BOQI International Medical Inc. (NASDAQ: BIMI) (“BIMI” or the
“Company”) today announced its financial results for the third
quarter and nine months ended September 30, 2020.
“We have made good progress in line with our new
business, especially the online-to-offline strategy. We opened our
first retail pharmacy store in Chongqing at the end of June 2020,
then gradually opened five more stores in the latter part of the
third quarter,” said Mr. Tiewei Song, Chief Executive Officer and
President of BOQI International Medical Inc. “We are also
developing our online healthcare platform. We plan to connect the
platform with pharmacies, hospitals and other medical institutions
to further strengthen our capabilities in online and offline
healthcare services.”
Revenues
Revenues for the three months ended September
30, 2020 and 2019 were $3,091,071 and $208,402, respectively. The
Company’s revenues for the three months ended September 30, 2020
were principally attributable to wholesale sales of medical devices
and generic drugs by our newly acquired Guanzan Group. The
Company’s revenues for the three months ended September 30, 2019
were attributable to the sales of products manufactured by the NF
Group and from energy saving technical services and product
collaboration processing services performed by the NF Group, which
we sold in June 2020. Revenues from the wholesale medical devices
segment and the wholesale medicine segment for the three months
ended September 30, 2020 were $670,296 and $2,391,674,
respectively. Revenues from the retail pharmacy segment for the
three months ended September 30, 2020 were $29,101.
Revenues for the nine months ended September 30,
2020 and 2019 were $7,317,449 and $1,120,804, respectively. The
553% increase in revenues is attributable to the acquisition of the
Guanzan Group in late March 2020. Revenues from the wholesale
medicine segment for the nine months ended September 30, 2020 were
$4,698,985 and revenues from the wholesale medical device segment
for the nine months ended September 30, 2020 were $2,567,029.
Revenues from the retail pharmacy segment for the nine months ended
September 30, 2020 were $42,898.
Cost of Revenues
Cost of revenues for the three months ended
September 30, 2020 and 2019 were $2,833,793 and $281,014,
respectively, reflecting the impact of the acquisition of the
Guanzan Group. For the three months ended September 30, 2020, the
cost of revenues of the wholesale medical devices segment was
$586,939. For the three months ended September 30, 2020, the cost
of revenues of our wholesale medicine segment was $2,032,947. For
the three months ended September 30, 2020, the cost of revenues for
retail pharmacy segment was $227,883, which included an inventory
impairment charge of $202,981. Cost of revenues for the
nine months ended September 30, 2020 and 2019 were $6,240,962 and
$1,030,862, respectively. For the nine months ended June 30, 2020,
the cost of revenues of our wholesale medical devices segment was
$2,051,563. For the nine months ended September 30, 2020, the cost
of revenues of our wholesale medicine segment was $3,759,707. For
the nine months ended September 30, 2020, cost of revenues of our
retail pharmacy segment was $426,293, which included an inventory
write-off of $390,923.
Gross Profit
For the three months ended September 30, 2020,
the Company had a gross profit margin of 8.32% compared with a
negative gross profit margin of 34.84 % in the quarter ended
September 30, 2019. On a sequential basis, gross profit decreased
by 14.07% from the second quarter of 2020, due to the decrease in
revenues from high gross profit wholesale medical devices segment.
The gross profit margin of the wholesale medical devices and
wholesale medicine segments for three months ended September 30,
2020 were 12.44% and 15%, respectively. The retail pharmacy
segment’s cost of revenues exceeded its revenues by $198,782 in the
quarter.
For the nine months ended September 30, 2020,
the Company had a gross profit margin of 14.71% compared with a
gross profit margin of 8.02% in the first nine months of 2019. The
improvement in the gross profit margin in the first nine months
ended September 30, 2020 is mainly due to the inclusion of the
revenues from the wholesale medical devices and wholesale medicine
segments since the acquisition in March 2020. The gross profit
margin of the wholesale medical devices and wholesale medicine
segments for nine months ended September 30, 2020 were 20.08% and
19.99%, respectively. The retail pharmacy segment’s cost of
revenues exceeded its revenues by $383,395 in the nine-month period
ended September 30, 2020.
Operating Expenses
Operating expenses were $1,689,962 for the three
months ended September 30, 2020 compared to $359,307 for the same
period in 2019, an increase of $1,330,655. The increase is mainly
due to the additional amortization of the discounted convertible
notes and intangible assets and impairment loss of intangible
asset.
Operating expenses were $6,579,201 for the nine
months ended September 30, 2020 compared to $1,607,763 for the same
period in 2019, an increase of $ 4,975,922 or 309%. Operating
expenses for the nine months ended September 30, 2020 consist
mainly of amortization of the discounted convertible notes,
amortization of intangible assets, meeting and promotional
expenses, pharmaceutical and medical device industry compliance
management expenses, legal fees, convertible note issuance-related
costs in the amount of $211,425 and other professional service
fees. The Company also reduced the contingent consideration payable
to the former shareholders of Lasting (the parent of Boqi Zhengji)
by $5,655,709, following a re-evaluation of such commitment.
Operating expenses also included a $903,573
impairment loss with respect to the intangible assets recognized in
the acquisition of Boqi Zhengji.
Other Income
For the three months ended September 30, 2020,
the Company reported other income of $5,247 and other interest
expense of $339,780, as compared to other income of $58,718 and
other interest expense of $ 466,582 for the three months ended
September 30, 2019.
For the nine months ended September 30, 2020,
the Company reported other income of $6,973,409 and other interest
expense of $717,226 compared to other income of $11,021 and other
interest expense of $717,226 in the nine months ended September 30,
2019. Other income in the nine months ended September 30, 2020
includes the gain generated from the disposal of the NF
Group.
Net Profit (Loss)
For the three months ended September 30, 2020,
the Company reported a net loss of $1,860,573 compared to a net
loss of $547,689 for the same period of 2019. For the nine months
ended September 30, 2020, the Company reported a net profit of
$611,090 compared to a net loss of $1,973,382 for the same period
in 2019.
Liquidity and Capital
Resources
On September 30, 2020, the Company had cash and
cash equivalents of $11, 585,325 compared to cash and cash
equivalents of $36,363 on December 31, 2019. As of September 30,
2020, the Company had negative working capital of $5,439,912 as
compared to negative working capital of $500,765 on December 31,
2019.
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.
About BOQI International Medical
Inc.
BOQI International Medical Inc. (formerly known
as NF Energy Saving Corporation) (NASDAQ: BIMI) was founded in
2006. In February 2019, the Board of Directors of the company was
reorganized with a focus on the health industry. The Company is now
exclusively a healthcare products provider, offering a broad range
of healthcare products and related services. For more information
about BOQI International Medical, please visit www.usbimi.com.
Safe Harbor Statement
Certain matters discussed in this news release
are forward-looking statements that involve a number of risks and
uncertainties including, but not limited to, the Company’s ability
to achieve profitable operations, its ability to continue to
operate as a going concern, its ability to continue to meet NASDAQ
continued listing requirements, the effects of the spread of the
Coronavirus (COVID-19), the demand for the Company’s products and
the Company’s customers’ economic condition, risk of operations in
the People’s Republic of China, general economic conditions and
other risk factors detailed in the Company’s annual report and
other filings with the United States Securities and Exchange
Commission. Investors are urged to read the Company’s Quarterly
Report on Form 10-Q for the three months ended March 31, 2020 for
further information about the Company’s financial results,
liquidity and capital resources.
IR Contact:
Dragon Gate Investment Partners LLCTel: +1(646)-801-2803Email:
BIMI@dgipl.com
BOQI INTERNATIONAL MEDICAL, INC. AND ITS
SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS
|
|
September 30, |
|
|
December 31, |
|
|
|
2020 |
|
|
2019 |
|
|
|
(Unaudited) |
|
|
|
|
ASSETS |
|
|
|
|
|
|
CURRENT ASSETS |
|
|
|
|
|
|
Cash |
|
$ |
11,585,321 |
|
|
$ |
36,363 |
|
Restricted cash |
|
|
1,365 |
|
|
|
311 |
|
Accounts receivable, net |
|
|
3,935,514 |
|
|
|
24,840 |
|
Advances to suppliers |
|
|
2,251,811 |
|
|
|
1,252 |
|
Amount due from related parties |
|
|
- |
|
|
|
1,350 |
|
Inventories, net |
|
|
4,195,247 |
|
|
|
707,526 |
|
Prepayments and other receivables |
|
|
3,495,570 |
|
|
|
59,333 |
|
Assets from discontinued operations |
|
|
- |
|
|
|
21,218,983 |
|
Total current assets |
|
|
25,464,828 |
|
|
|
22,049,958 |
|
|
|
|
|
|
|
|
|
|
NON-CURRENT
ASSETS |
|
|
|
|
|
|
|
|
Deferred tax assets |
|
|
165,995 |
|
|
|
- |
|
Property, plant and equipment, net |
|
|
854,897 |
|
|
|
38,641 |
|
Intangible assets, net |
|
|
642,741 |
|
|
|
7,973,179 |
|
Goodwill |
|
|
6,443,170 |
|
|
|
- |
|
Total non-current assets |
|
|
8,106,803 |
|
|
|
8,011,820 |
|
|
|
|
|
|
|
|
|
|
TOTAL
ASSETS |
|
$ |
33,571,631 |
|
|
$ |
30,061,778 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES |
|
|
|
|
|
|
|
|
Short-term loans |
|
$ |
866,297 |
|
|
$ |
- |
|
Long-term loans due within one year |
|
|
185,147 |
|
|
|
- |
|
Convertible promissory notes, net |
|
|
3,616,330 |
|
|
|
107,383 |
|
Derivative liability |
|
|
1,173,505 |
|
|
|
1,272,871 |
|
Accounts payable, trade |
|
|
6,790,000 |
|
|
|
641,927 |
|
Advances from customers |
|
|
710,515 |
|
|
|
67,975 |
|
Amount due to related parties |
|
|
586,027 |
|
|
|
305,760 |
|
Taxes payable |
|
|
308,920 |
|
|
|
861 |
|
Other payables and accrued liabilities |
|
|
5,788,175 |
|
|
|
6,044,378 |
|
Liabilities from discontinued operations |
|
|
- |
|
|
|
13,108,038 |
|
Total current liabilities |
|
|
20,024,916 |
|
|
|
21,549,193 |
|
|
|
|
|
|
|
|
|
|
Long-term loans - non-current portion |
|
|
138,632 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
TOTAL
LIABILITIES |
|
|
20,163,548 |
|
|
|
21,549,193 |
|
|
|
|
|
|
|
|
|
|
EQUITY |
|
|
|
|
|
|
|
|
Common stock, $0.001 par value; 50,000,000 shares authorized;
10,505,821 and 9,073,289 shares issued and outstanding as of
September 30 2020 and December 31, 2019, respectively |
|
|
10,506 |
|
|
|
9,073 |
|
Additional paid-in capital |
|
|
24,081,799 |
|
|
|
15,643,825 |
|
Statutory reserves |
|
|
- |
|
|
|
2,227,634 |
|
Accumulated deficit |
|
|
(10,834,660 |
) |
|
|
(10,881,667 |
) |
Accumulated other comprehensive income |
|
|
26,633 |
|
|
|
1,683,770 |
|
Total BOQI International Medical Inc.’s equity |
|
|
13,284,278 |
|
|
|
8,682,635 |
|
|
|
|
|
|
|
|
|
|
NON-CONTROLLING INTERESTS |
|
|
123,805 |
|
|
|
(170,050 |
) |
|
|
|
|
|
|
|
|
|
Total equity |
|
|
13,408,083 |
|
|
|
8,512,585 |
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity |
|
$ |
33,571,631 |
|
|
$ |
30,061,778 |
|
BOQI INTERNATIONAL MEDICAL, INC. AND ITS
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE (GAIN)/LOSS(UNAUDITED)
|
|
For the Three Months Ended September 30 |
|
|
For the Nine Months Ended September 30 |
|
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUES |
|
|
3,091,071 |
|
|
|
208,402 |
|
|
|
7,317,449 |
|
|
|
1,120,804 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COST OF REVENUES |
|
|
2,833,793 |
|
|
|
281,014 |
|
|
|
6,240,962 |
|
|
|
1,030,862 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS
PROFIT/(LOSS) |
|
|
257,278 |
|
|
|
(72,612 |
) |
|
|
1,076,487 |
|
|
|
89,942 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing |
|
|
377,977 |
|
|
|
33,096 |
|
|
|
1,028,746 |
|
|
|
119,820 |
|
General and administrative |
|
|
1,311,985 |
|
|
|
326,211 |
|
|
|
5,554,939 |
|
|
|
1,487,943 |
|
Total
operating expenses |
|
|
1,689,962 |
|
|
|
359,307 |
|
|
|
6,583,685 |
|
|
|
1,607,763 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOSS FROM
OPERATIONS |
|
|
(1,432,684 |
) |
|
|
(431,919 |
) |
|
|
(5,507,198 |
) |
|
|
(1,517,821 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER
INCOME (EXPENSE) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(339,780 |
) |
|
|
(174,488 |
) |
|
|
(717,226 |
) |
|
|
(466,582 |
) |
Other income |
|
|
5,247 |
|
|
|
58,718 |
|
|
|
6,973,409 |
|
|
|
11,021 |
|
Total other
income (expense), net |
|
|
(334,533 |
) |
|
|
(115,770 |
) |
|
|
6,256,183 |
|
|
|
(455,561 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME
(LOSS) BEFORE INCOME TAXES |
|
|
(1,767,217 |
) |
|
|
(547,689 |
) |
|
|
748,985 |
|
|
|
(1,973,382 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PROVISION
FOR INCOME TAXES |
|
|
93,356 |
|
|
|
— |
|
|
|
137,895 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
INCOME (LOSS) |
|
|
(1,860,573 |
) |
|
|
(547,689 |
) |
|
|
611,090 |
|
|
|
(1,973,382 |
) |
Less: net income (loss) attributable to non-controlling
interest |
|
|
49,374 |
|
|
|
(3,220 |
) |
|
|
75,648 |
|
|
|
777 |
|
NET
INCOME (LOSS) ATTRIBUTE TO BOQI INTERATIONAL MEDICAL INC. |
|
$ |
(1,909,947 |
) |
|
$ |
(544,469 |
) |
|
$ |
535,442 |
|
|
$ |
(1,974,159 |
) |
OTHER
COMPREHENSIVE INCOME(LOSS) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment |
|
|
(108,236 |
) |
|
|
(271,289 |
) |
|
|
34,802 |
|
|
|
(244,964 |
) |
TOTAL
COMPREHENSIVE INCOME(LOSS) |
|
|
(1,968,809 |
) |
|
|
(818,978 |
) |
|
|
645,892 |
|
|
|
(2,218,346 |
) |
Less: comprehensive income (loss) attributable to non-controlling
interests |
|
|
1,193 |
|
|
|
(1,260 |
) |
|
|
(1,408 |
) |
|
|
3,286 |
|
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO BOQI INTERNATIONAL
MEDICAL INC. |
|
$ |
(1,970,002 |
) |
|
$ |
(817,718 |
) |
|
$ |
647,300 |
|
|
$ |
(2,221,632 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE NUMBER OF COMMON SHARES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted |
|
|
10,505,821 |
|
|
|
8,073,289 |
|
|
|
9,987,848 |
|
|
|
7,871,824 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME (LOSS) PER SHARE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted |
|
$ |
(0.19 |
) |
|
$ |
(0.07 |
) |
|
$ |
0.06 |
|
|
$ |
(0.25 |
) |
BOQI INTERNATIONAL MEDICAL, INC. AND ITS
SUBSIDIARIES(CONSOLIDATED STATEMENTS OF CASH FLOWS(UNAUDITED)
|
|
For the Nine Months Ended September 30, |
|
|
|
2020 |
|
|
2019 |
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
Net income (Loss) |
|
$ |
611,090 |
|
|
$ |
(1,973,382 |
) |
Adjustments to reconcile net income/(loss) to cash used in
operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
810,264 |
|
|
|
716,433 |
|
(Profit) on disposal of property |
|
|
(6,944,469 |
) |
|
|
(43,712 |
) |
Allowance for doubtful accounts |
|
|
(263,260 |
) |
|
|
(75,203 |
) |
Amortization of discount of convertible promissory notes |
|
|
1,950,901 |
|
|
|
1,239 |
|
Change in derivative liabilities |
|
|
43,224 |
|
|
|
2,132 |
|
Impairment loss from construction in progress |
|
|
- |
|
|
|
24,803 |
|
Allowance for inventory provision |
|
|
390,923 |
|
|
|
- |
|
Impairment loss of intangible assets |
|
|
903,573 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Change in
operating assets and liabilities |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
(1,284,400 |
) |
|
|
970,444 |
|
Advances to suppliers |
|
|
418,847 |
|
|
|
- |
|
Inventories |
|
|
(2,928,419 |
) |
|
|
(634,860 |
) |
Prepayments and other receivables |
|
|
(1,245,981 |
) |
|
|
(67,709 |
) |
Accounts payable, trade |
|
|
4,844,674 |
|
|
|
(284,077 |
) |
Advances from customers |
|
|
(707,586 |
) |
|
|
|
|
Taxes payable |
|
|
(9,368 |
) |
|
|
55,943 |
|
Other payables and accrued liabilities |
|
|
594,793 |
|
|
|
371,982 |
|
Net cash used in operating activities |
|
|
(2,815,194 |
) |
|
|
(935,967 |
) |
|
|
|
|
|
|
|
|
|
CASH FLOWS
FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
Cash received from acquisition of Guanzan Group |
|
|
95,220 |
|
|
|
- |
|
Proceeds from disposal of property, planet, and equipment |
|
|
- |
|
|
|
50,063 |
|
Purchase of property, planet, and equipment |
|
|
(121,176 |
) |
|
|
- |
|
Cash received from sale of NF Group |
|
|
10,375,444 |
|
|
|
- |
|
Repayment from related party loan |
|
|
- |
|
|
|
540,294 |
|
Loan to related party |
|
|
- |
|
|
|
(1,161,458 |
) |
Net cash provided by (used in) investing activities |
|
|
10,349,488 |
|
|
|
(571,101 |
) |
|
|
|
|
|
|
|
|
|
CASH FLOWS
FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
Net proceeds from issuance of convertible promissory notes |
|
|
3,457,325 |
|
|
|
- |
|
Proceeds from short-term loans |
|
|
27,371 |
|
|
|
5,835,897 |
|
Repayment of short-term loans |
|
|
(65,516 |
) |
|
|
(5,838,815 |
) |
Repayment of long-term loans |
|
|
(48,164 |
) |
|
|
- |
|
Amount financed by related parties |
|
|
173,547 |
|
|
|
1,591,910 |
|
Net cash provided by financing activities |
|
|
3,544,563 |
|
|
|
1,588,992 |
|
|
|
|
|
|
|
|
|
|
EFFECT OF
EXCHANGE RATE ON CASH |
|
|
471,155 |
|
|
|
(33,401 |
) |
|
|
|
|
|
|
|
|
|
INCREASE IN
CASH |
|
|
11,550,012 |
|
|
|
48,523 |
|
|
|
|
|
|
|
|
|
|
CASH AND
CASH EQUIVALENTS, beginning of period |
|
|
36,674 |
|
|
|
197,356 |
|
|
|
|
|
|
|
|
|
|
CASH AND
CASH EQUIVALENTS, end of period |
|
$ |
11,586,686 |
|
|
$ |
245,879 |
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
CASH FLOW INFORMATION: |
|
|
|
|
|
|
|
|
Cash paid for income tax |
|
$ |
42,130 |
|
|
$ |
- |
|
Cash paid for interest expense, net of capitalized interest |
|
$ |
62,636 |
|
|
$ |
434,198 |
|
|
|
|
|
|
|
|
|
|
NON-CASH
TRANSACTIONS OF INVESTING AND FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
Issuance of common shares for the equity acquisition of Chongqing
Guanzan Technology Co., Ltd. |
|
$ |
2,717,000 |
|
|
$ |
- |
|
Goodwill recognized from the equity acquisition of the Boqi
Group |
|
$ |
6,443,170 |
|
|
$ |
2,040,000 |
|
Outstanding payment for the equity acquisition of Chongqing Guanzan
Technology Co., Ltd. |
|
$ |
4,414,119 |
|
|
$ |
- |
|
Common shares to be issued upon conversion of convertible
promissory notes |
|
$ |
5,160,473 |
|
|
$ |
- |
|
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