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BioNexus Gene Lab Corp - Quarter Report: 2021 June (Form 10-Q)

 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2021

 

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: 333-229399

 

BIONEXUS GENE LAB CORP.

(Exact name of registrant as specified in its charter)

 

Wyoming

 

35-2604830

(State or Other Jurisdiction of
Incorporation or Organization)

 

(I.R.S. Employer

Identification No.)

 

 

 

 

 

Unit 02, Level 10 Tower B, Avenue 3, The Vertical

Business Suite II Bangsar South

No. 8 Jalan Kerinchi

Kuala Lumpur, Malaysia

 

59200

(Address of Principal Executive Offices)

 

(Zip Code)

 

+60 1221-26512

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act: None

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒   No ☐

 

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). Yes ☒   No ☐

 

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

Non-accelerated filer

Smaller reporting company

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐   No ☒

 

As of August 9, 2021, there were 171,218,152 shares of common stock, no par value, outstanding.

 

 

 

 

TABLE OF CONTENTS

 

 

 

 

Page

 

PART I – FINANCIAL INFORMATION

 

 

 

Item 1.

Financial Statements

 

3

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

25

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

 

34

 

Item 4.

Controls and Procedures

 

34

 

 

 

 

 

 

PART II – OTHER INFORMATION

 

 

 

Item 1.

Legal Proceedings

 

36

 

Item 1A.

Risk Factors

 

36

 

Item 2.

Unregistered Sale of Equity Securities and Use of Proceeds

 

36

 

Item 3.

Defaults Upon Senior Securities

 

36

 

Item 4.

Mine Safety Disclosures

 

36

 

Item 5.

Other Information

 

36

 

Item 6.

Exhibits

 

37

 

 

 

 

 

 

SIGNATURES

 

38

 

 

 
2

Table of Contents

 

PART I — FINANCIAL INFORMATION

 

ITEM 1. Financial Statements

 

BIONEXUS GENE LAB CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF JUNE 30, 2021 AND DECEMBER 31, 2020

(Currency expressed in United States Dollars (“US$”))

 

 

 

 

 

 

As of

 

 

 

 

 

 

June 30,

 

 

December 31,

 

 

Note

 

 

2021

 

 

2020

 

 

 

 

 

 

(Unaudited)

 

 

(Audited)

 

ASSETS

 

 

 

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

 

 

 

Cash and bank balances

 

 

 

 

 

422,893

 

 

 

699,585

 

Fixed deposits placed with financial institutions

 

 

 

 

 

1,059,812

 

 

 

2,088,107

 

Trade receivables

 

4

 

 

 

3,880,647

 

 

 

3,996,802

 

Other receivables, deposits and prepayments

 

 

 

 

 

29,355

 

 

 

22,640

 

Tax Recoverable

 

5

 

 

 

2,727

 

 

 

2,190

 

Inventories

 

 

 

 

 

1,703,136

 

 

 

1,176,170

 

Total current assets

 

 

 

 

 

7,098,570

 

 

 

7,985,494

 

 

 

 

 

 

 

 

 

 

 

 

 

NON-CURRENT ASSETS

 

 

 

 

 

 

 

 

 

 

 

Operating lease right of use asset, net

 

6

 

 

 

51,265

 

 

 

62,529

 

Property, plant and equipment, net

 

7

 

 

 

1,683,566

 

 

 

1,785,602

 

Other investments

 

8

 

 

 

614,722

 

 

 

281,668

 

Total non-current assets

 

 

 

 

 

2,349,553

 

 

 

2,129,799

 

TOTAL ASSETS

 

 

 

 

$9,448,123

 

 

$10,115,293

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

Trade payables

 

9

 

 

 

2,394,808

 

 

 

3,170,653

 

Other payables and accrued liabilities

 

 

 

 

 

34,884

 

 

 

93,962

 

Current portion of obligation under finance lease

 

10

 

 

 

21,385

 

 

 

25,048

 

Current portion of operating lease liabilities

 

6

 

 

 

18,472

 

 

 

20,702

 

Tax payables

 

5

 

 

 

106,161

 

 

 

61,313

 

Amount owing to director

 

11

 

 

 

83

 

 

 

1,920

 

Total current liabilities

 

 

 

 

 

2,575,793

 

 

 

3,373,598

 

 

See accompanying notes to the condensed consolidated financial statements.

 

 
3

 

  

ITEM 1. FINANCIAL STATEMENTS (CONT’D)

 

BIONEXUS GENE LAB CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF JUNE 30, 2021 AND DECEMBER 31, 2020

(Currency expressed in United States Dollars (“US$”))

 

 

 

 

 

As of

 

 

 

 

 

 

June 30,

 

 

December 31,

 

 

 

Note

 

 

2021

 

 

2020

 

 

 

 

 

 

(Unaudited)

 

 

(Audited)

 

 

 

 

 

 

 

 

 

 

 

NON-CURRENT LIABILITIES

 

 

 

 

 

 

 

 

 

Non-current portion of obligation under finance lease

 

10

 

 

 

23,610

 

 

 

35,292

 

Non-current portion of operating lease liabilities

 

6

 

 

 

33,685

 

 

 

42,377

 

Deferred tax liabilities

 

5

 

 

 

1,811

 

 

 

1,872

 

Total non-current liabilities

 

 

 

 

 

59,106

 

 

 

79,541

 

TOTAL LIABILITIES

 

 

 

 

$2,634,899

 

 

$3,453,139

 

 

 

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

As at June 30, 2021, common stock, no par value; 300,000,000 shares authorized and 171,218,152 shares outstanding, and preferred stock, no par value; 30,000,000 shares authorized and no shares outstanding. As at December 31, 2020, common stock, no par value; 300,000,000 shares authorized and 171,218,152 shares outstanding, and preferred stock, no par value; 30,000,000 shares authorized and no shares outstanding.

 

12

 

 

 

10,779,574

 

 

 

10,779,574

 

Additional paid in capital

 

 

 

 

 

(5,011,891)

 

 

(5,011,891)

Accumulated surplus

 

 

 

 

 

1,127,793

 

 

 

760,787

 

Other comprehensive (losses) /income

 

 

 

 

 

(82,252)

 

 

133,684

 

TOTAL STOCKHOLDERS’ EQUITY

 

 

 

 

 

6,813,224

 

 

 

6,662,154

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

$9,448,123

 

 

$10,115,293

 

 

See accompanying notes to the condensed consolidated financial statements.

 

 
4

Table of Contents

 

BIONEXUS GENE LAB CORP.

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2021 AND 2020

(Currency expressed in United States Dollars (“US$”))

(Unaudited)

 

 

 

Three months ended

 

 

Six months ended

 

June 30,

June 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

REVENUE

 

$3,092,171

 

 

$1,103,516

 

 

$6,541,330

 

 

$4,173,542

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COST OF REVENUE

 

 

(2,624,564)

 

 

(944,226)

 

 

(5,491,158)

 

 

(3,358,945)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GROSS PROFIT

 

 

467,607

 

 

 

159,290

 

 

 

1,050,172

 

 

 

814,597

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER INCOME

 

 

50,429

 

 

 

23,729

 

 

 

112,916

 

 

 

770,370

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

 

(378,046)

 

 

(216,993)

 

 

(680,965)

 

 

(545,411)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PROFIT/(LOSS) FROM OPERATIONS

 

 

139,990

 

 

 

(33,974)

 

 

482,123

 

 

 

1,039,556

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FINANCE COSTS

 

 

(3,448)

 

 

(1,380)

 

 

(6,837)

 

 

(4,406)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PROFIT/(LOSS) BEFORE TAX

 

 

136,542

 

 

 

(35,354)

 

 

475,286

 

 

 

1,035,150

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax expense

 

 

(108,280)

 

 

(487)

 

 

(108,280)

 

 

(1,347)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET PROFIT/(LOSS)

 

$28,262

 

 

$(35,841)

 

$367,006

 

 

$1,033,803

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation(loss)/gain

 

 

(7,468)

 

 

43,558

 

 

 

(215,936)

 

 

(251,138)

COMPREHENSIVE INCOME

 

$20,794

 

 

$7,717

 

 

$151,070

 

 

$782,665

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share - Basic and diluted

 

 

0.00

 

 

 

0.00

 

 

 

0.00

 

 

 

0.00

 

Weighted average number of common shares outstanding – Basic and diluted

 

 

171,218,152

 

 

 

102,730,891

 

 

 

171,218,152

 

 

 

102,730,891

 

 

See accompanying notes to the condensed consolidated financial statements.

 

 
5

Table of Contents

 

BIONEXUS GENE LAB CORP

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

AS OF JUNE 30, 2021 AND 2020

(Amount expressed in United States Dollars (“US$))

 

 

 

Common stock

 

 

Additional

 

 

 

 

Accumulated other comprehensive

 

 

 

 

 

Number of shares

 

 

Amount

 

 

paid in

capital

 

 

Accumulated surplus/(loss)

 

 

income/
(loss)

 

 

Total Equity

 

Balance as of December 31, 2019

 

 

102,730,891

 

 

$6,484,669

 

 

$(5,011,891)

 

$(333,311)

 

$(17,103)

 

$1,122,364

 

Issuance of shares

 

 

68,487,261

 

 

 

4,294,905

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

4,294,905

 

Net profit for the period

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,069,644

 

 

 

-

 

 

 

1,069,644

 

Foreign currency translation loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(294,696)

 

 

(294,696)

Balance as of March 31, 2020

 

 

171,218,152

 

 

$10,779,574

 

 

$(5,011,891)

 

$736,333

 

 

$(311,799)

 

$6,192,217

 

Net profit for the period

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(35,841)

 

 

-

 

 

 

(35,841)

Foreign currency translation gain

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

43,558

 

 

 

43,558

 

Balance as of June 30, 2020

 

 

171,218,152

 

 

$10,779,574

 

 

$(5,011,891)

 

$700,492

 

 

$(268,241)

 

$6,199,934

 

 

See accompanying notes to the condensed consolidated financial statements.

 

 
6

Table of Contents

 

BIONEXUS GENE LAB CORP

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

AS OF JUNE 30, 2021 AND 2020

(Amount expressed in United States Dollars (“US$))

 

 

 

Common stock

 

 

Additional

 

 

 

 

 

Accumulated other comprehensive

 

 

 

 

 

 

Number of shares

 

 

Amount

 

 

paid in

capital

 

 

Accumulated surplus/(loss)

 

 

income/
(loss)

 

 

Total Equity

 

Balance as of December 31, 2020

 

 

171,218,152

 

 

$10,779,574

 

 

$(5,011,891)

 

$760,787

 

 

$133,684

 

 

$6,662,154

 

Net profit for the period

 

 

-

 

 

 

-

 

 

 

-

 

 

 

338,744

 

 

 

-

 

 

 

338,744

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(208,468)

 

 

(208,468)

Balance as of March 31, 2021

 

 

171,218,152

 

 

$10,779,574

 

 

$(5,011,891)

 

$1,099,531

 

 

$(74,784)

 

$6,792,430

 

Net profit for the period

 

 

-

 

 

 

-

 

 

 

-

 

 

 

28,262

 

 

 

-

 

 

 

28,262

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(7,468)

 

 

(7,468)

Balance as of June 30, 2021

 

 

171,218,152

 

 

$10,779,574

 

 

$(5,011,891)

 

$1,127,793

 

 

$(82,252)

 

$6,813,224

 

 

See accompanying notes to the condensed consolidated financial statements.

 

 
7

Table of Contents

 

BIONEXUS GENE LAB CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30 2021 AND 2020

(Currency expressed in United States Dollars (“US$”))

(Unaudited)

 

 

 

Six months ended

 

 

 

June 30,

 

 

 

2021

 

 

2020

 

Cash flows from operating activities:

 

 

 

 

 

 

Net profit

 

$367,006

 

 

$1,033,803

 

 

 

 

 

 

 

 

 

 

Adjustments to reconcile net profit to net cash generated from operating activities:

 

 

 

 

 

 

 

 

Amortization of right of use asset

 

 

8,861

 

 

 

5,171

 

Depreciation of property, plant and equipment

 

 

46,022

 

 

 

20,259

 

Dividend income

 

 

(41,238)

 

 

(1,578)

Fair value loss on other investments

 

 

18,581

 

 

 

-

 

Loss on disposal of other investments

 

 

-

 

 

 

9,890

 

Gain on disposal of property, plant and equipment

 

 

-

 

 

 

(707,618)

Operating profit before working capital changes

 

 

399,323

 

 

 

359,927

 

 

 

 

 

 

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Inventories

 

 

(526,966)

 

 

(28,266)

Trade and other receivables

 

 

109,439

 

 

 

968,071

 

Trade and other payables

 

 

(834,925)

 

 

(2,382,727)

Operating lease liabilities

 

 

(10,921)

 

 

(6,868)

Tax recoverable

 

 

44,249

 

 

 

(44,683)

Cash used in operating activities

 

 

(819,892)

 

 

(1,134,546)

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Acquisition of other investment

 

 

(371,759)

 

 

(109,126)

Dividend income

 

 

41,238

 

 

 

1,578

 

Net cash from acquisition of business under common control

 

 

-

 

 

 

346,008

 

Purchase of plant and equipment

 

(1,473

)

 

 

(305)

Proceeds from disposal of other investments

 

 

6,466

 

 

 

26,089

 

Proceeds from disposal of property, plant and equipment

 

 

-

 

 

 

1,467,865

 

Net cash (used in)/ generated from investing activities

 

 

(325,528)

 

 

1,732,109

 

 

 
8

Table of Contents

 

ITEM 1. FINANCIAL STATEMENTS (CONT’D)

 

BIONEXUS GENE LAB CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30 2021 AND 2020

(Currency expressed in United States Dollars (“US$”))

(Unaudited)

 

 

 

Six months ended

 

 

 

June 30,

 

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

Repayment of finance lease

 

 

(15,346)

 

 

(9,011)

Repayment from Directors

 

 

(1,836)

 

 

(378)

Net cash used in from financing activities

 

 

(17,182)

 

 

(9,389)

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

(142,385)

 

 

(160,139)

NET CHANGE IN CASH AND CASH EQUIVALENTS

 

 

(1,304,987)

 

 

428,035

 

CASH AND CASH EQUIVALENTS, BEGINNING OF FINANCIAL YEAR

 

 

2,787,692

 

 

 

859,076

 

 

 

 

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS, END OF FINANCIAL YEAR

 

$1,482,705

 

 

$1,287,111

 

 

 

 

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS INFORMATION:

 

 

 

 

 

 

 

 

Fixed deposits placed with financial institutions

 

$1,059,812

 

 

$783,923

 

Cash at bank

 

 

422,893

 

 

 

503,188

 

Cash and cash equivalents, end of financial year

 

 

1,482,705

 

 

 

1,287,111

 

 

 

 

 

 

 

 

 

 

Supplementary cash flow information:

 

 

 

 

 

 

 

 

Interest paid

 

$(6,837)

 

$(4,406)

Income taxes paid

 

 

(44,249)

 

 

(44,683)

 

See accompanying notes to the condensed consolidated financial statements.

 

 
9

Table of Contents

 

BIONEXUS GENE LAB CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021

(Currency expressed in United States Dollars (“US$”))

(Unaudited)

 

NOTE 1 - BASIS OF PREPARATION

 

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial reporting and the rules and regulations of the Securities and Exchange Commission that permit reduced disclosure for interim periods. Therefore, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted.

 

In the opinion of management, the consolidated balance sheet as of June 30, 2021 which has been derived from unaudited financial statements and these unaudited condensed consolidated financial statements reflect all normal and recurring adjustments considered necessary to state fairly the results for the periods presented. The results for the six months ended June 30, 2021 are not necessarily indicative of the results to be expected for the entire fiscal year ending December 31, 2021 or for any future period.

 

These unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the Management’s Discussion and the audited financial statements and notes thereto included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2020.

 

NOTE 2 - ORGANIZATION AND BUSINESS BACKGROUND

 

BioNexus Gene Lab Corp. was incorporated in the State of Wyoming on May 12, 2017. On August 23, 2017, the Company acquired all of the outstanding capital stock of Bionexus Gene Lab Sdn. Bhd., a Malaysian corporation (“Subsidiary”). The Subsidiary was incorporated in Malaysia on April 7, 2015 which it then subsequently changed its name to Bionexus Gene Lab Sdn. Bhd.

 

On December 31, 2020, the Company consummated a Share Exchange Agreement with Chemrex Corporation Sdn. Bhd. (“Chemrex”) and the Chemrex shareholders pursuant to which we acquired all of the issued and outstanding shares of capital stock of Chemrex from the Chemrex shareholders in exchange for 68,487,261 shares of common stock of the Company issued to the Chemrex shareholders.

 

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 principal office address is Unit 02 Level 10, Tower B, Vertical Business Suite, No. 8 Jalan Kerinchi, Bangsar South, 59200 Kuala Lumpur, Malaysia, our lab is located at Lab 353, Chemical Science Centre, University Science Malaysia, George Town, Penang, Malaysia. We also have a blood collection center located at 1st floor, Lifecare Medical Centre, Kuala Lumpur, Malaysia. Chemrex offices and supply hub is located at 4 Jalan CJ 1/6 Kawasan Perusahaan Cheras Jaya, Selangor, Malaysia.

 

 
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BIONEXUS GENE LAB CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021

(Currency expressed in United States Dollars (“US$”))

(Unaudited)

The corporate structure as at June 30, 2021 is depicted below:

 

 

 

BioNexus Gene Lab Corp.

a Wyoming company

 

 

 

 

 

 

 

 

 

 

100% owned

 

 

100% owned

Bionexus Gene Lab  

Sdn. Bhd., 

a Malaysian company

 

 

Chemrex Corporation  

Sdn. Bhd., 

a Malaysian company

   

   

 

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

The accompanying unaudited condensed consolidated financial statements reflect the application of certain significant accounting policies as described in this note and elsewhere in the accompanying consolidated financial statements and notes.

 

Basis of presentation

 

The accompanying condensed consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”).

 

Basis of consolidation

 

The condensed consolidated financial statements include the accounts of Bionexus Gene Lab Corp. and its subsidiaries. All significant inter-company balances and transactions within the Company have been eliminated upon consolidation.

 

 
11

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BIONEXUS GENE LAB CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021

(Currency expressed in United States Dollars (“US$”))

(Unaudited)

 

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 six months or less as of the purchase date of such investments.

 

Trade receivables

 

Trade receivables are recorded at the invoiced amount and do not bear interest. Management reviews the adequacy of the allowance for expected credit losses on an ongoing basis, using historical collection trends and aging of receivables. Management also periodically evaluates individual customer’s financial condition, credit history, and the current economic conditions to make adjustments in the allowance when it is considered necessary. Trade balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

 

Inventories

 

Inventories consisting of products available for sell, are stated at 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

 

In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-02, Leases, which was subsequently amended in 2018 by ASU 2018-10, ASU 2018-11 and ASU 2018-20 (collectively, Topic 842). Topic 842 will require the recognition of a right-of-use asset and a corresponding lease liability, initially measured at the present value of the lease payments, for all leases with terms longer than 12 months. For operating leases, the asset and liability will be expensed over the lease term on a straight-line basis, with all cash flows included in the operating section of the statement of cash flows. For finance leases, interest on the lease liability will be recognized separately from the amortization of the right-of-use asset in the statement of comprehensive income and the repayment of the principal portion of the lease liability will be classified as a financing activity while the interest component will be included in the operating section of the statement of cash flows. Topic 842 is effective for annual and interim reporting periods beginning after December 15, 2018. Early adoption is permitted. Upon adoption, leases will be recognized and measured at the beginning of the earliest period presented using a modified retrospective approach. Topic 842 allows for a cumulative-effect adjustment in the period the new lease standard is adopted and will not require restatement of prior periods.

 

 
12

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BIONEXUS GENE LAB CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021

(Currency expressed in United States Dollars (“US$”))

(Unaudited)

 

Prior to January 1, 2019, the Company accounted for leases under ASC 840, Accounting for Leases. Effective January 1, 2019, the Company adopted the guidance of ASC 842, Leases, which requires an entity to recognize a right-of-use asset and a lease liability for virtually all leases. The Company adopted ASC 842 using a modified retrospective approach. As a result, the comparative financial information has not been updated and the required disclosures prior to the date of adoption have not been updated and continue to be reported under the accounting standards in effect for those periods.

 

Property, plant and equipment

 

Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Depreciation is calculated on the straight-line basis to write off the cost over the following expected useful lives of the assets concerned.

 

The principal annual rates used are as follows:

 

Categories

 

Principal Annual Rates

Air conditioner

 

20%

Buildings

 

2%

Computer and software

 

33%

Equipment

 

20%

Furniture and fittings

 

10% to 20%

Lab Equipment

 

10%

Motor vehicle

 

10% to 20%

Office equipment

 

20%

Renovation

 

10% to 20%

Signboard

 

10%

 

Leasehold lands are depreciated over the period of lease term. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Company will obtain ownership by the end of the lease term. Freehold land is not depreciated. Property, plant and equipment under construction are not depreciated until the assets are ready for their intended use

 

Maintenance and repairs are charged to operations as incurred. Expenditures which substantially increase the useful lives of the related assets are capitalized. When properties are disposed of, 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.

 

 
13

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BIONEXUS GENE LAB CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021

(Currency expressed in United States Dollars (“US$”))

(Unaudited)

 

Impairment of long-lived assets

 

Long-lived assets primarily include goodwill, intangible assets and property, plant and equipment. In accordance with the provision of ASC Topic 360, “Impairment or Disposal of Long-Lived Assets”, the Company generally conducts its annual impairment evaluation to its long-lived assets, usually in the fourth quarter of each fiscal year, or more frequently if indicators of impairment exist, such as a significant sustained change in the business climate. The recoverability of long-lived assets is measured at the lowest level group. If the total of the expected undiscounted future net cash flows is less than the carrying amount of the asset, a loss is recognized for the difference between the fair value and carrying amount of the asset. There has been no impairment charge for the years presented.

 

Revenue recognition

 

Revenues are recognized when control of the promised goods or services are transferred to a customer, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services.

 

The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements:

Revenues are recognized when control of the promised goods or services are transferred to a customer, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services.

 

The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements:

 

            identify the contract with a customer; 

            identify the performance obligations in the contract; 

            determine the transaction price; 

            allocate the transaction price to performance obligations in the contract; and 

            recognize revenue as the performance obligation is satisfied. 

 

The Company records revenue at point in time which is recognized upon goods delivered or services rendered.

 

Cost of revenues

 

Cost of revenue includes the purchase cost of retail goods for re-sale to customers and packing materials (such as boxes). It excludes purchasing and receiving costs, inspection costs, warehousing costs, internal transfer costs and other costs of distribution network in cost of revenues.

 

 
14

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BIONEXUS GENE LAB CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021

(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 loss by the weighted average number of common shares outstanding during the period. Diluted earnings or loss per share is computed similar to basic earning 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.

 

 
15

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BIONEXUS GENE LAB CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021

(Currency expressed in United States Dollars (“US$”))

(Unaudited)

 

Foreign currencies translation

 

Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the statement of operations.

 

The functional currency of the Company is the United States Dollars (“US$”) and the accompanying financial statements have been expressed in US$. In addition, the subsidiaries maintain its books and record in a local currency, Malaysian Ringgit (“MYR” or “RM”), which is functional currency as being the primary currency of the economic environment in which the subsidiaries operate.

 

In general, for consolidation purposes, assets and liabilities of its subsidiaries whose functional currency is not US$ are translated into US$, in accordance with ASC Topic 830-30, “Translation of Financial Statement”, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of foreign subsidiary are recorded as a separate component of accumulated other comprehensive income.

 

Translation of amounts from MYR into US$1.00 has been made at the following exchange rates for the respective period and year:

 

 

 

June 30,

2021

 

 

December 31,

2020

 

 

 

 

 

 

 

 

Period ended June 30, 2021 /Year-ended December 31, 2020 US$1: MYR exchange rate

 

 

4.1520

 

 

 

4.0170

 

 

 

 

 

 

 

 

 

 

 

 

June 30,

2021

 

 

June 30,

2020

 

 

 

 

 

 

 

 

 

 

6 months average US$1: MYR exchange rate

 

 

4.0981

 

 

 

4.2619

 

 

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.

 

 
16

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BIONEXUS GENE LAB CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021

(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 June 30, 2021, and December 31, 2020, the Company did not have any nonfinancial assets and liabilities that are recognized or disclosed at fair value in the financial statements, at least annually, on a recurring basis, nor did the Company have any assets or liabilities measured at fair value on a non-recurring basis.

 

Recent accounting pronouncements

 

The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations.

 

NOTE 4 - TRADE RECEIVABLES

 

The Company has performed an analysis on all its trade receivables and determined that all amounts are collectible by the Company. As such, trade receivables are reflected as a current asset and no allowance for expected credit loss has been recorded as of June 30, 2021 and December, 31, 2020. The Company’s trade receivables consist of receivable from customers which are unrelated to the Company. The account receivables are non-interest bearing and is generally on 30 days to 90 days term.

 

 
17

Table of Contents

 

BIONEXUS GENE LAB CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021

(Currency expressed in United States Dollars (“US$”))

(Unaudited)

NOTE 5 - INCOME TAXES

 

The Company provides for income taxes under ASC 740, “Income Taxes. ASC 740 requires the use of an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statements and tax basis of assets and liabilities and the tax rates in effect when these differences are expected to reverse. It also requires the reduction of deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

 

Provision for income taxes consisted of the following:

 

United States of America, The Company is registered in the State of Wyoming and is subject to the tax laws of the United States of America.

 

Bionexus Gene Lab Sdn. Bhd. and Chemrex Corporation Sdn. Bhd. are subject to Malaysia Corporate Tax, which is charged at the statutory income tax rate range is 24% on its assessable income. Under the amendment of Income Tax Act 1967 by the Finance Act 2019 and with effect from year of assessment 2021, companies with paid-up capital of MYR2.5 million or less, and with annual business income of not more than RM50 million are subject to Small and Medium Enterprise Corporate Tax at 17% on chargeable income up to MYR600,000 except for companies with investment holding nature or companies does not have gross income from business sources are subject to corporate tax at 24% on chargeable income.

   

 

 

As of

 

 

 

June 30,

 

 

December 31,

 

 

 

2021

 

 

2020

 

Tax Recoverable

 

 

 

 

 

 

Local

 

$-

 

 

$-

 

Foreign, representing Malaysia

 

 

(2,727)

 

 

(2,190)

Tax Recoverable

 

 

(2,727)

 

 

(2,190)

 

 

 

 

 

 

 

 

 

Income tax liabilities:

 

 

 

 

 

 

 

 

Local

 

$-

 

 

$-

 

Foreign, representing Malaysia

 

 

106,161

 

 

 

61,313

 

Income tax liabilities

 

 

106,161

 

 

 

61,313

 

 

 

 

 

 

 

 

 

 

Deferred tax liabilities:

 

 

 

 

 

 

 

 

Local

 

$-

 

 

$-

 

Foreign, representing Malaysia

 

 

1,811

 

 

 

1,872

 

Deferred tax liabilities

 

 

1,811

 

 

 

1,872

 

Total

 

 

105,245

 

 

 

60,995

 

 

 
18

Table of Contents

 

BIONEXUS GENE LAB CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021

(Currency expressed in United States Dollars (“US$”))

(Unaudited)

 

NOTE 6 - LEASE RIGHT OF USE ASSET AND LEASE LIABILITIES

 

Operating lease right of use as follow:

 

As of

 

 

 

June 30,

 

 

December 31,

 

 

 

2021

 

 

2020

 

Balance as of beginning of the year

 

$62,529

 

 

$23,542

 

Add: Addition of right of use assets

 

 

-

 

 

 

61,128

 

Less: Amortization

 

 

(9,608)

 

 

(22,587)

Foreign translation differences

 

 

(1,656)

 

 

446

 

Balance

 

$51,265

 

 

$62,529

 

 

 

 

 

 

 

 

 

 

Operating lease liability as follow:

 

As of

 

 

 

June 30,

 

 

December 31,

 

 

 

2021

 

 

2020

 

Balance as of beginning of the year

 

$63,079

 

 

$24,148

 

Add: Addition of lease liabilities

 

 

-

 

 

 

61,128

 

Less: gross repayment

 

 

(9,884)

 

 

(26,036)

Add: imputed interest

 

 

1,500

 

 

 

3,380

 

Foreign translation differences

 

 

(2,538)

 

 

459

 

Balance as of end of the year

 

 

52,157

 

 

 

63,079

 

Less: lease liability current portion

 

 

(18,472)

 

 

(20,702)

Lease liability non-current portion

 

$33,685

 

 

$42,377

 

 

The amortization of the operating lease right of use asset for the six months’ period ended June 30, 2021 and the year ended June 30, 2020 were $8,861 and $10,816 respectively. 

   

 
19

Table of Contents

 

BIONEXUS GENE LAB CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021

(Currency expressed in United States Dollars (“US$”))

(Unaudited)

 

NOTE 7 - PROPERTY, PLANT AND EQUIPMENT

 

Property, plant and equipment consisted of the following:

 

 

 

As of

 

 

 

June 30,

 

 

December 31,

 

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

Air conditioner

 

$1,124

 

 

$1,124

 

Computer and software

 

 

1,814

 

 

 

1,371

 

Equipment

 

 

43,010

 

 

 

42,830

 

Furniture and fittings

 

 

86,961

 

 

 

86,961

 

Lab equipment

 

 

284,822

 

 

 

284,822

 

Land and buildings

 

 

1,506,969

 

 

 

1,506,969

 

Motor vehicle

 

 

137,914

 

 

 

137,914

 

Office equipment

 

 

36,010

 

 

 

35,160

 

Renovation

 

 

107,414

 

 

 

107,414

 

Signboard

 

 

704

 

 

 

704

 

 

 

 

2,206,742

 

 

 

2,205,269

 

(Less): Accumulated depreciation

 

 

(487,735)

 

 

(441,541)

Add: Foreign translation differences

 

 

(35,441)

 

 

21,874

 

Property, plant and equipment, net

 

$1,683,566

 

 

$1,785,602

 

  

Depreciation expense for the six months’ period ended June 30, 2021 and 2020 were $46,022 and $20,259 respectively.

  

NOTE 8 - OTHER INVESTMENTS

 

 

 

As of

 

 

 

June 30,

 

 

December 31,

 

 

 

2021

 

 

2020

 

As of beginning of the year

 

$281,668

 

 

$12,215

 

Acquisition of business under common control

 

 

-

 

 

 

147,882

 

Addition during the year

 

 

371,759

 

 

 

108,631

 

Disposal during the year

 

 

(6,466)

 

 

(34,923)

Fair value (loss)/gain

 

 

(18,581)

 

 

38,742

 

Foreign exchange translation

 

 

(13,658)

 

 

9,121

 

As of end of the year

 

$614,722

 

 

$281,668

 

 

The other investments consist of investment in quoted and unquoted shares in Malaysia of $612,840 and $1,882 as at June 30, 2021 and December 31, 2020 were $279,724 and $1,944 respectively.

 

 
20

Table of Contents

 

BIONEXUS GENE LAB CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021

(Currency expressed in United States Dollars (“US$”))

(Unaudited)

 

NOTE 9 - TRADE PAYABLES

 

Trade payables are amounts billed to the Company by suppliers for goods and services in the ordinary course of business. All amounts have short-term repayment terms and vary by supplier.

 

NOTE 10 - FINANCE LEASE

 

The Company purchased motor vehicles under finance lease agreements with the effective interest rate of 5.70% per annum, with principal and interest payable monthly. The obligations under the finance lease are as follows:

 

 

 

As of

 

 

 

June 30,

 

 

December 31,

 

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

Finance lease

 

$47,091

 

 

$63,703

 

Less: interest expense

 

 

(2,096)

 

 

(3,363)

Net present value of finance lease

 

 

44,995

 

 

 

60,340

 

 

 

 

 

 

 

 

 

 

Current portion

 

 

21,385

 

 

 

25,048

 

Non-current portion

 

 

23,610

 

 

 

35,292

 

Total

 

$44,995

 

 

$60,340

 

 

NOTE 11- AMOUNT OWING TO DIRECTOR

 

As of June 30, 2021, a director of the Company advanced $83 to the Company, which is unsecured, interest-free with no fixed repayment term, for working capital purpose. Imputed interest is considered insignificant.

  

NOTE 12 - STOCK HOLDERS’ EQUITY

 

As at June 30, 2021, the Company issued and outstanding common stock is 171,218,152 shares.

 

 
21

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BIONEXUS GENE LAB CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021

(Currency expressed in United States Dollars (“US$”))

(Unaudited)

NOTE 13 - SEGMENTED INFORMATION

  

At June 30, 2021, the Company (“BGLC”) operates in the biochemical industry segment through its two Malaysian subsidiaries, BioNexus Malaysia and Chemrex.

 

 

 

BioNexus Gene Lab Corp.

a Wyoming company

 

 

 

 

 

 

 

 

 

 

100% owned

 

 

100% owned

Bionexus Gene Lab  

Sdn. Bhd., 

a Malaysian company

 

 

Chemrex Corporation  

Sdn. Bhd., 

a Malaysian company

 

For the quarter ended June 30, 2021, segmented (unaudited) revenue and net profit/(loss) (Currency expressed in United States Dollars (“US$”) are as follows:

 

 

 

BioNexus

Malaysia

 

 

Chemrex

 

 

BGLC

 

 

Total

 

 

 

Six months ended June 30, 2021

 

REVENUE

 

$465,470

 

 

$6,075,860

 

 

$-

 

 

$6,541,330

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COST OF REVENUE

 

 

(358,528)

 

 

(5,132,630)

 

 

-

 

 

(5,491,158)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GROSS PROFIT

 

 

106,942

 

 

 

943,230

 

 

 

-

 

 

 

1,050,172

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER INCOME

 

 

3,848

 

 

 

109,068

 

 

 

-

 

 

 

112,916

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

 

(44,128)

 

 

(556,619)

 

 

(80,218)

 

 

(680,265)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FINANCE COSTS

 

 

(2,303)

 

 

(4,534)

 

 

-

 

 

(6,837)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PROFIT BEFORE TAX

 

 

64,359

 

 

 

491,145

 

 

 

(80,218

)

 

 

475,286

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax expense

 

 

(654)

 

 

(107,626)

 

 

-

 

 

(108,280)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET PROFIT

 

$63,705

 

 

$383,519

 

 

$(80,218

 

$367,006

 

 

 
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Table of Contents

 

BIONEXUS GENE LAB CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021

(Currency expressed in United States Dollars (“US$”))

(Unaudited)

 

 

 

BioNexus

Malaysia

 

 

Chemrex

 

 

BGLC

 

 

Total 

 

 

 

Six months ended June 30, 2020

 

REVENUE

 

$6,541

 

 

$4,167,001

 

 

$-

 

 

$4,173,542

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COST OF REVENUE

 

 

(30,308)

 

 

(3,328,637)

 

 

-

 

 

(3,358,945)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GROSS (LOSS)/PROFIT

 

 

(23,767)

 

 

838,364

 

 

 

-

 

 

 

814,597

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER INCOME

 

 

7,645

 

 

 

762,718

 

 

 

7

 

 

 

770,370

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

 

(47,254)

 

 

(449,744)

 

 

(48,413)

 

 

(545,411)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FINANCE COSTS

 

 

(1,361)

 

 

(3,045)

 

 

-

 

 

(4,406)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(LOSS)/PROFIT BEFORE TAX

 

 

(64,737)

 

 

1,148,293

 

 

 

(48,406

)

 

 

1,035,150

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax expense:

 

 

(1,347)

 

 

0

 

 

 

-

 

 

(1,347)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET (LOSS)/PROFIT

 

$(66,084)

 

$1,148,293

 

 

$(48,406

)

 

$1,033,803

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As Of June 30, 2021 and December 31, 2020

 

 

 

Total Assets

 

 

Total Liabilities

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BGLC & Bionexus

 

$1,378,590

 

 

$1,107,048

 

 

$588,441

 

 

$169,325

 

Chemrex

 

 

8,069,533

 

 

 

9,008,245

 

 

 

2,046,458

 

 

 

3,283,814

 

TOTAL

 

 

9,448,123

 

 

 

10,115,293

 

 

 

2,634,899

 

 

 

3,453,139

 

 

NOTE 14 - 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 June 30, 2021 up through Aug 9, 2021 of these consolidated financial statements.

 

 
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Table of Contents

 

BIONEXUS GENE LAB CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021

(Currency expressed in United States Dollars (“US$”))

(Unaudited)

 

NOTE 15 - CONCENTRATION OF RISKS

 

a) Major customers

 

During the period, the Company did not have any material recognizable major customers accounted for 10% or more of the Company’s revenue for the quarterly financial period ended June 30, 2021 and 2020.

 

b) Major suppliers

 

In view of privacy, names of suppliers changed to Vendor A,B,C and D.  For three months ended June 30, 2021 and 2020, the vendors who accounted for 10% or more of the Company's revenues and its accounts payable balance at period-end are presented as follows:

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

 

Purchase

 

 

Percentage of purchases

 

 

Accounts payable trade

 

Vendor A

 

$508,448

 

 

$136,351

 

 

 

19.39%

 

 

19.04%

 

$1,049,590

 

 

$318,400

 

Vendor B

 

$262,948

 

 

$194,737

 

 

 

8.50%

 

 

12.47%

 

$253,779

 

 

$195,874

 

Vendor C

 

$377,083

 

 

$119,888

 

 

 

12.19%

 

 

11.52%

 

$375,592

 

 

$120,742

 

Vendor D

 

$254,745

 

 

$141,746

 

 

 

8.24%

 

 

13.61%

 

$137,522

 

 

$114,739

 

 

 

$1,403,224

 

 

$592,722

 

 

 

48.33%

 

 

56.64%

 

$1,816,483

 

 

$749,755

 

   

For six months ended June 30, 2021 and 2020, the vendors who accounted for 10% or more of the Company's revenues and its accounts payable balance at period-end are presented as follows:

   

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

 

Purchase

 

 

Percentage of purchases

 

 

Accounts payable trade

 

Vendor A

 

$1,284,361

 

 

$2,684,016

 

 

 

23.39%

 

 

19.04%

 

$1,049,590

 

 

$318,400

 

Vendor B

 

$657,768

 

 

$1,758,246

 

 

 

11.98%

 

 

12.47%

 

$253,779

 

 

$195,874

 

Vendor C

 

$642,501

 

 

$1,624,179

 

 

 

11.70%

 

 

11.52%

 

$375,592

 

 

$120,742

 

Vendor D

 

$633,395

 

 

$1,919,375

 

 

 

11.53%

 

 

13.61%

 

$137,522

 

 

$114,739

 

 

 

$3,218,025

 

 

$7,985,816

 

 

 

58.60%

 

 

56.64%

 

$1,816,483

 

 

$749,755

 

 

 

 
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Table of Contents

 

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Description of Business

 

As used herein, unless the context otherwise indicates, references to the “Company,” “we,” “our,” “us,” “BioNexus” refer to BioNexus Gene Lab Corp., a Wyoming company (BGLC), and its wholly owned subsidiaries, Bionexus Gene Lab Sdn. Bhd. (“Bionexus Malaysia”), and Chemrex Sdn. Bhd. (“Chemrex”), both Malaysian companies.

 

BGLC is an emerging molecular diagnostics company focused on the application of functional genomics to enable early diagnosis and personalized health management. On August 23, 2017, we acquired all of the outstanding capital stock of BioNexus Malaysia, which was incorporated in Malaysia on April 7, 2015. BioNexus Malaysia owns algorithm software, technology and know-how related to the detection of common diseases through blood analysis which we use in our business. Our non-invasive blood screening tests analyze changes in ribonucleic acid (or RNA) to detect the risk potentiality of 11 different diseases. These diseases include eight cancers (nasopharyngeal, lung, liver, stomach, breast, cervical, prostate and colon), two bowel diseases (colitis and Crohn) and osteoarthritis. This unique blood based genomic biomarker approach is based on the scientific observation that circulating blood reflects, in a detectable way, what is occurring throughout the body currently.

 

The corporate and principal office address of the Company and BioNexus Malaysia is Unit 02, Level 10, Tower B, Avenue 3, The Vertical Business Suite II, Bangsar South, No. 8 Jalan Kerinchi, Kuala Lumpur, Malaysia., our lab is located at Lab 353, Chemical Science Centre, University Science Malaysia, George Town, Penang, Malaysia. We also have a blood collection center located at 1st floor, Lifecare Medical Centre, Kuala Lumpur, Malaysia. Our telephone number is (+60) 1221-26512 and our web-site is www.bionexusgenelab.com.

 

Chemrex is a wholesaler of industrial chemicals for the manufacture of industrial, medical, appliance, aero, automotive, mechanical and electronic industries in Asia Pacific 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 offices 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 web-site is www.chemrex.com.my.

 

Forward-Looking Statements

 

Certain statements made in this quarterly report on Form 10-Q are “forward-looking statements” (within the meaning of the Private Securities Litigation Reform Act of 1995) in regard to the plans and objectives of management for future operations. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of the registrant to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking statements included herein are based on current expectations that involve numerous risks and uncertainties. The Company’s plans and objectives are based, in part, on assumptions involving the continued expansion of business. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of the Company. Although the Company believes its assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance the forward-looking statements included in this quarterly report will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the registrant or any other person that the objectives and plans of the registrant will be achieved.

 

 
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Table of Contents

 

Substantial risks exist with respect to an investment in the Company. These risks include but are not limited to, those factors discussed in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 30, 2021. More broadly, these factors include, but are not limited to:

 

 

We have limited operating history and limited business growth;

 

 

The efficacy of our blood screening process;

 

 

We may face product liability claims and we have no insurance to cover such claims; and

 

 

There are risks associated with our business operations in Malaysia, including enforcing judgements against our operating subsidiary and management.

 

The results of operations of our subsidiary, BioNexus-Malaysia, with respect to its RNA screening process have been adversely impacted by the onset of the Covid-19 pandemic, which commenced in late December 2019 in Malaysia. We believe that most people have been and will continue to be reluctant to visit hospitals and clinics during the Covid-19 pandemic for fear of transmission from other patients or medical staff. Since our RNA screening is administered at hospitals and clinics, our business has been adversely affected as a result. Furthermore, on March 18, 2020, the Malaysian government first imposed its Movement Control Order (MCO) which lasted through June 9, 2020 to control the spread of COVID-19. The MCO restricted movement of all people except for those who were working for essential services. The MCOs were enhanced and relaxed at different phases in 2020 and 2021, including the Enhanced Movement Control Order (EMCO), Conditional Movement Control Order (CMCO) and Recovery Movement Control Order (RMCO). This Enhanced Movement Control Orders were implemented whenever there was a surge of Covid-19 cases. During these EMCOs, only companies classified under essential service were allowed to operate. This EMCO ended on July 16, 2021 and the government allowed more companies and factories to operate with strict Standard Operation Procedures. However, as discussed below, during fiscal 2021, BioNexus-Malaysia implemented the sale of its Covid19 qPCR test procedure through the Malaysian government. Our Covid testing generates substantially lower per ticket charges at $30-38 per test compared with $900 per customer for our RNA testing. Our Covid tests also generate lower margins than our RNA tests.

 

The results of operations for Chremrex were adversely impacted during the May to July 2020 period due to the MCO’s and Covid-19. However, since that time, the operations of Chemrex have not been materially impacted as a result of the MCO’s or Covid-19.

 

Recent Developments. As previously reported, we submitted to the Malaysian Ministry of Health (MOH) our Reverse Transcription Polymerase Chain Reaction (RT PCR) Covid-19 screening for approval, which occurred in June 2020. On April 30, 2021, BioNexus entered into an Agreement with MOH to outsource our Covid19 qPCR test for public hospitals and clinics within Malaysia. The use of our testing protocol began on May 6, 2021. We expect that our testing protocol would be continued to be used by the MOH’ public hospitals and clinics through August 2021, when the pandemic curve is expected to flatten. As of June 30, 2021, we completed roughly 13,635 tests at an average charge per test of $30.

 

 
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Table of Contents

 

Translation of amounts from MYR into US$1.00 has been made at the following exchange rates for the respective period and year:

 

 

 

June 30,

2021

 

 

December 31,

2020

 

 

 

 

 

 

 

 

Period ended June 30, 2021 /Year-ended December 31, 2020 US$1: MYR exchange rate

 

 

4.1520

 

 

 

4.0170

 

 

 

 

 

 

 

 

 

 

 

 

June 30,

2021

 

 

June 30,

2020

 

 

 

 

 

 

 

 

 

 

6 months average US$1: MYR exchange rate

 

 

4.0981

 

 

 

4.2619

 

 

Results of Operations

 

Three Months Ended June 30, 2021 Compared with the Three Months Ended June 30, 2020.

 

The following table sets forth key selected financial data for the three months ended June 30, 2021 and 2020.

 

Consolidated

 

 

 

Three months ended

 

 

 

June 30,

 

 

 

2021

 

 

2020

 

REVENUE

 

$3,092,171

 

 

$1,103,516

 

 

 

 

 

 

 

 

 

 

COST OF REVENUE

 

 

(2,624,564)

 

 

(944,226)

 

 

 

 

 

 

 

 

 

GROSS PROFIT

 

 

467,607

 

 

 

159,290

 

 

 

 

 

 

 

 

 

 

OTHER INCOME

 

 

50,429

 

 

 

23,729

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

General and administrative

 

 

(378,046)

 

 

(216,993)

 

 

 

 

 

 

 

 

 

PROFIT/(LOSS) FROM OPERATIONS

 

 

139,990

 

 

 

(33,974)

 

 

 

 

 

 

 

 

 

FINANCE COSTS

 

 

(3,448)

 

 

(1,380)

 

 

 

 

 

 

 

 

 

PROFIT/(LOSS) BEFORE TAX

 

 

136,542

 

 

 

(35,354)

 

 

 

 

 

 

 

 

 

Tax expense

 

 

(108,280)

 

 

(487)

 

 

 

 

 

 

 

 

 

NET PROFIT

 

$28,262

 

 

$(35,841)

Other comprehensive income:

 

 

 

 

 

 

 

 

Foreign currency (loss)/gain

 

 

(7,468)

 

 

43,558

 

 

 

 

 

 

 

 

 

 

COMPREHENSIVE INCOME

 

$20,794

 

 

$7,717

 

 

 
27

Table of Contents

 

BioNexus-Malaysia and Chemrex

 

 

 

BioNexus

Malaysia

 

 

Chemrex

 

 

BioNexus

Malaysia

 

 

Chemrex

 

 

 

Three months ended June 30, 2021

 

 

Three months ended June 30, 2020

 

REVENUE

 

$368,107

 

 

$2,724,064

 

 

$6,541

 

 

$1,096,975

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COST OF REVENUE

 

 

(290,821)

 

 

(2,333,743)

 

 

(17,315)

 

 

(926,911)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GROSS PROFIT

 

 

77,286

 

 

 

390,321

 

 

 

(10,774)

 

 

170,064

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER INCOME

 

 

2,986

 

 

 

47,443

 

 

 

2,893

 

 

 

20,821

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

 

(21,518)

 

 

(323,497)

 

 

(17,217)

 

 

(182,135)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FINANCE COSTS

 

 

(1,095)

 

 

(2,353)

 

 

(298)

 

 

(1,082)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PROFIT/(LOSS) BEFORE TAX

 

 

57,659

 

 

 

111,914

 

 

 

(25,396)

 

 

7,668

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax expense:

 

 

(654)

 

 

(107,626)

 

 

(487)

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET PROFIT/(LOSS)

 

$57,005

 

 

$4,288

 

 

$(25,883)

 

$7,668

 

 

Revenue. For the quarterly period ended June 30, 2021, we had total revenue of $3,092,171 as compared to total revenue of $1,103,516 for the same period in 2020, an increase of approximately 180.2% from the prior period.

 

Chemrex contributed $2,724,064 (88.1%) of the total revenue for the current quarterly period as compared to $1,096,975 (99.4%) of the total revenue for the same quarter last year. Chemrex’s revenues had increased to $2,724,064 from prior quarter of $1,096,975, an increase of 148.3%. The revenue decrease in 2020 was due to the changing from Movement Control Order (MCO) to Recovery Movement Control Order (RMCO) and then Enhanced Movement Control Order (EMCO) based on the number of Covid-19 cases during each period In view of the movement restriction especially during May to July 2020, many Chemrex customers had temporary suspended their operations and resulted no business transaction during this period.

 

BioNexus-Malaysia contributed $368,108 (11.9%) of the total revenue for the current quarter as compared to revenue of $6,541 (0.6%) of the total revenue from the same quarter last year. The substantial increase for the current period is due to the MOH’s approval of our Covid19 qPCR test which was outsourced to public hospitals and clinics beginning May 2021. During this three-month period, we had no revenues from our RNA testing.

 

Cost of Revenue. For the quarterly period ended June 30, 2021, we incurred $2,624,564 in cost of revenues, as compared to $944,226 for the same quarter in 2020, an increase of approximately 178%. Due to the reasons stated above.

 

 
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Table of Contents

 

Chemrex had incurred $2,333,743 (88.9%) of the total cost of revenue during the current quarter as compared to the same period last year wherein Chemrex had incurred $926,911 (98.2% of the total) in cost of revenue. The increased in Chemrex’s cost of revenues for the current period was due to its increased revenues for the current period and reasons as stated above.

  

BioNexus had incurred $290,821(11.1 %) of the total cost of revenues during the current quarter as compared to $17,315 (1.8 %) for the same period in 2020. The increase in cost of revenue for the current period reflects the costs associated with the outsource of our Covid19 PCR test to the MOH which began in May 2021.

 

Gross Profit. For the quarterly period ended June 30, 2021, we had total gross profit of $467,607 as compared to gross profit of $159,290 for the same period in 2020, an increase of approximately 193.6% from the prior period. Chemrex contributed $390,321 (83.5%) of the total gross profit for the current quarterly period as compared to $170,064 (106.8%) of the total gross profit for the same quarter last year. Chemrex’s gross profit increased to $390,321 from prior quarter of $170,064, an increase of 129.5%. The gross profit increase for Chemrex in current quarter was due to higher revenues although its margins were lower for the current quarter.

 

BioNexus-Malaysia contributed $77,286 (16.5%) of the total gross profit of $467,607 for the current quarter as compared to gross loss of $10,774 (-6.8%) of the total gross profit from the same quarter last year. The substantial increase for the current period is due to the MOH’s approval and sale of our Covid19 qPCR test which was outsourced to its public hospitals and clinics beginning May 2021. However, during the current three-month period, we had no revenues from our RNA testing.

 

Other Income. For the quarterly period ended June 30, 2021, we had of $50,429, as compared to of $23,729 for the same quarter in 2020, an increase of approximately 53%. Chemrex contributed $47,433 (94%) of other income for the current quarterly period as compared to $20,821 (88%) of the other income for the same quarter last year. Chemrex’s other income increased 56% due to dividends of $11,061 received from blue chip public companies listed on Malaysian Stock Exchange (KLSE), which increased by 86% form the prior period, in addition to gains on fair value of investment and bank interest and unrealized forex gain for this current quarterly.

 

Operating Expenses. For the quarterly period ended June 30, 2021, we had total operating expense of $378,046 as compared to total operating expenses of $216,993 for the same quarter in 2020, an increase of approximately 42.60%. Operating expenses consists of general and administrative expenses which includes depreciation of fixed assets, employee compensation and benefits, professional fees and marketing and travel expenses.

 

Chemrex had incurred $323,497 (86%) of the total operating expenses for the current quarter as compared to $182,135 (83.9%) of the total operating expenses for the same quarter last year. This current quarter incurred loss on fair value of investment of $38,238 and loss on unrealized forex $61,292. The slight increase in operating expenses was due to increased logistics, port charges and travel associated with the increased revenue for the period.

 

BioNexus-Malaysia had incurred $21,518 (18.1%) of the total operating expenses for the current quarter as compared to $17,217 (16.1%) of the total operating expenses for the same quarter last year. The slight increase in operating costs of the current quarter was due to logistic costs and staff over time associated with the outsource of our Covid 19 tests.

 

Profit/Loss from Operations. We had a profit from operations of $139,990 quarterly period ended June 30, 2021 as compared to a loss of $33,974 for the same period in 2020 for the reasons discussed above.

 

 
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Table of Contents

 

Income tax expense. For the three-month period ended June 30, 2021, we had $108,280 income tax which is an estimated expense ($107,626 for Chemrex and $654 for Bionexus) as compared to Bionexus estimated income tax expenses of $487 for the same quarter last year ($0 for Chemrex and $487 for Bio-Nexus).

 

Foreign currency exchange gain/(loss). We are exposed to fluctuations in foreign exchange rates on the revaluation of monetary assets and liabilities denominated in currencies other than the US Dollar. Therefore, any change in the relevant exchange rate would require us to recognize a transaction gain or loss on revaluation. For the three-month period ended June 30, 2021, we experienced a foreign currency loss of $7,468 as compared with a foreign currency gain of $43,558 for the same period in 2020.

 

Six Months Ended June 30, 2021 Compared with the Six Months Ended June 30, 2020.

 

The following table sets forth key selected financial data for the six months ended June 30, 2021 and 2020.

 

Consolidated

 

 

 

Six months ended

 

 

 

June 30,

 

 

 

2021

 

 

2020

 

REVENUE

 

$6,541,330

 

 

$4,173,542

 

 

 

 

 

 

 

 

 

 

COST OF REVENUE

 

 

(5,491,158)

 

 

(3,358,945)

 

 

 

 

 

 

 

 

 

GROSS PROFIT

 

 

1,050,172

 

 

 

814,597

 

 

 

 

 

 

 

 

 

 

OTHER INCOME

 

 

112,916

 

 

 

770,370

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

General and administrative

 

 

(680,965)

 

 

(545,411)

 

 

 

 

 

 

 

 

 

PROFIT FROM OPERATIONS

 

 

482,123

 

 

 

1,039,556

 

 

 

 

 

 

 

 

 

 

FINANCE COSTS

 

 

(6,837)

 

 

(4,406)

 

 

 

 

 

 

 

 

 

PROFIT BEFORE TAX

 

 

475,286

 

 

 

1,035,150

 

 

 

 

 

 

 

 

 

 

Tax expense

 

 

(108,280)

 

 

(1,347)

 

 

 

 

 

 

 

 

 

NET PROFIT

 

$367,006

 

 

$1,033,803

 

 

 

 

 

 

 

 

 

 

Other comprehensive income:

 

 

 

 

 

 

 

 

Foreign currency loss

 

 

(215,936)

 

 

(251,138)

 

 

 

 

 

 

 

 

 

COMPREHENSIVE INCOME

 

$151,070

 

 

$782,665

 

 

 
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BioNexus-Malaysia and Chemrex

 

 

 

BioNexus

Malaysia

 

 

Chemrex

 

 

BioNexus

Malaysia

 

 

Chemrex

 

 

 

Six months ended June 30, 2021

 

 

Six months ended June 30, 2020

 

REVENUE

 

$465,470

 

 

$6,075,860

 

 

$6,541

 

 

$4,167,001

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COST OF REVENUE

 

 

(358,528)

 

 

(5,132,630)

 

 

(30,308)

 

 

(3,328,637)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GROSS PROFIT

 

 

106,942

 

 

 

943,230

 

 

 

(23,767)

 

 

838,364

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER INCOME/(LOSS)

 

 

3,848

 

 

 

109,068

 

 

 

7,645

 

 

 

762,718

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

 

(44,128)

 

 

(556,619)

 

 

(47,254)

 

 

(449,744)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FINANCE COSTS

 

 

(2,303)

 

 

(4,534)

 

 

(1,361)

 

 

(3,045)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PROFIT/(LOSS) BEFORE TAX

 

 

64,359

 

 

 

491,145

 

 

 

(64,737)

 

 

1,148,293

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax expense:

 

 

(654)

 

 

(107,626)

 

 

(1,347)

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET PROFIT/(LOSS)

 

$63,705

 

 

$383,519

 

 

$(66,084)

 

$1,148,293

 

 

Revenue. For the six-month period ended June 30, 2021, we had total revenues of $6,541,330 as compared to total revenue of $4,173,542 for the quarterly period ended June 30, 2020, an increase of approximately 56.7% from the prior period.

 

For the current quarterly period, Chemrex contributed $6,075,860 (92.9%) of total revenues compared to its contribution of $4,167,001 (99.8%) of total revenues for the same period last year, an increase of 45.8%. The increase was due to Covid impact on revenues from the prior year’s six-month period. Covid did not significantly impact Chemrex’s operations and revenues of during the current six-month period.

    

BioNexus had a revenue of $465,470 for the current six-month period compared to revenues of $6,541 from the same quarterly period last year, an increase of 7,016%. BioNexus revenues for the current quarter resulted from the outsource of Covid19 PCR test to MOH which began on May 2021. The revenues for the same period last year were due entirely to our RNA screening tests.

 

Cost of revenues. For the six-month period ended June 30, 2021, we incurred $5,491,158 in the cost of revenues, as compared to $3,358,945 for the same period 2020, an increase of approximately 63.5% due to reasons as stated above.

 

Chemrex had incurred $5,132,630 (93.5%) of the total cost of revenue of $5,491,158 for the current six-month period as compared to the same period last year wherein Chemrex had incurred $3,328,637 (99.1%) of the total cost of revenue of $3,358,945. The increased in Chemrex’s cost of revenues for the current period was due to its increased revenues for the current period and reasons as stated above.

 

 
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BioNexus had incurred $358,528 on cost of revenues for the current six-month period as compared to $30,308 for the same period last year. The increase in cost of revenue for the current period reflects the costs associated with the outsource of our Covid19 PCR test to the MOH which began in May 2021.

 

Other Income. For the six-month period ended June 30, 2021, we had other income of $112,916 as compared to $770,370 for the same period in 2020. A reduction of 582% from the prior quarterly period is due principally to a net income of $707,618 from disposal of a property which occurred during the six month period last year. We did not have a similar gain during the current six month period.

 

Operating Expenses. For the six-month period ended June 30, 2021, we had an operating expense of $680,965 as compared to operating expenses of $545,411 for the same period ended June 30, 2020, an increase of approximately 35.9%. Operating expenses consists of general and administrative expenses which includes depreciation of fixed assets, employee compensation and benefits, professional fees and marketing and travel expenses. The increase for the current quarterly period due to annual fee of OTCQB and additional four part time laboratory technician to assist in the outsourced Covid-19 samples from MOH.

 

Chemrex had incurred $556,619 (82%) of the total operating expenses of $680,965 during the current six-month period in 2021 as compared to $449,744 for the same period last year. In addition, Chemrex incurred a loss of $38,238 from fair value investments and a loss of $111,945 from unrealized and realized forex transactions during the current period. The increase in Chemrex operating expenses for the current period due to was due to increase logistics, port charges and travel associated with the increased revenue for the period.

 

BioNexus had incurred $44,128 on operating expenses during for the current six-month period in 2021 as compared to $47,254 for the same period last year. The higher operating expenses for the last period was due to the $9,890 write-off of an investment in Genenews Diagnostics Sdn. Bhd., a local screening company. The write off should have occurred in 2018. The $3,126 decrease in operating expenses during the current period was off-set by higher logistic expenses and staff’ over time associated with the outsource of our Covid 19 tests.

 

Profit from Operations. We had a profit from operations of $482,123 during the six-month period ended June 30, 2021 compared to $1,039,556 for the same period in 2020, a reduction of 115.6% for the reasons discussed above. In addition, during 2020 period, we had one-time property disposal gain of $742,487.

 

Income tax expense. For the quarterly period ended June 30, 2021, we had $108,280 for the period as compared with $1,347 for the six-month period ended June 30, 2020. The provision is for the estimated tax on net income.

 

Foreign currency exchange gain/(loss). We are exposed to fluctuations in foreign exchange rates on the revaluation of monetary assets and liabilities denominated in currencies other than the US Dollar. Therefore, any change in the relevant exchange rate will require us to recognize a transaction gain or loss on revaluation. For the six-month period ended June 30, 2021, we experienced a foreign currency loss of $215,936 compared with a foreign currency loss of $251,138 for the six-month period ended June 30, 2020.

 

 
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LIQUIDITY AND CAPITAL RESOURCES

 

As of June 30, 2021, we had working capital of $4,522,777 compared with working capital of $4,611,896 as of December 31, 2020. The decrease in working capital as of June 30, 2021 from December 31, 2020 was due principally to the increase in cash used in our operations.

 

Our primary uses of cash have been for operations. The main sources of cash have been from operational revenues and the private placement of our common stock. The following trends are reasonably likely to result in a material decrease in our liquidity over the near to long term:

 

 

·

Addition of administrative and marketing personnel as the business grows,

 

·

Development of a Company website,

 

·

Increases in advertising and marketing in order to attempt to generate more revenues, and

 

·

The cost of being a public company.

 

The Company believes that cash flow from operations together will be sufficient to sustain its current level of operations for at least the next 12 months of operations.

 

The following is a summary of the Company’s cash flows provided by (used in) / generated from operating, investing, and financing activities for the six months ended June 30, 2021 and 2020:

 

 

 

Six months ended

 

 

 

June 30,

 

 

 

2021

 

 

2020

 

Net Cash Used in Operating Activities

 

$(819,892)

 

$(1,134,546)

Net cash (used in) /generated from investing activities

 

 

(325,528)

 

 

1,732,109

 

Net cash used in generated from financing activities

 

 

(17,182)

 

 

(9,389)

Foreign currency translation adjustment

 

 

(142,385)

 

 

(160,139)

Net Change in Cash and Cash Equivalents

 

$(1,304,987)

 

$428,035

 

 

Operating Activities

 

During the six months ended June 30, 2021, the Company incurred a net profit of $367,006 which, after adjusting for amortization, depreciation, dividend income, fair value on investment, an increase in inventories, a reduction in trade receivables and deposits, a substantial reduction in trade payables, operating lease liabilities, resulted in net cash of $819,892 being used in operating activities during the period. By comparison, during the six months ended June 30, 2020, the Company had a net profit of $1,033,803 which, after adjusting for amortization, depreciation, dividend income, gain on disposal of property, plant and equipment, a decrease in inventories, an increase in receivables and deposits, a substantial reduction in trade payables, operating lease liabilities, resulted in net cash of $1,134,546 being used in operating activities during the period.

 

 
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Investing Activities

 

During the six months ended June 30, 2021, the Company had net cash of $325,528 used in investment activities. During the six months ended June 30, 2020, the Company had net cash from acquisition of business under common control and disposed of property, plant and equipment of $1,467,865, resulting in net cash generated from investment activities of $1,732,109

 

Financing Activities

 

During the six months ended June 30, 2021, Company continued the repayment of a finance lease resulting in net cash used in financing activities of $17,182. By comparison, during the six months ended June 30, 2020, we had financing activities of $9,389 due to 6 months moratorium on leasing and loan instalments as initiated by the Malaysian Prime Minister in order to lessen the hardship faced by individual borrowers and Small and Medium Enterprises to enjoy an automatic monthly loan instalments moratorium for six months, starting from April 1, 2020 till September 30, 2020

 

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.

 

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(e) and 15d-15(e) under the Exchange Act (“Exchange Act”) as of June 30, 2021. 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 not effective 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 not 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.

 

 
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Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

 

The Company’s management conducted an assessment of the effectiveness of our internal control over financial reporting as of June 30, 2021, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, which assessment identified material weaknesses in internal control over financial reporting. A material weakness is a control deficiency, or a combination of deficiencies in internal control over financial reporting that creates a reasonable possibility that a material misstatement in annual or interim financial statements will not be prevented or detected on a timely basis. Since the assessment of the effectiveness of our internal control over financial reporting did identify a material weakness, management considers its internal control over financial reporting to be ineffective.

 

Management has concluded that our internal control over financial reporting had the following material deficiencies:

 

 

 

i

Lack of a functioning audit committee due to a lack of a majority of independent members and a lack of a majority of outside directors on our Board of Directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures.

 

While these control deficiencies did not result in any audit adjustments to our 2021 or 2020 interim or annual financial statements, it could have resulted in a material misstatement that might have been prevented or detected by a segregation of duties. Accordingly, we have determined that this control deficiency constitutes a material weakness.

 

To the extent reasonably possible, given our limited resources, our goal is, upon consummation of a merger with a private operating company, to separate the responsibilities of principal executive officer and principal financial officer, intending to rely on two or more individuals. We will also seek to expand our current board of directors to include additional individuals willing to perform directorial functions. Since the recited remedial actions will require that we hire or engage additional personnel, this material weakness may not be overcome in the near term due to our limited financial resources. Until such remedial actions can be realized, we will continue to rely on the advice of outside professionals and consultants.

 

This quarterly report does not include an attestation report of our registered public accounting firm regarding our internal controls over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to Section 404(c) of the Sarbanes-Oxley Act that permit us to provide only management’s report in this annual report.

 

Changes in Internal Controls over Financial Reporting

 

During the quarter ended June 30, 2021, there has been no change in internal control over financial reporting that has materially affected or is reasonably likely to materially affect our internal control over financial reporting.

 

 
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PART II OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

There are presently no material pending legal proceedings to which the Company, any executive officer, any owner of record or beneficially of more than five percent of any class of voting securities is a party or as to which any of its property is subject, and no such proceedings are known to the Company to be threatened or contemplated against it.

 

Item 1A. Risk Factors.

 

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.

 

Item 2. Unregistered Sale of Equity Securities and Use of Proceeds.

 

None.

 

Item 3. Defaults Upon Senior Securities.

 

None.

 

Item 4. Mine Safety Disclosures.

 

Not applicable to our Company.

 

Item 5. Other Information.

 

None

 

 
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Item 6. Exhibits.

 

Exhibit

 

Description

31.1

 

Certification of the Company’s Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*

 

 

 

31.2

 

Certification of the Company’s Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*

 

 

 

32.1

 

Certification of the Company’s Principal Executive Officer and Principal Financial pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002+

 

 

 

101.INS

 

XBRL INSTANCE DOCUMENT*

 

 

 

101.SCH

 

XBRL TAXONOMY EXTENSION SCHEMA DOCUMENT*

 

 

 

101.CAL

 

XBRL TAXONOMY CALCULATION LINKBASE DOCUMENT*

 

 

 

101.DEF

 

XBRL TAXONOMY DEFINITION LINKBASE DOCUMENT*

 

 

 

101.LAB

 

XBRL TAXONOMY LABEL LINKBASE DOCUMENT*

 

 

 

101.PRE

 

XBRL TAXONOMY PRESENTATION LINKBASE DOCUMENT*

__________

+ In accordance with SEC Release 33-8238, Exhibit 32.1 is being furnished and not filed.

 

*

Filed herewith.

 

 
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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

 

 

 

/s/ Chan Chong Wong

 

Chan Chong Wong

 

Chief Executive Officer and Director

 

(Principal Executive Officer)

 

 

 

/s/ Wei Li Leong

 

Wei Li Leong

 

Chief Financial Officer

 

(Principal Financial and Accounting Officer)

 

 

 

August 12, 2021

 

 

 
38