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Related Parties Transactions
 6 Months Ended
Jun. 30, 2024
Related Parties Transactions [Abstract]  
RELATED PARTIES TRANSACTIONS

10. RELATED PARTIES TRANSACTIONS

 

The related parties of the Company with whom transactions are reported in these financial statements are as follows:

 

Name of entity or Individual   Relationship with the Company and its subsidiaries
BioFirst Corporation (the “BioFirst”)   Entity controlled by controlling beneficiary shareholder of YuanGene
BioFirst (Australia) Pty Ltd. (the “BioFirst (Australia)”)   100% owned by BioFirst; Entity controlled by controlling beneficiary shareholder of YuanGene
Rgene Corporation (the “Rgene”)   Shareholder of the Company; Entity controlled by controlling beneficiary shareholder of YuanGene; the Chairman of Rgene is Mr. Tsung-Shann Jiang
ForSeeCon Corporation (the “FEYE”)   Cost method investment
YuanGene Corporation (the “YuanGene”)   Controlling beneficiary shareholder of the Company
GenePharm Inc. (the “GenePharm”)   Dr. George Lee, Board Director of BioKey, is the Chairman of GenePharm.
The Jiangs   Mr. Tsung-Shann Jiang, the controlling beneficiary shareholder of the Company; the Chairman of Rgene; the Chairman and CEO of the BioLite Holding Inc. and BioLite Inc. and the President and a member of board of directors of BioFirst

Ms. Shu-Ling Jiang, Mr. Tsung-Shann Jiang’s wife,  and a member of board of directors of BioLite Inc.

Mr. Eugene Jiang is Mr. and Ms. Jiang’s son. Mr. Eugene Jiang is the chairman, and majority shareholder of the Company and a member of board of directors of BioLite Inc.

Mr. Chang-Jen Jiang is Mr. Tsung-Shann Jiang’s sibling and the director of the Company.

Ms. Mei-Ling Jiang is Ms. Shu-Ling Jiang’s sibling.
BioLite Japan   Entity controlled by controlling beneficiary shareholder of ABVC
BioHopeKing Corporation (“BHK”)   Entity controlled by controlling beneficiary shareholder of ABVC

 

Revenues – related parties

 

During the six months ended June 30, 2024, the Company received $116,000 pursuant to the licensing agreement and related amendment with FEYE, and recognized $116,000 revenue in the period ended June 30, 2024. Please refer to Note 4, Collaborative Agreements for details.

 

   June 30,   June 30, 
   2024   2023 
   (Unaudited)     
FEYE  $116,000   $
   -
 
Total  $116,000   $
-
 

 

Accounts receivable - related parties

 

Accounts receivable due from related parties consisted of the following as of the periods indicated:

 

   June 30,   December 31, 
   2024   2023 
   (Unaudited)     
Rgene  $10,463   $10,463 
Total  $10,463   $10,463 

 

Due from related parties

 

Amount due from related parties consisted of the following as of the periods indicated:

 

Due from related-party - Current

 

   June 30,   December 31, 
   2024   2023 
   (Unaudited)     
Rgene  $553,229   $541,486 
BioFirst   705,083    206,087 
Total  $1,258,312   $747,573 

 

Due from related parties - Non-Current

 

   June 30,   December 31, 
   2024   2023 
BioFirst (Australia)  $839,983   $839,983 
BioHopeKing Corporation   121,392    113,516 
Total   961,375    953,499 
Less: allowance for expected credit losses accounts   (839,983)   (839,983)
Net  $121,392   $113,516 

 

(1)On June 16, 2022, the Company entered into a one-year convertible loan with Rgene, with a principal amount of $1,000,000 to Rgene which bears interest at 5% per annum for the use of working capital that, if fully converted, would result in ABVC owning an additional 6.4% of Rgene. The Company may convert the Note at any time into shares of Rgene’s common stock at either (i) a fixed conversion price equal to $1.00 per share or (ii) 20% discount of the stock price of the then most recent offering, whichever is lower; the conversion price is subject to adjustment as set forth in the Note. The Note includes standard events of default, as well as a cross default provision pursuant to which a breach of the Service Agreement will trigger an event of default under the convertible note if not cured after 5 business days of written notice regarding the breach is provided.

 

As of June 30, 2024 and December 31, 2023, the outstanding loan balance were both $500,000; and accrued interest was $51,319 and $38,819, respectively. The Company expects to receive the repayment within next 12 months once Rgene receives the licensing fees from OncoX.

 

As of June 30, 2024 and December 31, 2023, the Company has other receivables amounted $1,910 and $2,667 from Rgene due to daily operations, respectively.  

 

(2)The balances mainly represent advances to BioFirst (Australia) for research and development purposes. The business conditions of BioFirst (Australia) deteriorated and, as a result, the Company recognized expected credit losses of $839,983 for the year ended December 31, 2023.

 

(3)On February 24, 2015, BioLite Taiwan and BioHopeKing Corporation (the “BHK”) entered into a co-development agreement, (the “BHK Co-Development Agreement”, see Note 3). The development costs shall be shared 50/50 between BHK and the Company. Under the term of the agreement, BioLite issued relevant development cost to BHK. As of June 30, 2024 and December 31, 2023, due from BHK was $121,392 and $113,516, respectively.

 

(4) On December 31, 2023, the Company entered into a loan agreement with BioFirst, with a principal amount of $341,029 to BioFirst which bears interest at 12% per annum for the use of working capital. During the period ended June 30, 2024, the Company entered into another loan agreement with BioFirst, with a principal amount of $346,685 to BioFirst which bears interest at 12% per annum for the use of working capital. As of June 30, 2024 and December 31, 2023, the outstanding loan balance was $687,714 and $206,087, respectively; accrued interest was $16,362 and $0, respectively. The Company expects to receive the repayment within next 12 months once BioFirst receives the licensing fees from FEYE. As of June 30, 2024 and December 31, 2023, the Company has other receivables from BioFirst amounted $1,007 and $0, respectively, due to daily operations.

 

Potential risks for receivable:

 

1. Credit Risk:

 

Delayed Payments:There's a risk that OncoX or ForSeeCon may delay their payments to Rgene or BioFirst, respectively. This delay can affect the timing of the repayment.

 

Default Risk: OncoX or ForSeeCon may default on their payments due to financial instability, which would directly impact Rgene’s or BioFirst’s ability to repay the loan.

 

2. Operational Risk:

 

Dependency on Licensing Revenue: Both Rgene and BioFirst are dependent on receiving licensing fees from OncoX and ForSeeCon. Any disruption in these business relationships, such as contract disputes or changes in market conditions, could impact their revenue and, in turn, their ability to meet repayment obligations.

 

Collection Risk: Challenges in collecting licensing fees, such as administrative errors or disputes over payment amounts, could delay the receivables.

 

3. Market Risk:

 

Economic Downturn: A general economic downturn could affect the financial health of OncoX, ForSeeCon, Rgene, and BioFirst. Reduced market demand or adverse changes in regulations could reduce the licensing fees received, leading to potential issues in repayment.

 

Currency Fluctuations: If the licensing fees or loans are in different currencies, exchange rate volatility could reduce the value of receivables, impacting the repayment ability.

 

4. Legal and Regulatory Risks:

 

Contractual Obligations: Any ambiguity or changes in the licensing agreements between the parties could lead to legal disputes or renegotiations, potentially delaying the repayment process.

 

Compliance Risks: If either party fails to comply with relevant laws and regulations (e.g., intellectual property laws or tax regulations), it could result in fines, penalties, or legal costs that could deplete the funds available for repayment.

 

5. Counterparty Risk:

 

Financial Health of Counterparties: If OncoX or ForSeeCon face financial difficulties or insolvency, it could severely impact their ability to pay licensing fees, thus affecting the repayment to Rgene and BioFirst.

 

Changes in Business Strategy: OncoX or ForSeeCon may shift their business strategy or priorities, potentially reducing their focus on the products or technologies licensed from Rgene or BioFirst, leading to lower-than-expected fees.

 

6. Timing Risk:

 

12-Month Repayment Window:** While the repayment can be made within 12 months, any delays toward the end of this period can increase uncertainty. If the receivables are delayed beyond the 12-month window, it may lead to financial stress or breach of agreements.

 

7. Changes to the Repayment Plan:

 

Negotiation Risk: Any proposed changes to the repayment plan require mutual agreement. Disagreements or prolonged negotiations could delay repayment or lead to disputes.

 

By identifying and managing these risks, the parties involved will better ensure that the repayment process is smooth and any potential issues are mitigated in advance.

 

Due to related parties

 

Amount due to related parties consisted of the following as of the periods indicated:

 

   June 30,   December 31, 
   2024   2023 
   (Unaudited)     
The Jiangs  $178,533   $19,789 
Due to shareholders   143,528    152,382 
Due to a Director   4,237    961 
Total  $326,298   $173,132 

 

(1) Since 2019, the Jiangs advanced funds to the Company for working capital purpose. As of June 30, 2024, and December 31, 2023, the outstanding balance due to the Jiangs amounted to $178,533 and $19,789, respectively. These loans bear interest rate of 0% to 1% per month, and are due on demand.
   
(2) Since 2018, the Company’s shareholders have advanced funds to the Company for working capital purpose. The advances bear interest rate of 12% per annum. As of June 30, 2024 and December 31, 2023, the outstanding principal and accrued interest was $143,528 and $152,382, respectively. Interest expenses in connection with these loans were $4,019 and $5,171 for the three months ended June 30, 2024 and 2023, respectively, and were $9,957 and $10,067 for the six months ended June 30, 2024 and 2023, respectively.
   
(3) The Director of AiBtl has been paying on behalf of the company for setup fees and certain operating expenses. As of June 30, 2024, and December 31, 2023, the outstanding balance due to the Director amounted to $4,273 and $961, respectively.