Note 8 - Variable Interest Entity

3 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Variable Interest Entity Disclosure [Text Block]

8. Variable Interest Entity

On

May 23, 2016,

Amarillo Biosciences, Inc. (“ABI”), the Principal, entered into an Agency and Service Agreement with ACTS Global Healthcare, Inc. (“ACTS Global”), a Taiwan Corporation, the Agent. To date, ABI has advanced to ACTS Global “Principal Funds” in the amount of NTD

$3,000,681

(

$91,968

USD), to be utilized and /or expended by ACTS Global solely as instructed by ABI. Pursuant to the Agreement, additional advances

may

be made by ABI to ACTS Global. An advance in the amount of

$37,500

was made to ACTS Global on

September 1, 2017.

On

December 18, 2017,

an advance in the amount of

$50,000

was made to ACTS Global. ACTS Global was also engaged by ABI to perform such other business services as

may

be requested by ABI in the agreed geographic area of Taiwan and the People’s Republic of China. That Agency Agreement is still in force. For their services, ACTS Global, is paid by ABI,

one

percent (

1%

) of the Principal’s services expended by the Agent at the Principal’s direction. Any other services rendered by the Agent will be paid for by the Principal based on comparable and/or reasonable values of the service rendered.

Since the inception of the Agency Agreement in

2016,

ACTS Global has neither performed services for any other clients nor contracted any other clients for future services. Dr. Stephen T. Chen, ABI Chairman, CEO, and President, is also a stockholder in ACTS Global and has indicated that ACTS Global is working exclusively for ABI and that there is

no

desire on the part of ACTS Global to secure additional clients. Because of the exclusivity of this Agency relationship and control by Dr. Chen, it was determined by management that ACTS Global is a VIE and that the Company is the primary beneficiary of ACTS Global because the Company, through Dr. Chen, has the power to direct the activities of ACTS Global that most significantly impact the activities of ACTS Global, and the obligation to absorb losses of ACTS Global that could potentially be significant to ACTS Global and the right to receive benefits from ACTS Global that could potentially be significant to ACTS Global’s economic performance. As such, ACTS Global was consolidated in the financial statements of the Company effective

January 1, 2018

at the carrying values on ACTS Global. The net effect of the initial consolidation was trivial as the Company had been recording the transactions of ACTS through the agency agreement.

The carrying amounts and classification of ACTS assets and liabilities included in the Company’s unaudited condensed consolidated balance sheets are as follows:

	March 31, 2018
Current assets	$	100,497
Total assets	$	100,497
Current liabilities	$	19,331
Total liabilities	$	19,331

The amounts shown in the table above exclude intercompany balances that are eliminated upon consolidation. All of the assets in the table above are restricted for settlement of the ACTS obligations, and all of the liabilities in the table above can only be settled by using ACTS resources.