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What changed in Prenetics Global Ltd's 20-F — 2022 vs 2023

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Paragraph-level year-over-year comparison of Prenetics Global Ltd's 2022 and 2023 20-F annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+557 added−517 removedSource: 20-F (2024-05-01) vs 20-F (2023-05-01)

Top changes in Prenetics Global Ltd's 2023 20-F

557 paragraphs added · 517 removed · 319 edited across 6 sections

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed0 unchanged
Biggest changeADDITIONAL INFORMATION 86 ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 93 ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES 94 PART II 94 ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES 94
Biggest changeADDITIONAL INFORMATION 85 ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 92 ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES 93 PART II 93
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE 6 ITEM 3. KEY INFORMATION 6 ITEM 4.A. UNRESOLVED STAFF COMMENTS 56 ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS 56 ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES 69 ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS 79 ITEM 8. FINANCIAL INFORMATION 85 ITEM 9. THE OFFER AND LISTING 85 ITEM 10.
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE 5 ITEM 3. KEY INFORMATION 5 ITEM 4.A. UNRESOLVED STAFF COMMENTS 54 ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS 54 ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES 69 ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS 79 ITEM 8. FINANCIAL INFORMATION 84 ITEM 9. THE OFFER AND LISTING 84 ITEM 10.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

106 edited+166 added−25 removed260 unchanged
Biggest changeRisks Relating to Our Securities • The trading prices of our Class A Ordinary Shares and Warrants may be volatile and a market for our Class A Ordinary Shares and Warrants may not develop, which would adversely affect the liquidity and price of our Class A Ordinary Shares. • If securities or industry analysts do not publish research, publish inaccurate or unfavorable research or cease publishing research about us, our share price and trading volume could decline significantly. • Sales of a substantial number of our securities in the public market could cause the price of our Class A Ordinary Shares and Warrants to fall. 7 Table of Contents Risks Relating to Our Business and Industry A significant portion of our historical revenue was generated from our COVID-19 testing services, the demand for which has been substantially reduced with the changes in government policy with respect to stay-at-home and compulsory testing orders, and our failure to derive significant revenue from other products and services and expand our overall customer base would harm our business and results of operation.
Biggest changeA significant portion of our historical revenue was generated from our COVID-19 testing services, which we have exited given that demand for such services has been substantially reduced with changes in government policy with respect to stay-at-home and compulsory testing orders, and our failure to derive significant revenue from other products and services and expand our overall customer base would harm our business and results of operation.
Failure of us to comply with applicable laws or regulations or any other obligations relating to privacy, data protection, or information security, or any compromise of security that results in unauthorized access to, or use or release of personally identifiable information or other data relating to our customers, or other individuals, or the perception that any of the foregoing types of failure or compromise has occurred, could damage our reputation and brand, discourage new and existing customers from using our platform, or result in fines, investigations, or proceedings by governmental agencies and private claims and litigation, any of which could adversely affect our business, financial condition, and results of operations. 24 Table of Contents Our products and services are and will continue to be subject to extensive regulation, compliance of which could be costly and time-consuming or may cause unanticipated delays or prevent the receipt of the required approvals to offer our products and services.
Failure of us to comply with applicable laws or regulations or any other obligations relating to privacy, data protection, or information security, or any compromise of security that results in unauthorized access to, or use or release of personally identifiable information or other data relating to our customers, or other individuals, or the perception that any of the foregoing types of failure or compromise has occurred, could damage our reputation and brand, discourage new and existing customers from using our platform, or result in fines, investigations, or proceedings by governmental agencies and private claims and litigation, any of which could adversely affect our business, financial condition, and results of operations. 27 Table of Contents Our products and services are and will continue to be subject to extensive regulation, compliance of which could be costly and time-consuming or may cause unanticipated delays or prevent the receipt of the required approvals to offer our products and services.
We are subject to Section 404 of the Sarbanes-Oxley Act of 2002, or Section 404, which require that we include a report from management on our internal control over financial reporting in our annual report on Form 20-F beginning with our annual report for the fiscal year ending December 31, 2023.
We are subject to Section 404 of the Sarbanes-Oxley Act of 2002, or Section 404, which require that we include a report from management on our internal control over financial reporting in our annual report on Form 20-F beginning with this annual report for the fiscal year ending December 31, 2023.
Risks Relating to Acquisitions We have engaged in and may continue to engage in acquisitions, investments or strategic alliances in the future, which could require significant management attention and resources, may not achieve their intended results and could adversely affect our business, financial condition and results of operations.
Risks Relating to Acquisitions We have engaged in and may continue to engage in acquisitions, investments, strategic alliances, or divestitures in the future, which could require significant management attention and resources, may not achieve their intended results and could adversely affect our business, financial condition and results of operations.
The trading prices of Class A Ordinary Shares and Warrants may be volatile and may fluctuate due to a variety of factors, some of which are beyond our control, including, but not limited to: (i) changes in the sectors in which we operate; (ii) changes in its projected operating and financial results; (iii) changes in laws and regulations affecting our business; (iv) ability to continue to innovate and bring products to market in a timely manner; (v) changes in our senior management team, our board of directors or key personnel; (vi) our involvement in litigation or investigations; (vii) the anticipation of releases of remaining lock-up restrictions; (viii) negative publicity about us or our products; (ix) the volume of Class A Ordinary Shares and Warrants available for public sale; (x) announcements of significant business developments, acquisitions, or new offerings; (xi) general economic, political, regulatory, industry, and market conditions; and (xii) natural disasters or major catastrophic events.
The trading prices of Class A Ordinary Shares and Warrants may be volatile and may fluctuate due to a variety of factors, some of which are beyond our control, including, but not limited to: (i) changes in the sectors in which we operate; 29 Table of Contents (ii) changes in its projected operating and financial results; (iii) changes in laws and regulations affecting our business; (iv) ability to continue to innovate and bring products to market in a timely manner; (v) changes in our senior management team, our board of directors or key personnel; (vi) our involvement in litigation or investigations; (vii) the anticipation of releases of remaining lock-up restrictions; (viii) negative publicity about us or our products; (ix) the volume of Class A Ordinary Shares and Warrants available for public sale; (x) announcements of significant business developments, acquisitions, or new offerings; (xi) general economic, political, regulatory, industry, and market conditions; and (xii) natural disasters or major catastrophic events.
Any acquisitions also could result in the incurrence of debt, contingent liabilities or future write-offs of intangible assets or goodwill, any of which could have a material adverse effect on our financial condition, results of operations and cash flows.
Any acquisitions also could result in the incurrence of debt, contingent liabilities, impairment liabilities, or future write-offs of intangible assets or goodwill, any of which could have a material adverse effect on our financial condition, results of operations and cash flows.
Because we issued additional Class A Ordinary Shares for capital raising purposes in connection with the Business Combination at an effective issue price of $7.75 per Class A Ordinary Share (the “Newly Issued Price”) and the aggregate gross proceeds from such issuances represented more than 60% of the total equity proceeds, and interest thereon, available for the funding of the Business Combination on the date of the completion of the Business Combination (net of redemptions), pursuant to the Existing Warrant Agreement, if the volume weighted average trading price of our Class A Ordinary Shares during the 20-trading day period starting on the trading day prior to the day on which we consummated the Business Combination (such price, the “Market Value”) is below $9.20 per share, then the exercise price of the Warrants will be adjusted (to the nearest cent) to be equal to 115% of the higher of the Market Value and the Newly Issued Price, the $18.00 per share redemption trigger price applicable to our Warrants and described in the Existing Warrant Agreement will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price, and the $10.00 per share redemption trigger price applicable to our Warrants and described in the Existing Warrant Agreement will be adjusted (to the nearest cent) to be equal to the higher of the Market Value and the Newly Issued Price.
Because we issued additional Class A Ordinary Shares for capital raising purposes in connection with the Business Combination at an effective issue price of $7.75 per Class A Ordinary Share (the “Newly Issued Price”) and the aggregate gross proceeds from such issuances represented more than 60% of the total equity proceeds, and interest thereon, available 35 Table of Contents for the funding of the Business Combination on the date of the completion of the Business Combination (net of redemptions), pursuant to the Existing Warrant Agreement, if the volume weighted average trading price of our Class A Ordinary Shares during the 20-trading day period starting on the trading day prior to the day on which we consummated the Business Combination (such price, the “Market Value”) is below $9.20 per share, then the exercise price of the Warrants will be adjusted (to the nearest cent) to be equal to 115% of the higher of the Market Value and the Newly Issued Price, the $18.00 per share redemption trigger price applicable to our Warrants and described in the Existing Warrant Agreement will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price, and the $10.00 per share redemption trigger price applicable to our Warrants and described in the Existing Warrant Agreement will be adjusted (to the nearest cent) to be equal to the higher of the Market Value and the Newly Issued Price.
We rely substantially on our trademarks and trade names. If our trademarks and trade names are not adequately protected, then we may not be able to build name recognition in our markets of interest and our business may be harmed. We rely substantially upon trademarks and trade names to build and maintain the integrity of our brands.
If our trademarks and trade names are not adequately protected, then we may not be able to build name recognition in our markets of interest and our business may be harmed. We rely substantially upon trademarks and trade names to build and maintain the integrity of our brands.
In addition, our suppliers and contract manufacturers may not be able to allocate sufficient capacity in order to meet our requirements, which could adversely affect our business, financial condition and results of operations. 13 Table of Contents Given our very short history of operating a business at commercial scale and our rapid growth since our inception, we cannot assure you that we will be able to successfully manage the expansion of our operations or recruit and train additional qualified personnel in an effective manner.
In addition, our suppliers and contract manufacturers may not be able to allocate sufficient capacity in order to meet our requirements, which could adversely affect our business, financial condition and results of operations. 14 Table of Contents Given our very short history of operating a business at commercial scale and our rapid growth since our inception, we cannot assure you that we will be able to successfully manage the expansion of our operations or recruit and train additional qualified personnel in an effective manner.
If we are unable to manage the complexity of global operations successfully, or fail to comply with any of the regulations in other jurisdictions, our financial performance and operating results could suffer. 25 Table of Contents Risks Relating to Intellectual Property and Legal Proceedings We may be subject to legal proceedings and litigation, which are costly to defend, and adverse publicity about any investigation, litigation, regulatory or legal action against us or our senior management could harm our reputation and business.
If we are unable to manage the complexity of global operations successfully, or fail to comply with any of the regulations in other jurisdictions, our financial performance and operating results could suffer. 28 Table of Contents Risks Relating to Intellectual Property and Legal Proceedings We may be subject to legal proceedings and litigation, which are costly to defend, and adverse publicity about any investigation, litigation, regulatory or legal action against us or our senior management could harm our reputation and business.
As a foreign private issuer and a “controlled company,” we are permitted to elect to rely, and may rely, on certain exemptions from corporate governance rules, including (i) an exemption from the rule that a majority of our board of directors must be independent directors; (ii) an exemption from the rule that director nominees must be selected or recommended solely by independent directors; (iii) an exemption from the rule that the compensation committee must be comprised solely of independent directors; (iv) an exemption from the requirement that an audit committee be comprised of at least three members; (v) an exemption from the requirement that an annual general meeting must be held; (vi) an exemption from the requirement that we must obtain shareholder approval prior to a plan or other equity compensation arrangement is established or materially amended; and (vii) an exemption from the requirement to obtain shareholder approval for issuing additional securities exceeding 20% of our outstanding ordinary shares.
As a foreign private issuer and a “controlled company,” we are permitted to elect to rely, and may rely, on certain exemptions from corporate governance rules, including (i) an exemption from the rule that a majority of our board of directors must be independent directors; (ii) an exemption from the rule that director nominees must be selected or 33 Table of Contents recommended solely by independent directors; (iii) an exemption from the rule that the compensation committee must be comprised solely of independent directors; (iv) an exemption from the requirement that an audit committee be comprised of at least three members; (v) an exemption from the requirement that an annual general meeting must be held; (vi) an exemption from the requirement that we must obtain shareholder approval prior to a plan or other equity compensation arrangement is established or materially amended; and (vii) an exemption from the requirement to obtain shareholder approval for issuing additional securities exceeding 20% of our outstanding ordinary shares.
Our estimates of the total addressable markets for our products and services, including CircleDNA, ColoClear, and ACTOnco, are based on a number of internal and third-party estimates, including those prepared by Frost & Sullivan.
Our estimates of the total addressable markets for our products and services, including CircleDNA, and ACTOnco, are based on a number of internal and third-party estimates, including those prepared by Frost & Sullivan.
To address these risks, we must, among other things: (i) increase our customer base; (ii) continue to implement and successfully execute our business and marketing strategy; (iii) identify, acquire and successfully integrate assets or technologies in areas that are complementary to our business strategy; (iv) integrate our business with ACT Genomics’ business successfully and realize the anticipated synergies and related benefits within the anticipated timeframe; (v) successfully enter into other strategic collaborations or relationships; (vi) obtain access to capital on acceptable terms and effectively utilize that capital; (vii) identify, attract, hire, retain, motivate and successfully integrate additional employees; (viii) continue to expand, automate and upgrade our laboratory, technology and data systems; (ix) provide rapid test turnaround times with accurate and clear results at low prices; (x) provide superior customer service; and (xi) respond to competitive developments.
To address these risks, we must, among other 9 Table of Contents things: (i) increase our customer base; (ii) continue to implement and successfully execute our business and marketing strategy; (iii) identify, acquire and successfully integrate assets or technologies in areas that are complementary to our business strategy; (iv) integrate our business with ACT Genomics’ business successfully and realize the anticipated synergies and related benefits within the anticipated timeframe; (v) successfully enter into other strategic collaborations or relationships; (vi) obtain access to capital on acceptable terms and effectively utilize that capital; (vii) identify, attract, hire, retain, motivate and successfully integrate additional employees; (viii) continue to expand, automate and upgrade our laboratory, technology and data systems; (ix) provide rapid test turnaround times with accurate and clear results at low prices; (x) provide superior customer service; and (xi) respond to competitive developments.
If we fail to develop or improve our products and services for additional applications or features, we may not be able to compete effectively with the research and development programs of our competitors, and such failure to develop or inability to compete could harm our business. 10 Table of Contents If our products and services do not deliver reliable results as expected, our reputation, business and operating results will be adversely affected.
If we fail to develop or improve our products and services for additional applications or features, we may not be able to compete effectively with the research and development programs of our competitors, and such failure to develop or inability to compete could harm our business. 12 Table of Contents If our products and services do not deliver reliable results as expected, our reputation, business and operating results will be adversely affected.
Our near-term success is highly dependent on the continued commercialization of CircleDNA, ColoClear, ACTOnco and other products in our target geographies. If our existing or new products are unable to attain market acceptance or be successfully commercialized in all or any of these jurisdictions, our business and future prospects could be materially and adversely affected.
Our near-term success is highly dependent on the continued commercialization of CircleDNA, ACTOnco, ACTHRD, and other products in our target geographies. If our existing or new products are unable to attain market acceptance or be successfully commercialized in all or any of these jurisdictions, our business and future prospects could be materially and adversely affected.
If we are unable to effectively and efficiently manage the growth of our business, our future revenue and operating results may be harmed. We have experienced growth in our business operations and corporate infrastructure since our inception. From our inception through the date of this annual report, the number of our employees increased from 11 to approximately 400.
If we are unable to effectively and efficiently manage the growth of our business, our future revenue and operating results may be harmed. We have experienced growth in our business operations and corporate infrastructure since our inception. From our inception through the date of this annual report, the number of our employees increased from 11 to approximately 320.
If we cannot secure additional funding when needed or if financing is not available on satisfactory terms or at all, we may have to delay, reduce the scope of, or eliminate one or more research and development programs or sales and marketing or other initiatives.
Additional funding may not be available on acceptable terms, or at all. If we cannot secure additional funding when needed or if financing is not available on satisfactory terms or at all, we may have to delay, reduce the scope of, or eliminate one or more research and development programs or sales and marketing or other initiatives.
We may enter new business areas and expand our operations in areas, such as clinical genetic testing, and precision oncology, where we have limited experience. We would likely face competition from entities more familiar with those businesses, and our efforts may not succeed.
We may enter new business areas and expand our operations in areas, such as in consumer healthcare, clinical genetic testing, and precision oncology, where we have limited experience. We would likely face competition from entities more familiar with those businesses, and our efforts may not succeed.
These laws, rules, and regulations evolve frequently and their scope may continually change, through new legislation, amendments to existing legislation, and changes in enforcement, and may be inconsistent from one jurisdiction to another. 23 Table of Contents The PDPO applies to data users that control the collection, holding, processing or use of personal data in Hong Kong and does not have extraterritorial effect.
These laws, rules, and regulations evolve frequently and their scope may continually change, through new legislation, amendments to existing legislation, and changes in enforcement, and may be inconsistent from one jurisdiction to another. The PDPO applies to data users that control the collection, holding, processing or use of personal data in Hong Kong and does not have extraterritorial effect.
There can be no assurances that if we undertake to enter into any of the new business areas, the market will accept our offerings, or that such offerings will generate significant revenues for us. We may incur debt or assume contingent or other liabilities or dilute our shareholders in connection with acquisitions or strategic alliances.
There can be no assurances that if we undertake to enter into any of the new business areas, the market will accept our offerings, or that such offerings will generate significant revenues for us. 18 Table of Contents We may incur debt or assume contingent or other liabilities or dilute our shareholders in connection with acquisitions or strategic alliances.
We currently do not have any business operations in mainland China or generate revenues from any business in mainland China.
We currently do not have any business operations in mainland China or generate revenues from any businesses in mainland China.
If we do not establish sales and marketing capabilities successfully, either on our own or in collaboration with third parties, we will not be successful in commercializing any of our current or future products. Consequently, our business, results of operations, financial condition and future prospects may be materially and adversely affected.
If we do not establish sales and marketing capabilities successfully, either on our own or in collaboration with third parties, we will not be successful 16 Table of Contents in commercializing any of our current or future products. Consequently, our business, results of operations, financial condition and future prospects may be materially and adversely affected.
The PDPO does not specifically govern the use of human genetic data or other sensitive personal data, and we are subject to the general requirements under PDPO including to obtain the prescribed consent of the data subject and to take all practicable steps to protect the personal data held by data users against unauthorized or accidental access, loss or use.
The PDPO does not specifically govern the use of human genetic data or other sensitive personal data, and we are subject to the general requirements under PDPO including to obtain the prescribed consent of the data subject and to take all practicable steps to protect the personal data held by data users against 26 Table of Contents unauthorized or accidental access, loss or use.
If we are not successful in attracting and retaining highly qualified personnel, our business, financial condition and results of operations will be negatively impacted. 16 Table of Contents Competition for skilled personnel across virtually all areas where we operate and need to attract additional talent is intense.
If we are not successful in attracting and retaining highly qualified personnel, our business, financial condition and results of operations will be negatively impacted. Competition for skilled personnel across virtually all areas where we operate and need to attract additional talent is intense.
We intend to rely on all of the foregoing exemptions available to foreign private issuers and “controlled company.” 31 Table of Contents As a result, you may not be provided with the benefits of certain corporate governance requirements of NASDAQ applicable to companies that are subject to these corporate governance requirements.
We intend to rely on all of the foregoing exemptions available to foreign private issuers and “controlled company.” As a result, you may not be provided with the benefits of certain corporate governance requirements of NASDAQ applicable to companies that are subject to these corporate governance requirements.
If any of our estimates prove to be inaccurate, the market opportunity for our existing and pipeline products could be significantly less than we estimate. If this turns out to be the case, it may impair our potential for growth and our business and future prospects may be materially and adversely affected.
If any of our estimates prove to be inaccurate, the market opportunity for our existing and pipeline products could be significantly 17 Table of Contents less than we estimate. If this turns out to be the case, it may impair our potential for growth and our business and future prospects may be materially and adversely affected.
As a result of the ACT Acquisition, we face various additional risks, including, among others, the following: (i) difficulties in integrating and managing the combined operations of ACT Genomics, and realizing the anticipated economic, operational, and other benefits in a timely manner, which could result in substantial costs and delays or other operational, technical, or financial problems; (ii) disruption to ACT Genomics’ business and operations and relationships with service providers and/or other third parties; (iii) loss of key employees of ACT Genomics and other challenges associated with integrating new employees into our culture, as well as reputational harm if integration is not successful; (iv) failure to successfully realize our intended business strategy; (v) increase in the operating losses that we expect to incur in future periods; (vi) diversion of management time and focus from operating our business to addressing ACT Acquisition integration challenges; (vii) diversion of significant resources from the ongoing development of our existing products, services, and operations; (viii) regulatory complexities of integrating or managing the combined operations or expanding into other industries or parts of the healthcare industry; (ix) regulatory developments or enforcement trends focusing on corporate practice of medicine; (x) greater than anticipated costs related to the integration of ACT Genomics’ business and operations into ours; (xi) increase in compliance and related costs associated with the addition of a regulated business; (xii) responsibility for the liabilities of ACT Genomics, including those that were not disclosed to us or exceed our estimates, as well as, without limitation, liabilities arising out of their failure to maintain effective data protection and privacy practices controls and comply with applicable regulations; and (xiii) potential accounting charges to the extent intangibles recorded in connection with the ACT Acquisition, such as goodwill, trademarks, client relationships, or intellectual property, are later determined to be impaired and written down in value. 21 Table of Contents Our ability to execute all such plans will depend on various factors, many of which remain outside our control.
As a result of the ACT Acquisition, we face various additional risks, including, among others, the following: (i) difficulties in integrating and managing the combined operations of ACT Genomics, and realizing the anticipated economic, operational, and other benefits in a timely manner, which could result in substantial costs and delays or other operational, technical, or financial problems; (ii) disruption to ACT Genomics’ business and operations and relationships with service providers and/or other third parties; (iii) loss of key employees of ACT Genomics and other challenges associated with integrating new employees into our culture, as well as reputational harm if integration is not successful; (iv) failure to successfully realize our intended business strategy; (v) increase in the operating losses that we expect to incur in future periods; (vi) diversion of management time and focus from operating our business to addressing ACT Acquisition integration challenges; (vii) diversion of significant resources from the ongoing development of our existing products, services, and operations; (viii) regulatory complexities of integrating or managing the combined operations or expanding into other industries or parts of the healthcare industry; (ix) regulatory developments or enforcement trends focusing on corporate practice of medicine; (x) greater than anticipated costs related to the integration of ACT Genomics’ business and operations into ours; (xi) increase in compliance and related costs associated with the addition of a regulated business; (xii) responsibility for the liabilities of ACT Genomics, including those that were not disclosed to us or exceed our estimates, as well as, without limitation, liabilities arising out of their failure to maintain effective data protection and privacy practices controls and comply with applicable regulations; and (xiii) potential accounting charges to the extent intangibles recorded in connection with the ACT Acquisition, such as goodwill, trademarks, client relationships, or intellectual property, are later determined to be impaired and written down in value.
The commercial success of CircleDNA, ColoClear, ACTOnco and our other products in our target geographies will depend on many factors, some of which are outside of our control, including the following: (i) the timely receipt of regulatory approvals and marketing authorizations from the regulatory authorities in jurisdictions to which we plan to expand our business operations; (ii) acceptance by healthcare systems and providers, governments and regulatory authorities, key opinion leaders, consumers and the overall medical community of the convenience, accuracy, sufficiency and other benefits offered by our products; (iii) perceptions by the public and members of the medical community as to the perceived advantages, relative cost, relative convenience and relative accuracy of our test kits compared to those of our competitors; (iv) the effectiveness of our marketing and sales efforts, including our ability to have a sufficient number of talented sales representatives to sell our testing services; and (v) our ability to achieve and maintain compliance with all regulatory requirements applicable to our products in various jurisdictions, including manufacture, labeling, advertising, promotion and post-market surveillance requirements.
The commercial success of CircleDNA, ACTOnco, ACTHRD, and our other products in our target geographies will depend on many factors, some of which are outside of our control, including the following: (i) the timely receipt of regulatory approvals and marketing authorizations from the regulatory authorities in jurisdictions to which we plan to expand our business operations; (ii) acceptance by healthcare systems and providers, governments and regulatory authorities, key opinion leaders, consumers and the overall medical community of the convenience, accuracy, sufficiency and other benefits offered by our products; (iii) perceptions by the public and members of the medical community as to the perceived advantages, relative cost, relative convenience and relative accuracy of our test kits compared to those of our 10 Table of Contents competitors; (iv) the effectiveness of our marketing and sales efforts, including our ability to have a sufficient number of talented sales representatives to sell our testing services; (v) our ability to secure strategic and commercial partnerships; and (vi) our ability to achieve and maintain compliance with all regulatory requirements applicable to our products in various jurisdictions, including manufacture, labeling, advertising, promotion and post-market surveillance requirements.
Risks Relating to Acquisitions • We have engaged in and may continue to engage in acquisitions, investments or strategic alliances in the future, which could require significant management attention and resources, may not achieve their intended results and could adversely affect our business, financial condition and results of operations. • We face additional risks as a result of the ACT Acquisition and may be unable to integrate our businesses successfully and realize the anticipated synergies and related benefits of the ACT Acquisition or do so within the anticipated timeframe. • Our acquisition may not be accretive, and may be dilutive, to our earnings per share, which may negatively affect the market price of our ordinary shares.
Risks Relating to Acquisitions • We have engaged in and may continue to engage in acquisitions, investments, strategic alliances, joint ventures, or divestitures in the future, which could require significant management attention and resources, may not 8 Table of Contents achieve their intended results and could adversely affect our business, financial condition and results of operations. • We face additional risks as a result of the ACT Acquisition and may be unable to integrate our businesses successfully and realize the anticipated synergies and related benefits of the ACT Acquisition or do so within the anticipated timeframe. • Our acquisition may not be accretive, and may be dilutive, to our earnings per share, which may negatively affect the market price of our ordinary shares.
We also anticipate facing competition from companies that have or are developing cancer diagnostic tests, including screening and early detection tests, treatment selection and optimization, and recurrence monitoring tests, and other sources such as academic institutions, public and private research institutions and governmental agencies.
We also face competition from companies that have or are developing cancer diagnostic tests, including screening and early detection tests, treatment selection and optimization, and recurrence monitoring tests, and other sources such as academic institutions, public and private research institutions and governmental agencies.
Our marketing efforts currently include various initiatives and consist primarily of digital marketing on a variety of social media channels, such as YouTube, Instagram, LinkedIn, Facebook, search engine optimization on websites, such as Google and Facebook Ads, various branding strategies, and email.
Our marketing efforts currently include various initiatives and consist primarily of digital marketing on a variety of social media channels, such as YouTube, Instagram, LinkedIn, Facebook, search engine optimization on websites, such as 13 Table of Contents Google and Facebook Ads, various branding strategies, and email.
While our revenue has increased over time, given the numerous risks and uncertainties associated with our research, development, manufacturing and commercialization efforts, we expect to continue to incur significant losses as we develop and invest in our business, and we are unable to predict when we will become profitable on a sustained basis or at all. our ability to achieve or sustain profitability is based on numerous factors, many of which are beyond our control, including, among other factors, market acceptance of our products, the length of the COVID-19 pandemic, the vaccination effectiveness and vaccination rates, future product development, our market penetration and margins and our ability to commercialize the pipeline products.
While our revenue has increased over time, given the numerous risks and uncertainties associated with our research, development, manufacturing and commercialization efforts, we expect to continue to incur significant losses as we develop and invest in our business, and we are unable to predict when we will become profitable on a sustained basis or at all. our ability to achieve or sustain profitability is based on numerous factors, many of which are beyond our control, including, among other factors, market acceptance of our products, future product development, our market penetration and margins and our ability to commercialize the pipeline products.
Securities litigation could result in substantial costs and divert management’s attention and resources from our business. 27 Table of Contents Sales of a substantial number of our securities in the public market could cause the price of our Class A Ordinary Shares and Warrants to fall.
Securities litigation could result in substantial costs and divert management’s attention and resources from our business. Sales of a substantial number of our securities in the public market could cause the price of our Class A Ordinary Shares and Warrants to fall.
The consumer genetic testing market is highly competitive, and many of our competitors are more established and have stronger marketing capabilities and greater financial resources, which presents a continuous threat to the success of our consumer genetic testing business. In addition to diagnostic testing, we also operate a consumer genetic testing business primarily through our CircleDNA product line.
The consumer genetic testing market is highly competitive, and many of our competitors are more established and have stronger marketing capabilities and greater financial resources, which presents a continuous threat to the success of our consumer genetic testing business. We operate a consumer genetic testing business primarily through our CircleDNA product line.
Risks Relating to Our Business and Industry • We are a relatively early-stage company and have a limited operating history, and our near-term business strategy and in-house R&D efforts are centered around new and rapidly developing markets including diagnostics and precision oncology, which may make us difficult to evaluate our current business and predict our future performance. • A significant portion of our historical revenue was generated from our COVID-19 testing services, the demand for which has been substantially reduced with the changes in government policy with respect to stay-at-home and compulsory testing orders, and our failure to derive significant revenue from other products and services and expand our overall customer base would harm our business and results of operation. • Our near-term success is highly dependent on the continued commercialization of CircleDNA, ColoClear, ACTOnco and other products in our target geographies.
Risks Relating to Our Business and Industry • We are a relatively early-stage company and have a limited operating history, and our near-term business strategy and in-house R&D efforts are centered around new and rapidly developing markets including 7 Table of Contents diagnostics and precision oncology, which may make it difficult to evaluate our current business and predict our future performance. • A significant portion of our historical revenue was generated from our COVID-19 testing services, which we have exited given that demand for such services has been substantially reduced with changes in government policy with respect to stay-at-home and compulsory testing orders, and our failure to derive significant revenue from other products and services and expand our overall customer base would harm our business and results of operation. • Our near-term success is highly dependent on the continued commercialization of CircleDNA, ACTOnco, ACTHRD, and other products in our target geographies.
We may continue to incur losses both in the near term and longer term as we continue to devote a significant portion of our resources to scale up our business and operations, including continuing to build out our corporate infrastructure, increasing our manufacturing capabilities, engaging in continued research and development of key testing technologies as we work to expand our portfolio of available test services, and other related business activities, and as we incur additional costs associated with operating as a public company.
We may continue to incur losses both in the near term and longer term as we continue to devote a significant portion of our resources to, among other things, expand into consumer health, develop international market, scale up our business and operations, including continuing to build out our corporate infrastructure, increasing our manufacturing capabilities, engaging in continued research and development of key testing technologies as we work to expand our portfolio of available test services, and other related business activities, and as we incur additional costs associated with operating as a public company.
We may be unable to timely complete the evaluation testing and any required remediation. 18 Table of Contents Our management conducted an evaluation of the effectiveness of our internal control over financial reporting and concluded that our internal control over financial reporting was effective as of December 31, 2022.
We may be unable to timely complete the evaluation testing and any required remediation. Our management conducted an evaluation of the effectiveness of our internal control over financial reporting and concluded that our internal control over financial reporting was effective as of December 31, 2023.
Accordingly, we are a relatively early-stage company with a limited operating history upon which you can evaluate our business and prospects. Our limited operating history may make it difficult to evaluate our current business and predict our future performance, prospects or viability.
We are a relatively early-stage company that began in 2014 with a limited operating history upon which you can evaluate our business and prospects. Our limited operating history may make it difficult to evaluate our current business and predict our future performance, prospects or viability.
If we were to become subject to such oversight, discretion or control, including over overseas offerings of securities and/or foreign investments, it may result in a material adverse change in our operations, significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of our securities to significantly decline.
If we were to become subject to such oversight, discretion and control, including over overseas offerings of securities and/or foreign investments, it may result in a material adverse change in our operations, significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of our securities to significantly decline or be worthless, which would materially affect the interests of the investors.
In Hong Kong, medical device manufacturers may voluntarily complete an application and registration with the Medical Device Division of the Department of Health of Hong Kong in the Medical Device Administrative Control System, for which the applicant must demonstrate the safety and performance of the medical devices by submitting a number of supporting documents including test reports of the device’s chemical, physical and biological properties, and a performance evaluation report including evaluation of analytical performance and clinical performance of the device to demonstrate that the device achieves its intended purpose.
In addition, in Hong Kong, we are not required to obtain regulatory approval, but medical device manufacturers may voluntarily complete an application and registration with the Medical Device Division of the Department of Health of Hong Kong in the Medical Device Administrative Control System, for which the applicant must demonstrate the safety and performance of the medical devices by submitting a number of supporting documents including test reports of the device’s chemical, physical and biological properties, and a performance evaluation report including evaluation of analytical performance and clinical performance of the device to demonstrate that the device achieves its intended purpose.
If we raise additional funds through other third-party funding, collaborations agreements, strategic alliances, licensing arrangements or marketing and distribution arrangements, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or test kits or grant licenses on terms that may not be favorable to us. 17 Table of Contents Additional funding may not be available on acceptable terms, or at all.
If we raise additional funds through other third-party funding, collaborations agreements, strategic alliances, licensing arrangements or marketing and distribution arrangements, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or test kits or grant licenses on terms that may not be favorable to us.
The inability to license such intellectual property on favorable terms, including obtaining exclusive rights in relevant jurisdictions, and the termination of such licenses or other agreements permitting us to use such intellectual property, could adversely affect our business.
The inability to license such intellectual property on favorable terms, including obtaining exclusive rights in relevant jurisdictions, and the termination of such licenses or other agreements permitting us to use such intellectual property, could adversely affect our business. We rely substantially on our trademarks and trade names.
Our Warrants to purchase up to 22,384,585 Class A Ordinary Shares have become exercisable on June 17, 2022 in accordance with the terms of the Assignment, Assumption and Amendment Agreement and the Existing Warrant Agreement governing those securities.
Our Warrants to purchase up to 1,492,306 Class A Ordinary Shares have become exercisable on June 17, 2022 in accordance with the terms of the Assignment, Assumption and Amendment Agreement and the Existing Warrant Agreement governing those securities.
We rely on a limited number of suppliers for CircleDNA, ColoClear and ACTOnco and may not be able to find replacements or immediately transition to alternative suppliers, which could adversely affect our ability to meet customer demand. We rely on a limited number of suppliers for materials, genome sequencing service and RT-PCR testing service.
We rely on a limited number of suppliers for CircleDNA, ACTOnco, ACTHRD, and our other products and may not be able to find replacements or immediately transition to alternative suppliers, which could adversely affect our ability to meet customer demand. We rely on a limited number of suppliers for materials, and genome sequencing service.
However, the demand for COVID-19 testing services has already been substantially reduced with the production and widely administered use of efficacious vaccines and other therapeutic treatment for COVID-19, as well as changes in mandatory testing requirements.
However, we no longer provide COVID-19 testing services as demand for such services has been substantially reduced with the production and widely administered use of efficacious vaccines and other therapeutic treatment for COVID-19, as well as changes in mandatory testing requirements.
Because we qualify as a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers, including: (i) the rules under the Exchange Act requiring the filing of quarterly reports on Form 10-Q or current reports on Form 8-K with the SEC; (ii) the sections of the Exchange Act regulating the solicitation of proxies, consents, or authorizations in respect of a security registered under the Exchange Act; (iii) the sections of the Exchange Act requiring insiders to file public reports of their share ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and (iv) the selective disclosure rules by issuers of material nonpublic information under Regulation FD. 30 Table of Contents We will be required to file an annual report on Form 20-F within four months of the end of each fiscal year.
Because we qualify as a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers, including: (i) the rules under the Exchange Act requiring the filing of quarterly reports on Form 10-Q or current reports on Form 8-K with the SEC; (ii) the sections of the Exchange Act regulating the solicitation of proxies, consents, or authorizations in respect of a security registered under the Exchange Act; (iii) the sections of the Exchange Act requiring insiders to file public reports of their share ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and (iv) the selective disclosure rules by issuers of material nonpublic information under Regulation FD.
We have a limited history introducing new products and services to our customers. The future prospects of our business may be harmed if our efforts to attract new customers and engage existing customers by introducing new products are unsuccessful. Our success depends on our ability to continuously attract new customers and engage existing customers.
The future prospects of our business may be harmed if our efforts to attract new customers and engage existing customers by introducing new products are unsuccessful. Our success depends on our ability to continuously attract new customers and engage existing customers.
As of April 28, 2023, the closing price of our Class A Ordinary Shares was $0.83 per share. There is no guarantee that the Warrants will ever be “in the money” prior to their expiration, and as such, the Warrants may expire worthless.
As of April 24, 2024, the closing price of our Class A Ordinary Shares was $4.79 per share. There is no guarantee that the Warrants will ever be “in the money” prior to their expiration, and as such, the Warrants may expire worthless.
Our ability to compete depends upon a number of factors both within and beyond our control, including, among others, the following: (i) the quality and reliability of our and others’ products; (ii) accessibility of results; (iii) turnaround time of testing results; (iv) price; (v) convenience and ease of use; (vi) selling and marketing efforts; (vii) additional value-added services and health informatics tools; (viii) customer service and support efforts; (ix) adaptability to evolving regulatory landscape; (x) the ability to execute strategies to protect data privacy and build customer trust; and (xi) our brand recognition relative to our competitors. 8 Table of Contents We also face competition from other companies attempting to enter the genetic testing market and capitalize on similar opportunities.
Our ability to compete depends upon a number of factors both within and beyond our control, including, among others, the following: (i) the quality and reliability of our and others’ products; (ii) accessibility of results; (iii) turnaround time of testing results; (iv) price; (v) convenience and ease of use; (vi) selling and marketing efforts; (vii) additional value-added services and health informatics tools; (viii) customer service and support efforts; (ix) adaptability to evolving regulatory landscape; (x) the ability to execute strategies to protect data privacy and build customer trust; and (xi) our brand recognition relative to our competitors.
ITEM 3. KEY INFORMATION A. [Reserved] B. Capitalization and Indebtedness Not applicable. C. Reasons for the Offer and Use of Proceeds Not applicable. D. Risk Factors Summary of Risk Factors An investment in our Class A Ordinary Shares and Warrants involves significant risks. Below is a summary of certain material risks we face.
Capitalization and Indebtedness Not applicable. C. Reasons for the Offer and Use of Proceeds Not applicable. D. Risk Factors Summary of Risk Factors An investment in our Class A Ordinary Shares and Warrants involves significant risks. Below is a summary of certain material risks we face. These risks are more fully described under “Item 3. Key Information — D.
The diagnostic testing market is highly competitive and we face and expect ongoing substantial competition from different sources, including from diagnostic test manufacturers and producers.
The precision oncology diagnostics market is highly competitive and we face and expect ongoing substantial competition from different sources, including from diagnostics test manufacturers and producers.
The exercise price of the Warrants is $8.91 per 1.29 shares (or an effective price of $6.91 per share), subject to adjustment pursuant to the terms of the Assignment, Assumption and Amendment Agreement and the Existing Warrant Agreement.
The exercise price of the Warrants is $133.65 per 1.29 shares (or an effective price of $103.60 per share), subject to adjustment pursuant to the terms of the Assignment, Assumption and Amendment Agreement and the Existing Warrant Agreement.
However, because of our substantial operations in Hong Kong and given the mainland Chinese government’s significant oversight authority over the conduct of business in Hong Kong generally, there is no guarantee that we will not be subject to such direct influence or intervention in the future due to changes in laws or other unforeseeable reasons.
In addition, because of our substantial operations in Hong Kong and given the mainland Chinese government’s significant oversight authority over the conduct of business in Hong Kong generally, there is no guarantee that we will not be subject to such direct influence or intervention in the future due to changes in laws or other unforeseeable reasons, thus legal and operational risks associated with operating in China also apply to operations in Hong Kong.
Our quarterly and annual operating results may fluctuate significantly, which makes it difficult for us to predict our future operating results.
Our operating results may fluctuate significantly, which makes our future operating results difficult to predict and could cause our operating results to fall below expectations. Our quarterly and annual operating results may fluctuate significantly, which makes it difficult for us to predict our future operating results.
Our ability to compete depends upon a number of factors both within and beyond our control, including, among others, the following: (i) the ability to continue developing cancer screening tools, especially a broader product portfolio; (ii) cost-effectiveness of marketing efforts to market our products across Asia and EMEA; (iii) commercialization of infrastructure and distribution networks for the promotion and sale of our products; (iv) brand recognition in Asia and EMEA; (v) academic, talent and funding base that supports the iteration of products and large-scale clinical research; (vi) receipt of regulatory approvals and timing thereof for our products; and (vii) the ability to carry out mergers and acquisitions in the precision oncology market, thereby bringing in cutting-edge technologies, resources and opportunities.
We believe our ability to compete depends upon a number of factors both within and beyond our control, including, among others, the following: (i) the ability to continue developing cancer screening tools, especially a broader product portfolio; (ii) support from evidence of clinical performance; (iii) ability to obtain and maintain required regulatory approvals; (iv) level of patent protection; (v) ability to achieve economies of scale by lowering production cost; (vi) cost-effectiveness of marketing efforts to market our products across Asia and beyond; (vii) commercialization of infrastructure and distribution networks for the promotion and sale of our products; (viii) brand recognition globally; (ix) academic, talent and funding base that supports the iteration of products and large-scale clinical research; and (x) the ability to carry out mergers and acquisitions in the precision oncology market, thereby bringing in cutting-edge technologies, resources and opportunities.
Competitors with cancer diagnostic tests include Myraid Genetics, Inc., Grail, LLC, Qiagen N.V., Illumina, Inc, Foundation Medicine, Inc., and Personalis, Inc.
Competitors with cancer 11 Table of Contents diagnostic tests include Myraid Genetics, Inc., Grail, LLC, Qiagen N.V., Illumina, Inc, Foundation Medicine, Inc., Guardant Health, Inc. and Personalis, Inc.
This could in turn limit our access to capital markets, result in deterioration in our financial condition and results of operations, and lead to a decline in the market price of the Class A Ordinary Shares and the Warrants.
This could in turn limit our access to capital markets, result in deterioration in our financial condition and results of operations, and lead to a decline in the market price of the Class A Ordinary Shares and the Warrants. The implementation of a new enterprise resource planning (ERP) system could adversely affect our business and results of operations.
The precision oncology market is highly competitive, and many of our competitors are more established and have stronger marketing capabilities and greater financial resources, which presents a continuous threat to the success of our precision oncology business.
The diagnostics and precision oncology market is highly competitive, and many of our competitors are more established and have stronger marketing capabilities and greater financial resources, which presents a continuous threat to the success of our diagnostics and precision oncology business. We have ventured into the precision oncology diagnostics market through our acquisition of ACT Genomics and joint venture Insighta.
Our near-term success is dependent on the continued commercialization of CircleDNA, our in-house developed consumer genetic testing product, ColoClear, an at-home colorectal cancer screening test, and ACTOnco, a comprehensive cancer panel used to guide treatment selection for all major solid tumors.
Our near-term success is dependent on the continued commercialization of CircleDNA, our in-house developed consumer genetic testing product, ACTOnco, a comprehensive cancer panel used to guide treatment selection for all major solid tumors, ACTHRD, a test for the homologous recombination deficiency status of cancer patients.
Additionally, if we are a PFIC for any taxable year during which U.S. Holders hold our ordinary shares or Warrants, we would generally continue to be treated as a PFIC with respect to such U.S. Holders even if we do not satisfy either of the above tests to be classified as a PFIC in a subsequent taxable year.
Additionally, if we are a PFIC for any taxable year during which U.S. Holders hold our ordinary shares or Warrants, we would generally continue to be treated as a PFIC with respect to such U.S.
Such adjustment under the foregoing provisions will result in additional dilution to our shareholders. 32 Table of Contents Risks Relating to Taxation We may be or become a passive foreign investment company (“PFIC”), which could result in adverse U.S. federal income tax consequences to U.S. Holders of our ordinary shares or Warrants.
Risks Relating to Taxation We may be or become a passive foreign investment company (“PFIC”), which could result in adverse U.S. federal income tax consequences to U.S. Holders of our ordinary shares or Warrants.
In the event that we obtain securities or industry analyst coverage, if one or more of the analysts who cover us downgrade their assessment or publish inaccurate or unfavorable research about our business, the market price and liquidity for our Class A Ordinary Shares and Warrants could be negatively impacted.
In the event that we obtain securities or industry analyst coverage, if one or more of the analysts who cover us downgrade their assessment or publish inaccurate or unfavorable research about our business, the market price and liquidity for our Class A Ordinary Shares and Warrants could be negatively impacted. 30 Table of Contents Future resales of our ordinary shares issued to our shareholders and other significant shareholders may cause the market price of our Class A Ordinary Shares to drop significantly, even if our business is doing well.
It is critical that we continue to maintain and enhance the recognition and reputation of our brands. Many factors, some of which are beyond our control, are important to maintaining and enhancing our brands and if not properly managed, may cause material harm to our brands.
Many factors, some of which are beyond our control, are important to maintaining and enhancing our brands and if not properly managed, may cause material harm to our brands.
As of April 18, 2023, these Class B Ordinary Shares constitute approximately 14.16% of our total issued and outstanding shares and 76.74% of the aggregate voting power of our total issued and outstanding shares due to the disparate voting powers associated with our dual-class share structure.
Yeung beneficially owns all of the issued Class B Ordinary Shares. As of April 24, 2024, these Class B Ordinary Shares constitute approximately 12.94% of our total issued and outstanding shares and 74.83% of the aggregate voting power of our total issued and outstanding shares due to the disparate voting powers associated with our dual-class share structure.
If our existing or new services or product offerings are unable to attain market acceptance or be successfully commercialized in all or any of these jurisdictions, our business and future prospects could be materially and adversely affected. • The diagnostic testing market is highly competitive, and many of our competitors are larger, better established and have greater financial and other resources. • The consumer genetic testing market is highly competitive, and many of our competitors are more established and have stronger marketing capabilities and greater financial resources, which presents a continuous threat to the success of our consumer genetic testing business. 6 Table of Contents • The precision oncology market is highly competitive, and many of our competitors are more established and have stronger marketing capabilities and greater financial resources, which presents a continuous threat to the success of our precision oncology business. • We may enter new business areas and expand our operations in areas such as clinical genetic testing, and precision oncology, where we have limited experience.
If our existing or new services or product offerings are unable to attain market acceptance or be successfully commercialized in all or any of these jurisdictions, our business and future prospects could be materially and adversely affected. • The consumer genetic testing market is highly competitive, and many of our competitors are more established and have stronger marketing capabilities and greater financial resources, which presents a continuous threat to the success of our consumer genetic testing business. • The diagnostics and precision oncology market is highly competitive, and many of our competitors are more established and have stronger marketing capabilities and greater financial resources, which presents a continuous threat to the success of our diagnostics and precision oncology business. • We have pipeline products that are currently in the R&D phase, and may not be successful in our efforts to develop any of these or other products into marketable products.
Furthermore, we expect these rules and regulations to make it more difficult and more expensive for us to obtain director and officer liability insurance, and consequently we may be required to incur substantial costs to maintain the same or similar coverage. These additional obligations could have a material adverse effect on our business, financial condition, results of operations and prospects.
Furthermore, we expect these rules and regulations to make it more difficult and more expensive for us to obtain director and officer liability insurance, and consequently we may be required to incur substantial costs to maintain the same or similar coverage.
During the fiscal year ended December 31, 2022, we spent $13.3 million on sales and distribution, representing 5% of our revenue, respectively. 12 Table of Contents We anticipate that sales and distribution expenses will continue to represent a significant percentage of our overall operating costs for the foreseeable future.
During the fiscal year ended December 31, 2023, we spent $8.2 million on sales and distribution, including marketing expenses, representing 37.9% of our revenue from continuing operations. We anticipate that sales and distribution expenses will continue to represent a significant percentage of our overall operating costs for the foreseeable future.
This variability and unpredictability could also result in our failure to meet the expectations of industry or financial analysts or investors for any period, which in turn could have a material adverse effect on our business and prospects, and the market price of the Class A Ordinary Shares and the Warrants.
This variability and unpredictability could also result in our failure to meet the expectations of industry or financial analysts or investors for any period, which in turn could have a material adverse effect on our business and prospects, and the market price of the Class A Ordinary Shares and the Warrants. 15 Table of Contents Our business significantly depends upon the strength of our brands, including Prenetics, CircleDNA, and ACT Genomics, and any harm to our brands or reputation may materially and adversely affect our business and results of operations.
Any of these risks could adversely affect our business, financial condition and results of operations. In addition, the process of integrating ACT Genomics’ operations into our operations could result in unforeseen operating difficulties and require significant resources.
Our ability to execute all such plans will depend on various factors, many of which remain outside our control. Any of these risks could adversely affect our business, financial condition and results of operations. In addition, the process of integrating ACT Genomics’ operations into our operations could result in unforeseen operating difficulties and require significant resources.
If any issues arise post-closing, we may not be entitled to sufficient, or any, indemnification or recourse from ACT Genomics, sellers of shares of ACT Genomics or other parties involved in the ACT Sale and Purchase Agreements, which could have a material adverse impact on our business and results of operations. 22 Table of Contents Risks Relating to Government Regulation Our business collects and processes a large amount of data including personal information, and we will face legal, reputational, and financial risks if we fail to protect our customers’ data from security breaches or cyberattacks.
If any issues arise post-closing, we may not be entitled to sufficient, or any, indemnification or recourse from ACT Genomics, sellers of shares of ACT 25 Table of Contents Genomics or other parties involved in the ACT Sale and Purchase Agreements, which could have a material adverse impact on our business and results of operations.
We generated a total revenue of approximately $275.8 million for the year ended December 31, 2022, out of which $260 million was generated from our Diagnostics segment, which primarily comprises of COVID-19 testing services under Project Screen.
We generated a total revenue of approximately $275.8 million and $35.2 million for the years ended December 31, 2022 and 2023, respectively, out of which $262.6 million and $13.5 million were generated from our discontinued Diagnostics segment, which primarily comprises of our COVID-19 testing services named Project Screen.
These factors could also make it more difficult for us to attract and retain qualified members of our board of directors, particularly to serve on our audit committee, and qualified executive officers.
These additional 31 Table of Contents obligations could have a material adverse effect on our business, financial condition, results of operations and prospects. These factors could also make it more difficult for us to attract and retain qualified members of our board of directors, particularly to serve on our audit committee, and qualified executive officers.
Each Class B Ordinary Share is convertible into one Class A Ordinary Share at any time by the holder thereof, while Class A Ordinary Shares are not convertible into Class B Ordinary Shares under any circumstances.
Each Class B Ordinary Share is convertible into one Class A Ordinary Share at any time by the holder thereof, while Class A Ordinary Shares are not convertible into Class B Ordinary Shares under any circumstances. Only Class A Ordinary Shares are listed and traded on NASDAQ, and we intend to maintain the dual-class voting structure. Mr.
As a result, our competitors may develop products or services that are similar to or that achieve greater market acceptance than our offerings, and we may not be able to compete effectively against these organizations.
We also face competition from other companies attempting to enter the genetic testing market and capitalize on similar opportunities. Our competitors may develop products or services that are similar to or that achieve greater market acceptance than our offerings, and we may not be able to compete effectively against these organizations.
We have incurred net losses since our inception, and we anticipate that we will continue to incur losses for the foreseeable future, which could harm our future business prospects. We have incurred substantial losses since our inception.
We have incurred net losses since our inception, and we anticipate that we will continue to incur losses for the foreseeable future, which could harm our future business prospects. We have incurred substantial losses since our inception. For the years ended December 31, 2021, 2022 and 2023, our net losses were $174.0 million, $190.5 million and $64.8 million, respectively.
Furthermore, the prices charged for our products may not reflect changes in our packaging material, freight, tariff and energy costs at the time they occur, or at all.
Furthermore, the prices charged for our products may not reflect changes in our packaging material, freight, tariff and energy costs at the time they occur, or at all. Any of the foregoing risks, if they occur, could have a material adverse effect on our business, financial condition and results of operations.
If we are unable to manage our growth effectively, it may be difficult for us to execute our business strategy and our business and operations could be adversely affected. Some of our marketing initiatives, including celebrity and key opinion leader endorsement and use of social media, may adversely affect our reputation.
If we are unable to manage our growth effectively, it may be difficult for us to execute our business strategy and our business and operations could be adversely affected.
Since December 2022, we have proactively restructured our operations with a focus on streamlining resources and reducing cost, including executing a global workforce reduction of approximately 60%, resulting in annual headcount reduction costs of approximately US$10 million. If we are unsuccessful in hiring, training, managing and integrating employees and they perform poorly as a result, our business may be harmed.
Since December 2022, we have proactively restructured our operations with a focus on streamlining resources and reducing cost, including executing a global workforce reduction of over 60%, resulting in annual headcount reduction costs of more than US$60 million.
These risks are more fully described under “Item 3. Key Information — D. Risk Factors.” You should carefully consider such risks before making an investment decision. Additional risks not presently known to us or that we currently deem immaterial may also impair our business operations.
Risk Factors.” You should carefully consider such risks before making an investment decision. Additional risks not presently known to us or that we currently deem immaterial may also impair our business operations. Our business, financial condition, results of operations or prospects could be materially and adversely affected by any of these risks.
Our failure to achieve and sustain profitability in the future would negatively affect our business, financial condition, results of operations and cash flows, and could cause the market price of the Class A Ordinary Shares and the Warrants to decline. 11 Table of Contents We are a relatively early-stage company and have a limited operating history, and our near-term business strategy and in-house R&D efforts are centered around new and rapidly developing markets including diagnostics and precision oncology, which may make it difficult to evaluate our current business and predict our future performance.
Risks Relating to Our Business and Industry We are a relatively early-stage company and have a limited operating history, and our near-term business strategy and in-house R&D efforts are centered around new and rapidly developing markets including diagnostics and precision oncology, which may make it difficult to evaluate our current business and predict our future performance.

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Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeFor risk prediction: • ACT Risk , a screening of 67 cancer genes associated with 9 common hereditary cancers and 11 cancer syndromes. This test utilizes blood specimens and is aimed at providing those with a family history of cancer or early onset cancer with a way to evaluate and manage cancer risk.
Biggest changeIn addition, we offer a comprehensive NGS-based liquid biopsy assay for pan-solid tumors ( ACTLiquid™ Pro ), a blood test that analyzes 50 forms of circulating tumor DNA to provide real-time monitoring of drug resistance, treatment response, and cancer recurrence ( ACTMonitor® ), and a blood test to screen for 67 cancer genes associated with 9 common hereditary cancers and 11 cancer syndromes, providing those with a family history of cancer with a way to manage cancer risk ( ACT Risk™ ).
We have a strong fundraising history, with global investors providing us long-term support in research and development and strategic acquisitions to accumulate valuable intellectual property rights and commercialize innovative products. From 2014 to May 2021, we completed five series of fundraisings, in which multiple institutional investors participated.
We have a strong fundraising history, with global investors providing us with long-term support in research and development and strategic acquisitions to accumulate valuable intellectual property rights and commercialize innovative products. From 2014 to May 2021, we completed five series of fundraisings, in which multiple institutional investors participated.
Our laboratories are accredited by various organizations, including the Hong Kong Laboratory Accreditation Scheme, operated by the Hong Kong Accreditation Service, the Thailand Department of Medical Science, Ministry of Health, and the College of American Pathologists.
Our laboratories are accredited by various organizations, including the College of American Pathologists, the Hong Kong Laboratory Accreditation Scheme, operated by the Hong Kong Accreditation Service, and the Thailand Department of Medical Science, Ministry of Health.
We believe the following factors may affect our ability to compete successfully in the precision oncology market: • ability to continue developing cancer screening tools, especially a broader product portfolio; • effectiveness of marketing efforts to market our products across Asia and EMEA; • commercialization infrastructure and distribution networks for the promotion and sale of our products; • first-mover advantage in the market, especially in Asia market; • brand recognition in Asia and EMEA; • academic, talent and funding base that supports the iteration of products and large-scale clinical research; • receipt of regulatory approvals and timing thereof for our products; and • ability to carry out mergers and acquisitions in the precision oncology market, thereby bringing in cutting edge technologies, resources and opportunities.
We believe the following factors may affect our ability to compete successfully in the precision oncology market: • ability to continue developing cancer screening tools, especially a broader product portfolio; • effectiveness of marketing efforts to market our products across Asia and beyond; • commercialization infrastructure and distribution networks for the promotion and sale of our products; • first-mover advantage in the market, especially in Asia market; • brand recognition, especially in Asia and EMEA; • academic, talent and funding base that supports the iteration of products and large-scale clinical research; • receipt of regulatory approvals and timing thereof for our products; and • ability to carry out mergers and acquisitions in the precision oncology market, thereby bringing in cutting edge technologies, resources and opportunities.
Our laboratories are accredited by various organizations, including the Hong Kong Laboratory Accreditation Scheme, operated by the Hong Kong Accreditation Service, the Thailand Department of Medical Science, Ministry of Health, and the College of American Pathologists. 39 Table of Contents Research & Development Our specialized in-house R&D teams and experienced scientific advisory board are the pillars underpinning our strong R&D and product innovation capability.
Our laboratories are accredited by various organizations, including the College of American Pathologists, Hong Kong Laboratory Accreditation Scheme, operated by the Hong Kong Accreditation Service, and the Thailand Department of Medical Science, Ministry of Health. 42 Table of Contents Research & Development Our specialized in-house R&D teams and experienced scientific advisory board are the pillars underpinning our strong R&D and product innovation capability.
A data user is required to obtain the prescribed consent of the data subject if the data user intends to use the personal data for purposes other than those for which the data were originally collected or for a directly related purpose. • Fourth, data users shall take all practicable steps to protect the personal data they hold against unauthorized or accidental access, processing, erasure, loss or use. • Fifth, data subjects have a right to request access to and correction of their own personal data. • A data user should give reasons when refusing a data subject’s request to access or correct of his/her personal data.
A data user is required to obtain the prescribed consent of the data subject if the data user intends to use the personal data for purposes other than those for which the data were originally collected or for a directly related purpose. 47 Table of Contents • Fourth, data users shall take all practicable steps to protect the personal data they hold against unauthorized or accidental access, processing, erasure, loss or use. • Fifth, data subjects have a right to request access to and correction of their own personal data. • A data user should give reasons when refusing a data subject’s request to access or correct of his/her personal data.
In addition, customers of CircleDNA Premium can receive two complimentary one-on-one tele-consultations with our genetics-trained health professionals. 35 Table of Contents • Advanced . Our tests were validated by an external university genomic laboratory with a 99.9% analytical accuracy rate upon testing 452,172 pathogenic variants across 49 samples.
In addition, customers of CircleDNA Premium can receive two complimentary one-on-one tele-consultations with our genetics-trained health professionals. • Advanced . Our tests were validated by an external university genomic laboratory with a 99.9% analytical accuracy rate upon testing 452,172 pathogenic variants across 49 samples.
This user-generated content, including testimonials, reviews and social media posts, helps build trust and authenticity while showcasing the positive impact of our genetic testing services. • Content Marketing: Our team creates informative and engaging content in various formats, including blog articles, videos and infographics, to educate potential customers about CircleDNA’s services and the benefits of genetic testing.
This user-generated content, including testimonials, reviews and 43 Table of Contents social media posts, helps build trust and authenticity while showcasing the positive impact of our genetic testing services. • Content Marketing: Our team creates informative and engaging content in various formats, including blog articles, videos and infographics, to educate potential customers about CircleDNA’s services and the benefits of genetic testing.
The responsible person and the manufacturer are also required to carry out necessary corrective and preventive action as a result of any complaints or safety issues. 52 Table of Contents Generally, from a European Union perspective, the EU IVDD is a European Union directive, and is not automatically implemented into national laws of each European Union Member State.
The responsible person and the manufacturer are also required to carry out necessary corrective and preventive action as a result of any complaints or safety issues. Generally, from a European Union perspective, the EU IVDD is a European Union directive, and is not automatically implemented into national laws of each European Union Member State.
As of December 31, 2022, we owned over 180 trademarks in China (including Hong Kong and Macau), the U.K., Malaysia, Singapore, the European Union and the U.S., among other jurisdictions.
As of December 31, 2023, we owned over 180 trademarks in China (including Hong Kong and Macau), the U.K., Malaysia, Singapore, the European Union and the U.S., among other jurisdictions.
We believe our ability to compete successfully primarily depends on the following factors: • customer service and support efforts; 42 Table of Contents • technical performance of genetic testing product; • timing of when regulatory approvals are obtained; • commercialization infrastructure; • pricing; • relationship with distribution partners; and • KOL endorsement.
We believe our ability to compete successfully primarily depends on the following factors: • customer service and support efforts; • technical performance of genetic testing product; • timing of when regulatory approvals are obtained; • commercialization infrastructure; • pricing; • relationship with distribution partners; and • KOL endorsement.
Violations may lead to civil fines and even criminal penalties and some states enable consumers to bring a private lawsuit to enforce these protections. 49 Table of Contents All states require notification to affected individuals of a breach of the specific types of personal information set out in each state’s law.
Violations may lead to civil fines and even criminal penalties and some states enable consumers to bring a private lawsuit to enforce these protections. All states require notification to affected individuals of a breach of the specific types of personal information set out in each state’s law.
Medical laboratory technologists registered in Part II and III of the register may only practice under supervision. 50 Table of Contents Our laboratory has participated in the voluntary HOKLAS accreditation and is an ISO 15189 accredited medical laboratory providing accredited medical genetics test. Our laboratory is subject to regular and periodic inspections by HKAS.
Medical laboratory technologists registered in Part II and III of the register may only practice under supervision. Our laboratory has participated in the voluntary HOKLAS accreditation and is an ISO 15189 accredited medical laboratory providing accredited medical genetics test. Our laboratory is subject to regular and periodic inspections by HKAS.
Some of our existing and potential future competitors may have longer operating histories, larger customer bases, more expansive brand recognition and deeper market penetration, substantially greater financial, technological and research and development resources and selling and marketing capabilities, and more favorable terms from suppliers.
Some of our existing and potential future competitors may have longer operating histories, larger customer bases, more expansive brand recognition and deeper market penetration, substantially greater financial, technological and research and development resources and selling and marketing 45 Table of Contents capabilities, and more favorable terms from suppliers.
However, there is a voluntary registration system administered by the Medical Device Administrative Control System (“MDACS”). The Medical Device Division (“MDD”), operating under the Department of Health, is responsible for implementing and administering the MDACS. 51 Table of Contents Registration under the MDACS provides assurance that the medical device conforms to accepted standards of safety and performance.
However, there is a voluntary registration system administered by the Medical Device Administrative Control System (“MDACS”). The Medical Device Division (“MDD”), operating under the Department of Health, is responsible for implementing and administering the MDACS. Registration under the MDACS provides assurance that the medical device conforms to accepted standards of safety and performance.
For example, our customers are able to learn about their unique dietary profile, the breakdown of which genetic variants were analyzed and detected in their DNA sample and how they were analyzed, and DNA-based advice broken down into simple and actionable recommendations.
For example, our customers are able to learn about their unique dietary profile, the breakdown of which 40 Table of Contents genetic variants were analyzed and detected in their DNA sample and how they were analyzed, and DNA-based advice broken down into simple and actionable recommendations.
We rely on patent, trademark, and copyright law and employment agreements with intellectual property assignment clauses, as well as confidentiality and non-compete employment terms with our employees and others to protect our intellectual property rights. 44 Table of Contents We rely on trademarks to build and maintain the integrity of our brand.
We rely on patent, trademark, and copyright law and employment agreements with intellectual property assignment clauses, as well as confidentiality and non-compete employment terms with our employees and others to protect our intellectual property rights. We rely on trademarks to build and maintain the integrity of our brand.
We anticipate that government regulation and public expectations for personal data protection, particularly for sensitive genetic and health-related data, will become more demanding over time and require us to stay abreast of new legal developments.
We anticipate that government regulation and public expectations for personal data protection, particularly for sensitive genetic and health-related data, will become more demanding over time and require us to stay abreast of new legal 49 Table of Contents developments.
Risk Factors — Risks Relating to Our Business and Industry — The precision oncology market is highly competitive, and many of our competitors are more established and have stronger marketing capabilities and greater financial resources, which presents a continuous threat to the success of our precision oncology business.” Intellectual Property We regard our patents, trademarks, copyrights, domain names, know-how, trade secrets, and similar intellectual property, including our licenses to use and commercialize ColoClear, as critical to our success.
Risk Factors — Risks Relating to Our Business and Industry — The precision oncology market is highly competitive, and many of our competitors are more established and have stronger marketing capabilities and greater financial resources, which presents a continuous threat to the success of our precision oncology business.” Intellectual Property We regard our patents, trademarks, copyrights, domain names, know-how, trade secrets, and similar intellectual property as critical to our success.
Any manufacturer based outside the U.K. will also have to appoint a U.K. responsible person who will take responsibility for the product in the U.K. Any manufacturer based outside the U.K. will also have to appoint a U.K. responsible person who will take responsibility for the device in the U.K., including responding to MHRA and post-market surveillance of the device.
Any manufacturer based outside the U.K. will also have to appoint a U.K. responsible person who will take responsibility for the product in the U.K. 51 Table of Contents Any manufacturer based outside the U.K. will also have to appoint a U.K. responsible person who will take responsibility for the device in the U.K., including responding to MHRA and post-market surveillance of the device.
The average review time for a De Novo Request is 9 to 12 months but can take longer. 53 Table of Contents A PMA is generally required for a Class III medical device, and requires an applicant to provide clinical and laboratory data that establishes that the new medical device is safe and effective.
The average review time for a De Novo Request is 9 to 12 months but can take longer. A PMA is generally required for a Class III medical device, and requires an applicant to provide clinical and laboratory data that establishes that the new medical device is safe and effective.
With a diverse, talented and strong management team consisting of scientists, entrepreneurs and professionals, we have a strong capability and a proven track record in research and development, transforming technologies into commercial products and healthcare services that appeal to customers and effectively address their needs.
With a diverse, talented and strong management team consisting of scientists, entrepreneurs and professionals, we believe that we have a strong capability and a proven track record in research and development, transforming technologies into commercial products and healthcare services that appeal to customers and effectively address their needs. Our Current Products and Services CircleDNA.
This could attract customers away from our services and reduce our market share in markets where we have been successful. We anticipate facing competition from companies such as 23andMe, Inc., myDNA Life Ltd., Ancestry.com LLC, MyHeritage Ltd., Futura Genetics, and Invitae Corporation.
This could attract customers away from our services and reduce our market share in markets where we have been successful. We anticipate facing competition from companies such as 23andMe, Inc., myDNA Life Ltd., Ancestry.com LLC, and MyHeritage Ltd.
Risk Factors — Risks Relating to Our Business and Industry — We rely on a limited number of suppliers for CircleDNA, ColoClear and ACTOnco and may not be able to find replacements or immediately transition to alternative suppliers, which could adversely affect our ability to meet customer demand.” 40 Table of Contents Sales and Marketing For CircleDNA, we utilize a variety of marketing strategies to connect with potential customers and showcase the benefits of our direct-to-consumer genetic testing services.
Risk Factors — Risks Relating to Our Business and Industry — We rely on a limited number of suppliers for CircleDNA, ACTOnco, ACTHRD, and our other products, and may not be able to find replacements or immediately transition to alternative suppliers, which could adversely affect our ability to meet customer demand.” Sales and Marketing For CircleDNA, we utilize a variety of marketing strategies to connect with potential customers and showcase the benefits of our direct-to-consumer genetic testing services.
The FDA will approve the new device for commercial distribution if it determines that the data and information in the PMA application constitute valid scientific evidence and that there is reasonable assurance that the device is safe and effective for its intended use.
The FDA will approve the new device for 52 Table of Contents commercial distribution if it determines that the data and information in the PMA application constitute valid scientific evidence and that there is reasonable assurance that the device is safe and effective for its intended use.
In December 2022, we acquired ACT Genomics, an Asia-based precision oncology company with a comprehensive line of genomic tests to improve patients’ outcomes through cancer diagnosis, treatment and monitoring, thereby furthering our ambitions in precision oncology.
In December 2022, we acquired 74.39% of the equity interest in ACT Genomics, an Asia-based precision oncology company with a comprehensive line of genomic tests to improve patients’ outcomes through cancer diagnosis, treatment and monitoring, thereby furthering our ambitions in precision oncology.
Our approach includes the following tactics: • Direct Sales Force : Our specialized sales representatives and account managers engage with healthcare providers, hospitals, clinics and other potential clients to present the benefits of ACT Genomics’ diagnostic tests, precision medicine solutions and ColoClear.
Our approach includes the following tactics: • Direct Sales Force : Our specialized sales representatives and account managers engage with healthcare providers, hospitals, clinics and other potential clients to partner with our clients and bring the optimal benefits of ACT Genomics’ diagnostic tests, precision medicine solutions.
However, a significant majority of these companies are focused in the U.S. market and will continue to focus on their market due to lack of understanding and awareness for the Asia and the U.K. markets. We believe we have a significant advantage by having experienced and proven management on the ground in each of the markets we operate in.
However, a significant majority of our competitors are focused in the U.S. market and will continue to focus on their market due to lack of understanding and awareness for the Asia and the EMEA markets. We believe we have a significant advantage by having experienced and proven management on the ground in each of the markets we operate in.
We present four types of product offerings that target our customers’ diverse needs including Vital, Family Planning, Health and Premium. CircleDNA Premium is a package that encompasses all services provided in the other three offerings. As of December 31, 2022, approximately 75% of our CircleDNA customers chose to purchase our Premium package since its launch.
We present four types of product offerings that target our customers’ diverse needs including Vital, Family Planning, Health and Premium. CircleDNA Premium is a package that encompasses all services provided in the other three offerings. As of March 29, 2024, approximately 90% of our CircleDNA customers chose to purchase our Premium package since its launch.
For our clinical testing services, under ACT Genomics and ColoClear, we employ a combination of sales and marketing strategies to reach our target audience of healthcare professionals and promote our clinical tests and precision medicine solutions.
For our clinical testing services under ACT Genomics, we employ a combination of sales and marketing strategies, as well as medical science liaison to reach our target audience of healthcare professionals and promote our clinical tests and precision medicine solutions.
Senthil Sundaram, chief clinical officer, comprises clinical scientists, bioinformaticians and genetic counselors, and is charged with statistical analysis, development of in-house algorithms and computer modeling. ACT Genomics’ bioinformatics team, led by Dr.
Senthil Sundaram, chief clinical officer, comprises clinical scientists, bioinformaticians and genetic counselors, and is charged with statistical analysis, development of in-house algorithms and computer modeling. Dr.
By employing a mix of these marketing strategies, CircleDNA has an email and social media database of more than one million people globally as of December 31, 2022 (including DNAFit customers). In summary, CircleDNA effectively reaches its target audience, builds brand awareness and drives sales, helping more people access the benefits of our genetic testing services.
By employing a mix of these marketing strategies, we believe that CircleDNA effectively reaches its target audience, builds brand awareness and drive sales, helping more people access the benefits of our genetic testing services. As of December 31, 2023, CircleDNA has an email and social media database of more than one million people globally.
As of April 28, 2023, we had more than 50 employees focused on sales and marketing who are located in the Hong Kong, India, Taiwan, Thailand and South Africa. Competition In general, all of our consumer health and clinical testing products face competition from large and well-established players.
As of December 31, 2023, we had approximately 60 employees focused on sales and marketing who are located in the Hong Kong, Malaysia, Taiwan, Vietnam and Thailand. Competition In general, all of our consumer health and clinical testing products face competition from large and well-established players.
As a result, more companies are offering and looking to offer services and products in precision oncology. Our main competitors are diagnostic companies with products and services to profile genes in cancers based on next-generation sequencing in either blood or tissue specimens.
As a result, more companies are offering and looking to offer services and products in precision oncology. Our main competitors are diagnostic companies with products and services to profile genes in cancers based on next-generation sequencing in either blood or tissue specimens. They include Exact Sciences Corporation, Personalis, Inc., Foundation Medicine (Roche), and Guardant Health Inc., among others.
For our Hong Kong headquarters, we have leased office space totaling approximately 12,000 square feet. Our corporate head office space is used for management, sales and marketing, in-house R&D coordination, technology support, and general administrative activities. In addition, we operate 10 laboratories in Hong Kong, Taiwan, Japan and Thailand.
Our corporate head office space is used for management, sales and marketing, in-house R&D coordination, technology support, and general administrative activities. In addition, we operate five laboratories in Hong Kong, Taiwan, Japan, United Kingdom, and Thailand.
Currently, we sell our CircleDNA test kits internationally, primarily via our product website, and ship to customers from more than 30 countries. Since the global launch of CircleDNA globally in November 2019, we had delivered more than 300,000 test kits (including DNAFit customers) as of December 31, 2022.
Currently, we sell our CircleDNA test kits internationally, primarily via our product website, and ship to customers from more than 30 countries. Since the launch of CircleDNA globally in November 2019, we had delivered more than 480,000 test kits (including DNAFit customers) as of April 25, 2024. Fundamentally, CircleDNA has the following key attributes: • Informative.
If we are at fault for these breaches, we may be required to assume the relevant liabilities by our contract with the broadcaster. Regulations relating to Consumer Protection and Advertising in the U.K.
If we are at fault for these breaches, we may be required to assume the relevant liabilities by our contract with the broadcaster.
For example, using our in-house developed CircleDNA mobile application, customers of CircleDNA can track their sample status, access a wellspring of information about their genetic make-up and actionable recommendations at their fingertips, and schedule complementary tele-consultations.
To make comprehensive test results more accessible to our customers, we have integrated aspects of digitization into all of our product offerings. For example, using our in-house developed CircleDNA mobile application, customers of CircleDNA can track their sample status, access a wellspring of information about their genetic make-up and actionable recommendations at their fingertips, and schedule complementary tele-consultations.
General Data Protection Regulation (“UK GDPR”) and the Data Protection Act 2018 (“DPA 2018”). In addition, the Privacy and Electronic Communications (EC Directive) Regulations 2003 (as amended) apply to our websites and communications with customers.
General Data Protection Regulation (“UK GDPR”) and the Data Protection Act 2018 (“DPA 2018”). In addition, the Privacy and Electronic Communications (EC Directive) Regulations 2003 (as amended) apply to our websites and communications with customers. The Information Commissioner of the U.K. regulates the foregoing data protection laws. The UK GDPR applies to the processing of personal data.
In addition, customers of the Premium package are able to view over 500 reports across 20 categories on their personal computers or via the CircleDNA mobile application. Laboratory Accreditation We operate ten laboratories in Hong Kong, Japan, Taiwan and Thailand.
In addition, customers of the Premium package are able to view over 500 reports across 20 categories on their personal computers or via the CircleDNA mobile application.
Manufacture and Supply We currently rely on third-party manufacturers for the production of our existing products. We do not have in-house manufacturing capability and do not plan to develop such capacity in the foreseeable future.
Peter Wong, the chief technology officer is charged with the development of computer models, software, apps and the architecture of our IT infrastructure. Manufacture and Supply We currently rely on third-party manufacturers for the production of our existing products. We do not have in-house manufacturing capability and do not plan to develop such capacity in the foreseeable future.
Samples are extracted in our own internationally accredited laboratory. After removing personally identifiable information, we and our designated third-party service providers conduct sequencing, the outputs from which are then used as inputs to our in-house developed algorithm to produce the CircleDNA reports. • Popular .
After removing personally identifiable information, we and our designated third-party service providers conduct sequencing, the outputs from which are then used as inputs to our in-house developed algorithm to produce the CircleDNA reports. • Popular . We sell our CircleDNA test kits, primarily via our website, and ship to consumers from more than 30 countries.
Comprehensive Genomic Test Profiling for Targeted Therapy Comprehensive genetic tissue profiling and targeted therapy for cancer patients involve identifying the specific genetic mutations or alterations that drive tumor growth and selecting therapies that target those mutations.
Comprehensive Genomic Test Profiling for Targeted Therapy Selection for Cancer Comprehensive genetic tissue profiling and targeted therapy for cancer patients involve identifying the specific genetic mutations or alterations that drive tumor growth and selecting therapies that target those mutations. We provide an end-to-end workflow, from sample preparation, to NGS sequencing, and data analysis and reporting.
Regulations relating to Consumer Protection and Advertising in Hong Kong We make certain representations with respect to our products on various media, including the product itself, our website, social media (including through social media influencers), advertising billboards, advertising vehicles and broadcast media.
In Hong Kong and the U.K., there are certain laws and regulations relating to consumer protection, advertisements, data protection, codes of practice and standards, which may apply to our business. 46 Table of Contents Regulations relating to Consumer Protection and Advertising in Hong Kong We make certain representations with respect to our products on various media, including the product itself, our website, social media (including through social media influencers), advertising billboards, advertising vehicles and broadcast media.
The Information Commissioner of the U.K. regulates the foregoing data protection laws. 48 Table of Contents The UK GDPR applies to the processing of personal data. It broadly defines “processing,” which includes the collection, recording, use, storage, disclosure and destruction of any test results (and associated personal data) by our services, laboratories, websites and applications.
It broadly defines “processing,” which includes the collection, recording, use, storage, disclosure and destruction of any test results (and associated personal data) by our services, laboratories, websites and applications.
Risk Factors — Risks Relating to Intellectual Property and Legal Proceedings” for additional information regarding these and other risks related to our intellectual property rights. Collaboration Agreement with New Horizon Health Limited and Hangzhou New Horizon Health Technology Co., Ltd.
Risk Factors — Risks Relating to Intellectual Property and Legal Proceedings” for additional information regarding these and other risks related to our intellectual property rights.
Since our inception, we have grown from a small Hong Kong genetic testing laboratory with 11 employees to an innovative genomics and precision oncology company with approximately 400 employees and operations across nine locations, including the U.K., Hong Kong, Taiwan, Japan, India, South Africa and Southeast Asia.
ITEM 4. INFORMATION ON THE COMPANY A. History and Development of the Company We were founded in 2014 and headquartered in Hong Kong. Since our inception, we have grown from a small Hong Kong genetic testing laboratory to an innovative genomics and precision oncology company with operations across multiple locations, including the U.K., Hong Kong, Taiwan, Japan, and Southeast Asia.
Such Data Protection Laws address the collection, storage, sharing, use, disclosure, and protection of certain types of personal information, including genetic information, and frequently evolve in scope and enforcement.
Such Data Protection Laws address the collection, storage, sharing, use, disclosure, and protection of certain types of personal information, including genetic information, and frequently evolve in scope and enforcement. There can also be uncertainty, differing interpretations and contradictory requirements across the legal and regulatory landscape regarding privacy and security.
Below provides a brief landscape in terms of the competitive environment. Genetic Testing (CircleDNA) The number of companies entering the genetic testing market continues to increase.
Below is a description of the competitive landscape within which we operate. Genetic Testing (CircleDNA) The number of companies entering the genetic testing market continues to increase.
The inspections cover the management and technical capabilities of the laboratory, and involve inspection of policies, procedures, records, internal quality control and external quality assurance programs, and verification and validation of laboratory equipment. UKAS’ involvement in international groups, such as European Accreditation, International Accreditation Forum and International Laboratory Accreditation Cooperation, provides for international recognition of accredited laboratories.
The inspections cover the management and technical capabilities of the laboratory, and involve inspection of policies, procedures, records, internal quality control and external quality assurance programs, and verification and validation of laboratory equipment.
Under the UK GDPR, there are obligations with respect to the transfer of personal data to third countries, depending on whether such countries provide adequate protection for individuals’ rights and freedom in relation to their personal data.
Under the UK GDPR, there are obligations with respect to the transfer of personal data to third countries, depending on whether such countries provide adequate protection for individuals’ rights and freedom in relation to their personal data. 48 Table of Contents “Genetic data” and “data concerning health” constitute a “special category of data” under UK GDPR and the DPA 2018 and are subject to rules which provide it with more protection given its sensitive nature.
Through these partnerships, we can offer our diagnostic tests and precision medicine solutions as part of a comprehensive healthcare package, enhancing the overall patient experience. • Content Marketing : Our team creates informative and engaging content in various formats, such as blog articles, whitepapers, videos and webinars, to educate potential clients about our services, the benefits of our diagnostic tests and advancements in precision medicine.
These events often include presentations, panel discussions, workshops and service demonstrations. • Marketing Communication : Our team creates informative and engaging content in various formats, such as blog articles, whitepapers, videos and webinars, to educate potential clients about our services, the benefits of our diagnostic tests and advancements in precision medicine.
Our Technology and Laboratory Genetic Testing Exome sequencing is a laboratory test designed to identify and analyze the sequence of all protein-coding nuclear genes in the genome. Approximately 95% of the exome can be sequenced with currently available techniques. Next-generation sequencing, or NGS, is a substantially parallel sequencing technology that offers ultra-high throughput, scalability, and speed.
Approximately 95% of the exome can be sequenced with currently available techniques. Next-generation sequencing, or NGS, is a substantially parallel sequencing technology that offers ultra-high throughput, scalability, and speed. The technology is used to determine the order of nucleotides in entire genomes or targeted regions of DNA or RNA.
Through our acquisition of ACT Genomics in December 2022, we have added to our product portfolio a number a wide range of genomic profiling panels, tailored for different focuses and clinician needs, including: The following panels that enable treatment selection: • ACTOnco , a comprehensive test that helps clinicians choose the optimal treatment for all major solid tumors, It is an integrated pathway-based analysis of 440 cancer-related genes, including drug sensitivity or resistance markets, and pharmacogenomic biomarkers.
Currently, our primary panels include: • ACTOnco® , a comprehensive test that helps clinicians choose the optimal treatment for all major solid tumors, It is an integrated pathway-based analysis of 440 cancer-related genes and 13 fusion genes, including drug sensitivity or resistance markets, and pharmacogenomic biomarkers.
Failure by us to manufacture products in compliance with the QSR standards, or if our manufacturing facility suffers disruptions, supply chain issues, machine failures, slowdowns or disrepair, then we may not be able to fulfil customer demand and our business would be harmed. 54 Table of Contents After receiving approval for marketing IVD devices, the FDA may require post-market surveillance for Class II and Class III medical devices when deemed by the FDA to be necessary to protect public health or to provide additional safety and effectiveness data for the device.
Failure by us to manufacture products in compliance with the QSR standards, or if our manufacturing facility suffers disruptions, supply chain issues, machine failures, slowdowns or disrepair, then we may not be able to fulfil customer demand and our business would be harmed.
They include New Horizon Health, Exact Sciences Corporation, Personalis, Inc., Freenome Holdings, Inc., Foundation Medicine (Roche), GRAIL, Inc., and Guardant Health Inc., among others. The cancer screening market in which we operate is rapidly evolving and highly competitive. In addition, it is subject to changes in the overall healthcare industry globally.
The cancer screening market in which we operate is rapidly evolving and highly competitive. In addition, it is subject to changes in the overall healthcare industry globally.
There can also be uncertainty, differing interpretations and contradictory requirements across the legal and regulatory landscape regarding privacy and security. 47 Table of Contents Data Protection in Hong Kong In Hong Kong, the main data protection law is Personal Data (Privacy) Ordinance (Cap. 486) (“PDPO”). The PDPO is enforced by the Office of the Privacy Commissioner for Personal Data (“PCPD”).
Data Protection in Hong Kong In Hong Kong, the main data protection law is Personal Data (Privacy) Ordinance (Cap. 486) (“PDPO”). The PDPO is enforced by the Office of the Privacy Commissioner for Personal Data (“PCPD”).
ACTOnco received FDA clearance in January 2023. • ACTDrug+ , a screening test that checks for 40 cancer genes to map drug options and provide treatment strategy options. ACTDrug is suitable for breast, lung, colon cancers and other solid tumors. • ACTLung , a test focused on biomarkers associated with lung cancer for targeted therapy.
This test utilizes formalin-fixed paraffin-embedded (“FFPE”) tissues. • ACTDrug®+ , a screening test that checks for 40 cancer genes to map drug options and provide treatment strategy options. ACTDrug is suitable for breast, lung, colon cancers and other solid tumors.
Our agent for service of process in the United States is Cogency Global Inc., 122 East 42 nd Street, 18 th Floor New York, N.Y. 10168. B.
The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers, such as we, that file electronically, with the SEC at www.sec.gov. Our agent for service of process in the United States is Cogency Global Inc., 122 East 42 nd Street, 18 th Floor New York, N.Y. 10168. B.
We and our designated third-party service providers conduct sequencing after removing all personally identifiable information from the samples.
We and our designated third-party service providers conduct sequencing after removing all personally identifiable information from the samples. Once sequencing is completed, we use our in-house developed algorithm to decipher and interpret the results, thereafter generating reports for our customers.
We believe our ability to compete successfully in this market would primarily depend on the following factors: • breadth of tests offered; • test accuracy; • timeliness in delivery of test results; • user experience; • pricing; and • cost control. 43 Table of Contents Precision Oncology (ACTOnco, ACTDrug+, ACTLung, ACTFusion, ACTCerebra, ACTMonitor, ACTRisk) Significant progress has been made in identifying biomarkers to match cancer patients with the appropriate treatment based on the precise molecular features of an individual patient’s tumor.
Precision Oncology (ACTOnco, ACTDrug+, ACTLung, ACTFusion, ACTHRD, ACTMonitor, ACTRisk) Significant progress has been made in identifying biomarkers to match cancer patients with the appropriate treatment based on the precise molecular features of an individual patient’s tumor.
In addition, there are voluntary certifications in Hong Kong and the U.K. for laboratories where our samples are processed. In Hong Kong and the U.K., there are certain laws and regulations relating to consumer protection, advertisements, data protection, codes of practice and standards, which may apply to our business.
In addition, there are voluntary certifications in Hong Kong and the U.K. for laboratories where our samples are processed.
In addition, we have acquired a strong R&D team from ACT Genomics through the ACT Acquisition. As of April 28, 2023, we had 44 in-house R&D staff, 54 engineering developers, and approximately 30 product development staff. We have approximately 60 laboratory staff that conduct R&D activities from time to time.
In addition, we have acquired a strong R&D team from ACT Genomics through the ACT Acquisition. As of December 31, 2023, we had a total of 110 staff involved in R&D, including 49 bioinformatics or medical informatics staff, 13 R&D, IP and technology transfer staff, and 46 laboratory staff that conduct R&D activities from time to time.
The registration status of individual professionals is available on the websites of GMC and HCPC. Regulations and Approval Process for the Marketing and Sale of IVD Devices in Hong Kong There is no legislation directly regulating the manufacture, import, export, sale and use of medical devices or IVD devices in Hong Kong.
UKAS’ involvement in international groups, such as European Accreditation, International Accreditation Forum and International Laboratory Accreditation Cooperation, provides for international recognition of accredited laboratories. 50 Table of Contents Regulations and Approval Process for the Marketing and Sale of IVD Devices in Hong Kong There is no legislation directly regulating the manufacture, import, export, sale and use of medical devices or IVD devices in Hong Kong.
These events often include presentations, panel discussions, workshops and product demonstrations. • Partnerships with Healthcare Providers : We establish collaborations with healthcare providers, medical institutions and research organizations to expand our reach and access new markets.
They address any concerns and close deals to expand our physician client base. • Partnerships with Healthcare Providers : We establish collaborations with healthcare providers, medical institutions, insurance providers, and research organizations to expand our reach and access new markets.
We share this content on our website and through social media channels. • Public Relations and Media Outreach : Our public relations team works diligently to secure media coverage for ACT Genomics and ColoClear in news outlets, industry publications, podcasts and magazines, helping to establish credibility and increase brand visibility. • Customer Relationship Management (CRM) : We utilize CRM tools to manage and analyze customer interactions, track sales leads, and improve customer satisfaction.
We share this content on our website and through social media channels. • Public Relations and Media Outreach : Our public relations team works diligently to secure media coverage for ACT Genomics in news outlets, industry publications, podcasts and magazines, helping to establish credibility and increase brand visibility. 44 Table of Contents By employing a combination of these sales and marketing strategies, we are able to effectively promote our clinical tests, precision medicine solutions and drives sales, ultimately contributing to better patient outcomes.
The average review time for a PMA application is approximately one to two years but can take longer.
The average review time for a PMA application is approximately one to two years but can take longer. All manufacturing and distribution operations for medical devices sold in the U.S. are subject to the FDA’s Quality System Regulation (“QSR”) standards.
They address any concerns and close deals to expand our physician client base. 41 Table of Contents • Educational Events and Conferences : We actively participate in genomic-focused industry events, conferences and seminars to showcase our products and services, network with potential clients, and stay updated on the latest trends and innovations in our field.
Through these partnerships, we can offer our diagnostic tests and precision medicine solutions as part of a comprehensive healthcare package, enhancing the overall patient experience through medical discussions with our medical science liaison team. • Educational Events and Conferences : We actively participate in genomic-focused industry events, conferences and seminars to showcase our products and services, network with potential clients, and stay updated on the latest trends and innovations in our field.
The technology is used to determine the order of nucleotides in entire genomes or targeted regions of DNA or RNA. NGS has revolutionized the biological sciences, allowing laboratories to perform a wide variety of applications and study biological systems at a level never before possible. WES is a comprehensive NGS method for analyzing the entire exome.
NGS has revolutionized the biological sciences, allowing laboratories to perform a wide variety of applications and study biological systems at a level never before possible. 41 Table of Contents Our CircleDNA deploys NGS technology. Samples of all CircleDNA tests are extracted by our laboratory technicians.
Organizational Structure The following diagram depicts a simplified organizational structure of the Company as of the date of this annual report. 55 Table of Contents D. Property, Plants and Equipment Our headquarters is located in Hong Kong. We have leased office space in Hong Kong, the U.K. and South Africa, among others.
Insighta Holdings Limited is not a consolidated affiliated entity of the Company. D. Property, Plants and Equipment Our headquarters is located in Hong Kong. We have leased office space in Hong Kong, Taiwan, and Malaysia, among others. For our Hong Kong headquarters, we have leased office space totaling approximately 7,000 square feet.
Shu-Jen Chen, the co-founder of ACT Genomics, is responsible for providing clinical and research sequencing in the laboratory-developed tests-registered and the college of American pathologists-accredited laboratory, developing in-house bioinformatics algorithms and models, and assembling database for clinical data interpretation. Dr. Hua-Chien Chen leads our R&D team, which is responsible for developing diagnostic and screening technologies for clinical use.
Hua-Chien Chen leads ACT Genomics’ 37-person strong clinical and bioinformatics team, which is responsible for developing diagnostic and screening technologies for clinical use, building in-house algorithms and models, and utilizing AI and analytics capabilities for data analysis, annotation, medical interpretation, and report generation. Our engineering & development team, led by Dr.
It covers 13 lung cancer-related genes, including 8 fusion genes. • ACTFusion , a test which decodes 13 fusion genes and more than 350 transcripts to map drug options and provide clinicians with treatment strategy options.
ACTOnco® received US FDA 510(k) clearance in January 2023. • ACT HRD™ , a test designed to identify the homologous recombination deficiency status of cancer patients, which indicates whether patients would be more responsive to advanced treatments like PARP inhibitor treatment. • ACTFusion™ , a test which decodes 13 fusion genes and more than 350 transcripts to map drug options and provide clinicians with treatment strategy options.
The technology behind our comprehensive genetic tissue profiling involves the following steps: • Tumor Sample Collection: A tumor tissue sample is collected from the cancer patient. 38 Table of Contents • DNA/RNA Extraction: The DNA and/or RNA are extracted from the tumor sample. • Next-Generation Sequencing (NGS): NGS technology is used to sequence the DNA or RNA extracted from the tumor sample.
Over 90% of our clinical samples are able to extract over 30ng of nucleic acid, resulting in a high success rate in sample preparation and reducing the need for a re-do. • Next-Generation Sequencing (NGS): NGS technology is used to sequence the DNA or RNA extracted from the tumor sample.
We sell our CircleDNA test kits, primarily via our website, and ship to consumers from more than 30 countries. Since the global launch of CircleDNA in November 2019, we had delivered more than 300,000 test kits (including DNAFit customers) as of December 31, 2022.
Since the global launch of CircleDNA in November 2019, we had delivered more than 480,000 test kits (including DNAFit customers) as of April 25, 2024. CircleDNA also reached broader audiences through a substantial amount of user-generated content on social media. • Well-received .
Our website is https://www.prenetics.com/. The information contained in, or accessible through, our website does not constitute a part of this annual report. The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers, such as we, that file electronically, with the SEC at www.sec.gov.
Insighta Holdings Limited is not a consolidated affiliated entity of the Company. Our registered office is at Unit 703-706, K11 Atelier King’s Road, 728 King’s Road, Quarry Bay, Hong Kong and our telephone number is +852-2210-9588. Our website is https://www.prenetics.com. The information contained in, or accessible through, our website does not constitute a part of this annual report.
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ITEM 4. INFORMATION ON THE COMPANY A. History and Development of the Company We were founded in 2014 and headquartered in Hong Kong.
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In July 2023, we established a US$200 million joint venture, Insighta, to develop and commercialize Professor Dennis Lo’s patented breakthrough multi-cancer early detection technology, “FRAGMA”. The following diagram depicts a simplified organizational structure of the Company as of the date hereof. ------- indicates a 50% interest in Insighta Holdings Limited.
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In December 2022, we acquired 74.39% of the equity interest in ACT Genomics, an Asia-based precision oncology company with a comprehensive line of genomic tests to improve patients’ outcomes through cancer diagnosis, treatment and monitoring, thereby furthering our ambitions in precision oncology. 33 Table of Contents Our registered office is at Unit 701-706, K11 Atelier King’s Road, 728 King’s Road, Quarry Bay, Hong Kong and our telephone number is +852-2210-9588.
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Business Overview We are an innovative genomics-driven health sciences company that is seeking to revolutionize prevention, early detection and treatment of cancer. Founded in 2014 from a vision to redefine the very essence of healthcare, we harness the unparalleled power of genomics to pioneer the future of prevention, early cancer detection, and precision treatment.
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Business Overview We are an innovative genomics and precision oncology company that has devised an innovative strategy to integrate early detection for cancer, targeted therapy and direct-to-consumer genetic testing services into one comprehensive platform. Our mission is to revolutionize healthcare by integrating consumer health and genetics, and breakthrough technology for early cancer detection, targeted treatments and genetic risk identification.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeYear Ended December 31, 2022 2021 2020 $ in thousands Revenue 275,761 275,853 65,180 Direct costs (144,206 ) (169,722 ) (38,835 ) Gross profit 131,555 106,131 26,345 Other income and other net gains/(losses) 405 139 (315 ) Selling and distribution expenses (13,301 ) (21,932 ) (6,493 ) Share of loss of a joint venture — — (1,133 ) Research and development expenses (15,519 ) (10,564 ) (2,782 ) Restructuring costs in relation to diagnostic business (30,379 ) — — Administrative and other operating expenses (96,064 ) (83,991 ) (16,617 ) Loss from operations (23,303 ) (10,217 ) (995 ) Fair value loss on financial assets at fair value through profit or loss (9,364 ) (94 ) — Share-based payment on listing (89,547 ) — — Fair value loss on convertible securities — (29,055 ) (2,847 ) Fair value loss on preference shares liabilities (60,091 ) (125,399 ) — Fair value gain on warrant liabilities 3,197 — — Write-off on amount due from a shareholder — (106 ) — Gain on bargain purchase — 117 — Loss on disposal of a subsidiary — (292 ) — Other finance costs (4,198 ) (5,238 ) (60 ) Loss before taxation (183,306 ) (170,284 ) (3,902 ) Income tax (expense)/credit (7,147 ) (3,733 ) 1,938 Loss for the year (190,453 ) (174,017 ) (1,964 ) Other comprehensive income for the year (4,843 ) 260 1,581 Total comprehensive income for the year (195,296 ) (173,757 ) (383 ) Comparison of the Year Ended December 31, 2022 and December 31, 2021 Revenue Year Ended December 31 2022 2021 $Change % Change ($ in thousands, unless otherwise stated) Prevention 15,774 16,572 (798 ) -5 % Diagnostics 259,987 259,281 706 0 % Total Revenue 275,761 275,853 (92 ) 0 % Our revenue remained steady for the year ended December 31, 2022 as compared to the year ended December 31, 2021.
Biggest changeYear Ended December 31, 2023 2022 2021 $ in thousands (Restated) (Restated) Continuing operations Revenue 21,743 13,164 12,533 Direct costs (12,913) (9,546) (8,930) Gross profit 8,830 3,618 3,603 Other income and other net gains/(losses) 4,507 430 (202) Selling and distribution expenses (8,243) (4,738) (5,739) Research and development expenses (11,662) (5,989) (6,391) Impairment loss of goodwill (3,900) — — Administrative and other operating expenses (41,438) (59,342) (47,932) Operating loss from continuing operations (51,907) (66,020) (56,661) Fair value loss on financial assets at fair value through profit or loss (7,135) (9,363) (94) Share-based payment on listing — (89,547) — Fair value loss on convertible securities — — (29,055) Fair value loss on preference shares liabilities — (60,091) (125,399) Fair value gain on warrant liabilities 3,351 3,197 — Share of loss of equity-accounted investees, net of tax (859) — — Loss on disposal of a subsidiary — — (292) Other finance costs (120) (3,995) (5,052) Loss before taxation (56,669) (225,820) (216,553) Income tax credit/(expense) 269 245 (2,569) Loss from continuing operations (56,400) (225,575) (219,122) Discontinued operation (Loss)/profit from discontinued operation, net of tax (8,378) 35,122 45,105 Loss for the year (64,777) (190,453) (174,017) Other comprehensive income for the year 1,796 (4,843) 260 Total comprehensive income for the year (62,982) (195,296) (173,757) 60 Table of Contents Comparison of the Years Ended December 31, 2023 and 2022 Revenue From Continuing Operations Year Ended December 31 2023 2022 $Change % Change ($ in thousands, unless otherwise stated) (Restated) Prevention $ 6,155 $ 13,164 (7,009) -53 % Diagnostics 15,588 — 15,588 100 % Total Revenue $ 21,743 $ 13,164 8,579 65 % Our revenue from continuing operations increased by $8.6 million for the year ended December 31, 2023 as compared to the year ended December 31, 2022.
Net cash from operating activities of $13.4 million for the year ended December 31, 2021 was primarily related to a loss for the year of $174.0 million, adjusted for certain non-cash items, which included fair value loss on preference shares liabilities of $125.4 million, fair value loss on convertible securities of $29.1 million, equity-settled share-based payment expenses of $22.5 million, finance costs of $5.2 million, depreciation of $4.3 million, amortization of intangible assets of $3.1 million and loss on disposal of a subsidiary of $0.3 million.
Net cash from operating activities of $13.4 million for the year ended December 31, 2021 was primarily related to a loss for the year of $174.0 million, adjusted for certain non-cash items, which included fair value loss on preference shares liabilities of $125.4 million, fair value loss on convertible securities of $29.1 million, equity-settled share-based payment expenses of $22.5 million, other finance costs of $5.2 million, depreciation of $4.3 million, amortization of intangible assets of $3.1 million and loss on disposal of a subsidiary of $0.3 million.
Net cash used in investing activities was $46.1 million for the year ended December 31, 2022, which consisted primarily of payment for purchase of financial assets at fair value through profit or loss of $20 million, payment for purchase of short-term deposits of $20.0 million, proceeds from redemption of financial assets at fair value through profit or loss of $3.0 million, net cash outflow arising from the ACT Acquisition of $3.4 million, payment for purchase of property, plant and equipment of $4.9 million and payment for purchase of intangible assets of $1.4 million.
Net cash used in investing activities was $46.1 million for the year ended December 31, 2022, which consisted primarily of payment for purchase of financial assets at fair value through profit or loss of $20.0 million, payment for purchase of short-term deposits of $19.9 million, proceeds from redemption of financial assets at fair value through profit or loss of $3.0 million, net cash outflow arising from the ACT Acquisition of $3.4 million, payment for purchase of property, plant and equipment of $4.9 million and payment for purchase of intangible assets of $1.4 million.
If needed, cash may be transferred between Prenetics HK and its subsidiaries in the United Kingdom, India, Singapore and South Africa through intercompany fund advances and capital contributions, and there are currently no restrictions on transferring funds between Prenetics HK and its subsidiaries in the United Kingdom, India, Singapore and South Africa.
If needed, cash may be transferred between Prenetics HK and its subsidiaries in the United Kingdom, Taiwan, India, Singapore and South Africa through intercompany fund advances and capital contributions, and there are currently no restrictions on transferring funds between Prenetics HK and its subsidiaries in the United Kingdom, Taiwan, India, Singapore and South Africa.
In addition, we believe the increase was driven by enhanced brand awareness and customer recognition of our products resulting from our promotional and marketing efforts in our existing markets and new markets including the U.K., Singapore and Malaysia. Diagnostics .
In addition, we believe the increase was driven by enhanced brand awareness and customer recognition of our products resulting from our promotional and marketing efforts in our existing markets and new markets including the U.K., Singapore and Malaysia.
Trend Information Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events since January 1, 2022 to December 31, 2022 that are reasonably likely to have a material adverse effect on our net revenues, income, profitability, liquidity or capital resources, or that caused the disclosed financial information to be not necessarily indicative of future operating results or financial conditions.
Trend Information Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events since January 1, 2023 to December 31, 2023 that are reasonably likely to have a material adverse effect on our net revenues, income, profitability, liquidity or capital resources, or that caused the disclosed financial information to be not necessarily indicative of future operating results or financial conditions.
Even though the current trading price of the Class A Ordinary Shares is below $10.00, which is the price at which the units were issued in Artisan’s IPO, the Sponsor (or its transferees) and certain other selling securityholders have an incentive to sell their Class A Ordinary Shares because they will still profit on sales due to the lower price at which they purchased their shares compared to the public investors in Artisan’s IPO or the current trading price of our Class A Ordinary Shares.
Even though the current trading price of the Class A Ordinary Shares is below $10.00, which is the price at which the units were issued in Artisan’s IPO, Artisan LLC (the "Sponsor") (or its transferees) and certain other selling securityholders have an incentive to sell their Class A Ordinary Shares because they will still profit on sales due to the lower price at which they purchased their shares compared to the public investors in Artisan’s IPO or the current trading price of our Class A Ordinary Shares.
The net changes in operating assets and liabilities of $33.8 million were primarily related to a decrease in trade receivables of $7.0 million from the settlement of sales invoices, an increase in deposits and prepayments and other receivables of $1.2 million due primarily to increased prepayments for test kits, a decrease in inventories of $1.3 million due to consumption of test kits, which were partially offset by a decrease in trade payables, accrued expenses and other current liabilities of $24.4 million due to settlement of outstanding balance and decreased expenditure on staff costs and legal and professional fees, a decrease in contract liabilities of $4.0 million mainly related to the report release on COVID-19 testing services, and an increase in deferred expenses of $10.9 as a result of an advanced payment.
The net changes in operating assets and liabilities of $33.8 million were primarily related to a decrease in trade receivables of $7.0 million from the settlement of sales invoices, an increase in deposits and prepayments 66 Table of Contents and other receivables of $1.2 million due primarily to increased prepayments for test kits, a decrease in inventories of $1.3 million due to consumption of test kits, which were partially offset by a decrease in trade payables, accrued expenses and other current liabilities of $24.4 million due to settlement of outstanding balance and decreased expenditure on staff costs and legal and professional fees, a decrease in contract liabilities of $4.0 million mainly related to the report release on COVID-19 testing services, and an increase in deferred expenses of $10.9 million as a result of an advanced payment.
Cash generated from Prenetics HK is used to fund operations of its subsidiaries, and no funds were transferred from Prenetics HK’s subsidiaries in the United Kingdom to fund operations of Prenetics HK for the years ended December 31, 2020, 2021 and 2022.
Cash generated from Prenetics HK is used to fund operations of its subsidiaries, and no funds were transferred from Prenetics HK’s subsidiaries in the United Kingdom to fund operations of Prenetics HK for the years ended December 31, 2023, 2022 and 2021.
Following the table, we discuss our results of operations for the year ended December 31, 2022 compared to the year ended December 31, 2021 and for the year ended December 31, 2021 compared to the year ended December 31, 2020.
Following the table, we discuss our results of operations for the year ended December 31, 2023 compared to the year ended December 31, 2022 and for the year ended December 31, 2022 compared to the year ended December 31, 2021.
Other Income and Other Net Gains/(Losses) Other income and other net gains/(losses) primarily consist of government subsidies, bank interest income, dividend income, net foreign exchange losses and sundry income. Selling and Distribution Expenses Selling and distribution expenses primarily consist of advertising and marketing expenses, allocated staff costs, exhibition and seminar fees and other marketing and distribution expenses.
Other Income and Other Net Gains/(Losses) Other income and other net gains/(losses) primarily consist of government subsidies, bank interest income, dividend income, net foreign exchange losses and sundry income. 57 Table of Contents Selling and Distribution Expenses Selling and distribution expenses primarily consist of advertising and marketing expenses, allocated staff costs, exhibition and seminar fees and other marketing and distribution expenses.
The following table summarized the amount of cash transferred in between Prenetics HK to its subsidiaries for the periods presented: Year Ended December 31, 2022 2021 2020 ($ in thousands) Net cash transferred from Prenetics HK to UK subsidiaries — 5,600 4,150 Net cash transferred from Prenetics HK to India subsidiary 1,369 553 235 Net cash transferred from Prenetics HK to Singapore subsidiary — — 433 In connection with and prior to the Business Combination, holders of 28,878,277 Artisan Public Shares exercised their right to redeem their shares for cash at a price of approximately $10.01 per share, for an aggregate price of $288.9 million.
The following table summarized the amount of cash transferred in between Prenetics HK to its subsidiaries for the periods presented: Year Ended December 31, 2023 2022 2021 ($ in thousands) Net cash transferred from Prenetics HK to UK subsidiaries — — 5,600 Net cash transferred from Prenetics HK to India subsidiary 640 1,369 553 In connection with and prior to the Business Combination, holders of 28,878,277 Artisan Public Shares exercised their right to redeem their shares for cash at a price of approximately $10.01 per share, for an aggregate price of $288.9 million.
Our mission is to revolutionize healthcare by integrating consumer health and genetics, and breaking through technology for early cancer detection, targeted treatments and genetic risk identification.
Our mission is to revolutionize healthcare by integrating consumer health and genetics, and breakthrough technology for early cancer detection, targeted treatments and genetic risk identification.
Other Comprehensive Income Other comprehensive income mainly represents foreign exchange rate differences on translation of financial statements of our subsidiaries outside of Hong Kong, and the change is mainly due to the change in foreign exchange rate as at each reporting date compared to the reporting date of the prior year. 60 Table of Contents Results of Operations The following table sets forth our consolidated statements of profit or loss and other comprehensive income and their respective dollar amount and percentage change for the years presented.
Other Comprehensive Income Other comprehensive income mainly represents foreign exchange rate differences on translation of foreign operations, and the change is mainly due to the change in foreign exchange rate as at each reporting date compared to the reporting date of the prior year. 59 Table of Contents Results of Operations The following table sets forth our consolidated statements of profit or loss and other comprehensive income and their respective dollar amount and percentage change for the years presented.
We plan to seek bolt-on opportunities that will provide the right platform and/or technology for us to continue to grow our diagnostic and preventive healthcare businesses and to further expand our geographical footprint. Acquisitions will result in acquisition-related costs, which are expensed as they are incurred.
Key Factors Affecting Results of Operations We plan to seek bolt-on opportunities that will provide the right platform and/or technology for us to continue to grow our diagnostic and preventive healthcare businesses and to further expand our geographical footprint. Acquisitions will result in acquisition-related costs, which are expensed as they are incurred.
We also intend to continue engaging New Horizon Health alongside our in-house experts and scientific advisory board, whereby we would leverage these synergistic relationships and capture the resulting benefits to advance the development and launching of various new products in our pipeline.
We also intend to continue engaging our partners, including Insighta, alongside our in-house experts and scientific advisory board, whereby we would leverage these synergistic relationships and capture the resulting benefits to advance the development and launching of various new products in our pipeline.
Direct Costs, Gross Profit, and Gross Margin Our direct costs primarily consist of direct material costs including for purchasing test kit materials from our suppliers, service fees and charges including WES sequencing cost for our prevention services and external lab testing fee for our diagnostic services, lab equipment depreciation, staff costs and shipping cost.
Direct Costs, Gross Profit, and Gross Margin Our direct costs primarily consist of direct material costs including for purchasing test kit materials from our suppliers, service fees and charges including NGS sequencing cost for our prevention services, lab equipment depreciation, staff costs and shipping cost.
Accordingly, our effective tax rate will vary depending on the relative proportion of income derived in each jurisdiction, use of tax credits, changes in the valuation of our deferred tax assets, and liabilities and changes in respective tax laws.
These jurisdictions have different statutory tax rates. Accordingly, our effective tax rate will vary depending on the relative proportion of income derived in each jurisdiction, use of tax credits, changes in the valuation of our deferred tax assets, and liabilities and changes in respective tax laws.
Other Finance Costs Other finance costs decreased by $1.0 million, or 20%, from $5.2 million for the year ended December 31, 2021 to $4.2 million for the year ended December 31, 2022.
Other Finance Costs From Continuing Operations Other finance costs from continuing operations decreased by $1.1 million, or 21%, from $5.1 million for the year ended December 31, 2021 to $4.0 million for the year ended December 31, 2022.
There is no assurance that the warrants will be “in the money” prior to their expiration or that the warrant holders will exercise their warrants. As of June 9, 2022, the closing price of our Class A Ordinary Shares was $4.43 per share.
There is no assurance that the warrants will be “in the money” prior to their expiration or that the warrant holders will exercise their warrants. As of April 24, 2024, the closing price of our Class A Ordinary Shares was $4.79 per share.
Net cash from financing activities was $29.3 million for the year ended December 31, 2021, which consisted primarily of $26.0 million in proceeds from issuance of preference shares and $5.0 million in proceeds from issuance of convertible securities, partially offset by $1.3 million in capital element of lease rentals paid.
Net cash from financing activities was $143.3 million for the year ended December 31, 2022, which consisted primarily of $146.2 million in proceeds from the reverse capitalization and partially offset by $1.9 million in capital element of lease rentals paid. 67 Table of Contents Net cash from financing activities was $29.3 million for the year ended December 31, 2021, which consisted primarily of $26.0 million in proceeds from issuance of preference shares and $5.0 million in proceeds from issuance of convertible securities, partially offset by $1.3 million in capital element of lease rentals paid.
The following table sets forth their details as of December 31, 2022: Payment Due by Period Total Less than 1 year 1 – 2 Years More than 2 years ($ in thousands) Lease liabilities 7 3 2 2 Warrant liabilities 4 4 — — Liabilities for puttable financial instruments 17 17 — — Off-Balance Sheet Arrangements Since the date of our incorporation, we have not engaged in any off-balance sheet arrangements, as defined in the rules and regulations of the SEC.
The following table sets forth their details as of December 31, 2023: Payment Due by Period Total Less than 1 year 1 – 2 Years More than 2 years ($ in thousands) Lease liabilities 2,441 1,549 788 104 Warrant liabilities 224 224 — — Liabilities for puttable financial instruments 14,623 14,623 — — Off-Balance Sheet Arrangements Since the date of our incorporation, we have not engaged in any off-balance sheet arrangements, as defined in the rules and regulations of the SEC.
Impairment of Property, Plant and Equipment, Intangible Assets and Goodwill Internal and external sources of information are reviewed at the end of each reporting period to identify indications that the following assets may be impaired or, except in the case of goodwill, an impairment loss previously recognized no longer exists or may have decreased: • property, plant and equipment; • intangible assets; • interest in joint venture; and • goodwill If any such indication exists, the asset’s recoverable amount is estimated.
Impairment Test of Cash Generating Units Containing Goodwill and Intangible Assets Internal and external sources of information are reviewed at the end of each reporting period to identify indications that the following assets may be impaired or, except in the case of goodwill, an impairment loss previously recognized no longer exists or may have decreased: 68 Table of Contents • intangible assets; and • goodwill If any such indication exists, the asset’s recoverable amount is estimated.
The following table summarizes our cash flows for the periods presented: Year Ended December 31, 2022 2021 2020 ($ in thousands) Net cash from/(used in) operating activities 14,515 13,416 (2,880 ) Net cash used in investing activities (46,145 ) (22,022 ) (5,975 ) Net cash from financing activities 143,319 29,317 11,843 Operating Activities Net cash from operating activities of $14.5 million for the year ended December 31, 2022 was primarily related to a loss for the year of $190.5 million, adjusted for certain non-cash items, which included fair value loss on financial assets at fair value through profit or loss of $9.4 million, fair value loss on preference shares liabilities of $60.1 million, fair value gain on warrant liabilities of $3.2 million, share-based payment on listing of $89.5 million, equity-settled share-based payment expenses of $31.6 million, restructuring costs in relation to diagnostic business of $30.4 million, other finance costs of $4.2 million, write-off on inventories of $2.1 million, depreciation of $6.0 million and amortization of intangible assets of $1.6 million.
The following table summarizes our cash flows for the periods presented: Year Ended December 31, 2023 2022 2021 ($ in thousands) Net cash (used in)/from operating activities (13,765) 14,515 13,416 Net cash used in investing activities (82,952) (46,145) (22,022) Net cash (used in)/from financing activities (4,705) 143,319 29,317 Operating Activities Net cash used in operating activities of $13.8 million for the year ended December 31, 2023 was primarily related to a loss for the year of $64.8 million, adjusted for certain non-cash items, which included fair value loss on financial assets at fair value through profit or loss of $7.1 million, fair value gain on warrant liabilities of $3.4 million, impairment loss of goodwill of $3.9 million, equity-settled share-based payment expenses of $10.6 million, other finance costs of $0.2 million, write-off on inventories of $3.1 million, depreciation of $5.9 million and amortization of intangible assets of $1.9 million.
We incurred a net loss after tax of $190.5 million for the year ended December 31, 2022 and a net loss after tax of $174.0 million for the year ended December 31, 2021, respectively.
We incurred a 64 Table of Contents net loss after tax of $(64.8) million, $(190.5) million, and $(174.0) million for the years ended December 31, 2023, 2022 and 2021, respectively.
Ability to Grow Existing Revenue Streams The future commercial success of our existing diagnostic and preventive products and services is dependent on our ability to broaden our customer base across the Hong Kong and the U.K. markets and expand our presence in other markets in Asia and EMEA.
Ability to Grow Existing Revenue Streams The future commercial success of our existing diagnostic and preventive products and services is dependent on our ability to broaden our customer base across Hong Kong, other Asian markets, and beyond.
Our positive cash flows from operations were $14.5 million for the year ended December 31, 2022, while we generated positive cash flows from operations of $13.4 million for the year ended December 31, 2021. We raised $146.2 million of cash during the year ended December 31, 2022, through the reversed capitalization.
Our cash outflows from operations were $13.8 million for the year ended December 31, 2023, while our cash inflows from operations were $14.5 million and $13.4 million for the years ended December 31, 2022 and 2021, respectively. We raised $146.2 million of cash during the year ended December 31, 2022, through the reversed capitalization.
By offering a broad range of genomic testing services, we are well-positioned to serve both the consumer health and clinical testing markets. 56 Table of Contents Our current offerings include consumer genetic testing, early colorectal cancer screening, cancer prevention, monitoring and treatment, COVID-19 testing, and rapid point of care and at-home diagnostic testing.
By offering a broad range of genomic testing services, we are well-positioned to serve both the consumer health and clinical testing markets. 54 Table of Contents Our current offerings include consumer genetic testing, and cancer prevention, monitoring and treatment.
The net changes in operating assets and liabilities of $6.6 million were primarily related to an increase in trade receivables of $24.1 million from increased sales of the COVID-19 testing services in 2021, an increase in deposits and prepayments and other receivables of $6.1 million due primarily to increased prepayments for test kits, an increase in inventories of $2.3 million due to increased demand in test kits and our decision to continue to reasonably increase our inventory level to avoid any unpredictable logistics disruption from the ongoing impact of COVID-19 on the global supply chain, which were partially offset by an increase in accrued expenses and other current liabilities of $27.4 million due to increased expenditure on staff costs and legal and professional fees, an increase in contract liabilities of $2.5 million mainly related to increased deferred revenue on COVID-19 testing services corresponding to the growth in sales volume, and a decrease in trade payables of $3.5 million as a result of the settlement on outstanding balance. 66 Table of Contents Net cash used in operating activities of $2.9 million for the year ended December 31, 2020 was primarily related to a loss for the year of $2.0 million, adjusted for certain non-cash items, which included fair value loss on convertible securities of $2.8 million, equity-settled share-based payment expenses of $1.6 million, depreciation of $1.3 million, amortization of intangible assets of $1.1 million and share of loss of a joint venture of $1.1 million.
The net changes in operating assets and liabilities of $6.6 million were primarily related to an increase in trade receivables of $24.1 million from increased sales of the COVID-19 testing services in 2021, an increase in deposits and prepayments and other receivables of $6.1 million due primarily to increased prepayments for test kits, an increase in inventories of $2.3 million due to increased demand in test kits and our decision to continue to reasonably increase our inventory level to avoid any unpredictable logistics disruption from the ongoing impact of COVID-19 on the global supply chain, which were partially offset by an increase in accrued expenses and other current liabilities of $27.4 million due to increased expenditure on staff costs and legal and professional fees, an increase in contract liabilities of $2.5 million mainly related to increased deferred revenue on COVID-19 testing services corresponding to the growth in sales volume, and a decrease in trade payables of $3.5 million as a result of the settlement on outstanding balance.
The exercise price of our Warrants is $8.91 per 1.29 shares (or an effective price of $6.91 per share), subject to adjustment. We believe that the likelihood that warrant holders determine to exercise their warrants, and therefore the amount of cash proceeds that we would receive, is dependent upon the market price of our Class A Ordinary Shares.
We believe that the likelihood that warrant holders determine to exercise their warrants, and therefore the amount of cash proceeds that we would receive, is dependent upon the market price of our Class A Ordinary Shares.
Our revenue from the Prevention segment is generally recognized when the testing results or reports are delivered to our customers, except for one category of the genetic test kits for which we have an additional distinct performance obligation to provide customers with free future updates on new features, reports and categories, which we refer to as “update services.” 58 Table of Contents For our diagnostics services, we primarily generate revenue from the provision of diagnostic services which are primarily COVID-19 testing to individuals, corporate customers for their employees and customers and governments for community testing.
Our revenue from the Prevention segment is generally recognized when the testing results or reports are delivered to our customers, except for one category of the genetic test kits for which we have an additional distinct performance obligation to provide customers with free future updates on new features, reports and categories, which we refer to as “update services”.
Key Components of Results of Operations Revenue The table below presents our revenue by business segment for the years indicated. For the year ended December 31, 2022, prevention service and diagnostics service and product accounted for 6% and 94% of our total revenue, respectively.
Key Components of Results of Operations Revenue The table below presents our revenue by business segment for the years indicated. For the year ended December 31, 2023, our prevention service from continuing operations, diagnostics service from continuing operations and diagnostics service from discontinued operation accounted for 18%, 44% and 38% of our total revenue, respectively.
Fair Value Loss on Preference Shares Liabilities Fair value loss on preference share liabilities relates to the changes in the fair value of the conversion features of preference shares which are measured at fair value through profit or loss.
Fair Value Loss on Financial Assets at Fair Value Through Profit or Loss Fair value loss on financial assets at fair value through profit or loss relates to the changes in the fair value of the financial assets which are measured at fair value through profit or loss.
No other finance costs have been incurred in connection with the preference shares after May 18, 2022. 62 Table of Contents Fair Value Gain on Warrant Liabilities Fair value gain on warrant liabilities was $3.2 million for the year ended December 31, 2022, which relates to the changes in the fair value of the warrants which are issued for the de-SPAC transaction and measured at fair value through profit or loss.
Fair Value Gain on Warrant Liabilities Fair value gain on warrant liabilities was $3.2 million for the year ended December 31, 2022, which relates to the changes in the fair value of the warrants which are issued for the de-SPAC transaction and measured at fair value through profit or loss.
The revenue generated by our preventive testing service increased by $2.3 million, or 16%, from $14.3 million for the year ended December 31, 2020 to $16.6 million for the year ended December 31, 2021.
Prevention . The revenue generated by our preventive testing service increased by $0.6 million, or 5%, from $12.5 million for the year ended December 31, 2021 to $13.2 million for the year ended December 31, 2022.
Direct Costs, Gross Profit and Gross Margin Total direct costs increased by $130.9 million, or 337%, from $38.8 million for the year ended December 31, 2020 to $169.7 million for the year ended December 31, 2021.
Direct Costs, Gross Profit and Gross Margin From Continuing Operations Total direct costs from continuing operations increased by $0.6 million, or 7%, from $8.9 million for the year ended December 31, 2021 to $9.5 million for the year ended December 31, 2022.
We intend to continue to make capital expenditures to meet the needs of our research and development activities. 67 Table of Contents Contractual and Other Obligations Other than the ordinary cash requirements for our operations and our capital expenditure, our material cash requirements as of December 31, 2022 and any subsequent interim period primarily include lease liabilities, warrant liabilities, and liabilities for puttable financial instruments.
Contractual and Other Obligations Other than the ordinary cash requirements for our operations and our capital expenditure, our material cash requirements as of December 31, 2023 and any subsequent interim period primarily include lease liabilities, warrant liabilities, and liabilities for puttable financial instruments.
Other Income and Other Net (losses)/Gains Other income and other net losses or gains increased by $0.3 million, or 191%, from $0.1 million for the year ended December 31, 2021 to $0.4 million December 31, 2022.
Other Income and Other Net Gains/(Losses) From Continuing Operations Other income and other net gains/(losses) from continuing operations increased by $0.6 million, or 313%, from a loss of $0.2 million for the year ended December 31, 2021 to a gain of $0.4 million December 31, 2022.
E. Critical Accounting Estimates Our consolidated financial statements are prepared in accordance with IFRS, and the preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses and related disclosures. On an ongoing basis, we evaluate our estimates and assumptions.
E. Critical Accounting Estimates Our consolidated financial statements are prepared in accordance with IFRS Accounting Standards, and the preparation of these consolidated financial statements requires us to make estimates that affect the application of the Group's accounting policies and the reported amounts of assets, liabilities, revenue, costs and expenses. Actual results may differ from these estimates.
Selling and Distribution Expenses Selling and distribution expenses decreased by $8.6 million, or 39%, from $21.9 million for the year ended December 31, 2021 to $13.3 million for the year ended December 31, 2022. The decrease in selling and distribution expenses was primarily due to a decrease in advertising expenses.
Selling and Distribution Expenses From Continuing Operations Selling and distribution expenses from continuing operations decreased by $1.0 million, or 17%, from $5.7 million for the year ended December 31, 2021 to $4.7 million for the year ended December 31, 2022. The decrease in selling and distribution expenses was primarily due to a decrease in advertising expenses.
Where an asset does not generate cash inflows largely independent of those from other assets, the recoverable amount is determined for the smallest group of assets that generates cash inflows independently (i.e. a cash-generating unit). 68 Table of Contents Recognition of impairment losses An impairment loss is recognized in profit or loss if the carrying amount of an asset, or the cash-generating unit to which it belongs, exceeds its recoverable amount.
Where an asset does not generate cash inflows largely independent of those from other assets, the recoverable amount is determined for the smallest group of assets that generates cash inflows independently (i.e. a cash-generating unit).
Finance Costs Finance costs primarily consist of interest expenses on lease liabilities, interest expenses on trade financing and changes in the carrying amount of preference shares liabilities. If we decide to finance our growth with bank or other interest-bearing loans or issue debt securities, we would expect our finance costs to increase.
Other Finance Costs Other finance costs primarily consist of interest expenses on lease liabilities and interest expenses on trade financing. If we decide to finance our growth with bank or other interest-bearing trade financing, we would expect our finance costs to increase. Income Tax Credit We are subject to income taxes in the jurisdictions in which we do business.
We expect that our research and development expenses will increase on an absolute dollar basis and as a percentage of revenue in the near future.
We expect that our research and development expenses will increase on an absolute dollar basis and as a percentage of revenue in the near future. Impairment Loss of Goodwill Impairment loss of goodwill was determined that the carrying amount of a cash-generated unit's goodwill exceeded its fair value, necessitating the recognition of an impairment loss.
Financing Activities Net cash from financing activities was $143.3 million for the year ended December 31, 2022, which consisted primarily of $146.2 million in proceeds from the reverse capitalization and partially offset by $1.9 million in capital element of lease rentals paid.
Net cash used in financing activities was $4.7 million for the year ended December 31, 2023, which consisted primarily of $1.2 million in payment for purchase of treasury shares and $3.2 million in capital element of lease rentals paid.
Fair Value Gain on Warrant Liabilities Fair value gain on warrant liabilities relates to the changes in the fair value of the warrants which are issued for the de-SPAC transaction and measured at fair value through profit or loss. The warrants are exercisable from May 18, 2022 and will expire on May 18, 2027.
This loss is non-cash in nature and does not have an impact on our cash flows. Fair Value Gain on Warrant Liabilities Fair value gain on warrant liabilities relates to the changes in the fair value of the warrants which are issued for the de-SPAC transaction and measured at fair value through profit or loss.
As of December 31, 2022 and December 31, 2021, our principal source of liquidity was our cash balance of $146.7 million and $35.3 million, respectively, which was held for working capital purposes.
As of December 31, 2023 and 2022, our principal source of liquidity was our cash balance of $45.7 million and $146.7 million, respectively, which was held for working capital purposes. Additionally, we had short term deposits with banks beyond 3 months of $16.0 million and $19.9 million as of December 31, 2023 and 2022, respectively.
Our primary requirements for liquidity and capital are to finance working capital, capital expenditures and general corporate purposes as well as investment in R&D and potential mergers and acquisition opportunities.
Liquidity and Capital Resources We have financed our operations primarily through issuance of ordinary shares, and cash generated from sales of our genetic and diagnostic test kits. Our primary requirements for liquidity and capital are to finance working capital, capital expenditures and general corporate purposes as well as investment in R&D and potential mergers and acquisition opportunities.
For the year ended December 31, 2021, prevention service and diagnostics service and product accounted for 6% and 94% of our total revenue, respectively. For the year ended December 31, 2020, prevention service and diagnostics service accounted for 22% and 78% of our total revenue, respectively.
For the year ended December 31, 2022, our prevention service from continuing operations and diagnostics service from discontinued operation accounted for 5% and 95% of our total revenue, respectively. For the year ended December 31, 2021, our prevention service from continuing operations and diagnostics service from discontinued operation accounted for 5% and 95% of our total revenue, respectively.
As part of our global sales and marketing efforts, we plan to strengthen our collaboration with celebrity brand ambassadors and key opinion leaders, or KOLs, and we may also, from time to time, deploy mass media campaigns such as billboard advertisements to promote our products and services. 57 Table of Contents Growth Through Strategic Acquisitions We expect to continue to selectively pursue business combination opportunities in a highly disciplined manner, make strategic investments in, and acquisitions of, other businesses that we believe will expand our product offerings, attract more customers, and otherwise enhance our global presence.
Growth Through Strategic Acquisitions We expect to continue to selectively pursue business combination opportunities in a highly disciplined manner, make strategic investments in, and acquisitions of, other businesses that we believe will expand our product offerings, attract 55 Table of Contents more customers, and otherwise enhance our global presence.
We also expect our direct costs associated with our prevention services to gradually decrease mainly because we expect that the WES sequencing fees for CircleDNA will steadily decrease over the time. We also expect that external lab testing fees for COVID-19 tests processing will significantly decrease after we build our in-house lab testing capabilities, which was completed in June 2021.
In the short term, we expect our direct costs associated with our prevention services to gradually decrease mainly because we expect that the NGS sequencing fees for CircleDNA will steadily decrease over the time.
Selling and Distribution Expenses Selling and distribution expenses increased by $15.4 million, or 238%, from $6.5 million for the year ended December 31, 2020 to $21.9 million for the year ended December 31, 2021.
Selling and Distribution Expenses From Continuing Operations Selling and distribution expenses from continuing operations increased by $3.5 million, or 74%, from $4.7 million for the year ended December 31, 2022 to $8.2 million for the year ended December 31, 2023.
Restructuring Costs in Relation to Diagnostic Business Restructuring costs in relation to diagnostic business consist of impairment of intangible assets, impairment of goodwill, impairment losses on property, plant and equipment and write-off of prepayment. 59 Table of Contents Administrative and Other Operating Expenses Administrative and other operating expenses primarily consist of staff costs, consultancy fees, enterprise infrastructure fees, restructuring costs, legal and professional service fees, depreciation and amortization expenses.
Administrative and Other Operating Expenses Administrative and other operating expenses primarily consist of staff costs, consultancy fees, enterprise infrastructure fees, restructuring costs, legal and professional service fees, depreciation and amortization expenses.
Net cash used in investing activities was $6.0 million for the year ended December 31, 2020, which consisted primarily of payment for acquisition of a subsidiary (net of cash acquired) of $2.9 million in connection with acquisition of Oxsed, payment for purchase of property, plant and equipment of $2.9 million, and payment for purchase of intangible assets of $0.2 million.
Net cash used in investing activities was $83.0 million for the year ended December 31, 2023, which consisted primarily of payment for purchase of financial assets at fair value through profit or loss of $10.0 million, investment in an equity-accounted investee of $80.0 million, payment for purchase of property, plant and equipment of $0.3 million and payment for purchase of intangible assets of $0.6 million.
Our total capital expenditures were $3.1 million, $11.4 million and $6.3 million for the year ended December 31, 2020, 2021, and 2022, respectively.
Material Cash Requirements Capital Expenditures Our capital expenditures are primarily incurred for the purchase of property, equipment, and intangible assets. Our total capital expenditures were $0.9 million, $6.3 million, and $11.4 million for the years ended December 31, 2023, 2022, and 2021, respectively.
We have been offering CircleDNA, our in-house developed consumer genetic testing service globally since November 2019 and have delivered more than 300,000 (including DNAFit) test kits to consumers as of December 31, 2022. In June 2022, we launched ColoClear, a non-invasive stool DNA test for the early detection of colorectal cancer.
We have been offering CircleDNA, our in-house developed consumer genetic testing service globally since November 2019 and have delivered more than 480,000 (including DNAFit) test kits to consumers as of April 25, 2024. In December 2022, we acquired ACT Genomics Holdings Company Limited, an Asia-based genomics company specializing in precision oncology, thereby furthering our ambitions in precision oncology.
The decrease in direct costs was attributable primarily to the decrease in various costs associated with COVID-19 test kits, including direct material costs of test kits, service and other charges, and staff costs, while there was a slightly increase in the sales volume of our COVID-19 testing services.
The increase in direct costs was attributable primarily to the decrease in various costs, including direct material costs of test kits, service and other charges, and staff costs. Our gross profit from continuing operations slightly increased. This increase in gross profit occurred despite both revenue and direct costs experiencing an upward trend.
Prevention. The revenue generated by our preventive testing service decreased by $0.8 million, or 5%, from $16.6 million for the year ended December 31, 2021 to $15.8 million for the year ended December 31, 2022. The decrease was attributable primarily to the focus on diagnostics services. Diagnostics.
The revenue from continuing operations derived from our preventive testing service decreased by $7.0 million, or 53%, from $13.2 million for the year ended December 31, 2022 to $6.2 million for the year ended December 31, 2023. The decrease was attributed to internal restructuring following the discontinuation of our COVID-19-related diagnostic services. Diagnostics.
Research and Development Expenses Research and development expenses increased by $5.0 million, or 47%, from $10.6 million for the year ended December 31, 2021 to $15.5 million for the year ended December 31, 2022.
Research and Development Expenses From Continuing Operations Research and development expenses from continuing operations decreased by $0.4 million, or 6%, from $6.4 million for the year ended December 31, 2021 to $6.0 million for the year ended December 31, 2022. This decrease was primarily driven by reductions in staff costs and equity-settled share-based payment expenses.
Investing Activities Cash flows used in investing activities primarily relate to purchase of property, plant and equipment, acquisition of a subsidiary (net of cash acquired), investment in joint ventures as well as purchase of intangible assets.
Investing Activities Cash flows used in investing activities primarily relate to purchases of property, plant and equipment and intangible assets, payment for purchase of financial assets at fair value through profit or loss, payment for acquisition, and investment in an equity-accounted investee.
Year Ended December 31, 2022 2021 2020 ($ in thousands) Hong Kong 210,934 124,927 35,412 United Kingdom 64,827 150,926 29,768 Total Revenue 275,761 275,853 65,180 For our prevention services, we primarily generate revenue from the provision of preventive services which are genetic testing services to individuals and corporate customers for their employees and customers.
Year Ended December 31, 2023 2022 2021 ($ in thousands) (Restated) (Restated) Continuing operations Hong Kong $ 8,964 $ 13,164 $ 12,533 United Kingdom 2,270 — — Taiwan 9,325 — — Rest of the world 1,184 — — $ 21,743 $ 13,164 $ 12,533 Discontinued operation Hong Kong $ 12,916 $ 197,770 $ 112,394 United Kingdom 546 64,827 150,926 $ 13,462 $ 262,597 $ 263,320 For our prevention services, we primarily generate revenue from the provision of preventive services which are genetic testing services to individuals and corporate customers for their employees and customers.
Administrative and Other Operating Expenses Administrative and other operating expenses increased by $12.1 million, or 14%, from $84.0 million for the year ended December 31, 2021 to $96.1 million for the year ended December 31, 2022.
Other Finance Costs From Continuing Operations Other finance costs from continuing operations decreased by $3.9 million, or 97%, from $4.0 million for the year ended December 31, 2022 to $0.1 million for the year ended December 31, 2023.
The net changes in operating assets and liabilities of $7.8 million were primarily related to an increase in trade receivables of $20.1 million from sales of the new COVID-19 testing services in 2020, an increase in inventories of $3.7 million due to expanded categories of inventories for the new Diagnostics business segment, combined with the fact that we consider it necessary to reasonably increase our inventory level to avoid any unpredictable logistics disruption from the impact of COVID-19 on the global supply chain, an increase in deposits and prepayments and other receivables of $1.1 million due primarily to increased prepayments for test kits and rental deposit, which were partially offset by an increase in trade payables of $9.7 million as a result of increased inventory level and service charges related to the COVID-19 testing services, an increase in accrued expenses and other current liabilities of $6.0 million due to increased expenditure on staff costs and legal and professional fees, and an increase in contract liabilities of $1.5 million mainly representing deferred revenue on certain CircleDNA and COVID-19 tests where the report was not yet released and revenue not recognized as at the reporting date.
The net changes in operating assets and liabilities of $24.2 million were primarily related to a decrease in trade receivables of $37.6 million from the settlement of sales invoices, a decrease in deposits and prepayments and other receivables of $1.6 million due primarily to decrease prepayments for test kits, an increase in inventories of $1.7 million due to the inclusion of inventory from the acquisition of ACT, which occurred last year but was integrated into our operations during the current year, a decrease in trade payables of $5.6 million due to the settlement of the vendor balance, a decrease in accrued expenses and other current liabilities of $7.4 million due to settlement of outstanding balance and decreased expenditure on staff costs and legal and professional fees, an increase in contract liabilities of $0.4 million mainly related to the timing difference on the report release on testing services, and an increase in deferred expenses of $1.0 million as a result of RSUs repurchases.
The increase in administrative and other operating expenses was due primarily to an increase in staff costs as a result of our increased hiring efforts related to support business expansion.
The increase in administrative and other operating expenses was due primarily to an increase in equity-settled share-based payment expenses.
The revenue generated by diagnostics testing service increased by $0.7 million, or 0%, from $259.3 million for the year ended December 31, 2021 to $260.0 million for the year ended December 31, 2022.
The revenue from continuing operations generated by diagnostics testing service increased by $15.6 million, while the business of diagnostics service for the year ended December 31, 2022 was fully discontinued. The revenue from continuing operations generated by diagnostics testing service was mainly attributable from the sale of precision oncology testing services.
Our gross profit increased by $25.4 million, or 24%, from $106.1 million for the year ended December 31, 2021 to $131.6 million for the year ended December 31, 2022. The increase in gross profit was primarily due to the decrease in direct costs outpacing the decrease in revenue.
Direct Costs, Gross Profit and Gross Margin From Continuing Operations Total direct costs from continuing operations increased by $3.4 million, or 35%, from $9.5 million for the year ended December 31, 2022 to $12.9 million for the year ended December 31, 2023.
Year Ended December 31, 2022 2021 2020 ($ in thousands) Prevention 15,774 16,572 14,265 Diagnostics 259,987 259,281 50,915 Total Revenue 275,761 275,853 65,180 The table below presents our revenue by region for the years indicated.
Year Ended December 31, 2023 2022 2021 ($ in thousands) (Restated) (Restated) Prevention $ 6,155 $ 13,164 $ 12,533 Diagnostics 15,588 — — Total revenue from continuing operations 21,743 13,164 12,533 Prevention and diagnostics (discontinued) 13,462 262,597 263,320 Total Revenue $ 35,205 $ 275,761 $ 275,853 56 Table of Contents The table below presents our revenue from continuing operations and discontinued operation by region for the years indicated.
The increase in direct costs was attributable primarily to the increase in various costs associated with COVID-19 test kits, including direct material costs of test kits, service and other charges, and staff costs, driven by the significant increase in the sales volume of our COVID-19 testing services.
This notable increase was primarily driven by the strategic acquisition of ACT, aimed at expanding our capabilities in precision oncology testing services. The rise in direct costs can be attributed primarily to the inclusion of direct material costs of test kits, service charges, and other expenses related to the integration of ACT, alongside increased staffing costs..
Public investors may not experience a similar rate of return on the securities they purchase due to differences in the purchase prices that they paid and the current trading price.
Public investors may not experience a similar rate of return on the securities they purchase due to differences in the purchase prices that they paid and the current trading price. 65 Table of Contents On December 30, 2022, we acquired 74.39% of equity interest in ACT for a total consideration of $20 million in cash and 19,891,910 Class A Ordinary Shares (as of the date of this Annual Report, these shares have been consolidated into approximately 1,326,128 Class A Ordinary Shares, due to the reverse stock split).
Fair Value Loss on Preference Shares Liabilities Fair value loss on preference shares liabilities was $125.4 million for the year ended December 31, 2021, which relates to the conversion feature of the preference shares that are recognized as derivative financial liabilities and measured at fair value through profit or loss. 64 Table of Contents B.
Fair Value Loss on Financial Assets at Fair Value Through Profit or Loss Fair value loss on financial assets at fair value through profit or loss relates to the changes in the fair value of the financial assets which are measured at fair value through profit or loss.
The increase was mainly attributable to the finance cost in connection with the corporate restructuring, which resulted in changes in amortized cost of preference share liabilities in connection with the redemption feature attached.
The decrease was mainly attributable to the finance cost incurred in connection with the corporate restructuring, which resulted in amortization cost of Series A Preferred Shares, Series B Preferred Shares, Series C Preferred Shares, Series D Preferred Shares and Series E Preferred Shares in connection with the redemption right attached to such Preferred Shares, which was converted as an equity on May 18, 2022.
Research and Development Expenses Research and development expenses increased by $7.8 million, or 280%, from $2.8 million for the year ended December 31, 2020 to $10.6 million for the year ended December 31, 2021.
The increase was primarily driven by strategic investments in advertising expenses and staffing costs, particularly stemming from the acquisition of ACT. 61 Table of Contents Research and Development Expenses From Continuing Operations Research and development expenses from continuing operations increased by $5.7 million, or 95%, from $6.0 million for the year ended December 31, 2022 to $11.7 million for the year ended December 31, 2023.
Administrative and Other Operating Expenses Administrative and other operating expenses increased by $67.4 million, or 405%, from $16.6 million for the year ended December 31, 2020 to $84.0 million for the year ended December 31, 2021.
These adjustments reflect our ongoing efforts to optimize our research and development activities while ensuring prudent cost management. 63 Table of Contents Administrative and Other Operating Expenses From Continuing Operations Administrative and other operating expenses from continuing operations increased by $11.4 million, or 24%, from $47.9 million for the year ended December 31, 2021 to $59.3 million for the year ended December 31, 2022.
Our gross profit increased by $79.8 million, or 303%, from $26.3 million for the year ended December 31, 2020 to $106.1 million for the year ended December 31, 2021. The increase in gross profit was primarily due to the increase in revenue outpacing the increase in direct cost.
Our gross profit from continuing operations increased by $5.2 million, or 144%, from $3.6 million for the year ended December 31, 2022 to $8.8 million for the year ended December 31, 2023. This growth in gross profit was chiefly propelled by the efficiency gains achieved through the integration of ACT, resulting in a more streamlined cost structure.
Removed
In October 2022, we launched Circle Snapshot, an off-the-shelf at-home blood test through which individuals can get digital access to their own health information. In December 2022, we acquired ACT Genomics Holdings Company Limited, an Asia-based genomics company specializing in precision oncology, thereby furthering our ambitions in precision oncology.
Added
In July 2023, we established a US$200 million joint venture, Insighta, to develop and commercialize Professor Dennis Lo’s patented breakthrough multi-cancer early detection technology, "FRAGMA". Key Factors Affecting Results of Operations Our results of operations are affected by the following company-specific factors.
Removed
Key Factors Affecting Results of Operations Our results of operations are affected by the following company-specific factors.
Added
As part of our global sales and marketing efforts, we plan to strengthen our collaboration with celebrity brand ambassadors and key opinion leaders, or KOLs, and we may also, from time to time, deploy mass media campaigns such as billboard advertisements to promote our products and services.
Removed
Our revenue from the diagnostics services is recognized when the testing results or reports are delivered to our customers. For sales of Circle HealthPod and single-use capsule sets, we recognize revenue, less an estimate of expected returns, at the point in time when the products have been accepted by customers which is generally when we satisfy the associated performance obligation.
Added
In July 2023, we established a US$200 million joint venture, Insighta, to develop and commercialize Professor Dennis Lo’s patented breakthrough multi-cancer early detection technology, "FRAGMA".
Removed
In the short term, we expect our direct costs to decrease on an absolute dollar basis as we expect the demand of COVID-19 testing services to be minimized in 2023 resulting in a decrease in cost of materials and staff costs.

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Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeWong Yung Ho Peter * — * * * All Directors and Executive Officers as a Group 12,529,476 22,596,703 35,126,179 22.02 % 78.87 % 78 Table of Contents Ordinary Shares Beneficially Owned Class A Ordinary Shares Class B Ordinary Shares Total Ordinary Shares % of Total Ordinary Shares % of Voting Power (2) Principal Shareholders Prudential Hong Kong Limited (6) 12,660,138 — 12,660,138 7.93 % 2.15 % Woodbury Capital Management Limited (7) 11,192,524 — 11,192,524 7.02 % 1.90 % Da Yeung Limited (3) — 9,713,864 9,713,864 6.09 % 32.99 % Genetel Bioventures Limited (8) 9,206,785 — 9,206,785 5.77 % 1.56 % * Less than 1% of the total number of outstanding ordinary shares (1) The business address for the directors and executive officers of the Company is Unit 701-706, K11 Atelier King’s Road, 728 King’s Road, Quarry Bay, Hong Kong.
Biggest changeWong Yung Ho Peter * — * * * Joel Neoh * — * * * All Directors and Executive Officers as a Group 917,662 1,580,972 2,498,634 20.45 % 77.00 % Principal Shareholders Lo Yuk Ming Dennis (8) 722,223 — 722,223 5.91 % 1.71 % Prudential Hong Kong Limited (6) 684,822 — 684,822 5.61 % 1.62 % Yeung Danny Sheng Wu (3) — 1,580,972 1,580,972 12.94 % 74.83 % Genetel Bioventures Limited (7) 613,786 — 613,786 5.02 % 1.45 % _______________ * Less than 1% of the total number of outstanding ordinary shares (1) The business address for the directors and executive officers of the Company is Unit 703-706, K11 Atelier King’s Road, 728 King’s Road, Quarry Bay, Hong Kong.
Sundaram’s research articles have been published in reputed, high-impact journals such as Neurology, Annals of Neurology, Cerebral Cortex and others. Dr. Sundaram’s research works were funded by the National Institute of Health (NIH), USA. Dr. Sundaram also served as a reviewer of different journals and NIH study sections. Dr. Wong Yung Ho Peter is our Chief Technology Officer. Dr.
Dr. Sundaram’s research articles have been published in reputed, high-impact journals such as Neurology, Annals of Neurology, Cerebral Cortex and others. Dr. Sundaram’s research works were funded by the National Institute of Health (NIH), USA. Dr. Sundaram also served as a reviewer of different journals and NIH study sections. Dr. Wong Yung Ho Peter is our Chief Technology Officer. Dr.
From June 2018 to June 2019, Mr. Woo was also a Managing Director at C-Bridge Capital, a healthcare dedicated private equity firm focused on growth and buyout investment opportunities. Previously, from March 2005 to June 2018, Mr. Woo served various roles at Lazard, including serving as Managing Director in the global healthcare group. Mr.
Woo was also a Managing Director at C-Bridge Capital, a healthcare dedicated private equity firm focused on growth and buyout investment opportunities. Previously, from March 2005 to June 2018, Mr. Woo served various roles at Lazard, including serving as Managing Director in the global healthcare group. Mr.
The audit committee is responsible for, among other things: • appointing the independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by the independent auditors; • reviewing with the independent auditors any audit problems or difficulties and management’s response; • discussing the annual audited financial statements with management and the independent auditors; • reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any steps taken to monitor and control major financial risk exposures; • reviewing and approving all proposed related party transactions; 75 Table of Contents • meeting separately and periodically with management and the independent auditors; • monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance.
The audit committee is responsible for, among other things: • appointing the independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by the independent auditors; • reviewing with the independent auditors any audit problems or difficulties and management’s response; 74 Table of Contents • discussing the annual audited financial statements with management and the independent auditors; • reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any steps taken to monitor and control major financial risk exposures; • reviewing and approving all proposed related party transactions; • meeting separately and periodically with management and the independent auditors; • monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance.
The 2022 Plan permits the awards of options, share appreciation rights, restricted shares, RSUs and other awards approved by the plan administrator or the board of directors. Eligibility . We may grant awards to our employees, directors and consultants and our subsidiaries.
Types of Awards . The 2022 Plan permits the awards of options, share appreciation rights, restricted shares, RSUs and other awards approved by the plan administrator or the board of directors. Eligibility . We may grant awards to our employees, directors and consultants and our subsidiaries.
In the event there is a specified type of change in our capital structure, such as a dividend, share split, reverse share split, combination or exchange of shares, amalgamation, arrangement or consolidation, spin-off, recapitalization or other distribution (other than normal cash dividends), appropriate adjustments will be made to (i) the aggregate number and type of shares that may be issued under the 2022 Plan, (ii) the terms and conditions of any outstanding awards (including, without limitation, any applicable performance targets or criteria with respect thereto), (iii) the grant or exercise price per share for any outstanding awards under the 2022 Plan, and (iv) in the case of a spin-off, the additional number and type of shares (including shares in the entities being spun-off) that shall be issued or an appropriate decrease of exercise price in connection with the spin-off. 73 Table of Contents Types of Awards .
In the event there is a specified type of change in our capital structure, such as a dividend, share split, reverse share split, combination or exchange of shares, amalgamation, arrangement or consolidation, spin-off, recapitalization or other distribution (other than normal cash dividends), appropriate adjustments will be made to (i) the aggregate number and type of shares that may be issued under the 2022 Plan, (ii) the terms and conditions of any outstanding awards (including, without limitation, any applicable performance targets or criteria with respect thereto), (iii) the grant or exercise price per share for any outstanding awards under the 2022 Plan, and (iv) in the case of a spin-off, the additional number and type of shares (including shares in the entities being spun-off) that shall be issued or an appropriate decrease of exercise price in connection with the spin-off.
In limited exceptional circumstances, a shareholder may have the right to seek damages in the company’s name if a duty owed by the directors is breached. 76 Table of Contents Appointment and Removal of Directors The Articles provide that all directors may be appointed by ordinary resolution and removed by ordinary resolution.
In limited exceptional circumstances, a shareholder may have the right to seek damages in the company’s name if a duty owed by the directors is breached. 75 Table of Contents Appointment and Removal of Directors The Articles provide that all directors may be appointed by ordinary resolution and removed by ordinary resolution.
Yeung’s journey into healthcare started as a way to utilize his extensive entrepreneurial career into making an impact for society. Mr. Yeung’s vision from day 1 was to always turn our company into a global health group, recruiting the best talent, and to give everyone the power to be in control of their own health. Mr.
Yeung’s journey into healthcare started as a way to utilize his extensive entrepreneurial 69 Table of Contents career into making an impact for society. Mr. Yeung’s vision from day 1 was to always turn our company into a global health group, recruiting the best talent, and to give everyone the power to be in control of their own health. Mr.
Our employees are primarily located in the U.K., Hong Kong and Taiwan. We believe we generally have good relationships with our employees. Our human capital resources objectives include, as applicable, identifying, recruiting, retaining, incentivizing and integrating our existing and new employees, advisors and consultants.
Our employees are primarily located in Hong Kong and Taiwan. We believe we generally have good relationships with our employees. Our human capital resources objectives include, as applicable, identifying, recruiting, retaining, incentivizing and integrating our existing and new employees, advisors and consultants.
Share Ownership The following table sets forth information regarding the beneficial ownership of our ordinary shares as of April 18, 2023 by: • each person known by us to be the beneficial owner of more than 5% of the outstanding ordinary shares; • each of our directors and executive officers; and • all our directors and executive officers as a group.
Share Ownership The following table sets forth information regarding the beneficial ownership of our ordinary shares as of April 24, 2024 by: • each person known by us to be the beneficial owner of more than 5% of the outstanding ordinary shares; • each of our directors and executive officers; and • all our directors and executive officers as a group.
Initially, the maximum number of Ordinary Shares that may be issued under the 2022 Plan is (a) 16,479,399, which will be increased on the first day of each calendar year beginning in the year immediately following closing of the Business Combination and during the term of the 2022 Plan, in an amount equal to the lesser of (i) three percent (3%) of the total number of shares issued and outstanding on an as-converted fully-diluted basis on the last day of the immediately preceding fiscal year and (ii) such number of shares determined by our board of directors, plus (b) the number of shares reserved for issuance in accordance with an employee share purchase program (the “Employee Share Purchase Program”) to be adopted by a committee consisting of one or more members of our board of directors (the “Committee”) following the consummation of the Business Combination.
Initially, the maximum number of Ordinary Shares that may be issued under the 2022 Plan is (a) 16,479,399 (consolidated into 1,098,627 due to the 15:1 reverse stock split), which will be increased on the first day of each calendar year beginning in the year immediately following closing of the Business Combination and during the term of the 2022 Plan, in an amount equal to the lesser of (i) three percent (3%) of the total number of shares issued and outstanding on an as-converted fully-diluted basis on the last day of the immediately preceding fiscal year and (ii) such number of shares determined by our board of directors, plus (b) the number of shares reserved for issuance in accordance with an employee share purchase program (the “Employee Share Purchase Program”) to be adopted by a committee consisting of one or more members of our board of directors (the “Committee”) following the consummation of the Business Combination.
Under these agreements, we have agreed to indemnify our directors against certain liabilities and expenses incurred by such persons in connection with claims made by reason of their being our director.
We have entered into indemnification agreements with each of our directors. Under these agreements, we have agreed to indemnify our directors against certain liabilities and expenses incurred by such persons in connection with claims made by reason of their being our director.
The maximum number that may be issued subject to RSUs with respect to Prenetics Ordinary Shares (“Prenetics RSUs”) granted pursuant to the Employee Share Purchase Program is 3,295,880, which will automatically increase on the first day of each calendar year for a period of not more than ten years from the Acquisition Merger Effective Date, in an amount equal to the lesser of (a) one percent (1%) of our fully-diluted share capital on the last day of the immediately preceding calendar year or (b) such small number determined by the Committee.
The maximum number that may be issued subject to RSUs with respect to Prenetics Ordinary Shares (“Prenetics RSUs”) granted pursuant to the Employee Share Purchase Program is 3,295,880 (consolidated into 219,726 due to the 15:1 reverse stock split), which will automatically increase on the first day of each calendar year for a period of not more than ten years from the Acquisition Merger Effective Date, in an amount equal to the lesser of (a) one 72 Table of Contents percent (1%) of our fully-diluted share capital on the last day of the immediately preceding calendar year or (b) such small number determined by the Committee.
For Excelsiors Limited is wholly owned by Tzang Chi Hung Lawrence. The registered address of For Excelsiors Limited is Coastal Building, Wickham’ s Cay II, P. 0. Box 2221, Road Town, Tortola, VG 1110, British Virgin Islands.
For Excelsiors Limited is wholly owned by Tzang Chi Hung Lawrence. The registered address of For Excelsiors Limited is Coastal Building, Wickham’s Cay II, P.O. Box 2221, Road Town, Tortola, VG 1110, British Virgin Islands.
Sundaram is highly recognized for his experience as a physician-scientist, having led numerous genetic research programs in the USA. Dr. Sundaram has discovered genetic mutations and rare genetic variants causing different neurological diseases using cutting edge next-generation sequencing technologies such as whole exome sequencing. Dr.
Senthil Sundaram is our Chief Clinical Officer, and is responsible for overseeing the clinical policies. Dr. Sundaram is highly recognized for his experience as a physician-scientist, having led numerous genetic research programs in the USA. Dr. Sundaram has discovered genetic mutations and rare genetic variants causing different neurological diseases using cutting edge next-generation sequencing technologies such as whole exome sequencing.
Lo received a Master of Business Administration from Yale University’s School of Management, a Master of Science in Accounting and Finance from the London School of Economics and Political Science and a bachelor’s degree in Accounting from Hong Kong Baptist University. Mr.
Lo was an auditor with Ernst & Young. Mr. Lo received a Master of Business Administration from Yale University’s School of Management, a Master of Science in Accounting and Finance from the London School of Economics and Political Science and a bachelor’s degree in Accounting from Hong Kong Baptist University. Mr.
Share Incentive Plans Prenetics 2021 Plan In June 2021, Prenetics’ board of directors adopted the 2021 Share Incentive Plan of Prenetics, or Prenetics 2021 Plan, which provides for the issuance of up to 14,814,113 shares pursuant to all awards, including shares underlying the 2014 and 2016 Option Scheme and the 2017 Restricted Share Scheme.
Share Incentive Plans Prenetics 2021 Plan In June 2021, Prenetics’ board of directors adopted the 2021 Share Incentive Plan of Prenetics, or Prenetics 2021 Plan, which provides for the issuance of up to 14,814,113 shares (equivalent to approximately 987,608 shares after the reverse stock split) pursuant to all awards, including shares underlying the 2014 and 2016 Option Scheme and the 2017 Restricted Share Scheme.
Name Age Position/Title Yeung Danny Sheng Wu 44 Director, Chairperson and Chief Executive Officer Cheng Yin Pan (Ben) 35 Independent Director Dr. Cui Zhanfeng 60 Director Ian Ying Woo 50 Independent Director Chiu Wing Kwan Winnie 43 Independent Director Dr. Tzang Chi Hung Lawrence 49 Chief Scientific Officer Lo Hoi Chun (Stephen) 38 Chief Financial Officer Dr.
Name Age Position/Title Yeung Danny Sheng Wu 45 Director, Chairperson and Chief Executive Officer Cheng Yin Pan (Ben) 36 Independent Director Dr. Cui Zhanfeng 61 Director Ian Ying Woo 51 Independent Director Chiu Wing Kwan Winnie 44 Independent Director Dr. Tzang Chi Hung Lawrence 50 Chief Scientific Officer Lo Hoi Chun (Stephen) 39 Chief Financial Officer Dr.
The registered address of Lucky Rider Investments Limited is Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, VG1110, British Virgin Islands. (5) Represents 3,840,716 Class A Ordinary Shares held by For Excelsiors Limited, a British Virgin Islands company, and 4,202,460 Class A Ordinary Shares held by Tzang Chi Hung Lawrence.
The registered address of Lucky Rider Investments Limited is Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, VG1110, British Virgin Islands. (5) Represents 256,048 Class A Ordinary Shares held by For Excelsiors Limited, a British Virgin Islands company, and 281,054 Class A Ordinary Shares held by Tzang Chi Hung Lawrence.
(3) Represents 9,713,864 Class B Ordinary Shares held by Da Yeung Limited, a British Virgin Islands company and 12,882,839 Class B Ordinary Shares held by Yeung Danny Sheng Wu. Da Yeung Limited is wholly owned by Yeung Danny Sheng Wu. The registered address of Da Yeung Limited is Coastal Building, Wickham’s Cay II, P. 0.
(3) Represents 647,592 Class B Ordinary Shares held by Da Yeung Limited, a British Virgin Islands company and 933,380 Class B Ordinary Shares held by Yeung Danny Sheng Wu. Da Yeung Limited is wholly owned by Yeung Danny Sheng Wu. The registered address of Da Yeung Limited is Coastal Building, Wickham’s Cay II, P. 0.
Compensation Compensation of Directors and Executive Officers In 2022, we paid an aggregate of US$24.8 million and US$30.3 million in cash compensation and benefits in kind to our directors and executive officers as a group, respectively.
Compensation Compensation of Directors and Executive Officers In 2023, we paid an aggregate of US$4.7 million and US$10.3 million in cash compensation and benefits in kind to our directors and executive officers as a group, respectively.
Ordinary Shares Beneficially Owned Class A Ordinary Shares Class B Ordinary Shares Total Ordinary Shares % of Total Ordinary Shares % of Voting Power (2) Directors and Executive Officers (1) Yeung Danny Sheng Wu (3) — 22,596,703 22,596,703 14.16 % 76.74 % Cheng Yin Pan (Ben) — — — — — Dr.
Ordinary Shares Beneficially Owned Class A Ordinary Shares Class B Ordinary Shares Total Ordinary Shares % of Total Ordinary Shares % of Voting Power (2) Directors and Executive Officers (1) Yeung Danny Sheng Wu (3) — 1,580,972 1,580,972 12.94 % 74.83 % Cheng Yin Pan (Ben) — — — — — Dr.
RSU As of April 18, 2023, there were a total of 977,604 Class A Ordinary Shares and 2,787,253 Class B Ordinary Shares underlying grants of outstanding RSUs that were held by the directors and executive officers as a group.
RSU As of April 24, 2024, there were a total of 604,090 Class A Ordinary Shares and 165,247 Class B Ordinary Shares underlying grants of outstanding RSUs that were held by the directors and executive officers as a group.
Board Diversity Matrix The table below sets forth the board diversity matrix of our board of directors as of the date of this annual report pursuant to NASDAQ’s Board Diversity Rule.
Each of our directors has been serving on our board since May 18, 2022. Board Diversity Matrix The table below sets forth the board diversity matrix of our board of directors as of the date of this annual report pursuant to NASDAQ’s Board Diversity Rule.
The executive officer may resign at any time with a 90-day advance written notice. 72 Table of Contents The employment agreements with the other executive officers also include confidentiality and nondisclosure restrictions and non-competition and non-solicitation restrictions that apply during employment for certain periods following termination of employment. We have entered into indemnification agreements with each of our directors.
The employment may also be terminated without cause upon 90 days’ advance written notice. The executive officer may resign at any time with a 90-day advance written notice. The employment agreements with the other executive officers also include confidentiality and nondisclosure restrictions and non-competition and non-solicitation restrictions that apply during employment for certain periods following termination of employment.
Tzang received his post-doctoral research fellowship at the Department of Biology & Chemistry of the City University of Hong Kong from 2003 to 2009. Dr.
Tzang received his post-doctoral research fellowship at the Department of Biology & Chemistry of the City University of Hong Kong from 2003 to 2009. Dr. Tzang received a Ph.D. in Molecular Biology and a B.Sc. in Applied Chemistry from the City University of Hong Kong in 2003 and 1996, respectively.
He was elected to a Fellow of the Royal Academy of Engineering in 2013 and a Foreign Member of the Chinese Academy of Engineering in 2021. 70 Table of Contents Ian Ying Woo has served as the Executive Director, President and Chief Financial Officer of Everest Medicines (HKEx: 1952), a biopharma platform focused on bringing innovative medicines to Greater China and Asia emerging markets, since June 2018.
Ian Ying Woo has served as the Executive Director, President and Chief Financial Officer of Everest Medicines (HKEx: 1952), a biopharma platform focused on bringing innovative medicines to Greater China and Asia emerging markets, since June 2018. From June 2018 to June 2019, Mr.
Lo served as the Vice President in the Asia Pacific Investment Banking team of Citigroup, where he worked extensively on initial public offering transactions, placements, debt issuances and cross border mergers and acquisitions in Asia and the U.S. Previously, Mr. Lo was an auditor with Ernst & Young. Mr.
Lo Hoi Chun (Stephen) has served as our Chief Financial Officer since 2018. Prior to joining us, Mr. Lo served as the Vice President in the Asia Pacific Investment Banking team of Citigroup, where he worked extensively on initial public offering transactions, placements, debt issuances and cross border mergers and acquisitions in Asia and the U.S. Previously, Mr.
Ong Shih-Chang 46 Chief Medical Officer Dr. Senthil Sundaram 49 Chief Clinical Officer Dr. Wong Yung Ho Peter 41 Chief Technology Officer 69 Table of Contents Yeung Danny Sheng Wu is our co-founder. Since our business inception in 2014, Mr. Yeung has served as our Chief Executive Officer and director. Mr.
Senthil Sundaram 50 Chief Clinical Officer Dr. Wong Yung Ho Peter 42 Chief Technology Officer Joel Neoh 40 Chief Consumer Officer and Managing Director for CircleDNA Yeung Danny Sheng Wu is our co-founder. Since our business inception in 2014, Mr. Yeung has served as our Chief Executive Officer and director. Mr.
The following table sets forth the number of our employees categorized by function and geographic region as of the date of this annual report: Function: As of April 28, 2023 General and administrative 149 Operations 119 Products 30 Research and development 41 Sales and marketing 58 Total 397 77 Table of Contents Geographic Region: As of April 28, 2023 The U.K. 33 Hong Kong 146 Taiwan 159 Others 59 Total 397 As of April 28, 2023, we had approximately 400 employees and operated across nine locations, including the U.K., Hong Kong, Taiwan, Japan, India, South Africa and Southeast Asia.
The following table sets forth the number of our employees categorized by function and geographic region as of the date of this annual report: Function: As of December 31, 2023 General and administrative 88 Operations 62 Research and development 107 Sales and marketing 67 Total 324 76 Table of Contents Geographic Region: As of December 31, 2023 The U.K. 17 Hong Kong 107 Taiwan 147 Others 53 Total 324 As of December 31, 2023, we had 324 employees and operated across nine locations, including the U.K., Hong Kong, Taiwan, Japan, and Southeast Asia.
Employees As of April 28, 2023, we had approximately 400 full-time employees.
Employees As of December 31, 2023, we had approximately 320 full-time employees.
Chiu Wing Kwan Winnie has served as the President and Executive Director of Dorsett Hospitality International, an international hotel and hospitality group with footprint in 27 major cities worldwide and approximately 14,000 rooms, since November 2011, the Executive Director of Far East Consortium International Limited (HKEx: 0035) since June 2019, the director of various subsidiaries of Dorsett Group and Far East Consortium International Limited, the Chairperson of AGORA Hospitality Group Co., Ltd (TYO: 9704) since June 2015, and the director of Asian Youth Orchestra Limited since December 2011.
Chiu Wing Kwan Winnie, JP has served as the Chairman and Executive Director of Dorsett Hospitality International, a global hospitality group with a footprint in 22 major cities worldwide and over 60 hotels, since November 2011, the Joint Managing Director of Far East Consortium International Limited (HKEx: 0035) since January 2024, and the Chairperson of AGORA Hospitality Group Co., Ltd (TYO: 9704) since June 2015.
Our directors and executive officers do not receive pension, retirement or other similar benefits, and we have not set aside or accrued any amount to provide such benefits to our executive officers.
Our directors and executive officers do not receive pension, retirement or other similar benefits, and we have not set aside or accrued any amount to provide such benefits to our executive officers. Our subsidiary in Hong Kong is required by the applicable local laws and regulations to make contributions to Mandatory Provident Fund.
As of April 18, 2023, Prenetics RSUs underlying 2,111,296 Class A Ordinary Shares and 2,787,253 Class B Ordinary Shares were outstanding under the 2022 Plan.
As of April 24, 2024, Prenetics RSUs underlying 692,394 Class A Ordinary Shares and 165,247 Class B Ordinary Shares were outstanding under the 2022 Plan.
(6) The number of the Class A Ordinary Shares is as reported in a Schedule 13G/A filed by Eastspring Investments (Singapore) Limited on February 8, 2023.
(6) The number of the Class A Ordinary Shares is as reported in a Schedule 13G/A filed by Eastspring Investments (Singapore) Limited on February 5, 2024. Prudential Hong Kong Limited's shareholding has been reduced from 7.93%, as discussed in a Schedule 13G/A filed by Eastspring Investments (Singapore) Limited on February 8, 2023, to 5.61% as disclosed herein.
Tzang oversees development, evaluation and implementation of new testing products and services, laboratory automation, supervision of laboratory setup and operation and governance of medical laboratory accreditation. Dr. Tzang has over 20 years industry experience in diagnostic testing and is recognized as a leader in DNA-based molecular diagnostic techniques. Dr.
Tzang has over 20 years industry experience in diagnostic testing and is recognized as a leader in DNA-based molecular diagnostic techniques. Dr.
The following table summarizes, as of April 18, 2023, the number of outstanding ordinary shares underlying outstanding RSUs that we granted to our directors and executive officers.
The following 73 Table of Contents table summarizes, as of April 24, 2024, the number of outstanding ordinary shares underlying outstanding RSUs that we granted to our directors and executive officers. Name Number of Ordinary Shares Underlying outstanding RSUs Date of Grant Yeung Danny Sheng Wu 111,294 June 30, 2021 53,953 June 23, 2023 Dr.
Cui Zhanfeng * — * * * Ian Ying Woo — — — — — Chiu Wing Kwan Winnie (4) * — * * * Dr. Tzang Chi Hung Lawrence (5) 8,043,176 — 8,043,176 5.04 % 1.37 % Lo Hoi Chun (Stephen) 2,093,612 — 2,093,612 1.31 % * Dr. Ong Shih-Chang * — * * * Dr.
Cui Zhanfeng * — * * * Ian Ying Woo * — * * * Chiu Wing Kwan Winnie (4) * — * * * Dr. Tzang Chi Hung Lawrence (5) 537,102 — 537,102 4.40 % 1.27 % Lo Hoi Chun (Stephen) 162,624 — 162,624 1.33 % * Dr. Senthil Sundaram * — * * * Dr.
The Articles provide that the minimum number of directors shall be two and the exact number of directors shall be determined from time to time by our board of directors. A director is not required to hold any shares in us by way of qualification.
A director is not required to hold any shares in us by way of qualification.
However, these shares are not included in the computation of the percentage ownership of any other person. Each holder of Class A Ordinary Shares is entitled to one vote per share and each holder of Class B Ordinary Shares is entitled to twenty (20) votes per share.
However, these shares are not included in the computation of the percentage ownership of any other person.
Our subsidiaries in Hong Kong and the U.K. are required by the applicable local laws and regulations to make contributions to Mandatory Provident Fund and the National Employment Savings Trust (NEST) Corporation respectively. Employment Agreements and Indemnification Agreements Each of the executive officers is party to an employment agreement with Prenetics, which is our wholly-owned subsidiary.
Employment Agreements and Indemnification Agreements Each of the executive officers is party to an employment agreement with Prenetics, which is our wholly-owned subsidiary.
Lo is a Fellow of the Hong Kong Institute of Certified Public Accountants, a Chartered Accountant of the Institute of Chartered Accountants in England and Wales and a CFA Charter holder. Dr. Ong Shih-Chang is our Chief Medical Officer, and is responsible for shaping the policies and strategies for developing and transforming medical practice. Before joining us, Dr.
Lo is a Fellow of the Hong Kong Institute of Certified Public Accountants, a Chartered Accountant of the Institute of Chartered Accountants in England and Wales (ICAEW) and a CFA Charter holder. He serves on the Hong Kong Committee of ICAEW and co-chair the ICAEW Hong Kong Leaders under 40 Committee. Dr.
Wong holds a Doctorate degree in Computer Science from the University of Oxford, and B.Sc. and M.Sc. degrees in Computer Science from the University of Warwick. B.
Wong holds a Doctorate degree in Computer Science from the University of Oxford, and B.Sc. and M.Sc. degrees in Computer Science from the University of Warwick. Joel Neoh is our Chief Consumer Officer and Managing Director for CircleDNA. He is a serial entrepreneur and technology executive with over 15 years of top-flight leadership and board experience.
Ong Shih-Chang * May 18, 2022 * June 30, 2022 Note: * Less than 1% of the outstanding ordinary shares underlying RSUs an as-converted basis outstanding as of April 18, 2023. C. Board Practices Board of Directors Our board of directors consists of five directors as of the date of this annual report. Of these five directors, three are independent.
Wong Yung Ho Peter * June 30, 2022 * June 23, 2023 Joel Neoh * June 30, 2023 _______________ Note: * Less than 1% of the outstanding ordinary shares underlying RSUs an as-converted basis outstanding as of April 24, 2024. C.
The percentage of our ordinary shares beneficially owned is computed on the basis of 136,952,037 Class A Ordinary Shares and 22,596,703 Class B Ordinary Shares issued and outstanding as of April 18, 2023.
Each holder of Class A Ordinary Shares is entitled to one vote per share and each holder of Class B Ordinary Shares is entitled to twenty (20) votes per share. 77 Table of Contents The percentage of our ordinary shares beneficially owned is computed on the basis of 10,636,254 Class A Ordinary Shares and 1,580,972 Class B Ordinary Shares issued and outstanding as of April 24, 2024.
Chiu is the Council Member of the University of Hong Kong, Chairman of Hong Kong Art School, Vice President of the Society of the Academy for Performing Arts, Board Member of the Hong Kong Arts Centre, Asia Youth Orchestra, Member of the committee of overseers of Wu Yee Sun College of the Chinese University of Hong Kong since August 2016, and Member of discipline advisory board of Vocational Training Council.
Chiu has also served in various 70 Table of Contents government and community service capacities and is a Committee Member of Mega Arts and Cultural Events Committee since 2023, Hong Kong Academy for Wealth Legacy since 2023, Council Member of Vocational Training Council and University of Hong Kong since 2022, Member of the Singapore Management University International Advisory Council in China and Member of the Committee of Overseers of Wu Yee Sun College of Chinese University of Hong Kong since 2014.
The number of the Class A Ordinary Shares is as reported in a Schedule 13G filed by Woodbury Capital Management Limited on June 29, 2022. (8) The number of the Class A Ordinary Shares is as reported in a Schedule 13G jointly filed by Genetel Bioventures Limited and Michael Yang Mengsu on August 17, 2022. F.
(7) Based on the most recently available Schedule 13G jointly filed by Genetel Bioventures Limited and Michael Yang Mengsu on August 17, 2022. (8) Based on the most recently available Schedule 13D filed by Lo Yuk Ming Dennis on August 7, 2023. 78 Table of Contents F. Disclosure of A Registrant’s Action to Recover Erroneously Awarded Compensation Not applicable.
Removed
Ms. Chiu has also served on a number of government committees in various capacities and is appointed as a Justice of the Peace by the Government of the Hong Kong Special Administrative Region. Ms.
Added
He was elected to a Fellow of the Royal Academy of Engineering in 2013 and a Foreign Member of the Chinese Academy of Engineering in 2021.
Removed
Chiu is a member of the newly-formed Mega Arts and Cultural Events Committee, a member of the advisory committee on Built Heritage Conservation, a member of the 2021 Chief Executive Election Committee, 2017 Chief Executive Election Committee and the 12th National People’s Congress Electoral Committee. Ms.
Added
Ms. Chiu is also the head of the Dorsett Investment team and her own family office, the General Partner of Beyond Ventures and Astera Private Credit Fund, a member of the investment committee of the AEF (Alibaba Entrepreneurs Fund) Greater Bay Area Fund and leading venture capital firm Gobi Partners. Dr. Tzang Chi Hung Lawrence is our co-founder.
Removed
Chiu has also served on a number of social committees in various capacities as the Council Member at The Better Hong Kong Foundation, Board Member of and Member of the Investment Subcommittee of the Community Chest, Advisor of Our Hong Kong Foundation, Vice Chairman, Vice Convener of Advisory and Public Relations Committee of Greater Bay Area Homeland Youth Community Foundation, Primary Company Representative of the Hong Kong, General Chamber of Commerce, Advisor of The Federation of HK Hotel Owners, Honorary Vice President of the “Guangdong, Hong Kong and Macao” Hotel General Managers Society, and a member of Hong Kong — Japan Business Co-Operation Committee, The Y.Elites Association Limited, YPO Hong Kong Chapter and Hong Kong United Youth Association.
Added
Since our founding in 2014, Dr. Tzang has served as our Chief Scientific Officer and director, where Dr. Tzang oversees development, evaluation and implementation of new testing products and services, laboratory automation, supervision of laboratory setup and operation and governance of medical laboratory accreditation. Dr.
Removed
Ms. Chiu additionally serves as a committee member of Betting and Lotteries commission and Business Facilitation Advisory Committee. Ms. Chiu is a strong supporter of the Greater Bay Area’s new economy ecosystem, especially in regards to start-up companies and young entrepreneurs in the technology, healthcare and ESG sector.
Added
His experience in consumer technology spans sectors such as fintech, e-commerce, digital media, and health & wellness. Most recently, he was the founder of Fave, a leading Southeast Asian fintech platform backed by Sequoia Capital and acquired by Pine Labs, a unicorn company. Mr.
Removed
She is the management team member of Beyond Venture Fund, advisory committee member of Alibaba Entrepreneurs Fund (Greater Bay Area) as well as the Astera Capital Fund. In addition, she provides strategic and operational advice to a number of other investment funds. Ms.
Added
Neoh has been instrumental in accelerating digital payments and financial services for millions of consumers and merchants. Previously, he was the founder of GroupsMore, which was acquired by Groupon. While at Groupon, he headed up its Asia Pacific business, overseeing more than 2,000 employees. Mr. Neoh’s entrepreneurial journey started out by co-founding Says.com, one of Malaysia’s largest digital news platforms.
Removed
Previously, Ms. Chiu worked in Credit Suisse (Private Banking Division) and Malaysia Land Properties Sdn Bhd. Ms.
Added
He is also a Board Director for the Institute of Corporate Directors Malaysia, promoting excellence in corporate governance. His entrepreneurial success and leadership led to his recognition as Ernst & Young Emerging Entrepreneur of the Year (Malaysia) in 2012, and as a Young Global Leader by the World Economic Forum in 2013. 71 Table of Contents B.
Removed
Chiu also served as Director of the Hong Kong Philharmonic Orchestra, Development Committee Member of the Hong Kong Arts Festival Society Limited, chairman of Hong Kong Art School Council, Member of Hong Kong Arts Development Council, Joint president of the Society of the Academy for Performing Arts and Hong Kong Committee for UNICEF.
Added
Tzang Chi Hung Lawrence 304,295 June 23, 2023 Lo Hoi Chun (Stephen) 33,494 June 30, 2022 132,491 June 23, 2023 Dr. Senthil Sundaram * June 30, 2022 * June 23, 2023 Dr.
Removed
During her tenure at Hong Kong Philharmonic Orchestra, she successfully raised over HKD50 million for the Hong Kong Philharmonic Orchestra and the Hong Kong Academy for Performing Arts, benefiting over 1,000 art talents. Ms.
Added
Board Practices Board of Directors Our board of directors consists of five directors as of the date of this annual report. Of these five directors, three are independent. The Articles provide that the minimum number of directors shall be two and the exact number of directors shall be determined from time to time by our board of directors.
Removed
Chiu has also been accorded an Honorary Fellowship by The Hong Kong Academy for Performing Arts and Vocational Training Council, the 2017 Female Leader Legacy Award, the Golden Bauhinia Women Entrepreneur Award, the World Outstanding Chinese Youth Award and the Women of Hope 2016 Award: Global Champion category, Forbes Asia 2014: Top 12 Asia’s Power Businesswomen and the 2014 Hong Kong Professional Elite Ladies Award.
Removed
Ms. Chiu received a B.Sc from King’s College, University of London in 2003. Dr. Tzang Chi Hung Lawrence is our co-founder. Since our founding in 2014, Dr. Tzang has served as our Chief Scientific Officer and director, where Dr.
Removed
Tzang received a Ph.D. in Molecular Biology and a B.Sc. in Applied Chemistry from the City University of Hong Kong in 2003 and 1996, respectively. 71 Table of Contents Lo Hoi Chun (Stephen) has served as our Chief Financial Officer since 2018. Prior to joining us, Mr.
Removed
Ong held chief and senior positions in medical affairs and clinical science in various companies in the U.S., including EverlyWell, Guardant Health, Roche Diagnostics, NantHealth and Illumina. Dr. Ong holds a M.D. from the University of Southern California Keck School of Medicine. Dr.
Removed
Ong is also a Certified Physician/ Principal Investigator (CPI) of the Academy of Clinical Research Professionals (ACRP) and a Certified Clinical Research Professional (CCRP) of the Society of Clinical Research Associates (SOCRA). Dr. Senthil Sundaram is our Chief Clinical Officer, and is responsible for overseeing the clinical policies. Dr.
Removed
The employment may also be terminated without cause upon 90 days’ advance written notice.
Removed
Name Number of Ordinary Shares Underlying outstanding RSUs Date of Grant Yeung Danny Sheng Wu 2,773,914 June 30, 2021 518 May 18, 2022 12,821 June 30, 2022 Ian Ying Woo * June 30, 2022 Dr. Tzang Chi Hung Lawrence 518 May 18, 2022 12,821 June 30, 2022 Lo Hoi Chun (Stephen) 518 May 18, 2022 847,621 June 30, 2022 Dr.
Removed
Senthil Sundaram * May 18, 2022 * June 30, 2022 74 Table of Contents Name Number of Ordinary Shares Underlying outstanding RSUs Date of Grant Dr. Wong Yung Ho Peter * May 18, 2022 * June 30, 2022 Dr.
Removed
Senthil Sundaram * — * * * Dr.
Removed
(7) Represents (i) 6,066,863 Class A Ordinary Shares held by Woodbury Capital Management Limited and (ii) 5,125,661 Class A Ordinary Share issuable upon the exercise of 3,973,381 redeemable Warrants held by Woodbury Capital Management Limited on the basis that one redeemable Warrant is exercisable into 1.29 Class A Ordinary Share.
Removed
Disclosure of A Registrant’s Action to Recover Erroneously Awarded Compensation Not applicable.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeRisk Factors — Risks Relating to Our Securities — Future resales of our ordinary shares issued to our shareholders and other significant shareholders may cause the market price of our Class A Ordinary Shares to drop significantly, even if our business is doing well.” Sponsor Support Agreement Concurrently with the execution of the Business Combination Agreement, the Company, Artisan, Sponsor, Prenetics and the directors of Artisan entered into the Sponsor Support Agreement, pursuant to which Sponsor agreed, among other things and subject to the terms and conditions set forth therein: (a) to vote in favor of (i) the transactions contemplated in the Business Combination Agreement and the other transaction proposals, (b) to waive the anti-dilution rights it held in respect of the Founder Shares under the Artisan Articles, (c) to appear at the Extraordinary General Meeting for purposes of constituting a quorum, (d) to vote against any proposals that would materially impede the transactions contemplated in the Business Combination Agreement and the other transaction proposals, (e) not to redeem any Artisan Shares held by Sponsor, (f) not to amend that certain letter agreement between Artisan, Sponsor and certain other parties thereto, dated as of May 13, 2021, (g) not to transfer any Artisan Shares held by Sponsor, (h) to unconditionally and irrevocably waive the dissenters’ rights pursuant to the Cayman Islands Companies Act in respect to all Artisan Shares held by Sponsor with respect to the Initial Merger, to the extent applicable, (i) to release, effective as of the Acquisition Effective Time, the Company, Artisan, Prenetics and its subsidiaries from all claims in respect of or relating to the period prior to the Closing, subject to the exceptions set forth therein (with Prenetics agreeing to release the Sponsor and Artisan on a reciprocal basis) and (j) to agree to a lock-up of its Ordinary Shares, Warrants and Ordinary Shares received upon the exercise of any Warrants during the respective periods as set forth therein, subject to certain exceptions. 82 Table of Contents On March 30, 2022, the Company, Artisan, Prenetics, Sponsor and the Artisan directors entered into the Sponsor Support Agreement Amendment Deed, pursuant to which the lock-up period applicable to Sponsor was amended such that (a) 50% of the Ordinary Shares to be acquired by the Sponsor in the Business Combination would be subject to a lock-up of six (6) months after the Closing Date, and (b) the remaining 50% will be subject to a lock-up of twelve (12) months after the Closing Date, subject to certain exceptions.
Biggest changeRisk Factors — Risks Relating to Our Securities — Future resales of our ordinary shares issued to our shareholders and other significant shareholders may cause the market price of our Class A Ordinary Shares to drop significantly, even if our business is doing well.” Sponsor Support Agreement Concurrently with the execution of the Business Combination Agreement, the Company, Artisan, Artisan LLC ("Sponsor"), Prenetics and the directors of Artisan entered into the Sponsor Support Agreement, pursuant to which Sponsor agreed, among other things and subject to the terms and conditions set forth therein: (a) to vote in favor of (i) the transactions contemplated in the Business Combination Agreement and the other transaction proposals, (b) to waive the anti-dilution rights it held in respect of the Artisan Founder Shares under Artisan’s amended and restated memorandum and 81 Table of Contents articles of association adopted by special resolution dated May 13, 2021, (c) to appear at an extraordinary general meeting of shareholders of Artisan held at 10:00 AM Eastern Time, on May 9, 2022 for purposes of constituting a quorum, (d) to vote against any proposals that would materially impede the transactions contemplated in the Business Combination Agreement and the other transaction proposals, (e) not to redeem any Artisan Shares held by Sponsor, (f) not to amend that certain letter agreement between Artisan, Sponsor and certain other parties thereto, dated as of May 13, 2021, (g) not to transfer any Artisan Shares held by Sponsor, (h) to unconditionally and irrevocably waive the dissenters’ rights pursuant to the Cayman Islands Companies Act in respect to all Artisan Shares held by Sponsor with respect to the Initial Merger, to the extent applicable, (i) to release, effective as of the Acquisition Effective Time, the Company, Artisan, Prenetics and its subsidiaries from all claims in respect of or relating to the period prior to the Closing, subject to the exceptions set forth therein (with Prenetics agreeing to release the Sponsor and Artisan on a reciprocal basis) and (j) to agree to a lock-up of its Ordinary Shares, Warrants and Ordinary Shares received upon the exercise of any Warrants during the respective periods as set forth therein, subject to certain exceptions.
For further details regarding Ordinary Shares subject to the lock-up, see “Item 3. Key Information — D.
For further details regarding Ordinary Shares subject to the lock-up, see “Item 3. Key Information — D.
Risk Factors — Risks Relating to Our Securities — Future resales of our ordinary shares issued to our shareholders and other significant shareholders may cause the market price of our Class A Ordinary Shares to drop significantly, even if our business is doing well.” Sponsor Agreement On March 30, 2022 and in connection with the BCA Amendment, the Company, Prenetics and Artisan entered into the Sponsor Agreement with the Sponsor and the Artisan independent directors, pursuant to and subject to the terms of which, among other things, immediately prior to the consummation of the Initial Merger, Sponsor and the Artisan independent directors contributed, transferred, assigned, conveyed and delivered to Artisan all of their respective right, title and interest in, to and under their Founder Shares in exchange for Artisan Public Shares, and the Sponsor also surrendered and forfeited certain Private Placement Warrants for no consideration.
Risk Factors — Risks Relating to Our Securities — Future resales of our ordinary shares issued to our shareholders and other significant shareholders may cause the market price of our Class A Ordinary Shares to drop significantly, even if our business is doing well.” Sponsor Agreement On March 30, 2022 and in connection with the BCA Amendment, the Company, Prenetics and Artisan entered into the sponsor agreement with the Sponsor and the Artisan independent directors, pursuant to and subject to the terms of which, among other things, immediately prior to the consummation of the Initial Merger, Sponsor and the Artisan independent directors contributed, transferred, assigned, conveyed and delivered to Artisan all of their respective right, title and interest in, to and under their Artisan Founder Shares in exchange for Artisan Public Shares, and the Sponsor also surrendered and forfeited certain Private Placement Warrants for no consideration ("Sponsor Agreement").
In connection with the foregoing and immediately prior to the consummation of the Initial Merger, (i) all 9,133,558 outstanding Founder Shares held by Sponsor were exchanged and converted into such number of Artisan Public Shares equal to (x) 6,933,558, divided by (y) the Class A Exchange Ratio; (ii) the aggregate of 100,000 outstanding Founder Shares held by the Artisan independent directors were exchanged and converted into such number of Artisan Public Shares equal to (x) 100,000, divided by (y) the Class A Exchange Ratio; and (iii) the Sponsor automatically irrevocably surrendered and forfeited to Artisan for no consideration, as a contribution to capital, such number of Private Placement Warrants equal to (x) 5,857,898 minus (y) the quotient obtained by dividing 5,857,898 by the Class A Exchange Ratio.
In connection with the foregoing and immediately prior to the consummation of the Initial Merger, (i) all 9,133,558 outstanding Artisan Founder Shares held by Sponsor were exchanged and converted into such number of Artisan Public Shares equal to (x) 6,933,558, divided by (y) the Class A Exchange Ratio; (ii) the aggregate of 100,000 outstanding Artisan Founder Shares held by the Artisan independent directors were exchanged and converted into such number of Artisan Public Shares equal to (x) 100,000, divided by (y) the Class A Exchange Ratio; and (iii) the Sponsor automatically irrevocably surrendered and forfeited to Artisan for no consideration, as a contribution to capital, such number of Private Placement Warrants equal to (x) 5,857,898 minus (y) the quotient obtained by dividing 5,857,898 by the Class A Exchange Ratio.
For further details regarding Ordinary Shares subject to the lock-up, see “Item 3. Key Information — D.
For further details regarding Ordinary Shares subject to the lock-up, see “Item 3. Key Information — D.
Concurrently with the execution of the BCA Amendment, Artisan, the Company and Sponsor entered into an Amendment to Deed of Novation and Amendment with each of the Forward Purchase Investors, respectively, pursuant to which (i) the number of Class A Ordinary Shares was purchased by each Forward Purchase Investor immediately prior to the Acquisition Effective Time was increased by multiplying (a) the number of Class A Ordinary Shares that such Forward Purchase Investor agreed to purchase under the relevant Amended Forward Purchase Agreement by (b) the Class A Exchange Ratio, without additional consideration payable by such Forward Purchase Investor; (ii) the lock-up period applicable to such Forward Purchase Investor was amended to six months after the consummation of the Business Combination, subject to an earlier release if certain criteria are met; and (iii) such Forward Purchase Investor converted all Founder Shares held by it into Artisan Public Shares on a one-for-one basis immediately prior to the Initial Closing.
Concurrently with the execution of the BCA Amendment, Artisan, the Company and Sponsor entered into an Amendment to Deed of Novation and Amendment with each of the Forward Purchase Investors, respectively, pursuant to which (i) the number of Class A Ordinary Shares was purchased by each Forward Purchase Investor immediately prior to the Acquisition Effective Time was increased by multiplying (a) the number of Class A Ordinary Shares that such Forward Purchase Investor agreed to purchase under the relevant Amended Forward Purchase Agreement by (b) the Class A Exchange Ratio, without additional consideration payable by such Forward Purchase Investor; (ii) the lock-up period applicable to such Forward Purchase Investor was amended to six months after the consummation of the Business Combination, subject to an earlier release if certain criteria are met; and (iii) such Forward Purchase Investor converted all Artisan Founder Shares held by it into Artisan Public Shares on a one-for-one basis immediately prior to the closing of the Initial Merger.
The sum of all Class A Ordinary Shares received by Artisan shareholders is referred to as “Initial Merger Consideration.” 80 Table of Contents The Acquisition Merger Following the Initial Merger, as a result of the Acquisition Merger, at the Acquisition Effective Time (i) all the property, rights, privileges, agreements, powers and franchises, liabilities and duties of Prenetics Merger Sub and Prenetics became the assets and liabilities of Prenetics as the surviving company, and Prenetics became a wholly owned subsidiary of the Company and the separate corporate existence of Prenetics Merger Sub ceased to exist, (ii) each issued and outstanding security of Prenetics immediately prior to the Acquisition Effective Time was cancelled in exchange for or converted into securities of the Company or other rights or property as set out below, (iii) each share of Prenetics Merger Sub issued and outstanding immediately prior to the Acquisition Effective Time was automatically converted into one ordinary share of the surviving company, (iv) the board of directors and officers of Prenetics Merger Sub ceased to hold office, and the board of directors and officers of Prenetics was determined by us and (v) the memorandum and articles of association of Prenetics was amended and restated to read in their entirety in the form attached as Exhibit H to the Business Combination Agreement.
The sum of all Class A Ordinary Shares received by Artisan shareholders is referred to as “Initial Merger Consideration.” The Acquisition Merger Following the Initial Merger, as a result of the Acquisition Merger, at the Acquisition Effective Time (i) all the property, rights, privileges, agreements, powers and franchises, liabilities and duties of Prenetics Merger Sub and Prenetics became the assets and liabilities of Prenetics as the surviving company, and Prenetics became a wholly owned subsidiary of the Company and the separate corporate existence of Prenetics Merger Sub ceased to exist, (ii) each issued and outstanding security of Prenetics immediately prior to the Acquisition Effective Time was cancelled in exchange for or converted into securities of the Company or other rights or property as set out below, (iii) each share of Prenetics Merger Sub issued and outstanding immediately prior to the Acquisition Effective Time was automatically converted into one ordinary share of the surviving company, (iv) the board of directors and officers of Prenetics Merger Sub ceased to hold office, and the board of directors and officers of Prenetics was determined by us and (v) the memorandum and articles of association of Prenetics was amended and restated to read in their entirety in the form attached as Exhibit H to the Business Combination Agreement.
Pursuant to the Business Combination Agreement, (i) Artisan merged with and into Artisan Merger Sub, with Artisan Merger Sub surviving and remaining as our wholly owned subsidiary and (ii) following the Initial Merger, Prenetics Merger Sub merged with and into Prenetics, with Prenetics being the surviving entity and becoming our wholly owned subsidiary.
Pursuant to the Business Combination Agreement, (i) Artisan merged with and into Artisan Merger Sub, with Artisan Merger Sub surviving and remaining as our wholly owned subsidiary ("Initial Merger") and (ii) following the Initial Merger, Prenetics Merger Sub merged with and into Prenetics, with Prenetics being the surviving entity and becoming our wholly owned subsidiary ("Acquisition Merger").
In 2021 and 2022, we paid consulting fee to Oxford Engtech Ltd., which is controlled by an existing director of Prenetics, in an aggregate amount of US$90,353 and US$30,630, respectively. 84 Table of Contents C. Interests of Experts and Counsel Not applicable.
In 2021 and 2022, we paid consulting fee to Oxford Engtech Ltd., which is controlled by an existing director of Prenetics, in an aggregate amount of US$90,353 and US$30,630, respectively. C. Interests of Experts and Counsel Not applicable. 83 Table of Contents
The Business Combination Agreement contained customary representations and warranties and pre- and post-closing covenants of each party and customary closing conditions. 79 Table of Contents The Initial Merger As a result of the Initial Merger, at the Initial Merger Effective Time (i) all the property, rights, privileges, agreements, powers and franchises, liabilities and duties of Artisan and Artisan Merger Sub became the property, rights, privileges, agreements, powers and franchises, liabilities and duties of Artisan Merger Sub as the surviving company, and Artisan Merger Sub thereafter became as a wholly owned subsidiary of the Company and the separate corporate existence of Artisan ceased to exist, (ii) each issued and outstanding security of Artisan immediately prior to the Initial Merger Effective Time was cancelled in exchange for or converted into securities of the Company or other rights or property as set out below, (iii) Cheng Yin Pan (Ben) was appointed as a director on the board of directors of the Company, in addition to the then existing director of the Company, the then existing officers (if any) ceased to hold office and the initial officers of the Company from the Initial Merger Effective Time were appointed as determined by us, (iv) Cheng Yin Pan (Ben) was appointed as a director on the board of directors of Artisan Merger Sub and held office until the Acquisition Effective Time, in addition to the then existing director of Artisan Merger Sub, the then existing officers of Artisan Merger Sub (if any) ceased to hold office and the initial officers of Artisan Merger Sub from the Initial Merger Effective Time were appointed as determined by us, (v) Artisan Merger Sub’s memorandum and articles of association was amended and restated to read in their entirety in the form attached as Exhibit G to the Business Combination Agreement, and (vi) the Company’s memorandum and articles of association were amended and restated to read in their entirety in the form attached as Exhibit Ito the Business Combination Agreement.
The Initial Merger As a result of the Initial Merger, at the Initial Merger Effective Time (i) all the property, rights, privileges, agreements, powers and franchises, liabilities and duties of Artisan and Artisan Merger Sub became the property, rights, privileges, agreements, powers and franchises, liabilities and duties of Artisan Merger Sub as the surviving company, and Artisan Merger Sub thereafter became as a wholly owned subsidiary of the Company and the separate corporate existence of Artisan ceased to exist, (ii) each issued and outstanding security of Artisan immediately prior to the Initial Merger Effective Time was cancelled in exchange for or converted into securities of the Company or other rights or property as set out below, (iii) Cheng Yin Pan (Ben) was appointed as a director on the board of directors of the Company, in addition to the then existing director of the Company, the then existing officers (if any) ceased to hold office and the initial officers of the Company from the Initial Merger Effective Time were appointed as determined by us, (iv) Cheng Yin Pan (Ben) was appointed as a director on the board of directors of Artisan Merger Sub and held office until the Acquisition Effective Time, in addition to the then existing director of Artisan Merger Sub, the then existing officers of Artisan Merger Sub (if any) ceased to hold office and the initial officers of Artisan Merger Sub from the Initial Merger Effective Time were appointed as determined by us, (v) Artisan Merger Sub’s memorandum and articles of association was amended and restated to read in their entirety in the form attached as Exhibit G to the Business Combination Agreement, and (vi) the Company’s memorandum and articles of association were amended and restated to read in their entirety in the form attached as Exhibit I to the Business Combination Agreement.
Subject to the terms and conditions of the Business Combination Agreement, at the Initial Merger Effective Time: • each Unit issued and outstanding immediately prior to the Initial Merger Effective Time was automatically detached and the holder thereof was deemed to hold one Artisan Public Share and one-third of an Artisan Public Warrant; • immediately following the separation of each Unit, each Artisan Public Share (which, for the avoidance of doubt, includes the Artisan Public Shares held as a result of the separation of the Units and Artisan Public Shares issued in the Class B Recapitalization) issued and outstanding immediately prior to the Initial Merger Effective Time (excluding Artisan Public Shares that are held by Artisan shareholders that validly exercise their redemption rights, Dissenting Artisan Shares and Artisan treasury shares) was cancelled in exchange for the right to receive the number of newly issued Class A Ordinary Shares equal to the Class A Exchange Ratio; • each Artisan Warrant (which, for the avoidance of doubt, includes the Artisan Public Warrants held as a result of the separation of the Units) outstanding immediately prior to the Initial Merger Effective Time ceased to be a warrant with respect to Artisan Public Shares and be assumed by the Company and converted into a warrant to purchase such number of Class A Ordinary Share equal to the Class A Exchange Ratio subject to substantially the same terms and conditions prior to the Initial Merger Effective Time in accordance with the provisions of the Assignment, Assumption and Amendment Agreement; • the single share in the capital of Artisan Merger Sub issued and outstanding immediately prior to the Initial Merger Effective Time and owned by the Company continued existing and constituted the only issued and outstanding share in the capital of Artisan Merger Sub; and • the holder of one share of the Company and any other shares of the Company immediately prior to the Initial Merger Effective Time surrendered such shares for no consideration to the Company and all such shares were cancelled by the Company.
Subject to the terms and conditions of the Business Combination Agreement, at the Initial Merger Effective Time: • each unit issued in Artisan's IPO ("Unit") and outstanding immediately prior to the Initial Merger Effective Time was automatically detached and the holder thereof was deemed to hold one Class A ordinary share of Artisan ("Artisan Public Share") and one-third of a redeemable warrants entitling its holder to purchase one Artisan Public Share at an exercise price of $11.50 per share, subject to adjustment ("Artisan Public Warrant"); • immediately following the separation of each Unit, each Artisan Public Share issued and outstanding immediately prior to the Initial Merger Effective Time (excluding Artisan Public Shares that are held by Artisan shareholders that validly exercise their redemption rights, dissenting Artisan shares and Artisan treasury shares) was cancelled in exchange for the right to receive the number of newly issued Class A Ordinary Shares equal to a ratio equivalent to 1.29 ("Class A Exchange Ratio"); • each Artisan Warrant (which, for the avoidance of doubt, includes the Artisan Public Warrants held as a result of the separation of the Units) outstanding immediately prior to the Initial Merger Effective Time ceased to be a warrant with respect to Artisan Public Shares and be assumed by the Company and converted into a warrant to purchase such number of Class A Ordinary Share equal to the Class A Exchange Ratio subject to substantially the 79 Table of Contents same terms and conditions prior to the Initial Merger Effective Time in accordance with the provisions of the Assignment, Assumption and Amendment Agreement; • the single share in the capital of Artisan Merger Sub issued and outstanding immediately prior to the Initial Merger Effective Time and owned by the Company continued existing and constituted the only issued and outstanding share in the capital of Artisan Merger Sub; and • the holder of one share of the Company and any other shares of the Company immediately prior to the Initial Merger Effective Time surrendered such shares for no consideration to the Company and all such shares were cancelled by the Company.
The following summary is qualified in its entirety by reference to the complete text of each of the Related Agreements, and you are urged to read such Related Agreements in their entirety. 81 Table of Contents PIPE Financing (Private Placement) Substantially concurrently with the execution of the Business Combination Agreement, the Company, Artisan and the PIPE Investors entered into PIPE Subscription Agreements, pursuant to which the PIPE Investors committed to subscribe for and purchase, in the aggregate, 6,000,000 Class A Ordinary Shares for $10 per share, for an aggregate purchase price equal to $60,000,000 (the “PIPE Investment”).
PIPE Financing (Private Placement) Substantially concurrently with the execution of the Business Combination Agreement, the Company, Artisan and the PIPE Investors entered into PIPE Subscription Agreements, pursuant to which the PIPE Investors committed to subscribe for and purchase, in the aggregate, 6,000,000 Class A Ordinary Shares for $10 per share, for an aggregate purchase price equal to $60,000,000 (the “PIPE Investment”).
In 2020 and 2021, we purchased inventory and lab equipment from a joint venture in which Prenetics indirectly held approximately 44.07% equity interests, and paid an aggregate amount of US$21,119 and US$53,981, respectively.
Compensation.” Share Incentive Plans See “Item 6. Directors, Senior Management and Employees — B. Compensation — Share Incentive Plans.” Other Related Party Transactions In 2020 and 2021, we purchased inventory and lab equipment from a joint venture in which Prenetics indirectly held approximately 44.07% equity interests, and paid an aggregate amount of US$21,119 and US$53,981, respectively.
Related Party Transactions Business Combination On May 18, 2022, the Company consummated the transactions contemplated by the previously announced business combination pursuant to the Business Combination Agreement, by and among the Company, Artisan, Artisan Merger Sub, Prenetics Merger Sub and Prenetics.
Related Party Transactions Business Combination On May 18, 2022, the Company consummated the transactions contemplated by the previously announced business combination pursuant to the Business Combination Agreement dated September 15, 2021 (as amended by an Amendment to Business Combination Agreement dated as of March 30, 2022), by and among the Company, Artisan, AAC Merger Limited ("Artisan Merger Sub"), PGL Merger Limited ("Prenetics Merger Sub") and Prenetics.
The sum of all the Ordinary Shares and other securities receivable by Prenetics shareholders is referred to as “Acquisition Merger Consideration,” and the Initial Merger Consideration and the Acquisition Merger Consideration are referred to as the “Shareholder Merger Consideration.” Prior to the Initial Merger Effective Time, the Company deposited with Continental as Exchange Agent (or another exchange agent reasonably acceptable to Artisan and Prenetics) the Shareholder Merger Consideration.
The sum of all the Ordinary Shares and other securities receivable by Prenetics shareholders is referred to as “Acquisition Merger Consideration,” and the Initial Merger Consideration and the Acquisition Merger Consideration are referred to as the “Shareholder Merger Consideration.” Prior to the Initial Merger Effective Time, the Company deposited with Continental as Exchange Agent (or another exchange agent reasonably acceptable to Artisan and Prenetics) the Shareholder Merger Consideration. 80 Table of Contents Related Agreements This section describes the material provisions of certain additional agreements entered into pursuant to the Business Combination Agreement (the “Related Agreements”) but does not purport to describe all of the terms thereof.
Assignment, Assumption and Amendment Agreement Concurrently with the execution of the Business Combination Agreement, Artisan, the Company and Continental entered into the Assignment, Assumption and Amendment Agreement and amended the Existing Warrant Agreement, pursuant to which, among other things, Artisan assigned all of its right, title and interest in the Existing Warrant Agreement to the Company, and the Company assumed such assignment from Artisan, including the warrants provided for under the Existing Warrant Agreement, in each case effective upon the Initial Closing. 83 Table of Contents Forward Purchase Agreements Prior to the IPO, Artisan entered into the Forward Purchase Agreements, pursuant to which the Forward Purchase Investors agreed to purchase an aggregate of 6,000,000 Artisan Public Shares plus 1,500,000 redeemable Artisan Warrants, for a purchase price of $10.00 per Artisan Public Share, as applicable, or $60,000,000 in the aggregate, in a private placement to close immediately prior to the closing of the initial business combination of Artisan.
Assignment, Assumption and Amendment Agreement Concurrently with the execution of the Business Combination Agreement, Artisan, the Company and Continental entered into the Assignment, Assumption and Amendment Agreement and amended the Existing Warrant Agreement, pursuant to which, among other things, Artisan assigned all of its right, title and interest in the Existing Warrant Agreement to the Company, and the Company assumed such assignment from Artisan, including the warrants provided for under the Existing Warrant Agreement, in each case effective upon the closing of the Initial Merger.
Removed
Related Agreements This section describes the material provisions of certain additional agreements entered into pursuant to the Business Combination Agreement (the “Related Agreements”) but does not purport to describe all of the terms thereof.
Added
The Business Combination Agreement contained customary representations and warranties and pre- and post-closing covenants of each party and customary closing conditions.
Removed
Compensation.” Share Incentive Plans See “Item 6. Directors, Senior Management and Employees — B. Compensation — Share Incentive Plans.” Other Related Party Transactions In 2020, we sold testing kits to Prudential Hong Kong Limited, one of Prenetics’ major shareholders, and generated revenues in an aggregate amount of US$16,950.
Added
The following summary is qualified in its entirety by reference to the complete text of each of the Related Agreements, and you are urged to read such Related Agreements in their entirety.
Added
On March 30, 2022, the Company, Artisan, Prenetics, Sponsor and the Artisan directors entered into the Sponsor Support Agreement Amendment Deed, pursuant to which the lock-up period applicable to Sponsor was amended such that (a) 50% of the Ordinary Shares to be acquired by the Sponsor in the Business Combination would be subject to a lock-up of six (6) months after the Closing Date, and (b) the remaining 50% will be subject to a lock-up of twelve (12) months after the Closing Date, subject to certain exceptions.
Added
Forward Purchase Agreements 82 Table of Contents Prior to the IPO, Artisan entered into the Forward Purchase Agreements, pursuant to which Aspex Master Fund and Pacific Alliance Asia Opportunity Fund L.P.
Added
(the "Forward Purchase Investors") agreed to purchase an aggregate of 6,000,000 Artisan Public Shares plus 1,500,000 redeemable warrants, entitling its holder to purchase one Artisan Public Share at an exercise price of $11.50 per share, subject to adjustment ("Artisan Warrants"), for a purchase price of $10.00 per Artisan Public Share, as applicable, or $60,000,000 in the aggregate, in a private placement to close immediately prior to the closing of the initial business combination of Artisan.