American Brivision (ABVC) 10-Q Quarterly Report November 2022

FREMONT, CA, March 31, 2022 -- ABVC BioPharma, Inc. (Nasdaq: ABVC), a biotechnology company specializing in botanically based solutions that seeks to deliver high efficacy with low toxicity for improved health outcomes, today announced its financial and operating results for the fiscal year ended December 31, 2021.

Full Year 2021 Financial Results

All comparisons are made on a year-over-year basis.

	●	Revenues. We generated $355,797 and $483,045 in revenues for the year ended December 31, 2021 and 2020, respectively. The decrease of $127,248, or approximately 26%, was primarily caused by the decrease in contract services due to the impact of the COVID-19 pandemic.

	●	*Operating Expenses.* Our operating expenses were $12,056,679 in the year ended December 31, 2021, as compared to $8,970,105 in the year ended December 31, 2020. Such increase in operating expenses was mainly attributable to the increase in stock-based compensation and selling, general and administrative expenses by $2,632,427 which relates to costs in conjunction with our public offering and our recent stock issuances, as well as increasing research and development expenses of $454,147 to continue to develop our pipeline.

	●	Other Income (Expense). Other income was $495,141 for the year ended December 31, 2021, as compared to other expense of $2,308,160 for the year ended December 31, 2020. The increase was principally caused by an increase in foreign currency exchange income, government PPP forgiveness and a decrease in impairment loss and loss on investment in equity securities. Loss on impairment was $0 for the year ended December 31, 2021, compared to $961,217 for the year ended December 31, 2020.

	●	*Net Loss.* Net loss was $12,035,851 for the year ended December 31, 2021, compared to $10,593,584 for the year ended December 31, 2020. The Company’s net loss increased by $1,442,267, or approximately 14%, during the year ended December 31, 2021, from the year ended December 31, 2020.

	●	*Working Capital.* Working capital as of December 31, 2021 was $5,932,808, compared to $1,328,575 as of December 31, 2020, for an increase of $4,604,233, primarily as a result of an increase in net cash from financing activities. The net cash provided by financing activities increased by $427,707 due to the issuance of common stock partially offset by offering costs, repayment of convertible notes and repayment of short-term loans during the year ended December 31, 2021.

●

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 December 31, 2021 and 2020, the Company’s cash and cash equivalents amounted to $5,828,548 and $4,273,208, respectively.

Fourth Quarter 2021 Highlights

	●	Vitargus® received the 2021 “National Innovation and Renewal of Diligence” award from the Institute for Biotechnology and Medicine Industry (IBMI) of Taiwan.

	●	ABVC selected two additional clinical sites in Thailand to participate in the Phase II, Part 2 clinical study of Vitargus®.

●

BioKey, a wholly-owned subsidiary of the Company, took advantage of existing technology to produce a dietary supplement derived from the maitake mushroom. Research has shown that consuming certain amounts of the maitake mushroom tends to lower the risk of heart disease and provide immune system support. In addition, BioKey entered into a three-year distribution agreement with Define Biotech Co. Ltd. The agreement grants Define Biotech the exclusive right to distribute this new dietary supplement in China and Taiwan in exchange for a commitment to purchase $3 million worth of the new product over the three-year period.

“We are delighted with our remarkable accomplishments and meaningful progress in 2021,” said Dr. Howard Doong, M.D., Ph.D., Chief Executive Officer of ABVC BioPharma. “I am pleased that the CSR for the Phase II clinical study of our major depressive disorder (MDD) drug was received by the US FDA without comments. The study demonstrated material improvement in both efficacy and safety, compared to existing medications available. As such, we will seek a Phase III partner in 2022 to further prove the statistical significance of our MDD results. In addition, Vitargus, a gel we developed to make retina reattachment surgery more comfortable for the patient, has shown advantages over existing devices available to surgeons, prompting us to start a self-funded pivotal trial phase in 2022. We remain excited about our ongoing research initiatives and look forward to expanding our product pipeline in the future.”

About ABVC BioPharma

ABVC BioPharma is a clinical-stage biopharmaceutical company with an active pipeline of six drugs and one medical device (ABV-1701/Vitargus®) under development. For its drug products, it is focused on utilizing its licensed technology to conduct proof-of-concept trials through Phase II of the clinical development process at world-famous research institutions (such as Stanford University, University of California at San Francisco, and Cedars-Sinai Medical Center). For Vitargus®, the Company intends to conduct the clinical trials through Phase III at various locations throughout the globe.

Forward-Looking Statements

Clinical trials are in early stages, and there is no guarantee that any specific outcome will be achieved. This press release contains “forward-looking statements.” Such statements may be preceded by the words “intends,” “may,” “will,” “plans,” “expects,” “anticipates,” “projects,” “predicts,” “estimates,” “aims,” “believes,” “hopes,” “potential,” or similar words. Forward-looking statements are not guarantees of future performance, are based on certain assumptions, and are subject to various known and unknown risks and uncertainties, many of which are beyond the Company’s control, and cannot be predicted or quantified, and, consequently, actual results may differ materially from those expressed or implied by such forward-looking statements. Such risks and uncertainties include, without limitation, risks and uncertainties associated with (i) our inability to manufacture our product candidates on a commercial scale on our own, or in collaboration with third parties; (ii) difficulties in obtaining financing on commercially reasonable terms; (iii) changes in the size and nature of our competition; (iv) loss of one or more key executives or scientists; and (v) difficulties in securing regulatory approval to proceed to the next level of the clinical trials or to market our product candidates. More detailed information about the Company and the risk factors that may affect the realization of forward-looking statements is set forth in the Company’s filings with the Securities and Exchange Commission (SEC), including the Company’s Annual Report on Form 10-K and its Quarterly Reports on Form 10-Q. Investors are urged to read these documents free of charge on the SEC’s website at http://www.sec.gov. The Company assumes no obligation to publicly update or revise its forward-looking statements as a result of new information, future events or otherwise.

This press release does not constitute an offer to sell or the solicitation of an offer to buy these securities, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of that state or jurisdiction.

Contact

ICR, LLC
Lucy Peng
Phone: +1 646-677-1872
Email: Lucy.Peng@icrinc.com

ABVC BIOPHARMA, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS


	December 31,			December 31,
	2021			2020
ASSETS
Current Assets
Cash and cash equivalents	$	5,828,548		$	4,273,208
Restricted cash and cash equivalents		736,667			728,163
Accounts receivable, net		280,692			159,712
Accounts receivable - related parties, net		145,399			143,435
Due from related parties		1,286,618			696,255
Inventory, net		25,975			-
Short-term investments		108,147			-
Prepayment for long-term investments		684,720			-
Prepaid expense and other current assets		528,354			172,193
Total Current Assets		9,625,120			6,172,966

Property and equipment, net		525,881			514,834
Operating lease right-of-use assets		1,471,899			1,772,747
Goodwill, net		-			-
Long-term investments		932,755			1,190,727
Deferred tax assets		981,912			1,790,597
Prepaid expenses - noncurrent		119,309			119,315
Security deposits		41,157			45,519
Total Assets	$	13,698,033		$	11,606,705

LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	-		$	23,044
Short-term bank loans		1,640,000			1,629,000
Short term loan		-			100,000
Notes payable		-			106,800
Accrued expenses and other current liabilities		1,300,803			2,118,854
Advance from customers		10,985			12,070
Operating lease liability – current portion		347,100			316,178
Due to related parties		393,424			288,445
Convertible notes payable - related parties, current portion		-			250,000
Total Current Liabilities		3,692,312			4,844,391
Paycheck Protection Program Loan Payable		-			124,400
Tenant security deposit		10,580			19,280
Operating lease liability – noncurrent portion		1,124,799			1,456,567
Convertible notes payable - noncurrent portion		-			2,500,000
Total Liabilities		4,827,691			8,944,638

Equity
Preferred stock, $0.001 par value, 20,000,000 authorized, nil shares issued and outstanding		-			-
Common stock, $0.001 par value, 100,000,000 authorized, 28,926,322 and 24,420,526 shares issued and outstanding		28,926			24,420
Additional paid-in capital		58,113,667			40,751,807
Stock subscription receivable		(2,257,400	)		(3,160,360	)
Accumulated deficit		(38,481,200	)		(25,642,387	)
Accumulated other comprehensive income		539,660			564,860
Treasury stock		(9,100,000	)		(9,100,000	)
Total Stockholders’ equity		8,843,653			3,438,340
Noncontrolling Interest		26,689			(776,273	)
Total Equity		8,870,342			2,662,067

Total Liabilities and Equity	$	13,698,033		$	11,606,705

ABVC BIOPHARMA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

	Year Ended December 31,
	2021			2020
Revenue	$	355,797		$	483,045

Cost of revenue		5,086			18,716

Gross profit		350,711			464,329

Operating expenses
Selling, general and administrative expenses		5,746,119			4,273,468
Research and development expenses		1,003,805			549,658
Stock based compensation		5,306,755			4,146,979
Total operating expenses		12,056,679			8,970,105

Loss from operations		(11,705,968	)		(8,505,776	)

Other income (expense)
Interest income		43,196			71,045
Interest expense		(227,210	)		(405,032	)
Operating sublease income		134,576			20,071
Operating sublease income - related parties		4,800			4,800
Impairment loss		-			(961,217	)
Investment loss		-			(40,589	)
Gain/Loss on foreign exchange changes		426,316			(3,275	)
Gain/Loss on investment in equity securities		(269,844	)		(1,168,733	)
Other income (expense)		22,409			174,770
Government grant income		360,898			-
Total other income (expenses)		495,141			(2,308,160	)

Loss before provision for income tax		(11,210,827	)		(10,813,936	)

Provision for income tax expense (benefit)		825,024			(220,352	)

Net loss		(12,035,851	)		(10,593,584	)

Net loss attributable to noncontrolling interests		802,962			(802,420	)

Net loss attributed to ABVC and subsidiaries		(12,838,813	)		(9,791,164	)
Foreign currency translation adjustment		(25,200	)		(98,893	)
Comprehensive loss	$	(12,864,013	)	$	(9,890,057	)

Net loss per share:
Basic and diluted	$	(0.51	)	$	(0.50	)

Weighted average number of common shares outstanding:
Basic and diluted		25,053,522			19,715,559

ABVC BIOPHARMA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEAR ENDED DECEMBER 31, 2021 AND 2020

	2021			2020
Cash flows from operating activities
Net loss	$	(12,035,851	)	$	(10,593,584	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		11,993			37,142
Stock based compensation		5,306,755			4,146,979
Gain/Loss on investment in equity securities		269,844			1,168,733
Government grant income		(360,898	)		-
Other non-cash income and expenses		-			(15,360	)
Investment loss		-			1,001,806
Deferred tax		824,199			(223,201	)
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable		(120,980	)		3,696
Decrease (increase) in prepaid expenses and other current assets		(357,276	)		(15,778	)
Decrease (increase) in due from related parties		(595,037	)		20,645
Decrease (increase) in inventory		(25,830	)		-
Increase (decrease) in accounts payable		(23,044	)		(951	)
Increase (decrease) in accrued expenses and other current liabilities		(173,151	)		(359,822	)
Increase (decrease) in advanced from others		(1,085	)		(1,015	)
Increase (decrease) in due to related parties		(317,358	)		266,791
Net cash used in operating activities		(7,597,719	)		(4,563,919	)

Cash flows from investing activities
Net proceeds from sale of investment		-			147,804
Purchase of investments		(107,547	)		-
Purchase of equipment		(17,503	)		-
Loan to related parties		-			(373,235	)
Prepayment for equity investment		(680,916	)
Net cash used in investing activities		(805,966	)		(225,431	)

Cash flows from financing activities
Issuance of common stock		11,119,452			7,615,331
Payment for offering costs		(850,429	)		-
Proceeds from convertible notes		-			2,500,000
Repayment of convertible notes		(306,836	)		-
Repayment of short-term loan		(100,000	)		-
Repayment of notes payable		(107,400	)		-
Repayment of short-term bank loan		-			(350,000	)
Proceeds from short-term loan		-			100,000
Proceeds from long-term loan		236,498			124,400
Proceeds from (repayments of) short term borrowings from third parties		4,265			(480,989	)
Proceeds from borrowings from related parties		-			72,704
Repayment of long-term bank loans		-			(13,603	)
Net cash provided by financing activities		9,995,550			9,567,843

Effect of exchange rate changes on cash and cash equivalents and restricted cash		(28,021	)		62,435

Net increase in cash and cash equivalents and restricted cash		1,563,844			4,840,928

Cash and cash equivalents and restricted cash
Beginning		5,001,371			160,443
Ending	$	6,565,215		$	5,001,371

Supplemental disclosure of cash flows
Cash paid during the year for:
Interest expense paid	$	333,873		$	208,556
Income taxes paid	$	-		$	-
Non-cash financing and investing activities
Common shares issued for debt conversion	$	2,693,548		$	1,717,051

The following information was filed by American Brivision (ABVC) on Thursday, March 31, 2022 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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Inside American Brivision's 10-Q Quarterly Report:

Financial - Expense Highlight
Research and development expenses are comprised of costs incurred in performing research and development activities, including personnel-related costs, facilities-related overhead, and outside contracted services including clinical trial costs, manufacturing and process development costs for both clinical and preclinical materials, research costs, and other consulting services.

Revenue - Product Highlight
The Company paid to the co-placement agents an aggregate cash fee equal to 8% of the aggregate sales price of the securities sold and issued them warrants to purchase up to 160,000 shares of Common Stock, on the same terms as the warrants issued to the institutional investor.
Financial - Expense Highlight
Such increase in operating expenses was mainly attributable to the increase in stock-based compensation and selling, general and administrative expenses by $6,237,035 which relates to costs in conjunction with our recent stock issuance, as well as the increase in research and development expenses of $454,052 to continue developing our pipeline.
Financial - Expense Highlight
Such increase in operating expenses was mainly attributable to the increase in selling, general and administrative expenses by $1,636,150 which relates to costs in conjunction with our recent stock issuance, and increase in research and development expenses of $42,059 to continue developing our pipeline.
Other - Other Highlight
The Company places its cash and temporary cash investments in high quality credit institutions, but these investments may be in excess of Taiwan Central Deposit Insurance Corporation and the U.S. Federal Deposit Insurance Corporation's insurance limits.
Other - Other
At inception of the contract,...Read more
Financial - Shares
In accordance with the terms...Read more
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Management evaluated the nature of...Read more
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Management evaluated the nature of...Read more
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The Company completed the Public...Read more
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Financial - Shares
44 On March 12, 2020,...Read more
Revenue - Product
Revenue is recognized upon satisfaction...Read more
Revenue - Product
Revenue is recognized upon satisfaction...Read more
Other - Other
If a loss contingency is...Read more
Revenue - Geography
Once a drug is shown...Read more
Other - Other
On July 27, 2016, BioLite...Read more
Other - Other
The name change amendment to...Read more
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A beneficial conversion feature exists...Read more
Financial - Shares
Forward Stock Split On March...Read more
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While the closures and limitations...Read more
Financial - Dividend
The Series A Stock will...Read more
Financial - Income
In such situations, the adjustment...Read more
Revenue - Product
Milestones that are not considered...Read more
Revenue - Product
Milestones that are not considered...Read more
Financial - Shares
Diluted loss per share is...Read more
Financial - Expense
Early testing by BioFirst indicates...Read more
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Cash and Cash Equivalents The...Read more
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Revenue recognized is limited to...Read more
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Revenue recognized is limited to...Read more
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To determine revenue recognition for...Read more
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Financial - Expense
The increase of $49,028, or...Read more
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The Company and Rgene signed...Read more
Financial - Shares
? Non-marketable equity investments based...Read more
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Accordingly, estimated losses from loss...Read more
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Conversely, if the pattern of...Read more
Revenue - Product
Conversely, if the pattern of...Read more
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The business of the joint...Read more
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The sale and offering of...Read more
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A loss in value of...Read more
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ASC 360-10 also requires assets...Read more
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Leasehold improvements are depreciated on...Read more
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The second objective is to...Read more
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The amendment became effective on...Read more
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ASU 2020-06 is effective for...Read more
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The decrease in revenue was...Read more
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Actual results could differ materially...Read more
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The business of the joint...Read more
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In addition to collaborative agreements,...Read more
Financial - Expense
Our operating expenses have increased...Read more
Financial - Expense
Our operating expenses have increased...Read more
Other - Other
BioKey provides a wide range...Read more
Financial - Income
The Company completed the required...Read more
Revenue - Product
The revenue is recognized when...Read more
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The revenue is recognized when...Read more
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The Company had multiple deliverables...Read more
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If, after recording a valuation...Read more
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Additionally, it is reasonably possible...Read more
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On the balance sheet dates,...Read more
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According to the Coronavirus Aid,...Read more
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According to the Coronavirus Aid,...Read more
Financial - Expense
According to the Coronavirus Aid,...Read more
Revenue - Geography
For the three months ended...Read more
M & A - Other
On August 19, 2022, we...Read more
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The Company does not assess...Read more
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The Company does not assess...Read more
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The holder of the October...Read more
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Under the outstanding contracts, consideration...Read more
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Under the outstanding contracts, consideration...Read more
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As of September 30, 2022...Read more
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Post-retirement and post-employment benefits The...Read more
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Valuation of Deferred Tax Assets...Read more
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52 (i) Nonrefundable upfront payments...Read more
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(i) Non-refundable upfront payments If...Read more
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Pursuant to ASC 606, the...Read more
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Financial Statements, Disclosures and Schedules

Inside this 10-Q Quarterly Report

Material Contracts, Statements, Certifications & more

American Brivision provided additional information to their SEC Filing as exhibits

Exhibit 31.1: Certification

Exhibit 31.2: Certification

Exhibit 32.1: Certification

Exhibit 32.2: Certification

Ticker: ABVC
CIK: 1173313
Form Type: 10-Q Quarterly Report
Accession Number: 0001213900-22-072317
Submitted to the SEC: Mon Nov 14 2022 4:43:31 PM EST
Accepted by the SEC: Mon Nov 14 2022
Period: Friday, September 30, 2022
Industry: Pharmaceutical Preparations