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Intangible Assets

12 Months Ended

Dec. 31, 2022

NOTE 4 - INTANGIBLE ASSETS

Intangible assets represent the cost of medical formulas approved for production by the NMPA. The Company did not obtain NMPA production approval for any new medical formulas during the years ended December 31, 2022 and 2021 and no costs were reclassified from advances to intangible assets during the years ended December 31, 2022 and 2021, respectively.

Approved medical formulas are amortized from the date NMPA approval is obtained over their individually identifiable estimated useful life, which range from ten to thirteen years. It is at least reasonably possible that a change in the estimated useful lives of the medical formulas could occur in the near term due to changes in the demand for the drugs and medicines produced from these medical formulas. Amortization expense relating to intangible assets was $36,558 and $38,114 for the years ended December 31, 2022 and 2021, respectively which was included in the general and administrative expenses. Medical formulas typically do not have a residual value at the end of their amortization period.

On November 28, 2022, the Company entered into a Technology Transfer Contract (the “Agreement”) with Chengdu Bonier Medical Technology Development Co., Ltd (“Bonier”). Bonier owns the know-how of a technical invention and creation of an ophthalmic oxygen enriched atomization therapeutic instrument, which has obtained a utility model patent (the “Utility Model Patent”) and applied for an invention patent (the “Invention Patent”) at the same time. Pursuant to the Agreement, Bonier will transfer the ownership of the Utility Model Patent of the technical invention and the Invention Patent application right of the invention to Helpson. Bonier or its designated third party shall provide relevant technical services in Haikou, which include but are not limited to product research and development, writing of registration materials, registration application and other technical services, with a term of ten years. Effective November 28, 2022 the Company issued 1,552,229 share of its common stock valued at $1,707,452 based on the closing market price of its common stock of $1.10 per share at that date. The Company recorded the amount as Intangible assets on the accompanying balance sheet at December 31, 2022. The value of the intangible asset will be amortized over its remaining useful life of approximately 9.7 years.

The Company will pay a service fee of 15% of the net profit of the corresponding product sales revenue, which will be paid in cash annually after it launches to the market, contingent on the successful authorization of the above mentioned Invention Patent.

The Company evaluates each approved medical formula for impairment at the date of NMPA approval, when indications of impairment are present and also at the date of each financial statement. The Company’s evaluation is based on an estimated undiscounted net cash flow model, which considers currently available market data for the related drug and the Company’s estimated market share. If the carrying value of the medical formula exceeds the estimated future net cash flows, an impairment loss is recognized for the excess of the carrying value over the fair value of the medical formula, which is determined by the estimated discounted future net cash flows. No impairment loss was recognized during the years ended December 31, 2022 and 2021, respectively.

Intangible assets consisted solely of NMPA approved medical formulas as follows:

	December 31,			December 31,
	2022			2021
Gross carrying amount	$	6,554,628		$	5,294,892
Accumulated amortization		(4,747,142	)		(5,147,051	)
Net carrying amount	$	1,807,486		$	147,841

The estimated aggregate annual amortization expense for each of the next five years and thereafter is as follows:

Year	Amount
2023		211,939
2024		211,939
2025		206,055
2026		176,632
2027		176,632
Thereafter		824,289
Total	$	1,807,486