BIONEXUS GENE LAB CORP. Description of Business
As used herein, unless the context otherwise indicates, references to the "Company," "we," "our," "us," "BioNexus" refer toBioNexus Gene Lab Corp. , aWyoming company (BGLC), and its wholly owned subsidiaries,Bionexus Gene Lab Sdn . Bhd. ("Bionexus Malaysia"), andChemrex Corporation Sdn . Bhd. ("Chemrex"), both are Malaysian companies. BGLC is an emerging molecular lab focused on the application of functional genomics to enable early detection of infectious diseases and cancers. OnAugust 23, 2017 , we acquired all of the outstanding capital stock of BioNexus Malaysia, which was incorporated inMalaysia onApril 7, 2015 . BioNexus Malaysia owns algorithm software, technology and know-how related to the detection of common diseases through blood analysis which we use in our business. Our non-invasive blood screening tests analyze changes in ribonucleic acid (or RNA) to detect Covid-19, Dengue, HIV, HPV and the risk potentiality of cancers diseases. This unique blood genomic biomarker approach is based on the scientific observation that circulating blood reflects, in a detectable way, what is occurring throughout the body currently. The corporate and principal office address of the Company and BioNexus Malaysia is Unit 02, Level 10, Tower B, Avenue 3, The Vertical Business Suite II, Bangsar South, No. 8 Jalan Kerinchi,Kuala Lumpur, Malaysia ., our lab is located at Lab 353,Chemical Science Centre , University Science Malaysia,George Town ,Penang, Malaysia . Another lab focuses on Covid-19 and Colon cancer screening is located at 4th floor,Lifecare Diagnostic Centre ,Kuala Lumpur, Malaysia . Our telephone number is (+60) 1221-26512 and our web-site is www.bionexusgenelab.com.
Chemrex is a wholesaler of industrial chemicals for the manufacture of
industrial, medical, appliance, aero, automotive, mechanical and electronic
industries in Asean region. On
Chemrex's corporate office and distribution and storage center is located at 4
Jalan CJ 1/6 Kawasan Perusahaan Cheras Jaya,
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The results of operations of our subsidiary, BioNexus-Malaysia, with respect to
its RNA screening process have been adversely impacted by the onset of the
Covid-19 pandemic, which commenced in late December 2019 in Malaysia . We believe
that most people have been and will continue to be reluctant to visit hospitals
and clinics during the Covid-19 pandemic for fear of transmission from other
patients or medical staff. Since our RNA screening is administered at a
diagnostic center, our business has been adversely affected as a result.
Furthermore, on March 18, 2020 , the Malaysian government first imposed its
Movement Control Order (MCO) which lasted through June 9, 2020 to control the
spread of COVID-19. The MCO restricted movement of all people except for those
who were working for essential services. The MCOs were enhanced and relaxed at
different phases in 2020 and 2021, including the Enhanced Movement Control Order
(EMCO), Conditional Movement Control Order (CMCO) and Recovery Movement Control
Order (RMCO). This Enhanced Movement Control Orders were implemented whenever
there was a surge of Covid-19 cases. During these EMCOs, only companies
classified under essential service were allowed to operate. This EMCO ended on
July 16, 2021 and the government allowed more companies and factories to operate
with strict Standard Operating Procedures. However, as discussed below, during
fiscal 2021, BioNexus-Malaysia implemented the sale of its Covid19 qPCR test
procedure through the Malaysian government. Our Covid testing generates
substantially lower per ticket charges at $30-38 per test compared with $975 per
customer for our RNA testing. Our Covid tests also generate lower margins than
our RNA tests.
The results of operations for Chremrex were adversely impacted during the fiscal years of 2020 and 2021 due to the MCO's and Covid-19.
Recent Developments. As previously reported, we submitted to theMalaysian Ministry of Health (HHS) our Reverse Transcription Polymerase Chain Reaction (RT PCR) Covid-19 screening for approval, which occurred inJune 2020 . OnApril 30, 2021 , BioNexus entered into an Agreement with HHS to outsource our Covid19 qPCR test for its public hospitals and clinics withinMalaysia . The use of our testing protocol began onMay 6, 2021 . We expect that our testing protocol would be continued to be used by the HHS' public hospitals and clinics throughAugust 2021 , when the pandemic curve is expected to flatten in 2022.
Translation of amounts from MYR into
December
June 30 , 31,
2022 2021
Period ended June 30, 2022 /Year-ended December
31, 2021 US$1: MYR exchange rate 4.4080
4.1650
January 1 ,
January 1, 2022 2021
to June 30 , to June
2022 30,
20216 months average US$1: MYR exchange rate 4.2710
4.0981
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Results of Operations
Three Months Ended
The following table sets forth key selected financial data for the three months
ended
BIONEXUS GENE LAB CORP.
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED JUNE 30, 2022 AND 2021
(Currency expressed in United States Dollars ("US$"))
(Unaudited)
Three months ended
June 30,
2022 2021
REVENUE $ 2,485,101 $ 3,092,171
COST OF REVENUE (2,241,779 ) (2,624,564 )
GROSS PROFIT 243,322 467,607
OTHER INCOME 52,836 50,429
OPERATING EXPENSES
General and administrative (434,122 ) (378,046 )
(LOSS)/PROFIT FROM OPERATIONS (137,964 ) 139,990
FINANCE COSTS (2,319 ) (3,448 )
(LOSS)/PROFIT BEFORE TAX (140,283 ) 136,542
Tax expense 1,621 (108,280 )
NET (LOSS)/PROFIT $ (138,662 ) $ 28,262
Other comprehensive income:
Foreign currency loss (317,760 ) (7,468 )
COMPREHENSIVE (LOSS)/ INCOME $ (456,422 ) $ 20,794
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Segmented Information
BioNexus BioNexus
Malaysia Chemrex Malaysia Chemrex
Three months ended June 30, 2022 Three months ended June 30, 2021
REVENUE $ 9,198 $ 2,475,903 $ 368,107 COST OF REVENUE (27,540 ) (2,214,239 ) (290,821 ) (2,333,743 ) GROSS (LOSS)/PROFIT (18,342 ) 261,664 77,286 390,321 OTHER INCOME 2,209 50,639 2,986 47,443 OPERATING EXPENSES General and administrative (29,990 ) (320,579 ) (21,518 ) (323,497 ) FINANCE COSTS (1,061 ) (1,258 ) (1,095 ) (2,353 ) (LOSS)/PROFIT BEFORE TAX (47,184 ) (9,534 ) 57,659 111,914 Tax expense - 1,621 (654 ) (107,626 ) NET (LOSS)/PROFIT$ (47,184 ) $ (7,913 ) $ 57,005 $ 4,288
Revenue. For the quarterly period endedJune 30, 2022 , we had total revenue of$2,485,101 as compared to total revenue of$3,092,171 for the same period in 2021, decreased by 19.6% from the prior period. Chemrex contributed$2,475,903 (99.6%) of the total revenue for the current quarterly period as compared to$2,724,064 (88.1%) of the total revenue for the same quarter last year. Chemrex's revenues had decreased by$248,161 from prior quarter of$2,724,064 , a 9.1% decrease. The revenue decreased in 2022 was due to the prices of food and other essential items, which had shot up by 60 per cent and the effects were affecting everyone including Chemrex's customers that were ceasing or downsizing their operations due to lower demand of their products. BioNexus-Malaysia contributed$9,198 (0.4%) of the total revenue for the current quarter as compared to revenue of$368,107 (11.9%) of the total revenue from the same quarter last year. Revenues had decreased by$358,909 from prior quarter of$368,107 , a 97.5% decrease. A substantial decrease for the current period was due to Covid19 PCR test no longer require for air passengers traveling to several countries. By comparison, during last year three-month period, revenue from the outsource of Covid19 PCR test from MOH which began onMay 2021
Cost of Revenue. For the quarterly period ended
Chemrex had incurred$2,214,239 (98.8%) of the total cost of revenue during the current quarter as compared to the same period last year wherein Chemrex had incurred$2,333,743 (88.9%) of the total cost of revenue. The decrease in Chemrex's cost of revenues by 5.1% for the current period was due to its decreased revenues and reason as stated above. BioNexus had incurred$27,540 (1.2%) of the total cost of revenues during the current quarter as compared to$290,821 (11.1 %) for the same period in 2021. Cost of revenue had decreased by$263,281 from prior quarter of$290,821 , a 90.5% decrease was due to its decreased revenues and reason as stated above. 26 Table of Contents Gross Profit. For the quarterly period endedJune 30, 2022 , we had total gross profit of$243,322 as compared to gross profit of$467,607 for the same period in 2021, a decrease by approximately 48% from the prior period. Chemrex contributed$261,664 (107.5%) of the total gross profit for the current quarterly period as compared to$390,321 (88.9%) of the total gross profit for the same quarter last year. Chemrex's gross profit decreased by$128,657 from prior quarter of$390,321 , approximately 33% decrease. The gross profit decrease for Chemrex in current quarter was due to increase of material cost, international shipping freight costs and reason as stated above. BioNexus-Malaysia contributed gross loss of$18,342 (-7.5%) of the total gross profit of$243,322 for the current quarter as compared to gross profit of$77,286 (16.5%) of the total gross profit from the same quarter last year. The substantial decrease for the current period is due to revenues reduce and we had less revenues from our RNA testing.
Other Income. For the quarterly period ended
Chemrex contributed$50,639 (95.8%) of other income for the current quarterly period as compared to$47,443 (94.1%) of the other income for the same quarter last year. Chemrex's other income increased by 6.7% due to dividends received from blue chip public companies listed onMalaysian Stock Exchange and late interest payment received from debtors for this current quarter. BioNexus-Malaysia contributed$2,209 (4.2%) of other income for the current quarter as compared to$2,986 (5.9%) of the other income for the same quarter last year. The decrease by$777 , approximately 26% due to a reduction in bank interest earning. Operating Expenses. For the quarterly period endedJune 30, 2022 , we had total operating expense of$434,122 as compared to total operating expenses of$378,046 for the same quarter in 2021, an increase by approximately 14.8%. It was due to general and administrative expenses which includes depreciation of fixed assets, employee compensation and benefits, professional fees and marketing and travel expenses. Chemrex had incurred$320,579 (73.85%) of the total operating expenses for the current quarter as compared to$323,497 (85.6%) of the total operating expenses for the same quarter last year, a decrease by 0.9%. The slight decrease in operating expenses was due to loss on fair value investment & realized forex loss for current the period. BioNexus-Malaysia had incurred$29,990 (6.91%) of the total operating expenses for the current quarter as compared to$21,518 (5.7%) of the total operating expenses for the same quarter last year, an increase by approximately 39.4%. The increase in operating costs of the current quarter was due to increase of travelling cost and manpower cost. BGLC, the holding company had incurred$83,553 (19.25%) of total operating expenses for the current quarter as compared to$33,031 (8.74%) of the total operating expenses for the same quarter last year. The increase of$50,522 , approximately 153% in operating costs of the current quarter was due to the expenses incurred onVC International club Membership (an opportunity to capture equity investment fromVC International network) and increase in travelling cost, consultant fees for a vice president overlookingNorth America matters.
Profit/Loss from Operations. We had a loss from operations of
Income tax expense. For the three-month period endedJune 30, 2022 , we had tax credit of$1,621 which is a tax adjustment for overprovided from Chemrex as compared to estimated income tax expenses of$108,280 for the same quarter last year which is$107,626 (99.4%) for Chemrex and$654 (0.6%) for Bio-Nexus. Foreign currency exchange loss. We are exposed to fluctuations in foreign exchange rates on the revaluation of monetary assets and liabilities denominated in currencies other than the US Dollar. Therefore, any change in the relevant exchange rate would require us to recognize a transaction gain or loss on revaluation. For the three-month period endedJune 30, 2022 , we experienced a foreign currency loss of$317,760 as compared with a foreign currency loss of$7,468 for the same period in 2021. 27 Table of Contents
Six Months Ended
The following table sets forth key selected financial data for the six months
ended
BIONEXUS GENE LAB CORP.
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021
(Currency expressed in United States Dollars ("US$"))
(Unaudited)
Six months ended
June 30,
2022 2021
REVENUE $ 5,514,046 $ 6,541,330
COST OF REVENUE (4,937,185 ) (5,491,158 )
GROSS PROFIT 576,861 1,050,172
OTHER INCOME 99,230 112,916
OPERATING EXPENSES
General and administrative (779,364 ) (680,965 )
(LOSS)/PROFIT FROM OPERATIONS (103,273 ) 482,123
FINANCE COSTS (5,645 ) (6,837 )
(LOSS)/PROFIT BEFORE TAX (108,918 ) 475,286
Tax expense (12,678 ) (108,280 )
NET (LOSS)/PROFIT $ (121,596 ) $ 367,006
Other comprehensive income:
Foreign currency loss (386,536 ) (215,936 )
COMPREHENSIVE (LOSS)/ INCOME $ (508,132 ) $ 151,070
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Segmented Information
BioNexus BioNexus
Malaysia Chemrex Malaysia Chemrex
Six months ended Six months ended
June 30, 2022 June 30, 2021
REVENUE $ 33,467 $ 5,480,579 $ 465,470 $ 6,075,860
COST OF REVENUE (58,372 ) (4,878,813 ) (358,528 ) (5,132,630 )
GROSS (LOSS)/PROFIT (24,905 ) 601,766 106,942
943,230
OTHER INCOME 4,285 94,945 3,848 109,068
OPERATING EXPENSES
General and administrative (51,238 ) (618,348 ) (44,128 ) (556,619 ) FINANCE COSTS (1,860 ) (3,785 ) (2,303 ) (4,534 ) (LOSS)/PROFIT BEFORE TAX (73,718 ) 74,578 64,359 491,145 Tax expense - (12,678 ) (654 ) (107,626 ) NET (LOSS)/PROFIT$ (73,718 ) $ 61,900 $ 63,705 $ 383,519 Revenue. For the six months period endedJune 30, 2022 , we had total revenue of$5,514,046 as compared to total revenue of$6,541,330 for the same period in 2021, had decreased by$1,027,284 from prior period, approximately 15.7% decrease. Chemrex contributed$5,480,579 (99.4%) of the total revenue for the current six months period as compared to$6,075,860 (92.9%) of the total revenue for the same period last year. Chemrex's revenues had decreased by$595,281 from prior period, approximately 9.8% decrease. The revenue decreased in 2022 was due to worldwide inflation and competitors were clearing stock below cost. BioNexus-Malaysia contributed$33,467 (0.6%) of the total revenue for the current six months period as compared to revenue of$465,470 (7.1%) of the total revenue from the same period last year. BioNexus's revenue had decreased by$432,003 from prior quarter, approximately 92.8% decrease. The revenue decreased in 2022 was due to the outsource contract for Covid19 PCR test from Ministry of Health (HHS) has ended since last yearDecember 2021 , currently, Covid19 PCR test and ART test had reduced due to the discontinuation on movement control by Malaysia Government and air passengers traveling were not required to have Covid-19 test. Cost of Revenue. For the six months period endedJune 30, 2022 , we incurred$4,937,185 in cost of revenues, as compared to$5,491,158 for the same period in 2021, decreased by$553,973 approximately 10.1% decrease was due to the same reason stated above.
Chemrex had incurred
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BioNexus had incurred $58,372 (1.2%) of the total cost of revenues during the
current period as compared to $358,528 (6.5%) for the same period in 2022,
decreased by $300,156 , approximately 83.7% in cost of revenues for the current
period was due to the same reason stated above.
Gross Profit. For the six months period ended June 30, 2022 , we had total gross
profit of $576,861 as compared to gross profit of $1,050,172 for the same period
in 2022, decreased by $473,311 , approximately 45.1% from the prior period.
Chemrex contributed $601,766 (104.3%) of the total gross profit for the current
six months period as compared to $943,230 (89.8%) of the total gross profit for
the same period last year. The gross profit decreased by $341,464 , approximately
36.2% for current period was due to rising of material cost and increased
international shipping freight costs.
BioNexus-Malaysia had a gross loss of $24,905 (-4.3%) of the total gross profit
of $576,861 for the current six months period as compared to $106,942 (10.2%) of
the total gross profit of $1,050,172 from the same period last year. The gross
profit decreased by 123.3% was due to its decreased revenues for the current
period as according to reason stated above.
Other Income. For the six months period ended
Chemrex contributed$94,945 (95.7%) of other income for the current six months period as compared to$109,068 (96.6%) of the other income for the same period last year. Chemrex's other income decreased by$14,123 , approximately 12.95% was due to losses on unrealized forex and bank interest.
BioNexus Malaysia had
Operating Expenses. For the six months period endedJune 30, 2022 , we had a total operating expense of$779,364 as compared to total operating expenses of$680,965 for the same period in 2021. The increase of$98,399 , approximately 14.4% was due to general and administrative expenses which includes depreciation of fixed assets, employee compensation and benefits, professional fees and marketing and travel expenses. Chemrex had incurred$618,348 (79.3%) of the total operating expenses for the current six months period as compared to$556,619 (81.7%) of the total operating expenses for the same period last year, increased by$61,729 , approximately 11.09% due to the increased commission payout, fair value loss on investment and loss on realized forex. BioNexus-Malaysia had incurred$51,238 (6.6%) of the total operating expenses for the current six months period as compared to$44,128 (6.5%) of the total operating expenses for the same period last year. The increase of$7,110 , approximately 16.1% in operating costs for the six months period was due to increase of traveling expenses for marketing and staff remuneration increase. BGLC, the holding company had incurred$109,778 (14.1%) of total operating expenses for the current six months period as compared to$80,218 (11.8%) of the total operating expenses for the same period last year. The increase of$29,560 , approximately 36.85% in operating costs of the current period was due to the increased expenses in travelling, consultant fees, independent director fees and expenses incurred onVC International club Membership for an opportunity to capture equity investment fromVC International network. Profit/Loss from Operations. We had a loss from operations of$103,273 for six months period endedJune 30, 2022 as compared to profit of$482,123 for the same period in 2021. The decrease of$585,396 , approximately 121.4% was due to the reasons discussed above. Income tax expense. For the six-months period endedJune 30, 2022 , we had$12,678 income tax which is a tax estimated for Chemrex and for Bionexus no tax provided as compared to$108,280 for the same period last year which was a tax estimated$107,626 (99.4%) from Chemrex and$654 (0.6%) from Bionexus. Foreign currency exchange gain/(loss). We are exposed to fluctuations in foreign exchange rates on the revaluation of monetary assets and liabilities denominated in currencies other than the US Dollar. Therefore, any change in the relevant exchange rate would require us to recognize a transaction gain or loss on revaluation. For the six-months period endedJune 30, 2022 , we experienced a foreign currency loss of$386,536 as compared with a foreign currency loss of$215,936 for the same period in 2021. 30 Table of Contents
LIQUIDITY AND CAPITAL RESOURCES
As ofJune 30, 2022 , we had working capital of$4,263,643 compared with working capital of$4,821,100 as ofDecember 31, 2021 . The decrease in working capital as ofJune 30, 2022 fromDecember 31, 2021 was due principally to the decrease in cash used in our operations. Our primary uses of cash have been for operations. The main sources of cash have been from operational revenues and the private placement of our common stock. The following trends are reasonably likely to result in a material decrease in our liquidity over the near to long term: · Addition of administrative and marketing personnel as the business grows, · Development of a Company website,
· Increases in advertising and marketing in order to attempt to generate
more revenues, and
· The cost of being a public company.
The Company believes that cash flow from operations together will be sufficient
to sustain its current level of operations for at least the next 12 monthsof operations. The following is a summary of the Company's cash flows provided by (used in) / generated from operating, investing, and financing activities for the six months endedJune 30, 2022 and 2021: Six months ended June 30, 2022 2021 Net cash used in Operating Activities$ (237,593 ) $ (789,715 ) Net cash used in investing activities (418,955 ) (355,705 ) Net cash used in generated from financing activities 115,962 (17,182 ) Foreign currency translation adjustment (243,002 ) (142,385 ) Net Change in Cash and Cash Equivalents$ (783,588 ) $ (1,304,987 ) Operating Activities
During the six months endedJune 30, 2022 , the Company incurred a net loss of$121,596 which, after adjusting for amortization, depreciation, dividend income, fair value loss on share investment, a decrease in inventories and a substantial reduction in trade receivables, deposits, trade payables, advance payment from customer, deferred revenue, operating lease liabilities, resulted in net cash of$237,593 being used in operating activities during the period. By comparison, during the six months endedJune 30, 2021 , the Company had a net profit of$367,006 after adjusting for amortization, depreciation, dividend income, fair value loss on share investments, an increase in inventories, a reduce in receivables and deposits, a substantial reduction in trade payables, operating lease liabilities, resulted in net cash of$789,715 being used in operating activities during the period. Investing Activities During the six months endedJune 30, 2022 , the Company had net cash of$418,955 used in investment activities from acquisition of share investment of$404,793 and purchase of plant and equipment. During the six months endedJune 30, 2021 , the Company had net cash from acquisition of share investment of$371,759 , purchase of plant and equipment and disposal of other investments, resulting in net cash used in financing activities of$355,705 Financing Activities
During the six months ended
Item 3. Certain Relationships and Related Transactions.
Keith Wong had onApril 1, 2022 entered into a Consultancy Agreement with the Company for eighteen (18) months with a monthly fee ofeight thousand dollars ($8,000 ). 31 Table of Contents
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