amar_corresp
AMARILLO BIOSCIENCES, INC.
4134 Business Park Drive
Amarillo, Texas 79110
February
17, 2021
VIA
EDGAR DELIVERY
AND
ELECTRONIC MAIL
U.S. Securities & Exchange Commission
Division of Corporation Finance
Office of Life Sciences
100 F Street, NE
Washington, D.C. 20549
Attention:
Mr.
Dillon Hagrius
Mr. Joe McMann
Re:
Amarillo Biosciences, Inc.
Preliminary Information Statement on Schedule 14C
Filed January 28, 2021
File No. 000-20791
Dear Mr. Hagrius and Mr. McMann:
I am
writing as counsel to Amarillo Biosciences,
Inc. (the “Company”) in response to the comment
(the “Comment”) received from the U.S. Securities and
Exchange Commission (the “Commission”) by a letter
dated February 12, 2021 to the Company’s Preliminary
Information Statement on Schedule 14C filed with the Commission on
January 28, 2021 (the “Preliminary Information
Statement”). Set forth below is the Company’s response
to the Comment.
The
number of the paragraph corresponds to the numbering of the
Comment, which for your convenience we have incorporated into this
response letter. Capitalized terms not
defined herein have the meanings given to them in the Preliminary
Information Statement.
1.
Please
revise the Information Statement to provide the information
required by Item 14 of Schedule 14A concerning your prospective
acquisition of Ainos, Inc. and/or prospective acquisition of
Ainos’ assets. Refer to Item 1 of Schedule 14C and Items
14(a)(3) and (a)(1) of Schedule 14A. In this regard, and without
limitation, we note that your proxy and amended Restated
Certificate of Formation indicate that if the transaction were
completed: (i) you would be controlled by executive officers and
directors who currently control Ainos, Inc.; (ii) you would acquire
patent assets as well as personnel from Ainos; (iii) your name
would change to “Ainos, Inc.”; and (iv) Ainos, Inc.
would be expected to “contribute additional resources to your
business including a new product line of novel POCT rapid test
kits.”
Amarillo Biosciences, Inc.
Response to Commission Comments to Schedule 14C Preliminary
Information Statement - February 17 2021
Page 1 of 3
Company’s Response
In
response to the Commission’s Comment, the Company has
carefully considered Item 14(a)(3) and (a)(1) of Schedule 14A and
respectfully submits that the transaction does not constitute an
acquisition of a business as referenced in Item 14(a)(3) or, a
merger or consolidation as referenced in Item 14(a)(1) because the
sole consideration for the shares to be issued by the Company to
Ainos, Inc. (the “Purchaser”) is the assignment of the
Patent Assets by Purchaser to the Company. As such, pro-forma
financial statements and/or financial statements and additional
disclosures required under Item 14 are not required nor included in
our 14C Preliminary Information Statement filing.
The
definition of a “business” under Item 14(a)(3) is found
in Regulation S-X Rule 11-01(d) (17 C.F.R. 210.11-01(d)) which
states:
[T]he
term business should be evaluated in light of the facts and
circumstances involved and whether there is sufficient continuity
of the acquired entity’s operations prior to and after the
transactions so that disclosure of prior financial information is
material to an understanding of future operations. A presumption
exists that a separate entity, a subsidiary, or a division is a
business.
In this
particular transaction, there is no acquisition of a separate
entity, a subsidiary or a business division. While we acknowledge
that a product line of an entity may also constitute a business
under certain circumstances, none of such circumstances exist in
this particular transaction. Rule 11-01(d) provides guidance in
this regard, including, without limitation, the
following:
1.
Whether the nature of the revenue-producing activity of the
component will remain generally the same as before the transaction;
or
2.
Whether any of the following attributes remain with the component
after the transaction:
(i)
Physical facilities,
(ii)
Employee base,
(iii)
Market distribution system,
(iv)
Sales force,
(v)
Customer base,
(vi)
Operating rights,
(vii)
Production techniques, or
(viii)
Trade names
Amarillo Biosciences, Inc.
Response to Commission Comments to Schedule 14C Preliminary
Information Statement - February 17 2021
Page 2 of 3
Applying Rule
11-01(d) to the transaction contemplated by the SPA, the ongoing
operations of Purchaser will not be transferred to the Company. The
Purchaser is an indirect subsidiary of Taiwan Carbon Nano
Technology Corporation and is in the business of developing and
marketing advanced carbon technology including utilizing
nano-polymer materials, MEMS microchip technology, bionic
algorithms and analysis stems for artificial respirators and
electronic nose system sensing devices. The Patent Assets have not
been fully commercialized and there are no established revenue
generating activities relating to these Patent Assets. In
connection with the assignment of the Patent Assets to the Company
pursuant to the SPA, Purchaser is not contractually obligated to,
nor will it transfer any physical facilities, employee base, market
distribution system, sales force, customer base, operating rights,
and production techniques or trade names of the Purchaser to the
Company at the Closing except that the Company’s name will be
changed to “Ainos,
Inc.” After the Closing, the Company will continue to
develop its existing product lines and will also potentially
develop a new line of novel POCT rapid tests for pneumonia based on
the Patent Assets and market such existing and new products using
the Company’s own infrastructure and resources. There is no
contractual obligation or commitment of Purchaser to contribute a
product line or any items set forth under Rule 11-01(d)(2) to the
Company to commercialize the Patent Assets. As such, other than the
Company’s use of the Purchaser’s corporate name
following the Closing, the only component of the Purchaser’s
operations being transferred to the Company pursuant to the
transaction under the SPA are the Patent Assets.
The
election of the Purchaser Designated Directors and officers at the
Closing also does not guarantee or requires commitment of Purchaser
to contribute additional resources to the Company following the
Closing. There exists no provision under the SPA requiring the
Purchaser to transfer its sales force, research and development
staffing, or any personnel of any kind to the Company. The
post-Closing personnel plans for the Company have not been
determined yet, though it is expected that some of the
Company’s current key personnel may remain with the Company
in senior management or advisory positions
post-Closing.
We respectfully submit that the only transaction to which Item 14
of Schedule 14A could arguably apply is if the transaction involved
the acquisition of any other going business or the assets of a
going business. We have explained that the transaction contemplated
by the SPA is neither the acquisition of a going business nor the
assets of a going business. Although the transaction will result in
a change in control of the Company, there is no requirement that a
change in control, in and of itself, is the type of transaction to
which Item 14 applies. The transaction is not a merger or
consolidation under state law, the acquisition of the securities of
another person, the sale of the assets of the Company, or the
liquidation of the Company. As a result, Items 14(a)(3) and
(a)(1) of Schedule 14A are inapplicable to the transaction
contemplated by the SPA.
Amarillo Biosciences, Inc.
Response to Commission Comments to Schedule 14C Preliminary
Information Statement - February 17 2021
Page [Insert Page
Number] of 1
In
response to the above-comments, the Company hereby acknowledges
that:
●
the Company is responsible for the adequacy and accuracy of the
disclosure in the filing;
●
staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with respect to the filing; and
●
the Company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
I am
available to discuss this response by telephone at (213)300-5220 at
your convenience. Thank you in advance for your
assistance.
Very
truly yours,
AMARILLO
BIOSCIENCES, INC.
/s/
John Junyong Lee
Attorney
at Law
Legal
Counsel
Mr.
Lawrence Lin
Amarillo Biosciences, Inc.
Response to Commission Comments to Schedule 14C Preliminary
Information Statement - February 17 2021
Page 3 of 3