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 |
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period endedMarch31, 2019 September 30, 2023
OR
☐ TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
☐ | TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ________ to ______________________
Commission File Number:333-229399
BIONEXUS GENE LAB CORP
(Exact name of registrant as specified in its charter)
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.) |
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Unit 02, Level
No. 8 Jalan Kerinchi Kuala Lumpur, Malaysia |
| 59200 |
(Address of Principal Executive Offices) |
| (Zip Code) |
+601221-2651260 1221-26512
(Registrant’sRegistrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
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| Name of each exchange on which registered | |
Common stock, no par value | BGLC | The Nasdaq Stock Market LLC |
(Former Name, former address and former fiscal year, if changed since last report)
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 definitionsof“largedefinitions of “large accelerated filer, ”“ “ accelerated filer, ” "non-accelerated“ “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 ☐
Large accelerated filer | ☐ | Accelerated filer | ☐ |
Non-accelerated Filer | ☒ | Smaller reporting company | ☒ |
Emerging growth company | ☒ |
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 ☒
Securities registered pursuant to Section 12(b) of the Act: None
As of May6, 2019, therewere74,627,558November 20, 2023, there were 17,667,663 shares of common stock,no par value per share, issued and outstanding.
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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 contains statements that may be deemed to be “forward-looking statements” within the meaning of the federal securities laws. These statements relate to anticipated future events, future results of operations and or future financial performance. In some cases, you can identify forward-looking statements by their use of terminology such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “future,” “intend,” “may,” “ought to,” “plan,” “possible,” “potentially,” “predicts,” “project,” “should,” “will,” “would,” negatives of such terms or other similar terms. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. The forward-looking statements in this Quarterly Report on Form 10-Q include, without limitation, statements relating to:
● | our goals and strategies; | |
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| our estimates regarding expenses, future revenues, capital requirements and our need for additional financing; |
● | our estimates regarding the market opportunity for our services; | |
● | the impact of government laws and regulations; | |
● | our ability to recruit and retain qualified personnel; | |
● | our failure to comply with regulatory guidelines; | |
● | uncertainty in industry demand; | |
● | general economic conditions and market conditions in the financial services industry; | |
● | future sales of large blocks or our securities, which may adversely impact our share price; and | |
● | depth of the trading market in our securities. |
PART I — FINANCIAL INFORMATIONThe 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.
ITEM 1. FINANCIAL STATEMENTSYou should not unduly rely on any forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that future results, levels of activity, performance and events and circumstances reflected in the forward-looking statements will be achieved or will occur. Except as required by law, we undertake no obligation to update publicly any forward-looking statements for any reason after the date of this Quarterly Report on Form 10-Q, to conform these statements to actual results or to changes in our expectations.
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| Table of Contents |
BIONEXUS GENE LAB CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2019SEPTEMBER 30, 2023 AND DECEMBER 31, 20182022
(Currency expressed in United States Dollars (“(“US$”))
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| March 31, 2019 |
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| December 31, 2018 |
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| (Audited) |
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ASSETS |
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CURRENT ASSETS |
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Cash and bank balances |
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| 597,463 |
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| 659,235 |
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Fixed deposits placed with financial institutions |
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| 615,491 |
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| 601,004 |
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Other receivables and deposits |
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| 26,784 |
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| 22,814 |
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Inventories |
| $ | 10,050 |
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| $ | 15,301 |
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Total current assets |
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| 1,249,788 |
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| 1,298,354 |
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NON-CURRENT ASSETS |
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Plant and equipment, net |
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| 345,122 |
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| 341,805 |
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Other investment | 12,250 | 12,080 | ||||||
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TOTAL ASSETS |
| $ | 1,607,160 |
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| $ | 1,652,239 |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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CURRENT LIABILITIES |
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Other payables and accrued liabilities |
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| 12,212 |
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| 11,149 |
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Current portion of obligation under finance lease |
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| 19,632 |
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| 19,128 |
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Tax payables |
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| 34,338 |
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| 32,616 |
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Total current liabilities |
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| 66,182 |
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| 62,893 |
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NON-CURRENT LIABILITIES |
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Non-current portion of obligation under finance lease |
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| 58,825 |
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| 62,935 |
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Deferred tax liabilities | 4,549 | 4,485 | ||||||
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TOTAL LIABILITIES |
| $ | 129,556 |
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| $ | 130,313 |
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STOCKHOLDERS’ EQUITY |
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Issued capital,74,627,558 outstanding as of March 31, 2019 |
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| 6,647,636 |
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| 6,647,636 |
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Additional paid in capital |
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| (5,011,891) |
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| (5,011,891) |
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Accumulated losses |
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| (148,309) |
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| (86,842) |
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Other comprehensive income/(expense) |
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| (9,832) |
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| (26,977) | |
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TOTAL STOCKHOLDERS’ EQUITY |
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| 1,477,604 |
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| 1,521,926 |
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TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
| $ | 1,607,160 |
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| $ | 1,652,239 |
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As of September 30, December 31, Note 2023 2022 (Unaudited) (Audited) ASSETS CURRENT ASSETS Cash and bank balances Fixed deposits placed with financial institutions Trade receivables 3 Other receivables, deposits and prepayments Tax recoverable 4 Inventories Total current assets NON-CURRENT ASSETS Operating lease right of use assets 5 Property, plant and equipment, net 6 Other investments 7 Total non-current assets TOTAL ASSETS LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES Trade payables 8 Other payables and accrued liabilities Current portion of operating lease liabilities 5 Advance payment from customer Tax payables Total current liabilities NON-CURRENT LIABILITIES Non-current portion of operating lease liabilities 5 Deferred tax liabilities 4 Total non-current liabilities TOTAL LIABILITIES STOCKHOLDERS’ EQUITY As at September 30, 2023, common stock, no par value; 300,000,000 shares authorized and 17,792,663 shares outstanding, and preferred stock, no par value; 30,000,000 shares authorized and no shares outstanding. As at December 31, 2022, common stock, no par value; 300,000,000 shares authorized and 14,476,628 shares outstanding, and preferred stock, no par value; 30,000,000 shares authorized and no shares outstanding (on a post-reverse stock split basis)*. 10 Additional paid in capital Accumulated (losses)/surplus Accumulated other comprehensive losses TOTAL STOCKHOLDERS’ EQUITY TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY 4,704,785 611,849 1,442,098 1,507,015 900,396 2,868,364 110,793 25,240 3,838 31,551 1,107,917 977,807 8,269,827 6,021,826 147,916 55,730 1,496,562 1,511,708 1,551,217 1,150,898 3,195,695 2,718,336 $ 11,465,522 $ 8,740,162 1,569,992 1,861,015 29,776 103,370 33,897 16,569 8,218 23,123 2,177 - 1,644,060 2,004,077 104,867 40,206 28,880 30,866 133,747 71,072 $ 1,777,807 $ 2,075,149 17,280,269 10,929,574 (5,011,891 ) (5,011,891 ) (1,780,068 ) 1,156,392 (800,595 ) (409,062 ) 9,687,715 6,665,013 $ 11,465,522 $ 8,740,162
* 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 AND COMPREHENSIVE LOSS | ||||||
FOR THE THREE MONTHS ENDED MARCH 31, 2019 AND 2018 | ||||||
(Currency expressed in United States Dollars (“US$”)) | ||||||
(Unaudited) | ||||||
Three months ended | ||||||
March 31, |
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2019 | 2018 |
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REVENUE |
| $ | 28,088 |
| $ | - |
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COST OF REVENUE |
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| (18,822) |
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| (12,530) |
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GROSS PROFIT |
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| 9,266 |
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| (12,530) |
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OTHER INCOME |
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| 7,020 |
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| 266,979 |
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OPERATING EXPENSES |
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General and administrative |
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| (76,489) |
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| (36,588) |
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(LOSS) PROFIT FROM OPERATIONS |
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| (60,203) |
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| 271,861 |
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Income tax expense |
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| (1,264) |
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| - |
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NET (LOSS) PROFIT |
| $ | (61,467) |
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| 271,861 |
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Other comprehensive income: |
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Foreign currency translation gain |
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| 17,145 |
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| 1,753 |
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COMPREHENSIVE (LOSS) PROFIT |
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| (44,502) |
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| 273,614 |
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Net loss per share - Basic and diluted |
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| 0 |
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| 0 |
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Weighted average number of common shares outstanding – Basic and diluted |
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| 74,627,558 |
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| 50,987,558 |
See accompanying notes to the condensed consolidated financial statements. | ||||||
BIONEXUS GENE LAB CORP | |||||||||||
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY | |||||||||||
AS OF MARCH 31, 2019 | |||||||||||
(Amount expressed in United States Dollars (“US$)) | |||||||||||
| Common stock |
| Additional paid up share capital |
| Accumulated other comprehensive income/(expense) |
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Accumulated | Total Equity | ||||||||||
Number of shares |
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| losses |
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Balance as of March 31, 2019 |
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74,627,558 | $ | 6,647,636 | $ | (5,011,891) | (86,842) | (26,977) | 1,521,926 | ||||
Net loss for the period | - |
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| (61,467) |
| - |
| (61,467) |
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Foreign currency translation gain | - | - | - | - | 17,145 | 17,145 | |||||
Balance as of March 31, 2019 | 74,627,558 |
| 6,647,636 |
| (5,011,891) |
| (148,309) |
| (9,832) |
| 1,477,604 |
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See accompanying notes to the condensed consolidated financial statements. | |||||||||||
BIONEXUS GENE LAB CORP. | |||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||
FOR THE THREE MONTHS ENDED MARCH 31, 2019 AND 2018 | |||||
(Currency expressed in United States Dollars (“US$”)) | |||||
(Unaudited) | |||||
Three months ended | |||||
March 31, | |||||
| 2019 | 2018 | |||
Cash flows from operating activities: |
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Net (loss) profit | $ | (61,467) |
| $ | 271,861 |
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Adjustments to reconcile net profit/(loss) to net cash generated from/(used in) operating activities: |
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Depreciation of property, plant and equipment |
| 10,562 |
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| 10,519 |
Operating (loss) profit before working capital changes |
| (50,905) |
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| 282,380 |
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Changes in operating assets and liabilities: |
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Inventories |
| 5,251 |
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| (9,423) |
Other receivables and deposits |
| (3,970) |
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| 114,144 |
Trade and other payables |
| 1,063 |
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| (1,060,662) |
Cash used in operating activities |
| (48,561) |
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| (673,561) |
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Cash flows from investing activities: |
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Acquisition in other investment |
| - |
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| (12,944) |
Purchase of plant and equipment |
| (14,631) |
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| (17,190) |
Net cash used in investing activities |
| (14,631) |
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| (30,134) |
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Cash flows from financing activities: |
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Repayment of finance lease |
| (3,606) |
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| - |
Advances from Directors |
| - |
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| 1,307 |
Shares subscriptions |
| - |
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| 1,115,374 |
Net cash (used in) generated from financing activities |
| (3,606) |
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| 1,116,681 |
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Foreign currency translation adjustment |
| 19,513 |
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| (27,589) |
NET CHANGE IN CASH AND CASH EQUIVALENTS |
| (47,285) |
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| 385,397 |
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CASH AND CASH EQUIVALENTS, |
| 1,260,239 |
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| 839,145 |
BEGINNING OF FINANCIAL YEAR | |||||
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CASH AND CASH EQUIVALENTS, | $ |
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| 1,224,542 |
END OF FINANCIAL YEAR | 1,212,954 | ||||
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CASH AND CASH EQUIVALENTS INFORMATION: | |||||
Fixed deposits placed with financial institutions | $ | 615,491 |
| $ | 108,203 |
Cash at bank |
| 597,463 |
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| 1,116,339 |
Cash and cash equivalents, end of financial year |
| 1,212,954 |
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| 1,224,542 |
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Supplementary cash flow information: |
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Interest paid | $ | (921) |
| $ | (1,211) |
Income taxes refund/(paid) |
| - |
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| - |
See accompanying notes to the condensed consolidated financial statements. | |||||
BIONEXUS GENE LAB CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2019SEPTEMBER 30, 2023 AND 2022
(Currency expressed in United States Dollars (“(“US$”))
(Unaudited)
NOTE 1 - BASIS OF PREPARATION
The
Three months ended Nine months ended September 30, September 30, 2023 2022 2023 2022 REVENUE COST OF REVENUE GROSS PROFIT OTHER INCOME OPERATING EXPENSES General and administrative LOSS FROM OPERATIONS FINANCE COSTS LOSS BEFORE TAX Tax expense NET LOSS Other comprehensive income: Foreign currency translation loss COMPREHENSIVE LOSS Earnings per share - Basic and diluted 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. $ 2,553,686 $ 2,575,086 $ 7,497,739 $ 8,089,132 (2,199,354 ) (2,275,587 ) (6,434,796 ) (7,169,329 ) 354,332 299,499 1,062,943 919,803 199,284 54,110 511,792 153,340 (3,081,082 ) (418,824 ) (4,425,031 ) (1,241,631 ) (2,527,466 ) (65,215 ) (2,850,296 ) (168,488 ) (4,259 ) (2,072 ) (9,746 ) (7,717 ) (2,531,725 ) (67,287 ) (2,860,042 ) (176,205 ) (76,418 ) (10,114 ) (76,418 ) (22,792 ) $ (2,608,143 ) $ (77,401 ) $ (2,936,460 ) $ (198,997 ) (18,603 ) (320,592 ) (391,533 ) (707,128 ) $ (2,626,746 ) $ (397,993 ) $ (3,327,993 ) $ (906,125 ) (0.024 ) (0.063 ) (0.025 ) (0.063 ) 134,745,041 14,409,733 134,745,041 14,409,733
See accompanying unauditednotes to the condensed consolidated financial statements have been preparedstatements.
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| 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 accordance with accounting principles generally accepted in the United States (“GAAP”Dollars (“US$) 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
Accumulated Common stock Additional paid in Accumulated other comprehensive Total Number of shares Amount capital surplus loss Equity Balance as of December 31, 2021 Net profit for the period Foreign currency translation loss Balance as of March 31, 2022 Net loss for the period Issuance of shares Foreign currency translation loss Balance as of June 30, 2022 Net loss for the period Foreign currency translation loss Balance as of September 30, 2022 14,272,605 $ 10,779,574 $ (5,011,891 ) $ 1,512,358 $ (100,262 ) $ 7,179,779 - - - 17,066 - 17,066 - - - - (68,776 ) (68,776 ) 14,272,605 $ 10,779,574 $ (5,011,891 ) $ 1,529,424 $ (169,038 ) $ 7,128,069 - - - (138,662 ) - (138,662 ) 208,333 150,000 - - - 150,000 - - - - (317,760 ) (317,760 ) 14,480,938 $ 10,929,574 $ (5,011,891 ) $ 1,390,762 $ (486,798 ) $ 6,821,647 - - - (77,401 ) - (77,401 ) - - - - (320,592 ) (320,592 ) 14,480,938 $ 10,929,574 $ (5,011,891 ) $ 1,313,3612 $ (807,390 ) $ 6,423,654
Common stock Additional paid in Accumulated Accumulated other comprehensive Total Number of shares Amount capital surplus loss Equity Balance as of December 31, 2022 Net loss for the period Foreign currency translation loss Balance as of March 31, 2023 Net loss for the period Foreign currency translation loss Balance as of June 30, 2023 Net loss for the period Issuance of shares Foreign currency translation loss Balance as of September 30, 2023 14,480,938 $ 10,929,574 $ (5,011,891 ) $ 1,156,392 $ (409,062 ) $ 6,665,013 - - - (69,066 ) - (69,066 ) - - - - (39,039 ) (39,039 ) 14,480,938 $ 10,929,574 $ (5,011,891 ) $ 1,087,326 $ (448,101 ) $ 6,556,908 - - - (259,251 ) - (259,251 ) - - - - (333,891 ) (333,891 ) 14,480,938 $ 10,929,574 $ (5,011,891 ) $ 828,075 $ (781,992 ) $ 5,963,766 - - - (2,608,143 ) - (2,608,143 ) 3,311,725 6,350,695 - - - 6,350,695 - - - - (18,603 ) (18,603 ) 17,792,663 $ 17,280,269 $ (5,011,891 ) $ (1,780,068 ) $ (800,595 ) $ 9,687,715
Share activity (number of management, the consolidated balance sheet asshares or both number and amount of March 31, 2019 whichshares) has been derived from audited financial statements and these unauditedadjusted 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.
See accompanying notes to the 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 three months ended March 31, 2019 are not necessarily indicative of the results to be expected for the entire fiscal year ending December 31, 2019 or for any future period.statements.
These unaudited
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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)
Nine months ended September 30, 2023 2022 Cash flows from operating activities: Net loss Adjustments to reconcile net loss to net cash used in from operating activities: Amortization of right of use asset Allowances for expected credit losses Bad debts Depreciation of property, plant and equipment Dividend income Fair value (gain)/loss on other investments Loss on disposal of other investments - Interest Property, plant and equipment written off Share-base compensation Stock written off Operating loss before working capital changes Changes in operating assets and liabilities: Inventories Trade and other receivables Deferred cost of revenue Trade and other payables Advance payment from customer Deferred revenue Operating lease liabilities Tax recoverable Net cash (used in)/generated from operating activities Cash flows from investing activities: Acquisition of other investment Dividend income Purchase of plant and equipment Proceeds from disposal of other investments Net cash used in investing activities $ (2,936,460 ) $ (198,997 ) 15,620 12,754 1,372,573 - 4,175 - 63,147 66,608 (48,892 ) (34,523 ) (223,284 ) 128,683 1,798 6,794 5,521 18 - 600,695 - 392 - (1,145,222 ) (18,156 ) (130,502 ) 425,972 505,667 638,401 - 67,606 (364,617 ) (769,436 ) (14,905 ) (21,810 ) - (77,276 ) 81,989 (17,009 ) 27,904 (153,209 ) (1,039,686 ) 75,083 (296,109 ) (397,974 ) 48,892 34,523 (148,461 ) (37,144 ) 26,854 - (368,824 ) (400,595 )
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 (6,794 ) (5,521 ) - (34,038 ) 5,750,000 150,000 5,743,206 110,441 (306,677 ) (446,579 ) 4,028,019 (661,650 ) 2,118,864 2,123,919 $ 6,146,883 $ 1,462,269 $ 1,442,098 $ 984,088 4,704,785 478,181 6,146,883 1,462,269 $ (9,746 ) $ (7,717 ) 315 - (47,808 ) (123,599 )
See accompanying notes to the 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 S1 for the fiscal year ended December 31, 2018.statements.
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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 -1 – ORGANIZATION AND BUSINESS BACKGROUND
BioNexus Gene Lab CorpCorp. (the “Company”) 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 BGSBionexus Gene Lab Sdn. Bhd., a Malaysian corporation (“Subsidiary”(“BioNexus Malaysia”). The SubsidiaryBioNexus Malaysia was incorporated in Malaysia on April 7, 2015 which it then subsequently changed its name to Bionexus Gene LabMRNA Scientific Sdn. Bhd. (MRNA Scientific). on September 19, 2023.
The principal office address is Unit 02 Level 8,10, Tower 8, Avenue 5, The Horizon,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.
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 68,487,261 shares of common stock of the Company.
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. a Malaysian company | Chemrex Corporation Sdn. Bhd., a Malaysian company | |||||
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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 32 - 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”GAAP”).
BIONEXUS GENE LAB CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2019
(Currency expressed in United States Dollars (“US$”))
(Unaudited)
· | 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 threeThree months or less as of the purchase date of such investments.
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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:
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Fully depreciated plant and equipment are retained in the financial statements until they are no longer in use.
· | Trade receivables |
Trade receivables arewere recorded at the invoiced amount and do not bear interest.Chemrex did charge interest to certain debtors with overdue outstanding. Management reviews the adequacy of the allowance for doubtful accountsimpairment on an ongoing basis, using historical collection trends and aging of receivables. Management also periodically evaluates individual customer’scustomer’s financial condition, credit history, and the current economic conditions to make adjustmentsadjust 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 Condensed StatementsStatement 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.
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BIONEXUS GENE LAB CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREENINE MONTHS ENDED MARCH 31, 2019SEPTEMBER 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 | |||
| 20 | % | ||
Buildings | 2 | % | ||
Computer and software | 33 | % | ||
Equipment | 20 | % | ||
Furniture and fittings | 10%to20% | |||
Lab Equipment | 10 | % | ||
Motor vehicle | 10%to20% | |||
Office equipment | 20 | % | ||
Renovation | 10%to20% | |||
Signboard | 10 | % | ||
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.
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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“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.
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Leases that transfer substantially all the rewards and risks of ownership to the lessee, other than legal title, are accounted for as finance leases. Substantially all of the risks or benefits of ownership are deemed to have been transferred if any one of the four criteria is met: (i) transfer of ownership to the lessee at the end of the lease term, (ii) the lease containing a bargain purchase option, (iii) the lease term exceeding 75% of the estimated economic life of the leased asset, (iv) the present value of the minimum lease payments exceeding 90% of the fair value. At the inception of a finance lease, the Company as the lessee records an asset and an obligation at an amount equal to the present value of the minimum lease payments. The leased asset is amortized over the shorter of the lease term or its estimated useful life if title does not transfer to the Company, while the leased asset is depreciated in accordance with the Company’s depreciation policy if the title is to eventually transfer to the Company. The periodic rent payments made during the lease term are allocated between a reduction in the obligation and interest element using the effective interest method in accordance with the provisions of ASC Topic 835-30, “Imputation of Interest”.
· | Revenue recognition |
RevenueRevenues are recognized when it is probablecontrol of the promised goods or services are transferred to a customer, in an amount that reflects the consideration that the economic benefits associated withCompany expects to receive in exchange for those goods or services.
The Company applies the transaction will flowfollowing five steps in order to determine the enterprise and theappropriate amount of the revenue canto be measured reliably. Revenue is measured at the fair valuerecognized as it fulfills its obligations under each of consideration received or receivable.its agreements:
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An entity shall recognize revenue associated with the transaction by reference to the stage of completion of the transaction at the end of the reporting period. The outcome of a transaction can be estimated reliably when all the following conditions are satisfied: -
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Interest is recognized on receipt basis.
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· | determine the transaction price; |
· | allocate the transaction price to performance obligations in the contract; and |
· | recognize revenue as the performance obligation is satisfied. |
BIONEXUS GENE LAB CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2019
(Currency expressed
The Company records revenue at point in United States Dollars (“US$”))time which is recognized upon goods delivered or services rendered.
(Unaudited)
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.
· | Shipping and handling fees |
Shipping and handling fees, if billed to customers, are included in revenue. Shipping angand handling fees associated with inbound and outbound freight are expensed as incurred and included in selling and distribution expenses.
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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’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”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 shareshare.”. 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.
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BIONEXUS GENE LAB CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREENINE MONTHS ENDED MARCH 31, 2019SEPTEMBER 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 Company maintains itssubsidiaries maintain their books and recordrecords in a local currency, Malaysian Ringgit (“MYR”(“MYR” or “RM”“RM”), which is functional currency as being the primary currency of the economic environment in which the entity operates.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 subsidiarysubsidiaries are recorded as a separate component of accumulated other comprehensive income.
Translation of amounts from the local currency of the CompanyMYR into US$11.00 has been made at the following exchange rates for the respective years:period and year:
| March 31,2019 |
| December 31, 2018 |
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Year-end US$1 : MYR exchange rate | 4.0816 |
| 4.1391 |
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January 1,2019 to March 31, 2019 | January 1,2018 to March 31, 2018 | |||
3 months average US$1 : MYR exchange rate | 4.0800 | 3.8941 |
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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$1: MYR exchange rate 4.6920 4.3900 4.5192 4.3442
· | Related parties |
Parties, which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Companies are also considered to be related if they are subject to common control or common significant influence.
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BIONEXUS GENE LAB CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022
(Currency expressed in United States Dollars (“US$”))
(Unaudited)
☐ | Fair value of financial instruments |
The carrying value of the Company’sCompany’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"820-10”), with respect to financial assets and liabilities that are measured at fair value. ASC 820-10 establishes a three-tiersix-tier fair value hierarchy that prioritizes the inputs used in measuring fair value as follows:
BIONEXUS GENE LAB CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2019
(Currency expressed in United States Dollars (“US$”))
(Unaudited)
| 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 March 31, 2019,September 30, 2023, and December 31, 2018,2022, 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 doesdo 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 - SHAREHOLDERS’ EQUITY
☐ | Recently Adopted Accounting Standards |
AsIn 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 March 31,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 had 74,627,558 shares of common stock issued and outstanding.on January 1, 2023
NOTE 5 - PLANT AND EQUIPMENTCredit 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.
PlantNOTE 3 - TRADE RECEIVABLES
The Company has performed an analysis on all its trade receivables. As such, trade receivables are recognized and equipment consistedcarried 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 following: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 6% per annum on Interlink Techno started in May 2021 till June 2023. From July 2023 onwards, Chemrex had increased the interest to 8.4%. Chemrex imposed 6% per annum interest on Mawintech Sdn Bhd since May 2021 till to date. The normal trade credit term is generally on 30 days to 90 days term.
Depreciation expense for the three months’ period ended March 31, 2019 and 2018 were $10,562 and $10,519, respectively.
As of September 30, December 31, 2023 2022 Trade receivables Allowances for expected credit losses 2,222,414 2,868,364 (1,322,018 ) - $ 900,396 $ 2,868,364
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BIONEXUS GENE LAB CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREENINE MONTHS ENDED MARCH 31, 2019SEPTEMBER 30, 2023 AND 2022
(Currency expressed in United States Dollars (“(“US$”))
(Unaudited)
NOTE 6 – Finance lease4 - INCOME TAXES
The Company purchased motor vehiclesprovides 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 finance lease agreement, with principal and interest payable monthly. The obligation undervaluation allowance if, based on the finance leaseweight of available evidence, it is as follows:
NOTE 7 - INCOME TAXESmore 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
Bionexus Gens Lab Sdn BhdMRN Scientific Malaysia and Chemrex are both subject to Malaysia Corporate Tax, which is charged at the statutory income tax rate range from 18% toof 24% on its assessable income.
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 $ - $ - (3,838 ) (31,551 ) (3,838 ) (31,551 ) $ - $ - 2,177 - 2,177 - $ - $ - 28,880 30,866 28,880 30,866 27,219 (685 )
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BIONEXUS GENE LAB CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREENINE MONTHS ENDED MARCH 31, 2019SEPTEMBER 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 6.40% per annum effective date and 6.65% per annum effective date initial recognized date adopted from Malayan Banking (Maybank) Berhad's base rate as a reference for the discount rate, as this bank is the largest bank and national bank of Malaysia.
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 $ 55,730 $ 41,090 110,817 32,281 (15,045 ) (15,534 ) (3,586 ) (2,107 ) $ 147,916 $ 55,730
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 $ 56,775 $ 42,909 110,817 30,770 (28,485 ) (19,618 ) 3,311 4,913 (3,654 ) (2,199 ) 138,764 56,775 (33,897 ) (16,569 ) $ 104,867 $ 40,206
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 $15,620 and $12,754 respectively.
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 $ 81,989 $ (126,686 ) 147,916 55,730 4.75 4 $ 6.53 % $ 6.40 %
Lease expenses for the nine months’ period ended September 30, 2023 and nine months’ period ended September 30, 2022 were $3,438 and $1,358, respectively.
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BIONEXUS GENE LAB CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022
(Currency expressed in United States Dollars (“US$”))
(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 $ 1,124 $ 1,124 2,516 2,516 59,801 60,525 100,118 87,122 430,742 320,102 1,506,969 1,506,969 161,148 137,914 33,477 38,213 98,597 107,414 806 704 2,395,298 2,262,603 (638,363 ) (590,317 ) (260,373 ) (160,578 ) $ 1,496,562 $ 1,511,708
Depreciation expense for the nine months’ period ended September 30, 2023 and 2022 were $63,147 and $66,608 respectively.
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 $ 1,150,898 $ 749,027 296,109 511,706 (26,854 ) - - (1,776 ) 223,284 (70,628 ) (92,220 ) (37,431 ) $ 1,551,217 $ 1,150,898
The other investments consist of the following shares: As of September 30, December 31, 2023 2022 Investment in quoted shares: Malaysia Singapore Hong Kong 982,257 659,970 84,407 101,426 484,553 389,502 $ 1,551,217 $ 1,150,898
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.
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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 $ 407,094 $ 268,101 18.51 % 11.78 % $ 467,447 $ 256,536 $ 353,697 $ 233,770 16.08 % 10.27 % $ 279,092 $ 227,124 $ 320,413 $ 282,848 14.57 % 12.43 % $ 316,067 $ 272,734 $ 1,081,204 $ 784,719 49.16 % 34.48 % $ 1,062,606 $ 756,394
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 $ 1,167,862 $ 1,012,770 18.15 % 14.13 % $ 316,067 $ 272,734 $ 1,077,986 $ 924,246 16.75 % 12.89 % $ 467,447 $ 256,536 $ 922,895 $ 815,818 14.34 % 11.38 % $ 279,092 $ 227,124 $ 3,168,743 $ 2,752,834 49.24 % 38.40 % $ 1,062,606 $ 756,394
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 4,425 shares were issued to applicable shareholders as a result of the round-up.
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 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 full 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 $4.40 per share. The Underwriter's Warrants are exercisable from July 24, 2023 until July 24, 2028.
In August, 2023, an aggregate of 759,299 shares of common stock were issued to professional parties or service providers in lieu of cash for services rendered, 125,000 were subsequently cancelled in November, 2023.
In August, 2023, an aggregate of 75,000 shares of common stock were issued to three directors in lieu of cash for services rendered in connection with their employment as directors of the Company.
In August 2023, an aggregate of 1,039,926 shares of common stock were issued to Cede & Co. as part of the round-up exercise to the reverse stock split. The Company is checking to ensure the accuracy of these issuances.
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BIONEXUS GENE LAB CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022
(Currency expressed in United States Dollars (“US$”))
(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, MRN 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 OTHER INCOME OPERATING EXPENSES General and administrative LOSS FROM OPERATIONS FINANCE COSTS LOSS BEFORE TAX Tax expense NET LOSS $ 28,468 $ 7,469,271 $ - $ 7,497,739 (14,849 ) (6,419,947 ) - (6,434,796 ) 13,619 1,049,324 - 1,062,943 3,922 507,870 - 511,792 (170,590 ) (2,348,127 ) (1,906,314 ) (4,425,031 ) (153,049 ) (790,933 ) (1,906,314 ) (2,850,296 ) (2,952 ) (6,794 ) - (9,746 ) (156,001 ) (797,727 ) (1,906,314 ) (2,860,042 ) - (76,418 ) - (76,418 ) $ (156,001 ) $ (874,145 ) $ (1,906,314 ) $ (2,936,460 )
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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 $ 39,409 $ 8,049,723 $ - $ 8,089,132 (19,173 ) (7,150,156 ) - (7,169,329 ) 20,236 899,567 - 919,803 6,617 146,720 3 153,340 (157,686 ) (906,698 ) (177,247 ) (1,241,631 ) (130,833 ) 139,589 (177,244 ) (168,488 ) (2,196 ) (5,521 ) - (7,717 ) (133,029 ) 134,068 (177,244 ) (176,205 ) - (22,792 ) - (22,792 ) $ (133,029 ) $ 111,276 $ (177,244 ) $ (198,997 )
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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 & Bionexus Chemrex TOTAL $ 5,002,908 $ 677,477 $ 176,805 $ 108,390 6,462,614 8,062,685 1,601,002 1,966,759 11,465,522 8,740,162 1,777,807 2,075,149
NOTE 12 – SUBSEQUENT EVENTS
In accordance with ASC Topic 855, “Subsequent“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 March 31, 2019September 30, 2023 up through May 2, 2019November 20, 2023 of these consolidated financial statements. During
On August 1, 2023, Mr. Liong Tai Tan, the period,Chief Operating Officer and a member of the Board of Directors, notified the Company didof 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 havedue to any material recognizable subsequent events.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. Lee Su-Leng Tan 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.
14On 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.
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Forward-Looking Statements
Description of Business
Certain statements made in this quarterly report on Form 10-Q are “forward-looking statements” (within
As used herein, unless the meaning of the Private Securities Litigation Reform Act of 1995) in regardcontext otherwise indicates, references to the plans“Company,” “we,” “our,” “us,” “BioNexus” refer to BioNexus Gene Lab Corp., a Wyoming company (“BGLC”), and objectives of management for future operations. Such statements involve knownits wholly owned subsidiaries, MRNA Scientific Sdn. Bhd. (“MRNA Scientific Malaysia”), 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 hereinChemrex Corporation Sdn. Bhd. (“Chemrex”), both 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.
Substantial risks exist with respect to an investment in the Company. These risks include but are not limited to, those factors discussed in ourAmendment No. 2 to Form S-1 Registration Statement (as amended), filed with the Securities and Exchange Commission (“Commission”) onMarch 27, 2019. More broadly, these factors include, but are not limited to:
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Description of BusinessMalaysian companies.
We areBGLC is an emerging molecular diagnostics companylab focused on the application of functional genomics to enable early diagnosisdetection of infectious diseases and personalized health management. We were incorporated in the State of Wyoming on May 12, 2017.cancers. On August 23, 2017, we acquired all of the outstanding capital stock of BioNexus Gene Lab Sdn Bhd., a Malaysian corporation (“Subsidiary”). The SubsidiaryMRNA Scientific Malaysia, which was incorporated in Malaysia on April 7, 2015. The SubsidiaryMRNA Scientific Malaysia owns algorithm software, technology, and know howknow-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.
OurThe corporate and principal office address of the Company and MRNA Scientific Malaysia is Unit 02, Level 8,10, Tower 8,B, Avenue 5,3, The Horizon,Vertical Business Suite II, Bangsar South, No. 8 Jalan Kerinchi, Bangsar South, 59200 Kuala Lumpur, Malaysia,Malaysia., our lab is located at Lab353, Chemical Science Centre, University Science Malaysia, George Town, Penang, Malaysia. We also have a blood collection centerAnother lab focuses on Covid-19 and Colon cancer screening is located at 14stth floor, Lifecare MedicalDiagnostic Centre, Kuala Lumpur, Malaysia. Our telephone number is (+60) 1221265121221-26512 and currently,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 do not have a web-site.
We commenced operationsacquired all of the outstanding capital stock of Chemrex, which was incorporated in Malaysia in July 2017. Ouron September 29, 2004.
Chemrex’s corporate structureoffice and distribution and storage center is depicted below: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.
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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.
(iii) 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.
(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.
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 4.6920 4.3900 4.5192 4.3442
100% owned
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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 March 31, 2019September 30, 2023 and 2018.2022.
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REVENUE |
| $ | 28,088 |
| $ | - |
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COST OF REVENUE |
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| (18,822) | (12,530) | ||||
GROSS PROFIT |
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| 9,266 | (12,530) | ||||
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OTHER INCOME |
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| 7,020 | 266,979 | ||||
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OPERATING EXPENSES |
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General and administrative |
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| (76,489) | (36,588) | ||||
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(LOSS) PROFIT FROM OPERATIONS |
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| (60,203) | 271,861 | ||||
Income tax expense July |
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NET (LOSS) PROFIT |
| $ | (61,467) | 271,861 | ||||
Other comprehensive income: |
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Foreign currency translation gain |
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| 17,145 | 1,753 | ||||
COMPREHENSIVE (LOSS) PROFIT |
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Revenues.Consolidated
Three months ended September 30, 2023 2022 REVENUE COST OF REVENUE GROSS PROFIT OTHER INCOME OPERATING EXPENSES General and administrative LOSS FROM OPERATIONS FINANCE COSTS LOSS BEFORE TAX Tax expense NET LOSS Other comprehensive income: Foreign currency loss COMPREHENSIVE LOSS $ 2,553,686 $ 2,575,086 (2,199,354 ) (2,275,587 ) 354,332 299,499 199,284 54,110 (3,081,082 ) (418,824 ) (2,527,466 ) (65,215 ) (4,259 ) (2,072 ) (2,531,725 ) (67,287 ) (76,418 ) (10,114 ) $ (2,608,143 ) $ (77,401 ) (18,603 ) (320,592 ) $ (2,626,746 ) $ (397,993 )
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Segmented Information
MRNA Scientific Malaysia Chemrex MRNA Scientific Malaysia Chemrex Three months ended September 30, 2023 Three 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 NET (LOSS)/PROFIT $ 16,536 $ 2,537,150 $ 5,942 $ 2,569,144 (7,301 ) (2,192,053 ) (4,244 ) (2,271,343 ) 9,235 345,097 1,698 297,801 1,757 197,527 2,332 51,775 (71,870 ) (1,322,231 ) (63,005 ) (288,350 ) (60,878 ) (779,607 ) (58,975 ) 61,226 (1,677 ) (2,582 ) (336 ) (1,736 ) (62,555 ) (782,189 ) (59,311 ) 59,490 - (76,418 ) - (10,114 ) $ (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.
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Gross Profit. For the quarterly period ended March 31, 2019,September 30, 2023, we had revenuestotal gross profit of $28,088$354,332 as compared to revenuesgross profit of nil$299,499 for the quarterly period ended March 31, 2019.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 Company begangross 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 operations in July 2017 and did not actually commence product sales until July 2018.increased revenues for the same reason stated above.
Cost of revenuesOther Income. For the quarterly period ended March 31, 2019,September 30, 2023, we had cost of revenues of $18,822,$199,284, as compared to cost of revenues of $12,530$54,110 for the quarterly period ended March 31, 2018,September 30, 2022, an increase of approximately 138%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 $3,081,082 as compared to total operating expenses of $418,824 for the quarter ended September 30, 2022, an increase by approximately 635.7%. 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 $1,686,981 (54.8%) of total operating expenses for the current quarterlyquarter 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 $1,619,512 by approximately 2400.4% 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)/Profit from Operations. We had a loss from operations of $2,527,466 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 3775.6% from the prior period, reflectsfor the increasereasons was due to increment of directors ’ fees, hired a medical adviser, appointed an investor relations service, additional professional expenses for successful listed in costs attributableNasdaq 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.
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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 COST OF REVENUE GROSS PROFIT OTHER INCOME OPERATING EXPENSES General and administrative LOSS FROM OPERATIONS FINANCE COSTS LOSS BEFORE TAX Tax expense NET LOSS Other comprehensive income: Foreign currency translation loss COMPREHENSIVE LOSS $ 7,497,739 $ 8,089,132 (6,434,796 ) (7,169,329 ) 1,062,943 919,803 511,792 153,340 (4,425,031 ) (1,241,631 ) (2,850,296 ) (168,488 ) (9,746 ) (7,717 ) (2,860,042 ) (176,205 ) (76,418 ) (22,792 ) $ (2,936,460 ) $ (198,997 ) (391,533 ) (707,128 ) $ (3,327,993 ) $ (906,125 )
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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 COST OF REVENUE GROSS PROFIT OTHER INCOME OPERATING EXPENSES General and administrative (LOSS)/PROFIT FROM OPERATIONS FINANCE COSTS (LOSS)/PROFIT BEFORE TAX Tax expense NET (LOSS)/PROFIT $ 28,468 $ 7,469,271 $ 39,409 $ 8,049,723 (14,849 ) (6,419,947 ) (19,173 ) (7,150,156 ) 13,619 1,049,324 20,236 899,567 3,922 507,870 6,617 146,720 (170,590 ) (2,348,127 ) (157,686 ) (906,698 ) (153,049 ) (790,933 ) (130,833 ) 139,589 (2,952 ) (6,794 ) (2,196 ) (5,521 ) (156,001 ) (797,727 ) (133,029 ) 134,068 - (76,418 ) - (22,792 ) $ (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. MRN 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 increased revenues and includes the purchasesubvariants for fear of additional laboratory consumables, suchtransmission from other patients or medical staff. Since our RNA screening is administered at diagnostic center, our business had been adversely affected as reagent kits and paxgene tubes, in advancea result.
Cost of future sales.
Other IncomeRevenue. For the quarterlynine months period ended March 31, 2019,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 other incometotal gross profit of $7,020,$1,062,943 as compared $266,979to gross profit of $919,803 for the quarterlysame period ended March 31, 2018, a substantial reductionin 2023, increased by approximately 15.6% from the prior quarterly period. On February 14, 2018,
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
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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 obtained a waiver from Dr. Liew, our largest shareholder, whereby he waived all amounts due himhad $511,792 as compared to $153,340 for the same period in connection with his transfer of equipment and consumable stock to the Subsidiary which occurred in June 2017. The amount due Dr. Liew was the stated amount of $266,979 (currency adjusted)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 quarterlynine months period ended March 31, 2019,September 30, 2023, we had a total operating expense of $4,425,031 as compared to total operating expenses of $76,489, as compared to operating expenses of $36,588$1,241,631 for the quarterlysame period ended March 31, 2018, anin 2022. The increase of $3,183,400, approximately 109%. Operating expenses consists of256.40% was due to general and administrative expenses which includes depreciation of fixed assets, employee compensation and benefits, marketing/travel expenses, professional feesexpenses and marketingcharges from Advisor, Attorney, STC (Transfer Agent), Finra, Nasdaq and travel expenses. The increaseSEC 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 quarterlynine months period reflects costs attributablein 2023 as compared to office renovations$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 furniture and fixtures purchases which occurred duringprovision for losses on account receivables of $1,372,573.
MRNA Scientific-Malaysia had incurred $170,590 (3.9%) of the current quarter, along with increased depreciation and higher professional feestotal operating expenses for the current quarter. 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.
Profit/(loss)BGLC, the holding company had incurred $1,906,314 (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 $1,729,067 approximately 975.51% 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 $600,695
(Loss)/Profit from operationsOperations. We had a loss from operations of $60,203 quarterly$2,850,296 for nine months period ended March 31, 2019September 30, 2023 as compared with income from operationsto loss of $271,861$168,488 for the quarterlysame period ended March 31, 2018 forin 2022. The increase of $2,681,808, approximately 1591.7% was due to the reasons discussed above.
Income tax expense. For the quarterlynine-months period ended March 31, 2019,September 30, 2023, we had income tax expenseprovided 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 $1,264monetary 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 period. During quarterlysame period ended March 31, 2018, we had no income tax expense due our lack of revenues. The corporate tax rate in Malaysia ranges from 18% to 24% on its assessable income.2022.
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16
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 2019,September 30, 2023, we had working capital of $1,183,606$6,625,767 compared with working capital of $1,235,461$4,017,749 as of December 31, 2018.2022. The slight decreaseincrease in working capital as of March 31, 2019September 30, 2023 from December 31, 2018 is2022 was due principally to the reductionincrease in cash used ingenerated from our operations.
Our primary uses of cash havehad been for operations. The main sources of cash have beenwas generated from operational revenues and the private placement of our common stock. The following trends are reasonably likely tocould result in a material decrease in our liquidity over the near to long term:
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Addition of administrative and marketing personnel as the business grows,
· | 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. |
Development of a Company website,
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Increases in advertising and marketing in order to attempt to generate more revenues, and
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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’sCompany’s cash flows provided by (used in) / generated from operating, investing, and financing activities for thethree months endedMarch 31, 2019ended September 30, 2023 and 2018: 2022:
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Net Cash Used in Operating Activities |
| $ | (48,561) |
| $ | (673,561 | ) | |
Net Cash Used in Investing Activities |
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Net Cash Provided in Financing Activities |
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Net Change in Cash and Cash Equivalents |
| $ | (47,285) |
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| $ | 385,397 | |
Nine months ended September 30, 2023 2022 Net cash (used in)/ generated from Operating Activities Net cash used in investing activities Net cash generated from financing activities Foreign currency translation adjustment Net Change in Cash and Cash Equivalents Operating Activities$ (1,039,686 ) $ 75,083 (368,824 ) (400,595 ) 5,743,206 110,441 (306,677 ) (446,579 ) $ 4,028,019 $ (661,650 )
Operating Activities
During thethreethe nine months endedMarch 31, 2019,ended September 30, 2023, the Company incurred a net loss of $61,467$2,936,460 which, after adjusting fordepreciation,for amortization, depreciation, dividend income, fair value gain on share investment, allowances for expected credit losses, share-base compensation, an increase in inventories, a reductiondecrease in trade receivables anddeposits,an increaseand a substantial reduction in trade payables, operating lease liabilities, advance payment from customer, resulted in net cash of $48,561$1,039,686 being used in operating activities during the period.nine months ended September 30, 2023. By comparison, during thethree nine months endedMarch 31, 2018,ended September 30, 2022, the CompanyhadCompany had a netprofitnet loss of $282,380 which,$198,997 after adjusting fordepreciation, anfor amortization, depreciation, dividend income, fair value loss on share investments and a decrease in inventories, an increase intrade receivables, anddeposits,deferred cost of revenue, a substantial reduction intradein trade payables, operating lease liabilities, advance payment from customer, deferred revenue, resulted in net cashof $673,561cash of $75,083 being used incash generated from operating activities during the period.
Investing Activities
During thethreethe nine months endedMarch 31, 2019,ended September 30, 2023, the CompanyhadCompany 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 purchasesof $37,144, resulting in net cash used in investmentinvesting activities of $14,631.During thethree months endedMarch 31, 2018,$400,595.
Financing Activities
During the Companyhad plant and equipment purchasesresulting innine-month ended September 30, 2023, the Company had net cash used in investmentof $5,743,206 generated from financing activities for shares subscriptions of $30,134.The increase is dueinitial public offering (IPO) of 1,473,500 shares at a price to replacing old equipment and computers in the first quarterpublic of 2019.
Financing Activities
During thethree$4.00 per share for total proceeds of $5,750,000. By comparison during the nine months endedMarch 31, 2019,ended September 30, 2022, we had net cash of $110,441 generated from financing activities for continued the Companya repayment of a finance lease resulting in net cash used in financing activities of $3,606. By comparison,during thethree months endedMarch 31,2018, the Company receivedadvances from directors$34,038 and shares subscriptions from private placements resulting in cash generated from financing activities of $1,116,681.
Summary of Significant AccountingPolicies.
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These accompanying financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”).
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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.
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In preparing these 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 years reported. Actual results may differ from these estimates.
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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.
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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:
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Fully depreciated plant and equipment are retained in the financial statements until they are no longer in use.
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Trade receivables are recorded at the invoiced amount and do not bear interest. Management reviews the adequacy of the allowance for doubtful accounts 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.
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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 Condensed Statements of Operations and Comprehensive Income.
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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.
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Leases that transfer substantially all the rewards and risks of ownership to the lessee, other than legal title, are accounted for as finance leases. Substantially all of the risks or benefits of ownership are deemed to have been transferred if any one of the four criteria is met: (i) transfer of ownership to the lessee at the end of the lease term, (ii) the lease containing a bargain purchase option, (iii) the lease term exceeding 75% of the estimated economic life of the leased asset, (iv) the present value of the minimum lease payments exceeding 90% of the fair value. At the inception of a finance lease, the Company as the lessee records an asset and an obligation at an amount equal to
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the present value of the minimum lease payments. The leased asset is amortized over the shorter of the lease term or its estimated useful life if title does not transfer to the Company, while the leased asset is depreciated in accordance with the Company’s depreciation policy if the title is to eventually transfer to the Company. The periodic rent payments made during the lease term are allocated between a reduction in the obligation and interest element using the effective interest method in accordance with the provisions of ASC Topic 835-30, “Imputation of Interest”.
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Revenue recognized when it is probable that the economic benefits associated with the transaction will flow to the enterprise and the amount of the revenue can be measured reliably. Revenue is measured at the fair value of consideration received or receivable.
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An entity shall recognize revenue associated with the transaction by reference to the stage of completion of the transaction at the end of the reporting period. The outcome of a transaction can be estimated reliably when all the following conditions are satisfied: -
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Interest is recognized on receipt basis.
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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.
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Shipping and handling fees, if billed to customers, are included in revenue. Shipping ang handling fees associated with inbound and outbound freight are expensed as incurred and included in selling and distribution expenses.
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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.
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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.$150,000.
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.
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The Company calculates net loss per share in accordance with ASC Topic 260“Earnings per share”. Basic loss per share is computed by dividing the net loss by the weighted average number of common shares outstanding during the period. Diluted loss per share is computed similar to basic 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.
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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$. In addition, the Company maintains its books and record in a local currency, Malaysian Ringgit (“MYR” or “RM”), which is functional currency as being the primary currency of the economic environment in which the entity operates.
In general, for consolidation purposes, assets and liabilities of its subsidiaries whose functional currency is not US$ 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 the local currency of the Company into US$1 has been made at the following exchange rates for the respective years:
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Year-end US$1 : MYR exchange rate | 4.0816 |
| 4.1391 |
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January 1,2019 to March 31, 2019 | January 1,2018 to March 31, 2018 | |||
3 months average US$1: MYR exchange rate | 4.0800 | 3.8941 |
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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.
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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 three-tier fair value hierarchy that prioritizes the inputs used in measuring fair value as follows:
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As of March 31, 2019, and December 31, 2018, 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.
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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.
Off Balance Sheet Arrangements
The Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
Contractual Obligations
None.
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
As a “smaller“smaller reporting company”company” as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.item.
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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’sCompany’s management, with the participation of the principal executive officer and the principal financial officer, of the effectiveness of the Company’sCompany’s disclosure controls and procedures (as defined in Rules 13a-15(e)13a-15(c) and 15d-15(e) under the Exchange Act (“(“Exchange Act”Act”) as of March 31, 2019.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’sCommission’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’sCompany’s management concluded, as of the end of the period covered by this report, that the Company’sCompany’s disclosure controls and procedures were not effectivecapable in recording, processing, summarizing, and reporting information required to be disclosed, within the time periods specified in the Commission’sCommission’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’sManagement’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’sCompany’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’sCompany’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 |
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 |
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’sCompany’s management conducted an assessment ofhad assessed the effectiveness of our internal control over financial reporting as ofMarch 31, 2019, 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.reporting had improved. A material weakness is a control deficiency, or a combination of deficiencies in internal control over financial reporting that creates acould create 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,statements. The management considers its internal control over financial reporting to be ineffective.required further improvement.
Management hashad concluded that ouran internal control over financial reporting hadand glad to note that a majority of our Board of Directors was made up of independent directors and the following material deficiencies:Audit Committee comprised of all independent directors since 2023, the adequacy in the monitoring of required internal controls and procedures were improving.
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While these control deficiencies did not result in any audit adjustments to our 20192023 or 20182022 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 relyCompany had been relying on twothree or more individuals. We will also seek to expandwere expanding our current board of directors to include additional individualsindependents willing to perform directorial functions. Since the recited remedial actions will require thatand we would hire or engage additional personnel, this material weakness may notwould be overcome in the near term due to our limited financial resources.term. Until such remedial actions cancould be realized, we willwould 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’sManagement’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’smanagement’s report in this annual report.
Changes in Internal Controls over Financial Reporting
During the quarterperiod endedMarch31, 2019, September 30, 2023, there hashad been no change in internal control over financial reporting that hashad materially affected or iswas reasonably likely to materially affect our internal control over financial reporting.
PART II
OTHER INFORMATION
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There are presently no material pending legal proceedings to which the Company or any executiveof 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 ashas a material interest adverse to which any of its property is subject,the Company, 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.
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 aggreaget 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 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable to our Company.
NoneThere were issuances of an aggregate of 1,039,926 shares to Cede & Co. in August, 2023 as part of the round-up exercise to the reverse stock split. The Company is checking to ensure the accuracy of these issuances. The Company cautions the reader of this Form 10-Q that the issuances currently impact the total number of shares outstanding and weighted average shares’ calculation as a result. If needed, the Company will rectify the discrepancy and expects to file an amendment to this Form 10-Q as soon as practicable upon resolution. The amendment to this Form 10-Q will require and auditors’ consent. The Company is actively looking to rectify the discrepancy and expects to file an amendment to this Form 10-Q, if needed, as soon as practicable upon resolution.
| 32 |
| Table of Contents |
Exhibit |
| Description |
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101.INS |
| Inline XBRL |
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101.SCH |
| Inline XBRL |
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101.CAL |
| Inline XBRL |
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101.DEF |
| Inline XBRL |
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101.LAB |
| Inline XBRL |
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101.PRE |
| Inline XBRL |
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 is
__________
+ | In accordance with SEC Release 33-8238, Exhibit 32.1 and 32.2 are being furnished and not filed. | |||||||||||||||||||||||||||||||||||
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.
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