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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended
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Jun. 30, 2025
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 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 six months ended June 30, 2025 and 2024 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 June 30, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025. The Condensed Consolidated Balance Sheet information as of December 31, 2024 was derived from the Company’s audited Consolidated Financial Statements as of and for the year ended December 31, 2024 included in the Company’s Annual Report on Form 10-K filed with the SEC on April 15, 2025. These financial statements should be read in conjunction with that report.
· | Basis of consolidation
The consolidated financial statements include the accounts of BioNexus Gene Lab Corp. and its subsidiaries. Acquired businesses are included in the consolidated financial statements from the dates of acquisition. The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. All inter-company accounts and transactions have been eliminated in consolidation.
· | Going concern
The accompanying condensed consolidated financial statements have been prepared on a going concern basis. As of June 30, 2025, the Company recorded a net loss of $1,239,499 and negative cash flows from operating activities of $1,561,979, and had an accumulated deficit of $4,682,119. Management has evaluated the Company’s liquidity for the twelve‑month period following issuance of these financial statements in light of these conditions and currently available sources of liquidity, including cash and cash equivalents, fixed deposits, liquid investments, and trade receivables (collectively, “total liquidity” as described in MD&A), together with cost‑reduction actions and Board‑approved strategic initiatives described in Item 2 and Note 15. Management has evaluated the Company’s liquidity position, recent capital actions, and planned operating initiatives. Based on these plans—which we believe are probable of being implemented and, if implemented, are probable of mitigating the relevant conditions within one year after the date the financial statements are issued—management has concluded that the conditions that previously raised substantial doubt about the Company’s ability to continue as a going concern are alleviated. Accordingly, these condensed consolidated financial statements have been prepared on a going‑concern basis.
· | Use of estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant accounting estimates include certain assumptions related to allowance for credit losses for financial assets and impairment analysis of long-lived assets. 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. The Company maintains cash balances with multiple financial institutions in Malaysia. Deposits at each institution are insured by the Malaysia Deposit Insurance Corporation (Perbadanan Insurans Deposit Malaysia or PIDM) up to RM250,000 (approximately USD 55,000) per depositor. From time to time, the Company’s cash balances may exceed these insured limits. However, the Company has not incurred any losses on such accounts and believes it is not exposed to significant risk. The Company actively monitors the balances held with these financial institutions and considers the likelihood of loss to be remote.
· | Trade receivables
Trade receivables are recorded at the invoiced amount and are generally non-interest bearing. However, interest may be imposed on extended credit terms or overdue balances. The Company recognizes an allowance for credit losses in accordance with ASC 326, Financial Instruments – Credit Losses, using an expected credit loss (ECL) model. The allowance for credit losses is measured based on historical collection experience, aging of receivables, customer-specific credit risk, and current and expected future economic conditions. The Company disaggregates its trade receivables by customer type, as management has determined that risk profiles vary based on the industry and nature of the customer. For each customer type, the Company applies a historical loss rate matrix, adjusted for forward-looking information and macroeconomic trends relevant to the industries in which customers operate. In addition to the collective assessment, specific allowances are established for customers with known financial difficulties or higher risk of default, based on a review of individual outstanding invoices and relevant credit information. Trade receivables are written off against the allowance when all reasonable collection efforts have been exhausted and recovery is considered remote. The allowance for credit losses is recorded as a contra-asset account to trade receivables in the consolidated balance sheets, and changes to the allowance are recognized in the consolidated statement of operations and comprehensive income/(loss).
· | 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 Consolidated Statement of Operations and Comprehensive Income/(Loss).
· | Leases
The Company determines if a contract is or contains a lease at the inception of the contract or modification of the contract. A contract is or contains a lease if the contract conveys the right to control the use of an identified asset for a period in exchange for consideration. Control over the use of the identified asset means the lessee has both (a) the right to obtain substantially all of the economic benefits from the use of the asset and (b) the right to direct the use of the asset. Finance and operating lease right-of-use (“ROU”) assets and liabilities are recognized based on the present value of future minimum lease payments over the expected lease term at commencement date. As the implicit rate is not determinable in most of the Company’s leases, management uses the Company’s incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The expected lease term includes options to extend or terminate the lease when it is reasonably certain the Company will exercise the option. Lease expense for minimum lease payments is recognized on a straight-line basis over the expected lease term. The Company’s lease arrangements have lease and non-lease components. Leases with an expected term of 12 months or less are not accounted for on the balance sheet and the related lease expense is recognized on a straight-line basis over the expected lease term.
· | 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 |  |  | 10 | %
Leasehold lands are depreciated over the period of 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 of, 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.
· | Investments in equity securities
The Company accounts for its investments that represent less than 20% ownership, and for which the Company does not have the ability to exercise significant influence, using ASC 321, Investments—Equity Securities. Equity securities with readily determinable fair values are measured at fair value, with changes in fair value recognized in net income. These investments are classified within “Investments in equity securities” on the consolidated balance sheets, and unrealized gains and losses are included in “Other income (expense), net” in the consolidated statement of operations and comprehensive income/(loss). For equity securities without readily determinable fair values, the Company may elect the practicability exception to measure such investments at cost, less impairment, if any, plus or minus observable price changes in orderly transactions for the identical or a similar investment of the same issuer. These securities are evaluated at each reporting period for impairment or observable price changes. Realized gains and losses on sales of equity securities are determined based on the specific identification method and are also recorded in net income.
· | 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.
· | 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.
· | 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:
|  | June 30, |  |  | December 31, |
|  | 2025 |  |  | 2024 |
Period ended June 30, 2025 /Year-ended December 31, 2024 US$1: MYR exchange rate |  |  | 4.2125 |  |  |  | 4.4755 |
|  | January 1, |  |  | January 1, |
|  | 2025 |  |  | 2024 |
|  | to June 30, |  |  | to June 30, |
|  | 2025 |  |  | 2024 |
6 months average US$1: MYR exchange rate |  |  | 4.3772 |  |  |  | 4.7279 |
· | 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.
☐ | Fair value of 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 three-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
The carrying value of the Company’s financial instruments: cash and bank balances, fixed deposits placed with financial institutions, trade receivable, other receivables, deposits, trade payables, other payables and accrued liabilities, advance payment from customers and amount owing to directors approximate at their fair values because of the short-term nature of these financial instruments As of June 30, 2025 and December 31, 2024, respectively, 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. Accounting Standards not yet adopted Accounting Standards Update 2023-09, Income Taxes (Topic 740): Improvements to Income Tax 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 that this ASU may have on its 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 consolidated financial statements. Accounting Standards Update 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses: In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses. The new standard requires entities to disclose additional information about certain expenses, such as purchases of inventory, employee compensation, depreciation, intangible asset amortization, as well as selling expenses included in commonly presented expense captions on the income statement. The FASB further clarified the effective date in January 2025 with the issuance of ASU 2025-01, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date. The ASU is effective for fiscal years beginning after December 15, 2026, and interim periods beginning after December 15, 2027. Companies have the option to apply this guidance either on a retrospective or prospective basis, and early adoption is permitted. The Company is currently evaluating this guidance to determine the impact it may have on its 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 consolidated financial statements.

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