BYSI filing — read by section

Item 8. Financial Statements and Supplementary Data

Item 8. Financial Statements and Supplementary Data 

 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS 

 Page 
 
 Audited Consolidated Financial Statements of BeyondSpring Inc. 
 
 Report of Independent Registered Public Accounting Firm (PCAOB ID: 199 ) 
 142 
 
 Report of Independent Registered Public Accounting Firm (PCAOB ID: 688) 
 143 
 
 Consolidated balance sheets as of December 31, 2024 and 2025 
 144 
 
 Consolidated statements of comprehensive loss for the years ended December 31, 2024 and 2025 
 145 
 
 Consolidated statements of shareholders’ deficit for the years ended December 31, 2024 and 2025 
 146 
 
 Consolidated statements of cash flows for the years ended December 31, 2024 and 2025 
 147 
 
 Notes to consolidated financial statements 
 148 
 
 141

 Report of Independent Registered Public Accounting Firm 

 To the Stockholders and Board of Directors of

 BeyondSpring Inc.

 Opinion on the Financial Statements 

 We have audited the accompanying consolidated balance sheet of BeyondSpring Inc. (the “Company”) as of December 31, 2025, the related consolidated statements of comprehensive loss, shareholders’ deficit and cash flows for the year ended December 31, 2025, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025, and the results of its operations and its cash flows for the year ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.

 Basis for Opinion 

 These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

 Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

 Critical Audit Matters 

 The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

 Accrual for research contract costs 

 As described in Note 2 to the financial statements, the Company has entered into various research and development contracts with research institutions and other companies primarily in China, U.S. and Europe. Related payments are recorded as research and development expenses, and accruals are recorded for estimated ongoing research costs. When evaluating the adequacy of the accrual for research contract costs, the Company analyzes progress of the studies, including the phase or completion of events, invoices received and contracted costs. Significant judgments and estimates are made in determining the accrued balances at the end of the reporting period and actual results could differ from the Company’s estimates.

 The principal consideration for our determination in performing procedures related to the accrual for research contract costs is a critical audit matter is that there was judgment by management in determining the achievement of milestones and occurrence of other events that creates a present obligation for the Company to pay the research institutions and other companies for their services.

 Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the financial statements. These procedures included, among others, (i) obtaining an understanding of the design and implementation of certain key controls and how management estimates and records the accrued research contract costs; (ii) inspecting research and development related contract terms and conditions, and assessing the status of contracts with research institutions and other companies through corroborative inquiries with the in-house research personnel; (iii) reviewing subsequent disbursements to determine whether any invoices belong to the period under audit were properly accrued for to identify any unrecorded accrued expenses at year end; (iv) evaluating management’s estimate by testing the activities of the expenses and payments recorded in the current period; (v) comparing and reconciling the confirmation responses from the research institutions and other companies with the accrual balances.

 /s/ CBIZ CPAs P.C.

 CBIZ CPAs P.C. 

 We have served as the Company’s auditor since 2023 (such date takes into account the acquisition of the attest business of Marcum LLP by CBIZ CPAs P.C. effective November 1, 2024).

 Costa Mesa, CA 

 March 25, 2026

 142

 Report of Independent Registered Public Accounting Firm 

 To the Shareholders and Board of Directors of

 BeyondSpring Inc.

 Opinion on the Financial Statements 

 We have audited the accompanying consolidated balance sheet of BeyondSpring Inc. (the “Company”) as of December 31, 2024, the related consolidated statements of comprehensive loss, shareholders’ deficit and cash flows for the year ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cash flows for the year ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

 Basis for Opinion 

 These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

 Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

 /s/ Marcum LLP

 Marcum LLP

 We have served as the Company’s auditor from 2023 to 2025.

 Costa Mesa, CA

 March 27, 2025

 143

 BEYONDSPRING INC. 

 CONSOLIDATED BALANCE SHEETS 

 (Amounts in thousands of U.S. Dollars ( “ $ ” ), except for number of shares and per share data) 

 As of December 31, 

 2024 
 
 2025 
 
 $ 
 
 $ 
 
 Assets 

 Current assets: 

 Cash and cash equivalents

 2,922 
 
 7,786 
 
 Short-term investments

 - 
 
 4,775 
 
 Advances to suppliers

 240 
 
 227 
 
 Prepaid expenses and other current assets

 68 
 
 71 
 
 Current assets of discontinued operations

 25,347 
 
 8,023 
 
 Total current assets

 28,577 
 
 20,882 
 
 Noncurrent assets: 

 Property and equipment, net

 239 
 
 166 
 
 Operating right-of-use assets

 513 
 
 305 
 
 Other noncurrent assets

 213 
 
 224 
 
 Noncurrent assets of discontinued operations

 4,773 
 
 4,356 
 
 Total noncurrent assets

 5,738 
 
 5,051 
 
 Total assets 

 34,315 
 
 25,933 
 
 Liabilities and equity 

 Current liabilities: 

 Accounts payable

 295 
 
 363 
 
 Accrued expenses

 840 
 
 938 
 
 Current portion of operating lease liabilities

 282 
 
 320 
 
 Other current liabilities

 780 
 
 822 
 
 Current liabilities of discontinued operations

 8,813 
 
 11,133 
 
 Total current liabilities

 11,010 
 
 13,576 
 
 Noncurrent liabilities: 

 Operating lease liabilities

 307 
 
 - 
 
 Deferred revenue

 27,400 
 
 28,600 
 
 Other noncurrent liabilities

 3,686 
 
 3,981 
 
 Noncurrent liabilities of discontinued operations

 6,197 
 
 3,766 
 
 Total noncurrent liabilities

 37,590 
 
 36,347 
 
 Total liabilities 

 48,600 
 
 49,923 
 
 Commitments and contingencies (Note 13) 

 Shareholders ’ deficit 

 Ordinary shares ($ 0.0001 par value; 500,000,000 shares authorized; 40,316,320 and 41,122,320 shares issued and outstanding as of December 31, 2024 and 2025, respectively)

 4 
 
 4 
 
 Additional paid-in capital

 373,185 
 
 375,664 
 
 Accumulated deficit

 ( 407,425 
 ) 
 
 ( 408,431 
 ) 
 
 Accumulated other comprehensive income

 1,336 
 
 602 
 
 Total BeyondSpring Inc.’s shareholders’ deficit

 ( 32,900 
 ) 
 
 ( 32,161 
 ) 
 
 Noncontrolling interests

 18,615 
 
 8,171 
 
 Total shareholders’ deficit

 ( 14,285 
 ) 
 
 ( 23,990 
 ) 
 
 Total liabilities and shareholders ’ deficit 

 34,315 
 
 25,933 
 
 The accompanying notes are an integral part of these consolidated financial statements.

 144

 BEYONDSPRING INC. 

 CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS 

 (Amounts in thousands of U.S. Dollars ( “ $ ” ), except for number of shares and per share data) 

 Year ended December 31, 

 2024 

 2025 

 $

 $

 Revenue 

 - 
 
 - 
 
 Operating expenses 

 Research and development

 ( 2,644 
 ) 
 
 ( 4,388 
 ) 
 
 General and administrative

 ( 6,110 
 ) 
 
 ( 4,557 
 ) 
 
 Loss from operations 

 ( 8,754 
 ) 
 
 ( 8,945 
 ) 
 
 Foreign exchange gain (loss), net

 ( 96 
 ) 
 
 165 
 
 Interest income

 59 
 
 78 
 
 Other income, net

 22 
 
 77 
 
 Loss before income tax 

 ( 8,769 
 ) 
 
 ( 8,625 
 ) 
 
 Income tax expenses

 ( 96 
 ) 
 
 ( 90 
 ) 
 
 Net loss from continuing operations 

 ( 8,865 
 ) 
 
 ( 8,715 
 ) 
 
 Discontinued operations 

 Loss from discontinued operations

 ( 7,828 
 ) 
 
 ( 12,488 
 ) 
 
 Gain on disposal of discontinued operations

 - 
 
 6,986 
 
 Income tax expenses

 - 
 
 - 
 
 Net loss from discontinued operations 

 ( 7,828 
 ) 
 
 ( 5,502 
 ) 
 
 Net loss 

 ( 16,693 
 ) 
 
 ( 14,217 
 ) 
 
 Less: Net loss attributable to noncontrolling interests from continuing operations

 ( 388 
 ) 
 
 ( 242 
 ) 
 
 Less: Net loss attributable to noncontrolling interests from discontinued operations

 ( 5,182 
 ) 
 
 ( 12,969 
 ) 
 
 Net loss attributable to BeyondSpring Inc. 

 ( 11,123 
 ) 
 
 ( 1,006 
 ) 
 
 Net earnings (loss) per share, basic and diluted 

 Continuing operations

 ( 0.21 
 ) 
 
 ( 0.21 
 ) 
 
 Discontinued operations

 ( 0.07 
 ) 
 
 0.19 
 
 Basic and diluted loss per share

 ( 0.28 
 ) 
 
 ( 0.02 
 ) 
 
 Weighted-average shares outstanding

 Basic and diluted

 39,733,191 
 
 40,406,347 
 
 Other comprehensive loss, net of tax of nil: 

 Foreign currency translation adjustment gain (loss) from continuing operations

 710 
 
 ( 1,147 
 ) 
 
 Foreign currency translation adjustment gain (loss) from discontinued operations

 17 
 
 ( 107 
 ) 
 
 Comprehensive loss 

 ( 15,966 
 ) 
 
 ( 15,471 
 ) 
 
 Less: Comprehensive loss attributable to noncontrolling interests from continuing operations

 ( 131 
 ) 
 
 ( 655 
 ) 
 
 Less: Comprehensive loss attributable to noncontrolling interests from discontinued operations

 ( 5,154 
 ) 
 
 ( 13,076 
 ) 
 
 Comprehensive loss attributable to BeyondSpring Inc. 

 ( 10,681 
 ) 
 
 ( 1,740 
 ) 
 
 The accompanying notes are an integral part of these consolidated financial statements.

 145

 BEYONDSPRING INC. 

 CONSOLIDATED STATEMENTS OF SHAREHOLDERS ’ DEFICIT 

 (Amounts in thousands of U.S. Dollars ( “ $ ” ), except for number of shares and per share data) 

 BeyondSpring Inc.’s shareholders 

 Accumulated 
 
 Additional 

 other 

 Ordinary share 
 
 paid-in 
 
 Accumulated 
 
 comprehensive 
 
 Noncontrolling 
 
 Total 

 Shares 

 Amount 

 capital 
 
 deficit 
 
 (loss) gain 
 
 Subtotal 
 
 interests 

 deficit 

 $

 $

 $

 $

 $

 $

 $

 Balances at January 1, 2024 

 39,029,163 
 
 4 
 
 368,599 
 
 ( 396,302 
 ) 
 
 894 
 
 ( 26,805 
 ) 
 
 ( 8,530 
 ) 
 
 ( 35,335 
 ) 
 
 Issuance of ordinary shares, net of issuance costs

 1,271,187 
 
 - 
 
 2,970 
 
 - 
 
 - 
 
 2,970 
 
 - 
 
 2,970 
 
 Share-based compensation

 - 
 
 - 
 
 2,073 
 
 - 
 
 - 
 
 2,073 
 
 195 
 
 2,268 
 
 Exercise of share options

 15,970 
 
 - 
 
 - 
 
 - 
 
 - 
 
 - 
 
 - 
 
 - 
 
 Capital contribution from noncontrolling interests

 - 
 
 - 
 
 - 
 
 - 
 
 - 
 
 - 
 
 20,000 
 
 20,000 
 
 Issuance costs incurred by noncontrolling interests

 - 
 
 - 
 
 - 
 
 - 
 
 - 
 
 - 
 
 ( 96 
 ) 
 
 ( 96 
 ) 
 
 Accretion of contingently redeemable noncontrolling interest

 - 
 
 - 
 
 ( 457 
 ) 
 
 - 
 
 - 
 
 ( 457 
 ) 
 
 - 
 
 ( 457 
 ) 
 
 Reclassification of noncontrolling interests from mezzanine equity to permanent equity

 - 
 
 - 
 
 - 
 
 - 
 
 - 
 
 - 
 
 12,331 
 
 12,331 
 
 Other comprehensive income

 - 
 
 - 
 
 - 
 
 - 
 
 442 
 
 442 
 
 285 
 
 727 
 
 Net loss

 - 
 
 - 
 
 - 
 
 ( 11,123 
 ) 
 
 - 
 
 ( 11,123 
 ) 
 
 ( 5,570 
 ) 
 
 ( 16,693 
 ) 
 
 Balances at December 31, 2024 

 40,316,320 
 
 4 
 
 373,185 
 
 ( 407,425 
 ) 
 
 1,336 
 
 ( 32,900 
 ) 
 
 18,615 
 
 ( 14,285 
 ) 
 
 Issuance of ordinary shares, net of issuance costs

 800,000 
 
 - 
 
 1,980 
 
 - 
 
 - 
 
 1,980 
 
 - 
 
 1,980 
 
 Share-based compensation

 6,000 
 
 - 
 
 499 
 
 - 
 
 - 
 
 499 
 
 225 
 
 724 
 
 Capital contribution from noncontrolling interests

 - 
 
 - 
 
 - 
 
 - 
 
 - 
 
 - 
 
 2,720 
 
 2,720 
 
 Issuance costs incurred by noncontrolling interests

 - 
 
 - 
 
 - 
 
 - 
 
 - 
 
 - 
 
 ( 26 
 ) 
 
 ( 26 
 ) 
 
 Ownership interests in subsidiary transferred to third parties

 - 
 
 - 
 
 - 
 
 - 
 
 - 
 
 - 
 
 368 
 
 368 
 
 Other comprehensive income

 - 
 
 - 
 
 - 
 
 - 
 
 ( 734 
 ) 
 
 ( 734 
 ) 
 
 ( 520 
 ) 
 
 ( 1,254 
 ) 
 
 Net loss

 - 
 
 - 
 
 - 
 
 ( 1,006 
 ) 
 
 - 
 
 ( 1,006 
 ) 
 
 ( 13,211 
 ) 
 
 ( 14,217 
 ) 
 
 Balances at December 31, 2025 

 41,122,320 
 
 4 
 
 375,664 
 
 ( 408,431 
 ) 
 
 602 
 
 ( 32,161 
 ) 
 
 8,171 
 
 ( 23,990 
 ) 
 
 The accompanying notes are an integral part of these consolidated financial statements.

 146

 BEYONDSPRING INC. 

 CONSOLIDATED STATEMENTS OF CASH FLOWS 

 (Amounts in thousands of U.S. Dollars ( “ $ ” )) 

 Year ended December 31, 

 2024 

 2025 

 $

 $

 Cash flows from operating activities: 

 Net loss 

 ( 16,693 
 ) 
 
 ( 14,217 
 ) 
 
 Adjustments to reconcile net loss to cash used in operating activities: 

 Depreciation expenses

 285 
 
 87 
 
 Share-based compensation

 2,255 
 
 722 
 
 Non-cash operating lease expenses

 702 
 
 747 
 
 Unrealized gain on short-term investments

 ( 3 
 ) 
 
 - 
 
 Gain on sale of subsidiary interests

 - 
 
 ( 6,986 
 ) 
 
 Changes in assets and liabilities: 

 Short-term investments

 ( 64 
 ) 
 
 254 
 
 Advances to suppliers

 ( 19 
 ) 
 
 ( 18 
 ) 
 
 Prepaid expenses and other current assets

 10 
 
 64 
 
 Other noncurrent assets

 ( 117 
 ) 
 
 ( 42 
 ) 
 
 Accounts payable

 ( 607 
 ) 
 
 ( 76 
 ) 
 
 Accrued expenses

 ( 387 
 ) 
 
 1,842 
 
 Operating lease liabilities

 ( 631 
 ) 
 
 ( 709 
 ) 
 
 Other current liabilities

 ( 163 
 ) 
 
 268 
 
 Deferred revenue

 ( 1,001 
 ) 
 
 ( 2,001 
 ) 
 
 Other noncurrent liabilities

 ( 10 
 ) 
 
 296 
 
 Net cash used in operating activities 

 ( 16,443 
 ) 
 
 ( 19,769 
 ) 
 
 Cash flows from investing activities: 

 Acquisitions of property and equipment

 ( 224 
 ) 
 
 ( 50 
 ) 
 
 Purchase of short-term investments

 ( 12,788 
 ) 
 
 ( 14,949 
 ) 
 
 Proceeds from maturity of short-term investments

 1,000 
 
 18,432 
 
 Proceeds from sale of subsidiary interests

 - 
 
 7,354 
 
 Net cash (used in) provided by investing activities 

 ( 12,012 
 ) 
 
 10,787 
 
 Cash flows from financing activities: 

 Proceeds from issuance of ordinary shares

 3,000 
 
 2,000 
 
 Capital contribution from noncontrolling interests

 20,000 
 
 2,720 
 
 Payments of offering costs

 ( 30 
 ) 
 
 ( 12 
 ) 
 
 Payments of issuance costs of noncontrolling interests

 ( 96 
 ) 
 
 ( 26 
 ) 
 
 Proceeds from loans

 3,911 
 
 286 
 
 Net cash provided by financing activities 

 26,785 
 
 4,968 
 
 Effect of foreign exchange rate changes 

 ( 33 
 ) 
 
 105 
 
 Net decrease in cash and cash equivalents 

 ( 1,703 
 ) 
 
 ( 3,909 
 ) 
 
 Cash and cash equivalents from continuing operations at beginning of year

 15,337 
 
 2,922 
 
 Cash and cash equivalents and from discontinued operations at beginning of year

 2,413 
 
 13,125 
 
 Less: cash and cash equivalents from discontinued operations at end of year

 13,125 
 
 4,352 
 
 Cash and cash equivalents from continuing operations at end of year

 2,922 
 
 7,786 
 
 Supplemental disclosures of cash flow information 

 Interest paid

 - 
 
 - 
 
 Interest received

 148 
 
 311 
 
 Income taxes paid

 7 
 
 2 
 
 Non-cash activities:

 Operating lease right-of-use assets obtained in exchange for operating lease liabilities

 - 
 
 40 
 
 Issuance costs accrued in accrued expenses

 - 
 
 8 
 
 The accompanying notes are an integral part of these consolidated financial statements.

 147

 BEYONDSPRING INC.

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

 (Amounts in thousands of U.S. Dollars (“$”) and Renminbi (“RMB”),

 except for number of shares and per share data)

 1. 

 Nature of the business 

 BeyondSpring Inc. (the “Company”) was incorporated in the Cayman Islands on November 21, 2014. The Company and its subsidiaries (collectively, the “Group”) are principally engaged in clinical stage biopharmaceutical activities focused on the development of innovative cancer therapies. The Company is under the control of Mr. Linqing Jia and Dr. Lan Huang as a couple (collectively, the “Founders”) since its incorporation.

 On March 14, 2017, the Company completed its initial public offering (“IPO”) on the NASDAQ Capital Market.

 On June 14, 2019 and July 3, 2019, certain investors led by Shenzhen Efung 9th Venture Investment Center (Limited Partnership) (“Efung Capital”) entered into investment agreements with Dalian Wanchunbulin Pharmaceuticals Ltd. (“Wanchunbulin”), a subsidiary of the Company, to invest $ 14,537 (RMB 100,000 ) for a total of 4.76 % equity interest of Wanchunbulin. In 2019, the Company received aggregate gross proceeds of $ 10,083 (RMB 70,000 ) from this equity financing.

 In August 2024, SEED Therapeutics Inc. (“SEED”) completed the first close of its Series A-3 financing, where SEED sold an aggregate of 5,647,059 of its Series A-3 Preferred Shares to Eisai Co., Ltd (“Eisai”) and certain other third-party investors, for an aggregate purchase price of $ 24,000 , each at a cash purchase price of $ 4.25 per share.

 In January 2025, the Company entered into definitive agreements with three investors to sell a portion of Series A-1 Preferred Shares of SEED owned by the Company, for gross proceeds of approximately $ 35,418 . Upon completion of the transactions, the Company and SEED Technology Limited (“SEED Technology”), a majority-owned indirect subsidiary of the Company (collectively, the “BYSI Entities”) are expected to retain approximately 13.62 % of SEED’s outstanding shares. See Note 3 – Discontinued operations for further information.

 In September 2025, SEED entered into share purchase agreements with certain third-party investors and a related party (see Note 15 – Related Party Transactions) to sell an aggregate of 1,411,761 of its Series A-3 Preferred Shares for an aggregate purchase price of $ 6,000 at a cash purchase price of $ 4.25 per share. As of December 31, 2025, the BYSI Entities owns approximately 34.29 % of the outstanding equity interest in SEED, calculated on an as-converted basis. SEED continues to be consolidated into the financial statements of the Company since the Company remains substantive control of SEED.

 As of December 31, 2025, the subsidiaries of the Company are as follows:

 Name of company 

 Place of incorporation 

 Date of incorporation 

 Percentage of ownership by the Group 

 Principal activities 

 BeyondSpring Pharmaceuticals Inc. (“BeyondSpring US”)

 Delaware, U.S.

 June 18, 2013

 100 %

 Clinical trial activities

 BeyondSpring Ltd.

 The British Virgin Islands (“BVI”)

 December 3, 2014

 100 %

 Holding company

 BeyondSpring (HK) Limited (“BeyondSpring HK”)

 Hong Kong

 January 13, 2015

 100 %

 Holding company

 Wanchun Biotechnology Limited (“BVI Biotech”)

 BVI

 April 1, 2015

 100 %

 Holding company

 Wanchun Biotechnology (Dalian) Ltd. (“Wanchun Dalian”)

 People’s Republic of China (“PRC”)

 April 23, 2015

 100 %

 Holding company

 Dalian Wanchunbulin Pharmaceuticals Ltd. (“Wanchunbulin”)

 PRC

 May 6, 2015

 57.97 %

 Clinical trial activities

 Beijing Wanchun Pharmaceutical Technology Ltd. (“Beijing Wanchun”)

 PRC

 May 21, 2018

 57.97 %

 Holding company

 SEED Therapeutics Inc. (“SEED”)

 BVI

 June 25, 2019

 36.61 %

 Pre-clinical development activities

 SEED Technology Limited (“SEED Technology”)

 BVI

 December 9, 2019

 57.97 %

 Holding company

 SEED Therapeutics US, Inc. (“SEED US”)

 Delaware, U.S.

 November 25, 2020

 36.61 %

 Pre-clinical development activities

 Wanchun Hongji (Dalian) Pharmaceuticals Ltd. (“Wanchun Hongji”)

 PRC

 March 22, 2022

 36.61 %

 Pre-clinical development activities

 SEED LH Inc.

 BVI

 September 30, 2025

 36.61 %

 Holding company

 SEED LH MG Inc.

 Delaware, U.S.

 October 6, 2025

 36.61 %

 Product development activities

 148

 BEYONDSPRING INC.

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

 (Amounts in thousands of U.S. Dollars (“$”) and Renminbi (“RMB”),

 except for number of shares and per share data)

 2. 

 Summary of significant accounting policies 

 Basis of presentation 

 The consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”).

 Basis of consolidation 

 The consolidated financial statements include the financial statements of the Company and its subsidiaries. All intercompany transactions and balances between the Company and its subsidiaries are eliminated upon consolidation.

 Discontinued operations 

 The Company presents discontinued operations when there is a disposal of a component group or a group of components that represents a strategic shift that will have a major effect on operations and financial results. The Company aggregates the results of operations for discontinued operations into a single line item in the Consolidated Statements of Comprehensive Loss for all periods presented. See Note 3 for additional information.

 Use of estimates 

 The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the period. Areas where management uses subjective judgment include, but are not limited to, share-based compensation, clinical trial accruals, valuation allowance for deferred tax assets, estimating uncertain tax positions (“UTP”), measurement of right-of-use assets and lease liabilities, fair value of financial instruments, impairment of long-lived assets and estimating of useful life for property and equipment. Management bases the estimates on historical experience, known trends and various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ from these estimates.

 Research and development ( “ R&D ” ) costs 

 The Company accounts for R&D costs in accordance with ASC 730, Research and Development . R&D costs primarily are comprised of costs incurred in performing research and development activities, including related personnel and consultant’s salaries, benefits and related costs, raw materials and supplies to develop product candidates, patent-related costs incurred in connection with filing patent applications, costs incurred related to clinical approval, and external costs of outside vendors engaged to conduct clinical development activities and trials. The Company expenses R&D costs as they are incurred.

 Costs incurred related to nonrefundable advance payments for goods or services that will be used in future research and development activities are deferred and capitalized. The capitalized amounts are expensed as R&D costs when the related goods are delivered or the services are performed, or when the Company does not expect it will need the goods to be delivered or the services to be rendered.

 Research contract costs and accruals 

 The Company has entered into various R&D contracts with research institutions and other companies primarily in the PRC, the U.S., and Europe.

 Related payments are recorded as R&D expenses and are expensed as incurred. The Company records accruals for estimated ongoing research costs. When evaluating the adequacy of the accrued liabilities, the Company analyzes progress of the studies, including the phase or completion of events, invoices received and contracted costs. Significant judgments and estimates are made in determining the accrued balances at the end of any reporting period. Actual results could differ from the Company’s estimates. The Company’s historical accrual estimates have not been materially different from the actual costs.

 Foreign currency translation and transactions 

 Functional currency 

 The Company currently uses the U.S. dollar as the functional currency for all its entities, except for entities in the PRC, which adopt the RMB as their functional currency. The determination of the respective functional currency is based on the criteria of ASC 830, Foreign Currency Matters . The Company uses the U.S. dollar as its reporting currency.

 149

 BEYONDSPRING INC.

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

 (Amounts in thousands of U.S. Dollars (“$”) and Renminbi (“RMB”),

 except for number of shares and per share data)

 2. 
 
 Summary of significant accounting policies (continued) 
 
 Foreign currency translation and transactions (continued) 
 
 Functional currency translation 

 For subsidiaries whose functional currencies are not the U.S. dollar, the Company uses the average exchange rate for the year and the exchange rate at the balance sheet date, to translate the operating results and financial position to U.S. dollar, the reporting currency, respectively. Translation differences are recorded in accumulated other comprehensive (loss) income, a component of shareholders’ deficit. Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing on the transaction dates. Foreign currency denominated financial assets and liabilities are remeasured at the exchange rates prevailing at the balance sheet date. Exchange gains and losses are included in the consolidated statements of comprehensive loss.

 Cash and cash equivalents 

 Cash and cash equivalents consist of cash on hand and bank deposits, and highly liquid investments with an original maturity date of three months or less at the date of purchase and are stated at cost which approximates their fair value. All cash and cash equivalents are unrestricted as to withdrawal and use.

 Short-term investments 

 Short-term investments consist of time deposits with original maturities of greater than three months but less than twelve months and structured deposits with maturities of less than twelve months. These structured deposits are classified as short-term investments as they are not readily convertible to known amounts of cash. Financial products issued by commercial banks expected to be realized in cash within the next twelve months are also included in short-term investments.

 Advances to suppliers 

 Advances to suppliers consist of cash to contractors and vendors for services and materials that have not been provided or received. Advances to suppliers are reviewed periodically to determine whether their carrying values have become impaired. The Company considers the assets to be impaired if it is doubtful that the services and materials will be or can be provided by the suppliers. As of December 31, 2024, and 2025, there were no allowances provided.

 Leases 

 The Company determines if an arrangement is a lease or contains a lease at lease inception. For leases with lease and non-lease components, the Company has elected to apply the practical expedient to not separate the lease component and its associated non-lease component. Leases are classified as operating or finance leases in accordance with the recognition criteria in ASC 842, Leases (“ASC842”). The Company’s lease portfolio consists entirely of operating leases as of December 31, 2024 and 2025. The Company’s leases do not contain any material residual value guarantees or material restrictive covenants.

 At the commencement date of a lease, the Company determines the classification of the lease based on the relevant factors present and records right-of-use (“ROU”) assets and lease liabilities. ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. ROU assets and lease liabilities are calculated as the present value of the lease payments not yet paid. Variable lease payments not dependent on an index or rate are excluded from the ROU asset and lease liability calculations and are recognized in expense in the period which the obligation for those payments is incurred. As the rate implicit in the Company’s leases is not typically readily available, the Company uses an incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments. This incremental borrowing rate reflects the fixed rate at which the Company could borrow on a collateralized basis the amount of the lease payments in the same currency, for a similar term, in a similar economic environment. ROU assets include any lease prepayments and are reduced by lease incentives. Operating lease expense for lease payments is recognized on a straight-line basis over the lease term. Lease terms are based on the non-cancelable term of the lease and may contain options to extend the lease when it is reasonably certain that the Company will exercise that option.

 The Company reassesses whether a contract is or contains a lease whenever a substantive change is made to the terms and conditions of the contract. Such changes are not limited to those that meet the definition of a lease modification, which is a specific type of modification characterized by a change in the scope of or consideration for a lease. When a modification does not meet the definition of a lease modification, the Company reassesses whether the contract is or contains a lease but would not apply the lease modification framework if the conclusion regarding whether the contract is or contains a lease is unchanged. If there is a lease modification, the Company considers whether the lease modification results in a separate contract. If so, the Company accounts for the separate contract the same manner as any other new lease, in addition to the original unmodified contract. Otherwise, the Company remeasures and reallocates the remaining consideration in the contract, reassesses the classification of the lease at the effective date of the modification and accounts for any initial direct costs, lease incentives and other payments made to or by the lessee. If the modification fully or partially terminates the existing lease, the Company remeasures the lease liability and decreases the carrying amount of the ROU assets in proportion to the full or partial termination of the existing lease and recognizes in profit or loss any difference between the reduction in the lease liability and the reduction in the ROU assets.

 Operating leases are included in operating lease right-of-use assets and lease liabilities on the consolidated balance sheets. Lease liabilities that become due within one year of the balance sheet date are classified as current liabilities.

 Leases with an initial lease term of 12 months or less are short-term leases. The Company has elected to apply the practical expedient to not record short-term leases on the consolidated balance sheets. Lease expense for short-term leases is recognized on a straight-line basis over the lease term.

 150

 BEYONDSPRING INC.

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

 (Amounts in thousands of U.S. Dollars (“$”) and Renminbi (“RMB”),

 except for number of shares and per share data)

 2. 
 
 Summary of significant accounting policies (continued) 
 
 Property and equipment 

 Property and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation is computed using the straight-line method over the estimated useful lives of the respective assets as follows:

 Category

 Estimated useful life

 Office equipment

 5 ~ 10 years

 Laboratory equipment

 3 - 8 years

 Motor vehicles

 4 years

 Leasehold improvements

 Lower of lease term or economic life

 Repair and maintenance costs are charged to expense as incurred, whereas the cost of renewals and betterment that extends the useful lives of plant and equipment are capitalized as additions to the related assets. Retirements, sales and disposals of assets are recorded by removing the cost and accumulated depreciation from the assets and accumulated depreciation accounts with any resulting gain or loss reflected in the consolidated statements of comprehensive loss.

 Impairment of long-lived assets 

 The Company evaluates long-lived assets such as laboratory equipment for impairment whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable in accordance with ASC 360-10, Property, Plant and Equipment: Overall (“ASC 360-10”). The Company recognizes an impairment loss when the fair value less cost to sell, if any, is less than their carrying values. For the years ended December 31, 2024 and 2025, the Company did not record any impairment losses on its long-lived assets.

 Fair value measurements 

 The Company applies ASC 820, Fair Value Measurements and Disclosures (“ASC 820”), in measuring fair value. ASC 820 defines fair value, establishes a framework for measuring fair value and requires disclosures to be provided on fair value measurement.

 ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

 •

 Level 1—Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

 •

 Level 2—Other inputs that are directly or indirectly observable in the marketplace.

 •

 Level 3—Unobservable inputs which are supported by little or no market activity.

 ASC 820 describes three main approaches to measuring the fair value of assets and liabilities: (1) market approach; (2) income approach and (3) cost approach. The market approach uses prices and other relevant information generated from market transactions involving identical or comparable assets or liabilities. The income approach uses valuation techniques to convert future amounts to a single present value amount. The measurement is based on the value indicated by current market expectations about those future amounts. The cost approach is based on the amount that would currently be required to replace an asset.

 Financial instruments of the Company primarily include cash and cash equivalents, short-term investments, and accounts payable. The Company measures its financial products issued by commercial banks at fair value on a recurring basis based on quoted subscription/redemption price published by the relevant banks. The carrying values of cash and cash equivalents, short-term investments, accounts payable, and time deposits approximated their fair values due to their short-term nature.

 151

 BEYONDSPRING INC.

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

 (Amounts in thousands of U.S. Dollars (“$”) and Renminbi (“RMB”),

 except for number of shares and per share data)

 2. 
 
 Summary of significant accounting policies (continued) 
 
 Segment reporting 

 Operating segments are defined as components of an enterprise for which separate financial information is available and evaluated regularly by the chief operating decision maker (the “CODM”) in deciding how to allocate resources and in assessing performance. The Company operates in two reportable segments, Plinabulin pipeline and Targeted Protein Degradation (“TPD”) platform, as the CODM manages and assesses the Company’s performance and operating results of Plinabulin pipeline and TPD platform separately to allocate resources. The Plinabulin pipeline focuses on developing innovative cancer therapies to improve clinical outcomes for patients who have high unmet medical needs. The Company’s lead asset, Plinabulin, is being developed as a “pipeline in a drug” in a number of cancer indications. The TPD platform is utilizing a unique “molecular glue” technology to develop innovative therapeutic agents and discover and develop new chemical entities for the most debilitating diseases and disorders.

 On December 13, 2024, the Company’s Board of Directors discussed and approved a divestiture plan to sell and transfer about 90 % to 100 % of the Company’s interests in SEED to potential investors at a determined price. The TPD platform segment was comprised of SEED’s operations. As a result, the TPD platform segment qualified for discontinued operations reporting.

 The consolidated financial statements include segment information which reflects the current composition of the reportable segments in accordance with ASC 280, Segment Reporting . See Note 14 – Segment reporting and geographic information for further information.

 Revenue recognition 

 Under ASC 606, Revenue from Contracts with Customers (“ASC 606”), an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price, including variable consideration, if any; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration to which it is entitled in exchange for the goods or services it transfers to the customer.

 Once a contract is determined to be within the scope of ASC 606 at contract inception, the Company reviews the contract to determine which performance obligations it must deliver and which of these performance obligations are distinct. The Company recognizes as revenue the amount of the transaction price that is allocated to each performance obligation when that performance obligation is satisfied or as it is satisfied.

 The Company recognizes a contract asset or a contract liability in the consolidated balance sheets, depending on the relationship between the entity’s performance and the customer’s payment. Contract liabilities represent the excess of payments received as compared to the consideration earned, and is recorded as deferred revenue in the consolidated balance sheets. The Company had no contract assets for the periods presented.

 Collaboration revenue 

 At contract inception, the Company analyzes its collaboration arrangements to assess whether they are within the scope of ASC 808, Collaborative Arrangements (“ASC 808”) to determine whether such arrangements involve joint operating activities performed by parties that are both active participants in the activities and exposed to significant risks and rewards dependent on the commercial success of such activities. For collaboration arrangements within the scope of ASC 808 that contain multiple elements, the Company first determines which elements of the collaboration are deemed to be within the scope of ASC 808 and those that are more reflective of a vendor-customer relationship and therefore within the scope of ASC 606. For elements of collaboration arrangements that are accounted for pursuant to ASC 808, an appropriate recognition method is determined and applied consistently.

 In determining the appropriate amount of revenue to be recognized as the Company fulfills its obligations under each of the agreements, the Company performs the five-step model under ASC 606 noted above.

 The collaborative arrangements may contain more than one unit of account, or performance obligation, including grants of licenses to intellectual property rights, agreement to provide research and development services and other deliverables. The transaction price is generally comprised of an upfront payment due at contract inception and variable consideration in the form of payments for the Company’s services and materials and milestone payments due upon the achievement of specified events. In general, the consideration allocated to the performance obligation is recognized when the obligation is satisfied either by delivering a good or providing a service, limited to the consideration that is not constrained. Non-refundable payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as deferred revenue.

 Licenses of Intellectual Property : Upfront non-refundable payments allocated to the licensing of the Company’s intellectual property are evaluated to determine if the license is distinct from the other performance obligations identified in the arrangement. For licenses determined to be distinct, the Company recognizes revenues from non-refundable up-front fees allocated to the license at a point in time, when the license is transferred to the licensee and the licensee is able to use and benefit from the license. For licenses determined to be not distinct from other promised goods or services, the Company accounts for the promise to grant a license and other promised goods or services together as a single performance obligation, and the Company considers the nature of the combined goods or services in determining whether the performance obligation is satisfied over time or at a point in time.

 Research and Development Service: Upfront non-refundable payment allocated to research and development services performance obligations is deferred and recognized overtime.

 Milestone Payments: At the inception of each arrangement that includes milestone payments, the Company evaluates whether the milestones are considered probable of being reached and estimates the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price. Due to the uncertainty involved in meeting these discovery or development-based targets, they are generally fully constrained at contract inception. The Company will assess whether the variable consideration is fully constrained each reporting period based on the facts and circumstances surrounding the discovery and clinical trials. Upon changes to constraint associated with the discovery or developmental milestones, variable consideration will be included in the transaction price when a significant reversal of revenue recognized is not expected to occur.

 Royalties: For arrangements that include sales-based royalties, including milestone payments based on the level of sales, and the license is deemed to be the predominant item to which the royalties relate, the Company recognizes revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).

 152

 BEYONDSPRING INC.

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

 (Amounts in thousands of U.S. Dollars (“$”) and Renminbi (“RMB”),

 except for number of shares and per share data)

 2. 
 
 Summary of significant accounting policies (continued) 
 
 Comprehensive income (loss) 

 Comprehensive income (loss) is defined as the changes in equity (deficit) of the Company during a period from transactions and other events and circumstances excluding transactions resulting from investments by owners and distributions to owners. For each of the periods presented, the Company’s comprehensive income (loss) includes net loss and foreign currency translation adjustments, and is presented in the consolidated statements of comprehensive loss.

 Income taxes 

 The Company uses the liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting and the tax bases of assets and liabilities and are measured using enacted tax rates that will be in effect when the differences are expected to reverse. A valuation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized. All deferred income tax assets and liabilities are classified as non- current on the consolidated balance sheets.

 The Company evaluates its uncertain tax positions using the provisions of ASC 740, Income Taxes, which prescribes a recognition threshold that a tax position is required to meet before being recognized in the financial statements. The Company recognizes in the financial statements the benefit of a tax position which is “more likely than not” to be sustained under examination based solely on the technical merits of the position assuming a review by tax authorities having all relevant information. Tax positions that meet the recognition threshold are measured using a cumulative probability approach, at the largest amount of tax benefit that has a greater than fifty percent likelihood of being realized upon settlement. It is the Company’s policy to recognize interest and penalties related to unrecognized tax benefits, if any, as a component of income tax expense.

 Share-based compensation 

 The Company applies ASC 718, Compensation — Stock Compensation (“ASC 718”), to account for its share-based payments for both employees and non-employees. In accordance with ASC 718, the Company determines whether an award should be classified and accounted for as a liability award or equity award. Equity classified share-based awards are recognized in the consolidated financial statements based on their grant date fair values. Liability classified awards are measured at the fair value of the award on the grant date and remeasured at each reporting period at fair value until the award is settled. The Company has elected to recognize compensation expense on a straight-line basis over the requisite service period for each separately vesting portion of the award as if the award was, in-substance, multiple awards for all employee equity awards granted with graded vesting based on service condition. The Company uses the accelerated method for all awards granted with performance and/or market conditions. Compensation expense is recognized for awards containing performance conditions only to the extent that it is probable that those performance conditions will be met. Market conditions are included in the determination of the estimated grant-date fair value of share-based awards. Compensation costs related to awards with a market condition are recognized over the requisite service period regardless of whether the market condition is satisfied. The Company elected to account for forfeitures in the period they occur as a reduction to expense.

 Modification, replacements or cancellation of awards 

 A change in the terms or conditions of the awards is accounted for as a modification of the award. Incremental compensation cost is measured as the excess, if any, of the fair value of the modified award over the fair value of the original award immediately before its terms are modified, measured based on the fair value of the awards and other pertinent factors at the modification date. For vested awards, the Company recognizes incremental compensation cost in the period the modification occurs. For unvested awards, the Company recognizes over the remaining requisite service period, the sum of the incremental compensation cost and the remaining unrecognized compensation cost for the original award on the modification date. If the fair value of the modified award is lower than the fair value of the original award immediately before modification, the minimum compensation cost the Company recognizes is the cost of the original award. Cancellation of an award accompanied by the concurrent grant of (or offer to grant) a replacement award or other valuable consideration shall be accounted for as a modification of the terms of the cancelled award. Cancellation of an award without the concurrent grant or offer of a replacement award is treated as a settlement for no consideration.

 Loss per share 

 Loss per share is calculated in accordance with ASC 260, Earnings per Share . Basic loss per ordinary share for continuing operations and for discontinued operations are computed by dividing net loss from continuing operations and from discontinued operations, respectively, attributable to ordinary shareholders, by the weighted average number of ordinary shares outstanding during the period.

 Diluted loss per share for continuing operations and for discontinued operations are calculated by dividing net loss from continuing operations and from discontinued operations, respectively, attributable to ordinary shareholders as adjusted for the effect of dilutive ordinary equivalent shares, if any, by the weighted average number of ordinary and dilutive ordinary equivalent shares outstanding during the period. Ordinary equivalent shares consist of the ordinary shares issuable upon the conversion of the share options and the vesting of restricted shares, using the treasury stock method. Ordinary share equivalents are excluded from the computation of diluted loss per share if their effects would be anti-dilutive. The effects of all share options and unvested restricted shares were excluded from the calculation of diluted loss per share as their effect would have been anti-dilutive during the years ended December 31, 2024, and 2025. Basic and diluted loss per ordinary share is presented in the Company’s consolidated statements of comprehensive loss.

 Concentration of risks 

 Concentration of credit risk 

 Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash and cash equivalents. The Company’s cash and cash equivalents are held at financial institutions that management believes to be of high credit quality. As of December 31, 2024 and 2025, cash and cash equivalents, and short-term investments were held by financial institutions located in the U.S. and PRC.

 PRC state-owned banks, such as China Merchants Bank and Bank of China, are subject to a series of risk control regulatory standards, and PRC bank regulatory authorities are empowered to take over the operation and management when any of those banks faces a material credit crisis. The Company does not foresee substantial credit risk with respect to cash and cash equivalents, and short-term investments held at the PRC state-owned banks. Meanwhile, China does not have an official deposit insurance program, nor does it have an agency similar to what was the Federal Deposit Insurance Corporation (FDIC) in the U.S. In the event of bankruptcy of one of the financial institutions in which the Company has deposits or investments, it may be unlikely to claim its deposits or investments back in full. The Company selected reputable financial institutions with high rating rates to place its currencies. The Company regularly monitors the rating of the financial institutions to avoid any potential defaults. The Company has not experienced any losses on cash and cash equivalents or short-term investments to date. The Company does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships.

 153

 BEYONDSPRING INC.

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

 (Amounts in thousands of U.S. Dollars (“$”) and Renminbi (“RMB”),

 except for number of shares and per share data)

 2. 
 
 Summary of significant accounting policies (continued) 
 
 Concentration of risks (continued) 
 
 Business, customer, political, social and economic risks 

 The Company participates in a dynamic biopharmaceutical industry and believes that changes in any of the following areas could have a material adverse effect on the Company’s future financial position, results of operations, or cash flows: changes in the overall demand for services and products; competitive pressures due to existing competitors and new entrants; advances and new trends in new drugs and industry standards; changes in clinical research organizations and other key vendors; changes in certain strategic relationships or customer relationships; regulatory considerations; intellectual property considerations; and risks associated with the Company’s ability to attract and retain employees necessary to support its operations. The Company’s operations could also be adversely affected by significant political, economic and social uncertainties in PRC and in relations between PRC and the U.S.

 Business risk 

 The Company relies on third parties to support clinical development activities, trials and the manufacturing process for product candidates. If these third parties do not successfully carry out their contractual duties or meet expected deadlines, the Company may not be able to obtain regulatory approval for the Company’s drug candidates and the Company’s business could be substantially impacted. The Company’s main activities are in the U.S. and PRC.

 Currency convertibility risk 

 The Company incurs portions of expenses in currencies other than the U.S. dollars, in particular, the RMB. On January 1, 1994, the PRC government abolished the dual rate system and introduced a single rate of exchange as quoted daily by the People’s Bank of China (the “PBOC”). However, the unification of the exchange rates does not imply that the RMB may be readily convertible into U.S. dollars or other foreign currencies. All foreign exchange transactions continue to take place either through the PBOC or other banks authorized to buy and sell foreign currencies at the exchange rates quoted by the PBOC. Approvals of foreign currency payments by the PBOC or other institutions require submitting a payment application form together with suppliers’ invoices, shipping documents and signed contracts.

 Additionally, the value of the RMB is subject to changes in central government policies and international economic and political developments affecting supply and demand in the PRC foreign exchange trading system market.

 Foreign currency exchange rate risk 

 From July 21, 2005, the RMB is permitted to fluctuate within a narrow and managed band against a basket of certain foreign currencies. The depreciation of RMB against the U.S. dollar was approximately 2.8 % for the year ended December 31, 2024, and the appreciation of RMB against the U.S. dollar was approximately 4.2 % for the year ended December 31, 2025. It is difficult to predict how market forces or PRC or U.S. government policy may impact the exchange rate between the RMB and the U.S. dollar in the future.

 To the extent that the Company needs to convert U.S. dollars into RMB for capital expenditures and working capital and other business purposes, appreciation of the RMB against the U.S. dollar would have an adverse effect on the RMB amount the Company would receive from the conversion. Conversely, if the Company decides to convert RMB into U.S. dollars for the purpose of making payments for dividends on ordinary shares, strategic acquisitions or investments or other business purposes, appreciation of the U.S. dollar against the RMB would have a negative effect on the U.S. dollar amount available to the Company. In addition, a significant depreciation of the RMB against the U.S. dollar may significantly reduce the U.S. dollar equivalent of the Company’s earnings or losses.

 Recent accounting pronouncements 

 New accounting standards which have been adopted 

 In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This update requires that public entities on an annual basis, (1) in the rate reconciliation, disclose specific categories and provide additional information for reconciling items that meet a quantitative threshold; (2) about income taxes paid, disclose the amount of income taxes paid (net of refunds received) disaggregated by federal, state, and foreign taxes and by individual jurisdiction in which income taxes paid (net of refunds received) is equal to or greater than 5 percent of total income taxes paid (net of refunds received); and (3) disclose income (or loss) from continuing operations before income tax expense (or benefit) disaggregated between domestic and foreign and income tax expense (or benefit) disaggregated by federal, state, and foreign. This update is effective for annual periods beginning after December 15, 2024. Early adoption is permitted. This guidance should be applied on a prospective basis. Retrospective application is permitted. The Company adopted ASU 2023-09 for the year ended December 31, 2025 on a prospective basis. See Note 6 for income tax disclosures.

 New accounting standards which have not yet been adopted 

 In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. This update requires that at each interim and annual reporting period public entities disclose (1) the amounts of purchases of inventory, employee compensation, depreciation, amortization, and depletion) in commonly presented expense captions; (2) certain amounts that are already required to be disclosed under current GAAP in the same disclosure as the other disaggregation requirements; (3) a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively; and (4) the total amount of selling expenses and, in annual reporting periods, the definition of selling expenses. In January 2025, the FASB issued ASU 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date. This update clarifies that ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact on its financial statements of adopting this guidance.

 In December 2025, the FASB issued ASU 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities. The amendments in this update establish the accounting for a government grant received by a business entity, including guidance for (1) a grant related to an asset and (2) a grant related to income. The amendments in this update are effective for annual reporting periods beginning after December 15, 2028, and interim reporting periods within those annual reporting periods. Early adoption is permitted in both interim and annual reporting periods in which financial statements have not yet been issued or made available for issuance. The Company is currently evaluating the impact on its financial statements of adopting this guidance.

 From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies and adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that recently issued standards that are not yet effective will not have a material impact on the Company’s consolidated financial statements.

 154

 BEYONDSPRING INC.

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

 (Amounts in thousands of U.S. Dollars (“$”) and Renminbi (“RMB”),

 except for number of shares and per share data)

 3. 

 Discontinued operations 

 On December 13, 2024, the Company’s Board of Directors discussed and approved a divestiture plan to sell and transfer about 90 % to 100 % of the Company’s interests in SEED to potential investors at a determined price. The divestiture of SEED represents a strategic shift in the Company’s reallocation and optimization of the available resources to pipelines with greater potential. In accordance with ASC 205-20, all assets and liabilities of SEED were classified as held-for-sale in the consolidated balance sheet as of December 31, 2024 and 2025, and the results of operations of SEED were reflected as discontinued operations in the consolidated statement of operations for the years ended December 31, 2024 and 2025.

 On January 24, 2025, the Company entered into a Preferred Share Purchase Agreement (each, an “Agreement” and collectively, the “Agreements”) with each of Winning View Investment Limited, a business company organized in the BVI, FULL TECH CORPORATE DEVELOPMENT LIMITED, a business company organized in the BVI, and Mapfil Investment Limited, a limited company organized in Hong Kong, respectively (each, a “Purchaser” and collectively, the “Purchasers”). On February 17, 2025, the Company and Winning View Investments Limited entered into the First Amendment to Purchase Agreement (the “Amendment”). Pursuant to the Agreements and the Amendment, the Company agreed to sell a total of 8,333,637 Series A-1 Preferred Shares (the “Shares”) of SEED to the Purchasers at a price per share of $ 4.25 , in exchange of aggregate cash proceeds of $ 35,418 .

 The Agreements, as amended, will be executed in three separate closings as described below. The below ownership percentage for the First Closing is calculated after taking into account the issuance of an aggregate of 5,647,059 Series A-3 Preferred Shares in August 2024, and the ownership percentages for the Second Closing and Third Closing are calculated after taking into account the additional issuance of an aggregate of 1,411,761 Series A-3 Preferred Shares in September 2025, assuming there is no other changes to SEED’s share capital prior to such Closings and excluding any shares that may be reserved under an employee stock ownership plan or similar arrangement.

 (i)

 On February 19, 2025, the First Closing (as defined in each Agreement, as amended) was completed. The Company sold and transferred a total of 1,730,454 Shares, comprised of 980,427 Shares to Winning View Investment Limited, 250,009 Shares to FULL TECH CORPORATE DEVELOPMENT LIMITED and 500,018 Shares to Mapfil Investment Limited. Immediately upon the First Closing, the Company’s direct and indirect ownership in SEED decreased to 40.12 %, but still retained the controlling interest of SEED through the control of the SEED Board. The Company’s noncontrolling interests increased by 6.75 % upon the First Closing.

 (ii)

 At the Second Closing (as defined in each Agreement, as amended, which management expects to be completed in 2026), the Company will sell and transfer to the Purchasers a total of 3,103,055 Shares, comprised of 1,436,327 Shares to Winning View Investment Limited, 555,576 Shares to FULL TECH CORPORATE DEVELOPMENT LIMITED and 1,111,152 Shares to Mapfil Investment Limited. Immediately upon the Second Closing, the Company’s direct and indirect ownership in SEED will further decrease to 26.56 %. The Company will lose the controlling interest of SEED due to the loss of control of the SEED Board.

 (iii)

 At the Third Closing (as defined in each Agreement, as amended, which shall be no later than December 15, 2026), the Company will sell and transfer to the Purchasers a total of 3,500,128 Shares, comprised of 1,750,064 Shares to Winning View Investment Limited, 583,355 Shares to FULL TECH CORPORATE DEVELOPMENT LIMITED and 1,166,709 Shares to Mapfil Investment Limited. Immediately upon the Third Closing, the Company’s direct and indirect ownership in SEED will ultimately decrease to 13.62 %.

 The Company determined that the multiple arrangements of the SEED sales with the Purchasers and the three-tranche closings should be accounted for as a single transaction in accordance with ASC 810-10-40-6, as the transactions were entered in contemplation of one another and were essentially a single transaction designed to achieve an overall commercial effect.

 The following tables set forth the assets, liabilities, statement of operations, and cash flows of discontinued operations which were included in the Company’s consolidated financial statements (in thousands).

 As of December 31, 

 2024 

 2025 

 Assets 

 Current assets: 

 Cash and cash equivalents

 $ 
 13,125 
 
 $ 
 4,352 
 
 Short-term investments

 12,044 
 
 3,531 
 
 Advances to suppliers

 86 
 
 117 
 
 Prepaid expenses and other current assets

 92 
 
 23 
 
 Total current assets

 25,347 
 
 8,023 
 
 Noncurrent assets: 

 Property and equipment, net

 1,323 
 
 1,373 
 
 Operating right-of-use assets

 3,182 
 
 2,683 
 
 Other noncurrent assets

 268 
 
 300 
 
 Total noncurrent assets

 4,773 
 
 4,356 
 
 Total assets 

 $ 
 30,120 
 
 $ 
 12,379 
 
 Liabilities and equity 

 Current liabilities: 

 Short-term loans

 $ 
 3,911 
 
 $ 
 4,369 
 
 Accounts payable

 505 
 
 361 
 
 Accrued expenses

 1,354 
 
 3,105 
 
 Current portion of operating lease liabilities

 400 
 
 430 
 
 Deferred revenue

 2,001 
 
 2,001 
 
 Other current liabilities

 642 
 
 867 
 
 Total current liabilities

 8,813 
 
 11,133 
 
 Noncurrent liabilities: 

 Operating lease liabilities

 2,375 
 
 1,945 
 
 Deferred revenue

 3,822 
 
 1,821 
 
 Total noncurrent liabilities

 6,197 
 
 3,766 
 
 Total liabilities 

 $ 
 15,010 
 
 $ 
 14,899 
 
 155

 BEYONDSPRING INC.

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

 (Amounts in thousands of U.S. Dollars (“$”) and Renminbi (“RMB”),

 except for number of shares and per share data)

 3. 
 
 Discontinued operations (continued) 
 
 Year ended December 31, 

 2024 

 2025 

 Revenue 

 $ 
 2,001 
 
 $ 
 2,001 
 
 Operating expenses 

 Research and development

 ( 7,503 
 ) 
 
 ( 10,853 
 ) 
 
 General and administrative

 ( 2,660 
 ) 
 
 ( 3,929 
 ) 
 
 Loss from operations 

 ( 8,162 
 ) 
 
 ( 12,781 
 ) 
 
 Foreign exchange gain, net

 - 
 
 1 
 
 Interest income

 149 
 
 176 
 
 Other income, net

 185 
 
 116 
 
 Loss before income tax 

 ( 7,828 
 ) 
 
 ( 12,488 
 ) 
 
 Income tax expense

 - 
 
 - 
 
 Net loss from discontinued operations 

 ( 7,828 
 ) 
 
 $ 
 ( 12,488 
 ) 
 
 Year ended December 31, 

 2024 

 2025 

 Net cash used in discontinued operating activities

 $ 
 ( 7,665 
 ) 
 
 $ 
 ( 12,314 
 ) 
 
 Net cash provided by (used in) discontinued investing activities

 $ 
 ( 12,012 
 ) 
 
 $ 
 8,207 
 
 Net cash provided by discontinued financing activities

 $ 
 23,815 
 
 $ 
 2,980 
 
 In connection with the First Closing, the Company recorded a gain on the sale of subsidiary interests:

 Gain recognized on the First Closing

 Fair value of consideration received

 $ 
 7,354 
 
 Less: Adjustments to noncontrolling interests ( 6.75 % of the equity interests)

 368 
 
 Gain on sale of subsidiary interests

 $ 
 6,986 
 
 4. 

 Collaboration agreements 

 Jiangsu Hengrui Pharmaceuticals Co., Ltd . 

 On August 25, 2021, the Company’s subsidiary, Wanchunbulin, entered into an exclusive commercialization and co-development agreement (“Hengrui Collaboration Agreement”) with Hengrui, pursuant to which Wanchunbulin granted Hengrui exclusive rights to commercialize Plinabulin in all indications (the “Plinabulin Products”) in mainland China, Hong Kong, Macau and Taiwan (the “Greater China”). Under the terms of Hengrui Collaboration Agreement, Hengrui assumed all commercialization responsibilities for the Plinabulin Products effective September 22, 2021, including sales and marketing, and Wanchunbulin agreed to provide services to Hengrui, including manufacture and supply of the Plinabulin Products. Wanchunbulin and Hengrui may further participate in the research and development of the Plinabulin Products for additional indications other than prevention of chemotherapy-induced neutropenia (“CIN”) and 2 nd /3 rd line treatment of non-small cell lung cancer (“NSCLC”), and each will share 50% of the research and development costs. The Hengrui Collaboration Agreement will remain effective until the patent protection period of all Plinabulin Products related intellectual properties expires.

 Under the Hengrui Collaboration Agreement, Hengrui paid Wanchunbulin an upfront non-refundable fee of RMB 200,000 ($ 28,600 ) in September 2021. Wanchunbulin will be eligible to receive up to RMB 700,000 ($ 100,099 ) in potential regulatory development milestone payments, and up to RMB 400,000 ($ 57,199 ) in commercial milestone payments, respectively. In addition, Wanchunbulin will be eligible to receive royalty payments based on net sales of the Plinabulin Products, which sets forth minimum royalties to be received by Wanchunbulin for a specified period.

 The Hengrui Collaboration Agreement is within the scope of ASC 808 as both parties are active participants and are exposed to the risks and rewards dependent on the commercial success of the activities performed under the agreement. The Company identified the following material components under the agreement: (1) license of exclusive commercialization rights of the Plinabulin Products (the “License”), (2) the manufacturing and supply of the Plinabulin Products (the “Manufacturing and Supply Services”), and (3) research and development of the Plinabulin Products for additional indications. The Company further determined the license of exclusive commercialization rights of the Plinabulin Products and the manufacturing and supply of the Plinabulin Products are reflective of a vendor-customer relationship and therefore within the scope of ASC 606, and research and development of the Plinabulin Products for additional indications is not a promise to a customer within the scope of ASC 606.

 The Company determined that the License and the Manufacturing and Supply Services are not distinct from each other and represent a single performance obligation. The transaction price of the arrangement was the upfront payment of RMB 200,000 ($ 28,600 ). The development and commercialization milestone payments and the minimum royalty payments are fully constrained at contract inception due to uncertainty of achievement and are not included in the transaction price. The transaction price allocated to the License and Manufacturing and Supply Services, as a combined performance obligation, will be recognized as revenue over time using unit of delivery measure of progress, as the Company believes that it faithfully depicts the Company’s performance toward complete satisfaction of the performance obligation. The Company did not recognize any revenues from the Hengrui Collaboration Agreement for the years ended December 31, 2024 and 2025, and recorded the entire upfront non-refundable fee received as deferred revenue.

 156

 BEYONDSPRING INC.

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

 (Amounts in thousands of U.S. Dollars (“$”) and Renminbi (“RMB”),

 except for number of shares and per share data)

 4. 
 
 Collaboration agreements (continued) 
 
 Eli Lilly and Company 

 On November 12, 2020, the Company’s subsidiary, SEED, entered into a research collaboration and license agreement (the “Lilly Collaboration Agreement”) with Eli Lilly and Company (“Lilly”). Under the Lilly Collaboration Agreement, SEED controls certain rights to an intellectual property and other materials related to a platform technology for ubiquitin ligase agonist screening (the “Ub Platform Technology”), and Lilly and SEED shall use commercially reasonable efforts to conduct a research and development program to generate, identify and/or optimize active compounds (“Lilly Compounds”) that directed against no more than three targets selected by Lilly (“Lilly Targets”), using the Ub Platform Technology in accordance with the applicable research plans for each of the Lilly Targets.

 Under the Lilly Collaboration Agreement, Lilly paid SEED an upfront non-refundable fee of $ 10,000 in November 2020. In addition, SEED will also be eligible to receive up to approximately $ 780,000 in potential pre-clinical discovery, clinical and regulatory development milestone payments, as well as commercial milestones and royalty payments based on net sales of products that result from the collaboration. As of December 31, 2025, SEED has received $ 3,000 of these milestone payments for pre-clinical discovery. The Lilly Collaboration Agreement is within the scope of ASC 808, as both parties are active participants and are exposed to the risks and rewards dependent on the commercial success of the activities performed under the agreement. The Company further determined the collaboration is reflective of a vendor-customer relationship and therefore within the scope of ASC 606.

 Under ASC 606, the Company determined the license under the Ub Platform Technology is not distinct within the context of the contract because it is used as inputs to produce and deliver the combined outputs, i.e. the identification of Lilly Compounds. The Company determined that it has a single performance obligation which is the stand ready obligation to provide the research and development services to Lilly throughout the shorter of the period up to the completion of research and development activities under the research plans for three Lilly Targets or the contract period of 7 years. Transaction price allocated to the research and development services is recognized as revenue over time on a straight-line basis because the customer simultaneously receives and consumes the benefits as the Company performs throughout a fixed term. The preclinical discovery, clinical and regulatory development milestone payments were fully constrained at contract inception, and are not included in the transaction price.

 SEED recognized collaboration revenue of $ 2,001 and $ 2,001 related to the Lilly Collaboration Agreement for the years ended December 31, 2024 and 2025, respectively. Revenue recognized in each year were from amounts included in contract liabilities at the beginning of the year and milestone payments received during the year, if any. These recognized revenues were included in loss from discontinued operations and the related contract liabilities were included in current and noncurrent liabilities of discontinued operations, for all the periods presented.

 5. 

 Property and equipment, net 

 Property and equipment of continuing operations consisted of the following:

 December 31, 

 2024 

 2025 

 $ 

 $ 

 Office equipment

 317 
 
 323 
 
 Laboratory equipment

 111 
 
 115 
 
 Motor vehicles

 94 
 
 98 
 
 Leasehold improvements

 271 
 
 271 
 
 793 
 
 807 
 
 Less: accumulated depreciation

 ( 554 
 ) 
 
 ( 641 
 ) 
 
 Property and equipment, net

 239 
 
 166 
 
 Depreciation expenses of continuing operations for the years ended December 31, 2024 and 2025 were $ 72 and $ 87 , respectively.

 157

 BEYONDSPRING INC.

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

 (Amounts in thousands of U.S. Dollars (“$”) and Renminbi (“RMB”),

 except for number of shares and per share data)

 6. 

 Income taxes 

 Cayman Islands 

 The Company is incorporated in the Cayman Islands and is not subject to income tax under the current laws of the Cayman Islands.

 BVI 

 BeyondSpring Ltd., SEED Technology, BVI Biotech, SEED, and SEED LH Inc. are all incorporated in the BVI and are not subject to income tax under the current laws of the BVI.

 U.S. 

 BeyondSpring US, SEED US, and SEED LH MG Inc. are incorporated in Delaware, the U.S. They are subject to statutory U.S. Federal corporate income tax at a rate of 21 % for all years presented

 Hong Kong 

 BeyondSpring HK is incorporated in Hong Kong. Companies registered in Hong Kong are subject to Hong Kong Profits Tax on the taxable income as reported in their respective statutory financial statements adjusted in accordance with relevant Hong Kong tax laws. The applicable tax rate is 16.5 % in Hong Kong. BeyondSpring HK had no taxable income for all years presented and therefore, no provision for income taxes is required.

 PRC 

 Wanchun Dalian, Wanchunbulin, Beijing Wanchun, and Wanchun Hongji are subject to the statutory tax rate of 25 % in accordance with the PRC Enterprise Income Tax Law (“EIT Law”), which was effective since January 1, 2008. In accordance with the implementation rules of EIT Law, a qualified “High and New Technology Enterprise” (“HNTE”) is eligible for a preferential tax rate of 15 %. The HNTE certificate is effective for a period of three years. An entity must file required supporting documents with the tax authority and ensure fulfillment of the relevant HNTE criteria before using the preferential rate. An entity could re-apply for the HNTE certificate when the prior certificate expires. Starting from 2022, Wanchunbulin is designated as the qualified HNTE and is subject to the preferential statutory tax rate of 15 % for 3 years. In 2025, the tax rate of Wanchunbulin is 25%.

 The components of loss (income) before income tax of continuing operations are as follows:

 2024 

 2025 

 $

 $

 Cayman Islands

 3,613 
 
 2,129 
 
 U.S.

 2,023 
 
 3,023 
 
 PRC

 975 
 
 596 
 
 BVI

 2,158 
 
 2,877 
 
 Loss before income tax

 $ 
 8,769 
 
 $ 
 8,625 
 
 Income tax expenses of continuing operations for the years ended December 31, 2024and 2025 are as follows:

 2024 

 2025 

 $

 $

 Current income tax

 ( 96 
 ) 
 
 ( 90 
 ) 
 
 Deferred income tax

 - 
 
 - 
 
 Income tax expense

 ( 96 
 ) 
 
 ( 90 
 ) 
 
 A reconciliation of the differences between income tax expenses and the amount computed by applying the U.S. Federal corporate income tax rate of 21% for the years of 2024 and 2025 are as follows. The U.S. statutory tax rate is being used as this is the jurisdiction of the primary operations:

 2024 

 Amount

 $

 Percent of

 Pretax Income

 Loss before income tax

 8,769 
 
 Expected income tax benefit

 $ 
 1,841 
 
 21.0 
 % 
 
 Tax rate differential

 ( 1,138 
 ) 
 
 -13.0 
 % 
 
 Non-deductible expenses

 ( 20 
 ) 
 
 -0.2 
 % 
 
 Research tax credits

 ( 79 
 ) 
 
 - 0.9 
 % 
 
 Preferential rate

 ( 166 
 ) 
 
 -1.9 
 % 
 
 Current and deferred tax rate differences

 147 
 
 1.7 
 % 
 
 Stock compensation expense-windfall

 ( 44 
 ) 
 
 - 0.5 
 % 
 
 Research and development super-deduction

 424 
 
 4.8 
 % 
 
 UTP - interest expense

 ( 525 
 ) 
 
 -6.0 
 % 
 
 Others

 41 
 
 0.5 
 % 
 
 Changes in valuation allowance

 ( 577 
 ) 
 
 -6.6 
 % 
 
 Income tax expense

 ( 96 
 ) 
 
 -1.1 
 % 
 
 158

 BEYONDSPRING INC.

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

 (Amounts in thousands of U.S. Dollars (“$”) and Renminbi (“RMB”),

 except for number of shares and per share data)

 6. 
 
 Income Taxes (continued) 
 
 Upon adoption of ASU 2023-09, Improvements to Income Tax Disclosures, as described in Note 2, Summary of Significant Accounting Policies, the reconciliation of the differences between income tax expenses and the amount computed by applying the U.S. Federal corporate income tax rate of 21% for the year ended December 31, 2025 was as follows:

 2025 

 Amount

 Percent of Pretax

 $

 Income

 Loss before income tax

 8,625 
 
 Expected income tax benefit

 $ 
 1,811 
 
 21.0 
 % 
 
 Foreign tax effects

 Cayman

 Statutory tax rate difference between Cayman and United States

 ( 447 
 ) 
 
 - 5.2 
 % 
 
 BVI

 Statutory tax rate difference between BVI and United States

 ( 604 
 ) 
 
 - 7.0 
 % 
 
 PRC

 Statutory tax rate difference between PRC and United States

 165 
 
 1.9 
 % 
 
 Statutory GAAP prior year adjustment

 310 
 
 3.6 
 % 
 
 Research and development

 442 
 
 5.1 
 % 
 
 Change in valuation allowance

 ( 1,033 
 ) 
 
 - 12.0 
 % 
 
 Other

 ( 9 
 ) 
 
 - 0.1 
 % 
 
 Nontaxable or non-deductible items

 Stock Compensation Expense

 ( 34 
 ) 
 
 - 0.4 
 % 
 
 Other

 ( 9 
 ) 
 
 0.1 
 % 
 
 Tax Credits

 Research and development tax credits

 86 
 
 1.0 
 % 
 
 Change in unrecognized tax benefits

 ( 2,318 
 ) 
 
 - 26.9 
 % 
 
 Changes in valuation allowance

 1,551 
 
 18.0 
 % 
 
 Income tax expense 
 
 ( 90 
 ) 
 
 - 1.0 
 % 
 
 Net deferred tax assets as of December 31, 2024 and 2025 consisted of the following:

 December 31, 2025 

 2024 

 2025 

 $

 $

 Deferred tax assets:

 Net operating loss carryforward

 28,181 
 
 29,675 
 
 Capitalization of R&D expense under PRC tax

 6,729 
 
 6,749 
 
 Section 174 mandatory R&E capitalization

 2,870 
 
 2,152 
 
 Share-based compensation

 1,695 
 
 756 
 
 Deferred incentive compensation

 15 
 
 19 
 
 Research tax credits

 5,403 
 
 5,489 
 
 Lease liability obligation

 124 
 
 71 
 
 Deferred revenue

 6,075 
 
 5,652 
 
 Accruals and reserves

 48 
 
 76 
 
 Deferred tax assets from discontinued operations

 7,855 
 
 10,682 
 
 Total deferred tax assets

 58,995 
 
 61,321 
 
 Deferred tax liabilities:

 Depreciation

 ( 29 
 ) 
 
 ( 20 
 ) 
 
 Unrealized gain/loss

 ( 41 
 ) 
 
 ( 68 
 ) 
 
 Right of use lease assets

 ( 108 
 ) 
 
 ( 62 
 ) 
 
 Deferred tax liabilities from discontinued operations

 ( 1,005 
 ) 
 
 ( 909 
 ) 
 
 Total deferred tax liabilities

 ( 1,183 
 ) 
 
 ( 1,059 
 ) 
 
 Total gross deferred tax assets

 57,812 
 
 60,262 
 
 Less: valuation allowance

 ( 57,812 
 ) 
 
 ( 60,262 
 ) 
 
 Net deferred tax assets

 - 
 
 - 
 
 The Company operates through several subsidiaries and valuation allowances are considered for each of the subsidiaries on an individual basis. The Company recorded a valuation allowance against deferred tax assets of those subsidiaries that are individually in a three-year cumulative loss, or in a cumulative loss and not forecasting profits in the foreseeable future as of December 31, 2024 and 2025. As of December 31, 2025, the Company continues to assert indefinite reinvestment on the excess of the financial reporting bases over tax bases in the Company’s investments in foreign subsidiaries. A deferred tax liability of nil has not been established for the approximately nil of cumulative undistributed foreign earnings that may be subject to withholding taxes.

 As of December 31, 2024 and 2025, the Company had gross net operating loss carryforwards of approximately $ 133,383 and $ 149,963 , respectively. As of December 31, 2025, the Company had U.S. and PRC tax loss carryforwards of approximately $ 128,309 and $ 21,654 , respectively. For losses incurred in the U.S. in years after December 31, 2017, the Tax Cuts and Jobs Act included a limitation on the deduction for net operating losses to 80% of current year taxable income and a provision where such losses can be carried forward indefinitely. $ 18,347 of loss carryforwards generated prior to 2018 are not limited in their current usage and can be carried forward for 20 years after the year they were generated and begin to expire in 2035. The Company has $ 5,489 R&D credits which begin to expire in 2040.

 159

 BEYONDSPRING INC.

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

 (Amounts in thousands of U.S. Dollars (“$”) and Renminbi (“RMB”),

 except for number of shares and per share data)

 6. 
 
 Income Taxes (continued) 
 
 NOL and tax credit carryforwards are subject to review and possible adjustment by the Internal Revenue Service and may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant shareholders over a three-year period in excess of 50% as defined under Sections 382 and 383 in the Internal Revenue Code (“IRC”). This could limit the amount of tax attributes that can be utilized annually to offset future taxable income or tax liabilities. The amount of the annual limitation is determined based on the Company’s value immediately prior to the ownership change. As a result of ownership changes in the Company from its inception through December 31, 2024, the Company’s NOL and tax credit carryforwards allocable to the periods preceding each such ownership change could be subject to limitations under IRC Section 382, however the Company has not yet completed an IRC Section 382 study.

 As of December 31, 2024 and 2025, the Company had unrecognized tax benefits of $ 3,053 and $ 10,460 , respectively. The gross unrecognized tax benefits for the years ended December 31, 2024 and 2025 were as follows:

 Year Ended December 31, 

 2024 

 2025 

 $

 $

 Beginning balance, as of January 1

 3,194 
 
 3,053 
 
 Additions based on tax positions related to prior tax years

 197 
 
 7,842 
 
 Reductions based on tax positions related to prior tax years

 ( 434 
 ) 
 
 ( 435 
 ) 
 
 Additions based on tax positions related to current tax year

 96 
 
 - 
 
 Ending balance, as of December 31

 3,053 
 
 10,460 
 
 The Company recognizes interest and penalties accrued related to unrecognized tax benefits in income tax expenses. For the year ended December 31, 2021, the Company did not recognize interest and penalties accrued related to unrecognized tax benefits in income tax expenses. For the years end December 31, 2024 and 2025, the Company recognized $ 96 interest accrued and $ 193 reversal of interest expense related to unrecognized tax benefits in income tax expense. The Company had approximately $ 1,566 and $ 1,373 in accumulated accrued interest and penalties recorded in other current liabilities as of December 31, 2024 and 2025, respectively.

 The Company does not anticipate that the amount of existing unrecognized tax benefits will significantly change within the next 12 months, and the fluctuation in deferred taxes would essentially be offset by a valuation allowance. The Company’s subsidiaries in the U.S. and PRC filed income tax returns in the U.S. and PRC, respectively. For the entities in the U.S., the tax returns are subject to U.S. federal and state income tax examination by tax authorities for tax years beginning in 2022. For entities in the PRC, the tax returns for tax years after 2020 are open to examination by the PRC tax authorities.

 The Company is currently under federal audit for the 2023 tax year for BeyondSpring US. The Company believes no material adjustments will result from this examination.

 160

 BEYONDSPRING INC.

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

 (Amounts in thousands of U.S. Dollars (“$”) and Renminbi (“RMB”),

 except for number of shares and per share data)

 7. 

 Share-based compensation 

 General 

 On February 24, 2017, in connection with the IPO, the Company’s board of directors and shareholders approved an equity compensation plan, the 2017 Omnibus Incentive Plan (the “2017 Plan”), which became effective on March 9, 2017, to provide an additional incentive to selected officers, employees, non-employee directors, independent contractors and consultants of the Company (the “Participants”). The share awards granted by the Company under the 2017 Plan contain service conditions, and will generally vest based on a time-based vesting schedule determined by the administrator of the 2017 Plan. Certain awards also contain (1) performance conditions with respect to research and development progress or/and business development progress, or/and (2) market conditions with respect to the share price of the Company. Under the 2017 Plan, the maximum number of the Company’s ordinary shares reserved for issuance is 5,277,197 shares.

 Restricted Shares 

 The following table summarizes the Company’s restricted share activities under the 2017 Plan:

 Number 

 of shares 

 Weighted 

 average grant date 

 fair value 

 $

 Outstanding at December 31, 2023

 - 
 
 - 
 
 Granted

 - 
 
 - 
 
 Vested

 - 
 
 - 
 
 Forfeited

 - 
 
 - 
 
 Outstanding at December 31, 2024

 - 
 
 - 
 
 Granted

 6,000 
 
 1.63 
 
 Vested

 ( 3,000 
 ) 
 
 1.63 
 
 Forfeited

 - 
 
 - 
 
 Outstanding at December 31, 2025

 3,000 
 
 1.63 
 
 Expected to vest at December 31, 2025

 3,000 
 
 1.63 
 
 The total fair value of restricted shares vested during the years ended December 31, 2024 and 2025 was nil and $ 5 , respectively.

 As of December 31, 2025, there was $ 1 of total unrecognized share-based compensation cost, related to unvested and expected to vest restricted shares. This unrecognized share-based compensation cost is expected to be recognized over an estimated weighted-average period of 0.21 years. Total unrecognized compensation cost may be adjusted for actual forfeitures occurring in the future.

 Share options 

 The following table summarizes the Company’s share option activities under the 2017 Plan:

 Number 

 of options 

 Weighted 

 average 

 exercise 

 price 

 Weighted 

 average grant 

 date fair value 

 Weighted 

 average 

 remaining 

 contractual 

 term 

 Aggregate 

 intrinsic 

 value 

 $

 $

 Years

 $

 Outstanding at December 31, 2023

 1,865,226 
 
 6.46 
 
 7.66 
 
 Granted

 838,939 
 
 3.02 
 
 2.53 
 
 Exercised

 ( 28,666 
 ) 
 
 0.95 
 
 0.77 
 
 34 
 
 Forfeited

 ( 149,845 
 ) 
 
 7.50 
 
 5.73 
 
 Outstanding at December 31, 2024

 2,525,654 
 
 5.32 
 
 7.43 
 
 455 
 
 Granted

 224,750 
 
 1.34 
 
 1.08 
 
 Forfeited

 ( 18,598 
 ) 
 
 2.67 
 
 2.07 
 
 Outstanding at December 31, 2025

 2,731,806 
 
 5.01 
 
 6.58 
 
 514 
 
 Exercisable as of December 31, 2025

 2,059,124 
 
 4.88 
 
 6.61 
 
 362 
 
 Vested and expected to vest at December 31, 2025

 2,452,926 
 
 4.32 
 
 6.81 
 
 514 
 
 As of December 31, 2025, there was $ 128 of total unrecognized share-based compensation cost, related to unvested and expected to vest share options. This unrecognized share-based compensation cost is expected to be recognized over an estimated weighted-average period of 0.41 years. Total unrecognized compensation cost may be adjusted for actual forfeitures occurring in the future. The intrinsic value of a share option is the difference between the market price of the ordinary share at the measurement date and the exercise price of the option.

 The total fair value of share options vested during the years ended December 31, 2024 and 2025 was $ 1,412 and $ 246 , respectively.

 161

 BEYONDSPRING INC.

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

 (Amounts in thousands of U.S. Dollars (“$”) and Renminbi (“RMB”),

 except for number of shares and per share data)

 7. 
 
 Share-based compensation (continued) 
 
 Fair value of options 

 The Black-Scholes-Merton formula was applied in determining the estimated fair value of the share options granted without market conditions. The model requires the input of assumptions including the estimated expected share price volatility and the expected terms of awards. The Company historically has limited available historical data to demonstrate consistent early exercise behavior. To determine the expected term of the awards, the Company applied a simplified method considering factors including the timing of achieving various performance conditions and their respective probabilities as well as the contractual life of the options. The determination of the expected terms for awards with performance conditions involves the application of management’s judgment. The risk-free interest rates for the periods within the expected term of the option are based on the U.S. Treasury rate. The volatility assumption was estimated based on the historical volatility of the Company’s share price.

 The following table presents the assumptions used in Black-Scholes-Merton formula to estimate the fair values of the share options granted in the years presented:

 For the year ended December 31, 

 2024 
 
 2025 

 Fair value of ordinary share

 0.90 
 
 ~

 3.60 
 
 1.34 
 
 Risk-free interest rate

 3.84 
 
 %

 ~ 
 
 4.52 
 
 %

 3.77 
 % 
 
 ~

 4.03 
 % 
 
 Expected term (years)

 2.89 
 
 ~

 6.25 
 
 3.00 
 
 ~

 5.50 
 
 Expected volatility

 110 
 
 %

 ~

 140 
 
 %

 105 
 % 
 
 ~

 115 
 % 
 
 Expected dividend yield

 0 
 % 
 
 0 
 % 
 
 Contractual life (years)

 5 
 
 ~

 10 
 
 5 
 
 ~

 10 
 
 Long-term incentives 

 During 2021, the Company issued long-term incentive with an aggregate value of $ 79,225 to certain of its senior management. The long-term incentive awards are subject to certain performance-based vesting conditions and certain awards also are subject to market conditions. 25 % of the long-term incentive awards will be settled in the Company’s ordinary shares, and the remaining 75 % of the awards will be settled in cash or the Company’s ordinary shares, all or in part, at the grantee’s election.

 The long-term incentive awards are classified as liability awards. As of December 31, 2025, the Company has issued a total of 3,486 ordinary shares with a total fair value of $ 37 . Compensation expense recognized for the years ended December 31, 2024 and 2025 was $( 13 ) and $( 153 ) respectively. As of December 31, 2025, there was $ 60 of total unrecognized share-based compensation cost, related to unvested and expected to vest long-term incentive awards. This unrecognized share-based compensation cost is expected to be recognized over an estimated weighted-average period of 3.06 years. Total unrecognized compensation cost may be adjusted for actual forfeitures occurring in the future.

 The following table summarizes total share-based compensation expense recognized under 2017 Plan for the years ended December 31, 2024 and 2025:

 Year ended December 31, 

 2024 

 2025 

 $

 $

 Research and development

 63 
 
 106 
 
 General and administrative

 2,000 
 
 390 
 
 Total

 2,063 
 
 496 
 
 SEED 2022 Share Incentive Plan 

 In 2022, SEED adopted its 2022 Share Incentive Plan (the “SEED Plan”). Under this plan, SEED has granted share options to some of its employees and consultants, which will be settled by SEED in its ordinary shares upon exercise of those options. These awards are generally subject to a four -year or five -year time-based vesting schedule as determined by the administrator of the plan.

 The following table summarizes SEED’s share option activities under the 2022 Plan:

 Number 
 of options 

 Weighted 

 average 

 exercise 

 price 

 Weighted 

 average grant 

 date fair value 

 Weighted 

 average 

 remaining 

 contractual 

 term 

 Aggregate 

 intrinsic 

 value 

 Years

 Outstanding at December 31, 2023

 1,257,000 
 
 0.50 
 
 8.82 
 
 Granted

 651,333 
 
 0.60 
 
 0.26 
 
 Forfeited

 ( 9,500 
 ) 
 
 0.50 
 
 0.32 
 
 Outstanding at December 31, 2024

 1,898,833 
 
 0.53 
 
 7.63 
 
 1,760 
 
 Granted

 375,344 
 
 1.46 
 
 1.30 
 
 Exercised

 ( 77,250 
 ) 
 
 1.12 
 
 0.84 
 
 26 
 
 Forfeited

 ( 7,500 
 ) 
 
 0.50 
 
 0.23 
 
 Outstanding at December 31, 2025

 2,189,427 
 
 0.67 
 
 7.05 
 
 2,230 
 
 Exercisable as of December 31, 2025

 989,749 
 
 0.50 
 
 6.69 
 
 946 
 
 Vested and expected to vest at December 31, 2025

 2,124,427 
 
 0.65 
 
 6.98 
 
 2,215 
 
 As of December 31, 2025, there was $ 354 of total unrecognized share-based compensation cost, related to unvested and expected to vest share options under the SEED Plan. This unrecognized share-based compensation cost is expected to be recognized over an estimated weighted-average period of 1.32 years. The total fair value of share options vested during the years ended December 31, 2024 and 2025 was $ 88 and $ 23 , respectively.

 162

 BEYONDSPRING INC.

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

 (Amounts in thousands of U.S. Dollars (“$”) and Renminbi (“RMB”),

 except for number of shares and per share data)

 7. 
 
 Share-based compensation (continued) 
 
 SEED 2022 Share Incentive Plan (continued) 
 
 The Black-Scholes-Merton formula was applied in determining the estimated fair value of the share options granted by SEED. The following table presents the assumptions used in Black-Scholes-Merton formula to estimate the fair values of the share options granted in the years presented:

 For the year ended December 31, 

 2024 

 2025 

 Fair value of ordinary share

 0.19 
 
 ~

 1.46 
 
 1.46 
 
 ~

 1.69 
 
 Risk-free interest rate

 3.51 
 
 %

 ~

 4.31 
 
 %

 3.81 
 % 
 
 ~

 4.44 
 % 
 
 Expected term (years)

 3.75 
 
 ~

 6.25 
 
 5.50 
 
 ~

 10 
 
 Expected volatility

 117.10 
 
 %

 141.40 
 % 
 
 114.02 
 % 
 
 126.34 
 % 
 
 Expected dividend yield

 0 
 % 
 
 0 
 % 
 
 Contractual life (years)

 5 
 
 ~

 10 
 
 10 
 
 The following table summarizes total share-based compensation expense recognized under the SEED Plan for the years ended December 31, 2024, and 2025. These expenses were included in loss from discontinued operations for all the periods presented.

 Year ended December 31, 

 2024 

 2025 

 $

 $

 Research and development

 50 
 
 29 
 
 General and administrative

 142 
 
 196 
 
 Total

 192 
 
 225 
 
 8. 

 Employee defined contribution plan 

 Full time employees of the Company in the PRC participate in a government mandated defined contribution plan, pursuant to which certain pension benefits, medical care, employee housing funds and other welfare benefits are provided to employees. Chinese labor regulations require that the Company’s PRC subsidiaries make contributions to the government for these benefits based on certain percentages of the employees’ salaries. The Company has no legal obligation for the benefits beyond the contributions made. The total amounts for such employee benefits from continuing operations, which were expensed as incurred, were $ 45 and $ 47 for the years ended December 31, 2024 and 2025, respectively.

 BeyondSpring US maintains a defined contribution 401(k) savings plan (the “401(k) Plan”) for eligible employees in the U.S. employees. The 401(k) Plan allows participants to defer a portion of their annual compensation on a pretax or Roth basis. In addition, the Company matches up to 6 % of the participant’s base salary. Company contributions for continuing operations to the 401(k) Plan totaled $ 66 and $ 60 in the years ended December 31, 2024 and 2025, respectively.

 9. 

 Restricted net assets 

 The Company’s ability to pay dividends may depend on the Company receiving distributions of funds from its PRC subsidiaries. Relevant PRC statutory laws and regulations permit payments of dividends by the Company’s PRC subsidiaries only out of its retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. The results of operations reflected in the consolidated financial statements prepared in accordance with U.S. GAAP differ from those reflected in the statutory financial statements of the Company’s PRC subsidiaries.

 In accordance with the PRC Regulations on Enterprises with Foreign Investment and their articles of association, a foreign invested enterprise established in the PRC is required to provide certain statutory reserves, which are appropriated from net profit as reported in the enterprise’s PRC statutory accounts. A foreign invested enterprise is required to allocate at least 10% of its annual after-tax profit to the general reserve until such reserve has reached 50% of its respective registered capital based on the enterprise’s PRC statutory accounts.

 Appropriations to other funds are at the discretion of the board of directors for all foreign invested enterprises. The aforementioned reserves can only be used for specific purposes and are not distributable as cash dividends. Wanchun Dalian and Wanchun Hongji were established as foreign invested enterprises and therefore are subject to the above mandated restrictions on distributable profits.

 Additionally, in accordance with the Company Law of the PRC, a domestic enterprise is required to provide a statutory common reserve of at least 10% of its annual after-tax profit until such reserve has reached 50% of its respective registered capital based on the enterprise’s PRC statutory accounts. A domestic enterprise is also required to provide discretionary surplus reserve, at the discretion of the board of directors, from the profits determined in accordance with the enterprise’s PRC statutory accounts. The aforementioned reserves can only be used for specific purposes and are not distributable as dividends. Wanchunbulin and Beijing Wanchun were established as domestic invested enterprises and therefore are subject to the above mandated restrictions on distributable profits.

 Foreign exchange and other regulations in the PRC further restrict the Company’s PRC subsidiaries from transferring funds to the Company in the form of loans, advances or cash dividends. As of December 31, 2024 and 2025, amounts restricted were the net assets of the Company’s PRC subsidiaries, which amounted to nil and $ 12 , respectively.

 163

 BEYONDSPRING INC.

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

 (Amounts in thousands of U.S. Dollars (“$”) and Renminbi (“RMB”),

 except for number of shares and per share data)

 10. 

 Leases 

 The Company’s continuing operations has operating leases for offices in the U.S. and China. Total expenses incurred under these operating leases for the years ended December 31, 2024 and 2025 were $ 267 and $ 281 , respectively. Total expenses incurred under short-term leases for the years ended December 31, 2024 and 2025 were $ 31 and $ 1 , respectively. The short-term lease commitments were nil as of December 31, 2025.

 Maturities of operating lease liabilities as of December 31, 2025 are as follows:

 $

 Year ending December 31, 2026

 332 
 
 Total lease payments

 332 
 
 Less: imputed interest

 ( 12 
 ) 
 
 Present value of lease liabilities

 320 
 
 Other supplemental information related to leases is summarized below:

 Year ended December 31, 

 2024 

 2025 

 Operating cash flows used in operating lease

 $ 
 295 
 
 410 
 
 As of December 31, 

 2024 
 
 2025 
 
 Weighted average remaining lease term (years)

 2.16 
 
 1.20 
 
 Weighted average discount rate

 5.1 
 % 
 
 5.0 
 % 
 
 11. 

 Supplemental balance sheet information 

 Other noncurrent assets consist of the following:

 December 31, 

 2024 

 2025 

 $

 $

 Deductible input value-added tax

 113 
 
 125 
 
 Others

 100 
 
 99 
 
 Total

 213 
 
 224 
 
 Other current liabilities consist of the following:

 December 31, 

 2024 

 2025 

 $

 $

 Compensation related

 612 
 
 538 
 
 Professional services

 71 
 
 2 
 
 Income tax and other taxes payable

 1 
 
 248 
 
 Others

 96 
 
 34 
 
 Total

 780 
 
 822 
 
 Other noncurrent liabilities consist of the following:

 December 31, 

 2024 

 2025 

 $

 $

 Compensation related

 73 
 
 90 
 
 Income tax payable

 3,240 
 
 3,474 
 
 Other taxes payable

 373 
 
 417 
 
 Total

 3,686 
 
 3,981 
 
 164

 BEYONDSPRING INC.

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

 (Amounts in thousands of U.S. Dollars (“$”) and Renminbi (“RMB”),

 except for number of shares and per share data)

 12. 

 Noncontrolling interests 

 The main rights, preferences and privileges of Preferred Shares issued by SEED are as follows: Liquidation preferences 

 In the event of any voluntary or involuntary liquidation, dissolution or winding up of SEED, or in a deemed liquidation event, the assets of SEED shall be distributed in the following order:

 a.

 before any payment shall be made to the holders of Series A-1 Preferred Shares or ordinary shares by reason of their ownership thereof, holders of Series A-2 Preferred Shares and Series A-3 Preferred Shares (the “Senior Series A Preferred Shares”) shall be entitled to an amount per share equal to the greater of (i) the applicable original issue price, plus any dividends declared but unpaid thereon, or (ii) such amount per share as would have been payable had all Senior Series A Preferred Shares been converted into ordinary shares immediately prior to such liquidation, dissolution, winding up or deemed liquidation event.

 b.

 after the payment in full of the amount distributable or payable on the Senior Series A Preferred Shares, the holders of Series A-1 Preferred Shares then outstanding shall be entitled to be paid out of the assets of SEED available for distribution to its Shareholders, and in the event of a deemed liquidation event, the holders of Series A-1 Preferred Shares then outstanding shall be entitled to be paid out of the consideration not payable to the holders of Senior Series A Preferred Shares or the remaining available proceeds, as applicable, before any payment shall be made to the holders of ordinary shares by reason of their ownership thereof, an amount per share equal to the greater of (i) the applicable original issue price, plus any dividends declared but unpaid thereon, or (ii) such amount per share as would have been payable had all Series A-1 Preferred Shares been converted into ordinary shares immediately prior to such liquidation, dissolution, winding up or deemed liquidation event.

 c.

 after the payment in full of the amount distributable or payable on the Preferred Shares, the remaining assets of SEED available for distribution to the shareholders or, in the case of a deemed liquidation event, the consideration not payable to the holders of Preferred Shares or the remaining available proceeds, as the case may be, shall be distributed among the holders of ordinary shares, pro rata based on the number of ordinary shares held by each such holder.

 Redemption rights 

 The Series A-2 Preferred Shares shall be redeemed by SEED at a price equal to the applicable original issue price per share plus an annual return of 8 % of the applicable original issue price, in three annual installments commencing not more than sixty days after receipt by SEED at any time on or after November 10, 2025 from the holders of at least a majority of the outstanding Series A-2 Preferred Shares of written notice requesting redemption of all Series A-2 Preferred Shares. The redemption is not guaranteed by the Company. On July 26, 2024, the redemption rights associated with the Series A-2 Preferred Shares were removed upon the signing of A3 SPA.

 Conversion rights 

 Each Preferred Share shall be convertible, at the option of the holder thereof, at any time and from time to time, and without the payment of additional consideration by the holder thereof, into such number of fully paid and non-assessable ordinary shares of SEED as at an initial conversion ratio of 1:1 adjusted for share splits, share dividends, recapitalizations and similar transactions.

 Each Preferred Shares shall automatically be converted into ordinary shares based on a one-for-one basis upon either (a) in the event of a firm commitment underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended, in the Nasdaq Stock Market’s National Market, the New York Stock Exchange or another exchange or marketplace approved by SEED’s Board of Directors, at a price per share of at least $ 7.5375 resulting in at least $ 50,000 of gross proceeds to SEED (the “Qualified IPO”) or (b) the date and time, or the occurrence of an event, specified by vote or written consent of either (x) at least a majority of the outstanding Preferred Shares voting together as a single class on an as-converted basis, which majority must include the approval of either Lilly or Eisai or (y) a majority of the Senior Series A Preferred Shares, voting together as a single class on an as-converted basis.

 Voting rights 

 Each holder of outstanding Preferred Shares shall be entitled to cast the number of votes equal to the number of whole ordinary shares into which the Preferred Shares held by such holder are convertible as of the record date for determining shareholders entitled to vote on such matter.

 165

 BEYONDSPRING INC.

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

 (Amounts in thousands of U.S. Dollars (“$”) and Renminbi (“RMB”),

 except for number of shares and per share data)

 12. 
 
 Noncontrolling interests (continued) 
 
 Accounting for the Series A-2 Preferred Shares 

 Series A-2 Preferred Shares issued by SEED were previously classified as contingently redeemable noncontrolling interests within mezzanine equity because the shares were redeemable at the option of the holders upon the occurrence of certain events outside the control of SEED. The Company recognized changes in the redemption value by adjusting the carrying amount of the redeemable noncontrolling interests to the redemption value at each reporting date.

 On July 26, 2024, the redemption rights associated with the Series A-2 Preferred Shares were removed upon the execution of the A3 SPA. As a result, the Series A-2 Preferred Shares no longer contain redemption features outside the control of the Company, and the carrying value previously classified as mezzanine equity was reclassified to permanent equity.

 The accretion to redemption value associated with contingently redeemable noncontrolling interests totaled $ 457 and nil for the years ended December 31, 2024 and 2025, respectively.

 Accounting for the Series A-3 Preferred Shares 

 The Series A-3 Preferred Shares were classified as permanent equity because the shares did not have redemption features that were not solely within the control of the Company, and their conversion option is clearly and closely related to the host instrument and the underlying ordinary shares are not publicly traded nor readily convertible into cash. The Series A-3 Preferred Shares are recorded at their initial fair value, equal to the original issuance price, less issuance costs, and are not subsequently remeasured.

 13. 

 Commitments and contingencies 

 Legal proceedings 

 From time to time, we may become involved in legal proceedings or be subject to claims arising in the ordinary course of our business. We are not presently a party to any legal proceedings that, if determined adversely to us, would individually or taken together have a material adverse effect on our business, results of operation, financial condition or cash flows.

 Commitments 

 Wanchunbulin, a subsidiary of the Company, has entered into a government grant agreement with specific local authorities in PRC. Wanchunbulin commits to staying within designated districts, maintaining current tax jurisdictions, and retaining its registered capital, until 2033. Wanchunbulin also undertakes not to establish additional entities in other jurisdictions within Greater China for the purposes of conducting research, development, and commercialization activities related to Plinabulin, provided such activities fall within the scope of the government grant agreement. Otherwise, Wanchunbulin may be required to refund the grants.

 166

 BEYONDSPRING INC.

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

 (Amounts in thousands of U.S. Dollars (“$”) and Renminbi (“RMB”),

 except for number of shares and per share data)

 14. 

 Segment reporting and geographic information 

 For the years ended December 31, 2024 and 2025, the Company operated in two reportable segments: (i) Plinabulin pipeline and (ii) TPD platform.

 On December 13, 2024, the Company’s Board of Directors discussed and approved a divestiture plan to sell and transfer about 90 % to 100 % of the Company’s interests in SEED to potential investors at a determined price. The TPD platform segment was comprised of SEED’s operations. As a result, for the years ended December 31, 2024 and 2025, the TPD platform segment qualified for discontinued operations reporting. See Note 3 – Discontinued operations.

 The Company presents segment information after elimination of inter-company transactions. In general, revenues and operating expenses are directly attributable, or are allocated, to each segment. The Company allocates operating expenses that are not directly attributable to a specific segment, such as those that support infrastructure across different segments, to different segments mainly on the basis of usage, headcount, depending on the nature of the relevant operating expenses.

 The Company’s Chief Executive Officer, as the CODM, uses segment net loss to allocate resources for each segment and to assess the performance of each segment, primarily by monitoring actual results versus approved budgets. Significant segment expenses are presented in the table below. Other segment items include interest income, other income, net, and income tax expenses. The CODM does not evaluate the performance of segments using asset or liability information.

 For the year ended December 31, 

 2024 

 2025 

 $

 $

 Clinical and pre-clinical expenses

 462 
 
 1,630 
 
 Patent expenses

 928 
 
 792 
 
 Personnel costs

 4,642 
 
 3,196 
 
 Professional services

 1,442 
 
 1,958 
 
 Other operational expenses

 1,280 
 
 1,369 
 
 Other segment items

 111 
 
 ( 230 
 ) 
 
 Segment net loss

 8,865 
 
 8,715 
 
 Reconciliation of net loss:

 Net loss from discontinued operations

 7,828 
 
 5,502 
 
 Consolidated net loss

 16,693 
 
 14,217 
 
 The Company’s long-lived assets of continuing operations by geographic area are presented as follows:

 December 31, 

 2024 

 2025 

 $

 $

 Property and equipment, net:

 PRC

 34 
 
 11 
 
 U.S.

 205 
 
 155 
 
 Total

 239 
 
 166 
 
 167

 BEYONDSPRING INC.

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

 (Amounts in thousands of U.S. Dollars (“$”) and Renminbi (“RMB”),

 except for number of shares and per share data)

 15. 

 Related Party Transactions 

 In September 2025, The JKNM Living Trust, dated November 27th, 2020 purchased 117,647 shares of SEED's Series A-3 Preferred Shares, at $ 4.25 per share. The aggregate purchase price is $ 500 . One of the Company’s Board Member, Jiangwen Majeti, is the trustee of The JKNM Living Trust, dated November 27th, 2020. The investment was made on the same terms as those offered to third-party investors.

 168

 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure. 

 On April 8, 2025, Marcum LLP (“Marcum”) resigned as our independent registered public accounting firm. On November 1, 2024, CBIZ acquired the attest business of Marcum. Substantially all of the partners and staff that provided attestation services with Marcum joined CBIZ. On April 9, 2025, upon Marcum’s resignation as our auditors and with the approval of our audit committee, CBIZ was engaged as our independent registered public accounting firm.

 Marcum’s audit reports on the Company’s consolidated financial statements as of and for the years ended December 31, 2024 and 2023 did not contain any adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope, or accounting principles, except that the audit report on the consolidated financial statements of the Company for the year ended December 31, 2023 contained an explanatory paragraph regarding the Company stating that there was substantial doubt about the Company’s ability to continue as a going concern.

 During the audits for the fiscal years ended December 31, 2024 and 2023 and the subsequent interim period through April 8, 2025, there were (i) no disagreements (as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) between the Company and Marcum on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Marcum, would have caused Marcum to make reference to the subject matter of the disagreements in connection with its reports on the consolidated financial statements for the years ended December 31, 2024 and 2023, and (ii) no “reportable events” (as defined in Item 304(a)(1)(v) of Regulation S-K and the related instructions).

 During the Company’s two most recent fiscal years ended December 31, 2024 and 2023 and the subsequent interim period prior to the engagement of CBIZ on April 9, 2025, neither the Company nor anyone on its behalf has consulted with CBIZ on either (a) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s consolidated financial statements, and neither a written report nor oral advice was provided to the Company by CBIZ that CBIZ concluded was an important factor considered by the Company in reaching a decision as to any accounting, auditing or financial reporting issue, or (b) any matter that was the subject of a disagreement, as that term is defined in Item 304(a)(1)(iv) of Regulation S-K, or a reportable event as set forth in Item 304(a)(1)(iv) of Regulation S-K.
BeyondSpring Inc. 10-K

Item 8. Financial Statements and Supplementary Data
