Full Press Release Details
of Independent Registered Public Accounting Firm
the Board of Directors and Shareholders of BioLite Holding, Inc.
on the Financial Statements
have audited the accompanying consolidated balance sheets of BioLite Holding, Inc. and its subsidiaries. ( collectively referred
to as "the Company") as of December 31, 2017 and 2016, the related statements of operations and comprehensive income(loss),
stockholders' equity (deficit), and cash flows for the years then ended, and the related notes (collectively referred to
as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects,
the financial position of the Company at December 31, 2017 and 2016, and the results of its operations and
its cash flows for the years ended December 31, 2017 and 2016, in conformity with the U.S. generally accepted accounting
financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on
the Company's 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
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. 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.
accompanying consolidated financial statements have been prepared assuming that BioLite Holding, Inc. and its subsidiaries will
continue as a going concern. As described in Note 2 to the consolidated financial statements, the Company has incurred losses
from operations, has a working capital deficit, and is in need of additional capital to grow its operations so that it can become
profitable. These factors raise substantial doubt about the Company's ability to continue as a going concern. Management's
plans with regard to these matters are described in Note 2. The accompanying consolidated financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
| /s/ KCCW Accountancy Corp. | |
| We have served as the Company's auditor since 2017. | |
| Diamond Bar, California | |
| April 30, 2018 |
| KCCW Accountancy Corp. | |
| 3333 S Brea Canyon Rd. #206, Diamond Bar, CA 91765, USA | |
| Tel: +1 909 348 7228 Fax: +1 909 895 4155 info@kccwcpa.com |
HOLDING, INC. AND SUBSIDIARIES
| December 31, | December 31, | |||||||
| 2017 | 2016 | |||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | 256,925 | $ | 100,464 | ||||
| Restricted cash | 56,579 | 66,944 | ||||||
| Accounts Receivable - related parties | 3,475 | 1,265 | ||||||
| Receivable from collaboration partners - related parties | - | 5,037,500 | ||||||
| Due from related parties | 153,953 | 258 | ||||||
| Inventory, net | 199,708 | 185,951 | ||||||
| Prepaid expenses and other current assets | 90,333 | 43,376 | ||||||
| Total Current Assets | 760,973 | 5,435,758 | ||||||
| Restricted cash - noncurrent | - | 185,436 | ||||||
| Property and equipment, net | 570,576 | 563,253 | ||||||
| Long-term investments | 4,185,969 | 3,594,241 | ||||||
| Deferred tax assets | 1,017,897 | 593,021 | ||||||
| Security Deposits | 68,876 | 48,811 | ||||||
| Total Assets | $ | 6,604,291 | $ | 10,420,520 | ||||
| LIABILITIES AND EQUITY | ||||||||
| Current Liabilities | ||||||||
| Short-term bank loan | 927,800 | 231,481 | ||||||
| Long-term bank loan - current portion | 40,203 | 119,773 | ||||||
| Notes payable | 202,429 | - | ||||||
| Accrued expenses | 511,212 | 724,327 | ||||||
| Other payable | 16,288 | 168,551 | ||||||
| Due to related parties | 2,390,498 | 319,910 | ||||||
| Total Current Liabilities | 4,088,430 | 1,564,042 | ||||||
| Noncurrent Liabilities | ||||||||
| Long-term bank loan | 55,690 | - | ||||||
| Total Noncurrent Liabilities | 55,690 | - | ||||||
| Total Liabilities | 4,144,120 | 1,564,042 | ||||||
| Equity | ||||||||
| Common Stock, $0.0001 par value, 500,000,000 shares authorized, 20,000,000 and 41,207,444 shares issued and outstanding | 4,121 | 2,000 | ||||||
| Additional paid-in capital | 10,862,995 | 11,303,457 | ||||||
| Accumulated deficit | (9,971,033 | ) | (4,922,762 | ) | ||||
| Other comprehensive income | 757,327 | 61,754 | ||||||
| Total Stockholders' Equity | 1,653,410 | 6,444,449 | ||||||
| Noncontrolling Interest | 806,761 | 2,412,029 | ||||||
| Total Equity | 2,460,171 | 8,856,478 | ||||||
| Total Liabilities and Equity | $ | 6,604,291 | $ | 10,420,520 |
accompanying notes are an integral part of these financial statements.
HOLDING, INC. AND SUBSIDIARIES
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
THE YEARS ENDED DECEMBER 31, 2017 AND 2016
| 2017 | 2016 | |||||||
| Net revenue | ||||||||
| Merchandise sales | $ | 940 | $ | 2,812 | ||||
| Merchandise sales-related parties | 2,256 | 3,253 | ||||||
| Collaborative revenue | - | 982,083 | ||||||
| Total net revenue | 3,196 | 988,148 | ||||||
| Cost of revenue | 2,249 | 24,318 | ||||||
| Gross profit | 947 | 963,830 | ||||||
| Operating expenses | ||||||||
| Research and development expenses | 256,682 | 823,046 | ||||||
| Selling, general and administrative expenses | 1,735,931 | 1,752,168 | ||||||
| Total operating expenses | 1,992,613 | 2,575,214 | ||||||
| Loss from operations | (1,991,666 | ) | (1,611,384 | ) | ||||
| Other income (expense) | ||||||||
| Interest income | 7,207 | 3,429 | ||||||
| Interest expense | (222,060 | ) | (7,602 | ) | ||||
| Rental income | 11,814 | 11,884 | ||||||
| Impairment loss | - | (1,470,378 | ) | |||||
| Investment loss | (34,139 | ) | - | |||||
| Loss on foreign exchange changes | (409,170 | ) | (85,398 | ) | ||||
| Loss on investment in equity securities | (4,443,876 | ) | (3,560,325 | ) | ||||
| Other income (expenses) | 51,574 | 67,328 | ||||||
| Total other income (expenses) | (5,038,650 | ) | (5,041,062 | ) | ||||
| Loss before income taxes | (7,030,316 | ) | (6,652,446 | ) | ||||
| Provision for income taxes expense (benefit) | (360,395 | ) | (60,660 | ) | ||||
| Net loss | (6,669,921 | ) | (6,591,786 | ) | ||||
| Net loss attributable to noncontrolling interests, net of tax | 1,621,650 | 1,669,024 | ||||||
| Net loss attributable to BioLite Holding, Inc. | (5,048,271 | ) | (4,922,762 | ) | ||||
| Foreign currency translation adjustment | 695,573 | 61,754 | ||||||
| Comprehensive Loss | $ | (4,352,698 | ) | $ | (4,861,008 | ) | ||
| Net loss per share attributable to common stockholders | ||||||||
| Basic and Diluted | $ | (0.16 | ) | $ | (0.25 | ) | ||
| Weighted average number of common shares outstanding: | ||||||||
| Basic and Diluted | 30,720,246 | 20,000,000 |
accompanying notes are an integral part of these financial statements.
HOLDING, INC. AND SUBSIDIARIES
STATEMENTS OF EQUITY
YEARS ENDED DECEMBER 31, 2017 AND 2016
| Additional | Other | |||||||||||||||||||||||||||
| Common Stocks | Paid-in | Accumulated | Comprehensive | Noncontrolling | ||||||||||||||||||||||||
| Shares | Amounts | Capital | Deficit | Income | Interest | Total | ||||||||||||||||||||||
| Balance at July 27, 2016 (inception) | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | |||||||||||||||
| Capital Contribution | 20,000,000 | 2,000 | - | - | - | - | 2,000 | |||||||||||||||||||||
| Effects from restructuring | - | - | 11,303,457 | - | - | 4,081,053 | 15,384,510 | |||||||||||||||||||||
| Net income | - | - | - | (4,922,762 | ) | 61,754 | (1,669,024 | ) | (6,530,032 | ) | ||||||||||||||||||
| Balance at December 31, 2016 | 20,000,000 | 2,000 | 11,303,457 | (4,922,762 | ) | 61,754 | 2,412,029 | 8,856,478 | ||||||||||||||||||||
| Capital Contribution | 21,207,444 | 2,121 | 7,679,786 | - | - | - | 7,681,907 | |||||||||||||||||||||
| Effects from restructuring | - | - | (8,120,248 | ) | - | - | 16,382 | (8,103,866 | ) | |||||||||||||||||||
| Net income | - | - | - | (5,048,271 | ) | - | (1,621,650 | ) | (6,669,921 | ) | ||||||||||||||||||
| Cumulative translation adjustments | - | - | - | - | 695,573 | - | 695,573 | |||||||||||||||||||||
| Balance at December 31, 2017 | 41,207,444 | $ | 4,121 | $ | 10,862,995 | $ | (9,971,033 | ) | $ | 757,327 | $ | 806,671 | $ | 2,460,171 |
accompanying notes are an integral part of these financial statements.
HOLDING, INC. AND SUBSIDIARIES
STATEMENTS OF CASH FLOWS
THE YEARS ENDED DECEMBER 31, 2017 AND 2016
| 2017 | 2016 | |||||||
| Cash flows from operating activities | ||||||||
| Net loss | $ | (6,669,921 | ) | $ | (6,591,786 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation & amortization | 43,996 | 43,777 | ||||||
| Investment loss | 34,139 | - | ||||||
| Impairment losses for doubtful account | - | 1,470,378 | ||||||
| Loss on investment in equity securities | 4,443,876 | 3,560,325 | ||||||
| Deferred tax | (360,395 | ) | (60,660 | ) | ||||
| Changes in assets and liabilities: | ||||||||
| Decrease (increase) in accounts receivable | (724 | ) | (533 | ) | ||||
| Decrease (increase) in receivable from collaboration revenue | 1,054,913 | - | ||||||
| Decrease (increase) in due from related parties | (167,197 | ) | 11,580 | |||||
| Decrease (increase) in inventory | 3,469 | 19,166 | ||||||
| Decrease (increase) in prepaid expenses and other deposits | (56,973 | ) | 72,408 | |||||
| Increase (decrease) in accrued expenses and other current liabilities | (338,236 | ) | 151,147 | |||||
| Increase (decrease) in due to related parties | 329,556 | 295,298 | ||||||
| Net Cash Used In Operating Activities | (1,683,497 | ) | (1,028,900 | ) | ||||
| Cash flows from investing activities | ||||||||
| Restricted cash | 213,808 | (181,997 | ) | |||||
| Net proceeds from sale of investment in equity securities | 128,480 | - | ||||||
| Loan to related parties | (32,893 | ) | - | |||||
| Long-term equity investment | (7,803,713 | ) | (3,070,940 | ) | ||||
| Net Cash Used In Investing Activities | (7,494,318 | ) | (3,252,937 | ) | ||||
| Cash flows from financing activities | ||||||||
| Net proceeds from the issuance of common stock | 7,681,907 | 2,000 | ||||||
| Proceeds from loan from related parties | 914,427 | - | ||||||
| Capital contribution from related parties under common control | 6,579 | 2,642,823 | ||||||
| Net proceeds from short-term bank loans | 657,861 | 232,728 | ||||||
| Net proceeds from short-term borrowing from third-parties | 98,679 | 93,091 | ||||||
| Repayment of long-term bank loans | (34,156 | ) | (36,138 | ) | ||||
| Net Cash Provided By Financing Activities | 9,325,297 | 2,934,504 | ||||||
| Effect of exchange rate changes on cash and cash equivalents | 8,979 | 22,730 | ||||||
| Net increase (decrease) in cash and cash equivalents | 156,461 | (1,324,603 | ) | |||||
| Cash and cash equivalents | ||||||||
| Beginning | 100,464 | 1,425,067 | ||||||
| Ending | $ | 256,925 | $ | 100,464 | ||||
| Supplemental disclosure of cash flows | ||||||||
| Cash paid during the year for: | ||||||||
| Income tax | $ | - | $ | - | ||||
| Interest expense | $ | 92,238 | $ | 7,602 | ||||
| Non-cash financing and investing activities | ||||||||
| Capital contribution from related parties under common control | $ | 1,316 | $ | 6,750,000 |
accompanying notes are an integral part of these financial statements
HOLDING, INC. AND SUBSIDIARIES
TO FINANCIAL STATEMENTS
1. ORGANIZATION AND BUSINESS
Holding, Inc. (the "BioLite Holding") was incorporated under the laws of the State of Nevada on July 27, 2016. BioLite
BVI, Inc. (the "BioLite BVI"), a wholly owned subsidiary of BioLite Holding, was incorporated in the British Virgin
Islands on September 13, 2016. BioLite Holding and BioLite BVI are holding companies and have not carried out substantive business
operations of their own.
Inc., (the "BioLite Taiwan") was incorporated on February 13, 2006 under the laws of Taiwan. BioLite is in the business
of developing and commercialization of new botanical drugs with application in central nervous system, autoimmunity, inflammation,
hematology, and oncology. In addition, BioLite Taiwan distributes dietary supplements made from extracts of Chinese herbs and
January 2017, BioLite Holding, BioLite BVI, BioLite Taiwan, and certain shareholders of BioLite Taiwan entered into a share purchase
/ exchange agreement (the "BioLite Share Purchase / Exchange Agreement"). Pursuant to the BioLite Share Purchase /
Exchange Agreement, the shareholder participants to the BioLite Share Purchase / Exchange Agreement have sold their equity in
BioLite Taiwan and were using the proceeds from such sales to purchase shares of common stock of BioLite Holding at the same price
per share, resulting in their owning the same number of shares of common stock as they owned in the BioLite Taiwan. Upon closing
of the Share Purchase/ Exchange Agreement in August 2017, BioLite Holding ultimately owns via BioLite BVI approximately 73% of
BioLite Taiwan. The other shareholders who did not enter this Share Purchase/ Exchange Agreement retain their equity ownership
fiscal year of BioLite Holding, BioLite BVI, and BioLite Taiwan (collectively referred to as "the Company") ends on
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
of Presentation and Principles of Consolidation - The accompanying consolidated financial statements, including
the accounts of BioLite Holding, BioLite BVI, and BioLite Taiwan, have been prepared in conformity with accounting principles
generally accepted in the United States of America. Since BioLite Holding, BioLite BVI, and BioLite Taiwan are the entities under
Dr. Tsung-Shann Jiang's common control prior to the Share Purchase / Exchange Agreement, the transaction is accounted for
as a restructuring transaction. All the assets and liabilities of BioLite Taiwan were transferred to BioLite Holding at their
respective carrying amounts on the closing date of Share Purchase / Exchange transaction. The Company has recast prior period
financial statements to reflect the conveyance of BioLite Taiwan's common shares as if the restructuring transaction had
occurred as of the earliest date of the financial statements. All material intercompany accounts, transactions, and profits have
been eliminated in consolidation. The nature of and effects on earnings per share (EPS) of nonrecurring intra-entity transactions
involving long-term assets and liabilities is not required to be eliminated and EPS amounts have been recast to include the earnings
(or losses) of the transferred net assets.
functional currency of BioLite Taiwan is the New Taiwan dollars, however the accompanying consolidated financial statements have
been translated and presented in United States Dollars ($). In the accompanying financial statements and notes, "$",
"US$" and "U.S. dollars" mean United States dollars, and "NT$" and "NT dollars"
mean New Taiwan dollars.
Concern - The accompanying consolidated financial statements have been prepared assuming the Company will continue
as a going concern. The Company has incurred losses since its inception resulting in an accumulated deficit of $9,971,033 and
$4,922,762 as of December 31, 2017 and 2016, respectively, and incurred net loss attributable to BioLite Holding, Inc. of $5,048,271
and $4,922,762 for the years ended December 31, 2017, and 2016, respectively. The Company also had working capital deficiency
of $3,327,457 at December 31, 2017. The ability to continue as a going concern is dependent upon the Company generating profitable
operations in the future and/or obtaining the necessary financing to meet its obligations and repay its liabilities arising from
normal business operations when they become due. These consolidated financial statements do not include any adjustments to the
recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the
Company upon signing of that agreement.
order to continue as a going concern, the Company will need, among other things, additional capital resources. Management's
plans to obtain such resources for the Company include (1) obtaining capital from the sale of its equity securities (2) short-term
and long-term borrowings from banks and third-parties, and (3) short-term borrowings from stockholders or other related party(ies)
when needed. However, management cannot provide any assurance that the Company will be successful in accomplishing any of its
ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described
in the preceding paragraph and eventually to secure other sources of financing and attain profitable operations.
Reporting - The Company follows the provisions of ASC Topic 280, "Segment Reporting", which establishes
standards for reporting information about operating segments, which uses a "management" approach for determining segments.
The management approach designates the internal organization that is used by management for making operating decisions and assessing
performance as the source of the Company's reportable segments. ASC Topic 280, "Segment Reporting," also requires
disclosures about products or services, geographic areas, and major customers. The Company's management reporting structure