2023 Q2 Form 20-F Financial Statement

#000101376223007289 Filed on October 27, 2023

View on sec.gov

Income Statement

Concept 2023 Q2 2023 2022 Q2
Revenue $0.00 $0.00
YoY Change
Cost Of Revenue
YoY Change
Gross Profit
YoY Change
Gross Profit Margin
Selling, General & Admin $4.692M $2.562M
YoY Change -8.1% 171.69%
% of Gross Profit
Research & Development $1.582M $1.397M
YoY Change -37.04% 218.66%
% of Gross Profit
Depreciation & Amortization $293.1K
YoY Change 95.23%
% of Gross Profit
Operating Expenses $6.274M $3.959M
YoY Change -17.64% 186.59%
Operating Profit -$6.274M
YoY Change -17.64%
Interest Expense
YoY Change
% of Operating Profit
Other Income/Expense, Net $210.0K $23.13K
YoY Change 804.39% -33.19%
Pretax Income -$6.062M -$3.936M
YoY Change -20.18% 192.24%
Income Tax $0.00
% Of Pretax Income
Net Earnings -$5.871M -$3.854M
YoY Change -22.69% 186.21%
Net Earnings / Revenue
Basic Earnings Per Share $0.45
Diluted Earnings Per Share -$0.45 -$301.0K
COMMON SHARES
Basic Shares Outstanding 13.01M shares 13.01M shares 13.01M shares
Diluted Shares Outstanding 13.01M shares

Balance Sheet

Concept 2023 Q2 2023 2022 Q2
SHORT-TERM ASSETS
Cash & Short-Term Investments $11.56M $16.42M
YoY Change -29.59% 27533.4%
Cash & Equivalents $1.565M $6.417M
Short-Term Investments $10.00M $10.00M
Other Short-Term Assets $60.00K $27.60K
YoY Change 117.39% 270.97%
Inventory
Prepaid Expenses $56.55K $27.60K
Receivables
Other Receivables
Total Short-Term Assets $11.62M $11.62M $16.44M
YoY Change -29.33% -29.34% 24499.25%
LONG-TERM ASSETS
Property, Plant & Equipment $440.8K $890.0K $712.6K
YoY Change -38.14% -39.04% 770.4%
Goodwill
YoY Change
Intangibles
YoY Change
Long-Term Investments
YoY Change
Other Assets $110.0K $114.3K
YoY Change -3.76% -40.29%
Total Long-Term Assets $1.000M $1.000M $1.574M
YoY Change -36.45% -36.48% 476.08%
TOTAL ASSETS
Total Short-Term Assets $11.62M $11.62M $16.44M
Total Long-Term Assets $1.000M $1.000M $1.574M
Total Assets $12.62M $12.62M $18.02M
YoY Change -29.95% -29.96% 5197.66%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable
YoY Change
Accrued Expenses $158.1K $600.0K $151.1K
YoY Change 4.6% 6.74% -73.62%
Deferred Revenue
YoY Change
Short-Term Debt $0.00 $0.00
YoY Change -100.0%
Long-Term Debt Due
YoY Change
Total Short-Term Liabilities $606.9K $610.0K $577.8K
YoY Change 5.05% 5.58% -86.68%
LONG-TERM LIABILITIES
Long-Term Debt $0.00 $0.00
YoY Change
Other Long-Term Liabilities $30.00K $360.3K
YoY Change -91.67%
Total Long-Term Liabilities $30.00K $360.3K
YoY Change -91.67%
TOTAL LIABILITIES
Total Short-Term Liabilities $606.9K $610.0K $577.8K
Total Long-Term Liabilities $30.00K $360.3K
Total Liabilities $632.3K $590.0K $938.0K
YoY Change -32.59% -38.12% -78.38%
SHAREHOLDERS EQUITY
Retained Earnings -$17.32M -$11.44M
YoY Change 51.3% 186.24%
Common Stock $29.43M $130.00
YoY Change 22639943.85% 30.0%
Preferred Stock
YoY Change
Treasury Stock (at cost)
YoY Change
Treasury Stock Shares
Shareholders Equity $12.03M $12.03M $17.07M
YoY Change
Total Liabilities & Shareholders Equity $12.62M $12.62M $18.02M
YoY Change -29.95% -29.96% 5197.66%

Cashflow Statement

Concept 2023 Q2 2023 2022 Q2
OPERATING ACTIVITIES
Net Income -$5.871M -$3.854M
YoY Change -22.69% 186.21%
Depreciation, Depletion And Amortization $293.1K
YoY Change 95.23%
Cash From Operating Activities -$4.963M
YoY Change -5.77%
INVESTING ACTIVITIES
Capital Expenditures $27.39K
YoY Change -96.49%
Acquisitions
YoY Change
Other Investing Activities $90.00K
YoY Change -100.9%
Cash From Investing Activities $58.98K
YoY Change -100.55%
FINANCING ACTIVITIES
Cash Dividend Paid
YoY Change
Common Stock Issuance & Retirement, Net
YoY Change
Debt Paid & Issued, Net
YoY Change
Cash From Financing Activities $134.9K
YoY Change -99.4%
NET CHANGE
Cash From Operating Activities -$4.963M
Cash From Investing Activities $58.98K
Cash From Financing Activities $134.9K
Net Change In Cash -$4.852M
YoY Change -176.32%
FREE CASH FLOW
Cash From Operating Activities -$4.963M
Capital Expenditures $27.39K
Free Cash Flow -$4.990M
YoY Change -17.49%

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Note 1 – Nature of business and organization</b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b> </b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Regencell Bioscience Holdings Limited (“Regencell” or the “Company”) is a holding company incorporated as an exempted company on October 30, 2014, under the laws of the Cayman Islands and holding all of the outstanding share capital of Regencell Limited (Hong Kong), established under the laws of Hong Kong on November 20, 2014, and Regencell Bioscience Limited (Hong Kong), established under the laws of Hong Kong on May 12, 2015.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company, through its controlling interests in the wholly owned subsidiaries, operates an early-stage bioscience company that focuses on research, development and commercialization of Traditional Chinese Medicine (“TCM”) for the global treatment of neurocognitive disorder and degeneration, specifically for Attention Deficit Hyperactivity Disorder (“ADHD”) and Autism Spectrum Disorder (“ASD”) and infectious diseases affecting people’s immune system such as COVID-19 (“COVID”). The Company is in the research and development stage and has not yet generated any revenue since inception.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In January 2018, the Company entered into Strategic Partnership Agreement with Mr. Sik-Kee Au (the “TCM Practitioner”), the father of Mr. Yat-Gai Au, CEO and director of the Company. Pursuant to the Strategic Partnership Agreement, the Company has exclusive rights including the intellectual property rights and ownership of all his TCM formulae. Any inventions, TCM formulae, utilities, models’ improvements, research, discoveries, designs, processes, methods of manufacture, and products conceived or made by the TCM Practitioner in relation to TCM shall be the sole and exclusive property of the Company.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Strategic Partnership Agreement does not have a termination date and will remain effective indefinitely under the Hong Kong law. The Strategic Partnership Agreement can be amended or terminated by the mutual written agreement of the parties without breach. Pursuant to the Strategic Partnership Agreement, in exchange for the rights, the Company is required to donate three percent (3.0%) of net revenue that the Company generates in association with the use and/or commercialization of the TCM formulae to any of charitable institutions and/or trusts of a public character anywhere in the world at the sole and absolute choice of the TCM Practitioner and in such proportion at the sole and absolute discretion of the TCM practitioner on a yearly basis. The Company also undertakes to pay for all reasonable costs and expenses incurred by the TCM Practitioner in relation to the research and development of the TCM formulae for ADHD and ASD. All research and development costs and expenses incurred by the TCM Practitioner are charged to operations as incurred.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On July 20, 2021, the Company consummated its Initial Public Offering (“IPO”) of 2,300,000 Ordinary Shares at a price of $9.50 per share. The gross proceeds from IPO were approximately $21.85 million with net proceeds of approximately $19.82 million. As a result of the IPO, the Ordinary Shares now trade on the Nasdaq Capital Market under the symbol “RGC”. Additional net proceeds of approximately $2.85 million were received on August 20, 2021 from the issuance of the overallotment of 325,000 ordinary shares. 342,105 ordinary shares were issued to Mr. Yat-Gai Au upon the automatic conversion of $3,250,000 principal amount of the shareholder loan under the conversion note that was issued to Mr. Yat-Gai Au at a price of $9.50 per share.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">  </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On September 2, 2021, Regencell Bioscience Limited entered into a joint venture agreement (the “JV Agreement”) with Honor Epic Enterprises Limited (“Honor Epic”), a company incorporated in the British Virgin Islands, to form a joint venture under the laws of Hong Kong (the “Joint Venture”). Pursuant to the JV Agreement, among other things and subject to the terms and conditions contained therein, Regencell Bioscience Limited and Honor Epic agreed to establish Regencell Bioscience Asia Limited (the “JV”), a private company limited by shares in Hong Kong.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Pursuant to the JV Agreement, Regencell Bioscience Limited shall contribute 60% of the capital for the JV to fund its operations including trading, manufacturing, marketing and distribution of traditional Chinese medicine formulae products and to procure, enable, provide or support the treatment of COVID-19. In addition, Regencell Bioscience Limited will grant the JV exclusive rights to market and distribute its proprietary COVID-19 TCM treatment (“Regencell COVID Treatment Products”) in ASEAN countries, India, Japan, Australia and New Zealand (“Designated Markets”), for an initial term of two years, pursuant to a license agreement to be entered into by and between Regencell Bioscience Limited and the JV. Honor Epic shall contribute 40% of the capital for the JV and shall use its best effort to market, promote, and distribute the Regencell COVID Treatment Products in the Designated Markets. Regencell Bioscience Limited may appoint two board members in the JV, and Honor Epic may appoint one board member in the JV. Sixty percent (60%) of the net profits or net loss of the JV will be distributed to or assigned to Regencell Bioscience Limited and the remaining forty percent (40%) being distributed to or assigned to Honor Epic. In the event that Regencell Bioscience Limited decides to dispose all of its shares in the JV, Regencell Bioscience Limited may require all other shareholders to sell and transfer all their shares in the JV to a proposed buyer, so long as Regencell Bioscience Limited is holding more than 50% of equity interest in the JV. Regencell Bioscience Limited is entitled to a right of first refusal if a shareholder receives a third-party offer to purchase the shares of the JV in accordance with the requirements specified in the JV Agreement.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company has funded its operations primarily from the net proceeds from the completion of its IPO. The accompanying consolidated financial statements reflect the activities of the Company and each of the following entities:</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p> <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="text-indent: -0.125in; padding-left: 0.125in; width: 25%; border-bottom: black 1.5pt solid"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Name of Entity</b></span></td> <td style="width: 1%; text-align: center"> </td> <td style="width: 24%; border-bottom: black 1.5pt solid; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Principal Activities</b></span></td> <td style="width: 1%; text-align: center"> </td> <td style="width: 24%; border-bottom: black 1.5pt solid; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Place and Date of<br/> Incorporation</b></span></td> <td style="width: 1%; text-align: center"> </td> <td style="width: 24%; border-bottom: black 1.5pt solid; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Ownership</b></span></td></tr> <tr style="vertical-align: top"> <td style="text-indent: -0.125in; padding-left: 0.125in"> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr style="vertical-align: top; background-color: #CCEEFF"> <td style="text-indent: -0.125in; padding-left: 0.125in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Regencell Bioscience Limited </span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Research and Development Day-to-day operations </span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Hong Kong, incorporated on May 12, 2015</span></td> <td> </td> <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">100% owned by Regencell Bioscience Holdings Limited</span></td></tr> <tr style="vertical-align: top"> <td style="text-indent: -0.125in; padding-left: 0.125in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Regencell Limited </span></td> <td> </td> <td> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Production and testing laboratory Research and Development</p></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Hong Kong, incorporated on November 20, 2014</span></td> <td> </td> <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">100% owned by Regencell Bioscience Holdings Limited</span></td></tr> <tr style="vertical-align: top; background-color: #CCEEFF"> <td style="text-indent: -0.125in; padding-left: 0.125in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Regencell Bioscience Asia Limited</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Research and Development</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Hong Kong, incorporated on September 17, 2021</span></td> <td> </td> <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">60% owned by Regencell Bioscience Limited </span></td></tr> <tr style="vertical-align: top"> <td style="text-indent: -0.125in; padding-left: 0.125in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Regencell Bioscience North America Limited</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Research and Development</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">BVI, incorporated on April 25, 2022</span></td> <td> </td> <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">100% owned by Regencell Bioscience Holdings Limited</span></td></tr> </table>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="text-decoration:underline">Use of estimates and assumptions</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The preparation of 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 disclosures of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the periods presented. Significant accounting estimates reflected in the Company’s consolidated financial statements required to be made by management include, but not limited to, the useful lives of property and equipment, impairment of long-lived assets, valuation of share options, share-based compensation, allowance for deferred tax assets and uncertain tax position. Actual results could differ from these estimates.</p>
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CY2023 us-gaap Effective Income Tax Rate Reconciliation At Federal Statutory Income Tax Rate
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CY2022 us-gaap Effective Income Tax Rate Reconciliation At Federal Statutory Income Tax Rate
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The Board authorized that the maximum aggregate number of ordinary shares reserved and available pursuant to this Plan shall be the aggregate of (i) 1,235,076 Ordinary Shares, and (ii) on each January 1, starting with January 1, 2022, an additional number of shares equal to the lesser of (A) 2% of the outstanding number of Ordinary Shares (on a fully-diluted basis) on the immediately preceding December 31, and (B) such lower number of Ordinary Shares as may be determined by the board of directors.
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CY2023Q2 us-gaap Lessee Operating Lease Liability Payments Due In Rolling Year Three
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CY2023 dei Amendment Flag
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EntityCentralIndexKey
0001829667

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