0001493152-18-008900.txt : 20180619 0001493152-18-008900.hdr.sgml : 20180619 20180619125553 ACCESSION NUMBER: 0001493152-18-008900 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 38 CONFORMED PERIOD OF REPORT: 20180430 FILED AS OF DATE: 20180619 DATE AS OF CHANGE: 20180619 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Advanced Biomedical Technologies Inc. CENTRAL INDEX KEY: 0001385799 STANDARD INDUSTRIAL CLASSIFICATION: ORTHOPEDIC, PROSTHETIC & SURGICAL APPLIANCES & SUPPLIES [3842] IRS NUMBER: 980516589 STATE OF INCORPORATION: NV FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-53051 FILM NUMBER: 18906707 BUSINESS ADDRESS: STREET 1: 350 FIFTH AVE., 59TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10118 BUSINESS PHONE: (718) 766-7898 MAIL ADDRESS: STREET 1: 350 FIFTH AVE., 59TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10118 FORMER COMPANY: FORMER CONFORMED NAME: Geostar Mineral CORP DATE OF NAME CHANGE: 20070110 10-Q 1 form10-q.htm

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

 

FORM 10-Q

 

[X]

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarter ended April 30, 2018

 

OR

 

[  ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission file number 000-53051

 

Advanced BioMedical Technologies, Inc.

(Exact name of registrant as specified in its charter)

 

Nevada

(State or other jurisdiction of incorporation or organization)

 

350 Fifth Avenue, 59th Floor

New York, NY 10118

(Address of principal executive offices, including zip code.)

 

(718) 766-7898

(Registrant’s telephone number, including area code)

 

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 the 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 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]

 

As of June 19, 2018, there are 69,374,850 shares of common stock outstanding.

 

All references in this Report on Form 10-Q to the terms “we”, “our”, “us”, the “Company”, “ABMT” and the “Registrant” refer to Advanced BioMedical Technologies, Inc. unless the context indicates another meaning.

 

 

 

 
 

 

TABLE OF CONTENTS

 

    Page
   
PART I FINANCIAL INFORMATION  
Item 1. Financial Statements 3
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 4
Item 3. Quantitative and Qualitative Disclosures about Market Risk 14
Item 4. Controls and Procedures 14
     
PART II OTHER INFORMATION  
Item 1. Legal Proceedings 15
Item 1A. Risk Factors 15
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 15
Item 3. Defaults upon Senior Securities 15
Item 4. Mine Safety Disclosure 15
Item 5. Other Information 15
Item 6. Exhibits 16

 

2
 

 

PART I – FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

The accompanying condensed consolidated unaudited financial statements of Advanced BioMedical Technologies, Inc., a Nevada corporation are condensed and, therefore, do not include all disclosures normally required by accounting principles generally accepted in the United States of America. These statements should be read in conjunction with the Company’s most recent annual financial statements for the year ended October 31, 2017 included in our Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (“SEC”) on February 13, 2018. In the opinion of management, all adjustments necessary for a fair presentation have been included in the accompanying condensed consolidated financial statements and consist of only normal recurring adjustments. The results of operations presented in the accompanying condensed consolidated financial statements for the period ended April 30, 2018 are not necessarily indicative of the operating results that may be expected for the full year ending October 31, 2018.

 

3
 

 

ADVANCED BIOMEDICAL TECHNOLOGIES, INC.

AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AS OF APRIL 30, 2018

(UNAUDITED)

 

 
 

 

ADVANCED BIOMEDICAL TECHNOLOGIES, INC.

AND SUBSIDIARIES

 

CONTENTS

 

  Pages
   
Condensed Consolidated Balance Sheets as of April 30, 2018 (unaudited) and October 31, 2017 F - 2
   
Condensed Consolidated Statements of Operations and Comprehensive Loss for the three months and the six months ended April 30, 2018 and 2017 (unaudited) F - 3
   
Condensed Consolidated Statements of Stockholders’ Deficit for the period from October 31, 2017 through April 30, 2018 (unaudited) F - 4
   
Condensed Consolidated Statements of Cash Flows for the six months ended April 30, 2018 and 2017 (unaudited) F - 5
   
Notes to Condensed Consolidated Financial Statements (unaudited) F - 6 – F - 9

 

F-1
 

 

ADVANCED BIOMEDICAL TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

 

   Apr 30, 2018   October 31, 2017 
   (unaudited)     
ASSETS          
           
CURRENT ASSETS          
Cash and cash equivalents  $13,485   $7,463 
Other receivables and prepaid expenses   20,329    17,469 
Total Current Assets   33,814    24,932 
           
Property and equipment, cost   511,158    483,482 
Less: Accumulated depreciation   (447,036)   (422,967)
PROPERTY AND EQUIPMENT, NET   64,122    60,515 
LONG-TERM PREPAID EXPENSES, NET   31,488    - 
TOTAL ASSETS  $129,424   $85,447 
           
LIABILITIES AND STOCKHOLDERS’ DEFICIT          
           
CURRENT LIABILITIES          
Other payables and accrued expenses  $439,424   $409,079 
Due to directors   322,514    321,420 
Due to a stockholders   669,571    582,795 
Due to related parties   4,333,783    3,767,180 
Total Current Liabilities   5,765,292    5,080,474 
           
STOCKHOLDERS’ DEFICIT          
Common stock, $0.00001 par value, 100,000,000 shares authorized, 69,374,850 issued and outstanding as of April 30, 2018 and October 31, 2017   694    694 
Additional paid-in capital   2,681,261    2,673,620 
Accumulated deficit   (8,110,660)   (7,679,298)
Accumulated other comprehensive (loss)/income   (207,163)   9,957 
Total Deficit   (5,635,868)   (4,995,027)
           
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT  $129,424   $85,447 

 

The accompanying notes are an integral part of these condensed consolidated financial statements

 

F-2
 

 

ADVANCED BIOMEDICAL TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED)

 

   Three months ended   Six months ended 
   April 30, 2018   April 30, 2017   Apr 30, 2018   Apr 30, 2017 
OPERATING EXPENSES                    
General and administrative expenses  $118,298   $100,238   $239,970   $169,861 
Depreciation   2,338    3,619    4,517    8,285 
Research and development   7,956    12,977    23,726    27,276 
Total Operating Expenses   128,592    116,834    268,213    205,422 
                     
LOSS FROM OPERATIONS   (128,592)   (116,834)   (268,213)   (205,422)
                     
OTHER (EXPENSES) INCOME                    
Interest income   14    6    21    16 
Interest paid to a stockholder and related parties   (72,293)   (56,317)   (139,839)   (111,873)
Interest paid to a third party   -    (2,574)   -    (4,735)
Imputed interest   (3,797)   (3,927)   (7,641)   (8,020)
Other, net   (4,151)   (3,689)   (15,690)   (7,414)
Total Other Expenses, net   (80,227)   (66,501)   (163,149)   (132,026)
                     
LOSS BEFORE TAXES   (208,819)   (183,335)   (431,362)   (337,448)
Income tax expense   -    -    -    - 
NET LOSS   (208,819)   (183,335)   (431,362)   (337,448)
Net loss attributable to non-controlling interests   -    -    -    - 
NET LOSS ATTRIBUTABLE TO ABMT COMMON STOCKHOLDERS   (208,819)   (183,335)   (431,362)   (337,448)
                     
OTHER COMPREHENSIVE INCOME                    
Foreign currency translation income   38,298    7,485    (217,120)   65,715 
Total other comprehensive loss   38,298    7,485    (217,120)   65,715 
COMPREHENSIVE LOSS ATTRIBUTABLE TO ABMT COMMON STOCKHOLDERS  $(170,521)  $(175,850)  $(648,482)  $(271,733)
                     
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   69,374,850    67,200,693    69,374,850    67,162,142 

 

The accompanying notes are an integral part of these condensed consolidated financial statements

 

F-3
 

 

ADVANCED BIOMEDICAL TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT (UNAUDITED)

 

                   Accumulated     
   Common stock   Additional       other     
   Number       paid-in   Accumulated   comprehensive     
   of shares   Amount   capital   deficit   loss   Total 
Balance at October 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 loss   -    -    -    -    (94,255)   (94,255)
                               
Balance at October 31, 2017   69,374,850   $694   $2,673,620   $(7,679,298)  $9,957   $(4,995,027)
                               
Imputed interest on advances from directors   -    -    7,641    -    -    7,641 
                               
Net loss for the period   -    -    -    (431,362)   -    (431,362)
                               
Foreign currency translation loss   -    -    -    -    (217,120)   (217,120)
                               
Balance at April 30, 2018   69,374,850   $694   $2,681,261   $(8,110,660)  $(207,163)  $(5,635,868)

 

The accompanying notes are an integral part of these condensed consolidated financial statements

 

F-4
 

 

ADVANCED BIOMEDICAL TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

 

   Six months ended 
   Apr 30, 
   2018   2017 
CASH FLOWS FROM OPERATING ACTIVITIES          
Net loss attributable to ABMT common stockholders  $(431,362)  $(337,448)
Adjustments to reconcile net loss to cash used in          
Depreciation   4,517    8,285 
Amortisation of long-term prepaid expenses   1,825    - 
Stock issued for services   -    37,500 
Imputed interest   7,641    

8,020

 
Changes in operating assets and liabilities          
Decrease (increase) in:          
Other receivables and prepaid expenses   (2,219)   (1,352)
(Decrease) increase in:          
Other payables and accrued expenses   13,114    94,322 
Net cash used in operating activities   (406,484)   (190,673)
           
CASH FLOWS FROM INVESTING ACTIVITIES          
Purchase of property and equipment   (5,256)   - 
Renovation of factory premises   (32,854)   - 
Decrease in deposit for purchase of property and equipment   -    1,198 
Net cash used in investing activities   (38,110)   1,198 
           
CASH FLOWS FROM FINANCING ACTIVITIES          
Due to a stockholder   87,308    58,495 
Due to directors   (12,925)   (26,437)
Due to related parties   376,056    186,810 
Net cash provided by financing activities   450,439    218,868 
           
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS   177    (80)
           
NET INCREASE IN CASH AND CASH EQUIVALENTS   6,022    29,313 
           
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF PERIOD   7,463    6,559 
           
CASH AND CASH EQUIVALENTS AT THE END OF PERIOD  $13,485   $35,872 

 

The accompanying notes are an integral part of these condensed consolidated financial statements

 

F-5
 

 

ADVANCED BIOMEDICAL TECHNOLOGIES, INC.

AND SUBSIDIARIES

 

NOTES TO THE CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS (UNAUDITED)

 

NOTE 1 BASIS OF PRESENTATION

 

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

 

In the opinion of management, the unaudited condensed consolidated financial statements contain adjustments considered necessary to present fairly the Company’s financial position as of April 30, 2018, the consolidated results of operations for the three and six months ended April 30, 2018 and 2017 and consolidated statements of cash flows for the six months ended April 30, 2018 and 2017 on an accrual basis and in accordance with accounting principles generally accepted in the United States of America for interim financial information and rules and regulations of the SEC. The consolidated results for the three and six months ended April 30, 2018 are not necessarily indicative of the results to be expected for the entire fiscal year ending October 31, 2018. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes for the year ended October 31, 2017 appearing in the Company’s annual report on Form 10-K as filed with the Securities and Exchange Commission on February 13, 2018.

 

The reporting currency of the Company is US dollar.

 

NOTE 2 ORGANIZATION

 

Advanced BioMedical Technologies, Inc. (fka “Geostar Mineral Corporation” or “Geostar”) (“ABMT”) was incorporated in Nevada on September 12, 2006.

 

Shenzhen Changhua Biomedical Engineering Company Limited (“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 is a developer and manufacturer of polymer orthopaedic internal fixation devices. The Company is currently conducting clinical trials on its products and intends to raise additional capital to produce and market its products commercially. The Company’s Polymer Internal Fixation Screws has been approved by the China Food and Drug Administration (“CFDA”, fka “SFDA”) of the PRC in April 2018. The Company has no revenue since its inception and, in accordance with Accounting Standards Codification (“ASC”) Topic 915, “Development Stage Entities” (formerly Statement of Financial Accounting Standard (“SFAS”) No. 7, “Accounting and Reporting by Development Stage Enterprise”), is considered a Development Stage Company.

 

Masterise Holdings Limited (“Masterise”) was incorporated in the British Virgin Islands on May 31, 2007 as an investment holding company and was then owned as to 63% by the spouse of Shenzhen Changhua’s 70% majority stockholder at the time 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 were 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 ABMT 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.

 

F-6
 

 

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”).

 

NOTE 3 PRINCIPLES OF CONSOLIDATION

 

The accompanying condensed consolidated financial statements include the financial statements of ABMT and its wholly owned subsidiaries, Masterise and its 70% owned subsidiary, Shenzhen Changhua. The non-controlling interests in periods prior to 2012 represent the non-controlling stockholders’ 30% proportionate share of the results of Shenzhen Changhua.

 

All significant inter-company balances and transactions have been eliminated in consolidation.

 

NOTE 4 USE OF ESTIMATES

 

The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America 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.

 

NOTE 5 RELATED PARTY TRANSACTIONS

 

As of April 30, 2018 and October 31, 2017, the Company owed a stockholder $669,571 and $582,795 respectively which are unsecured and repayable on demand. Interests are charged at 7% per annum on the amount owed.

 

As of April 30, 2018 and October 31, 2017, the Company owed three related parties a total of $4,333,783 and $3,767,180 respectively which are unsecured and repayable on demand. Interests are charged at 7% per annum on the amounts owed.

 

Total interest expenses on advances from a stockholder and the related parties accrued for the three and six months ended April 30, 2018 and 2017 were $72,293, $56,317, $139,839 and $111,873 respectively.

 

As of April 30, 2018 and October 31, 2017, the Company owed $322,514 and $321,420 respectively, to two directors for advances made on an unsecured basis, repayable on demand and interest free.

 

Imputed interest charged at 5% per annum on the amounts owed to two directors is $3,797, $3,927, $7,641 and $8,020 for the three and six months ended April 30, 2018 and 2017 respectively.

 

F-7
 

 

NOTE 6 COMMITMENTS AND CONTINGENCIES

 

The Company’s existing rental leases do not contain significant restrictive provisions. The schedule of future minimum lease obligations falling due under non-cancelable rental operating leases is as follows:

 

Fiscal year ending October 31, 2018   7,580 
Fiscal year ending October 31, 2019   7,580 
      
Total  $15,160 

 

NOTE 7 FAIR VALUE OF FINANCIAL INSTRUMENTS

 

The Financial Accounting Standards Board (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 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.

 

NOTE 8 RECENT ACCOUNTING PRONOUNCEMENTS

 

Business Combination: Clarifying the Definition of a Business

 

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 screen 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 its consolidated financial statements.

 

Simplifying the Test for Goodwill Impairment

 

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.

 

Share-based Compensation

 

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.

 

F-8
 

 

Revenue Recognition

 

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.

 

Leases

 

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”), which modifies lease accounting for lessees to increase transparency and comparability by recording lease assets and liabilities for operating leases and disclosing key information about leasing arrangements. The new standard is effective for interim and annual periods beginning after December 15, 2018 on a modified retrospective basis. The Company will adopt ASU 2016-02 in its first quarter of the year ending October 31 2020. The Company expects its leases designated as operating leases in Note 6, “Commitments and Contingencies,” will be reported on the consolidated balance sheets upon adoption. However, the ultimate impact of adopting ASU 2016-02 will depend on the lease terms as of the adoption date.

 

The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and do 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.

 

NOTE 9 GOING CONCERN

 

As reflected in the accompanying unaudited condensed consolidated financial statements, the Company has not commenced revenue producing operations and has an accumulated deficit of $8,110,660 as of April 30, 2018 and which includes a net loss of $431,362 for the six months ended April 30, 2018. As of April 30, 2018, the Company’s total current liabilities exceeded its total current assets by $5,731,478 and the Company used cash in operations of $406,484 for the six months ended on that date. 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 condensed consolidated 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.

 

Management has taken the following 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 actively pursuing additional funding and strategic partners, which will enable the Company to implement its business plan. Management believes that these actions as successful will allow the Company to continue its operations through the next fiscal year.

 

F-9
 

 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Forward Looking Statements

 

This section of the report includes 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. 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 Quarterly Report, and in the Company’s most recent Annual Report on Form 10-K filed on February 13, 2018.

 

All written and oral forward-looking statements made in connection with this Quarterly Report on Form 10-Q 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, which apply only as of the date of this quarterly report. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or our predictions.

 

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 Quarterly Report on Form 10-Q.

 

The Company is subject to a number of risks similar to other companies in the medical device industry. These risks include but are not limited to rapid technological change, uncertainty of market acceptance of our products, uncertainty of regulatory approval, competition from substitute products and larger companies, the need to obtain additional financing, compliance with government regulation, protection of proprietary technology, product liability, and the dependence on key individuals.

 

Our Business

 

We are engaged in the business of designing, developing, manufacturing and the planned future marketing of biomaterial internal fixation devices. We hold one medical device permit from the China Food and Drug Administration (“CFDA”) for our product - polymer orthopaedic internal fixation screws and two 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. A new patent, No. ZL201410647464.1 titled “Bone Fracture Plate Made of High Polymer Materials” was granted to us in January 2018. Our polyamide materials are used in producing screws, binding wires, rods and related products. These products are used in a variety of applications including orthopedic trauma, sports related medical treatment, or cartilage injuries, and reconstructive dental procedures. At 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 in the PRC. Our products are made of a very unique material called PA6-P(MMA-CO-NVP)-HA (“PA”). Our PA products, such as screws, 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.

 

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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 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. Reducing the chance of post-operative infection;
  5. Stimulate bone tissues to facilitate effective biological integration, benefitting the regeneration of bone;
  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 polymer orthopaedic internal fixation screws received approval from the China Food and Drug Administration (“CFDA”) in April 2018.

 

CFDA Application Process and Approval for PA Screws

 

The Company first submitted its application for PA Screws to the CFDA in 2008. The application has been withheld by the CFDA pending additional clinical trial cases. This is due to the amended CFDA regulations, which unlike previous regulations require the applicant to specify the position on the body where the clinical trial is carried out. Our amended CFDA 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.

 

Due to the uniqueness of our material, there were no established CFDA Product Standards that we could follow during our application process for our PA Screws. To establish our own Product Standards, the Company had been carrying out extra tests. The Company submitted its Product Standards and supplementary reports to the CFDA in 2014. In December 2016, the Company received a notice from the CFDA requesting supplementary report as part of the review process. The Company completed the supplementary report and submitted it to the CFDA in June 2017.

 

In April 2018, the Company’s application for its PA Screws was approved by the CFDA in China (Medical Device Certification Number: 20183460133).

 

Process of Human Trials

 

As of April 30, 2018, for medical study and comparison purpose, the 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 human trials at the 6 state level hospitals recognized by CFDA for clinical trials in different cities throughout China; including Nanchang, Changsha, Luoyang, Nanning and Tianjin. The cities and provinces where our clinical trial hospitals are based will be the 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 the Company’s PA Screws have been completed with 100 percent success rate. Having gained CFDA approval for PA Screws, the Company is planning to start clinical trials on series of orthopaedic products the Company has developed using the same unique biomaterial.

 

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Government Regulation

 

Medical implant devices/products manufactured or marketed by the Company in China are subject to extensive regulations by the CFDA. Pursuant to the related laws and acts, as amended, and the regulations promulgated there under (the “CFDA Regulations”), the CFDA regulates the clinical testing, manufacture, labeling, distribution and promotion of medical devices. The CFDA also has the authority to request repair, replacement, or refund of the cost of any device manufactured or distributed by the Company.

 

Under the CFDA Regulations, medical devices are classified into three classes (class I, II or III), the basis of the controls deemed necessary by the CFDA to reasonably assure their safety and efficacy. Under the CFDA’s regulations, class I devices are subject to general controls (for example, labeling and adherence to Good Manufacturing Practices (“GMP”) 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 CFDA 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 CFDA 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 CFDA marketing clearance through clinical trials. Since the Company is classified as a manufacturer of Class III medical devices, the Company must carry out all clinical trials in pre-selected CFDA 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 CFDA has publicly stated that compliance will be more strictly scrutinized. From time to time the CFDA 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’s business, financial condition and results of operations. There can be no assurance that the Company 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’s business, financial condition and results of operations.

 

Regulations regarding the development, manufacturing and sale of the Company’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 the Company for the period from September 25, 2002 (Shenzhen Changhua’s date of inception) to April 30, 2018 and 2017.

 

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Revenues

 

The Company is in its development stage and does not have any revenue. The management team is continuously looking for fundraising possibilities for product improvement, machinery upgrades, facility expansions, continuous research and development, and sales and marketing preparation.

 

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 capacity, are capable of generating approximately $32,000,000 in annual revenue.

 

Estimate current production lines in full capacity 
   Output Quantity (Max.)  Price at ex-factory ($)   Total Turnover ($) 
PA Screw   100,000   (piece)   200        20,000,000 
PA Binding Wire   240,000   (pack)   50         12,000,000 
                 Total:    32,000,000 

 

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.

 

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 Shangli Liu, our chief medical advisor, 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 Chinese market size for trauma treatment implant devices such as our PA Screw and PA Wire was US$1.88 billion in 2013 and US$2.12 billion in 2014 with 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 2018 with a growth rate of 11.6%9. (Source: Shenwan Hongyuan Securities research report).

 

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The Company has advantages and more opportunities over other competitors due to:

 

  - We are the only company received approval for our unique PA biomaterial by CFDA in China.
  - No other similar patent registrations in China.
  - We are the only company qualified and permitted to perform PA clinical trials by CFDA 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 CFDA permit on clinical trials.
  - Under existing regulations by CFDA, it will take at least 3-5 years for clinical trials of new materials.

 

Number of Hospitals at the end of March 2018 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

(March 2018)

 

   March 2018   March 2017   Increase / (Decrease) 
Total No. of Hospitals   30,294    28,751    1,543 
Public Hospital   12,235    12,608    (373)
Private Hospital   19,139    16,807    2,332 
Hospital Rating               
AAA   2,418    2,260    158 
AA   8,504    8,059    445 
A   10,133    9,416    717 

 

In general, technological advancements and the marketing potential within Asia are the biggest factors in driving significant growth within the global orthopedic 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.

 

Research and Development

 

The Company has developed five proprietary 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 polymer fixation devices. The Company’s product range will ultimately cover the full gamut of components featuring PA macromolecule polymer materials for implantation, including human orthopaedic and dental applications, as well as veterinary applications. We expect research and development expenses to grow as we continue to invest in basic and advanced research, clinical trials, product development and in our intellectual property.

 

Although there are substantial research and development (R&D) activities within the Company and, the Company regards R&D activity as the key to maintain its technological advantage and innovation, 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.

 

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Pre-Market Research

 

The Company has been conducting Pre-Market Research before its PA Screws application was approved by the CFDA in April 2018. The research is intended to estimate the potential market success 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.

 

Finance Costs

 

As of April 30, 2018 and October 31, 2017, a stockholder and four related parties had loaned a total of $5,003,354 and $4,349,975 respectively to the Company as unsecured loans repayable on demand and interest is charged at 7% per annum on the amount due. Total interest expenses on advances from a stockholder and the related parties accrued for the three and six months ended April 30, 2018 and 2017 were $72,293, $56,317, $139,839 and $111,873 respectively.

 

As of April 30, 2018 and October 31, 2017, the Company owed $322,514 and $321,420 respectively to the directors for advances made on an unsecured basis, repayable on demand. Total imputed interest expenses on advances from the directors, calculated at 5% per annum, recorded as additional paid-in capital amounted to $3,797, $3,927, $7,641 and $8,020 for the three and six months ended April 30, 2018 and 2017 respectively.

 

Net Loss

 

The net loss attributable to common stockholders for the three and six months ended April 30, 2018 and 2017 were $208,819, $183,335, $431,362 and $337,448 respectively. We do not have any revenue from inception to April 30, 2018 but have to incur operating expenses for the upkeep of the Company and the clinical trials.

 

Liquidity and Capital Resources

 

We had a working capital deficit of $5,731,478 and $5,055,542 as of April 30, 2018 and October 31, 2017 respectively. Our working capital deficit is due to the fact that we received the CFDA approval for one product in April 2018 and we are in the process to produce, market and sell our product in China. We had no revenues during the period and that our sole source of financing is loans from our related parties and stockholders. Meanwhile, we have been upgrading our facilities and continuing R&D works.

 

Cash Flows

 

Net Cash Used in Operating Activities

 

Net cash used in operating activities was $406,484 and $190,673 in the six months ended April 30, 2018 and 2017 respectively. This amount was attributable primarily to the net loss after adjustment for non-cash items, such as depreciation, stock issued for services, imputed interest on advances from directors, and others like charges in other receivables and prepaid expenses and other payables and accrued expenses.

 

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Net Cash Used in Investing Activities

 

We recorded $38,110 net cash used and $1,198 net cash from in investing activities in the six months ended April 30, 2018 and 2017 respectively. This amount reflected purchases of property and equipment, primarily for research and development to our facilities.

 

Net Cash Provided by Financing Activities

 

Net cash provided by financing activities in the six months ended April 30, 2018 and 2017 was $450,439 and $218,868 respectively, which represented advances from a stockholder, directors and related parties, loan repayment to directors and advances to a related company.

 

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 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 common stock to fund our business plan should we decide to proceed. We anticipate continuing 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 April 30, 2018, will be insufficient to meet our cash needs. Our minimum cash requirement for the next 12 months is projected to be $600,000. This amount may increase if we decide to start clinical trials on new products. Once we start production and marketing of our PA Screws, our revenue will cover our basic expenditures. Otherwise, we will continue to rely on external investments and shareholder’s loans to meet our cash needs. The management is actively pursuing additional funding and strategic partners, which will enable the Company to implement our business plan, business strategy, to continue research and development, clinical trials or further development that may arise.

 

We intend to spend more to support the commercialization of current products and on research and development activities, including new products development, regulatory and compliance, clinical studies, and the enhancement and protection of our intellectual property portfolio.

 

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.

 

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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.

 

  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 liabilities and 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. Income taxes

 

The Company accounts for income taxes under The Financial Accounting Standards Board (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.

 

  5. Research and Development

 

Research and development costs related to both present and future products are expensed as incurred.

 

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  6. Foreign currency translation

 

The reporting currency of the company’s financial statements is the US dollar. The financial statements of the Company’s subsidiary denominated in currencies other than the US dollar are translated into US dollars using the closing rate method. The balance sheet items are translated into US dollars 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

 

Business Combination: Clarifying the Definition of a Business

 

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 screen 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 its consolidated financial statements.

 

Simplifying the Test for Goodwill Impairment

 

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.

 

Share-based Compensation

 

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.

  

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Revenue Recognition

 

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.

 

Leases

 

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”), which modifies lease accounting for lessees to increase transparency and comparability by recording lease assets and liabilities for operating leases and disclosing key information about leasing arrangements. The new standard is effective for interim and annual periods beginning after December 15, 2018 on a modified retrospective basis. The Company will adopt ASU 2016-02 in its first quarter of the year ending October 31 2020. The Company expects its leases designated as operating leases in Note 6, “Commitments and Contingencies,” will be reported on the consolidated balance sheets upon adoption. However, the ultimate impact of adopting ASU 2016-02 will depend on the lease terms as of the adoption date.

 

The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and do 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.

 

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ITEM 3. 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 required under this item.

 

ITEM 4. 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 April 30, 2018 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 effective as of April 30, 2018.

 

Changes in Internal Control

 

During the most recently completed fiscal quarter, there has been no change in the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.

 

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PART II – OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

Currently we are not involved in any pending litigation or legal proceeding.

 

ITEM 1A. RISK FACTORS

 

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 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

None.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

None.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

Not applicable.

 

ITEM 5. OTHER INFORMATION

 

None.

 

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ITEM 6. EXHIBITS

 

The following documents are filed as a part of this report or are incorporated by reference to previous filings, if so indicated:

 

Exhibit No.   Description
     
3.1   Articles of Incorporation (1)
3.2   Bylaws (1)
31.1   Section 302 Certification of Chief Executive Officer*
31.2   Section 302 Certification of Chief Financial Officer *
32.1   Section 906 Certification of Chief Executive Officer *
32.2   Section 906 Certification of Chief Financial Officer *
     
101.INS   XBRL Instance Document
101.SCH   XBRL Taxonomy Extension Schema Document
101.CAL   XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF   XBRL Taxonomy Extension Definition Linkbase Document
101.LAB   XBRL Taxonomy Extension Label Linkbase Document
101.PRE   XBRL Taxonomy Extension Presentation Linkbase Document

 

*filed herewith

 

(1) Incorporated by reference to the Form SB-2 registration statement filed on January 16, 2007.

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Date: June 19, 2018 By:  
     
    ADVANCED BIOMEDICAL TECHNOLOGIES, INC.
       
    By: /s/Chi Ming Yu
     

Chi Ming Yu, President and Director

(Principal Executive Officer)

       
    By: /s/ Hui Wang
     

Hui Wang, Director and Chief Executive Officer

(Controller)

       
    By: /s/ Kai Gui
     

Kai Gui, Director, Secretary and Chief Financial Officer

(Principal Financial Officer)

 

17
 

EX-31.1 2 ex31-1.htm

 

Exhibit 31.1

 

SARBANES-OXLEY SECTION 302(a) CERTIFICATION

 

I, Hui Wang, certify that:

 

1. I have reviewed this 10-Q for the three and six months ended April 30, 2018 of Advanced BioMedical Technologies, Inc;
 
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
 
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
 
  a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
  b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
     
  c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
  d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
 
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
 
  a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
 
  b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: June 19, 2018 /s/ Hui Wang
    Hui Wang, Director and Chief Executive Officer

 

 
 

 

EX-31.2 3 ex31-2.htm

 

Exhibit 31.2

 

SARBANES-OXLEY SECTION 302(a) CERTIFICATION

 

I, Kai Gui, certify that:

 

1. I have reviewed this 10-Q for the three and six months ended April 30, 2018 of Advanced BioMedical Technologies, Inc.;
 
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
 
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
 
  a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
  b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
     
  c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
  d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
 
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
 
  a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
 
  b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: June 19, 2018 /s/ Kai Gui
    Kai Gui, Director, Secretary, and Chief Financial Officer

 

 
 

 

EX-32.1 4 ex32-1.htm

 

Exhibit 32.1

 

CERTIFICATION PURSUANT TO

18 U.S.C. Section 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of Advanced BioMedical Technologies, Inc. (the “Company”) on Form 10-Q for the period ended April 30, 2018, as filed with the Securities and Exchange Commission on the date hereof (the “report”), I, Hui Wang, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

 

(1) The Report fully complies with the requirements of Section 13 (a) or 15 (d) of the Securities Exchange Act of 1934; and

 

(2) The information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Date: June 19, 2018  
   
/s/ Hui Wang  
Hui Wang, Director and Chief Executive Officer  

 

 
 

 

EX-32.2 5 ex32-2.htm

 

Exhibit 32.2

 

CERTIFICATION PURSUANT TO

18 U.S.C. Section 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of Advanced BioMedical Technologies, Inc. (the “Company”) on Form 10-Q for the period ended April 30, 2018, as filed with the Securities and Exchange Commission on the date hereof (the “report”), I, Kai Gui, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

 

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

(2) The information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Date: June 19, 2018  
   
/s/ Kai Gui  
Kai Gui, Director, Secretary, and Chief Financial Officer  

 

 
 

 

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Document and Entity Information - shares
6 Months Ended
Apr. 30, 2018
Jun. 19, 2018
Document And Entity Information    
Entity Registrant Name Advanced Biomedical Technologies Inc.  
Entity Central Index Key 0001385799  
Document Type 10-Q  
Document Period End Date Apr. 30, 2018  
Amendment Flag false  
Current Fiscal Year End Date --10-31  
Entity Filer Category Smaller Reporting Company  
Entity Common Stock, Shares Outstanding   69,374,850
Trading Symbol ABMT  
Document Fiscal Period Focus Q2  
Document Fiscal Year Focus 2018  
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Condensed Consolidated Balance Sheets - USD ($)
Apr. 30, 2018
Oct. 31, 2017
CURRENT ASSETS    
Cash and cash equivalents $ 13,485 $ 7,463
Other receivables and prepaid expenses 20,329 17,469
Total Current Assets 33,814 24,932
Property and equipment, cost 511,158 483,482
Less: Accumulated depreciation (447,036) (422,967)
PROPERTY AND EQUIPMENT, NET 64,122 60,515
LONG-TERM PREPAID EXPENSES, NET 31,488
TOTAL ASSETS 129,424 85,447
CURRENT LIABILITIES    
Other payables and accrued expenses 439,424 409,079
Due to directors 322,514 321,420
Due to a stockholders 669,571 582,795
Due to related parties 4,333,783 3,767,180
Total Current Liabilities 5,765,292 5,080,474
STOCKHOLDERS' DEFICIT    
Common stock, $0.00001 par value, 100,000,000 shares authorized, 69,374,850 issued and outstanding as of April 30, 2018 and October 31, 2017 694 694
Additional paid-in capital 2,681,261 2,673,620
Accumulated deficit (8,110,660) (7,679,298)
Accumulated other comprehensive (loss)/income (207,163) 9,957
Total Deficit (5,635,868) (4,995,027)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 129,424 $ 85,447
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Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares
Apr. 30, 2018
Oct. 31, 2017
Statement of Financial Position [Abstract]    
Common stock, par value $ 0.00001 $ 0.00001
Common stock, shares authorized 100,000,000 100,000,000
Common stock, shares issued 69,374,850 69,374,850
Common stock, shares outstanding 69,374,850 69,374,850
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Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($)
3 Months Ended 6 Months Ended
Apr. 30, 2018
Apr. 30, 2017
Apr. 30, 2018
Apr. 30, 2017
OPERATING EXPENSES        
General and administrative expenses $ 118,298 $ 100,238 $ 239,970 $ 169,861
Depreciation 2,338 3,619 4,517 8,285
Research and development 7,956 12,977 23,726 27,276
Total Operating Expenses 128,592 116,834 268,213 205,422
LOSS FROM OPERATIONS (128,592) (116,834) (268,213) (205,422)
OTHER (EXPENSES) INCOME        
Interest income 14 6 21 16
Interest paid to a stockholder and related parties (72,293) (56,317) (139,839) (111,873)
Interest paid to a third party (2,574) (4,735)
Imputed interest (3,797) (3,927) (7,641) (8,020)
Other, net (4,151) (3,689) (15,690) (7,414)
Total Other Expenses, net (80,227) (66,501) (163,149) (132,026)
LOSS BEFORE TAXES (208,819) (183,335) (431,362) (337,448)
Income tax expense
NET LOSS (208,819) (183,335) (431,362) (337,448)
Net loss attributable to non-controlling interests
NET LOSS ATTRIBUTABLE TO ABMT COMMON STOCKHOLDERS (208,819) (183,335) (431,362) (337,448)
OTHER COMPREHENSIVE INCOME        
Foreign currency translation income 38,298 7,485 (217,120) 65,715
Total other comprehensive loss 38,298 7,485 (217,120) 65,715
COMPREHENSIVE LOSS ATTRIBUTABLE TO ABMT COMMON STOCKHOLDERS $ (170,521) $ (175,850) $ (648,482) $ (271,733)
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 69,374,850 67,200,693 69,374,850 67,162,142
XML 16 R5.htm IDEA: XBRL DOCUMENT v3.8.0.1
Condensed Consolidated Statements of Stockholders' Deficit (Unaudited) - USD ($)
Common Stock [Member]
Additional Paid-in Capital [Member]
Accumulated Deficit [Member]
Accumulated Other Comprehensive Loss [Member]
Total
Balance at Oct. 31, 2016 $ 671 $ 2,520,520 $ (6,987,698) $ 104,212 $ (4,362,295)
Balance, shares at Oct. 31, 2016 67,124,850        
Stock issued for debt conversion at 0.05 per shares $ 20 99,980 100,000
Stock issued for debt conversion at 0.05 per shares, shares 2,000,000        
Stock issued for services ($0.15 per share) $ 3 37,497 37,500
Stock issued for services ($0.15 per share), shares 250,000        
Imputed interest on advances from directors 15,623 15,623
Net loss for the period (691,600) (691,600)
Foreign currency translation loss (94,255) (94,255)
Balance at Oct. 31, 2017 $ 694 2,673,620 (7,679,298) 9,957 (4,995,027)
Balance, shares at Oct. 31, 2017 69,374,850        
Stock issued for services ($0.15 per share)        
Imputed interest on advances from directors 7,641 7,641
Net loss for the period (431,362) (431,362)
Foreign currency translation loss (217,120) (217,120)
Balance at Apr. 30, 2018 $ 694 $ 2,681,261 $ (8,110,660) $ (207,163) $ (5,635,868)
Balance, shares at Apr. 30, 2018 69,374,850        
XML 17 R6.htm IDEA: XBRL DOCUMENT v3.8.0.1
Condensed Consolidated Statements of Stockholders' Deficit (Unaudited) (Parenthetical)
Oct. 31, 2017
$ / shares
Statement of Stockholders' Equity [Abstract]  
Debt conversion price, per share $ 0.05
Shares issued for service, per share $ 0.15
XML 18 R7.htm IDEA: XBRL DOCUMENT v3.8.0.1
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)
6 Months Ended
Apr. 30, 2018
Apr. 30, 2017
CASH FLOWS FROM OPERATING ACTIVITIES    
Net loss attributable to ABMT common stockholders $ (431,362) $ (337,448)
Adjustments to reconcile net loss to cash used in    
Depreciation 4,517 8,285
Amortization of long-term prepaid expenses 1,825
Stock issued for services 37,500
Imputed interest 7,641 8,020
Decrease (increase) in:    
Other receivables and prepaid expenses (2,219) (1,352)
(Decrease) increase in:    
Other payables and accrued expenses 13,114 94,322
Net cash used in operating activities (406,484) (190,673)
CASH FLOWS FROM INVESTING ACTIVITIES    
Purchase of property and equipment (5,256)
Renovation of factory premises (32,854)
Decrease in deposit for purchase of property and equipment 1,198
Net cash used in investing activities (38,110) 1,198
CASH FLOWS FROM FINANCING ACTIVITIES    
Due to a stockholder 87,308 58,495
Due to directors (12,925) (26,437)
Due to related parties 376,056 186,810
Net cash provided by financing activities 450,439 218,868
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS 177 (80)
NET INCREASE IN CASH AND CASH EQUIVALENTS 6,022 29,313
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF PERIOD 7,463 6,559
CASH AND CASH EQUIVALENTS AT THE END OF PERIOD $ 13,485 $ 35,872
XML 19 R8.htm IDEA: XBRL DOCUMENT v3.8.0.1
Basis of Presentation
6 Months Ended
Apr. 30, 2018
Accounting Policies [Abstract]  
Basis of Presentation

NOTE 1 BASIS OF PRESENTATION

 

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

 

In the opinion of management, the unaudited condensed consolidated financial statements contain adjustments considered necessary to present fairly the Company’s financial position as of April 30, 2018, the consolidated results of operations for the three and six months ended April 30, 2018 and 2017 and consolidated statements of cash flows for the six months ended April 30, 2018 and 2017 on an accrual basis and in accordance with accounting principles generally accepted in the United States of America for interim financial information and rules and regulations of the SEC. The consolidated results for the three and six months ended April 30, 2018 are not necessarily indicative of the results to be expected for the entire fiscal year ending October 31, 2018. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes for the year ended October 31, 2017 appearing in the Company’s annual report on Form 10-K as filed with the Securities and Exchange Commission on February 13, 2018.

 

The reporting currency of the Company is US dollar.

XML 20 R9.htm IDEA: XBRL DOCUMENT v3.8.0.1
Organization
6 Months Ended
Apr. 30, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Organization

NOTE 2 ORGANIZATION

 

Advanced BioMedical Technologies, Inc. (fka “Geostar Mineral Corporation” or “Geostar”) (“ABMT”) was incorporated in Nevada on September 12, 2006.

 

Shenzhen Changhua Biomedical Engineering Company Limited (“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 is a developer and manufacturer of polymer orthopaedic internal fixation devices. The Company is currently conducting clinical trials on its products and intends to raise additional capital to produce and market its products commercially. The Company’s Polymer Internal Fixation Screws has been approved by the China Food and Drug Administration (“CFDA”, fka “SFDA”) of the PRC in April 2018. The Company has no revenue since its inception and, in accordance with Accounting Standards Codification (“ASC”) Topic 915, “Development Stage Entities” (formerly Statement of Financial Accounting Standard (“SFAS”) No. 7, “Accounting and Reporting by Development Stage Enterprise”), is considered a Development Stage Company.

 

Masterise Holdings Limited (“Masterise”) was incorporated in the British Virgin Islands on May 31, 2007 as an investment holding company and was then owned as to 63% by the spouse of Shenzhen Changhua’s 70% majority stockholder at the time 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 were 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 ABMT 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”).

XML 21 R10.htm IDEA: XBRL DOCUMENT v3.8.0.1
Principles of Consolidation
6 Months Ended
Apr. 30, 2018
Accounting Policies [Abstract]  
Principles of Consolidation

NOTE 3 PRINCIPLES OF CONSOLIDATION

 

The accompanying condensed consolidated financial statements include the financial statements of ABMT and its wholly owned subsidiaries, Masterise and its 70% owned subsidiary, Shenzhen Changhua. The non-controlling interests in periods prior to 2012 represent the non-controlling stockholders’ 30% proportionate share of the results of Shenzhen Changhua.

 

All significant inter-company balances and transactions have been eliminated in consolidation.

XML 22 R11.htm IDEA: XBRL DOCUMENT v3.8.0.1
Use of Estimates
6 Months Ended
Apr. 30, 2018
Use Of Estimates  
Use of Estimates

NOTE 4 USE OF ESTIMATES

 

The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America 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.

XML 23 R12.htm IDEA: XBRL DOCUMENT v3.8.0.1
Related Party Transactions
6 Months Ended
Apr. 30, 2018
Related Party Transactions [Abstract]  
Related Party Transactions

NOTE 5 RELATED PARTY TRANSACTIONS

 

As of April 30, 2018 and October 31, 2017, the Company owed a stockholder $669,571 and $582,795 respectively which are unsecured and repayable on demand. Interests are charged at 7% per annum on the amount owed.

 

As of April 30, 2018 and October 31, 2017, the Company owed three related parties a total of $4,333,783 and $3,767,180 respectively which are unsecured and repayable on demand. Interests are charged at 7% per annum on the amounts owed.

 

Total interest expenses on advances from a stockholder and the related parties accrued for the three and six months ended April 30, 2018 and 2017 were $72,293, $56,317, $139,839 and $111,873 respectively.

 

As of April 30, 2018 and October 31, 2017, the Company owed $322,514 and $321,420 respectively, to two directors for advances made on an unsecured basis, repayable on demand and interest free.

 

Imputed interest charged at 5% per annum on the amounts owed to two directors is $3,797, $3,927, $7,641 and $8,020 for the three and six months ended April 30, 2018 and 2017 respectively.

XML 24 R13.htm IDEA: XBRL DOCUMENT v3.8.0.1
Commitments and Contingencies
6 Months Ended
Apr. 30, 2018
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies

NOTE 6 COMMITMENTS AND CONTINGENCIES

 

The Company’s existing rental leases do not contain significant restrictive provisions. The schedule of future minimum lease obligations falling due under non-cancelable rental operating leases is as follows:

 

Fiscal year ending October 31, 2018     7,580  
Fiscal year ending October 31, 2019     7,580  
         
Total   $ 15,160  

XML 25 R14.htm IDEA: XBRL DOCUMENT v3.8.0.1
Fair Value of Financial Instruments
6 Months Ended
Apr. 30, 2018
Fair Value Disclosures [Abstract]  
Fair Value of Financial Instruments

NOTE 7 FAIR VALUE OF FINANCIAL INSTRUMENTS

 

The Financial Accounting Standards Board (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 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.

XML 26 R15.htm IDEA: XBRL DOCUMENT v3.8.0.1
Recent Accounting Pronouncements
6 Months Ended
Apr. 30, 2018
Accounting Changes and Error Corrections [Abstract]  
Recent Accounting Pronouncements

NOTE 8 RECENT ACCOUNTING PRONOUNCEMENTS

 

Business Combination: Clarifying the Definition of a Business

 

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 screen 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 its consolidated financial statements.

 

Simplifying the Test for Goodwill Impairment

 

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.

 

Share-based Compensation

 

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.

 

Revenue Recognition

 

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.

 

Leases

 

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”), which modifies lease accounting for lessees to increase transparency and comparability by recording lease assets and liabilities for operating leases and disclosing key information about leasing arrangements. The new standard is effective for interim and annual periods beginning after December 15, 2018 on a modified retrospective basis. The Company will adopt ASU 2016-02 in its first quarter of the year ending October 31 2020. The Company expects its leases designated as operating leases in Note 6, “Commitments and Contingencies,” will be reported on the consolidated balance sheets upon adoption. However, the ultimate impact of adopting ASU 2016-02 will depend on the lease terms as of the adoption date.

 

The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and do 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.

XML 27 R16.htm IDEA: XBRL DOCUMENT v3.8.0.1
Going Concern
6 Months Ended
Apr. 30, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Going Concern

NOTE 9 GOING CONCERN

 

As reflected in the accompanying unaudited condensed consolidated financial statements, the Company has not commenced revenue producing operations and has an accumulated deficit of $8,110,660 as of April 30, 2018 and which includes a net loss of $431,362 for the six months ended April 30, 2018. As of April 30, 2018, the Company’s total current liabilities exceeded its total current assets by $5,731,478 and the Company used cash in operations of $406,484 for the six months ended on that date. 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 condensed consolidated 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.

 

Management has taken the following 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 actively pursuing additional funding and strategic partners, which will enable the Company to implement its business plan. Management believes that these actions as successful will allow the Company to continue its operations through the next fiscal year.

XML 28 R17.htm IDEA: XBRL DOCUMENT v3.8.0.1
Commitments and Contingencies (Tables)
6 Months Ended
Apr. 30, 2018
Commitments and Contingencies Disclosure [Abstract]  
Schedule of Future Minimum Lease Obligations of Operating Leases

The schedule of future minimum lease obligations falling due under non-cancelable rental operating leases is as follows:

 

Fiscal year ending October 31, 2018     7,580  
Fiscal year ending October 31, 2019     7,580  
         
Total   $ 15,160  

XML 29 R18.htm IDEA: XBRL DOCUMENT v3.8.0.1
Organization (Details Narrative) - USD ($)
Dec. 31, 2008
Jan. 29, 2008
May 31, 2007
Sep. 25, 2002
Masterise [Member]        
Ownership interest - majority stockholder     63.00%  
Ownership interest - minority stockholder     37.00%  
Masterise [Member] | ABMT [Member]        
Ownership acquired 100.00%      
Stock issued in acquisition, shares 50,000      
Shenzhen Changhua [Member]        
Registered capital       $ 724,017
Ownership interest - majority stockholder       70.00%
Ownership interest - minority stockholder       30.00%
Shenzhen Changhua [Member] | Masterise [Member]        
Ownership acquired   70.00%    
Payment for acquisition   $ 64,100    
Majority Shareholders [Member] | ABMT [Member]        
Ownership acquired 80.70%      
Stock sold per affiliate agreement, shares 5,001,000      
Stock sold per affiliate agreement $ 5,000      
Majority Shareholders [Member] | Masterise [Member]        
Stock sold per affiliate agreement, shares 4,438,250      
XML 30 R19.htm IDEA: XBRL DOCUMENT v3.8.0.1
Principles of Consolidation (Details Narrative)
Apr. 30, 2018
Accounting Policies [Abstract]  
Ownership of subsidiaries 70.00%
Ownership by noncontrolling stockholders 30.00%
XML 31 R20.htm IDEA: XBRL DOCUMENT v3.8.0.1
Related Party Transactions (Details Narrative) - USD ($)
3 Months Ended 6 Months Ended 12 Months Ended
Apr. 30, 2018
Apr. 30, 2017
Apr. 30, 2018
Apr. 30, 2017
Oct. 31, 2017
Due to stockholder $ 669,571   $ 669,571   $ 582,795
Interest rate     7.00%   7.00%
Due to related parties 4,333,783   $ 4,333,783   $ 3,767,180
Interest paid to a stockholder and related parties 72,293 $ 56,317 139,839 $ 111,873  
Due to directors 322,514   322,514   321,420
Imputed interest $ 3,797 $ 3,927 $ 7,641 $ 8,020  
Two Directors [Member]          
Interest rate 5.00% 5.00% 5.00% 5.00%  
Due to directors $ 322,514   $ 322,514   $ 321,420
Imputed interest 3,797 $ 3,927 $ 7,641 $ 8,020  
Three Related Parties [Member]          
Interest rate     7.00%   7.00%
Due to related parties $ 4,333,783   $ 4,333,783   $ 3,767,180
XML 32 R21.htm IDEA: XBRL DOCUMENT v3.8.0.1
Commitments and Contingencies - Schedule of Future Minimum Lease Obligations of Operating Leases (Details)
Apr. 30, 2018
USD ($)
Commitments and Contingencies Disclosure [Abstract]  
Fiscal year ending October 31, 2018 $ 7,580
Fiscal year ending October 31, 2019 7,580
Total $ 15,160
XML 33 R22.htm IDEA: XBRL DOCUMENT v3.8.0.1
Going Concern (Details Narrative) - USD ($)
3 Months Ended 6 Months Ended
Apr. 30, 2018
Apr. 30, 2017
Apr. 30, 2018
Apr. 30, 2017
Oct. 31, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]          
Accumulated deficit $ 8,110,660   $ 8,110,660   $ 7,679,298
Net loss 208,819 $ 183,335 431,362 $ 337,448  
Working capital deficit $ 5,731,478   5,731,478    
Net cash used in operating activities     $ 406,484 $ 190,673  
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