Description of Business
As used herein, unless the context otherwise indicates, references to the
"Company," "we," "our," "us," "BioNexus" refer to BioNexus Gene Lab Corp., a
Wyoming company (BGLC), and its wholly owned subsidiaries, Bionexus Gene Lab
Sdn. Bhd. ("Bionexus Malaysia"), and Chemrex Corporation Sdn. Bhd. ("Chemrex"),
both are Malaysian companies.
BGLC is an emerging molecular lab focused on the application of functional
genomics to enable early detection of infectious diseases and cancers. On August
23, 2017, we acquired all of the outstanding capital stock of BioNexus Malaysia,
which was incorporated in Malaysia on April 7, 2015. BioNexus Malaysia owns
algorithm software, technology and know-how related to the detection of common
diseases through blood analysis which we use in our business. Our non-invasive
blood screening tests analyze changes in ribonucleic acid (or RNA) to detect
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 December 31, 2020, we acquired all of the
outstanding capital stock of Chemrex, which was incorporated in Malaysia on
September 29, 2004.
Chemrex's corporate office and distribution and storage center is located at 4
Jalan CJ 1/6 Kawasan Perusahaan Cheras Jaya, Selangor, Malaysia. Its phone
number is (+60) 1922-23815 and website is www.chemrex.com.my.
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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 the Malaysian
Ministry of Health (HHS) our Reverse Transcription Polymerase Chain Reaction (RT
PCR) Covid-19 screening for approval, which occurred in June 2020. On April 30,
2021, BioNexus entered into an Agreement with HHS to outsource our Covid19 qPCR
test for its public hospitals and clinics within Malaysia. The use of our
testing protocol began on May 6, 2021. We expect that our testing protocol would
be continued to be used by the HHS' public hospitals and clinics through August
2021, when the pandemic curve is expected to flatten in 2022.
Translation of amounts from MYR into US$1.00 has been made at the following
exchange rates for the respective period and year:
September 30, December 31,
2022 2021
Period ended September 30, 2022 /Year-ended
December 31, 2021 US$1: MYR exchange rate 4.6340 4.1650
January 1, January 1,
2022 to 2021 to
September 30, September 30,
2022 2021
9 months average US$1: MYR exchange rate 4.3442 4,1315
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Results of Operations
Three Months Ended September 30, 2022 Compared with the Three Months Ended
September 30, 2021.
The following table sets forth key selected financial data for the three months
ended September 30, 2022 and 2021.
BIONEXUS GENE LAB CORP.
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021
(Currency expressed in United States Dollars ("US$"))
(Unaudited)
Three months ended
September 30,
2022 2021
REVENUE $ 2,575,086 $ 3,575,966
COST OF REVENUE (2,275,587 ) (2,866,772 )
GROSS PROFIT 299,499 709,194
OTHER INCOME 54,110 46,848
OPERATING EXPENSES
General and administrative (418,824 ) (383,401 )
(LOSS)/PROFIT FROM OPERATIONS (65,215 ) 372,641
FINANCE COSTS (2,072 ) (2,150 )
(LOSS)/PROFIT BEFORE TAX (67,287 ) 370,491
Tax expense (10,114 ) (75,169 )
NET (LOSS)/PROFIT $ (77,401 ) $ 295,322
Other comprehensive income:
Foreign currency loss (320,592 ) (56,940 )
COMPREHENSIVE (LOSS)/ INCOME $ (397,993 ) $ 238,382
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Segmented Information
BioNexus BioNexus
Malaysia Chemrex Malaysia Chemrex
Three months ended September Three months ended September 30,
30, 2022 2021
REVENUE $ 5,942 $ 2,569,144 $ 1,038,594 $ 2,537,372
COST OF REVENUE (4,244 ) (2,271,343 ) (729,194 ) (2,137,578 )
GROSS (LOSS)/PROFIT 1,698 297,801 309,400 399,794
OTHER INCOME 2,332 51,775 1,488 45,360
OPERATING EXPENSES
General and
administrative (63,005 ) (288,350 ) (41,222 ) (287,002 )
FINANCE COSTS (336 ) (1,736 ) (962 ) (1,188 )
(LOSS)/PROFIT BEFORE TAX (59,311 ) 59,490 268,704 156,964
Tax expense - (10,114 ) (37,414 ) (37,755 )
NET (LOSS)/PROFIT $ (59,311 ) $ 49,376 $ 231,290 $ 119,209Revenue. For the quarterly period ended September 30, 2022, we had total revenue
of $2,575,086 as compared to total revenue of $3,575,966 for the same period in
2021, decreased by 28% from the prior period.
Chemrex contributed $2,569,144 (99.8%) of the total revenue for the current
quarterly period as compared to $2,537,372 (71%) of the total revenue for the
same quarter last year. Chemrex's revenues had increased by $31,772 from prior
quarter of $2,537,372 a 1.3% increase. The revenue increased in three months
2022 was due to customer demanding has gone up.
BioNexus-Malaysia contributed $5,942 (0.2%) of the total revenue for the current
quarter as compared to revenue of $1,038,594 (29%) of the total revenue from the
same quarter last year. Revenues had decreased by $1,032,652 from prior quarter
of $1,038,594, a 99.4% 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 on May 2021.
Currently this three months revenue for RNA test is lesser due to our resource
focusing to complete the research/clinical test for cardiovascular diseases with
INSTITUT JANTUNG NEGARA (IJM).
Cost of Revenue. For the quarterly period ended September 30, 2022, we incurred
$2,275,587 in cost of revenues, as compared to $2,866,772 for the same quarter
in 2021, a decrease of approximately 20.6% was due to reason as stated above.
Chemrex had incurred $2,271,343 (99.8%) of the total cost of revenue during the
current quarter as compared to the same period last year wherein Chemrex had
incurred $2,137,578 (74.6%) of the total cost of revenue. The increase in
Chemrex's cost of revenues by 6.3% for the current period was due to its
increased revenues and reason as stated above.
BioNexus had incurred $4,244 (0.2%) of the total cost of revenues during the
current quarter as compared to $729,194 (25.4 %) for the same period in 2021.
Cost of revenue had decreased by $724,950 from prior quarter of $729,194 a 99.4%
decrease was due to its decreased revenues and reason as stated above.
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Gross Profit. For the quarterly period ended September 30, 2022, we had total
gross profit of $299,499 as compared to gross profit of $709,194 for the same
period in 2021, a decrease by approximately 57.8% from the prior period.
Chemrex contributed $297,801 (99.4%) of the total gross profit for the current
quarterly period as compared to $399,794 (56.4%) of the total gross profit for
the same quarter last year. Chemrex's gross profit decreased by $101,993 from
prior quarter of $399,794, approximately 25.5% decrease. The gross profit
decrease for Chemrex in current quarter was due to increase of material costs,
international shipping freight costs plus foreign exchange rate and reason as
stated above.
BioNexus-Malaysia contributed $1,698 (0.6%) of the total gross profit of
$299,499 for the current quarter as compared to gross profit of $309,400 (43.6%)
of the total gross profit from the same quarter last year. The substantial
decrease by approximately 99.5% from the prior period due to its decreased
revenues for the same reason stated above.
Other Income. For the quarterly period ended September 30, 2022, we had of
$54,110, as compared to of $46,848 for the same quarter in 2021, an increase of
approximately15.5%.
Chemrex contributed $51,775 (95.7%) of other income for the current quarterly
period as compared to $45,360 (96.8%) of the other income for the same quarter
last year. Chemrex's other income increased by 14.1% due to dividends received
from blue chip public companies listed on Malaysian Stock Exchange.
BioNexus-Malaysia contributed $2,332 (4.3%) of other income for the current
quarter as compared to $1,488 (3.2%) of the other income for the same quarter
last year. The increase by $844, approximately 56.70% due to an increased in
bank interest earning.
Operating Expenses. For the quarterly period ended September 30, 2022, we had
total operating expense of $418,824 as compared to total operating expenses of
$383,401 for the same quarter in 2021, an increase by approximately 9.2%. 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 $288,350 (68.8%) of the total operating expenses for the
current quarter as compared to $287,002 (74.9%) of the total operating expenses
for the same quarter last year, an increase by 0.5%. The slight increase in
operating expenses was due to insurances cost and loss on fair value of
investment for current the period.
BioNexus-Malaysia had incurred $63,005 (15%) of the total operating expenses for
the current quarter as compared to $41,222 (10.8%) of the total operating
expenses for the same quarter last year, an increase by approximately 52.8%. The
increase in operating costs of the current quarter was due to extra cost
incurred for IJM Research/clinical test project including travelling expenses to
USM Penang Lab and investment written off for company Genenews Diagnostic
including debts.
BGLC, the holding company had incurred $67,469 (16.1%) of total operating
expenses for the current quarter as compared to $55,177 (14.4%) of the total
operating expenses for the same quarter last year. The increase of $12,292,
approximately 22.3% in operating costs of the current quarter was due to the
expenses incurred consultant fees for a vice president overlooking North America
matters, director fees for three independent directors had hired and additional
fees for SEC compliance services.
Loss/Profit from Operations. We had a loss from operations of $65,215 quarterly
period ended September 30, 2022 as compared to a profit of $372,641 for the same
period in 2021, a decrease by approximately 117.5% from the prior period, for
the reasons discussed above.
Income tax expense. For the three-month period ended September 30, 2022, we had
estimated income tax expenses of $10,114 from Chemrex as compared to $75,169 for
the same quarter last year which is $37,755 (50.2%) for Chemrex and $37,414
(49.8%) 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 ended September 30, 2022, we experienced
a foreign currency loss of $320,592 as compared with a foreign currency loss of
$56,940 for the same period in 2021.
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Nine Months Ended September 30, 2022 Compared with the Nine Months Ended
September 30, 2021.
The following table sets forth key selected financial data for the nine months
ended September 30, 2022 and 2021.
BIONEXUS GENE LAB CORP.
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021
(Currency expressed in United States Dollars ("US$"))
(Unaudited)
Nine months ended
September 30,
2022 2021
REVENUE $ 8,089,132 $ 10,117,296
COST OF REVENUE (7,169,329 ) (8,327,522 )
GROSS PROFIT 919,803 1,789,774
OTHER INCOME 153,340 159,764
OPERATING EXPENSES
General and administrative (1,241,631 ) (1,094,774 )
(LOSS)/PROFIT FROM OPERATIONS (168,488 ) 854,764
FINANCE COSTS (7,717 ) (8,987 )
(LOSS)/PROFIT BEFORE TAX (176,205 ) 845,777
Tax expense (22,792 ) (183,449 )
NET (LOSS)/PROFIT $ (198,997 ) $ 662,328
Other comprehensive income:
Foreign currency loss (707,128 ) (272,876 )
COMPREHENSIVE (LOSS)/ INCOME $ (906,125 ) $ 389,452
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Segmented Information
BioNexus BioNexus
Malaysia Chemrex Malaysia Chemrex
Nine months ended Nine months ended
September 30, 2022 September 30, 2021
REVENUE $ 39,409 $ 8,049,723 $ 1,504,064 $ 8,613,232
COST OF REVENUE (19,173 ) (7,150,156 ) (1,057,314 ) (7,270,208 )
GROSS (LOSS)/PROFIT 20,236 899,567 446,750 1,343,024
OTHER INCOME 6,617 146,720 5,335 154,429
OPERATING EXPENSES
General and administrative (157,686 ) (906,698 ) (115,758 ) (843,620 )
FINANCE COSTS (2,196 ) (5,521 ) (3,265 ) (5,722 )
(LOSS)/PROFIT BEFORE TAX (133,029 ) 134,068 333,062 648,111
Tax expense - (22,792 ) (38,068 ) (145,381 )
NET (LOSS)/PROFIT $ (133,029 ) $ 111,276 $ 294,994 $ 502,730Revenue. For the nine months period ended September 30, 2022, we had total
revenue of $8,089,132 as compared to total revenue of $10,117,296 for the same
period in 2021, had decreased by $2,028,164 from prior period, approximately 20%
decrease.
Chemrex contributed $8,049,723 (99.5%) of the total revenue for the current nine
months period as compared to $8,613,232(85.1%) of the total revenue for the same
period last year. Chemrex's revenues had decreased by $563,509 from prior
period, approximately 6.54% decrease. The revenue decreased in 2022 was due to
lower of selling price for competitors.
BioNexus-Malaysia contributed $39,409 (0.5%) of the total revenue for the
current nine months period as compared to revenue of $1,504,064 (14.9%) of the
total revenue from the same period last year. BioNexus's revenue had decreased
by $1,464,655 from prior quarter, approximately 97.4% 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 year December 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 nine months period ended September 30, 2022, we
incurred $7,169,329 in cost of revenues, as compared to $8,327,522 for the same
period in 2021, decreased by $1,158,193 approximately 13.9% decrease was due to
the same reason stated above.
Chemrex had incurred $7,150,156 (99.7%) of the total cost of revenue during the
current period as compared to the same period last year wherein Chemrex had
incurred $7,270,208 (87.3%) of the total in cost of revenue, decreased by
$120,052, approximately 1.65% was due to the same reason stated above.
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BioNexus had incurred $19,173 (0.3%) of the total cost of revenues during the
current period as compared to $1,057,314 (12.7%) for the same period in 2022,
decreased by $1,038,141 approximately 98.2% in cost of revenues for the current
period was due to the same reason stated above.
Gross Profit. For the nine months period ended September 30, 2022, we had total
gross profit of $919,803 as compared to gross profit of $1,789,774 for the same
period in 2022, decreased by $869,971, approximately 48.6% from the prior
period.
Chemrex contributed $899,567 (97.8%) of the total gross profit for the current
nine months period as compared to $1,343,024 (75%) of the total gross profit for
the same period last year. The gross profit decreased by $443,457, approximately
33% for current period was due to rising of material cost, increased
international shipping freight costs and foreign exchange rate.
BioNexus-Malaysia contributed $20,236 (2.2%) of the total gross profit of
$919,803 for the current nine months period as compared to $446,750 (25%) of the
total gross profit of $1,789,774 from the same period last year. The gross
profit decreased by 95.5% was due to its decreased revenues for the current
period as according to reason stated above.
Other Income. For the nine months period ended September 30, 2022, we had
$153,340 as compared to $159,764 for the same period in 2021, decreased by
$6,424, approximately 4%.
Chemrex contributed $146,720 (95.7%) of other income for the current nine months
period as compared to $154,429 (96.7%) of the other income for the same period
last year. Chemrex's other income decreased by $7,709, approximately 4.99% was
due to losses on unrealized forex and bank interest.
BioNexus Malaysia had $6,617 (4.3%) for nine months period ended September 30,
2022 as compared to $5,335 (3.3%) for the same period in 2021, increased by
$1,282, approximately 24% was due to last year higher bank interest gathered
from the revenue generated by Covid-19 tests.
BGLC, had a gain on foreign exchange rate of $3 for the current nine months
period.
Operating Expenses. For the nine months period ended September 30, 2022, we had
a total operating expense of $1,241,631 as compared to total operating expenses
of $1,094,774 for the same period in 2021. The increase of $146,857
approximately 13.4% 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 $906,698 (73%) of the total operating expenses for the
current nine months period as compared to $843,620 (77.1%) of the total
operating expenses for the same period last year, increased by $63,078,
approximately 7.48% due to the increased commission payout, fair value loss on
investment and loss on realized forex.
BioNexus-Malaysia had incurred $157,686 (12.7%) of the total operating expenses
for the current nine months period as compared to $115,758 (10.6%) of the total
operating expenses for the same period last year. The increase of $41,928
approximately 36.2% in operating costs for the nine months period was due to
increase of traveling expenses for marketing, increased of staff remuneration
for hired new lab staffs, written off of investment and debtor of Genenews
Diagnostic because company has been strike off and additional cost incurred for
IJM Research/clinical test project.
BGLC, the holding company had incurred $177,247 (14.3%) of total operating
expenses for the current nine months period as compared to $135,396 (12.4%) of
the total operating expenses for the same period last year. The increase of
$41,851, approximately 30.91% in operating costs of the current period was due
to the increased expenses in travelling, consultant fees, independent director
fee, expenses incurred on VC International club Membership for an opportunity to
capture equity investment from VC International network and additional fee
incurred for SEC Compliance services.
Loss/Profit from Operations. We had a loss from operations of $168,488 for nine
months period ended September 30, 2022 as compared to profit of $854,764 for the
same period in 2021. The decrease of $1,023,252, approximately 119.7% was due to
the reasons discussed above.
Income tax expense. For the nine-months period ended September 30, 2022, we had
$22,792 income tax which is a tax estimated for Chemrex and for Bionexus no tax
provided as compared to $183,449 for the same period last year which was a tax
estimated $145,381 (79.2%) from Chemrex and $38,068 (20.8%) 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 nine-months period ended September 30, 2022, we experienced
a foreign currency loss of $707,128 as compared with a foreign currency loss of
$272,876 for the same period in 2021.
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LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 2022, we had working capital of $4,074,052 compared with
working capital of $4,821,100 as of December 31, 2021. The decrease in working
capital as of September 30, 2022 from December 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 months of
operations.
The following is a summary of the Company's cash flows provided by (used in) /
generated from operating, investing, and financing activities for the nine
months ended September 30, 2022 and 2021:
Nine months ended
September 30,
2022 2021
Net cash generated from/(used in) Operating Activities $ 69,562 $ (473,846 )
Net cash used in investing activities
(400,595 ) (414,285 )
Net cash generated from/(used in) financing activities 115,962 (23,263 )
Foreign currency translation adjustment
(446,579 ) (175,902 )
Net Change in Cash and Cash Equivalents $ (661,650 ) $ (1,087,296 )
Operating Activities
During the nine months ended September 30, 2022, the Company incurred a net loss
of $198,997 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 $69,562 being generated from operating activities during the
period. By comparison, during the nine months ended September 30, 2021, the
Company had a net profit of $662,328 after adjusting for amortization,
depreciation, dividend income, fair value loss on share investments, an increase
in inventories, receivables and deposits, a substantial reduction in trade
payables, operating lease liabilities, resulted in net cash of $473,846 being
used in operating activities during the period.
Investing Activities
During the nine months ended September 30, 2022, the Company had net cash of
$400,595 used in investment activities from acquisition of share investment of
$397,974 and purchase of plant & equipment of $34,523 During the nine months
ended September 30, 2021, the Company had net cash from acquisition of share
investment of $432,293, purchase of plant and equipment and disposal of other
investments, resulting in net cash used in financing activities of $414,285
Financing Activities
During the nine months ended September 30, 2022, Company had net cash of
$115,962 generated from financing activities for 2.5 million shares
subscriptions of $150,000 and fully repayment of a finance lease of $34,038. By
comparison, during the nine months ended September 30, 2021, we had net cash of
$23,263 used in financing activities for continued the repayment of a finance
lease and repayment of director.
Item 3. Certain Relationships and Related Transactions.
Keith Wong had on April 1, 2022 entered into a Consultancy Agreement with the
Company for eighteen (18) months with a monthly fee of eight thousand dollars
($8,000).
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