UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
or
For the transition period from _____________ to ____________
Commission File Number:
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
, | ||
| (Address of Principal Executive Offices) | (Zip Code) |
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered | ||
| The |
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days. ☒
Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such fi les). ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ |
| Smaller reporting company | |
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes
The aggregate market value of the voting common stock of the issuer held by non-affiliates computed by reference to the closing price of the registrant as of June 30, 2021 was approximately $ 28,668,735.9.
As of August 13, 2021, the registrant had
TABLE OF CONTENTS
| Page | ||
| PART I FINANCIAL INFORMATION | 1 | |
| Item 1 | Financial Statements | 1 |
| Item 2 | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 33 |
| Item 3 | Quantitative and Qualitative Disclosures About Market Risk | 46 |
| Item 4 | Controls and Procedures | 46 |
| PART II OTHER INFORMATION | 47 | |
| Item 1 | Legal Proceedings | 47 |
| Item 1A | Risk Factors | 47 |
| Item 2 | Unregistered Sales of Equity Securities and Use of Proceeds | 47 |
| Item 3 | Defaults Upon Senior Securities | 47 |
| Item 4 | Mine Safety Disclosures | 47 |
| Item 5 | Other Information. | 47 |
| Item 6 | Exhibits. | 48 |
| Signatures | 49 | |
i
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
BIMI INTERNATIONAL MEDICAL, INC. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
| June 30, | December 31, | |||||||
| 2021 | 2020 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash | $ | $ | ||||||
| Restricted Cash | ||||||||
| Accounts receivable, net | ||||||||
| Advances to suppliers | ||||||||
| Amount due from related parties | ||||||||
| Inventories | ||||||||
| Prepayments and other receivables | ||||||||
| Operating lease-right of use assets-current | ||||||||
| Total current assets | ||||||||
| NON-CURRENT ASSETS | ||||||||
| Deferred tax assets | ||||||||
| Property, plant and equipment, net | ||||||||
| Intangible assets, net | ||||||||
| Operating lease-right of use assets | ||||||||
| Goodwill | ||||||||
| - | ||||||||
| Total non-current assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Short-term loans | $ | $ | ||||||
| Long-term loans due within one year | ||||||||
| Convertible promissory notes, net | ||||||||
| Accounts payable, trade | ||||||||
| Advances from customers | ||||||||
| Amount due to related parties | ||||||||
| Taxes payable | ||||||||
| Other payables and accrued liabilities | ||||||||
| lease liabilities-current | ||||||||
| Total current liabilities | ||||||||
| Long-term loans - noncurrent portion | ||||||||
| Lease liabilities-non current | ||||||||
| TOTAL LIABILITIES | $ | |||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||
| EQUITY | ||||||||
| Common stock, $ | ||||||||
| Additional paid-in capital | ||||||||
| Statutory reserves | ||||||||
| Accumulated deficits | ( | ) | ( | ) | ||||
| Accumulated other comprehensive income | ||||||||
| Total BIMI International Medical Inc.'s equity | ||||||||
| NONCONTROLLING INTERESTS | ||||||||
| Total equity | ||||||||
| Total liabilities and equity | $ | |||||||
The accompanying notes are an integral part of the condensed consolidated financial statements
1
BIMI INTERNATIONAL MEDICAL, INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(UNAUDITED)
| For the three months ended | For the six months ended | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| REVENUES | $ | $ | $ | |||||||||||||
| COST OF REVENUES | ||||||||||||||||
| GROSS PROFIT | ||||||||||||||||
| OPERATING EXPENSES: | ||||||||||||||||
| Sales and marketing | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| LOSS FROM OPERATIONS | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| OTHER INCOME (EXPENSE) | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expense) | ( | ) | ( | ) | ||||||||||||
| Total other income (expense), net | ( | ) | ( | ) | ||||||||||||
| INCOME (LOSS) BEFORE INCOME TAXES | ( | ) | ( | ) | ||||||||||||
| PROVISION FOR INCOME TAXES | ||||||||||||||||
| NET INCOME (LOSS) FROM CONTINUING OPERATIONS | ( | ) | ( | ) | ||||||||||||
| DISCONTINUED OPERATIONS | ||||||||||||||||
| Income (loss) from operating activities of discontinued operations | - | ( | ) | |||||||||||||
| NET INCOME (LOSS) | ( | ) | ( | ) | ||||||||||||
| Less: net income attributable to noncontrolling interest | ||||||||||||||||
| NET INCOME (LOSS) ATTRIBUTABLE TO BIMI INTERNATIONAL MEDICIAL INC. | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||
| OTHER COMPREHENSIVE INCOME (LOSS) | ||||||||||||||||
| Foreign currency translation adjustment | ( | ) | ||||||||||||||
| TOTAL COMPREHENSIVE INCOME (LOSS) | ( | ) | ( | ) | ||||||||||||
| Less: comprehensive income (loss) attributable to noncontrolling interest | ( | ) | ( | ) | ||||||||||||
| COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO BIMI INTERNATIONAL MEDICIAL INC. | ( | ) | ( | ) | $ | |||||||||||
| WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING | ||||||||||||||||
| Basic and diluted | ||||||||||||||||
| EARNINGS (LOSS) PER SHARE | ||||||||||||||||
| Net income (loss) - basic and diluted-continuing operations | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||
| Net income (loss) - basic and diluted-discontinuing operations | $ | $ | $ | $ | ( | ) | ||||||||||
The accompanying notes are an integral part of the consolidated financial statements
2
BIMI INTERNATIONAL MEDICAL, INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| For the six months ended June 30 | ||||||||
| 2021 | 2020 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net income | $ | ( | ) | $ | ||||
| Net loss from discontinued operations | - | ( | ) | |||||
| Net income(loss) from continuing operations | ( | ) | ||||||
| Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| (Profit) on disposal of NF Group | ( | ) | ||||||
| Stock compensation | ||||||||
| Non-cash lease expense | ||||||||
| Allowance for inventory provision | ||||||||
| Allowance for doubtful accounts | ||||||||
| Amortization of discount of convertible promissory notes | ||||||||
| Change in derivative liabilities | ||||||||
| Change in operating assets and liabilities | ||||||||
| Accounts receivable | ( | ) | ( | ) | ||||
| Advances to suppliers | ( | ) | ( | ) | ||||
| Inventories | ( | ) | ( | ) | ||||
| Prepayments and other receivables | ( | ) | ||||||
| Operating lease-right of use assets | ||||||||
| Other current assets | ||||||||
| Accounts payable, trade | ||||||||
| Advances from customers | ( | ) | ||||||
| Taxes payable | ( | ) | ( | ) | ||||
| Operating lease liabilities | ( | ) | ||||||
| Other payables and accrued liabilities | ( | ) | ( | ) | ||||
| Net cash used in operating activities from continuing operations | ( | ) | ( | ) | ||||
| Net cash provided by operating activities from discontinued operations | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Cash received from acquisition of Guoyitang Hospital and Zhongshan Hospital | - | |||||||
| Cash received from acquisition of Guanzan Group | ||||||||
| Cash received from acquisition of Minkang, Qiangsheng and Eurasia Hospitals | - | |||||||
| Purchase of PPE | ( | ) | - | |||||
| Net cash provided by (used in) investing activities from continuing operations | ( | ) | ||||||
| Net cash used in investing activities from discontinued operations | ||||||||
| Net cash provided by (used in) investing activities | ( | ) | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Repayment of short-term loans | ( | ) | ||||||
| Repayment of long-term loans | ( | ) | ( | ) | ||||
| Net proceeds from issuance of convertible promissory notes | ||||||||
| Proceeds from long-term loan | ||||||||
| Amount financed from related parties | ||||||||
| Net cash provided by financing activities from continuing operations | ||||||||
| Net cash used in financing activities from discontinued operations | ( | ) | ||||||
| Net cash provided by financing activities | ||||||||
| EFFECT OF EXCHANGE RATE ON CASH | ( | ) | ||||||
| INCREASE IN CASH | ||||||||
| CASH AND CASH EQUIVALENTS, beginning of period | ||||||||
| CASH AND CASH EQUIVALENTS, end of period | $ | |||||||
| SUPPLEMENTAL CASH FLOW INFORMATION: | ||||||||
| Cash paid for income tax | $ | $ | ||||||
| Cash paid for interest expense, net of capitalized interest | $ | $ | ||||||
| NON-CASH TRANSACTIONS OF INVESTING AND FINANCING ACTIVITIES | ||||||||
| Issuance of common share for equity acquisition of Zhongshan Chaohu Hospital | $ | $ | ||||||
| Issuance of common share for equity acquisition of Guoyitang Hospital | $ | $ | ||||||
| Issuance of common share for equity acquisition of Minkang, Qiangsheng and Eurasia Hospitals | $ | $ | ||||||
| Issuance of common share upon conversion of convertible notes | $ | $ | ||||||
| Issuance of common share for payment of improvements to offices | $ | |||||||
| Issuance of common shares upon cashless exercises of warrants | $ | - | ||||||
| Intangible assets recognized from equity acquisition of Boqi Zhengji Group | $ | $ | ||||||
| Outstanding receivable for disposal of NF Group | $ | $ | ||||||
| Issuance of common share for equity acquisition of Guanzan Group | $ | $ | ||||||
| Goodwill recognized from equity acquisition of Zhongshan Chaohu Hospital | $ | $ | ||||||
| Goodwill recognized from equity acquisition of Guoyitang Hospital | $ | $ | ||||||
| Goodwill recognized from equity acquisition of Minkang, Qiangsheng and Eurasia Hospital | $ | $ | ||||||
| Outstanding payment for equity acquisition of Guanzan Group | $ | $ | ||||||
| Outstanding payment for equity acquisition of Zhongshan Chaohu Hospital | $ | $ | ||||||
| Outstanding payment for equity acquisition of Guoyitang Hospital | $ | $ | ||||||
| Outstanding payment for equity acquisition of Minkang, Qiangsheng and Eurasia Hospitals | $ | $ | ||||||
The accompanying notes are an integral part of the consolidated financial statements
3
BIMI INTERNATIONAL MEDICAL INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
| 1. | ORGANIZATION AND BUSINESS BACKGROUND |
BIMI International Medical, Inc. (the “Company” or “BIMI”) was incorporated in the State of Delaware as Galli Process, Inc. on October 31, 2000. On February 7, 2002, the Company changed its name to Global Broadcast Group, Inc. On November 12, 2004, the Company changed its name to Diagnostic Corporation of America. On March 15, 2007, the Company changed its name to NF Energy Saving Corporation of America, and on August 24, 2009, the Company changed its name to NF Energy Saving Corporation. On December 16, 2019, the Company changed its name to BOQI International Medical Inc., to reflect the Company’s refocus of its business from the energy saving industry to the health care industry and on June 21,2021, the Company changed its name to BIMI International Medical Inc.
Until October 14, 2019, the Company, through NF Energy Saving Investment Limited and its subsidiaries (the “NF Group”), operated in the energy saving enhancement technology industry in the People’s Republic of China (the “PRC”). The NF Group focused on providing services relating to energy saving technology, optimization design, energy saving reconstruction of pipeline networks and contractual energy management for the electric power, petrochemical, coal, metallurgy, construction, and municipal infrastructure development industries in the PRC and the manufacture and sales of energy-saving flow control equipment. In late 2019, the Company committed to a plan to dispose of all its equity interests in the NF Group and on March 31, 2020, the Company entered into a stock purchase agreement (the “NF SPA”) to sell the NF Group. The sale of the NF Group closed on June 23, 2020. Please refer to NOTE 7 for more information relating to the sale of the NF Group.
On October 14, 2019,
Lasting also indirectly owns 100% equity interests in Dalian Boyi Technology Co., Ltd. (“Dalian Boyi”), a subsidiary established in January 2020 and responsible for the Company’s R&D and other technology related functions.
On June 24, 2020, the Company established a wholly owned subsidiary Boyi (Liaoning) Technology Co., Ltd (“Liaoning Boyi”), in order to be qualified to participate in local healthcare projects. On December 22, 2020, the Company established another subsidiary Bimai Pharmaceutical (Chongqing) Co., Ltd., as the holding company for all of the Company’s retail, wholesale and hospital operations in China.
On March 18, 2020,
4
On December 9, 2020,
On April 9, 2021, the Company entered into a stock purchase agreement to acquire three private hospitals in the PRC, Wuzhou Qiangsheng Hospital (“Qiangsheng”), Suzhou Eurasia Hospital(“Eurasia”) and Yunnan Yuxi MinKang hospital(“Minkang”). The transaction was closed on May 6, 2021.
On April 21, 2021, Bimai Hospital Management (Chongqing) Co. Ltd.(‘Chongqing HM”) was incorporated in the PRC by the Company to manage the operation of the Company’s medical devices segment.
On April 21, 2021, Pusheng Pharmaceutical Co., Ltd. (“Pusheng”) was incorporated in the PRC by the Company to manage its wholesale distribution of generic drugs.
As of June 30,2021, the details of the Company’s major subsidiaries are as follows:
| Name | Place of incorporation and kind of legal entity | Principal activities and place of operation |
Effective interest held | |||||
| Lasting Wisdom Holdings Limited (“Lasting”) | % | |||||||
| Pukung Limited (“Pukung”) | % | |||||||
| Beijing Xinrongxin Industrial Development Co., Ltd. (“Xinrongxin”) | % | |||||||
| Boyi (Liaoning) Technology Co., Ltd (“Liaoning Boyi”) | % | |||||||
| Dalian Boyi Technology Co., Ltd (“Dalian Boyi”) | % | |||||||
| Chongqing Guanzan Technology Co., Ltd. (“Guanzan”) | % | |||||||
| Chongqing Shude Pharmaceutical Co., Ltd.(“Shude”) | % | |||||||
| Chongqing Lijiantang Pharmaceutical Co., Ltd.(“Lijiantang”) | % | |||||||
| Bimai Pharmaceutical (Chongqing) Co., Ltd. (“Chongqing Bimai”) | % | |||||||
| Chongqing Guoyitang Hospital Co., Ltd. (“Guoyitang”) | % | |||||||
| Chaohu Zhongshan Minimally Invasive Hospital Co. ,Ltd. (“Zhongshan”) | % | |||||||
| Yuannan Yuxi Minkang Hospital Co., Ltd. (“Minkang”) | % | |||||||
| Wuzhou Qiangsheng Hospital Co., Ltd. (“Qiangsheng”) | % | |||||||
| Suzhou Eurasia Hospital Co., Ltd. (“Eurasia”) | % | |||||||
| Bimai Hospital Management (Chongqing) Co. Ltd (“Chongqing HM”) | % | |||||||
| Pusheng Pharmaceutical Co., Ltd (“Pusheng”) | % | |||||||
5
| 2. | GOING CONCERN UNCERTAINTIES |
The accompanying unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the discharge of liabilities in the normal course of business for the foreseeable future.
As reflected in the accompanying unaudited condensed consolidated financial
statements, the Company incurred a net loss of $
The continuation of the Company as a going concern through the next twelve months is dependent upon: (1) the continued financial support from its stockholders or external financing, and (2) further implementation of management’s business plan to generate sufficient revenues and cash flow to meet its obligations. While the Company believes in the viability of its strategy to increase sales volume and in its ability to raise additional funds, there can be no assurance to that it will be successful in either respect.
These conditions raise substantial doubt about the Company’s ability to continue as a going concern. These unaudited condensed financial statements do not include any adjustments to reflect the possible future effect on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the outcome of these uncertainties. Management believes that the actions presently being taken to obtain additional funding and implement its strategic plan provides the opportunity for the Company to continue as a going concern.
| 3. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
| ● | Basis of presentation and consolidation |
These accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”). These unaudited condensed consolidated financial statements include the financial statements of the Company and its subsidiaries. All significant inter-company balances and transactions within the Company have been eliminated upon consolidation.
The unaudited interim condensed consolidated financial information as of June 30, 2021 and for the three and six months ended June 30, 2021 and 2020 have been prepared, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures, which are normally included in annual consolidated financial statements prepared in accordance with US GAAP, have been omitted pursuant to those rules and regulations. The unaudited interim condensed consolidated financial information should be read in conjunction with the consolidated financial statements and the notes thereto, included in the Company’s Form 10-K for the fiscal year ended December 31, 2020 filed with the SEC on March 31, 2021.
6
In the opinion of management, all adjustments (which include normal recurring adjustments) necessary to present a fair statement of the Company’s unaudited condensed consolidated financial position as of June 30, 2021 and its unaudited condensed consolidated results of operations for the three and six months ended June 30, 2021 and 2020, and its unaudited condensed consolidated cash flows for the six months ended June 30, 2021 and 2020, as applicable, have been made. The interim results of operations are not necessarily indicative of the operating results for the fiscal year or any future periods.
| ● | Use of estimates |
The preparation of these condensed consolidated financial statements in conformity with the US GAAP requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities on the date of these condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. The Company bases its estimates and judgments on historical experience and on various other assumptions and information that are believed to be reasonable under the circumstances. Estimates and assumptions of future events and their effects cannot be perceived with certainty and, accordingly, these estimates may change as new events occur, as more experience is acquired, as additional information is obtained and as our operating environment changes. Significant estimates and assumptions made by management include, among others, useful lives and impairment of long-lived assets, collectability of accounts receivable, advances to suppliers, allowance for doubtful accounts, reserve of inventory, fair value of goodwill and valuation of derivative liabilities. While the Company believes that the estimates and assumptions used in the preparation of these condensed consolidated financial statements are appropriate, actual results could differ from those estimates. Estimates and assumptions are periodically reviewed and the effects of revisions are reflected in the consolidated financial statements in the period they are determined to be necessary.
| ● | Reclassification |
Certain prior year balances were reclassified to conform to the current period presentation, which mainly reflect the presentation of the discontinued operation of the NF Group and Boqi Zhengji. Except for the assets and liabilities of the NF Group and Boqi Zhengji which were reclassified as discontinued assets or liabilities and presented as current assets or liabilities in the consolidated balance sheets, there was no other impacts on reported financial position or cash flows for any of the periods presented.
| ● | Cash |
Cash consists primarily of cash on hand and cash in banks which is readily available in checking and saving accounts. The Company maintains cash with various financial institutions in the PRC where its accounts are uninsured. The Company has not experienced any losses from funds held in bank accounts and believes it is not exposed to any risk on its bank accounts.
| ● | Restricted cash |
Cash that is restricted as to withdrawal or use under the terms of certain contractual agreements or orders are recorded in a restricted cash account in the Company’s unaudited interim condensed consolidated balance sheet.
| ● | Accounts receivable and allowance for doubtful accounts |
Accounts receivable are recorded at the invoiced
amount and do not bear interest, which are due within contractual payment terms, generally
7
| ● | Advances to suppliers |
Advances to suppliers consist of prepayments to
the Company’s vendors, such as pharmaceutical manufacturers and medicine suppliers. The Company typically prepays for the purchase
of our merchandise, especially for those salable, scarce, personalized medicine or medical devices. The Company typically receive products
from vendors within three to nine months after making prepayments. The Company continuously monitor delivery from, and payments to, the
vendors while maintaining a provision for estimated credit losses based upon historical experience and any specific supplier issues, such
as discontinuing of inventory supply, that have been identified. If the Company has difficulty receiving products from a vendor, the Company
would cease purchasing products from such vendor, request return of our prepayment promptly, and if necessary, take legal action. The
Company has not taken such type of legal action during the reporting periods. If none of these steps are successful, management will then
determine whether the prepayments should be reserved or written off. As of June 30, 2021 and December 31, 2020, the allowance for doubtful
accounts was $
| ● | Inventories |
Inventories are stated at the lower of cost or
market value. Cost is determined using the weighted average method, and market value is the middle (the second highest) value among an
inventory item’s replacement cost, market celling and market floor. The Company carries out physical inventory counts on a monthly
basis at each store and warehouse location. The Company reviews historical sales activity quarterly to determine excess, slow moving items
and potentially obsolete items. The Company provides inventory reserve based on the excess quantities on hand equal to the difference,
if any, between the cost of the inventory and its estimated market value, or obsolescence of inventories determined principally by customer
demand. As of June 30, 2021 and December 31, 2020, the Company recorded an allowance for obsolete inventories, which mainly consists of
expired medicine, of $
| ● | Property, plant and equipment |
Property, plant and equipment are stated at cost less accumulated depreciation and impairment, if any. Depreciation is calculated on the straight-line basis over the following expected useful lives from the date on which they become fully operational and after taking into account their estimated residual values:
Expected useful lives | Residual value | |||||
| Building | % | |||||
| Office equipment | % | |||||
| Electronic equipment | % | |||||
| Furniture | % | |||||
| Medical equipment | % | |||||
| Vehicles | % | |||||
Expenditures for repairs and maintenance are expensed as incurred. When assets have been retired or sold, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in the results of operations.
| ● | Intangible assets |
Intangible assets consist primarily of software of management systems. Intangible assets are stated at cost less accumulated amortization and impairment, if any. Intangible assets are amortized using the straight-line method with the following estimated useful lives:
| Expected useful lives | ||
| Software |
8
| ● | Leases |
The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, current portion of obligations under operating leases, and obligations under operating leases, non-current on the Company’s consolidated balance sheets. Finance leases are included in property and equipment, net, current portion of obligations under capital leases, and obligations under capital leases, non-current on our consolidated balance sheets.
Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date, adjusted by the deferred rent liabilities at the adoption date. As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The operating lease ROU assets also include any lease payments made and excludes lease incentives and initial direct costs incurred. The Company’s terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Operating lease expense is recognized on a straight-line basis over the lease term.
| ● | Goodwill |
Goodwill represents the excess of the purchase price over the amounts assigned to the fair value of the assets acquired and the liabilities assumed of an acquired business. In accordance with ASC 350, Goodwill and Other Intangible Assets, recorded goodwill amounts are not amortized, but rather are tested for impairment annually or more frequently if there are indicators of impairment present.
Goodwill is tested for impairment at the reporting unit level on at least an annual basis or when an event occurs, or circumstances change that would more-likely-than-not reduce the fair value of a reporting unit below its carrying value. These events or circumstances include a significant change in stock prices, business environment, legal factors, financial performances, competition, or events affecting the reporting unit. Application of the goodwill impairment test requires judgment, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units, and determination of the fair value of each reporting unit. The estimation of fair value of reporting unit using a discounted cash flow methodology also requires significant judgments, including estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term rate of growth for the Company’s business, estimation of the useful life over which cash flows will occur, and determination of the Company’s weighted average cost of capital. The estimates used to calculate the fair value of a reporting unit change from year to year based on operating results and market conditions. Changes in these estimates and assumptions could materially affect the determination of fair value and goodwill impairment for the reporting unit.
9
Management evaluates the recoverability of goodwill by performing a qualitative assessment before using a two-step impairment test approach at the reporting unit level. If the Company reorganizes its reporting structure in a manner that changes the composition of one or more of its reporting units, goodwill will be reassigned based on the relative fair value of each of the affected reporting units.
| ● | Impairment of long-lived assets and intangibles |
In accordance with the provisions of ASC Topic 360, “Impairment or Disposal of Long-Lived Assets”, all long-lived assets such as property, plant and equipment held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is evaluated by a comparison of the carrying amount of an asset to its estimated future undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amounts of the assets exceed the fair value of the assets.
| ● | Revenue recognition |
We adopted Accounting Standard Codification (“ASC”) Topic 606, Revenues from Contract with Customers (“ASC 606”) for all periods presented. Under ASC 606, revenue is recognized when control of the promised goods and services is transferred to the Company’s customers, in an amount that reflects the consideration that the Company expects to be entitled to in exchange for those goods and services, net of value-added tax. The Company determines revenue recognition through the following steps:
| ● | Identify the contract with a customer; |
| ● | Identify the performance obligations in the contract; |
| ● | Determine the transaction price; |
| ● | Allocate the transaction price to the performance obligations in the contract; and |
| ● | Recognize revenue when (or as) the entity satisfies a performance obligation. |
The transaction price is allocated to each performance obligation on a relative standalone selling price basis. The transaction price allocated to each performance obligation is recognized when that performance obligation is satisfied by the control of the promised goods and services is transferred to the customers, which at a point in time or over time as appropriate.
The Company’s revenue is net of value added tax (“VAT”) collected on behalf of PRC tax authorities in respect to the sales of products. VAT collected from customers, net of VAT paid for purchases, is recorded as a liability in the accompanying consolidated balance sheets until it is paid to the relevant PRC tax authorities
10
| ● | Cost of revenue |
Cost of revenue consists primarily of cost of goods purchased from suppliers plus direct material costs for packaging and storage, direct labor, which are directly attributable to the acquisition and maintaining of products for sales. Cost of revenues also include impairment loss of our products which are obsolete or expired for sale, if any. Shipping and handling costs, associated with the distribution of finished products to customers, are borne by the customers.
| ● | Comprehensive income |
ASC Topic 220, “Comprehensive Income”, establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive income as defined includes all changes in equity during a period from non-owner sources. Accumulated other comprehensive income, as presented in the accompanying condensed consolidated statement of stockholders’ equity, consists of changes in unrealized gains and losses on foreign currency translation. This comprehensive income is not included in the computation of income tax expense or benefit.
| ● | Income taxes |
Income taxes are determined in accordance with the provisions of ASC Topic 740, “Income Taxes” (“ASC 740”). Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
ASC 740 prescribes a comprehensive model for how
companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to
be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely
than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be
measured as the largest amount of tax benefit that has a greater than
For the six months ended June 30, 2021 and 2020, the Company did not incur any interest or penalties associated with tax positions. As of June 30, 2021, the Company did not have any significant unrecognized uncertain tax positions.
The Company conducts all of its business in the PRC and is subject to tax in this jurisdiction. As a result of its corporate structure the Company files tax returns that are subject to examination by a foreign tax authority.
11
| ● | Value added tax |
Sales revenue represents the invoiced value of
goods sold, net of VAT. All of the Company’s products that are sold in the PRC are subject to a VAT on the gross sales price. The
VAT rates range up to
| ● | Convertible promissory notes |
The Company records debt net of a discount for beneficial conversion features and warrants, on a relative fair value basis. Beneficial conversion features are recorded pursuant to the Beneficial Conversion and Debt Topics of the FASB Accounting Standards Codification. The amounts allocated to warrants and beneficial conversion rights are recorded as debt discount and as additional paid-in-capital. Debt discount is amortized to interest expense over the life of the debt.
| ● | Derivative instruments |
The Company has entered into financing arrangements that consist of freestanding derivative instruments or are hybrid instruments that contain embedded derivative features. The Company accounts for these arrangements in accordance with Accounting Standards Codification Topic 815, Accounting for Derivative Instruments and Hedging Activities (“ASC 815”) as well as related interpretation of this standard. In accordance with this standard, derivative instruments are recognized as either assets or liabilities in the balance sheet and are measured at fair values with gains or losses recognized in earnings. Embedded derivatives that are not clearly and closely related to the host contract are bifurcated and are recognized at fair value with changes in fair value recognized as either a gain or loss in earnings. The Company determines the fair value of derivative instruments and hybrid instruments based on available market data using appropriate valuation models, giving consideration to all of the rights and obligations of each instrument.
We estimate fair values of derivative financial instruments using various techniques (and combinations thereof) that are considered to be consistent with the objective measuring fair values. In selecting the appropriate technique, we consider, among other factors, the nature of the instrument, the market risks that it embodies and the expected means of settlement. For less complex derivative instruments, such as free-standing warrants, we generally use the Black-Scholes model, adjusted for the effect of dilution, because it embodies all of the requisite assumptions (including trading volatility, estimated terms, dilution and risk free rates) necessary to fair value these instruments. Estimating fair values of derivative financial instruments requires the development of significant and subjective estimates that may, and are likely to, change over the duration of the instrument with related changes in internal and external market factors. In addition, option-based techniques (such as Black-Scholes model) are highly volatile and sensitive to changes in the trading market price of our common stock. Since derivative financial instruments are initially and subsequently carried at fair values, our income (expense) going forward will reflect the volatility in these estimate and assumption changes. Under the terms of the new accounting standard, increases in the trading price of the Company’s common stock and increases in fair value during a given financial quarter result in the application of non-cash derivative expense. Conversely, decreases in the trading price of the Company’s common stock and decreases in trading fair value during a given financial quarter result in the application of non-cash derivative income.
12
| ● | Net loss per share |
The Company calculates net loss per share in accordance with ASC Topic 260, “Earnings per Share.” Basic income per share is computed by dividing the net income by the weighted-average number of common shares outstanding during the period. Diluted income per share is computed similar to basic income per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common stock equivalents had been issued and if the additional common shares were dilutive.
| ● | Foreign currencies translation |
Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the statement of operations.
The reporting currency of the Company is the United States Dollar (“US$”). The Company’s subsidiaries in the PRC maintain their books and records in their local currency, the Renminbi Yuan (“RMB”), which is the functional currency as being the primary currency of the economic environment in which these entities operate.
In general, for consolidation purposes, assets and liabilities of its subsidiaries whose functional currency is not the US$ are translated into US$, in accordance with ASC Topic 830-30, “Translation of Financial Statement”, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of foreign subsidiaries are recorded as a separate component of accumulated other comprehensive income within the statement of stockholders’ equity.
Translation of amounts from RMB into US$ has been made at the following exchange rates for the respective period:
| June 30, 2021 | June 30, 2020 | |||||||
| Period-end RMB:US$1 exchange rate | ||||||||
| Six months end average RMB:US$1 exchange rate | ||||||||
13
| ● | Related parties |
Parties, which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operational decisions. Companies are also considered to be related if they are subject to common control or common significant influence.
| ● | Segment reporting |
ASC Topic 280, “Segment Reporting”
establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organization
structure as well as information about the type of products and services, geographical areas, business strategies and major customers
in business components. For the six months ended June 30, 2021, the Company operated in
| ● | Fair value of financial instruments |
The carrying value of the Company’s financial instruments (excluding short-term bank borrowing and convertible promissory notes): cash and cash equivalents, accounts and retention receivable, prepayments and other receivables, accounts payable, income tax payable, amounts due to related parties other payables and accrued liabilities approximate their fair values because of the short-term nature of these financial instruments.
Management believes, based on the current market prices or interest rates for similar debt instruments, the fair value of its obligation under its finance lease and short-term bank borrowing approximate the carrying amount.
The Company also follows the guidance of the ASC Topic 820-10, “Fair Value Measurements and Disclosures” (“ASC 820-10”), with respect to financial assets and liabilities that are measured at fair value. ASC 820-10 establishes a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair value as follows:
| ● | Level 1 : Inputs are based upon unadjusted quoted prices for identical instruments traded in active markets; |
| ● | Level 2: Inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques (e.g. Black-Scholes Option-Pricing model) for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs; and |
| ● | Level 3: Inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques, including option pricing models and discounted cash flow models. |
14
Fair value estimates are made at a specific point in time based on relevant market information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.
The carrying amount of cash, accounts receivable, other receivable, bank credit, accounts payable and other accounts payable approximate their fair value due to the short-term maturity of these instruments.
| ● | Recent accounting pronouncements |
In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740)—Simplifying the Accounting for Income Taxes. ASU 2019-12 is intended to simplify accounting for income taxes. It removes certain exceptions to the general principles in Topic 740 and amends existing guidance to improve consistent application. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020 and interim periods within those fiscal years, with early adoption permitted. The Company will adopt this guidance effective October 1, 2021. The Company is currently evaluating the impact of its pending adoption of this guidance on its consolidated financial statements but does not expect this guidance will have a material impact on its consolidated financial statements.
In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326), which requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost. ASU 2016-13 was subsequently amended by ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments — Credit Losses, ASU 2019-04 Codification Improvements to Topic 326, Financial Instruments — Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, and ASU 2019-05, Targeted Transition Relief. For public entities, ASU 2016-13 and its amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. For all other entities, this guidance and its amendments will be effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. As an emerging growth company, the Company plans to adopt this guidance effective October 1, 2023. The Company is currently evaluating the impact of its pending adoption of ASU 2016-13 on its consolidated financial statements but does not expect this guidance will have a material impact on its consolidated financial statements.
Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the Company’s consolidated financial statements upon adoption.
15
| 4. | THE ACQUISITION OF THE GUANZAN GROUP |
Guanzan is a distributor of
medical devices whose customers are primarily drug stores, private clinics, pharmaceutical dealers and hospitals in the Southwest of
China. Guanzan also holds an
Shude is a pharmaceutical distributor that markets generic drugs. Shude’s customers include a wide range of clinics, private and public hospitals and pharmacies in the PRC. Shude holds PRC business licenses such as a Business Permit for Medical Devices and a Drug Wholesale Distribution License, which qualify Shude to engage in the distribution of medicines and medical devices in the PRC.
The following summarizes the identified assets acquired and liabilities assumed pursuant to the Guanzan Acquisition as of March 18, 2020:
| Items | Amount | |||
| Assets | ||||
| Cash | $ | |||
| Accounts receivable | ||||
| Advances to suppliers | ||||
| Amount due from related parties | ||||
| Inventories | ||||
| Prepayments and other receivables | ||||
| Property, plant and equipment | ||||
| Intangible assets | ||||
| Goodwill | ||||
| Liabilities | ||||
| Short-term bank borrowings | ( | ) | ||
| Long-term loans due within one year | ( | ) | ||
| Accounts payable, trade | ( | ) | ||
| Advances from customers | ( | ) | ||
| Amount due to related parties | ( | ) | ||
| Taxes payable | ( | ) | ||
| Other payables and accrued liabilities | ( | ) | ||
| Long-term loans – non-current portion | ( | ) | ||
| Non-controlling interests | ( | ) | ||
| Total net assets | $ | |||
16
The fair value of all assets acquired and liabilities
assumed is the estimated book value of the Guanzan Group. Goodwill represent the excess of the fair value of purchase price over the
amounts assigned to the fair value of the assets acquired and the liabilities assumed of Guanzan Group at the acquisition date. Upon
the Guanzan Acquisition, the Company recognized non-controlling interest in Shude in the amount of $
On November 20, 2020, we entered into an agreement
for the prepayment (the “Prepayment”) of a portion of the Guanzan Cash Consideration in the amount of RMB
| 5. | THE ACQUISITION OF THE GUOYITANG HOSPITAL |
On December 9, 2020, the Company entered
into an agreement to acquire Chongqing Guoyitang Hospital Co., Ltd (“Guoyitang”), the owner and operator of a private
general hospital in Chongqing City, a southwest city of China, with 100 hospital beds, 53 medical doctors, 40 medical technicians,
50 nurses and 57 administrative employees. Pursuant to the agreement, the Company agreed to purchase all the issued and outstanding
equity interests in Guoyitang. The aggregate purchase price for Guoyitang was $
The following summarizes the identified assets acquired and liabilities assumed pursuant to the Guoyitang Acquisition as of February 2, 2021:
| Items | Amount | |||
| Assets | ||||
| Cash | $ | |||
| Accounts receivable | ||||
| Advances to suppliers | ||||
| Amount due from related parties | ||||
| Inventories | ||||
| Prepayments and other receivables | ||||
| Property, plant and equipment | ||||
| Right of use asset | ||||
| Goodwill | ||||
| Liabilities | ||||
| Accounts payable, trade | ( | ) | ||
| Amount due to related parties | ( | ) | ||
| Taxes payable | ( | ) | ||
| Other payables and accrued liabilities | ( | ) | ||
| Lease liability-current | ( | ) | ||
| Lease liability-non-current | ( | ) | ||
| Total net assets | $ | |||
17
The fair value of all assets acquired and liabilities assumed is the estimated book value of the Guoyitang. Goodwill represents the excess of the fair value of purchase price over the amounts assigned to the fair value of the assets acquired and the liabilities assumed of Guoyitang at the acquisition date.
| 6. | THE ACQUISITION OF THE ZHONGSHAN HOSPITAL |
On December 15, 2020,
The following summarizes the identified assets acquired and liabilities assumed pursuant to the Zhongshan Acquisition as of February 5, 2021:
| Items | Amount | |||
| Assets | ||||
| Cash | $ | |||
| Accounts receivable | ||||
| Inventories | ||||
| Prepayments and other receivables | ||||
| Property, plant and equipment | ||||
| Right of use asset | ||||
| Goodwill | ||||
| Liabilities | ||||
| Short-term bank borrowings | ( | ) | ||
| Accounts payable, trade | ( | ) | ||
| Advances from customers | ( | ) | ||
| Amount due to related parties | ( | ) | ||
| Other payables and accrued liabilities | ( | ) | ||
| Lease liability-current | ( | ) | ||
| Lease liability-non-current | ( | ) | ||
| Total net assets | $ | |||
The fair value of all assets acquired and liabilities assumed is the estimated book value of the Zhongshan. Goodwill represents the excess of the fair value of purchase price over the amounts assigned to the fair value of the assets acquired and the liabilities assumed of Zhongshan Hospital at the acquisition date.
18
| 7. | THE ACQUISITION OF THE QIANGSHENG, EURASIA AND MINKANG HOSPITALS |
On April 9, 2021, the Company and Chongqi
Bimai entered into a stock purchase agreement to acquire three private hospitals in the PRC, Wuzhou Qiangsheng Hospital Co.,Ltd
(“Qiangsheng”), Suzhou Eurasia Hospital Co., Ltd (“Eurasia”) and Yunnan Yuxi MinKang hospital Co., Ltd
(“Minkang”).
The following summarizes the identified assets acquired and liabilities assumed pursuant to the Qiangsheng, Eurasia and Minkang acquisition as of May 6, 2021:
| Items | Amount | |||
| Assets | ||||
| Cash | $ | |||
| Accounts receivable | ||||
| Inventories | ||||
| Advances and other receivables | ||||
| Property, plant and equipment | ||||
| Right of use assets | ||||
| Goodwill | ||||
| Liabilities | ||||
| Accounts payable | ( | ) | ||
| Advances from customers | ( | ) | ||
| Tax payable | ( | ) | ||
| Other payables and accrued liabilities | ( | ) | ||
| Lease liability-current | ( | ) | ||
| Lease liability-non-current | ( | ) | ||
| Total net assets | $ | |||
The fair value of all assets acquired and liabilities assumed is the estimated book value of the Qiangsheng, Eurasia and Minkang hospitals. Goodwill represents the excess of the fair value of purchase price over the amounts assigned to the fair value of the assets acquired and the liabilities assumed of Qiangsheng, Eurasia and Minkang Hospitals at the acquisition date.
| 8. | DISCONTINED OPERATIONS |
In late 2019, the Company committed to a plan
to dispose of the NF Group and on March 31, 2020 entered into an agreement to sell the NF Group for $
On December 11. 2020, the Company entered into
an agreement to sell the equity interests in Boqi Zhengji for $
The Company determined that the plans and the subsequent actions taken to dispose of the NF Group and Boqi Zhengji qualified as discontinued operations under the criteria set forth in the ASC 205-20 Presentation of Financial Statements – Discontinued Operation. Upon closing of the two sales, the Company is no longer involved in the energy efficiency enhancement business or the operation of Boqi Zhengji.
19
The summarized operating results of the discontinued operation included in the Company’s unaudited interim condensed consolidated statements of operations consist of the following:
For the six months ended | ||||
| Revenues | $ | |||
| Cost of revenues | ||||
| Gross loss | ||||
| Operating expenses | ||||
| Other expense | ||||
| Loss before income taxes | ( | ) | ||
| Income taxes | ||||
| Net loss from discontinued operations | $ | ( | ) | |
| 9. | ACCOUNTS RECEIVABLE |
The majority of the Company’s pharmacy retail revenues are derived from cash sales, except for sales to the government social security bureaus or commercial health insurance programs, which typically settle once a month. The Company offers several credit terms to our wholesale customers and to our authorized retailer stores. The Company routinely evaluates the need for allowance for doubtful accounts based on specifically identified amounts that the management believes to be uncollectible. If the actual collection experience changes, revisions to the allowance may be required. As of June 30, 2021 and December 31,2020, accounts receivable consisted of the following:
| June 30, 2021 | December 31, 2020 | |||||||
| Accounts receivable, cost | $ | $ | ||||||
| Less: allowance for doubtful accounts | ( | ) | ( | ) | ||||
| Accounts receivable, net | $ | $ | ||||||
The Company routinely evaluates the need for allowance
for doubtful accounts based on specifically identified amounts that the management believes to be uncollectible. If the actual collection
experience changes, revisions to the allowance may be required. Due to subsequent collections, the Company reversed an allowance of $
| 10. | ADVANCES TO SUPPLIERS |
Advances to suppliers represent the amount the Company prepaid to its suppliers for merchandises for sale in the ordinary course of business. As of June 30, 2021 and December 31, 2020, the Company reported advances to suppliers as follow:
| June 30, 2021 | December 31, 2020 | |||||||
| Advances to suppliers, cost | $ | $ | ||||||
| Less: allowance for doubtful accounts | ( | ) | ( | ) | ||||
| Advances to suppliers, net | $ | $ | ||||||
Excluding the effect of the foreign exchange rate,
20
| 11. | INVENTORIES |
The Company’s inventories consist of medicine and medical devices that were purchased from third parties and sold in our retail pharmacy stores and wholesale to third party pharmacies, clinics, hospitals, etc. Inventories consisted of the following:
| June 30 , 2021 | December 31, 2020 | |||||||
| Medicine | $ | $ | ||||||
| Medical devices | ||||||||
| Less: allowance for obsolete and expired inventory | ( | ) | ( | ) | ||||
| $ | $ | |||||||
For the three months ended June 30, 2021 and 2020,
the Company accrued an allowance of $
| 12. | PREPAYMENTS AND OTHER RECEIVABLES |
Prepayments and other receivables represent the amount that the Company prepaid as rent deposits for retail store, hospitals and office facilities, special medical device purchase deposits, prepaid rental fee and professional services, advances to employees in the ordinary course of business, VAT deductibles and other miscellaneous receivables. The table below sets forth the balances as of June 30, 2021and December 31, 2020, respectively.
| June 30, 2021 | December 31, 2020 | |||||||
| Deposit for rental | $ | |||||||
| Prepaid rental fee and improvements of offices | ||||||||
| Deposit for purchase of medical devices | ||||||||
| Receivables from convertible bonds | ||||||||
| Deferred offering cost | ||||||||
| Prepayment for acquisition of Guoyitang | ||||||||
| Deposit for acquisition of Cogmer | ||||||||
| Prepayment for professional services | ||||||||
| Receivables from third party | ||||||||
| Others | ||||||||
| Less: allowance for doubtful accounts | ( | ) | ( | ) | ||||
| Prepayments and other receivables, net | $ | |||||||
In 2020, we made a deposit of $
Management evaluates the recoverable value of
these balances periodically in accordance with the Company’s policies. For the three months ended June 30, 2021 and 2020, the Company
accrued an allowance for doubtful accounts of $
21
| 13. | PROPERTY, PLANT AND EQUIPMENT |
Property, plant and equipment consisted of the following:
| June 30, 2021 | December 31, 2020 | |||||||
| Building | $ | $ | ||||||
| Office equipment | ||||||||
| Electronic equipment | ||||||||
| Furniture | ||||||||
| Medical equipment | ||||||||
| Vehicles | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Property, plant and equipment, net | $ | $ | ||||||
Depreciation expense for the three months ended
June 30, 2021 and 2020 were $
| 14. | Intangible assets |
| June 30, 2021 | December 31, 2020 | |||||||
| Software | $ | $ | ||||||
| Less: accumulated amortization | ( | ) | ||||||
| Intangible assets, net | $ | $ | ||||||
Amortization expense for the three months ended
June 30, 2021 and 2020 were $
| 15. | LEASES |
Balance sheet information related to the Company’s operating leases was as follows:
| June 30, 2021 | December 31, 2020 | |||||||
| Operating Lease Assets | ||||||||
| Operating lease | $ | |||||||
| Total operating lease assets | $ | |||||||
| Operating Lease Obligations | ||||||||
| Current operating lease liabilities | $ | |||||||
| Non-current operating lease liabilities | $ | |||||||
| Total Lease Liabilities | $ | |||||||
22
Lease liability maturities as of June 30, 2021, are as follows:
| June 30, 2021 | ||||
| 2021 | ||||
| 2022 | ||||
| 2023 | ||||
| 2024 | ||||
| 2025 and thereafter | ||||
| Total minimum lease payments | ||||
| Less: Amount representing interest | ||||
| Total | $ | |||
| 16. | GOODWILL |
The goodwill associated with the acquisition of:
(i) Guanzan of $
Based on an assessment of the qualitative factors,
management determined that it is more-likely-than-not that the fair value of each of the reporting units is in excess of its carrying
amount. Therefore, management concluded that it was not necessary to proceed to the two-step goodwill impairment test. At June 30, 2021
and December 31, 2020, goodwill was $
| 17. | LOANS |
Short-term loans
| June 30, 2021 | December 31, 2020 | |||||||
| Construction Bank of China | $ | $ | ||||||
| Chongqing Nan’an Zhongyin Fuden Village Bank Co. LTD | - | |||||||
| China Minsheng Bank | - | |||||||
| Postal Savings Bank of China | ||||||||
| Total | $ | $ | ||||||
For the three months ended June 30, 2021 and 2020,
interest expense on short-term loans amounted to $
Long-term loans
| June 30, 2021 | December 31, 2020 | |||||||
| Standard Chartered Bank | $ | $ | ||||||
| Chongwing Nan’an Zhongyin Fuden Village Bank Co. Ltd. | ||||||||
| We Bank | ||||||||
| Subtotal of long-term loans | ||||||||
| Less: current portion | - | ( | ) | |||||
| Long-term loans – noncurrent portion | $ | $ | ||||||
For the three months ended June 30, 2021 and
2020, interest expense on long-term loans amounted to $
23
| 18. | CONVERTIBLE PROMISSORY NOTES AND EMBEDDED DERIVATIVE INSTRUCTIONS |
On May 19, 2020, the Company entered into a Securities
Purchase Agreement (the “May SPA”) with two institutional investors (each, an “Institutional Investor”, and collectively,
the “Institutional Investors”) to sell in a private placement a new series of senior secured convertible notes having an original
issue amount of $
Upon evaluation, the Company determined that the two agreements contained embedded beneficial conversion features which met the definition of Debt with Conversion and Other Options covered under the Accounting Standards Codification topic 470 (“ASC 470”). According to ASC 470, an embedded beneficial conversion feature present in a convertible instrument shall be recognized separately at issuance by allocating a portion of the proceeds equal to the intrinsic value of that feature to additional paid-in capital.
| June 30, 2021 | December 31, 2020 | |||||||
| Convertible note – principal | $ | $ | ||||||
| Convertible note – discount | ( | ) | ( | ) | ||||
| $ | $ | |||||||
Additionally, the Company accounted for the embedded conversion option liability in accordance with the Accounting Standards Codification topic 815, Accounting for Derivative Instruments and Hedging Activities (“ASC 815”) as well as related interpretation of this standard. In accordance with these standards, derivative instruments are recognized as either assets or liabilities in the balance sheet and are measured at fair values with gains or losses recognized in earnings. Embedded derivatives that are not clearly and closely related to the host contract are bifurcated and are recognized at fair value with changes in fair value recognized as either a gain or loss in earnings. The Company determines the fair value of derivative instruments and hybrid instruments based on available market data using appropriate valuation models, giving consideration to all of the rights and obligations of each instrument. The fair value of the embedded conversion option liability associated with each Note was valued using the Black-Scholes model. The key assumptions used in the Black-Scholes option pricing model are as follows:
| June 30, 2021 | December 31, 2020 | |||||||
| Dividend yield | $ | % | $ | % | ||||
| Expected volatility | % | % | ||||||
| Risk free interest rate | % | % | ||||||
| Expected life (year) | ||||||||
24
| 19. | OTHER PAYABLES AND ACCRUED LIABILITIES |
Other payables and accrued liabilities consisted of the following:
| June 30, 2021 | December 31, 2020 | |||||||
| Salary payable | $ | $ | ||||||
| Salary payable – related party (1) | ||||||||
| Loan payable | ||||||||
| Accrued operating expenses | - | |||||||
| Acquisition payable (2) | ||||||||
| Other payables | ||||||||
| $ | $ | |||||||
| (1) |
| (2) | |
| 20. | RELATED PARTIES AND RELATED PARTIES TRANSACTIONS |
Amount due from related parties
As of June 30, 2021, $
As of December 31, 2020, the total amounts due from related parties was .
Amounts payable to related parties
As of June 30, 2021 and December 31, 2020, the
total amounts payable to related parties was $
| 1. | Amount payable to Mr. Yongquan Bi, the former Chief Executive Officer and current Chairman of the Board of directors of the Company, of $ |
| 2. | Amount payable to Mr. Li
Zhou, the legal representative (general manager) of Guanzan, of $ |
25
| 3. | Amounts payable to Mr. Fuqing Zhang, the Chief Executive Officer of Xinrongxin of $ |
| 4. | Amounts payable to Mr. Youwei Xu, the financial manager of Xinrongxin of $ |
| 5. | Amounts payable to Shaohui Zhuo, the general manager of Guoyitang of $ |
| 6. | Amounts payable to Nanfang Xiao, a director of Guoyitang of $ |
| 7. | Amounts payable to Jia Song, the manager of Guoyitang of $ |
| 21. | STOCK EQUITY |
The Company is authorized to issue
On April 20, 2019 and October 7, 2019, respectively,
the Company issued an aggregate of
On March 12, 2020, the Company issued
From April 6, 2020 through October 20, 2020, holders of convertible notes issued during the period from September 27, 2019 to February 13, 2020, in the aggregate principal amount of $1,534,250 plus interest into an aggregate of 1,658,213 shares of the Company’s common stock.
26
On November 30, 2020, the Company issued
On December 2, 2020, the Institutional
Investor, Hudson Bay Master Fund Ltd (“Hudson Bay”), converted a Convertible Note in the aggregate principal
amount of $
On December 2, 2020, the Institutional
Investor, CVI Investments, Inc. (“CVI”), converted a Convertible Note in the aggregate principal amount of
$
From January 4, 2021 to February 9, 2021, Hudson
Bay converted Convertible Notes in the aggregate principal amount of $
From January 4, 2021 to March 1, 2021, CVI converted
Convertible Notes in the aggregate principal amount of $
On February 2, 2021, the Company issued
On February 3, 2021, a holder of a convertible
note issued on December 16, 2019 converted a part of the note in the aggregate principal amount of $
On February 11, 2021, the Company issued
On March 26, 2021, the Company issued
On April 20, 2021, the Company issued
27
On April 29, 2021, the Company issued
On June 18, 2021,
| 22. | NET INCOME (LOSS) PER SHARE |
Basic net income (loss) per share is computed using the weighted average number of common shares outstanding during the year. The dilutive effect of potential common shares outstanding is included in diluted net income (loss) per share. Due to the Company’s net income (loss) from its continuing operations, all potential common share issuance had anti-dilutive effect on net income (loss) per share. The following table sets forth the computation of basic and diluted net income (loss) per share for the six months ended June 30, 2021 and 2020:
| For the six months ended June 30, | ||||||||
| 2021 | 2020 | |||||||
| Net income (loss) from continuing operation attributable to common shareholders | $ | ( | ) | $ | ||||
| Net loss from discontinued operations attributable to common shareholders | ( | ) | ||||||
| Total net income (loss) attributable to common shareholders | $ | ( | ) | $ | ||||
| Weighted average common shares outstanding – Basic and diluted | ||||||||
| Income (loss) per share – basic and diluted: | ||||||||
| Continuing operations | $ | ( | ) | $ | ||||
| Discontinued operations | - | ( | ) | |||||
| Total | $ | ( | ) | $ | ||||
| 23. | LITIGATION |
On April 1, 2020, the Guizhou Province Xiuwen
County People’s Court ordered the attachment of two of Shude’s bank accounts pursuant to a pre-litigation attachment application
filed by one of Shude’s suppliers in connection with unpaid outstanding payables. No lawsuit was filed by the supplier and the dispute
has been resolved and attachment removed. The total amount of cash in the two accounts subject to the attachment was RMB
28
| 24. | SEGMENTS |
General Information About Reportable Segments:
The Company operates in
To date, there were no inter-segment revenues between our retail pharmacy and wholesale pharmaceuticals segments. The wholesale medical devices segment distributes medical devices, including medical consumables to private clinics, hospitals, third party pharmacies and other medical devices dealers. Disclosure should relate to all segments.
The segments’ accounting policies are the same as those described in the summary of significant accounting policies. The Company’s chief operating decision maker, who is the CEO of the Company, evaluates performance of each of the segments based on profit or loss from continuing operations net of income tax.
The Company’s reportable business segments are strategic business units that offer different products. Each segment is managed independently because they require different operations and each markets to distinct classes of customers.
Information about Reported Segment Profit or Loss and Segment Assets
BIMI, as the holding company, incurred a significant amount of general operating expenses, such as financing costs, that the Company’s chief operating decision maker did not allocate to segments to evaluate the segments performance and allocate recourse of the Company. In addition, except for depreciation and amortization of long-lived assets, the Company does not allocate the change in fair value of derivative liabilities and the amortization of discount of convertible notes to reporting segments in its reported profit or loss. The following amounts were used by the chief operating decision maker.
| For the six months ended June 30, 2021 | Retail pharmacy | Medical device wholesale | Drugs wholesale | Medical services | Others | Total | ||||||||||||||||||
| Revenues from external customers | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Cost of revenues | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Depreciation, depletion, and amortization expense | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Profit (loss) | $ | ( | ) | $ | ( | ) | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||
| Total assets | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
29
Reconciliations of Reportable Segment Revenues, Profit or Loss, and Assets, to the Consolidated Totals as of June 30, 2021 and for the six months ended June 30, 2021.
| >>Revenues | ||||
| Total revenues from reportable segments | $ | |||
| Other revenues | ||||
| Elimination of intersegments revenues | ||||
| Total consolidated revenues | $ | |||
| >> Profit or loss | ||||
| Total profit from reportable segments | $ | |||
| Elimination of intersegments profit or loss | ||||
| Unallocated amount: | ||||
| Amortization of discount of convertible notes | ( | ) | ||
| Other corporate expense | ( | ) | ||
| Total net loss | $ | ( | ) | |
| >>Assets | ||||
| Total assets from reportable segments | $ | |||
| Elimination of intersegments receivables | ( | ) | ||
| Unallocated amount: | ||||
| Other unallocated assets – Xinrongxin | ||||
| Other unallocated assets – Liaoning Boyi | ||||
| Other unallocated assets – Dalian Boyi | ||||
| Other unallocated assets – Chongqing Bimai | ||||
| Other unallocated assets – BIMI | ||||
| Total consolidated assets | $ | |||
30
| 25. | ENTITY-WIDE INFORMATION AND CONCENTRATIONS OF RISK |
Entity-Wide Information
| (a) | Revenues from each types of products |
For the six months ended June 30, 2021 and 2020, respectively, the Company reported revenues for each type of products and services as follows:
For the six months ended June 30, | ||||||||
| 2021 | 2020 | |||||||
| Medical devices | $ | $ | ||||||
| Medical services | ||||||||
| Medicines (including pharmacy sales) | ||||||||
| Total | $ | $ | ||||||
| (b) | Geographic areas information |
For the six months ended June 30, 2021 and 2020, respectively, all the Company’s revenues were generated in the PRC. There were no long-lived assets located outside of the PRC as of June 30, 2021 and 2020.
| (c) | Major customers |
For the six months ended June 30, 2021, no customer
accounted for more than
| (d) | Major vendors |
For the six months ended June 30, 2021, no vendor
accounted for more than
Concentrations of Risk
The Company is exposed to the following concentrations of risk:
| (a) | Credit risk |
Financial instruments that are potentially subject to credit risk consist principally of trade receivables. The Company believes the concentration of credit risk in its trade receivables is substantially mitigated by its ongoing credit evaluation process and relatively short collection terms. The Company does not generally require prepayments or deposits from customers. The Company evaluates the need for an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends and other information.
31
| (b) | Interest rate risk |
The Company’s interest-rate risk arises from convertible promissory notes, short-term and long-term loans. The Company manages interest rate risk by varying the issuance and maturity dates, fixing interest rate of debt, limiting the amount of debts, and continually monitoring the effects of market changes in interest rates. As of June 30, 2021 and December 31, 2020, respectively, the Convertible Notes and other outstanding notes, short-term and long-term loans were at fixed rates.
| (c) | Exchange rate risk |
Substantially all of the Company’s revenues and a majority of its costs are denominated in RMB and a significant portion of its assets and liabilities are denominated in RMB. As a result, the Company’s results of operations may be affected by fluctuations in the exchange rate between US$ and RMB. If the RMB depreciates against the US$, the value of RMB revenues and assets as expressed in US$ financial statements will decline. The Company does not hold any derivative or other financial instruments that expose to substantial market risk.
| (d) | Economic and political risks |
The Company’s operations are conducted in the PRC. Accordingly, the Company’s business, financial condition and results of operation may be influenced by the political, economic and legal environment in the PRC, and by the general state of the PRC economy. The outbreak of COVID-19 pandemic has expanded all over the world since the beginning of 2020, which has greatly slowed the growth of the global economy, including the PRC, and this effect may continue until the pandemic is controlled, or a vaccine or cure is developed. The slowdown of the growth of the PRC’s economy has adversely effected our current business and future success will be adversely affected if we are unable to capitalize on the opportunities arising from the increasing demand for medicine and medical devices in the markets in which we operate.
The Company’s operations in the PRC are subject to special considerations. These include risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Company’s results may be adversely affected by changes in the political and social conditions in the PRC, and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation.
32
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and the notes to those financial statements appearing elsewhere in this Report.
Certain statements in this Report constitute forward-looking statements. These forward-looking statements include statements, which involve risks and uncertainties, regarding, among other things, (a) our projected sales, profitability, and cash flows, (b) our growth strategy, (c) anticipated trends in our industry, (d) our future financing plans, and (e) our anticipated needs for, and use of, working capital. They are generally identifiable by use of the words “may,” “will,” “should,” “anticipate,” “estimate,” “plan,” “potential,” “project,” “continuing,” “ongoing,” “expects,” “management believes,” “we believe,” “we intend,” or the negative of these words or other variations on these words or comparable terminology. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this filing will in fact occur. You should not place undue reliance on these forward-looking statements.
The forward-looking statements speak only as of the date on which they are made, and, except to the extent required by federal securities laws, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date on which the statements are made or to reflect the occurrence of unanticipated events.
As used herein the terms “we”, “us”, “our,” “BIMI” and the “Company” mean, BIMI International Medical, Inc., a Delaware corporation and its subsidiaries.
OVERVIEW
From 2007 until October 2019, we, through the NF Group, were engaged in the energy efficiency enhancement business. With the decline in the constructions of power generation plants and municipal water, gas, heat and energy pipelines in China due to a policy change by the PRC government, the demand for our products and services declined markedly. As a result, our energy efficiency enhancement business, incurred operating losses in each of the last seven years, especially in 2018, when the PRC government adopted a series of policies to favor more environmentally friendly projects and products. Our net loss from the operation of the energy efficiency enhancement business was $16.79 million in 2018 and $2.18 million in 2019. We explored many different alternatives in an effort to revive this business, including attempts to expand into international markets, before we determined this business was not sustainable for us. In late 2019, we committed to a plan to dispose of the NF Group and on March 31, 2020, we entered into an agreement for the sale of the NF Group. The sale closed on June 23, 2020 when the $10 million sales price was paid to us in full.
Our current operations are focused on the healthcare industry in the PRC. On October 14, 2019, we acquired Boqi Zhengji, an operator of a pharmacy chain business in the PRC. This was the first step of our shift of focus from the energy sector to the healthcare business. Boqi Zhengji, however, suffered significant setbacks during 2020. The COVID-19 pandemic caused the pharmacy stores to record almost no sales for several months due to the national shutdown order and other government orders specifically targeting OTC drugs. To avoid exposing our other business to further risks and potential joint liabilities, we decided to divest the pharmacy chain. On December 11, 2020 we entered into an agreement to sell Boqi Zhengji for $1,700,000 in cash. On December 18, 2020, we received the full consideration from the buyer and the control of the Boqi Zhengji business was transferred. Due to the Chinese government’s alternative working schedule and other delays caused by COVID-19, the government record reflecting the transfer of ownership was not updated until February 2, 2021.
33
The disposal of NF Group and Boqi Zhengji and the actions taken to fulfill the plans resulted in our classifying the businesses of NF Group and Boqi Zhengji as discontinued operations according to ASC 205-20 Presentation of Financial Statements – Discontinued Operation. The disposals of the NF Group and Boqi Zhengji were closed on June 23, 2020 and December 18, 2020, respectively. As a result, all of the assets and liabilities of the NF Group and Boqi Zhengji were reclassified as assets and liabilities of a discontinued operation in the Company’s consolidated balance sheets as of December 31, 2019 and the results of the operation of the NF Group are presented under the line item net loss from discontinued operations for the three and six months ended June 30, 2020.
On March 18, 2020, we completed the acquisition of Guanzan. The rationale for the acquisition was to further expand our healthcare operation by acquiring a medical devices and pharmaceuticals distribution business. The acquisition was is in line with our expansion strategy, which focuses on deeper penetration of the healthcare market in the Southwest region of China and gaining a wider footprint in the PRC.
On February 2, 2021, we acquired Guoyitang, the owner and operator of a private general hospital in Chongqing with 50 hospital beds and 98 employees, including 14 doctors, 28 nurses, 43 other medical staff and 13 non-medical staff. The Guoyitang acquisition enabled us to serve more individuals with medical needs and was the first step in our efforts to build a hospital chain specializing in obstetrics and gynecology.
On February 5, 2021, we acquired Zhongshan, a private hospital in the southeast region of China with 160 hospital beds (of which 110 beds are currently in use) and 95 employees, including 20 doctors, 48 nurses, 10 other medical staff and 17 non-medical staff. Zhongshan is a general hospital known for its complex minimally invasive surgeries and equipped with high-end diagnostics equipment and surgical instruments for gynecology and obstetrics use. The Zhongshan acquisition marked the second step in our effort to establish a nationwide hospital chain specializing in obstetrics and gynecology.
On May 6, 2021, we acquired three private hospitals operating in China, Wuzhou Qiangsheng Hospital Co.,Ltd.(“Qiangsheng”) in the southeast region of the PRC, Suzhou Eurasia Hospital Co.,Ltd. (“Eurasia”) in the central region of the PRC and Yunan Yuxi Minkang Hospital Co.,Ltd.(“Minkang”) in the southwest region of the PRC. Qiangsheng, Eurasia and Minkang were owned by the same owners. Qiangsheng has 20 hospital beds and 68 employees, including 10 doctors, 26 nurses, 14 other medical staff and 18 non-medical staff, and is a general hospital locally known for its OB/GYN and Chinese traditional medicine specialties. Eurasia has 30 hospital beds and 42 employees, including 11 doctors, 12 nurses, 4 other medical staff and 15 non-medical staff. Minkang has 120 hospital beds and 118 employees, including 28 doctors, 55 nurses, 12 other medical staff and 23 non-medical staff, and is a general hospital locally known for its OB/GYN and Chinese traditional medicine specialties.
34
BUSINESS SEGMENTS
The Company currently operates in four reportable segments: retail pharmacy, wholesale pharmaceuticals, wholesale medical devices and medical services. The retail pharmacy segment sells prescription and OTC medicines, TCM, healthcare supplies and sundry items to retail customers through its directly-owned pharmacies and authorized retail stores. The wholesale pharmaceuticals segment includes supplying prescription and OTC medicines, TCM, healthcare supplies and sundry items to clinics, third party pharmacies, hospitals and other drug wholesalers. There were no inter-segment revenues between our retail pharmacy and wholesale pharmaceuticals segments. The wholesale medical device segment distributes medical devices, including medical consumables to private clinics, hospitals, third party pharmacies and other medical device dealers. Medical services include private comprehensive hospitals operating in China.
The segments’ accounting policies are the same as those described in the summary of significant accounting policies. The Company’s chief operating decision maker (“CODM”), who is the CEO of the Company, evaluates performance of each segment based on profit or loss from continuing operations net of income tax.
The Company’s reportable business segments are strategic business units that offer different products and services. Each segment is managed independently because they require different operations and markets to distinct classes of customers.
GOING CONCERN
The accompanying unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the discharge of liabilities in the normal course of business for the foreseeable future.
As reflected in the accompanying unaudited condensed consolidated financial statements, the Company incurred a net loss of $3,566,365 for the six months ended June 30, 2021 and as of June 30, 2021, the Company had an accumulated deficit of $16.5 million and a working capital deficit of $2.03 million. In addition, the Company continues to generate operating losses and has negative cash flow from its continuing operations. Primarily as a result of its operating loss in the first half year, the Company’s cash position from operating activities declined by $3.5 million in the six months ended June 30, 2021. Management believes these factors raise substantial doubt about the Company’s ability to continue as a going concern for the next twelve months.
The continuation of the Company as a going concern through the next twelve months is dependent upon (1) the continued financial support from its stockholders or external financing, and (2) further implement management’s business plan to extend its operations and generate sufficient revenues and cash flow to meet its obligations.
In order to provide necessary financing, the Company entered into a securities purchase agreement on May 18, 2020 (the “May SPA”) with two institutional investors (each an “Institutional Investor” and collectively the “Institutional Investors”) to sell a new series of senior secured convertible notes (the “Convertible Notes”) of the Company in a private placement, in the aggregate principal amount of $6,550,000 having an aggregate original issue discount of 19.85%, and ranking senior to all outstanding and future indebtedness of the Company. On June 2, 2020, two Convertible Notes in an aggregate original principal amount of $4,450,000 were issued to the Institutional Investors. On February 24, 2021 additional Convertible Notes in the aggregate original principal amount of $5,400,000 were issued to the same Institutional Investors. See “LIQUIDITY AND CAPITAL RESOURCES.”
35
These conditions raise substantial doubt about the Company’s ability to continue as a going concern. These unaudited condensed financial statements do not include any adjustments to reflect the possible future effect on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the outcome of these uncertainties. Management believes that the actions presently being taken to obtain additional funding and implement its strategic plan provide the opportunity for the Company to continue as a going concern.
CRITICAL ACCOUNTING POLICIES
Our discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. On an on-going basis, we evaluate our estimates and judgments, including those related to revenue, receivable, inventory, and accrued expenses. We base our estimates on historical experience, known trends and events and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Changes in estimates are recorded in the period in which they become known.
We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements.
| ● | Accounts receivable and allowance for doubtful accounts |
Accounts receivable are recorded at the invoiced amount and do not bear interest, which are due within contractual payment terms, generally 30 to 90 days from delivery. Credit is extended based on evaluation of a customer’s financial condition, the customer credit-worthiness and their payment history. Accounts receivable outstanding longer than the contractual payment terms are considered past due. Past due balances over 90 days and over a specified amount are reviewed individually for collectability. At the end of each period, the Company specifically evaluates individual customer’s financial condition, credit history, and the current economic conditions to monitor the progress of the collection of accounts receivables. For the receivables that are past due or not being paid according to payment terms, the appropriate actions are taken to exhaust all means of collection, including seeking legal resolution in a court of law. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any off-balance-sheet credit exposure related to its customers. As of June 30, 2021 and December 31, 2020, the allowance for doubtful accounts was $1,205,824 and $1,236,830, respectively.
| ● | Advances to suppliers |
Advances to suppliers consist of prepayments to the Company’s vendors, such as pharmaceutical manufacturers and medicine suppliers. The Company typically prepays for the purchase of our merchandise, especially for those salable, scarce, personalized medicine or medical devices. The Company typically receive products from vendors within three to nine months after making prepayments. The Company continuously monitor delivery from, and payments to, the vendors while maintaining a provision for estimated credit losses based upon historical experience and any specific supplier issues, such as discontinuing of inventory supply, that have been identified. If the Company has difficulty receiving products from a vendor, the Company would cease purchasing products from such vendor, request return of our prepayment promptly, and if necessary, take legal action. The Company has not taken such type of legal action during the reporting periods. If none of these steps are successful, management will then determine whether the prepayments should be reserved or written off. As of June 30, 2021 and December 31, 2020, the allowance for doubtful accounts was $7,541 and $7,463, respectively.
36
| ● | Inventories |
Inventories are stated at the lower of cost or market value. Cost is determined using the weighted average method, and market value is the middle (the second highest) value among an inventory item’s replacement cost, market celling and market floor. The Company carries out physical inventory counts on a monthly basis at each store and warehouse location. The Company reviews historical sales activity quarterly to determine excess, slow moving items and potentially obsolete items. The Company provides inventory reserve based on the excess quantities on hand equal to the difference, if any, between the cost of the inventory and its estimated market value, or obsolescence of inventories determined principally by customer demand. As of June 30, 2021 and December 31, 2020, the Company recorded an allowance for obsolete inventories, which mainly consists of expired medicine, of $62,675 and $9,825, respectively.
| ● | Property, plant and equipment |
Property, plant and equipment are stated at cost less accumulated depreciation and impairment, if any. Depreciation is calculated on the straight-line basis over the following expected useful lives from the date on which they become fully operational and after taking into account their estimated residual values:
Expected | Residual value | |||||
| Building | 20 years | 5 | % | |||
| Office equipment | 3 years | 5 | % | |||
| Electronic equipment | 3 years | 5 | % | |||
| Furniture | 5 years | 5 | % | |||
| Medical equipment | 10 years | 5 | % | |||
| Vehicles | 4 years | 5 | % | |||
Expenditures for repairs and maintenance are expensed as incurred. When assets have been retired or sold, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in the results of operations.
| ● | Intangible assets |
Intangible assets consist primarily of management system software. Intangible assets are stated at cost less accumulated amortization and impairment, if any. Intangible assets are amortized using the straight-line method with the following estimated useful lives:
Expected | ||
| Software | 10 years |
| ● | Goodwill |
Goodwill represents the excess of the purchase price over the amounts assigned to the fair value of the assets acquired and the liabilities assumed of an acquired business. In accordance with ASC 350, Goodwill and Other Intangible Assets, recorded goodwill amounts are not amortized, but rather are tested for impairment annually or more frequently if there are indicators of impairment present.
Goodwill is tested for impairment at the reporting unit level on at least an annual basis or when an event occurs, or circumstances change that would more-likely-than-not reduce the fair value of a reporting unit below its carrying value. These events or circumstances include a significant change in stock prices, business environment, legal factors, financial performances, competition, or events affecting the reporting unit. Application of the goodwill impairment test requires judgment, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units, and determination of the fair value of each reporting unit. The estimation of fair value of a reporting unit using a discounted cash flow methodology also requires significant judgments, including estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term rate of growth for the Company’s business, estimation of the useful life over which cash flows will occur, and determination of the Company’s weighted average cost of capital. The estimates used to calculate the fair value of a reporting unit change from year to year based on operating results and market conditions. Changes in these estimates and assumptions could materially affect the determination of fair value and goodwill impairment for the reporting unit.
The Company identified reporting units at the lowest level within the entity at which goodwill is monitored for internal management purposes. Management evaluated the recoverability of goodwill by performing a qualitative assessment before using a two-step impairment test approach at the reporting unit level. If the Company reorganizes its reporting structure in a manner that changes the composition of one or more of its reporting units, goodwill is reassigned based on the relative fair value of each of the affected reporting units.
37
| ● | Revenue recognition |
We adopted Accounting Standard Codification (“ASC”) Topic 606, Revenues from Contract with Customers (“ASC 606”) for all periods presented. Under ASC 606, revenue is recognized when control of the promised goods and services is transferred to the Company’s customers, in an amount that reflects the consideration that we expect to be entitled to in exchange for those goods and services, net of value-added tax. We determine revenue recognition through the following steps:
| ● | Identify the contract with a customer; |
| ● | Identify the performance obligations in the contract; |
| ● | Determine the transaction price; |
| ● | Allocate the transaction price to the performance obligations in the contract; and |
| ● | Recognize revenue when (or as) the entity satisfies a performance obligation. |
The transaction price is allocated to each performance obligation on a relative standalone selling price basis. The transaction price allocated to each performance obligation is recognized when that performance obligation is satisfied by the control of the promised goods and services is transferred to the customers, which at a point in time or over time as appropriate.
Our revenues are net of value added tax (“VAT”) collected on behalf of PRC tax authorities in respect to the sales of merchandise. VAT collected from customers, net of VAT paid for purchases, is recorded as a liability in the accompanying consolidated balance sheets until it is paid to the relevant PRC tax authorities
| ● | Convertible promissory notes |
We record debt net of debt discount for beneficial conversion features and warrants, on a relative fair value basis. Beneficial conversion features are recorded pursuant to the Beneficial Conversion and Debt Topics of the FASB Accounting Standards Codification. The amounts allocated to warrants and beneficial conversion rights are recorded as debt discount and as additional paid-in-capital. Debt discount is amortized to interest expense over the life of the debt.
| ● | Derivative instruments |
We enter into financing arrangements that consist of freestanding derivative instruments or are hybrid instruments that contain embedded derivative features. We account for these arrangements in accordance with ASC Topic 815, Accounting for Derivative Instruments and Hedging Activities (“ASC 815”) as well as related interpretation of this standard. In accordance with this standard, derivative instruments are recognized as either assets or liabilities in the balance sheet and are measured at fair values with gains or losses recognized in earnings. Embedded derivatives that are not clearly and closely related to the host contract are bifurcated and are recognized at fair value with changes in fair value recognized as either a gain or loss in earnings. We determine the fair value of derivative instruments and hybrid instruments based on available market data using appropriate valuation models, giving consideration to all of the rights and obligations of each instrument.
We estimate fair values of derivative financial instruments using various techniques (and combinations thereof) that are considered to be consistent with the objective measuring fair values. In selecting the appropriate technique, we consider, among other factors, the nature of the instrument, the market risks that it embodies and the expected means of settlement. For less complex derivative instruments, such as free-standing warrants, we generally use the Black-Scholes model, adjusted for the effect of dilution, because it embodies all of the requisite assumptions (including trading volatility, estimated terms, dilution and risk free rates) necessary to fair value these instruments. Estimating fair values of derivative financial instruments requires the development of significant and subjective estimates that may, and are likely to, change over the duration of the instrument with related changes in internal and external market factors. In addition, option-based techniques (such as Black-Scholes model) are highly volatile and sensitive to changes in the trading market price of our common stock. Since derivative financial instruments are initially and subsequently carried at fair values, our income (expense) going forward will reflect the volatility in these estimate and assumption changes. Under the terms of the new accounting standard, increases in the trading price of our common stock and increases in fair value during a given financial quarter result in the application of non-cash derivative expense. Conversely, decreases in the trading price of our common stock and decreases in trading fair value during a given financial quarter result in the application of non-cash derivative income.
38
| ● | Foreign currencies translation |
Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the statement of operations. The reporting currency of our company is the United States Dollar (“US$”). Our subsidiaries in the PRC maintain their books and records in their local currency, the Renminbi Yuan (“RMB”), which is the functional currency as it is the primary currency of the economic environment in which these entities operate.
In general, for consolidation purposes, assets and liabilities of its subsidiaries whose functional currency is not the US$ are translated into US$, in accordance with ASC Topic 830-30, “Translation of Financial Statement”, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of foreign subsidiaries are recorded as a separate component of accumulated other comprehensive income within the statement of stockholders’ equity.
| ● | Segment reporting |
ASC Topic 280, “Segment Reporting” establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organization structure as well as information about the type of products and services, geographical areas, business strategies and major customers in business components. For the three and six months ended June 30, 2021 the Company operated in four reportable segments: retail pharmacy, wholesale medical devices, wholesale pharmaceuticals and medical services in the PRC. For the three and six months ended June 30, 2020, the Company operated in three reportable segments: retail pharmacy, wholesale medical devices and wholesale pharmaceuticals.
| ● | Recent accounting pronouncements |
In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740)—Simplifying the Accounting for Income Taxes. ASU 2019-12 is intended to simplify accounting for income taxes. It removes certain exceptions to the general principles in Topic 740 and amends existing guidance to improve consistent application. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020 and interim periods within those fiscal years, with early adoption permitted. The Company will adopt this guidance effective October 1, 2021. The Company is currently evaluating the impact of its pending adoption of this guidance on its consolidated financial statements but does not expect this guidance will have a material impact on its consolidated financial statements.
In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326), which requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost. ASU 2016-13 was subsequently amended by ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments — Credit Losses, ASU 2019-04 Codification Improvements to Topic 326, Financial Instruments — Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, and ASU 2019-05, Targeted Transition Relief. For public entities, ASU 2016-13 and its amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. For all other entities, this guidance and its amendments will be effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. As an emerging growth company, the Company plans to adopt this guidance effective October 1, 2023. The Company is currently evaluating the impact of its pending adoption of ASU 2016-13 on its consolidated financial statements but does not expect this guidance will have a material impact on its consolidated financial statements.
Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the Company’s consolidated financial statements upon adoption.
Recent Developments
An outbreak of infectious respiratory illness caused by a novel coronavirus known as COVID-19 spread globally in 2020. This outbreak resulted in travel restrictions, closed international borders, enhanced health screenings at ports of entry and elsewhere, disruption of and delays in healthcare service preparation and delivery, prolonged quarantines, cancellations, supply chain disruptions, and lower consumer demand, layoffs, defaults and other significant economic impacts, as well as general concern and uncertainty.
39
Since the outbreak of the pandemic, our operations have been materially impacted. At the beginning of February 2020, the Chinese government issued a quarantine order, which lasted for more than two months in many parts of the country, where everyone had to stay at home. During February and March, all of our administrative functions had to be performed remotely. In July 2020, there was a second wave of COVID-19 and a lockdown in Dalian, which lasted for several weeks. As a result, sales in our pharmacy stores in Dalian continued to be severely impacted.
Because of the pandemic, we also suffered a significant reduction in sales during the first quarter in 2020. As a result of the Chinese government’s lockdown order, our customer traffic plummeted. Certain of our popular and high profit margin products could not be sold due to the governmental restrictive orders, which also resulted in the expiration of a large quantity of our inventory of medicines that are otherwise in high demand in the winter season.
During the epidemic outbreak of 2020, our pharmacies experienced significant difficulty in obtaining products including prescription drugs, OTC drugs, TCM, nutritional supplements, sundry products and medical consumables from our suppliers for resale, pending the settlement of several large court judgements against Boqi Zhengji in favor of such suppliers. As a result, our retail pharmacy business had minimal sales. On December 11, 2020, we entered into a Termination and Release Agreement (the with the four individuals who sold Boqi Zhengji to the Company. The four individuals confirmed that Boqi Zhengji’s performance targets as stipulated in the Stock Purchase Agreement would not be met, and therefore they would not be eligible to receive the Cash Consideration or any other additional payments.
Our operations have not been materially impacted by the pandemic in 2021.
Since the acquisition of Guanzan Group, our wholesale distribution of medical devices and pharmaceuticals made a significant contribution to our company. We started to focus on deeper penetration of the healthcare market in the Southwest region of China and gained a wider footprint in the PRC. We decided to re-focus our retail pharmacy business to Chongqing. By the end of 2020, we had opened five (5) retail pharmacies branded “Lijiantang”. We intend to open additional pharmacy stores to expand the geographic coverage of our pharmacy business.
Guoyitang and Zhongshan were acquired during February 2021 as part our plan to establish a more comprehensive healthcare platform, promote innovative internet healthcare services and to create a regional healthcare partnership. On May 6, we acquired three private hospitals, Qiangsheng, Eurasia and Minkang.We believe that the hospital acquisitions will also accelerate our online-to-offline strategy. We believe that the online-to-offline platform, in combination with enhanced drug delivery and future telemedicine services, will help the hospitals expand the coverage of their services and offer better services to patients.
We plan to form partnerships with hospitals with regional reputation and emerging medical services facilities, with the goal of making quality medical care more accessible to the wider public, especially in less-developed areas, to provide health management and healthcare services for both urban and rural residents alike in a more inclusive and coherent manner.
On July 6, 2021, the General Office of the Communist Party of China Central Committee and the General Office of the State Council jointly issued a document to crack down on illegal activities in the securities markets and promote the high-quality development of the capital markets, which, among other things, requires the relevant governmental authorities to strengthen cross-border oversight of law-enforcement and judicial cooperation, to enhance supervision over China-based companies listed overseas, and to establish and improve the system of extraterritorial application of the PRC securities laws. Since this document is relatively new, uncertainties still exist in relation to how soon legislative or administrative regulation making bodies will respond and what existing or new laws or regulations or detailed implementations and interpretations will be modified or promulgated, if any, and the potential impact such modified or new laws and regulations will have on companies like us.
RESULTS OF OPERATIONS
Comparison of the three months ended June 30, 2021 and 2020 of consolidated results of operations:
| For the three months ended June 30, | Comparison | |||||||||||||||||||
| 2021 | % of Revenues | 2020 | Amount increase (decrease) | Percentage increase (decrease) | ||||||||||||||||
| Revenues | $ | 9,256,987 | 100 | % | $ | 3,803,257 | $ | 5,453,730 | 143 | % | ||||||||||
| Cost of revenues | 7,292,152 | 79 | % | 3,071,476 | 4,220,676 | 137 | % | |||||||||||||
| Gross profit | 1,964,835 | 21 | % | 731,781 | 1,233,054 | 169 | % | |||||||||||||
| Operating expenses | 2,115,279 | 23 | % | 2,989,489 | (874,210 | ) | (29 | )% | ||||||||||||
| Other income (expenses), net | (112,040 | ) | (1 | )% | 6,920,481 | (7,032,521 | ) | (102 | )% | |||||||||||
| Income (loss) before income tax | (262,484 | ) | (3 | )% | 4,662,773 | (4,925,257 | ) | (106 | )% | |||||||||||
| Income tax expense | 13,255 | 0.1 | % | 43,271 | (30,016 | ) | (69 | )% | ||||||||||||
| Net income (loss) from continuing operations | (275,739 | ) | (3 | )% | 4,619,502 | (4,895,241 | ) | (106 | )% | |||||||||||
| Income from operations of discontinued operations | - | 0 | % | 54,352 | (54,352 | ) | (100 | )% | ||||||||||||
| Less: non-controlling interest | 246 | 0 | % | 33,590 | (33,344 | ) | (99 | )% | ||||||||||||
| Net income (loss) attributable to BIMI International Medical Inc. | $ | (275,985 | ) | (3 | )% | $ | 4,640,264 | $ | (4,916,249 | ) | (106 | )% | ||||||||
40
Comparison of the six months ended June 30, 2021 and 2020 of consolidated results of operations:
| For the six months ended June 30, | Comparison | |||||||||||||||||||
| 2021 | % of Revenues | 2020 | Amount increase (decrease) | Percentage increase (decrease) | ||||||||||||||||
| Revenues | $ | 11,424,991 | 100 | % | $ | 4,217,841 | $ | 7,207,150 | 171 | % | ||||||||||
| Cost of revenues | 8,867,894 | 78 | % | 3,403,775 | 5,464,119 | 161 | % | |||||||||||||
| Gross profit | 2,557,097 | 22 | % | 814,066 | 1,743,031 | 214 | % | |||||||||||||
| Operating expenses | 5,947,929 | 52 | % | 4,395,511 | 1,552,418 | 35 | % | |||||||||||||
| Other income (expenses), net | (143,530 | ) | (1 | )% | 6,898,252 | (7,041,782 | ) | (102 | )% | |||||||||||
| Income (loss) before income tax | (3,534,362 | ) | (31 | )% | 3,316,807 | (6,815,169 | ) | (207 | )% | |||||||||||
| Income tax expense | 32,003 | 0.3 | % | 44,539 | (12,536 | ) | (28 | )% | ||||||||||||
| Net loss from continuing operations | (3,566,365 | ) | (32 | )% | 3,272,268 | (6,838,633 | ) | (209 | )% | |||||||||||
| Loss from operations of discontinued operations | - | 0 | % | (800,605 | ) | 800,605 | (100 | )% | ||||||||||||
| Less: non-controlling interest | 42,861 | 0.4 | % | 26,274 | 16,587 | 63 | % | |||||||||||||
| Net income (loss) attributable to BIMI International Medical Inc. | $ | (3,609,226 | ) | (32 | )% | $ | 2,445,389 | $ | (6,054,615 | ) | (248 | )% | ||||||||
Revenues
Revenues for the three months ended June 30, 2021 and 2020 were $9,256,987 and $3,803,257, respectively. Compared with the three months ended June 30, 2020, revenue increased by $5,453,730, mainly due to the increase in sales of wholesale pharmaceuticals of $3,090,309 and medical services of $3,028,487. Revenues for the six months ended June 30, 2021 and 2020 were $11,424,991 and $4,217,841, respectively. Compared with the same period in 2020, revenue increased by $7,027,150, mainly due to the increase in sales of wholesale pharmaceuticals of $4,188,620 and medical services of $3,732,974.
The significant increase in revenues for the three and six months ended June 30, 2021 were primarily attributable to (1) the focus on gaining wholesale pharmaceutical companies as our major customers and the termination of some customers with a history of poor payment; (2) the operations of our newly-acquired five hospitals.
Revenues from retail pharmacy segment for the three and six months ended June 30, 2021 were $121,117 and $241,230 which were generated from 5 retail pharmacy stores in Chongqing. Our first pharmacy in Chongqing was opened in May 2020.
Revenues from retail pharmacy segment for the three and six months ended June 30, 2020 were $1,483 and $13,797 which were generated from Boqi Zhengji, a discontinued operation. Due to Covid-19, the local lockdown policy had an adverse effect on our Boqi Zhengji retail pharmacy business in which our retail pharmacy stores generated $12,314 of revenue during the first quarter of 2020. During the second quarter of 2020, we experienced significant difficulty in obtaining products from our suppliers for resale, pending the settlement of several large court judgements against Boqi Zhengji in favor of such suppliers. As a result, our retail pharmacy business had minimal sales in the six months ended June 30, 2020.
Revenues from wholesale medical devices segment for the three months ended June 30, 2021 and 2020 was $851,754 and $1,648,746 respectively. Revenues from wholesale medical devices segment for the six months ended June 30, 2021 and 2020 was $916,193 and 1,896,773, respectively. Compared to the same periods in 2020, the decreases in revenues from wholesale medical devices segment in both the three and six months ended June 30, 2021 were due to the unusually longer ordering and shipping process for large-scale medical devices in these periods in 2021. We don’t recognize revenues from the sale of medical devices until the customers have received the medical devices, and longer processing time for large-scale medical devices resulted in a longer revenue recognition cycle.
Revenues from the wholesale pharmaceuticals segment for the three months ended June 30, 2021 and 2020 were $5,231,063 and $2,140,754 respectively. Revenues from the wholesale pharmaceuticals segment for the six months ended June 30, 2021 and 2020 were $6,495,931 and $2,307,311, respectively. Compared with the same periods in 2020, the main reason for the increases were the changes in our customers as we started to develop business relationships with larger wholesale pharmaceutical companies and terminated our business with some customers who had a poor payment history. Moreover, the wholesale pharmaceuticals segment was acquired in March 2020 and the revenues for the three months ended March 31, 2020 were minimal.
41
Revenues from medical services segment for the three months ended June 30,2021 were $3,028,487. Revenue from medical services segment for the six months ended June 30, 2021 were $3,732,974. These revenues reflect the revenues generated by the Guoyitang and Zhongshan hospitals acquired in February 2021 and the Minkang, Eurasia and Qiangsheng hospitals acquired in May 2021.
Cost of revenues
Cost of revenues for the three months ended June 30, 2021 and 2020 were $7,292,151 and $3,071,476 respectively. Cost of revenues for the six months ended June 30, 2021 and 2020 were $8,867,894 and $3,403,775, respectively.
Cost of revenues of our retail pharmacy segment consists primarily of the cost of the pharmaceuticals, medical devices and other products that we sell to customers. For the three and six months ended June 30, 2021, cost of revenues of our retail pharmacy segment were $96,087 and $195,582, respectively. For the six and three months ended June 30, 2020, cost of revenues of our discontinued retail pharmacy operations in Dalian were $198,410 and $68,927, respectively, including an inventory impairment of $68,600 that resulted from the expiration of a large portion of our products because of the local lockdown.
Cost of revenues of our wholesale medical devices segment consists primarily of cost of medical devices, medical consumables and costs related directly to contracts with customers. For the three months ended June 30, 2021 and 2020, the cost of revenues of our wholesale medical devices segment was $666,860 and $1,265,588, respectively. For the six months ended June 30, 2021 and 2020, the cost of revenues of the wholesale medical devices segment was $697,321 and $1,464,624, respectively. The decreases in the three and six months periods in 2021 are mainly due to the decrease in revenue from wholesale medical devices segment in 2021.
Cost of revenues of our wholesale pharmaceuticals segment consists primarily of the cost of medicines, medical consumables and costs related directly to contracts with customers. For the three months ended June 30, 2021 and 2020, the cost of revenues of our wholesale pharmaceuticals segment were $4,956,216 and $1,593,497, respectively. For the six months ended June 30, 2021 and 2020, the cost of revenues of our wholesale pharmaceuticals segment were $5,763,072 and $1,726,760, respectively. The increase in both the three and six month periods in 2021 is mainly due to the increase in revenue from the wholesale pharmaceuticals segment in 2021.
Cost of revenues of our medical services consists primarily of the cost of medicine, doctor and nurses’ salaries and rental expense. For the three and six months ended June 30, 2021, the cost of revenues of the medical services segment were $1,454,726 and $2,093,533, respectively.
Gross margin
For the three months ended June 30, 2021 and 2020, we had gross margins of 21.2% and 19.2%, respectively. For the three months ended June 30, 2021 and 2020, the gross profit margin of our: (i) retail pharmacy segment was 20.7% (in 2021; (ii) wholesale medical devices segment were 21.7% and 23.2%, respectively; (iii) wholesale pharmaceuticals segments were 5.3% and 25.6%, respectively; and (iv) medical services segment was 52.0% in 2021.
For the six months ended June 30, 2021 and 2020, we had gross margins of 22.4% and 19.3%, respectively. For the six months ended June 30, 2021 and 2020, the gross profit margin of our: (i) retail pharmacy segment was 18.9% in 2021; (ii) wholesale medical devices segment were 23.9% and 22.8%, respectively; (iii) wholesale pharmaceuticals segments were 11.3% and 25.2%, respectively; and (iv) medical services segment was 43.9% in 2021.
Operating expenses
Operating expenses consist mainly of auditing and legal service fees, other professional service fees, directors’ and officers’ compensation expenses, meeting and promotional expenses, depreciation and amortization of items not associated with production, office rental fee and utilities.
Operating expenses were $2,115,279 for the three months ended June 30, 2021 as compared to $2,989,489 for the same period in 2020, a decrease of $874,210 or 29.2%. The decrease is primarily attributable to the amortization in 2020 of the discounts relating to the Convertible Notes issued in the second quarter of 2020.
42
Operating expenses were $5,947,929 for the six months ended June 30, 2021 as compared to $4,395,511 for the same period in 2020, an increase of $1,552,418 or 35.3%. The increase in operating expenses is primarily attributable to the acquisition of Guanzan Group in March 2020 and the acquisition of the hospitals operated by the medical services segment.
Operating expenses of the retail pharmacy segment for the three and six months ended June 30, 2021 were $209,205 and $387,171. Operating expenses of the retail pharmacy segment for the three months ended June 30, 2020 were $306,097, which included $256,511 of amortization of the intangible assets recognized in the acquisition of Boqi Zhengji. Operating expenses of the retail pharmacy segment for the six months ended June 30, 2020 were $651,528, which included $513,022 of amortization of the intangible assets recognized in the acquisition of Boqi Zhengji.
Operating expenses of the wholesale medical devices segment for the three and six months ended June 30, 2021 were $105,944 and $226,527, respectively. Operating expenses of the wholesale medical devices segment for the three months ended June 30, 2020 were $2,108, which amount reflects the recovery of funds previously written off as bad debts. Operating expenses of the wholesale medical devices segment for the six months ended June 30, 2020 were $14,858.
Operating expenses of the wholesale pharmaceuticals segment for the three months ended June 30, 2021 and 2020 were $269,704 and $495,761, respectively. Operating expenses of the wholesale pharmaceuticals segment for the six months ended June 30, 2021 and 2020 were $480,598 and $530,522, respectively. Compared to the same period in 2020, the decrease in operating expenses is primarily attributable to better budgeting and expenses management.
Operating expenses of medical services segment for the three and six months ended June 30, 2021 were $922,511 and $1,241,680, respectively.
For the three months ended June 30, 2021, operating expenses of $41,100 were allocated to the parent company, which primarily related to audit fees paid during the second quarter of 2021. For the six months ended June 30, 2021, operating expenses of $2,814,940 were allocated to the parent company, which primarily related to the general operating expenses of $1,207,835 incurred by the parent company and Xinrongxin, as holding companies and the amortization of the discount relating to the convertible notes issued in 2021 in the amount of $1,607,105.
Other income (expenses)
For three months ended June 30, 2021, we had $112,040 of other expenses, net that included $18,158 of other expenses and $93,882 of interest expenses from short-term bank loans and long-term bank loans of the Guanzan Group and the Guoyitang and Zhongshan hospitals. For six months ended June 30, 2021, we had $143,530 of other expenses, net that included $5,293 of other expenses and $138,237 of interest expenses from the short-term bank loans and long-term bank loans of the Guanzan Group and the Guoyitang and Zhongshan hospitals.
For the three months ended June 30, 2020, we reported other income of $6,986,717 and other interest expense of $48,236. For the six months ended June 30, 2020, we reported other income of $6,968,172 and other interest expense of $69,920. Other income in both periods includes the gain generated from the disposal of the NF Group.
Net income (loss) from continuing operation
Net loss from continuing operations were $275,739 and $3,566,365 for the three and six months ended June 30, 2021, respectively. Net income from continuing operations were $4,619,502 and $3,272,268 for the three and six months ended June 30, 2020, respectively.
Loss from operations of discontinued operations
The operations of the NF Group are classified as discontinued operations. Loss from the NF Group’s operation was $800,605 for the six months ended June 30, 2020.
Net income (loss)
As a result of the foregoing, our net losses were $275,239 and $3,566,365 for the three and six months ended June 30, 2021. For the three and six months ended June 30, 2020 we had net income of $4,673,854 and $2,471,663, respectively.
43
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 2021, we had cash of $631,214 and a working capital deficit of $2.03 million as compared to cash of $135,309 and working capital of $9,619,274 at December 31, 2020.
During the period between September 27, 2019 and February 13, 2020, we sold $1,534,250 of convertible notes to various investors that matured during the period beginning September 27, 2020 and ending on February 13, 2021. Each of these notes was issued for a term of 12 months, carrying 6% annual interest rate and convertible into the Company’s common stock. According to the applicable agreements, each holder of such notes had the right during the period beginning one hundred eighty (180) calendar days following the date of their issuance and ending on the maturity date, to convert all or any part of the outstanding and unpaid principal into shares of common stock. All of the above notes, other than a note in the amount $74,473, were converted into shares of our common stock during the year ended December 31, 2020. The remaining note of $74,473 was converted into shares of the Company’s common stock on February 3, 2021.
On February 1, 2020, we entered into a stock purchase agreement to acquire Guanzan. Pursuant to the agreement, we agreed to purchase all the issued and outstanding equity interests in Guanzan and its subsidiary, Shude, for RMB 100,000,000 (approximately $14,285,714) to be paid by the issuance of 950,000 shares of our common stock and the cash payment of RMB 80,000,000 (approximately $11,428,571.) On March 18, 2020, we closed the Guanzan acquisition by delivering 950,000 shares of our common stock. In addition, we assumed bank indebtedness of $1,135,884 in connection with the acquisition.
On May 18, 2020, we entered into the May SPA with the Institutional Investors to sell $6,550,000 of our Convertible Notes at an aggregate original issue discount of 19.85% and ranking senior to all outstanding and future indebtedness of the Company. The Convertible Notes do not bear interest except upon the occurrence of an event of default.
Pursuant to the May SPA, two 2020 Convertible Notes, each in the face amount of $2,225,000, were issued to the Institutional Investors in consideration of the payment of $1,750,000 in cash for each Convertible Note. The Convertible Notes mature on the eighteen-month anniversary of the issuance date, are payable in installments and are convertible at the election of the investors at the conversion price of $2.59 per share, subject to adjustment in the event of default. Each investor also received a warrant to purchase 650,000 shares of our company’s common stock at an initial exercise price of $2.845 per share. The placement agent for the private placement received a warrant to purchase up to 171,845 shares of our common stock at an initial exercise price of $2.845 per share, subject to increase based on the number of shares of common stock issued pursuant to the 2020 Notes. Pursuant to the May SPA, additional convertible notes in an aggregate original face amount not to exceed $2,100,000 (the “Additional Notes”) could also be issued to the Institutional Investors under certain circumstances. On February 24, 2021, we entered into an amendment to the May SPA with the Institutional Investors to increase the amount of the Additional Notes by $3,300,000 to $5,400,000. On February 26, 2021, Additional Notes in an aggregate original principal amount of $5,400,000 were issued to the Institutional Investors, together with the issuance of warrants to acquire an aggregate of 760,000 shares of common stock at an initial exercise price of $2.845 per share. The placement agent for the private placement received a warrant to purchase up to 173,745 shares of our common stock at an initial exercise price of $2.845 per share, subject to increase based on the number of shares of common stock issued pursuant to the Additional Notes.
In connection with the May SPA, the Institutional Investors and the Chairman of the Board our company, Mr. Yongquan Bi, entered into a Shareholder Pledge Agreement, pursuant to which Mr. Bi agreed to pledge 1.5 million shares of common stock beneficially owned by him, in favor of the Institutional Investors to secure the performance of our obligations in the above two private placement transactions.
On June 23, 2020, we completed the disposition of the NF Group, at which time we received $10 million from the buyer,
On December 11, 2020, we entered into the Release Agreement extinguishing our obligation to pay any additional consideration in connection with the purchase of Boqi Zhengji. We subsequently sold all the issued and outstanding shares of the capital stock of Boqi Zhengji in consideration of $1,700,000 on December 11, 2020.
The following is a summary of cash provided by or used in each of the indicated types of activities during the six months ended June 30, 2021 and 2020, respectively.
| For the six months ended June 30, | ||||||||
| 2021 | 2020 | |||||||
| Net cash used in operating activities | $ | (3,589,450 | ) | $ | (3,429,513 | ) | ||
| Net cash provided by(used in) investing activities | (287,702 | ) | 95,220 | |||||
| Net cash provided by financing activities | 4,255,662 | 4,000,531 | ||||||
| Exchange rate effect on cash | 117,396 | (593,510 | ) | |||||
| Net cash inflow | $ | 495,906 | $ | 72,728 | ||||
44
Operating Activities
We used $3,589,450 in our continuing operations during the six months ended June 30, 2021, as compared to $3,636,187 used in continuing operating activities and $206,674 provided by discontinued operating activities during the six months ended June 30, 2020.
Net loss from our operation (before non-cash adjustments) was $3.56 million for the six months ended June 30, 2021 compared to net income of $3.27 million incurred in the same period in 2020. The decrease is attributable to: (1) the increase in fees paid for external professional services as a result of increased auditing and legal services of approximately $0.59 million; (2) increase of amortization of discount on the Additional Notes of $0.67 million; and (3) significant changes in account receivables, inventories, accounts payable and advances from customers.
During the six months ended June 30, 2020, adjustments for non-cash items primarily included the gain recorded on the disposal of the NF Group in the amount of $6.94 million, amortization of convertible notes of $1.075 million and depreciation and amortization expenses of $245,300.
Investing Activities
Cash used in investing activities was $287,702 for the six months ended June 30, 2021 compared to $95,220 of cash provided by investing activities for the same period in 2020. Cash used in investing activities for the six months ended June 30, 2021 included $75,192 and $12,341 of cash received from the acquisition of the Guoyitang and Zhongshan and the acquisition of Minkang, Eurasia and Qiangsheng Hospitals, and $375,235 paid for the purchase of property, plant and equipment.
Cash provided by investing activities for the six months ended June 30, 2020 was $95,220 received in the acquisition of the Guanzan Group.
Financing Activities
Cash provided by our financing activities was $4,255,662 for the six months ended June 30, 2021, as compared to $4,159,357 provided by financing activities from continuing operations and $158,826 used in discontinued financing activities for the six months ended June 30, 2020.
For the six months ended June 30, 2021, cash provided by our financing activities included $4,065,500 of net proceeds from the issuance of the Additional Notes, $553,490 from bank loans, $164,841 from related party loans, offset by the repayment of $350,416 of long-term loans and the $177,253 repayment of short-term loans.
During the six months ended June 30, 2020, we raised $3.46 million through the issuance of the Convertible Notes and $0.68 million from related party loans. The proceeds from the sale of the NF Group were not included in cash flows during the period.
Management believes that the continued implementation of its strategic plan will provide the Company with the resources to fund its operations for the next twelve months. In addition, the Company believes it will recover the $3,065,118 prepayment it made in connection with its plan to acquire Chongqing Cogmer Biology Technology Co., Ltd. The continuation of the Company as a going concern through the next twelve months is dependent upon: (1) the continued financial support from its stockholders or external financing, and (2) further implementation of management’s business plan to generate sufficient revenues and cash flow to meet its obligations. While the Company believes in the viability of its strategy to increase sales volume and in its ability to raise additional funds, there can be no assurance to that it will be successful in either respect.
Contractual Obligations
As of June 30, 2021 we had contractual obligations of $25,178,043, consisting of: (i) a $6,100,723 contractual obligation, which is the maximum amount of the cash consideration for the Guoyitang acquisition, which is subject to post-closing adjustments; (ii) a $6,100,723 contractual obligation, which is the maximum amount of the cash consideration for the Zhongshan acquisition, which is subject to post-closing adjustments; (iii) a $3,065,181 contractual obligation, which is the maximum amount of the cash consideration for the acquisition of the Guanzan Group, which is subject to post-closing adjustments; and (iv) a $9,911,416 contractual obligation, which is the maximum amount of the cash consideration for the acquisition of the Minkang, Eurasia and Qiangsheng hospitals, which is subject to post-closing adjustments.
Inflation and Seasonality
We do not believe that our operating results have been materially affected by inflation during the preceding two years. There can be no assurance, however, that our operating results will not be affected by inflation in the future. At present we are able to increase our product sale prices due to the rising prices charged by our suppliers. At present we are able to increase our product sale prices to offset the rising prices charged by our suppliers.
45
OFF-BALANCE SHEET ARRANGEMENTS
We do not have any material off-balance sheet arrangements.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Pursuant to Item 305(e) of Regulation S-K (§ 229.305(e)), the Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined by Rule 229.10(f)(1).
Item 4. Controls and Procedures
Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures
We conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (Exchange Act), under the supervision of and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer. Based on that evaluation and the identification of a material weakness in internal control over financial reporting described below, our management, including the Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures, as of June 30, 2021, and during the period prior were not effective.
Internal control over financial reporting is defined in Rule 13a-15(f) under the Exchange Act as a process designed by, or under the supervision of, the company’s principal executive officer and principal financial officer and effected by the Company’s Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:
| ● | Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; |
| ● | Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with management authorization; and |
| ● | Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements. |
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Due to the Company’s limited resources, the Company does not have accounting personnel with extensive experience in maintaining books and records and preparing financial statements in accordance with US GAAP which could lead to untimely identification and resolution of accounting matters inherent in the Company’s financial transactions in accordance with US GAAP.
Management’s Remediation plan
While management believes that the financial statements we previously filed in our SEC reports have been properly recorded and disclosed in accordance with US GAAP, based on the control deficiencies identified above, management is currently seeking to engage an outside consultant with considerable public company reporting experience and breadth of knowledge of US GAAP to provide additional training to its accounting personnel in connection with the preparation and review of our financial statements.
Changes in Internal Control over Financial Reporting
Subject to the foregoing disclosure, there were no changes in our internal control over financial reporting during the six months ended June 30, 2021 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
46
PART II ---- OTHER INFORMATION
Item 1. Legal Proceedings.
On April 1, 2020, the Guizhou Province Xiuwen County People’s Court ordered the attachment of two of Shude’s bank accounts pursuant to a pre-litigation attachment application filed by one of Shude’s suppliers in connection with unpaid outstanding payables of approximately RMB 365,200 (approximately $51,437). No lawsuit was filed by the supplier and the dispute has been resolved and attachment removed.
Item 1A. Risk Factors
As of the date of this filing, there have been no material changes from the risk factors disclosed in Part I, Item 1A (Risk Factors) contained in our Annual Report on Form 10-K for the year ended December 31, 2020.
We operate in a changing environment that involves numerous known and unknown risks and uncertainties that could materially affect out operations. The risks, uncertainties and other factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2020, including the risks arising from the spread of COVID-19 and the risks associated with our acquisition of five hospitals, may cause our actual results, performances and achievements to be materially different from those expressed or implied by our forward-looking statements.
On July 6, 2021, the General Office of the Communist Party of China Central Committee and the General Office of the State Council jointly issued a document to crack down on illegal activities in the securities markets and promote the high-quality development of the capital markets, which, among other things, requires the relevant governmental authorities to strengthen cross-border oversight of law-enforcement and judicial cooperation, to enhance supervision over China-based companies listed overseas, and to establish and improve the system of extraterritorial application of the PRC securities laws. Since this document is relatively new, uncertainties still exist in relation to how soon legislative or administrative regulation making bodies will respond and what existing or new laws or regulations or detailed implementations and interpretations will be modified or promulgated, if any, and the potential impact such modified or new laws and regulations will have on companies like us.
If any of these risks or events occurs, our business, financial condition or results of operations may be adversely affected.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
On February 2, 2021, we issued 2,000,000 shares of our common stock as the Guoyitang Stock Consideration.
On February 2, 2021, we entered into a consulting agreement with Real Miracle Investments Limited for consulting services. On February 5, 2021, we issued 250,000 shares of the Company’s common stock to the consultant in consideration for services rendered.
On March 26, 2021, we issued 2,000,000 shares of our common stock as the Zhongshan Stock Consideration.
On April 20, 2021, the Company issued 4,000,000 shares of our common stock as stock consideration for the Acquisition of Minkang, Qiangsheng and Eurasia hospitals.
On April 29, 2021, we issued 500,000 shares of our common stock as payment for improvements to our offices in Chongqing.
All of such issuances were made in reliance on Regulation S.
Item 3. Defaults upon Senior Securities.
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information.
None.
47
Item 6. Exhibits.
The list of Exhibits required by Item 601 of Regulation S-K to be filed as a part of this Form 10-Q are set forth on the Exhibit Index immediately preceding such Exhibits and is incorporated herein by this reference.
| Exhibit Number |
Description | Incorporated by Reference to | ||
| 31.1 | Rule 13(a)-14(a)/15(d)-14(a) Certification of principal executive officer | |||
| 31.2 | Rule 13(a)-14(a)/15(d)-14(a) Certification of principal financial officer | |||
| 32.1 | Section 1350 Certification of principal executive officer | |||
| 32.2 | Section 1350 Certification of principal financial officer | |||
| 101.INS | Inline XBRL Instance Document. | |||
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document. | |||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |||
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. | |||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
48
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned.
| BIMI International Medical Inc. | ||
| (Registrant) | ||
| Date: August 16, 2021 | By: | /s/ Tiewei Song |
| Tiewei Song | ||
| Chief Executive Officer | ||
| Date: August 16, 2021 | By: | /s/ Yanhong Xue |
| Yanhong Xue | ||
| Chief Financial Officer | ||
49
Exhibit 31.1
Certifications
I, Tiewei Song, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of BOQI International Medical Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-(e)) and internal control over financial reporting (as defined in Exchange Act rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidates subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b) | Designed such internal control over financial reporting, or cause such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures, and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter ( the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
| 5. | The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): |
| a) | All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
| b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
| Date: August 16, 2021 | |
| /s/ Tiewei Song | |
| Tiewei Song | |
| (Principal Executive Officer) |
Exhibit 31.2
Certifications
I, Yanhong Xue, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of BOQI International Medical Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-(e)) and internal control over financial reporting (as defined in Exchange Act rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidates subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b) | Designed such internal control over financial reporting, or cause such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures, and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter ( the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
| 5. | The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): |
| a) | All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
| b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
| Date: August 16, 2021 | |
| /s/ Yanhong Xue | |
| Yanhong Xue | |
| (Principal Financial and Accounting Officer) |
Exhibit 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of BOQI International Medical Inc (the "Company") for the period ended June 30, 2021, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Tiewei Song, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, based on my knowledge:
| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the period ended June 30, 2021. |
| BOQI International Medical Inc | ||
| Date: August 16, 2021 | By: | /s/ Tiewei Song |
| Tiewei Song | ||
| (Principal Executive Officer) | ||
A signed original of this written statement required by Section 906 of the Sarbanes- Oxley Act of 2002 has been provided to BOQI International Medical Inc (the “Company”) and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. This written statement accompanies the Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission, and will not be incorporated by reference into any filing of the Company under the Securities Act of 1933 or the Securities Exchange Act of 1934, irrespective of any general incorporation language contained in such filing.
Exhibit 32.2
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of BOQI International Medical Inc (the "Company") for the period ended June 30, 2021, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Yanhong Xue, certifies, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, based on my knowledge:
| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the period ended June 30, 2021. |
| BOQI International Medical Inc | ||
| Date: August 16, 2021 | By: | /s/ Yanhong Xue |
| Yanhong Xue | ||
|
(Principal Financial and Accounting Officer) | ||
A signed original of this written statement required by Section 906 of the Sarbanes- Oxley Act of 2002 has been provided to BOQI International Medical Inc (the “Company”) and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. This written statement accompanies the Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission, and will not be incorporated by reference into any filing of the Company under the Securities Act of 1933 or the Securities Exchange Act of 1934, irrespective of any general incorporation language contained in such filing.
Condensed Consolidated Balance Sheets (Parentheticals) - $ / shares |
Jun. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Statement of Financial Position [Abstract] | ||
| Common stock, par value (in Dollars per share) | $ 0.001 | $ 0.001 |
| Common stock, shares authorized | 50,000,000 | 50,000,000 |
| Common stock, shares issued | 24,793,988 | 13,254,587 |
| Common stock, shares outstanding | 24,793,988 | 13,254,587 |
Organization and Business Background |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ORGANIZATION AND BUSINESS BACKGROUND |
BIMI International Medical, Inc. (the “Company” or “BIMI”) was incorporated in the State of Delaware as Galli Process, Inc. on October 31, 2000. On February 7, 2002, the Company changed its name to Global Broadcast Group, Inc. On November 12, 2004, the Company changed its name to Diagnostic Corporation of America. On March 15, 2007, the Company changed its name to NF Energy Saving Corporation of America, and on August 24, 2009, the Company changed its name to NF Energy Saving Corporation. On December 16, 2019, the Company changed its name to BOQI International Medical Inc., to reflect the Company’s refocus of its business from the energy saving industry to the health care industry and on June 21,2021, the Company changed its name to BIMI International Medical Inc.
Until October 14, 2019, the Company, through NF Energy Saving Investment Limited and its subsidiaries (the “NF Group”), operated in the energy saving enhancement technology industry in the People’s Republic of China (the “PRC”). The NF Group focused on providing services relating to energy saving technology, optimization design, energy saving reconstruction of pipeline networks and contractual energy management for the electric power, petrochemical, coal, metallurgy, construction, and municipal infrastructure development industries in the PRC and the manufacture and sales of energy-saving flow control equipment. In late 2019, the Company committed to a plan to dispose of all its equity interests in the NF Group and on March 31, 2020, the Company entered into a stock purchase agreement (the “NF SPA”) to sell the NF Group. The sale of the NF Group closed on June 23, 2020. Please refer to NOTE 7 for more information relating to the sale of the NF Group.
On October 14, 2019, the Company acquired 100% of the equity interests in Lasting Wisdom Holdings Limited (“Lasting”), a holding company incorporated under the laws of the British Virgin Islands (“BVI”), which through its subsidiaries held all the ownership interest of Dalian Boqi Zhengji Pharmacy Chain Co., Ltd. (“Boqi Zhengji”). Boqi Zhengji operated 16 retail pharmacy stores in China at the time of the acquisition. Lasting and Boqi Zhengji are hereinafter collectively referred to as the “Boqi Zhengji Group”. On December 11, 2020, the Company entered into a stock purchase agreement to sell Boqi Zhengji. While the sale of Boqi Zhengji closed by the end of 2020, the governmental record was not updated until February 2, 2021 due to the Chinese government’s alternative working schedule and other delays caused by COVID-19.
Lasting also indirectly owns 100% equity interests in Dalian Boyi Technology Co., Ltd. (“Dalian Boyi”), a subsidiary established in January 2020 and responsible for the Company’s R&D and other technology related functions.
On June 24, 2020, the Company established a wholly owned subsidiary Boyi (Liaoning) Technology Co., Ltd (“Liaoning Boyi”), in order to be qualified to participate in local healthcare projects. On December 22, 2020, the Company established another subsidiary Bimai Pharmaceutical (Chongqing) Co., Ltd., as the holding company for all of the Company’s retail, wholesale and hospital operations in China.
On March 18, 2020, the Company, through its wholly owned subsidiary, Xinrongxin, acquired 100% of the equity interests in Chongqing Guanzan Technology Co., Ltd. (“Guanzan”). Guanzan holds an 95% equity interest in Chongqing Shude Pharmaceutical Co., Ltd. (“Shude”, collectively with Guanzan, the “Guanzan Group”). Guanzan also owns 100% equity interest in Chongqing Lijiantang Pharmaceutical Co. Ltd., a subsidiary established in May 2020 that operates 5 retail pharmacy stores in China.
On December 9, 2020, the Company entered into an agreement to acquire 100% of the equity interests in Chongqing Guoyitang Hospital (“Guoyitang”), the owner and operator of a private general hospital in Chongqing City, a city in Southwest China. The transaction closed on February 2, 2021. On December 15, 2020, the Company entered into a stock purchase agreement to acquire Chaohu Zhongshan Minimally Invasive Hospital (“Zhongshan”), a private hospital in the east region of China. The transaction was closed on February 5, 2021.
On April 9, 2021, the Company entered into a stock purchase agreement to acquire three private hospitals in the PRC, Wuzhou Qiangsheng Hospital (“Qiangsheng”), Suzhou Eurasia Hospital(“Eurasia”) and Yunnan Yuxi MinKang hospital(“Minkang”). The transaction was closed on May 6, 2021.
On April 21, 2021, Bimai Hospital Management (Chongqing) Co. Ltd.(‘Chongqing HM”) was incorporated in the PRC by the Company to manage the operation of the Company’s medical devices segment.
On April 21, 2021, Pusheng Pharmaceutical Co., Ltd. (“Pusheng”) was incorporated in the PRC by the Company to manage its wholesale distribution of generic drugs.
As of June 30,2021, the details of the Company’s major subsidiaries are as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Going Concern Uncertainties |
6 Months Ended | ||
|---|---|---|---|
Jun. 30, 2021 | |||
| Going Concern Uncertainties [Abstract] | |||
| GOING CONCERN UNCERTAINTIES |
The accompanying unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the discharge of liabilities in the normal course of business for the foreseeable future.
As reflected in the accompanying unaudited condensed consolidated financial statements, the Company incurred a net loss of $3,566,365 for the six months ended June 30, 2021and as of June 30, 2021, the Company had an accumulated deficit of $16.5 million and a working capital deficit of $2.03 million. In addition, the Company continues to generate operating losses and has negative cash flow from its continuing operations. Primarily as a result of its operating loss in the first half of 2021, the Company’s cash position from operating activities declined by $3.5 million in the six months ended June 30, 2021. Management believes these factors raise substantial doubt about the Company’s ability to continue as a going concern for the next twelve months.
The continuation of the Company as a going concern through the next twelve months is dependent upon: (1) the continued financial support from its stockholders or external financing, and (2) further implementation of management’s business plan to generate sufficient revenues and cash flow to meet its obligations. While the Company believes in the viability of its strategy to increase sales volume and in its ability to raise additional funds, there can be no assurance to that it will be successful in either respect.
These conditions raise substantial doubt about the Company’s ability to continue as a going concern. These unaudited condensed financial statements do not include any adjustments to reflect the possible future effect on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the outcome of these uncertainties. Management believes that the actions presently being taken to obtain additional funding and implement its strategic plan provides the opportunity for the Company to continue as a going concern. |
Summary of Significant Accounting Policies |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
These accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”). These unaudited condensed consolidated financial statements include the financial statements of the Company and its subsidiaries. All significant inter-company balances and transactions within the Company have been eliminated upon consolidation.
The unaudited interim condensed consolidated financial information as of June 30, 2021 and for the three and six months ended June 30, 2021 and 2020 have been prepared, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures, which are normally included in annual consolidated financial statements prepared in accordance with US GAAP, have been omitted pursuant to those rules and regulations. The unaudited interim condensed consolidated financial information should be read in conjunction with the consolidated financial statements and the notes thereto, included in the Company’s Form 10-K for the fiscal year ended December 31, 2020 filed with the SEC on March 31, 2021.
In the opinion of management, all adjustments (which include normal recurring adjustments) necessary to present a fair statement of the Company’s unaudited condensed consolidated financial position as of June 30, 2021 and its unaudited condensed consolidated results of operations for the three and six months ended June 30, 2021 and 2020, and its unaudited condensed consolidated cash flows for the six months ended June 30, 2021 and 2020, as applicable, have been made. The interim results of operations are not necessarily indicative of the operating results for the fiscal year or any future periods.
The preparation of these condensed consolidated financial statements in conformity with the US GAAP requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities on the date of these condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. The Company bases its estimates and judgments on historical experience and on various other assumptions and information that are believed to be reasonable under the circumstances. Estimates and assumptions of future events and their effects cannot be perceived with certainty and, accordingly, these estimates may change as new events occur, as more experience is acquired, as additional information is obtained and as our operating environment changes. Significant estimates and assumptions made by management include, among others, useful lives and impairment of long-lived assets, collectability of accounts receivable, advances to suppliers, allowance for doubtful accounts, reserve of inventory, fair value of goodwill and valuation of derivative liabilities. While the Company believes that the estimates and assumptions used in the preparation of these condensed consolidated financial statements are appropriate, actual results could differ from those estimates. Estimates and assumptions are periodically reviewed and the effects of revisions are reflected in the consolidated financial statements in the period they are determined to be necessary.
Certain prior year balances were reclassified to conform to the current period presentation, which mainly reflect the presentation of the discontinued operation of the NF Group and Boqi Zhengji. Except for the assets and liabilities of the NF Group and Boqi Zhengji which were reclassified as discontinued assets or liabilities and presented as current assets or liabilities in the consolidated balance sheets, there was no other impacts on reported financial position or cash flows for any of the periods presented.
Cash consists primarily of cash on hand and cash in banks which is readily available in checking and saving accounts. The Company maintains cash with various financial institutions in the PRC where its accounts are uninsured. The Company has not experienced any losses from funds held in bank accounts and believes it is not exposed to any risk on its bank accounts.
Cash that is restricted as to withdrawal or use under the terms of certain contractual agreements or orders are recorded in a restricted cash account in the Company’s unaudited interim condensed consolidated balance sheet.
Accounts receivable are recorded at the invoiced amount and do not bear interest, which are due within contractual payment terms, generally 30 to 90 days from delivery. Credit is extended based on evaluation of a customer’s financial condition, the customer credit-worthiness and their payment history. Accounts receivable outstanding longer than the contractual payment terms are considered past due. Past due balances over 90 days and over a specified amount are reviewed individually for collectability. At the end of each period, the Company specifically evaluates individual customer’s financial condition, credit history, and the current economic conditions to monitor the progress of the collection of accounts receivables. For the receivables that are past due or not being paid according to payment terms, the appropriate actions are taken to exhaust all means of collection, including seeking legal resolution in a court of law. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any off-balance-sheet credit exposure related to its customers. As of June 30, 2021 and December 31, 2020, the allowance for doubtful accounts was $1,205,824 and $1,236,830, respectively.
Advances to suppliers consist of prepayments to the Company’s vendors, such as pharmaceutical manufacturers and medicine suppliers. The Company typically prepays for the purchase of our merchandise, especially for those salable, scarce, personalized medicine or medical devices. The Company typically receive products from vendors within three to nine months after making prepayments. The Company continuously monitor delivery from, and payments to, the vendors while maintaining a provision for estimated credit losses based upon historical experience and any specific supplier issues, such as discontinuing of inventory supply, that have been identified. If the Company has difficulty receiving products from a vendor, the Company would cease purchasing products from such vendor, request return of our prepayment promptly, and if necessary, take legal action. The Company has not taken such type of legal action during the reporting periods. If none of these steps are successful, management will then determine whether the prepayments should be reserved or written off. As of June 30, 2021 and December 31, 2020, the allowance for doubtful accounts was $7,541 and $7,463, respectively.
Inventories are stated at the lower of cost or market value. Cost is determined using the weighted average method, and market value is the middle (the second highest) value among an inventory item’s replacement cost, market celling and market floor. The Company carries out physical inventory counts on a monthly basis at each store and warehouse location. The Company reviews historical sales activity quarterly to determine excess, slow moving items and potentially obsolete items. The Company provides inventory reserve based on the excess quantities on hand equal to the difference, if any, between the cost of the inventory and its estimated market value, or obsolescence of inventories determined principally by customer demand. As of June 30, 2021 and December 31, 2020, the Company recorded an allowance for obsolete inventories, which mainly consists of expired medicine, of $62,675 and $9,825, respectively.
Property, plant and equipment are stated at cost less accumulated depreciation and impairment, if any. Depreciation is calculated on the straight-line basis over the following expected useful lives from the date on which they become fully operational and after taking into account their estimated residual values:
Expenditures for repairs and maintenance are expensed as incurred. When assets have been retired or sold, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in the results of operations.
Intangible assets consist primarily of software of management systems. Intangible assets are stated at cost less accumulated amortization and impairment, if any. Intangible assets are amortized using the straight-line method with the following estimated useful lives:
The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, current portion of obligations under operating leases, and obligations under operating leases, non-current on the Company’s consolidated balance sheets. Finance leases are included in property and equipment, net, current portion of obligations under capital leases, and obligations under capital leases, non-current on our consolidated balance sheets.
Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date, adjusted by the deferred rent liabilities at the adoption date. As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The operating lease ROU assets also include any lease payments made and excludes lease incentives and initial direct costs incurred. The Company’s terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Operating lease expense is recognized on a straight-line basis over the lease term.
Goodwill represents the excess of the purchase price over the amounts assigned to the fair value of the assets acquired and the liabilities assumed of an acquired business. In accordance with ASC 350, Goodwill and Other Intangible Assets, recorded goodwill amounts are not amortized, but rather are tested for impairment annually or more frequently if there are indicators of impairment present.
Goodwill is tested for impairment at the reporting unit level on at least an annual basis or when an event occurs, or circumstances change that would more-likely-than-not reduce the fair value of a reporting unit below its carrying value. These events or circumstances include a significant change in stock prices, business environment, legal factors, financial performances, competition, or events affecting the reporting unit. Application of the goodwill impairment test requires judgment, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units, and determination of the fair value of each reporting unit. The estimation of fair value of reporting unit using a discounted cash flow methodology also requires significant judgments, including estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term rate of growth for the Company’s business, estimation of the useful life over which cash flows will occur, and determination of the Company’s weighted average cost of capital. The estimates used to calculate the fair value of a reporting unit change from year to year based on operating results and market conditions. Changes in these estimates and assumptions could materially affect the determination of fair value and goodwill impairment for the reporting unit.
Management evaluates the recoverability of goodwill by performing a qualitative assessment before using a two-step impairment test approach at the reporting unit level. If the Company reorganizes its reporting structure in a manner that changes the composition of one or more of its reporting units, goodwill will be reassigned based on the relative fair value of each of the affected reporting units.
In accordance with the provisions of ASC Topic 360, “Impairment or Disposal of Long-Lived Assets”, all long-lived assets such as property, plant and equipment held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is evaluated by a comparison of the carrying amount of an asset to its estimated future undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amounts of the assets exceed the fair value of the assets.
We adopted Accounting Standard Codification (“ASC”) Topic 606, Revenues from Contract with Customers (“ASC 606”) for all periods presented. Under ASC 606, revenue is recognized when control of the promised goods and services is transferred to the Company’s customers, in an amount that reflects the consideration that the Company expects to be entitled to in exchange for those goods and services, net of value-added tax. The Company determines revenue recognition through the following steps:
The transaction price is allocated to each performance obligation on a relative standalone selling price basis. The transaction price allocated to each performance obligation is recognized when that performance obligation is satisfied by the control of the promised goods and services is transferred to the customers, which at a point in time or over time as appropriate.
The Company’s revenue is net of value added tax (“VAT”) collected on behalf of PRC tax authorities in respect to the sales of products. VAT collected from customers, net of VAT paid for purchases, is recorded as a liability in the accompanying consolidated balance sheets until it is paid to the relevant PRC tax authorities
Cost of revenue consists primarily of cost of goods purchased from suppliers plus direct material costs for packaging and storage, direct labor, which are directly attributable to the acquisition and maintaining of products for sales. Cost of revenues also include impairment loss of our products which are obsolete or expired for sale, if any. Shipping and handling costs, associated with the distribution of finished products to customers, are borne by the customers.
ASC Topic 220, “Comprehensive Income”, establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive income as defined includes all changes in equity during a period from non-owner sources. Accumulated other comprehensive income, as presented in the accompanying condensed consolidated statement of stockholders’ equity, consists of changes in unrealized gains and losses on foreign currency translation. This comprehensive income is not included in the computation of income tax expense or benefit.
Income taxes are determined in accordance with the provisions of ASC Topic 740, “Income Taxes” (“ASC 740”). Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts.
For the six months ended June 30, 2021 and 2020, the Company did not incur any interest or penalties associated with tax positions. As of June 30, 2021, the Company did not have any significant unrecognized uncertain tax positions.
The Company conducts all of its business in the PRC and is subject to tax in this jurisdiction. As a result of its corporate structure the Company files tax returns that are subject to examination by a foreign tax authority.
Sales revenue represents the invoiced value of goods sold, net of VAT. All of the Company’s products that are sold in the PRC are subject to a VAT on the gross sales price. The VAT rates range up to 13% depending on the type of products sold. The VAT may be offset by VAT paid by the Company on its purchase activities of merchandises, raw materials, utilities, and other materials which cost was included in the cost of producing or acquiring its products for sales. The Company records a VAT payable net of payments if the VAT payable on the gross sales is larger than VAT paid by the Company on purchase of finished goods; on the other hand, the Company records a VAT deductible in the accompanying financial statements net of any VAT payable at the end of reporting period.
The Company records debt net of a discount for beneficial conversion features and warrants, on a relative fair value basis. Beneficial conversion features are recorded pursuant to the Beneficial Conversion and Debt Topics of the FASB Accounting Standards Codification. The amounts allocated to warrants and beneficial conversion rights are recorded as debt discount and as additional paid-in-capital. Debt discount is amortized to interest expense over the life of the debt.
The Company has entered into financing arrangements that consist of freestanding derivative instruments or are hybrid instruments that contain embedded derivative features. The Company accounts for these arrangements in accordance with Accounting Standards Codification Topic 815, Accounting for Derivative Instruments and Hedging Activities (“ASC 815”) as well as related interpretation of this standard. In accordance with this standard, derivative instruments are recognized as either assets or liabilities in the balance sheet and are measured at fair values with gains or losses recognized in earnings. Embedded derivatives that are not clearly and closely related to the host contract are bifurcated and are recognized at fair value with changes in fair value recognized as either a gain or loss in earnings. The Company determines the fair value of derivative instruments and hybrid instruments based on available market data using appropriate valuation models, giving consideration to all of the rights and obligations of each instrument.
We estimate fair values of derivative financial instruments using various techniques (and combinations thereof) that are considered to be consistent with the objective measuring fair values. In selecting the appropriate technique, we consider, among other factors, the nature of the instrument, the market risks that it embodies and the expected means of settlement. For less complex derivative instruments, such as free-standing warrants, we generally use the Black-Scholes model, adjusted for the effect of dilution, because it embodies all of the requisite assumptions (including trading volatility, estimated terms, dilution and risk free rates) necessary to fair value these instruments. Estimating fair values of derivative financial instruments requires the development of significant and subjective estimates that may, and are likely to, change over the duration of the instrument with related changes in internal and external market factors. In addition, option-based techniques (such as Black-Scholes model) are highly volatile and sensitive to changes in the trading market price of our common stock. Since derivative financial instruments are initially and subsequently carried at fair values, our income (expense) going forward will reflect the volatility in these estimate and assumption changes. Under the terms of the new accounting standard, increases in the trading price of the Company’s common stock and increases in fair value during a given financial quarter result in the application of non-cash derivative expense. Conversely, decreases in the trading price of the Company’s common stock and decreases in trading fair value during a given financial quarter result in the application of non-cash derivative income.
The Company calculates net loss per share in accordance with ASC Topic 260, “Earnings per Share.” Basic income per share is computed by dividing the net income by the weighted-average number of common shares outstanding during the period. Diluted income per share is computed similar to basic income per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common stock equivalents had been issued and if the additional common shares were dilutive.
Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the statement of operations.
The reporting currency of the Company is the United States Dollar (“US$”). The Company’s subsidiaries in the PRC maintain their books and records in their local currency, the Renminbi Yuan (“RMB”), which is the functional currency as being the primary currency of the economic environment in which these entities operate.
In general, for consolidation purposes, assets and liabilities of its subsidiaries whose functional currency is not the US$ are translated into US$, in accordance with ASC Topic 830-30, “Translation of Financial Statement”, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of foreign subsidiaries are recorded as a separate component of accumulated other comprehensive income within the statement of stockholders’ equity.
Translation of amounts from RMB into US$ has been made at the following exchange rates for the respective period:
Parties, which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operational decisions. Companies are also considered to be related if they are subject to common control or common significant influence.
ASC Topic 280, “Segment Reporting” establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organization structure as well as information about the type of products and services, geographical areas, business strategies and major customers in business components. For the six months ended June 30, 2021, the Company operated in four reportable segments: retail pharmacy, wholesale pharmaceuticals, wholesale medical devices and medical services in the PRC.
The carrying value of the Company’s financial instruments (excluding short-term bank borrowing and convertible promissory notes): cash and cash equivalents, accounts and retention receivable, prepayments and other receivables, accounts payable, income tax payable, amounts due to related parties other payables and accrued liabilities approximate their fair values because of the short-term nature of these financial instruments.
Management believes, based on the current market prices or interest rates for similar debt instruments, the fair value of its obligation under its finance lease and short-term bank borrowing approximate the carrying amount.
The Company also follows the guidance of the ASC Topic 820-10, “Fair Value Measurements and Disclosures” (“ASC 820-10”), with respect to financial assets and liabilities that are measured at fair value. ASC 820-10 establishes a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair value as follows:
Fair value estimates are made at a specific point in time based on relevant market information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.
The carrying amount of cash, accounts receivable, other receivable, bank credit, accounts payable and other accounts payable approximate their fair value due to the short-term maturity of these instruments.
In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740)—Simplifying the Accounting for Income Taxes. ASU 2019-12 is intended to simplify accounting for income taxes. It removes certain exceptions to the general principles in Topic 740 and amends existing guidance to improve consistent application. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020 and interim periods within those fiscal years, with early adoption permitted. The Company will adopt this guidance effective October 1, 2021. The Company is currently evaluating the impact of its pending adoption of this guidance on its consolidated financial statements but does not expect this guidance will have a material impact on its consolidated financial statements.
In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326), which requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost. ASU 2016-13 was subsequently amended by ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments — Credit Losses, ASU 2019-04 Codification Improvements to Topic 326, Financial Instruments — Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, and ASU 2019-05, Targeted Transition Relief. For public entities, ASU 2016-13 and its amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. For all other entities, this guidance and its amendments will be effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. As an emerging growth company, the Company plans to adopt this guidance effective October 1, 2023. The Company is currently evaluating the impact of its pending adoption of ASU 2016-13 on its consolidated financial statements but does not expect this guidance will have a material impact on its consolidated financial statements.
Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the Company’s consolidated financial statements upon adoption. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The Acquisition of the Guanzan Group |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| The Acquisition Of The Guanzan Group [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| THE ACQUISITION OF THE GUANZAN GROUP |
On February 1, 2020, the Company entered into an agreement to purchase all the issued and outstanding shares of Guanzan (the “Guanzan Shares”) for RMB 100,000,000 (approximately $14,285,714), to be paid by the issuance of 950,000 shares of the Company’s common stock (the “Guanzan Stock Consideration”) and the payment of RMB 80,000,000 in cash (the “Guanzan Cash Consideration”). The Guanzan Stock Consideration was payable at closing and the Guanzan Cash Consideration, which is subject to post-closing adjustments based on the performance of Guanzan in the years ending December 31, 2020 and 2021, was to be paid pursuant to a post-closing payment schedule. The transaction closed on March 18, 2020. The Guanzan Cash Consideration has not been paid as of the date of this report.
Guanzan is a distributor of medical devices whose customers are primarily drug stores, private clinics, pharmaceutical dealers and hospitals in the Southwest of China. Guanzan also holds an 80% ownership interest in Shude. Guanzan holds business licenses in the PRC such as a Business Permit for Medical Devices and a Recordation Certificate for Business Activities Involving Class II Medical Devices, etc., which qualify Guanzan to engage in the distribution of medical devices in the PRC.
Shude is a pharmaceutical distributor that markets generic drugs. Shude’s customers include a wide range of clinics, private and public hospitals and pharmacies in the PRC. Shude holds PRC business licenses such as a Business Permit for Medical Devices and a Drug Wholesale Distribution License, which qualify Shude to engage in the distribution of medicines and medical devices in the PRC. The following summarizes the identified assets acquired and liabilities assumed pursuant to the Guanzan Acquisition as of March 18, 2020:
The fair value of all assets acquired and liabilities assumed is the estimated book value of the Guanzan Group. Goodwill represent the excess of the fair value of purchase price over the amounts assigned to the fair value of the assets acquired and the liabilities assumed of Guanzan Group at the acquisition date. Upon the Guanzan Acquisition, the Company recognized non-controlling interest in Shude in the amount of $46,295, representing the 20% non-controlling equity interest in Shude at the acquisition date. On April 9, 2021, the Company increased its equity interest in Shude from 80% to 95.2% through making a capital investment in Shude directly.
On November 20, 2020, we entered into an agreement for the prepayment (the “Prepayment”) of a portion of the Guanzan Cash Consideration in the amount of RMB 20,000,000, in the form of shares of our Company’s common stock valued at $3.00 per share, in light of Guanzan’s performance during the period from March 18, 2020 to September 30, 2020. On November 30, 2020, 1,000,000 shares of our common stock were issued to the designated assignees of the seller as the Prepayment. The balance of the Guanzan Cash Consideration in the amount of RMB 60,000,000 has not been paid as of this date. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The Acquisition of the Gyoyitang Hospital |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Mineral Industries Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| THE ACQUISITION OF THE GUOYITANG HOSPITAL |
On December 9, 2020, the Company entered into an agreement to acquire Chongqing Guoyitang Hospital Co., Ltd (“Guoyitang”), the owner and operator of a private general hospital in Chongqing City, a southwest city of China, with 100 hospital beds, 53 medical doctors, 40 medical technicians, 50 nurses and 57 administrative employees. Pursuant to the agreement, the Company agreed to purchase all the issued and outstanding equity interests in Guoyitang. The aggregate purchase price for Guoyitang was $15,251,807 (RMB 100,000,000).Upon signing the agreement, 2,000,000 shares of common stock of BIMI and approximately $3,096,119 (RMB 20,000,000) was paid as partial consideration for the purchase of Guoyitang. The transaction closed on February 2, 2021. The balance of the purchase price in the amount of approximately $6,100,723 (RMB 40,000,000) is subject to post-closing adjustments based on the performance of Guoyitang in 2021 and 2022.
The following summarizes the identified assets acquired and liabilities assumed pursuant to the Guoyitang Acquisition as of February 2, 2021:
The fair value of all assets acquired and liabilities assumed is the estimated book value of the Guoyitang. Goodwill represents the excess of the fair value of purchase price over the amounts assigned to the fair value of the assets acquired and the liabilities assumed of Guoyitang at the acquisition date. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The Acquisition of the Zhongshan Hospital |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| The Acquisition Of The Zhongshan Hospital [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| THE ACQUISITION OF THE ZHONGSHAN HOSPITAL |
On December 15, 2020, the Company entered into an agreement to acquire Chaohu Zhongshan Minimally Invasive Hospital Co., Ltd (“Zhongshan Hospital”), a private hospital in the east region of China with 65 hospital beds, 25 medical doctors, 22 medical technicians and 45 nurses. Zhongshan Hospital is a general hospital known for its complex minimally invasive surgeries. Pursuant to the agreement, the Company agreed to purchase all the issued and outstanding equity interests in Zhongshan Hospital in consideration of approximately $18,515,661 (RMB 120,000,000). As partial consideration, approximately $6,100,723 (RMB 40,000,000) was paid in cash at the closing and 2,000,000 shares of common stock of the Company were issued on February 2021. The balance of the purchase price of approximately $6,100,723 (RMB 40,000,000) is subject to post-closing adjustments based on the performance of Zhongshan Hospital in 2021 and 2022. The transaction closed on February 5, 2021.
The following summarizes the identified assets acquired and liabilities assumed pursuant to the Zhongshan Acquisition as of February 5, 2021:
The fair value of all assets acquired and liabilities assumed is the estimated book value of the Zhongshan. Goodwill represents the excess of the fair value of purchase price over the amounts assigned to the fair value of the assets acquired and the liabilities assumed of Zhongshan Hospital at the acquisition date. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The Acquisition Of The Qiangsheng, Eurasia And Minkang Hospitals |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| HEACQUISITIONOFTHEQIANGSHENGEURASIAANDMINKANGHOSPITALS [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| THE ACQUISITION OF THE QIANGSHENG, EURASIA AND MINKANG HOSPITALS |
On April 9, 2021, the Company and Chongqi Bimai entered into a stock purchase agreement to acquire three private hospitals in the PRC, Wuzhou Qiangsheng Hospital Co.,Ltd (“Qiangsheng”), Suzhou Eurasia Hospital Co., Ltd (“Eurasia”) and Yunnan Yuxi MinKang hospital Co., Ltd (“Minkang”). Pursuant to the agreement, the Company agreed to purchase all the issued and outstanding equity interests in Qiangsheng, Eurasia and Minkang in consideration of approximately $25,023,555 (RMB162,000,000) to paid by the issuance of 4,000,000 shares of common stock of the Company (the “Stock Consideration”), the value of which was agreed to be RMB 78 million or $12 million and the payment of RMB 84,000,000 (approximately US$13,008,734) in cash (the “Cash Consideration”). The first payment of the Cash Consideration was RMB 20,000,000 (approximately $3,097,317). The second and third payments of the Cash Consideration of RMB 64,000,000 (approximately $9,911,416) are subject to post-closing adjustments based on the performance of Qiangsheng, Eurasia and Minkang in 2021 and 2022. The sellers can choose to receive the second and third payments in the form of the shares of common stock of the Company valued at $3.00 per share or in cash. The transaction closed on May 6, 2021, at which time the Stock Consideration was issued.
The following summarizes the identified assets acquired and liabilities assumed pursuant to the Qiangsheng, Eurasia and Minkang acquisition as of May 6, 2021:
The fair value of all assets acquired and liabilities assumed is the estimated book value of the Qiangsheng, Eurasia and Minkang hospitals. Goodwill represents the excess of the fair value of purchase price over the amounts assigned to the fair value of the assets acquired and the liabilities assumed of Qiangsheng, Eurasia and Minkang Hospitals at the acquisition date. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Discontined Operations |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| DISCONTINED OPERATIONS |
In late 2019, the Company committed to a plan to dispose of the NF Group and on March 31, 2020 entered into an agreement to sell the NF Group for $10,000,000. The sale closed on June 23, 2020.
On December 11. 2020, the Company entered into an agreement to sell the equity interests in Boqi Zhengji for $1,700,000. The sale of Boqi Zhengji closed on December 18, 2020. Upon closing, the Company ceased operating pharmacies in Dalian.
The Company determined that the plans and the subsequent actions taken to dispose of the NF Group and Boqi Zhengji qualified as discontinued operations under the criteria set forth in the ASC 205-20 Presentation of Financial Statements – Discontinued Operation. Upon closing of the two sales, the Company is no longer involved in the energy efficiency enhancement business or the operation of Boqi Zhengji.
The summarized operating results of the discontinued operation included in the Company’s unaudited interim condensed consolidated statements of operations consist of the following:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Receivable |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||
| Credit Loss, Additional Improvements [Abstract] | |||||||||||||||||||||||||||||||||||||||
| ACCOUNTS RECEIVABLE |
The majority of the Company’s pharmacy retail revenues are derived from cash sales, except for sales to the government social security bureaus or commercial health insurance programs, which typically settle once a month. The Company offers several credit terms to our wholesale customers and to our authorized retailer stores. The Company routinely evaluates the need for allowance for doubtful accounts based on specifically identified amounts that the management believes to be uncollectible. If the actual collection experience changes, revisions to the allowance may be required. As of June 30, 2021 and December 31,2020, accounts receivable consisted of the following:
The Company routinely evaluates the need for allowance for doubtful accounts based on specifically identified amounts that the management believes to be uncollectible. If the actual collection experience changes, revisions to the allowance may be required. Due to subsequent collections, the Company reversed an allowance of $31,006 for the six months ended June 30, 2021. The Company accrued an allowance of $944,045 for the six months ended June 30, 2020. The Company accrued an allowance of $12,793 and $952,765 for the three months ended June 30, 2021 and 2020, respectively. |
||||||||||||||||||||||||||||||||||||||
Advances to Suppliers |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||
| Advances To Suppliers [Abstract] | |||||||||||||||||||||||||||||||||||||||
| ADVANCES TO SUPPLIERS |
Advances to suppliers represent the amount the Company prepaid to its suppliers for merchandises for sale in the ordinary course of business. As of June 30, 2021 and December 31, 2020, the Company reported advances to suppliers as follow:
Excluding the effect of the foreign exchange rate, no bad debt expenses were accrued for doubtful accounts relating to advances to suppliers for the three and six months ended June 30, 2021 and 2020, respectively. |
||||||||||||||||||||||||||||||||||||||
Inventories |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||
| INVENTORIES |
The Company’s inventories consist of medicine and medical devices that were purchased from third parties and sold in our retail pharmacy stores and wholesale to third party pharmacies, clinics, hospitals, etc. Inventories consisted of the following:
For the three months ended June 30, 2021 and 2020, the Company accrued an allowance of $38,343 and $68,600 for obsolete and expired items, respectively. For the six months ended June 30, 2021 and 2020, the Company accrued an allowance of $52,850 and $187,942 for obsolete and expired items, respectively. |
|||||||||||||||||||||||||||||||||||||||||||||||
Prepayments and Other Receivables |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Prepayments And Other Receivables [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PREPAYMENTS AND OTHER RECEIVABLES |
Prepayments and other receivables represent the amount that the Company prepaid as rent deposits for retail store, hospitals and office facilities, special medical device purchase deposits, prepaid rental fee and professional services, advances to employees in the ordinary course of business, VAT deductibles and other miscellaneous receivables. The table below sets forth the balances as of June 30, 2021and December 31, 2020, respectively.
In 2020, we made a deposit of $3,065,181 in connection with the pending acquisition of Chongqing Cogmer Biology Technology Co., Ltd. The transaction was subsequently canceled and we expect to receive the refund of the deposit in the second half of 2021.
Management evaluates the recoverable value of these balances periodically in accordance with the Company’s policies. For the three months ended June 30, 2021 and 2020, the Company accrued an allowance for doubtful accounts of $0 and $21,224, respectively. For the six months ended June 30, 2021 and 2020, the Company accrued allowances for doubtful accounts of $0 and $22,110, respectively. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PROPERTY, PLANT AND EQUIPMENT |
Property, plant and equipment consisted of the following:
Depreciation expense for the three months ended June 30, 2021 and 2020 were $65,567 and $2,707, respectively. Depreciation expense for the six months ended June 30, 2021 and 2020 were $115,711 and $2,707, respectively. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||
| Intangible assets |
Amortization expense for the three months ended June 30, 2021 and 2020 were $1,910 and $, respectively. Amortization expense for the six months ended June 30, 2021 and 2020 were $3,092 and $, respectively. |
|||||||||||||||||||||||||||||||||||||||||||||||
Leases |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| LEASES |
Balance sheet information related to the Company’s operating leases was as follows:
Lease liability maturities as of June 30, 2021, are as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill |
6 Months Ended | ||
|---|---|---|---|
Jun. 30, 2021 | |||
| Goodwill [Abstract] | |||
| GOODWILL |
The goodwill associated with the acquisition of: (i) Guanzan of $6,914,232; (ii) Guoyitang of $7,154,393; (iii) Zhongshan of $10,443,494; and (iv) Minkang, Qiangsheng and Eurasia of $5,390,619, were initially recognized at the acquisition closing date.
Based on an assessment of the qualitative factors, management determined that it is more-likely-than-not that the fair value of each of the reporting units is in excess of its carrying amount. Therefore, management concluded that it was not necessary to proceed to the two-step goodwill impairment test. At June 30, 2021 and December 31, 2020, goodwill was $30,442,737 and $6,914,232, respectively. No impairment losses were recorded for the three and six months ended June 30, 2021 and 2020. |
Loans |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| LOANS |
Short-term loans
For the three months ended June 30, 2021 and 2020, interest expense on short-term loans amounted to $4,523 and $11,086 respectively. For the six months ended June 30, 2021 and 2020, interest expense on short-term loans amounted to $16,538 and $12,698 respectively.
Long-term loans
For the three months ended June 30, 2021 and 2020, interest expense on long-term loans amounted to $9,473 and $25,106 respectively. For the six months ended June 30, 2021 and 2020, interest expense on long-term loans amounted to $30,676 and $27,661 respectively. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Convertible Promissory Notes and Embedded Derivative Instructions |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Convertible Promissory Notes And Embedded Derivative Instructions [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| CONVERTIBLE PROMISSORY NOTES AND EMBEDDED DERIVATIVE INSTRUCTIONS |
On May 19, 2020, the Company entered into a Securities Purchase Agreement (the “May SPA”) with two institutional investors (each, an “Institutional Investor”, and collectively, the “Institutional Investors”) to sell in a private placement a new series of senior secured convertible notes having an original issue amount of $6,550,000, with a discount of 19.85%, and ranking senior to all outstanding and future indebtedness of the Company (the “Convertible Notes”). Each Institutional Investor paid $1,750,000 in cash for a Convertible Note in the face amount of $2,225,000. The May SPA also provided for the issuance of additional Convertible Notes in an aggregate original principal amount not to exceed $2,100,000 under certain circumstances. The Convertible Notes mature on the eighteen-month anniversary of the issuance date, are payable by the Company in installments and are convertible at the election of the Institutional Investors at the conversion price of $2.59, which is subject to adjustment in the event of default. Each Institutional Investor also received a warrant to purchase 650,000 shares of the Company’s common stock at an initial exercise price of $2.845 per share. The placement agent for the private placement received a warrant to purchase up to 171,845 shares of the Company’s common stock at an initial exercise price of $2.845 per share, subject to increase based on the number of shares of the Company’s common stock issued pursuant to the Convertible Notes. On February 24, 2021, the Company and the Investors agreed to increase the amount of Convertible Notes that may be purchased under the May SPA from $2,100,000 to $5,400,000 at an original issue discount of 16.67% ($4,500,000, net). The Convertible Notes issued in 2021 are convertible at a base conversion price of $2.59 per share, subject to the previously agreed conversion floor price of $0.554 (or $0.372 with respect to the increased amount). The Investors also received additional warrants to purchase 720,000 additional shares of the Company’s common stock at an exercise price of $2.845 per share.
Upon evaluation, the Company determined that the two agreements contained embedded beneficial conversion features which met the definition of Debt with Conversion and Other Options covered under the Accounting Standards Codification topic 470 (“ASC 470”). According to ASC 470, an embedded beneficial conversion feature present in a convertible instrument shall be recognized separately at issuance by allocating a portion of the proceeds equal to the intrinsic value of that feature to additional paid-in capital.
Additionally, the Company accounted for the embedded conversion option liability in accordance with the Accounting Standards Codification topic 815, Accounting for Derivative Instruments and Hedging Activities (“ASC 815”) as well as related interpretation of this standard. In accordance with these standards, derivative instruments are recognized as either assets or liabilities in the balance sheet and are measured at fair values with gains or losses recognized in earnings. Embedded derivatives that are not clearly and closely related to the host contract are bifurcated and are recognized at fair value with changes in fair value recognized as either a gain or loss in earnings. The Company determines the fair value of derivative instruments and hybrid instruments based on available market data using appropriate valuation models, giving consideration to all of the rights and obligations of each instrument. The fair value of the embedded conversion option liability associated with each Note was valued using the Black-Scholes model. The key assumptions used in the Black-Scholes option pricing model are as follows:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Payables and Accrued Liabilities |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| OTHER PAYABLES AND ACCRUED LIABILITIES |
Other payables and accrued liabilities consisted of the following:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Parties and Related Parties Transactions |
6 Months Ended | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2021 | |||||||||||||||||||
| Related Party Transactions [Abstract] | |||||||||||||||||||
| RELATED PARTIES AND RELATED PARTIES TRANSACTIONS |
Amount due from related parties
As of June 30, 2021, $41,642 was due from Wenfa Zhuo, a former shareholder of Guoyitang. The amount due, which was outstanding prior to the Guoyitang Acquisition, was free of interest and due on demand.
As of December 31, 2020, the total amounts due from related parties was .
Amounts payable to related parties
As of June 30, 2021 and December 31, 2020, the total amounts payable to related parties was $792,398 and $226,514, respectively, which included:
|
Stock Equity |
6 Months Ended | ||
|---|---|---|---|
Jun. 30, 2021 | |||
| Stockholders' Equity Note [Abstract] | |||
| STOCK EQUITY |
The Company is authorized to issue 50,000,000 shares of common stock, $0.001 par value. As of June 30, 2021 and December 31, 2020, it had 24,793,988 shares and 13,254,587 shares outstanding, respectively. As of June 30, 2021, the Company reserved a total of 4,696,137 shares of common stock for future issuance pursuant to the requirements of the Convertible Notes.
On April 20, 2019 and October 7, 2019, respectively, the Company issued an aggregate of 1,500,000 shares of its common stock as a part of the consideration for the acquisition of Boqi Zhengji.
On March 12, 2020, the Company issued 950,000 shares of its common stock as the Guanzan Stock Consideration.
From April 6, 2020 through October 20, 2020, holders of convertible notes issued during the period from September 27, 2019 to February 13, 2020, in the aggregate principal amount of $1,534,250 plus interest into an aggregate of 1,658,213 shares of the Company’s common stock.
On November 30, 2020, the Company issued 1,000,000 shares of its common stock as the prepayment of the Guanzan Cash Consideration.
On December 2, 2020, the Institutional Investor, Hudson Bay Master Fund Ltd (“Hudson Bay”), converted a Convertible Note in the aggregate principal amount of $173,154 plus interest into an aggregate of 125,627 shares of the Company’s common stock .
On December 2, 2020, the Institutional Investor, CVI Investments, Inc. (“CVI”), converted a Convertible Note in the aggregate principal amount of $609,615 plus interest into an aggregate of 447,458 shares of the Company’s common stock.
From January 4, 2021 to February 9, 2021, Hudson Bay converted Convertible Notes in the aggregate principal amount of $ 2,150,000 plus interest into an aggregate of 1,384,714 shares of the Company’s common stock.
From January 4, 2021 to March 1, 2021, CVI converted Convertible Notes in the aggregate principal amount of $ 2,150,000 plus interest into an aggregate of 1,138,657 shares of the Company’s common stock.
On February 2, 2021, the Company issued 2,000,000 shares of the Company’s common stock as the Guoyitang Stock Consideration.
On February 3, 2021, a holder of a convertible note issued on December 16, 2019 converted a part of the note in the aggregate principal amount of $ 74,473 plus interest into an aggregate of 103,530 shares of the Company’s common stock.
On February 11, 2021, the Company issued 250,000 shares of the Company’s common stock to Real Miracle Investments Limited in consideration for consulting services.
On March 26, 2021, the Company issued 2,000,000 shares of the Company’s common stock as the Zhongshan Stock Consideration.
On April 20, 2021, the Company issued 4,000,000 shares of the Company’s common stock as partial consideration for the acquisition of the Minkang, Qiangsheng and Eurasia hospitals.
On April 29, 2021, the Company issued 500,000 shares of the Company’s common stock as payment for improvements to offices located in Chongqing.
On June 18, 2021, 162,500 shares of the Company’s common stock were issued to CVI with respect to its cashless exercise 650,000 warrants that were issued in 2020. |
Net Income (Loss) Per Share |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| NET INCOME (LOSS) PER SHARE |
Basic net income (loss) per share is computed using the weighted average number of common shares outstanding during the year. The dilutive effect of potential common shares outstanding is included in diluted net income (loss) per share. Due to the Company’s net income (loss) from its continuing operations, all potential common share issuance had anti-dilutive effect on net income (loss) per share. The following table sets forth the computation of basic and diluted net income (loss) per share for the six months ended June 30, 2021 and 2020:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Litigation |
6 Months Ended | ||
|---|---|---|---|
Jun. 30, 2021 | |||
| Litigation Disclosure [Abstract] | |||
| LITIGATION |
On April 1, 2020, the Guizhou Province Xiuwen County People’s Court ordered the attachment of two of Shude’s bank accounts pursuant to a pre-litigation attachment application filed by one of Shude’s suppliers in connection with unpaid outstanding payables. No lawsuit was filed by the supplier and the dispute has been resolved and attachment removed. The total amount of cash in the two accounts subject to the attachment was RMB 570,902 (approximately $80,409). |
Segments |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SEGMENTS |
General Information About Reportable Segments:
The Company operates in four reportable segments: retail pharmacy, wholesale medical devices, wholesale pharmaceuticals and medical services. The retail pharmacy segment sells prescription and OTC medicines, traditional Chinese medicines (“TCM”), healthcare supplies, and sundry items to retail customers through its directly-owned pharmacies and authorized retail stores. The wholesale pharmaceuticals segment includes supplying prescription and OTC medicines, TCM, healthcare supplies and sundry items to clinics, third party pharmacies, hospitals and other drug vendors. The medical services segment includes the hospitals acquired in February and April 2021.
To date, there were no inter-segment revenues between our retail pharmacy and wholesale pharmaceuticals segments. The wholesale medical devices segment distributes medical devices, including medical consumables to private clinics, hospitals, third party pharmacies and other medical devices dealers. Disclosure should relate to all segments.
The segments’ accounting policies are the same as those described in the summary of significant accounting policies. The Company’s chief operating decision maker, who is the CEO of the Company, evaluates performance of each of the segments based on profit or loss from continuing operations net of income tax.
The Company’s reportable business segments are strategic business units that offer different products. Each segment is managed independently because they require different operations and each markets to distinct classes of customers.
Information about Reported Segment Profit or Loss and Segment Assets
BIMI, as the holding company, incurred a significant amount of general operating expenses, such as financing costs, that the Company’s chief operating decision maker did not allocate to segments to evaluate the segments performance and allocate recourse of the Company. In addition, except for depreciation and amortization of long-lived assets, the Company does not allocate the change in fair value of derivative liabilities and the amortization of discount of convertible notes to reporting segments in its reported profit or loss. The following amounts were used by the chief operating decision maker.
Reconciliations of Reportable Segment Revenues, Profit or Loss, and Assets, to the Consolidated Totals as of June 30, 2021 and for the six months ended June 30, 2021.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Entity-Wide Information and Concentrations of Risk |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risks and Uncertainties [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ENTITY-WIDE INFORMATION AND CONCENTRATIONS OF RISK |
Entity-Wide Information
For the six months ended June 30, 2021 and 2020, respectively, the Company reported revenues for each type of products and services as follows:
For the six months ended June 30, 2021 and 2020, respectively, all the Company’s revenues were generated in the PRC. There were no long-lived assets located outside of the PRC as of June 30, 2021 and 2020.
For the six months ended June 30, 2021, no customer accounted for more than 10% of the Company’s total revenues. As of June 30, 2021, one customer account for 42.42% of the balance of accounts receivable.
For the six months ended June 30, 2021, no vendor accounted for more than 10% of the Company’s total purchases. As of June 30, 2021, no vendor account for more than 10% of the Company’s balance of accounts payable.
Concentrations of Risk
The Company is exposed to the following concentrations of risk:
Financial instruments that are potentially subject to credit risk consist principally of trade receivables. The Company believes the concentration of credit risk in its trade receivables is substantially mitigated by its ongoing credit evaluation process and relatively short collection terms. The Company does not generally require prepayments or deposits from customers. The Company evaluates the need for an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends and other information.
The Company’s interest-rate risk arises from convertible promissory notes, short-term and long-term loans. The Company manages interest rate risk by varying the issuance and maturity dates, fixing interest rate of debt, limiting the amount of debts, and continually monitoring the effects of market changes in interest rates. As of June 30, 2021 and December 31, 2020, respectively, the Convertible Notes and other outstanding notes, short-term and long-term loans were at fixed rates.
Substantially all of the Company’s revenues and a majority of its costs are denominated in RMB and a significant portion of its assets and liabilities are denominated in RMB. As a result, the Company’s results of operations may be affected by fluctuations in the exchange rate between US$ and RMB. If the RMB depreciates against the US$, the value of RMB revenues and assets as expressed in US$ financial statements will decline. The Company does not hold any derivative or other financial instruments that expose to substantial market risk.
The Company’s operations are conducted in the PRC. Accordingly, the Company’s business, financial condition and results of operation may be influenced by the political, economic and legal environment in the PRC, and by the general state of the PRC economy. The outbreak of COVID-19 pandemic has expanded all over the world since the beginning of 2020, which has greatly slowed the growth of the global economy, including the PRC, and this effect may continue until the pandemic is controlled, or a vaccine or cure is developed. The slowdown of the growth of the PRC’s economy has adversely effected our current business and future success will be adversely affected if we are unable to capitalize on the opportunities arising from the increasing demand for medicine and medical devices in the markets in which we operate.
The Company’s operations in the PRC are subject to special considerations. These include risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Company’s results may be adversely affected by changes in the political and social conditions in the PRC, and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies, by Policy (Policies) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Basis of presentation and consolidation |
These accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”). These unaudited condensed consolidated financial statements include the financial statements of the Company and its subsidiaries. All significant inter-company balances and transactions within the Company have been eliminated upon consolidation.
The unaudited interim condensed consolidated financial information as of June 30, 2021 and for the three and six months ended June 30, 2021 and 2020 have been prepared, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures, which are normally included in annual consolidated financial statements prepared in accordance with US GAAP, have been omitted pursuant to those rules and regulations. The unaudited interim condensed consolidated financial information should be read in conjunction with the consolidated financial statements and the notes thereto, included in the Company’s Form 10-K for the fiscal year ended December 31, 2020 filed with the SEC on March 31, 2021.
In the opinion of management, all adjustments (which include normal recurring adjustments) necessary to present a fair statement of the Company’s unaudited condensed consolidated financial position as of June 30, 2021 and its unaudited condensed consolidated results of operations for the three and six months ended June 30, 2021 and 2020, and its unaudited condensed consolidated cash flows for the six months ended June 30, 2021 and 2020, as applicable, have been made. The interim results of operations are not necessarily indicative of the operating results for the fiscal year or any future periods.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||
| Use of estimates |
The preparation of these condensed consolidated financial statements in conformity with the US GAAP requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities on the date of these condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. The Company bases its estimates and judgments on historical experience and on various other assumptions and information that are believed to be reasonable under the circumstances. Estimates and assumptions of future events and their effects cannot be perceived with certainty and, accordingly, these estimates may change as new events occur, as more experience is acquired, as additional information is obtained and as our operating environment changes. Significant estimates and assumptions made by management include, among others, useful lives and impairment of long-lived assets, collectability of accounts receivable, advances to suppliers, allowance for doubtful accounts, reserve of inventory, fair value of goodwill and valuation of derivative liabilities. While the Company believes that the estimates and assumptions used in the preparation of these condensed consolidated financial statements are appropriate, actual results could differ from those estimates. Estimates and assumptions are periodically reviewed and the effects of revisions are reflected in the consolidated financial statements in the period they are determined to be necessary.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||
| Reclassification |
Certain prior year balances were reclassified to conform to the current period presentation, which mainly reflect the presentation of the discontinued operation of the NF Group and Boqi Zhengji. Except for the assets and liabilities of the NF Group and Boqi Zhengji which were reclassified as discontinued assets or liabilities and presented as current assets or liabilities in the consolidated balance sheets, there was no other impacts on reported financial position or cash flows for any of the periods presented.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash |
Cash consists primarily of cash on hand and cash in banks which is readily available in checking and saving accounts. The Company maintains cash with various financial institutions in the PRC where its accounts are uninsured. The Company has not experienced any losses from funds held in bank accounts and believes it is not exposed to any risk on its bank accounts.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||
| Restricted cash |
Cash that is restricted as to withdrawal or use under the terms of certain contractual agreements or orders are recorded in a restricted cash account in the Company’s unaudited interim condensed consolidated balance sheet.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounts receivable and allowance for doubtful accounts |
Accounts receivable are recorded at the invoiced amount and do not bear interest, which are due within contractual payment terms, generally 30 to 90 days from delivery. Credit is extended based on evaluation of a customer’s financial condition, the customer credit-worthiness and their payment history. Accounts receivable outstanding longer than the contractual payment terms are considered past due. Past due balances over 90 days and over a specified amount are reviewed individually for collectability. At the end of each period, the Company specifically evaluates individual customer’s financial condition, credit history, and the current economic conditions to monitor the progress of the collection of accounts receivables. For the receivables that are past due or not being paid according to payment terms, the appropriate actions are taken to exhaust all means of collection, including seeking legal resolution in a court of law. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any off-balance-sheet credit exposure related to its customers. As of June 30, 2021 and December 31, 2020, the allowance for doubtful accounts was $1,205,824 and $1,236,830, respectively.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||
| Advances to suppliers |
Advances to suppliers consist of prepayments to the Company’s vendors, such as pharmaceutical manufacturers and medicine suppliers. The Company typically prepays for the purchase of our merchandise, especially for those salable, scarce, personalized medicine or medical devices. The Company typically receive products from vendors within three to nine months after making prepayments. The Company continuously monitor delivery from, and payments to, the vendors while maintaining a provision for estimated credit losses based upon historical experience and any specific supplier issues, such as discontinuing of inventory supply, that have been identified. If the Company has difficulty receiving products from a vendor, the Company would cease purchasing products from such vendor, request return of our prepayment promptly, and if necessary, take legal action. The Company has not taken such type of legal action during the reporting periods. If none of these steps are successful, management will then determine whether the prepayments should be reserved or written off. As of June 30, 2021 and December 31, 2020, the allowance for doubtful accounts was $7,541 and $7,463, respectively.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||
| Inventories |
Inventories are stated at the lower of cost or market value. Cost is determined using the weighted average method, and market value is the middle (the second highest) value among an inventory item’s replacement cost, market celling and market floor. The Company carries out physical inventory counts on a monthly basis at each store and warehouse location. The Company reviews historical sales activity quarterly to determine excess, slow moving items and potentially obsolete items. The Company provides inventory reserve based on the excess quantities on hand equal to the difference, if any, between the cost of the inventory and its estimated market value, or obsolescence of inventories determined principally by customer demand. As of June 30, 2021 and December 31, 2020, the Company recorded an allowance for obsolete inventories, which mainly consists of expired medicine, of $62,675 and $9,825, respectively.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||
| Property, plant and equipment |
Property, plant and equipment are stated at cost less accumulated depreciation and impairment, if any. Depreciation is calculated on the straight-line basis over the following expected useful lives from the date on which they become fully operational and after taking into account their estimated residual values:
Expenditures for repairs and maintenance are expensed as incurred. When assets have been retired or sold, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in the results of operations.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||
| Intangible assets |
Intangible assets consist primarily of software of management systems. Intangible assets are stated at cost less accumulated amortization and impairment, if any. Intangible assets are amortized using the straight-line method with the following estimated useful lives:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||
| Leases |
The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, current portion of obligations under operating leases, and obligations under operating leases, non-current on the Company’s consolidated balance sheets. Finance leases are included in property and equipment, net, current portion of obligations under capital leases, and obligations under capital leases, non-current on our consolidated balance sheets.
Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date, adjusted by the deferred rent liabilities at the adoption date. As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The operating lease ROU assets also include any lease payments made and excludes lease incentives and initial direct costs incurred. The Company’s terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Operating lease expense is recognized on a straight-line basis over the lease term.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||
| Goodwill |
Goodwill represents the excess of the purchase price over the amounts assigned to the fair value of the assets acquired and the liabilities assumed of an acquired business. In accordance with ASC 350, Goodwill and Other Intangible Assets, recorded goodwill amounts are not amortized, but rather are tested for impairment annually or more frequently if there are indicators of impairment present.
Goodwill is tested for impairment at the reporting unit level on at least an annual basis or when an event occurs, or circumstances change that would more-likely-than-not reduce the fair value of a reporting unit below its carrying value. These events or circumstances include a significant change in stock prices, business environment, legal factors, financial performances, competition, or events affecting the reporting unit. Application of the goodwill impairment test requires judgment, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units, and determination of the fair value of each reporting unit. The estimation of fair value of reporting unit using a discounted cash flow methodology also requires significant judgments, including estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term rate of growth for the Company’s business, estimation of the useful life over which cash flows will occur, and determination of the Company’s weighted average cost of capital. The estimates used to calculate the fair value of a reporting unit change from year to year based on operating results and market conditions. Changes in these estimates and assumptions could materially affect the determination of fair value and goodwill impairment for the reporting unit.
Management evaluates the recoverability of goodwill by performing a qualitative assessment before using a two-step impairment test approach at the reporting unit level. If the Company reorganizes its reporting structure in a manner that changes the composition of one or more of its reporting units, goodwill will be reassigned based on the relative fair value of each of the affected reporting units.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||
| Impairment of long-lived assets and intangibles |
In accordance with the provisions of ASC Topic 360, “Impairment or Disposal of Long-Lived Assets”, all long-lived assets such as property, plant and equipment held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is evaluated by a comparison of the carrying amount of an asset to its estimated future undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amounts of the assets exceed the fair value of the assets.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenue recognition |
We adopted Accounting Standard Codification (“ASC”) Topic 606, Revenues from Contract with Customers (“ASC 606”) for all periods presented. Under ASC 606, revenue is recognized when control of the promised goods and services is transferred to the Company’s customers, in an amount that reflects the consideration that the Company expects to be entitled to in exchange for those goods and services, net of value-added tax. The Company determines revenue recognition through the following steps:
The transaction price is allocated to each performance obligation on a relative standalone selling price basis. The transaction price allocated to each performance obligation is recognized when that performance obligation is satisfied by the control of the promised goods and services is transferred to the customers, which at a point in time or over time as appropriate.
The Company’s revenue is net of value added tax (“VAT”) collected on behalf of PRC tax authorities in respect to the sales of products. VAT collected from customers, net of VAT paid for purchases, is recorded as a liability in the accompanying consolidated balance sheets until it is paid to the relevant PRC tax authorities
|
|||||||||||||||||||||||||||||||||||||||||||||||||||
| Cost of revenue |
Cost of revenue consists primarily of cost of goods purchased from suppliers plus direct material costs for packaging and storage, direct labor, which are directly attributable to the acquisition and maintaining of products for sales. Cost of revenues also include impairment loss of our products which are obsolete or expired for sale, if any. Shipping and handling costs, associated with the distribution of finished products to customers, are borne by the customers.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||
| Comprehensive income |
ASC Topic 220, “Comprehensive Income”, establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive income as defined includes all changes in equity during a period from non-owner sources. Accumulated other comprehensive income, as presented in the accompanying condensed consolidated statement of stockholders’ equity, consists of changes in unrealized gains and losses on foreign currency translation. This comprehensive income is not included in the computation of income tax expense or benefit.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||
| Income taxes |
Income taxes are determined in accordance with the provisions of ASC Topic 740, “Income Taxes” (“ASC 740”). Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts.
For the six months ended June 30, 2021 and 2020, the Company did not incur any interest or penalties associated with tax positions. As of June 30, 2021, the Company did not have any significant unrecognized uncertain tax positions.
The Company conducts all of its business in the PRC and is subject to tax in this jurisdiction. As a result of its corporate structure the Company files tax returns that are subject to examination by a foreign tax authority.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||
| Value added tax |
Sales revenue represents the invoiced value of goods sold, net of VAT. All of the Company’s products that are sold in the PRC are subject to a VAT on the gross sales price. The VAT rates range up to 13% depending on the type of products sold. The VAT may be offset by VAT paid by the Company on its purchase activities of merchandises, raw materials, utilities, and other materials which cost was included in the cost of producing or acquiring its products for sales. The Company records a VAT payable net of payments if the VAT payable on the gross sales is larger than VAT paid by the Company on purchase of finished goods; on the other hand, the Company records a VAT deductible in the accompanying financial statements net of any VAT payable at the end of reporting period.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||
| Convertible promissory notes |
The Company records debt net of a discount for beneficial conversion features and warrants, on a relative fair value basis. Beneficial conversion features are recorded pursuant to the Beneficial Conversion and Debt Topics of the FASB Accounting Standards Codification. The amounts allocated to warrants and beneficial conversion rights are recorded as debt discount and as additional paid-in-capital. Debt discount is amortized to interest expense over the life of the debt.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||
| Derivative instruments |
The Company has entered into financing arrangements that consist of freestanding derivative instruments or are hybrid instruments that contain embedded derivative features. The Company accounts for these arrangements in accordance with Accounting Standards Codification Topic 815, Accounting for Derivative Instruments and Hedging Activities (“ASC 815”) as well as related interpretation of this standard. In accordance with this standard, derivative instruments are recognized as either assets or liabilities in the balance sheet and are measured at fair values with gains or losses recognized in earnings. Embedded derivatives that are not clearly and closely related to the host contract are bifurcated and are recognized at fair value with changes in fair value recognized as either a gain or loss in earnings. The Company determines the fair value of derivative instruments and hybrid instruments based on available market data using appropriate valuation models, giving consideration to all of the rights and obligations of each instrument.
We estimate fair values of derivative financial instruments using various techniques (and combinations thereof) that are considered to be consistent with the objective measuring fair values. In selecting the appropriate technique, we consider, among other factors, the nature of the instrument, the market risks that it embodies and the expected means of settlement. For less complex derivative instruments, such as free-standing warrants, we generally use the Black-Scholes model, adjusted for the effect of dilution, because it embodies all of the requisite assumptions (including trading volatility, estimated terms, dilution and risk free rates) necessary to fair value these instruments. Estimating fair values of derivative financial instruments requires the development of significant and subjective estimates that may, and are likely to, change over the duration of the instrument with related changes in internal and external market factors. In addition, option-based techniques (such as Black-Scholes model) are highly volatile and sensitive to changes in the trading market price of our common stock. Since derivative financial instruments are initially and subsequently carried at fair values, our income (expense) going forward will reflect the volatility in these estimate and assumption changes. Under the terms of the new accounting standard, increases in the trading price of the Company’s common stock and increases in fair value during a given financial quarter result in the application of non-cash derivative expense. Conversely, decreases in the trading price of the Company’s common stock and decreases in trading fair value during a given financial quarter result in the application of non-cash derivative income.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss per share |
The Company calculates net loss per share in accordance with ASC Topic 260, “Earnings per Share.” Basic income per share is computed by dividing the net income by the weighted-average number of common shares outstanding during the period. Diluted income per share is computed similar to basic income per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common stock equivalents had been issued and if the additional common shares were dilutive.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currencies translation |
Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the statement of operations.
The reporting currency of the Company is the United States Dollar (“US$”). The Company’s subsidiaries in the PRC maintain their books and records in their local currency, the Renminbi Yuan (“RMB”), which is the functional currency as being the primary currency of the economic environment in which these entities operate.
In general, for consolidation purposes, assets and liabilities of its subsidiaries whose functional currency is not the US$ are translated into US$, in accordance with ASC Topic 830-30, “Translation of Financial Statement”, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of foreign subsidiaries are recorded as a separate component of accumulated other comprehensive income within the statement of stockholders’ equity.
Translation of amounts from RMB into US$ has been made at the following exchange rates for the respective period:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||
| Related parties |
Parties, which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operational decisions. Companies are also considered to be related if they are subject to common control or common significant influence.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment reporting |
ASC Topic 280, “Segment Reporting” establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organization structure as well as information about the type of products and services, geographical areas, business strategies and major customers in business components. For the six months ended June 30, 2021, the Company operated in four reportable segments: retail pharmacy, wholesale pharmaceuticals, wholesale medical devices and medical services in the PRC.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair value of financial instruments |
The carrying value of the Company’s financial instruments (excluding short-term bank borrowing and convertible promissory notes): cash and cash equivalents, accounts and retention receivable, prepayments and other receivables, accounts payable, income tax payable, amounts due to related parties other payables and accrued liabilities approximate their fair values because of the short-term nature of these financial instruments.
Management believes, based on the current market prices or interest rates for similar debt instruments, the fair value of its obligation under its finance lease and short-term bank borrowing approximate the carrying amount.
The Company also follows the guidance of the ASC Topic 820-10, “Fair Value Measurements and Disclosures” (“ASC 820-10”), with respect to financial assets and liabilities that are measured at fair value. ASC 820-10 establishes a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair value as follows:
Fair value estimates are made at a specific point in time based on relevant market information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.
The carrying amount of cash, accounts receivable, other receivable, bank credit, accounts payable and other accounts payable approximate their fair value due to the short-term maturity of these instruments.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||
| Recent accounting pronouncements |
In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740)—Simplifying the Accounting for Income Taxes. ASU 2019-12 is intended to simplify accounting for income taxes. It removes certain exceptions to the general principles in Topic 740 and amends existing guidance to improve consistent application. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020 and interim periods within those fiscal years, with early adoption permitted. The Company will adopt this guidance effective October 1, 2021. The Company is currently evaluating the impact of its pending adoption of this guidance on its consolidated financial statements but does not expect this guidance will have a material impact on its consolidated financial statements.
In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326), which requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost. ASU 2016-13 was subsequently amended by ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments — Credit Losses, ASU 2019-04 Codification Improvements to Topic 326, Financial Instruments — Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, and ASU 2019-05, Targeted Transition Relief. For public entities, ASU 2016-13 and its amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. For all other entities, this guidance and its amendments will be effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. As an emerging growth company, the Company plans to adopt this guidance effective October 1, 2023. The Company is currently evaluating the impact of its pending adoption of ASU 2016-13 on its consolidated financial statements but does not expect this guidance will have a material impact on its consolidated financial statements.
Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the Company’s consolidated financial statements upon adoption. |
|||||||||||||||||||||||||||||||||||||||||||||||||||
Organization and Business Background (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of description of subsidiaries |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of expected useful lives |
|
|||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Intangible assets are amortized ofestimated useful lives |
|
|||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of exchange rates |
|
|||||||||||||||||||||||||||||||||||||||||||||||||
The Acquisition of the Guanzan Group (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Guanzan Acquisition [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| The Acquisition of the Guanzan Group (Tables) [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of identified assets acquired and liabilities |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The Acquisition of the Gyoyitang Hospital (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Guoyitang Acquisition [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| The Acquisition of the Gyoyitang Hospital (Tables) [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of identified assets acquired and liabilities |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The Acquisition of the Zhongshan Hospital (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| The Acquisition Of The Zhongshan Hospital [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of identified assets acquired and liabilities assumed pursuant to the Zhongshan Acquisition |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The Acquisition Of The Qiangsheng, Eurasia And Minkang Hospitals (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Qiangsheng, Eurasia and Minkang Acquisition {Member} | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| The Acquisition Of The Qiangsheng, Eurasia And Minkang Hospitals (Tables) [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of summarizes the identified assets acquired and liabilities |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Discontined Operations (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of discontined operations |
|
||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Receivable (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||
| Credit Loss, Additional Improvements [Abstract] | |||||||||||||||||||||||||||||||||||||
| Schedule of accounts receivable |
|
||||||||||||||||||||||||||||||||||||
Advances to Suppliers (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||
| Advances To Suppliers [Abstract] | |||||||||||||||||||||||||||||||||||||
| Schedule of advances to suppliers |
|
||||||||||||||||||||||||||||||||||||
Inventories (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||
| Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of inventories |
|
|||||||||||||||||||||||||||||||||||||||||||||
Prepayments and Other Receivables (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Prepayments And Other Receivables [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of prepayment and other receivables |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of property, plant and equipment |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||
| Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of intangible assets |
|
|||||||||||||||||||||||||||||||||||||||||||||
Leases (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of operating leases |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of lease liability maturities |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of short-term loans |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of long term loans |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Convertible Promissory Notes and Embedded Derivative Instructions (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||
| Convertible Promissory Notes And Embedded Derivative Instructions [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of additional paid-in capital |
|
|||||||||||||||||||||||||||||||||||||||||||||
| Schedule of assumptions used in the Black-Scholes option pricing model |
|
|||||||||||||||||||||||||||||||||||||||||||||
Other Payables and Accrued Liabilities (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of other payables and accrued liabilities |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Income (Loss) Per Share (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of basic and diluted net income (loss) per share |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segments (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of reported segment profit or loss and segment assets |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of reportable segment revenues, profit or loss, and assets |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Entity-Wide Information and Concentrations of Risk (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risks and Uncertainties [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of revenues from each types of products |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization and Business Background (Details) |
1 Months Ended | ||
|---|---|---|---|
Dec. 09, 2020 |
Oct. 14, 2019 |
Mar. 18, 2020 |
|
| Accounting Policies [Abstract] | |||
| Ownership, description | the Company entered into an agreement to acquire 100% of the equity interests in Chongqing Guoyitang Hospital (“Guoyitang”), the owner and operator of a private general hospital in Chongqing City, a city in Southwest China. The transaction closed on February 2, 2021. On December 15, 2020, the Company entered into a stock purchase agreement to acquire Chaohu Zhongshan Minimally Invasive Hospital (“Zhongshan”), a private hospital in the east region of China. The transaction was closed on February 5, 2021. | the Company acquired 100% of the equity interests in Lasting Wisdom Holdings Limited (“Lasting”), a holding company incorporated under the laws of the British Virgin Islands (“BVI”), which through its subsidiaries held all the ownership interest of Dalian Boqi Zhengji Pharmacy Chain Co., Ltd. (“Boqi Zhengji”). Boqi Zhengji operated 16 retail pharmacy stores in China at the time of the acquisition. Lasting and Boqi Zhengji are hereinafter collectively referred to as the “Boqi Zhengji Group”. On December 11, 2020, the Company entered into a stock purchase agreement to sell Boqi Zhengji. While the sale of Boqi Zhengji closed by the end of 2020, the governmental record was not updated until February 2, 2021 due to the Chinese government’s alternative working schedule and other delays caused by COVID-19.Lasting also indirectly owns 100% equity interests in Dalian Boyi Technology Co., Ltd. (“Dalian Boyi”), a subsidiary established in January 2020 and responsible for the Company’s R&D and other technology related functions. | the Company, through its wholly owned subsidiary, Xinrongxin, acquired 100% of the equity interests in Chongqing Guanzan Technology Co., Ltd. (“Guanzan”). Guanzan holds an 95% equity interest in Chongqing Shude Pharmaceutical Co., Ltd. (“Shude”, collectively with Guanzan, the “Guanzan Group”). Guanzan also owns 100% equity interest in Chongqing Lijiantang Pharmaceutical Co. Ltd., a subsidiary established in May 2020 that operates 5 retail pharmacy stores in China. |
Going Concern Uncertainties (Details) - USD ($) |
6 Months Ended | |
|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
|
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
| Net loss | $ (3,566,365) | $ 2,471,663 |
| Accumulated deficit | 16,500,000 | |
| Working capital deficit | 2,030,000.00 | |
| Operating losses | $ 3,500,000 | |
Summary of Significant Accounting Policies (Details) - USD ($) |
6 Months Ended | |
|---|---|---|
Jun. 30, 2021 |
Dec. 31, 2020 |
|
| Summary of Significant Accounting Policies (Details) [Line Items] | ||
| Allowance for doubtful accounts | $ 1,205,824 | $ 1,236,830 |
| Allowance for obsolete inventories | $ 62,675 | 9,825 |
| Income tax benefit percentage | 50.00% | |
| VAT rates percentage | 13.00% | |
| Number of reportable segments | 4 | |
| Suppliers [Member] | ||
| Summary of Significant Accounting Policies (Details) [Line Items] | ||
| Allowance for doubtful accounts | $ 7,541 | $ 7,463 |
| Minimum [Member] | ||
| Summary of Significant Accounting Policies (Details) [Line Items] | ||
| Accounts receivables contractual term | 30 days | |
| Maximum [Member] | ||
| Summary of Significant Accounting Policies (Details) [Line Items] | ||
| Accounts receivables contractual term | 90 days |
Summary of Significant Accounting Policies (Details) - Schedule of Intangible assets are amortized ofestimated useful lives |
6 Months Ended |
|---|---|
Jun. 30, 2021 | |
| Software [Member] | |
| Indefinite-lived Intangible Assets [Line Items] | |
| Expected useful lives | 10 years |
Summary of Significant Accounting Policies (Details) - Schedule of exchange rates |
Jun. 30, 2021 |
Jun. 30, 2020 |
|---|---|---|
| Schedule of exchange rates [Abstract] | ||
| Period-end RMB:US$1 exchange rate | 6.4572 | 7.0741 |
| Six months end average RMB:US$1 exchange rate | 6.4711 | 7.0574 |
The Acquisition of the Guanzan Group (Details) - Schedule of identified assets acquired and liabilities - Parent [Member] |
Mar. 18, 2020
USD ($)
|
|---|---|
| Assets | |
| Cash | $ 95,220 |
| Accounts receivable | 1,835,981 |
| Advances to suppliers | 1,222,986 |
| Amount due from related parties | 410,943 |
| Inventories | 950,225 |
| Prepayments and other receivables | 90,256 |
| Property, plant and equipment | 707,289 |
| Intangible assets | 254,737 |
| Goodwill | 6,443,170 |
| Liabilities | |
| Short-term bank borrowings | (838,926) |
| Long-term loans due within one year | (250,663) |
| Accounts payable, trade | (1,303,399) |
| Advances from customers | (1,350,126) |
| Amount due to related parties | (106,720) |
| Taxes payable | (406,169) |
| Other payables and accrued liabilities | (390,594) |
| Long-term loans – non-current portion | (186,796) |
| Non-controlling interests | (46,295) |
| Total net assets | $ 7,131,119 |
The Acquisition of the Gyoyitang Hospital (Details) - Chongqing Guoyitang Hospital [Member] |
Dec. 09, 2020
USD ($)
shares
|
Dec. 09, 2020
CNY (¥)
shares
|
|---|---|---|
| The Acquisition of the Gyoyitang Hospital (Details) [Line Items] | ||
| Aggregate purchase price | $ 15,251,807 | ¥ 100,000,000 |
| Shares of common stock | 2,000,000 | 2,000,000 |
| Consideration for purchase | $ 3,096,119 | ¥ 20,000,000 |
| Balance of purchase price | $ 6,100,723 | ¥ 40,000,000 |
The Acquisition of the Gyoyitang Hospital (Details) - Schedule of identified assets acquired and liabilities - Parent Company [Member] - Chongqing Guoyitang Hospital [Member] |
Feb. 02, 2021
USD ($)
|
|---|---|
| Assets | |
| Cash | $ 28,457 |
| Accounts receivable | 11,797 |
| Advances to suppliers | 12,670 |
| Amount due from related parties | 41,598 |
| Inventories | 167,440 |
| Prepayments and other receivables | 61,102 |
| Property, plant and equipment | 528,814 |
| Right of use asset | 441,150 |
| Goodwill | 7,154,393 |
| Liabilities | |
| Accounts payable, trade | (599,391) |
| Amount due to related parties | (183,796) |
| Taxes payable | (121) |
| Other payables and accrued liabilities | (231,375) |
| Lease liability-current | (161,707) |
| Lease liability-non-current | (354,912) |
| Total net assets | $ 6,916,119 |
The Acquisition of the Zhongshan Hospital (Details) |
Dec. 15, 2020 |
|---|---|
| Stock Purchase Agreement [Member] | Zhongshan Hospital [Member] | |
| The Acquisition of the Zhongshan Hospital (Details) [Line Items] | |
| Stock purchase agreement, description | the Company entered into an agreement to acquire Chaohu Zhongshan Minimally Invasive Hospital Co., Ltd (“Zhongshan Hospital”), a private hospital in the east region of China with 65 hospital beds, 25 medical doctors, 22 medical technicians and 45 nurses. Zhongshan Hospital is a general hospital known for its complex minimally invasive surgeries. Pursuant to the agreement, the Company agreed to purchase all the issued and outstanding equity interests in Zhongshan Hospital in consideration of approximately $18,515,661 (RMB 120,000,000). As partial consideration, approximately $6,100,723 (RMB 40,000,000) was paid in cash at the closing and 2,000,000 shares of common stock of the Company were issued on February 2021. The balance of the purchase price of approximately $6,100,723 (RMB 40,000,000) is subject to post-closing adjustments based on the performance of Zhongshan Hospital in 2021 and 2022. |
The Acquisition of the Zhongshan Hospital (Details) - Schedule of identified assets acquired and liabilities assumed pursuant to the Zhongshan Acquisition - Zhongshan Acquisition [Member] |
Feb. 05, 2021
USD ($)
|
|---|---|
| Assets | |
| Cash | $ 46,748 |
| Accounts receivable | 92,900 |
| Inventories | 108,413 |
| Prepayments and other receivables | 432,231 |
| Property, plant and equipment | 344,208 |
| Right of use asset | 1,188,693 |
| Goodwill | 10,443,494 |
| Liabilities | |
| Short-term bank borrowings | (154,701) |
| Accounts payable, trade | (928,640) |
| Advances from customers | (5,603) |
| Amount due to related parties | (217,203) |
| Other payables and accrued liabilities | (435,290) |
| Lease liability-current | (160,774) |
| Lease liability-non-current | (1,102,589) |
| Total net assets | $ 9,651,887 |
The Acquisition Of The Qiangsheng, Eurasia And Minkang Hospitals (Details) |
Apr. 09, 2021 |
|---|---|
| Acquisition Of The Qiangsheng, Eurasia And Minkang Hospitals [Member} | |
| The Acquisition Of The Qiangsheng, Eurasia And Minkang Hospitals (Details) [Line Items] | |
| Acqusition, description | Pursuant to the agreement, the Company agreed to purchase all the issued and outstanding equity interests in Qiangsheng, Eurasia and Minkang in consideration of approximately $25,023,555 (RMB162,000,000) to paid by the issuance of 4,000,000 shares of common stock of the Company (the “Stock Consideration”), the value of which was agreed to be RMB 78 million or $12 million and the payment of RMB 84,000,000 (approximately US$13,008,734) in cash (the “Cash Consideration”). The first payment of the Cash Consideration was RMB 20,000,000 (approximately $3,097,317). The second and third payments of the Cash Consideration of RMB 64,000,000 (approximately $9,911,416) are subject to post-closing adjustments based on the performance of Qiangsheng, Eurasia and Minkang in 2021 and 2022. The sellers can choose to receive the second and third payments in the form of the shares of common stock of the Company valued at $3.00 per share or in cash. |
The Acquisition Of The Qiangsheng, Eurasia And Minkang Hospitals (Details) - Schedule of summarizes the identified assets acquired and liabilities - Acquisition Of The Qiangsheng, Eurasia And Minkang Hospitals [Member} |
May 06, 2021
USD ($)
|
|---|---|
| The Acquisition Of The Qiangsheng, Eurasia And Minkang Hospitals (Details) - Schedule of summarizes the identified assets acquired and liabilities [Line Items] | |
| Cash | $ 12,341 |
| Accounts receivable | 41,836 |
| Inventories | 156,576 |
| Advances and other receivables | 40,620 |
| Property, plant and equipment | 653,104 |
| Right of use assets | 2,168,709 |
| Goodwill | 5,930,619 |
| Accounts payable | (355,980) |
| Advances from customers | (36,798) |
| Tax payable | (345,870) |
| Other payables and accrued liabilities | (311,174) |
| Lease liability-current | (365,788) |
| Lease liability-non current | (1,988,195) |
| Total net assets | $ 5,600,000 |
Discontined Operations (Details) - USD ($) |
6 Months Ended | |
|---|---|---|
Dec. 11, 2021 |
Jun. 30, 2021 |
|
| Discontined Operations (Details) [Line Items] | ||
| Aggregate sale price | $ 10,000,000 | |
| Boqi Zhengji [Member] | ||
| Discontined Operations (Details) [Line Items] | ||
| Aggregate sale price | $ 1,700,000 |
Discontined Operations (Details) - Schedule of discontined operations |
6 Months Ended |
|---|---|
|
Jun. 30, 2021
USD ($)
| |
| Schedule of discontined operations [Abstract] | |
| Revenues | $ 8,537 |
| Cost of revenues | 3,394 |
| Gross loss | 5,143 |
| Operating expenses | 498,212 |
| Other expense | 307,536 |
| Loss before income taxes | (800,605) |
| Income taxes | |
| Net loss from discontinued operations | $ (800,605) |
Accounts Receivable (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
|
| Credit Loss, Additional Improvements [Abstract] | ||||
| Reversed allowance | $ 12,793 | $ 952,765 | $ 31,006 | $ 944,045 |
Accounts Receivable (Details) - Schedule of accounts receivable - USD ($) |
6 Months Ended | 12 Months Ended |
|---|---|---|
Jun. 30, 2021 |
Dec. 31, 2020 |
|
| Schedule of accounts receivable [Abstract] | ||
| Accounts receivable, cost | $ 10,487,396 | $ 7,923,382 |
| Less: allowance for doubtful accounts | (1,205,824) | (1,236,830) |
| Accounts receivable, net | $ 9,281,572 | $ 6,686,552 |
Advances to Suppliers (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
|
| Advances To Suppliers [Abstract] | ||||
| Bad debt expense | $ 0 | $ 0 | $ 0 | $ 0 |
Advances to Suppliers (Details) - Schedule of advances to suppliers - USD ($) |
6 Months Ended | 12 Months Ended |
|---|---|---|
Jun. 30, 2021 |
Dec. 31, 2020 |
|
| Schedule of advances to suppliers [Abstract] | ||
| Advances to suppliers, cost | $ 4,509,227 | $ 2,700,788 |
| Less: allowance for doubtful accounts | (7,541) | (7,463) |
| Advances to suppliers, net | $ 4,501,686 | $ 2,693,325 |
Inventories (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
|
| Inventory Disclosure [Abstract] | ||||
| Accrued allowance of inventory | $ 38,343 | $ 68,600 | $ 52,850 | $ 187,942 |
Inventories (Details) - Schedule of inventories - USD ($) |
Jun. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Schedule of inventories [Abstract] | ||
| Medicine | $ 4,841,423 | $ 196,506 |
| Medical devices | 337,967 | 548,670 |
| Less: allowance for obsolete and expired inventory | (62,675) | (9,825) |
| Total inventory | $ 5,116,715 | $ 735,351 |
Prepayments and Other Receivables (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
|
| Prepayments and Other Receivables (Details) [Line Items] | ||||
| Allowance for doubtful accounts | $ 0 | $ 21,224 | $ 0 | $ 22,110 |
| Chongqing Cogmer Biology Technology Co Ltd [Member] | ||||
| Prepayments and Other Receivables (Details) [Line Items] | ||||
| Deposit amount | $ 3,065,181 | |||
Prepayments and Other Receivables (Details) - Schedule of prepayments and other receivables - USD ($) |
Jun. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Schedule of prepayments and other receivables [Abstract] | ||
| Deposit for rental | $ 45,298 | $ 11,050 |
| Prepaid rental fee and improvements of offices | 978,902 | 37,687 |
| Deposit for purchase of medical devices | 16,914 | 28,113 |
| Receivables from convertible bonds | 1,500,000 | |
| Deferred offering cost | 1,232,186 | 889,971 |
| Prepayment for acquisition of Guoyitang | 9,195,543 | |
| Deposit for acquisition of Cogmer | 3,097,317 | 3,065,181 |
| Prepayment for professional services | 62,198 | |
| Receivables from third party | 237,495 | |
| Others | 352,158 | 162,326 |
| Less: allowance for doubtful accounts | (9,443) | (9,345) |
| Prepayments and other receivables, net | $ 6,013,025 | $ 14,880,526 |
Property, Plant and Equipment (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
|
| Property, Plant and Equipment [Abstract] | ||||
| Depreciation expense | $ 65,567 | $ 2,707 | $ 115,711 | $ 2,707 |
Intangible Assets (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
|
| Goodwill and Intangible Assets Disclosure [Abstract] | ||||
| Amortization expense | $ 1,910 | $ 3,092 | ||
Intangible Assets (Details) - Schedule of intangible assets - USD ($) |
Jun. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Finite-Lived Intangible Assets [Line Items] | ||
| Intangible assets, gross | $ 18,127 | |
| Less: accumulated amortization | (3,092) | |
| Intangible assets, net | 15,035 | |
| Software [Member] | ||
| Finite-Lived Intangible Assets [Line Items] | ||
| Intangible assets, gross | $ 18,127 |
Leases (Details) - Schedule of operating leases - USD ($) |
Jun. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Operating Lease Assets | ||
| Operating lease | $ 3,706,823 | $ 53,425 |
| Total operating lease assets | 3,706,823 | 53,425 |
| Operating Lease Obligations | ||
| Current operating lease liabilities | 758,568 | 23,063 |
| Non-current operating lease liabilities | 3,392,857 | 22,457 |
| Total Lease Liabilities | $ 4,151,425 | $ 45,520 |
Leases (Details) - Schedule of lease liability maturities |
Jun. 30, 2021
USD ($)
|
|---|---|
| Schedule of lease liability maturities [Abstract] | |
| 2021 | $ 716,520 |
| 2022 | 771,272 |
| 2023 | 723,763 |
| 2024 | 564,400 |
| 2025 and thereafter | 2,185,943 |
| Total minimum lease payments | 4,961,898 |
| Less: Amount representing interest | 810,473 |
| Total | $ 4,151,425 |
Goodwill (Details) - USD ($) |
6 Months Ended | |
|---|---|---|
Jun. 30, 2021 |
Dec. 31, 2020 |
|
| Goodwill (Details) [Line Items] | ||
| Goodwill | $ 30,442,737 | $ 6,914,232 |
| Guanzan Acquisition [Member] | ||
| Goodwill (Details) [Line Items] | ||
| Goodwill associated with acquisition | 6,914,232 | |
| Guoyitang Acquisition [Member] | ||
| Goodwill (Details) [Line Items] | ||
| Goodwill associated with acquisition | 7,154,393 | |
| Zhongshan Acquisition [Member] | ||
| Goodwill (Details) [Line Items] | ||
| Goodwill associated with acquisition | 10,443,494 | |
| Minkang Qiansheng and Eurasia [Member] | ||
| Goodwill (Details) [Line Items] | ||
| Goodwill associated with acquisition | $ 5,390,619 |
Loans (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
|
| Debt Disclosure [Abstract] | ||||
| Interest expense on short-term loans | $ 4,523 | $ 11,086 | $ 16,538 | $ 12,698 |
| Interest expense on long-term loans | $ 9,473 | $ 25,106 | $ 30,676 | $ 27,661 |
Loans (Details) - Schedule of short-term loans - USD ($) |
Jun. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Short-term Debt [Line Items] | ||
| Total short-term loans | $ 915,876 | $ 904,228 |
| Construction Bank of China [Member] | ||
| Short-term Debt [Line Items] | ||
| Total short-term loans | 33,140 | |
| Chongqing Nan’an Zhongyin Fuden Village Bank Co. LTD [Member] | ||
| Short-term Debt [Line Items] | ||
| Total short-term loans | 153,259 | |
| China Minsheng Bank [Member] | ||
| Short-term Debt [Line Items] | ||
| Total short-term loans | 123,893 | |
| Postal Savings Bank of China [Member] | ||
| Short-term Debt [Line Items] | ||
| Total short-term loans | $ 758,843 | $ 750,969 |
Loans (Details) - Schedule of long term loans - USD ($) |
Jun. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Loans (Details) - Schedule of long term loans [Line Items] | ||
| Subtotal of long-term loans | $ 924,071 | $ 755,198 |
| Less: current portion | (34,201) | |
| Long-term loans – noncurrent portion | 924,071 | 720,997 |
| Standard Chartered Bank [Member] | ||
| Loans (Details) - Schedule of long term loans [Line Items] | ||
| Subtotal of long-term loans | 100,788 | 163,973 |
| Chongqing Nan’an Zhongyin Fuden Village Bank Co. LTD [Member] | ||
| Loans (Details) - Schedule of long term loans [Line Items] | ||
| Subtotal of long-term loans | 139,433 | |
| We Bank [Member] | ||
| Loans (Details) - Schedule of long term loans [Line Items] | ||
| Subtotal of long-term loans | $ 683,850 | $ 591,225 |
Convertible Promissory Notes and Embedded Derivative Instructions (Details) - USD ($) |
1 Months Ended | ||
|---|---|---|---|
May 19, 2020 |
Jun. 30, 2021 |
Dec. 31, 2020 |
|
| Convertible Promissory Notes and Embedded Derivative Instructions (Details) [Line Items] | |||
| Initial exercise price (in Dollars per share) | $ 2.845 | ||
| Securities Purchase Agreement [Member] | |||
| Convertible Promissory Notes and Embedded Derivative Instructions (Details) [Line Items] | |||
| Purchase of shares | $ 650,000 | ||
| Convertible notes, description | subject to increase based on the number of shares of the Company’s common stock issued pursuant to the Convertible Notes. On February 24, 2021, the Company and the Investors agreed to increase the amount of Convertible Notes that may be purchased under the May SPA from $2,100,000 to $5,400,000 at an original issue discount of 16.67% ($4,500,000, net). The Convertible Notes issued in 2021 are convertible at a base conversion price of $2.59 per share, subject to the previously agreed conversion floor price of $0.554 (or $0.372 with respect to the increased amount). The Investors also received additional warrants to purchase 720,000 additional shares of the Company’s common stock at an exercise price of $2.845 per share | ||
| Convertible Notes Payable [Member] | |||
| Convertible Promissory Notes and Embedded Derivative Instructions (Details) [Line Items] | |||
| Face value | $ 6,015,426 | $ 5,367,174 | |
| Convertible Notes Payable [Member] | Securities Purchase Agreement [Member] | |||
| Convertible Promissory Notes and Embedded Derivative Instructions (Details) [Line Items] | |||
| Converted amount | $ 6,550,000 | ||
| Discount rate | 19.85% | ||
| Investor issued cash | $ 1,750,000 | ||
| Face value | 2,225,000 | ||
| Converted note principal amount | $ 2,100,000 | ||
| Convertible price (in Dollars per share) | $ 2.59 | ||
| Private Placement [Member] | Securities Purchase Agreement [Member] | |||
| Convertible Promissory Notes and Embedded Derivative Instructions (Details) [Line Items] | |||
| Initial exercise price (in Dollars per share) | $ 2.845 | ||
| Purchase of shares (in Shares) | 171,845 |
Convertible Promissory Notes and Embedded Derivative Instructions (Details) - Schedule of additional paid-in capital - Convertible Notes Payable [Member] - USD ($) |
Jun. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Convertible Promissory Notes and Embedded Derivative Instructions (Details) - Schedule of additional paid-in capital [Line Items] | ||
| Convertible note – principal | $ 6,015,426 | $ 5,367,174 |
| Convertible note – discount | (882,896) | (2,038,727) |
| Convertible promissory note, net | $ 5,132,530 | $ 3,328,447 |
Other Payables and Accrued Liabilities (Details) |
1 Months Ended | 6 Months Ended | |||||
|---|---|---|---|---|---|---|---|
|
Oct. 02, 2019
USD ($)
|
Nov. 30, 2020
shares
|
Mar. 31, 2020
USD ($)
shares
|
Jun. 30, 2021
USD ($)
$ / shares
|
Sep. 30, 2020
CNY (¥)
|
Dec. 31, 2020
$ / shares
|
Sep. 30, 2020
$ / shares
|
|
| Other Payables and Accrued Liabilities (Details) [Line Items] | |||||||
| Annual base salary | $ 500,000 | ||||||
| Unpaid salary | $ 163,267 | ||||||
| Issuance of common stock (in Shares) | shares | 1,000,000 | 950,000 | |||||
| Subject to post-closing adjustments amount | $ 4,414,119 | ||||||
| Common stock, par value (in Dollars per share) | $ / shares | $ 0.001 | $ 0.001 | $ 3.00 | ||||
| RMB [Member] | |||||||
| Other Payables and Accrued Liabilities (Details) [Line Items] | |||||||
| Prepayment Of Common Stock (in Yuan Renminbi) | ¥ | ¥ 20,000,000 | ||||||
Other Payables and Accrued Liabilities (Details) - Schedule of other payables and accrued liabilities - USD ($) |
Jun. 30, 2021 |
Dec. 31, 2020 |
||||
|---|---|---|---|---|---|---|
| Schedule of other payables and accrued liabilities [Abstract] | ||||||
| Salary payable | $ 608,151 | $ 96,915 | ||||
| Salary payable – related party (1) | [1] | 163,267 | 663,267 | |||
| Loan payable | 774,329 | |||||
| Accrued operating expenses | 102,358 | |||||
| Acquisition payable (2) | [2] | 3,065,181 | 3,065,181 | |||
| Other payables | 449,514 | 301,255 | ||||
| Other payables and accrued liabilities | $ 5,060,442 | $ 4,228,976 | ||||
| ||||||
Stock Equity (Details) - USD ($) |
1 Months Ended | 2 Months Ended | 6 Months Ended | 12 Months Ended | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Feb. 11, 2021 |
Dec. 02, 2020 |
Dec. 02, 2020 |
Mar. 12, 2020 |
Oct. 07, 2019 |
Jun. 18, 2021 |
Apr. 29, 2021 |
Apr. 20, 2021 |
Mar. 26, 2021 |
Feb. 11, 2021 |
Feb. 09, 2021 |
Feb. 02, 2021 |
Nov. 30, 2020 |
Nov. 30, 2020 |
Mar. 31, 2020 |
Apr. 20, 2019 |
Mar. 02, 2021 |
Jun. 30, 2021 |
Oct. 20, 2020 |
Jun. 30, 2020 |
Dec. 31, 2020 |
Sep. 30, 2020 |
|
| Stock Equity (Details) [Line Items] | ||||||||||||||||||||||
| Common stock, shares authorized | 50,000,000 | 50,000,000 | ||||||||||||||||||||
| Common stock, par value (in Dollars per share) | $ 0.001 | $ 0.001 | $ 3.00 | |||||||||||||||||||
| Common stock, shares outstanding | 24,793,988 | 13,254,587 | ||||||||||||||||||||
| Common stock, shares | 1,000,000 | 950,000 | ||||||||||||||||||||
| Number of share issued | 162,500 | 500,000 | 4,000,000 | 2,000,000 | 250,000 | 2,000,000 | ||||||||||||||||
| Debt conversion, description | From April 6, 2020 through October 20, 2020, holders of convertible notes issued during the period from September 27, 2019 to February 13, 2020, in the aggregate principal amount of $1,534,250 plus interest into an aggregate of 1,658,213 shares of the Company’s common stock. | |||||||||||||||||||||
| Fair value of note (in Dollars) | $ 104 | $ 1,008,067 | ||||||||||||||||||||
| Common stock | 103,530 | 1,138,657 | ||||||||||||||||||||
| Cashless exercise warrants | 650,000 | |||||||||||||||||||||
| Aggregate principal amount (in Dollars) | $ 74,473 | $ 74,473 | $ 2,150,000 | |||||||||||||||||||
| Boqi Zhengji [Member] | ||||||||||||||||||||||
| Stock Equity (Details) [Line Items] | ||||||||||||||||||||||
| Common stock, shares | 1,500,000 | 1,500,000 | ||||||||||||||||||||
| Guanzan [Member] | ||||||||||||||||||||||
| Stock Equity (Details) [Line Items] | ||||||||||||||||||||||
| Number of share issued | 950,000 | 1,000,000 | ||||||||||||||||||||
| Hudson Bay [Member] | ||||||||||||||||||||||
| Stock Equity (Details) [Line Items] | ||||||||||||||||||||||
| Fair value of note (in Dollars) | $ 173,154 | |||||||||||||||||||||
| Common stock | 1,384,714 | 125,627 | ||||||||||||||||||||
| Aggregate principal amount (in Dollars) | $ 2,150,000 | |||||||||||||||||||||
| Investor [Member] | ||||||||||||||||||||||
| Stock Equity (Details) [Line Items] | ||||||||||||||||||||||
| Fair value of note (in Dollars) | $ 609,615 | |||||||||||||||||||||
| Common stock | 447,458 | |||||||||||||||||||||
| Convertible Notes [Member] | ||||||||||||||||||||||
| Stock Equity (Details) [Line Items] | ||||||||||||||||||||||
| Common stock reserve for future issuance | 4,696,137 | |||||||||||||||||||||
| Common Stock [Member] | ||||||||||||||||||||||
| Stock Equity (Details) [Line Items] | ||||||||||||||||||||||
| Common stock, shares authorized | 50,000,000 | |||||||||||||||||||||
| Common stock, par value (in Dollars per share) | $ 0.001 | |||||||||||||||||||||
| Common stock, shares outstanding | 24,793,988 | 13,254,587 | ||||||||||||||||||||
Net Income (Loss) Per Share (Details) - Schedule of basic and diluted net income (loss) per share - USD ($) |
6 Months Ended | |
|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
|
| Schedule of basic and diluted net income (loss) per share [Abstract] | ||
| Net income (loss) from continuing operation attributable to common shareholders | $ (3,566,365) | $ 3,272,268 |
| Net loss from discontinued operations attributable to common shareholders | (800,605) | |
| Total net income (loss) attributable to common shareholders | $ (3,566,365) | $ 2,471,663 |
| Weighted average common shares outstanding – Basic and diluted (in Shares) | 20,859,159 | 9,728,861 |
| Income (loss) per share – basic and diluted: | ||
| Continuing operations (in Dollars per share) | $ (0.17) | $ 0.25 |
| Discontinued operations (in Dollars per share) | (0.08) | |
| Total (in Dollars per share) | $ (0.17) | $ 0.17 |
Litigation (Details) - Apr. 02, 2020 |
USD ($) |
CNY (¥) |
|---|---|---|
| Litigation Disclosure [Abstract] | ||
| Amount agreed to pay on settlement | $ 80,409 | ¥ 570,902 |
Segments (Details) |
6 Months Ended |
|---|---|
Jun. 30, 2021 | |
| Segment Reporting [Abstract] | |
| Number of reportable segments | 4 |
Segments (Details) - Schedule of reportable segment revenues, profit or loss, and assets |
6 Months Ended |
|---|---|
|
Jun. 30, 2021
USD ($)
| |
| >>Revenues | |
| Total revenues from reportable segments | $ 14,121,913 |
| Other revenues | 38,663 |
| Elimination of intersegments revenues | 2,735,585 |
| Total consolidated revenues | 11,424,991 |
| >> Profit or loss | |
| Total profit from reportable segments | 13,445 |
| Elimination of intersegments profit or loss | 2,325 |
| Unallocated amount: | |
| Amortization of discount of convertible notes | (1,386,586) |
| Other corporate expense | (2,190,899) |
| Total net loss | (3,566,365) |
| >>Assets | |
| Total assets from reportable segments | 32,546,382 |
| Elimination of intersegments receivables | (8,999,782) |
| Unallocated amount: | |
| Other unallocated assets – Xinrongxin | 3,102,087 |
| Other unallocated assets – Liaoning Boyi | 185,382 |
| Other unallocated assets – Dalian Boyi | 20,173 |
| Other unallocated assets – Chongqing Bimai | 2,932,238 |
| Other unallocated assets – BIMI | 32,825,945 |
| Total consolidated assets | $ 62,612,245 |
Entity-Wide Information and Concentrations of Risk (Details) - Schedule of revenues from each types of products - USD ($) |
6 Months Ended | |
|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
|
| Schedule of revenues from each types of products [Abstract] | ||
| Medical devices | $ 916,193 | $ 1,896,732 |
| Medical services | 3,732,974 | 2,331,221 |
| Medicines (including pharmacy sales) | 6,737,161 | 13,797 |
| Total | $ 11,386,328 | $ 4,241,750 |
I,73L6<\>18GDC%6_Q%R_/U]QPVS
M/*OB-XL"S_IB,AO1:U-W6U=7C^O+$C$[]@MU26)@<,,SKX\XK*=;.U)G\"TR
MY=C[IQ52EF(>=^HO4EJ^&,V]3?*+NR3 W,IVHW27&;EGZ(AU2RR&CHD2OE#$
M%X_88H.B -"%:O*0#V9PZ-"8VDH*M([,#AQI"%I)$U_3=-*:@>]LH)V94R%[
M9NR.- 7?@)@:IHSVD\390W&3'H&O+O9\AZ4UZ6L*3Q4$UO3E9D]6E5:;PW,A
MG_