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Intangible Assets

6 Months Ended

Jun. 30, 2023

NOTE 4 – INTANGIBLE ASSETS

Intangible assets represent the cost of medical formulas approved for production by the NMPA and the intellectual property acquired in November 2022 from Chengdu Bonier Medical Technology Development Co., Ltd (“Bonier”). On November 28, 2022, Helpson entered into a Technology Transfer Contract (the “Bonier Agreement”) with Bonier regarding a technical invention and creation of an ophthalmic oxygen enriched atomization therapeutic instrument, pursuant to which Helpson has been granted a utility model patent (the “Utility Model Patent”) and applied for an invention patent (the “Invention Patent”). The Company did not obtain NMPA production approval for any new medical formulas during the six months ended June 30, 2023 and 2022 and no costs were reclassified from advances to intangible assets during the six months ended June 30, 2023 and 2022, respectively. On August 9, 2023 the Company obtained the “Drug Supplementary Application Approval Notice” from the NMPA informing the Company that the Company’s Candesartan tablets have passed the quality and efficacy consistency evaluation of generic drugs.

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 $55,161 and $9,680 for the three months ended June 30, 2023 and 2022, respectively and $109,024 and $18,963 for the six months ended June 30, 2023 and 2022, 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.

Based on the Bonier Agreement, Helpson will pay a service fee of 15% of the net profit of the corresponding product sales revenue to Bonier, which will be paid in cash annually after it launches to the market, contingent on the successful authorization of the Invention Patent. There were no service fees paid for the six months ended June 30, 2023 and 2022, respectively.

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 six months ended June 30, 2023 and 2022.

Intangible assets consisted of NMPA approved medical formulas, a Utility Model Patent and an Invention Patent as follows:

	June 30,			December 31,
	2023			2022
Gross carrying amount	$	6,364,265		$	6,554,628
Accumulated amortization		(4,680,089	)		(4,747,142	)
Net carrying amount	$	1,684,176		$	1,807,486