UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
| [X] | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| For the fiscal year ended October 31, | |
| OR | |
| [ ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission file number000-53051number 000-53051
Advanced Biomedical Technologies Inc.
(Exact name of registrant as specified in its charter)
Nevada
(State or other jurisdiction of incorporation or organization)
Empire State Building
350 Fifth Ave, 59th Floor200 Park Avenue, Suite 1700
New York City, NY 1011810166
(Address of principal executive offices, including zip code.)
(718) 766-7898
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:None
Securities registered pursuant to Section 12(g) of the Act:Common Stock, $0.00001 par value
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No [X]
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes [ ] No [X]
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 of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [X] NO [ ]
Indicate by check mark whether registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 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 [X] NO [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of 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, or a small reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “small reporting company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | [ ] | Accelerated filer | [ ] | |
| Non-accelerated filer | [ ] | Smaller reporting company | [X] |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes [ ] No [X]
There was no active public trading market as of the last business day of the Company’s year-end.
The aggregate market value of common stock held by non-affiliates of the registrant, computed by reference to the price at which the common equity was last sold being $0.15$0.17 on March 23, 2017April 30, 2020 which is the last trading day of the second quarter, was approximately $2,975,672$3,703,951 as of April 28, 201730, 2020 (the last business day of the registrant’s most recently completed second quarter), assuming solely for the purpose of this calculation that all directors, officers and more than 10% stockholders of the registrant are affiliates. The determination of affiliate status for this purpose is not necessarily conclusive for any other purpose.
As of February 13, 2018,January 29, 2021, there are 69,374,85070,224,850 shares of common stock outstanding.
TABLE OF CONTENTS
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS
Investors are cautioned that certain statements contained
Certain matters discussed in this document, as well as someAnnual Report, including, but not limited to those set forth under Item 1, “Business,” Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” our consolidated financial statements and notes thereto included in periodic press releasesthis report, and some oralthose set forth from time to time in our other filings with the SEC, contain forward-looking statements. Although we believe that, in making any such statements, of Advanced Biomedical Technologies Inc. (“ABMT”) officials during presentations about ABMT,our expectations are “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Act”). Forward-lookingbased on reasonable assumptions, any such statement may be influenced by factors that could cause actual outcomes and results to be materially different from those projected.
These forward-looking statements include, but are not limited to, statements thatrelating to our anticipated financial performance, business prospects, expectations of future revenues and funding requirements, business strategy, the market for our products, our competitive position with regard to any competitor, the market for our products generally, market acceptance of our products and technology over competing technologies, and our expectation regarding the ongoing and future impact of COVID-19 on our business and results of operations. Forward looking statements are predictive in nature, that depend uponoften preceded by, followed by or refer to future events or conditions, which include the words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates,” “can,” “may,” “could,” “should,” “would,” “assume,” “forecasts,” “believe,” “will,” “potential,” “position,” “predicts,” “strategy,” “guidance,” “intend,” “budget,” “seek,” “project” or similar expressions. In addition, any statements concerning future financial performance (including future revenues, earnings or growth rates), ongoing business strategies or prospects, and possible future ABMT actions, which may be provided by management, are also“continue.”
We have based the forward-looking statements as defined by the Act. Forward-looking statements are basedcontained in this Annual Report primarily on our current expectations and projections about future events and are subject to risks, uncertainties,trends that we believe may affect our business, financial condition, results of operations, prospects, business strategy and assumptions about ABMT, economic and market factors and the industries in which ABMT does business, among other things. These statements are not guaranties of future performance and we have no specific intention to update these statements.
financial needs. Actual events and results maycould differ materially from those expressed or forecastedanticipated in forward-lookingthese forward looking statements due toas a result of any number of factors. Although forward-looking statementsfactors, including those set forth in this Annual Report on Form 10-K, reflectand elsewhere in our other public filings. Some of the good faith judgment of our management, forward-looking statements are inherently subject to known and unknown risks, business, economic and other risks and uncertaintiesfactors that may cause actual results, our performance or achievements, or industry results to bediffer materially different from those discussedcontemplated by such forward-looking statements include but are not limited to:
| 1. | The company’s lack of funds: for new R&D, especially in clinical testing; for new equipment and the utilization of the production process after the NMPA approval; for marketing and sales network build-up; |
| 2. | The company may need to seek funding through such vehicles as convertible notes and warrants, private placements, and/or convertible debentures; |
| 3. | The company plans to seek approval for clinical testing and marketing on a worldwide basis, including US FDA approval for testing and marketing in the United States of America, and there is no guaranty that we will obtain any such approval; |
| 4. | While the company currently holds two patents originating in China, the patents does not protect our intellectual property in the United States, and the company is unsure of the validity of the patent in other countries. However, specific trade secrets are involved in the manufacturing of our product to help protect our technologies, and reverse engineering is unlikely for our types of products and technologies. New patents are expected to be filed as result of our continuous research works for new and refined materials. Additionally, all machinery used to manufacture our products is protected by Chinese patents; |
| 5. | The Company’s new product offerings may not be accepted in the marketplace; |
| 6. | The Company faces risks related to access to information and regulatory oversight. According to Article 177 of the PRC Securities Law, which became effective in March 2020, no overseas securities regulator can directly conduct investigations or evidence collection activities within the PRC and no entity or individual in China may provide documents and information relating to securities business activities to overseas regulators without Chinese government approval. As a result, investors in China-based Issuers may not benefit from a regulatory environment that fosters effective enforcement of U.S. federal securities laws; |
| 7. | The company faces other risks related to being based in China, including but not limited to: restrictions on the Public Company Accounting Oversight Board’s (“PCAOB”) ability to inspect audit work and practices of PCAOB-registered public accounting firms in China and Hong Kong; restrictions on U.S. regulators’ access to information and ability to investigate or pursue remedies with respect to China-based Issuers; difficulties in effecting service of legal process, enforcing judgments obtained in U.S. courts, and bringing claims against the company or its directors and officers. |
| 8. | The COVID-19 pandemic has impacted, and may in the future materially and adversely affect our business; |
These risks are not exhaustive. Other sections of this Annual Report include additional factors that could adversely affect our business and financial performance. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Annual Report. We cannot assure you that the results, events and circumstances reflected in the forward-looking statements will be achieved or occur, and Readersactual results, events or circumstances could differ materially from those described in the forward-looking statements.
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are urged notbased upon information available to place undue reliance on these forward-looking statements, which speak onlyus as of the date of this Annual Report, on Form 10-K.and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.
The forward-looking statements made in this Annual Report relate only to events as of the date on which such statements are made. We undertake no obligation to update any forward-looking statements after the date of this Annual Report or to conform such statements to actual results or revised expectations, except as required by law.
Organizational History
Advanced Biomedical Technologies, Inc. has one direct wholly owned subsidiary, Masterise Holdings Ltd., a limited liability company organized under the laws of British Virgin Islands (“Masterise”). Masterise, owns seventy percent (70%) of the issued and outstanding equity or voting interests in Shenzhen Changhua, a company formed under the laws of the People’s Republic of China. (ABMT, Masterise, and Shenzhen Changhua are collectively referred to throughout this document as “We, “Us,” “Our” (and similar pronouns), “ABMT” and the “Company”).
We were incorporated in the State of Nevada on September 12, 2006.We2006. We maintain our statutory registered agent’s office at The Corporation Trust Company of Nevada, 311 S Division Street, Carson City, Nevada 89703, and our business office is located at 350 Fifth200 Park Avenue, 59th Floor,Suite 1700, New York City, NY 10118.10166. We have not been subject to any bankruptcy, receivership, or similar proceeding, or any material reclassification or consolidation.
Our primary business is carried out by Masterise through Shenzhen Changhua, as set forth in the following diagram:
Shenzhen Changhua does not have any subsidiary.
Organizational History of Masterise and Shenzhen Changhua
Masterise is a wholly owned subsidiary of Advanced Biomedical Technologies, Inc.
Masterise is a limited liability company which was organized under the laws of British Virgin Islands (“BVI”) on May 31, 2007, and owns 70% of the capital stock of Shenzhen Changhua.
Shenzhen Changhua is a limited liability company which was organized under the laws of PRC on September 25, 2002.
Since their founding, Shenzhen Changhua has been involved in the development of self-reinforced, absorbable degradablepolymer screws, rods and binding wires for fixation on human fractured bones. The Company is currently involved in researching, manufacturing, marketing and conducting clinical trials on its products and intends to raise additional capital to produce and market its products commercially pending approval of its products bycommercially. The Company holds one Class III permit and one Class II permit from the China Food and Drug Administration (“CFDA”), formallynow the National Medical Products Administration of the PRC (“NMPA”). The Company holds three patents issued by the State Food and Drug Administration (“SFDA”)Intellectual Property Office of the PRC.
P.R.C. (“SIPO”) and further patent applications are currently under review by the SIPO.
Primary Products
Our primary products include Absorbable PAPolymer Osteosynthesis Devices made of a proprietary material compositing of polyamide material.6 (PA6), hydroxyapatite (HA) and poly(methyl methacrylate-co-N-vinylpyrrolidone) (P(MMA-co-NVP)). These advanced materials are used in surgical screws, binding wires, rods and related medical devices for the treatment of orthopedicorthopaedic trauma, sports-related medical treatment, cartilage repair, and related treatments, and reconstructive dental procedures. Our devices are Self-Reinforced, Bio-absorbable, Brady-degradablepolymer orthopaedic internal fixation devices. Our PA Screws have completed clinical trials and are pendingscrews received approval byfrom the China Food and Drug Administration of China (“CFDA”);, now the National Medical Products Administration of the PRC (“NMPA”), in April 2018; and our PA Binding Wires are under clinical trials; and our PA Mini-Screws are under animal test.
Product Characteristics:
The theory of Brady-degradable PA absorbableCompany’s new and unique material is based on water dissolution, that is, the material is broken down by body fluids in a predictablehas ideal mechanical properties with similar strength, toughness, tensile strength and carefully engineered fashion. As a bone fracture heals, the supporting implant is designed to degrade from the outerflexibility etc. to the inner layers, inducing newhuman bone. Its elasticity, toughness and high fatigue resistance can effectively stabilize fractures without causing stress shielding. Its strong biocompatibility includes: no inflammation, no pyrogen, no cytotoxicity, no subchronic systemic toxicity etc. Additionally, the biomaterials promote the synthesis of matrix mature protein (ALP, collagen I, osteopontin, osteocalcin) gene expressions, via local transcription factors of osterix, Runx2 mRNA for a long time. Facilitating the continuous synthesis of extracellular matrix proteins required for cell mineralization, and bone generation in the gap left by the degrading material. Eventually, newtissue regeneration from an effective bio-interface integration.
More than 10 years of clinical trials and long-term follow-ups have shown our PA bone is formedscrew products to occupy allbe safe and effective, completing 100% of the space left byrequired clinical trials with a 100% success rate. Unlike metallic screws, our PA screws do not require secondary removal surgery, even over long periods of time. Our innovative biomedical composite material exhibits the degraded implant.following key technological attributes:
| 1. | Notably reduced implant removal surgeries due to post-operative complications: avoids the unnecessary risk and expense associated with competing technologies; | |
| 2. | Enhanced material performance: our material is manufactured to be easily fitted, facilitating an exact fit for each patient need; | |
| 3. | Improved biological activity of materials: clinical trial results have shown that PA implants promote a progressive shift of load to the new bone creating micro-motion and thereby avoiding bone atrophy due to ‘stress shielding’; | |
| 4. | Reduced chance of post-operative infection: use of our PA implants reduces post-operative infections, speeding recovery times; | |
| 5. | Stimulates bone tissues: use of our PA implant technology facilitates effective biological integration, benefitting bone regeneration; | |
| 6. | Ease of post-operative care: our products do not distort during x-ray imaging, further easing post-operative care; | |
| 7. | Simple and cost-effective to manufacture. |
Brady-degradable PA absorbable materials consist of enhanced fiber and high molecular polymers. It has high tensile, bending, and shear strengths, and is particularly suitable for patients with severe conditions, high tensile, bending, and shear strengths, and is particularly suitable for patients with severe conditions, such as fractures with light osteoporosis, severe soft tissue injury or bad blood supply, and so forth. This innovative material provides several benefits:
1. Reduces costs on all patient medical care,
2. Helps avoid the necessity for secondary surgery,
3. Enhances the performance of components constructed from these materials,
4. Improves the biological activity of components employing these materials,
5. Effectively controls the degeneration speed of the temporary support component.
The Company has developed six proprietary re-absorbable polymer fixation implant product lines, including screws, pins, tacks, rods and binding wires, which provide an alternative to metal implants and overcome the limitations of first generation re-absorbable fixation devices. The Company’s product range will ultimately cover the full gamut of components featuring self-reinforced, re-absorbable, biodegradable PA macromolecule polymer materials for implantation, including human orthopedicorthopaedic and dental applications, as well as veterinary applications.
Industry Development
The fracture fixation industry has developed through three generations of materials science:
The first generation internal-fracture fixation material:
The first generation internal-fracture-fixer components are usually made of stainless steel, titanium and alloy. Due to their high intensity, low costs and easy machining character, these components have achieved huge success in fracture treatment and remain the most widely used internal-fracture-fixer material. However, their prominent flaws are the huge difference between metal’s elasticity co-efficient, easily causing second-time bone fracture. The metallic ion can also cause tissue inflammation, and the need of a secondary surgery to have them taken out. These flaws stimulated the development of the degradable macromolecule material.
The second generation fracture fixation material:
The second generation bone-fracture-fixed components are made of degradable macromolecule material, such as PLLA, PGA and PDS, etc. The disadvantage of these components is rapid self-degeneration in early stages after the initial implant. For example, the strength of SR-PLLA decreases to 10-20Mpa after 4 weeks of implantation. Therefore, the second generation bone-fracture-fixed components can be only used to treat substantial spongiosa bone fractures.
The third generation fracture fixation material:
The third generation fracture fixation material, biodegradable fracture fixation components are currently under research by developed countries. There are many technical challenges to research in the third generation fracture fixation material field; for example, the materials must have a high degree of bio-compatibility and mechanical compatibility. They also must be of high biological activity, self-absorbable, and degeneration controllable.
Product Development
After careful deliberation, we selected the biodegradablepolymer screw as our first product to market. In order to replace the widely-used metal components, the new materials must meet multiple bio-consistency and mechanical-consistency requirements. Furthermore, they must also exhibit specific properties with respect to bio-activities, degradability, and controllable degradation speed. Although many macromolecule materials are degradable inside human body, relatively few provide the physical characters required for fracture fixation.
Development began with selection of macromolecule materials that exhibited the desired physical characters, leading, ultimately, to our selection of polyamide. In order to achieve the desired mechanical performance and degrading speed, various chemical and physical techniques were employed to modify the bio-degradable polyamide so as to synthesize the required new bio-degradable material. This phase of our research also entailed the selection of monomer class, polymerization conditions, the mensuration of polymer molecular weight, hydrophile capability, crystal capability, the mensuration and controlled degrading speed of the polymer, the mensuration and control of the mechanical performance of the polymer, and numerous other critical considerations.
Our next challenge was to identify a suitable bio-active inorganic material, and to optimize the compound and associated production conditions. It was critical that we could predict and control the bio-activities of the implanted fixture material, and to this end we used high grade and mature phosphate type bio-active materials, taking into account the preparation characteristics of the compound material, and the surface character requirements of the finished products. We also improved current technical parameters by modifying the surface character, thereby achieving critical control over the desired grain size and surface activities.
The third technological hurdle involved the actual preparation and utilization of the engineered compound in conjunction with a bio-active material. Hydronium bombardment of the surface, with spread and cover techniques, was employed during this critical step in the process. This had the effect of creating a well-knit bio-active membrane on the degradable polymer’s surface, and embedding a bio-active core inside the degradable polymer stick, so as to form the bio-active degradable compound material.
The final step entailed strengthening and shaping the processed compound by using directional extrusion and molding. Degradable acantha inoculators, fixation screws, orthopedicsorthopaedics stuffing, enlace strings, and anti-conglutination membrane can all be manufactured, as needed, using this same technique.
Our company has studied and researched Polyamide, changing its chemical and physical properties to meet the above requirements. As a result of our research we have:
| 1. | Increased mechanical strength to 170Mpa. |
| 2. | Increased biological activities to accelerate bone cell substitution. |
| 3. | Extended the degeneration period during the implant. While the PA is degenerating layer by layer, the bone cells grow and take its place. |
| 6 |
Product Analysis
Our Company is researching and currently developing the capability of manufacturing several different kinds of human implant products including Artificial Lumbar Disc, Mini-Screws, Suture Anchors, reconstructive dental devices and other PA products. Currently the company has two production lines certified by the GMP regulations.
Our Company is constantly analyzing the market needs to develop suitable products. One of the company’s products is currently pending CFDA approval, two products are under clinical testsmanufactured in a 100,000 level GMP factory with stringent quality management system, workshop alongside a 10,000-level bacteria purification zone. The R&D, production and one product will start clinical tests.quality management capabilities satisfies the requirements of implantable medical device production management specifications, ISO9001 and ISO13485. Over the years, Shenzhen Changhua has developed a series of orthopedic internal fixation products such as bone screws, rib nails, tying lines and bone plates using a newly synthesized material, PPH (PA6-P(MMA-co-NVP)-HA)
Overview of PA Devices and Market in the US, China and Worldwide
FracturesThe global orthopaedic device market reached US$51 billion in 2018, owing to multiple factors that are amongenabling it to progress at a CAGR of 15% from 2019 to 2023.
The key drivers of the most commonglobal orthopaedic problems. Theredevices market are estimated 1.5 million fracture cases each yearthe 2 factors below:
| 1. | Rapidly aging population | |
| 2. | High demand for painless treatments |
Growth in the United States alone (Riggsgeriatric population is primarily pushing demand for orthopaedic solutions globally. Effects of aging, such as diminishing bone density and Melton 1995),weakening bones due to excessive loss of bone mass, make their presence felt from 35 years of age and the average citizen in a developed country can expect to sustain two fractures over the course of their lifetime. Fractures occur at an annual rate of 2.4 per 100 population. Men arebecome more likely to experience fractures (2.8 per 100 population) than women (2.0 per 100). In 1998, over 10.7 million fractures were seen by physicians in office-based practice (this included visits for follow-up care).Of these, approximately 8.6 million visits for fracture care (79.6%) were made to orthopaedic surgeons. When a fracture was referred to another physician, approximately 90.6% were referred to orthopaedic surgeons.(Data Source: National Ambulatory Medical Care Survey & American Academy of Orthopaedic).prominent after 55 years. By 2050, 1 billion or more people would be above 60 years old.
Hip fracture rates areIn addition, the demand for more pain-free treatments and increasing throughout urban Asia. A landmark study from Beijing 2002–2006 indicates the hip fracture incidence in those aged over 50 years to be 229/100,000 per year in women and 129/100,000 per year in men. This study found the rates of age-specific hip fractures in those aged over 50 years increased by 58% in women and by 49% in men. The same study also compared hip fractures that occurred from 2002-2006 with those that had occurred previously from 1990-1992, and it was found that the adjusted age-specific rates of hip fracture over age 50 years increased 2.76-fold in women and 1.61-fold in men. The increasing rate of hip fractures is serious since they are associated with increased mortality. In Mainland China, 1.8 million new osteoporotic vertebral fractures occurred in 2006. Since the number of people aged older than 60 years issport related injuries and road accidents are expected to approach 438 million by 2050, it can be projected thatfuel the number of Chinese in this age group with osteoporotic vertebral fractures could reach 36.7 million and 48.5 million in 2020 and 2050, respectively.(Data Source: International Osteoporosis Foundation).
Global market size ofneed for orthopaedic medical devices reached 43.1 billion U.S. dollars in 2012. It maintained a 3.1% annual composite growth rate during 2012 to 2015 and reached 47.2 billion U.S. dollars in 2015. China will remain the fastest growing market in the next 10-15 years due to aging population, economic development and improvement of national health services. China has already overtaken Japandevices. However, stringent regulatory approval procedures as well as the second largesthigh cost of surgical procedures and these devices are the main reasons restraining market for orthopaedic medical devices with an annual growth, rateand making it a high-barrier of 15%. Current largest market USA has an annual growth rate of less than 3% and it is expected that China will overtake USA as the largest market in the future.entry.
China’s Market for PA Devices
China’s market for PA devices depends on 3 major conditions:
InWith a population of over 1.3 billion, China is the first 50 yearsworld’s most densely populated country and makes up of one-fifth of the 21st century,world’s population. China’s population is nearly five times more than United States even though both roughly cover the same geographic area. There are 32 Provinces, Autonomous Regions, and Municipalities of Mainland China.
China’s orthopaedic implant device industry is in a state of rapid market growth. With the acceleration of population aging, the improvement of medical policies, and an increase in people’s treatment awareness, China’s orthopaedic implant medical device sector continues to boom, with a huge potential orthopaedic market base and developmental space. According to The Blue Book of Chinese Medical Devices, the size of the orthopaedic implant market in China will havereached US$4.34 billion and US$3.74 billion in 2019 and 2018, an annual increase of 16.03% and 16.44% respectively, and the compound annual growth rate from 2010 to 2018 was 17.52%. With a growingdomestic aging population, whilecoupled with increasing demand for health care and increased purchasing power, the total population in China will continually increase. New and improved medical technologies will be rapidly developed and utilized throughout hospitals in China, and material optimization and product pricingorthopaedic implant market is expected to directly stimulate increased sales.maintain an annual growth rate of 15%. (source: 2020 China NMPA Blue Book).)
Competitive Analysis
To the best of our knowledge, our Company is the only patent holder of PA technologies in China, as well as the only company carrying out Clinical Trials on PA productsreceived the NMPA (formerly the CFDA) approval in China. At this time there are no similar products in this market (bio-degradable internal fixation devices that degrade without acids or other non-naturally occurring substances).market. Moreover, due to the nature of the regulatory environment, and the requirements and logistics of mounting a clinical trial, it would take any new competitor a minimum of three years to catch up to our lead in this area alone. Factoring in our established relationships with key customers, distributors, and regulators, as well as our ready-to-run production facilities, and our actual advantage is considerableconsiderably longer than the 3 year3-year regulatory advantage. This represents an invaluable window in which to firmly entrench our company as the preferred purveyor of self-reinforced, absorbable biodegradable PA components in the Chinese health care environment.
To reiterate, our company and product line offer several critical competitive advantages, specifically:
| ● | There are no similar patent registrations in China. | |
| ● | Our initial product, the PA Screw approved by the NMPA in 2018, has completed 100% of the required clinical trials, with a 100% success | |
| ● | We are the only company qualified and permitted to conduct clinical trials of other PA products by China’s | |
| ● | We have a timing advantage over other companies in China, which would have to go through the preclinical testing before they could even apply for a permit to conduct actual clinical trials. | |
| ● | Under the existing |
Specific Competition
Competition in the medical implant device industry is intense both in China and in global markets. In orthopedics,orthopaedics, ABMT’s principal competitors are the numerous companies that sell metal implants. ABMT competes with the manufacturers and marketers of metal implants by emphasizing the ease of implantation of the Company’s Self-Reinforced, Bio-absorbable, Brady-degradablepolymer implants, the cost effectiveness of such products, and the elimination of risks associated with the necessity of performing removal surgeries frequently required with less modern products.
WithinAccording to the resorbable implantrecord from the NMPA and our estimates, it will take at least 5 years for another medical device provider with similar technology to appear in the market. This is because much time will need to be spent on developing material compatibility, safety and undergoing clinical trials in reaching proper standards.
In addition, the current market ABMT is competingmainly saturated with other manufacturers of resorbable internal fixation devices primarily on the basis of the physiological strength of ABMT’s polymersmetallic compound bone screws, and the length ofmedical industry has been using it predominantly since the strength retention time demonstrated1900s. Not only is our invented material biologically stable and easily accepted by ABMT’s formulations. In order to replace the widely-used metal components, the new materials must meet numerous bioconsistency and mechanical-consistency requirements. Furthermore, they must also exhibit specific properties with respect to bio-activities, degradability, and controllable degradation speed. Although many macromolecule materials are degradable inside human body, relatively few provide the physical characters required for fracture fixation.it is also very versatile and therefore has a great market potential.
Our primary competition will be the generation-one and generation-two counterparts, which, despite their functional inferiority, enjoy the benefit of familiarity and an established manufacturing and marketing base. This competition comes from a number of entrenched players worldwide, including Acumed,Stryker Corp, Zimmer Biomet, Inc., Conmed Corp., Encore Orthopedics, Exactech, Inc.,Medtronic, Johnson & Johnson DePuy, Inc., Medtronic Sofamor Danek, Inc., Orthofix International N.V.,Services, and Smith and& Nephew Plc, Stryker Corp., Synthes, Inion, Ltd. and others. Although many of these competitors have substantially greater resources upon which to draw, we are confidentbelieve that the technological superiority of the more forward-looking product will ultimately equalize the playing field by orthopaedic innovation.
For the past 20 years, titanium has been the most widely used, and the most expensive material for fixing fractures (in both elective and emergency surgery). Although metal exhibits the desired strength and rigidity to allow the healing process to begin, there are a number of issues associated with using permanent titanium systems. Biodegradable plating systems deliver many of the benefits of their metal counterparts, without the disadvantages.
There are a number of marketers and manufacturers of PLA and PLLA—the first generation of Self-degradable, absorbable, orthopedic internal fixation devices in China. (Note: Titanium screws cost as much as $2200.)
Other foreign companies that produce PLA, PLLA or titanium, stainless products, but have less marketing in China are:
● DePuy (Johnson & Johnson)
● Medtronic
● Stryker Corp.
● Zimmer Biomet
● Smith & Nephew
● Inion
Product advantage and Market Opportunity:
Product Comparisons
Among many other advantages, a main advantage of ABMT’s proprietary PA technology is the elimination of the need for secondary surgery to remove an implantation device. Implant removal belongs to the most common elective orthopaedic procedures in industrial countries. In children, implant removal may be necessary to remove implants early to avoid disturbances to the growing skeleton, to prevent their bony immuring making later removal technically difficult or impossible, and to allow for planned reconstructive surgery after skeletal maturation (e.g., in case of hip dysplasia). In adults, pain, soft tissue irritation, the resumption of strenuous activities or contact sports after fracture healing, and the patient’s demand are typical indications for implant removal in clinical practice. However, implant removal requires a second surgical procedure in scarred tissue, and poses a risk for nerve damage and re-fractures.(cite: Hanson et al.BMC Musculoskeletal Disorders 2008)
| ABMT’s | ||||||
| Bio-compatibility level | Bending Strength and tensile strength exceeds that of the human bone. | Bending strength and tensile strength are close to that of the human bone | Bending strength and tensile strength are close to that of the human bone | |||
| ||||||
| No apparent issues and with mechanical sturdiness; no inflammation resulted. | ||||||
| Long-term Effects |
| |||||
|
| |||||
| High | ||||||
| Surgical cost | ||||||
| Remarks | Characteristics and properties easily altered during manufacturing, purification and storage processes | Composition and characteristics not easily affected by external factors during production | ||||
1Titanium and aluminum hasMetallic Compounds have been traced in serum and hair of 16 of 46 patients after receiving titanium implants.(cite: Kasai Y, Iida R, Uchida A: Metal concentrations in the serum and hair of patients with titanium alloy spinal implants.)
2Implant removal belongs to the most common elective orthopaedic procedures in the industrial countries. In a frequently cited Finnish study, implant removal contributed to almost 30% of all planned orthopaedic operations, and 15% of all operations.(cite: (cite: Bostman O, Pihlajamaki H: Routine implant removal after fracture surgery: a potentially reducible consumer of hospital resources in trauma units.)
| 9 |
Towards the end of the last century, spinal and orthopedicorthopaedic implants evolved towards progressively stronger and stiffer devices, as it was presumed that increased construct rigidity would optimize the biological milieu and provide more rapid and robust healing and arthrodesis. For the past 20 years, titanium has been the most widely used, and the most expensive material for fixing fractures (in both elective and emergency surgery). More than 1,000 tons (2.2 million pounds) of titanium devices of every description and function are implanted in patients worldwide each year. Although metal exhibits the desired strength and rigidity to allow the healing process to begin, there are a number of issues associated with using permanent titanium systems. Biodegradable systemsOur PA materials deliver many of the benefits of their metal counterparts, without the disadvantages:
| METAL | ABMT’s PA devices | |||
| Cranial Growth | ● Growth restriction
| ● Stimulation of growth leading to better bone healing | ||
| Accumulation of Metal in tissues | Yes | No | ||
| Adverse Effect | ● Many necessitate removal operation either for mechanical strength of the overall structure
| None | ||
| Stiffness for optimal healing | ● Too stiff
| ● Optimal stiffness/flexibility characteristics to achieve surgical fixation, while conforming to the softer, more pliable bone of the patient | ||
| Other Effects | ● Implant palpability
| ● No long-term palpability
| ||
| Cost of product | Cost to hospital: $400-$2200 | Cost to hospital: |
Intellectual Property
The Company has been granted one patent for its material by the State Intellectual Property Office of the P.R.China (“SIPO”), patent no. ZL971190739. This patent also protects the use and manufacturing process of the material.
In January 2017, SIPO has issued to the Company a new patent titled “Bone Fracture Plate Made of High Polymer Materials”, patent no. ZL 2014 1 0647464.1, which strengthens the Company’s position in manufacturing process and related controls using our unique polyamide materials.
The companyCompany is establishing broad and new intellectual property protection schemes around our unique PA product lines, not only on its combination compounds, but also to lead as an outstanding material in the future of clinical activity.
Patent Abstract
The present invention discloses a macromolecular implant for human body and its preparation process, and relates to the products made up by using said macromolecular implant and their application. Said invented product is made up by using resin fibrefiber through hot-pressing treatment according to the formula provided by said invention, and its strength is high, tenacity is good and its shape can be processed according to the requirement in the period of bone union after implantation, and said implant can be made into the fixation block, eurymeric block, fastening piece and suture for reduction of fracture, and can be started to be degraded from twenty-fourth week after implantation, and can be absorbed by human body after 1.5-2 years, and its cost is low.
Employees
As of October 31, 2017,2020, we had 1517 employees, with 6 employees in R&D, Clinical and Regulatory, 45 employees in Manufacturing, 45 employees in General and Administration, and 1 employee in Accounting.
We believe that our future success will depend in part on our continued ability to attract, hire and retain qualified personnel. None of our employees are represented by a labor union, and our employee relations have been good.
The company’s facilities are located at Block A, Longcheng Tefa Industrial park, Longgang, Shenzhen, China.
Availability of new qualified employees
Shenzhen is located in the southern part of the Guangdong Province, on the eastern shore of the Pearl River Delta. Neighboring the Pearl River Delta and Hong Kong, Shenzhen’s location gives it a geographical advantage for economic development.
Shenzhen’s well-built market economy and diversified culture of migration have helped to create the best-developed and most dynamic market economy in China. Shenzhen is China’s first special economic zone. After more than 30 years of development, Shenzhen has grown into a powerful city boasting the highest per capita GDP in China’s mainland. Its comprehensive economic capacity ranks among the top of the country’s big cities. The combined value of imports and exports has remained No.1 for 20 years in China’s foreign trade.
Since 1997, China has accelerated the development of higher education and increased enrollment in regular universities and colleges. Between 2003 and 2017 the number of students completing undergraduate and graduate courses in China more than tripled, from 2.12 million to 7.95 million graduates.
Insurance
While we are carrying out the Clinical Trials, we do not have any Product Liability Insurance coverage for the use of our proposed products. We intend to obtain Product Liability Insurance coverage for commercial sale of our products in due course.
Government Regulations
Our primary target market is the medical community of the People’s Republic of China (PRC). Medical devices manufactured by the Company in China are subject to regulation by the National Medical Products Administration of the PRC (“NMPA”), formerly the China Food and Drug Administration (“CFDA”), formally and the State Food and Drug Administration (“SFDA”) of the PRC. The manufacturing facilities are also required to meet China’s Good Manufacturing Practices (“GMP”) standards.
The Company’s production facilities are fully compliant with GMP requirements. The Company’s CFDA Application for its PA Screw is atwas approved by the final stageNMPA in April 2018. Furthermore, due to the uniqueness of CFDA Review Process.our PA Screw, it has been independently categorized so the marketing prices are set by the Company rather than healthcare platforms.
| 11 |
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
ITEM 1B. UNRESOLVED STAFF COMMENTS
There are no unresolved comments from the SEC.
None.
We are not involved in any pending or imminent litigations or current legal proceedings.
ITEM 4. MINE SAFETY DISCLOSURE
Not applicable.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Only a limited market exists for our securities. There is no assurance that a regular trading market will develop, or if developed, that it will be sustained. Therefore, a shareholder in all likelihood will be unable to resell his securities in our company. Furthermore, it is unlikely that a lending institution will accept our securities as pledged collateral for loans unless a regular trading market develops.
Our company’s securities are traded on the world’s largest electronic interdealer quotation system “OTCQB” operated by the OTC Markets Group under the symbol “ABMT”.
| Fiscal Quarter | High Bid | Low Bid | ||||||
| 2017 | ||||||||
| Fourth Quarter 08-01-17 to 10-31-17 | $ | 0.21 | $ | 0.12 | ||||
| Third Quarter 05-01-17 to 07-31-17 | $ | 0.21 | $ | 0.10 | ||||
| Second Quarter 02-01-17 to 04-30-17 | $ | 0.20 | $ | 0.10 | ||||
| First Quarter 11-01-16 to 01-31-17 | $ | 0.20 | $ | 0.10 | ||||
| Fiscal Year | High Bid | Low Bid | ||||||
| 2020 | ||||||||
| Fourth Quarter 08-01-20 to 10-31-20 | $ | 0.336 | $ | 0.15 | ||||
| Third Quarter 05-01-20 to 07-31-20 | $ | 0.51 | $ | 0.151 | ||||
| Second Quarter 02-01-20 to 04-30-20 | $ | 0.30 | $ | 0.034 | ||||
| First Quarter 11-01-19 to 01-31-20 | $ | 0.20 | $ | 0.047 | ||||
| Fiscal Quarter | High Bid | Low Bid | ||||||
| 2016 | ||||||||
| Fourth Quarter 08-01-16 to 10-31-16 | $ | 0.20 | $ | 0.15 | ||||
| Third Quarter 05-01-16 to 07-31-16 | $ | 0.23 | $ | 0.15 | ||||
| Second Quarter 02-01-16 to 04-30-16 | $ | 0.25 | $ | 0.21 | ||||
| First Quarter 11-01-15 to 01-31-16 | $ | 0.21 | $ | 0.14 | ||||
| Fiscal Year | High Bid | Low Bid | ||||||
| 2019 | ||||||||
| Fourth Quarter 08-01-19 to 10-31-19 | $ | 0.25 | $ | 0.012 | ||||
| Third Quarter 05-01-19 to 07-31-19 | $ | 0.322 | $ | 0.121 | ||||
| Second Quarter 02-01-19 to 04-30-19 | $ | 0.50 | $ | 0.112 | ||||
| First Quarter 11-01-18 to 01-31-19 | $ | 0.75 | $ | 0.121 | ||||
Shareholders
At October 31, 2017,2020, we had 5160 shareholders of record of our common stock, including shares held by brokerage clearing houses, depositories or otherwise in unregistered form. We have no outstanding options or warrants, or other securities convertible into, common equity.
Dividend Policy
We have not declared any cash dividends. We do not intend to pay dividends in the foreseeable future, but rather to reinvest earnings, if any, in our business operations.
Section 15(g) of the Securities Exchange Act of 1934
Our shares are covered by section 15(g) of the Securities Exchange Act of 1934, as amended that imposes additional sales practice requirements on broker/dealers who sell such securities to persons other than established customers and accredited investors (generally institutions with assets in excess of $5,000,000 or individuals with net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouses). For transactions covered by the Rule, the broker/dealer must make a special suitability determination for the purchase and have received the purchaser’s written agreement to the transaction prior to the sale. Consequently, the Rule may affect the ability of broker/dealers to sell our securities and also may affect your ability to sell your shares in the secondary market.
Section 15(g) also imposes additional sales practice requirements on broker/dealers who sell penny securities. These rules require a one-page summary of certain essential items. The items include the risk of investing in penny stocks in both public offerings and secondary marketing; terms important to in understanding of the function of the penny stock market, such as “bid” and “offer” quotes, a dealers “spread” and broker/dealer compensation; the broker/dealer compensation, the broker/dealers duties to its customers, including the disclosures required by any other penny stock disclosure rules; the customers rights and remedies in causes of fraud in penny stock transactions; and, the FINRA’s toll free telephone number and the central number of the North American Administrators Association, for information on the disciplinary history of broker/dealers and their associated persons.
Securities authorized for issuance under equity compensation plans
We have no equity compensation plans and accordingly we have no shares authorized for issuance under an equity compensation plan.
ITEM 6. SELECTED FINANCIAL DATA
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This section ofYou should read this discussion together with the report includesFinancial Statements, related Notes and other financial information included elsewhere in this Form 10-K. The following discussion contains assumptions, estimates and other forward-looking statements that involve a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like: believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements, which apply only as of the date of this annual report. These forward-looking statements are subject to certain risks and uncertainties, thatincluding those discussed under “SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS,” and elsewhere in this Form 10-K. These risks could cause our actual results to differ materially from historical results or our predictions.those anticipated in these forward-looking statements.
Overview
The following discussion is an overview of the important factors that management focuses on in evaluating our businesses, financial condition and operating performance and should be read in conjunction with the financial statements included in this Annual Report on Form 10-K. This discussion contains forward-looking statements that involve risks and uncertainties. Actual results could differ materially from those anticipated in these forward looking statements as a result of any number of factors, including those set forth in this Annual Report on Form 10-K, and elsewhere in our other public filings. Factors that may cause actual results, our performance or achievements, or industry results to differ materially from those contemplated by such forward-looking statements include without limitation:
| 1. | The company’s lack of funds in new R&D, especially in clinical testing; |
| 2. | The company’s lack of funds in new equipment and the utilization of the production process after |
| 3. | The company may need to seek funding through such vehicles as convertible notes and warrants, private placements, and/or convertible debentures; |
| 4. | The company needs funding for marketing and sales network build-up; |
| 5. | The company plans to seek approval for clinical testing and marketing on a worldwide basis, including US FDA approval for testing and marketing in the United States of America, and there is no guaranty that we will obtain any such approval; |
| 6. | While the company currently holds |
The Company is subject to a number of risks similar to other companies in the medical device industry. These risks include rapid technological change, uncertainty of market acceptance of our products, uncertainty of regulatory approval, competition from substitute products from larger companies, the need to obtain additional financing, compliance with government regulations, protection of proprietary technology, product liability, and the dependence on key individuals.
All written and oral forward-looking statements made in connection with this Form 10-K that are attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. Given the uncertainties that surround such statements, you are cautioned not to place undue reliance on such forward-looking statements.
Our Business
We are engaged in the business of designing, developing, manufacturing and the planned future marketing of self-reinforced, re-absorbable biodegradablebiomaterial internal fixation devices. We hold twoone medical device permit from the National Medical Products Administration of the PRC (“NMPA”) for our product - polymer orthopaedic internal fixation screws and three patents issued by the State Intellectual Property Office of the P.R.C. (“SIPO”). Our polyamide materials, their uses and manufacturing processes are protected by Patent No. ZL971190739. Patent No. ZL201410647464.1 titled “Bone Fracture Plate Made of High Polymer Materials” and patent no. ZL971190739, isNo. ZL201511005531.0 titled “Composite fiber, manufacturing method and orthopaedic binding wire” were granted to us in 2018 and 2020 respectively. Our polyamide materials are used in producing screws, binding wires, rods and related products. These products are used in a variety of applications which include orthopedicincluding orthopaedic trauma, sports related medical treatment, or cartilage injuries, and reconstructive dental procedures. Our products are biodegradableAt this time, our company is the sole patent holder and market permit holder of PA technologies in China, as well as the only company currently engaged in clinical trials, manufacturing and marketing for PA orthopaedic internal fixation devices whichin the PRC. Our products are made of a very unique material called PolyamidePA6-P(MMA-CO-NVP)-HA (“PA”). Our PA products, such as screws, rods, and binding wires, rods, suture anchors and rib-pins consist of enhanced fibers and high molecular polymers which are designed to facilitate quick healing of complex fractures in many areas of the human skeletal system.
Our products offer a number of significant advantages over existing metal implants and the first generation of degradable implants (i.e. PLLA) for patients, surgeons and other customers including:
| 1. | A notably reduced need for a secondary surgery to remove implant due to post-operative complications, therefore avoiding unnecessary risk and expense on all patient care; | |
| 2. | Enhancing the performance of the materials by manufacturing them to be easily fitted to each patient, forming an exact fit; | |
| 3. | Improving the biological activity of materials. Clinical trial results have shown that | |
| 4. | Reducing the chance of post-operative infection; | |
| 5. | ||
| 6. | Ease of post-operative care i.e. no distortion during x-ray imaging; | |
| 7. | Simple and cost-effective to manufacture. |
Our products are designed to replace the traditional internal fixation device made of stainless steel and titanium and overcome the limitations of previous generations of products such as PLA and PLLA. Our laboratory statistics show that our PA products have a higher mechanical strength, last longer in degradation ratio and are more evenly absorbed form outer layer inwards as compared with similar materials such as PLA and PLLA. Thus PA allows increased restoration time for bone healing and re-growth. The Company’s PA Degradable and Absorbable Screw (“PA Screw”) and Degradable and Absorbable Binding Wire (“PA Binding Wire) are currently being tested in human trials under permitpolymer orthopaedic internal fixation screws received approval from the China Food and DrugNational Medical Products Administration of the PRC (“CFDA”NMPA”). As in April 2018. We launched our sales campaign at the end of our fiscal year ended October 31, 2017,2019 and achieved a milestone in the Company completed 83 successfulCompany’s history by generating revenue through the sales of our PA Screw trial cases, and 57 successful PA Binding Wire. Upon the completion of these trials the Company has already exceeded China CFDA’s requirement on PA Screw trial. The Company’s CFDA Application for its PA Screw is at the final stage of the CFDA Review Process.Screws.
CFDANMPA Application Process and Approval for PAPolymer Screws
The Company first submitted its application for PA Screws to the CFDA, formally SFDA,NMPA (formerly the SFDA/CFDA) in 2008. The application has been withheld by the CFDANMPA pending additional clinical trial cases. This is due to the amended CFDANMPA regulations, which unlike previous regulations require the applicant to specify the position on the body where the clinical trial is carried out. Our amended CFDANMPA application has specified the ankle fracture as the body part of our clinical trial. This is because bones around this part carry most of the body weight. As of October 31, 2011, we have completed all additional clinical trials required by the CFDA with 100 percent success rate. As of October 31, 2017, the company’s CFDA Application is at the final stage of the CFDA Review Process.
In March 2013, The State Food and Drug Administration of the PRC (“SFDA”), China’s medical device market regulatory agency, underwent a reorganization that saw much of China’s food and drug regulatory powers consolidated into the agency, elevating it back to a ministerial-level agency directly under the State Council. The new name for the agency is China State Food and Drug Administration (“CFDA”). The name change meant the CFDA reports directly to China’s State Council and has broader authority to oversee medical device as well as food and drug sectors. This reorganization leads to a more streamlined and efficient registration process for medical devices in China. Since the reorganization, the CFDA has issued series of circulars and guidelines to help applicants. Following the CFDA guidelines, the Company has improved its GMP facilities, updated its Technical Documentation System to cover key areas such as Clinical Trial, Manufacturing Process, R&D, Monitoring and Quality Control. Due to the uniqueness of our material, there arewere no established CFDANMPA Product Standards that we cancould follow during our application process for our PA Screws. To establish our own Product Standards, the Company hashad been carrying out extra tests. The Company has submitted its Product Standards and supplementary reports to the CFDANMPA in 2014. In December 2016, the Company received a notice from the CFDANMPA requesting supplementary report as part of currentthe review process. The Company completed the supplementary report and submitted it to the CFDANMPA in June 2017. The CFDA has not requested further information from the Company.
The Company’s production lines are fully operational. We have been producing products for further researches, testing and product quality control improvements. Following the CFDA final approval, the company will be earning revenues in the same quarter that its application is approved. The Company has been renovating its Shenzhen GMP facility to meet new China Food and Drug Administration (“CFDA”) regulations and in preparation for CFDA’s approval ofIn April 2018, the Company’s application for its PA Screws product. The facility upgrade was expected to take three months but we estimateapproved by the completion date to be earlier.
NMPA in China (Medical Device Certification Number: 20183460133).
Clinical Trials on Other Products
Currently, weThe Company has completed a total of 83 successful clinical human trial cases, including 71 cases on ankle fractures and 57 successful PA Binding Wire trial cases. We have been conducting clinicalhuman trials for PA Binding Wires at the 6 state level hospitals authorizedrecognized by the CFDANMPA for clinical trials in different cities throughout China,China; including Nanchang, Changsha, Luoyang, Nanning and Tianjin. We have successfully completed all 60 clinical human trial cases required by the CFDA,The cities and we have completed 42 comparison cases. CFDA regulations require each successfulprovinces where our clinical trial case tohospitals are based will be accompanied by a trial case that uses a different productthe initial target regions on our marketing plan. These regions are both densely populated and have experienced high or above medium economic growth. The clinical trials for comparison reasons. We intendedthe Company’s PA Screws have been completed with 100 percent success rate. Having gained NMPA approval for PA Screws, the Company is planning to start CFDA Application Process for our PA Binding Wires when we completeclinical trials on series of orthopaedic products the remaining 18 comparison cases.
The Company has setup a joint research project with Sichuan University. The Company has completeddeveloped using the design and production of testing mini-screws using its patented PA material. This project is currently under way.
However, there can be no assurance that the company will be able to obtain any further clearances or approvals, if required, to market its products for their intended uses on a timely basis, if at all. Moreover, regulatory approvals, if granted, may include significant limitations on the indicated uses for which a product may be marketed. Delays in the receipt of or the failure to obtain such clearances or approvals, the need for additional clearances or approvals, the loss of previously received clearances or approvals, unfavorable limitations or conditions of approval, or the failure to comply with existing or future regulatory requirements could have a material adverse effect on the Company’s business, financial condition and results of operations.
The Company has decided to take a new approach to clinical trials by outsourcing its clinical trial operations starting 2018. The Company believes that employing Contract Research Organizations (“CROs”) in future product development will help reduce costs and speed the process of bringing a product to market. By outsourcing tasks such as clinical trial management; monitoring; clinical laboratory services; data management, preparation of a submission to CFDA; regulatory affairs support etc., the Company can concentrate on other core tasks such as R&D and manufacturing.same unique biomaterial.
Government Regulation
Medical implant devices/products manufactured or marketed by the companyCompany in China are subject to extensive regulations by the CFDA.NMPA. Pursuant to the related laws and acts, as amended, and the regulations promulgated there under (the “CFDA“NMPA Regulations”), the CFDANMPA regulates the clinical testing, manufacture, labeling, distribution and promotion of medical devices. The CFDANMPA also has the authority to request repair, replacement, or refund of the cost of any device manufactured or distributed by the Company.
Under the CFDANMPA Regulations, medical devices are classified into three classes (class I, II or III), the basis of the controls deemed necessary by the CFDANMPA to reasonably assure their safety and efficacy. Under the CFDA’sNMPA’s regulations, class I devices are subject to general controls [for(for example, labeling and adherence to Good Manufacturing Practices (“GMP”) requirements]requirements) and class II devices are subject to general and special controls. Generally, class III devices are those which must receive premarket approval by the CFDANMPA to ensure their safety and efficacy (for example, life-sustaining, life-supporting and certain implantable devices, or new devices which have not been found substantially equivalent to legally marketed class I or class II devices). The Company is classified as a manufacturer of class III medical devices. Current CFDANMPA enforcement policy prohibits the marketing of approved medical devices for unapproved uses.
Before a new device can be introduced into the market in China, the manufacturer generally must obtain CFDANMPA marketing clearance through clinical trials. Since the companyCompany is classified as a manufacturer of Class III medical devices, the companyCompany must carry out all clinical trials in pre-selected CFDANMPA approved hospitals.
Manufacturers of medical devices for marketing in China are required to adhere to GMP requirements. Enforcement of GMP requirements has increased significantly in the last several years and the CFDANMPA has publicly stated that compliance will be more strictly scrutinized. From time to time the CFDANMPA has made changes to the GMP and other requirements that increase the cost of compliance. Changes in existing laws or requirements or adoption of new laws or requirements could have a material adverse effect on the company’sCompany’s business, financial condition and results of operations. There can be no assurance that the companyCompany will not incur significant costs to comply with applicable laws and requirements in the future or that applicable laws and requirements will not have a material adverse effect upon the company’sCompany’s business, financial condition and results of operations.
Regulations regarding the development, manufacturing and sale of the company’sCompany’s products are subject to change. The Company cannot predict the impact, if any, that such changes might have on its business, financial condition and results of operations.
Results of Operations
The “Results of Operations” discussed in this section merely reflect the information and results of Masterise and Shenzhen Changhua for the years ended October 31, 20172020 and 2016.2019.
Sales and Marketing
The Company launched the sales and marketing campaign of its NMPA approved unique proprietary bio-polymer internal fixation screws (“PA Screws”) at the end of the fiscal year ended October 31, 2019. The campaign was kick-started with the signing of a sales and marketing distribution agreement between Shenzhen Changhua, an ABMT subsidiary, and Guangzhou Ding Hua Biomedical Technology Ltd. (“GZDH”), a medical device sales company based in Guangzhou, South China. Both companies share core values and a common vision of the future. Guangzhou Ding Hua (GZDH) has been authorized as Changhua’s national sales representative company and will be leading its sales effort in China, where the market value for orthopaedic devices is expected to reach US$4 billion and continue to grow in the coming years. Mr. Tie Jun Chen, a related party, has a significant equity interest in Guangzhou Ding Hua (“GZDH”).
The Company has established long term relationships with many hospitals and national distributors in China. Ms. Hui Wang, the Company’s CEO, has over 25 years’ sales experience in medical distribution. She is in charge of our sales programs. Professor LIU, Shangli, our chief medical advisor for Greater China, is one of the highest ranked orthopaedic doctors in China as well as being highly renowned in the rest of the world. He has assisted the Company in nationwide product promotion and joint projects with associated academic institutions and medical schools.
The Company has been actively boosting its brand through participating in national and provincial orthopaedic conferences, garnering deals with national and provincial distributors. In addition, we have coordinated with government authorities to obtain the National New Orthopaedic Consumables Classification Code (“OCCC”) especially for our unique proprietary bio-polymer internal fixation screws and completed the provincial product registrations meeting China’s Medical Sourcing regulations. We believe that these activities will not only strengthen our network of agents and distributors to reach a greater number of hospitals, but also allow us to better understand the needs and demands of surgeons, without inhibiting existing operational procedures and maximizing the effectiveness of our products.
Revenues
The Company isachieved a milestone in its development stagehistory at the end of the fiscal year ended October 31, 2019, by completing sales of $11,657 to its distributor, a company in which Mr. Tie Jun Chen, a key management personnel of Shenzhen Changhua, has a significant equity interest. We generated $60,501 in sales revenue in the following quarter ended January 31, 2020, an over 400% increase compared with the previous quarter. Our marketing campaign was then disrupted by the COVID-19 pandemic during the second and does notthird quarter of 2020. Like most of the businesses in Mainland China, our facility in Shenzhen was closed during pandemic lockdown. With the easing of COVID-19 restrictions in Mainland China, we generated $62,336 in sales revenue in the fourth quarter ended October 31, 2020, and achieved a quarterly growth rate of 435% compared with the quarter ended October 31, 2019. We anticipate our sales revenue to grow at a moderate rate during 2021.
Cost of Sales
Cost of sales for the years ended October 31, 2020 and 2019 was $51,817 and $7,596 respectively, which accounted for 41.93% and 65.16% of the gross revenue. Most of the costs were expenses for attending exhibitions and trade shows.
Gross Profits
Gross profits for the years ended October 31, 2020 and 2019 was $71,770 and $4,061 respectively. Compared to prior year, the gross profits for the years ended October 31, 2020 and 2019 were positive rather than nil. We started to generate revenue at the end of our fiscal year from inception to October 31, 2019 before our sales campaign was disrupted by the COVID-19 pandemic,
Operating Expenses
Operating expenses for the years ended October 31, 2020 and 2019 were $518,394 and $608,799 respectively, which accounted for 419.46% and 5,222.6% of the gross revenue. Compared to prior year, operating expenses for the years ended October 31, 2020 and 2019 were reduced by 14.85% and 3.98%. The primary reasons for the changes were due to the General and Administrative expenses reduction of $99,551 or 30.72% and $237,200 or 42.27% for the years ended October 31, 2020 and 2019 respectively, in addition to Research and Development reduction of $80,680 or 30.6% for the year ended October 31, 2020, and Research and Development increment of $207,127 or 366.52% for the year ended October 31, 2019.
Funding Needs
The Company estimates that it will need to raise minimum $1,000,000 over the next 12 months to market and expand the sales of its products. This amount may increase if we decide to start clinical trials on new products.
Due to the COVID-19 pandemic, our sales plan has been disrupted and our revenue was insufficient to cover our expenditures in 2020. We estimate that our sales revenue to be insufficient to meet our operating costs in 2021, albeit our sales revenue started to recover with the easing of pandemic restrictions in China. Therefore, we will continue to rely on external investments and shareholder’s loans to cover our cash shortage. While the Company has no outside sources of funding, the Company’s shareholders have any revenue. committed to advance the Company funds as needed. There is a Letter of Continuing Financial Support signed between the Company and one of its major shareholders, Titan Technology Development Ltd.
The management team is continuously looking for fundraising possibilities for sales and marketing expansion, product improvement, machinery upgrades, facility expansions and continuous research and development, and sales and marketing preparation.development.
Estimate current production lines in full capacity
Our facility is located in Shenzhen, China, which is built to meet the GMP standards. Our facility covers about 865 square meters, which includes the combined facilities of offices, laboratories, and workshops. There is one production line for the PA Screw and another production line for the PA Binding Wire. The annual production capabilities of each production line are 100,000 pieces for PA Screw, and 240,000 packs for the PA Binding Wires. Both production lines, at their maximum production capacities are capable of generating approximately $30,000,000 in annual revenue.
| Estimate current production lines in full capacity | ||||||||||
| Output Quantity (Max.) | Price at ex-factory (US$) | Total Turnover (US$) | ||||||||
| PA Screw | 100,000 (piece) | 180 | 18,000,000 | |||||||
| PA Binding Wire | 240,000 (pack) | 50 | 12,000,000 | |||||||
| Total: | 30,000,000 | |||||||||
The Company will market its products through a hybrid sales force comprised of a managed network of independent regional distributors/sales agents (80%) and direct sales representatives (20%) in China.
There are two ways the company will generate revenue, 1) through our nationwide and regional distributors and 2) through our direct sales channels.
Funding Needs
The Company estimates that it will need to raise minimum $900,000 over the next 12 months to bring its current products to market, and begin earning revenues. This amount may increase if we decide to start clinical trials on new products. Once we receive the CFDA permit for our PA Screw, our revenue will cover our expenditures. Otherwise, we will continue to rely on external investments and shareholder’s loans to meet our cash needs. While the Company has no outside sources of funding, the Company’s shareholders have committed to advance the Company funds as needed. There is a Letter of Continuing Financial Support signed between the Company and one of its major shareholders, Titan Technology Development Ltd.
| Output Quantity (Max.) | Price at ex-factory (US$) | Total Turnover (US$) | |||||
| PA Screw | 100,000 (piece) | 180 | 18,000,000 | ||||
| PA Binding Wire | 240,000 (pack) | 50 | 12,000,000 | ||||
| Total: | 30,000,000 |
China’s Marketing Analysis and Sales Strategy
We have established long term relationships with many hospitals and national distributors in China. Ms. Hui Wang, the Company’s CEO, has over 25 years’ sales experience in medical distribution. She will be in charge of our sales programs. Professor LIU, Shangli, our chief medical advisor for Greater China, is one of the highest ranked orthopedic doctors in China as well as being highly renowned in the rest of the world. He will assist the Company in nationwide product promotion and joint projects with associated academic institutions and medical schools.
During product development and clinical trial stages we developed close relationships with many major national hospitals. We expect these relationships to boost our revenue generation following CFDA final approval. In order to better serve our customers, including hospitals, distributors, patients and the general public, the Company will set up Regional Service Offices to provide technical support, product information, and customer aid service.
China’s market for PA devices depends on 3 major conditions:
- Patients
- Advanced technology level
- Performance and price of the materials
The demand for internal fixation medical devices has rapidly increased during the last decade. According to China Health Care Year Book 2013, the total revenue of Chinese orthopaedic hospitals in 2013 was US$1.28 billion with over 11.5 million patients. From 2009 to 2013, the market size of China’s orthopaedic devices has grown from US$1.1 billion to US$1.92 billion, and it is estimated to reach US$4 billion in 2020. China has overtaken Japan as the second largest market in the world. The Chinesesize of the orthopaedic implant market size for trauma treatment implant devices such as our PA Screw and PA Wire wasin China continued to grow from US$1.88 billion in 2013 and US$2.122 billion in 2014 withto US$3.2 billion in 2017. Even taken into account of the factors that have slowed down the growth, such as centralized procurement and domestic “import substitution” programs, the size of the China’s orthopaedic implant medical device market was US$4.34 billion in 2019, a growth rate of 12.7%, it is estimated to grow to US$3.02 billion in 2017 and reach US$3.17 billion in 201816.03% compared with a growth rate of 11.6%. (Source: Shenwan Hongyuan Secutities research report)2018.(source: 2020 China NMPA Blue Book).
China has gradually entered the Old Age Society. It is expected that there will be 245 million people over 60 years of age by 2020, and, according to the survey of 50 years old, the incidence of osteoporosis is as high as 60%, accompanied by osteoporosis, fracture, bone necrosis, disability and other diseases, resulting in continued high demand of orthopaedic implant medical devices. (Source: The UN; Shenwan Hongyuan SecutitiesSecurities research report).
Other factors such as new and improved medical technology will continue to rapidly grow throughout hospitals in China, and material optimization and product pricing is expected to directly stimulate double digits market growth rate in the near future in China.
The Company has advantages and more opportunities over others competitors due to:
- No other similar patent registrations in China.
- We are the only company qualifiedreceived market approval and permitted to perform PA clinical trials by the CFDANMPA to the best of our knowledge.
- We have a timing advantage over other companies in China, which would have to go through the preclinical testing for the CFDANMPA permit on clinical trials.
- Under new regulations by the CFDA,NMPA, it will take at least 5-10 years for clinical trials of new materials.
- Our patented material will enables us to rapidly diversify our product line according to market trend and demand.
Number of Hospitals at the end of October 20172020 Statistic and Census report by the National Health and Family Planning Commission of the People’s Republic of China.
| Statistic and Census report by National Health and Family Planning Commission of the People’s Republic of China | ||||||||||||
| (October 2017) | ||||||||||||
| October 2017 | October 2016 | Increase / (Decrease) | ||||||||||
| Total No. of Hospitals | 29,971 | 28,584 | 1,387 | |||||||||
| Public Hospital | 12,200 | 12,786 | (586 | ) | ||||||||
| Private Hospital | 17,771 | 15,798 | 1,973 | |||||||||
| Hospital Rating | ||||||||||||
| AAA | 2,305 | 2,194 | 111 | |||||||||
| AA | 8,227 | 7,807 | 420 | |||||||||
| A | 9,495 | 9,090 | 405 | |||||||||
Statistic and Census report by National Health Commission of the People’s Republic of China
(October 2020)
| October 2020 | October 2019 | Increase / (Decrease) | ||||||||||
| Total No. of Hospitals | 34,879 | 33,752 | 1,127 | |||||||||
| Public Hospital | 11,876 | 11,914 | (38 | ) | ||||||||
| Private Hospital | 23,003 | 21,838 | 1,165 | |||||||||
| Hospital Rating | ||||||||||||
| AAA | 2,860 | 2,671 | 189 | |||||||||
| AA | 10,059 | 9,410 | 649 | |||||||||
| A | 11,545 | 11,011 | 534 | |||||||||
| Unrated | 10,415 | 10,660 | (245 | ) | ||||||||
In general, technological advancements and the marketing potential within Asia are the biggest factors in driving significant growth within the global orthopedicorthopaedic devices market. Another major factor that positively influences this market is the growing number of aging baby boomers with active lifestyles. This sector represents a large portion of the total population.
Distribution Model
The Company will market its products through a hybrid sales force comprised of a managed network of independent regional distributors/sales agents (80%) and direct sales representatives (20%) in China.
Dealer/Distributor System:
We collaborate with dealers to sell and distribute our products to various hospitals and reach the consumers, i.e. bone fracture victims. The company will assist dealers to promote products to famous orthopaedic hospitals
By utilizing a distributor, ABMT will further benefit from promotional activities by having a second party help with common objectives, and at the same time, increase our sales audience through their contacts.
Currently, we have established contacts with various national and district distributors, every distributor covers a minimum of 50 hospitals, so our total coverage is 6,000 hospitals. We will provide ongoing after-sales service, technical supports and conventional meetings, etc., to help our distributors better promote our products.
Direct Hospital Sales (DHS):
Our Direct Hospital Sales (DHS) regions will include Guangdong, Jiangsu, Zhejiang, Xinjiang, Shanghai and Beijing at the beginning. We have already established close relationships with the 7 state-level hospitals where our clinical tests have been conducted. These hospitals are located in one of the fastest growing areas of China, with healthcare coverage for 20% of the Chinese population. These 7 State level hospitals are:
| 1. | The First Affiliated Hospital of Hunan University of Traditional Chinese Medicine. | |
| 2. | The Second Affiliated Hospital of Zhongshan University. | |
| 3. | The First Affiliated Hospital of Guangxi Traditional Chinese Medicine University. | |
| 4. | The First Affiliated Hospital of Guangxi Medical University. | |
| 5. | The People’s Hospital of Guangxi Zhuang Autonomous Region. | |
| 6. | The Affiliated Hospital of Jiangxi University of Traditional Chinese Medicine. | |
| 7. | Luoyang Orthopaedic-Traumatological Hospital. |
Apart from assisting in our sales, these 7 hospitals will also be assisting ABMT in future clinical applications and trials.
In addition, we will receive up-to-date information directly from physicians to develop new products better suited for current patient needs and hence, speed up product commercialization.
Appointment of Chief Medical Officer
On March 9, 2020, the Company announced the appointment of Prof. Puyi Sheng, M.D., PhD, as its Chief Medical Officer. Prof. Sheng, age 53, is a professor and surgeon, specializing in Primary and Revision Arthroplasties, and Joint Surgery. Prof. Sheng currently serves as the vice director of the Department of Orthopaedic Surgery, the vice director of the Department of Joint Surgery in the First Affiliated Hospital of Sun Yat-sen University, professor and PhD student mentor of Sun Yat-sen University in Guangzhou, China. Prof. Sheng received his Bachelor and Master degrees from Sun Yat-Sen University of Medical Sciences, he received his PhD in Bone Science from Sun Yat-sen University in China and PhD in Surgery from Tampere University in Finland. During his career as an orthopaedic surgeon for over 20 years, Prof. Sheng has served in various capacities at different medical institutions including the First Affiliated Hospital of Sun Yat-Sen University in China, Coxa Hospital for Joint Replacement in Finland and Nagoya University in Japan. Prof. Sheng has published 48 science papers as author or co-author.
Prof. Sheng will have an advisory role only and report directly to and take direction from the Company’s Board of Directors. His scientific and strategic input and advice will help the Company’s research and development projects.
Research and Development
Research and development costs related to both present and future products are expensed as incurred. Total expenditure on research and development charged to general and administrative expenses for the years ended October 31, 20172020 and 20162019 was $48,053$182,959 and $57,300.
$263,639. Compared to prior period, the research and development expenses for the years ended October 31, 2020 and 2019 were reduced by 30.6% and increased by 366.52%. The main component of research and development costs is staff costs of the technical personnel on product improvements to enhance industrial design.
The Company started research projects on two new products in 2020. These products are Class II and Class III medical devices for treating Sports Trauma. We expect research and development expenses to grow as we continue to invest in basic research, clinical trials, product development and in our intellectual property. The Company will be working closely with medical institutions and research universities to expedite future clinical trials of upcoming series of polymer fixation devices, including Intramedullary Nailing Fixation, Binding Wires, Micromodule Screws & Plates, Maxillofacial & Craniofacial Plates, and Rib Pins.
Pre-Market ResearchImpact of COVID-19 Pandemic
The Company’s primary business is carried out through its subsidiary, Shenzhen Changhua Biomedical Engineering Co., Ltd. (“Shenzhen Changhua”), based in Shenzhen, China, where COVID-19 pandemic started in January 2020.
The Company has identified the following areas that had been adversely affected by COVID-19:
| 1. | Operation: Our facilities in China were not fully staffed due to COVID-19 lockdown, travel restrictions and quarantine requirements. This affected our accounting and marketing departments mostly because a large number of staff could not come back to office as they were not allowed to travel or have 14-day quarantine before they came back to work. Our operation gradually came back to normal with the easing of COVID-19 restrictions in China during the third and fourth quarter of 2020. | |
| 2. | Manufacturing: We had sufficient raw material stock for 2 months, however, our production was affected by staff shortage and facilities closure during lockdown. | |
| 3. | Marketing: We launched our sales campaign in late 2019 and we generated revenue the first time in the history of the Company at the end of 2019 fiscal year. Our sales and marketing plans were disrupted by COVID-19 pandemic because almost all the hospitals in China were dealing with COVID-19 and non-essential operations were postponed or cancelled. |
The Company has been conducting Pre-Market Research whileworking with its PA Screw Application is under CFDA review. The research is intendedbusiness partners and workforce through crisis planning, effective communication and co-operation to estimateminimize the potential market successnegative impact of the company’s products that can be expected. The research also looks beyond the Company’s initial market - China, and covers international markets. Based on the results of our Pre-Market Research and the positive feedbacks, we have received from trade shows and industrial conferences, it is the Company’s intention to apply for additional international regulatory approvals in due course.COVID-19.
Finance Costs
As of October 31, 20172020 and 2016,2019, the Company owed $582,795$880,108 and $546,953$824,705 respectively to a stockholder – Titan Technology Development Limited, which is unsecured and repayable on demand. Interest is charged at 7% per annum on the amount owed.
As of October 31, 20172020 and 2016,2019, the Company owed $1,710,759$2,068,471 and $1,578,843$1,802,625 to Chi Fung Yu, $1,800,541$2,327,850 and $1,471,898$2,835,785 to Tie Jun Chen, $35,782$41,742 and $32,972$37,701 to Que Feng, $220,098$267,449 and $130,914$240,527 to Shenzhen Hygeian Medical Device Company, Limited., which are unsecured and repayable on demand. Interest is charged at 7% per annum on the amount owed.
Total interest expenses on advances from a stockholder accrued for the yearyears ended October 31, 20172020 and October 31, 20162019 are $37,379$50,065 and $33,665$48,418 for Titan Technology Development Limited.
Total interest expenses on advances from following related parties accrued for the yearyears ended October 31, 20172020 and October 31, 20162019 are $93,951$92,625 and $96,828$93,742 for Chi Fung Yu; $97,045$152,606 and $92,369$155,444 for Tie Jun Chen; $2,059$2,007 and $2,133$2,032 for Que Feng; $11,710$13,899 and $5,289$14,067 for Shenzhen Hygeian Medical Device Company.
As of October 31, 20172020 and October 31, 2016,2019, the Company owed the following amounts respectively to twothree directors for advances made - $298,818$283,627 and $341,626$256,469 to Wang Hui $22,602Wang; $20,930 and $22,139$23,478 to Chi Ming Yu.Yu; $3,474 and $567 to Kai Gui. These advances were made on an unsecured basis, repayable on demand and interest free.
Imputed interest charged at 5% per annum on the amounts owed to twothe directors for the yearyears ended October 31, 20172020 and 20162019 respectively is $15,623$13,695 and $18,990$12,707 for Wang Hui;Hui Wang; $0 and $0 for Chi Ming Yu.Yu and Kai Gui.
Income Tax
ABMT was incorporated in the United States and has incurred net operating loss for income tax purposes for 20172020 and 2016.2019. ABMT has net operating loss carry forwards for income taxes amounting to approximately $1,915,159$2,421,252 and $1,771,223$2,224,307 as of October 31, 20172020 and 20162019 respectively which may be available to reduce future years’ taxable income. These carry forwards, will expire, if not utilized, commencing in 2029. Management believes that the realization of the benefits from these losses appears uncertain due to the Company’s limited operating history and continuing losses. Accordingly, a full, deferred tax asset valuation allowance has been provided and no deferred tax asset valuation allowance has been provided and no deferred tax asset benefit has been recorded. The valuation allowance at October 31, 20172020 and 20162019 was $478,790$797,623 and $442,806$756,265 respectively. The net change in the valuation allowance for 20172020 was an increase of $35,984.$41,358.
Masterise was incorporated in the BVI and under current law of the BVI, is not subject to tax on income.
Shenzhen Changhua was incorporated in the PRC and is subject to PRC income tax which is computed according to the relevant laws and regulations in the PRC. The income tax rate has been 25%. No income tax expense has been provided by Shenzhen Changhua as it is waiting for CFDA approvalhas only started to generated revenue at the end of fiscal year and it has incurred losses.
Other Income/(Expenses)
Other expenses for the years ended October 31, 2020 and 2019 were $225,376 and $344,082 respectively. Comparing with prior year, the other expenses were reduced by $118,706 or 34.5%. There were no substantial changes in other income/expenses except the added in government grants and interest on lease liabilities. During the year ended 31 October 2020, the Company was awarded a government grant equivalent to US$125,806 by the government of Shenzhen Longgang District where our facilities are located. The grant was a Biomedical Incentive Award recognizing the Company’s achievement of obtaining a Class III medical device permit from China’s NMPA.
Net Loss
As reflected in the accompanying audited consolidated financial statements, the Company has an accumulated deficit of $7,679,298$10,256,364 at October 31, 20172020 that includes a net loss of $691,600$672,000 for the year ended October 31, 2017.2020. We are in Clinical Trial phase and do not have a CFDA permitstarted to produce, market or sell in China.
We therefore do not have anygenerate revenue at the end of 2019 fiscal year from inception, but our marketing campaign was disrupted by the COVID-19 pandemic. Revenue income from our PA Screws sales was not sufficient to October 31, 2017 but have to incurmeet operating expenses for the upkeep of the Company and the clinical trials.
Liquidity and Capital Resources
We had a working capital deficit of $5,055,542$7,533,045 at October 31, 20172020 compared to a working capital deficit of $4,435,981$6,577,273 as of October 31, 2016.2019. Our working capital deficit increased as a result of the fact that we areonly started to market of our NMPA approved PA Screw in clinical trial phase,China at the end of 2019 fiscal year, and the company has to put all resources to market its products, complete the clinical trials. We dotrials of other products. Although we began to generate revenues at the end of 2019 fiscal year, the first time in the Company’s history, our marketing campaign was disrupted by the COVID-19 pandemic and the revenue income was not have a CFDA permit to produce, market or sell in China. We had no revenuessufficient. Our main source of financing during the year and that our sole source of financing came in the form of aPA Screws sales and loan from our related parties and stockholders.
Cash Flows
Net Cash Used inGenerated from Operating Activities
Net cash used ingenerated from operating activities was $557,712$646,660 in the year ended October 31, 2017.2020. This amount was attributable primarily to the net loss after adjustment for non-cash items, such as depreciation and imputed interest on advances from directors.
Net Cash Used in Investing Activities
We recorded $760$30,706 net cash used in investing activities in the year ended October 31, 2017.2020. This amount reflected purchases of property and equipment, primarily for research and development to our facilities.
Net Cash Provided byUsed in Financing Activities
Net cash provided byused in financing activities in the year ended October 31, 20172020 was $557,751,$427,821, which represented advances from related parties.
Operating Capital and Capital Expenditure Requirements
Our ability to continue as a going concern and support the commercialization of current products is dependent upon our ability to obtain additional financing in the near term. We anticipate that such funding will be in the form of marketing of our products and equity financing from sales of our common stock. However, there is no assurance that we will be able to raise sufficient funding from the sale of our products and common stock to fund our business plan should we decide to proceed. We anticipate continuingour sales revenue will not meet our financial needs in 2021 and we need to rely on advances from our related parties and stockholders in order to continue to fund our business operations
We believe that our existing cash, cash equivalents at October 31, 2017,2020, will be insufficient to meet our cash needs. The management is actively marketing its product, pursuing additional funding and strategic partners, which will enable the Company to implement our business plan, business strategy, to continue research and development, manufacturing and marketing our products, clinical trials or further development that may arise.
Debt Conversion
On April 28, 2017, the Company entered into a debt conversion agreement with Titan Technology Development Ltd., pursuant to which the Company and Titan agreed to convert $100,000 of the accrued interest of the outstanding debt owed by the Company to Titan into shares of the Company’s Common Stock at a conversion price of $0.05 per share. Pursuant to the terms of the Debt Conversion Agreement, on April 28, 2017, $100,000 of the accrued interest of TTD’s outstanding loan was converted into 2,000,000 shares of Company Common Stock.
Going Concern
As reflected in the accompanying consolidated financial statements, the Company has an accumulated deficit of $7,679,298$10,256,364 as of October 31, 20172020 that includes a net loss of $691,600$672,000 for the year ended October 31, 2017.2020. The Company’s total current liabilities exceed its total current assets by $5,055,542 and the Company used cash in operations of $557,712.$7,533,045.
These factors raise substantial doubt about our ability to continue as a going concern. In view of the matters described above, recoverability of a major portion of the recorded asset amounts shown in the accompanying balance sheet is dependent upon continued operations of the Company, which in turn is dependent upupon the Company’s ability to generating revenue, raise additional capital, obtain financing and succeed in its future operations. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
Management has taken steps to revise its operating and financial requirements, which it believes are sufficient to provide the Company with the ability to continue as a going concern. The Company is now marketing its products, pursuing additional funding and potential merger or acquisition candidates, which would enhance stockholders’ investment. Management believes that the above actions will allow the Company to continue operations through the next fiscal year.
As of October 31, 2017,2020, loans from the Company’s stockholder, twothree directors, three related parties and a non-related third party totaling $4,671,395$5,893,651 were provided to us for use as working capital. Management believes that such financing will allow us to continue operations through the next fiscal year. The Company is also actively pursuing a number of private placements funding which would ensure continued operations.
The Company launched the sales campaign for its NMPA approved PA Screws at the end of fiscal year ended October 31, 2019 and continuously generated revenue since then. The Company believes its revenue will gradually increase during 2021.
OFF-BALANCE SHEET ARRANGEMENTS
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to our investors.
CRITICAL ACCOUNTING POLICIES
The preparation of our financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including but not limited to those related to income taxes and impairment of long-lived assets. We base our estimates on historical experience and on various other assumptions and factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Based on our ongoing review, we plan to adjust to our judgments and estimates where facts and circumstances dictate. Actual results could differ from our estimates.
We believe the following critical accounting policies are important to the portrayal of our financial condition and results and require our management’s most difficult, subjective or complex judgments, often because of the need to make estimates about the effect of matters that are inherently uncertain.
| 1. | Property and equipment |
Property and equipment are stated at cost, less accumulated depreciation. Expenditures for additions, major renewals and betterments are capitalized and expenditures for maintenance and repairs are charged to expense as incurred.
Depreciation is provided on a straight-line basis, less estimated residual value over the assets estimated useful lives. The estimated useful lives of the assets are 5 years.
| 2. | Long-lived assets |
In accordance with FASB Codification Topic 360 (ASC Topic 360), “Accounting for the impairment or disposal of Long-Lived Assets”, long-lived assets and certain identifiable intangible assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. For purposes of evaluating the recoverability of long-lived assets, the recoverability test is performed using undiscounted net cash flows related to the long-lived assets. The Company reviews long-lived assets to determine that carrying values are not impaired.
Long-lived assets, such as property, plant and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the book value of the asset may not be recoverable. Impairment of the carrying value of long-lived assets would be indicated if the best estimate of future undiscounted cash flows expected to be generated by the asset grouping is less than its carrying value. If an impairment is indicated, any loss is measured as the difference between estimated fair value and carrying value and is recognized in operating income. For the yearyears ended October 31, 20172020 and 2016,2019, the company has not recognized any impairment charges.
| 3. | Fair value of financial instruments |
FASB Codification Topic 825(ASC Topic 825), “Disclosure About Fair Value of Financial Instruments,” requires certain disclosures regarding the fair value of financial instruments. The carrying amounts of other receivables and prepaid expenses, other payables and accrued expenses, due to a stockholder, directors and related parties approximate their fair values because of the short-term nature of the instruments. The management of the Company is of the opinion that the Company is not exposed to significant interest or credit risks arising from these financial statements.
| 4. | Government grant |
Government grants are recognized when there is reasonable assurance that the Company complies with any conditions attached to them and the grants will be received.
| 5. | Revenue recognition |
Revenue from contract with customers is recognized when control of goods is transferred to a customer, at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods. Control is considered to be transferred when the customer has the ability to direct the use of and obtain substantially all of the remaining benefits of that good, generally on delivery of the goods.
Revenues are generated from manufacturing and supply of biomaterial internal fixation devices, which are sold through its network of distributors/agents and direct sales channels. Our performance obligations are satisfied at a point in time. Our contracts have an anticipated duration of less than a year.
Actual returns and claims in any future period are inherently uncertain and thus may differ from our estimates. If actual or expected future returns and claims are significantly greater or lower than the reserves that we have established, we will record a reduction or increase to net revenue in the period in which we make such a determination.
| 6. | Income taxes |
The Company accounts for income taxes under the FASB Codification Topic 740-10-25 (“ASC 740-10-25”). Under ASC 740-10-25, 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 bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC 740-10-25, the effect on deferred tax assets and liabilities of a change in tax rates is recognized as income in the period included the enactment date.
| Research and Development |
Research and development costs related to both present and future products are expensed as incurred.
| Foreign currency translation |
The financial statements of the Company’s subsidiary denominated in currencies other than US $ are translated into US $ using the closing rate method. The balance sheet items are translated into US $ using the exchange rates at the respective balance sheet dates. The capital and various reserves are translated at historical exchange rates prevailing at the time of the transactions while income and expenses items are translated at the average exchange rate for the year. All exchange differences are recorded within equity.
Recent Accounting Pronouncements
In January 2017, the FASB issued ASU No. 2017-1 “Topic 805, Business Combinations: Clarifying the Definition of a Business”. The amendments in this update provide a screenThere has been no newly effective accounting pronouncement that has significance, or potential significance, to determine when a set is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. This screen reduces the number of transactions that need to be further evaluated. The amendments in this update affect all reporting entities that must determine whether they have acquired or sold a business. Public business entities should apply the amendments in this update to annual periods beginning after December 15, 2017, including interim periods within those periods. All other entities should apply the amendments to annual periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019. The Company does not expect the adoption of ASU 2017-1 to have a material impact on itsour consolidated financial statements.
In January 2017, the FASB issued ASU No. 2017-4 “Topic 350: Intangibles-Goodwill and Other: Simplifying the Test for Goodwill Impairment.” The amendments in this update eliminate step two of the goodwill impairment test and specifies that goodwill impairment should be measured by comparing the fair value of a reporting unit with its carrying amount. Additionally, the amount of goodwill allocated to each reporting unit with a zero or negative carrying amount of net assets should be disclosed. The amendments in this update are effective for annual or interim goodwill impairment tests performed in fiscal years beginning after December 15, 2019; early adoption is permitted. The Company does not expect the adoption of ASU 2017-4 to have a material impact on its consolidated financial statements.
In May 2017, the FASB issued guidance on changes to terms and conditions of share-based payment awards. The amendment provides guidance about which changes to terms or conditions of a share-based payment award require an entity to apply modification accounting. The guidance is effective for the fiscal year beginning on January 1, 2018, including interim periods within that year. The Company does not anticipate that adoption of this guidance will have a material impact on its consolidated financial statements.
In May 2014, the FASB issued guidance on revenue from contracts with customers that will supersede most current revenue recognition guidance, including industry-specific guidance. Under the new standard, a good or service is transferred to the customer when (or as) the customer obtains control of the good or service, which differs from the risk and rewards approach under current guidance. The guidance provides a five-step analysis of transactions to determine when and how revenue is recognized. Other major provisions include capitalization of certain contract costs, consideration of the time value of money in the transaction price and allowing estimates of variable consideration to be recognized before contingencies are resolved in certain circumstances. The guidance also requires enhanced disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. In March, April and May 2016, the FASB issued three additional updates regarding identifying performance obligations and licensing, certain principal versus agent considerations and various narrow scope improvements based on practical questions raised by users. In September 2017, the FASB issued additional amendments providing clarification and implementation guidance. The guidance may be adopted through either retrospective application to all periods presented in the financial statements (full retrospective approach) or through a cumulative effect adjustment to retained earnings at the effective date (modified retrospective approach). The guidance is effective for the fiscal periods beginning on January 1, 2018.
The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and dodoes not believe the future adoptions of any such pronouncements may be expected to cause a material impact on the financial condition or the results of operations. The Company will carefully analyze these recently accounting pronouncements and take action to adopt them as required.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ADVANCED BIOMEDICAL TECHNOLOGIES, INC.
AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
AS OF OCTOBER 31, 20172020
ADVANCED BIOMEDICAL TECHNOLOGIES, INC.
AND SUBSIDIARIES
CONTENTS
To:
Report of Independent Registered Public Accounting Firm
To the Boardshareholders and the board of Directors and Shareholdersdirectors of
Advanced Biomedical Technologies, Inc. and subsidiaries
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMOpinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Advanced Biomedical Technologies, Inc. and subsidiaries (“the Company”(the “Company”) as of October 31, 20172020 and 20162019, and the related consolidated statements of operations stockholders’and comprehensive loss, changes in equity and cash flows for each of the years in the two-year period ended October 31, 2017. These financial statements are2020, and the responsibility ofrelated notes (collectively referred to as 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)“financial statements”). 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 October 31, 20172020 and 2016,2019, and the results of its operations and its cash flows for each of the years in the two-year period ended October 31, 2017,2020, 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 9 to the consolidated financial statements, the Company has suffered recurringfrom losses from operation and significant accumulated deficits. The Company comes to have insufficient cash flows generated from operations and has a significant accumulated deficit.provided for development. 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.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting 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.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
| /s/ Centurion ZD CPA | |
| Centurion ZD CPA & Co. | |
| We have served as the Company’s auditor since 2016. | |
Hong Kong, China | |
| January 29, 2021 |
Hong Kong
Dated: February 13, 2018
| October 31, 2020 | October 31, 2019 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | 201,664 | $ | 5,592 | ||||
| Other receivables and prepaid expenses | 29,260 | 49,767 | ||||||
| Inventory | 100,026 | 64,107 | ||||||
| Total current assets | 330,950 | 119,466 | ||||||
| NON-CURRENT ASSETS | ||||||||
| Property and equipment, cost | 552,423 | 534,666 | ||||||
| Less: Accumulated depreciation | (446,949 | ) | (435,632 | ) | ||||
| Property and equipment, net | 105,474 | 99,034 | ||||||
| Operating lease right-of-use assets | 32,802 | - | ||||||
| Total non-current assets | 138,276 | 99,034 | ||||||
| TOTAL ASSETS | $ | 469,226 | $ | 218,500 | ||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| CURRENT LIABILITIES | ||||||||
| Other payables and accrued expenses | 1,942,316 | 674,882 | ||||||
| Operating lease liabilities, current portion | 28,028 | - | ||||||
| Due to directors | 308,031 | 280,514 | ||||||
| Due to a stockholder | 880,108 | 824,705 | ||||||
| Advances from related parties | 4,705,512 | 4,916,638 | ||||||
| Total current liabilities | 7,863,995 | 6,696,739 | ||||||
| NON-CURRENT LIABILITIES | ||||||||
| Operating lease liabilities, less current portion | 7,029 | - | ||||||
| STOCKHOLDERS’ DEFICIT | ||||||||
| Common stock, $0.00001 par value, 100,000,000 shares authorized, 70,224,850 and 69,874,850 issued and outstanding as of October 31, 2020 and October 31, 2019 | 702 | 698 | ||||||
| Additional paid-in capital | 2,824,279 | 2,768,138 | ||||||
| Stock-based compensation reserves | 8,160 | - | ||||||
| Accumulated deficit | (10,256,364 | ) | (9,581,438 | ) | ||||
| Accumulated other comprehensive income | 21,425 | 334,363 | ||||||
| Total stockholders’ deficit | (7,401,798 | ) | (6,478,239 | ) | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | 469,226 | $ | 218,500 | ||||
| The accompanying notes are an integral part of these consolidated financial statements |
| ADVANCED BIOMEDICAL TECHNOLOGIES, INC. AND SUBSIDIARIES |
| CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS |
| Years ended | ||||||||
| October 31, 2020 | October 31, 2019 | |||||||
| SALES | $ | 123,587 | $ | 11,657 | ||||
| Cost of sales | (51,817 | ) | (7,596 | ) | ||||
| Gross margin | 71,770 | 4,061 | ||||||
| OPERATING EXPENSES | ||||||||
| General and administrative expenses | 224,459 | 324,010 | ||||||
| Research and development | 182,959 | 263,639 | ||||||
| Depreciation | 17,025 | 21,150 | ||||||
| Depreciation on right-of-use assets | 43,341 | - | ||||||
| Stock-based compensation expenses | 50,610 | - | ||||||
| Total Operating Expenses | 518,394 | 608,799 | ||||||
| LOSS FROM OPERATIONS | (446,624 | ) | (604,738 | ) | ||||
| OTHER (EXPENSES) INCOME | ||||||||
| Government grants | 125,806 | - | ||||||
| Interest income | 44 | 24 | ||||||
| Interest paid to a stockholder and related parties | (311,202 | ) | (313,703 | ) | ||||
| Interest on lease liabilities | (4,046 | ) | - | |||||
| Imputed interest | (13,695 | ) | (12,707 | ) | ||||
| Other, net | (22,283 | ) | (17,696 | ) | ||||
| Total Other (Expenses) Income, net | (225,376 | ) | (344,082 | ) | ||||
| LOSS BEFORE TAXES | (672,000 | ) | (948,820 | ) | ||||
| Income tax expense | - | - | ||||||
| NET LOSS | (672,000 | ) | (948,820 | ) | ||||
| Net loss attributable to non-controlling interests | - | - | ||||||
| NET LOSS ATTRIBUTABLE TO ABMT COMMON STOCKHOLDERS | (672,000 | ) | (948,820 | ) | ||||
| OTHER COMPREHENSIVE INCOME/(LOSS) | ||||||||
| Foreign currency translation gain/(loss) | (312,938 | ) | 61,636 | |||||
| Total other comprehensive income/(loss) | (312,938 | ) | 61,636 | |||||
| COMPREHENSIVE LOSS ATTRIBUTABLE TO ABMT COMMON STOCKHOLDERS | $ | (984,938 | ) | $ | (887,184 | ) | ||
| Net loss per share-basic and diluted | ||||||||
| - basic and diluted | $ | (0.01 | ) | $ | (0.01 | ) | ||
| Weighted average number of shares outstanding during the year | ||||||||
| - basic | 69,944,658 | 69,626,220 | ||||||
| - diluted | 70,104,002 | 69,626,220 | ||||||
| The accompanying notes are an integral part of these consolidated financial statements |
| ADVANCED BIOMEDICAL TECHNOLOGIES, INC. AND SUBSIDIARIES |
| CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT |
| Accumulated | ||||||||||||||||||||||||||||
| Common stock | Additional | Stock-based | other | |||||||||||||||||||||||||
| Number | paid-in | compensation | Accumulated | comprehensive | ||||||||||||||||||||||||
| of shares | Amount | capital | reserve | deficit | loss | Total | ||||||||||||||||||||||
| Balance at October 31, 2017 | 69,374,850 | $ | 694 | $ | 2,673,620 | $ | - | $ | (7,679,298 | ) | $ | 9,957 | $ | (4,995,027 | ) | |||||||||||||
| Stock issued for services ($0.211 per share) | 250,000 | 2 | 52,748 | - | - | - | 52,750 | |||||||||||||||||||||
| Imputed interest on advances from directors | - | - | 13,815 | - | - | - | 13,815 | |||||||||||||||||||||
| Net loss for the year | - | - | - | - | (953,320 | ) | - | (953,320 | ) | |||||||||||||||||||
| Foreign currency translation gain | - | - | - | - | - | 262,770 | 262,770 | |||||||||||||||||||||
| Balance at October 31, 2018 | 69,624,850 | $ | 696 | $ | 2,740,183 | $ | - | $ | (8,632,618 | ) | $ | 272,727 | $ | (5,619,012 | ) | |||||||||||||
| Stock to be issued ($0.061 per share) | 250,000 | 2 | 15,248 | - | - | - | 15,250 | |||||||||||||||||||||
| Imputed interest on advances from directors | - | - | 12,707 | - | - | - | 12,707 | |||||||||||||||||||||
| Net loss for the year | - | - | - | - | (948,820 | ) | - | (948,820 | ) | |||||||||||||||||||
| Foreign currency translation gain | - | - | - | - | - | 61,636 | 61,636 | |||||||||||||||||||||
| Balance at October 31, 2019 | 69,874,850 | $ | 698 | $ | 2,768,138 | $ | - | $ | (9,581,438 | ) | $ | 334,363 | $ | (6,478,239 | ) | |||||||||||||
| Effect of adoption of ASU 2016-02 | - | - | - | - | (2,926 | ) | - | (2,926 | ) | |||||||||||||||||||
| Stock issued for services ($0.042 per share) | 100,000 | 2 | 4,198 | - | - | - | 4,200 | |||||||||||||||||||||
| Stock issued for services ($0.153 per share) | 250,000 | 2 | 38,248 | - | - | - | 38,250 | |||||||||||||||||||||
| Imputed interest on advances from directors | - | - | 13,695 | - | - | - | 13,695 | |||||||||||||||||||||
| Stock-based compensation expenses | - | - | - | 8,160 | - | - | 8,160 | |||||||||||||||||||||
| Net loss for the year | - | - | - | - | (672,000 | ) | - | (672,000 | ) | |||||||||||||||||||
| Foreign currency translation loss | - | - | - | - | - | (312,938 | ) | (312,938 | ) | |||||||||||||||||||
| Balance at October 31, 2020 | 70,224,850 | $ | 702 | $ | 2,824,279 | $ | 8,160 | $ | (10,256,364 | ) | $ | 21,425 | $ | (7,401,798 | ) | |||||||||||||
| The accompanying notes are an integral part of these consolidated financial statements |
| ADVANCED BIOMEDICAL TECHNOLOGIES, INC. AND SUBSIDIARIES |
| CONSOLIDATED STATEMENTS OF CASH FLOWS |
| Year ended | ||||||||
| October 31, | ||||||||
| 2020 | 2019 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net loss attributable to ABMT common stockholders | $ | (672,000 | ) | $ | (948,820 | ) | ||
| Adjustments to reconcile net loss to cash generated from (used in) operating activities: | ||||||||
| Depreciation on property & equipment | 17,025 | 21,150 | ||||||
| Depreciation on right-of-use assets | 43,341 | - | ||||||
| Loss on disposal of property & equipment | 3,953 | - | ||||||
| Imputed interest | 13,695 | 12,707 | ||||||
| Interest on lease liabilities | 4,046 | - | ||||||
| Shares issued for services | 50,610 | 15,250 | ||||||
| Net exchange difference | (3 | ) | - | |||||
| Changes in operating assets and liabilities | ||||||||
| Decrease (Increase) in: | ||||||||
| Inventory | (31,284 | ) | (65,473 | ) | ||||
| Other receivables and prepaid expenses | 23,673 | (17,745 | ) | |||||
| Depreciation allocated to inventory | 8,432 | 404 | ||||||
| Increase in: | ||||||||
| Other payables and accrued expenses | 1,185,172 | 239,997 | ||||||
| Net cash generated from/(used in) in operating activities | 646,660 | (742,530 | ) | |||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Purchase of property and equipment | (30,706 | ) | (18,565 | ) | ||||
| Net cash used in investing activities | (30,706 | ) | (18,565 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Due to a stockholder | 54,285 | 105,877 | ||||||
| Due to directors | 13,694 | 9,078 | ||||||
| Due to related parties | (447,623 | ) | 644,887 | |||||
| Principal element of lease rental paid | (44,131 | ) | - | |||||
| Interest element of lease rental paid | (4,046 | ) | - | |||||
| Net cash provided by (used in) financing activities | (427,821 | ) | 759,842 | |||||
| EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | 7,939 | (15 | ) | |||||
| INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 196,072 | (1,268 | ) | |||||
| CASH AND CASH EQUIVALENTS AT THE BEGINNING OF YEAR | 5,592 | 6,860 | ||||||
| CASH AND CASH EQUIVALENTS AT THE END OF YEAR | $ | 201,664 | $ | 5,592 | ||||
| Supplemental of cash flow information | ||||||||
| Interest income | $ | 44 | $ | 24 | ||||
| Other non cash items | ||||||||
| Interest expenses | $ | 315,248 | $ | 313,703 | ||||
ADVANCED BIOMEDICAL TECHNOLOGIES, INC. AND SUBSIDIARIES
| The accompanying notes are an integral part of these consolidated financial statements |
| October 31, 2017 | October 31, 2016 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | 7,463 | $ | 6,559 | ||||
| Other receivables and prepaid expenses | 17,469 | 20,465 | ||||||
| Total Current Assets | 24,932 | 27,024 | ||||||
| Property and equipment, cost | 483,482 | 473,240 | ||||||
| Less: Accumulated depreciation | (422,967 | ) | (400,772 | ) | ||||
| PROPERTY AND EQUIPMENT, NET | 60,515 | 72,468 | ||||||
| DEPOSIT FOR PURCHASE OF PROPERTY AND EQUIPMENT | - | 1,218 | ||||||
| TOTAL ASSETS | $ | 85,447 | $ | 100,710 | ||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| CURRENT LIABILITIES | ||||||||
| Other payables and accrued expenses | $ | 409,079 | $ | 337,660 | ||||
| Due to directors | 321,420 | 363,765 | ||||||
| Due to a stockholder | 582,795 | 546,953 | ||||||
| Due to related parties | 3,767,180 | 3,214,627 | ||||||
| Total Current Liabilities | 5,080,474 | 4,463,005 | ||||||
| STOCKHOLDERS’ DEFICIT | ||||||||
| Common stock, $0.00001 par value, 100,000,000 shares authorized, 69,374,850 and 67,124,850 issued and outstanding as of October 31, 2017 and October 31, 2016 respectively | 694 | 671 | ||||||
| Additional paid-in capital | 2,673,620 | 2,520,520 | ||||||
| Accumulated deficit | (7,679,298 | ) | (6,987,698 | ) | ||||
| Accumulated other comprehensive income/(loss) | 9,957 | 104,212 | ||||||
| Total Deficit | (4,995,027 | ) | (4,362,295 | ) | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | 85,447 | $ | 100,710 | ||||
The accompanying notes are an integral part of these consolidated financial statements
ADVANCED BIOMEDICAL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
| Year ended | ||||||||
| October 31, 2017 | October 31, 2016 | |||||||
| OPERATING EXPENSES | ||||||||
| General and administrative expenses | $ | 341,956 | $ | 374,441 | ||||
| Depreciation | 13,604 | 29,588 | ||||||
| Research and development | 48,053 | 57,300 | ||||||
| Total Operating Expenses | 403,613 | 461,329 | ||||||
| LOSS FROM OPERATIONS | (403,613 | ) | (461,329 | ) | ||||
| OTHER (EXPENSES) INCOME | ||||||||
| Interest income | 36 | 59 | ||||||
| Interest paid to a stockholder and related parties | (242,144 | ) | (230,284 | ) | ||||
| Imputed interest | (15,623 | ) | (18,990 | ) | ||||
| Other, net | (30,256 | ) | (14,193 | ) | ||||
| Total Other (Expenses) Income, net | (287,987 | ) | (263,408 | ) | ||||
| LOSS BEFORE TAXES | (691,600 | ) | (724,737 | ) | ||||
| Income tax expense | - | - | ||||||
| NET LOSS | (691,600 | ) | (724,737 | ) | ||||
| Net loss attributable to non-controlling interests | - | - | ||||||
| NET LOSS ATTRIBUTABLE TO ABMT COMMON STOCKHOLDERS | (691,600 | ) | (724,737 | ) | ||||
| OTHER COMPREHENSIVE INCOME | ||||||||
| Foreign currency translation income | (94,255 | ) | 252,439 | |||||
| Total other comprehensive loss | (94,255 | ) | 252,439 | |||||
| COMPREHENSIVE LOSS ATTRIBUTABLE TO ABMT COMMON STOCKHOLDERS | $ | (785,855 | ) | $ | (472,298 | ) | ||
| Net loss per share-basic and diluted | ||||||||
| - basic and diluted | $ | (0.01 | ) | $ | (0.01 | ) | ||
| Weighted average number of shares outstanding during the period | ||||||||
| - basic and diluted | 68,277,590 | 66,693,839 | ||||||
The accompanying notes are an integral part of these consolidated financial statements
ADVANCED BIOMEDICAL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT (UNAUDITED)
| Common stock | Additional | Accumulated other | ||||||||||||||||||||||
| Number of shares | Amount | paid-in capital | Accumulated deficit | comprehensive loss | Total | |||||||||||||||||||
| Balance at October 31, 2015 | 56,874,850 | $ | 569 | $ | 1,949,132 | $ | (6,262,961 | ) | $ | (148,227 | ) | $ | (4,461,487 | ) | ||||||||||
| Stock issued for debt conversion at 0.05 per shares | 10,000,000 | $ | 100 | 499,900 | - | - | 500,000 | |||||||||||||||||
| Stock issued for services ($1 per share) | 250,000 | 2 | 52,498 | - | - | 52,500 | ||||||||||||||||||
| Imputed interest on advances from directors | - | - | 18,990 | - | - | 18,990 | ||||||||||||||||||
| Net loss for the year | - | - | - | (724,737 | ) | - | (724,737 | ) | ||||||||||||||||
| Foreign currency translation gain | - | - | - | - | 252,439 | 252,439 | ||||||||||||||||||
| Balance at Oct 31, 2016 | 67,124,850 | $ | 671 | $ | 2,520,520 | $ | (6,987,698 | ) | $ | 104,212 | $ | (4,362,295 | ) | |||||||||||
| Stock issued for debt conversion at | ||||||||||||||||||||||||
| 0.05 per share | 2,000,000 | 20 | 99,980 | - | - | 100,000 | ||||||||||||||||||
| Stock issued for services ($0.15 per share) | 250,000 | 3 | 37,497 | - | - | 37,500 | ||||||||||||||||||
| Imputed interest on advances from directors | - | - | 15,623 | - | - | 15,623 | ||||||||||||||||||
| Net loss for the year | - | - | - | (691,600 | ) | - | (691,600 | ) | ||||||||||||||||
| Foreign currency translation gain | - | - | - | - | (94,255 | ) | (94,255 | ) | ||||||||||||||||
| Balance at October 31, 2017 | 69,374,850 | $ | 694 | $ | 2,673,620 | $ | (7,679,298 | ) | $ | 9,957 | $ | (4,995,027 | ) | |||||||||||
The accompanying notes are an integral part of these consolidated financial statements
ADVANCED BIOMEDICAL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
| Year ended | ||||||||
| October 31, | ||||||||
| 2017 | 2016 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net loss attributable to ABMT common stockholders | $ | (691,600 | ) | $ | (724,737 | ) | ||
| Adjustments to reconcile net loss to cash used in operating activities: | ||||||||
| Depreciation | 13,604 | 29,588 | ||||||
| Stock issued for services | 37,500 | 52,500 | ||||||
| Imputed interest | 15,623 | 18,990 | ||||||
| Changes in operating assets and liabilities | ||||||||
| Decrease (increase) in: | ||||||||
| Inventories | - | 2,687 | ||||||
| Other receivables and prepaid expenses | 3,291 | (3,526 | ) | |||||
| (Decrease) increase in: | ||||||||
| Other payables and accrued expenses | 63,870 | 252,845 | ||||||
| Net cash used in operating activities | (557,712 | ) | (371,653 | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Purchase of property and equipment | (453 | ) | (1,699 | ) | ||||
| (Increase) decrease in deposit for purchase of property and equipment | 1,213 | (1,257 | ) | |||||
| Net cash used in investing activities | 760 | (2,956 | ) | |||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Due to a stockholder | 89,444 | 91,317 | ||||||
| Due to directors | (48,351 | ) | (49,538 | ) | ||||
| Due from related parties | - | - | ||||||
| Due to related parties | 516,658 | 302,047 | ||||||
| Net cash provided by financing activities | 557,751 | 343,826 | ||||||
| EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | 105 | (962 | ) | |||||
| NET DECREASE IN CASH AND CASH EQUIVALENTS | 904 | (31,745 | ) | |||||
| CASH AND CASH EQUIVALENTS AT THE BEGINNING OF PERIOD | 6,559 | 38,304 | ||||||
| CASH AND CASH EQUIVALENTS AT THE END OF PERIOD | $ | 7,463 | $ | 6,559 | ||||
| Supplemental of cash flow information | ||||||||
| Interest income | $ | 36 | $ | 59 | ||||
| Income tax | $ | - | $ | - | ||||
| Other non cash items | ||||||||
| Interest expenses | $ | 242,144 | $ | 230,284 |
The accompanying notes are an integral part of these consolidated financial statements
ADVANCED BIOMEDICAL TECHNOLOGIES, INC.
AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
| 1. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION |
| (A) | Organization |
Advanced Biomedical Technologies, Inc. (fka “Geostar Mineral Corporation” or “Geostar”) (“ABMT”) was incorporated in Nevada on September 12, 2006.
Shenzhen Changhua Biomedical Engineering Co., Ltd. (“Shenzhen Changhua”) was incorporated in the People’s Republic of China (“PRC”) on September 25, 2002 as a limited liability company with a registered capital of $724,017. Shenzhen Changhua is owned by two stockholders in the proportion of 70% and 30% respectively. Shenzhen Changhua plans to develop, manufacture and market self-reinforced, re-absorbable degradable PA screws, robs and binding ties for fixation on human fractured bones. The Company is currently conducting clinical trials on its products and intends to raise additional capital to produce and market its products commercially pending the approval from the China Food and Drug Administration (“CFDA”, formerly known as “SFDA”) of the PRC on its products. The Company has no revenue since its inception and, in accordance with Accounting Standards Codification (“ASC”) Topic 915, “Development Stage Entities”, is considered a Development Stage Company.
Masterise Holdings Limited (“Masterise”) was incorporated in the British Virgin Islands on 31 May, 2007 as an investment holding company. Masterise is owned as to 63% by the spouse of Shenzhen Changhua’s 70% majority stockholder and 37% by a third party corporation.
On January 29, 2008, Masterise entered into a Share Purchase Agreement (“the Agreement”) with a stockholder of Shenzhen Changhua whereupon Masterise acquired 70% of Shenzhen Changhua for US$64,100 in cash. The acquisition was completed on February 25, 2008. As both Masterise and Shenzhen Changhua are under common control and management, the acquisition was accounted for as a reorganization of entities under common control. Accordingly, the operations of Shenzhen Changhua were included in the consolidated financial statements as if the transactions had occurred retroactively.
On December 31, 2008, ABMT consummated a Share Exchange Agreement (“the Exchange Agreement”) with the stockholders of Masterise pursuant to which Geostar issued 50,000 shares of Common Stock to the stockholders of Masterise for 100% equity interest in Masterise.
Concurrently, on December 31, 2008, a major stockholder of ABMT also consummated an Affiliate Stock Purchase Agreement (the “Affiliate Agreement”) with thirteen individuals including all the stockholders of Masterise, pursuant to which the major stockholder sold a total of 5,001,000 shares of ABMT’s common stock for a total aggregate consideration of $5,000, including 4,438,250 shares to the stockholders of Masterise.
On consummation of the Exchange Agreement and the Affiliate Agreement, the 70% majority stockholder of Masterise became an 80.7% stockholder of ABMT.
On March 13, 2009, the name of the Company was changed from Geostar Mineral Corporation to Advanced Biomedical Technologies, Inc.
The merger of ABMT and Masterise was treated for accounting purposes as a capital transaction and recapitalization by Masterise (“the accounting acquirer”) and a re-organization by ABMT (“the accounting acquiree”). The financial statements have been prepared as if the re-organization had occurred retroactively.
Accordingly, these financial statements include the following:
| (1) | The balance sheet consisting of the net assets of the acquirer at historical cost and the net assets of the acquiree at historical cost. | |
| (2) | The statement of operations including the operations of the acquirer for the periods presented and the operations of the acquiree from the date of the transaction. |
ABMT, Masterise and Shenzhen Changhua are hereinafter referred to as (“the Company”).
| (B) | Principles of consolidation |
The accompanying consolidated financial statements include the financial statements of ABMT and its wholly owned subsidiaries, Masterise and its 70% owned subsidiary, Shenzhen Changhua. The noncontrolling interests represent the noncontrolling stockholders’ 30% proportionate share of the results of Shenzhen Changhua.
All significant inter-company balances and transactions have been eliminated in consolidation.
| (C) | Use of estimates |
The preparation of the financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
| (D) | Cash and cash equivalents |
For purpose of the statements of cash flows, cash and cash equivalents include cash on hand and demand deposits with a bank with a maturity of less than three months. As of October 31, 20172020 and 2016,2019, all the cash and cash equivalents were denominated in United States Dollars (“US$”), Hong Kong Dollars (“HK$”) and Renminbi (“RMB”) and were placed with banks in the United States of America, Hong Kong and PRC. Balances at financial institutions or state-owned banks within the PRC are not freely convertible into foreign currencies and the remittance of these funds out of the PRC is subject to exchange control restrictions imposed by the PRC government.
| (E) | Inventories |
Raw materials, work in progress and finished goods are stated at the lower of cost and net realisable value. Cost comprises direct materials, direct labour and an applicable proportion of production overheads. Production overheads are allocated to inventories on the basis of normal operating capacity. Costs are assigned to individual inventory items on weighted average costs basis. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated selling costs.
| (F) | Property and equipment |
Property and equipment are stated at cost, less accumulated depreciation. Expenditures for additions, major renewals and betterments are capitalized and expenditures for maintenance and repairs are charged to expense as incurred.
Depreciation is provided on a straight-line basis, less estimated residual value over the assets estimated useful lives. The estimated useful lives of the assets are 5 years.
| Long-lived assets |
The Company accounts for long-lived assets under the FASB Codification Topic 360 (ASC 360) “Accounting for Impairment or Disposal of Long-Lived Assets”. In accordance with ASC Topic 360, long-lived assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. For purposes of evaluating the recoverability of long-lived assets, when undiscounted future cash flows will not be sufficient to recover an asset’s carrying amount, the asset is written down to its fair value. The long-lived assets of the Company, which are subject to evaluation, consist primarily of property and equipment. For the years ended October 31, 20172020 and 2016,2019, the Company has not recognized any allowances for impairment.
| Fair value of financial instruments |
FASB Codification Topic 825 (ASC Topic 825), “Disclosure About Fair Value of Financial Instruments,” requires certain disclosures regarding the fair value of financial instruments. The carrying amounts of other receivables and prepaid expenses other payables and accrued liabilities and due to directors, a stockholder and related parties approximate their fair values because of the short-term nature of the instruments. The management of the Company is of the opinion that the Company is not exposed to significant interest or credit risks arising from these financial statements.
| Stock-based compensation |
The fair value of services received, as measured at the fair value of stock granted at the grant date, is expensed in the statements of operations and comprehensive loss with a corresponding increase in the common stock and additional paid-in capital where applicable.
Where the shares are granted for services to be rendered over a period of time, the fair value of the stock granted is accounted for as a prepayment with a corresponding increase in the common stock and additional paid-in capital where applicable. This prepaid stock-based compensation is amortized as an expense on a straight-line basis over the period for which the services are rendered.
Where, pursuant to an agreement, the stock of the Company is to be granted for services being rendered, the fair value of the stock-based compensation is credited to the stock-based compensation reserve which will be transferred to common stock and additional paid-in-capital upon the actual granting of the shares. The stock-based compensation would be amortized as an expense on a straight-line basis over the period for which the services are rendered.
| (J) | Income taxes |
The Company accounts for income taxes under the FASB Codification Topic 740-10-25 (“ASC 740-10-25”). Under ASC 740-10-25, 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 bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC 740-10-25, the effect on deferred tax assets and liabilities of a change in tax rates is recognized as income in the period included the enactment date.
We assess our income tax positions and record tax benefits for all years subject to examination based upon our evaluation of the facts, circumstances and information available at the reporting date. For those tax positions where there is greater than 50% likelihood that a tax benefit will be sustained, we have recorded the largest amount of tax benefit that may potentially be realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. For those income tax positions where there is a 50% or less likelihood that a tax benefit will be sustained, no tax benefit has been recognized in the financial statements.
| Research and development |
Research and development costs related to both present and future products are expensed as incurred. Total expenditure on research and development charged to general and administrative expenses for the years ended October 31, 20172020 and 20162019 were $48,053$182,959 and $57,300$263,639 respectively.
| Foreign currency translation |
The reporting currency of the Company is the US dollar. ABMT, Masterise and Shenzhen Changhua maintain their accounting records in their functional currencies of US$, HK$ and RMB respectively.
Foreign currency transactions during the year are translated to the functional currency at the approximate rates of exchange on the dates of transactions. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the approximate rates of exchange at that date. Non-monetary assets and liabilities are translated at the rates of exchange prevailing at the time the asset or liability was acquired. Exchange gains or losses are recorded in the statement of operations.
The financial statements of Masterise and Shenzhen Changhua (whose functional currency is HK$ and RMB respectively) are translated into US$ using the closing rate method. The balance sheet items are translated into US$ using the exchange rates at the respective balance sheet dates. The capital and various reserves are translated at historical exchange rates prevailing at the time of the transactions while income and expenses items are translated at the average exchange rate for the year. All exchange differences are recorded within equity.
The exchange rates used to translate amounts in HK$ and RMB into US$ for the purposes of preparing the financial statements were as follows:
| October 31, | October 31, | ||||
| Balance sheet items, except for share capital, additional paid-in capital and accumulated deficits, as of year end | US$1=HK$ | US$1=HK$ | |||
Amounts included in the statements of operations and cash flows for the year | US$1=HK$ | US$1=HK$ |
The translation loss(loss) and gain recorded for the years ended October 31, 20172020 and 20162019 were $94,255$(312,938) and $252,439$61,636 respectively.
No presentation is made that RMB amounts have been, or would be, converted into US$ at the above rates. Although the Chinese government regulations now allow convertibility of RMB for current account transactions, significant restrictions still remain. Hence, such translations should not be construed as representations that RMB could be converted into US$ at that rate or any other rate.
The value of RMB against US$ and other currencies may fluctuate and is affected by, among other things, changes in China’s political and economic conditions. Any significant revaluation of RMB may materially affect the Company’s financial condition in terms of US$ reporting.
| Other comprehensive loss |
The foreign currency translation gain or loss resulting from translation of the financial statements expressed in RMB and HK$ to US$ is reported as other comprehensive gain or loss in the statements of operations and stockholders’ deficit. Other comprehensive loss(loss) and gain for the years ended October 31, 20172020 and 20162019 were $94,255$(312,938) and $252,439$61,636 respectively.
Basic lossearnings/(loss) per share are computed by dividing income available to stockholders by the weighted average number of shares outstanding during the year. Diluted lossearnings per share is computed similar to basic lossearnings per share except that the denominator is increased to include the number of additional shares that would have been outstanding if the potential shares had been issued and if the additional shares were diluted. However, the diluted loss per share will not be computed because of the anti-dilutive effect. There are no potentially dilutive securities as at October 31, 20172020 and October 31, 2016.2019.
| Segments |
The Company operates in only one business segment and one geographic region, thereafter segment disclosure is not presented.
| Recent Accounting Pronouncements |
In January 2017, the FASB issued ASU No. 2017-1 “Topic 805, Business Combinations: Clarifying the Definition of a Business”. The amendments in this update provide a screenThere has been no newly effective accounting pronouncement that has significance, or potential significance, to determine when a set is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. This screen reduces the number of transactions that need to be further evaluated. The amendments in this update affect all reporting entities that must determine whether they have acquired or sold a business. Public business entities should apply the amendments in this update to annual periods beginning after December 15, 2017, including interim periods within those periods. All other entities should apply the amendments to annual periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019. The Company does not expect the adoption of ASU 2017-1 to have a material impact on itsour consolidated financial statements.
In January 2017, the FASB issued ASU No. 2017-4 “Topic 350: Intangibles-Goodwill and Other: Simplifying the Test for Goodwill Impairment.” The amendments in this update eliminate step two of the goodwill impairment test and specifies that goodwill impairment should be measured by comparing the fair value of a reporting unit with its carrying amount. Additionally, the amount of goodwill allocated to each reporting unit with a zero or negative carrying amount of net assets should be disclosed. The amendments in this update are effective for annual or interim goodwill impairment tests performed in fiscal years beginning after December 15, 2019; early adoption is permitted. The Company does not expect the adoption of ASU 2017-4 to have a material impact on its consolidated financial statements.
In May 2017, the FASB issued guidance on changes to terms and conditions of share-based payment awards. The amendment provides guidance about which changes to terms or conditions of a share-based payment award require an entity to apply modification accounting. The guidance is effective for the fiscal year beginning on January 1, 2018, including interim periods within that year. The Company does not anticipate that adoption of this guidance will have a material impact on its consolidated financial statements.
In May 2014, the FASB issued guidance on revenue from contracts with customers that will supersede most current revenue recognition guidance, including industry-specific guidance. Under the new standard, a good or service is transferred to the customer when (or as) the customer obtains control of the good or service, which differs from the risk and rewards approach under current guidance. The guidance provides a five-step analysis of transactions to determine when and how revenue is recognized. Other major provisions include capitalization of certain contract costs, consideration of the time value of money in the transaction price and allowing estimates of variable consideration to be recognized before contingencies are resolved in certain circumstances. The guidance also requires enhanced disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. In March, April and May 2016, the FASB issued three additional updates regarding identifying performance obligations and licensing, certain principal versus agent considerations and various narrow scope improvements based on practical questions raised by users. In September 2017, the FASB issued additional amendments providing clarification and implementation guidance. The guidance may be adopted through either retrospective application to all periods presented in the financial statements (full retrospective approach) or through a cumulative effect adjustment to retained earnings at the effective date (modified retrospective approach). The guidance is effective for the fiscal periods beginning on January 1, 2018.
The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and dodoes not believe the future adoptions of any such pronouncements may be expected to cause a material impact on the financial condition or the results of operations.
Certain classifications have been made The Company will carefully analyze these recently accounting pronouncements and take action to the prior year financial statements to conform to the current year presentation. The reclassification had no impact on previously reported net loss or accumulated deficit.adopt them as required.
| 2. | PROPERTY AND EQUIPMENT |
The following is a summary of property and equipment at October 31, 20172020 and 2016:2019:
| October 31, | October 31, | |||||||||||||||
| 2017 | 2016 | 2020 | 2019 | |||||||||||||
| Plant and machinery | $ | 280,871 | $ | 274,582 | $ | 356,132 | $ | 309,626 | ||||||||
| Motor vehicles | 41,566 | 40,703 | - | 39,174 | ||||||||||||
| Office equipment | 34,902 | 34,328 | 39,668 | 36,696 | ||||||||||||
| Computer software | 5,017 | 5,017 | 5,017 | 5,017 | ||||||||||||
| Office improvements | 121,126 | 118,610 | 151,606 | 144,153 | ||||||||||||
| 483,482 | 473,240 | 552,423 | 534,666 | |||||||||||||
| Less: accumulated depreciation | 422,967 | 400,772 | 446,949 | 435,632 | ||||||||||||
| Property and equipment, net | $ | 60,515 | $ | 72,468 | $ | 105,474 | $ | 99,034 | ||||||||
Depreciation expense for the yearyears ended October 31, 20172020 and 20162019 was $13,604$17,025 and $29,588$21,150 respectively.
| 3. | OTHER PAYABLES AND ACCRUED EXPENSES |
Other payables and accrued expenses at October 31, 20172020 and 20162019 consisted of the followings:
| October 31, | October 31, | |||||||||||||||
| 2017 | 2016 | 2020 | 2019 | |||||||||||||
| Trade payables | $ | 234 | $ | 2,493 | ||||||||||||
| Contract liabilities | 1,343,281 | 135,942 | ||||||||||||||
| Other payables | $ | 223,437 | $ | 221,560 | 224,151 | 213,132 | ||||||||||
| Accrued expenses | 185,642 | 116,100 | 374,650 | 323,315 | ||||||||||||
| $ | 409,079 | $ | 337,660 | |||||||||||||
| $ | 1,942,316 | $ | 674,882 | |||||||||||||
Movements in contract liabilities during the reporting periods are as follows:
| Related | Non-related | |||||||||||
| parties | parties | Total | ||||||||||
| At 1 November 2018 | $ | - | $ | - | $ | - | ||||||
| Deposit received | 141,440 | 15,220 | 156,660 | |||||||||
| Revenue recognised | (11,657 | ) | - | (11,657 | ) | |||||||
| VAT and other tax paid | (4,066 | ) | (2,099 | ) | (6,165 | ) | ||||||
| Exchange realignment | (2,622 | ) | (274 | ) | (2,896 | ) | ||||||
| At 30 October and 1 November 2019 | 123,095 | 12,847 | 135,942 | |||||||||
| Revenue recognised | (110,899 | ) | (12,964 | ) | (123,863 | ) | ||||||
| VAT paid | (12,732 | ) | - | (12,732 | ) | |||||||
| Deposits received | 1,288,311 | - | 1,288,311 | |||||||||
| Exchange realignment | 55,506 | 117 | 55,623 | |||||||||
| At 31 October 2020 | $ | 1,343,281 | $ | - | $ | 1,343,281 | ||||||
| F-11 |
| 4. | RELATED PARTY TRANSACTIONS |
As of October 31, 20172020 and 2016,2019, the Company owed $582,795$880,108 and $546,953$824,705 respectively to Titan Technology Development Limited, a stockholder.
As of October 31, 20172020 and 2016, advances from2019, amount due to related parties were as follows:
| October 31, | ||||||||
| 2017 | 2016 | |||||||
| Yu Chi Fung | $ | 1,710,759 | $ | 1,578,843 | ||||
| Que Feng | 35,782 | 32,972 | ||||||
| Chen Tie Jun | 1,800,541 | 1,471,898 | ||||||
| Shenzhen Hygeian Medical Device Co., Ltd. | 220,098 | 130,914 | ||||||
| Amount due to related parties | $ | 3,767,180 | $ | 3,214,627 | ||||
| As at October 31, | ||||||||
| 2020 | 2019 | |||||||
| Advances from related parties: | ||||||||
| Chi Fung Yu | $ | 2,068,471 | $ | 1,802,625 | ||||
| Que Feng | 41,742 | 37,701 | ||||||
| Tie Jun Chen | 2,327,850 | 2,835,785 | ||||||
| Shenzhen Hygeian Medical Device Co., Ltd. | 267,449 | 240,527 | ||||||
| Total advances from related parties | 4,705,512 | 4,916,638 | ||||||
| Due to directors | 308,031 | 280,514 | ||||||
| Due to a stockholder | 880,108 | 824,705 | ||||||
| Contract liabilities | 1,343,281 | 123,095 | ||||||
| Total amount due to related parties | $ | 7,236,932 | $ | 6,144,952 | ||||
Sales for the year ended 31 October 2020 and 2019 amounted to US$110,899 and US$11,657 respectively were to a company in which Mr. Tie Jun Chen has a significant equity interest. Advance payments for undelivered goods are recognised as contract liabilities at the end of the reporting period.
Advances from a stockholder and related parties are unsecured, repayable on demand and bearing interest at 7% per annum. Interest expenses on advances from a stockholder and the related parties accrued for the years ended October 31, 20172020 and 20162019 were as follows:
| October 31, | Year ended October 31, | |||||||||||||||
| 2017 | 2016 | 2020 | 2019 | |||||||||||||
| Titan Technology Development Limited, a stockholder | $ | 37,379 | $ | 33,665 | ||||||||||||
Titan Technology Development Limited, a stockholder of the Company | $ | 50,065 | 48,418 | |||||||||||||
| Related parties: | ||||||||||||||||
| Chi Fung Yu | 92,625 | 93,742 | ||||||||||||||
| Que Feng | 2,059 | 2,133 | 2,007 | 2,032 | ||||||||||||
| Yu Chi Fang | 93,951 | 96,828 | ||||||||||||||
| Chen Tie Jun | 97,045 | 92,369 | ||||||||||||||
| Tie Jun Chen | 152,606 | 155,444 | ||||||||||||||
| Shenzhen Hygeian Medical Device Co., Ltd. | 11,710 | 5,289 | 13,899 | 14,067 | ||||||||||||
| Interest expenses to a stockholder and related parties | $ | 242,144 | $ | 230,284 | $ | 311,202 | $ | 313,703 | ||||||||
As of October 31, 20172020 and 2016,2019, advances from directors were as follows:
| October 31, | As at October 31, | |||||||||||||||
| 2017 | 2016 | 2020 | 2019 | |||||||||||||
| Hui Wang | $ | 298,818 | $ | 341,626 | ||||||||||||
| Wang Wei | $ | 283,627 | $ | 256,469 | ||||||||||||
| Kai Gui | 3,474 | 567 | ||||||||||||||
| Chi Ming Yu | 22,602 | 22,139 | 20,930 | 23,478 | ||||||||||||
| Amount due to directors | $ | 321,420 | $ | 363,765 | $ | 308,031 | $ | 280,514 | ||||||||
Advances from directors were unsecured, repayable on demand and interest free. Imputed interests on the amounts owed to Hui Wang Wei, a director, were $15,623$13,695 and $18,990$12,707 for the years ended October 31, 2017,2020, and 20162019 respectively.
| 5. | STOCKHOLDERS’ DEFICIENCY |
Common stock
On December 8, 2011, the Company issued 100,000 shares of restricted common stock at $0.2 to Dr. John Lynch, the Company’s chief officer of dental technologies, for services for a term of twelve months. The shares were valued at the closing price on the date of grant yielding an aggregate fair value of $20,000, fully recognised in prior years as consultancy fees included in general and administrative expenses.
On 28 October 2013, the Company issued 150,000 shares of restricted common stock as directors’ services compensation for past services to each of Mr. Chi Ming Yu and Kai Gui, directors of the Company. The shares were valued at the closing price of $0.71 per share on the date of grant, yielding an aggregate fair value of $213,000.
On 13 November 2015, $106,506 of the interest payable to a Company’s stockholder and $393,494 of the interest payable to two related parties, totaled $500,000, were converted into 10,000,000 shares of common stock at a conversion price of $0.05 per share and which were issued to the said stockholder.
On 31 March 2016, the Company issued 100,000 and 150,000 shares of restricted common stock as directors’ compensation for past services to Mr. Chi Ming Yu and Mr. Kai Gui, directors of the Company respectively. The shares were valued at the closing price of $0.21 per share on the date of grant, yielding an aggregate fair value of $52,500.
On 28 April 2017, the Company issued 100,000 and 150,000 shares of restricted common stock as directors’ compensation for past services to Mr. Chi Ming Yu and Mr. Kai Gui, directors of the Company respectively. The shares were valued at the closing price of $0.15 per share on the date of grant, yielding an aggregate fair value of $37,500.
On 23 October 2018, the Company issued 100,000 and 150,000 shares of restricted common stock as directors’ compensation for past services to Mr. Chi Ming Yu and Mr. Kai Gui, directors of the Company respectively. The shares were valued at the closing price of $0.211 per share on the date of grant, yielding an aggregate fair value of $52,750.
On 30 October 2019, the Company issued 100,000 and 150,000 shares of restricted common stock as directors’ compensation for past services to Mr. Chi Ming Yu and Mr. Kai Gui, directors of the Company respectively. The shares were valued at the closing price of $0.061 per share on the date of grant, yielding an aggregate fair value of $15,250.
On March 1, 2020 the Company and Mr. Puyi Sheng entered into an agreement to appoint the Mr. Sheng as the Chief Medical Officer for a term of 36 months. Pursuant to the Agreement, the Company has issued to Mr. Sheng 100,000 shares of the Company’s common stock (“the Shares”). The shares were valued at the closing price of US$0.042 on the date of grant yielding an aggregate fair value of $4,200, fully recognised as consultancy fees included in general and administrative expenses for the current year. The Company agrees to issue to Mr. Sheng 80,000 shares at the end of each 12-month term effective from 1 March 2020.
On 27 October 2020, the Company issued 100,000 and 150,000 shares of restricted common stock as directors’ compensation for past services to Mr. Chi Ming Yu and Mr. Kai Gui, directors of the Company respectively. The shares were valued at the closing price of $0.153 per share on the date of grant, yielding an aggregate fair value of $38,250.
| F-13 |
| 6. | COMMITMENTS AND CONTINGENCIES |
| (A) | Employee benefits |
The full time employees of the Company are entitled to employee benefits including medical care, welfare subsidies, unemployment insurance and pension benefits through a Chinese government mandated multi-employer defined contribution plan. The Company is required to accrue for these benefits based on certain percentages of the employees’ salaries and make contributions to the plans out of the amounts accrued for medical and pension benefits. The total provisions and contributions made for such employee benefits was $37,440$27,662 and $30,771$71,247 for the years ended October 31, 20172020 and 20162019 respectively. The Chinese government is responsible for the medical benefits and the pension liability to be paid to these employees.
| (B) |
The Company adopted ASU 2016-02 on November 1, 2019 using the modified retrospective adoption method. The reported results for year ended October 31, 2020 reflect the adoption of ASC 842 guidance while the reported results for the year ended October 31, 2019 were prepared and continue to be reported under the guidance of ASC 840, Leases.
Pursuant to ASC 842, the Company measures right-of-use assets and recognizes lease liabilities for all leases, with exemptions for low-value assets and short-term leases of 12 months or less. The Company recognises lease liabilities and the underlying right-of-use assets in respect of two operating leases with unrelated parties for factory space and director’s quarter in the P.R.C., which are non-cancelable and expiring on dates between 28 March 2021 and 30 April 2022, and do not include options to renew. The depreciable life of right-of use assets are limited by the term of leases.
As of October 31, 2017,2020, the Company had outstanding commitments with respect to operating leases, which are duehas future lease payments as follows:
| 2018 | $ | 14,473 | ||
| 2019 | 7,237 | |||
| Total | $ | 21,710 |
| For the year ending October 31, | ||||
| 2021 | $ | 29,513 | ||
| 2022 | 7,173 | |||
| Total lease payment payables | 36,686 | |||
| Short-term lease not recognized as a liability | (224 | ) | ||
| Less: Interest element | (1,405 | ) | ||
| Total lease liabilities | 35,057 | |||
| Lease liabilities, current portion | (28,028 | ) | ||
| Lease liabilities, non-current portion | $ | 7,029 |
The Company leased from a third party office space at monthly rent prevailing at October 31, 20172020 of $1,963 (2016: $1,922)$1,945 (2019: $1,850). This operating lease expired on July 20, 2015. The Company continues to lease this premises at same monthly rent pending a formal renewal of the lease.
| (C) | Capital commitments |
As of October 31, 2020, The Company has no outstanding commitments contracted for, net of deposit paid, in respect of acquisitions of plant and machineries as of October 31, 2017 (2016: $1,218)(2019: US$7,235).
| 7. | INCOME TAX |
ABMT was incorporated in the United States and has incurred net operating loss for income tax purposes for 20172020 and 2016.2019. ABMT has net operating loss carry forwards for income taxes amounting to approximately $1,915,159$2,421,252 and $1,771,223$2,224,307 as of October 31, 20172020 and 20162019 respectively which may be available to reduce future years’ taxable income. These carry forwards, will expire, if not utilized, commencing in 2029. Management believes that the realization of the benefits from these losses appears uncertain due to the Company’s limited operating history and continuing losses. Accordingly, a full, deferred tax asset valuation allowance has been provided and no deferred tax asset valuation allowance has been provided and no deferred tax asset benefit has been recorded. The valuation allowance at October 31, 20172020 and 20162019 was $478,790$797,623 and $442,806$756,265 respectively. The net change in the valuation allowance for 20172020 was an increase of $35,984.$41,358.
Masterise was incorporated in the BVI and under current law of the BVI, is not subject to tax on income.
Shenzhen Changhua was incorporated in the PRC and is subject to PRC income tax which is computed according to the relevant laws and regulations in the PRC. The income tax rate has been 25%. No income tax expense has been provided by Shenzhen Changhua as it has incurred losses. The losses cannot be carried forward as Shenzhen Changhua has not yet commenced operation.
| 8. | CONCENTRATIONS AND RISKS |
As at October 31, 2017, 94%2020 and 6% of the Company’s assets were located in the P.R.C.2019, 98% and the United States respectively.
As at October 31, 2016, 95% and 5%2% of the Company’s assets were located in the P.R.C. and the United States respectively.
| 9. | GOING CONCERN |
As reflected in the accompanying consolidated financial statements, the Company has an accumulated deficit of $7,679,298$10,256,364 as of October 31, 20172020 that includes a net loss of $691,600$672,000 for the year ended October 31, 2017.2020. The Company’s total current liabilities exceed its total current assets by $5,055,542 and the Company used cash in operations of $557,712.$7,533,045. These factors raise substantial doubt about its ability to continue as a going concern. In view of the matters described above, recoverability of a major portion of the recorded asset amounts shown in the accompanying balance sheet is dependent upon continued operations of the Company, which in turn is dependent upon the Company’s ability to raise additional capital, obtain financing and succeed in its future operations. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
To continue as a going concern, the Company is actively pursuing additional funding and strategic partners to enable it to implement its business plan. Management believes that these actions, if successful, will allow the Company to continue its operations through the next fiscal year.
| 10. | SUBSEQUENT EVENT |
The Company has evaluated the existence of significant events subsequent to the balance sheet date through the date the financial statements were issued and has determined that there were no subsequent events or transactions which would require recognition or disclosure in the financial statements.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
There were no disagreements related to accounting principles or practices, financial statement disclosure, internal controls or auditing scope or procedure during the two fiscal years and interim periods, including the interim period up through the date the relationship ended.
ITEM 9A. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
We have established disclosure controls and procedures, as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934. Our disclosure controls and procedures are designed to ensure that material information relating to us, including our consolidated subsidiaries, is made known to our principal executive officer and principal financial officer by others within our organization. Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of October 31, 20172020 to ensure that the information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is accumulated and communicated to our management, including our principal executive officer and principal financial officer as appropriate, to allow timely decisions regarding required disclosure. Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were not effective as of October 31, 2017.2020.
Management’s Annual Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Under the supervision and with the participation of our management, including ourthen principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the effectivenessSecurities Exchange Act of 1934, as amended, as of October 31, 2020. Based on this evaluation, the management concluded that the disclosure controls and procedures were ineffective at such time to ensure that information required to be disclosed by the company in the reports filed or submitted under the Exchange Act were recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Our principal executive officer and principal financial officer also concluded that our disclosure controls, which are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to management, were inappropriate to allow timely decisions regarding required disclosure.
Based on officers’ assessment, the Company determined that there were material weaknesses in its internal control over financial reporting as of October 31, 2017,2020 based on the criteria establishedmaterial weaknesses described below:
| ● | Because the Company consists of one person who acts as the financial officer, operating officer, secretary and director of the Company, there are limited internal controls over information processing. | |
| ● | There is an inadequate segregation of duties consistent with control objectives as financial reporting function is composed of only one person. In order to remedy this situation, we would need to hire additional staff to provide greater segregation of duties. Currently, it is not feasible to hire additional staff to obtain optimal segregation of duties. Management will reassess this matter after the Company has obtained additional financial resources to determine whether improvement in segregation of duty is feasible. | |
| ● | The Company does not have a formal audit committee with a financial expert, and thus the Company lacks of effective Board oversight role within the financial reporting process. | |
| ● | There is a lack of formal policies and procedures necessary to adequately review significant accounting transactions and activities. |
The Company utilizes a third-party independent contractor for the preparation of its financial statements. Although the financial statements and footnotes are reviewed by our management, we do not have a formal policy to review significant accounting transactions and the accounting treatment of such transactions. The third-party independent contractor is not involved inInternal Control — Integrated Frameworkissued by the Committee of Sponsoring Organizations (COSO)day-to-day operations of the Treadway Commission (1992). BasedCompany and may not provide financial information from and to the management on this evaluation, our management concluded that our internal control over financial reporting was effective asa timely basis to allow for adequate reporting/consideration of October 31, 2017. The Company’s internal control over financial reporting as of October 31, 2017 has not been audited by the Company’s independent accountants.certain transactions.
Changes in Internal Control Over Financial Reporting
During the year ended October 31, 2017,2020, there were no significant changes in our internal control over financial reporting that materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.
None.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Officers and Directors
Our directors serve until his successor is elected and qualified. Each of our officers is elected by the board of directors to a term of one (1) year and serves until his or her successor is duly elected and qualified, or until he or she is removed from office. The board of directors has no nominating, auditing or compensation committees.
The name, age and position of our officers and directors are set forth below:
| Name and Address | Age | Position(s) | |||
| Chi Ming Yu | 47 | President, Director | |||
| Hui Wang | 51 | Chief Executive Officer, Director | |||
| Kai Gui | 51 | Director, Secretary, Chief Financial Officer, Chief Operating Officer | |||
| Puyi Sheng | 53 | Chief Medical Officer | |||
The person named above has held his offices/positions since inception of our company and is expected to hold his offices/positions until the next annual meeting of our stockholders.
Background of our Officers and Directors
Chi Ming Yu, Director and President, is Director of Operations at Titan Holdings, Inc. where his main responsibilities are in Administration, Company Finance and Investment, Marketing Research and Customer Relationship. From 2000 to 2003, Mr. Yu worked as a sales manager at Fu Feng LLC.LLC. From 2003 to present, Mr. Yu worked as Vice President at Titan Technology Development Ltd. Mr. Yu studied Computer Science at Rutgers University, New Jersey. Mr. Yu has extensive knowledge of the Company’s product line, and is fluent in several languages, including English and Chinese. The Board concluded that Mr. Yu should serve as a Director due to his background in the Company’s product line together with his communication skills
Hui Wang, Director and Chief Executive Officer, started her career at Hainan Xinte Pharmaceutical Ltd in Chinain 1990. She worked her way up from cashier to sales representative and then to sales manager. She then worked as District Manager of Southern China with Hainan Tianfeng Pharmaceutical Ltd,from 1995 to 2000 and as General Manager with Hainan Yichen Pharmaceutical Ltd.from 2001 to 2004. She is now the General Manager of Shenzhen Changhua. MsMs. Wang has skills and experience in R&A, marketing and business development in Chinese medical industry. The Board concluded that Hui Wang should serve as a Director due to her skills and experience in pharmaceutical sales and business development.
Kai Gui, Director, Secretary, Chief Financial Officer and Chief FinancialOperating Officer, worked as an Analyst Programmer in the British media industry, and as IT Manager, Circulation Manager, and Foreign Publishing Director at S.J.P. Ltd in Londonfrom 1994 to 2008. Beginning in 2000 Mr. Gui participated in several business projects involving Chinese publicly listed companies. He was the Director of China Feed Industry Association Information Centre’s European Office. He is Vice President of Titan Technology Development Ltd. After graduating from the University of Westminster in London, Mr. Gui took a Post-graduate course in Financial Management at Middlesex University in London. The Board concluded that Kai Gui should serve as a Director due to his business experience and financial management skills.
Puyi Sheng, Chief Medical Officer, is a professor and surgeon, specializing in Primary and Revision Arthroplasties, and Joint Surgery. Prof. Sheng currently serves as the vice director of the Department of Orthopaedic Surgery, the vice director of the Department of Joint Surgery in the First Affiliated Hospital of Sun Yat-sen University, professor and PhD student mentor of Sun Yat-sen University in Guangzhou, China. Prof. Sheng received his Bachelor and Master degrees from Sun Yat-Sen University of Medical Sciences, he received his PhD in Bone Science from Sun Yat-sen University in China and PhD in Surgery from Tampere University in Finland. During his career as an orthopaedic surgeon for over 20 years, Prof. Sheng has served in various capacities at different medical institutions including the First Affiliated Hospital of Sun Yat-Sen University in China, Coxa Hospital for Joint Replacement in Finland and Nagoya University in Japan. Prof. Sheng has published 48 science papers as author or co-author. The Board concluded that Prof. Sheng’s scientific and strategic input and advice will help the Company’s research and development projects and he should serve as the Company’s Chief Medical Officer.
Involvement in Certain Legal Proceedings
To the best of our knowledge, none of our directors or executive officers, during the past ten years, has been involved in any legal proceeding of the type required to be disclosed under applicable SEC rules, including:
| 1. | Any petition under the Federal bankruptcy laws or any state insolvency law being filed by or against, or a receiver, fiscal agent or similar officer being appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing; | |
| 2. | Conviction in a criminal proceeding, or being a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses); |
| 3. | Being the subject of any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from, or otherwise limiting, the following activities: |
i. | Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity; | ||
ii. | Engaging in any type of business practice; or | ||
| iii. | Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities laws; | ||
| 4. | Being the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in paragraph (3)(i) of this section, or to be associated with persons engaged in any such activity; | |
| 5. | Being found by a court of competent jurisdiction in a civil action or by the Securities and Exchange Commission to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated; | |
| 6. | Being found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated; | |
| 7. | Being the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of: |
i. | Any Federal or State securities or commodities law or regulation; or | ||
ii. | Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or | ||
iii. | Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or | ||
| 8. | Being the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. |
Audit Committee and Charter
We do not have a separately-designatedan independent audit committee of the board. Our board of directors also performs audit committee functions.functions due to our small company size and limited human resources. None of our directors are deemed independent. All directors also hold positions as our officers. Our audit committee is responsible for: (1) selection and oversight of our independent accountant; (2) establishing procedures for the receipt, retention and treatment of complaints regarding accounting, internal controls and auditing matters; (3) establishing procedures for the confidential, anonymous submission by our employees of concerns regarding accounting and auditing matters; (4) engaging outside advisors; and, (5) funding for the outside auditory and any outside advisors engagement by the audit committee. A copy of our audit committee charter is filed as an exhibit to this report.
Audit Committee Financial Expert
None of our directors or officers has the qualifications or experience to be considered a financial expert. We believe the cost related to retaining a financial expert at this time is prohibitive. Further, because of our limited operations, we believe the services of a financial expert are not warranted.
Code of Ethics
We have adopted a corporate code of ethics. We believe our code of ethics is reasonably designed to deter wrongdoing and promote honest and ethical conduct; provide full, fair, accurate, timely and understandable disclosure in public reports; comply with applicable laws; ensure prompt internal reporting of code violations; and provide accountability for adherence to the code. A copy of the code of ethics is filed as an exhibit to this report.
Disclosure Committee and Charter
We have a disclosure committee and disclosure committee charter. Our disclosure committee is comprised of all of our officers and directors. The purpose of the committee is to provide assistance to the Chief Executive Officer and the Chief Financial Officer in fulfilling their responsibilities regarding the identification and disclosure of material information about us and the accuracy, completeness and timeliness of our financial reports. A copy of the disclosure committee charter is filed as an exhibit to this report.
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth information with respect to compensation paid by the registrant to its officers during the last completed fiscal year ended October 31, 2017.2020 and 2019.
| Executive Officer Compensation Table | Executive Officer Compensation Table | Executive Officer Compensation Table | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fees | Fees | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Earned | Nonqualified | Earned | Nonqualified | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| or | Non-Equity | Deferred | or | Non-Equity | Deferred | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Paid in | Stock | Option | Incentive Plan | Compensation | All Other | Paid in | Stock | Option | Incentive Plan | Compensation | All Other | |||||||||||||||||||||||||||||||||||||||||||||
| Cash | Awards | Awards | Compensation | Earnings | Compensation | Total | Cash | Awards | Awards | Compensation | Earnings | Compensation | Total | |||||||||||||||||||||||||||||||||||||||||||
| Name | (US$) | (US$) | (US$) | (US$) | (US$) | (US$) | (US$) | (US$) | (US$) | (US$) | (US$) | (US$) | (US$) | (US$) | ||||||||||||||||||||||||||||||||||||||||||
| (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | ||||||||||||||||||||||||||||||||||||||||||
| Hui Wang | $ | 35,481 | 0 | 0 | 0 | 0 | 0 | $ | 35,481 | |||||||||||||||||||||||||||||||||||||||||||||||
| Chi Ming Yu | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Kai Gui | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Hui Wang (Oct 31, 2020) | $ | 34,602 | 0 | 0 | 0 | 0 | 0 | $ | 34,602 | |||||||||||||||||||||||||||||||||||||||||||||||
| (Oct 31, 2019) | $ | 35,019 | 0 | 0 | 0 | 0 | 0 | $ | 35,019 | |||||||||||||||||||||||||||||||||||||||||||||||
| Chi Ming Yu (Oct 31, 2020) | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||||||||||||||||||||||||
| (Oct 31, 2019) | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Kai Gui (Oct 31, 2020) | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||||||||||||||||||||||||
| (Oct 31, 2019) | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Puyi Sheng (Oct 31, 2020) | 0 | 4,200 | 0 | 0 | 0 | 0 | 4,200 | |||||||||||||||||||||||||||||||||||||||||||||||||
| (Oct 31, 2019) | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||||||||||||||||||||||||
The following table sets forth information with respect to compensation paid by the registrant to its directors during the last completed fiscal year ended October 31, 2017.2020 and 2019.
| Director Compensation | Director Compensation | Director Compensation | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fees | Fees | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Earned | Nonqualified | Earned | Nonqualified | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| or | Non-Equity | Deferred | or | Non-Equity | Deferred | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Paid in | Stock | Option | Incentive Plan | Compensation | All Other | Paid in | Stock | Option | Incentive Plan | Compensation | All Other | |||||||||||||||||||||||||||||||||||||||||||||
| Cash | Awards | Awards | Compensation | Earnings | Compensation | Total | Cash | Awards | Awards | Compensation | Earnings | Compensation | Total | |||||||||||||||||||||||||||||||||||||||||||
| Name | (US$) | (US$) | (US$) | (US$) | (US$) | (US$) | (US$) | (US$) | (US$) | (US$) | (US$) | (US$) | (US$) | (US$) | ||||||||||||||||||||||||||||||||||||||||||
| (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | ||||||||||||||||||||||||||||||||||||||||||
| Hui Wang | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Chi Ming Yu | 0 | 15,000 | 0 | 0 | 0 | 0 | 15,000 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Kai Gui | 0 | 22,500 | 0 | 0 | 0 | 0 | 22,500 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Hui Wang (Oct 31, 2020) | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||||||||||||||||||||||||
| (Oct 31, 2019) | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Chi Ming Yu (Oct 31, 2020) | 0 | 15,300 | 0 | 0 | 0 | 0 | 15,300 | |||||||||||||||||||||||||||||||||||||||||||||||||
| (Oct 31, 2019) | 0 | 6,100 | 0 | 0 | 0 | 0 | 6,100 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Kai Gui (Oct 31, 2020) | 0 | 22,950 | 0 | 0 | 0 | 0 | 22,950 | |||||||||||||||||||||||||||||||||||||||||||||||||
| (Oct 31, 2019) | 0 | 9,150 | 0 | 0 | 0 | 0 | 9,150 | |||||||||||||||||||||||||||||||||||||||||||||||||
All compensation received by our officers and directors has been disclosed.
There are no stock option, retirement, pension, or profit sharing plans for the benefit of our officers and directors.
Long-Term Incentive Plan Awards
We do not have any long-term incentive plans that provide compensation intended to serve as incentive for performance.
Indemnification
Under our Bylaws, we may indemnify an officer or director who is made a party to any proceeding, including a lawsuit, because of his position, if he acted in good faith and in a manner he reasonably believed to be in our best interest. We may advance expenses incurred in defending a proceeding. To the extent that the officer or director is successful on the merits in a proceeding as to which he is to be indemnified, we must indemnify him against all expenses incurred, including attorney’s fees. With respect to a derivative action, indemnity may be made only for expenses actually and reasonably incurred in defending the proceeding, and if the officer or director is judged liable, only by a court order. The indemnification is intended to be to the fullest extent permitted by the laws of the State of Nevada.
Regarding indemnification for liabilities arising under the Securities Act of 1933, which may be permitted to directors or officers under Nevada law, we are informed that, in the opinion of the Securities and Exchange Commission, indemnification is against public policy, as expressed in the Act and is, therefore, unenforceable.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The registrant has no compensation plans (including individual compensation arrangements) under which equity securities of the registrant are authorized for issuance.
The following table sets forth, as of the date of this Annual Report on Form 10-K, the total number of shares owned beneficially by each of our directors, officers and key employees, individually and as a group, and the present owners of 5% or more of our total outstanding shares. The stockholders listed below have direct ownership of his/her shares and possess voting and dispositive power with respect to the shares.
| (1) Title of Class | (2) Name and address of beneficial owner | (3) Amount and nature of beneficial ownership | (4) Percent of class | |||||||
| Common Stock | Hui Wang, CEO & Director | 22,153,540 | 31,933 | % | ||||||
| Common Stock | Chi Ming Yu, President & Director | 350,000 | 0.505 | % | ||||||
| Common Stock | Kai Gui, Secretary & Director | 600,000 | 0.865 | % | ||||||
| Common Stock | Titan Technology Development, LTD., Room 1903 Hing Yip, Commercial Centre, 272 Des Voeux Road Central, Hong Kong, 718332 | 26,133,499 | 37.67 | % | ||||||
| All Officers & Directors | 23,103,540 | 33.303 | % | |||||||
| (1) Title of Class | (2) Name and address of beneficial owner | (3) Amount and nature of beneficial ownership | (4) Percent of class | |||||||
| Common Stock | Hui Wang, CEO & Director | 22,153,540 | 31.547 | % | ||||||
| Common Stock | Chi Ming Yu, President & Director | 650,000 | 0.926 | % | ||||||
| Common Stock | Kai Gui, Secretary & Director | 1,050,000 | 1.495 | % | ||||||
| Common Stock | Puyi Sheng, Chief Medical Officer | 100,000 | 0.142 | % | ||||||
| Common Stock | Titan Technology Development, LTD., Room 1903 Hing Yip, Commercial Centre, 272 Des Voeux Road Central, Hong Kong, 718332 | 24,183,359 | 34.437 | % | ||||||
| All Officers & Directors | 23,953,540 | 34.11 | % | |||||||
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
Kai Gui, officer and director of Registrant owns five percent (5%) of the outstanding capital stock of Titan Technology Development, LTD., and Chi Fung Yu, brother of Registrant’s president Chi Ming Yu, owns seventy percent (70%) of the outstanding capital stock of Titan Technology Development, LTD.
As of October 31, 20172020 and 2016,2019, the Company owed $582,795$880,108 and $546,953$824,705 respectively to a stockholder – Titan Technology Development Limited, which is unsecured and repayable on demand. Interest is charged at 7% per annum on the amount owed.
As of October 31, 20172020 and 2016,2019, the Company owed $1,710,759$2,068,471 and $1,578,843$1,802,625 to Chi Fung Yu, $1,800,541$2,327,850 and $1,471,898$2,835,785 to Tie Jun Chen, $35,782$41,742 and $32,972$37,701 to Que Feng, $220,098$267,449 and $130,914$240,527 to Shenzhen Hygeian Medical Device Company, Limited., which are unsecured and repayable on demand. Interest is charged at 7% per annum on the amount owed.
Total interest expenses on advances from a stockholder accrued for the yearyears ended October 31, 20172020 and October 31, 20162019 are $37,379$50,065 and $33,665$48,418 for Titan Technology Development Limited.
Total interest expenses on advances from following related parties accrued for the yearyears ended October 31, 20172020 and October 31, 20162019 are $93,951$92,625 and $96,828$93,742 for Chi Fung Yu; $97,045$152,606 and $92,369$155,444 for Tie Jun Chen; $2,059$2,007 and $2,133$2,032 for Que Feng; $11,710$13,899 and $5,289$14,067 for Shenzhen Hygeian Medical Device Company.
As of October 31, 20172020 and October 31, 2016,2019, the Company owed the following amounts respectively to twothree directors for advances made - $298,818$283,627 and $341,626$256,469 to Wang Hui $22,602Wang; $20,930 and $22,139$23,478 to Chi Ming Yu.Yu; $3,474 and $567 to Kai Gui. These advances were made on an unsecured basis, repayable on demand and interest free.
Imputed interest charged at 5% per annum on the amounts owed to twothe directors for the yearyears ended October 31, 20172020 and 20162019 respectively is $15,623$13,695 and $18,990$12,707 for Wang Hui;Hui Wang; $0 and $0 for Chi Ming Yu.Yu and Kai Gui.
Sales for the years ended 31 October 2020 and 2019 amounted to US$110,899 and US$11,657 respectively were to a company in which Mr. Tie Jun Chen has a significant equity interest. Advance payments for undelivered goods are recognised as contract liabilities at the end of the reporting period.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
(1) Audit Fees
The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for our audit of annual financial statements and review of financial statements included in our Form 10-Qs or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years was:
| 2017 | $ | 37,000 | Centurion ZD CPA Limited | |||
| 2016 | $ | 20,000 | Centurion ZD CPA Limited | |||
| 2016 | $ | 8,000 | DCAW (CPA) Limited | |||
| 2016 | $ | 4,095 | AWC (CPA) Limited |
| 2020 | $ | 48,000 | Centurion ZD CPA & Co. | ||||
| 2019 | $ | 45,000 | Centurion ZD CPA & Co. |
(2) Audit-Related Fees
There is no fee billed in each of the last two fiscal years for assurance and related services by the principal accountants that are reasonably related to the performance of the audit or review of our financial statements and are not reported in the preceding paragraph.
(3) Tax Fees
There is no fee billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning.
(4) All Other Fees
There is no fee billed in each of the last two fiscal years for the products and services provided by the principal accountant, other than the services reported in paragraphs (1), (2), and (3).
(5)Our audit committee’s pre-approval policies and procedures described in paragraph (c)(7)(i) of Rule 2-01 of Regulation S-X were that the audit committee pre-approves all accounting related activities prior to the performance of any services by any accountant or auditor.
(6)There is no hour expended on the principal accountant’s engagement to audit our financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant’s full time and permanent employees was.
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
| Incorporated by reference | ||||||||||
| Exhibit | Document Description | Form | Date | Number | Filed herewith | |||||
| 3.1 | Articles of Incorporation | SB-2 | 01-16-07 | 3.1 | ||||||
| 3.2 | Bylaws | SB-2 | 01-16-07 | 3.2 | ||||||
| 4.1 | Specimen Stock Certificate | SB-2 | 01-16-07 | 4.1 | ||||||
| 14.1 | Code of Ethics | X | ||||||||
| 10.1 | Titan – ABMT Loan Agreement | X | ||||||||
| 31.1 | Certification of Chief Executive Officer pursuant to 15d-15(e), promulgated under the Securities and Exchange Act of 1934, as amended. | X | ||||||||
| 31.2 | Certification of Chief Financial Officer pursuant to 15d-15(e), promulgated under the Securities and Exchange Act of 1934, as amended. | X | ||||||||
| 32.1 | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer) | X | ||||||||
| 32.2 | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Financial Officer) | X | ||||||||
| 99.1 | Audit Committee Charter | X | ||||||||
| 99.2 | Disclosure Committee Charter | X | ||||||||
| Incorporated by reference | ||||||||||
| Exhibit | Document Description | Form | Date | Number | Filed herewith | |||||
| 3.1 | Articles of Incorporation | SB-2 | 01-16-07 | 3.1 | ||||||
| 3.2 | Bylaws | SB-2 | 01-16-07 | 3.2 | ||||||
| 4.1 | Specimen Stock Certificate | SB-2 | 01-16-07 | 4.1 | ||||||
| 10.1 | Titan – ABMT Loan Agreement | X | ||||||||
| 14.1 | Code of Ethics | X | ||||||||
| 31.1 | Certification of Chief Executive Officer pursuant to 15d-15(e), promulgated under the Securities and Exchange Act of 1934, as amended. | X | ||||||||
| 31.2 | Certification of Chief Financial Officer pursuant to 15d-15(e), promulgated under the Securities and Exchange Act of 1934, as amended. | X | ||||||||
| 32.1 | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer) | X | ||||||||
| 32.2 | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Financial Officer) | X | ||||||||
| 99.1 | Audit Committee Charter | X | ||||||||
| 99.2 | Disclosure Committee Charter | X | ||||||||
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, thereto duly authorized.
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.
ADVANCED BIOMEDICAL TECHNOLOGIES, INC.
| Signature | Title | Date | ||
| /s/Chi Ming Yu | President and Director | |||
| Chi Ming Yu | (Principal Executive Officer) | |||
| /s/Kai Gui | Director, Secretary and Chief Financial Officer | |||
| Kai Gui | (Principal Financial Officer) | |||
| /s/Hui Wang | Director and Chief Executive Officer | |||
| Hui Wang | (Controller) |