BioNexus Gene Lab Corp SEC 10-Q Report

BioNexus Gene Lab Corp, a company specializing in genetic testing and laboratory services, has released its Form 10-Q report for the nine months ended September 30, 2024. The report provides a comprehensive overview of the company's financial performance, business operations, strategic initiatives, and the challenges it faces in the current market environment.

Financial Highlights

The company's financial performance for the period is summarized as follows:

• Total Revenue: $6.99 million, a decrease of 6.8% compared to the same period in 2023, primarily due to increased competition and fewer orders from existing customers.
• Gross Profit: $0.98 million, down by approximately 7.8% from the prior period, mainly due to lower revenues.
• Loss from Operations: $(1.16) million, a reduction of 59.4% from the prior period, reflecting effective cost management and reduced professional expenses.
• Net Loss: $(1.25) million, an improvement from a net loss of $(2.94) million in the same period in 2023, attributed to cost reductions and increased other income.
• Earnings per Share - Basic and Diluted: $(0.023), reflecting the net loss per share for the period.

Business Highlights

The company's business performance and operational highlights include:

• Revenue Segments: Chemrex Corporation contributed 99.8% of the total revenue for the nine months ended September 30, 2024, with a slight decrease in revenue due to increased competition and fewer orders from existing customers. MRNA Scientific contributed 0.2% of the total revenue, experiencing a decline due to fewer client referrals and equipment issues.
• Geographical Performance: The company operates primarily in Malaysia through its subsidiaries, MRNA Scientific and Chemrex Corporation. Chemrex's performance was impacted by the lingering effects of COVID-19 and supply chain disruptions, affecting its customer base in the ASEAN region.
• Operational Challenges: Chemrex faced challenges due to increased competition and a lack of new projects, which affected its revenue. MRNA Scientific experienced operational issues with RNA machine breakdowns, impacting its ability to generate revenue from BGS tests.
• Other Income: Chemrex saw a significant increase in other income due to dividends received, gains on equity investments, and recovery of doubtful debts. MRNA Scientific also reported increased other income from higher interest revenue and rental income.
• Operational Expenses: The company reduced its operating expenses by 20.1% compared to the previous year, primarily due to decreased professional expenses and share-based compensation at the holding company level.
• Future Outlook: The company is focused on enhancing its internal control environment and improving governance procedures, particularly within its Chemrex subsidiary, to ensure compliance with corporate policies and regulatory requirements.

Strategic Initiatives

BioNexus Gene Lab Corp has engaged in several strategic initiatives to bolster its market position and financial health:

• Public Offering and Nasdaq Listing: The company issued 1,437,500 shares of common stock, raising $5.75 million in gross proceeds.
• Advisory Service Agreement: Entered into an agreement with Maxim Group LLC to provide M&A and financial advisory services, issuing 300,000 shares of common stock as compensation.
• Strategic Investment: Made a strategic investment in Ascension Innovation Sdn Bhd, a Malaysian company, to enhance its business capabilities.
• Capital Management: Completed a 12-for-1 reverse stock split to consolidate shares and improve stock price. Issued shares to professional parties and directors in lieu of cash for services rendered, reflecting a strategic use of equity to manage cash flow.
• Future Outlook: Plans to continue its strategic focus on mergers and acquisitions, address Nasdaq listing compliance issues, and strengthen internal controls and governance procedures.

Challenges and Risks

The company faces several challenges and risks, including:

• Operational Risks: The lingering impact of COVID-19 and supply chain disruptions have affected Chemrex's customers in the manufacturing sector, leading to interrupted supply chains, decreased demand, and shortages in supplies and inputs.
• Financial Risks: Received a delisting notification from Nasdaq due to non-compliance with the minimum bid price requirement, introducing market and regulatory risks.
• Internal Control Risks: Addressing concerns raised by independent auditors about financial reporting and internal control structures, particularly within its Chemrex subsidiary.
• Foreign Currency Exchange Risks: Exposure to foreign currency exchange risks, with significant gains and losses reported due to fluctuations in exchange rates, impacting the revaluation of monetary assets and liabilities.

SEC Filing: BioNexus Gene Lab Corp [ BGLC ] - 10-Q - Nov. 15, 2024