| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles
of presentation and consolidation The
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. All material intercompany balances and transactions have been eliminated in preparation
of the consolidated financial statements. Non-controlling
interests Non-controlling
interests represent the equity interests that are not attributable to the Group. Use
of estimates The
preparation of the 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 consolidated
financial statements as well as income and expenses during the reporting period. Significant accounting estimates reflected in the Group’s
consolidated financial statements include valuation of equity securities, fair value of investments in securities, convertible debts,
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. Foreign
currency translation and transaction USD
is the reporting currency. The functional currency of subsidiaries in the Cayman Islands, Seychelles, Samoa and the United States are
USD, the functional currency of subsidiaries in Hong Kong is Hong Kong Dollars (“HKD”), the functional currency of a subsidiary
in Singapore is Singapore Dollars (“SGD”), the functional currency of a subsidiary in the United Kingdom is Great British
Pound (“GBP”), the functional currency of subsidiaries in Canada is Canadian Dollars (“CAD”), and the functional
currency of subsidiaries in Ireland is Euro (“EUR”). An entity’s functional currency is the currency of the primary
economic environment in which it operates, normally that is the currency of the environment in which it primarily generates and expends
cash. The management considered various indicators, such as cash flows, market expenses, financing and inter-company transactions and
arrangements in determining the Group’s functional currency. In
the consolidated financial statements, the financial information of the Company and its subsidiaries, which use HKD, SGD, GBP, CAD and
EUR as their functional currency, has been translated into USD. Assets and liabilities are translated from each subsidiary’s functional
currency at the exchange rates on the balance sheet dates, equity amounts are translated at historical exchange rates, and revenues,
expenses, gains, and losses are translated using the average exchange rates for the year. Translation adjustments are reported as cumulative
translation adjustments and are shown as a separate component of other comprehensive income or loss in the consolidated statements of
operations and comprehensive income or loss. Cash Cash
consists of cash on hand and bank deposits, which is unrestricted as to withdraw and use. Restricted
cash Restricted
cash represented time deposits pledged for banking facilities. Digital
currencies Digital
currencies represented BitCoin, Ethereum, or other virtual currencies that the Group purchased and used to settle certain token related
expenses. Digital
currencies are included in current assets in the consolidated balance sheets. Digital currencies purchased are recorded at cost. Digital
currencies held are accounted for as intangible assets with indefinite useful lives. An intangible asset with an indefinite useful life
is not amortized but assessed for impairment annually, or more frequently, when events or changes in circumstances occur indicating that
it is more likely than not that the indefinite-lived asset is impaired. Impairment exists when the carrying amount exceeds its fair value,
which is measured using the quoted price of the digital currency at the time its fair value is being measured. In testing for impairment,
the Group has the option to first perform a qualitative assessment to determine whether it is more likely than not that an impairment
exists. If it is determined that it is not more likely than not that an impairment exists, a quantitative impairment test is not necessary.
If the Group concludes otherwise, it is required to perform a quantitative impairment test. To the extent an impairment loss is recognized,
the loss establishes the new cost basis of the asset. Subsequent reversal of impairment losses is not permitted. Purchases
of digital currencies by the Group are included within investing activities in the consolidated statements of cash flows. The utilization
of digital currencies in exchange of services are included within operating activities in the consolidated statements of cash flows and
any gains or losses from such use are included in other income (loss) in the consolidated statements of operations. The Company accounts
for its gains or losses in accordance with the first in first out (FIFO) method. Inventories Inventories
are stated at lower of cost and net realizable value. Cost is determined using the weighted average method. Where
there is evidence that the utility of inventories, in their disposal in the ordinary course of business, will be less than cost, whether
due to physical deterioration, obsolescence, changes in price levels, or other causes, the inventories are written down to net realizable
value. Accounts
receivable Accounts
receivable are stated at the original amount less an allowance for doubtful receivables, if any, based on a review of all outstanding
amounts at period end. An allowance is also made when there is objective evidence that the Group will not be able to collect all amounts
due according to the original terms of the receivables. The Group analyzes the aging of the customer accounts, historical and current
economic trends and the age of the receivables when evaluating the adequacy of the allowance for doubtful accounts. 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). Investments
in derivatives Investments
in derivatives are warrants measured at fair value, with gains or losses from changes in fair value recorded through earnings. The fair
value of these warrants have been determined using the Black-Scholes pricing mode. The Black-Scholes pricing model provides for assumptions
regarding volatility, call and put features and risk-free interest rates within the total period to maturity. Non-marketable
investments Non-marketable
investments are comprising of investments in non-redeemable preferred shares of privately-held companies that are not required to be
consolidated under the variable interest or voting models. Non-marketable investments are classified as non-current assets on the consolidated
balance sheets as those investments do not have stated contractual maturity dates. 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. Fair
value measurement Fair
value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required
or permitted to be recorded at fair value, the Group considers the principal or most advantageous market in which it would transact its
business, and it considers assumptions that market participants would use when pricing the asset or liability. As
a basis for considering such assumptions, a three-tier fair value hierarchy prioritizes the inputs utilized in measuring fair value as
follows:
● Level
1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
● Level
2 applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observable
for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical
assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations
in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.
● Level
3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the
measurement of the fair value of the assets or liabilities. The
hierarchy requires the Group to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair
value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is
significant to the fair value measurement. The Group has estimated the fair value amounts of its financial instruments using the available
market information and valuation methodologies considered to be appropriate and has determined that the carrying value of the Group’s
cash, restricted cash, accounts receivable, due from brokers, other receivables and prepayments, amounts due from/to related parties
and accounts payable and accrued expenses as of December 31, 2020 and 2019 approximate fair value due to the short-term nature of these
assets and liabilities. Property,
plant and equipment Property,
plant and equipment is stated at cost less accumulated depreciation and impairment losses. Cost represents the purchase price of the
asset and other costs incurred to bring the asset into its existing use. Maintenance, repairs and betterments, including replacement
of minor items, are charged to expense; major additions to physical properties are capitalized. Assets
under construction are stated at cost less impairment losses. Cost comprises of cost of laboratory equipment delivered but not ready
to be used, together with interest expense capitalized during the period of construction or installation and testing. Capitalization
of these costs ceases and the asset concerned is transferred to the appropriate fixed assets category when substantially all the activities
necessary to prepare the asset for its intended use are completed. Depreciation
of property, plant and equipment is provided using the straight-line method over their estimated useful lives:
Building 29
years
Computer
equipment 3
years
Furniture,
fixture, and office and medical equipment 5
years
Leasehold
improvements Shorter
of the remaining lease terms or 5 years
Laboratory
equipment 5
years
Motor
vehicle 5
years Upon
sale or disposal, the applicable amounts of asset cost and accumulated depreciation are removed from the accounts and the net amount
less proceeds from disposal is charged or credited to income. Other
non-current assets Other
non-current assets represents laboratory supplies that can be used for more than one year. It is stated at cost less accumulated depreciation
and impairment losses. Cost represents the purchase price of the supplies. Amortization
of other non-current assets is provided using the straight-line method over their estimated useful lives. The amortization expenses for
the years ended December 31, 2020, 2019 and 2018 are $59,833, $59,834 and $59,833, respectively. Intangible
assets Indefinite-lived
intangible assets are tested for impairment at least annually and are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. Indefinite-lived intangible assets are impaired if their estimated
fair values are less than their carrying values. Finite-lived
intangible assets are carried at cost less accumulated amortization and impairment if any. The finite intangible assets are amortized
over their estimated useful life, which is the period over which the assets are expected to contribute directly or indirectly to the
future cash flows of the Group. These intangible assets are tested for impairment at the time of a triggering event, if one were to occur.
Finite-lived intangible assets may be impaired when the estimated undiscounted future cash flows generated from the assets are less than
their carrying amounts. The
Group’s intangible assets mainly consist of computer software, exclusive rights in prepaid patented and unpatented licenses. The
prepaid patented licenses are for clinical purpose or further development into other products. Prepaid unpatented license is for further
development, once the associated research and development efforts are completed, the prepaid unpatented license will be reclassified
as a finite-lived asset and is amortized over its useful life. The estimated useful life of the exclusive rights in using patents is
generally the remaining patent life from the acquisition date to expiration date under the law, which is 17 to 20 years, the Group will
reassess the remaining patent life on annual basis, and the Group will assess the intangible assets for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may no longer be recoverable. Impairment
of long-lived assets The
Group reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an
asset may no longer be recoverable. When these events occur, the Group measures impairment by comparing the carrying value of the long-lived
assets to the estimated undiscounted future cash flows expected to result from the use of the assets and their eventual disposition.
If the sum of the expected undiscounted cash flow is less than the carrying amount of the assets, the Group would recognize an impairment
loss, which is the excess of carrying amount over the fair value of the assets, using the expected future discounted cash flows. Convertible
debts The
Group determines the appropriate accounting treatment of its convertible debts in accordance with the terms in relation to the conversion
feature, call and put option, beneficial conversion feature (“BCF”) and settlement feature. After considering the impact
of such features, the Group concluded that, the convertible debts contained a contingent beneficial conversion feature, which shall not
be recognized in earnings until the contingency is resolved, and therefore accounted for such instrument as a liability in its entirety. Convertible
debts were subsequently measured at amortized cost, using the effective interest rate method. Amortized cost is calculated by taking
into account any discount or premium on acquisition and fees or costs that are an integral part of the effective interest rate. The effective
interest rate amortization is included in interest expense in the consolidated statements of operations. Management
concluded that the contingency was effectively resolved upon the completion of the IPO on December 17, 2018 so that part of the convertible
debts were converted automatically accordingly. The BCF derecognized upon automatic conversion was recorded as interest expense with
a corresponding increase to additional paid-in capital. The remaining BCF was recorded as debt discount, which was amortized through
the maturity of the convertible debts, with a corresponding increase to additional paid-in capital. On
April 24, 2019, the Group repurchased its convertible debts at approximately $13.6 million with carrying amount of approximately $13.5
million and a gain on extinguishment on convertible debts of approximately $1.2 million was recognized. The repurchasing of convertible
debts is considered an extinguishment and the difference between the repurchasing price of debt, the net carrying amount of the extinguished
debt and the intrinsic value of BCF is recognized in the consolidated statements of operations. The intrinsic value of BCF of approximately
$1.3 million at the extinguishment date was recorded as a reduction of additional paid-in capital. Deferred
offering costs Deferred
offering costs consist principally of legal and registration costs in connection with the Group’s public offering. Such costs are
deferred until the closing of the offering, at which time the deferred costs are offset against the offering proceeds and charged to
additional paid-in capital. Operating
leases Prior
to the adoption of Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842) and subsequent amendments to the initial
guidance including ASU No. 2017-13, ASU No. 2018-10, ASU No. 2018-11, ASU No. 2018-20, and ASU No. 2019-01 (collectively, “Topic
842”), operating leases were not recognized on the consolidated balance sheets, instead, rental expenses with fixed payments were
recognized on a straight-line basis over the lease term. Effective
January 1, 2020, the Group adopted Topic 842 using a modified retrospective transition approach for leases that exist at, or are entered
into after January 1, 2020, and has not recast the comparative periods presented in the consolidated financial statements. 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. Finance
lease Leases
that transfer substantially all the rewards and risks of ownership of assets to the Group, other than legal title, are accounted for
as finance leases. At the inception of a finance lease, the cost of the leased asset is capitalized at the present value of the minimum
lease payments and recorded together with the obligation, excluding the interest element, to reflect the purchase and financing. Assets
held under capitalized finance leases are included in property, plant and equipment, and depreciated over the shorter of the lease terms
and the estimated useful lives of the assets. The interest expenses of such leases are charged to the consolidated statements of operations
to provide a constant periodic rate of charge over the lease terms. Warrants
In
connection of the issuance of Class A Ordinary Shares, the Company may issue warrants to purchase Class A Ordinary Shares. Warrants classified
as equity are initially recorded at fair value and subsequent changes in fair value are not recognized as long as the warrants continue
to be classified as equity. Revenue
recognition Revenue is recognized when (or as) the Group satisfies
performance obligations by transferring a promised goods or services to a customer. Revenue is measured at the transaction price which
is based on the amount of consideration that the Group expects to receive in exchange for transferring the promised goods or services
to the customer. Revenue from healthcare services is measured upon the provision of the relevant services. Cost
of healthcare services Cost
of healthcare services rendered represents cost in relation to the medical services provided including the compensation of the physicians
and cost of pharmaceutical supplies and medicine. Research
and development expenses Research
and development costs are expensed as incurred. Research and development expenses are comprised of costs incurred in performing research
and development activities, including amortization of the patent license, depreciation of laboratory equipment, costs of engaging external
consultants, advisors and contracted research organization to conduct preclinical development activities and trials, and sponsored research
expenses to universities and research institutions. Income
taxes The
Group accounts for income taxes under the asset and liability method. Under this method, deferred income taxes are determined based on
differences between the financial carrying amounts of existing assets and liabilities and their tax bases. Income taxes are provided
for in accordance with the laws of the relevant taxing authorities. A
valuation allowance is provided for deferred tax assets if it is more likely than not that these items will either expire before the
Group is able to realize their benefits, or that future deductibility is uncertain. Valuation allowances are established, when necessary,
to reduce deferred tax assets to the amount expected to be realized. Uncertain
tax positions The
Group accounts for uncertainty in income taxes using a two-step approach to recognizing and measuring uncertain tax positions. The first
step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely
than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second
step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. Interest and
penalties related to uncertain tax positions are recognized and recorded as necessary in the provision for income taxes. The Group recognizes
interest on non-payment of income taxes and penalties associated with tax positions when a tax position does not meet more likely than
not thresholds be sustained under examination. The tax returns of the Group’s Hong Kong subsidiaries are subject to examination
by the relevant tax authorities. According to the Hong Kong Inland Revenue Department, the statute of limitation is six years if any
company chargeable with tax has not been assessed or has been assessed at less than the proper amount, the statute of limitation is extended
to ten years if the underpayment of taxes is due to fraud or willful evasion. According to United Kingdom, Singapore, the United States
and Samoa tax rule, trading losses are available to be carried forward indefinitely. According to the Seychelles tax rule, net operating
losses are available to be carried forward for 5 years. The Group did not have any material interest or penalties associated with tax
positions for the years ended December 31, 2020, 2019 and 2018, and did not have any significant unrecognized uncertain tax positions
as of December 31, 2020 and 2019. The Group does not believe that its assessment regarding unrecognized tax benefits will materially
change over the next twelve months. Comprehensive
income or loss U.S.
GAAP generally requires that recognized revenue, expenses, gains and losses be included in net income or loss. Although certain changes
in assets and liabilities are reported as separate components of the equity section of the consolidated balance sheets, such items, along
with net income or loss, are components of comprehensive income or loss. The components of other comprehensive income or loss consist
of exchange differences on translation of foreign operations. Net
income or loss per share Basic
net income or loss per share is computed by dividing net income or loss attributable to ordinary shareholders by the weighted average
number of ordinary shares outstanding during the period. Diluted net income or 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. Risks
and uncertainties The
Group is subject to a number of risks associated with companies at a similar stage, including dependence on key individuals, competition
from similar services and larger companies, volatility of the industry, ability to obtain regulatory clearance, ability to obtain adequate
financing to support growth, the ability to attract and retain additional qualified personnel to manage the anticipated growth of the
Group and general economic conditions. Recently
adopted accounting pronouncements In
February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02, Leases (“ASU 2016-02”),
which requires a lessee to recognize a right-of-use asset and a lease liability for operating leases, initially measured at the present
value of the future lease payments, in the balance sheet. ASU 2016-02 also requires a lessee to recognize a single lease cost, calculated
so that the cost of the lease is allocated over the lease term, generally on a straight-line basis. Upon the adoption effective on January
1, 2020, the Group recognized operating lease right-of-use assets of $959,641, and operating lease liabilities of $982,288 in the consolidated
financial statements. In
July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives
and Hedging (Topic 815). ASU 2017-11 no longer requires the Group to consider down round features when determining whether its warrant
and embedded conversion option is indexed to its own stock. The Group adopted this standard effective on January 1, 2020. The adoption
does not have a material impact on the Group’s consolidated financial statements. In
August 2018, the FASB issued ASU 2018-13, Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement,
which amends ASC 820, Fair Value Measurement. This ASU modifies the disclosure requirements for fair value measurements by removing,
modifying, or adding certain disclosures. The Group adopted this standard effective on January 1, 2020. The removed and modified disclosures
are adopted on a retrospective basis and the new disclosures are adopted on a prospective basis. The adoption does not have a material
impact on the Group’s consolidated financial statements. Recently
issued accounting standards which have not yet been adopted The
Group is an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2010 (the “JOBS Act”).
Under the JOBS Act, the emerging growth companies (“EGCs”) can delay adopting new or revised accounting standards issued
subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. In
June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (“ASU 2016-13”). Subsequently, the FASB issued
ASU 2019-05, Financial Instruments- Credit Losses (Topic 326): Targeted Transition Relief. The amendments in ASU 2016-13 update guidance
on reporting credit losses for financial assets. These amendments affect loans, debt securities, accounts receivables, net investments
in leases, off balance sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that
have the contractual right to receive cash. The amendments are effective for fiscal years beginning after December 15, 2020, and interim
periods within those fiscal years. The Group is currently evaluating the impact on its financial statements of adopting this guidance. In
December 2019, the FASB issued Accounting Standards Update No. 2019-12, Income Taxes (Topic 740): “Simplifying the Accounting for
Income Taxes” (“ASU 2019-12”), which simplifies the accounting for income taxes. This standard will be effective for
fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022, on a prospective
basis, and early adoption is permitted. The Group is currently evaluating the impact of the new standard on its consolidated financial
statements. The
Group does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material
impact on the consolidated balance sheets, consolidated statements of operations and cash flows. |
