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
Coronavirus, Dengue, HIV, HPV and the risk potentiality of cancers diseases.
This unique blood genomic biomarker approach is based on the scientific
observation that circulating blood reflects, in a detectable way, what is
occurring throughout the body currently.
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 website is www.bionexusgenelab.com.
Chemrex is a wholesaler of industrial chemicals for the manufacture of
industrial, medical, appliance, aero, automotive, mechanical and electronic
industries in Asean region. On December 31, 2020, we 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 followed by a number of prominent variants, including Alpha,
Beta, Delta, and Omicron. Although new variants are an expected part of the
evolution of viruses, new variant is more aggressive, highly transmissible,
vaccine-resistant, able to cause more severe disease in Malaysia. We believe
that most people were reluctant to visit hospitals and clinics in view of the
post Covid-19 Omicron and its subvariants for fear of transmission from other
patients or medical staff. Since our RNA screening is administered at a
diagnostic center, our business has been adversely affected as a result.
The results of operations for Chemrex were adversely impacted during fiscal year
2022 and the 1st quarter of 2023 as businesses of Chemrex customers especially
the manufacturers had suffered significant impact. Many of them across the
country saw their supply chains interrupted, demand for their products and
services decline, shortages in supplies and inputs.
Recent Developments.
We had proposed an annual $28m screening project to the Chief Secretary of the
Health Ministry of Malaysia for a nationwide RNA screening on 0.2% of the
population aged 40 and above. The Deputy Director General from Public Health met
us on January 17, 2023 to examine the cost effectiveness of our RNA screening.
While the Federal government is studying our proposal, Sabah state government
planned to allocate $2.5m to establish a lab in Kota Kinabalu, Sabah capital
city for Bionexus-Malaysia to work with local hospitals and state insurance
corporation. Meanwhile, we had presented our technology and expansion plan
nationally and globally to the Minister of Science and Technology. We received
favorable response and we are advised to submit for a $2m technology grant for
the continuation of research, commercialization and expansion.
Translation of amounts from MYR into US$1.00 has been made at the following
exchange rates for the respective period and year:
December
March 31, 31,
2023 2022
Period ended March 31, 2023 /Year-ended December 31,
2022 US$1: MYR exchange rate 4.4170 4.3900
January 1, January 1,
2023 to 2022 to
March 31, March 31,
2023 2022
3 months average US$1: MYR exchange rate 4.3968 4,1938
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Results of Operations
Three Months Ended March 31, 2023 Compared with the Three Months Ended March 31,
2022.
The following table sets forth key selected financial data for the three months
ended March 31, 2023 and 2022.
Consolidated
Three months ended
March 31,
2023 2022
REVENUE $ 2,377,205 $ 3,028,945
COST OF REVENUE (2,008,308 ) (2,672,612 )
GROSS PROFIT 368,897 356,333
OTHER INCOME 117,344 46,394
OPERATING EXPENSES
General and administrative (536,872 ) (368,036 )
(LOSS)/PROFIT FROM OPERATIONS (50,631 ) 34,691
FINANCE COSTS (2,445 ) (3,326 )
(LOSS)/PROFIT BEFORE TAX (53,076 ) 31,365
Tax expense (15,990 ) (14,299 )
NET (LOSS)/PROFIT $ (69,066 ) $ 17,066
Other comprehensive income:
Foreign currency loss (39,039 ) (68,776 )
COMPREHENSIVE LOSS $ (108,105 ) $ (51,710 )
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Segmented Information
BioNexus BioNexus
Malaysia Chemrex Malaysia Chemrex
Three months ended March 31, 2023 Three months ended March 31, 2022
REVENUE $ 7,436 $ 2,369,769 $ 24,269 $ 3,004,676
COST OF REVENUE (5,347 ) (2,002,961 ) (8,038 ) (2,664,574 )
GROSS PROFIT 2,089 366,808 16,231 340,102
OTHER INCOME 1,126 116,218 2,076 44,306
OPERATING EXPENSES
General and
administrative (46,255 ) (383,177 ) (44,042 ) (297,769 )
FINANCE COSTS (666 ) (1,779 ) (799 ) (2,527 )
(LOSS)/PROFIT
BEFORE TAX (43,706 ) 98,070 (52,269 ) 170,751
Tax expense - (15,990 ) - (14,299 )
NET (LOSS)/PROFIT $ (43,706 ) $ 82,080 $ (52,269 ) $ 156,452
Revenue. For the quarter ended March 31, 2023, we had total revenue of
$2,377,205 as compared to total revenue of $3,028,945 for the quarter ended
March 31, 2022, decreased by 21.5% from the prior quarter.
Chemrex contributed $2,369,769 (99.7%) of the total revenue for the current
quarter ended March 31, 2023 as compared to $3,004,676 (99.2%) of the total
revenue for the quarter ended March 31, 2022. Chemrex's revenues had a decrease
by $634,907 of 21.13% from prior quarter. The revenue decreased in first quarter
of 2023 was due to material cost for Resin & Fiberglass mat has been reduced in
Malaysia. As a result, we adjusted the selling price of our product to stay
competitive. Chemrex is catching up with the markets change post pandemic by
targeting the right manufacturers to reduce cost of logistics and warehousing
meanwhile may scarify some small retail business.
BioNexus-Malaysia contributed $7,436 (0.3%) of the total revenue for the quarter
ended March 31, 2023 as compared to revenue of $24,269 (0.8%) of the total
revenue from the quarter ended March 31, 2022. Revenues had decreased by $16,833
from prior quarter of $24,269, a 69.4% decrease. RNA screening process have been
adversely impacted by the onset of the Covid-19 pandemic followed by a number of
prominent variants, including Alpha, Beta, Delta, and Omicron. Although new
variants are an expected part of the evolution of viruses, new variant is more
aggressive, highly transmissible, vaccine-resistant, able to cause more severe
disease in Malaysia. We believe that most people were reluctant to visit
hospitals and clinics in view of the post Covid-19 Omicron and its subvariants
for fear of transmission from other patients or medical staff. Since our RNA
screening is administered at a diagnostic center, our business had been
adversely affected as a result.
Cost of Revenue. For the quarter ended March 31, 2023, we incurred $2,008,308 in
cost of revenues, as compared to $2,672,612 for the quarter ended March 31,
2022, a decrease of approximately 24.9% was due to reason as stated above.
Chemrex had incurred $2,002,961 (99.7%) of the total cost of revenue during the
current quarter period ended March 31, 2023 as compared to the quarter ended
March 31, 2022 wherein Chemrex had incurred $2,664,574 (99.7%) of the total cost
of revenue. The decrease in Chemrex's cost of revenues of 24.8% for the current
period was due to its decreased revenues and reason as stated above.
BioNexus had incurred $5,347 (0.3%) of the total cost of revenues during the
current quarter period ended March 31, 2023 as compared to $8,038 (0.3%) for the
quarterly period ended March 31, 2022. Cost of revenue had decreased by $2,691
from prior quarter of 33.5% decrease was due to its decreased revenues and
reason as stated above.
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Gross Profit. For the quarterly period ended March 31, 2023, we had total gross
profit of $368,897 as compared to gross profit of $356,333 for the quarterly
period ended March 31, 2022, an increase by approximately 3.5% from the prior
period.
Chemrex contributed $366,808 (99.4%) of the total gross profit for the current
quarter ended March 31, 2023 as compared to $340,106 (95.4%) of the total gross
profit for the quarter ended March 31, 2022. Chemrex's gross profit increased by
$26,706 from prior quarter, approximately 7.85% increase. The gross profit
increase for Chemrex in current quarter was due to cost of revenue had been
reduced.
BioNexus-Malaysia contributed $2,089 (0.6%) of the total gross profit of
$368,897 for the current quarter ended March 31, 2023 as compared to gross
profit of $16,231 (4.6%) of the total gross profit from the quarter ended March
31, 2022. The substantial decrease by approximately 87.1% from the prior period
due to its decreased revenues and less lab consumables purchased for the same
reason stated above.
Other Income. For the quarterly period ended March 31, 2023, we had of $117,344,
as compared to of $46,394 for the quarterly period ended March 31, 2022, an
increase of approximately 152.9%.
Chemrex contributed $116,218 (99%) of other income for the current quarter ended
March 31, 2023 as compared to $44,306 (95.5%) of the other income for the
quarter ended March 31, 2022. Chemrex's other income increased by 162.3% due to
gain on fair value of investment, bank interest earning and unrealized forex
gain.
BioNexus-Malaysia contributed $1,126 (1%) of other income for the current
quarter ended March 31, 2023 as compared to $2,076 (4.5%) of the other income
for the quarter ended March 31, 2022. The decrease of 45.8% due to bank interest
earning has been reduced.
Operating Expenses. For the quarter ended March 31, 2023, we had total operating
expense of $536,872 as compared to total operating expenses of $368,036 for the
quarter ended March 31, 2022, an increase by approximately 45.9%. 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 $383,177 (71.4%) of the total operating expenses for the
current quarter ended March 31, 2023 as compared to $297,769 (80.9%) of the
total operating expenses for the quarter ended March 31, 2022, an increase by
28.68%. The increase in operating expenses was due to commission, travelling and
increased in medical expenses.
BioNexus-Malaysia had incurred $46,255 (8.6%) of the total operating expenses
for the current quarter ended March 31, 2023 as compared to $44,042 (12%) of the
total operating expenses for the quarter ended March 31, 2022, a slightly
increase by 5%. The increase in operating costs of the current quarter was due
to travelling and cost incurred for vehicle maintenance.
BGLC, the holding company had incurred $107,440 (20%) of total operating
expenses for the current quarter ended March 31, 2023 as compared to $26,255
(7.1%) of the total operating expenses for the quarter ended March 31, 2022. The
increase of $81,215, approximately 309.69% in operating costs for the quarter
ended March 31, 2023 was due to the expenses on filing fees for form S-1,
consultant fees for capital & corporation advisory services, fees for three
independent board members and audit committee, SEC compliance services, SEC
registration fee, increased fee of shareholder maintenance by Securities
Transfer Corporation and an additional review fee for S-1.
Loss/Profit from Operations. We had a loss from operations of $50,631 for the
quarter ended March 31, 2023 as compared to a profit of $34,691 for the quarter
ended March 31, 2022, an increase by approximately 145.9% from the prior period,
for the reasons discussed above.
Income tax expense. For the quarter ended March 31, 2023, we had estimated
income tax expenses of $15,990 as compared to $14,299 for the quarter ended
March 31, 2022 for Chemrex. There was no tax provision for Bio-Nexus Malaysia
for the quarters ended March 31, 2023 and 2022.
Foreign currency exchange loss. We are exposed to fluctuations in foreign
exchange rates on the revaluation of monetary assets and liabilities denominated
in currencies other than the US Dollar. Therefore, any change in the relevant
exchange rate would require us to recognize a transaction gain or loss on
revaluation. For the three-month period ended March 31, 2023, we experienced a
foreign currency loss of $39,039 as compared with a foreign currency loss of
$68,776 for the three-month period ended March 31, 2022.
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LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 2023, we had working capital of $3,895,384 compared with working
capital of $4,017,749 as of December 31, 2022. The decrease in working capital
as of March 31, 2023 from December 31, 2022 was due principally to the decrease
in cash used in our operations.
Our primary uses of cash had been for operations. The main sources of cash was
generated from operational revenues and the private placement of our common
stock. The following trends could 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 three
months ended March 31, 2023 and 2022:
Three months ended
March 31,
2023 2022
Net cash used in Operating Activities $ (118,297 ) $ (37,839 )
Net cash used in investing activities (5,056 ) (197,133 )
Net cash generated from/(used in) financing activities - -
Foreign currency translation adjustment (22,299 ) (44,625 )
Net Change in Cash and Cash Equivalents $ (145,652 ) $ (279,597 )
Operating Activities
During the first quarter ended March 31, 2023, the Company incurred a net loss
of $69,066 which, after adjusting for amortization, depreciation, dividend
income, fair value gain on share investment, a decrease in inventories, trade
receivables and a substantial reduction in trade payables, operating lease
liabilities, advance payment from customer, resulted in net cash of $118,297
being used in activities during the first quarter ended 2023. By comparison,
during the first quarter ended March 31, 2022, the Company had a net profit of
$17,066 after adjusting for amortization, depreciation, dividend income, fair
value loss on share investments, an increase in inventories and a decrease in
trade receivables, deposits, deferred cost of revenue, a substantial reduction
in trade payables, operating lease liabilities, advance payment from customer,
deferred revenue, resulted in net cash of $37,839 being used in operating
activities during the period.
Investing Activities
During the first quarter ended March 31, 2023, the Company had net cash of
$5,056 used in investment activities from acquisition of share investment of
$13,646 and purchase of plant & equipment of $102. During the first quarter
ended March 31, 2022, the Company had net cash from acquisition of share
investment of $172,172 and purchase of plant and equipment of $32,191 resulting
in net cash used in financing activities of $197,133.
Financing Activities
During the first quarter ended March 31, 2023 and 2022, Company had no financing
activities.
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