What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-08-14 compared with 2024-05-17 · 310 added, 862 removed, 1070 unchanged (52% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Caution Regarding Forward-Looking Information

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analysis of the study is in progress.

ABV-1601, Major Depression in Cancer Patients, Phase I/II, NCE drug Principal Investigator:

ABV-1601, Major Depression

in Cancer Patients, Phase I/II, NCE drug Principal Investigator:

Scott Irwin, MD, Ph.D.

- Cedars Sinai Medical Center (CSMC).

The Phase I clinical study will be initiated in the 2nd quarter of 2024.

I clinical study will be initiated in the 2nd quarter of 2024.

● Medical Device:

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As of June 21, 2023, Dr.

Howard Doong resigned as the Company’s

CEO and was replaced by Dr.

Howard Doong resigned

as the Company’s CEO and was replaced by Dr.

On August 14, 2023, the Company entered into a

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the shares, AIBL became a subsidiary of ABVC.

On February 6, 2024, the Company entered into

a definitive agreement with Shuling Jiang (“Shuling”), pursuant to which Shuling shall transfer the ownership of certain land

she owns located at Taoyuan City, Taiwan (the “Land”) to the Company (the “Agreement”).

Shuling is a director

of the Company, is married to TS Jiang, the Company’s Chief Strategic Officer and owns approximately 15.4% of the Company’s

issued and outstanding shares of common stock.

In consideration for the Land, the Company shall pay Shuling (i) 703,495 restricted shares

of the Company’s common stock (the “Shares”) at a price of $3.50 per share and (ii) five-year warrants to purchase up

to 1,000,000 shares of the Company’s common stock, with an exercise price of $2.00 per share.

Under the Agreement, Shuling will

also transfer outstanding liability owed on the Land (approximately $500,000) to the Company.

Based on the above, the parties value the

exchange at approximately $2,962,232.

On March 25, 2024, the Company, and one of its

co-development partners, BioFirst Corporation, a company registered in Taiwan (“BioFirst”), each entered into a twenty-year,

global definitive licensing agreement (the “Licensing Agreement”) with ForSeeCon Eye Corporation, a company registered in

the British Virgin Islands (“FEYE”) for the products in the Company and BioFirst’s Ophthalmology pipeline, including

Vitargus (the “Licensed Products”).

The license covers the Licensed Products’ clinical trial, registration, manufacturing,

supply, and distribution rights;

FEYE also has the rights to sublicense or partner with a third party to develop the Licensed Products.

On June 23, 2024, the Company and BioLite, each entered

into an amendment (the “ Amendment ”) to the Licensing Agreement with AIBL,

pursuant to which the Company and BioLite have agreed to allow AIBL to pay the second milestone payment in the amount of $3,500,000 per

Licensing Agreement, incrementally (such as $50,000), at any given time, rather than in one lump sum.

On February 6, 2024,

the Company entered into a definitive agreement with Shuling Jiang (“Shuling”), pursuant to which Shuling shall transfer the

ownership of certain land she owns located at Taoyuan City, Taiwan (the “Land”) to the Company (the “Agreement”).

Shuling is a director of the Company, is married to TS Jiang, the Company’s Chief Strategic Officer and owns approximately 15.4%

of the Company’s issued and outstanding shares of common stock.

In consideration for the Land, the Company was to pay Shuling (i)

703,495 restricted shares of the Company’s common stock (the “Shares”) at a price of $3.50 per share and (ii) five-year

warrants to purchase up to 1,000,000 shares of the Company’s common stock, with an exercise price of $2.00 per share.

Agreement, Shuling was to also transfer outstanding liability owed on the Land (approximately $500,000) to the Company.

On May 16, 2024,

the Company’s board of directors determined that it was in the best interest of the Company and its shareholders to terminate the

Agreement and not proceed with the transfer of land ownership;

the Company may reconsider the transaction at a later date.

were returned and the warrants were not issued.

On March 25, 2024, the Company, and one of its co-development partners,

BioFirst Corporation, a company registered in Taiwan (“BioFirst”), each entered into a twenty-year, global definitive licensing

agreement (the “Licensing Agreement”) with ForSeeCon Eye Corporation, a company registered in the British Virgin Islands (“FEYE”)

for the products in the Company and BioFirst’s Ophthalmology pipeline, including Vitargus (the “Licensed Products”).

The license covers the Licensed Products’ clinical trial, registration, manufacturing, supply, and distribution rights;

has the rights to sublicense or partner with a third party to develop the Licensed Products.

As per each of the respective FEYE Licensing

Agreements, each of the Company and BioFirst shall receive a total licensing fee of $33,500,000, composed of an upfront payment of $30,000,000,

which can instead be paid with 5 million shares of FEYE stock at $6 per share within 30 days after the execution of the FEYE Licensing

Agreement, and a $3,500,000 cash milestone payment, due 30 days upon completion of next round fundraising.

Additionally, each of the Company

and BioFirst are eligible to receive royalties of 5% of net Sales.

As of June 30, 2024, the Company received 5,000,000 FEYE shares

but did not recognize such licensing revenue since the fair value of FEYE stock is uncertain.

June 18, 2024, the Company and BioFirst, each entered into an amendment (the “ Amendment ”)

to the Licensing Agreement with FEYE, pursuant to which the Company and BioFirst have agreed to allow FEYE to pay the second milestone

payment in the amount of $3,500,000 per Licensing Agreement, incrementally (such as $100,000), at any given time, rather than in one lump

For the period ended June 30, 2024, the Company has received $116,000 as the partial second milestone payment and recognized as licensing

revenue according to ASC 606.

On April 16, 2024, the Company entered into a

definitive agreement with OncoX BioPharma, Inc., a private company registered in the British Virgin Islands (“Oncox”), pursuant

to which the Company will grant Oncox an exclusive right to develop and commercialize ABVC’s single-herb botanical drug extract from the

dry fruit body of Maitake Mushroom (Grifola Frondosa) for treatment of Non-Small Cell Lung Cancer (the “Licensed Products”),

to which the Company will grant Oncox an exclusive right to develop and commercialize ABVC’s single-herb botanical drug extract

from the dry fruit body of Maitake Mushroom (Grifola Frondosa) for treatment of Non-Small Cell Lung Cancer (the “Licensed Products”),

within North America for 20 years (the “Oncox Agreement”).

In consideration thereof, Oncox shall pay ABVC $6,250,000 (or 1,250,000

Oncox shares valued at $5 per share 1 ) 30 days after entering

into the Oncox Agreement and $625,000 30 days following the completion of Oncox’s next round of fundraising, of which there is no

ABVC is also entitled to 5% royalties based on the Net Sales, as defined in the Oncox Agreement, from the first commercial

sale of the Licensed Product in North America, of which there can be no guarantee.

Oncox entered into the same agreement with ABVC’s

affiliate, Rgene Corporation.

On May 8, 2024,

the Company entered into a definitive agreement with OncoX BioPharma, Inc., a private company registered in the British Virgin Islands

(“Oncox”), pursuant to which the Company will grant Oncox an exclusive right to develop and commercialize ABVC’s BLEX

404 single-herb botanical drug extract from the dry fruit body of Maitake Mushroom (Grifola Frondosa) for treatment of Pancreatic Cancer

(the “Licensed Products”), within a certain territory, specified as 50% of the Worldwide Marketsfor 20 years (the “May

2024 Oncox Agreement”).

In consideration thereof, Oncox shall pay ABVC a total of $6,250,000 (or 1,250,000 Oncox shares valued at

$5 per share 1 ) within 30 days of entering into the May 2024 Oncox Agreement, with

an additional milestone payment of $625,000 in cash after OncoX’s next round of fundraising, of which there can be no guarantee.

Oncox may remit cash payments of at least $100,000 towards the licensing fees and deductible from the second milestone payment;

also entitled to royalties of 5% of Net Sales, as defined in the May 2024 Oncox Agreement, from the first commercial sale of the Licensed

Product in the noted territory, which remains uncertain.

The Company will permit Oncox to pay the license fee in installments or in a

lump sum and will allow Oncox to use its revenue to fund such payments.

Oncox entered into the same agreement with ABVC’s affiliate,

Rgene Corporation.

Oncox shares valued at $5 per share 1 ) 30 days after entering into the Oncox Agreement and $625,000 30 days following the completion

of Oncox’s next round of fundraising, of which there is no guarantee;

ABVC is also entitled to 5% royalties based on the Net Sales,

as defined in the Oncox Agreement, from the first commercial sale of the Licensed Product in North America, of which there can be no guarantee.

Oncox entered into the same agreement with ABVC’s affiliate, Rgene Corporation.

On May 8, 2024, the Company entered into a definitive

agreement with OncoX BioPharma, Inc., a private company registered in the British Virgin Islands (“Oncox”), pursuant to which

the Company will grant Oncox an exclusive right to develop and commercialize ABVC’s BLEX 404 single-herb botanical drug extract

from the dry fruit body of Maitake Mushroom (Grifola Frondosa) for treatment of Pancreatic Cancer (the “Licensed Products”),

within a certain territory, specified as 50% of the Worldwide Marketsfor 20 years (the “May 2024 Oncox Agreement”).

In consideration

thereof, Oncox shall pay ABVC a total of $6,250,000 (or 1,250,000 Oncox shares valued at $5 per share 1 ) within 30 days of entering

into the May 2024 Oncox Agreement, with an additional milestone payment of $625,000 in cash after OncoX’s next round of fundraising,

of which there can be no guarantee.

Oncox may remit cash payments of at least $100,000 towards the licensing fees and deductible from

the second milestone payment;

ABVC is also entitled to royalties of 5% of Net Sales, as defined in the May 2024 Oncox Agreement, from

the first commercial sale of the Licensed Product in the noted territory, which remains uncertain.

The Company will permit Oncox to pay

the license fee in installments or in a lump sum and will allow Oncox to use its revenue to fund such payments.

Oncox entered into the

same agreement with ABVC’s affiliate, Rgene Corporation.

On May 23, 2024, the Company entered into a definitive agreement with

OncoX BioPharma, Inc., a private company registered in the British Virgin Islands (“Oncox”), pursuant to which the Company

will grant Oncox an exclusive right to develop and commercialize ABVC’s BLEX 404 single-herb botanical drug extract from the dry

fruit body of Maitake Mushroom (Grifola Frondosa) for treatment of Myelodysplastic Syndrome (the “Licensed Products”), within

a certain territory, specified as 50% of the Worldwide Markets for 20 years (the “Oncox Agreement”).

In consideration thereof,

Oncox shall pay ABVC a total of $6,250,000 (or 1,250,000 Oncox shares valued at $5 per share 1 ) 30 days after entering the Oncox

Agreement, with an additional milestone payment of $625,000 in cash after OncoX’s next round of fundraising, of which there can

be no guarantee.

Oncox may remit cash payments of at least $100,000 towards the licensing fees and deductible from the second milestone

ABVC is also entitled to royalties of 5% of Net Sales, as defined in the Oncox Agreement, from the first commercial sale of the

Licensed Product in the noted territory, which remains uncertain.

Oncox may use its revenue to fund the licensing fees.

Oncox entered

into the same agreement with ABVC’s affiliate, Biolite, Inc.

Common Stock Reverse Split

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Series A Convertible Preferred Stock

As of March 31, 2024, no Series A Convertible

Preferred Stock has been issued by the Company.

As of June 30, 2024, no Series A Convertible Preferred

Stock has been issued by the Company.

NASDAQ Listing

In August 2022, we received a deficiency letter

from the Nasdaq Listing Qualifications Department (the “Staff”) notifying us that, for the last 30 consecutive business days,

the closing bid price for our common stock was below the minimum $1.00 per share required for continued listing on The Nasdaq Capital

Market pursuant to Nasdaq Listing Rule 5550(a)(2) (“Rule 5550(a)(2)”).

In accordance with Nasdaq Listing Rule 5810(c)(3)(A),

we were initially given until February 14, 2023 to regain compliance with Rule 5550(a)(2).

Since the Company did not regain compliance

by such date, it requested and received an additional 180 days, until August 14, 2023, to comply with Rule 5550(a)(2).

The deficiency has no immediate effect on the

listing of the Company’s common stock, and its common stock continues to trade on The Nasdaq Capital Market under the symbol “ABVC”

at this time.

If at any time before August 14, 2023, the bid

price of the Company’s common stock closes at $1.00 per share or more for a minimum of 10 consecutive business days, the Staff will

provide written confirmation that the Company has achieved compliance and the matter will be closed.

If the Company does not regain compliance with

Rule 5550(a)(2) by August 14, 2023, the Staff will provide written notification that the Company’s securities will be delisted,

although the Company maintains the right to appeal such determination.

The Company intends to actively monitor the closing bid price for

its common stock and will consider available options to resolve the deficiency and regain compliance with Rule 5550(a)(2).

1 Price was determined through private negotiations between the

no third party valuation was completed.

On May 24, 2023, we received a deficiency

letter from the Nasdaq Listing Qualifications Department (the “Staff”) of the Nasdaq Stock Market LLC

(“Nasdaq”) notifying the Company that it is not currently in compliance with the minimum stockholders’ equity

requirement, or the alternatives of market value of listed securities or net income from continuing operations, for continued

listing on the Nasdaq Capital Market.

Nasdaq Listing Rule 5550(b)(1) requires listed companies to maintain stockholders’

equity of at least $2,500,000, and the Company’s stockholders’ equity was $1,734,507 as of March 31, 2023.

In accordance

with Nasdaq rules, the Company had 45 calendar days, or until July 10, 2023, to submit a plan to regain compliance.

After submitting

a plan to regain compliance, on July 10, 2023, Nasdaq granted the Company an extension until August 30, 20203, to comply with

Listing Rule 5550(b)(1).

On July 31, 2023, the Company issued 300,000 shares of Common Stock and 200,000 pre-funded warrants, at an

exercise price of $0.01 per share, in a registered direct offering.

Pursuant to this transaction, the stockholders’ equity was

increased by $1.75M.

On August 1, 2023, $500,000 of Notes were converted at $3.50 per share and the holder received 142,857 shares

of Common Stock.

As a result of this conversion, the stockholders’ equity was increased by $0.5M.

Additionally, on August 14,

2023, the Company entered into a cooperation agreement with Zhonghui United Technology (Chengdu) Group Co., Ltd., pursuant to which

the Company acquired a 20% ownership of certain property and a parcel of the land owned by Zhonghui in exchange for an aggregate of

On May 24, 2023, we received a deficiency letter from the Nasdaq Listing

Qualifications Department (the “Staff”) of the Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that it

is not currently in compliance with the minimum stockholders’ equity requirement, or the alternatives of market value of listed

securities or net income from continuing operations, for continued listing on the Nasdaq Capital Market.

Nasdaq Listing Rule 5550(b)(1)

requires listed companies to maintain stockholders’ equity of at least $2,500,000, and the Company’s stockholders’ equity

was $1,734,507 as of March 31, 2023.

In accordance with Nasdaq rules, the Company had 45 calendar days, or until July 10, 2023, to submit

a plan to regain compliance.

After submitting a plan to regain compliance, on July 10, 2023, Nasdaq granted the Company an extension until

August 30, 20203, to comply with Listing Rule 5550(b)(1).

On July 31, 2023, the Company issued 300,000 shares of Common Stock and 200,000

pre-funded warrants, at an exercise price of $0.01 per share, in a registered direct offering.

Pursuant to this transaction, the stockholders’

equity was increased by $1.75M.

On August 1, 2023, $500,000 of Notes were converted at $3.50 per share and the holder received 142,857

shares of Common Stock.

As a result of this conversion, the stockholders’ equity was increased by $0.5 million.

Additionally, on

August 14, 2023, the Company entered into a cooperation agreement with Zhonghui United Technology (Chengdu) Group Co., Ltd., pursuant

to which the Company acquired a 20% ownership of certain property and a parcel of the land owned by Zhonghui in exchange for an aggregate

of 370,000 shares of Common Stock.

Accordingly, stockholders’ equity increased by $7.4M.

On February 23, 2023, the Company

entered into a securities purchase agreement with Lind, pursuant to which the Company issued Lind a secured, convertible note in the

principal amount of $3,704,167 (the “Lind Offering”), for a purchase price of $3,175,000 (the “Lind Note”),

that is convertible into shares of Common Stock at an initial conversion price of $1.05 per share, subject to adjustment.

24, 2023, the Company started repaying Lind the monthly installments due under the Lind Notes;

$308,000 was repaid via the issuance

of 176,678 shares of Common Stock (the “Monthly Shares”) at the Redemption Share Price (as defined in the Lind Note) of

$1.698 per share.

Pursuant to the terms of the Lind Note, Lind increased the amount of the next monthly payment to one million

dollars, such that as of September and together with the Monthly Shares, the Company repaid Lind a total of $1M by September 2023.

As a result, the stockholders’ equity increased by an additional $1M.

As a result of the four transactions referenced above,

the Company’ estimated that its stockholders’ equity would increase by approximately $10.65M.

On September 6, 2023,

Nasdaq issued a letter that the Company is in compliance with Rule 5550(b)(1), but noted that if at the time of the Company’s

next periodic report the Company does not evidence compliance, it may be subject to delisting.

On February 23, 2023, the Company entered

into a securities purchase agreement with Lind, pursuant to which the Company issued Lind a secured, convertible note in the principal

amount of $3,704,167 (the “Lind Offering”), for a purchase price of $3,175,000 (the “Lind Note”), that is convertible

into shares of Common Stock at an initial conversion price of $1.05 per share, subject to adjustment.

On August 24, 2023, the Company

started repaying Lind the monthly installments due under the Lind Notes;

$308,000 was repaid via the issuance of 176,678 shares of Common

Stock (the “Monthly Shares”) at the Redemption Share Price (as defined in the Lind Note) of $1.698 per share.

the terms of the Lind Note, Lind increased the amount of the next monthly payment to one million dollars, such that as of September and

together with the Monthly Shares, the Company repaid Lind a total of $1 million by September 2023.

As a result, the stockholders’

equity increased by an additional $1 million.

As a result of the four transactions referenced above, the Company’ estimated that

its stockholders’ equity would increase by approximately $10.65 million.

On September 6, 2023, Nasdaq issued a letter that the Company

is in compliance with Rule 5550(b)(1), but noted that if at the time of the Company’s next periodic report the Company does not

evidence compliance, it may be subject to delisting.

On July 10, 2024, we received a notification letter

from the Nasdaq notifying the Company that the minimum bid price per share for its common shares has been below $1.00 for a period of

30 consecutive business days and the Company therefore no longer meets the minimum bid price requirements set forth in Nasdaq Listing

Rule 5550(a)(2).

The notification received has no immediate effect on the listing of the Company’s common stock on Nasdaq.

the Nasdaq Listing Rules, the Company has until January 6, 2025, to regain compliance.

If at any time during such 180-day period the closing

bid price of the Company’s common shares is at least $1 for a minimum of 10 consecutive business days, Nasdaq will provide the Company

written confirmation of compliance.

If the Company does not regain compliance during such 180-day period, the Company may be eligible

for an additional 180 calendar days, provided that the Company meets the continued listing requirement for market value of publicly held

shares and all other initial listing standards for Nasdaq except for Nasdaq Listing Rule 5550(a)(2), and provide a written notice of its

intention to cure this deficiency during the second compliance period, by effecting a reverse stock split, if necessary.

Joint Venture Agreement

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which have all been received.

Pursuant to the Agreement and the related share transfer agreement,

the Company shall transfer 54 of its Ordinary Shares to Lucidaim for no consideration, such that following the transfer, Lucidaim shall

own 1,555 Ordinary Shares (51%) and the Company shall own 1,494 Ordinary Shares (49%).

Also pursuant to the Agreement, there shall be

3 directors of Biolite JP, consisting of 1 director appointed by the Company and 2 appointed by Lucidiam.

The Company shall appoint Eugene

Jiang, the Company’s current Chairman and Chief Business Officer and Lucidaim shall appoint Michihito Onishi;

the current director

of Biolite JP, Toru Seo (who is also a director of BioLite Japan’s other shareholder), is considered the second Lucidaim director.

The Agreement further provides that the Company and Biolite JP shall assign the research collaboration and license agreement between them

to Biolite JP or prepare the same (the “ License Agreement ”).

The aforementioned transactions occurred on the Completion

Pursuant to the Agreement and the related share

transfer agreement, the Company shall transfer 54 of its Ordinary Shares to Lucidaim for no consideration, such that following the transfer,

Lucidaim shall own 1,555 Ordinary Shares (51%) and the Company shall own 1,494 Ordinary Shares (49%).

Also pursuant to the Agreement,

there shall be 3 directors of Biolite JP, consisting of 1 director appointed by the Company and 2 appointed by Lucidiam.

The Company shall

appoint Eugene Jiang, the Company’s current Chairman and Chief Business Officer and Lucidaim shall appoint Michihito Onishi;

current director of Biolite JP, Toru Seo (who is also a director of BioLite Japan’s other shareholder), is considered the second

Lucidaim director.

The Agreement further provides that the Company and Biolite JP shall assign the research collaboration and license

agreement between them to Biolite JP or prepare the same (the “ License Agreement ”).

The aforementioned transactions

occurred on the Completion Date.

As per the Agreement, the Shareholders shall supervise

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2024 Financings

On May 22, 2024, the Company and Lind entered

into a letter agreement (the “Letter Agreement”), pursuant to which Lind Global Fund II, LP (“Lind”) exercised,

for cash, 1,000,000 of its Pre-Existing Warrants (all of the warrants issued to Lind on February 23, 2023, November 17, 2023 and January

17, 2024 are hereinafter referred to as the “Pre-Existing Warrants”) to purchase shares of Common Stock at a reduced exercise

price of $0.75 per share.

Lind also received a new warrant to purchase 1,000,000 shares Common Stock, exercisable at any time on or after

the date of its issuance and until the five-year anniversary thereof, for $1.00 per share (the “New Lind Warrant”).

On January 17, 2024, the Company entered into

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same terms as set forth in the 3 rd Lind Warrant.

The securities purchase

agreement also contains customary representation and warranties of the Company and the Investors, indemnification obligations of the Company,

termination provisions, and other obligations and rights of the parties.

The securities purchase agreement also contains

customary representation and warranties of the Company and the Investors, indemnification obligations of the Company, termination provisions,

and other obligations and rights of the parties.

The foregoing description of the Transaction Documents

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Financing in 2023

On November 17, 2023,

the Company entered into a securities purchase agreement (the “2 nd Lind Securities Purchase Agreement”) with Lind

Global Fund II, LP (“Lind”), pursuant to which the Company issued Lind a secured, convertible note in the principal amount

of $1,200,000 (the “2 nd Lind Offering”), for a purchase price of $1,000,000 (the “2 nd Lind Note”),

that is convertible into shares of the Company’s common stock at a conversion price, which shall be the lesser of (i) $3.50 (the

“Fixed Price”) and (ii) 90% of the average of the three lowest VWAPs (as defined in the 2 nd Lind Note) during the

20 trading days prior to conversion, subject to adjustment.

Notwithstanding the foregoing, provided that no Event of Default (as defined

in the 2 nd Lind Note) shall have occurred, conversions under the 2 nd Lind Note shall be at the Fixed Price for the

first 180 days following the closing date.

Lind will also receive a 5-year, common stock purchase warrant (the “2 nd Lind

Warrant”) to purchase up to 1,000,000 shares of the Company’s common stock at an initial exercise price of $2 per share, subject

to adjustment.

The parties later agreed to a floor price of $1.00 for the Variable Price and that the Company would compensate Lind in

cash if the variable price was less than such floor price at the time of conversion.

On November 17, 2023, the Company entered into

a securities purchase agreement (the “2 nd Lind Securities Purchase Agreement”) with Lind Global Fund II, LP (“Lind”),

pursuant to which the Company issued Lind a secured, convertible note in the principal amount of $1,200,000 (the “2 nd

Lind Offering”), for a purchase price of $1,000,000 (the “2 nd Lind Note”), that is convertible into shares

of the Company’s common stock at a conversion price, which shall be the lesser of (i) $3.50 (the “Fixed Price”) and

(ii) 90% of the average of the three lowest VWAPs (as defined in the 2 nd Lind Note) during the 20 trading days prior to conversion,

subject to adjustment.

Notwithstanding the foregoing, provided that no Event of Default (as defined in the 2 nd Lind Note) shall

have occurred, conversions under the 2 nd Lind Note shall be at the Fixed Price for the first 180 days following the closing

Lind will also receive a 5-year, common stock purchase warrant (the “2 nd Lind Warrant”) to purchase up to

1,000,000 shares of the Company’s common stock at an initial exercise price of $2 per share, subject to adjustment.

later agreed to a floor price of $1.00 for the Variable Price and that the Company would compensate Lind in cash if the variable price

was less than such floor price at the time of conversion.

Upon the occurrence of any Event of Default (as

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herein by reference.

On February 23, 2023, the Company entered into

a securities purchase agreement (the “Lind Securities Purchase Agreement”) with Lind Global Fund II, LP (“Lind”),

pursuant to which the Company issued Lind a secured, convertible note in the principal amount of $3,704,167 (the “Lind Offering”),

for a purchase price of $3,175,000 (the “Lind Note”), that is convertible into shares of the Company’s common stock

at an initial conversion price of $1.05 per share, subject to adjustment (the “Note Shares”).

The Company also issued Lind

a common stock purchase warrant (the “Lind Warrant”) to purchase up to 5,291,667 shares of the Company’s common stock

at an initial exercise price of $1.05 per share, subject to adjustment (each, a “Warrant Share,” together with the Note, Note

Shares and Warrants, the “Lind Securities”).

On February 23, 2023, the Company entered into a securities purchase

agreement (the “Lind Securities Purchase Agreement”) with Lind Global Fund II, LP (“Lind”), pursuant to which

the Company issued Lind a secured, convertible note in the principal amount of $3,704,167 (the “Lind Offering”), for a purchase

price of $3,175,000 (the “Lind Note”), that is convertible into shares of the Company’s common stock at an initial conversion

price of $10.5 per share, subject to adjustment (the “Note Shares”).

The Company also issued Lind a common stock purchase

warrant (the “Lind Warrant”) to purchase up to 529,1,67 shares (post-split) of the Company’s common stock at an initial

exercise price of $10.5 per share, subject to adjustment (each, a “Warrant Share,” together with the Note, Note Shares and

Warrants, the “Lind Securities”).

The Lind Note does not carry any interest.

with the date that is six months from the issuance date of the Lind Note and on each one (1) month anniversary thereafter, the Company

shall pay Lind an amount equal to $308,650.58, until the outstanding principal amount of the Lind Note has been paid in full prior to

or on the Maturity Date or, if earlier, upon acceleration, conversion or redemption of the Lind Note in accordance with the terms thereof

shall pay Lind an amount equal to $308,651, until the outstanding principal amount of the Lind Note has been paid in full prior to or

on the Maturity Date or, if earlier, upon acceleration, conversion or redemption of the Lind Note in accordance with the terms thereof

(the “Monthly Payments”).

23 unchanged sentences

The Lind Warrant may be exercised via cashless

Pursuant to the terms of the Lind Securities Purchase Agreement, if

at any time prior to a date that is 18 months following the closing of the Lind Offering, the Company proposes to offer or sell any additional

securities in a subsequent financing, the Company shall first offer Lind the opportunity to purchase up to 10% of such new securities.

Pursuant to the terms of the Lind Securities Purchase

Agreement, if at any time prior to a date that is 18 months following the closing of the Lind Offering, the Company proposes to offer

or sell any additional securities in a subsequent financing, the Company shall first offer Lind the opportunity to purchase up to 10%

of such new securities.

In connection with the Lind Offering, the Company

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herein by reference.

On August 1, 2023, Lind converted $500,000 convertible

notes into 142,857 shares of Common Stock, at a conversion price of $3.50 per share.

On August 1, 2023, Lind converted $500,000 convertible notes into 142,857

shares of Common Stock, at a conversion price of $3.50 per share, as an installment repayment to the Lind Note.

On July 27, 2023, the Company entered into that

11 unchanged sentences

on the same terms as the Pre-Funded Warrants.

The above-mentioned equity is before the reverse

stock split in 2023.

2022 Financing

On May 11, 2022, the Company entered into certain

securities purchase agreement (the “May SPA”) with certain investors (the “Purchasers”).

Pursuant to the May SPA,

the Company agreed to issue 2,000,000 shares of its Common Stock, at a price of $2.11 per share and 5-year warrants to purchase up to

2,000,000 shares of Common Stock, exercisable at a price of $2.45 per share (the “May Warrants”) to the Purchasers.

proceeds before deducting any estimated offering expenses are $4,220,000.

The transaction contemplated by the May SPA was closed on May

The Company paid to the co-placement agents

an aggregate cash fee equal to 8% of the aggregate sales price of the securities sold and issued them warrants to purchase up to

160,000 shares of Common Stock, on the same terms as the May Warrants.

The above-mentioned equity is before the reverse stock split

Key elements of our business strategy include:

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for the treatment of major depressive disorder, MDD, after the successful completion of its Phase II clinical trials.

● Completing Phase II, Part 2 clinical

trial for ABV-1505 for the treatment of attention deficit hyperactivity disorder, ADHD.

● Completing Phase II, Part 2

clinical trial for ABV-1505 for the treatment of attention deficit hyperactivity disorder, ADHD.

● Out licensing drug candidates

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● nonrefundable upfront license

● development and commercial milestones,

● development and commercial

● partial or complete reimbursement

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is entitled to receive a royalty equal to 12% of BHK’s net sales related to ABV-1501, ABV-1504 and ABV-1505 Products.

As of March 31, 2024, the Company has not earned royalties under the BHK Co-Development Agreement.

As of June 30, 2024, the Company has not earned royalties under the BHK Co-Development Agreement.

(v) The BHK Co-Development Agreement

will remain in effect for fifteen years from the date of first commercial sale of the Product in in Asia excluding Japan.

Collaborative agreement with BioLite, Inc., a related party

Collaborative agreement with BioLite, Inc.,

a related party

The Company entered into a collaborative agreement

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Pursuant to the Purchase Agreement, the Company issued

428,571 shares of the Company’s common stock to BioFirst in consideration for $3,000,000 owed by the Company to BioFirst (the “Total

Payment”) in connection with a certain collaborative agreement between the Company and BioFirst dated July 24, 2017 (the “Collaborative

Pursuant to the Collaborative Agreement, BioFirst granted the Company the global licensing right to co-develop BFC-1401

or ABV-1701 Vitreous Substitute for Vitrectomy for medical purposes in consideration for the Total Payment.

On August 5, 2019, BriVision entered into a second

Stock Purchase Agreement (“Purchase Agreement 2”) with BioFirst Corporation.

Pursuant to Purchase Agreement 2, the Company

issued 414,702 shares of the Company’s common stock to BioFirst in consideration for $2,902,911 owed by the Company to BioFirst

in connection with a loan provided to BriVision from BioFirst.

42,857 shares (post-split) of the Company’s common stock to BioFirst in consideration for $3,000,000 owed by the Company to BioFirst

(the “Total Payment”) in connection with a certain collaborative agreement between the Company and BioFirst dated July 24,

2017 (the “Collaborative Agreement”).

Pursuant to the Collaborative Agreement, BioFirst granted the Company the global licensing

right to co-develop BFC-1401 or ABV-1701 Vitreous Substitute for Vitrectomy for medical purposes in consideration for the Total Payment.

On August 5, 2019, BriVision entered into a second Stock Purchase Agreement

(“Purchase Agreement 2”) with BioFirst Corporation.

Pursuant to Purchase Agreement 2, the Company issued 41,470 shares (post-split)

of the Company’s common stock to BioFirst in consideration for $2,902,911 owed by the Company to BioFirst in connection with a loan

provided to BriVision from BioFirst.

On November 4, 2020, the Company executed an amendment

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BioFirst is targeting to complete the construction

The above-mentioned equity is before the reverse

stock split in 2023.

Co-Development agreement with BioLite Japan K.K.

Co-Development agreement with BioLite Japan

On October 6, 2021 (the “ Completion Date ”),

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Agreement without any liability to the Company.

The Agreement contains non-solicitation and non-compete clauses for

a period of 2 years after a Shareholder or its subsidiaries ceases to be a Shareholder, with such restrictive covenants limited to business

within the ophthalmologic filed or central neurological field.

Any rights to intellectual property that arise from Biolite’s activities,

shall belong to BioLite JP.

The Agreement contains non-solicitation and non-compete

clauses for a period of 2 years after a Shareholder or its subsidiaries ceases to be a Shareholder, with such restrictive covenants limited

to business within the ophthalmologic filed or central neurological field.

Any rights to intellectual property that arise from Biolite’s

activities, shall belong to BioLite JP.

The Agreement contains standard indemnification

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This was a related party transaction.

In November 2021, the Company received $4,244,452

in gross proceeds from the exercise of warrants issued in the Company’s August 3, 2021, public offering of securities.

exercised a total of 673,405 Series A warrants at a price of $6.30 per share, and 200 Series B warrants at a price of $10 per share.

BioKey Revenues

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Summary of Critical Accounting Policies

Basis of Presentation

The accompanying unaudited consolidated

interim financial statements have been prepared in accordance with the generally accepted accounting principles in the United States

of America (the “U.S.

All significant intercompany transactions and account balances have been eliminated.

This basis of accounting involves the application

of accrual accounting and consequently, revenues and gains are recognized when earned, and expenses and losses are recognized when incurred.

The Company’s financial statements are expressed in U.S.

Reclassifications of Prior Year Presentation

Certain prior year unaudited consolidated

interim balance sheet and unaudited consolidated cash flow statement amounts have been reclassified for consistency with the current

year presentation.

These reclassifications had no effect on the reported results of operations.

Use of Estimates

The preparation of financial statements in conformity

with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that

affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited

consolidated financial statements and the amount of revenues and expenses during the reporting periods.

Actual results could differ materially

from those results.

Stock Reverse Split

On July 25, 2023, the Company filed a Certificate

of Amendment to its Articles of Incorporation authorizing a 1-for-10 reverse stock split of the issued and outstanding shares of its common

The Company’s stockholders previously approved the Reverse Stock Split at the Company’s Special Shareholder Meeting

held on July 7, 2023.

The Reverse Stock Split was effected to reduce the number of issued and outstanding shares and to increase the per

share trading value of the Company’s common stock, although that outcome is not guaranteed.

In turn, the Company believes that the

Reverse Stock Split will enable the Company to restore compliance with certain continued listing standards of NASDAQ Capital Market.

shares and related financial information in this report reflect this 1-for-10 reverse stock split.

On July 14, 2023, the Company filed

a certificate of amendment to the Company’s articles of incorporation (the “Amendment”) to implement the 2023 Split

with the Secretary of State of the State of Nevada.

The 2023 Split took effect on July 25, 2023.

Fair Value Measurements

FASB ASC 820, “Fair Value Measurements”

defines fair value for certain financial and nonfinancial assets and liabilities that are recorded at fair value, establishes a framework

for measuring fair value and expands disclosures about fair value measurements.

It requires that an entity measure its financial instruments

to base fair value on exit price, maximize the use of observable units and minimize the use of unobservable inputs to determine the exit

It establishes a hierarchy which prioritizes the inputs to valuation techniques used to measure fair value.

This hierarchy increases

the consistency and comparability of fair value measurements and related disclosures by maximizing the use of observable inputs and minimizing

the use of unobservable inputs by requiring that observable inputs be used when available.

Observable inputs are inputs that reflect the

assumptions market participants would use in pricing the assets or liabilities based on market data obtained from sources independent

of the Company.

Unobservable inputs are inputs that reflect the Company’s own assumptions about the assumptions market participants

would use in pricing the asset or liability developed based on the best information available in the circumstances.

The hierarchy prioritizes

the inputs into three broad levels based on the reliability of the inputs as follows:

● Level 1 - Inputs are quoted prices

in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

these instruments does not require a high degree of judgment as the valuations are based on quoted prices in active markets that are

readily and regularly available.

● Level 2 - Inputs other than quoted

prices in active markets that are either directly or indirectly observable as of the measurement date, such as quoted prices for similar

assets or liabilities;

quoted prices in markets that are not active;

or other inputs that are observable or can be corroborated by observable

market data for substantially the full term of the assets or liabilities.

● Level 3 - Valuations based on

inputs that are unobservable and not corroborated by market data.

The fair value for such assets and liabilities is generally determined

using pricing models, discounted cash flow methodologies, or similar techniques that incorporate the assumptions a market participant

would use in pricing the asset or liability.

The carrying values of certain assets and liabilities

of the Company, such as cash and cash equivalents, restricted cash, accounts receivable, due from related parties, inventory, prepaid

expenses and other current assets, accounts payable, accrued liabilities, and due to related parties approximate fair value due to their

relatively short maturities.

The carrying value of the Company’s short-term bank loan, convertible notes payable, and accrued interest

approximates their fair value as the terms of the borrowing are consistent with current market rates and the duration to maturity is short.

The carrying value of the Company’s long-term bank loan approximates fair value because the interest rates approximate market rates

that the Company could obtain for debt with similar terms and maturities.

Cash and Cash Equivalents

The Company considers highly liquid investments

with maturities of three months or less, when purchased, to be cash equivalents.

As of March 31, 2024 and December 31, 2023, the Company’s

cash and cash equivalents amounted to $30,489 and $60,155, respectively.

Some of the Company’s cash deposits are held in financial

institutions located in Taiwan where there is currently regulation mandated on obligatory insurance of bank accounts.

The Company believes

this financial institution is of high credit quality.

Restricted Cash

Restricted cash primarily consist of certificate

of deposits as a collateral of short-term loan held in CTBC Bank.

As of March 31, 2024 and December 31, 2023, the Company’s restricted

cash amounted to $628,513 and $656,625, respectively.

Concentration of Credit Risk

The Company’s financial instruments that

are exposed to concentrations of credit risk consist primarily of cash and cash equivalents.

The Company places its cash and temporary

cash investments in high quality credit institutions, but these investments may be in excess of Taiwan Central Deposit Insurance Corporation

Federal Deposit Insurance Corporation’s insurance limits.

The Company does not enter into financial instruments for

hedging, trading or speculative purposes.

We perform ongoing credit evaluation of our customers

and requires no collateral.

An allowance for doubtful accounts is provided based on a review of the collectability of accounts receivable.

We determine the amount of allowance for doubtful accounts by examining its historical collection experience and current trends in the

credit quality of its customers as well as its internal credit policies.

Actual credit losses may differ from our estimates.

Concentration of clients

As of March 31, 2024, the most major client, specializes

in developing and commercializing of dietary supplements and therapeutics in dietary supplement industry, accounted for 87.24% of the

Company’s total account receivable.

As of December 31, 2023, the most major client,

specializes in developing and commercializing of dietary supplements and therapeutics in dietary supplement industry, accounted for 87.24%

of the Company’s total account receivable.

For the three months ended March 31, 2024, one

major client, manufactures a wide range of pharmaceutical products, accounted for 100% of the Company’s total revenues.

three months ended March 31, 2023, one major client, manufacturing drugs, dietary supplements, and medical products, accounted for 84.78%

of the Company’s total revenues.

Accounts receivable and allowance for expected

credit losses accounts

Accounts receivable is recorded and carried at

the original invoiced amount less an allowance for any potential uncollectible amounts.

The Company make estimates of expected credit

and collectability trends for the allowance for credit losses and allowance for unbilled receivables based upon our assessment of various

factors, including historical experience, the age of the accounts receivable balances, credit quality of customers, current economic conditions

reasonable and supportable forecasts of future economic conditions, and other factors that may affect our ability to collect from customers.

The provision is recorded against accounts receivable balances, with a corresponding charge recorded in the consolidated statements of

Actual amounts received may differ from management’s estimate of credit worthiness and the economic environment.

account balances are written-off against the allowance for doubtful accounts after management has determined that the likelihood of collection

is not probable.

Allowance for expected credit losses accounts

was $616,448 and $616,505 as of March 31, 2024 and December 31, 2023, respectively.

Revenue Recognition

During the fiscal year 2018, the Company adopted

Accounting Standards Codification (“ASC”), Topic 606 (ASC 606), Revenue from Contracts with Customers, using the modified

retrospective method to all contracts that were not completed as of January 1, 2018, and applying the new revenue standard as an adjustment

to the opening balance of accumulated deficit at the beginning of 2018 for the cumulative effect.

The results for the Company’s

reporting periods beginning on and after January 1, 2018 are presented under ASC 606, while prior period amounts are not adjusted and

continue to be reported under the accounting standards in effect for the prior period.

Based on the Company’s review of existing

collaborative agreements as of January 1, 2018, the Company concluded that the adoption of the new guidance did not have a significant

change on the Company’s revenue during all periods presented.

Pursuant to ASC 606, the Company recognizes revenue

when its customer obtains control of promised goods or services, in an amount that reflects the consideration that the Company expects

to receive in exchange for those goods or services.

To determine revenue recognition for arrangements that the Company determines is within

the scope of ASC 606, the Company performs the following five steps:

(i) identify the contract(s) with a customer;

(ii) identify the performance

obligations in the contract;

(iii) determine the transaction price;

(iv) allocate the transaction price to the performance obligations

in the contract;

and (v) recognize revenue when (or as) the Company satisfies a performance obligation.

The Company only applies the five-step

model to contracts when it is probable that the Company will collect the consideration the Company is entitled to in exchange for the

goods or services the Company transfers to the customers.

At inception of the contract, once the contract is determined to be within the

scope of ASC 606, the Company assesses the goods or services promised within each contract, determines those that are performance obligations,

and assesses whether each promised good or service is distinct.

The Company then recognizes as revenue the amount of the transaction price

that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

The following are examples of when the Company

recognizes revenue based on the types of payments the Company receives.

Collaborative Revenues - The Company recognizes

collaborative revenues generated through collaborative research, development and/or commercialization agreements.

The terms of these agreements

typically include payment to the Company related to one or more of the following:

non-refundable upfront license fees, development and

commercial milestones, partial or complete reimbursement of research and development costs, and royalties on net sales of licensed products.

Each type of payments results in collaborative revenues except for revenues from royalties on net sales of licensed products, which are

classified as royalty revenues.

To date, the Company has not received any royalty revenues.

Revenue is recognized upon satisfaction of

a performance obligation by transferring control of a good or service to the collaboration partners.

As part of the accounting for these arrangements,

the Company applies judgment to determine whether the performance obligations are distinct, and develop assumptions in determining the

stand-alone selling price for each distinct performance obligation identified in the collaboration agreements.

To determine the stand-alone

selling price, the Company relies on assumptions which may include forecasted revenues, development timelines, reimbursement rates for

R&D personnel costs, discount rates and probabilities of technical and regulatory success.

The Company had multiple deliverables under the

collaborative agreements, including deliverables relating to grants of technology licenses, regulatory and clinical development, and marketing

Estimation of the performance periods of the Company’s deliverables requires the use of management’s judgment.

Significant factors considered in management’s evaluation of the estimated performance periods include, but are not limited to,

the Company’s experience in conducting clinical development, regulatory and manufacturing activities.

The Company reviews the estimated

duration of its performance periods under its collaborative agreements on an annually basis, and makes any appropriate adjustments on

a prospective basis.

Future changes in estimates of the performance period under its collaborative agreements could impact the timing

of future revenue recognition.

(i) Non-refundable upfront payments

If a license to the Company’s intellectual

property is determined to be distinct from the other performance obligations identified in an arrangement, the Company recognizes revenue

from the related non-refundable upfront payments based on the relative standalone selling price prescribed to the license compared to

the total selling price of the arrangement.

The revenue is recognized when the license is transferred to the collaboration partners and

the collaboration partners are able to use and benefit from the license.

To date, the receipt of non-refundable upfront fees was solely

for the compensation of past research efforts and contributions made by the Company before the collaborative agreements entered into and

it does not relate to any future obligations and commitments made between the Company and the collaboration partners in the collaborative

(ii) Milestone payments

The Company is eligible to receive milestone payments

under the collaborative agreement with collaboration partners based on achievement of specified development, regulatory and commercial

Management evaluated the nature of the events triggering these contingent payments, and concluded that these events fall into

two categories:

(a) events which involve the performance of the Company’s obligations under the collaborative agreement with collaboration

partners, and (b) events which do not involve the performance of the Company’s obligations under the collaborative agreement with

collaboration partners.

The former category of milestone payments consists

of those triggered by development and regulatory activities in the territories specified in the collaborative agreements.

Management concluded

that each of these payments constitute substantive milestone payments.

This conclusion was based primarily on the facts that (i) each

triggering event represents a specific outcome that can be achieved only through successful performance by the Company of one or more

of its deliverables, (ii) achievement of each triggering event was subject to inherent risk and uncertainty and would result in additional

payments becoming due to the Company, (iii) each of the milestone payments is non-refundable, (iv) substantial effort is required to complete

each milestone, (v) the amount of each milestone payment is reasonable in relation to the value created in achieving the milestone, (vi)

a substantial amount of time is expected to pass between the upfront payment and the potential milestone payments, and (vii) the milestone

payments relate solely to past performance.

Based on the foregoing, the Company recognizes any revenue from these milestone payments in

the period in which the underlying triggering event occurs.

(iii) Multiple Element Arrangements

The Company evaluates multiple element arrangements

to determine (1) the deliverables included in the arrangement and (2) whether the individual deliverables represent separate units of

accounting or whether they must be accounted for as a combined unit of accounting.

This evaluation involves subjective determinations

and requires management to make judgments about the individual deliverables and whether such deliverables are separate from other aspects

of the contractual relationship.

Deliverables are considered separate units of accounting provided that:

(i) the delivered item(s) has

value to the customer on a standalone basis and (ii) if the arrangement includes a general right of return relative to the delivered item(s),

delivery or performance of the undelivered item(s) is considered probable and substantially within its control.

In assessing whether an

item under a collaboration has standalone value, the Company considers factors such as the research, manufacturing, and commercialization

capabilities of the collaboration partner and the availability of the associated expertise in the general marketplace.

The Company also

considers whether its collaboration partners can use the other deliverable(s) for their intended purpose without the receipt of the remaining

element(s), whether the value of the deliverable is dependent on the undelivered item(s), and whether there are other vendors that can

provide the undelivered element(s).

The Company recognizes arrangement consideration

allocated to each unit of accounting when all of the revenue recognition criteria in ASC 606 are satisfied for that particular unit of

In the event that a deliverable does not represent a separate unit of accounting, the Company recognizes revenue from the

combined unit of accounting over the Company’s contractual or estimated performance period for the undelivered elements, which is

typically the term of the Company’s research and development obligations.

If there is no discernible pattern of performance or objectively

measurable performance measures do not exist, then the Company recognizes revenue under the arrangement on a straight-line basis over

the period the Company is expected to complete its performance obligations.

Conversely, if the pattern of performance in which the service

is provided to the customer can be determined and objectively measurable performance measures exist, then the Company recognizes revenue

under the arrangement using the proportional performance method.

Revenue recognized is limited to the lesser of the cumulative amount

of payments received or the cumulative amount of revenue earned, as determined using the straight-line method or proportional performance

method, as applicable, as of the period ending date.

At the inception of an arrangement that includes

milestone payments, the Company evaluates whether each milestone is substantive and at risk to both parties on the basis of the contingent

nature of the milestone.

This evaluation includes an assessment of whether:

(1) the consideration is commensurate with either the Company’s

performance to achieve the milestone or the enhancement of the value of the delivered item(s) as a result of a specific outcome resulting

from its performance to achieve the milestone, (2) the consideration relates solely to past performance and (3) the consideration is reasonable

relative to all of the deliverables and payment terms within the arrangement.

The Company evaluates factors such as the scientific, clinical,

regulatory, commercial, and other risks that must be overcome to achieve the particular milestone and the level of effort and investment

required to achieve the particular milestone in making this assessment.

There is considerable judgment involved in determining whether

a milestone satisfies all of the criteria required to conclude that a milestone is substantive.

Milestones that are not considered substantive

are recognized as earned if there are no remaining performance obligations or over the remaining period of performance, assuming all other

revenue recognition criteria are met.

(iv) Royalties and Profit Sharing Payments

Under the collaborative agreement with the collaboration

partners, the Company is entitled to receive royalties on sales of products, which is at certain percentage of the net sales.

recognizes revenue from these events based on the revenue recognition criteria set forth in ASC 606.

Based on those criteria, the Company

considers these payments to be contingent revenues, and recognizes them as revenue in the period in which the applicable contingency is

Revenues Derived from Research and Development

Activities Services - Revenues related to research and development and regulatory activities are recognized when the related services

or activities are performed, in accordance with the contract terms.

The Company typically has only one performance obligation at the inception

of a contract, which is to perform research and development services.

The Company may also provide its customers with an option to request

that the Company provides additional goods or services in the future, such as active pharmaceutical ingredient, API, or IND/NDA/ANDA/510K

The Company evaluates whether these options are material rights at the inception of the contract.

If the Company determines

an option is a material right, the Company will consider the option a separate performance obligation.

If the Company is entitled to reimbursement from

its customers for specified research and development expenses, the Company accounts for the related services that it provides as separate

performance obligations if it determines that these services represent a material right.

The Company also determines whether the reimbursement

of research and development expenses should be accounted for as revenues or an offset to research and development expenses in accordance

with provisions of gross or net revenue presentation.

The Company recognizes the corresponding revenues or records the corresponding offset

to research and development expenses as it satisfies the related performance obligations.

The Company then determines the transaction price

by reviewing the amount of consideration the Company is eligible to earn under the contracts, including any variable consideration.

the outstanding contracts, consideration typically includes fixed consideration and variable consideration in the form of potential milestone

At the start of an agreement, the Company’s transaction price usually consists of the payments made to or by the Company

based on the number of full-time equivalent researchers assigned to the project and the related research and development expenses incurred.

The Company does not typically include any payments that the Company may receive in the future in its initial transaction price because

the payments are not probable.

The Company would reassess the total transaction price at each reporting period to determine if the Company

should include additional payments in the transaction price.

The Company receives payments from its customers

based on billing schedules established in each contract.

Upfront payments and fees may be recorded as contract liabilities upon receipt

or when due, and may require deferral of revenue recognition to a future period until the Company performs its obligations under these

arrangements.

Amounts are recorded as accounts receivable when the right of the Company to consideration is unconditional.

does not assess whether a contract has a significant financing component if the expectation at contract inception is such that the period

between payment by the customers and the transfer of the promised goods or services to the customers will be one year or less.

Property and Equipment

Property and equipment is carried at cost net

of accumulated depreciation.

Repairs and maintenance are expensed as incurred.

Expenditures that improve the functionality of the related

asset or extend the useful life are capitalized.

When property and equipment is retired or otherwise disposed of, the related gain or

loss is included in operating income.

Leasehold improvements are depreciated on the straight-line method over the shorter of the remaining

lease term or estimated useful life of the asset.

Depreciation is calculated on the straight-line method, including property and equipment

under capital leases, generally based on the following useful lives:

Buildings and leasehold improvements

Machinery and equipment

Office equipment

Construction-in-Progress

The Company acquires constructions that constructs

certain of its fixed assets.

All direct and indirect costs that are related to the construction of fixed assets and incurred before the

assets are ready for their intended use are capitalized as construction-in-progress.

No depreciation is provided in respect of construction-in-progress.

Construction in progress is transferred to specific fixed asset items and depreciation of these assets commences when they are ready for

their intended use.

The Company acquired 20% of the ownership of a certain property and parcel of land owned by Zhonghui, with a view

to jointly develop the property into a healthcare center for senior living, long-term care, and medical care in the areas of ABVC’s

special interests, such as Ophthalmology, Oncology, and Central Nervous Systems.

The plan is to establish a base for the China market

and global development of these interests.

The Company is a party to a related cooperation agreement with Zhonghui, but is awaiting final

asset ownership certification from the Chinese government.

Impairment of Long-Lived Assets

The Company has adopted Accounting Standards Codification

subtopic 360-10, Property, Plant and Equipment (“ASC 360-10”).

ASC 360-10 requires that long-lived assets and certain identifiable

intangibles held and used by the Company be reviewed for impairment whenever events or changes in circumstances indicate that the carrying

amount of an asset may not be recoverable.

The Company evaluates its long-lived assets for impairment annually or more often if events

and circumstances warrant.

Events relating to recoverability may include significant unfavorable changes in business conditions, recurring

losses, or a forecasted inability to achieve break-even operating results over an extended period.

Should impairment in value be indicated,

the carrying value of intangible assets will be adjusted, based on estimates of future discounted cash flows resulting from the use and

ultimate disposition of the asset.

ASC 360-10 also requires assets to be disposed of be reported at the lower of the carrying amount or

the fair value less costs to sell.

Long-term Equity Investment

The Company acquires the equity investments to

promote business and strategic objectives.

The Company accounts for non-marketable equity and other equity investments for which the Company

does not have control over the investees as:

● Equity method investments when

the Company has the ability to exercise significant influence, but not control, over the investee.

Its proportionate share of the income

or loss is recognized monthly and is recorded in gains (losses) on equity investments.

● Non-marketable cost method

investments when the equity method does not apply.

Significant judgment is required to identify whether

an impairment exists in the valuation of the Company’s non-marketable equity investments, and therefore the Company considers this

a critical accounting estimate.

Its yearly analysis considers both qualitative and quantitative factors that may have a significant impact

on the investee’s fair value.

Qualitative analysis of its investments involves understanding the financial performance and near-term

prospects of the investee, changes in general market conditions in the investee’s industry or geographic area, and the management

and governance structure of the investee.

Quantitative assessments of the fair value of its investments are developed using the market

and income approaches.

The market approach includes the use of comparable financial metrics of private and public companies and recent

financing rounds.

The income approach includes the use of a discounted cash flow model, which requires significant estimates regarding

the investees’ revenue, costs, and discount rates.

The Company’s assessment of these factors in determining whether an impairment

exists could change in the future due to new developments or changes in applied assumptions.

Other-Than-Temporary Impairment

The Company’s long-term equity investments

are subject to a periodic impairment review.

Impairments affect earnings as follows:

● Marketable equity securities

include the consideration of general market conditions, the duration and extent to which the fair value is below cost, and our ability

and intent to hold the investment for a sufficient period of time to allow for recovery of value in the foreseeable future.

also considers specific adverse conditions related to the financial health of, and the business outlook for, the investee, which may

include industry and sector performance, changes in technology, operational and financing cash flow factors, and changes in the investee’s

credit rating.

The Company records other-than-temporary impairments on marketable equity securities and marketable equity method investments

in gains (losses) on equity investments.

Non-marketable equity investments based on the Company’s assessment of the severity and duration of the impairment, and qualitative and quantitative analysis of the operating performance of the investee;

adverse changes in market conditions and the regulatory or economic environment;

changes in operating structure or management of the investee;

additional funding requirements;

and the investee’s ability to remain in business.

A series of operating losses of an investee or other factors may indicate that a decrease in value of the investment has occurred that is other than temporary and that shall be recognized even though the decrease in value is in excess of what would otherwise be recognized by application of the equity method.

A loss in value of an investment that is other than a temporary decline shall be recognized.

Evidence of a loss in value might include, but would not necessarily be limited to, absence of an ability to recover the carrying amount of the investment or inability of the investee to sustain an earnings capacity that would justify the carrying amount of the investment.

The Company records other-than-temporary impairments for non-marketable cost method investments and equity method investments in gains (losses) on equity investments.

Other-than-temporary impairments of equity investments were both $0 for the three months ended March 31, 2024 and 2023.

The Company evaluates goodwill for impairment

annually or more frequently when an event occurs or circumstances change that indicate the carrying value may not be recoverable.

goodwill for impairment, the Company may elect to utilize a qualitative assessment to evaluate whether it is more likely than not that

the fair value of a reporting unit is less than its carrying amount.

If the qualitative assessment indicates that goodwill impairment

is more likely than not, the Company performs a two-step impairment test.

The Company tests goodwill for impairment under the two-step

impairment test by first comparing the book value of net assets to the fair value of the reporting units.

If the fair value is determined

to be less than the book value or qualitative factors indicate that it is more likely than not that goodwill is impaired, a second step

is performed to compute the amount of impairment as the difference between the estimated fair value of goodwill and the carrying value.

The Company estimates the fair value of the reporting units using discounted cash flows.

Forecasts of future cash flows are based on our

best estimate of future net sales and operating expenses, based primarily on expected category expansion, pricing, market segment share,

and general economic conditions.

The Company completed the required testing

of goodwill for impairment as of March 31, 2024 and December 31, 2023, and determined that goodwill was impaired because of the current financial

condition of the Company and the Company’s inability to generate future operating income without substantial sales volume

increases, which are highly uncertain.

Furthermore, the Company anticipates future cash flows indicate that the recoverability of

goodwill is not reasonably assured.

Convertible Notes

The Company accounts for the convertible notes

issued at a discount, by comparing the principal amount and book value, with the calculation of discounted method.

The Company assess

the discount per month.

The amortization period of the promissory note is 18 months.

Research and Development Expenses

The Company accounts for the cost of using licensing

rights in research and development cost according to ASC Topic 730-10-25-1.

This guidance provides that absent alternative future uses

the acquisition of product rights to be used in research and development activities must be charged to research and development expenses

when incurred.

For CDMO business unit, the Company accounts for

R&D costs in accordance with Accounting Standards Codification (“ASC”) 730, Research and Development (“ASC 730”).

Research and development expenses are charged to expense as incurred unless there is an alternative future use in other research and development

projects or otherwise.

Research and development expenses are comprised of costs incurred in performing research and development activities,

including personnel-related costs, facilities-related overhead, and outside contracted services including clinical trial costs, manufacturing

and process development costs for both clinical and preclinical materials, research costs, and other consulting services.

Non-refundable

advance payment for goods and services that will be used in future research and development activities are expensed when the activity

has been performed or when the goods have been received rather than when the payment is made.

In instances where the Company enters into

agreements with third parties to provide research and development services, costs are expensed as services are performed.

Post-retirement and post-employment benefits

The Company’s subsidiaries in Taiwan adopted

the government mandated defined contribution plan pursuant to the Labor Pension Act (the “Act”) in Taiwan.

Such labor regulations

require that the rate of contribution made by an employer to the Labor Pension Fund per month shall not be less than 6% of the worker’s

monthly salaries.

Pursuant to the Act, the Company makes monthly contribution equal to 6% of employees’ salaries to the employees’

pension fund.

The Company has no legal obligation for the benefits beyond the contributions made.

The total amounts for such employee

benefits, which were expensed as incurred, were $2,379 and $2,804 for the three months ended March 31, 2024 and 2023, respectively.

than the above, the Company does not provide any other post-retirement or post-employment benefits.

Stock-based Compensation

The Company measures expense associated with all

employee stock-based compensation awards using a fair value method and recognizes such expense in the consolidated financial statements

on a straight-line basis over the requisite service period in accordance with FASB ASC Topic 718 “Compensation-Stock Compensation”.

Total employee stock-based compensation expenses were $1,935,755 and $0 for the three months ended March 31, 2024 and 2023, respectively.

The Company accounted for stock-based compensation

to non-employees in accordance with FASB ASC Topic 718 “Compensation-Stock Compensation” and FASB ASC Topic 505-50 “Equity-Based

Payments to Non-Employees” which requires that the cost of services received from non-employees is measured at fair value at the

earlier of the performance commitment date or the date service is completed and recognized over the period the service is provided.

non-employee stock-based compensation expenses were $225,740 and $366,489 for the three months ended March 31, 2024 and 2023, respectively.

Beneficial Conversion Feature

From time to time, the Company may issue convertible

notes that may contain an imbedded beneficial conversion feature.

A beneficial conversion feature exists on the date a convertible note

is issued when the fair value of the underlying common stock to which the note is convertible into is in excess of the remaining unallocated

proceeds of the note after first considering the allocation of a portion of the note proceeds to the fair value of the warrants, if related

warrants have been granted.

The intrinsic value of the beneficial conversion feature is recorded as a debt discount with a corresponding

amount to additional paid in capital.

The debt discount is amortized to interest expense over the life of the note using the effective

interest method.

The Company accounts for income taxes using the

asset and liability approach which allows the recognition and measurement of deferred tax assets to be based upon the likelihood of realization

of tax benefits in future years.

Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary

differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax

A valuation allowance is provided for deferred tax assets if it is more likely than not these items will expire before the Company

is able to realize their benefits, or future deductibility is uncertain.

Under ASC 740, a tax position is recognized as

a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination

being presumed to occur.

The evaluation of a tax position is a two-step process.

The first step is to determine whether it is more-likely-than-not

that a tax position will be sustained upon examination, including the resolution of any related appeals or litigations based on the technical

merits of that position.

The second step is to measure a tax position that meets the more-likely-than-not threshold to determine the amount

of benefits recognized in the financial statements.

A tax position is measured at the largest amount of benefit that is greater than 50

percent likely of being realized upon ultimate settlement.

Tax positions that previously failed to meet the more-likely-than-not recognition

threshold should be recognized in the first subsequent period in which the threshold is met.

Previously recognized tax positions that

no longer meet the more-likely-than-not criteria should be de-recognized in the first subsequent financial reporting period in which the

threshold is no longer satisfied.

Penalties and interest incurred related to underpayment of income tax are classified as income tax expense

in the year incurred.

No significant penalty or interest relating to income taxes has been incurred for the three months ended March

31, 2024 and 2023.

GAAP also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods,

disclosures and transition.

On December 22, 2017, the SEC issued Staff Accounting

Bulletin (“SAB 118”), which provides guidance on accounting for tax effects of the Tax Act.

SAB 118 provides a measurement

period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under ASC 740.

In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Act for which the accounting under ASC

740 is complete.

To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete but it is

able to determine a reasonable estimate, it must record a provisional estimate to be included in the financial statements.

cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of

the provision of the tax laws that were in effect immediately before the enactment of the Tax Act.

While the Company is able to make reasonable

estimates of the impact of the reduction in corporate rate and the deemed repatriation transition tax, the final impact of the Tax Act

may differ from these estimates, due to, among other things, changes in our interpretations and assumptions, additional guidance that

may be issued by the I.R.S., and actions the Company may take.

The Company is continuing to gather additional information to determine

the final impact.

Valuation of Deferred Tax Assets

A valuation allowance is recorded to reduce the

Company’s deferred tax assets to the amount that is more likely than not to be realized.

In assessing the need for the valuation

allowance, management considers, among other things, projections of future taxable income and ongoing prudent and feasible tax planning

If the Company determines that sufficient negative evidence exists, then it will consider recording a valuation allowance

against a portion or all of the deferred tax assets in that jurisdiction.

If, after recording a valuation allowance, the Company’s

projections of future taxable income and other positive evidence considered in evaluating the need for a valuation allowance prove, with

the benefit of hindsight, to be inaccurate, it could prove to be more difficult to support the realization of its deferred tax assets.

As a result, an additional valuation allowance could be required, which would have an adverse impact on its effective income tax rate

Conversely, if, after recording a valuation allowance, the Company determines that sufficient positive evidence exists in

the jurisdiction in which the valuation allowance was recorded, it may reverse a portion or all of the valuation allowance in that jurisdiction.

In such situations, the adjustment made to the deferred tax asset would have a favorable impact on its effective income tax rate and results

in the period such determination was made.

Loss Per Share of Common Stock

The Company calculates net loss per share in accordance

with ASC Topic 260, “Earnings per Share”.

Basic loss per share is computed by dividing the net loss by the weighted average

number of common stock outstanding during the period.

Diluted loss per share is computed similar to basic loss per share except that the

denominator is increased to include the number of additional common stock that would have been outstanding if the potential common stock

equivalents had been issued and if the additional common stock were dilutive.

Diluted earnings per share excludes all dilutive potential

shares if their effect is anti-dilutive.

Commitments and Contingencies

The Company has adopted ASC Topic 450 “Contingencies”

subtopic 20, in determining its accruals and disclosures with respect to loss contingencies.

Accordingly, estimated losses from loss contingencies

are accrued by a charge to income when information available before financial statements are issued or are available to be issued indicates

that it is probable that an assets had been impaired or a liability had been incurred at the date of the financial statements and the

amount of the loss can be reasonably estimated.

Legal expenses associated with the contingency are expensed as incurred.

If a loss contingency

is not probable or reasonably estimable, disclosure of the loss contingency is made in the financial statements when it is at least reasonably

possible that a material loss could be incurred.

Foreign-currency Transactions

For the Company’s subsidiaries in Taiwan,

the foreign-currency transactions are recorded in New Taiwan dollars (“NTD”) at the rates of exchange in effect when the transactions

Gains or losses resulting from the application of different foreign exchange rates when cash in foreign currency is converted into

New Taiwan dollars, or when foreign-currency receivables or payables are settled, are credited or charged to income in the year of conversion

or settlement.

On the balance sheet dates, the balances of foreign-currency assets and liabilities are restated at the prevailing exchange

rates and the resulting differences are charged to current income except for those foreign currencies denominated investments in shares

of stock where such differences are accounted for as translation adjustments under the Statements of Stockholders’ Equity (Deficit).

Translation Adjustment

The accounts of the Company’s subsidiaries

in Taiwan were maintained, and their financial statements were expressed, in New Taiwan Dollar (“NT$”).

Such financial statements

were translated into U.S.

Dollars (“$” or “USD”) in accordance ASC 830, “Foreign Currency Matters”,

with the NT$ as the functional currency.

According to the Statement, all assets and liabilities are translated at the current exchange

rate, shareholder’s deficit are translated at the historical rates and income statement items are translated at an average exchange

rate for the period.

The resulting translation adjustments are reported under other comprehensive income (loss) as a component of shareholders’

equity (deficit).

Recent Accounting Pronouncements

In August 2020, the FASB issued ASU 2020-06, Debt

- Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”).

simplifies the accounting for convertible debt by eliminating the beneficial conversion and cash conversion accounting models.

Upon adoption

of ASU 2020-06, convertible debt, unless issued with a substantial premium or an embedded conversion feature that is not clearly and closely

related to the host contract, will no longer be allocated between debt and equity components.

This modification will reduce the issue

discount and result in less non-cash interest expense in financial statements.

ASU 2020-06 also updates the earnings per share calculation

and requires entities to assume share settlement when the convertible debt can be settled in cash or shares.

For contracts in an entity’s

own equity, the type of contracts primarily affected by ASU 2020-06 are freestanding and embedded features that are accounted for as derivatives

under the current guidance due to a failure to meet the settlement assessment by removing the requirements to (i) consider whether the

contract would be settled in registered shares, (ii) consider whether collateral is required to be posted, and (iii) assess shareholder

ASU 2020-06 is effective for fiscal years beginning after December 15, 2023.

Early adoption is permitted, but no earlier than

fiscal years beginning after December 15, 2020, and only if adopted as of the beginning of such fiscal year.

The Company is currently

evaluating the impact that the standard will have on its unaudited consolidated financial statements.

In March 2022, the FASB issued ASU 2022-02, Troubled

Debt Restructurings and Vintage Disclosures.

This ASU eliminates the accounting guidance for troubled debt restructurings by creditors

that have adopted ASU 2016-13, Measurement of Credit Losses on Financial Instruments.

This ASU also enhances the disclosure requirements

for certain loan refinancing and restructurings by creditors when a borrower is experiencing financial difficulty.

In addition, the ASU

amends the guidance on vintage disclosures to require entities to disclose current period gross write-offs by year of origination for

financing receivables and net investments in leases within the scope of ASC 326-20.

The ASU is effective for annual periods beginning

after December 15, 2022, including interim periods within those fiscal years.

Adoption of the ASU would be applied prospectively.

adoption is also permitted, including adoption in an interim period.

The Company is currently evaluating the impact that the standard

will have on its unaudited consolidated financial statements.

The Company has identified critical accounting

policies that, as a result of judgments, uncertainties, uniqueness and complexities of the underlying accounting standards and operation

involved could result in material changes to our financial position or results of operations under different conditions or using different

The Company uses the same accounting policies

in preparing quarterly and annual financial statements.

Certain information and footnote disclosures normally included in the annual

consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America

GAAP”) have been condensed or omitted.

These unaudited consolidated financial statements should be read in conjunction

with the Company’s audited consolidated financial statements and notes thereto included in the Company’s Annual Report on

Form 10-K for the year ended December 31, 2023, filed with the SEC on March 13, 2024 (“2023 Form 10-K.”)

Estimates and Assumptions

5 unchanged sentences

to other risks and uncertainties that may cause actual results to differ from estimated amounts.

Results of Operations - Three Months Ended March 31, 2024 Compared

to Three Months Ended March 31, 2023.

Recent Accounting Pronouncements

In August 2023, the FASB issued ASU 2023-05, Business

Combinations—Joint Venture Formations (Subtopic 805-60) which requires certain joint ventures to apply a new basis of accounting

upon formation by recognizing and initially measuring most of their assets and liabilities at fair value.

The guidance does not apply

to joint ventures that may be proportionately consolidated and those that are collaborative arrangements.

ASU 2023-05 is effective for

joint venture with a formation date on or after January 1, 2025, early adoption is permitted.

The Company is currently evaluating the

impact that the standard will have on its unaudited consolidated financial statements.

of Operations - Three Months Ended June 30, 2024 Compared to Three Months Ended June 30, 2023.

The following table presents, for the three months

indicated, our unaudited consolidated statements of operations information.

Three Months Ended

Cost of revenues

Gross (loss) profit

Three Months Ended June 30,

Gross Profits

Operating Expenses

Selling, general and administrative expenses

Research and development expenses

Stock-based compensation

Total operating expenses

Loss from Operations

Other Income (Expense)

Interest income

Interest expense

Operating sublease income

Gain/Loss on foreign exchange changes

Other (expense) income

Total other (expense) income

Loss before income tax

Provision for (benefit from) income tax

Net loss attributable to noncontrolling interests

Net loss attributed to ABVC and subsidiaries

Foreign currency translation adjustment

Comprehensive Loss

$ (4,216,040 )

$ (1,794,586 )

Net loss per share:

Basic and diluted

Weighted average number of common stock outstanding:

Basic and diluted

We generated $1,205 and

$128,272 in revenues for the three months ended March 31, 2024 and 2023, respectively.

The decrease in revenues was due to completion

of ongoing projects and awaiting for new approval.

Interest (Expense), Net

We generated $117,142 and $6,109 in revenues for the three months ended

June 30, 2024 and 2023, respectively.

The increase in revenues was mainly due to the milestone revenue recognized from licensing to ForSeeCon.

Operating Expenses.

Our operating

expenses have increased by $1,471,098 or 75%, to $3,445,318 for the three months ended March 31, 2024 from $1,974,220 for the three months

ended March 31, 2023.

Such increase in operating expenses was mainly attributable to the increase in stock-based compensation, while being

offset by the decrease in selling, general and administrative expenses and research and development expenses, since research and development

projects have been dormant as the Company waits for results for further development.

Our operating expenses have decreased by $1,033,377 or 49%, to $1,093,593

for the three months ended June 30, 2024 from $2,126,970 for the three months ended June 30, 2023.

Such decrease in operating expenses

was mainly attributable to the decrease in selling, general and administrative expenses and research and development expenses.

Other Income (Expense) .

expense was $536,629 for the three months ended March 31, 2024, compared to other income of $8,954 for the three months ended March 31,

The change was principally caused by the increase in other income, and the gain on foreign exchange changes, while being offset

by the decrease in interest income, interest expense for the three months ended March 31, 2024.

Interest income (expense), net, was $(680,634)

for the three months ended March 31, 2024, compared to $(3,952) for the three months ended March 31, 2023.

Our other expense was $406,942 for the three months ended June 30, 2024,

compared to other expense of $39,688 for the three months ended June 30, 2023.

The change was principally caused by the increase in interest

expense and the loss on equity investment, while being offset by the increase in interest income for the three months ended June 30, 2024.

Interest income (expense), net.

was $(232,891) for the three months ended June 30, 2024, compared to ($59,711) for the three months ended June 30, 2023.

of $173,180, or approximately 290%, was primarily due to the increase in interest expense due to recognition of interest expense for

the converted notes for proper accounting purpose .

As a result of the above factors, our net loss was $1,272,689 for the

three months ended June 30, 2024 compared to $2,315,225 for the three months ended June 30, 2023, representing a decrease of $1,042,536,

Results of Operations - Six Months Ended June

30, 2024 Compared to Six Months Ended June 30, 2023.

The following table presents, for the six months

indicated, our unaudited consolidated statements of operations information.

Six Months Ended June 30,

Gross Profits

Operating Expenses

Loss from Operations

Other Income (Expense)

Interest (Expense), Net

We generated $118,347 and $134,381 in revenues for the six months ended

June 30, 2024 and 2023, respectively.

The decrease in revenues was mainly due to the decrease in revenue from Contract Development and

Manufacturing Organization (“CDMO”) services.

Operating Expenses.

Our operating expenses have increased by $437,721, or 11%, to $4,538,911

for the six months ended June 30, 2024 from $4,101,190 for the six months ended June 30, 2023.

Such increase in operating expenses was

mainly attributable to the increase in stock-based compensation expenses by $2,365,507 which relates to costs in conjunction with employee

compensation and non-employee share-based payments.

Other Income (Expense) .

Our other expense was $943,571 for the six months ended June 30, 2024,

compared to other expense of $30,734 for the six months ended June 30, 2023.

The change was principally caused by the increase in interest

expense and loss on equity method investment, while being offset by the increase in foreign exchange income for the six months ended June

Interest income (expense), net.

was $(913,525) for the six months ended June 30, 2024, compared to $(63,663) for the six months ended June 30, 2023.

The increase of

or approximately 17,123%, was primarily due to the increase in interest expense due to recognition of interest expense for the converted

notes for proper accounting purpose.

As a result of the above

factors, our net loss was $(3,981,019) for the three months ended March 31, 2024 compared to $(1,897,230) for the three months ended March

31, 2023, representing an increase of $2,083,789, or 110%.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT

$849,862, or approximately 1335%, was primarily due to the increase in interest expense due to recognition of interest expense for the

converted notes for proper accounting purpose .

As a result of the above factors, our net loss was $5,253,708 for the

six months ended June 30, 2024 compared to $4,212,455 for the six months ended June 30, 2023, representing an increase of $1,041,253,

Liquidity and Capital Resources

Working Capital

Current Assets

Current Liabilities

Working Capital (Deficit)

$ (4,359,360 )

$ (4,275,781 )

Cash Flow from Operating Activities

During the six months ended June 30, 2024 and 2023, the net cash used

in operating activities were $1,487,251 and $2,397,460, respectively.

The decrease was primarily due to the increase in licensing cash

payment from ForSeeCon, and the decrease in operating expenses.

Company has been strictly control the operating cash outflow, such as

making certain payments with shares in lieu of cash, extending vendors’ payment terms, and other initiatives to save the cash burn.

Cash Flow from Investing Activities

During the six months ended June 30, 2024 and

2023, the net cash used in investing activities were $0 and $440,575 respectively.

The increases were mainly due to the increase in prepayment

for long-term investments during six months ended June 30, 2024.

Cash Flow from Financing Activities

During the six months ended June 30, 2024 and 2023, the net cash provided

by financing activities were $1,544,706 and $2,175,000, respectively.

The decrease in net cash provided by financing activities were primarily

due to the proceeds from issuance of convertible notes, Lind’s exercise of warrants, and common stock subscription in advance.

QUANTITATIVE AND QUALITATIVE

DISCLOSURES ABOUT MARKET RISK.

As a smaller reporting company, we are not required

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What changed 10-Q

Item 2. Management’s Discussion and Analysis