UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

 

FORM 10-K/A

Amendment No. 3

 

☒  ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the fiscal year ended: September 30, 2016

 

OR

 

☐  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from                        to                       

 

Commission file number: 333-91436

 

AMERICAN BRIVISION (HOLDING) CORPORATION

(Exact name of Company in its charter)

 

Nevada		26-0014658
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification)

 

11 Sawyers Peak Drive, Goshen, NY, 10924

(Address of principal executive offices, including zip code)

 

Registrant's Telephone number, including area code: (845) 291-1291

 

Securities registered pursuant to Section 12(b) of the Act:  None

 

Securities registered pursuant to Section 12(g) of the Act:  None

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act.  Yes ☐ No ☒

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (section 232.406 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

 

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 during the preceding 12 months (or such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for at least the part 90 days. Yes ☐  No ☒

 

Indicate by check mark if disclosure of delinquent filers in response to Item 405 of Regulation S-K is not contained hereof, and will not be contained, to will be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

	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 March 31, 2016, approximately 19,393,782 shares of our common stock, par value $0.001 per share, were held by non-affiliates, which had a market value of approximately $35,193,896.2 based on the available OTCQB closing price of $1.8147 per share on March 31, 2016.

 

As of January 6, 2017, the registrant had 210,821,647 shares of common stock of outstanding and 0 shares of convertible preferred stock outstanding. 

 

No documents are incorporated into the text by reference.

 

 

 

Explanatory Note

 

American BriVision (Holding) Corporation (together with its subsidiary, the “Company” sometimes referred to as “we”, “us” or “our”) is filing this Amendment No. 3 (“Amendment No. 3” or “Form 10K/A”) to its Annual Report on Form 10-K for the period ended September 30, 2016, originally filed on January 12, 2017 (the “Original Form 10-K”); Form 10-K/A Amendments No, 1 and 2 for the period ended September 30, 2016, originally filed on February 22, 2017 and May 22, 2017 (respectively, “Amendment No. 1” and “Amendment No. 2”), solely to add an explanatory paragraph in the audit report of independent registered public accounting firm on Item 8 per PCAOB Auditing Standard AS3101.11(d) to indicate that a material misstatement in previous issued (January 17, 2017) financial statements for the year ended September 30, 2016 has been corrected. This statement is omitted in the previous report and is added in accordance with AS3101.18A.

 

Pursuant to Rule 12b-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), Amendment No. 3 also contains new certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002. Accordingly, Amendment No. 3 includes the currently dated certifications as exhibits.

 

Except as described above, no attempt has been made in this Amendment No. 3 to modify or update the other disclosures in the Original Form 10-K or Amendment No. 1 or Amendment No. 2. Amendment No. 3 continues to speak as of the date of the Original Form 10-K, and the Company has not updated the disclosures contained therein to reflect any events which occurred at a date subsequent to the filing of the Original Annual Report. Accordingly, Amendment No. 3 should be read in conjunction with the Original Form 10-K, Amendment No. 1 and Amendment No. 2.

 

 

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 

AMERICAN BRIVISION (HOLDING) CORPORATION

Index to the Financial Statements

AMERICAN BRIVISION (HOLDING) CORPORATION

Index to the Financial Statements

 

		Page
Report of Independent Registered Public Accounting Firm		F-1
Consolidated Balance Sheets at September 30, 2016 and 2015		F-2
Consolidated Statements of Operations for the years ended September 30, 2016 and 2015		F-3
Consolidated Statements of Changes in Stockholders' Equity (Deficit) for the years ended September 30, 2016 and 2015		F-4
Consolidated Statements of Cash Flows for the years ended September 30, 2016 and 2015		F-5
Notes to Consolidated Financial Statements		F-6

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Board of Directors and Shareholders of American BriVision Corporation and subsidiaries

 

We have audited the accompanying consolidated balance sheets of American BriVision Corporation and subsidiaries (“the Company”) as of September 30, 2016 and 2015 the related statements of operations, stockholders’ equity and cash flows for each of the years in the period ended September 30, 2016 and 2015.

 

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of September 30, 2016 and 2015 and the results of its operations and its cash flows for each of the years in the period ended September 30, 2016 and 2015 in conformity with accounting principles generally accepted in the United States of America.

 

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 4 to the consolidated financial statements, the Company has suffered recurring losses from operations and has a significant accumulated deficit. In addition, the Company continues to experience negative cash flows from operations. These factors raise substantial doubt about the Company's ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. 

 

As discussed in Note 2 to the financial statements, the financial statements for the year ended September 30, 2016 have been restated to correct misstatements in the research and development expenses and the typographical errors.

 

/s/ Centurion ZD CPA Limited

 

Certified Public Accountants

(Practising) Hong Kong

 

Dated: January 12, 2017

Except for Note 2 which was dated at May 22, 2017

 

 

 American BriVision (Holding) Corporation.

(formerly METU BRANDS, INC.)

CONSOLIDATED BALANCE SHEETS

 

		September 30, 2016				September 30, 2015
			(Restated)
Assets
Current assets
Cash		$	173,537			$	994,830
Prepayment			-				3,815
Total Current Assets			173,537				998,645
Deposit			3,815				3,815
Total Assets		$	177,352			$	1,002,460
Liabilities and Equity
Accounts Payable			18,370				-
Accrued expense			38,100				-
Other payable			-				300,000
Due to related party			6,500,000				22,517
Due to shareholder			-				46,586
Total Liabilities			6,556,470				369,103
Commitments and Contingencies
Stockholders’ equity (deficit)
Common Stock 360,000,000 authorized at $0.001 par value; shares issued and outstanding 210,821,647 and 166,273,921 at September 30, 2016 and September 30, 2015			210,822				166,274
Additional paid-in capital			4,733,461				1,132,685
Subscription receivable			-				(350,000	)
Accumulated deficit			(11,323,401	)			(315,602	)
Total equity (deficit)			(6,379,118	)			633,357
Total liabilities and equity (deficit)		$	177,352			$	1,002,460

 

* All shares outstanding for all periods have been retroactively restated to reflect Company’s 1 to 3:141 forward stock split, which was effective on April 8, 2016.

 

“The accompanying notes are an integral part of these consolidated financial statements.”

 

American BriVision (Holding) Corporation.

(formerly METU BRANDS, INC.)

CONSOLIDATED STATEMENTS OF OPERATIONS

 

		For the  year ended September 30, 2016				For the period From  July 21, 2015 (inception) to  September 30, 2015
			(Restated)
Revenues		$	-			$	-
Cost of sales			32				-
Gross loss			(32	)			-
Operating expenses
Selling, general and administrative expenses			997,263				315,602
Research and development expenses			10,000,000				-
Net loss from operations			(10,997,295	)			(315,602	)
Other income(expenses)
Bank Interest Income			361				-
Gain on exchange differences			141				-
Interest Expense			(10,170	)			-
Total Other Expenses			(9,668	)			-
Loss from continuing operations before income taxes			(11,006,963	)			(315,602	)
Income taxes			(836	)			-
Net loss		$	(11,007,799	)		$	(315,602	)
Basic and Diluted loss per share
Basic and diluted loss per share			(0.06	)			(0.00	)
Weighted average number of shares outstanding basic and diluted			193,981,153				160,823,831

 

* All shares outstanding for all periods have been retroactively restated to reflect Company’s 1 to 3:141 forward stock split, which was effective on April 8, 2016.

 

“The accompanying notes are an integral part of these consolidated financial statements.”

 

 

American BriVision (Holding) Corporation.

(formerly METU BRANDS, INC.)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

 

		Common stock
		Number of								Additional paid-in				Subscription				Accumulated				Stockholders’
		shares				Amount				capital				receivable				deficit				equity
										(Restated)								(Restated)
Balance at July 21, 2015 (inception)			159,622,964			$	159,623			$	1,087,378			$	(350,000	)		$	-			$	897,001
Issuance of common shares			6,650,957				6,651				45,307				-				-				51,958
Net loss for the period			-				-				-				-				(315,602	)			(315,602	)
Balance at September 30, 2015			166,273,921				166,274				1,132,685				(350,000	)			(315,602	)			633,357
Reverse merger recapitalization			42,359,253				42,359				(44,995	)			-				-				(2,636	)
Issuance of common shares			2,031,423				2,032				3,247,968				-				-				3,250,000
Stock based compensation			157,050				157				397,803				-				-				397,960
Receipt of subscription receivable			-				-				-				350,000				-				350,000
Net loss for the year			-				-				-				-				(11,007,799	)			(11,007,799	)
Balance at September 30, 2016 (Restated)			210,821,647				210,822				4,733,461				-				(11,323,401	)			(6,379,118	)

 

The accompanying notes are an integral part of these consolidated financial statements.

 

American BriVision (Holding) Corporation.

(formerly METU BRANDS, INC.)

CONSOLIDATED STATEMENTS OF CASH FLOW

 

		For the  year ended September 30, 2016				For the period  From July 21, 2015 (inception) to September 30, 2015
			(Restated)				(Restated)
Cash flows from operating activities
Net loss from continuing operations		$	(11,007,799	)		$	(315,602	)
Adjustments to reconcile net loss to net cash used by operating activities:
Issuance of common stock for compensation and recapitalization			1,295,324				-
Change in operating assets and liabilities:
Increase in deposit			-				(3,815	)
Decrease (increase) in prepayment			3,815				(3,815	)
(Decrease) increase in other payable			(300,000	)			300,000
(Decrease) increase in due to related party			6,477,483				22,517
Increase in accounts payable			18,370				-
Increase in accrued expense			38,100				-
Net cash used in operating activities			(3,474,707	)			(715	)
Cash flows from investing activities
Net cash provided by (used in) investing activities			-				-
Cash flows from financing activities
(Decrease) increase in due to shareholder			(46,586	)			46,586
Proceeds from subscription receivable			350,000				-
Proceeds from issuance of shares			2,350,000				948,959
Net cash provided by financing activities			2,653,414				995,545
Effect Of Exchange Rates On Cash			-				-
Net (decrease) increase in cash			(821,293	)			994,830
Cash, beginning of period			994,830				-
Cash, end of period		$	173,537			$	994,830
Supplemental disclosure of cash flow information
Prepayment			-				-
Supplemental disclosure of cash flow information
Interest paid		$	-			$	-
Income taxes paid		$	-			$	-

 

“The accompanying notes are an integral part of these consolidated financial statements.”

 

American BriVision (Holding) Corporation.

(formerly METU BRANDS, INC.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2016 AND SEPTEMBER 30, 2015

 

1. ORGANIZATION AND DESCRIPTION OF BUSINESS

 

American BriVision (Holding) Corporation (the “Company” or “Holding entity”), a Nevada corporation, thru the Company’s operating entity, American BriVision Corporation (“BriVision”), which was incorporated in July 2015 in the State of Delaware, engages in biotechnology and focuses on the development of new drugs and innovative medical devices to fulfill unmet medical needs.  The business model of the Company is to integrate research achievements from world-famous institutions (such as Memorial Sloan Kettering Cancer Center (“MSKCC”) and MD Anderson Cancer Center), conduct clinical trials of translational medicine for Proof of Concept (“POC”), out-license to international pharmaceutical companies, and exploit global markets. BriVision had to predecessor operations prior to its formation on July 21, 2015.

 

REVERSE MERGER

 

On February 8, 2016, a Share Exchange Agreement (“Share Exchange Agreement”) was entered into by and among American BriVision (Holding) Corporation American BriVision Corporation (“BriVision”), Euro-Asia Investment & Finance Corp. Limited, a company incorporated under the laws of Hong Kong Special Administrative Region of the People's Republic of China (“Euro-Asia”), being the owners of record of 164,387,376 (52,336,000 pre-stock split) shares of common stock of the Company, and the owners of record of all of the issued share capital of the Company(the “BriVision Stock”).

 

Pursuant to the Share Exchange Agreement, upon surrender by the BriVision Shareholders and the cancellation by BriVision of the certificates evidencing the BriVision Stock as registered in the name of each BriVision Shareholder, and pursuant to the registration of the Company in the register of members maintained by BriVision as the new holder of the BriVision Stock and the issuance of the certificates evidencing the aforementioned registration of the BriVision Stock in the name of the Company, the Company should issue 166,273,921(52,936,583 pre-stock split) shares (the “Acquisition Stock”) (subject to adjustment for fractionalized shares as set forth below) of the Company’s common stock to the BriVision Shareholders (or their designees), and 163,159,952 (51,945,225 pre-stock split) shares of the Company’s common stock owned by Euro-Asia should be cancelled and retired to treasury. The Acquisition Stock collectively should represent 79.70% of the issued and outstanding common stock of the Company immediately after the Closing, in exchange for the BriVision Stock, representing 100% of the issued share capital of BriVision in a reverse merger, or the Merger.

 

Pursuant to the Merger, all of the issued and outstanding shares of BriVision’s common stock were converted, at an exchange ratio of 0.2536-for-1, into an aggregate of 166,273,921(52,936,583pre-stock split) shares of Company’s common stock and BriVision became a wholly owned subsidiary, of the Company. The holders of Company’s common stock as of immediately prior to the Merger held an aggregate of 205,519,223(65,431,144 pre-stock split) shares of Company’s common stock, Because of the exchange of the BriVision Stock for the Acquisition Stock (the “Share Exchange”), BriVision became a wholly owned subsidiary (the “Subsidiary”) of the Company and there was a change of control of the Company following the closing.  There were no warrants, options or other equity instruments issued in connection with the share exchange agreement.

 

Because of the consummation of the Share Exchange, BriVision is now our wholly owned subsidiary and its shareholders own approximately 79.70% of our issued and outstanding common stock.

 

Following the Share Exchange, we have abandoned our prior business plan and we are now pursuing BriVision’s historical businesses and proposed businesses, which focus on the development of new drugs and innovative medical devices to fulfill unmet medical needs.  The business model of the Company is to integrate research achievements from world-famous institutions, conduct clinical trials of translational medicine for Proof of Concept (“POC”), out-license to international pharmaceutical companies, and exploit global markets.

 

Accounting Treatment of the Reverse Merger

 

For financial reporting purposes, the Share Exchange represents a “reverse merger” rather than a business combination and BriVision is deemed the accounting acquirer in the transaction. The Share Exchange is being accounted for as a reverse-merger and recapitalization. BriVision is the acquirer for financial reporting purposes and the Company is the acquired company. Consequently, the assets and liabilities and the operations reflected in the historical financial statements prior to the Share Exchange will be those of BriVision and recorded at the historical cost basis of BriVision. In addition, the consolidated financial statements after completion of the Share Exchange will include the assets and liabilities of the Company and BriVision, and the historical operations of BriVision and operations of the Combined Company from the closing date of the Share Exchange.

 

 

2. CORRECTIONS TO PREVIOUSLY ISSUED CONSOLIDATED FINANCIAL STATEMENTS

 

The Company discovered that it had erroneously stated that the research and development expenses were understated during the year ended September 30, 2016. Instead, our research and development expenses were $10,000,000 for the year ended September 30, 2016 and were restated in the Adjustments No. 1 column. Moreover, there were typographical errors on Selling, General and Administration expenses which were corrected in the Adjustments No. 2 column. For the year ended September 30, 2015, the Net cash used in the operating activities was mistyped from $(715) to $(517) and was corrected in this restatement.

 

The following tables present the effect of the corrections discussed above and other adjustments on selected line items of our previously reported consolidated financial statements as of and for the year ended September 30, 2016,

 

ITEMS		Previously  Reported on Form 10K				Adjustments No.1				Adjustments No.2				Restated
Consolidated Balance Sheet
As of September 30, 2016
Due to related party			-				6,500,000				-				6,500,000
Total Liabilities			56,470				6,500,000				-				6,556,470
Additional paid-in capital			4,733,401				-				60				4,733,461
Accumulated deficit			(4,823,401	)			(6,500,000	)			-				(11,323,401	)
Total equity (deficit)			120,882				(6,500,000	)			-				(6,379,118	)
Consolidated Statements of Operations and Comprehensive Loss
For the year ended September 30, 2016
Selling, general and administrative expenses			4,497,263				(3,500,060	)			60				997,263
Research and development expenses			-				10,000,000				-				10,000,000
Net loss from operations			(4,497,295	)			(6,499,940	)			(60	)			(10,997,295	)
Loss from continuing operations before income taxes			(4,506,963	)			(6,499,940	)			(60	)			(11,006,963	)
Net Loss			(4,507,799	)			(6,499,940	)			(60	)			(11,007,799	)
Basic and diluted loss per share			(0.00	)			(0.06	)			(0.00	)			(0.06	)
Consolidated Statements of Cash Flow For the year ended September 30, 2016
Net loss from continuing operations			(4,507,799	)			(6,499,940	)			(60	)			(11,007,799	)
Issuance of common stock for compensation			1,295,324				(60	)			60				1,295,324
(Decrease) increase in due to related party			(22,517	)			6,500,000								6,477,483
Consolidated Statements of Cash Flow
For the year ended September 30, 2015
Net cash used in operating activities			(517	)			-				(198	)			(715	)

 

As a result of the restatement of the consolidated balance sheets as of September 30, 2016, Due to related party and Total liabilities were increased by $6,500,000; changed from $0 to $6,500,000 and from $56,470 to $6,556,470. Additional paid in capital was increased by $60 and changed from $4,733,401 to $4,733,461. Accumulated deficit was increased by $6,500,000 and changed from $(4,823,401) to $(11,323,401). Total equity (deficit) was decreased by $6,500,000 and changed from $120,882 to $(6,379,118).

 

As a result of the restatement of the consolidated statements of operations and comprehensive loss for the year ended September 30, 2016, Selling, general and administrative expenses were decreased by $3,500,000 and changed from $4,497,263 to $997,263. Research and development expenses were increased by $10,000,000 and changed from $0 to $10,000,000. Net loss from operations was increased by $6,500,000 and changed from $(4,497,295) to $(10,997,295) Loss from continuing operations before taxes was increased by $6,500,000 and changed from $(4,506,963) to $(11,006,963). Net loss was increased by $6,500,000 and changed from $(4,507,799) to $(11,007,799). Basic and diluted loss per share were also increased by 0.06 and changed from $0 to $(0.06).

 

As a result of the restatement of the consolidated statements of cash flow for the year ended September 30, 2016, Net loss from continuing operations was increased by $6,500,000; changed from $(4,507,799) to $(11,007,799). Issuance of common stock for compensation did not have changes and stated as $1,295,324. (Decrease) increase in due to related party was increased by $6,500,000 and changed from $(22,517) to $6,477,483. There were no changes in Net cash used in operating activities.

 

As a result of the restatement of the consolidated statements of cash flow for the year ended September 30, 2015, Net cash used in operating activities was increased by $198 and changed from $(517) to $(715).

 

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

The consolidated financial statements have been prepared in accordance with the generally accepted accounting principles in the United States (“U.S. GAAP”).

 

 

This basis of accounting involves the application of accrual accounting and consequently, revenues and gains are recognized when earned, and expenses and losses are recognized when incurred. The Company’s financial statements are expressed in U.S. dollars.

 

Use of Estimates

 

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the amount of revenues and expenses during the reporting periods. Actual results could differ materially from those results.

 

Forward Stock split

 

On March 21, 2016, the Board of Directors of the Company approved an amendment to Articles of Incorporation to effect a forward split at a ratio of 1 to 3.141 and increase the number of our authorized shares of common stock, par value $0.001 per share, to 360,000,000, which was effective on April 8, 2016. The majority of the shareholders of the Company approved the amendment to Articles of Incorporation.

 

Fair Value Measurements

 

The Company applies the provisions of ASC Subtopic 820-10, “Fair Value Measurements”, for fair value measurements of financial assets and financial liabilities and for fair value measurements of nonfinancial items that are recognized or disclosed at fair value in the financial statements.  ASC 820 also establishes a framework for measuring fair value and expands disclosures about fair value measurements.

 

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  When determining the fair value measurements for assets and liabilities, the Company considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability.

 

ASC 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes three levels of inputs to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:

 

-         Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

 

-         Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments.

 

-         Level 3 inputs to the valuation methodology are unobservable and significant to the fair value.

 

There were no assets or liabilities measured at fair value on a recurring basis subject to the disclosure requirements of ASC 820 as of September 30, 2016.

 

Cash and Cash Equivalents

 

The Company considers highly liquid investments with maturities of three months or less, when purchased, to be cash equivalents. As of September 30, 2016, the Company’s cash and cash equivalents amounted $173,537. As of September 30, 2015, the Company’s cash and cash equivalents amounted $994,830. All of the Company’s cash deposits are held in a financial institution located in Taiwan where there is currently regulation mandated on obligatory insurance of bank accounts. The Company believes this financial institution is of high credit quality.

 

Income Taxes

 

The Company accounts for income taxes using the asset and liability approach which allows the recognition and measurement of deferred tax assets to be based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will expire before the Company is able to realize their benefits, or future deductibility is uncertain.

 

 

Under ASC 740, a tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The evaluation of a tax position is a two-step process. The first step is to determine whether it is more-likely-than-not that a tax position will be sustained upon examination, including the resolution of any related appeals or litigations based on the technical merits of that position. The second step is to measure a tax position that meets the more-likely-than-not threshold to determine the amount of benefits recognized in the financial statements. A tax position is measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. Tax positions that previously failed to meet the more-likely-than-not recognition threshold should be recognized in the first subsequent period in which the threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not criteria should be de-recognized in the first subsequent financial reporting period in which the threshold is no longer satisfied. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the year incurred. No significant penalty or interest relating to income taxes has been incurred during the period from July 21, 2015 (inception) to September 30, 2016. GAAP also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosures and transition.

 

As of September 30, 2016 and September 30, 2015, the Company’s income tax expense amounted $836 and $0, respectively.

 

Recent Accounting Pronouncements

 

From time to time, new accounting standards issued by the Financial Accounting Standards Board (“FASB”) or other standard setting bodies are adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption. The recent accounting standards are not expected to have a material impact on the consolidated financial statements upon adoption.

 

4. GOING CONCERN

 

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. The Company has incurred losses since its inception resulting in an accumulated deficit of $11,323,401 as of September 30, 2016. The Company also incurred net losses of $11,007,799 and negative cash flow of $821,293 during the year ended September 30, 2016. The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they become due. These combined financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company upon signing of that agreement. On May 6, 2016, we and BioLite agreed to amend the Collaborative Agreement, through entry into the Milestone Payment Agreement, whereby we have agreed to pay the Milestone Payment to BioLite $2,600,000 in cash and $900,000 in newly issued shares of our common stock, at the price of $1.60 per share, for an aggregate number of 562,500 shares. The cash payment and shares issuance were completed in June 2016.

 

Pursuant to the Collaborative Agreement, 6.5% of total payment, $6,500,000 shall be made upon the first IND submission which was submitted in March 2016. $6,500,000 was wholly recorded as due to related party as of September 30, 2016.

 

This Collaborative Agreement shall, once signed by both Parties, remain in effect for fifteen years as of the first commercial sales of the Product in the Territory and automatically renew for five more years unless either party gives the other party six month written notice of termination prior to the expiration date of the term.

 

The Company determined to fully expense the entire amount of $10,000,000 since currently the related licensing rights do not have alternative future uses. According to ASC 730-10-25-1, absent alternative future uses the acquisition of product rights to be used in research and development activities must be charged to research and development expenses immediately. Hence the entire amount is fully expensed as research and development expense.

 

5. COLLABORATIVE AGREEMENT

 

On December 29, 2015, American BriVision Corporation entered into a Collaborative Agreement with BioLite Inc., a related party, pursuant to which BioLite granted the Company sole licensing rights for drug and therapeutic use of five products: BLI-1005 CNS-Major Depressive Disorder; BLI-1008 CNS-Attention Deficit Hyperactivity Disorder; BLI-1401-1 Anti-Tumor Combination Therapy-Solid Tumor with Anti-PD-1; BLI-1401-2 Anti-Tumor Combination Therapy-Triple Negative Breast Cancer; and BLI-1501 Hematology-Chronic Lymphocytic Leukemia, in USA and Canada. Under the Collaborative Agreement, BriVision should pay a total of $100,000,000 in cash or stock of BriVision with equivalent value, according to the following schedule:

 

	●	upfront payment shall upon the signing of this Collaborative Agreement: 3.5% of total payment. After receiving upfront payment from BriVision, BioLite has to deliver all data to BriVision in one week.
		upon the first IND submission, BriVision shall pay, but no later than December 15, 2016: 6.5% of total payment. After receiving second payment from BriVision, BioLite has to deliver IND package to BriVision in one week.
	●	at the completion of first phase II clinical trial, BriVision shall pay, but no later than September 15, 2017: 15% of total payment. After receiving third payment from BriVision, BioLite has to deliver phase II clinical study report to BriVision in three months.
	●	upon the phase III IND submission, BriVision shall pay, but no later than December 15, 2018: 20% of total payment. After receiving forth payment from BriVision, BioLite has to deliver IND package to BriVision in one week.

  

	●	at the completion of phase III, BriVision shall pay, but no later than September 15, 2019:25% of total payment. After receiving fifth payment from BriVision, BioLite has to deliver phase III clinical study report to BriVision in three months.
	●	upon the NDA submission, BriVision shall pay, but no later than December 15, 2020, BriVision shall pay: 30% of total payment. After receiving sixth payment from BriVision, BioLite has to deliver NDA package to BriVision in one week.

 

Pursuant to the Collaborative Agreement, an upfront payment of $3,500,000 (the “Milestone Payment”), which is 3.5% of total payments due under the Collaborative Agreement, was to be paid by the Company upon signing of that agreement. On May 6, 2016, we and BioLite agreed to amend the Collaborative Agreement, through entry into the Milestone Payment Agreement, whereby we have agreed to pay the Milestone Payment to BioLite $2,600,000 in cash and $900,000 in newly issued shares of our common stock, at the price of $1.60 per share, for an aggregate number of 562,500 shares. The cash payment and shares issuance were completed in June 2016.

 

Pursuant to the Collaborative Agreement, 6.5% of total payment, $6,500,000 shall be made upon the first IND submission which was submitted in March 2016. $6,500,000 was wholly recorded as due to related party as of September 30, 2016.

 

This Collaborative Agreement shall, once signed by both Parties, remain in effect for fifteen years as of the first commercial sales of the Product in the Territory and automatically renew for five more years unless either party gives the other party six month written notice of termination prior to the expiration date of the term.

 

The Company determined to fully expense the entire amount of $10,000,000 since currently the related licensing rights do not have alternative future uses. According to ASC 730-10-25-1, absent alternative future uses the acquisition of product rights to be used in research and development activities must be charged to research and development expenses immediately. Hence the entire amount is fully expensed as research and development expense.

 

6. RELATED PARTIES TRANSACTIONS

 

As of September 30, 2016 and September 30, 2015, the amount due to a related party, BioLite, Inc (“Biolite”) was $6,500,000 and $22,517 respectively.

 

As of September 30, 2016 and September 30, 2015, the amount due to shareholder, YuanGene Corporation, was $0 and $46,586 respectively.

 

7. ACCOUNTS PAYABLE

 

As of September 30, 2016 and September 30, 2015, the amount of Accounts Payable to LiteArt, Inc. was $18,370 and $0 respectively.

 

8. EQUITY

 

During October 2015, $350,000 of subscription receivable was fully collected from the shareholders.

 

On February 8, 2016, a Share Exchange Agreement (“Share Exchange Agreement”) was entered into by and among American BriVision (Holding) Corporation (the “Company”), American BriVision Corporation (“BriVision”), Euro-Asia Investment & Finance Corp. Limited, a company incorporated under the laws of Hong Kong Special Administrative Region of People's Republic of China (“Euro-Asia”), being the owners of record of 164,387,376 (52,336,000 pre-stock split) shares of common stock of the Company, and the owners of record of all of the issued share capital of BriVision (the “BriVision Stock”). Pursuant to the Share Exchange Agreement, upon surrender by the BriVision Shareholders and the cancellation by BriVision of the certificates evidencing the BriVision Stock as registered in the name of each BriVision Shareholder, and pursuant to the registration of the Company in the register of members maintained by BriVision as the new holder of the BriVision Stock and the issuance of the certificates evidencing the aforementioned registration of the BriVision Stock in the name of the Company, the Company should issue 166,273,921(52,936,583 pre-stock split) shares (the “Acquisition Stock”) (subject to adjustment for fractionalized shares as set forth below) of the Company’s common stock to the BriVision Shareholders (or their designees), and 163,159,952 (51,945,225 pre-stock split) shares of the Company’s common stock owned by Euro-Asia should be cancelled and retired to treasury. The Acquisition Stock collectively should represent 79.70% of the issued and outstanding common stock of the Company immediately after the Closing, in exchange for the BriVision Stock, representing 100% of the issued share capital of BriVision in a reverse merger, or the Merger. Pursuant to the Merger, all of the issued and outstanding shares of BriVision’s common stock were converted, at an exchange ratio of 0.2536-for-1, into an aggregate of 166,273,921(52,936,583 pre-stock split) shares of Company’s common stock and BriVision became a wholly owned subsidiary, of the Company. The holders of Company’s common stock as of immediately prior to the Merger held an aggregate of 205,519,223 (65,431,144 pre-stock split) shares of Company’s common stock, Because of the exchange of the BriVision Stock for the Acquisition Stock (the “Share Exchange”), BriVision became a wholly owned subsidiary (the “Subsidiary”) of the Company and there was a change of control of the Company following the closing.  There were no warrants, options or other equity instruments issued in connection with the share exchange agreement.

 

On February17, 2016, pursuant to the 2016 Equity Incentive Plan (the “2016 Plan”), 157,050 (50,000 pre-stock split) shares were granted to the employees.

 

On March 21, 2016, the Board of Directors of the Company approved an amendment to Articles of Incorporation to effect a forward split at a ratio of 1 to 3:141 (the “Forward Stock Split”) and increase the number of our authorized shares of common stock, par value $0.001 per share, to 360,000,000, which was effective on April 8, 2016.

 

The majority of the shareholders of the Company approved the amendment to Articles of Incorporation.

 

 

On May 6, 2016, we and BioLite agreed to amend the Collaborative Agreement, through entry into the Milestone Payment Agreement, whereby we have agreed to issue shares of our common stock, at the price of $1.60 per share, for an aggregate number of 562,500 shares, as part of our first installation of payment pursuant to the Milestone Payment. The shares issuance was completed in June 2016.

 

On August 26, 2016, the Company issued 1,468,750 shares (“Shares”) of the Company’s common stock, par value $0.001 (the “Offering”) to BioLite, Inc., a non-U.S. accredited investor (the “Purchaser”) pursuant to a certain Stock Purchase Agreement dated August 26, 2016 (the “SPA”). The Shares are exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), pursuant to Regulation S of the Securities Act promulgated thereunder. Our sole director, Eugene Jiang, is a director of BioLite and it is therefore considered a related party.

 

The purchase price per share of the Offering is $1.60. The net proceeds to the Company from the Offering are approximately $2,350,000. The proceeds may be used for general corporate purposes. 

  

9. EARNINGS PER SHARE

 

Basic earnings per share is computed by dividing net loss by the weighted-average number of common shares outstanding during the year. Diluted earnings per share is computed by dividing net loss by the weighted-average number of common shares and dilutive potential common shares outstanding during the year.

 

		For the Year Ended September 30, 2016				For the period from July 21, 2015 (Inception) to September 30, 2015
Numerator:
Net loss		$	(11,007,799	)			(315,602	)
Denominator:
Weighted-average shares outstanding:
Weighted-average shares outstanding - Basic			193,981,153				160,823,831
Stock options			-				-
Weighted-average shares outstanding - Diluted			193,981,153				160,823,831
Earnings per share
-Basic			(0.06	)			0.00
-Diluted			(0.06	)			0.00

  

Diluted earnings per share takes into account the potential dilution that could occur if securities or other contracts to issue common stock were exercised and converted into common stock.

 

10. COMMITMENTS AND CONTINGENCIES

 

Operating Commitment

 

The total future minimum lease payments under the non-cancellable operating lease with respect to the office as of September 30, 2016 are payable as follows:

 

Remaining 2016		$	5,948
Year ending September 30, 2017			23,793
Year ending September 30, 2018			17,845
Total		$	47,586

 

Rental expense of the Company was $29,129 and nil for the year ended September 30, 2016 and 2015, respectively. 

 

11. SUBSEQUENT EVENT

 

The Company evaluated and concluded that no subsequent events have occurred that would require recognition or disclosure in the consolidated financial statements. 

 

The following exhibits are included herewith:

  

Exhibit No.		Description
31.1		Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002+
31.2		Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002+
32.1		Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002+
32.2		Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002+

 

101.INS*		XBRL Instance Document
101.SCH*		XBRL Taxonomy Extension Schema Document
101.CAL*		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*		XBRL Taxonomy Extension Label Linkbase Document
101.PRE*		XBRL Taxonomy Extension Presentation Linkbase Document

 

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on the 22nd day of September 2017.

 

	American BriVision (Holding) Corporation
	By:	/s/ Howard Doong
		Howard Doong
		Chief Executive Officer

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:

 

Signature		Title		Date
/s/ Howard Doong		Chief Executive Officer and Chairman,		September 22, 2017
Howard Doong		Director (Principal Executive Officer)
/s/ Chun Mu Hung		Chief Financial Officer		September 22, 2017
Chun Mu Hung		(Principal Accounting Officer)

 

 

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