |
|
| (782,189 | ) |
|
| (59,311 | ) |
|
| 59,490 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax expense |
|
| - |
|
|
| (76,418 | ) |
|
| - |
|
|
| (10,114 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET (LOSS)/PROFIT |
| $ | (62,555 | ) |
| $ | (858,607 | ) |
| $ | (59,311 | ) |
| $ | 49,376 |
|
Revenue. For the quarter ended September 30, 2023, we had total revenue of $2,553,686 as compared to total revenue of $2,575,086 for the quarter ended September 30, 2022, decreased by 0.8% from the prior quarter due to slight decrease in purchases from customers.
Chemrex contributed $2,537,150 (99.4%) of the total revenue for the current quarter ended September 30, 2023 as compared to $2,569,144 (99.8%) of the total revenue for the quarter ended September 30, 2022. Chemrex’s revenues had the decrease of 1.2% from prior quarter. The revenue decreased in third quarter of 2023 was due to decrease in purchases from customers as no new project in market
MRNA Scientific-Malaysia contributed $16,536 (0.6%) of the total revenue for the quarter ended September 30, 2023 as compared to revenue of $5,942 (0.2%) of the total revenue from the quarter ended September 30, 2022. Revenues had increased by $10,594 from prior quarter of $5,942, a 178.3% increase due to RNA test from BGLC shareholders.
Cost of Revenue. For the quarter ended September 30, 2023, we incurred $2,199,354 in cost of revenues, as compared to $2,275,587 for the quarter ended September 30, 2022, a slight decrease of 3.4% was due to reason as stated above.
Chemrex had incurred $2,192,053 (99.7%) of the total cost of revenue during the current quarter period ended September 30, 2023 as compared to the quarter ended September 30, 2022 wherein Chemrex had incurred $2,271,343 (99.8%) of the total cost of revenue. The slightly decrease in Chemrex’s cost of revenues of 3.5% for the current period was due to its decreased revenues, stock price reduced and reason as stated above.
MRNA Scientific-Malaysia had incurred $7,301 (0.3%) of the total cost of revenues during the current quarter period ended September 30, 2023 as compared to $4,244 (0.2%) for the quarterly period ended September 30, 2022. Cost of revenue had increased by $3,057 from prior quarter of 72% increase was due to its increased revenues and reason as stated above.
| 25 |
| Table of Contents |
Gross Profit. For the quarterly period ended September 30, 2023, we had total gross profit of $354,332 as compared to gross profit of $299,499 for the quarterly period ended September 30, 2022, an increase by approximately 18.3% from the prior period.
Chemrex contributed $345,097 (97.4%) of the total gross profit for the current quarter ended September 30, 2023 as compared to $297,801 (99.4%) of the total gross profit for the quarter ended September 30, 2022. Chemrex’s gross profit increased by $47,296 from the prior quarter, an approximately 15.9% increase. The gross profit increase for Chemrex in current quarter was due to old stock at lower prices.
MRNA Scientific-Malaysia contributed $9,235 (2.6%) of the total gross profit of $354,332 for the current quarter ended September 30, 2023 as compared to gross profit of $1,698 (0.6%) of the total gross profit from the quarter ended September 30, 2022. The increase of $7,537 by approximately 443.9% from the prior period due to its increased revenues for the same reason stated above.
Other Income. For the quarterly period ended September 30, 2023, we had of $199,284, as compared to of $54,110 for the quarterly period ended September 30, 2022, an increase of approximately 268.3%.
Chemrex contributed $197,527 (99.1%) of other income for the current quarter ended September 30, 2023 as compared to $51,775 (95.7%) of the other income for the quarter ended September 30, 2022. Chemrex’s other income increased by 281.5% due to dividend received, gain on fair value of investment, bank interest earning and unrealized equity investment gain.
MRNA Scientific-Malaysia contributed $1,757 (0.9%) of other income for the current quarter ended September 30, 2023 as compared to $2,332 (4.3%) of the other income for the quarter ended September 30, 2022. The decrease of 24.7% due to lesser fund in the fixed deposit resulted from a reduction in bank interest earning.
Operating Expenses. For the quarter ended September 30, 2023, we had total operating expense of $3,082,128 as compared to total operating expenses of $418,824 for the quarter ended September 30, 2022, an increase by approximately 635.9%. It was due to general and administrative expenses which includes depreciation of fixed assets, employee compensation, professional fees for the Nasdaq uplisting and provision for losses on accounts receivable
Chemrex had incurred $1,322,231 (42.9%) of the total operating expenses for the current quarter ended September 30, 2023 as compared to $288,350 (68.8%) of the total operating expenses for the quarter ended September 30, 2022, an increase by 358.6.%. The major increase in operating expenses was due to provision for losses on accounts receivable of $1,067,413
MRNA Scientific-Malaysia had incurred $71,870 (2.3%) of the total operating expenses for the current quarter ended September 30, 2023 as compared to $63,005 (15%) of the total operating expenses for the quarter ended September 30, 2022, an increase by 14.1%. The increase in operating costs of the current quarter was due to hire new staff, increment of staff remuneration, increase of depreciation of fixed assets for new lab equipment and motor vehicle and additional cost for motor vehicle running expenses and travelling expenses.
BGLC, the holding company had incurred $1,688,027 (54.8%) of total operating expenses for the current quarter ended September 30, 2023 as compared to $67,469 (16.1%) of the total operating expenses for the quarter ended September 30, 2022. The increase of $1,620,558 by approximately 2401.9% in operating costs for the quarter ended September 30, 2023 was due to increment of directors ’ fees, hired a medical adviser, appointed an investor relations service, additional professional expenses for successful listed in Nasdaq from Advisor, Attorney, underwriting cost expenses, share-based compensation, broker fee, NOBO conduit fee, listing expenses and Nasdaq annual fee.
Loss from Operations. We had a loss from operations of $2,528,512 for the quarter ended September 30, 2023 as compared to a loss of $65,215 for the quarter ended September 30, 2022, an increase by approximately 3777.2% from the prior period, for the reasons was due to increment of directors ’ fees, hired a medical adviser, appointed an investor relations service, additional professional expenses for successful listed in Nasdaq from Advisor, Attorney, underwriting cost expenses, share-based compensation, broker fee, conduit fee, listing expenses and Nasdaq annual fee.
Income tax expense. For the quarter ended September 30, 2023, we had a tax expense of $76,418 as compared to tax expenses of $10,114 for the quarter ended September 30, 2022 for Chemrex. There was no tax provision for MRNA Scientific-Malaysia for the quarters ended September 30, 2023 and 2022.
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, 2023, we experienced a foreign currency loss of $18,603 as compared with a foreign currency loss of $320,592 for the three-month period ended September 30, 2022.
| 26 |
| Table of Contents |
Nine Months Ended September 30, 2023 Compared with the Nine Months Ended September 30, 2022.
The following table sets forth key selected financial data for the nine months ended September 30, 2023 and 2022.
Consolidated
|
| Nine months ended |
| |||||
|
| September 30, |
| |||||
|
| 2023 |
|
| 2022 |
| ||
REVENUE |
| $ | 7,497,739 |
|
| $ | 8,089,132 |
|
|
|
|
|
|
|
|
|
|
COST OF REVENUE |
|
| (6,434,796 | ) |
|
| (7,169,329 | ) |
|
|
|
|
|
|
|
|
|
GROSS PROFIT |
|
| 1,062,943 |
|
|
| 919,803 |
|
|
|
|
|
|
|
|
|
|
OTHER INCOME |
|
| 511,792 |
|
|
| 153,340 |
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES |
|
|
|
|
|
|
|
|
General and administrative |
|
| (4,426,077 | ) |
|
| (1,241,631 | ) |
|
|
|
|
|
|
|
|
|
LOSS FROM OPERATIONS |
|
| (2,851,342 | ) |
|
| (168,488 | ) |
|
|
|
|
|
|
|
|
|
FINANCE COSTS |
|
| (9,746 | ) |
|
| (7,717 | ) |
|
|
|
|
|
|
|
|
|
LOSS BEFORE TAX |
|
| (2,861,088 | ) |
|
| (176,205 | ) |
|
|
|
|
|
|
|
|
|
Tax expense |
|
| (76,418 | ) |
|
| (22,792 | ) |
|
|
|
|
|
|
|
|
|
NET LOSS |
| $ | (2,937,506 | ) |
| $ | (198,997 | ) |
|
|
|
|
|
|
|
|
|
Other comprehensive income: |
|
|
|
|
|
|
|
|
Foreign currency translation loss |
|
| (391,533 | ) |
|
| (707,128 | ) |
COMPREHENSIVE LOSS |
| $ | (3,329,039 | ) |
| $ | (906,125 | ) |
| 27 |
| Table of Contents |
Segmented Information
segmental reporting for BGLC |
| MRNA Scientific Malaysia |
|
| Chemrex |
|
| MRNA Scientific Malaysia |
|
| Chemrex |
| ||||
|
| Nine months ended September 30, 2023 |
|
| Nine months ended September 30, 2022 |
| ||||||||||
REVENUE |
| $ | 28,468 |
|
| $ | 7,469,271 |
|
| $ | 39,409 |
|
| $ | 8,049,723 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COST OF REVENUE |
|
| (14,849 | ) |
|
| (6,419,947 | ) |
|
| (19,173 | ) |
|
| (7,150,156 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS PROFIT |
|
| 13,619 |
|
|
| 1,049,324 |
|
|
| 20,236 |
|
|
| 899,567 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME |
|
| 3,922 |
|
|
| 507,870 |
|
|
| 6,617 |
|
|
| 146,720 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative |
|
| (170,590 | ) |
|
| (2,348,127 | ) |
|
| (157,686 | ) |
|
| (906,698 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(LOSS)/PROFIT FROM OPERATIONS |
|
| (153,049 | ) |
|
| (790,933 | ) |
|
| (130,833 | ) |
|
| 139,589 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCE COSTS |
|
| (2,952 | ) |
|
| (6,794 | ) |
|
| (2,196 | ) |
|
| (5,521 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(LOSS)/PROFIT BEFORE TAX |
|
| (156,001 | ) |
|
| (797,727 | ) |
|
| (133,029 | ) |
|
| 134,068 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax expense |
|
| - |
|
|
| (76,418 | ) |
|
| - |
|
|
| (22,792 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET (LOSS)/PROFIT |
| $ | (156,001 | ) |
| $ | (874,145 | ) |
| $ | (133,029 | ) |
| $ | 111,276 |
|
Revenue. For the nine months period ended September 30, 2023, we had total revenue of $7,497,739 as compared to total revenue of $8,089,132 for the same period in 2022, which had decreased by $591,393 from the prior period, approximately 7.3% decrease.
Chemrex contributed $7,469,271 (99.6%) of the total revenue for the current nine months period as compared to $8,049,723 (99.5%) of the total revenue for the same period last year. Chemrex’s revenues had decreased by $580,4528 from prior period, approximately 7.21% decrease. The revenue decreased in 2023 was due to competition with reduced selling price for Resin & Fiberglass mat in Malaysia since January 2023 and there was no new project in the market resulted less order from customer.
MRNA Scientific-Malaysia contributed $28,468 (0.4%) of the total revenue for the current nine months in 2023 as compared to revenue of $39,409 (0.5%) of the total revenue from the same period last year. MRNA Scientific-Malaysia’s revenue had decreased by $10,941 from nine months in 2022, an approximately 27.8% decrease. The revenue decreased in 2023 was due to RNA screening process having been adversely impacted by the onset of the Covid-19 pandemic followed by a number of prominent variants, including Alpha, Beta, Delta, and Omicron. Although new variants are an expected part of the evolution of viruses, new variant is more aggressive, highly transmissible, vaccine-resistant, able to cause more severe disease in Malaysia. We believe that most people were reluctant to visit hospitals and clinics in view of the post Covid-19 Omicron and its subvariants for fear of transmission from other patients or medical staff. Since our RNA screening is administered at diagnostic center, our business had been adversely affected as a result.
Cost of Revenue. For the nine months period ended September 30, 2023, we incurred $6,434,796 in cost of revenues, as compared to $7,169,329 for the same period in 2022, decreased by $734,533 approximately 10.2% decrease was due to the same reason stated above.
Chemrex had incurred $6,419,947 (99.8%) of the total cost of revenue during the current period in 2023 as compared to the same period in 2022 last year wherein Chemrex had incurred $7,150,156 (99.7%) of the total in cost of revenue, cost of revenue decreased by $730,209 approximately 10.21% was due to no new project and competition as stated above.
MRNA Scientific-Malaysia had incurred $14,849 (0.2%) of the total cost of revenues during the current period in 2023 as compared to $19,173 (0.3%) for the same period in 2022, cost of revenue decreased by $4,324, approximately 22.6% in cost of revenues for the current period was due to post Covid-19 pandemic as stated above.
Gross Profit. For the nine months period ended September 30, 2023, we had total gross profit of $1,062,943 as compared to gross profit of $919,803 for the same period in 2023, increased by approximately 15.6% from the prior period.
Chemrex contributed $1,049,324 (98.7%) of the total gross profit for the current nine months period as compared to $899,567 (97.8%) of the total gross profit for the same period last year. The gross profit increased by $149,757 approximately 16.65% for current period in 2023 was due to higher gross margin from the old stock that bought at lower prices
| 28 |
| Table of Contents |
MRNA Scientific-Malaysia had a gross profit of $13,619 (1.3%) of the total gross profit of $1,062,943 for the current nine months period 2023 as compared to $20,236 (2.2%) of the total gross profit of $919,803 from the same period last year 2022. The gross profit decreased by 32.7% 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, 2023, we had $511,792 as compared to $153,340 for the same period in 2022, increased by $358,452 approximately 233.8%.
Chemrex contributed $507,870 (99.2%) of other income for the current nine months period as compared to $146,720 (95.7%) of the other income for the same period last year. Chemrex’s other income increased by $361,150 approximately 246.15% was generated from dividend received, bank interest and gain from fair value on investment.
MRNA Scientific-Malaysia had $3,922 (0.8%) for nine months period ended September 30, 2023 as compared to $6,617 (4.3%) for the same period in 2022, decreased by approximately 40.7% was due to lower bank interest earning from lower fund deposited.
Operating Expenses. For the nine months period ended September 30, 2023, we had a total operating expense of $4,426,077 as compared to total operating expenses of $1,241,631 for the same period in 2022. The increase of $3,184,446, approximately 256.5% was due to general and administrative expenses which includes depreciation of fixed assets, employee compensation and benefits, marketing/travel expenses, professional expenses and charges from Advisor, Attorney, STC (Transfer Agent), Finra, Nasdaq and SEC on the Company’s uplisting to Nasdaq, an additional cost for underwriting cost expenses and share-based compensation and provision for losses on account receivables.
Chemrex had incurred $2,348,127(53.1%) of the total operating expenses for the current nine months period in 2023 as compared to $906,698 (73%) of the total operating expenses for the same period 2022 last year, increased by $1,441,429 approximately 158.98% due to the increased commission, directors’ remuneration, medical expenses, loss on unrealized/realized currency exchange, withholding taxes and provision for losses on account receivables of $1,372,573.
MRNA Scientific-Malaysia had incurred $170,590 (3.9%) of the total operating expenses for the current nine months period as compared to $157,686 (12.7%) of the total operating expenses for the same period last year. The increase of $12,904 by approximately 8.2% in operating costs for the nine months period was due to an increase of traveling expenses for marketing, increment of staff remuneration, increase of depreciation of fixed assets for new lab equipment and motor vehicle and additional cost for motor vehicle running expenses.
BGLC, the holding company had incurred $1,907,360 (43.1%) of total operating expenses for the current nine months period as compared to $177,247 (14.3%) of the total operating expenses for the same period last year. The increase of $1,730,113 approximately 976.1% in operating costs of the current period was due to the expenses on filing fees for form S-1, consultant fees for capital & corporation advisory services, fees for three independent board members and audit committee, SEC compliance services, SEC registration fee, shareholders’ notice printing and mailing expenses regarding stock reverse split by Securities Transfer Corporation, an additional review fees for S-1, listing expenses of $205,224 for Nasdaq uplist, the underwriting cost of $660,000 and share-based compensation of $601,740
Loss from Operations. We had a loss from operations of $2,851,342 for nine months period ended September 30, 2023 as compared to loss of $168,488 for the same period in 2022. The increase of $2,682,854, approximately 1592.3% was due to the reasons discussed above.
Income tax expense. For the nine-months period ended September 30, 2023, we had income tax provided by Chemrex $76,418 and MRNA Scientific-Malaysia had no tax provision as compared to the same period 2022 which had a tax estimated $22,792 from Chemrex and no tax provided from MRNA Scientific-Malaysia.
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 nine-months period ended September 30, 2023, we experienced a foreign currency loss of $391,533 as compared with a foreign currency loss of $707,128 for the same period in 2022.
| 29 |
| Table of Contents |
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 2023, we had working capital of $6,625,767 compared with working capital of $4,017,749 as of December 31, 2022. The increase in working capital as of September 30, 2023 from December 31, 2022 was due principally to the increase in cash generated from our operations.
Our primary uses of cash had been for operations. The main sources of cash was generated from operational revenues and the private placement of our common stock. The following trends could 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 (used in) / generated from operating, investing, and financing activities for the three months ended September 30, 2023 and 2022:
|
| Nine months ended |
| |||||
|
| September 30, |
| |||||
|
| 2023 |
|
| 2022 |
| ||
Net cash (used in)/ generated from Operating Activities |
| $ | (1,039,686 | ) |
| $ | 75,083 |
|
Net cash used in investing activities |
|
| (368,824 | ) |
|
| (400,595 | ) |
Net cash generated from financing activities |
|
| 5,743,206 |
|
|
| 110,441 |
|
Foreign currency translation adjustment |
|
| (306,677 | ) |
|
| (446,579 | ) |
Net Change in Cash and Cash Equivalents |
| $ | 4,028,019 |
|
| $ | (661,650 | ) |
Operating Activities
During the nine months ended September 30, 2023, the Company incurred a net loss of $2,937,506 which, after adjusting for amortization, depreciation, dividend income, fair value gain on share investment, allowances for expected credit losses, share-base compensation, an increase in inventories, a decrease in trade receivables and a substantial reduction in trade payables, operating lease liabilities, advance payment from customer, resulted in net cash of $1,039,686 being used in operating activities during the nine months ended September 30, 2023. By comparison, during the nine months ended September 30, 2022, the Company had a net loss of $198,997 after adjusting for amortization, depreciation, dividend income, fair value loss on share investments and a decrease in inventories, trade receivables, deferred cost of revenue, a substantial reduction in trade payables, operating lease liabilities, advance payment from customer, deferred revenue, resulted in net cash of $75,083 being cash generated from operating activities during the period.
Investing Activities
During the nine months ended September 30, 2023, the Company had net cash of $368,824 used in investment activities from acquisition of share investment of $296,109 and purchase of plant & equipment of $148,461. By comparison during the nine months ended September 30, 2022, the Company had net cash from acquisition of share investment of $397,974 and purchase of plant and equipment of $37,144, resulting in net cash used in investing activities of $400,595.
Financing Activities
During the nine-month ended September 30, 2023, the Company had net cash of $5,743,206 generated from financing activities for shares subscriptions of initial public offering (IPO) of 1,473,500 shares at a price to the public of $4.00 per share for total proceeds of $5,750,000. By comparison during the nine months ended September 30, 2022, we had net cash of $110,441 generated from financing activities for continued the repayment of a finance lease of $34,038 and shares subscriptions of $150,000.
Item 3. 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.
| 30 |
| Table of Contents |
Item 4. 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(c) and 15d-15(e) under the Exchange Act (“Exchange Act”) as of September 30, 2023. 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 had assessed the effectiveness of our internal control over financial reporting as of September 30, 2023, 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 had improved. A material weakness could create reasonable possibility that a material misstatement in annual or interim financial statements. The management considers its internal control over financial reporting required further improvement.
Management had concluded an internal control over financial reporting and glad to note that a majority of our Board of Directors was made up of independent directors and the Audit Committee comprised of all independent directors since 2023, the adequacy in the monitoring of required internal controls and procedures were improving.
While these control deficiencies did not result in any audit adjustments to our 2023 or 2022 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.
To the extent reasonably possible, given our limited resources, upon consummation of a merger with a private operating company, the Company had been relying on three or more individuals. We were expanding our current board of directors to include additional independents willing to perform directorial functions. Since the recited remedial actions and we would hire or engage additional personnel, this material weakness would be overcome in the near term. Until such remedial actions could be realized, we would 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, 2023, there had been no change in internal control over financial reporting that had materially affected or was reasonably likely to materially affect our internal control over financial reporting.
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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 and Use of Proceeds.
In August 2023, an aggregate of 759,299 shares of common stock were issued to professional parties in lieu of cash for services rendered in connection with Company’s listing onto the Nasdaq Capital Market, 125,000 were subsequently cancelled in November, 2023. The shares were issued at $0.72 per share. These issuances were made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.
In August 2023, an aggregate of 75,000 shares of common stock were issued to directors for services rendered. The shares were issued at $0.72 per share. These issuances were made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable to our Company.
Item 5. Other Information.
There were issuances of an aggregate total of 1,044,351 shares from July 20,2023 to August 4, 2023 as part of the round-up exercise to the reverse stock split, as detailed in the Schedule 14C filing related to the reverse stock split with the record date May 8th, 2023.
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Item 6. Exhibits.
Exhibit |
| Description |
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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).* |
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101.SCH |
| Inline XBRL Taxonomy Extension Schema Document.* |
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101.CAL |
| Inline XBRL Taxonomy Extension Calculation Linkbase Document.* |
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101.DEF |
| Inline XBRL Taxonomy Extension Definition Linkbase Document.* |
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101.LAB |
| Inline XBRL Taxonomy Extension Labels Linkbase Document.* |
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101.PRE |
| Inline XBRL Taxonomy Extension Presentation Linkbase Document.* |
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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 were furnished and not filed. |
** | Previously filed or furnished as an exhibit to BioNexus Gene Lab Corp.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2023. |
* | Furnished with this Form 10-Q/A. |
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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 |
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/s/ Su-Leng Tan Lee |
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Su-Leng Tan Lee |
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Chief Executive Officer |
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(Principal Executive Officer) |
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March 26, 2024 | |
| 34 |
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/A of the Registrant for the fiscal quarter ended September 30, 2023; |
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| 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; |
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| 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; |
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| 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: |
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| (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; |
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| (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; |
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| (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 |
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| (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): |
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| (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 |
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| (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. |
March 26, 2024
| /s/ Su-Leng Tan Lee |
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| Su-Leng Tan Lee |
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| Chief Executive Officer |
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| (Principal Executive Officer) |
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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/A of the Registrant for the fiscal quarter ended September 30, 2023; |
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| 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; |
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| 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; |
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| 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: |
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| (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; |
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| (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; |
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| (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 |
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| (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): |
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| (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 |
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| (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. |
March 26, 2024
| /s/ Su-Leng Tan Lee |
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| Su-Leng Tan Leec |
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| Chief Executive Officer |
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| (Principal Financial and Accounting Officer) |
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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/A for the period ended September 30, 2023 (the “Form 10-Q/A”) 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/A, fairly presents, in all material respects, the financial condition and results of operations of the registrant.
| Bionexus Gene Lab Corporation |
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| Dated: March 26 2024 |
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| /s/ Su-Leng Tan Lee |
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| Su-Leng Tan Lee Chief Executive Officer |
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| (Principal Executive Officer) |
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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/A for the period ended September 30, 2023 (the “Form 10-Q/A”) 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/A, fairly presents, in all material respects, the financial condition and results of operations of the registrant.
| Bionexus Gene Lab Corporation |
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| Dated: March 26, 2024 |
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| /s/ Su-Leng Tan Lee |
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| Su-Leng Tan Lee Chief Executive Officer |
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| (Principal Accounting Officer) |
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