Exhibit 99.1
APTORUM GROUP LIMITED
Financial Statements
Table of Contents
F-1
APTORUM GROUP LIMITED
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, 2022 and December 31, 2021
(Stated in U.S. Dollars)
| June 30, 2022 | December 31, 2021 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | $ | ||||||
| Restricted cash | ||||||||
| Accounts receivable | ||||||||
| Inventories | ||||||||
| Marketable securities, at fair value | ||||||||
| Amounts due from related parties | ||||||||
| Due from brokers | ||||||||
| Loan receivable from a related party | ||||||||
| Other receivables and prepayments | ||||||||
| Total current assets | ||||||||
| Property, plant and equipment, net | ||||||||
| Operating lease right-of-use assets | ||||||||
| Long-term investments | ||||||||
| Intangible assets, net | ||||||||
| Long-term deposits | ||||||||
| Total Assets | $ | $ | ||||||
| LIABILITIES AND EQUITY | ||||||||
| LIABILITIES | ||||||||
| Current liabilities: | ||||||||
| Amounts due to related parties | $ | $ | ||||||
| Accounts payable and accrued expenses | ||||||||
| Finance lease liabilities, current | ||||||||
| Operating lease liabilities, current | ||||||||
| Loan payables | - | |||||||
| Total current liabilities | ||||||||
| Operating lease liabilities, non-current | ||||||||
| Total Liabilities | $ | $ | ||||||
| Commitments and contingencies | ||||||||
| EQUITY | ||||||||
| Class A Ordinary Shares ($ | $ | $ | ||||||
| Class B Ordinary Shares ($ | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated other comprehensive income (deficit) | ( | ) | ||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total equity attributable to the shareholders of Aptorum Group Limited | ||||||||
| Non-controlling interests | ( | ) | ( | ) | ||||
| Total equity | ||||||||
| Total Liabilities and Equity | $ | $ | ||||||
See accompanying notes to the condensed consolidated financial statements.
F-2
APTORUM GROUP LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
For the six months ended June 30, 2022 and 2021
(Stated in U.S. Dollars)
| For the six months ended June 30, | ||||||||
| 2022 | 2021 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Revenue | ||||||||
| Healthcare services income | $ | $ | ||||||
| Operating expenses | ||||||||
| Costs of healthcare services | ( | ) | ( | ) | ||||
| Research and development expenses | ( | ) | ( | ) | ||||
| General and administrative fees | ( | ) | ( | ) | ||||
| Legal and professional fees | ( | ) | ( | ) | ||||
| Other operating expenses | ( | ) | ( | ) | ||||
| Total operating expenses | ( | ) | ( | ) | ||||
| Other income (loss) | ||||||||
| Loss on investments in marketable securities, net | ( | ) | ( | ) | ||||
| Gain on non-marketable investment, net | - | |||||||
| Loss on investments in derivatives, net | - | ( | ) | |||||
| Gain on use of digital currencies | - | |||||||
| Interest income (expense), net | ( | ) | ||||||
| Sundry income | ||||||||
| Total other income (loss), net | ( | ) | ||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Less: net loss attributable to non-controlling interests | ( | ) | ( | ) | ||||
| Net loss attributable to Aptorum Group Limited | $ | ( | ) | $ | ( | ) | ||
| $ | ( | ) | $ | ( | ) | |||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Other comprehensive income (loss) | ||||||||
| Exchange differences on translation of foreign operations | ( | ) | ||||||
| Other comprehensive income (loss) | ( | ) | ||||||
| Comprehensive loss | ( | ) | ( | ) | ||||
| Less: comprehensive loss attributable to non-controlling interests | ( | ) | ( | ) | ||||
| Comprehensive loss attributable to the shareholders of Aptorum Group Limited | ( | ) | ( | ) | ||||
See accompanying notes to the condensed consolidated financial statements.
F-3
APTORUM GROUP LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
For the six months ended June 30, 2022 and 2021
(Stated in U.S. Dollars)
| Class A Ordinary Shares | Class B Ordinary Shares | Additional Paid-in Capital | Accumulated deficit | Accumulated other comprehensive income (loss) | Non- controlling interests | Total | ||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Amount | Amount | Amount | Amount | Amount | ||||||||||||||||||||||||||||
| Balance, January 1, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||
| Issuance of shares to non-controlling interest | - | - | ( | ) | ||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | ( | ) | - | ( | ) | ( | ) | ||||||||||||||||||||||||
| Share-based compensation | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||
| Exercise of share options | - | - | - | - | - | |||||||||||||||||||||||||||||||
| Exchange difference on translation of foreign operations | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||
| Balance, June 30, 2022 (Unaudited) | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||||||||||||||||
| Balance, January 1, 2021 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||||||||||||||||
| Issuance of share to non-controlling interest | - | - | ( | ) | - | |||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Issuance of Class A Ordinary Shares | ||||||||||||||||||||||||||||||||||||
| Share-based compensation | - | - | ||||||||||||||||||||||||||||||||||
| Exercise of share options | ||||||||||||||||||||||||||||||||||||
| Exercise of warrants | ||||||||||||||||||||||||||||||||||||
| Disposal of subsidiaries under common control transaction | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Exchange difference on translation of foreign operations | - | - | ( | ) | - | ( | ) | |||||||||||||||||||||||||||||
| Balance, June 30, 2021 (Unaudited) | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||||||||||||||||
See accompanying notes to the condensed consolidated financial statements.
F-4
APTORUM GROUP LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the six months ended June 30, 2022 and 2021
(Stated in U.S. Dollars)
| For the six months ended June 30, | ||||||||
| 2022 | 2021 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Cash flows from operating activities | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Amortization and depreciation | ||||||||
| Share-based compensation | ||||||||
| Loss on investments in marketable securities, net | ||||||||
| Gain on non-marketable investment, net | ( | ) | ||||||
| Loss on investments in derivatives, net | ||||||||
| Gain on use of digital currencies | ( | ) | ||||||
| Settlement of service fee by tokens and digital currencies | ||||||||
| Operating lease cost | ||||||||
| Impairment loss of other receivables and prepayment | ||||||||
| Interest income | ( | ) | ( | ) | ||||
| Interest expense | ||||||||
| Accretion of finance lease liabilities | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ||||||||
| Inventories | ||||||||
| Other receivables and prepayments | ( | ) | ||||||
| Long-term deposits | ||||||||
| Due from brokers | ( | ) | ||||||
| Amounts due from related parties | ( | ) | ( | ) | ||||
| Amounts due to related parties | ( | ) | ( | ) | ||||
| Accounts payable and accrued expenses | ||||||||
| Operating lease liabilities | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities | ||||||||
| Loan to related parties | ( | ) | ||||||
| Loan repayment from a related party | ||||||||
| Purchases of property, plant and equipment | ( | ) | ( | ) | ||||
| Proceeds from sale of marketable securities | ||||||||
| Disposal of subsidiary, net of cash disposed | ( | ) | ||||||
| Purchases of intangible assets | ( | ) | ||||||
| Net cash provided by investing activities | ||||||||
| Cash flows from financing activities | ||||||||
| Loan from banks | ||||||||
| Exercise of options and warrants | ||||||||
| Payment of finance lease obligations | ( | ) | ( | ) | ||||
| Proceeds from issuance of subsidiaries’ shares | ||||||||
| Loan from a related party | ||||||||
| Repayment of loan from related parties | ( | ) | ||||||
| Proceeds from issuance of Class A Ordinary Shares and warrants, net | ||||||||
| Net cash provided by financing activities | ||||||||
| Net (decrease) increase in cash and restricted cash | ( | ) | ||||||
| Cash and restricted cash- Beginning of period | ||||||||
| Cash and restricted cash - End of period | $ | $ | ||||||
| Supplemental disclosures of cash flow information | ||||||||
| Interest paid | $ | $ | ||||||
| Income taxes paid | $ | $ | ||||||
| Reconciliation of cash and restricted cash | ||||||||
| Cash | $ | $ | ||||||
| Restricted cash | ||||||||
| Total cash and restricted cash shown on the condensed consolidated statements of cash flows | $ | $ | ||||||
See accompanying notes to the condensed consolidated financial statements.
F-5
APTORUM GROUP LIMITED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(Stated in U.S. Dollars)
1. ORGANIZATION
The condensed consolidated financial statements include the financial statements of Aptorum Group Limited (the “Company”) and its subsidiaries. The Company and its subsidiaries are hereinafter collectively referred to as the “Group”.
The Company, formerly known as APTUS Holdings Limited and STRIKER ASIA OPPORTUNITIES FUND CORPORATION, is a company incorporated on September 13, 2010 under the laws of the Cayman Islands with limited liability.
The Company researches and develops life science and biopharmaceutical products within its wholly-owned subsidiary, Aptorum Therapeutics Limited, formerly known as APTUS Therapeutics Limited (“Aptorum Therapeutics”) and its indirect subsidiary companies (collectively, “Aptorum Therapeutics Group”).
2. LIQUIDITY
The Group reported a net loss of $
The Group’s principal sources of liquidity
have been cash and line of credit facility from related parties and banks. As of the date of issuance of the condensed consolidated financial
statements, the Group has approximately $
The Group believes that available cash, together with the efforts from aforementioned management plan and actions, should enable the Group to meet current anticipated cash needs for at least the next 12 months after the date that the condensed consolidated financial statements are issued and the Group has prepared the condensed consolidated financial statements on a going concern basis. We may, however, need additional capital in the future to fund our continued operations. If we determine that our cash requirements exceed the amount of cash and cash equivalents we have at the time, we may seek to issue equity or debt securities or obtain credit facilities. The issuance and sale of additional equity or convertible debts would result in further dilution to our shareholders. The incurrence of indebtedness would result in increased fixed obligations and could result in operating covenants that might restrict our operations. We cannot assure you the financing will be available in amounts or on terms acceptable to us, if at all.
F-6
APTORUM GROUP LIMITED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(Stated in U.S. Dollars)
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of presentation and consolidation
The condensed consolidated financial statements of the Group are presented on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include the accounts of the Company, its direct and indirect wholly and majority owned subsidiaries. In accordance with the provisions of Accounting Standards Codification (“ASC”) 810, Consolidation, we consolidate any variable interest entity (“VIE”) of which we are the primary beneficiary. The typical condition for a controlling financial interest ownership is holding a majority of the voting interests of an entity; however, a controlling financial interest may also exist in entities, such as VIEs, through arrangements that do not involve controlling voting interests. ASC 810 requires a variable interest holder to consolidate a VIE if that party has the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. We do not consolidate a VIE in which we have a majority ownership interest when we are not considered the primary beneficiary. We have determined that we are not the primary beneficiary of one of the VIE (see Note 12, Variable Interest Entity). We evaluate our relationships with the VIE on an ongoing basis to determine whether we become the primary beneficiary. All material intercompany balances and transactions have been eliminated in preparation of the consolidated financial statements.
Use of estimates
The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP 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 financial statements as well as income and expenses during the reporting period. Significant accounting estimates reflected in the Group’s condensed consolidated financial statements include valuation of equity securities, fair value of investments in securities, finance lease, warrants and share options, the useful lives of intangible assets and property, plant and equipment, impairment of long-lived assets, valuation allowance for deferred tax assets, and collectability of receivables. Actual results could differ from those estimates.
Marketable securities
Marketable securities are publicly traded stocks measured at fair value and classified within Level 1 and 2 in the fair value hierarchy because the Group either uses quoted prices for identical assets in active markets, inputs that are based upon quoted prices for similar instruments in active markets, or quoted prices for identical assets in markets with insufficient volume or infrequent transaction (less active markets).
F-7
APTORUM GROUP LIMITED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(Stated in U.S. Dollars)
Long-term investments
The Group’s long-term investments consist of equity method investment in common stocks and non-marketable investments in non-redeemable preferred shares of privately-held companies that are not required to be consolidated under the variable interest or voting models. Long-term investments are classified as non-current assets on the condensed consolidated balance sheets as those investments do not have stated contractual maturity dates.
Non marketable investments
The non-marketable equity securities not accounted for under the equity method are measured at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer. Adjustments are determined primarily based on a market approach as of the transaction date.
Equity method investment – Fair value option
The Group elects the fair value option for an investment that would otherwise be accounted for using the equity method of accounting. Such election is irrevocable and is applied on an investment by investment basis at initial recognition. The fair value of such investments is based on quoted prices in an active market, if any, or recent orderly transactions for identical or similar investment of the same issuer. Changes in the fair value of these equity method investments are recognized in other income (loss), net in the condensed consolidated statement of operations.
Operating leases
At the inception of a contract, the Group determines if the arrangement is, or contains, a lease. Operating lease liabilities are recognized at lease commencement based on the present value of lease payments over the lease term. Operating lease right-of-use assets are initially measured at cost, which comprises the initial amount of the lease liability adjusted for lease payments made at or before the lease commencement date, plus any initial direct costs incurred and less any lease incentives received. As the rate implicit in the lease cannot be readily determined, the Group uses incremental borrowing rate at the lease commencement date in determining the imputed interest and present value of lease payments. The incremental borrowing rate is determined based on the rate of interest that the Group would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term in a similar economic environment. The lease term for all of the Group’s leases includes the non-cancellable period of the lease plus any additional periods covered by either a Group’s option to extend (or not to terminate) the lease that the Group is reasonably certain to exercise, or an option to extend (or not to terminate) the lease controlled by the lessor. For operating leases, the Group recognizes a single lease cost on a straight-line basis over the remaining lease term.
The Group has elected not to recognize right-of-use assets or lease liabilities for leases with an initial term of 12 months or less and the Group recognizes lease expense for these leases on a straight-line basis over the lease terms.
F-8
APTORUM GROUP LIMITED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(Stated in U.S. Dollars)
Revenue recognition
Revenues are derived from healthcare services rendered to patients for healthcare consultation and medical treatment. Revenue is reported at the amount that reflects the consideration to which the Group expects to be entitled in exchange for providing healthcare services.
The Group recognizes revenue as its performance obligations are completed. Healthcare services are treated as a single performance obligation satisfied at a point in time because the performance obligations are generally satisfied less than one day.
The Group determines the transaction price based
on established billing rates. The Group considers the patient's ability and intent to pay the amount of consideration upon admission. Subsequent
changes resulting from a patient’s ability to pay are recorded as bad debt expense, which is included as a component of other operating
expenses in the condensed consolidated statements of operations. During the six months ended June 30, 2022 and 2021, the
bad debt expenses were $
Recently adopted accounting pronouncements
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): “Simplifying the Accounting for Income Taxes” (“ASU 2019-12”), which simplifies the accounting for income taxes. The Group adopted this standard effective January 1, 2022. The adoption does not have a material effect on the Group’s condensed consolidated financial statements.
In May 2021, the FASB issued ASU No. 2021-04, Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. The ASU addresses the previous lack of specific guidance in the accounting standards codification related to modifications or exchanges of freestanding equity-classified written call options (such as warrants) by specifying the accounting for various modification scenarios. The Group adopted this standard effective January 1, 2022. The adoption does not have a material effect on the Group’s condensed consolidated financial statements.
In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832). This ASU requires business entities to disclose information about government assistance they receive if the transactions were accounted for by analogy to either a grant or a contribution accounting model. The disclosure requirements include the nature of the transaction and the related accounting policy used, the line items on the balance sheets and statements of operations that are affected and the amounts applicable to each financial statement line item and the significant terms and conditions of the transactions. The Group adopted this standard effective January 1, 2022. The adoption does not have a material effect on the Group’s condensed consolidated financial statements.
F-9
APTORUM GROUP LIMITED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(Stated in U.S. Dollars)
4. REVENUE
For the six months ended June 30, 2022 and 2021, all revenue came from provision of healthcare services in Hong Kong.
5. INVESTMENT AND FAIR VALUE MEASUREMENT
Assets Measured at Fair Value on a Recurring Basis
The following table provides the assets and liabilities carried at fair value measured on a recurring basis as of June 30, 2022 and December 31, 2021:
| June 30, 2022 (unaudited) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Current Assets | ||||||||||||||||
| Marketable securities | ||||||||||||||||
| Common stocks | $ | $ | $ | $ | ||||||||||||
| Non-current Assets | ||||||||||||||||
| Long-term investments | ||||||||||||||||
| Common stocks | $ | $ | $ | $ | ||||||||||||
| Total assets at fair value | $ | $ | $ | $ | ||||||||||||
| December 31, 2021 | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Current Assets | ||||||||||||||||
| Marketable securities | ||||||||||||||||
| Common stocks | $ | $ | $ | $ | ||||||||||||
| Non-current Assets | ||||||||||||||||
| Long-term investments | ||||||||||||||||
| Common stocks | $ | $ | $ | $ | ||||||||||||
| Total assets at fair value | $ | $ | $ | $ | ||||||||||||
The following is a reconciliation of Level 3 assets measured and recorded at fair value on a recurring basis for the six months ended June 30, 2022 and 2021:
| Common Stocks | ||||
| Balance at January 1, 2022 | $ | |||
| Change in unrealized appreciation | ||||
| Balance at June 30, 2022 (Unaudited) | $ | |||
| Net change in unrealized appreciation relating to investments still held at June 30, 2022 | ||||
| Warrants | ||||
| Balance at January 1, 2021 | $ | |||
| Change in unrealized depreciation | ( | ) | ||
| Balance at June 30, 2021 (Unaudited) | $ | |||
| Net change in unrealized depreciation relating to investments still held at June 30, 2021 | ||||
F-10
APTORUM GROUP LIMITED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(Stated in U.S. Dollars)
The following table presents the quantitative information about the Group’s Level 3 fair value measurements of investment as of June 30, 2022 and December 31, 2021, which utilized significant unobservable internally-developed inputs:
| June 30, 2022 (Unaudited) |
Valuation technique | Unobservable input |
Range (weighted average) |
|||
| Common stocks |
| December 31, 2021 | Valuation technique | Unobservable input |
Range (weighted average) |
|||
| Common stocks |
F-11
APTORUM GROUP LIMITED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(Stated in U.S. Dollars)
Non-marketable investments
The Group’s non-marketable investments are investments in privately held companies without readily determinable fair values. The carrying value of the non-marketable investments are adjusted based on price changes from observable transactions of identical or similar securities of the same issuer (referred to as the measurement alternative) or for impairment if the carrying amount of the non-marketable investments may not be fully recoverable. Any changes in carrying value are recorded within other income (loss), net in the condensed consolidated statements of operations.
The following is a summary of annual upward or downwards adjustments and impairment recorded in other income (loss), net, during the six months ended June 30, 2022 and 2021:
| June 30, 2022 | June 30, 2021 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Upward adjustments | $ | $ | ||||||
| Downward adjustments and impairment | ( | ) | ||||||
| Gain on investment in non-marketable security, net | $ | $ | ||||||
During the six months ended June 30, 2022 and 2021, the Group did not sell any non-marketable investments. The whole amounts of gain on investment in non-marketable security, net represented the unrealized gains and losses on non-marketable investments held as of June 30, 2022 and 2021.
The following table summarizes the total carrying value of the non-marketable investments held as of June 30, 2022 and December 31, 2021 including cumulative unrealized upward or downward adjustments and impairment made to the initial cost basis of the investments:
| June 30, 2022 | December 31, 2021 | |||||||
| (Unaudited) | ||||||||
| Initial cost basis | $ | $ | ||||||
| Upward adjustments | ||||||||
| Downward adjustments and impairment | ( | ) | ||||||
| Total carrying value at the end of the period | $ | $ | ||||||
The Group did not transfer any non-marketable investments into marketable securities during the six months ended June 30, 2022 and 2021.
F-12
APTORUM GROUP LIMITED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(Stated in U.S. Dollars)
6. OTHER RECEIVABLES AND PREPAYMENTS
Other receivables and prepayments as of June 30, 2022 and December 31, 2021 consisted of:
| June 30, 2022 | December 31, 2021 | |||||||
| (Unaudited) | ||||||||
| Prepaid research and development expenses | $ | $ | ||||||
| Prepaid insurance | ||||||||
| Prepaid service fee | ||||||||
| Rental deposits | ||||||||
| Prepaid rental expenses | ||||||||
| Other receivables | ||||||||
| Others | ||||||||
| $ | $ | |||||||
7. PROPERTY, PLANT AND EQUIPMENT, NET
Property, plant and equipment as of June 30, 2022 and December 31, 2021 consisted of:
| June 30, 2022 | December 31, 2021 | |||||||
| (Unaudited) | ||||||||
| Computer equipment | $ | $ | ||||||
| Furniture, fixture, and office and medical equipment | ||||||||
| Leasehold improvements | ||||||||
| Laboratory equipment | ||||||||
| Motor vehicle under finance leases | ||||||||
| Assets in construction | ||||||||
| Less: accumulated depreciation | ||||||||
| Property, plant and equipment, net | $ | $ | ||||||
Depreciation expenses for property, plant and
equipment amounted to $
During the six months ended June 30, 2022 and 2021, no impairment loss or gain or loss from disposal was recorded.
F-13
APTORUM GROUP LIMITED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(Stated in U.S. Dollars)
8. LONG-TERM DEPOSITS
Long-term deposits as of June 30, 2022 and December 31, 2021 consisted of:
| June 30, 2022 | December 31, 2021 | |||||||
| (Unaudited) | ||||||||
| Rental deposits | $ | $ | ||||||
| Prepayments for equipment | ||||||||
| $ | $ | |||||||
9. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses as of June 30, 2022 and December 31, 2021 consisted of:
| June 30, 2022 | December 31, 2021 | |||||||
| (Unaudited) | ||||||||
| Deferred bonus and salaries payable | $ | $ | ||||||
| Research and development expenses payable | ||||||||
| Professional fees payable | ||||||||
| Cost of healthcare services payable | ||||||||
| Insurance expenses payable | ||||||||
| Others | ||||||||
| $ | $ | |||||||
10. INCOME TAXES
The Company and its subsidiaries file tax returns separately.
Income taxes
Cayman Islands: under the current laws of the Cayman Islands, the Company and its subsidiaries in the Cayman Islands are not subject to taxes on their income and capital gains.
Hong Kong: in accordance with the relevant tax
laws and regulations of Hong Kong, a company registered in Hong Kong is subject to income taxes within Hong Kong at the applicable tax
rate on taxable income. All the Hong Kong subsidiaries that are not entitled to any tax holiday were subject to income tax at a rate of
F-14
APTORUM GROUP LIMITED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(Stated in U.S. Dollars)
United Kingdom: in accordance with the relevant
tax laws and regulations of United Kingdom, a company registered in the United Kingdom is subject to income taxes within the United Kingdom
at the applicable tax rate on taxable income. All the United Kingdom subsidiaries that are not entitled to any tax holiday were subject
to income tax at a rate of
Singapore: in accordance with the relevant tax
laws and regulations of Singapore, a company registered in the Singapore is subject to income taxes within Singapore at the applicable
tax rate on taxable income. All the Singapore subsidiaries that are not entitled to any tax holiday were subject to income tax at a rate
of
United States (Nevada): in accordance with the
relevant tax laws and regulations of the United States, a company registered in the United States is subject to income taxes within the
United States at the applicable tax rate on taxable income. All the United States subsidiaries in Nevada that are not entitled to any
tax holiday were subject to income tax at a rate of
Canada: in accordance with the relevant tax laws
and regulations of Canada, a company registered in Canada is subject to income taxes within Canada at the applicable tax rate on taxable
income. All the Canada subsidiaries that are not entitled to any tax holiday were subject to income tax at a rate of
Ireland: in accordance with the relevant tax laws
and regulations of Ireland, a company registered in Ireland is subject to income taxes within Ireland at the applicable tax rate on taxable
income. All the Ireland subsidiaries that are not entitled to any tax holiday were subject to income tax at a rate of
On a semi-annually basis, the Group evaluates the realizability of deferred tax assets by jurisdiction and assesses the need for a valuation allowance. In assessing the realizability of deferred tax assets, the Group considers historical profitability, evaluation of scheduled reversals of deferred tax liabilities, projected future taxable income and tax-planning strategies. Valuation allowances have been provided on deferred tax assets where, based on all available evidence, it was considered more likely than not that some portion or all of the recorded deferred tax assets will not be realized in future periods. After consideration of all positive and negative evidence, the Group believes that as of June 30, 2022, it is more likely than not the deferred tax assets will not be realized.
F-15
APTORUM GROUP LIMITED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(Stated in U.S. Dollars)
11. RELATED PARTY BALANCES AND TRANSACTIONS
The following is a list of a director and related parties to which the Group has transactions with:
| (a) | Ian Huen, a Non-executive Director of the Group since June 1, 2022. Before June 1, 2022, he was the Chief Executive Officer and Executive Director of the Group; |
| (b) | Darren Lui, the Chief Executive Officer and Executive Director since June 1, 2022. Before June 1, 2022, he was the President and Executive Director of the Group; |
| (c) | Clark Cheng, an Executive Director of the Group; |
| (d) | Libra Sciences Limited, an entity which was originally a wholly owned subsidiary of ATL. Since December 30, 2021, Libra has become a related party to the Group due to the voting power owned by ATL is decreased to below |
| (e) | Libra Therapeutics Limited, a wholly owned subsidiary of Libra Sciences Limited; |
| (f) | Talem Medical Group Limited, an entity which Clark Cheng is a director; |
| (g) | Aeneas Group Limited, an entity controlled by Ian Huen; |
| (h) | Jurchen Investment Corporation, the holding company and an entity controlled by Ian Huen; |
| (i) | CGY Investment Limited, an entity jointly controlled by Darren Lui; |
| (j) | ACC Medical Limited, an entity controlled by Clark Cheng; |
| (k) | Sabrina Khan, the Chief Financial Officer of the Group. On July 11, 2022, she resigned from her position as Chief Financial Officer. |
Amounts due from related parties
Amounts due from related parties consisted of the following as of June 30, 2022 and December 31, 2021:
| June 30, 2022 | December 31, 2021 | |||||||
| Current | (Unaudited) | |||||||
| Libra Sciences Limited | $ | $ | ||||||
| Libra Therapeutics Limited | ||||||||
| Talem Medical Group Limited | ||||||||
| Ian Huen | ||||||||
| Jurchen Investment Corporation | ||||||||
| CGY Investment Limited | ||||||||
| Total | $ | $ | ||||||
Amounts due to related parties
Amounts due to related parties consisted of the following as of June 30, 2022 and December 31, 2021:
| June 30, 2022 | December 31, 2021 | |||||||
| Current | (Unaudited) | |||||||
| Sabrina Khan | $ | $ | ||||||
| Darren Lui | ||||||||
| Clark Cheng | ||||||||
| Ian Huen | ||||||||
| Total | $ | $ | ||||||
F-16
APTORUM GROUP LIMITED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(Stated in U.S. Dollars)
Related party transactions
Related party transactions consisted of the following for the six months ended June 30, 2022 and 2021:
| For the six months ended June 30, | ||||||||
| 2022 | 2021 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Loan from related parties (Note a) | ||||||||
| - Aeneas Group Limited | $ | $ | ||||||
| - Jurchen Investment Corporation | $ | $ | ||||||
| Repayment of loan and interest to related parties (Note a) | ||||||||
| - Aeneas Group Limited | $ | $ | ||||||
| - Jurchen Investment Corporation | $ | $ | ||||||
| Interest expenses (Note a) | ||||||||
| - Aeneas Group Limited | $ | $ | ||||||
| - Jurchen Investment Corporation | $ | $ | ||||||
| Loan to a related party (Note f) | ||||||||
| - Libra Sciences Limited | $ | $ | ||||||
| Repayment of loan and interest from a related party (Note b) | ||||||||
| - Talem Medical Group Limited | $ | $ | ||||||
| Interest incomes (Note b and f) | ||||||||
| - Talem Medical Group Limited | $ | $ | ||||||
| - Libra Sciences Limited | $ | $ | ||||||
| Consultant, management and administrative fees (Note c) | ||||||||
| - CGY Investments Limited | $ | $ | ||||||
| - ACC Medical Limited | $ | $ | ||||||
| Administrative fees income (Note e) | ||||||||
| - Libra Sciences Limited | $ | $ | ||||||
F-17
APTORUM GROUP LIMITED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(Stated in U.S. Dollars)
Note a: On August 13, 2019, Aptorum Therapeutics
Limited (“ATL”), a wholly owned subsidiary of the Company, entered into financing arrangements with Aeneas Group Limited,
a related party, and Jurchen Investment Corporation, the ultimate parent of the Group, allowing ATL to access up to a total $
Note b: On November 17, 2021, Aptorum Therapeutics
Limited (the “Lender”) entered into a loan agreement with Talem Medical Group Limited (the “Borrower”). According
to the loan agreement, the Lender granted a loan of up to AUD4,
Note c: CGY Investment Limited provided certain consultancy, advisory and management
services to the Group on potential investment projects related to healthcare or R&D platforms. CGY Investment Limited is initially
entitled to receive HK $
ACC Medical Limited provided certain consultancy,
advisory, and management services to the Group on clinic operations and other related projects for clinics’ business development.
ACC Medical Limited is initially entitled to receive HK $
Note d: On January 2, 2021, Aptorum Medical Limited
issued
Note e: On January 1, 2022, Aptus Management Limited
(“AML”), a wholly owned subsidiary of the Company, entered into an administrative management services agreement with Libra
Sciences Limited. According to the agreement, AML will provide documentation and administrative services, include but are not limited
to human resources and payroll administration, general secretarial and administrative support, and accounting and financial reporting
services. AML is entitled to receive a fixed amount of services fees of HKD
Note f: On January 13, 2022, ATL entered a line
of credit facility with Libra Sciences Limited to provide up to a total $
Note g: On May 27, 2021, ATL entered a Share Sale
Agreement to sell all of the shares of SMPTH Limited to Aeneas Group Limited at the consideration $
F-18
APTORUM GROUP LIMITED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(Stated in U.S. Dollars)
12. VARIABLE INTEREST ENTITY
The Company consolidates VIEs in which the Group has a variable interest and is determined to be the primary beneficiary. This determination is based on whether the Group has a variable interest (or combination of variable interests) that provides the Company with (a) the power to direct the activities that most significantly impact the VIE’s economic performance and (b) the obligation to absorb losses or right to receive benefits that could be potentially significant to the VIE. The Group continually reassesses whether it is the primary beneficiary of a VIE throughout the entire period the Group is involved with the VIE.
We have considered each of these entity’s Memorandum and Article of Association and their respective board of directors (the sole director of each of Mios and Scipio is an executive director of the Group), and determined that we have the power to manage and make decisions that affect Mios and Scipio’s research and development activities, which activities most significantly impact Mios and Scipio’s economic performance. However, we do not have such power over Libra’s research and development activities, which activities most significantly impact Libra’s economic performance. Accordingly, we determined that we are the primary beneficiary of Mios and Scipio, but not the primary beneficiary of Libra.
The following tables summarize the aggregate carrying value of VIEs’ assets and liabilities in the consolidated balance sheets that are consolidated
| Assets | Liabilities | Net Assets | ||||||||||
| June 30, 2022 (Unaudited) | ||||||||||||
| Total | $ | $ | $ | |||||||||
| Assets | Liabilities | Net Assets | ||||||||||
| December 31, 2021 | ||||||||||||
| Total | $ | $ | $ | |||||||||
The following tables summarize the aggregate carrying value of assets and liabilities in the Group’s consolidated balance sheets that relate to the VIE in which the Group holds a variable interest but is not the primary beneficiary.
| Assets | Liabilities | Net Assets | Maximum Exposure to Losses | |||||||||||||
| June 30, 2022 (Unaudited) | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
| Assets | Liabilities | Net Assets | Maximum Exposure to Losses |
|||||||||||||
| December 31, 2021 | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
The Group’s maximum exposure to loss from
its involvement with unconsolidated VIE represents the estimated loss that would be incurred if the VIE is liquidated, so that the fair
value of the equity investment in VIE is
On January 1, 2022, the Group entered into an
administrative management services agreement with Libra. According to the agreement, the Group will provide documentation and administrative
services, including but are not limited to human resources and payroll administration, general secretarial and administrative support,
and accounting and financial reporting services. The Group is entitled to receive a fixed amount of services fees of HKD
On January 13, 2022, the Group entered a line of credit facility with Libra to provide up to a total $1 million in line of credit debt financing for its daily operation. The line of credit will mature on January 12, 2023, extendable for up to 3 years, and the interest on the outstanding principal indebtedness will be at the rate of 10% per annum.
F-19
APTORUM GROUP LIMITED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(Stated in U.S. Dollars)
13. LEASE
As of June 30, 2022, the Group has three non-short-term
operating leases for office, laboratories and clinic with remaining terms expiring from 2023 through 2024 and a weighted average remaining
lease term of
| For the six months ended June 30, | ||||||||
| 2022 | 2021 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Lease cost | ||||||||
| Finance lease cost: | ||||||||
| Depreciation | $ | $ | ||||||
| Interest on lease liabilities | ||||||||
| Operating lease cost | ||||||||
| Short-term lease cost | ||||||||
| Variable lease cost | ||||||||
| Sublease income | ||||||||
| Total lease cost | $ | $ | ||||||
| Other information | ||||||||
| Cash paid for amounts included in the measurement of lease liabilities | ||||||||
| Operating cash flows from operating leases | $ | $ | ||||||
| Financing cash flows from finance leases | ||||||||
| Right-of-use assets obtained in exchange for new operating lease liabilities | ||||||||
| Weighted-average remaining lease term – finance leases | ||||||||
| Weighted-average remaining lease term – operating leases | ||||||||
| Weighted-average discount rate – finance leases | % | % | ||||||
| Weighted-average discount rate – operating leases | % | % | ||||||
The maturity analysis of operating leases liabilities as of June 30, 2022 is as follows:
| June 30, 2022 | ||||
| (Unaudited) | ||||
| Remaining periods ending December 31, | ||||
| 2022 | $ | |||
| 2023 | ||||
| 2024 | ||||
| Total future undiscounted cash flow | ||||
| Less: Discount on operating lease liabilities | ( | ) | ||
| Present value of operating lease liabilities | ||||
| Less: Current portion of operating lease liabilities | ( | ) | ||
| Non-current portion of operating lease liabilities | $ | |||
On May 14, 2018, the Group leased a vehicle for its operation with a lease term of 54 months, and the lease was classified as a finance lease. The following lists the components of the net present value of finance leases liabilities:
| June 30, 2022 | ||||
| (Unaudited) | ||||
| Remaining periods ending December 31, | ||||
| 2022 | $ | |||
| Total future undiscounted cash flow | ||||
| Less: Discount on finance lease liabilities | ( | ) | ||
| Present value of finance lease liabilities | $ | |||
F-20
APTORUM GROUP LIMITED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(Stated in U.S. Dollars)
14. ORDINARY SHARES
On March 26, 2021, the Company entered into an
at-the-market offering agreement (the “Sales Agreement”), with H.C. Wainwright & Co., LLC, acting as our sales agent
(the “Sales Agent”), relating to the sale of our Class A Ordinary Shares, offered pursuant to the prospectus supplement and
the accompanying prospectus to the registration statement on Form F-3 (File No. 333-235819) (such offering, the “ATM Offering”,
or “At The Market Offering”). In accordance with the terms of the Sales Agreement, we may offer and sell shares of our Class
A Ordinary Shares having an aggregate offering price of up to $
On May 26, 2021, the Company entered into a private
placement shares purchase agreement with Jurchen Investment Corporation, issuing
For the six months ended June 30, 2022 and 2021,
the Group issued
15. SHARE BASED COMPENSATION
Share option plan
F-21
APTORUM GROUP LIMITED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(Stated in U.S. Dollars)
A summary of the option activity as of June 30, 2022 and 2021 and changes during the period is presented below:
| Number of share options | Weighted average exercise price $ | Remaining contractual term in years | Aggregate Intrinsic value $ | |||||||||||||
| Outstanding, January 1, 2022 | - | |||||||||||||||
| Granted | ||||||||||||||||
| Exercised | ( | ) | ||||||||||||||
| Forfeited | ( | ) | ||||||||||||||
| Cancelled | ( | ) | ||||||||||||||
| Outstanding, June 30, 2022 | ||||||||||||||||
| Exercisable, June 30, 2022 | ||||||||||||||||
| Outstanding, January 1, 2021 | ||||||||||||||||
| Granted | ||||||||||||||||
| Exercised | ( | ) | ||||||||||||||
| Forfeited | ( | ) | ||||||||||||||
| Outstanding, June 30, 2021 | ||||||||||||||||
| Exercisable, June 30, 2021 | ||||||||||||||||
The weighted-average grant date fair value of
share option grants during the six months ended June 30, 2022 and 2021 was $
The fair value of each stock option award is estimated on the date of grant using the Black-Scholes option pricing model under the following assumptions.
| Granted in 2022 | Granted in 2021 | |||||||
| Expected volatility | % | % | ||||||
| Risk-free interest rate | % | % | ||||||
| Expected term from grant date (in years) | ||||||||
| Dividend rate | ||||||||
| Dilution factor | ||||||||
| Fair value | $ | $ | ||||||
In connection with the grant of share options
to employees and non-employees, the Group recorded share-based compensation charges of $
F-22
APTORUM GROUP LIMITED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(Stated in U.S. Dollars)
16. NET LOSS PER SHARE
The following table sets forth the computation of basic and diluted loss per share:
| For the six months ended June 30, | ||||||||
| 2022 | 2021 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Numerator: | ||||||||
| Net loss attributable to Aptorum Group Limited | $ | ( | ) | $ | ( | ) | ||
| Denominator: | ||||||||
| $ | ( | ) | $ | ( | ) | |||
Basic loss per share is computed by dividing net loss attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period. Diluted loss per share reflects the potential dilution that could occur if securities or other contracts to issue ordinary shares were exercised or converted into ordinary shares. Potential dilutive securities are excluded from the calculation of diluted loss per share in loss periods as their effect would be anti-dilutive.
17. CONTINGENT PAYMENT OBLIGATIONS
The Group has entered into agreements with independent
third parties for purchasing office and laboratory equipment. As of June 30, 2022, we had non-cancellable purchase commitments of $
The Group has additional contingency payment obligations under each of the license agreements, such as milestone payments, royalties, research and development funding, if certain condition or milestone is met.
Milestone payments are to be made upon achievements of certain conditions, such as Investigational New Drugs (“IND”) filing or U.S. Food and Drug Administration (“FDA”) approval, first commercial sale of the licensed products, or other achievements. The aggregate amount of the milestone payments that we are required to pay up to different achievements of conditions and milestones for all the license agreements signed as of June 30, 2022 are as below:
| Amount | ||||
| Drug molecules: up to the conditions and milestones of | ||||
| Preclinical to IND filing | $ | |||
| From entering phase 1 to before first commercial sale | ||||
| First commercial sale | ||||
| Net sales amount more than certain threshold in a year | ||||
| Subtotal | ||||
| Diagnostics technology: up to the conditions and milestones of | ||||
| Before FDA approval | ||||
| Total | $ | |||
For the six months ended June 30, 2022 and 2021,
the Group incurred $ and $
18. SUBSEQUENT EVENTS
The Group has evaluated subsequent events through the date of issuance of the condensed consolidated financial statements, no subsequent event is identified that would have required adjustment or disclosure in the condensed consolidated financial statements.
F-23