Company: APM
Filing Date: 2025-07-15
Form Type: DRS
Source: 0001213900-25-063899
Chunk: 381

Company: Aptorum Group Ltd
Filing Date: 2025-07-15
Form: DRS
Chunk 381
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 regulations addressing the PFIC rules.

A U.S. Holder (who is not
a U.S. Shareholder) that beneficially owns (directly, indirectly, or constructively) Company shares with a fair market value of less than
$50,000 would not be required to recognize any gain or loss or include any part of the all earnings and profits amount in income under
Section 367(b) of the Code in connection with the Domestication.

Effect of the PFIC Rules on the Domestication

Aptorum’s status as a PFIC.

If Aptorum would be a Passive
Foreign Investment Company (“PFIC”) with respect to a U.S. Holder if for any taxable year in which the U.S. Holder held Aptorum
shares (i) at least 75% of Aptorum’s gross income for the taxable year was passive income, or (ii) at least 50% of the value, determined
on the basis of a quarterly average, of Aptorum’s assets was attributable to assets that produced, or were held for the production
of, passive income.

Passive income generally includes
dividends, interest, rents, certain royalties and gains from the disposition of passive assets. Once a foreign corporation is classified
as a PFIC for any taxable year during which a U.S. holder owns stock in the foreign corporation, the foreign corporation generally remains
thereafter classified as a PFIC with respect to that U.S. holder.

If Aptorum is treated as owning
its VIE (and therefore the VIE’s subsidiaries) for purposes of U.S. federal income tax laws, then in determining its PFIC status
it could take into account all of the income and assets of the subsidiaries of its VIE and, based on Aptorum’s financial statements,
Aptorum would not be considered a PFIC.

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Aptorum does not own an equity
interest in its VIE. Instead, through another wholly-owned subsidiary, it controls and receives the economic benefits of the VIE’s
and its subsidiaries’ business operations through a series of contractual arrangements which are designed to provide Aptorum with
the power, rights and obligations equivalent in all material respects to those it would possess as the sole equity holder of the VIE,
including absolute control rights and the rights to the assets, property and revenue of the VIE.

There is no authority as to
whether such an arrangement constitutes ownership of the VIE by Aptorum for purposes of U