BIONEXUS GENE LAB CORP. 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
• 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.
The results of operations for BioNexus described below have been adversely
impacted by the onset of the Covid-19 pandemic, which commenced in late
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Description of Business
We have two operating subsidiaries located in
BioNexus Malaysia is an emerging molecular diagnostics company focused on the
application of functional genomics to enable early diagnosis and personalized
health management. It was incorporated in the
Our corporate and principal office address of BioNexus Malaysia is Unit 02,
Level 10, Tower B, Avenue 3, The Vertical Business Suite II, Bangar South, No. 8
Jalan Kerinchi,
Chemrex is a wholesaler of industrial chemicals for the manufacture of
industrial, medical, appliance, aero, automotive, mechanical and electronic
industries in
Chemrex's corporate offices and distribution and storage center is located at 4
Jalan CJ 1/6 Kawasan Perusahaan Cheras Jaya,
Our corporate structure is depicted below:
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BIONEXUS GENE LAB CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2021
(Currency expressed in United States Dollars ("US$"))
(Unaudited)
Results of Operations
The following table sets forth key selected financial data for the three months
ended
Three months ended
March 31,
2021 2020
REVENUE $ 3,449,159 $ 3,070,026
COST OF REVENUE (2,866,594 ) (2,414,719 )
GROSS PROFIT 590,235 655,307
OTHER INCOME 62,388 746,641
OPERATING EXPENSES
General and administrative (302,851 ) (328,418 )
PROFIT FROM OPERATIONS 349,102 1,073,530
FINANCE COSTS (3,358 ) (3,026 )
PROFIT BEFORE TAX 338,744 1,070,504
Tax expense - (860 )
NET PROFIT $ 338,744 $ 1,069,644
Other comprehensive income:
Foreign currency loss (208,468 ) (294,696 )
COMPREHENSIVE INCOME $ 130,276 $ 774,948 Revenues. For the quarterly period ended
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Cost of revenues. For the quarterly period ended
Other Income. For the quarterly period ended
Operating Expenses. For the quarterly period ended
Profit from operations. We had a profit from operations of
Income tax expense. For the quarterly period ended
LIQUIDITY AND CAPITAL RESOURCES
As of
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Our primary uses of cash have been for operations. The main sources of cash have been from operational revenues and the private placement of our common stock. The following trends are reasonably likely to result in a material decrease in our liquidity over the near to long term:
· Addition of administrative and marketing personnel as the business grows,
· Development of a Company website,
· Increases in advertising and marketing in order to attempt to generate
more revenues, and
· The cost of being a public company.
The Company believes that cash flow from operations together will be sufficient to sustain its current level of operations for at least the next 12 months of operations.
The following is a summary of the Company's cash flows provided by (used in) operating, investing, and financing activities for the three months endedMarch 31, 2021 and 2020: Three months ended March 31, 2021 2020 Foreign currency translation adjustment (124,085 ) (190,829 )
Net Cash Generated from/(Used in) Operating Activities
(8,550 ) (6,399 )
Net Change in Cash and Cash Equivalents $ (313,033 ) $ 537,671
Operating Activities
During the three months ended
Investing Activities
During the three months ended
Financing Activities
During the three months ended
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Summary of Significant Accounting Policies.
• Basis of presentation
These accompanying financial statements have been prepared in accordance with
generally accepted accounting principles in
• Basis of consolidation
The condensed consolidated financial statements include the accounts of
• Use of estimates
In preparing these financial statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheets and revenues and expenses during the years reported. Actual results may differ from these estimates.
• Cash and cash equivalents
Cash and cash equivalents represent cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of three months or less as of the purchase date of such investments.
• Plant and equipment
Plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Depreciation is calculated on the straight-line basis to write off the cost over the following expected useful lives of the assets concerned. The principal annual rates used are as follows:
Categories Principal Annual Rates Air conditioner 20% Buildings 2% Computer and software 33% Equipment 20% Furniture and fittings 10% to 20% Lab Equipment 10% Motor vehicle 10% to 20% Office equipment 20% Renovation 10% to 20% Signboard 10%
Fully depreciated plant and equipment are retained in the financial statements until they are no longer in use.
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• Trade receivables
Trade receivables are recorded at the invoiced amount and do not bear interest. Management reviews the adequacy of the allowance for doubtful accounts on an ongoing basis, using historical collection trends and aging of receivables. Management also periodically evaluates individual customer's financial condition, credit history, and the current economic conditions to make adjustments in the allowance when it is considered necessary. Trade balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.
• Inventories
Inventories consisting of products available for sell, are stated at the lower of cost or market value. Cost of inventory is determined using the first-in, first-out (FIFO) method. Inventory reserve is recorded to write down the cost of inventory to the estimated market value due to slow-moving merchandise and damaged goods, which is dependent upon factors such as historical and forecasted consumer demand, and promotional environment. The Company takes ownership, risks and rewards of the products purchased. Write downs are recorded in cost of revenues in the Condensed Statements of Operations and Comprehensive Income.
• Impairment of long-lived assets
Long-lived assets primarily include goodwill, intangible assets and property, plant and equipment. In accordance with the provision of ASC Topic 360, "Impairment or Disposal of Long-Lived Assets", the Company generally conducts its annual impairment evaluation to its long-lived assets, usually in the fourth quarter of each fiscal year, or more frequently if indicators of impairment exist, such as a significant sustained change in the business climate. The recoverability of long-lived assets is measured at the lowest level group. If the total of the expected undiscounted future net cash flows is less than the carrying amount of the asset, a loss is recognized for the difference between the fair value and carrying amount of the asset. There has been no impairment charge for the years presented.
• Finance lease
Leases that transfer substantially all the rewards and risks of ownership to the lessee, other than legal title, are accounted for as finance leases. Substantially all of the risks or benefits of ownership are deemed to have been transferred if any one of the four criteria is met: (i) transfer of ownership to the lessee at the end of the lease term, (ii) the lease containing a bargain purchase option, (iii) the lease term exceeding 75% of the estimated economic life of the leased asset, (iv) the present value of the minimum lease payments exceeding 90% of the fair value. At the inception of a finance lease, the Company as the lessee records an asset and an obligation at an amount equal to the present value of the minimum lease payments. The leased asset is amortized over the shorter of the lease term or its estimated useful life if title does not transfer to the Company, while the leased asset is depreciated in accordance with the Company's depreciation policy if the title is to eventually transfer to the Company. The periodic rent payments made during the lease term are allocated between a reduction in the obligation and interest element using the effective interest method in accordance with the provisions of ASC Topic 835-30, "Imputation of Interest".
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• Revenue recognition
Revenue recognized when it is probable that the economic benefits associated with the transaction will flow to the enterprise and the amount of the revenue can be measured reliably. Revenue is measured at the fair value of consideration received or receivable.
a. Sales of goods or rendering of services
An entity shall recognize revenue associated with the transaction by reference to the stage of completion of the transaction at the end of the reporting period. The outcome of a transaction can be estimated reliably when all the following conditions are satisfied: -
i. The amount of revenue can be measured reliably;
ii. It is probable that the economic benefits associated with the
transaction will flow to the entity;
iii. The stage of completion of the transaction at the end of the reporting
period can be measured reliably; and
iv. The costs incurred for the transaction and the costs to complete the
transaction can be measured reliably.
b. Interest income
Interest is recognized on receipt basis.
• Cost of revenues
Cost of revenue includes the purchase cost of retail goods for re-sale to customers and packing materials (such as boxes). It excludes purchasing and receiving costs, inspection costs, warehousing costs, internal transfer costs and other costs of distribution network in cost of revenues.
• Shipping and handling fees
Shipping and handling fees, if billed to customers, are included in revenue. Shipping ang handling fees associated with inbound and outbound freight are expensed as incurred and included in selling and distribution expenses.
• Comprehensive income
ASC Topic 220, "Comprehensive Income" establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive income as defined includes all changes in equity during a period from non-owner sources. Accumulated other comprehensive income, as presented in the accompanying statements of stockholders' equity consists of changes in unrealized gains and losses on foreign currency translation and cumulative net change in the fair value of available-for-sale investments held at the balance sheet date. This comprehensive income is not included in the computation of income tax expense or benefit.
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• Income tax expense
Income taxes are determined in accordance with the provisions of ASC Topic 740, "Income Taxes" ("ASC Topic 740"). Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclosed in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax; the present value of the minimum lease payments. The leased asset is amortized over the shorter of the lease term or its estimated useful life if title does not transfer to the Company, while the leased asset is depreciated in accordance with the Company's depreciation policy if the title is to eventually transfer to the Company. The periodic rent payments made during the lease term are allocated between a reduction in the obligation and interest element using the effective interest method in accordance with the provisions of ASC Topic 835-30, "Imputation of Interest".
Translation of amounts from the local currency of the Company into
March 31, December 31,
2021 2020
Year-end US$1 : MYR exchange rate 4.1460 4.0170
January 1, January 1,
2021 to March 2020 to March
31, 2021 31, 2020
3 months average US$1 : MYR exchange rate 4.0678 4.1820
• Related parties
Parties, which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Companies are also considered to be related if they are subject to common control or common significant influence.
• Fair value of financial instruments
The carrying value of the Company's financial instruments: cash and cash equivalents, trade receivable, deposits and other receivables, amount due to related parties and other payables approximate at their fair values because of the short-term nature of these financial instruments.
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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 three-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
• 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.
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