bion_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 March 31, 2024

☐	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)

+1 307 241 6898

(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 May 8, 2024, there were 17,667,663 shares of common stock, no par value per share, issued and outstanding.

TABLE OF CONTENTS

		Page
PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
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, 2023 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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PART I — FINANCIAL INFORMATION

ITEM 1. Financial Statements

BIONEXUS GENE LAB CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF MARCH 31, 2024 AND DECEMBER 31, 2023

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

			As of
			March 31,			December 31,
	Note		2024			2023
			(Unaudited)			(Audited)
ASSETS
CURRENT ASSETS
Cash and bank balances				2,489,215			2,623,965
Fixed deposits placed with financial institutions				3,342,966			3,305,371
Trade receivables		3		839,558			799,674
Other receivables, deposits and prepayments				106,304			122,432
Tax Recoverable		4		50,441			57,588
Inventories				1,076,953			1,137,770
Total current assets				7,905,437			8,046,800

NON-CURRENT ASSETS
Operating lease right of use assets		5		128,176			141,544
Property, plant and equipment, net		6		1,471,638			1,511,618
Other investments		7		1,656,232			1,699,831
Total non-current assets				3,256,046			3,352,993
TOTAL ASSETS			$	11,161,483		$	11,399,793

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Trade payables		8		1,429,162			1,402,180
Other payables and accrued liabilities				214,735			180,912
Current portion of operating lease liabilities		5		32,508			34,632
Amount owing to directors				40,129			13,199
Total current liabilities				1,716,534			1,630,923

NON-CURRENT LIABILITIES
Non-current portion of operating lease liabilities		5		88,846			98,763
Deferred tax liabilities		4		11,916			12,255
Total non-current liabilities				100,762			111,018
TOTAL LIABILITIES			$	1,817,296		$	1,741,941

STOCKHOLDERS’ EQUITY
As at March 31, 2024, common stock, no par value; 300,000,000 shares authorized and 17,667,663 shares outstanding, and preferred stock, no par value; 30,000,000 shares authorized and no shares outstanding. As at December 31, 2023, common stock, no par value; 300,000,000 shares authorized and 17,667,663 shares outstanding, and preferred stock, no par value; 30,000,000 shares authorized and no shares outstanding (on a post-reverse stock split basis)*.		10		17,191,315			17,191,315
Additional paid in capital				(5,011,891	)		(5,011,891	)
Accumulated deficit				(1,948,035	)		(1,844,278	)
Other comprehensive losses				(887,202	)		(677,294	)
TOTAL STOCKHOLDERS’ EQUITY				9,344,187			9,657,852

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY			$	11,161,483		$	11,399,793

* Issued and outstanding shares of common stock have been adjusted for the periods prior to July 20, 2023, to reflect the 12-for-1 reverse stock split effected on that date on a retroactive basis as described in Note 10.

See accompanying notes to the consolidated financial statements.

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BIONEXUS GENE LAB CORP.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023

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

(Unaudited)

	Three months ended
	March 31,
	2024			2023

REVENUE	$	2,381,851		$	2,377,205

COST OF REVENUE		(2,016,820	)		(2,008,308	)

GROSS PROFIT		365,031			368,897

OTHER INCOME		201,847			117,344

OPERATING EXPENSES
General and administrative		(645,906	)		(536,872	)

LOSS FROM OPERATIONS		(79,028	)		(50,631	)

FINANCE COSTS		(4,661	)		(2,445	)

LOSS BEFORE TAX		(83,689	)		(53,076	)

Tax expense		(20,068	)		(15,990	)

NET LOSS		(103,757	)	$	(69,066	)

Other comprehensive income:
Foreign currency translation loss		(209,908	)		(39,039	)

COMPREHENSIVE LOSS	$	(313,665	)	$	(108,105	)

Earnings per share - Basic and diluted		(0.018	)		(0.007	)
Weighted average shares outstanding and per share amount have been adjusted for the periods shown to reflect the 12-for-1 reverse stock split effected on July 20, 2023, on a retroactive basis as described in Note 10.		17,667,663			14,476,513

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 MARCH 31, 2024 AND 2023

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

(Unaudited)

	Common stock
	Number of shares		Amount		Additional paid in capital			Accumulated surplus			Accumulated other comprehensive loss			Total Equity
Balance as of December 31, 2022		14,476,513	$	10,929,574	$	(5,011,891	)	$	1,156,392		$	(409,062	)	$	6,665,013
Impacts arising from application of Topic 326		-		-		-			(371,627	)		-			(371,627	)
Balance as of January 1, 2023, (restated)		14,476,513		10,929,574		(5,011,891	)		784,765			(409,062	)		6,293,386
Net loss for the period		-		-		-			(69,066	)		-			(69,066	)
Foreign currency translation loss		-		-		-			-			(39,039	)		(39,039	)
Balance as of March 31, 2023		14,476,513	$	10,929,574	$	(5,011,891	)	$	715,699		$	(448,101	)	$	6,185,281

	Common stock
	Number of shares		Amount		Additional paid in capital			Accumulated loss			Accumulated other comprehensive loss			Total Equity
Balance as of December 31, 2023		17,667,663	$	17,191,315	$	(5,011,891	)	$	(1,844,278	)	$	(677,294	)	$	9,657,852
Net loss for the period		-		-		-			(103,757	)		-			(103,757	)
Foreign currency translation loss		-		-		-			-			(209,908	)		(209,908	)
Balance as of March 31, 2024		17,667,663	$	17,191,315	$	(5,011,891	)	$	(1,948,035	)	$	(887,202	)	$	9,344,187

Share activity (number of shares or both number and amount of shares) has been adjusted for the periods shown to reflect the 12-for-1 reverse stock split effected on July 20, 2023, on a retroactive basis as described in Note 10.

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 THREE MONTHS ENDED MARCH 31, 2024 AND 2023

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

(Unaudited)

	Three months ended
	March 31,
	2024			2023
Cash flows from operating activities:
Net loss	$	(103,757	)	$	(69,066	)

Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of right of use asset		9,448			3,972
Allowances for expected credit losses		120,469			-
Recovered for expected credit losses		(31,752	)		-
Depreciation of property, plant and equipment		20,138			20,897
Dividend income		(8,946	)		(8,692	)
Fair value gain on other investments		(40,488	)		(37,399	)
Gain on disposal of other investments		(6,181	)		(4	)
Interest		2,711			1,779
Operating loss before working capital changes		(38,358	)		(88,513	)

Changes in operating assets and liabilities:
Inventories		60,817			78,171
Trade and other receivables		(112,473	)		335,512
Trade and other payables		55,227			(433,061	)
Advance payment from customer		5,578			(7,801	)
Operating lease liabilities		(12,041	)		(4,366	)
Tax recoverable		6,808			3,540
Net cash used in operating activities		(34,442	)		(116,518	)

Cash flows from investing activities:
Acquisition of other investment		(174,247	)		(13,646	)
Dividend income		8,946			8,692
Purchase of plant and equipment		(21,945	)		(102	)
Proceeds from disposal of other investments		211,344			-
Net cash generated from/(used in) investing activities		24,098			(5,056	)

Cash flows from financing activities:
Interest		(2,711	)		(1,779	)
Advances from Directors		26,930			-
Net cash generated from/(used in) financing activities		24,219			(1,779	)

Foreign currency translation adjustment		(111,030	)		(22,299	)
NET CHANGE IN CASH AND CASH EQUIVALENTS		(97,155	)		(145,652	)
CASH AND CASH EQUIVALENTS, BEGINNING OF FINANCIAL PERIOD/YEAR		5,929,336			2,118,864

CASH AND CASH EQUIVALENTS, END OF FINANCIAL PERIOD/YEAR	$	5,832,181		$	1,973,212

CASH AND CASH EQUIVALENTS INFORMATION:
Fixed deposits placed with financial institutions	$	3,342,966		$	1,566,425
Cash at bank		2,489,215			406,787
Cash and cash equivalents, end of financial period/year		5,832,181			1,973,212

Supplementary cash flow information:
Interest paid	$	(4,661	)	$	(2,445	)
Income tax paid		(14,517	)		(12,438	)

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 THREE MONTHS ENDED MARCH 31, 2024 AND 2023

(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 Bionexus Gene Lab Sdn. Bhd., a Malaysian corporation (“BioNexus Malaysia”). BioNexus Malaysia was incorporated in Malaysia on April 7, 2015 and subsequently changed its name to MRNA Scientific Sdn. Bhd. (“MRNA Scientific”) on September 19, 2023.

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 March 31, 2024 is depicted below:

	BioNexus Gene Lab Corp.
	a Wyoming company


100% owned		100% owned
MRNA Scientific Sdn. Bhd. (formerly “Bionexus Gene Lab Sdn. Bhd.”),		Chemrex Corporation Sdn. Bhd.,
a Malaysian company		a Malaysian Company

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BIONEXUS GENE LAB CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023

(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 as of and for the three months ended March 31, 2024 and 2023 have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) that permit reduced disclosure for interim periods. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) have been condensed or omitted.

In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the period ended March 31, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024. The Condensed Consolidated Balance Sheet information as of December 31, 2023 was derived from the Company’s audited Consolidated Financial Statements as of and for the year ended December 31, 2023 included in the Company’s Annual Report on Form 10-K filed with the SEC on April 16, 2024. These financial statements should be read in conjunction with that report.

·	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 primarily consist of invoiced amounts from Chemrex’s revenue. Chemrex applies interest charges to outstanding balances for certain receivables that exceed certain periods

Expected credit losses

The Company estimates and records a provision for its expected credit losses related to its financial instruments, including its trade receivables. Management considers historical collection rates, the current financial status of the Company’s customers, macroeconomic factors, and other industry-specific factors when evaluating current expected credit losses. Forward-looking information is also considered in the evaluation of current expected credit losses.

To determine the provision for credit losses for accounts receivable, the Company has disaggregated its accounts receivable by business component, as management determined that risk profile of the Company’s customers is consistent based on the type and industry in which they operate. Each business component is analyzed for estimated credit losses individually. In doing so, the Company establishes a historical loss matrix, based on the previous collections of accounts receivable by the age of such receivables. Further, the Company considers macroeconomic factors and the status of the industry the business component is in to estimate if there are current expected credit losses within its trade receivables based on the trends of the Company’s expectation of the future status of such economic and industry-specific factors. Also, specific allowance amounts are established based on review of outstanding invoices to record the appropriate provision for customers that have a higher probability of default.

·	Inventories

Inventories consisting of products available for sell are stated at the lower of cost or net realizable 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 net realizable 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.

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BIONEXUS GENE LAB CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023

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

(Unaudited)

Leases

Operating lease right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Generally, the implicit rate of interest (“discount rate”) in arrangements is not readily determinable and the Company utilizes its incremental borrowing rate in determining the present value of lease payments. The Company’s incremental borrowing rate is based on reference of a borrowing rate from the country where the operating subsidiary is located. The operating lease ROU asset includes any lease payments made and excludes lease incentives.

·	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:

	Principal
Categories	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	%
Solar PV System		20	%

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 THREE MONTHS ENDED MARCH 31, 2024 AND 2023

(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 THREE MONTHS ENDED MARCH 31, 2024 AND 2023

(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 THREE MONTHS ENDED MARCH 31, 2024 AND 2023

(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:

	March 31,		December 31,
	2024		2023
Period ended March 31, 2024 /Year-ended December 31, 2023 US$1: MYR exchange rate		4.7205		4.5900

	January 1, 2024 to March 31, 2024		January 1, 2023 to March 31, 2023
3 months average US$1: MYR exchange rate		4.7240		4.3968

·	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.

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BIONEXUS GENE LAB CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023

(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 March 31, 2024, and December 31, 2023, the Company did not have any non-financial 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.

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BIONEXUS GENE LAB CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023

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

(Unaudited)

NOTE 3 - TRADE RECEIVABLES

The Company recognized its trade receivables at their original invoice amounts minus an allowance for expected credit losses using a provisional matrix. Any bad debts are written off as identified,

Trade receivables primarily consist of amounts owed by unrelated customers, with credit terms typically ranging from 30 to 120 days.

In certain instances, the Company applies interest charges to overdue balance on specific trade receivables. Interlink Techno Sdn. Bhd., a customer of Chemrex has been subject to interest at a rate of 6% per annum from May 2021 to June 2023, subsequently increasing to 8.4% from July 2023 onwards. Similarly, Mawintech Sdn Bhd, another customer of Chemrex has been subject to a 6% per annum interest rate since May 2021.

Throughout the financial year, no other interest charges were applied to the trade receivables.

	As of
	March 31,			December 31,
	2024			2023

Trade receivables		2,180,459			2,107,182
Allowances for expected credit losses		(1,359,126	)		(1,314,427	)
Foreign translation differences		18,225			(6,919	)
	$	839,558		$	799,674

Movement for trade receivables allowance for impairment accounts:

	As of
	March 31,			December 31,
	2024			2023
At January 1, 2024 and January 1, 2023		1,314,427			-
Impacts arising from application of Topic 326		-			371,627
At January 1, 2024 and January 1, 2023, (restated)		1,314,427			371,627
Charge for the period/year
Allowances for expected credit losses		120,469			942,800
Recovered for expected credit losses		(31,752	)		-
Foreign translation differences		(44,018	)		-
	$	1,359,126		$	1,314,427

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BIONEXUS GENE LAB CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023

(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

The Company is registered in the State of Wyoming and is subject to the tax laws of the United States of America.

Malaysia

MRNA Scientific Malaysia and Chemrex are both subject to Malaysia Corporate Tax, which is charged at the statutory income tax rate range from 15% to 24% on its assessable income.

	As of
	March 31,			December 31,
	2024			2023
Tax Recoverable
Local	$	-		$	-
Foreign, representing Malaysia		(50,441	)		(57,588	)
Tax Recoverable		(50,441	)		(57,588	)

Income tax liabilities:
Local	$	-		$	-
Foreign, representing Malaysia		-			-
Income tax payables		-			-

Deferred tax liabilities:
Local	$	-		$	-
Foreign, representing Malaysia		11,916			12,255
Deferred tax liabilities		11,916			12,255
Total		(38,525	)		(45,333	)

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BIONEXUS GENE LAB CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023

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

(Unaudited)

NOTE 5 – OPERATING LEASE RIGHT OF USE ASSET AND LEASE LIABILITIES

The Company has operating lease arrangements for office space, lab, and motor vehicles in Malaysia with a term between two and five years. The Company accounts for the lease and non-lease components of its leases as a single lease component. Lease expense is recognized on a straight-line basis over the lease term.

Operating lease right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term.

The present value of the lease payments are discounted with rates ranging from 6.40% to 6.65% per annum. These rates are reference from base rate of Malayan Banking Berhad, the largest bank in Malaysia.

The lease payments of operating lease are classified within operating activities in the statement of cash flows.

Operating lease right of use assets as follows:	As of
	March 31,			December 31,
	2024			2023
Balance as of beginning of the period/year	$	141,544		$	55,730
Add: Addition of lease liabilities		-			113,279
Less: Amortization		(9,448	)		(25,038	)
Foreign translation differences		(3,920	)		(2,427	)
Balance as of end of the period/year	$	128,176		$	141,544

Operating lease liabilities as follows:
	March 31,			December 31,
	2024			2023
Balance as of beginning of the period/year	$	133,395		$	56,775
Add: Addition of lease liabilities		-			113,279
Less: gross repayment		(10,377	)		(39,798	)
Add: imputed interest		2,030			5,613
Foreign translation differences		(3,694	)		(2,474	)
Balance as of end of the year		121,354			133,395
Less: lease liability current portion		(32,508	)		(34,632	)
Lease liability non-current portion	$	88,846		$	98,763

The amortization of the right of use asset for the three months’ period ended March 31, 2024 and three months’ period ended March 31, 2023 were $9,448 and $3,972 respectively.

Other information:	As of
	March 31, 2024			December 31, 2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flow from operating lease	$	(12,041	)	$	76,620
Right of use assets obtained in exchange for operating lease liabilities		128,176			141,544
Remaining lease term for operating lease (years)		4.25			4.5
Weighted average discount rate for operating lease	$	6.53	%	$	6.53	%

Lease expenses for the three months’ period ended March 31, 2024 and three months’ period ended March 31, 2023 were $2,030 and $855, respectively.

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BIONEXUS GENE LAB CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023

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

(Unaudited)

NOTE 6 - PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consisted of the following:

	As of
	March 31,			December 31,
	2024			2023
Air conditioner	$	1,124		$	1,124
Computer and software		5,502			3,923
Equipment		62,423			60,412
Furniture and fittings		100,118			100,118
Lab equipment		320,102			320,102
Land and buildings		1,506,969			1,506,969
Motor vehicle		161,148			161,148
Office equipment		35,335			33,914
Renovation		98,597			98,597
Signboard		806			806
Solar PV System		16,935			-
Capital Work In Progress		109,509			109,509
		2,418,568			2,396,622
(Less): Accumulated depreciation		(679,253	)		(659,115	)
Add: Foreign translation differences		(267,677	)		(225,889	)
Property, plant and equipment, net	$	1,471,638		$	1,511,618

Depreciation expense for the three months’ period ended March 31, 2024 and 2023 were $20,138 and $20,897 respectively.

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BIONEXUS GENE LAB CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023

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

(Unaudited)

NOTE 7 - OTHER INVESTMENTS

	As of
	March 31,			December 31,
	2024			2023
As of beginning of the period/year	$	1,699,831		$	1,150,898
Addition during the year		174,247			320,733
Disposal during the year		(211,344	)		(26,146	)
Fair value gain		40,488			313,859
Impairment on other investment		-			(6,194	)
Foreign exchange translation		(46,990	)		(53,319	)
As of end of the period/year	$	1,656,232		$	1,699,831

The other investments consist of the following shares:
	As of
	March 31,		December 31,
	2024		2023
Investment in quoted shares:
Malaysia		1,000,324		1,138,863
Singapore		152,635		79,577
Hong Kong		503,273		481,391
	$	1,656,232	$	1,699,831

NOTE 8 - TRADE PAYABLES

Trade payables are amounts billed to the Company by suppliers for goods and services in the ordinary course of business. All amounts have short-term repayment terms and vary by supplier.

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BIONEXUS GENE LAB CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023

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

(Unaudited)

NOTE 9 - CONCENTRATION OF RISKS

a) Major customers

During the three months and three months ended March 31, 2024 and 2023, the Company did not have any material recognizable major customers accounted for 10% or more of the Company’s revenue.

b) Major suppliers

For three months ended March 31, 2024 and 2023, the suppliers who accounted for 10% or more of the Company’s cost of sales and their balances at year ended are presented as follows:

	2024		2023		2024			2023			2024		2023
	Purchase				Percentage of purchases						Accounts payable trade
Vendor A	$	392,225	$	194,453		19.45	%		9.68	%	$	438,579	$	252,727
Vendor B	$	346,329	$	410,208		17.17	%		20.43	%	$	318,622	$	408,334
Vendor C	$	315,041	$	314,739		15.62	%		15.67	%	$	215,517	$	313,300
	$	1,053,595	$	919,400		52.24	%		45.78	%	$	972,718	$	974,361

NOTE 10 - STOCK HOLDERS’ EQUITY

Reverse Stock Split

On June 5, 2023, the Company filed an Article of Amendment to the Articles of Incorporation with the Wyoming Secretary of State to modify the ratio of the Reverse Stock Split from one-for-ten (10) to one-for-twelve (12) (the “Revised Reverse Stock Split”). Upon effectiveness of the Revised Reverse Stock Split, every twelve (12) outstanding shares of common stock were combined into and automatically became one share of common stock. No fractional shares was issued in connection with the Revised Reverse Stock Split and all such fractional shares or odd lots (less than 100 shares to any record or beneficial holder) issuable in the Revised Reverse Stock Split were rounded up to 100 shares. An aggregate of 1,044,351 shares were issued to applicable shareholders as a result of the round-up.

The Revised Reverse Stock Split was approved and authorized by a majority of the Company’s stockholder on May 8, 2023 and by the Board of Directors of the Company on May 8, 2023.

Public Offering & Nasdaq Listing

On July 20, 2023, the Company entered into an underwriting agreement (the "Underwriting Agreement") with Network 1 Financial Securities, Inc., as underwriter (the "Underwriter") pursuant to which the Company agreed to issue and sell, in a firm commitment underwritten public offering by the Company (the "Offering") of 1,250,000 shares of common stock, no par value, priced at a public offering price of $4.00 per share.

In addition, pursuant to the Underwriting Agreement, the Underwriter was granted a 45-day option (the "Over-Allotment Option") to purchase up to an additional 187,500 shares of common stock at the public offering price of $4.00 per share. The Underwriter fully exercised the Over-Allotment Option on July 24, 2023.

The securities were offered by the Company pursuant to the registration statement on Form S-1 (File No. 333-269753), which was originally filed with the U.S. Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended, on February 14, 2023, and declared effective by the Commission on July 19, 2023.

On July 24, 2023, the Offering closed, and the Company issued and sold 1,437,500 shares of common stock, including 187,500 shares sold pursuant to the full exercise of the Over-Allotment Option. The Offering was priced at $4.00 per share for total gross proceeds of $5.75 million before deducting underwriting discounts, commissions, and offering expenses. Pursuant to the Underwriting Agreement, the Underwriter received an 8% underwriting discount on the public offering price for the shares common stock. The Company will therefore receive net proceeds, before expenses, of $5,290,000 from the sale of the common stocks. In addition, the Company issued to the Underwriter warrants to purchase up to an aggregate of 115,000 shares of the Company's common stock (the "Underwriter's Warrants") at an exercise price of $4.40 per share. The Underwriter's Warrants are exercisable from July 24, 2023 until July 24, 2028.

In August, 2023, an aggregate of 759,299 shares of common stock were issued to professional parties or service providers in lieu of cash for services rendered, 125,000 were subsequently cancelled in November, 2023.

In August, 2023, an aggregate of 75,000 shares of common stock were issued to three directors in lieu of cash for services rendered in connection with their employment as directors of the Company.

From July 20, 2023 to August 4, 2023, an aggregate total of 1,044,351 shares of common stock were issued as part of the round-up exercise to the reverse stock split.

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BIONEXUS GENE LAB CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023

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

(Unaudited)

NOTE 11 – SEGMENTED INFORMATION

At March 31, 2024, the Company (“BGLC”) operates in the biochemical industry segment through its two Malaysian subsidiaries, MRNA Scientific Malaysia (formerly known as Bionexus Gene Lab Sdn. Bhd.) and Chemrex.

	BioNexus Gene Lab Corp.
	a Wyoming company


100% owned		100% owned
MRNA Scientific Sdn. Bhd. (formerly “Bionexus Gene Lab Sdn. Bhd.”),		Chemrex Corporation Sdn. Bhd.,
a Malaysian company		a Malaysian Company

At March 31, 2024, the Company (“BGLC”) operates in the biochemical industry segment through its two Malaysian subsidiaries, MRNA Scientific Malaysia and Chemrex.

For the three months ended March 31, 2024, segmented (unaudited) revenue and net (loss)/profit (Currency expressed in United States Dollars (“US$”) are as follows:

	MRNA Scientific Malaysia		Chemrex		BGLC		Total
	Three months ended March 31, 2024

REVENUE	$	3,165	$	2,378,686	$	-

SEC Form 10-Q filed by BioNexus Gene Lab Corp