bglc_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023

☐	TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________

Commission File Number: 333-229399

BIONEXUS GENE LAB CORP.

(Exact name of registrant as specified in its charter)

Wyoming		35-2604830
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

Unit 02, Level 10 Tower B, Avenue 3, The Vertical Business Suite II Bangsar South No. 8 Jalan Kerinchi Kuala Lumpur, Malaysia		59200
(Address of Principal Executive Offices)		(Zip Code)

+60 1221-26512

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common stock, no par value		BGLC		The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer, “ “ accelerated filer, “ “non-accelerated filer ,” “ smaller reporting company, “ and “ emerging growth company “ in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated Filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 14, 2023, there were 17,698,549 shares of common stock, no par value per share, issued and outstanding.

TABLE OF CONTENTS

		Page
PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30
Item 4.	Controls and Procedures	31

PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	32
Item 2.	Unregistered Sale of Equity Securities and Use of Proceeds	32
Item 3.	Defaults Upon Senior Securities	32
Item 4.	Mine Safety Disclosures	32
Item 5.	Other Information	32
Item 6.	Exhibits	33

SIGNATURES		34

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CAUTIONARY NOTE REGARDING

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains statements that may be deemed to be “forward-looking statements” within the meaning of the federal securities laws. These statements relate to anticipated future events, future results of operations and or future financial performance. In some cases, you can identify forward-looking statements by their use of terminology such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “future,” “intend,” “may,” “ought to,” “plan,” “possible,” “potentially,” “predicts,” “project,” “should,” “will,” “would,” negatives of such terms or other similar terms. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. The forward-looking statements in this Quarterly Report on Form 10-Q include, without limitation, statements relating to:

	●	our goals and strategies;

	●	our future business development, results of operations and financial condition;

	●	our estimates regarding expenses, future revenues, capital requirements and our need for additional financing;

	●	our estimates regarding the market opportunity for our services;

	●	the impact of government laws and regulations;

	●	our ability to recruit and retain qualified personnel;

	●	our failure to comply with regulatory guidelines;

	●	uncertainty in industry demand;

	●	general economic conditions and market conditions in the financial services industry;

	●	future sales of large blocks or our securities, which may adversely impact our share price; and

	●	depth of the trading market in our securities.

The preceding list is not intended to be an exhaustive list of all of our forward-looking statements. Forward-looking statements reflect our current views with respect to future events and are based on assumptions and subject to risks and uncertainties, including those described in Item 1A “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 and elsewhere in this Quarterly Report on Form 10-Q.

You should not unduly rely on any forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that future results, levels of activity, performance and events and circumstances reflected in the forward-looking statements will be achieved or will occur. Except as required by law, we undertake no obligation to update publicly any forward-looking statements for any reason after the date of this Quarterly Report on Form 10-Q, to conform these statements to actual results or to changes in our expectations.

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ITEM 1. Financial Statements

BIONEXUS GENE LAB CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF JUNE 30, 2023 AND DECEMBER 31, 2022

(Currency expressed in United States Dollars (“US$”))

			As of
			June 30,			December 31,
	Note		2023			2022
			(Unaudited)			(Audited)
ASSETS
CURRENT ASSETS
Cash and bank balances				297,084			611,849
Fixed deposits placed with financial institutions				1,461,596			1,507,015
Trade receivables		3		2,195,815			2,868,364
Other receivables, deposits and prepayments				47,481			25,240
Tax recoverable		4		59,000			31,551
Inventories				1,165,773			977,807
Total current assets				5,226,749			6,021,826

NON-CURRENT ASSETS
Operating lease right of use assets		5		44,896			55,730
Property, plant and equipment, net		6		1,396,621			1,511,708
Other investments		7		1,230,674			1,150,898
Total non-current assets				2,672,191			2,718,336
TOTAL ASSETS			$	7,898,940		$	8,740,162

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Trade payables		8		1,822,506			1,861,015
Other payables and accrued liabilities				30,771			103,370
Current portion of operating lease liabilities		5		16,098			16,569
Advance payment from customer				7,094			23,123
Total current liabilities				1,876,469			2,004,077

NON-CURRENT LIABILITIES
Non-current portion of operating lease liabilities		5		29,658			40,206
Deferred tax liabilities		4		29,047			30,866
Total non-current liabilities				58,705			71,072
TOTAL LIABILITIES			$	1,935,174		$	2,075,149

STOCKHOLDERS’ EQUITY
As at June 30, 2023, common stock, no par value; 300,000,000 shares authorized and 173,718,152 shares outstanding, and preferred stock, no par value; 30,000,000 shares authorized and no shares outstanding. As at December 31, 2022, common stock, no par value; 300,000,000 shares authorized and 173,718,152 shares outstanding, and preferred stock, no par value; 30,000,000 shares authorized and no shares outstanding.		10		10,929,574			10,929,574
Additional paid in capital				(5,011,891	)		(5,011,891	)
Accumulated surplus				828,075			1,156,392
Accumulated other comprehensive losses				(781,992	)		(409,062	)
TOTAL STOCKHOLDERS’ EQUITY				5,963,766			6,665,013

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY			$	7,898,940		$	8,740,162

See accompanying notes to the condensed consolidated financial statements.

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BIONEXUS GENE LAB CORP.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2023 AND 2022

(Currency expressed in United States Dollars (“US$”))

(Unaudited)

	Three months ended						Six months ended
	June 30,						June 30,
	2023			2022			2023			2022
REVENUE	$	2,566,848		$	2,485,101		$	4,944,053		$	5,514,046

COST OF REVENUE		(2,227,134	)		(2,221,130	)		(4,235,442	)		(4,893,742	)

GROSS PROFIT		339,714			263,971			708,611			620,304

OTHER INCOME		195,164			52,848			312,508			99,230

OPERATING EXPENSES
General and administrative		(807,077	)		(454,783	)		(1,343,949	)		(822,807	)

LOSS FROM OPERATIONS		(272,199	)		(137,964	)		(322,830	)		(103,273	)

FINANCE COSTS		(3,042	)		(2,319	)		(5,487	)		(5,645	)

LOSS BEFORE TAX		(275,241	)		(140,283	)		(328,317	)		(108,918	)

Tax credit/ (expense)		15,990			1,621			-			(12,678	)

NET LOSS	$	(259,251	)	$	(138,662	)	$	(328,317	)	$	(121,596	)

Other comprehensive income:
Foreign currency translation loss		(333,891	)		(317,760	)		(372,930	)		(386,536	)
COMPREHENSIVE LOSS	$	(593,142	)	$	(456,422	)	$	(701,247	)	$	(508,132	)

Earnings per share - Basic and diluted		(0.003	)		(0.003	)		(0.004	)		(0.003	)
Weighted average number of common shares outstanding – Basic and diluted		173,718,152			172,976,394			173,718,152			172,102,130

See accompanying notes to the condensed consolidated financial statements.

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BIONEXUS GENE LAB CORP

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

AS OF JUNE 30, 2023 AND 2022

(Amount expressed in United States Dollars (“US$))


											Accumulated
	Common stock				Additional paid in			Accumulated			other comprehensive			Total
	Number of shares		Amount		capital			surplus			loss			Equity
Balance as of December 31, 2021		171,218,152	$	10,779,574	$	(5,011,891	)	$	1,512,358		$	(100,262	)	$	7,179,779
Net profit for the period		-		-		-			17,066			-			17,066
Foreign currency translation loss		-		-		-			-			(68,776	)		(68,776	)
Balance as of March 31, 2022		171,218,152	$	10,779,574	$	(5,011,891	)	$	1,529,424		$	(169,038	)	$	7,128,069
Net loss for the period		-		-		-			(138,662	)		-			(138,662	)
Issuance of shares		2,500,000		150,000		-			-			-			150,000
Foreign currency translation loss		-		-		-			-			(317,760	)		(317,760	)
Balance as of June 30, 2022		173,718,152	$	10,929,574	$	(5,011,891	)	$	1,390,762		$	(486,798	)	$	6,821,647


	Common stock				Additional paid in			Accumulated			Accumulated other comprehensive			Total
	Number of shares		Amount		capital			surplus			loss			Equity
Balance as of December 31, 2022		173,718,152	$	10,929,574	$	(5,011,891	)	$	1,156,392		$	(409,062	)	$	6,665,013
Net loss for the period		-		-		-			(69,066	)		-			(69,066	)
Foreign currency translation loss		-		-		-			-			(39,039	)		(39,039	)
Balance as of March 31, 2023		173,718,152	$	10,929,574	$	(5,011,891	)	$	1,087,326		$	(448,101	)	$	6,556,908
Net loss for the period		-		-		-			(259,251	)		-			(259,251	)
Foreign currency translation loss		-		-		-			-			(333,891	)		(333,891	)
Balance as of June 30, 2023		173,718,152	$	10,929,574	$	(5,011,891	)	$	828,075		$	(781,992	)	$	5,963,766

See accompanying notes to the condensed consolidated financial statements.

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BIONEXUS GENE LAB CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

(Currency expressed in United States Dollars (“US$”))

(Unaudited)

	Six months ended June 30,
	2023			2022
Cash flows from operating activities:
Net loss	$	(328,317	)	$	(121,596	)

Adjustments to reconcile net loss to net cash used in from operating activities:
Amortization of right of use asset		7,891			8,586
Allowances for expected credit losses		291,940			-
Bad debts		4,078			-
Depreciation of property, plant and equipment		41,587			44,943
Dividend income		(19,788	)		(19,322	)
Fair value (gain)/loss on other investments		(140,862	)		63,202
Interest		4,212			3,785
Property, plant and equipment written off		18			-
Operating loss before working capital changes		(139,241	)		(20,402	)

Changes in operating assets and liabilities:
Inventories		(187,966	)		9,717
Trade and other receivables		354,290			526,165
Deferred cost of revenue		-			67,606
Trade and other payables		(111,108	)		(635,694	)
Advance payment from customer		(16,029	)		(30,307	)
Deferred revenue		-			(77,276	)
Operating lease liabilities		(11,019	)		(11,182	)
Tax recoverable		(29,268	)		(62,435	)
Net cash used in operating activities		(140,341	)		(233,808	)

Cash flows from investing activities:
Acquisition of other investment		(13,444	)		(404,793	)
Dividend income		19,788			19,322
Purchase of plant and equipment		(14,458	)		(33,484	)
Net cash used in investing activities		(8,114	)		(418,955	)

Cash flows from financing activities:
Interest		(4,212	)		(3,785	)
Repayment of finance lease		-			(34038	)
Shares subscriptions		-			150,000
Net cash (used in)/generated from financing activities		(4,212	)		112,177
Foreign currency translation adjustment		(207,517	)		(243,002	)
NET CHANGE IN CASH AND CASH EQUIVALENTS		(360,184	)		(783,588	)
CASH AND CASH EQUIVALENTS, BEGINNING OF FINANCIAL YEAR		2,118,864			2,123,919

CASH AND CASH EQUIVALENTS, END OF FINANCIAL YEAR	$	1,758,680		$	1,340,331

CASH AND CASH EQUIVALENTS INFORMATION:
Fixed deposits placed with financial institutions	$	1,461,596		$	849,744
Cash at bank		297,084			490,587
Cash and cash equivalents, end of financial year		1,758,680			1,340,331

Supplementary cash flow information:
Interest paid	$	(5,487	)	$	(5,645	)
Income taxes paid		(30,635	)		(73,547	)

See accompanying notes to the condensed consolidated financial statements.

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BIONEXUS GENE LAB CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

(Currency expressed in United States Dollars (“US$”))

(Unaudited)

NOTE 1 – ORGANIZATION AND BUSINESS BACKGROUND

BioNexus Gene Lab Corp. (the “Company”) was incorporated in the State of Wyoming on May 12, 2017. On August 23, 2017, the Company acquired all the outstanding capital stock of BGS Lab Sdn. Bhd., a Malaysian corporation (“BioNexus Malaysia”). BioNexus Malaysia 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.

On December 31, 2020, the Company consummated its acquisition of Chemrex Corporation Sdn. Bhd. (“Chemrex”), pursuant to a Share Exchange Agreement by and among the Company, Chemrex and the Chemrex shareholders wherein the Company acquired all the issued and outstanding shares of capital stock of Chemrex from the Chemrex shareholders in exchange for 68,487,261 shares of common stock of the Company.

The acquisition of Chemrex has been accounted for as a common control transaction as there is no change in the control over the assets acquired and liabilities assumed. The net assets are derecognized by the transferring entity (i.e. Chemrex) and recognized by the receiving entity (i.e. the Company). The difference between the consideration transferred and the carrying amounts of the net assets is recognized in equity.

The financial statements of the receiving entity report the results of operations for the period in which the transfer occurs as though the transfer of net assets or exchange of equity interests had occurred at the beginning of the period. Results of operations for that period will thus comprise those of the previously separate entities combined from the beginning of the period to the date the transfer is completed and those of the combined operations from that date to the end of the period. The comparative financial statements were not adjusted retrospectively as Chemrex was not under common control during the comparative period.

The corporate structure as at June 30, 2023 is depicted below:

	BioNexus Gene Lab Corp., a Wyoming company

100% owned		100% owned
Bionexus Gene Lab Sdn. Bhd., a Malaysian company		Chemrex Corporation Sdn. Bhd., a Malaysian company

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BIONEXUS GENE LAB CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

(Currency expressed in United States Dollars (“US$”))

(Unaudited)

NOTE 2 - 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.

·	Basis of presentation

The accompanying condensed consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”).

·	Basis of consolidation

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.

·	Use of estimates

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 Three months or less as of the purchase date of such investments.

·	Trade receivables

Trade receivables are recorded at the invoiced amount and Chemrex do charge interest to certain debtors with overdue outstanding. Management reviews the adequacy of the allowance for impairment on an ongoing basis, using historical collection trends and aging of receivables. Management also periodically evaluates individual customer’s financial condition, credit history, and current economic conditions to adjust 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 Statement of Operations and Comprehensive Income.

Leases

Prior to January 1, 2019, the Company accounted for leases under ASC 840, Accounting for Leases. Effective January 1, 2019, the Company adopted the guidance of ASC 842, Leases, which requires an entity to recognize a right-of-use asset and a lease liability for virtually all leases. The Company adopted ASC 842 using a modified retrospective approach. As a result, the comparative financial information has not been updated and the required disclosures prior to the date of adoption have not been updated and continue to be reported under the accounting standards in effect for those periods.

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BIONEXUS GENE LAB CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

(Currency expressed in United States Dollars (“US$”))

(Unaudited)

·	Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Depreciation is calculated on a 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	%

Leasehold lands are depreciated over the period of the lease term. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Company will obtain ownership by the end of the lease term. Freehold land is not depreciated. Property, plant and equipment under construction are not depreciated until the assets are ready for their intended use

Maintenance and repairs are charged to operations as incurred. Expenditures which substantially increase the useful lives of the related assets are capitalized. When properties are disposed, the related costs and accumulated depreciation are removed from the accounts and any gain or loss is reported in the period the transaction takes place.

Fully depreciated plant and equipment are retained in the financial statements until they are no longer in use.

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BIONEXUS GENE LAB CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

(Currency expressed in United States Dollars (“US$”))

(Unaudited)

·	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.

·	Revenue recognition

Revenues are recognized when control of the promised goods or services are transferred to a customer, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services.

The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements:

·	identify the contract with a customer;
·	identify the performance obligations in the contract;
·	determine the transaction price;
·	allocate the transaction price to performance obligations in the contract; and
·	recognize revenue as the performance obligation is satisfied.

The Company records revenue at point in time which is recognized upon goods delivered or services rendered.

·	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 expensed as incurred and included in selling and distribution expenses.

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BIONEXUS GENE LAB CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

(Currency expressed in United States Dollars (“US$”))

(Unaudited)

·	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.

·	Income taxes

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.

·	Net earnings or loss per share

The Company calculates net earnings or loss per share in accordance with ASC Topic 260 “Earnings per share.” Basic earnings or loss per share is computed by dividing the net earnings or loss by the weighted average number of common shares outstanding during the period. Diluted earnings or loss per share is computed similar to basic earnings or 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.

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BIONEXUS GENE LAB CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

(Currency expressed in United States Dollars (“US$”))

(Unaudited)

·	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 subsidiaries maintain their books and records 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 subsidiaries operate.

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 the translation of financial statements of foreign subsidiaries are recorded as a separate component of accumulated other comprehensive income.

Translation of amounts from MYR into US$1.00 has been made at the following exchange rates for the respective period and year:

	June 30,		December 31,
	2023		2022
Period ended June 30, 2023 /Year-ended December 31, 2022 US$1: MYR exchange rate		4.6650		4.3900

	January 1, 2023 to June 30, 2023		January 1, 2022 to June 30, 2022
6 months average US$1: MYR exchange rate		4.4629		4.2710

·	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.

Table of Contents

BIONEXUS GENE LAB CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

(Currency expressed in United States Dollars (“US$”))

(Unaudited)

☐	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 June 30, 2023, and December 31, 2022, 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 do 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.

☐	Recently Adopted Accounting Standards

In June 2016, the FASB issued Accounting Standards Update No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which introduced the expected credit losses methodology for the measurement of credit losses on financial assets measured at amortized cost basis, replacing the previous incurred loss methodology. In November 2019, the FASB issued ASU 2019-10 highlighted the adoption timeline. For smaller reporting entities, Topic 326 is effective for annual periods beginning after December 15, 2022, including interim periods within those fiscal years, of which is effective for the Company on January 1, 2023

Credit loss rate is determined by historical collection based on aging schedule, adjusted for current conditions using reasonable and supportable forecasts. Based on the aging categorization and the adjusted loss rate per category, an allowance for credit losses is calculated by multiplying the adjusted loss rate with the amortized cost in the respective age category.

NOTE 3 - TRADE RECEIVABLES

The Company has performed an analysis on all its trade receivables. As such, trade receivables are recognized and carried at the original invoice amount less an allowance for any uncollectible amounts. An estimate for doubtful debts and expected credit losses is made when collection of the full amount is no longer probable. Bad debts are written off as identified for the quarter ended June 30, 2023. The Company’s trade receivables consist of receivable from customers which are unrelated to the Company. The account receivables are interest bearing at a rate of 6% per annum on a case to case basis for customers that exceeded credit term. The normal trade credit term is generally on 30 days to 90 days term.

	As of
	June 30,			December 31,
	2023			2022

Trade receivables		2,487,755			2,868,364
Allowances for expected credit losses		(291,940	)		-
	$	2,195,815		$	2,868,364

Table of Contents

BIONEXUS GENE LAB CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

(Currency expressed in United States Dollars (“US$”))

(Unaudited)

NOTE 4 - INCOME TAXES

The Company provides for income taxes under ASC 740, “Income Taxes. ASC 740 requires the use of an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statements and tax basis of assets and liabilities and the tax rates in effect when these differences are expected to reverse. It also requires the reduction of deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

Provision for income taxes consisted of the following:

United States of America

SEC Form 10-Q filed by BioNexus Gene Lab Corp