Company: FTII
Filing Date: 2025-02-14
Form Type: S-4
Source: 0001493152-25-006997
Chunk: 437

Company: FutureTech II Acquisition Corp.
Filing Date: 2025-02-14
Form: S-4
Chunk 437
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Critical Accounting Policies

Our financial statements are prepared in accordance with U.S. generally accepted accounting principles (“US GAAP”). The preparation of our financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of expenses during a reporting period. Actual results could differ from estimates.

While our significant accounting policies are described in more detail in Note 2 to our annual audited financial statements, included elsewhere in this proxy statement/prospectus, we believe the following accounting policies are those most critical to the judgements and estimates used in preparation of our financial statements.

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Research and Development Expenses

Research and development costs are expensed as incurred and include all direct and indirect costs associated with the development of our product candidates. These expenses include payments to third parties for research, development and manufacturing services, personnel costs and depreciation on laboratory equipment. At the end of the reporting period, we compare payments made to third party service providers to the estimated progress toward completion of the research or development objectives. Such estimates are subject to change as additional information becomes available. Depending on the timing of payments to service providers and the progress that we estimate have been made as a result of the service provided, we may record net prepaid or accrued expense relating to these costs.

Stock-Based Compensation

We maintain performance incentive plans under which incentive and nonqualified stock options are granted primarily to employees and nonemployee consultants. We account for stock-based awards to employees in accordance with the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 718, Compensation — Stock Compensation, which requires the recognition of compensation expense, using a fair-value based method, for all stock-based payments, including stock options. ASC 718 requires companies to estimate the fair value of stock-based payment awards on the date of grant using an option-pricing model. We account for equity instruments issued to nonemployees based on the grant-date fair value of grants.

We estimate the fair value of employee and nonemployee stock options on the grant date using the Black- Scholes option-pricing model. In valuing stock options, we make assumptions about the fair value of the underlying equity, risk-free interest rates, dividend yields, volatility, and the expected term. Stock-based compensation expense is based on awards ultimately expected to vest. We recognize stock-based compensation expense for stock option awards with only service-based vesting conditions on a straight-line basis over