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.
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.
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.
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.
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.
The accompanying condensed consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”).
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)
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.
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 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 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.
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 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.
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 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.
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.
|
Interest is recognized on receipt basis.
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.
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.
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 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.
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$, in accordance with ASC Topic 830-30, “Translation of Financial Statement”, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of foreign subsidiary are recorded as a separate component of accumulated other comprehensive income.
BIONEXUS GENE LAB CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020
(Currency expressed in United States Dollars (“US$”))
(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
|
|
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.
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
|
|
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 $2,001, respectively.
NOTE 8 - INCOME TAXES
Provision for income taxes consisted of the following:
United States of America
The Company is registered in the State of Wyoming and is subject to the tax laws of the United States of America.
BIONEXUS GENE LAB CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020
(Currency expressed in United States Dollars (“US$”))
(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.
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.
|
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
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100% owned
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↓
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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 $10,000 in our private placements in 2018 and 2019.
Three Months Ended September 30, 2020 Compared with the Three Months Ended September 30, 2019.
The following table sets forth key selected financial data for the three months ended September 30, 2020 and 2019.
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Three month periods
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ended September 30,
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2020
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2019
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|
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REVENUE
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$
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23,471
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$
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24,173
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|
|
|
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|
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COST OF REVENUE
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(15,253
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)
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(16,499
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)
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GROSS PROFIT
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8,218
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7,674
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OTHER INCOME
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2,897
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5,285
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OPERATING EXPENSES
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General and administrative
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(70,658
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)
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(63,097
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)
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LOSS FROM OPERATIONS
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(59,543
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)
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(50,138
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)
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Income tax expense
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(492
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)
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28,110
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NET LOSS
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$
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(60,035
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)
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$
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(22,028
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)
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Other comprehensive income:
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Foreign currency translation gain/(loss)
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21,942
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(10,802
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)
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COMPREHENSIVE LOSS
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$
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(38,093
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)
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$
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(32,830
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)
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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.
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 $10,802 for the quarter ended September 30, 2019.
Nine Months Ended September 30, 2020 Compared with the Nine Months Ended September 30, 2019.
The following table sets forth key selected financial data for the nine months ended September 30, 2020 and 2019.
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Nine-month periods
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ended September 30,
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2020
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2019
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|
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REVENUE
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$
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30,012
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$
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73,906
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|
|
|
|
|
|
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COST OF REVENUE
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|
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(45,561
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)
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(52,341
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)
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|
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GROSS (LOSS) /PROFIT
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(15,549
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)
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21,565
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|
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OTHER INCOME
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10,548
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19,684
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OPERATING EXPENSES
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|
|
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|
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General and administrative
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(167,685
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)
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(220,809
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)
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|
|
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LOSS FROM OPERATIONS
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(172,686
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)
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(179,560
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)
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|
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|
|
|
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Income tax expense
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|
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(1,839
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)
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25,668
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|
|
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|
|
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NET LOSS
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$
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(174,525
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)
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$
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(153,892
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)
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|
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Other comprehensive income:
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|
|
|
|
|
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Foreign currency translation loss
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(16,249
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)
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(11,256
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)
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|
|
|
|
|
|
|
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COMPREHENSIVE LOSS
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$
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(190,774
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)
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$
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(165,148
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)
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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 $830,997 as of December 31, 2019. The decrease in working capital as of September 30, 2020 from December 31, 2019 is due principally to the losses experienced during the nine month period in 2020.
Our primary uses of cash have been for operations. The main sources of cash have been from operational revenues and the private placement of our common stock. The following trends are reasonably likely to result in a material decrease in our liquidity over the near to long term:
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☐
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Addition of administrative and marketing personnel as the business grows,
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☐
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Development of a Company website,
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☐
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Increases in advertising and marketing in order to attempt to generate more revenues, and
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☐
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The cost of being a public company.
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The Company believes that cash flow from operations together will be sufficient to sustain its current level of operations for at least the next 12 months of operations.
The following is a summary of the Company’s cash flows provided by (used in) operating, investing, and financing activities for the nine months ended September 30, 2020 and 2019:
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Nine-Month Ended September 30, 2020
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|
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Nine-Month Ended September 30, 2019
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Net Cash Used in Operating Activities
|
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$
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(154,909
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)
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$
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(158,911
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)
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Net Cash Used in Investing Activities
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-
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(5,672
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)
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Net Cash Provided in Financing Activities
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|
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(5,599
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)
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|
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(107,333
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)
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Net Change in Cash and Cash Equivalents
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$
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(171,873
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)
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$
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(283,090
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)
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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
Summary of Significant Accounting Policies.
These accompanying financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”).
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.
In preparing these financial statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheets and revenues and expenses during the years reported. Actual results may differ from these estimates.
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Cash and cash equivalents
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Cash and cash equivalents represent cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of Six months or less as of the purchase date of such investments.
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
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Principal Annual Rates/Expected Useful Life
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Furniture & fittings
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|
20
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%
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Computer and software
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|
|
33
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%
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Motor vehicle
|
|
|
10
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%
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Lab Equipment
|
|
|
10
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%
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Office equipment
|
|
|
20
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%
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Renovation
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|
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20
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%
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Fully depreciated plant and equipment are retained in the financial statements until they are no longer in use.
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.
Inventories consisting of products available for sell, are stated at the lower of cost or market value. Cost of inventory is determined using the first-in, first-out (FIFO) method. Inventory reserve is recorded to write down the cost of inventory to the estimated market value due to slow-moving merchandise and damaged goods, which is dependent upon factors such as historical and forecasted consumer demand, and promotional environment. The Company takes ownership, risks and rewards of the products purchased. Write downs are recorded in cost of revenues in the Condensed Statements of Operations and Comprehensive Income.
•
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Impairment of long-lived assets
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Long-lived assets primarily include goodwill, intangible assets and property, plant and equipment. In accordance with the provision of ASC Topic 360, “Impairment or Disposal of Long-Lived Assets”, the Company generally conducts its annual impairment evaluation to its long-lived assets, usually in the fourth quarter of each fiscal year, or more frequently if indicators of impairment exist, such as a significant sustained change in the business climate. The recoverability of long-lived assets is measured at the lowest level group. If the total of the expected undiscounted future net cash flows is less than the carrying amount of the asset, a loss is recognized for the difference between the fair value and carrying amount of the asset. There has been no impairment charge for the years presented.
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 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.
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Sales of goods or rendering of services
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An entity shall recognize revenue associated with the transaction by reference to the stage of completion of the transaction at the end of the reporting period. The outcome of a transaction can be estimated reliably when all the following conditions are satisfied: -
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i.
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The amount of revenue can be measured reliably;
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ii.
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It is probable that the economic benefits associated with the transaction will flow to the entity;
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iii.
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The stage of completion of the transaction at the end of the reporting period can be measured reliably; and
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iv.
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The costs incurred for the transaction and the costs to complete the transaction can be measured reliably.
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Interest is recognized on receipt basis.
Cost of revenue includes the purchase cost of retail goods for re-sale to customers and packing materials (such as boxes). It excludes purchasing and receiving costs, inspection costs, warehousing costs, internal transfer costs and other costs of distribution network in cost of revenues.
•
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Shipping and handling fees
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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.
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 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”.
Translation of amounts from the local currency of the Company into US$1 has been made at the following exchange rates for the respective years:
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September 30, 2020
|
|
|
December 31, 2019
|
|
|
|
|
|
|
|
|
Period-end US$1 : MYR exchange rate
|
|
|
4.2800
|
|
|
|
4.0925
|
|
|
|
|
|
|
|
|
|
|
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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
|
|
Parties, which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Companies are also considered to be related if they are subject to common control or common significant influence.
•
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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.
Contractual Obligations
None.