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ABVC Biopharma Reports Third Quarter 2021 Financial and Operational Results

Fremont, CA – (NewMediaWire) – November 15, 2021 – ABVC BioPharma, Inc. (Nasdaq: ABVC), a biotechnology company specializing in botanically based solutions that deliver high efficacy with low toxicity for improved health outcomes, today announced its financial and operating results for the third quarter of 2021.

Third Quarter 2021 Financial Results

  • Revenues. The Company generated $98,999 and $115,553 in revenues for the three months ended September 30, 2021 and 2020, respectively; and incurred $393 and $8,619 in cost of sales for the three months ended September 30, 2021 and 2020, respectively. The decrease in revenues was mainly due to the impact of COVID-19 on our CDMO business sector. 
  • Operating Expenses increased by $672,460, or 48%, to $2,069,160 for the three months ended September 30, 2021 from $1,396,700 for the three months ended September 30, 2020. Such increase in operating expenses was mainly due to the increase in selling, general and administrative expenses and research and development expenses. The Company’s selling, general and administrative expenses and stock-based compensation increased by $543,537, or 43%, mainly due to the increase in company’s marketing and Nasdaq up-list related expenses.
  • Research and Development expenses increased by $128,923 or approximately 96% primarily because of new service agreements signed with vendors during the three months ended September 30, 2021. 
  • Other Income (Expense) was $8,643 and ($886,100) for the three months ended September 30, 2021 and 2020, respectively. The change was principally caused by the decrease in interest income and rental income, as well as decreasing loss on investment in equity securities and the increase in government grant income. Interest income was $9,333 for the three months ended September 30, 2021 as compared to $19,571 for the three months ended September 30, 2020. The decrease of $10,238, or approximately -49%, was primarily due to the repayment of certain related-party loans. Other income totaled $131,927 for the three months ended September 30, 2021 as compared to other expense of $171 for the three months ended September 30, 2020. The increase of $132,098 was primarily due to the receipt of the second round of PPP loan forgiveness during the third quarter of 2021. 
  • Net Loss was $1,886,244 for the three months ended September 30, 2021 compared to $2,131,131 for the three months ended September 30, 2020, representing a decrease of $244,887, or 11%.

Third Quarter 2021 Highlights

  • The company completed a successful NASDAQ listing that resulted in improved trading liquidity for its shareholders and completion of a public offering of its shares.
  • Selected the first study site and principal investigator for conducting Phase II clinical trials of Vitargus® in Australia.
  • Strengthened its intellectual property protections with the filing of two new PCT (Patent Cooperation Treaty) applications in connection with ABVC medicines that help to treat major depressive disorder (MDD) and Attention-Deficit Hyperactivity Disorder (ADHD).
  • Restructured its joint venture agreement with BioLite Japan K.K., a drug discovery and research firm, which strengthened the company’s global abilities to identify early-stage opportunities in drug development, digital health, and medical device technology, especially in Japan.

Dr. Howard Doong (M.D., Ph.D), Chief Executive Officer of ABVC BioPharma, commented, “ABVC is proud of its accomplishments since the start of the year, highlighted by clinical trial success that continued to demonstrate that botanically derived medicines are safe and effective.” Dr. Doong further noted, “Our successful public offering completed during the quarter and the subsequent exercise of our Series A warrants by many investors has provided sufficient cash to assure that we can meet our goals through mid-2023. And, we are particularly pleased that our up listing on to the Nasdaq exchange has resulted in materially improved liquidity of our stock coupled with a far wider investor base, including several prominent funds that specialize in the biotech sector. Heading into 2022, we continue to proceed down the right path with the development of our product pipeline.”

About ABVC BioPharma, Inc.

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

Forward-Looking Statements

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

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

Contact

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

ABVC BIOPHARMA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
 
    September 30,
2021
    December 31,
2020
 
    (Unaudited)        
ASSETS            
Current Assets            
Cash and cash equivalents   $ 3,715,609     $ 4,273,208  
Restricted cash and cash equivalents     734,163       728,163  
Short-term Investment     111,320        
Accounts receivable, net     331,367       159,712  
Accounts receivable – related parties, net     141,826       143,435  
Due from related parties     561,085       696,255  
                 
Inventory, net     60,007        
Prepayment for long-term investments     639,738        
Prepaid expense and other current assets     815,916       172,193  
Total Current Assets     7,111,031       6,172,966  
                 
Property and equipment, net     527,764       514,834  
Operating lease right-of-use assets     1,554,280       1,772,747  
Goodwill, net            
Long-term investments     1,006,533       1,190,727  
Deferred tax assets     1,993,789       1,790,597  
Prepaid expenses – noncurrent     120,320       119,315  
Security deposits     41,099       45,519  
Total Assets   $ 12,354,816     $ 11,606,705  
                 
LIABILITIES AND EQUITY                
Current Liabilities                
Accounts payable   $ 16,497     $ 23,044  
Short-term bank loans     1,637,250       1,629,000  
Short-term loan           100,000  
Notes payable           106,800  
Accrued expenses and other current liabilities     1,133,748       2,118,854  
Advance from customers     10,985       12,070  
Operating lease liabilities – current portion     342,131       316,178  
Due to related parties     298,269       288,445  
Convertible notes payable – related parties, current portion           250,000  
Total Current Liabilities     3,438,880       4,844,391  
Paycheck Protection Program loan payable     104,167       124,400  
Tenant security deposit     9,880       19,280  
Operating lease liability – noncurrent portion     1,212,148       1,456,567  
Convertible notes payable – noncurrent portion           2,500,000  
Total Liabilities     4,765,075       8,944,638  
                 
Equity                
Preferred stock, $0.001 par value, 20,000,000 authorized, nil shares issued and outstanding            
Common stock, $0.001 par value, 100,000,000 authorized, 27,935,783 and 24,420,526 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively     27,935       24,420  
Additional paid-in capital     49,716,411       40,751,807  
Stock subscription receivable     (2,483,140 )     (3,160,360 )
Accumulated deficit     (30,548,946 )     (25,642,387 )
Accumulated other comprehensive income     981,718       564,860  
Treasury stock     (9,100,000 )     (9,100,000 )
Total Stockholders’ Equity     8,593,978       3,438,340  
Noncontrolling interest     (1,004,237 )     (776,273 )
Total Equity     7,589,741       2,662,067  
                 
Total Liabilities and Equity   $ 12,354,816     $ 11,606,705  

ABVC BIOPHARMA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(UNAUDITED)

    Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
    2021     2020     2021     2020  
Revenues   $ 98,999     $ 115,553     $ 393,590     $ 420,852  
                                 
Cost of revenues     393       8,619       2,284       16,814  
                                 
Gross profit     98,606       106,934       391,306       404,038  
                                 
Operating expenses                                
Selling, general and administrative expenses     1,579,996       1,262,199       3,979,283       2,693,001  
Research and development expenses     263,424       134,501       743,617       366,374  
Stock-based compensation     225,740             927,220       999,820  
Total operating expenses     2,069,160       1,396,700       5,650,120       4,059,195  
                                 
Loss from operations     (1,970,554 )     (1,289,766 )     (5,258,814 )     (3,655,157 )
                                 
Other income (expense)                                
Interest income     9,333       19,571       72,584       39,641  
Interest expense     (38,677 )     (16,311 )     (251,577 )     (288,353 )
Rent income     2,624       4,774       60,822       15,254  
Rent income – related parties     1,200       1,200       3,600       3,600  
Impairment loss           (8,507 )           (952,711 )
Investment loss           665             (38,272 )
Gain/Loss on foreign exchange changes     (5,999 )     (90 )     (10,806 )     8,569  
Gain/Loss on investment in equity securities     (91,765 )     (887,231 )     (193,147 )     (1,067,298 )
Other (expense) income     (404 )     (171 )     (171 )     176,330  
Government grant income     132,331             256,731        
Total other expenses     8,643       (886,100 )     (61,964 )     (2,103,240 )
                                 
Loss before provision income tax     (1,961,911 )     (2,175,866 )     (5,320,778 )     (5,758,397 )
                                 
Provision for income tax     (75,667 )     (44,735 )     (186,255 )     (133,947 )
                                 
Net loss     (1,886,244 )     (2,131,131 )     (5,134,523 )     (5,624,450 )
                                 
Net loss attributable to noncontrolling interests     (79,756 )     (285,085 )     (227,964 )     (681,569 )
                                 
Net loss attributed to ABVC and subsidiaries     (1,806,488 )     (1,846,046 )     (4,906,559 )     (4,942,881 )
Foreign currency translation adjustment     16,137       (25,384 )     416,858       (42,403 )
Comprehensive loss   $ (1,790,351 )   $ (1,871,430 )   $ (4,489,701 )   $ (4,985,284 )
                                 
Net loss per share:                                
Basic and diluted   $ (0.07 )   $ (0.09 )   $ (0.20 )   $ (0.25 )
                                 
Weighted average number of common shares outstanding:                                
Basic and diluted     26,882,181       19,488,168       25,053,522       19,486,959  

ABVC BIOPHARMA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS 
(UNAUDITED)

    Nine Months Ended
September 30,
 
    2021     2020  
Cash flows from operating activities            
Net loss   $ (5,134,523 )   $ (5,624,450 )
Adjustments to reconcile net loss to net cash used in operating activities:                
Depreciation     8,725       30,329  
Stock based compensation for non employees     927,220       999,820  
Gain/Loss on investment in equity securities     193,147       1,067,298  
Government grant income     (256,731 )      
Other non-cash income and expenses           (15,360 )
Investment loss           990,982  
Deferred tax     (187,055 )     (136,797 )
Changes in operating assets and liabilities:                
Decrease (increase) in accounts receivable     (171,655 )     14,051  
Decrease (increase) in prepaid expenses and deposits     (647,219 )     47,310  
Decrease (increase) in due from related parties     (45,784 )     381,918  
Increase (decrease) in accounts payable     (6,547 )     (921 )
Increase (decrease) in inventory     (59,673 )      
Increase (decrease) in notes payable           22,806  
Increase (decrease) in accrued expenses and other current liabilities     (338,928 )     429,051  
Increase (decrease) in advance from others     (1,085 )     332  
Increase (decrease) in due to related parties     178,570       (582,242 )
Net cash used in operating activities     (5,541,538 )     (2,375,873 )
                 
Cash flows from investing activities                
Sale of investments           137,088  
Loan to related parties           (469,627 )
Purchase of investments     (110,700 )      
Purchases of property, plant and equipment     (17,503 )        
Prepayment for equity investment     (636,174 )      
Net cash used in investing activities     (764,377 )     (332,539 )
                 
Cash flows from financing activities                
Proceeds from short-term loan           100,000  
Proceeds from short-term borrowing from third parties           512,212  
Proceeds from short-term borrowing from related parties           72,433  
Issuance of common stock     6,875,000       2,153,231  
Payment for offering costs            (850,429)                
Repayment of convertible notes     (306,836 )      
Repayment of short-term loan     (100,000 )      
Repayment of notes payable     (107,100 )      
Proceeds from long-term loans     236,498       124,400  
Repayment of long-term bank loans     (4,396 )     (263,483 )
Net cash provided by financing activities     5,742,737       2,698,793  
                 
Effect of exchange rate changes on cash and cash equivalents and restricted cash     11,579       1,029  
                 
Net increase (decrease) in cash and cash equivalents and restricted cash     (551,599 )     (8,590 )
                 
Cash and cash equivalents and restricted cash                
Beginning     5,001,371       160,443  
Ending   $ 4,449,772     $ 151,853  
                 
Supplemental disclosure of cash flows                
Cash paid during the year for:                
Interest expense paid   $ 327,642     $ 130,309  
Income taxes paid   $     $  
Non-cash financing and investing activities                
Common shares issued for debt conversion    2,693,550      $ 1,446,780

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