Quarterly report pursuant to Section 13 or 15(d)

Equity Method Investment

Equity Method Investment
9 Months Ended
Sep. 30, 2019
Equity Method Investments and Joint Ventures [Abstract]  



The Company uses the equity method of accounting for its investment in, and earning or loss of, company that it does not control but over which it does exert significant influence. The Company considers whether the fair value of its equity method investment has declined below its carrying value whenever adverse events or changes in circumstances indicate that recorded value may not be recoverable. If the Company considers any decline to be other than temporary (based on various factors, including historical financial results and the overall health of the investee), then a write-down would be recorded to estimated fair value.


As of September 30, 2019 and December 31, 2018, the equity method investment amounted to $436,100 and $385,162, respectively. The investment represents the Company's subsidiary, Avalon Shanghai's interest in Epicon Biotech Co., Ltd. ("Epicon"). Epicon was incorporated on August 14, 2018 in the PRC. Avalon Shanghai and the other unrelated company, Jiangsu Unicorn Biological Technology Co., Ltd. ("Unicorn"), accounted for 40% and 60% of the total ownership, respectively. Epicon is focused on cell preparation, third party testing, biological sample repository for commercial and scientific research purposes and the clinical transformation of scientific achievements.


The Company treats the equity investment in the condensed consolidated financial statements under the equity method. Under the equity method, the investment is initially recorded at cost, adjusted for any excess of the Company's share of the incorporated-date fair values of the investee's identifiable net assets over the cost of the investment (if any). Thereafter, the investment is adjusted for the post incorporation change in the Company's share of the investee's net assets and any impairment loss relating to the investment. For the three and nine months ended September 30, 2019, the Company's share of Epicon's net loss was $25,266 and $48,353, respectively, which was included in loss from equity-method investment in the accompanying condensed consolidated statements of operations and comprehensive loss. For the three and nine months ended September 30, 2018, the Company's share of Epicon's net loss was $0.


Activity recorded for the Company's equity method investment in Epicon is summarized in the following table.


Equity investment carrying value at December 31, 2018   $ 385,162  
Epicon's net loss attributable to the Company     (48,353 )
Payment made for equity method investment     116,545  
Foreign currency fluctuation     (17,254 )
Equity investment carrying value at September 30, 2019   $ 436,100  


The tables below present the summarized financial information, as provided to the Company by the investee, for the unconsolidated company:


    September 30,
    December 31,
Current assets   $ 51,666     $ 301,714  
Noncurrent assets     241,541       7,015  
Current liabilities     336       38  
Noncurrent liabilities     -       -  
Equity     292,871       308,691  


    For the Three Months Ended
September 30,
    For the Nine Months Ended
September 30,
Net revenue   $ -     $ -  
Gross profit     -       -  
Loss from operation     63,165       120,882  
Net loss     63,165       120,882