# BioNexus Gene Lab Corp: Form 10-Q for the period ended Jun 30, 2024

- Company: [BioNexus Gene Lab Corp](/companies/bglc.md) (CIK 1737523)
- Form: 10-Q
- Filed: 2024-08-14
- Accepted by EDGAR: Aug 14, 2024, 18:15 ET
- Period: 2024-06-30
- Accession: 0001477932-24-004792
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1737523/000147793224004792/bglc_10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1737523/000147793224004792/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-06-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2024-04-01 to 2024-06-30 | $2.0m | us-gaap:Revenues |
| Revenue | 6 months, 2024-01-01 to 2024-06-30 | $4.4m | us-gaap:Revenues |
| Cost of revenue | 3 months, 2024-04-01 to 2024-06-30 | $1.7m | us-gaap:CostOfRevenue |
| Cost of revenue | 6 months, 2024-01-01 to 2024-06-30 | $3.7m | us-gaap:CostOfRevenue |
| Gross profit | 3 months, 2024-04-01 to 2024-06-30 | $288.7k | us-gaap:GrossProfit |
| Gross profit | 6 months, 2024-01-01 to 2024-06-30 | $653.8k | us-gaap:GrossProfit |
| Operating income | 3 months, 2024-04-01 to 2024-06-30 | $259.2k | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months, 2024-01-01 to 2024-06-30 | $180.1k | us-gaap:OperatingIncomeLoss |
| Interest expense | 6 months, 2024-01-01 to 2024-06-30 | $9.1k | us-gaap:InterestExpense |
| Income tax | 3 months, 2024-04-01 to 2024-06-30 | −$55.6k | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2024-01-01 to 2024-06-30 | −$75.7k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-04-01 to 2024-06-30 | $199.1k | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2024-01-01 to 2024-06-30 | $95.3k | us-gaap:NetIncomeLoss |
| Operating cash flow | 6 months, 2024-01-01 to 2024-06-30 | −$705.0k | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Current assets | at 2024-06-30 | $7.8m | us-gaap:AssetsCurrent |
| Total assets | at 2024-06-30 | $11.1m | us-gaap:Assets |
| Current liabilities | at 2024-06-30 | $1.4m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2024-06-30 | $1.6m | us-gaap:Liabilities |
| Shareholders' equity | at 2024-06-30 | $9.5m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 27,303 characters.

### 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 molecular lab 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.

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The results of operations of our subsidiary, MRNA Scientific-Malaysia, with respect to its RNA screening process have been adversely impacted by the onset of the Covid-19 pandemic followed by a number of prominent variants, including Alpha, Beta, Delta, and Omicron. Although new variants are an expected part of the evolution of viruses, new variant is more aggressive, highly transmissible, vaccine-resistant, able to cause more severe disease in Malaysia. We believe that most people were reluctant to visit hospitals and clinics in view of the post Covid-19 Omicron and its subvariants for fear of transmission from other patients or medical staff. Since our RNA screening is administered at a diagnostic center, our business has been adversely affected as a result.

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. 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, we 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. We 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.

(b) Notification of granting of an additional 180 days to regain compliance with Rule 5550(a)(2) by Nasdaq Staff

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.

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

|  | June 30, 2024 | December 31, 2023 |
| --- | ---: | ---: |
| Period ended June 30, 2024 /Year-ended December 31, 2023 US$1: MYR exchange rate | 4.7195 | 4.5900 |

|  | January 1, 2024 to June 30, 2024 | January 1, 2023 to June 30, 2023 |
| --- | ---: | ---: |
| 6 months average US$1: MYR exchange rate | 4.7279 | 4.4629 |

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### Results of Operations

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

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

### Consolidated

|  | Three months ended June 30, 2024 | 2023 |
| --- | ---: | ---: |
| REVENUE | $1,974,564 | $2,566,848 |
| COST OF REVENUE | (1,685,844) | (2,227,134) |
| GROSS PROFIT | 288,720 | 339,714 |
| OTHER INCOME | 730,105 | 195,164 |
| OPERATING EXPENSES |  |  |
| General and administrative | (759,657) | (807,077) |
| **PROFIT/(LOSS) FROM OPERATIONS** | **259,168** | **(272,199)** |
| FINANCE COSTS | (4,480) | (3,042) |
| **PROFIT/(LOSS) BEFORE TAX** | **254,688** | **(275,241)** |
| Tax (expense)/credit | (55,584) | 15,990 |
| **NET PROFIT/(LOSS)** | **$199,104** | **$(259,251)** |
| Other comprehensive income: |  |  |
| Foreign currency translation gain/(loss) | 2,463 | (333,891) |
| **COMPREHENSIVE INCOME/(LOSS)** | **$201,567** | **$(593,142)** |

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### Segmented Information

|  | MRNA Scientific Three months ended June 30, 2024 | Chemrex Corporation | MRNA Scientific Three months ended June 30, 2023 | Chemrex Corporation |
| --- | ---: | ---: | ---: | ---: |
| REVENUE | $5,496 | $1,969,068 | $4,496 | $2,562,352 |
| COST OF REVENUE | (2,353) | (1,683,491) | (2,201) | (2,224,933) |
| **GROSS PROFIT** | 3,143 | 285,577 | 2,295 | 337,419 |
| OTHER INCOME | 37,364 | 692,741 | 1,039 | 194,125 |
| OPERATING EXPENSES |  |  |  |  |
| General and administrative | (104,363) | (281,134) | (52,465) | (642,719) |
| **(LOSS)/PROFIT FROM OPERATIONS** | (63,856) | 697,184 | (49,131) | (111,175) |
| FINANCE COSTS | (2,645) | (1,746) | (609) | (2,433) |
| **(LOSS)/PROFIT BEFORE TAX** | **(66,501)** | **695,438** | **(49,740)** | **(113,608)** |
| Tax expense | - | (55,584) | - | 15,990 |
| **NET (LOSS)/PROFIT** | **$(66,501)** | **$639,854** | **$(49,740)** | **$(97,618)** |

***Revenue.*** For the quarter ended June 30, 2024, we had total revenue of $1,974,564 as compared to total revenue of $2,566,848 for the quarter ended June 30, 2023, a decreased by 23.1% from the prior quarter.

Chemrex contributed $1,969,068 (99.7%) of the total revenue for the current quarter ended June 30, 2024 as compared to $2,562,352 (99.8%) of the total revenue for the quarter ended June 30, 2023. Chemrex’s revenues had a decrease by $593,284 of 23.2% from prior quarter. The revenue decreased in second quarter of 2024 was due to lower selling price because of market competition.

MRNA Scientific contributed $5,496 (0.3%) of the total revenue for the quarter ended June 30, 2024 as compared to revenue of $4,496 (0.2%) of the total revenue from the quarter ended June 30, 2023. Revenues had increased of 22.2% from the prior quarter due to referrals from diagnostics centers & clinics.

***Cost of Revenue.*** For the quarter ended June 30, 2024, we incurred $1,685,844 in cost of revenues, as compared to $2,227,134 for the quarter ended June 30, 2023, a decrease of 24.3% which was compatible to its decreased revenues for the current period.

Chemrex had incurred $1,683,491 (99.9%) of the total cost of revenue during the current quarter period ended June 30, 2024 as compared to the quarter ended June 30, 2023 wherein Chemrex had incurred $2,224,933 (99.9%) of the total cost of revenue. The decrease in Chemrex’s cost of revenues of 24.3% for the current period was due to its decreased revenues and reason as stated above.

MRNA Scientific had incurred $2,353 (0.1%) of the total cost of revenues during the current quarter period ended June 30, 2024 as compared to $2,201 (0.1%) for the quarterly period ended June 30, 2023. Cost of revenue had increased 6.9% from the prior quarter due to its increased revenues and reason as stated above.

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***Gross Profit.*** For the quarterly period ended June 30, 2024, we had total gross profit of $288,720 as compared to gross profit of $339,714 for the quarterly period ended June 30, 2023, a decrease by approximately 15% from the prior period.

Chemrex contributed $285,577 (98.9%) of the total gross profit for the current quarter ended June 30, 2024 as compared to $337,419 (99.3%) of the total gross profit for the quarter ended June 30, 2023. Chemrex’s gross profit decreased by $51,842 from the prior quarter, an approximately 15.4% decrease. The gross profit decrease for Chemrex in current quarter compared to the last quarter, was due to lower selling prices.

MRNA Scientific contributed $3,143 (1.1%) of the total gross profit of $288,720 for the current quarter ended June 30, 2024 as compared to gross profit of $2,295 (0.7%) of the total gross profit from the quarter ended June 30, 2023. The increase by approximately 36.9% from the prior period due to its increased revenues for the same reason stated above.

***Other Income.*** For the quarterly period ended June 30, 2024, we had other income of $730,105, as compared to $195,164 for the quarterly period ended June 30, 2023, an increase of approximately 274.1%.

Chemrex contributed $692,741 (94.9%) of other income for the current quarter ended June 30, 2024 as compared to $194,125 (99.5%) of the other income for the quarter ended June 30, 2023. Chemrex’s other income increased by 256.9% due to recovery of provision losses allowances, recovery of doubtful debts, capital gain on stock investment and bank interest earning.

MRNA Scientific contributed $37,364 (5.1%) of other income for the current quarter ended June 30, 2024 as compared to $1,039 (0.5%) of the other income for the quarter ended June 30, 2023. The increase by $36,325, an approximately 3496.2% was due to increased fund in the fixed deposits resulted increased of bank interest earning and gain on unrealise forex.

***Operating Expenses.*** For the quarter ended June 30, 2024, we had total operating expense of $759,657 as compared to total operating expenses of $807,077 for the quarter ended June 30, 2023, a decrease by approximately 5.9%. It was due to decrease in provision for losses allowance, provision for doubtful debt, director remuneration, loss of unrealised forex and commission.

Chemrex had incurred $281,134 (37%) of the total operating expenses for the current quarter ended June 30, 2024 as compared to $642,719 (79.6%) of the total operating expenses for the quarter ended June 30, 2023, a decrease by 56.3% due to reduction in provision for losses allowance and doubtful debts, commission, loss on unrealised forex and decrease of directors’ remuneration.

MRNA Scientific had incurred $104,363 (13.7%) of the total operating expenses for the current quarter ended June 30, 2024 as compared to $52,465 (6.5%) of the total operating expenses for the quarter ended June 30, 2023, an increase by 98.9%. The increase in operating costs of the current quarter was due to directors remuneration, staff salary for marketing & business development, increase of travelling cost, motor vehicle running cost and loss arising from settlement of supplier contract dispute.

BGLC, the holding company had incurred $374,160 (49.3%) of total operating expenses for the current quarter ended June 30, 2024 as compared to $111,893 (13.9%) of the total operating expenses for the quarter ended June 30, 2023. The increase by approximately 234.4% in operating costs for the quarter ended June 30, 2024 was due to increase of directors fees and back charge of director fees.

***Profit/(Loss) from Operations.*** We had a profit from operations of $259,168 for the quarter ended June 30, 2024 as compared to a loss of $272,199 for the quarter ended June 30, 2023, an increase by approximately 195.2% from the prior period, for the reasons discussed above.

***Income tax expense.*** For the quarter ended June 30, 2024, we had tax expenses of $55,584 as compared to tax credit of $15,990 for the quarter ended June 30, 2023 for Chemrex. There was no tax provision for MRNA Scientific for the quarters ended June 30, 2024 and 2023.

***Foreign currency translation gain/(loss).*** We are exposed to fluctuations in foreign exchange rates on the revaluation of monetary assets and liabilities denominated in currencies other than the US Dollar. Therefore, any change in the relevant exchange rate would require us to recognize a transaction gain or loss on revaluation. For the three-month period ended June 30, 2024, we experienced a foreign currency gain of $2,463 as compared with a foreign currency loss of $333,891 for the three-month period ended June 30, 2023.

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### Six Months Ended June 30, 2024 Compared with the Six Months Ended June 30, 2023.

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

### Consolidated

|  | Six months ended June 30, 2024 | 2023 |
| --- | ---: | ---: |
| REVENUE | $4,356,415 | $4,944,053 |
| COST OF REVENUE | (3,702,664) | (4,235,442) |
| GROSS PROFIT | 653,751 | 708,611 |
| OTHER INCOME | 931,952 | 312,508 |
| OPERATING EXPENSES |  |  |
| General and administrative | (1,405,563) | (1,343,949) |
| **PROFIT/(LOSS) FROM OPERATIONS** | **180,140** | **(322,830)** |
| FINANCE COSTS | (9,141) | (5,487) |
| **PROFIT/(LOSS) BEFORE TAX** | **170,999** | **(328,317)** |
| Tax expense | (75,652) | - |
| **NET PROFIT/(LOSS)** | **$95,347** | **$(328,317)** |
| Other comprehensive income: |  |  |
| Foreign currency translation loss | (207,445) | (372,930) |
| **COMPREHENSIVE LOSS** | **$(112,098)** | **$(701,247)** |

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### Segmented Information

|  | MRNA Scientific Six months ended June 30, 2024 | Chemrex Corporation | MRNA Scientific Six months ended June 30, 2023 | Chemrex Corporation |
| --- | ---: | ---: | ---: | ---: |
| REVENUE | $8,661 | $4,347,754 | $11,932 | $4,932,121 |
| COST OF REVENUE | (4,605) | (3,698,059) | (7,548) | (4,227,894) |
| **GROSS PROFIT** | 4,056 | 649,695 | 4,384 | 704,227 |
| OTHER INCOME | 76,058 | 855,894 | 2,165 | 310,343 |
| OPERATING EXPENSES |  |  |  |  |
| General and administrative | (185,218) | (696,763) | (98,720) | (1,025,896) |
| **(LOSS)/PROFIT FROM OPERATIONS** | (105,104) | 808,826 | (92,171) | (11,326) |
| FINANCE COSTS | (4,595) | (4,433) | (1,275) | (4,212) |
| **(LOSS)/PROFIT BEFORE TAX** | **(109,699)** | **804,393** | **(93,446)** | **(15,538)** |
| Tax expense | - | - | - | - |
| **NET (LOSS)/PROFIT** | **$(109,699)** | **$804,393** | **$(93,446)** | **$(15,538)** |

***Revenue.*** For the six months period ended June 30, 2024, we had total revenue of $4,356,415 as compared to total revenue of $4,944,053 for the same period in 2023, which had decreased by $587,638 from the prior period, approximately 11.9% decrease.

Chemrex contributed $4,347,754 (99.8%) of the total revenue for the current six months period as compared to $4,932,121 (99.8%) of the total revenue for the same period last year. Chemrex’s revenues had decreased by $584,367 from the prior period, approximately 11.85% decrease. The revenue decreased in 2024 was due lower selling price because of market competition.

MRNA Scientific contributed $8,661 (0.2%) of the total revenue for the current six months period as compared to revenue of $$11,932 (0.2%) of the total revenue from the same period last year. MRNA Scientific’s revenue had decreased by $3,271 from the prior quarter, an approximately 27.4% decrease. The revenue decrease in 2024 was due to RNA machine breakdowns which occurred during the current period.

***Cost of Revenue***. For the six months period ended June 30, 2024, we incurred $3,702,664 in cost of revenues, as compared to $4,235,442 for the same period in 2023. The decrease of $532,778 or approximately 12.6% was due to the same reason stated above.

Chemrex had incurred $3,698,059 (99.9%) of the total cost of revenue during the current period as compared to the same period last year wherein Chemrex had incurred $4,227,894 (99.8%) of the total in cost of revenue. The decrease of $529,835, or approximately 12.53% was due to the same reason stated above.

MRNA Scientific had incurred $4,605 (0.1%) of the total cost of revenues during the current period as compared to $7,548 (0.2%) for the same period in 2023, decreased by $2,943, approximately 39% from the prior period due to the same reason stated above.

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***Gross Profit.*** For the six months period ended June 30, 2024, we had total gross profit of $653,751 as compared to gross profit of $708,611 for the same period in 2023, a decreased by approximately 7.7% from the prior period.

Chemrex contributed $649,695 (99.4%) of the total gross profit for the current six months period as compared to $704,227 (99.38%) of the total gross profit for the same period last year. The gross profit decreased by $54,532, approximately 7.74% for the current period due to decreased revenues for the current period as according to reason stated above.

MRNA Scientific had a gross profit of $4,056 (0.6%) of the total gross profit of $653,751 for the current six months period as compared to $4,384 (0.6%) of the total gross profit of $708,611 from the same period last year. The gross profit decreased by 7.5% due to its decreased revenues for the current period as according to reason stated above.

***Other Income***. For the six months period ended June 30, 2024, we had $931,952 other income as compared to $312,508 for the same period in 2023, increased by $619,444 or approximately 198.2%.

Chemrex contributed $855,894 (91.8%) of other income for the current six months period as compared to $310,343 (99.3%) for the same period last year. Chemrex’s other income increased by $545,551, approximately 175.79% due to recovered of doubtful debts, provision losses allowances recovered and capital gain from share investment.

MRNA Scientific had $76,058 (8.2%) for the six months period ended June 30, 2024 as compared to $2,165 (0.7%) for the same period in 2023, increased by $73,893, approximately 3413.1% due to bank interest earning from US dollar and gain on unrealise forex.

***Operating Expenses***. For the six months period ended June 30, 2024, we had a total operating expense of $1,405,563 as compared to total operating expenses of $1,343,949 for the same period in 2023. The increase of $61,614, approximately 4.4% was due to increase of general and administrative expenses which include depreciation of fixed assets, employee compensation and benefits, marketing/travel expenses, Nasdaq annual fees and professional fees.

Chemrex had incurred $696,763 (49.6%) of the total operating expenses for the current six months period as compared to $1,025,896 (76.3%) of the total operating expenses for the same period last year, decreased by $329,133, approximately 32.08% due to the deduction of commission, decrease of loss on unrealized/realized currency exchanges, provision for doubtful debt on account receivables and decrease in directors’ remuneration.

MRNA Scientific had incurred $185,218 (13.2%) of the total operating expenses for the current six months period as compared to $98,720 (7.3%) of the total operating expenses for the same period last year. The increase by approximately 87.6% in operating costs for the six months period was due to the hire of new staff for marketing & business development, increase in director’s remuneration, increase in amortisation of ROU asset and loss arising from settlement of supplier contract dispute.

BGLC, the holding company had incurred $523,582 (37.2%) of total operating expenses for the current six months period as compared to $219,333 (16.4%) of the total operating expenses for the same period last year. The increase of $304,249, approximately 138.72% in operating costs of the current period was due to increase of legal fees, audit fees, Nasdaq annual fee plus increase and back charge of directors’ fees.

***Profit/(Loss) from Operations***. We had a profit from operations of $180,140 for the six months period ended June 30, 2024 as compared to loss of $322,830 for the same period in 2023. The increase of $502,980, approximately 155.8% was due to the reasons discussed above.

***Income tax expense***. For the six-months period ended June 30, 2024, we had income tax expenses of $75,652 provided for Chemrex and no tax provision for MRNA Scientific as compared to the same period in 2023 whereby we had no income tax provided for both Chemrex and MRNA Scientific.

***Foreign currency translation loss.*** We are exposed to fluctuations in foreign exchange rates on the revaluation of monetary assets and liabilities denominated in currencies other than the US Dollar. Therefore, any change in the relevant exchange rate would require us to recognize a transaction gain or loss on revaluation. For the six-months period ended June 30, 2024, we experienced a foreign currency loss of $207,445 as compared with a foreign currency loss of $372,930 for the same period in 2023.

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LIQUIDITY AND CAPITAL RESOURCES

As of June 30, 2024, we had working capital of $6,443,511 compared with working capital of $6,415,877 as of December 31, 2023. The increase in working capital as of June 30, 2024 from December 31, 2023 was due principally to profit incurred during the quarter ended June 30, 2024.

Our primary uses of cash had been for operations. The main sources of cash were generated from operational revenues, the private placement of our common stock, and the proceeds of our public offering. The following trends could result in a material decrease in our liquidity over the near to long term:

- Addition of administrative and marketing personnel as the business grows,
- Development of a Company website,
- Increases in advertising and marketing in order to attempt to generate more revenues, and
- The cost of being a public company.

The Company believes that cash flow from operations together will be sufficient to sustain its current level of operations for at least the next 12 months of operations.

The following is a summary of the Company’s cash flows (used in) / generated from operating, investing, and financing activities for the six months ended June 30, 2024 and 2023:

|  | Six months ended June 30, 2024 | 2023 |
| --- | ---: | ---: |
| Net Cash Used in Operating Activities | $(704,982) | $(140,341) |
| Net cash generated from/(used in) investing activities | 107,160 | (8,114) |
| Net cash generated from/(used in) financing activities | 197,799 | (4,212) |
| Foreign currency translation adjustment | (115,280) | (207,517) |
| **Net Change in Cash and Cash Equivalents** | **$(515,303)** | **$(360,184)** |

#### Operating Activities

During the six months ended June 30, 2024, the Company incurred a net profit of $95,347 which, after adjusting for amortization, depreciation, dividend income, allowances for expected credit losses, recovery for expected credit losses, fair value gain on share investment, gain on disposal on share investment, loss arising from settlement of supplier contract dispute, a decrease inventories and operating lease liabilities, increase in trade and other receivables, advance payment from customer and a substantial reduction in trade payables, resulted in net cash of $704,982 being used in operating activities during the six months ended June 30, 2024.

By comparison, during the six months ended June 30, 2023, the Company had a net loss of $328,317 which, after adjusting for amortization, depreciation, dividend income, fair value gain on share investment, provision for losses on accounts receivable, an increase in inventories, a decrease in trade receivables and a substantial reduction in trade payables, operating lease liabilities, advance payment from customer, resulted in net cash of $140,341 being used in operating activities during the six months ended June 30, 2023.

#### Investing Activities

During the six months ended June 30, 2024, the Company had net cash of $107,160 generated from investment activities from acquisition of share investment of $264,768, purchase of plant & equipment of $23,778, proceeds from disposal of share investments of $297,678, refund from settlement of supplier contract dispute at $77,201 and receiving dividend income of $20,827. By comparison during the six months ended June 30, 2023, the Company had net cash of $8,114 used in investment activities from acquisition of share investment of $13,444, purchase of plant & equipment of $14,458 and receiving dividend income of $19,788.

#### Financing Activities

During the six months ended June 30, 2024, the Company had net cash of $197,799 generated from financing activities for advances from directors of $202,344 and used for interest of $4,545. By comparison during the six months ended June 30, 2023, we had net cash of $4,212 used in financing activities for interest used of $4,212.

## Market risk

As filed, 173 characters.

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this item.

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## Controls and procedures

As filed, 4,567 characters.

#### Evaluation of Disclosure Controls and Procedures

In connection with the preparation of this quarterly report, an evaluation was carried out by the Company’s management, with the participation of the principal executive officer and the principal financial officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(c) and 15d-15(e) under the Exchange Act (“Exchange Act”) as of June 30, 2024. Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Commission’s rules and forms, and that such information is accumulated and communicated to management, including the principal executive officer and the principal financial officer, to allow timely decisions regarding required disclosures.

Based on that evaluation, the Company’s management concluded, as of the end of the period covered by this report, that the Company’s disclosure controls and procedures were effective in recording, processing, summarizing, and reporting information required to be disclosed, within the time periods specified in the Commission’s rules and forms, and that such information was accumulated and communicated to management, including the principal executive officer and the principal financial officer, to allow timely decisions regarding required disclosures.

#### Management’s Report on Internal Control over Financial Reporting

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is a process, under the supervision of the principal executive officer and the principal financial officer, designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external purposes in accordance with United States generally accepted accounting principles (GAAP). Internal control over financial reporting includes those policies and procedures that:

i) Pertain to the maintenance of records that is in reasonable detail accurately and fairly reflect the transactions and dispositions of the Company’s assets;

ii) Provide reasonable assurance that transactions are recorded as necessary to permit preparation of the financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with the authorizations of management and the board of directors; and

iii) Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

The Company’s management had assessed the effectiveness of our internal control over financial reporting as of June 30, 2024, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, which assessment identified material weaknesses in internal control over financial reporting had improved. A material weakness could create reasonable possibility that a material misstatement in annual or interim financial statements. The management considers its internal control over financial reporting required further improvement.

This quarterly report does not include an attestation report of our registered public accounting firm regarding our internal controls over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to Section 404(c) of the Sarbanes-Oxley Act that permit us to provide only management’s report in this annual report.

### Changes in Internal Controls over Financial Reporting

During the period ended June 30, 2024, there had been no change in internal control over financial reporting that had materially affected or was reasonably likely to materially affect our internal control over financial reporting.

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Filed Aug 14, 2024.
Source: SEC EDGAR, the filing index for accession 0001477932-24-004792. Last ingested by Listed: Oct 24, 2026, 15:07 ET. No prices; not investment advice.