The accompanying unaudited
consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Regulation S-X, Rule 10-01(c)
Interim Financial Statements, and, therefore, do not include all information and footnotes necessary for a complete presentation of financial
position, results of operations, cash flows, and stockholders’ equity in conformity with generally accepted accounting principles.
In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial
position have been included and all such adjustments are of a normal recurring nature. Operating results for the six months ended June
30, 2021 are not necessarily indicative of the results that can be expected for the year ended December 31, 2021.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN USD)
NOTE 1. DESCRIPTION OF BUSINESS AND ORGANIZATION
JRSIS Health Care Corporation (the “Company”
or “JRSS”) was incorporated on November 20, 2013 under the laws of the State of Florida. In December 2013 JRSS acquired 100%
of the equity in JRSIS Health Care Limited (“JHCL”), which is a Limited Liability Company registered in British Virgin Island
(“BVI”) on February 25, 2013. JHCL owns 100% of the equity in Runteng Medical Group Co., Ltd (“Runteng”), a limited
liability company registered in Hong Kong on September 17, 2012. Runteng owns 70% of the equity in Harbin Jiarun Hospital Co., Ltd (“Jiarun”),
a for-profit hospital incorporated in Harbin City of Heilongjiang, China in February 2006. The remaining 30% of the equity in Jiarun is
owned by Junsheng Zhang, who is the Chairman of the Board of JRSIS Health Care Corporation.
Jiarun is a private hospital serving patients
on a municipal and county level and providing both Western and Chinese medical practices to the residents of Harbin. Jiarun also owns
100% of the equity in:
|
●
|
Harbin
Jiarun Hospital Co., Ltd Nanjing Road Branch (“NRB Hospital”), a hospital branch of Jiarun, incorporated in Harbin City of
Heilongjiang, China in October 2017. NRB hospital is a private hospital serving patients on a municipal and county level and providing
both Western and Chinese medical practices to the residents of Harbin.
|
|
●
|
Harbin Jiarun Hospital Co., Ltd 2nd Branch (“2nd Branch Hospital”), a second hospital branch of Jiarun, incorporated in Harbin City of Heilongjiang, China in November 2017. 2nd Branch Hospital is a private hospital serving patients on a municipal and county level and providing both Western and Chinese medical practices to the residents of Harbin.
|
|
●
|
Harbin Jiarun Hospital Co., Ltd Harbin New District Branch (“3rd Branch Hospital”), a third hospital branch of Jiarun, incorporated in Harbin City of Heilongjiang, China in April 2021. 3rd Branch Hospital is a private hospital serving patients on a municipal and county level and providing both Western and Chinese medical practices to the residents of Harbin.
|
30% of the equity in Jiarun is held by Junsheng
Zhang, and is therefore a non-controlling interest (“NCI”), accounted for pursuant to ASC 810-10-45, which states that the
ownership interest in the subsidiary that is held by owners other than the parent is a non-controlling interest. According to the supplemental
agreement signed between Junsheng Zhang and Runteng on June 1, 2013, the comprehensive income from Jiarun would be attributable to retained
earnings and non-controlling interest for 70% and 30% respectively, from July 1, 2013.
NOTE 2. SUMMARIES OF SIGNIFICANT ACCOUNTING POLICIES
A. Basis of presentation
The consolidated financial statements have been
prepared in accordance with the United States generally accepted accounting principles (“U.S. GAAP”).
B. Principles of consolidation
The consolidated financial statements include
the accounts of the Company and its subsidiaries. All inter-company transactions and balances have been eliminated in consolidation. Non-controlling
interests represent the equity interest in Jiarun that is not attributable to the Company. Non-controlling interest is reported in the
consolidated financial position within equity, separate from the Company’s equity. Net income or loss and comprehensive income or
loss are attributed to the Company’s and the non-controlling interest.
C. Use of estimates
The preparation of audited consolidated financial
statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets
and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts
of revenue and expenses during the reporting periods. Management makes these estimates using the best information available at the time
the estimates are made; however actual results could differ from those estimates. Significant items subject to such estimates and assumptions
include valuation allowances for receivables and recoverability of carrying amount and the estimated useful lives of long-lived assets.
These estimates are often based on complex judgments and assumptions that management believes to be reasonable but are inherently uncertain
and unpredictable. Actual results could differ from these estimates.
JRSIS HEALTH CARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN USD)
NOTE 2. SUMMARIES OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
D. Functional currency and foreign currency
translation
JRSS and JHCL’s functional currency is the
United States dollar (“US$”). Runteng’s functional currency is the Hong Kong dollar (“HK$”). The functional
currency of Jiarun is the Renminbi (“RMB”).
The Company’s reporting currency is US$.
Assets and liabilities of Runteng and Jiarun are translated at the current exchange rate at the balance sheet dates, revenues and expenses
are translated at the average exchange rates during the reporting periods, and equity accounts are translated at historical rates. Translation
adjustments are reported in other comprehensive income.
The exchange rates used for foreign currency
translation are as follows:
|
|
|
|
|
For
six months ended
June 30,
|
|
|
|
|
|
|
2021
|
|
|
|
2020
|
|
|
|
|
|
|
(USD to RMB/USD to HKD)
|
|
|
|
(USD to RMB/USD to HKD)
|
|
Assets and liabilities
|
|
period end exchange rate
|
|
|
6.4579 / 7.7652
|
|
|
|
7.0697 / 7.7504
|
|
Revenue and expenses
|
|
period average
|
|
|
6.4717 / 7.7614
|
|
|
|
7.0339 / 7.7612
|
|
E. Concentration of Credit Risk
Financial instruments that potentially subject
the Company to concentrations of credit risk are cash, accounts receivable and other receivables arising from its normal business activities.
The Company places its cash in what it believes to be credit-worthy financial institutions. The majority of sales are either cash receipt
in advance or cash receipt upon delivery. For six months ended June 30, 2021 and 2020, no customer accounted for more than 10% of net
revenue. As of June 30, 2021 and December 31, 2020, three and three customers, respectively, accounted for more than 5% of net accounts
receivable. For those credit sales, the Company routinely assesses the financial strength of its customers and, based upon factors surrounding
the credit risk, establishes an allowance, if required, for uncollectible accounts. As a consequence, believes that its accounts receivable
credit risk exposure beyond such allowance is limited.
F. Cash and cash equivalents
Cash and cash equivalents include all cash, deposits
in banks and other liquid investments with initial maturities of three months or less.
G. Accounts receivable
Accounts receivable are recorded at net realizable
value consisting of the carrying amount less an allowance for uncollectible accounts as needed. The allowance for doubtful accounts is
the Company’s best estimate of the amount of probable credit losses in the Company’s existing accounts receivable. The Company
determines the allowance based on aging data, historical collection experience, customer specific facts and economic conditions. Account
balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered
remote.
H. Inventories
Inventories, consisting principally of medicines,
are stated at the lower of cost or market using the first-in, first-out method (“FIFO”). This policy requires the Company
to make estimates regarding the market value of inventory, including an assessment of excess or obsolete inventory. The Company determines
excess or obsolete inventory based on an estimate of the future demand and estimated selling prices for its products.
JRSIS HEALTH CARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN USD)
NOTE 2. SUMMARIES OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
I. Construction in progress
Construction in progress represents the new hospital
painting and decoration costs. All direct costs relating to the polishing and decoration are capitalized as construction in progress.
No depreciation is provided in respect of construction in progress.
J. Property and equipment
Property and equipment are stated at cost. Expenditures
for maintenance and repairs are charged to operations when incurred, while additions and betterments are capitalized. Depreciation is
recorded on a straight-line basis reflective of the useful lives of the assets. When assets are retired or disposed, the asset’s
original cost and related accumulated depreciation are eliminated from accounts and any gain or loss is reflected in income.
The estimated useful lives for property and equipment
categories are as follows:
Buildings and improvement
|
|
|
10-40 years
|
|
Medical equipment
|
|
|
5-15 years
|
|
Transportation instrument
|
|
|
5-10 years
|
|
Office equipment
|
|
|
5-10 years
|
|
Electronic equipment
|
|
|
5-10 years
|
|
Software
|
|
|
5-10 years
|
|
K. Leases
In February 2016, the FASB issued ASU 2016-02–Leases
(Topic 842), which increases transparency and comparability among organizations by recognizing right-of-use (“ROU”) lease
assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The ASU maintains a distinction
between finance leases and operating leases, which is substantially similar to the classification criteria for distinguishing between
capital leases and operating leases in the previous lease guidance. Retaining this distinction allows the recognition, measurement and
presentation of expenses and cash flows arising from a lease to remain similar to the previous accounting treatment. A lessee is permitted
to make an accounting policy election by class of underlying asset to exclude from balance sheet recognition any lease assets and lease
liabilities with a term of 12 months or less, and instead to recognize lease expense on a straight-line basis over the lease term. For
both financing and operating leases, the ROU asset and lease liability is initially measured at the present value of the lease payments
in the consolidated balance sheet. In July 2018, the FASB issued ASU 2018-11 which provides entities with the option to initially apply
the new lease standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in
the period of adoption, if necessary. As discussed in Note 8, we adopted ASU 2016-02–Leases (Topic 842) effective January 1, 2019
utilizing the transition option provided by ASU 2018-11.
L. Fair Value Measurement
The Company applies the provisions of ASC Subtopic
820-10, Fair Value Measurements, for fair value measurements of financial assets and financial liabilities and for fair value measurements
of nonfinancial items that are recognized or disclosed at fair value in the financial statements. ASC 820 also establishes a framework
for measuring fair value and expands disclosures about fair value measurements.
Fair value is defined as the price that would
be received when selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement
date. In determining the fair value for the assets and liabilities required or permitted to be recorded, the Company considers the principal
or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the
asset or liability.
ASC 820 establishes a fair value hierarchy that
requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC
820 establishes three levels of inputs that may be used to measure fair value. The hierarchy gives the highest priority to unadjusted
quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving
significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:
|
Level 1:
|
Unadjusted quoted prices in active markets that are accessible
at the measurement date for identical, unrestricted assets or liabilities;
|
|
Level 2:
|
Quoted prices in markets that are not active, or inputs that
is observable, either directly or indirectly, for substantially the full term of the asset or liability;
|
|
Level 3:
|
Prices or valuation techniques that require inputs that are
both significant to the fair value measurement and unobservable (supported by little or no market activity).
|
JRSIS HEALTH CARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN USD)
NOTE 2. SUMMARIES OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
The following table sets forth by level within
the fair value hierarchy our financial assets and liabilities that were accounted for at fair value on a recurring basis:
|
|
Carrying
Value at
June 30,
|
|
|
Fair Value Measurement at
June 30, 2021
|
|
|
|
2021
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
Convertible Note
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Warrant liability
|
|
$
|
7,862
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
7,862
|
|
A summary of changes in Warrant liability for six
months ended June 30, 2021 was as follows:
Balance at January 1, 2021
|
|
$
|
1,149
|
|
Change in fair value of warrant liability
|
|
|
6,713
|
|
Balance at June 30, 2021
|
|
|
7,862
|
|
The fair value of the outstanding warrants was
calculated using the Binomial Option Pricing Model with the following assumptions at inception and on subsequent valuation date:
|
|
June 30,
2021
|
|
Warrants
|
|
Auctus
|
|
Market price per share (USD/share)
|
|
$
|
0.37
|
|
Exercise price (USD/share)
|
|
|
0.60
|
|
Risk free rate
|
|
|
0.252
|
%
|
Dividend yield
|
|
|
-
|
|
Expected term/Contractual life (years)
|
|
|
1.08
|
|
Expected volatility
|
|
|
61.68
|
%
|
Cash and cash equivalents, accounts receivable,
accounts payable and accrued liabilities are reflected in the accompanying consolidated financial statements at amounts that approximate
fair value because of the short-term nature of these instruments. The fair value of the Company’s capital lease obligations also
approximates carrying value as they bear interest at current market rates.
JRSIS HEALTH CARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN USD)
NOTE 2. SUMMARIES OF SIGNIFICANT ACCOUNTING
POLICIES (Continued)
M. Segment and geographic information
The Company is operating in one segment in accordance
with the accounting guidance FASB ASC topic 280, “Segment Reporting”. The Company’s revenues are from customers in People’s
Republic of China (“PRC”). All assets of the company are located in PRC.
N. Revenue recognition
The Company recognizes revenue when the amount
of revenue can be reliably measured, it is probable that economic benefits will flow to the entity, and specific criteria have been met
for each of the Company’s activities as described below.
Medicine sales
Revenue from the sale of medicine is recognized
when it is both earned and realized. The Company’s policy is to recognize the sale of medicine when the title of the medicine, ownership
and risk of loss have transferred to the purchasers, and collection of the sales proceeds is reasonably assured, all of which generally
occur when the patient receives the medicine.
Given the nature of this revenue source of the
Company’s business and the applicable rules guiding revenue recognition, the revenue recognition practices for the sale of medicine
do not contain estimates that materially affect results of operations nor does the Company have any policy for return of products.
Patient Services
In accordance with the medical licenses under
which Jiarun operates, the scope of its approved medical patient service includes medical consulting, surgery, obstetrics and gynecology,
pediatrics, anesthesia, clinic laboratory, medical imaging, and traditional Chinese medicine.
Patient service revenue is recognized when it
is both earned and realized. The Company’s policy is to recognize patient service revenue when the medical service has been provided
to the patient and collection of the revenue is reasonably assured.
The Company provides services to both patients
covered by social insurance and patients who are not covered by social insurance. The Company charges the same rates for patient services
regardless of the coverage by social insurance.
Patients who are not covered by social insurance
are liable for the total cost of medical treatment.
|
●
|
For
out-patient medical services, revenue is recognized when the Company provides medical service to the patient. The Company collects payment
before the patient leaves the hospital.
|
|
●
|
For
in-patient medical services, when a patient checks into the hospital, the Company estimates the approximate fee the patient will spend
in the hospital based on patient’s symptoms. At that time, the Company collects the estimated fees from the patient and records
the payment as deposits received.
|
During the in-patient services period, the Company
recognizes revenue when the patient service is provided and deducts the cost of service from the deposit received. The Company records
these transactions based on daily reports generated by the respective medical department. When medical services exceed patient deposits
received the Company records revenue and accounts receivable when the patient services are provided.
When a patient checks out from the hospital, the
Company calculates and determines the remaining deposit, if any, and refunds the unused portion of the deposit to the patients. In the
case where the patient has a balance in accounts receivable, accounts receivable are required to be paid in full at checkout.
Patients covered by social insurance will receive
a portion or full medical services reimbursed or paid by the social insurance agencies via prepaid cards or insurance claim settlement
process.
JRSIS HEALTH CARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN USD)
NOTE 2. SUMMARIES OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Settlement process
The Company is a registered medical service vendor
under the state social insurance system for various social insurance agencies. The insurance agencies include “Social Medical Insurance
funded by PRC and Heilongjiang Province” and “Heilongjiang Province New Rural Cooperative Medical Care System”. The
Company utilizes an online system maintained by the social insurance agencies for patients who are covered by social insurance agencies.
|
●
|
The
Company records patients’ information in the social insurance system at check in. The system determines the covered portion and
amounts based on the information input to the system.
|
|
●
|
At
the time of check out, the Company collects payment for services the patients are liable for and records accounts receivable from the
social insurance agencies for the portion of services covered by the social insurance. In the case that the patients have made payment
during the in-patient services period, the Company refunds any amount in excess of the portion they are liable for.
|
|
●
|
The
Company is responsible for submitting supporting documents of patient services provided to the social insurance agencies for their review.
The Company is also required to reconcile its records with the social insurance agencies once a month. Once the social insurance agencies
approve the reconciliation, the insurance agencies will settle the accounts receivable balance in the next month following the approval.
|
O. Income taxes
The Company has adopted FASB ASC Topic 740, “Income
Taxes,” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events
that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax
consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each
period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect
taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
In July 2006, the FASB issued FIN 48 (ASC 740-10),
Accounting for Uncertainty in Income Taxes-An Interpretation of FASB Statement No. 109 (ASC 740), which requires income tax positions
to meet a more-likely-than-not recognition threshold to be recognized in the financial statements. Under FIN 48 (ASC 740-10), tax positions
that previously failed to meet the more-likely-than-not threshold should be recognized in the first subsequent financial reporting period
in which that threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not threshold should be derecognized
in the first subsequent financial reporting period in which that threshold is no longer met.
The application of tax laws and regulations is
subject to legal and factual interpretation, judgment and uncertainty. Tax laws and regulations themselves are subject to change as a
result of changes in fiscal policy, changes in legislation, the evolution of regulations and court rulings. Therefore, the actual liability
may be materially different from our estimates, which could result in the need to record additional tax liabilities or potentially reverse
previously recorded tax liabilities or deferred tax asset valuation allowance.
Enterprise income tax is determined under the
Provisional Regulations of PRC Concerning Income Tax on Enterprises promulgated by the PRC, income tax is payable by enterprises at a
rate of 25% of their taxable income.
JRSIS HEALTH CARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN USD)
NOTE 2. SUMMARIES OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
P. Earnings per share
Basic earnings per common share is computed by
using net income divided by the weighted average number of shares of common stock outstanding for the periods presented. Diluted earnings
per share is computed by dividing net income by the weighted average number of shares of common stock, common stock equivalents and potentially
dilutive securities outstanding for the periods presented.
Q. Reclassification
The comparative figures have been reclassified
to conform to current year presentation.
R. Recently adopted accounting pronouncements
The FASB has issued Accounting Standards Update
(ASU) No. 2019-01, Leases (Topic 842): Codification Improvements. The new ASU aligns the guidance for fair value of the underlying asset
by lessors that are not manufacturers or dealers in Topic 842 with that of existing guidance. As a result, the fair value of the underlying
asset at lease commencement is its cost, reflecting any volume or trade discounts that may apply. However, if there has been a significant
lapse of time between when the underlying asset is acquired and when the lease commences, the definition of fair value (in Topic 820,
Fair Value Measurement) should be applied.
The ASU also requires lessors within the scope
of Topic 942, Financial Services—Depository and Lending, to present all “principal payments received under leases” within
investing activities.
Finally, the ASU exempts both lessees and lessors
from having to provide certain interim disclosures in the fiscal year in which a company adopts the new leases standard.
We do not believe other recently issued but not
yet effective accounting standards, if currently adopted, would have a material effect on the consolidated financial position, statements
of operations and cash flows.
NOTE 3. ACCOUNTS RECEIVABLE, NET
|
|
June 30
|
|
|
December 31
|
|
|
|
2021
|
|
|
2020
|
|
|
|
(Unaudited)
|
|
|
|
|
Accounts receivable
|
|
$
|
8,509,875
|
|
|
$
|
7,691,679
|
|
Less: allowance for doubtful debts
|
|
|
3,338,246
|
|
|
|
3,300,027
|
|
|
|
$
|
5,171,629
|
|
|
$
|
4,391,652
|
|
The Company experienced $ nil bad debts during
six months ended June 30, 2021 and 2020. The allowances for doubtful debts as of June 30, 2021 and December 31, 2020 were taken by the
Company to reflect excess insurance claims submitted by the Company to the Harbin Medical Insurance Management Centre that have remained
unreimbursed for over two years.
NOTE 4. INVENTORIES
At June 30, 2021 and December 31, 2020, inventories
consist of the following:
|
|
June 30
|
|
|
December 31
|
|
|
|
2021
|
|
|
2020
|
|
|
|
(Unaudited)
|
|
|
|
|
Western pharmaceuticals
|
|
$
|
669,483
|
|
|
$
|
720,622
|
|
Chinese herbal medicine
|
|
|
57,656
|
|
|
|
32,840
|
|
Medical material
|
|
|
446,794
|
|
|
|
697,535
|
|
Other material
|
|
|
4,543
|
|
|
|
7,220
|
|
|
|
$
|
1,178,476
|
|
|
$
|
1,458,217
|
|
JRSIS HEALTH CARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN USD)
NOTE 5. PREPAYMENT
At June 30, 2021 and December 31, 2020 prepayment
consists of the following:
|
|
June 30
|
|
|
December 31
|
|
|
|
2021
|
|
|
2020
|
|
|
|
(Unaudited)
|
|
|
|
|
Deposits on medical equipment
|
|
$
|
310,790
|
|
|
$
|
173,438
|
|
Deposits on lease
|
|
|
584,857
|
|
|
|
162,045
|
|
Heating fees
|
|
|
-
|
|
|
|
78,356
|
|
Others
|
|
|
100,099
|
|
|
|
212,083
|
|
|
|
$
|
995,746
|
|
|
$
|
625,922
|
|
NOTE 6. PROPERTY AND EQUIPMENT
At June 30, 2021 and December 31, 2020, property
and equipment, at cost, consist of:
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2021
|
|
|
2020
|
|
|
|
(Unaudited)
|
|
|
|
|
Transportation equipment
|
|
$
|
1,108,051
|
|
|
$
|
1,263,860
|
|
Medical equipment
|
|
|
25,165,263
|
|
|
|
24,234,134
|
|
Electrical equipment
|
|
|
2,366,439
|
|
|
|
2,300,036
|
|
Office equipment and others
|
|
|
1,381,360
|
|
|
|
1,354,139
|
|
Buildings
|
|
|
28,465,118
|
|
|
|
28,139,226
|
|
Software
|
|
|
200,357
|
|
|
|
198,063
|
|
Total fixed assets at cost
|
|
|
58,686,588
|
|
|
|
57,489,458
|
|
Accumulated depreciation
|
|
|
(11,798,990
|
)
|
|
|
(10,213,582
|
)
|
Total fixed assets, net
|
|
$
|
46,887,598
|
|
|
$
|
47,275,876
|
|
Reclass to Right-of-use assets
|
|
|
(14,859,808
|
)
|
|
|
(15,820,452
|
)
|
Total fixed assets, net after reclassing
|
|
|
32,027,790
|
|
|
|
31,455,424
|
|
The Company recorded depreciation expense of $804,072
and $579,065, $1,612,046 and $1,159,012 for the three and six months ended June 30, 2021 and 2020, respectively.
NOTE 7. LONG TERM DEFERRED EXPENSES
On May 7, 2015, July 3, 2015 and October 16, 2015,
Jiarun entered into three lease agreements to lease medical equipment from Hair Finance Leasing (China) Co., Ltd. (“Hair”),
a third party, for a five-year period, in which Jiarun is required to pay a consulting fee to Hair for the services provided over the
five years. During the year ended December 31, 2018, the Company paid approximately $1.6 million for the decoration of its outpatient
building and the two Branch Hospitals. The consulting and decoration fees paid but attributable to the current and subsequent accounting
periods were accounted for as deferred expenses and long-term deferred expenses.
The current portion of the prepaid consulting
and decoration fees were recorded as deferred expenses of $457,442 and $452,205 as of June 30, 2021 and December 31, 2020.
The long-term deferred expenses were $2,299,871 and $2,510,460 as of June 30, 2021 and December 31, 2020.
The Company recorded consulting fee of $nil and
$11,700 for the three months ended June 30, 2021 and 2020, and decoration fees of $114,332 and $104,205 for the three months
ended June 30, 2021 and 2020, respectively. The Company recorded consulting fee of $nil and $27,857 for the six months ended June
30, 2021 and 2020, and decoration fees of $228,232 and $209,990 for the six months ended June 30, 2021 and 2020, respectively.
NOTE 8. RIGHT-OF-USE ASSETS AND LEASE LIABILITIES
On January 1, 2019, the Company adopted Accounting
Standards Codification (“ASC”) Topic 842, “Leases” (“new lease standard”). The new lease standard
was adopted using the optional transition method approach that allows for the cumulative effect adjustment to be recorded without restating
prior periods. The Company has elected the practical expedient package related to the identification, classification and accounting for
initial direct costs whereby prior conclusions do not have to be reassessed for leases that commenced before the effective date. As the
Company will not reassess such conclusions, the Company has not adopted the practical expedient to use hindsight to determine the likelihood
of whether a lease will be extended or terminated or whether a purchase option will be exercised.
JRSIS HEALTH CARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN USD)
NOTE 8. RIGHT-OF-USE ASSETS AND LEASE LIABILITIES
(Continued)
Finance lease
On June 5, 2013, Jiarun entered into a lease agreement
to lease its hospital building from Harbin Baiyi Real Estate Development Co., Ltd (“the Lessor”), which is owned by Junsheng
Zhang, a related party. The Lease has a term of 30 years, requiring annual prepayments of a rent of RMB7,000,000. The first payment was
made on September 1, 2014. At the end of the leasing period, a final payment will be made to settle the total leasing amount. Both parties
agreed for Jiarun to pay RMB3,000,000 as deposit at the execution of the Leasing agreement, which will be deducted from the final rental
settlement. In accordance with proper accounting principles, this payment was booked as a deposit in our accounts. The Lessor shall return
the premium for lease to Jiarun at expiration of the Contract or pledge the deposit as part of rents for the last period or periods in
2043. The implicit interest rate, which determined the rental fee after fair value was amortized, was calculated at 6.55%, which is the
benchmark interest rate announced by The People’s Bank of China. After the completion of all payments, the ownership of the lease
item will be transferred to Jiarun.
The leasing agreement for our hospital building
contains the following provisions:
|
●
|
Rental
payments of RMB7,000,000 (equivalent to $1,004,593) per year, payable at the beginning of September.
|
|
●
|
An
option allowing the lessor to extend the lease for thirty years beyond the last renewal option exercised by the Company.
|
|
●
|
A
guarantee by the Company that the lessor will realize $nil from selling the asset at the expiration of the lease. This lease is a capital
lease because its term (30 years) exceeds 75% of the building’s estimated economic life. In addition, the present value ($15,185,032)
of the minimum lease payments exceeds 90% of the fair value of the building ($15,721,295).
|
|
●
|
Accumulated
annual amounts resulting from applying an interest rate of 6.55% to the balance of the lease obligation at the beginning of each year.
The lease obligation is increased by the amount of the prior year’s interest, the amount of the net rental payment at the beginning
of each year; and this amount represents the guaranteed residual value at the end of the lease term.
|
On May 7, 2015, July 3, 2015, October 16, 2015,
April 6, 2016, November 25, 2016, April 5 2017 and May 25, 2019 Jiarun entered into several lease agreements to lease medical equipment
and an elevator from three lease finance companies, which are all unrelated third parties, for three to five-year periods, in which Jiarun
is required to make monthly or quarterly payments toward the leases. The Company was also required to pay deposits up front, which deposits
will later be offset against the last quarterly payment. The medical equipment and elevator will be transferred to Jiarun upon the completion
of the agreement.
On November 20, 2020 Jiarun entered into a sale
and leaseback agreement for the sale-leaseback of properties from Haier Finance Leasing Company Limited, with a collective net value of
$2,272,053.
Operating lease
In August 2017 JHCC leased office space under
non-cancellable operating lease agreements. Under terms of the lease agreement, from August 2017, JHCC is committed to make lease payments
of approximately $36,881 per year for 5 years. This office is used for outpatient services by 2nd Branch Hospital.
In December 2017 JHCC leased office space under
non-cancellable operating lease agreements. Under terms of the lease agreement, from December 2017, JHCC is committed to make lease payments
of approximately $68,128 per year for 5 years. This office is used by 1st Branch Company. In October 2019 JRSS updated
this operating lease agreements to expand the operating area for the remain lease period, under terms of the new lease agreement, from
October 2019, JRSS is committed to lease expense payments of approximately $186,308 per year.
In January 2021 JHCC leased office space under
non-cancellable operating lease agreements. Under terms of the lease agreement, from January 2021, JHCC is committed to make lease payments
of approximately $848,000 per year for 5 years. This office is used by 3rd Branch Hospital.
In June 2021 JHCC leased office space under non-cancellable
operating lease agreements. Under terms of the lease agreement, from June 2021, JHCC is committed to make lease payments of approximately
$123,600 per year for 3 years. This office is used by 3rd Branch Hospital
The Company’s adoption of the new lease
standard included new processes and controls regarding asset financing transactions, financial reporting and a system-related implementation
required for the new lease standard. The Company’s accounting for finance leases (formerly referred to as capital leases prior to
the adoption of the new lease standard) remained substantially unchanged. The impact of the adoption of the new lease standard included
the recognition of right-of-use (“ROU”) assets and lease liabilities. The adoption of the new lease standard resulted in additional
net lease assets and net lease liabilities of approximately $18.83 million and $19.07 million, respectively, as of June
30, 2021.
JRSIS HEALTH CARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN USD)
NOTE 8. RIGHT-OF-USE ASSETS AND LEASE LIABILITIES
(Continued)
As of June 30, 2021, the Company has the following
amounts recorded on the Company’s unaudited condensed consolidated balance sheet:
|
|
June 30,
2021
|
|
|
December 31,
2020
|
|
|
|
(Unaudited)
|
|
|
|
|
Assets
|
|
|
|
|
|
|
Operating lease assets
|
|
$
|
3,967,112
|
|
|
$
|
366,828
|
|
Finance lease assets
|
|
|
14,859,808
|
|
|
|
15,820,452
|
|
Total
|
|
$
|
18,826,920
|
|
|
$
|
16,187,280
|
|
Liabilities
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
Operating lease liabilities
|
|
|
1,021,822
|
|
|
|
209,689
|
|
Finance lease liabilities
|
|
|
1,899,637
|
|
|
|
2,254,977
|
|
Long-term
|
|
|
|
|
|
|
|
|
Operating lease liabilities
|
|
|
2,945,290
|
|
|
|
157,139
|
|
Finance lease liabilities
|
|
|
13,199,869
|
|
|
|
14,287,507
|
|
Total
|
|
$
|
19,066,618
|
|
|
$
|
16,909,312
|
|
The future minimum lease payments for annual capital
lease obligation as of June 30, 2021 are as follows:
Year
|
|
Amounts
|
|
2021
|
|
$
|
972,403
|
|
2022
|
|
|
1,442,144
|
|
2023
|
|
|
1,055,461
|
|
Thereafter
|
|
|
11,629,498
|
|
Total
|
|
$
|
15,099,506
|
|
The Company recorded finance lease fees of $276,451
and $$270,171 for the three months ended June 30, 2021 and 2020, respectively, and recorded finance lease fees of $534,243 and $$509,460
for the six months ended June 30, 2021 and 2020, respectively.
Future annual minimum lease payments, for non-cancellable
operating leases are as follows:
Year ending March 31
|
|
Amount $
|
|
2021
|
|
|
505,736
|
|
2022
|
|
|
972,697
|
|
2023
|
|
|
853,611
|
|
Thereafter
|
|
|
1,635,068
|
|
Total
|
|
|
3,967,112
|
|
The company has recorded operating lease expense
of $280,523 and $42,978 for three months ended June 30, 2021 and 2020, and recorded operating lease expense of $549,727 and $86,608 for
six months ended June 30, 2021 and 2020 respectively
At June 30, 2021 right-of-use assets consist of:
|
|
June 30, 2021
(Unaudited)
|
|
|
December 31, 2020
|
|
|
|
Operating
lease
|
|
|
Finance
lease
|
|
|
Total
|
|
|
Operating
lease
|
|
|
Finance
lease
|
|
|
Total
|
|
Lease assets
|
|
$
|
4,414,576
|
|
|
$
|
15,427,442
|
|
|
$
|
19,842,018
|
|
|
$
|
559,607
|
|
|
$
|
16,936,882
|
|
|
$
|
17,496,489
|
|
Accumulated amortization
|
|
|
(447,464
|
)
|
|
|
(567,634
|
)
|
|
|
(1,015,098
|
)
|
|
|
(192,779
|
)
|
|
|
(1,116,430
|
)
|
|
|
(1,309,209
|
)
|
Total right-of-use assets, net
|
|
$
|
3,967,112
|
|
|
$
|
14,859,808
|
|
|
$
|
18,826,920
|
|
|
$
|
366,828
|
|
|
$
|
15,820,452
|
|
|
$
|
16,187,280
|
|
The Company recorded finance lease amortization
expense of $284,362 and $268,656 in depreciation and amortization for the three months ended June 30, 2021 and 2020, respectively, and
recorded finance lease amortization expense of $567,643 and $541,383 in depreciation and amortization for the six months ended June 30,
2021 and 2020, respectively. For the three and six months ended June 30, 2021, the amount of depreciation and amortization was $804,072
and $1,612,046, also included general property and equipment depreciation of $427,199 and $951,892.
JRSIS HEALTH CARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN USD)
NOTE 8. RIGHT-OF-USE ASSETS AND LEASE LIABILITIES
(Continued)
The Company recorded operating lease expense of
$280,523 and $42,978 for the three months ended June 30, 2021 and 2020, and recorded operating lease expense of $549,727 and $86,608 for
the six months ended June 30, 2021 and 2020, including operating lease amortization expense of $228,608 and $26,729 for the three months
ended June 30, 2021 and 2020, and $447,464 and $53,864 for the six months ended June 30, 2021 and 2020, respectively.
NOTE 9. DERIVATIVE FINANCIAL INSTRUMENTS
Derivative Financial Instruments
The Company has adopted the provisions of ASC
subtopic 825-10, Financial Instruments (“ASC 825-10”). ASC 825-10 defines fair value as the price that would be received from
selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining
the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal
or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset
or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. ASC 825-10 establishes a fair value hierarchy
that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
Warrant liabilities – The Company issued
two common stock purchase warrants (the “warrants”) to purchase 28,200 shares and 21,000 shares of the registrant’s
common stock to Labrys Fund, LP and Auctus Fund, LLC. These warrants contain certain reset provisions. The accounting treatment of derivative
financial instruments requires that the Company record fair value of the derivatives as of the inception date (issuance date) and to record
changes in fair value as of each subsequent reporting date.
In January 2020 the Company issued 38,322 shares
of common stock to Labrys Fund, LP in full satisfaction of its warrant. At June 30, 2021, the Company marked to market the fair value
of the Auctus Fund warrant liability and determined a fair value of $7,862. The Company recorded a loss from issuance expense and change
in fair value of warrant liability of $6,713 and $445,089 for six months ended June 30, 2021 and 2020. The fair value of the warrant liability
was determined using Binomial Option Pricing Model based on the following assumptions: (1) dividend yield of 0%, (2) expected volatility
of 61.68%, (3) weighted average risk-free interest rate of 0.252%, (4) expected life of 1.08 years, and (5) the quoted market price of
the Company’s common stock at each valuation date.
NOTE 10.
NON-CONTROLLING INTERESTS
Jiarun is the Company’s majority-owned subsidiary
which is consolidated in the Company’s financial statements with a non-controlling interest recognized. The Company holds a 70%
equity interest in Jiarun as of June 30, 2021 and December 31, 2020.
As of June 30, 2021 and December 31, 2020, NCI
on the consolidated balance sheet was $10,445,812 and $9,802,677, respectively, representing the 30% of Jiarun that is owned by Junsheng
Zhang.
For the three months ended June 30, 2021, the
comprehensive income attributable to shareholders’ equity and NCI is $1,138,883 and $366,610 respectively. For the six months ended
June 30, 2021, the comprehensive income attributable to shareholders’ equity and NCI is $1,415,408 and $643,135, respectively. For
the three months ended June 30, 2020, the comprehensive income attributable to shareholders’ equity and NCI is $347,902 and $136,521
respectively. For the six months ended June 30, 2020, the comprehensive income attributable to shareholders’ equity and NCI is $159,598
and $151,800, respectively.
JRSIS
HEALTH CARE CORPORATION
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS
IN USD)
NOTE
11. REVENUE
The
Company’s revenue consists of pharmaceuticals sales and patient care revenue.
|
|
Three
Months Ended
June 30,
|
|
|
|
2021
|
|
|
2020
|
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
Pharmaceuticals:
|
|
|
|
|
|
|
Western pharmaceuticals
|
|
$
|
2,438,115
|
|
|
$
|
1,348,816
|
|
Chinese medicine
|
|
|
285,625
|
|
|
|
152,799
|
|
Herbal
medicine
|
|
|
473,291
|
|
|
|
253,873
|
|
Total
pharmaceuticals
|
|
$
|
3,197,031
|
|
|
$
|
1,755,488
|
|
|
|
|
|
|
|
|
|
|
Patient services:
|
|
|
|
|
|
|
|
|
Medical consulting
|
|
$
|
3,907,822
|
|
|
$
|
2,330,362
|
|
Medical treatment
|
|
|
4,308,924
|
|
|
|
2,782,799
|
|
Others
|
|
|
326,823
|
|
|
|
147,722
|
|
Total
patient services
|
|
$
|
8,543,569
|
|
|
$
|
5,260,883
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
11,740,600
|
|
|
$
|
7,016,371
|
|
|
|
Six
Months Ended
June 30,
|
|
|
|
2021
|
|
|
2020
|
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
Pharmaceuticals:
|
|
|
|
|
|
|
Western pharmaceuticals
|
|
$
|
3,823,043
|
|
|
$
|
2,813,298
|
|
Chinese medicine
|
|
|
440,700
|
|
|
|
323,102
|
|
Herbal
medicine
|
|
|
697,589
|
|
|
|
454,797
|
|
Total
pharmaceuticals
|
|
$
|
4,961,332
|
|
|
$
|
3,591,197
|
|
|
|
|
|
|
|
|
|
|
Patient services:
|
|
|
|
|
|
|
|
|
Medical consulting
|
|
$
|
6,115,564
|
|
|
$
|
4,097,680
|
|
Medical treatment
|
|
|
7,516,599
|
|
|
|
5,089,836
|
|
Others
|
|
|
473,339
|
|
|
|
225,657
|
|
Total
patient services
|
|
$
|
14,105,502
|
|
|
$
|
9,413,173
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
19,066,834
|
|
|
$
|
13,004,370
|
|
NOTE
12. INCOME TAX EXPENSE
The
Company uses the asset-liability method of accounting for income taxes prescribed by ASC 740 Income Taxes. The Company and its subsidiaries
each file their taxes individually.
United
States
JRSS
is subject to the United States of America tax at a tax rate of 21%. No provision for the US federal income taxes has been made as the
Company had no US taxable income for the periods presented, and its earnings are planned to be reinvested indefinitely into the
operations of the Company in the PRC.
The
following table shows the components of the allowance for US income tax recorded for six months ended June 30, 2021:
|
|
Amounts
|
|
Loss before
income tax
|
|
$
|
(25,171
|
)
|
Tax rate at 21%
|
|
|
(5,286
|
)
|
Disallowed
tax losses
|
|
|
5,286
|
|
Income
tax expense
|
|
$
|
-
|
|
BVI
JHCL
was incorporated in the BVI and, under the current laws of the BVI, it is not subject to income tax.
JRSIS
HEALTH CARE CORPORATION
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS
IN USD)
NOTE
12. INCOME TAX EXPENSE (Continued)
Hong
Kong
Runteng was
incorporated in Hong Kong and is subject to Hong Kong profits tax. Runteng is subject to Hong Kong taxation on its activities conducted
in Hong Kong and income arising in or derived from Hong Kong. The applicable statutory tax rate is 16.5%.
The
following table shows the components of the allowance for Hong Kong income tax recorded for six months ended June 30, 2021:
|
|
Amounts
|
|
Loss before
income tax
|
|
$
|
(166
|
)
|
Tax rate at 16.5%
|
|
|
(27
|
)
|
Disallowed
tax losses
|
|
|
27
|
|
Income
tax expense
|
|
$
|
-
|
|
PRC
Corporate
Income Tax (CIT) is determined under the Provisional Regulations of PRC Concerning Income Tax on Enterprises promulgated by the PRC.
Income tax is payable by enterprises at a rate of 25% of their taxable income.
The
following table shows the components of the allowance for PRC income tax recorded for six months ended June 30, 2021:
|
|
Amounts
|
|
Income tax
expense
|
|
$
|
583,307
|
|
Income
tax: 2020 deferred
|
|
|
8,348
|
|
Tax
expense from continuing operation
|
|
$
|
574,959
|
|
Reconciliation:
|
|
Amounts
|
|
Income
tax at statutory rate
|
|
$
|
583,307
|
|
Tax
expense from continuing operation
|
|
$
|
583,307
|
|
According
to the PRC “Notice on Preferential Corporate Income Tax (CIT) Treatment for Eligible Equipment or Machinery (Cai Shui [2018] No.
54)”, a 100% immediate tax deduction for CIT purposes is allowed on the condition that the unit price of each item of equipment
or machinery is individually less than RMB5 million. Depreciation for tax purposes is not required. Basis differences between tax and
GAAP for depreciation of property and equipment exist because in the first half year of 2021 the Company purchased Eligible Equipment
for RMB 4.2 million, with $8,348 deferred income tax, creating differences between the tax treatment mandated by the Chinese government
and GAAP tax treatment.
JRSIS
HEALTH CARE CORPORATION
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS
IN USD)
NOTE
13. RELATED PARTY TRANSACTIONS
The
following is the list of the related parties with which the Group has had transactions:
The
following is the list of the related parties with which the Company had transactions in the past two years:
(a)
Junsheng Zhang, the Chairman of the Company
(b)
Harbin Baiyi Real Estate Development Co., Ltd, owned by Junsheng Zhang
(c)
Harbin Jiarun Pharmacy Co., Ltd, owned by Junsheng Zhang
(d)
Heilongjiang Province Runjia Medical Equipment Company Limited, owned by Junsheng Zhang
(e)
Jiarun Super Market Co., Ltd,. owned by Junsheng Zhang
Prepayments
- related parties consisted of the following as of the periods indicated:
Name
of related parties
|
|
June
30,
2021
|
|
|
December 31,
2020
|
|
Harbin
Baiyi Real Estate Development Co., Ltd,
|
|
$
|
1,650,406
|
|
|
$
|
-
|
|
|
|
$
|
1,650,406
|
|
|
$
|
-
|
|
Amount
due from Baiyi mainly represented the deposit decoration.
On
March 1 and June 1, 2021, the company signed decoration agreement for the new third branch hospital building with Harbin Baiyi Real Estate
Development Co., Ltd. Under terms of the agreement, the Company had paid a deposit of $1,650,406 in the first half year of 2021 for decoration
during the following period until to October 2021.
Amount
due to related parties
Amount
due to related parties consisted of the following as of the periods indicated:
Name
of related parties
|
|
June
30,
2021
|
|
|
December 31,
2020
|
|
Harbin Jiarun
Pharmacy Co., Ltd
|
|
$
|
44,625
|
|
|
$
|
33,624
|
|
Heilongjiang Province Runjia
Medical Equipment Co., Ltd
|
|
|
(77
|
)
|
|
|
1,761
|
|
Jiarun Super Market Co., Ltd.
|
|
|
-
|
|
|
|
282
|
|
Harbin Baiyi Real Estate Development
Co., Ltd,
|
|
|
-
|
|
|
|
114,584
|
|
Junsheng
Zhang
|
|
|
54,952
|
|
|
|
12,670
|
|
|
|
$
|
99,500
|
|
|
$
|
162,921
|
|
Amount
due to Harbin Jiarun Pharmacy Co., Ltd., Jiarun Super Market Co., Ltd.. and Heilongjiang Province Runjia Medical Equipment Company
Limited were mainly the balance due for purchase of medicine and medical material from these three companies.
Amounts
due to Junsheng Zhang represented amounts paid by Mr. Zhang for the daily operation of the company.
Related
parties’ transactions
Purchase
of pharmaceuticals and medical material from related parties consisted of the following for the periods indicated:
|
|
For
six months ended
June 30,
|
|
Name
of related parties
|
|
2021
|
|
|
2020
|
|
Harbin
Jiarun Pharmacy Co., Ltd
|
|
$
|
10,589
|
|
|
$
|
9,379
|
|
|
|
$
|
10,589
|
|
|
$
|
9,379
|
|
Deposits
for capital leases and capital lease obligations
On
June 5, 2013, Jiarun entered into a Lease Agreement to lease a new hospital building from Harbin Baiyi Real Estate Development Co., Ltd,
which is owned by Junsheng Zhang, a related party. As of June 30, 2021, the Company has balance of deposits for capital leases and capital
lease obligations of $464,551 and $12,312,012, respectively. As of December 31, 2020, the Company had deposits for capital leases and
capital lease obligations of $459,232 and $12,831,348, respectively.
JRSIS
HEALTH CARE CORPORATION
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS
IN USD)
NOTE
14. BASIC AND DILUTED EARNINGS PER SHARE
Basic
net income per share is computed using the weighted average number of common shares outstanding during the period. Diluted net income
per share is computed using the weighted average number of common shares and, if dilutive, potential common shares outstanding during
the period. Potential common shares comprise shares issuable upon the exercise of share-based awards, using the treasury stock method.
The reconciliation of the numerators and denominators of the basic and diluted earnings per share computations for income from continuing
operations is shown as follows:
|
|
Six
Months Ended
June 30,
|
|
|
|
2021
|
|
|
2020
|
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
Numerator:
|
|
|
|
|
|
|
Net
income available to common stockholders
|
|
$
|
994,034
|
|
|
$
|
446,740
|
|
Denominator:
|
|
|
|
|
|
|
|
|
Basic weighted-average number
of shares outstanding
|
|
|
18,271,814
|
|
|
|
18,011,270
|
|
Diluted
weighted-average number of shares outstanding
|
|
|
18,481,814
|
|
|
|
18,032,270
|
|
Net
income per share:
|
|
|
|
|
|
|
|
|
Basic
EPS
|
|
$
|
0.0544
|
|
|
$
|
0.02480
|
|
Diluted
EPS
|
|
$
|
0.0538
|
|
|
$
|
0.02477
|
|
NOTE
15. CONTINGENCIES AND COMMITMENT
Certain
conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company but which
will only be resolved when one or more future events occur or fail to occur. The Company’s management and legal counsel assess
such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related
to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company’s
legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount
of relief sought or expected to be sought. There was no contingency of this type as of June 30, 2021 or December 31, 2020.
If
the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability
can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates
that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the
nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material would be disclosed.
There was no contingency of this type as of June 30, 2021 and December 31, 2020.
Loss
contingencies considered to be remote by management are generally not disclosed unless they involve guarantees, in which case the guarantee
would be disclosed.
JRSIS
HEALTH CARE CORPORATION
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS
IN USD)
NOTE
16. COMMON STOCK
During
the second quarter of 2021, the Company issued 382,238 shares to Auctus Fund, LLC for services. These issuances were made pursuant to
SEC Regulation S to eight non-US persons during 2021, and accordingly were exempt from registration under the Securities Act of 1933.
NOTE
17. GOING CONCERN
As
reflected in the accompanying consolidated financial statements, the Company had a $3,115,523 negative retained earnings or accumulated
deficit as of June 30, 2021; in addition, the Company’s total current liabilities exceeded its current assets by $4,313,031. These
factors raised substantial doubt about its ability to continue as a going concern. In view of the matters described above, recoverability
of a major portion of the recorded asset amounts shown in the accompanying balance sheet is dependent upon continued operations of the
Company, which in turn is dependent upon the Company’s ability to raise additional capital, obtain financing and succeed in its
future operations. The financial statements do not include any adjustments relating to the recoverability and classification of recorded
asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going
concern.
To
continue as a going concern, the Company is actively pursuing additional funding and strategic partners to enable it to implement its
business plan. In addition, the Company is also working to devote more efforts to improve its operation and generate more profits. Management
believes that these actions will allow the Company to continue its operations through the next fiscal year.
NOTE
18. SUBSEQUENT EVENTS
The
COVID-19 pandemic has had a significant adverse impact and created many uncertainties related to our business, and we expect that it
will continue to do so. The Company is experiencing challenges in sales and has suffered a significant decrease in revenues which has
increased financial uncertainty. Our future business outlook and expectations are very uncertain due to the impact of the COVID-19 pandemic
and are very difficult to quantify. It is difficult to assess or predict the impact of this unprecedented event on our business, financial
results or financial condition.
Except
for the above matter, the Management of the Company determined that there were no material reportable subsequent events required
to be disclosed or because of which adjustments are needed.