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EX-32.1 - CERTIFICATION - BioNexus Gene Lab Corpbion_ex321.htm
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

Amendment No. 1 to

FORM 10-Q

 

(Mark One)

 

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

 

For the quarterly period ended September 30, 2020

 

OR

 

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

 

For the transition period from _____________

 

Commission File Number: 333-229399

 

BIONEXUS GENE LAB CORP

(Exact name of registrant as specified in its charter)

 

Wyoming

 

35-2604830

(State or Other Jurisdiction of
Incorporation or Organization)

 

(I.R.S. Employer

Identification No.)

 

 

 

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

Business Suite II

Bangsar South

No. 8 Jalan Kerinchi

Kuala Lumpur, Malaysia

 

59200

(Address of Principal Executive Offices)

 

(Zip Code)

 

+60 1221-26512

(Registrant’s telephone number, including area code)

 

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

 

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

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒     No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer, ” “ accelerated filer, ” “non-accelerated filer ,” “ smaller reporting company, ” and “ emerging growth company ” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

 

 

Emerging growth company

 

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

 

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

 

As of November 3, 2020, there were 102,730,891 shares of common stock, no par value, outstanding.

 

EXPLANATORY NOTE

  

On November 3, 2020, the Company filed its Form 10-Q for the quarterly period ended September 30, 2020 (“Original Filing”). This Amendment No. 1 to Form 10-Q corrects certain non-material, clerical errors contained in the Original Filing. Except to the extent expressly set forth herein, this Amendment No. 1 speaks as of the date of the Original Filing and has not been updated to reflect events occurring subsequent to the date of the Original Filing other than to correct the stated deficiencies.

  

 

 

 

  

TABLE OF CONTENTS

 

 

 

 

Page

 

PART I – FINANCIAL INFORMATION

 

 

 

Item 1.

Financial Statements

 

3

 

Item 2.

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

 

16

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

 

26

 

Item 4.

Controls and Procedures

 

26

 

 

 

 

 

 

PART II – OTHER INFORMATION

 

 

 

Item 1.

Legal Proceedings

 

28

 

Item 1A.

Risk Factors

 

28

 

Item 2.

Unregistered Sale of Equity Securities and Use of Proceeds

 

28

 

Item 3.

Defaults Upon Senior Securities

 

28

 

Item 4.

Mine Safety Disclosures

 

28

 

Item 5.

Other Information

 

28

 

Item 6.

Exhibits

 

29

 

 

 

 

 

 

SIGNATURES

 

30

 

 

 
2

Table of Contents

 

ITEM 1. Financial Statements

 

BIONEXUS GENE LAB CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF SEPTEMBER 30, 2020 AND DECEMBER 31, 2019

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

 

 

 

 

 

 

As of

 

 

Note

 

 

September 30,

2020

 

 

December 31,

2019

 

 

 

 

 

 

(Unaudited)

 

 

(Audited)

 

ASSETS

 

 

 

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

 

 

 

Cash and bank balances

 

 

 

 

 

264,519

 

 

 

366,038

 

Fixed deposits placed with financial institutions

 

 

 

 

 

422,684

 

 

 

493,038

 

Other receivables and deposits

 

 

 

 

 

13,847

 

 

 

13,057

 

Tax recoverable

 

 

8

 

 

 

-

 

 

 

2,858

 

Inventories

 

 

 

 

 

 

19,165

 

 

 

7,580

 

Total current assets

 

 

 

 

 

$ 720,215

 

 

$ 882,571

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NON-CURRENT ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

Operating lease right of use asset, net

 

 

 

 

 

 

14,258

 

 

 

23,542

 

Plant and equipment, net

 

 

5

 

 

 

276,866

 

 

 

312,908

 

Other investment

 

 

 

 

 

 

1,880

 

 

 

12,215

 

Total non-current assets

 

 

 

 

 

 

293,004

 

 

 

348,665

 

TOTAL ASSETS

 

 

 

 

 

$ 1,013,219

 

 

$ 1,231,236

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

 

Other payables and accrued liabilities

 

 

 

 

 

 

6,452

 

 

 

19,437

 

Current portion of obligation under finance lease

 

 

6

 

 

 

19,886

 

 

 

20,201

 

Current portion of operating lease liability

 

 

7

 

 

 

11,152

 

 

 

11,936

 

Tax payables

 

 

 

 

 

 

673

 

 

 

-

 

Total current liabilities

 

 

 

 

 

 

38,163

 

 

 

51,574

 

NON-CURRENT LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

 

Non-current portion of obligation under finance lease

 

 

6

 

 

 

39,500

 

 

 

45,086

 

Non-current portion of operating lease liability

 

 

7

 

 

 

3,966

 

 

 

12,212

 

Total non-current liabilities

 

 

 

 

 

 

43,466

 

 

 

57,298

 

TOTAL LIABILITIES

 

 

 

 

 

$ 81,629

 

 

$ 108,872

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

Common stock, no par value, authorized 300,000,000 shares and outstanding 102,730,891 shares; Preferred stock, no par value, 30,000,000 shares authorized and no shares outstanding

 

 

4

 

 

 

6,484,669

 

 

 

6,484,669

 

Additional paid in capital

 

 

 

 

 

 

(5,011,891 )

 

 

(5,011,891 )

Accumulated losses

 

 

 

 

 

 

(507,836 )

 

 

(333,311 )

Other comprehensive expense

 

 

 

 

 

 

(33,352 )

 

 

(17,103 )

TOTAL STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

931,590

 

 

 

1,122,364

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

$ 1,013,219

 

 

$ 1,231,236

 

 

See accompanying notes to the condensed consolidated financial statements.

 

 
3

Table of Contents

 

 BIONEXUS GENE LAB CORP.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019

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

 

 

 

Three months ended

 

 

Nine months ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

REVENUE

 

$ 23,471

 

 

$ 24,173

 

 

$ 30,012

 

 

$ 73,906

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COST OF REVENUE

 

 

(15,253 )

 

 

(16,499 )

 

 

(45,561 )

 

 

(52,341 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GROSS PROFIT / (LOSS)

 

 

8,218

 

 

 

7,674

 

 

 

(15,549 )

 

 

21,565

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER INCOME

 

 

2,897

 

 

 

5,285

 

 

 

10,548

 

 

 

19,684

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

 

(70,658 )

 

 

(63,097 )

 

 

(167,685 )

 

 

(220,809 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LOSS FROM OPERATIONS

 

 

(59,543 )

 

 

(50,138 )

 

 

(172,686 )

 

 

(179,560 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

 

(492 )

 

 

28,110

 

 

 

(1,839 )

 

 

25,668

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET LOSS

 

$ (60,035 )

 

$ (22,028 )

 

$ (174,525 )

 

$ (153,892 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation gain/ (loss)

 

 

21,942

 

 

 

(10,802 )

 

 

(16,249 )

 

 

(11,256 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COMPREHENSIVE LOSS

 

 

(38,093 )

 

 

(32,830 )

 

 

(190,774 )

 

 

(165,148 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share - Basic and diluted

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding – Basic and diluted

 

 

102,730,891

 

 

 

80,283,110

 

 

 

102,730,891

 

 

 

80,283,110

 

 

See accompanying notes to the condensed consolidated financial statements.

 

 
4

Table of Contents

 

BIONEXUS GENE LAB CORP

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

AS OF SEPTEMBER 30, 2020 AND DECEMBER 31, 2019

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated 

 

 

 

 

 

 

Common stock

 

 

Additional

paid up

 

 

 

 

other comprehensive

 

 

 

 

 

Number of shares

 

 

Share

capital

 

 

share

capital

 

 

Accumulated

losses

 

 

 income/
(expense)

 

 

Total Equity

 

Balance as of January 1, 2019

 

 

74,627,558

 

 

$ 6,647,636

 

 

$ (5,011,891 )

 

$ (86,842 )

 

$ (26,977 )

 

$ 1,521,926

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issued shares

 

 

30,033,333

 

 

 

30,033

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

30,033

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cancellation of Shares

 

 

(1,930,000 )

 

 

(193,000 )

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(193,000 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss for the year

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(246,469 )

 

 

-

 

 

 

(246,469 )

Foreign currency translation gain

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

9,874

 

 

 

9,874

 

Balance as of December 31, 2019

 

 

102,730,891

 

 

$ 6,484,669

 

 

$ (5,011,891 )

 

$ (333,311 )

 

$ (17,103 )

 

$ 1,122,364

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss for the period

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(47,953 )

 

 

-

 

 

 

(47,953 )

Foreign currency translation loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(41,677 )

 

 

(41,677 )

Balance as of March 31, 2020

 

 

102,730,891

 

 

$ 6,484,669

 

 

$ (5,011,891 )

 

$ (381,264 )

 

$ (58,780 )

 

$ 1,032,734

 

Net loss for the period

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(66,537 )

 

 

-

 

 

 

(66,537 )

Foreign currency translation gain

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

3,486

 

 

 

3,486

 

Balance as of June 30, 2020

 

 

102,730,891

 

 

$ 6,484,669

 

 

$ (5,011,891 )

 

$ (447,801 )

 

$ (55,294 )

 

$ 969,683

 

Net loss for the period

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(60,035 )

 

 

-

 

 

 

(60,035 )

Foreign currency translation gain

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

21,942

 

 

 

21,942

 

Balance as of September 30, 2020

 

 

102,730,891

 

 

$ 6,484,669

 

 

$ (5,011,891 )

 

$ (507,836 )

 

$ (33,352 )

 

$ 931,590

 

 

See accompanying notes to the condensed consolidated financial statements.

 

 
5

Table of Contents

 

BIONEXUS GENE LAB CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019

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

(Unaudited)

  

 

 

Nine months ended
September 30,

 

 

 

2020

 

 

2019

 

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

 

$ (174,525 )

 

$ (153,892 )

 

 

 

 

 

 

 

 

 

Adjustments to reconcile net profit/(loss) to net cash generated from/(used in) operating activities:

 

 

 

 

 

 

 

 

Depreciation of property, plant and equipment

 

 

30,567

 

 

 

31,295

 

Amortization of right of use asset

 

 

8,210

 

 

 

-

 

Loss on other investment

 

 

9,948

 

 

 

-

 

Operating loss before working capital changes

 

 

(125,800 )

 

 

(122,597 )

 

 

 

 

 

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Inventories

 

 

(11,585 )

 

 

3,484

 

Other receivables and deposits

 

 

(790 )

 

 

(3,879 )

Trade and other payables

 

 

(9,383 )

 

 

(35,919 )

Operating lease liability

 

 

(7,351 )

 

 

-

 

Cash used in operating activities

 

 

(154,909 )

 

 

(158,911 )

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Purchase of plant and equipment

 

 

-

 

 

 

(5,672 )

Net cash used in investing activities

 

 

-

 

 

 

(5,672 )

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Repayment of finance lease

 

 

(5,901 )

 

 

(13,453 )

Advance/(Repayments) to Directors

 

 

302

 

 

 

(880 )

Shares cancellation

 

 

-

 

 

 

(93,000 )

Net cash used in financing activities

 

 

(5,599 )

 

 

(107,333 )

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

(11,365 )

 

 

(11,174 )

NET CHANGE IN CASH AND CASH EQUIVALENTS

 

 

(171,873 )

 

 

(283,090 )

 

 

 

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS, BEGINNING OF FINANCIAL YEAR

 

 

859,076

 

 

 

1,260,239

 

 

 

 

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS, END OF FINANCIAL YEAR

 

$

687,203

 

 

$

977,149

 

 

 

 

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS INFORMATION:

 

 

 

 

 

 

 

 

Fixed deposits placed with financial institutions

 

$ 422,684

 

 

$ 606,633

 

Cash at bank

 

 

264,519

 

 

 

370,516

 

Cash and cash equivalents, end of financial year

 

 

687,203

 

 

 

977,149

 

 

 

 

 

 

 

 

 

 

Supplementary cash flow information:

 

 

 

 

 

 

 

 

Interest paid

 

$ (1,480 )

 

$ (2,295 )

Income taxes refunded/(paid)

 

 

3,531

 

 

 

(4,137 )

   

See accompanying notes to the condensed consolidated financial statements.

 

 
6

Table of Contents

 

BIONEXUS GENE LAB CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020

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

(Unaudited)

 

NOTE 1 - BASIS OF PREPARATION

 

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

 

In the opinion of management, the consolidated balance sheet as of September 30, 2020 which has been derived from audited financial statements and these unaudited condensed consolidated financial statements reflect all normal and recurring adjustments considered necessary to state fairly the results for the periods presented. The results for the n ine months ended September 30, 2020 are not necessarily indicative of the results to be expected for the entire fiscal year ending December 31, 2020 or for any future period.

 

These unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the Management’s Discussion and the audited financial statements and notes thereto included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2019.

 

NOTE 2 - ORGANIZATION AND BUSINESS BACKGROUND

 

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

 

The principal office address is Unit 02 Level 10, Tower B, Vertical Business Suite, No. 8 Jalan Kerinchi, Bangsar South, 59200 Kuala Lumpur, Malaysia, our lab is located at Lab 353, Chemical Science Centre, University Science Malaysia, George Town, Penang, Malaysia. We also have a blood collection center located at 1st floor, Lifecare Medical Centre, Kuala Lumpur, Malaysia.

 

The corporate structure is depicted below:

 

BioNexus Gene Lab Corp.,

a Wyoming company

100% owned

 

Bionexus Gene Lab Sdn. Bhd.,

a Malaysian company

 

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

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

 

Basis of presentation

 

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

 

 
7

Table of Contents

 

BIONEXUS GENE LAB CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2020

(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 Nine months or less as of the purchase date of such investments.

 

Plant and equipment

 

Plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Depreciation is calculated on the straight-line basis to write off the cost over the following expected useful lives of the assets concerned. The principal annual rates used are as follows:

 

Categories

 

Principal Annual Rates/Expected Useful Life

 

Furniture & fittings

 

 

20 %

Computer and software

 

 

33 %

Motor vehicle

 

 

10 %

Lab Equipment

 

 

10 %

Office equipment

 

 

20 %

Renovation

 

 

20 %

 

Fully depreciated plant and equipment are retained in the financial statements until they are no longer in use.

 

Trade receivables

 

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.

 

 
8

Table of Contents

 

BIONEXUS GENE LAB CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2020

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

 

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 Statements of Operations and Comprehensive Income.

  

Impairment of long-lived assets

 

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

 

Finance lease

 

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

 

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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BIONEXUS GENE LAB CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020

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

(Unaudited)

  

 

a.

Sales of goods or rendering of services

 

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: -

 

 

i.

The amount of revenue can be measured reliably;

 

 

ii.

It is probable that the economic benefits associated with the transaction will flow to the entity;

 

 

iii.

The stage of completion of the transaction at the end of the reporting period can be measured reliably; and

 

 

iv.

The costs incurred for the transaction and the costs to complete the transaction can be measured reliably.

 

 

b.

Interest income

 

Interest is recognized on receipt basis.

 

Cost of revenues

 

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

 

Shipping and handling fees

 

Shipping and handling fees, if billed to customers, are included in revenue. Shipping and handling fees associated with inbound and outbound freight are expended as incurred and included in selling and distribution expenses.

 

Comprehensive income

 

ASC Topic 220, “Comprehensive Income” establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive income as defined includes all changes in equity during a period from non-owner sources. Accumulated other comprehensive income, as presented in the accompanying statements of stockholders’ equity consists of changes in unrealized gains and losses on foreign currency translation and cumulative net change in the fair value of available-for-sale investments held at the balance sheet date. This comprehensive income is not included in the computation of income tax expense or benefit.

 

 
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BIONEXUS GENE LAB CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020

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

(Unaudited)

 

Income taxes

 

Income taxes are determined in accordance with the provisions of ASC Topic 740, “Income Taxes” (“ASC Topic 740”). Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

 

ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclosed in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts.

 

The Company conducts major businesses in Malaysia and is subject to tax in their own jurisdictions. As a result of its business activities, the Company will file separate tax returns that are subject to examination by the foreign tax authorities.

 

Net loss per share

 

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.

 

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 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.

 

 
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BIONEXUS GENE LAB CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020

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

(Unaudited)

 

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: remove line above December 31

 

 

 

September 30,

2020

 

 

December 31,

2019

 

 

 

 

 

 

 

 

Period-end US$1: MYR exchange rate

 

 

4.1585

 

 

 

4.0925

 

 

 

 

 

 

 

 

 

 

 

 

January 1, 2020 to September 30, 2020

 

 

January 1, 2019 to September 30, 2019

 

 

 

 

 

 

 

 

 

 

9 months average US$1: MYR exchange rate

 

 

4.2386

 

 

 

4.1390

 

 

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.

 

Fair value of financial instruments

 

The carrying value of the Company’s financial instruments: cash and cash equivalents, trade receivable, deposits and other receivables, amount due to related parties and other payables approximate at their fair values because of the short-term nature of these financial instruments.

 

The Company also follows the guidance of the ASC Topic 820-10, “Fair Value Measurements and Disclosures” (“ASC 820-10”), with respect to financial assets and liabilities that are measured at fair value. ASC 820-10 establishes a Six-tier fair value hierarchy that prioritizes the inputs used in measuring fair value as follows:

 

Level 1: Observable inputs such as quoted prices in active markets;

 

Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

 

Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions

 

As of September 30, 2020, and December 31, 2019, the Company did not have any nonfinancial assets and liabilities that are recognized or disclosed at fair value in the financial statements, at least annually, on a recurring basis, nor did the Company have any assets or liabilities measured at fair value on a non-recurring basis.

 

Recent accounting pronouncements

 

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

 

 
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BIONEXUS GENE LAB CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020

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

(Unaudited)

 

NOTE 4 - SHAREHOLDERS’ EQUITY

 

As at September 30, 2020, the Company had 102,730,891 shares of common stock issued and outstanding.

 

NOTE 5 - PLANT AND EQUIPMENT

 

Plant and equipment consisted of the following:

 

 

 

As of

 

 

 

September 30,

2020

 

 

December 31,

2019

 

Furniture and fittings

 

$ 5,617

 

 

$ 5,617

 

Computer and software

 

 

1,372

 

 

 

1,372

 

Motor vehicle

 

 

112,344

 

 

 

112,344

 

Lab equipment

 

 

281,651

 

 

 

281,651

 

Office equipment

 

 

1,091

 

 

 

1,091

 

Renovation

 

 

2,916

 

 

 

2,916

 

 

 

 

404,991

 

 

 

404,991

 

(Less): Accumulated depreciation

 

 

(128,786 )

 

 

(98,219 )

Add: Foreign translation differences

 

 

661

 

 

 

6,136

 

Plant and equipment, net

 

$ 276,866

 

 

$ 312,908

 

 

Depreciation expense for the nine-month periods ended September 30, 2020 and 2019 was $30,567 and $31,295, respectively.

 

NOTE 6 - FINANCE LEASE

 

The Company purchased motor vehicles under a finance lease agreement with the effective interest rate 5.99% of per annum due through January 2023, with principal and interest payable monthly. The obligation under the finance lease is as follows:

 

 

 

As of

 

 

 

September 30,

2020

 

 

December 31,

2019

 

Finance lease

 

$ 63,199

 

 

$ 69,863

 

Less: interest expense

 

 

(3,813 )

 

 

(4,576 )

Net present value of finance lease

 

$ 59,386

 

 

$ 65,287

 

 

 

 

 

 

 

 

 

 

Current portion

 

$ 19,886

 

 

$ 20,201

 

Non-current portion

 

 

39,500

 

 

 

45,086

 

Total

 

$ 59,386

 

 

$ 65,287

 

 

 
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BIONEXUS GENE LAB CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020

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

(Unaudited)

 

 

NOTE 7 - LEASE RIGHT OF USE ASSET AND LEASE LIABILITY

 

Operating lease right of use as follow:

 

As of

 

 

 

September 30,

2020

 

 

December 31,

2019

 

Initial recognition

 

$ 33,977

 

 

$ 35,313

 

Accumulated amortization

 

 

(19,719 )

 

 

(11,771 )

Balance

 

$ 14,258

 

 

$ 23,542

 

    

Operating lease liability as follow:

 

As of

 

 

 

September 30,

2020

 

 

December 31,

2019

 

Initial recognition

 

$ 33,977

 

 

$ 35,313

 

Less: gross repayment

 

 

(21,761 )

 

 

(13,192 )

Add: imputed interest

 

 

2,901

 

 

 

2,027

 

Balance

 

$ 15,118

 

 

$ 24,148

 

Less: lease liability current portion

 

 

(11,152 )

 

 

(11,936 )

Lease liability non-current portion

 

 

3,966

 

 

 

12,212

 

 

The amortization of the operating lease right of use asset for the nine-month period ended September 30, 2020 and the year ended December 31, 2019 was $8,210 and $11,618, respectively.

   

Other information:

 

As of

 

 

 

September 30,

2020

 

 

December 31,

2019

 

Cash paid for amounts included in the measurement of lease liabilities:

 

 

 

 

 

 

Operating cash flow from operating lease

 

$ 7,351

 

 

$ 11,012

 

Right of use assets obtained in exchange for operating lease liabilities

 

 

14,258

 

 

 

23,542

 

Remaining lease term for operating lease (years)

 

 

2

 

 

 

2

 

Weighted average discount rate for operating lease

 

$ 6.70 %

 

$ 6.70 %

 

Lease expenses for the nine-month period ended September 30, 2020 and the year ended December 31, 2019 were $802 and $2,001, respectively.

  

NOTE 8 - INCOME TAXES

 

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.

 

 
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BIONEXUS GENE LAB CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020

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

(Unaudited)

 

Malaysia

Bionexus Gene Lab Sdn Bhd is subject to Malaysia Corporate Tax, which is charged at the statutory income tax rate range is 24% on its assessable income.

 

 

 

As of

 

 

 

September 30,

 

 

December 31,

 

 

 

2020

 

 

2019

 

Tax Recoverable

 

 

 

 

 

 

Local

 

$ -

 

 

$ -

 

Foreign, representing:

 

 

 

 

 

 

 

 

Malaysia

 

 

-

 

 

 

(2,858 )

Tax Recoverable

 

 

-

 

 

 

(2,858 )

 

 

 

 

 

 

 

 

 

Income tax liabilities:

 

 

 

 

 

 

 

 

Local

 

$ -

 

 

$ -

 

Foreign, representing:

 

 

 

 

 

 

 

 

Malaysia

 

 

673

 

 

 

-

 

Income tax liabilities

 

 

673

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Deferred tax liabilities:

 

 

 

 

 

 

 

 

Plant and equipment

 

 

 

 

 

 

 

 

Local

 

$ -

 

 

$ -

 

Foreign, representing:

 

 

 

 

 

 

 

 

Malaysia

 

 

-

 

 

 

-

 

Deferred tax liabilities

 

 

-

 

 

 

-

 

Total

 

 

673

 

 

 

(2,858 )

 

NOTE 9 - SUBSEQUENT EVENTS

 

In accordance with ASC Topic 855, “Subsequent Events”, which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued, the Company has evaluated all events or transactions that occurred after September 30, 2020 up through October 15, 2020 of these consolidated financial statements. During the period, the Company did not have any material recognizable subsequent events.

  

 
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

Forward-Looking Statements

 

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

 

Substantial risks exist with respect to an investment in the Company. These risks include but are not limited to, those factors discussed in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on September 30, 2020. More broadly, these factors include, but are not limited to:

 

 

We have limited operating history and limited business growth;

 

 

The efficacy of our blood screening process;

 

 

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

 

 

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

 

 
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Description of Business

 

We are an emerging molecular diagnostics company focused on the application of functional genomics to enable early disease diagnosis and personalized health management. Our focus is on developing and marketing safe, effective and non-invasive blood tests for early detection of diseases in order to minimize treatment cost and improve patient management. Our non-invasive blood tests analyze changes in ribonucleic acid (or RNA) to detect the risk potentiality of 11 different diseases. These diseases include eight cancers (nasopharyngeal, lung, liver, stomach, breast, cervical, prostate and colon), two bowel diseases (colitis and Crohn) and osteoarthritis. This unique blood based genomic biomarker approach is based on the scientific observation that circulating blood reflects, in a detectable way, what is occurring throughout the body in real time.

 

The Company believes that its blood based genomic screening protocol for the risk of disease detection can be utilized in conjunction with other medical procedures for disease detection including blood tests, imaging and biopsies. We market our blood based genomic screening process to health care providers, such as doctors, laboratories and hospitals, which began in July 2017. During the 3rd fiscal quarter of 2020, we began testing for COVID 19 using our RNA platform. During this period, the Ministry of Health began providing us with COVID samples taken at hospitals for testing using our platform. We are able to deliver results with three hours from receipt of the samples.

 

We were incorporated in the State of Wyoming on May 12, 2017. On August 23, 2017, we acquired all of the outstanding capital stock of Bionexus Gene Lab Sdn Bhd., a Malaysian corporation (“Subsidiary”). The Subsidiary was incorporated in Malaysia on April 7, 2015. The Subsidiary owns algorithm software, technology and know-how related to the detection of common diseases through blood analysis which we use in our business.

 

Our principal office address is Unit 02 Level 10, Tower B, Vertical Business Suite, No. 8 Jalan Kerinchi, Bangsar South, 59200 Kuala Lumpur, Malaysia, our lab is located at Lab 353, Chemical Science Centre, University Science Malaysia, George Town, Penang, Malaysia. We also have a blood collection center located at 1st floor, Lifecare Medical Centre, Kuala Lumpur, Malaysia. Our telephone number is (+60) 122126512 and currently, we do not have a web-site.

 

We commenced operations in Malaysia in July 2017. Our corporate structure is depicted below:

 

BioNexus Gene Lab Corp.,

a Wyoming company

100% owned

 

Bionexus Gene Lab Sdn. Bhd.,

a Malaysian company

 

 
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Results of Operations

 

Our results of operations, particularly results for the current nine-month period, have been adversely impacted by the onset of the Covid-19 pandemic, which commenced in late December 2019 in Malaysia. We believe that most people are reluctant to visit hospitals and clinics for fear of transmission from other patients or medical staff. Since our RNA screening is administered at hospitals and clinics, our business has been adversely affected as a result. Furthermore, on March 18, 2020, the Malaysian government had declared Movement Control Order for the entire nation which restricted movement of all people except for those who were working for essential services. The gradual relaxation of the restrictions of the Order is expected to commence in October 2020. However, we cannot predict when we will be able to re-commence our RNA screening. During the first quarter of 2020, we submitted our screening tests (rRT-PCR Covid screening) to the Ministry of Health, which was approved on June 15, 2020. This rRT-PCR screening is meant for back to work employees after the Conditional Movement Control Order is enforced. Our Covid testing generates substantially lower per ticket charges at $40-$60 per test compared with $2,500 per customer for our RNA testing. They also generate lower margins than our RNA tests. In addition, we are promoting this rRT-PCR test through the Malaysian General & Life Insurance Association and small and medium enterprises in Malaysia. We do not have any indication as to response to our promotion.

 

In addition, as indicated below, we have offered a free RNA screening to shareholders that invested in excess of $10,000 in our private placements in 2018 and 2019. 

  

Three Months Ended September 30, 2020 Compared with the Three Months Ended September 30, 2019.

 

The following table sets forth key selected financial data for the three months ended September 30, 2020 and 2019.

 

 

 

Three month periods

 

ended September 30,

 

 

 

2020

 

 

2019

 

 

 

 

 

 

 

 

REVENUE

 

$ 23,471

 

 

$ 24,173

 

 

 

 

 

 

 

 

 

 

COST OF REVENUE

 

 

(15,253 )

 

 

(16,499 )

 

 

 

 

 

 

 

 

 

GROSS PROFIT

 

 

8,218

 

 

 

7,674

 

 

 

 

 

 

 

 

 

 

OTHER INCOME

 

 

2,897

 

 

 

5,285

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

General and administrative

 

 

(70,658 )

 

 

(63,097 )

 

 

 

 

 

 

 

 

 

LOSS FROM OPERATIONS

 

 

(59,543 )

 

 

(50,138 )

 

 

 

 

 

 

 

 

 

Income tax expense

 

 

(492 )

 

 

28,110

 

 

 

 

 

 

 

 

 

 

NET LOSS

 

$ (60,035 )

 

$ (22,028 )

 

 

 

 

 

 

 

 

 

Other comprehensive income:

 

 

 

 

 

 

 

 

Foreign currency translation gain/(loss)

 

 

21,942

 

 

 

(10,802 )

 

 

 

 

 

 

 

 

 

COMPREHENSIVE LOSS

 

$ (38,093 )

 

$ (32,830 )

  

Revenues. For the quarterly period ended September 30, 2020, we had revenue of $23,471 as compared to revenues of $24,173 for the quarterly period ended September 30, 2019, a decrease of approximately 3%. The slight decrease was due to the impact of Covid-19 pandemic on our business. During the current quarter, we experienced an increase in COVID testing and a decrease in RNA testing compared with the same quarter last year.

 

 
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Cost of Revenues. For the quarterly period ended September 30, 2020, we had incurred $15,253 in cost of revenues, as compared to cost of revenues of $16,499 for the quarterly period ended September 30, 2019, a slight decrease of approximately 8%. The slight decrease in cost of revenues for the current quarterly period is due to a reduction in  our RNA testing supplies which was adversely impacted during the quarter coupled with volume discounts on Covid testing supplies as our Covid screening increased during the period.  The cost of revenues for the current quarterly period reflects the costs attributable to RNA and Covid-19 screenings.

 

Gross Profit. Gross profit for this quarterly period ended September 30, 2020 was $8,212 with margin 35% as compared gross profit of $7,674 with a margin 32% for the same quarter last year. The increase of gross profit margin of 3% due to better margins for Covid-19 testing compared with our RNA testing.

 

Other Income. For the quarterly period ended September 30, 2020, we had other income consisting of interest on deposits of $2,897 compared $5,285 for the quarterly period ended September 30, 2019. The 82% reduction for the current quarterly period is due to lower interest rates on deposits and reduced amounts on deposit.

 

Operating Expenses. For the quarterly period ended September 30, 2020, we had operating expenses of $70,658 as compared to operating expenses of $63,097 for the quarterly period ended September 30, 2019, an increase of approximately 11%. The increase in operating expenses for the current period is due to 20 shareholders were offered complimentary RNA testing because of their prior investment in the Company.  Operating expenses consists of general and administrative expenses which includes depreciation of fixed assets, employee compensation and benefits, professional fees and marketing and travel expenses.

 

Loss from operations. We had a loss from operations of $59,543 for the quarterly period ended September 30, 2020 compared with a loss of $50,138 for the quarterly period ended September 30, 2019 for the reasons discussed above.

 

Income tax expense. For the quarterly period ended September 30, 2020, we had provision of income tax expense of $492 for estimated 17% of the bank interest earnings. As compared to tax adjustment of $28,110 for the quarterly period ended September 30, 2019.

 

Foreign currency exchange gain/(loss). We are exposed to fluctuations in foreign exchange rates on the revaluation of monetary assets and liabilities denominated in currencies other than the US Dollar. Therefore, any change in the relevant exchange rate will require us to recognize a transaction gain or loss on revaluation. For the quarterly period ended September 30, 2020, we experienced a foreign currency gain of $21,942 compared with a foreign currency loss of $10,802 for the quarter ended September 30, 2019.

 

Nine Months Ended September 30, 2020 Compared with the Nine Months Ended September 30, 2019.

 

The following table sets forth key selected financial data for the nine months ended September 30, 2020 and 2019.

 

 

 

Nine-month periods

 

 

 

ended September 30,

 

 

 

2020

 

 

2019

 

 

 

 

 

 

 

 

REVENUE

 

$ 30,012

 

 

$ 73,906

 

 

 

 

 

 

 

 

 

 

COST OF REVENUE

 

 

(45,561 )

 

 

(52,341 )

 

 

 

 

 

 

 

 

 

GROSS (LOSS) /PROFIT

 

 

(15,549 )

 

 

21,565

 

 

 

 

 

 

 

 

 

 

OTHER INCOME

 

 

10,548

 

 

 

19,684

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

General and administrative

 

 

(167,685 )

 

 

(220,809 )

 

 

 

 

 

 

 

 

 

LOSS FROM OPERATIONS

 

 

(172,686 )

 

 

(179,560 )

 

 

 

 

 

 

 

 

 

Income tax expense

 

 

(1,839 )

 

 

25,668

 

 

 

 

 

 

 

 

 

 

NET LOSS

 

$ (174,525 )

 

$ (153,892 )

 

 

 

 

 

 

 

 

 

Other comprehensive income:

 

 

 

 

 

 

 

 

Foreign currency translation loss

 

 

(16,249 )

 

 

(11,256 )

 

 

 

 

 

 

 

 

 

COMPREHENSIVE LOSS

 

$ (190,774 )

 

$ (165,148 )

 

 
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Revenues. For the nine-month period ended September 30, 2020, we had revenues of $30,012 as compared to revenues of $73,906 for the same period ended September 30, 2019, a decrease of approximately 59%. The substantial decrease was due to the impact of Covid-19 pandemic on our business. Moreover, the revenues for this period were substantially from Covid screening compared to the same period last year which were entirely from our blood-based gene (RNA) screening.

 

Cost of revenues. For the nine-month period ended September 30, 2020, we had incurred $45,461 in cost of revenue, as compared to cost of revenues of $52,341 for the nine-month period ended September 30, 2019, a decrease of approximately 13%. The cost of revenue for the current quarterly period reflects the costs attributable to Covid-19 screening kits and reagents stock without adding any RNA screening kits and reagents stock.

 

Gross (Loss)/Profit. Gross loss for this  nine-month period ended September 30, 2019 was $15,549 compared gross profit of $21,565. The gross loss for the current  nine-month period  was due to testing fees allocable to the 20 shareholders discussed above.

 

Other Income. For the nine-month period ended September 30, 2020, we had other income consisting of interest on deposits of $10,548 compared with $19,684 for the same period ended September 30, 2019. The 46% reduction during the current nine month period is due to lower interest rates on deposits and reduced amounts on deposit.

 

Operating Expenses. For the nine-month period ended September 30, 2020, total the operating expenses was $167,685 as compared to operating expenses of $220,809 for the nine-month period ended September 30, 2019, a decrease of approximately 24%. The decrease for the current period is due to office rental which was reduced by our landlord and less traveling expenses.  Operating expenses consists of general and administrative expenses which includes depreciation of fixed assets, employee compensation and benefits, professional fees and marketing and travel expenses.

 

Loss from operations. We had a loss from operations of $172,686 for the nine-month period ended September 30, 2020 compared with a loss from operations of $179,560 for the nine-month period ended September 30, 2019 for the reasons discussed above.

 

Income tax expense. For the nine-month period ended September 30, 2020, we had provision of income tax expense of $1,839 for estimated 17% of the bank interest earnings.

 

For the Nine-month period ended September 30, 2019, tax adjustment of $25,668 for over provided income tax expenses in prior financial year

 

Foreign currency exchange gain/(loss). We are exposed to fluctuations in foreign exchange rates on the revaluation of monetary assets and liabilities denominated in currencies other than the US Dollar. Therefore, any change in the relevant exchange rate will require us to recognize a transaction gain or loss on revaluation. For the nine-month period ended September 30, 2020, we experienced a foreign currency loss of $16,249 compared with a foreign currency loss of $11,256 for the nine-month period ended September 30, 2019.

 

LIQUIDITY AND CAPITAL RESOURCES

 

As of September 30, 2020, we had working capital of $682,052 compared with working capital of $830,997 as of December 31, 2019. The decrease in working capital as of September 30, 2020 from December 31, 2019 is due principally to the losses experienced during the nine month period in 2020.

 

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

 

 

Addition of administrative and marketing personnel as the business grows,

 

Development of a Company website,

 

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

 

The cost of being a public company.

 

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

 

The following is a summary of the Company’s cash flows provided by (used in) operating, investing, and financing activities for the nine months ended September 30, 2020 and 2019:

 

 

 

Nine-Month Ended September 30, 2020

 

 

Nine-Month Ended September 30, 2019

 

Net Cash Used in Operating Activities

 

$ (154,909 )

 

$ (158,911 )

Net Cash Used in Investing Activities

 

 

-

 

 

 

(5,672 )

Net Cash Provided in Financing Activities

 

 

(5,599 )

 

 

(107,333 )

Net Change in Cash and Cash Equivalents

 

$ (171,873 )

 

$ (283,090 )

 

Operating Activities

 

During the nine-month ended September 30, 2020, the Company incurred a net loss of $174,525 which, after adjusting for depreciation, an increase in inventories, an increase in receivables and deposits, a reduction in trade payables, resulted in net cash of $154,909 being used in operating activities during the period. By comparison, during the nine-month ended September 30, 2019, the Company had a net loss of $153,892 which, after adjusting for depreciation, a decrease in inventories, an increase in receivables and deposits, an increase in trade payables, resulted in net cash of $158,911 being used in operating activities during the period.

 

Investing Activities

 

During the nine-month ended September 30, 2020, the Company had no net cash used in investing activities. During the nine-month ended September 30, 2019, the Company had plant and equipment purchases, consisting mainly of equipment and computer purchases, resulting in net cash used in investing activities of $5,672. During the current nine-month period, we had no replacement of equipment and computers.

  

Financing Activities

 

During the nine-month ended September 30, 2020, the Company had a repayment of a finance lease $5,901 and advances from directors $302 resulting in net cash used in financing activities of $5,599. By comparison, during the nine-month ended September 30, 2019, the Company had a repayment of a finance lease $13,453, repayment of advances to directors of $880 and share cancellation from private placements $93,000 resulting in cash used in financing activities of $107,333

  

The Malaysian Prime Minister announced that individual borrowers and Small and Medium Enterprises (SMEs) would enjoy an automatic loan moratorium for six months, starting from 1st April 2020 onwards.  As a result, the Company had a deferment of finance lease resulting in net cash used in financing activities of $5,901 with 6 months moratorium implemented by the banks in view of the Covid-19 pandemic. During the nine-month ended September 30, 2019, the Company had a repayment of a finance lease resulting in net cash used in financing activities of $13,453

 

 
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Summary of Significant Accounting Policies.

 

Basis of presentation

 

These accompanying financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”).

 

Basis of consolidation

 

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

 

Use of estimates

 

In preparing these 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.

 

Cash and cash equivalents

 

Cash and cash equivalents represent cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of Six months or less as of the purchase date of such investments.

 

Plant and equipment

 

Plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Depreciation is calculated on the straight-line basis to write off the cost over the following expected useful lives of the assets concerned. The principal annual rates used are as follows:

 

Categories

 

Principal Annual Rates/Expected Useful Life

 

Furniture & fittings

 

 

20 %

Computer and software

 

 

33 %

Motor vehicle

 

 

10 %

Lab Equipment

 

 

10 %

Office equipment

 

 

20 %

Renovation

 

 

20 %

 

Fully depreciated plant and equipment are retained in the financial statements until they are no longer in use.

 

Trade receivables

 

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

 

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.

 

Impairment of long-lived assets

 

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

 

Finance lease

 

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

 

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.

 

 

a.

Sales of goods or rendering of services

 

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: -

 

 

i.

The amount of revenue can be measured reliably;

 

 

ii.

It is probable that the economic benefits associated with the transaction will flow to the entity;

 

 
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iii.

The stage of completion of the transaction at the end of the reporting period can be measured reliably; and

 

 

iv.

The costs incurred for the transaction and the costs to complete the transaction can be measured reliably.

 

 

b.

Interest income

 

Interest is recognized on receipt basis.

 

Cost of revenues

 

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

 

Shipping and handling fees

 

Shipping and handling fees, if billed to customers, are included in revenue. Shipping and handling fees associated with inbound and outbound freight are expensed as incurred and included in selling and distribution expenses.

 

Comprehensive income

 

ASC Topic 220, “Comprehensive Income” establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive income as defined includes all changes in equity during a period from non-owner sources. Accumulated other comprehensive income, as presented in the accompanying statements of stockholders’ equity consists of changes in unrealized gains and losses on foreign currency translation and cumulative net change in the fair value of available-for-sale investments held at the balance sheet date. This comprehensive income is not included in the computation of income tax expense or benefit.

  

Income tax expense

 

Income taxes are determined in accordance with the provisions of ASC Topic 740, “Income Taxes” (“ASC Topic 740”). Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

 

ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclosed in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax; 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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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:

 

 

 

September 30, 2020

 

 

December 31, 2019

 

 

 

 

 

 

 

 

Period-end US$1 : MYR exchange rate

 

 

4.2800

 

 

 

4.0925

 

 

 

 

 

 

 

 

 

 

 

 

January 1, 2020 to September 30, 2020

 

 

January 1, 2019 to September 30, 2019

 

 

 

 

 

 

 

 

 

 

9 months average US$1 : MYR exchange rate

 

 

4.2619

 

 

 

4.1191

 

 

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.

 

Fair value of financial instruments

 

The carrying value of the Company’s financial instruments: cash and cash equivalents, trade receivable, deposits and other receivables, amount due to related parties and other payables approximate at their fair values because of the short-term nature of these financial instruments.

   

The Company also follows the guidance of the ASC Topic 820-10, “Fair Value Measurements and Disclosures” ("ASC 820-10"), with respect to financial assets and liabilities that are measured at fair value. ASC 820-10 establishes a Six-tier fair value hierarchy that prioritizes the inputs used in measuring fair value as follows:

 

Level 1: Observable inputs such as quoted prices in active markets;

 

Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

 

Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions

 

As of September 30, 2020, and December 31, 2019, the Company did not have any nonfinancial assets and liabilities that are recognized or disclosed at fair value in the financial statements, at least annually, on a recurring basis, nor did the Company have any assets or liabilities measured at fair value on a non-recurring basis.

 

Recent accounting pronouncements

 

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

 

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.

 

 
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Contractual Obligations

 

None.

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

 

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.

 

Item 4. Controls and Procedures.

 

Evaluation of Disclosure Controls and Procedures

 

In connection with the preparation of this quarterly report, an evaluation was carried out by the Company’s management, with the participation of the principal executive officer and the principal financial officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act (“Exchange Act”) as of September 30, 2020. Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Commission’s rules and forms, and that such information is accumulated and communicated to management, including the principal executive officer and the principal financial officer, to allow timely decisions regarding required disclosures.

 

Based on that evaluation, the Company’s management concluded, as of the end of the period covered by this report, that the Company’s disclosure controls and procedures were not effective in recording, processing, summarizing, and reporting information required to be disclosed, within the time periods specified in the Commission’s rules and forms, and that such information was not accumulated and communicated to management, including the principal executive officer and the principal financial officer, to allow timely decisions regarding required disclosures.

 

Management’s Report on Internal Control over Financial Reporting

 

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is a process, under the supervision of the principal executive officer and the principal financial officer, designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external purposes in accordance with United States generally accepted accounting principles (GAAP). Internal control over financial reporting includes those policies and procedures that:

 

 

i)

Pertain to the maintenance of records that is in reasonable detail accurately and fairly reflect the transactions and dispositions of the Company’s assets;

 

 

ii)

Provide reasonable assurance that transactions are recorded as necessary to permit preparation of the financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with the authorizations of management and the board of directors; and

 

 

iii)

Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.

 

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.

 

 
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The Company’s management conducted an assessment of the effectiveness of our internal control over financial reporting as of September 30, 2020, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, which assessment identified material weaknesses in internal control over financial reporting. A material weakness is a control deficiency, or a combination of deficiencies in internal control over financial reporting that creates a reasonable possibility that a material misstatement in annual or interim financial statements will not be prevented or detected on a timely basis. Since the assessment of the effectiveness of our internal control over financial reporting did identify a material weakness, management considers its internal control over financial reporting to be ineffective.

 

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

 

 

i)

We were unable to maintain segregation of duties within our business operations due to our reliance on a single individual fulfilling the role of sole officer and director.

 

 

ii)

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

 

While these control deficiencies did not result in any audit adjustments to our 2020 or 2019 interim or annual financial statements, it could have resulted in a material misstatement that might have been prevented or detected by a segregation of duties. Accordingly, we have determined that this control deficiency constitutes a material weakness.

 

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

 

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

 

Changes in Internal Controls over Financial Reporting

 

During the quarter ended September 30, 2020, there has been no change in internal control over financial reporting that has materially affected or is reasonably likely to materially affect our internal control over financial reporting.

 

 
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PART II OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

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

 

Item 1A. Risk Factors.

 

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.

 

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

 

None.

 

Item 3. Defaults Upon Senior Securities.

 

None.

 

Item 4. Mine Safety Disclosures.

 

Not applicable to our Company.

 

Item 5. Other Information.

 

None

 

 
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Item 6. Exhibits.

 

Exhibit

 

Description

31.1

 

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

 

 

 

31.2

 

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

 

 

 

32.1

 

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

 

 

 

101.INS

 

XBRL INSTANCE DOCUMENT*

 

 

 

101.SCH

 

XBRL TAXONOMY EXTENSION SCHEMA DOCUMENT*

 

 

 

101.CAL

 

XBRL TAXONOMY CALCULATION LINKBASE DOCUMENT*

 

 

 

101.DEF

 

XBRL TAXONOMY DEFINITION LINKBASE DOCUMENT*

 

 

 

101.LAB

 

XBRL TAXONOMY LABEL LINKBASE DOCUMENT*

 

 

 

101.PRE

 

XBRL TAXONOMY PRESENTATION LINKBASE DOCUMENT*

__________ 

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

 

*

Filed herewith.

 

 
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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

BIONEXUS GENE LAB CORPORATION

 

 

 

/s/ Chan Chong Wong

 

Chan Chong Wong

 

Chief Executive Officer and Director

 

(Principal Executive Officer)

 

 

 

/s/ Wei Li Leong

 

Wei Li Leong

 

Chief Financial Officer

 

(Principal Financial and Accounting Officer)

 

 

 

November 5, 2020

 

    

30