BioNexus Gene Lab Corp [BGLC] Filings

10-Q 1 bglc_10q.htm FORM 10-Q 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 September 30, 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: 001-41750

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:A-28-7, Tower A, Menara UOA Bangsar,
No.5 Jln Bangsar Utama 1,
59000 Kuala Lumpur		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 November 15, 2024, there were 17,967,663 shares of common stock, no par value per share, issued and outstanding.

TABLE OF CONTENTS

		Page
PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	33
Item 4.	Controls and Procedures	34

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	35
Item 2.	Unregistered Sale of Equity Securities and Use of Proceeds	35
Item 3.	Defaults Upon Senior Securities	35
Item 4.	Mine Safety Disclosures	35
Item 5.	Other Information	35
Item 6.	Exhibits	36
SIGNATURES		37

Table of Contents

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 SEPTEMBER 30, 2024 AND DECEMBER 31, 2023

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

			As of
			September 30,			December 31,
	Note		2024			2023
ASSETS			(Unaudited)			(Audited)
CURRENT ASSETS
Cash and bank balances				2,061,716			2,623,965
Fixed deposits placed with financial institutions				2,075,503			3,305,371
Trade receivables		3		1,425,343			799,674
Other receivables, deposits and prepayments				65,683			122,432
Tax recoverable		4		22,132			57,588
Inventories				1,389,076			1,137,770
Total current assets				7,039,453			8,046,800

NON-CURRENT ASSETS
Operating lease right of use assets		5		232,747			141,544
Property, plant and equipment, net		6		1,728,680			1,511,618
Other investments		7		1,994,175			1,699,831
Total non-current assets				3,955,602			3,352,993
TOTAL ASSETS			$	10,995,055			11,399,793

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Trade payables		8		1,033,125			1,402,180
Other payables and accrued liabilities				292,135			180,912
Current portion of operating lease liabilities		5		48,214			34,632
Advance payment from customer				22,834			-
Amount owing to directors				18,561			13,199
Total current liabilities				1,414,869			1,630,923

NON-CURRENT LIABILITIES
Non-current portion of operating lease liabilities		5		178,367			98,763
Deferred tax liabilities		4		13,646			12,255
Total non-current liabilities				192,013			111,018
TOTAL LIABILITIES			$	1,606,882			1,741,941

STOCKHOLDERS’ EQUITY
As at September 30, 2024, common stock, no par value; 300,000,000 shares authorized and 17,967,663 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		17,332,315			17,191,315
Additional paid in capital				(5,011,891	)		(5,011,891	)
Accumulated deficit				(3,094,301	)		(1,844,278	)
Other comprehensive losses				162,050			(677,294	)
TOTAL STOCKHOLDERS’ EQUITY				9,388,173			9,657,852

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY			$	10,995,055			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 AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023 (Currency expressed in United States Dollars (“US$”)) (Unaudited)

	Three months ended						Nine months ended
	September 30,						September 30,
	2024			2023			2024			2023

REVENUE	$	2,630,376		$	2,553,686		$	6,986,791		$	7,497,739

COST OF REVENUE		(2,303,840	)		(2,199,354	)		(6,006,504	)		(6,434,796	)

GROSS PROFIT		326,536			354,332			980,287			1,062,943

OTHER INCOME		465,527			199,284			1,397,479			511,792

OPERATING EXPENSES
General and administrative		(2,129,685	)		(3,082,128	)		(3,535,248	)		(4,426,077	)

LOSS FROM OPERATIONS		(1,337,622	)		(2,528,512	)		(1,157,482	)		(2,851,342	)

FINANCE COSTS		(6,193	)		(4,259	)		(15,334	)		(9,746	)

LOSS BEFORE TAX		(1,343,815	)		(2,532,771	)		(1,172,816	)		(2,861,088	)

Tax expense		(1,555	)		(76,418	)		(77,207	)		(76,418	)

NET LOSS	$	(1,345,370	)	$	(2,609,189	)	$	(1,250,023	)	$	(2,937,506	)

Other comprehensive income:
Foreign currency translation gain/(loss)		1,046,789			(18,603	)		839,344			(391,533	)

COMPREHENSIVE LOSS	$	(298,581	)	$	(2,627,792	)	$	(410,679	)	$	(3,329,039	)

Earnings per share - Basic and diluted		(0.017	)		(0.157	)		(0.023	)		(0.218	)
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.		17,967,663			16,774,370			17,768,393			15,250,883

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 SEPTEMBER 30, 2024 AND 2023

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

(Unaudited)

	Common stock				Additional			Accumulated			Other			Total
	Number of shares		Amount		paid in capital			surplus/ (deficit)			comprehensive losses			stockholders’ 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
Net loss for the period		-		-		-			(259,251	)		-			(259,251	)
Foreign currency translation loss		-		-		-			-			(333,891	)		(333,891	)
Balance as of June 30, 2023		14,476,513	$	10,929,574	$	(5,011,891	)	$	456,448		$	(781,992	)	$	5,592,139
Net loss for the period		-		-		-			(2,609,189	)		-			(2,609,189	)
Round up shares		1,044,351		1,046		-			-			-			1,046
Issuance of shares*		1,437,500		5,750,000		-			-			-			5,750,000
Issuance of shares#		834,299		600,695		-			-			-			600,695
Foreign currency translation loss		-		-		-			-			(18,603	)		(18,603	)
Balance as of September 30, 2023		17,792,663	$	17,281,315	$	(5,011,891	)	$	(2,152,741	)	$	(800,595	)	$	9,316,088

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
* 1,437,500 shares of common stock were issued to the underwriter.
# 834,299 shares of common stock were issued to professional parties and board members

	Common stock				Additional						Other			Total
	Number of shares		Amount		paid in capital			Accumulated deficit			comprehensive (losses)/gain			stockholders’ 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
Net profit for the period		-		-		-			199,104			-			199,104
Foreign currency translation gain		-		-		-			-			2,463			2,463
Balance as of June 30, 2024		17,667,663	$	17,191,315	$	(5,011,891	)	$	(1,748,931	)	$	(884,739	)	$	9,545,754
Net loss for the period		-		-		-			(1,345,370	)		-			(1,345,370	)
Issuance of shares @		300,000		141,000		-			-			-			141,000
Foreign currency translation gain		-		-		-			-			1,046,789			1,046,789
Balance as of September 30, 2024		17,967,663	$	17,332,315	$	(5,011,891	)	$	(3,094,301	)	$	162,050		$	9,388,173

@ 300,000 shares of common stock were issued for professional services rendered

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 NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023

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

(Unaudited)

	Nine months ended
	September 30,
	2024			2023
Cash flows from operating activities:
Net loss	$	(1,250,023	)	$	(2,937,506	)

Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of right of use asset		35,507			15,620
Allowances for expected credit losses		122,843			1,372,573
Recovered for expected credit losses		(842,401	)		-
Bad debts		-			4,175
Depreciation of property, plant and equipment		74,611			63,147
Dividend income		(59,653	)		(48,892	)
Fair value gain on other investments		(63,650	)		(223,284	)
Loss arising from settlement of supplier contract dispute		29,140			-
Gain on disposal of other investments		(35,098	)		-
Gain on lease termination		(578	)		-
Interest		6,974			6,794
Property, plant and equipment written off		-			18
Share-base compensation		141,000			601,741
Stock written off		-			392
Operating loss before working capital changes		(1,841,328	)		(1,145,222	)

Changes in operating assets and liabilities:
Inventories		(251,306	)		(130,502	)
Trade and other receivables		150,638			505,667
Trade and other payables		(257,832	)		(364,617	)
Advance payment from customer		22,834			(14,905	)
Operating lease liabilities		(24,342	)		81,989
Tax recoverable		36,847			27,904
Net cash used in operating activities		(2,164,489	)		(1,039,686	)

Cash flows from investing activities:
Acquisition of other investment		(486,170	)		(296,109	)
Dividend income		59,653			48,892
Purchase of plant and equipment		(222,967	)		(148,461	)
Proceeds from disposal of other investments		494,741			26,854
Proceeds from settlement of supplier contract dispute		78,787			-
Net cash used in investing activities		(75,956	)		(368,824	)

Cash flows from financing activities:
Interest		(6,974	)		(6,794	)
Advances from Directors		5,362			-
Shares subscriptions		-			5,750,000
Net cash (used in)/generated from financing activities		(1,612	)		5,743,206

Foreign currency translation adjustment		449,940			(306,677	)
NET CHANGE IN CASH AND CASH EQUIVALENTS		(1,792,117	)		4,028,019
CASH AND CASH EQUIVALENTS, BEGINNING OF FINANCIAL PERIOD		5,929,336			2,118,864

CASH AND CASH EQUIVALENTS, END OF FINANCIAL PERIOD	$	4,137,219		$	6,146,883

CASH AND CASH EQUIVALENTS INFORMATION:
Fixed deposits placed with financial institutions	$	2,075,503		$	1,442,098
Cash at bank		2,061,716			4,704,785
Cash and cash equivalents, end of financial period		4,137,219			6,146,883

Supplementary cash flow information:
Interest paid	$	(15,334	)	$	(9,746	)
Income tax refunded		-			315
Income tax paid		(39,842	)		(47,808	)

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 NINE MONTHS ENDED SEPTEMBER 30, 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 A-28-7, Tower A, Menara UOA Bangsar, No.5 Jln Bangsar Utama 1, 59000 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 September 30, 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.”), 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 NINE MONTHS ENDED SEPTEMBER 30, 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 nine months ended September 30, 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 September 30, 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 sale 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 NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023

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

(Unaudited)

Leases

Operating lease right-of-use assets and liabilities are recognized at the 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	%
Machinery		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 NINE MONTHS ENDED SEPTEMBER 30, 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 fulfils 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.

Table of Contents

BIONEXUS GENE LAB CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 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 disclose uncertain tax positions taken in their financial statements 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 NINE MONTHS ENDED SEPTEMBER 30, 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 Dollar (“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:

	September 30,		December 31,
	2024		2023
Period ended September 30, 2024 /Year-ended December 31, 2023 US$1: MYR exchange rate		4.1220		4.5900

January 1,

2024

September 30,

2024

January 1,

2023

September 30,

2023

9 months average US$1: MYR exchange rate

4.6327

4.5192

·	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 NINE MONTHS ENDED SEPTEMBER 30, 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 September 30, 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, considers the applicability and impact of all accounting standards updates (“ASUs”). Management periodically reviews new accounting standards that are issued.

In November 2023, the FASB issued ASU 2023-07 “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures” which expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses. The ASU 2023-07 is effective for annual reporting periods beginning after December 15, 2023 and interim periods in fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the impact this ASU may have on its unaudited condensed consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU 2023-09 “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” to expand the disclosure requirements for income taxes, specifically related to the rate reconciliation and income taxes paid. The ASU 2023-09 is effective for annual reporting periods beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the impact of this ASU may have on its unaudited condensed consolidated financial statements and related disclosures.

The Company does not expect that any other recently issued accounting pronouncements will have a significant effect on its condensed consolidated financial statements.

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BIONEXUS GENE LAB CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023

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

(Unaudited)

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 September 30, 2024. 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 Interlink Techno started in May 2021 through June 2023. From July 2023 onwards, Chemrex had increased the interest to 8.4%. Chemrex imposed 6% per annum interest on Mawintech Sdn Bhd from May 2021 through the current date. The normal trade credit terms are generally 30 days to 90 days.

	As of
	September 30,			December 31,
	2024			2023

Trade receivables		2,072,588			2,107,182
Allowances for expected credit losses		(596,332	)		(1,314,427	)
Foreign translation differences		(50,913	)		(6,919	)
	$	1,425,343		$	799,674

Movement for trade receivables allowance for impairment accounts:

	As of
	September 30,			December 31,
	2024			2023
At January 1, 2024 and January 1, 2023		1,307,508			-
Impacts arising from application of Topic 326		-			371,627
At January 1, 2024 and January 1, 2023, (restated)		1,307,508			371,627
Charge for the period/year
Allowances for expected credit losses		853,686			942,800
Recovered for expected credit losses		(1,571,782	)		-
Foreign translation differences		57,832			(6,919	)

	$	647,244		$	1,307,508

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BIONEXUS GENE LAB CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 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
	September 30,			December 31,
	2024			2023
Tax Recoverable
Local	$	-		$	-
Foreign, representing Malaysia		(22,132	)		(57,588	)
Tax Recoverable		(22,132	)		(57,588	)

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

Deferred tax liabilities:
Local	$	-		$	-
Foreign, representing Malaysia		13,646			12,255
Deferred tax liabilities		13,646			12,255
Total		(8,486	)		(45,333	)

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BIONEXUS GENE LAB CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 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 the 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
	September 30,			December 31,
	2024			2023
Balance as of beginning of the period/year	$	141,544		$	55,730
Add: Addition of lease liabilities (1)		142,865			113,279
Less: Amortization (2)		(35,507	)		(25,038	)
Less: lease termination (3)		(24,759	)		-
Foreign translation differences		8,604			(2,427	)
Balance as of end of the period/year	$	232,747		$	141,544

Operating lease liabilities as follows:
	September 30,			December 31,
	2024			2023
Balance as of beginning of the period/year	$	133,395		$	56,775
Add: Addition of lease liabilities (1)		142,865			113,279
Less: gross repayment		(40,701	)		(39,798	)
Add: imputed interest (4)		8,360			5,613
Less: lease termination (3)		(25,337	)		-
Foreign translation differences		7,999			(2,474	)
Balance as of end of the year		226,581			133,395
Less: lease liability current portion		(48,214	)		(34,632	)
Lease liability non-current portion	$	178,367		$	98,763

(1) During the nine months period ended September 30, 2024, the Company had entered into a new operating lease of office space in Malaysia for 5 years. An additional right-of-use assets at $142,865 and lease liabilities at $142,865 are recognised upon the commencement of lease term

(2) The amortization of the right of use asset for the nine months’ period ended September 30, 2024, and nine months’ period ended September 30, 2023 were $35,507 and $15,620 respectively.

(3) During the nine months period ended September 30, 2024, the Company agreed to terminate its operating lease arrangement for office space in Malaysia, effective August 31, 2024. Accordingly, at the date of termination of the operating lease, the Company expensed a right-of-use-asset, net of accumulated depreciation, of $24,759 and recorded a write-off of lease liability of $25,337, with a gain on lease termination recorded for $578.

Other information:

	As of
	September 30,			December 31,
	2024			2023
Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flow from operating lease	$	(24,342	)		76,620
Right of use assets obtained in exchange for operating lease liabilities		232,747			141,544
Remaining lease term for operating lease (years)		4.67			4.50

Weighted average discount rate for operating lease	$	6.65	%		6.53	%

4) Lease expenses for the nine months’ period ended September 30, 2024 and nine months’ period ended September 30, 2023 were $8,360 and $3,311 respectively. A gain on lease termination for the nine months’ period ended September 30, 2024 and nine months’ period ended September 30, 2023 were $578 and nil respectively.

Table of Contents

BIONEXUS GENE LAB CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 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
	September 30,			December 31,
	2024			2023
Air conditioner	$	1,124		$	1,124
Computer and software		5,880			3,923
Equipment		65,214			60,412
Furniture and fittings		98,883			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		36,592			33,914
Renovation		101,137			98,597
Signboard		806			806
Solar PV System		16,935			-
Machinery (**)		190,341			-
Capital work in progress		-			109,509
		2,505,131			2,396,622
Less: Accumulated depreciation		(729,247	)		(659,115	)
Add: Foreign translation differences		(47,204	)		(225,889	)
Property, plant and equipment, net	$	1,728,680		$	1,511,618

Depreciation expense for the nine months’ period ended September 30, 2024, and 2023 were $74,611 and $63,147 respectively.

* includes an amount of approximately MYR4,372,574 (approximately $1,075,814) being the building that is under offer for purchase, as explained in Note 14.

** includes an amount of $190,341 as explained in Note 14.

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BIONEXUS GENE LAB CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023

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

(Unaudited)

NOTE 7 - OTHER INVESTMENTS

	As of
	September 30,			December 31,
	2024			2023
As of beginning of the period/year	$	1,699,831		$	1,150,898
Addition during the year		486,170			320,733
Disposal during the year		(459,642	)		(26,146	)
Fair value gain		63,650			313,859
Impairment on other investment		-			(6,194	)
Foreign exchange translation		204,166			(53,319	)
As of end of the period/year	$	1,994,175			1,699,831

The other investments consist of the following shares:
	As of
	September 30,		December 31,
	2024		2023
Investment in quoted shares:
Malaysia		947,310		1,138,863
Singapore		178,127		79,577
Hong Kong		626,017		481,391
	$	1,751,454	$	1,699,831

Investment in unquoted shares:
Malaysia		242,721		-
	$	1,994,175	$	1,699,831

The Company accounts for its investments in equity securities that represent less than 20% ownership, and for which the Company does not have the ability to exercise significant influence, subsequently at fair value in the balance sheets. Unrealized gains and losses for equity securities are recognized in other income and expenses.

The Company measure investments in equity securities without a readily determinable fair value using a measurement alternative that measures these securities at the cost method minus impairment, if any, plus or minus changes resulting from observable price changes on a non-recurring basis. Gains and losses on these securities are recognized in other income and expenses.

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.

Table of Contents

BIONEXUS GENE LAB CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023

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

(Unaudited)

NOTE 9 - CONCENTRATION OF RISKS

a)	Major customers

For three months September 30, 2024, and 2023, the customers who accounted for 10% or more of the Company's revenues and its accounts received balance at period-end are presented as follows:


	2024		2023		2024			2023		2024		2023
	Revenues				Percentage of revenues					Accounts receivable trade
Customer A	$	388,520	$	-		14.77	%		-	$	61,438	$	-
	$	388,520	$	-		14.77	%		-	$	61,438	$	-

For nine months ended September 30, 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 September 30, 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	$	586,206	$	353,697		25.44	%		16.08	%	$	177,783	$	279,092
Vendor B	$	386,895	$	407,094		16.79	%		18.51	%	$	317,624	$	467,447
Vendor C	$	347,281	$	320,413		15.07	%		14.57	%	$	313,016	$	316,067
	$	1,320,382	$	1,081,204		57.30	%		49.16	%	$	808,423	$	1,062,606

For nine months ended September 30, 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	$	1,069,272	$	922,895		17.80	%		14.34	%	$	177,783	$	279,092
Vendor B	$	1,058,928	$	1,077,986		17.63	%		16.75	%	$	317,624	$	467,447
Vendor C	$	968,574	$	1,167,862		16.13	%		18.15	%	$	313,016	$	316,067
	$	3,096,774	$	3,168,743		51.56	%		49.24	%	$	808,423	$	1,062,606

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 August 8, 2023 and by the Board of Directors of the Company on August 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.

Table of Contents

BIONEXUS GENE LAB CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023

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

(Unaudited)

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.

In August 2024, 300,000 shares of common stock were issued to professional parties or service providers in lieu of cash for services rendered.

NOTE 11 – SEGMENTED INFORMATION

At September 30, 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.”), a Malaysian company		Chemrex Corporation Sdn. Bhd., a Malaysian Company

At September 30, 2024, the Company (“BGLC”) operates in the biochemical industry segment through its two Malaysian subsidiaries, MRNA Scientific Malaysia and Chemrex Corporation.

For the nine months ended September 30, 2024, segmented (unaudited) revenue and net (loss)/profit (Currency expressed in United States Dollars (“US$”) are as follows:

	MRNA Scientific			Chemrex Corporation			BGLC			Total
	Nine months ended September 30, 2024

REVENUE	$	11,224		$	6,975,567		$	-		$	6,986,791

COST OF REVENUE		(6,723	)		(5,999,781	)		-			(6,006,504	)

GROSS PROFIT		4,501			975,786			-			980,287

OTHER INCOME		98,830			1,298,649			-			1,397,479

OPERATING EXPENSES
General and administrative		(475,762	)		(2,149,306	)		(910,180	)		(3,535,248	)

(LOSS)/PROFIT FROM OPERATIONS		(372,431	)		125,129			(910,810	)		(1,157,482	)

FINANCE COSTS		(8,360	)		(6,848	)		(126	)		(15,334	)

(LOSS)/PROFIT BEFORE TAX		(380,791	)		118,281			(910,306	)		(1,172,816	)

Tax expense		-			(77,207	)		-			(77,207	)

NET (LOSS)/PROFIT	$	(380,791	)	$	41,074		$	(910,306	)	$	(1,250,023	)

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BIONEXUS GENE LAB CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023

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

(Unaudited)

	MRNA Scientific			Chemrex Corporation			BGLC			Total
	Nine months ended September 30, 2023

REVENUE	$	28,468		$	7,469,271		$	-		$	7,497,739

COST OF REVENUE		(14,849	)		(6,419,947	)		-			(6,434,796	)

GROSS PROFIT		13,619			1,049,324			-			1,062,943

OTHER INCOME		3,922			507,870			-			511,792

OPERATING EXPENSES
General and administrative		(170,590	)		(2,348,127	)		(1,907,360	)		(4,426,077	)

LOSS FROM OPERATIONS		(153,049	)		(790,933	)		(1,907,360	)		(2,851,342	)

FINANCE COSTS		(2,952	)		(6,794	)		-			(9,746	)

LOSS BEFORE TAX		(156,001	)		(797,727	)		(1,907,360	)		(2,861,088	)

Tax expense		-			(76,418	)		-			(76,418	)

NET LOSS	$	(156,001	)	$	(874,145	)	$	(1,907,360	)	$	(2,937,506	)

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BIONEXUS GENE LAB CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023

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

(Unaudited)

	AS OF SEPTEMBER 30, 2024 AND DECEMBER 31, 2023
	Total Assets				Total Liabilities
	2024		2023		2024		2023
BGLC & MRNA Scientific	$	4,027,423		5,002,908	$	469,710	$	176,805
Chemrex Corporation		6,967,632		6,462,614		1,137,172		1,601,002
TOTAL		10,995,055		11,465,522		1,606,882		1,777,807

NOTE 12 – SUBSEQUENT EVENTS

In accordance with ASC Topic 855, “Subsequent Events,” which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued, the Company has evaluated all events or transactions that occurred after September 30, 2024 up through November 15, 2024 of these consolidated financial statements.

NOTE 13 – SIGNIFICANT EVENT

On January 12, 2024, our subsidiary, MRNA Scientific issued a termination notice to one of our suppliers for failing to deliver hardware of merchantable quality, for a contract with the value of MYR500,000 (approximately USD $109,000). Through subsequent negotiations, MRNA Scientific has been offered a without prejudice settlement of MYR350,000 (approximately USD $76,000) via a letter from the suppliers’ legal counsel, dated March 21, 2024.

On 30 May 2024, the supplier had proposed to collect the hardware from MRNA Scientific premises and upon the hardware being returned intact in same condition per deliver, the supplier would refund the sum of MYR350,000 to MRNA Scientific.

The supplier then duly refunded the sum on June 14, 2024 whereby MRNA Scientific had confirmed the receipt on June 19, 2024. MRNA Scientific then net off the receipt with fixed asset decapitalization in Balance Sheet while the remaining balance was recorded in the book as loss arising from settlement of supplier dispute in Income Statement.

NOTE 14 – AUDIT COMMITTEE OBSERVATIONS & PENDING INVESTIGATIONS

In connection with the Company’s preparation and review of its financial statements for the period ending September 30, 2024, the Audit Committee reviewed a number of transactions occurring at our wholly owned subsidiary, Chemrex Corporation Sdn. Bhd. ("Chemrex"), which were concerning to the Audit Committee and as a result, it has initiated investigations into the following matters;

A. Property Sale No. 4 Jalan CJ1/6 to CCRE Composite Sdn. Bhd.

On September 30, 2024, Chemrex entered into an Offer to Purchase Agreement with CCRE Composite Sdn. Bhd. to sell certain property located at No. 4, Jalan CJ 1/6B, Taman Cheras Jaya, Batu 11, 43300 Seri Kembangan, Selangor. The property is the main operating premises of Chemrex. The purchase price agreed upon in this transaction was MYR 4,400,000 (approximately USD $1,067,433), with specific terms outlined for deposits and completion requirements. An initial payment of MYR 44,000 (approximately USD $10,674) was made to Chremrex by the buyer subsequent to the end of the reporting period.

As mentioned, the Audit Committee has initiated an internal review of this transaction due to potential concerns that it may have been entered into without the appropriate authorization as mandated by corporate policies and Malaysian law. In addition, the terms of the transaction appear to be inconsistent with arm’s length transactions. The review is currently underway to assess compliance with internal controls over financial reporting and whether appropriate authority was granted to those involved in the transaction as well as whether the transaction was in compliance with Malaysian law. For the financial statements as of September 30, 2024, there is no immediate impact since the Offer to Purchase Agreement was signed on the last day of the current period, and the initial payment was received after the period-end. However, future impacts will depend on the completion status or potential rescission of the transaction.

B. Transactions with Honkuk Material Sdn. Bhd.

Chemrex engaged in transactions with Honkuk Material Sdn. Bhd., a related party by virtue of being owned by a number of Directors of Chemrex. The transactions relate to the purchase of materials totalling MYR789,696 (approximately USD $170,460) in conjunction with a manufacturing business recently engaged in by Chemrex. These transactions appear to lack independent review and board authorization and are currently undergoing further review.

C. Unauthorized Directors Remuneration Increases

Director remuneration for Chemrex directors was substantially increased by approximately MYR4,248,000 (approximately USD $916,954) during the third fiscal quarter of 2024. The payment increase appears to; lack documented board approval, have been inappropriately authorized and excessively exceed normal director compensation in violation of fiduciary responsibilities. The Audit Committee is reviewing the process undertaken and the transactions are undergoing investigation.

D. Transactions with Mr. Wong Kim Hai

Mr. Wong Kim Hai, a director of Chemrex, received payments during the current quarter from Chemrex totaling MYR200,000 (approximately USD $43,171). These payments appeared to lack documented board approval and be inappropriately authorised.

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BIONEXUS GENE LAB CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023

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

(Unaudited)

E. Transactions with Quote Me Sdn. Bhd.

Chemrex engaged in a transaction involving the purchase of technical know-how and machinery from a Malaysian company named Quote Me Sdn. Bhd.

The purchase agreement made on August 1, 2024 was for MYR 855,000 (approximately USD $190,341) in exchange for the transfer of machinery and know-how which appear to be related to Chemrex’s operations. These assets are currently reflected on our balance sheet as of the end of the current quarter.

However, the Audit Committee subsequently determined that Quote Me Sdn. Bhd. was a dissolved entity which raises concerns over the legitimacy of the transaction.

If the transaction is rescinded, it would impact the Company’s balance sheet as of the December 31, 2024 fiscal year end, potentially requiring adjustments to reduce both asset and liability accounts related to this transaction. Additionally, any previously recognized expenses, capitalized assets, or amortization related to the acquired know-how and machinery would need to be reconsidered, which could affect the profit or loss statements for the affected periods.

All of the above transactions are currently under review and investigation by the Audit Committee. In some instances, the Audit Committee has retained special counsel to assist in the investigation. The Company will provide updates of material irregularities regarding the above transactions.

NOTE 15 – RELATED PARTY TRANSACTIONS

As mentioned in Note 14, we have a number of ongoing investigations, however, as of the date of this filing the following represent the related party transactions known to us which occurred during the current quarter;

A. Transactions with Honkuk Material Sdn. Bhd.

As mentioned in Note 14(B) above, during the third quarter of 2024, Chemrex purchased materials totaling MYR 789,696 (approximately USD $170,460) from Honkuk Material Sdn. Bhd., a company owned by certain directors of Chemrex. These materials were acquired to support Chemrex’s recent entry into manufacturing operations.

Governance Review:

As these transactions involved related parties, they are undergoing further review by the Audit Committee to confirm that all necessary internal controls and governance procedures were followed. While formal board approval and independent review were not initially documented, management is working closely with the Audit Committee to assess compliance with applicable policies and ensure transparency.

Financial Reporting Impact:

This disclosure is made in line with ASC 850, Related Party Disclosures, to provide stakeholders with information on transactions involving related parties. If adjustments to these transactions are deemed necessary based on the review, they will be reflected in future financial statements.

B. Payments to Mr. Wong Kim Hai

As mentioned in Note 14(D) above, during the third quarter of 2024, Chemrex made payments totaling MYR 200,000 (approximately USD $43,171) to Mr. Wong Kim Hai, a director of Chemrex, as part of his compensation for services. These payments did not initially include documented board approval.

Review of Authorization:

The Audit Committee is conducting a review to confirm that all governance and authorization procedures were properly observed. Management and the Audit Committee are committed to ensuring that all transactions with related parties are documented in compliance with internal policies and applicable governance standards.

Disclosure and Financial Impact:

Consistent with ASC 850 requirements, these transactions are disclosed to provide transparency regarding related-party arrangements. Any adjustments that may result from the ongoing review will be reported in subsequent periods as necessary.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Description of Business

As used herein, unless the context otherwise indicates, references to the “Company,” “we,” “our,” “us,” “BioNexus” refer to BioNexus Gene Lab Corp., a Wyoming company (“BGLC”), and its wholly owned subsidiaries, MRNA Scientific Sdn. Bhd. (“MRNA Scientific Malaysia”), and Chemrex Corporation Sdn. Bhd. (“Chemrex”), both are Malaysian companies.

BGLC is an emerging technology company focused on the application of functional genomics to enable early detection of infectious diseases and cancers. On August 23, 2017, we acquired all of the outstanding capital stock of MRNA Scientific Malaysia, which was incorporated in Malaysia on April 7, 2015. MRNA Scientific Malaysia owns algorithm software, technology, and know-how related to the detection of common diseases through blood analysis which we use in our business. Our non-invasive blood screening tests analyze changes in ribonucleic acid (or RNA) to Coronavirus, Dengue, HIV, HPV and the risk potentiality of cancers diseases. This unique blood genomic biomarker approach is based on the scientific observation that circulating blood reflects, in a detectable way, what is occurring throughout the body currently.

The corporate and principal office address of the Company and MRNA Scientific Malaysia is Unit A-28-7, Tower A, Menara UOA Bangsar, No.5 Jln Bangsar Utama 1 , Kuala Lumpur, Malaysia., our lab is located at Lab 353, Chemical Science Centre, University Science Malaysia, George Town, Penang, Malaysia. Another lab focuses on Covid-19 and colon cancer screening is located at 4th floor, Lifecare Diagnostic Centre, Kuala Lumpur, Malaysia. Our telephone number is (+60) 18-2218762 and our website is www.bionexusgenelab.com.

Chemrex is a wholesaler of industrial chemicals for the manufacture of industrial, medical, appliance, aero, automotive, mechanical and electronic industries in Asean region. On December 31, 2020, we acquired all of the outstanding capital stock of Chemrex, which was incorporated in Malaysia on September 29, 2004.

Chemrex’s corporate office and distribution and storage center is located at 4 Jalan CJ 1/6 Kawasan Perusahaan Cheras Jaya, Selangor, Malaysia. Its phone number is (+60) 1922-23815 and website is www.chemrex.com.my.

The results of operations for Chemrex were adversely impacted during fiscal year 2023 and the slow recovery into 2024 as the businesses of Chemrex customers especially manufacturers continue to suffer from the lingering impact of Covid and supply chain shocks to the global economy. Many customers across Malaysia saw their supply chains interrupted, demand for their products and services decline and experienced shortages in supplies and inputs.

Recent Developments.

On July 1, 2024, the Company entered into an advisory service agreement with Maxim Group LLC (“Maxim”) to provide merger and acquisition (M&A) services, general financial advisory services, and investment banking services to the Company. The Company agreed and issued 300,000 shares of our common stock to Maxim for such service. Pursuant to the agreement, Maxim agrees to return a proportionate number of the shares to the company if Maxim is in material breach of the agreement.

If at any time during the term of the agreement or within twelve months from the effective date of the termination of the agreement, the Company proposes to effect a public offering of its securities on a US exchange, private placement of securities or other financing, the Company shall offer to retain Maxim as sole book running manager of such offering, or as its exclusive placement or sales agent in connection with such financing or other matter, upon such terms as the parties may mutually agree.

(a) Strategic Investment into Ascension Innovation Sdn Bhd. by our subsidiary, MRNA Scientific Sdn. Bhd.

Pursuant to a Form 8-K filed on April 18, 2024, the Company announced a strategic investment in Ascension Innovation Sdn Bhd (AISB), a privately held Malaysian company. Please refer to that filing for more information on the investment.

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(b) Notification of delisting and stay of suspension

On November 6, 2023, the Company reported that it received a letter from the Listing Qualifications Department of the Nasdaq Stock Market (“Nasdaq”) regarding the Company’s failure to comply with Nasdaq Continued Listing Rule (“Rule”) 5550(a)(2), which requires listed securities to maintain a minimum bid price of $1.00 per share. A failure to comply with Rule 5550(a)(2) exists when listed securities fail to maintain a closing bid price of at least $1.00 per share for 30 consecutive business days.

Under Rule 5810(c)(3)(A), the Company automatically was provided a period of 180 calendar days, until May 6, 2024, to regain compliance.

The Company then applied to NASDAQ to receive an additional 180 calendar days to regain compliance. On August 8, 2024, the Company received notification from NASDAQ that the compliance period has been extended to November 4, 2024. If at any time during this 180-day period the closing bid price of the Company’s securities is at least $1.00 for a minimum of ten consecutive business days, the Company’s compliance will be regained.

On November 5, 2024, BioNexus Gene Lab Corp (the "Company") received a notification from the Nasdaq Stock Market LLC ("Nasdaq") indicating that the Company’s common stock will be delisted from the Nasdaq Capital Market due to its failure to comply with Nasdaq Listing Rule 5550(a)(2), which requires listed securities to maintain a minimum bid price of $1 per share. The Company had been provided two consecutive 180-day grace periods, ending on November 4, 2024, to regain compliance but was unable to meet the requirement within the designated period.

In response, on November 8, 2024, the Company submitted a formal request for a hearing before a Nasdaq Hearings Panel to appeal the delisting determination. The Nasdaq Hearings Department has acknowledged receipt of the Company’s hearing request, which stays the suspension of trading of the Company’s common stock pending a decision by the Panel. The Company intends to present a compliance plan at the hearing, including potential corrective actions such as a reverse stock split, among other strategic initiatives, to regain compliance with Nasdaq’s listing standards.

On November 5, 2024, the Board of Directors of the Company appointed Ms. Jook Yuen Low as an independent director to the Board, effective immediately. Ms. Low has also been assigned to serve as a member of the Audit Committee and the Nomination & Corporate Governance Committee, bringing her expertise in corporate governance, legal compliance, and audit oversight. Ms. Low will serve in her capacity until the next annual meeting of shareholders.

Ms. Low (Age 46) holds a Bachelor of Laws (LL.B) and a Master of Business in Public Relations from the Queensland University of Technology, Australia. She was called to the Bar as an Advocate & Solicitor of the High Court of Malaya in 2004. Currently, Ms. Low is a partner at the law firm Azura Mokhtar & Low. Her legal career spans over 20 years, during which she has gained substantial experience in conveyancing, corporate law, and wealth management consulting. Her expertise includes advising on property, real estate, banking transactions, and corporate agreements such as shareholders’ agreements, joint ventures, and power of attorney.

There is no arrangement or understanding between the new director and any other person pursuant to which the new director was selected to be a director of the Company.

Ms. Low will receive the standard independent director compensation set by the Compensation Committee of the Company, which is $1,000 USD per month.

Except as stated above, there is no material plan, contract or arrangement (whether or not written) to which the new director is a party or in which each party participates that is entered into or a material amendment in connection with the triggering event or any grant or award to any such covered person or modification thereto, under any such plan, contract or arrangement in connection with any such event.

Additionally, the Board has re-appointed Mr. Su-Leng Tan Lee as Secretary of the Company and has appointed him as President, effective immediately. No change has been made to his compensation package as a result of his appointments.

(d) Internal Controls Enhancement

During and subsequent to the reporting period ending September 30, 2024, as a result of recent transactions occurring at its Chemrex subsidiary (See Note 14 to Unaudited financial statements included in this 10-Q filing), the Company focused on enhancing its internal control environment and improving governance procedures within its Chemrex subsidiary. Following the internal review of these recent transactions, management has implemented additional protocols to strengthen compliance with corporate policies and regulatory requirements, particularly concerning related-party transactions and transaction authorization at the subsidiary level.

The Company also acknowledges a recent communication from our independent auditors JP Centurion & Partners, in which the audit firm expressed concerns regarding certain aspects of Chemrex’s financial reporting and internal control structure. The Company is addressing these matters through comprehensive oversight, led by the audit committee, to ensure transparency, accuracy, and compliance in all reported information. These efforts aim to reinforce the integrity of our financial reporting and provide shareholders with reliable information on the Company’s operational and financial performance.

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

	September 30,		December 31,
	2024		2023
Period ended September 30, 2024 /Year-ended December 31, 2023 US$1: MYR exchange rate		4.1220		4.5900

January 1,

2024

September 30,

2024

January 1,

2023

September 30,

2023

9 months average US$1: MYR exchange rate

4.6327

4.5192

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Results of Operations

*Three Months Ended September 30, 2024 Compared with the Three Months Ended September 30, 2023.*

The following table sets forth key selected financial data for the three months ended September 30, 2024 and 2023.

Consolidated

	Three months ended
	September 30,
	2024			2023
REVENUE	$	2,630,376		$	2,553,686

COST OF REVENUE		(2,303,840	)		(2,199,354	)

GROSS PROFIT		326,536			354,332

OTHER INCOME		465,527			199,284

OPERATING EXPENSES
General and administrative		(2,129,685	)		(3,082,128	)

LOSS FROM OPERATIONS		(1,337,622	)		(2,528,512	)

FINANCE COSTS		(6,193	)		(4,259	)

LOSS BEFORE TAX		(1,343,815	)		(2,532,771	)

Tax expense		(1,555	)		(76,418	)

NET LOSS	$	(1,345,370	)	$	(2,609,189	)
Other comprehensive income:
Foreign currency translation gain/(loss)		1,046,789			(18,603	)

COMPREHENSIVE LOSS	$	(298,581	)	$	(2,627,792	)

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Segmented Information

	MRNA Scientific			Chemrex Corporation			MRNA Scientific			Chemrex Corporation
	Three months ended September 30, 2024						Three months ended September 30, 2023
REVENUE	$	2,563		$	2,627,813		$	16,536		$	2,537,150

COST OF REVENUE		(2,118	)		(2,301,722	)		(7,301	)		(2,192,053	)

GROSS PROFIT		445			326,091			9,235			345,097

OTHER INCOME		22,772			442,755			1,757			197,527

OPERATING EXPENSES
General and administrative		(290,544	)		(1,452,543	)		(71,870	)		(1,322,231	)

LOSS FROM OPERATIONS		(267,327	)		(683,697	)		(60,878	)		(779,607	)

FINANCE COSTS		(3,765	)		(2,415	)		(1,677	)		(2,582	)

LOSS BEFORE TAX		(271,092	)		(686,112	)		(62,555	)		(782,189	)

Tax expense		-			(1,555	)		-			(76,418	)