NEW YORK, May 15, 2020 (GLOBE NEWSWIRE) -- BOQI International Medical Inc. (NASDAQ: BIMI)  (“BIMI” or the “Company”) announced its financial results for the fiscal year ended December 31, 2019.

Fiscal Year 2019 Financial Highlights:

  • Revenues for the year ended December 31, 2019 and 2018 were $157,978 and $0, respectively.
  • Cost of revenues for the year ended December 31, 2019 was $304,120.
  • Net loss of $4,452,279 for the year ended December 31, 2019 compared to a net loss of $16,999,794 for the year ended December 31, 2018.

Fiscal Year 2019 and Recent Operational Highlights:

On October 14, 2019, the Company acquired Boqi Zhengji (the “Boqi Acquisition”), which operates a pharmacy chain business in the PRC, by purchasing 100% of the equity interests of Lasting, Boqi Zhengji’s parent company. The Boqi Acquisition was our first step of expansion and our shift of focus from the energy sector to the healthcare business. All of the revenues reported for 2019 reflect the operations of Boqi Zhengji for the period from October 14, 2019 through December 31, 2019.

Our, which operated under the umbrella of NF Investment, incurred operating losses in recent 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 enhanced our collection measures and explored many different alternatives in an effort to revive this business, including attempts to expand into international markets, before we determined this business was no longer sustainable for the Company. 

In late 2019, we committed to a plan to dispose of NF Investment and its subsidiaries (the “NF Group”), our legacy energy efficiency enhancement business.  On March 31, 2020, we entered into a stock purchase agreement to sell the NF Group for $10 million, to be paid in cash at the closing.  The closing of the NF SPA, which is subject to the satisfaction of certain conditions, is expected to close in the second quarter of 2020.  The plan to dispose of the NF Group and the actions taken to fulfill the plan resulted in our classifying the business of NF Group as a discontinued operation. As a result, all of the assets and liabilities of NF Group were reclassified as a discontinued operation in the statement of position as of December 31, 2019 and 2018, and the results of the operation are presented under the line item net loss from discontinued operation for the years ended December 31, 2019 and 2018.

On February 1, 2020, the Company entered into a stock purchase agreement (the “Guanzan SPA”) with Chongqing Guanzan Technology Co., Ltd., a company organized under the laws of the PRC (“Guanzan”) and Ms. Zhou Li, an individual residing in the PRC (the “Seller”). Guanzan reported sales of approximately $12.0 million in 2019.

Mr. Tiewei Song, Chief Executive Officer and President of BOQI International Medical Inc, said, "2019 was a milestone year for BOQI International Medical as we successfully completed our transformational acquisition of Boqi Zhengji, began effective implementation of our integration strategy, and took important steps toward building our membership-centric O2O healthcare model. We strengthened our financial position and reduced the net loss by 74%. We are confident that we’re on the right path to delivering significant value for all our shareholders."

Revenues

Revenues for the year ended December 31, 2019 and 2018 were $157,978 and $0, respectively. The revenues for the year ended December 31, 2019 were all attributable to the revenues of the Pharmacy Group’s directly-owned pharmacy retail stores and sales to authorized retailer stores. There were no revenues from continuing operations for the year ended December 31, 2018, because the business operation of NF Group was reclassified as a discontinued operation.

Cost of Revenues

Cost of revenues consists of primarily of the cost of the pharmaceuticals, medical devices and other products sold to customers. Cost of revenues for the year ended December 31, 2019 was $304,120. During 2019, the Company recorded an impairment loss of $184,311 with respect to inventories, which was included in cost of revenues. Because we closed a significant number of stores in 2019, a large portion of our inventory was not sold and expired.

Operating expenses

Operating expenses consist mainly of auditing and legal service fees, other professional service fees and listing support 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 $1,566,938 for the year ended December 31, 2019 compared to $212,582 for the year ended December 31, 2018, an increase of $1,354,356, or 637%. Except for the operating expenses attributable to the operation of the newly-acquired Pharmacy Group of appropriately $458,319, the increase in operating expenses primarily resulted from the increase in auditing and legal expenses, officers’ salary and the amortization of the intangible assets recognized from the Boqi Acquisition.

Other expenses

For the year ended December 31, 2019, we reported other loss of $555,921. Other loss mainly consists of: (i) the change of fair value of derivative liabilities related to the convertible promissory notes issued during 2019; (ii) amortization of the discount applicable to the convertible promissory notes; and (iii) interest on the convertible promissory notes. No other loss was incurred in 2018.

Net Loss

We reported a net loss of $4,452,279 for the year ended December 31, 2019 compared to a net loss of $16,999,794 for the year ended December 31, 2018, a decrease of $12,547,515, or 74%.

Liquidity And Capital Resources

At December 31, 2019, we had cash of $36,674 and working capital of $500,765 as compared to cash of $0 and working capital of $ 9,985,421 at December 31, 2018. The Company incurred losses for the years ended December 31, 2019 and 2018, amounting to $4,452,279 and $16,999,794, respectively and has an accumulated deficit of $10,881,667. Those factors raise substantial doubt about the Company's ability to continue as a going concern. While the Company is exploring various financing alternatives to raise additional funds to support its operations, there can be no assurance that additional financing will be available on satisfactory terms, or at all. If the Company is unable to secure needed financing, management may be forced to take additional actions, which may include significantly reducing its anticipated level of expenditures.

In 2019, we entered into seven (7) identical Security Purchase Agreements (the “Agreements”) with different lenders (the “Holders”), to sell convertible promissory notes (the “Notes”) of the Company to the Holders. Each of these Notes was issued with a term of 12 months, carrying 6% annual interest and convertible into the Company’s common stock. The conversion price under each Note is 65% multiplied by the market price of the Company’s common stock. According to the Agreements, each Holder has the right during the period beginning on the date which is one hundred eighty (180) calendar days following the date of the Note and ending on the maturity date of the Note, to convert all or any part of the outstanding and unpaid principal amount of the Note into fully paid and non-assessable shares of common stock, in respect of the remaining outstanding principal amount of the Note.

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 following efforts led by Mr. Yongquan Bi, the company’s new Chairman, with a renewed focus on the health industry. The company is now transforming from a provider of integrated energy conservation solutions utilizing energy-saving equipment, technical services and energy management re-engineering project operations to a health service provider. BOQI International Medical Inc. offers a broad range of consumer-directed health products and related services, including medical, pharmacy and behavioral health plans.

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 Coronavirus (COVID-19), the demand for our products and our 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.

IR Contact:
Dragon Gate Investment Partners LLC
Tel: +1(646)-801-2803
Email: BIMI@dgipl.com

BOQI INTERNATIONAL MEDICAL, INC. AND ITS SUBSIDIARIES
(FORMERLY KNOWN AS “NF ENERGY SAVING CORPORATION”)
CONSOLIDATED BALANCE SHEETS

  December 31, 
  2019  2018 
       
ASSETS      
CURRENT ASSETS      
Cash $36,363  $- 
Restricted cash  311   - 
Accounts receivable, net  24,840   - 
Advances to suppliers  1,252   - 
Amount due from related parties  1,350   - 
Inventories  707,526   - 
Prepayments and other receivables  59,333   - 
Assets from discontinued operations  21,218,983   23,050,799 
         
Total current assets  22,049,958   23,050,799 
         
NON-CURRENT ASSETS        
Equipment and vehicle, net  38,641   - 
Intangible assets, net  7,973,179   - 
         
Total non-current assets  8,011,820   - 
         
TOTAL ASSETS $30,061,778  $23,050,799 
         
LIABILITIES AND EQUITY        
CURRENT LIABILITIES        
Convertible promissory notes, net $107,383  $- 
Derivative liabilities  1,272,871   - 
Accounts payable, trade  641,927   - 
Advances from customers  67,975   - 
Amount due to related parties  305,760   177,808 
Taxes payable  861   - 
Other payables and accrued liabilities  6,044,378   250,943 
Liabilities from discontinued operations  13,108,038   12,636,627 
         
Total current liabilities  21,549,193   13,065,378 
         
TOTAL LIABILITIES  21,549,193   13,065,378 
         
COMMITMENTS AND CONTINGENCIES        
         
EQUITY        
Common stock, $0.001 par value; 50,000,000 shares authorized; 9,073,289 and 7,573,289 shares issued and outstanding as of December 31, 2019 and 2018, respectively  9,073   7,573 
Additional paid-in capital  15,643,825   12,555,325 
Statutory reserves  2,227,634   2,227,634 
Accumulated deficit  (10,881,667)  (6,443,102)
Accumulated other comprehensive income  1,683,770   1,788,302 
Total BOQI International Medical Inc.’s equity  8,682,635   10,135,732 
         
NONCONTROLLING INTERESTS  (170,050)  (150,311)
         
Total equity  8,512,585   9,985,421 
         
Total liabilities and equity $30,061,778  $23,050,799 


BOQI INTERNATIONAL MEDICAL, INC. AND ITS SUBSIDIARIES
(FORMERLY KNOWN AS “NF ENERGY SAVING CORPORATION”)
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

  For the Year Ended
December 31,
 
  2019  2018 
       
REVENUES $157,978  $- 
         
COST OF REVENUES  304,120   - 
         
GROSS LOSS  (146,142)  - 
         
OPERATING EXPENSES:        
Sales and marketing  216,791   - 
General and administrative  1,350,147   212,582 
Total operating expenses  1,566,938   212,582 
         
LOSS FROM OPERATIONS  (1,713,080)  (212,582)
         
OTHER EXPENSE        
Interest expense, net  (6,340)  - 
Other expenses, net  (549,581)  - 
Total other expense, net  (555,921)  - 
         
LOSS BEFORE INCOME TAXES  (2,269,001)  (212,582)
         
PROVISION FOR INCOME TAXES  -   - 
         
NET LOSS FROM CONTINUING OPERATIONS  (2,269,001)  (212,582)
         
DISCONTINUED OPERATIONS        
Loss from operations of discontinued operations  (2,183,278)  (16,787,212)
         
NET LOSS  (4,452,279)  (16,999,794)
Less: net loss attributable to non-controlling interest  (13,714)  (213,285)
NET LOSS ATTRIBUTABLE TO BOQI INTERNATIONAL MEDICIAL INC. $(4,438,565) $(16,786,509)
         
COMPREHENSIVE LOSS        
NET LOSS $(4,452,279) $(16,999,794)
OTHER COMPREHENSIVE LOSS        
Foreign currency translation adjustment  (110,557)  (811,597)
TOTAL COMPREHENSIVE LOSS  (4,562,836)  (17,811,391)
Less: comprehensive loss attributable to non-controlling interest  (19,739)  (199,355)
COMPREHENSIVE LOSS ATTRIBUTABLE TO BOQI INTERNATIONAL MEDICIAL INC. $(4,543,097) $(17,612,036)
         
WEIGHTED AVERAGE NUMBER OF COMMON SHARES        
Basic and diluted  8,169,179   7,477,399 
         
LOSS PER SHARE        
Continuing operations - basic and diluted $(0.28) $(0.03)
Discontinued operations - basic and diluted $(0.26) $(2.21)
Net loss - basic and diluted $(0.54) $(2.24)


BOQI INTERNATIONAL MEDICAL, INC. AND ITS SUBSIDIARIES
(FORMERLY KNOWN AS “NF ENERGY SAVING CORPORATION”)
CONSOLIDATED STATEMENTS OF CASH FLOWS

  For the Year Ended
December 31,
 
  2019  2018 
CASH FLOWS FROM OPERATING ACTIVITIES:      
Net loss from continuing operations $(2,269,001) $(212,582)
Adjustments to reconcile net loss to cash used in operating activities:        
Depreciation and amortization  261,983   - 
Inventories impairment reserve  184,311   - 
Allowance for doubtful accounts  20,969   - 
Amortization of discount of convertible promissory notes  104,975   - 
Change in derivative liabilities  437,467   - 
Change in operating assets and liabilities        
Accounts receivable  48,387   - 
Advances to suppliers  47,896   - 
Inventories  106,440   - 
Prepayments and other receivables  93,592   18,000 
Accounts payable, trade  (66,627)  - 
Advances from customers  (50,140)  - 
Taxes payable  (12,768)  - 
Other payables and accrued liabilities  (1,925)  - 
Net cash used in operating activities from continuing operations  (1,094,441)  (194,582)
Net cash used in operating activities from discontinued operations  (970,351)  (149,388)
Net cash used in operating activities  (2,064,792)  (343,970)
         
CASH FLOWS FROM INVESTING ACTIVITIES:        
Cash received from acquisition of the Pharmacy Group  116,976   - 
         
Net cash provided by investing activities from continuing operations  116,976   - 
Net cash provided by investing activities from discontinued operations  49,741   - 
Net cash provided by investing activities  166,717   - 
         
CASH FLOWS FROM FINANCING ACTIVITIES:        
Issuance of common stock  -   500,000 
Net proceeds from issuance of convertible promissory notes  837,812   - 
Amount financed from related parties  178,682   - 
         
Net cash provided by financing activities from continuing operations  1,016,494   500,000 
Net cash provided by (used in) financing activities from discontinued operations  819,609   (288,736)
Net cash provided by financing activities  1,836,103   211,264 
         
EFFECT OF EXCHANGE RATE ON CASH  98,646   132,706 
         
INCREASE IN CASH  36,674   - 
         
CASH, beginning of period  -   - 
         
CASH, end of period $36,674  $- 
         
SUPPLEMENTAL CASH FLOW INFORMATION:        
Cash paid for income tax $-  $117 
Cash paid for interest expense $-  $388,623 
         
NON-CASH TRANSACTIONS OF INVESTING AND FINANCING ACTIVITIES        
Issuance of common share for equity acquisition of the Pharmacy Group $3,090,000  $- 
Intangible assets recognized from equity acquisition of the Pharmacy Group $8,208,349  $- 
Outstanding payment for equity acquisition of the Pharmacy Group $5,655,709  $-