UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, ~~2022~~2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ~~_____________~~___________ to ~~____________~~___________

Commission File Number: 000-50155

BIMI International Medical Inc.

(Exact name of registrant as specified in its charter)

Delaware		02-0563302
(State of Incorporation)		(I.R.S. Employer ID Number)


~~9th~~ 725 5th Avenue, 15th Floor, Building 2, Chongqing Corporation Avenue, Yuzhong District, Chongqing, P. R. ChinaSuite 15-01 New York NY		400010
(Address of Principal Executive Offices)		(Zip Code)

~~(+86) 023-6310 7239~~212 542 0028

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class		Trading Symbol(s)		Name of Each Exchange on Which ~~Which~~ Registered
Common ~~stock,~~Stock, $0.001 par value		BIMI		The NASDAQ Capital Market

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. ☒ Yes ☐ No

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)~~files). ☒ Yes ☐ No

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	☐
Non-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 ☒ No

As of ~~November,~~December 15, ~~2022,~~2023, the registrant had ~~38,434,761~~11,589,569 shares of ~~common stock,~~Common Stock, par value $0.001 per share, issued and shares outstanding.

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	3448
Item 3	Quantitative and Qualitative Disclosures About Market Risk	5068
Item 4	Controls and Procedures	5069

PART II	OTHER INFORMATION	5172
Item 1	Legal Proceedings	5172
Item 1A	Risk Factors	5172
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	5372
Item 3	Defaults Upon Senior Securities	5372
Item 4	Mine Safety Disclosures	5372
Item 5	Other Information.	5372
Item 6	Exhibits.	5473

Signatures			5574

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

BIMI INTERNATIONAL MEDICAL, INC. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

(RESTATED)

September 30, December 31,
2022 2021
ASSETS
CURRENT ASSETS
Cash $ 1,046,876 $ 4,797,849
Accounts receivable, net 7,092,589 7,005,442
Advances to suppliers 4,460,024 3,163,836
Amount due from related parties 343,901 622,554
Inventories, net 1,230,339 2,639,883
Prepayments and other receivables 3,210,356 2,930,083
Total current assets 17,384,085 21,159,647

NON-CURRENT ASSETS
Deferred tax assets 186,382 207,549
Property, plant and equipment, net 2,884,120 3,521,401
Intangible assets-net 15,874 18,039
Operating lease-right of use assets 3,976,697 4,845,509
Security deposit 180,000 -
Goodwill 8,376,217 8,376,217
Total non-current assets 15,619,290 16,968,715

TOTAL ASSETS $ 33,003,375 $ 38,128,362

LIABILITIES AND EQUITY
CURRENT LIABILITIES
Short-term loans $ 1,382,630 $ 1,799,394
Long-term loans due within one year 183,203 369,187
Convertible promissory notes, net 6,320,075 5,211,160
Accounts payable, trade 4,231,997 7,339,210
Advances from customers 1,515,458 1,943,028
Amount due to related parties 475,518 730,285
Taxes payable 390,275 662,777
Other payables and accrued liabilities 3,563,059 3,082,917
Lease liability-current 836,871 954,182
Total current liabilities 18,899,086 22,092,140

Lease liability-non-current 3,418,873 4,161,789
Long-term loans – non-current 475,049 538,006
Total non-current liabilities 3,893,922 4,699,795

TOTAL LIABILITIES 22,793,008 26,791,935

EQUITY
Common stock, $0.001 par value; 200,000,000 shares authorized; 38,434,761 and 8,502,222 shares issued and outstanding as of September 30, 2022, and December 31, 2021, respectively * 38,435 8,502
Additional paid-in capital 65,759,712 55,220,130
Statutory reserves 2,263,857 2,263,857
Accumulated deficit (58,498,042 ) (47,900,929 )
Accumulated other comprehensive income 234,466 1,601,870
Total stockholders’ equity 9,798,428 11,193,430

NON-CONTROLLING INTERESTS 411,939 142,997

Total equity 10,210,367 11,336,427

Total liabilities and equity $ 33,003,375 $ 38,128,362

	September 30,			December 31,
	2023			2022
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	994,131		$	2,336,636
Accounts receivable, net		4,115,964			3,208,286
Advances to suppliers		8,737,956			6,589,759
Amount due from related parties		6,964			-
Inventories, net		7,086,791			7,654,242
Prepayments and other receivables		1,278,336			1,527,079	*
Current assets from discontinued operations-held for sale		2,147,050			2,099,673
Total current assets		24,367,192			23,415,675

NON-CURRENT ASSETS
Deferred tax assets		184,433			190,132
Property, plant and equipment, net		1,671,628			1,703,420
Intangible assets-net		468,163			16,183
Operating lease-right of use assets		2,907,606			2,942,265
Goodwill		2,065,666			2,065,666
Non-current assets from discontinued operations-held for sale		3,376,261			3,761,149
Total non-current assets		10,673,757			10,678,815	*

TOTAL ASSETS	$	35,040,949		$	34,094,490	*

LIABILITIES AND EQUITY
CURRENT LIABILITIES
Short-term loans	$	1,136,522		$	818,425
Long-term loans due within one year		135,809			105,965
Convertible promissory notes, net		-			1,108,785
Accounts payable, trade		10,438,404			10,785,531
Advances from customers		761,759			923,131
Amount due to related parties		524,195			2,980,441	*
Taxes payable		26,800			71,915
Other payables and accrued liabilities		3,265,456			3,175,574
Lease liabilities		726,309			532,630
Current liabilities from discontinued operations-held for sale		3,143,243			3,239,950
Total current liabilities		20,158,497			23,742,347	*

NON-CURRENT LIABILITIES
Lease liabilities		2,447,060			2,574,751
Long-term loans		24,374			314,786
Non-current liabilities from discontinued operations-held for sale		2,269,672			2,245,373
Total non-current liabilities		4,741,106			5,134,910

TOTAL LIABILITIES		24,899,603			28,877,257	*

STOCKHOLDERS’ EQUITY
Common Stock, $0.001 par value; 200,000,000 shares authorized; 6,673,006 and 3,764,780 shares issued and outstanding as of September 30, 2023, and December 31, 2022, respectively **		6,673			3,765
Additional paid-in capital		78,997,594			71,899,271
Statutory reserves		2,263,857			2,263,857
Accumulated deficit		(71,429,357	)		(70,143,785	)
Accumulated other comprehensive income (loss)		(1,132,206	)		24,583
Total BIMI International Medical Inc.’s equity		8,706,561			4,047,691

NON-CONTROLLING INTERESTS		1,434,785			1,169,542

Total stockholders’ equity		10,141,346			5,217,233

Total liabilities and stockholders’ equity	$	35,040,949		$	34,094,490	*

*	~~Retrospectively restated due~~In our financial statements for the year ended December 31, 2022, we incorrectly accounted for the acquisition of Phenix Bio Inc. On July 5, 2022, we entered into a stock purchase agreement, which was subsequently amended, pursuant to ~~five~~which we agreed to acquire Phenix and paid a deposit of $180,000 on July 7, 2022. The closing did not occur until March 15, 2023. As of December 31, 2022, the accounting for ~~one~~the Phenix acquisition was incorrectly recorded as follows: (1) a long-term equity investment as a debit entry, (2) cash as a credit, and (3) other payables as a credit entry. Since the Phenix acquisition had not taken place as of December 31, 2022, it should not have been recorded as a long-term equity investment. As such, we reversed the long-term equity investment account and other payables account and recorded the deposit as a prepayment.

**	On February 2, 2022, we effected a reverse stock split ~~see Note 21~~of Common Stock at a ratio of 1-to-5 and on December 9, 2022, we effected a reverse stock split of Common Stock at a ratio of 1-to-10 (collectively, the “Reverse Splits”).

The accompanying notes are an integral part of the condensed consolidated financial ~~statements~~statements.

BIMI INTERNATIONAL MEDICAL, INC. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE ~~LOSS~~INCOME (LOSS)
(UNAUDITED)

(RESTATED)

For the three months ended September 30, For the nine months ended September 30,
2022 2021 2022 2021

REVENUES $ 7,314,842 $ 13,777,494 $ 17,261,951 $ 25,202,485

COST OF REVENUES 　 5,730,125 11,748,385 12,993,304 20,616,279

GROSS PROFIT 　 1,584,717 2,029,109 4,268,647 4,586,206

OPERATING EXPENSES: 　
Sales and marketing 1,104,541 1,202,387 2,563,949 2,429,401
General and administrative 　 3,572,304 2,372,056 9,632,420 7,092,971
Total operating expenses 　 4,676,845 3,574,443 12,196,369 9,522,372
　　
LOSS FROM OPERATIONS 　 (3,092,128 ) (1,545,334 ) (7,927,722 ) (4,936,166 )
　　
OTHER INCOME (EXPENSE)
Interest income 　 293 - 616 -
Interest expense (97,373 ) (84,310 ) (316,692 ) (222,547 )
Bank service fees (60,269 ) (60,239 )
Exchange loss 　 4,389 - 3,988 -
Other expense (469,720 ) (74,302 ) (2,270,792 ) (79,595 )
Total other expense, net 　 (622,680 ) (158,612 ) (2,643,119 ) (302,142 )

LOSS BEFORE INCOME TAXES 　 (3,714,808 ) (1,703,946 ) (10,570,841 ) (5,238,308 )

PROVISION FOR INCOME TAXES (BENEFIT) (575 ) 5,930 30,216 37,933

NET LOSS FROM CONTINUING OPERATIONS 　 (3,714,233 ) (1,709,876 ) (10,601,057 ) (5,276,241 )

NET LOSS 　 (3,714,233 ) (1,709,876 ) (10,601,057 ) (5,276,241 )
Less: net loss attributable to non-controlling interest (1,450 ) (6,444 ) (3,948 ) 36,417
NET LOSS ATTRIBUTABLE TO BIMI INTERNATIONAL MEDICIAL INC. 　 (3,712,783 ) (1,703,432 ) (10,597,109 ) (5,312,658 )
OTHER COMPREHENSIVE LOSS 　　　　　　　　　　　
Foreign currency translation adjustment 　 (399,501 ) 　(128,005) (1,367,404 ) (126,893 )
TOTAL COMPREHENSIVE LOSS 　 (4,113,734)　 (1,837,881 ) (11,968,461 ) (5,403,134 )
Less: comprehensive loss attributable to noncontrolling interest 　 (487,621 ) (6,400) 　 (1,022,664 ) (6,345 )
COMPREHENSIVE LOSS ATTRIBUTABLE TO BIMI INTERNATIONAL MEDICIAL INC. $ (3,626,113 ) $ (1,831,481 ) $ (10,945,797 ) $ (5,396,789 )

WEIGHTED AVERAGE NUMBER OF COMMON SHARES 　　　　　　　　　　　
Basic and diluted 　 23,193,842 27,084,325 16,816,256 22,864,269
　　　　　　　　　　　　
LOSS PER SHARE
Basic and diluted 　 (0.16) 　 (0.06) 　　 (0.63) 　　 (0.23 )

	For three months ended September, 30						For nine months ended September 30,
	2023			2022			2023			2022
REVENUES	$	2,523,193		$	4,932,479	*	$	11,278,496		$	10,476,224	*

COST OF REVENUES		2,408,038			4,229,316	*		6,589,020			8,928,138	*

GROSS PROFIT		115,155			703,163	*		4,689,476			1,548,086	*

OPERATING EXPENSES:
Sales and marketing		171,763			310,475			664,076			952,102
General and administrative		3,093,088			2,805,211	*		5,220,553			7,924,995	*
Total operating expenses		3,264,851			3,115,686	*		5,884,629			8,877,097	*

INCOME (LOSS) FROM OPERATIONS		(3,149,696	)		(2,412,523	)*		(1,195,153	)		(7,329,011	)*
OTHER INCOME (EXPENSE)
Interest income		53			263	*		379			616	*
Interest expense		(35,877	)		(35,038	)		(105,407	)		(131,756	)
Exchange gain (loss)		(1,338	)		7,427	*		(3,622	)		991	*
Amortization of convertible notes (1)		-			(771,124	)		-			(2,313,372	)
Gain on disposition of former subsidiaries		107,101			-			304,840			-
Non-operating income (expense)		(54,315	)		101,498			(147,618	)		(2,511,520	)
Other income		-			8,886	*		-			75,606	*
Total other income (expense), net		15,624			(688,088	)*		48,572			(4,879,435	)*

INCOME (LOSS) BEFORE INCOME TAXES		(3,134,072	)		(3,100,611	)*		(1,146,581	)		(12,208,446	)*

PROVISION FOR INCOME TAXES		-			(949	)		-			6,202

NET INCOME (LOSS) FROM CONTINUING OPERATIONS		(3,134,072	)		(3,099,662	)*		(1,146,581	)		(12,214,648	)*

DISCONTINUED OPERATIONS
Loss from discontinued operations-held for sale		(116,718	)		(758,465	)*		(259,820	)		(957,203	)*
Loss from discontinued operations		-			(26,928	)		-			-
NET INCOME (LOSS)		(3,250,790	)		(3,885,055	)*		(1,406,401	)		(13,171,851	)*
Less: net loss attributable to noncontrolling interest		(121,545	)		(1,450	)		(120,830	)		(3,948	)
NET INCOME (LOSS) ATTRIBUTABLE TO BIMI INTERNATIONAL MEDICIAL INC.		(3,129,245	)		(3,883,605	)*		(1,285,571	)		(13,167,903	)*

OTHER COMPREHENSIVE (LOSS)
Foreign currency translation adjustment		(630,330	)		(399,821	)		(1,156,789	)		(1,367,407	)
TOTAL COMPREHENSIVE INCOME (LOSS)		(3,881,120	)		(4,284,876	)*		(2,563,190	)		(14,539,258	)*
Less: comprehensive income (loss) attributable to noncontrolling interest		190,783			(487,621	)		(1,317,844	)		(1,022,664	)
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO BIMI INTERNATIONAL MEDICIAL INC.	$	(4,071,903	)	$	(3,797,255	)*	$	(1,245,346	)	$	(13,516,594	)*
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
Basic and diluted		6,429,980			36,395,729	*		4,967,278			24,037,736	*

INCOME (LOSS) PER SHARE
Continuing operations-Basic and diluted		(0.49	)		(0.09	)*		(0.23	)		(0.51	)*
Discontinued operations-Basic and diluted		(0.02	)		(0.02	)*		(0.05	)		(0.04	)*
Basic and diluted		(0.51	)		(0.11	)*		(0.28	)		(0.55	)*

The accompanying notes are an integral part of the condensed consolidated financial statements

BIMI INTERNATIONAL MEDICAL, INC. AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY
(UNAUDITED)

(RESTATED)

Common Stock Additional
Paid-in Accumulated Other Comprehensive Statutory Non Controlling Accumulated Total Stockholders’
Shares Amount Capital Income Reserves Interests Deficit Equity

Balance as of December 31, 2021 8,502,222 8,502 55,220,130 1,601,870 2,263,857 142,997 (47,900,929 ) 11,336,427

Issuance of common shares 29,932,539 29,933 10,539,582 - - - - 10,569,515

Net loss - - - - - (1,022,664 ) (10,597,113 ) (11,619,777 )

Appropriated statutory surplus reserves - - - - - - - -

Foreign currency translation adjustment - - - (1,367,404 ) - 1,291,606 - (75,798 )

Balance as of September 30, 2022 38,434,761 38,435 65,759,712 234,466 2,263,857 411,939 (58,498,042 ) 10,210,367

	Common Stock				Additional Paid-in		Accumulated Other Comprehensive			Statutory		Non Controlling			Accumulated			Total Stockholders’
	Shares**		Amount		Capital		Income			Reserves		Interests			Deficit			Equity
Balance as of December 31, 2022		3,764,780		3,765		71,899,271		24,583			2,263,857		1,169,542			(70,143,785	)		5,217,233

Issuance of Common Stock		270,000		270		376,337		-			-		-			-			376,607	**

Net income		-		-		-		-			-		443			789,549	*		789,992	*

Foreign currency translation adjustment		-		-		-		227,068	*		-		(112,519	)*		3,187,087	*		3,301,636	*

Discontinued operations and subsidiaries -held for sale		-		-		-		(74	)		-		-			(3,186,202	)		(3,186,276	)

Balance as of March 31, 2023		4,034,780		4,035		72,275,608		251,577	*		2,263,857		1,057,466	*		(69,353,351	)*		6,499,192	*

Issuance of Common Stock		2,224,182		2,224		5,141,761		-			-		-			-			5,143,985

Net income		-		-		-		-			-		272			1,054,125			1,054,397

Foreign currency translation adjustment		-		-		-		(757,599	)		-		567,830			83,320			(106,449	)

Discontinued operations and subsidiaries -held for sale		-		-		-		4,146			-		-			(82,775	)		(78,629	)

Balance as of June 30, 2023		6,258,962		6,259		77,417,369		(501,876	)		2,263,857		1,625,568			(68,298,681	)		12,512,496

Issuance of Common Stock		414,044		414		1,580,225		-			-		-			-			1,580,639

Net loss		-		-		-		-			-		(121,545	)		(3,129,245	)		(3,250,790	)

Foreign currency translation adjustment		-		-		-		(631,231	)		-		(69,238	)		77,095			(623,374	)

Discontinued operations and subsidiaries -held for sale		-		-		-		901			-		-			(78,526	)		(77,625	)

Balance as of September 30, 2023		6,673,006		6,673	��	78,997,594		(1,132,206	)		2,263,857		1,434,785			(71,429,357	)		10,141,346

The accompanying notes are an integral part of the condensed consolidated financial ~~statements~~statements.

BIMI INTERNATIONAL MEDICAL, INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

	For the nine months ended September 30,						For the nine months ended September 30
	2022			2021			2023			2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(10,601,057	)	$	(5,276,241	)	$	(1,406,401	)	$	(13,171,851	)*
Net loss from discontinued operations								(259,820	)		(957,203	)*
Net loss from continuing operations								(1,146,581	)		(12,214,648	)*
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation and amortization		165,242			179,147			111,252			86,111
Allowance for inventory provision		-			35,013
Allowance for doubtful accounts		(561	)		94,037			2,394,843			-
Stock compensation		-			585,000			-			2,339,963	*
Amortization of discount of convertible promissory notes		1,108,915			1,473,306			-			2,313,372	*
Gain on disposition of former subsidiaries								304,840			-

Change in operating assets and liabilities
Accounts receivable		(86,586	)		(5,028,537	)		(3,302,521	)		414,102	*
Advances to suppliers		4,273,327			(1,693,866	)		1,937,809			5,417,687	*
Prepayments and other receivables		(280,273	)		2,464,793			248,743			145,802	*
Inventories		1,409,544			(1,417,149	)		567,451			1,287,095	*
Operating lease-right of use assets		868,812			(3,539,872	)		34,659			305,999	*
Accounts payable, trade		(3,107,213	)		7,617,880			(347,127	)		(3,042,294	)*
Advances from customers		(427,570	)		198,399			(161,372	)		(375,390	)*
Operating lease liabilities		(860,227	)		3,966,150			65,988			(286,203	)*
Taxes payable		(272,502	)		(119,214	)		(39,416	)		(232,187	)*
Other payables and accrued liabilities		480,142			(2,086,772	)		89,882			(1,695,774	)*
Net cash used in operating activities		(7,330,007	)		(2,547,926	)
Net cash provided by (used in) operating activities from continuing operations								758,450			(5,536,365	)*
Net cash provided by (used in) operating activities from discontinued operations								5,283			(1,054,953	)*
Net cash provided by (used in) operating activities								763,733			(6,591,318	)*

CASH FLOWS FROM INVESTING ACTIVITIES:
Payment for the acquisition of Phenix Bio Inc		(180,000	)		-
Purchase of property, plant, and equipment		-			(1,804,536	)
Payment for the acquisition of Phenix Bio Inc.								-			(180,000	)
Purchase of properties and intangible assets								(603,892	)		-
Net cash used in investing activities from continuing operations								(603,892	)		(180,000	)
Net cash used in investing activities		(180,000	)		(1,804,536	)		(603,892	)		(180,000	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stocks		5,000,000
Proceeds from short-term loans		-			238,955
Proceeds from long-term loans		-			73,541
Net proceeds from issuance of convertible promissory note to related party								-			5,000,000	*
Net proceeds from stock purchase								1,600,000			-
Issuance of Common Stock								1,600			-
Proceeds from short-term loan								318,097			112,679
Proceeds from long-term loan								29,844			-
Repayment of long-term loans		(248,941	)		-			(290,412	)		(366,315	)*
Net proceeds from issuance of convertible promissory notes		-			4,065,000
Repayment of short-term loans		(416,764	)		(34,201	)
Amount financed from related parties		23,886			171,657
Net cash provided by (used in) financing activities		4,358,181			4,514,952
Amount repaid to related parties								(2,463,210	)		(254,768	)*
Net cash (used in) provided by financing activities from continuing operations								(804,081	)		4,491,596	*
Net cash used in financing activities from discontinued operations								-			(333,686	)*
Net cash (used in) provided by financing activities								(804,081	)		4,157,910	*

EFFECT OF EXCHANGE RATE ON CASH		(599,147	)		(83,355	)		(698,265	)		(995,684	)*

INCREASE (DECREASE) IN CASH		(3,750,973	)		79,135
NET DECREASE IN CASH AND CASH EQUIVALENTS								(1,342,505	)		(3,609,092	)*
CASH AND CASH EQUIVALENTS, beginning of period		4,797,849			135,309			2,336,636			4,609,431	*
CASH AND CASH EQUIVALENTS, end of period	$	1,046,876		$	214,444		$	994,131		$	1,000,339	*

SUPPLEMENTAL CASH FLOW INFORMATION:							��
Cash paid for income tax	$	245,467		$	49,037		$	-		$	217,837	*
Cash paid for interest expense, net of capitalized interest	$	122,539		$	128,973		$	64,861		$	87,425	*

NON-CASH TRANSACTIONS OF INVESTING AND FINANCING ACTIVITIES

Issuance of shares of common stock for the equity acquisition of Chongqing	$	-		$	3,818,000
Issuance of shares of common stock for equity acquisition of Zhongshan Chaohu Hospital	$	-		$	3,480,000
Issuance of shares of common stock for equity acquisition of Guoyitang Hospital	$	-		$	3,820,000
Issuance of shares of common stock for equity acquisition of Minkang, Qiangsheng and Eurasia hospitals	$	-		$	5,930,619
Issuance of shares of common stock for prepayment of equity acquisition of Zhuoda	$	-		$	1,452,000
Issuance of shares of common stock for payment of improvements to offices	$	-		$	696,896
Goodwill recognized from equity acquisition of Zhongshan Chaohu Hospital	$	-		$	10,443,494
Goodwill recognized from equity acquisition of Guoyitang Hospital	$	-		$	7,154,392
Goodwill recognized from equity acquisition of Minkang, Qiangsheng and Eurasia hospitals	$	-		$	5,930,619
Intangible assets recognized from equity acquisition of Boqi Group	$	-		$	-
Outstanding payment for the equity acquisition of Chongqing Guanzan Technology Co., Ltd.	$	-		$	-
Outstanding payment for equity acquisition of Zhongshan Chaohu Hospital	$	-		$	6,100,723
Outstanding payment for equity acquisition of Guoyitang Hospital	$	-		$	6,100,723
Outstanding payment for equity acquisition of Minkang, Qiangsheng and Eurasia hospitals	$	-		$	9,911,416
Common stock to be issued upon conversion of convertible promissory notes	$	7,797,000		$	738,223
Issuance of common share for equity acquisition of Mali Hospital	$	600		$	-
Issuance of Common Stock upon conversion of convertible notes								-			15,531	*
Issuance of Common Stock as a result of the application of the “Floor Amount Issuance” with respect to the conversion of convertible promissory note								1,308			-
Lease liabilities arising from acquisition of right-of-use assets								39,875			44,826	*

BIMI INTERNATIONAL MEDICAL INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.	~~ORGANIZATION AND BUSINESS BACKGROUND~~

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.~~industry and on June 21, 2021, we changed our name to BIMI International Medical Inc. Since March 7, 2012, the ~~common stock~~Common Stock of the Company (the “Common Stock”) has been traded on the Nasdaq Capital Market.

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.~~

The Company is a Delaware holding company with operations conducted by its subsidiaries in China. The Company is now exclusively a healthcare products and services provider, offering a broad range of healthcare products and related services and operates five private hospitals in China. Due to our operations in China, our business, results of operations, financial condition and prospects may be influenced to a significant degree by economic, political, legal and social conditions in the PRC or changes in government relations between China and the United States or other governments.

On October 14, 2019, the Company acquired 100% of the equity interests in Lasting Wisdom Holdings Limited (“Lasting”), a limited company incorporated under the laws of the British Virgin Islands (“BVI”). Lasting has limited operating activities since incorporation except for holding the ownership interest in Pukung Limited (“Pukung”), a company organized under the laws of Hong Kong. Pukung owns 100% of the equity interest in Beijing Xinrongxin Industrial Development Co., Ltd. (“Xinrongxin”), a company organized under the laws of the PRC. Xinrongxin owns 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..~~acquisition. Lasting, Pukung, Xinrongxin and Boqi Zhengji are hereinafter collectively referred to as the “Boqi Zhengji Group”. Xinrongxin also 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., to replace ~~Xinrongxin~~Xinronxin as the holding company owning all the 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~~held an 80% equity interest in Chongqing Shude Pharmaceutical Co., Ltd. (“Shude”, ~~together~~and collectively with Guanzan, the “Guanzan Group”). Guanzan also owns 100% equity interest in Chongqing Lijiantang Pharmaceutical Co. Ltd.~~, (‘Lijiantang”)~~, a subsidiary established in May 2020. Lijiantang operates 4 retail pharmacy stores in China (collectively, the “Lijiantang Pharmacy Group”). The Lijiantang Pharmacy Group engages in the retail sale of medicine and other healthcare products to customers through its directly-owned stores. The Lijiantang Pharmacy Group offers a wide range of products, including prescription and over-the-counter (“OTC”) drugs, nutritional supplements, traditional Chinese medicines, personal and family care products and medical devices, as well as miscellaneous items.

On December 11, 2020, the Company entered into a stock purchase agreement to sell Boqi Zhengji. The sale of the Boqi Zhengji ~~was~~ closed by the end of 2020 although the government record was not updated until February 2, 2021 due to the Chinese government’s alternative working schedule and other delays caused by COVID-19.

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~~an agreement to acquire Chaohu Zhongshan Minimally Invasive Hospital (“Zhongshan”), a private hospital in the Southeast region of China. The transaction closed on February 5, 2021.

On April 9, 2021, the Company entered into ~~a stock purchase~~an 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 closed on May 6, 2021.

On April 21, 2021, Bimai Hospital Management (Chongqing) Co. Ltd. was incorporated in the PRC by the Company to manage the operations of the Company’s medical services ~~segment (“Bimi”). Bimi together with Guoyitang, Zhongshan, Qiangsheng , Eurasia and Minkang comprise the Company’s medical services group, which operate hospitals.~~segment.

On April 21, 2021, Pusheng Pharmaceutical Co., Ltd. was incorporated in the PRC by the Company to manage its wholesale distribution of generic drugs.

On September 10, 2021, the Company entered into ~~a stock purchase~~an agreement to acquire 100% of the equity interests in Chongqing Zhuoda Pharmaceutical Co., LTD (“Zhuoda”). The transaction closed on October 8, 2021.

On December 20, 2021, the Company entered into a stock purchase agreement to acquire Bengbu Mali OB-GYN Hospital Co., Ltd. (“Mali Hospital”). ~~The closing~~We agreed to purchase all the issued and outstanding equity interests in Mali Hospital in consideration of $16,750,000. At the signing, 60,000 shares of the ~~Mali Hospital SPA~~Company’s Common Stock (reflecting the Reverse Splits) were delivered as partial consideration for the purchase and on January 4, 2022, we paid RMB 7,227,000 to the seller as partial consideration. The transaction did not close and on December 15, 2022, we entered into a termination agreement with respect to the original purchase agreement. Pursuant to the termination agreement, the original agreement will terminate effective as of the date of the return of the 60,000 shares of the Company’s Common Stock (reflecting the Reverse Splits) previously issued to the sellers and certain third-party beneficiaries. On December 9, 2022, 52,000 shares of Common Stock were returned to the Company and on September 1, 2023, the remaining 8,000 shares of Common Stock were returned to the Company. All cash paid at the time of the acquisition is expected to ~~take place in September 2022, subject to necessary regulatory approvals.~~be returned by December 31, 2023.

On ~~June 9,~~July 5, 2022, ~~the Company~~we entered into a stock purchase agreement (as amended on February 27, 2023) with Mr. Fnu Oudom, the Chairman of ~~the Board~~our board of directors, whereby we agreed to acquire 100% of the ~~Company, Mr. Fnu Oudom, whereby~~equity interests in Phenix Bio Inc. (“Phenix”), a developer and distributor of dietary supplements, in consideration of $1,800,000. The transaction closed effective March 15, 2023. The aggregate purchase price for the equity interests in Phenix was $180,000 in cash, which was paid on July 7, 2022, plus up to 5,270,000 shares of the Company’s Common Stock (reflecting the Reverse Splits), of which 270,000 shares were issued to Mr. Oudom on June 19, 2023, after shareholder approval was obtained. We agreed to ~~purchase 12,500,000~~issue 5,000,000 shares of Common Stock ~~for $5 million, or $0.40 per share (the “Chairman’s Shares”), subject~~ to the approval of the stockholders of the Company. The purchase price per share reflects a 9% discount to the five-day average closing price of the Common Stock on NASDAQ before signing the SPA (the closing price of the Common Stock on Nasdaq on such date was $0.52). On June 9, 2022, Mr. Oudom ~~provided~~in the event that Phenix will generate at least $2,500,000 in net profit in calendar year 2023 or in any fiscal quarter of 2023. Such performance target was met in the second quarter of 2023 and the 5,000,000 shares were issued to Mr. Oudom on December 6, 2023.

As of September 30, 2023, the Company ~~with $5 million as interim financing~~has four operating segments: retail pharmacy, wholesale pharmaceuticals, wholesale medical devices and healthcare products.

The retail pharmacy segment engages in ~~consideration for~~ the ~~issuance of a $5 million subordinated promissory note (the “Chairman’s Note”), bearing no interest, which will become due and payable immediately if the~~retail sale of medicine and other healthcare products in the ~~Chairman’s Shares is not approved by~~PRC. The retail pharmacy segment sells its medicine and other healthcare products to customers through its directly owned stores. The group offers a wide range of products, including prescription and over the counter (“OTC”) drugs, nutritional supplements, traditional Chinese medicines, personal and family care products and medical devices, as well as miscellaneous items.

The Company’s ~~stockholders.~~wholesale segments are engaged in the distribution of medical devices and pharmaceuticals. The ~~Company expects~~wholesale medical devices segment distributes medical devices, including medical consumables to ~~seek stockholder approval of the sale at the upcoming annual meeting of stockholders. If approved~~drug stores, private clinics, pharmaceutical dealers, and ~~the Chairman’s Shares are issued, all obligations under the Chairman’s Note will have been performed~~hospitals. The wholesale pharmaceuticals segment supplies prescription and ~~discharged in full without any payment of interest. The Company has no obligation~~OTC medicines, TCM, healthcare supplies and sundry items to ~~file a registration statement with the SEC for the resale of the Chairman’s Shares.~~clinics, third party pharmacies, hospitals, and other drug vendors.

BIMI INTERNATIONAL MEDICAL INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSThe Company’s healthcare products are developed and distributed by Phenix. Phenix owns its formulas and uses out-sourced facilities in the U.S. and Australia to manufacture its products. To date, Phenix has sold all of its products through Meta Time, an online sales platform. Most of the customers were from Asian countries. Phenix currently offers six categories of dietary supplements, a cardiovascular product, an anti-insomnia and depression product, a male aphrodisiac product, a woman’s menopausal syndrome product, a gout product, and an immunity enhancer.

As of September 30, 2022, the Company had four operating segments: wholesale medical devices, wholesale pharmaceuticals, medical services, and retail pharmacy.

As of September ~~30,2022,~~30, 2023, the details of the Company’s ~~major~~ subsidiaries are as ~~follows:~~follows:

Name	Place of incorporation and kind of legal entity	Principal activities and ~~place~~Type of operation	Effective ownership interest held
Lasting Wisdom Holdings Limited (“Lasting”)	British Virgin Island, a limited liability company	Investment holding		100	%

~~Pukung Limited~~Phenix Bio Inc. (“~~Pukung”~~Phenix”)	~~Hong Kong,~~California, a ~~limited liability company~~corporation	~~Investment holding~~Distribution of healthcare products		100	%

~~Beijing Xinrongxin Industrial Development Co., Ltd.~~Pukung Limited (“~~Xinrongxin”~~Pukung”)	~~The PRC,~~Hong Kong, a limited liability company	Investment holding		100	%

~~Boyi (Liaoning)~~Chongqing Guanzan Technology Co., ~~Ltd~~Ltd. (“~~Liaoning Boyi”~~Guanzan”)	The PRC, a limited liability company	~~IT Technology service research and development~~Wholesale distribution of medical devices in the PRC		100	%

~~Dalian Boyi Technology~~Chongqing Shude Pharmaceutical Co., ~~Ltd~~ Ltd.(“~~Dalian Boyi”~~Shude”)	The PRC, a limited liability company	~~IT Technology service research and development~~Wholesale distribution of generic drugs in the PRC		~~100~~95	%

Chongqing ~~Guanzan Technology~~Lijiantang Pharmaceutical Co., Ltd.(“~~Guanzan”~~Lijiantang”)	The PRC, a limited liability company	Wholesale distribution of ~~medical devices~~generic drugs in the PRC		100	%

~~Chongqing Shude~~Bimai Pharmaceutical (Chongqing) Co., Ltd.~~(“Shude”)~~	The PRC, a limited liability company	~~Wholesale distribution of generic drugs in the PRC~~Investment holding		95100	%

Chongqing ~~Lijiantang Pharmaceutical~~Guoyitang Hospital Co., Ltd.~~(“Lijiantang”)~~	The PRC, a limited liability company	~~Wholesale distribution of generic drugs~~Hospital in the PRC		100	%

~~Bimai Pharmaceutical (Chongqing)~~Chongqing Huzhongtang Healthy Technology Co., Ltd.	The PRC, a limited liability company	~~Investment holding~~Wholesale distribution of generic drugs in the PRC		100	%

~~Chongqing Guoyitang~~Chaohu Zhongshan Minimally Invasive Hospital Co.,Ltd.	The PRC, a limited liability company	Hospital in the PRC		100	%

~~Chongqing Huzhongtang Healthy Technology~~Yunnan Yuxi Minkang Hospital Co., Ltd.	The PRC, a limited liability company	~~Wholesale distribution of generic drugs~~Hospital in the PRC		100	%

~~Chaohu Zhongshan Minimally Invasive~~Wuzhou Qiangsheng Hospital Co.,Ltd.	The PRC, a limited liability company	Hospital in the PRC		100	%

~~Yunnan Yuxi Minkang~~Suzhou Eurasia Hospital Co., Ltd.	The PRC, a limited liability company	Hospital in the PRC		100	%

~~Wuzhou Qiangsheng~~Bimai Hospital Management (Chongqing) Co.~~, Ltd.~~ Ltd	The PRC, a limited liability company	Hospital management in the PRC		100	%

~~Suzhou Eurasia Hospital~~Pusheng Pharmaceutical Co., ~~Ltd.~~Ltd	The PRC, a limited liability company	~~Hospital in the PRC~~		~~100~~	%

~~Bimai Hospital Management (Chongqing) Co. Ltd~~	~~The PRC, a limited liability company~~	~~Hospital management in the PRC~~		~~100~~	%

~~Pusheng Pharmaceutical Co., Ltd~~	~~The PRC, a limited liability company~~	Wholesale distribution of generic drugs in the PRC		100	%

~~Chongqing Zhuoda Pharmaceutical Co., Ltd(“Zhuoda”)~~	~~The PRC, a limited liability company~~	~~Wholesale distribution of generic drugs in the PRC~~		~~100~~	%

~~Chongqing Qianmei Medical Devices Co., Ltd (“Qianmei”)~~	~~The PRC, a limited liability company~~	~~Wholesale distribution of medical devices in the PRC~~		~~100~~	%

2.	~~GOING CONCERN UNCERTAINTIES~~

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 significant net losses of ~~$10,533,868~~$1,406,401 and ~~$5,276,241 for~~$13,171,851 during the nine months ended September 30, ~~2022,~~2023 and ~~2021,~~2022, respectively. As of September 30, ~~2022,~~2023, the Company had an accumulated deficit of ~~$59.3~~$71.4 million. ~~In addition, the Company continues to generate operating losses and has limited cash flow from its continuing operations.~~ 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 its ability to obtain external financing, and (2) further implementation of management’s business plan to expand its operations and 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~~neither any assurances to that iteffect, nor any assurance that the Company will be successful in ~~either respect.~~securing sufficient funds to sustain the operations.

~~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~~

3. RESTATEMENTS

We are in the process of restating our financial statements for year ended December 31, 2022 and the quarterly periods ended March 31, 2022, June 30, 2022, September 30, 2022 and March 31, 2023, to correct errors identified in our prior financial statements. We have concluded that the restatements do not materially affect our liquidity or our compliance with debt covenants or other financial obligations.

(1) We are in the process of restating the Consolidated Statements of Equity for the quarterly periods ended June 30, 2022 and September 30, 2022. The restatement relates to the stockholders’ equity and noncontrolling interests presented in the consolidated balance sheets, as of June 30, 2022 and September 30, 2022, which had been presented in the form of a reconciliation of the beginning balance to the ending balance for each period for which a consolidated statement of comprehensive income was required to be filed. We will provide reconciliations for the interim periods covered by the Consolidated Statement of Equity for the periods ended June 30, 2022 and September 30, 2022. This restatement should not have any effect on net income, per-share amount, or retained earnings and other components of equity or net assets for prior filing and current filing. We have concluded that the restatement does not materially affect our liquidity or our compliance with debt covenants or other financial obligations.

(2) On June 9, 2022, the Company issued a $5 million subordinated promissory note, which was converted into 1,250,000 shares of the Company’s Common Stock (post the December 2022 1 to 10 reverse split) on July 18, 2022, upon obtaining shareholder approval for the transaction. We erroneously reflected the proceeds of the promissory note in the Consolidated Statements of Cash Flows as “Issuance of Common Stock” for the nine month period ended September 30, 2022. We failed to reflect this promissory note as a note payable as of September 30, 2022. As a result, we are in the process of restating our financial statements for the quarterly period ended September 30, 2022. This restatement did not effect our net income, per-share amounts, retained earnings or other components of equity or net assets for prior filings and the current filing. We have concluded that the restatement does not materially affect our liquidity or our compliance with debt covenants or other financial obligations.

(3) We restated our financial statements for the year ended December 31, 2021 and are in the process of restating the our financial statements for the quarterly period ended September 30, 2022 to correct errors identified in our prior financial statements. In the year ended December 31, 2021 and the quarterly periods ended March 31, 2022, June 30, 2022 and September 30, 2022, we recorded amortization of convertible notes as a general and administrative expense in error. We have revised the financial statements for the year ended December 31, 2021 and the nine months ended September 30, 2022 and are in the process of revising our financial statements for the quarterly period ended March 31, 2022 and June 30, 2022 to record the amortization of convertible notes as an “other expense”. The impact of the restatement on our financial statements is the reclassification of such expense as an “other expense”. The reclassification also affected the classification of such expense in the Consolidated Statements of Cash Flows. We have also amended various footnotes to the financial statements. We restated our financial statements for the year ended December 31, 2021 and are in the process of restating the financial statements for the year ended December 31, 2022 and the quarterly periods ended March 31, 2022, June, 30, 2022 and September 30, 2022 to correct this issue. This restatement did not affect our net income (loss), net income (loss) per-share, retained earnings or other components of equity or net assets for our prior filings and the current filing. We have concluded that the restatement does not materially affect our liquidity or our compliance with debt covenants or other financial obligations.

(4) We are in the process of restating our financial statements for the year ended December 31, 2022, where we incorrectly accounted for the acquisition of Phenix. On July 5, 2022, we entered into a stock purchase agreement, which was subsequently amended, pursuant to which we agreed to acquire Phenix and paid a deposit of $180,000 on July 7, 2022. The closing did not occur until March 15, 2023. As of December 31, 2022, the accounting for the Phenix acquisition was incorrectly recorded as follows: (1) a long-term equity investment as a debit entry, (2) cash as a credit, and (3) other payables as a credit entry. Since the Phenix acquisition had not taken place as of December 31, 2022, it should not have been recorded as a long-term equity investment. As such, we reversed the long-term equity investment account and other payables account and recorded the deposit as a prepayment. This restatement did not affect our net income, per-share amounts, or retained earnings, but affected the net assets in the quarterly period ended March 31, 2023. We have concluded that the restatement does not materially affect our liquidity or other financial obligations.

(5) We are in the process of restating the Consolidated Statements of Cash Flows for the quarterly periods ended June 30, 2022, September 30, 2022, March 31, 2023 and for the year ended December 31, 2022. The restatement relates to the discontinued entities' cashflow presented in the Consolidated Statements of Cash Flows, for the quarterly periods ended June 30, 2022, September 30, 2022, March 31, 2023, and for the year ended December 31, 2022, which have not presented in the prior period filling. In the restated Consolidated Statements of Cash Flows, we will present the discontinued entities’ cash flows in the Consolidated Statements of Cash Flows instead of zero. This restatement does not affect net income (loss), net income (loss) per-share, or retained earnings and other components of equity or net assets in our prior filings or in our current filing. We have concluded that the restatement does not materially affect our liquidity or our compliance with debt covenants or other financial obligations.

We are taking steps to address the causes of the restatements and to improve our internal controls over financial reporting. We are in the process of hiring a new third party consulting firm to assist us in strengthening our daily internal controls and financial reporting process review. We also aim to improve our internal accounting department management as well. We are committed to maintaining the integrity of our financial statements and to provide accurate and transparent financial information to our investors.

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 September 30, ~~2022,~~2023, and for the three and nine months ended September 30, ~~2022~~2023, and ~~2021~~2022 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 Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021, previously~~2022, filed with the SEC on ~~September 30, 2022.~~May 4, 2023.

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 September 30, ~~2022~~2023 and its unaudited condensed consolidated results of operations for the three and nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, and its unaudited condensed consolidated cash flows for the three and nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, 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’~~suppliers, allowance for doubtful accounts, reserve offor inventory obsolescence, 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.

●	Business ~~combination~~combinations

The Company ~~accounted~~accounts for its business ~~combination~~combinations using the acquisition method of accounting in accordance with ASC 805 “Business Combinations”. The cost of an acquisition is measured as the aggregate of the acquisition date fair values of the assets transferred and liabilities incurred by the Company to the sellers and equity instruments issued. Transaction costs directly attributable to the acquisition are expensed as incurred. Identifiable assets and liabilities acquired or assumed are measured separately at their fair values as of the acquisition date, irrespective of the extent of any non-controlling interests. The excess of (i) the total costs of acquisition, fair value of the non-controlling interests and acquisition date fair value of any previously held equity interest in the acquiree over (ii) the fair value of the identifiable net assets of the acquiree is recorded as goodwill. If the cost of acquisition is less than the acquisition date amounts of the net assets of the subsidiary acquired, the difference is recognized directly in the consolidated income statements. During the measurement period, which can be up to one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Subsequent to the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any further adjustments are recorded in the consolidated income statements.

In a business combination achieved in stages, the Company re-measures the previously held equity interest in the acquiree immediately before obtaining control at its acquisition date fair value and the re-measurement gain or loss, if any, is recognized in the consolidated income statements.

When there is a change in ownership interests or a change in contractual arrangements that results in a loss of control of a subsidiary, the Company deconsolidates the subsidiary from the date control is lost. Any retained non-controlling investment in the former subsidiary is measured at fair value and is included in the calculation of the gain or loss upon deconsolidation of the subsidiary.

●	Cash and cash equivalents

Cash ~~consists~~and cash equivalents consist 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.

●	Accounts receivable and allowance for doubtful accounts

Accounts ~~receivables~~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~~creditworthiness 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~~We do not have any off-balance-sheet credit exposure related to its customers. ~~As of September 30, 2022, and December 31, 2021, the allowance for doubtful accounts was $288,767 and $322,145, 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 will 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 September 30, ~~2022,~~2023 and December 31, ~~2021,~~2022, the allowance for doubtful accounts ~~were $~~was Nil.

●	Businesses held for sale

In late 2022, we committed to a plan to dispose of the Zhongshan, Minkang, Qiangsheng and Eurasia hospitals and ceased the operation of the Guoyitang hospital. An impairment is recorded, if necessary, on an annual basis or at the point of sale, based on an impairment assessment report by a third party.

When we acquire a business, a substantial portion of the purchase price of the acquisition may be allocated to goodwill and other identifiable intangible assets. The amount of the purchase price which is allocated to goodwill and other intangible assets is determined by the excess of the purchase price over the net identifiable assets acquired. The current accounting standards require that goodwill and intangible assets should be deemed to have indefinite lives, which should be tested for impairment at least annually (or more frequently if impairment indicators arise). Other intangible assets are amortized over their useful lives. At the end of the fourth quarter of 2022, we recorded impairment losses totaling approximately $5.4 million with respect to the goodwill relating to our acquisitions of the Guanzan Group, Zhongshan, Guoyitang, Minkang, Qiangsheng and Eurasia.

On December 28, 2022, the Company entered into an agreement to transfer 87% of the equity interests in Zhongshan to the prior owner and retain 13% of the equity interests in Zhongshan. As consideration for the transfer and pursuant to an amendment to the original stock purchase agreement, the original seller agreed to return the 40,037 shares of Common Stock previously issued (reflecting the Reverse Splits) and RMB 40,000,000 in cash (approximately ($6,116,207) previously paid upon the acquisition of Zhongshan. The former owner also agreed to release the Company from any and all claims relating to two earn out payments that were payable under the original purchase agreement. The Company received a put option to sell part or all of its 13% interest in Zhongshan before December 31, 2032, based on a valuation determined by a reputable third-party appraisal firm jointly chosen by the two parties. On September 1, 2023, 39,037 shares of Common Stock were returned to the Company. The remaining 1,000 shares were returned in the form of $3,055 in cash because the shares were sold by the original seller. The transaction is expected to close by December 31, 2023, at which time the cash paid at the time of the transaction will also be returned.

On December 28, 2022, the Company entered into an agreement to transfer 90% of the equity interests in the Qiangsheng, Eurasia and Minkang hospitals to their former owners. Pursuant to the agreement, the Company will transfer 90% of the equity interests in each of the three hospitals and continue to own 10% of the equity interests in each hospital. As consideration for the transfer and pursuant to an amendment to the original stock purchase agreement, the original sellers agreed to return the 80,000 shares of Common Stock previously issued (reflecting the Reverse Splits) and RMB 20,000,000 (approximately $2,767,860) in cash previously paid upon the acquisition of the three hospitals. The former owner also agreed to release the Company from any and all claims relating to two earn out payments that were payable under the original purchase agreement. The Company received a put option to sell part or all of its 10% interest in each of the three hospitals to the former owner before December 31, 2032, based on a valuation determined by a reputable third-party appraisal firm jointly chosen by the parties. On December 9, 2022, 43,600 shares of Common Stock were returned to the Company and on September 1, 2023, 36,400 shares of Common Stock were returned to the Company. The transaction is expected to close by December 31, 2023, at which time the cash paid at the time of the transaction will also be returned.

The Company determined that the plan and the subsequent actions taken to dispose of the four hospitals qualified as held for sale operations under the criteria set forth in the ASC 205-20 Presentation of Financial Statements – Discontinued Operation.

The carrying amount of the major classes of assets and liabilities of the businesses held for sale as of September 30, 2023 and December 31, 2022 consist of the following:

	September 30,			December 31,
	2023			2022
Assets from held for sale
Current assets
Cash and cash equivalents	$	155,493		$	53,928
Accounts receivable, net		519,595			501,054
Advances to suppliers		199,004			211,335
Amount due from related parties		340,069			350,577
Inventories, net		154,964			155,736
Prepayments and other receivables		777,925			827,043
Total current assets		2,147,050			2,099,673

Non-current assets
Deferred tax assets		(129	)		(133	)
Property, plant and equipment, net		1,199,189			1,254,328
Operating lease-right of use assets		2,177,201			2,506,954
Total non-current assets		3,376,261			3,761,149

Total assets held for sale	$	5,523,311		$	5,860,822

Liabilities of held for sale businesses
Current liabilities
Short-term loans	$	208,919		$	215,375
Accounts payable, trade		1,384,753			1,480,098
Advances from customers		2,685			1,537
Taxes payable		326,661			336,755
Other payables and accrued liabilities		771,513			739,873
Lease liability-current		448,712			466,312
Total current liabilities		3,143,243			3,239,950

Non-current liabilities
Lease liability-non current		2,269,672			2,245,373
Total non-current liabilities		2,269,672			2,245,373

Total liabilities		5,412,915			5,485,323

The summarized operating results of the businesses held for sale included in the Company’s consolidated statements of operations consist of the following:

	For the nine months ended September 30,
	2023			2022
Revenues	$	326,245			6,785,727
Cost of revenues		176,161			4,065,166
Gross profit		150,084			2,720,561

Operating expense		308,152			3,319,273
Other expense		(101,026	)		(334,479	)
Loss before income taxes		(259,094	)		(933,191	)

Income tax expense		726			24,012
Loss from businesses held for sale	$	(259,820	)	$	(957,203	)

●	Inventories

Inventories are stated at the lower of cost or ~~net realizable~~market value. ~~Costs include the purchase price of the inventories and freight, the cost~~Cost is determined using the weighted average method, and ~~net realizable~~market value is the ~~estimated selling price in the normal course of business less any costs to complete~~middle (the second highest) value among an inventory item’s replacement cost, market celling and ~~sell products.~~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~~slow-moving items and potentially obsolete items. The Company provides inventory ~~reserves~~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 September 30, ~~2022,~~2023 and December 31, ~~2021,~~2022, the Company recorded an allowance for obsolete inventories, which mainly consists of expired medicine, of ~~$92,655~~$26,775 and ~~$103,178~~$27,602, 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:

Items	Expected useful lives	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	%
Leasehold ~~improvements~~Improvement	Shorter of lease term or useful life		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 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~~		~~10 years~~

●	Leases

On January 1, 2020, the Company adopted Accounting Standards Update (“ASU”) 2016-02. For all leases that were entered into prior to the effective date of ASC 842, we elected to apply the package of practical expedients. Based on this guidance, the Company did not reassess the following: (1) whether any expired or existing contracts are or contain leases; (2) the lease classification for any expired or existing leases; and (3) initial direct costs for any existing 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 asset also includes 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 consideration paid of an acquisition over the fair value of the net identifiable assets of the acquired subsidiary at the date of acquisition. Goodwill is not amortized, and is tested for impairment at least annually, more often when circumstances indicate impairment may have occurred. Goodwill is carried at cost less accumulated impairment losses. If impairment exists, goodwill is immediately written off to its fair value and the loss is recognized in the consolidated statements of operations and comprehensive loss. Impairment losses on goodwill are not reversed.

The Company reviews the carrying value of intangible assets not subject to amortization, including goodwill, to determine whether impairment may exist annually or more frequently if events and circumstances indicate that it is more likely than not that an impairment has occurred. ~~We have~~The Company has the ~~option~~opinion to ~~first~~ assess qualitative factors to determine whether it is ~~more likely than not that~~necessary to perform the two-step in accordance with ASC 350-20. If the Company believes, as a result of the qualitative carrying amount, the two-step quantities impairment test described below is required.

The first step compares the fair ~~value~~values of aeach reporting unit ~~is less than~~to its carrying ~~value.~~amount, including goodwill. If the fair value of each reporting unit exceeds its carrying amount, goodwill is not considered to be impaired and the second step will not be required.

If the carrying amount of a reporting unit exceeds its fair value, the second step compares the implied fair value of goodwill to the carrying value of a reporting unit’s goodwill. The implied fair value of goodwill is determined in a manner similar to accounting for a business acquisition with the allocation of the assessed fair value determined in the first step to the assets and liabilities of the reporting unit. The excess of the fair value of the reporting unit. over the amounts assigned to the assets and liabilities is the implied fair value of goodwill. Estimating fair value is performed by utilizing various valuation techniques, with the primary technique being a discounted cash flow. The fair value of discounted cash flow was determined using management’s estimates and assumptions.

Management ~~evaluated~~evaluates the recoverability of goodwill, with the assistance of a third party evaluation firm, 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. An impairment is recorded, if necessary, at the end of each year, based on an annual impairment assessment report by a third party.

As of September 30, ~~2022,~~2023 and December 31, ~~2021,~~2022, the Company recorded ~~impairment~~impairments for goodwill of $Nil and ~~$26,128,171,~~$5,385,811, respectively.

As a result of the impairments recognized on December 31, 2022, the remaining goodwill of the Company was related to the acquisitions of Guanzan and Zhongshan. The remaining goodwill of Guanzan was $1,392,449, and the remaining goodwill of Zhongshan was $673,217 as of December 31, 2022 and September 30, 2023. As of September 30, 2023, the fair value of these businesses was at risk for future goodwill impairments, based on the continuation of negative macroeconomic conditions, which could represent potential indicators of impairment requiring further impairment analysis in 2023. The Company continues to monitor for potential impairment should impairment indicators arise.

●	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.

Intangible assets that are considered to have a definite useful life are amortized over their useful lives using a method of amortization that reflects the pattern in which the economic benefits of the intangible assets are consumed or otherwise used up in accordance with ASC No. 350, “Intangibles - Goodwill and other” (“ASC 350”). The Company’s identifiable intangibles are reviewed for impairment in accordance with ASC 360 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 measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the assets. If such assets are considered to be impaired, the impairment is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets.

Goodwill and other certain purchased intangible assets have been recorded in the Company’s financial statements as a result of acquisitions. Goodwill represents the excess of the purchase price in a business combination over the fair value of the net tangible and intangible assets acquired. Under ASC 350 goodwill is not amortized, but rather is subject to an annual impairment test.

ASC 350 requires goodwill to be tested for impairment at the reporting unit level at least annually or between annual tests in certain circumstances and written down when impaired. Goodwill is tested for impairment by comparing the fair value of the reporting unit with its carrying value.

ASC 350 allows an entity to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. If the qualitative assessment does not result in a more likely than not indication of impairment, no further impairment testing is required. If it does result in a more likely than not indication of impairment, the two-step impairment test is performed. Alternatively, ASC 350 permits an entity to bypass the qualitative assessment for any reporting unit and proceed directly to performing the first step of the goodwill impairment test.

●	Revenue recognition

We adopted Accounting Standard Codification (“ASC”) Topic 606, Revenues from Contract with Customers (“ASC 606”) for all periods ~~presented.~~presented with respect to each of our segments. 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;~~

●

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~~authorities.

~~The primary sources of the Company’s revenues are as follows:~~

~~(1)~~

~~Wholesale medical devices~~

The Company’s sales of wholesale medical devices are made mainly through Guanzan,. The medical device business primarily involves purchasing wholesale medical devices from manufacturers and suppliers and then reselling them to customers. Upon obtaining purchase orders, the medical devices segment instructs its warehouse agent to transfer ownership of products to customers. The transaction is normally completed within a short period of time, ranging from a few days to a month. The Company recognizes revenue from product sales when obligations under the terms of a contract with the customer are satisfied; generally, this occurs with the transfer of control of the goods to customers.

~~(2)~~

~~Wholesale pharmaceuticals~~

The Company’s sales of wholesale pharmaceuticals are made mainly through Pusheng and Zhuoda. The wholesale pharmaceuticals business primarily involves purchasing wholesale pharmaceuticals from manufacturers and suppliers and then reselling them to customers. Upon obtaining purchase orders, the wholesale pharmaceutical segment instructs its warehouse agent to transfer ownership of products to customers. The transaction is normally completed within a short period of time, ranging from a few days to a month. The Company recognizes revenue from product sales when obligations under the terms of a contract with the customer are satisfied; generally, this occurs with the transfer of control of the goods to customers.

~~(3)~~

~~Medical services~~

The medical service segment operates five hospitals. For outpatient services, the patient normally receives outpatient treatment which consists of various treatment components. Outpatient services generally consist of more than one performance obligation, including (i) provision of consultation services (ii) provision of medical care (procedures) and (iii) sale of pharmaceutical products. The medical service segment allocates the transaction price for each performance obligation on a relative stand-alone selling price basis. Revenues from both the (i) provision of consultation services (ii) provision of medical care (procedures and (iii) sale of pharmaceutical products for which service is rendered or pharmaceutical products is transferred at a point in time, is recognized when the service is rendered or pharmaceutical products transferred to customers, and the hospital has satisfied its performance obligations, with present right to payment and the collection of the consideration is certainty.

For inpatient services, patients normally receive inpatient treatment which consists of various treatment components. Inpatient services generally consist of more than one performance obligation, including the (i) provision of inpatient healthcare services and (ii) sale of pharmaceutical products. The hospitals allocate the transaction price to each performance obligation on a relative stand-alone selling price basis. Revenues from provision of inpatient healthcare services is recognized over the service period when customers simultaneously receive the services and consume the benefits provided by the hospitals.

Revenues from the sale of pharmaceutical products is recognized when the customer obtains the control of the completed services or pharmaceutical products, and the hospitals has satisfied its performance obligations, with present right to payment and the collection of the consideration is certain.

~~(4)~~

~~Pharmacy retail sales~~

The physical pharmacies sell prescription drugs, over-the-counter (“OTC”) drugs, nutritional supplements, health foods, sundry products and medical devices. Revenue from sales of prescription medicine at drugstores is recognized when the prescription is filled and the customer picks up and pays for the prescription. Revenue from sales of other merchandise is recognized at the point of sale, which is when a customer pays for and receives the merchandise. Usually the merchandise, such as prescription and OTC drugs, are not refundable after the customers leaves the counter. Returns of other products, such as sundry products, are minimal. Sales of drugs reimbursed by the local government medical insurance agency and receivables from the agency are recognized when a customer pays for the drugs at a store. Based on historical experience, the pharmacy group reserves for potential losses from the denial of reimbursement for certain unqualified drugs by the government agency.

●	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 ~~for~~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.

●	~~Beneficial conversion feature~~

The Company evaluates the conversion feature to determine whether it was beneficial as described in ASC 470-20. The intrinsic value of a beneficial conversion feature inherent to a convertible note payable, which is not bifurcated and accounted for separately from the convertible notes payable and may not be settled in cash upon conversion, is treated as a discount to the convertible notes payable. This discount is amortized over the period from the date of issuance to the date the notes is due using the effective interest method. If the notes payable is retired prior to the end of their contractual term, the unamortized discount is expensed in the period of retirement to interest expense. In general, the beneficial conversion feature is measured by comparing the effective conversion price, after considering the relative fair value of detachable instruments included in the financing transaction, if any, to the fair value of the shares of common stock at the commitment date to be received upon conversion.

●	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 nine months ended September 30, ~~2022,~~2023 and ~~2021,~~2022, the Company did not incur any interest or penalties associated with the tax ~~positions.~~positions it has taken. As of September 30, ~~2022,~~2023, the Company did not have any significant unrecognized uncertain tax positions.

The Company conducts all 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 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.

●	Debt issuance costs and debt discounts

The Company may record debt issuance costs and/or debt discounts in connection with raising funds through the issuance of debt. These costs may be paid in the form of cash, or equity (such as warrants). These costs are amortized to interest expense through the maturity of the debt. If a conversion of the underlying debt occurs prior to maturity a proportionate share of the unamortized amounts is immediately expensed.

●

Beneficial conversion feature

The Company evaluates the conversion feature of its convertible promissory notes to determine whether it was beneficial as described in ASC 470-20. The intrinsic value of a beneficial conversion feature inherent to a convertible note payable, which is not bifurcated and accounted for separately from the convertible notes payable and may not be settled in cash upon conversion, is treated as a discount to the convertible notes payable. This discount is amortized over the period from the date of issuance to the date the notes is due using the effective interest method. If the notes payable are retired prior to the end of their contractual term, the unamortized discount is expensed in the period of retirement to interest expense. In general, the beneficial conversion feature is measured by comparing the effective conversion price, after considering the relative fair value of detachable instruments included in the financing transaction, if any, to the fair value of the shares of Common Stock at the commitment date to be received upon conversion.

●	Discontinued operations

In accordance with ASC 205-20, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, a disposal of a component of an entity or a group of components of an entity is required to be reported as a discontinued operation if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results when the components of an entity meets the criteria in paragraph 205-20-45-1E to be classified as held for sale. When all of the criteria to be classified as held for sale are met, including management, having the authority to approve the action, commits to a plan to sell the entity, the major current assets, other assets, current liabilities, and non-current liabilities shall be reported as components of total assets and liabilities separate from those balances of the continuing operations. At the same time, the results of all discontinued operations, less applicable income taxes (benefit), shall be reported as components of net income (loss) separate from the net income (loss) of continuing operations in accordance with ASC 205-20-45.

On October 19, 2022, the Company’s wholly owned Guanzan subsidiary agreed to sell its 100% equity interest in Zhuoda and Zhuoda’s wholly owned subsidiary, Qianmei, to the former owner. Guanzan had previously purchased Zhuoda for 44,000 of shares of Common Stock (post the Reverse Splits). As consideration for the sale, the buyer agreed to return the 44,000 shares of Common Stock to the Company. The transaction closed effective November 23, 2022, when 100% of the equity interests in Zhuoda were transferred to the former owners and the 44,000 shares of Common Stock were returned to the Company.

On December 28, 2022, the Company entered into an agreement to transfer 87% of the equity interests in Zhongshan to the prior owner. Pursuant to the agreement, the Company agreed to transfer 87% of the equity interests in Zhongshan to the former owner and will retain 13% of the equity interests in Zhongshan. As consideration for the transfer and pursuant to an amendment to the original stock purchase agreement, the original seller agreed to return the 40,037 shares of Common Stock previously issued (reflecting the Reverse Splits) and RMB 40,000,000 in cash (approximately ($6,116,207) previously paid upon the acquisition of Zhongshan. The former owner also agreed to release the Company from any and all claims relating to two earn out payments that were payable under the original purchase agreement. The Company received a put option to sell part or all of its 13% interest in Zhongshan before December 31, 2032, based on a valuation determined by a reputable third-party appraisal firm jointly chosen by the two parties. On September 1, 2023, 39,037 shares of Common Stock were returned to the Company. The remaining 1,000 shares were returned in the form of a cash payment of $3,055 because the shares were sold by the original seller. The transaction is expected to close by December 31, 2023, at which time the cash paid at the time of the transaction will also be returned.

On December 28, 2022, the Company entered into an agreement to transfer 90% of the equity interests in the Qiangsheng, Eurasia and Minkang hospitals to their former owners. Pursuant to the agreement, the Company will transfer 90% of the equity interests in each of the three hospitals and continue to own 10% of the equity interests in each hospital. As consideration for the transfer and pursuant to an amendment to the original stock purchase agreement, the original sellers agreed to return the 80,000 shares of Common Stock previously issued (reflecting the Reverse Splits) and RMB 20,000,000 (approximately $2,767,860 in cash previously paid upon the acquisition of the three hospitals. The former owner also agreed to release the Company from any and all claims relating to two earn out payments that were payable under the original purchase agreement. The Company received a put option to sell part or all of its 10% interest in each of the three hospitals to the former owner before December 31, 2032, based on a valuation determined by a reputable third-party appraisal firm jointly chosen by the parties. On December 9, 2022, 43,600 shares of Common Stock were returned to the Company and on September 1, 2023, 36,400 shares of Common Stock were returned to the Company. The transaction is expected to close by December 31, 2023, at which time the cash paid at the time of the transaction will also be returned.

●	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~~The Company estimates 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.~~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~~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~~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 of Common Stock 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 of Common Stock that would have been outstanding if the potential ~~common stock~~Common Stock equivalents had been issued and if the additional ~~common~~ shares of Common Stock were dilutive.

●	Foreign currencies translation

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:

	September 30, 2022		September 30, 2021		September 30, 2023		September 30, 2022
Period-end RMB:US$1 exchange rate		7.0998		6.4854		7.1798		7.0998
Nine months end average RMB:US$1 exchange rate		6.6068		6.4714		7.0148		6.6068

●	Related parties

Parties, which can be a corporation or an 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

As of September 30, 2023, the Company had four reportable segments, which consisted of retail pharmacy, wholesale pharmaceuticals, wholesale medical devices and healthcare products.

As of September 30, 2022, the Company had four reportable segments, which consisted of wholesale medical devices, wholesale pharmaceuticals, medical services and retail ~~pharmacy in the PRC.~~pharmacies.

●	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’~~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~~obligations under its finance lease and short-term bank borrowing approximates 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 1:1: 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.

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 Company measures the fair value of the following assets and liabilities:

Financial assets and liabilities for which carrying ~~amount of~~value approximates fair value - Cash and cash ~~restricted cash, accounts receivable, other receivable, bank credit, accounts payable~~equivalents, deposits, receivables, repurchase agreements, payables, and other ~~accounts payable approximate~~assets and liabilities are reflected in the consolidated balance sheets at their ~~fair value~~cost, which, due to the short-term ~~maturity~~nature of these ~~instruments.~~instruments and their limited inherent credit risk, approximates fair value.

Convertible promissory note - As of September 30, 2023 and 2022, the carrying value of the Company’s convertible promissory notes was Nil and $383,317, respectively. -

●	~~Recent accounting pronouncements~~

In June 2016, the FASB issued ASU No. 2016-13, “Measurement of Credit Losses on Financial Instruments (Topic 326)”, which significantly changes the way entities recognize impairment of many financial assets by requiring immediate recognition of estimated credit losses expected to occur over their remaining life, instead of when incurred. In November 2018, the FASB issued ASU No. 2018-19, “Codification Improvements to Topic 326, Financial Instruments—Credit Losses”, which amends Subtopic 326-20 (created by ASU No.2016-13) to explicitly state that operating lease receivables are not in the scope of Subtopic 326-20. Additionally, in April 2019, the FASB issued ASU No.2019-04, “Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments”, in May 2019, the FASB issued ASU No. 2019-05, “Financial Instruments—Credit Losses (Topic 326): Targeted Transition Relief”, and in November 2019, the FASB issued ASU No. 2019-10, “Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates”, and ASU No. 2019-11, “Codification Improvements to Topic 326, Financial Instruments—Credit Losses”, to provide further clarifications on certain aspects of ASU No. 2016-13 and to extend the nonpublic entity effective date of ASU No. 2016-13. The changes (as amended) are effective for the Company for annual and interim periods in fiscal years beginning after December 15, 2022, and the Company is in the process of evaluating the potential effect on its consolidated financial statements.Recent accounting pronouncements

In January 2017, the FASB issued ASU 2017-04, “Intangibles — Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment,” which simplifies how an entity is required to test goodwill for impairment by eliminating step two from the goodwill impairment test. Step two of the goodwill impairment test measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with its carrying amount. As amended by ASU 2019-10, annual or interim goodwill impairment tests are performed in fiscal years beginning after December 15, 2022. We do not expect that the adoption of this guidance will have a material impact on our financial position, results of operations and cash flows.

In August 2020, the FASB issued ASU No. 2020-06 (“ASU 2020-06”) “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.” ASU 2020-06 will simplify the accounting for convertible instruments by reducing the number of accounting models for convertible debt instruments and convertible preferred stock. For public business entities, the amendments in ASU 2020-06 are effective for public entities which meet the definition of a smaller reporting company are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2023. The Company will adopt ASU 2020-06 effective January 1, 2024. Management is currently evaluating the effect of the adoption of ASU 2020-06 on the consolidated financial statements. The effect will largely depend on the composition and terms of the financial instruments at the time of adoption.

In October 2021, the FASB issued ASU No. 2021-08, “‘Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers” (“ASU 2021-08”). This ASU requires entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination. The amendments improve comparability after the business combination by providing consistent recognition and measurement guidance for revenue contracts with customers acquired in a business combination and revenue contracts with customers not acquired in a business combination. The amendments are effective for the Company beginning after December 15, 2023, and are applied prospectively to business combinations that occur after the effective date. The Company does not expect the adoption of ASU 2021-04 will have a material effect on the consolidated financial statements.

In June 2022, the FASB issued ASU 2022-03, “Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions”, which clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The amendments also clarify that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. This guidance also requires certain disclosures for equity securities subject to contractual sale restrictions. The new guidance is required to be applied prospectively with any adjustments from the adoption of the amendments recognized in earnings and disclosed on the date of adoption. This guidance is effective for the Company for the fiscal year ending March 31, 2025 and interim reporting periods during the fiscal year beginning after December 15, 2023, and interim periods within those fiscal years. Early adoption is permitted. The Company does not expect that the adoption of this guidance will have a material impact on the financial position, results of operations and cash flows.

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 Company does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its consolidated financial condition, results of operations, cash flows or disclosures.

4.	~~THE ACQUISITION OF THE GUANZAN GROUP~~

4. THE ACQUISITION OF THE GUANZAN GROUP

On February 1, 2020, the Company entered into a stock purchase agreement to purchase ~~the~~ Guanzan, ~~Group~~ (the “Guanzan SPA”). Guanzan is a distributor of medical devices whose customers are primarily drug stores, private clinics, pharmaceutical dealers and hospitals in the Southwest of ~~China (the “Guanzan Acquisition”).~~China. 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. Pursuant to the Guanzan SPA, we agreed to purchase all the issued and outstanding shares of ~~the~~ Guanzan ~~Group (the “Guanzan Shares”)~~ for RMB 100,000,000 (approximately $14,285,714) to be paid by the issuance of ~~190,000~~19,000 shares of Common Stock (post the Reverse Splits) and the payment of RMB 80,000,000 (approximately $11,428,571) in cash. The stock consideration was payable at closing and the cash consideration, which was subject to post-closing adjustments based on the performance of ~~the~~ Guanzan ~~Group~~ in the years ending December 31, 2020, and 2021, respectively, was to be paid pursuant to a post-closing payment schedule. The transaction closed on March 18, 2020. Upon the closing, 100% of the shares of Guanzan ~~Shares~~ were transferred to the Company and the stock consideration was issued to the seller.

The following summarizes the identified assets acquired and liabilities assumed pursuant to the Guanzan acquisition as of March 18, 2020:

Items	Amount
Assets
Cash and cash equivalents	$	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		6,686,053
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		(390,593	)
Long-term loans – noncurrent portion		(186,796	)
Non-controlling interests		(46,295	)
Total-net assets	$	7,374,000

On November 20, 2020, the parties to the Guanzan SPA entered into a ~~Prepayment~~prepayment and ~~Amendment Agreement~~amendment agreement (the “Prepayment Agreement”) for the prepayment of a portion of the ~~Guanzan~~ cash consideration in the amount of RMB 20,000,000, ~~(the “Prepayment”),~~ in the form of shares of Common Stock valued at ~~$15.00~~$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, ~~200,000~~20,000 shares (after the Reverse Splits) of our Common Stock were issued to the designated assignees of the seller as the prepayment. Upon the approval of the Company’s shareholders, on August 27, 2021, the Company issued ~~920,000~~92,000 shares of Common Stock (post the Reverse Splits) as payment in full for the balance of the post-closing ~~cash~~ consideration for the acquisition of Guanzan.

The following reconciles the identified assets acquired and liabilities assumed pursuant to the Guanzan ~~Acquisition~~SPA, and the Prepayment and Amendment Agreement made on November ~~20,2020:~~20, 2020:

The value of the shares issued on March 12, 2020 2,717,000
The value of the shares issued on November 30, 2020 839,000
The value of the shares issued on August 27, 2021 3,818,000
Total consideration $ 7,374,000

The determination of the value of the shares issued was determined according to the closing price on the day the shares issued. On March 12, 2020, the price was $2.86 per share.

The fair value of the shares issued on March 12, 2020	$	2,717,000
The fair value of the shares issued on November 19, 2020		1,820,000
Cash		3,065,181
Total consideration	$	7,602,181
Net assets		(687,949	)
Goodwill	$	6,914,232

The fair value of all assets acquired, and liabilities assumed is the estimated book value of ~~Guanzan Group.~~Guanzan. 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 Guanzan ~~Group~~ at the acquisition date. Upon the acquisition of Guanzan, ~~Acquisition,~~ the Company recognized its non-controlling interest in Shude in the amount of $46,295, representing the 20% non-controlling equity interest ~~in Shude. On April 9, 2021, the Company increased its equity interest in Shude from 80% to 95.2% by making a direct capital investment~~ in Shude. Shude is a pharmaceuticals distributor. Shude’s customers include a wide range of clinics, private and public hospitals, and pharmacies in the PRC. On April 9, 2021, the Company increased its equity interest in Shude ~~holds Chinese business licenses such as Drug Wholesale Distribution License, which qualify Shude~~from 80% to ~~engage~~95.2% by making a direct capital investment of $4,892,293 in ~~the distribution of pharmaceuticals in China.~~Shude.

~~THE ACQUISITION OF THE GYOYITANG HOSPITAL~~

5. THE ACQUISITION OF THE GUOYITANG HOSPITAL

On December 9, 2020, the Company entered into an agreement to acquire all of the outstanding equity of Guoyitang, the owner and operator of a ~~100-bed~~ private general hospital in Chongqing City, a ~~city in~~ southwest city of China,. with 100 hospital beds. The aggregate purchase price for Guoyitang was ~~$15,251,807 (RMB 100,000,000)~~RMB 100,000,000 (approximately $15,251,807). Upon signing the agreement, ~~400,000~~40,000 shares of Common Stock (post the Reverse Splits) and ~~approximately $3,096,119 (RMB 20,000,000) was~~RMB 20,000,000 (approximately $3,096,119) were paid as partial consideration for the purchase of Guoyitang. The transaction closed on February 2, 2021. The balance of the purchase price of ~~approximately $6,100,723 (RMB 40,000,000)~~RMB 40,000,000 (approximately $6,100,723) was subject to post-closing adjustments based on the performance of Guoyitang in 2021 and 2022. As the future performance of Guoyitang in 2021 and 2022 was uncertain, the total acquired consideration at the acquisition date was calculated based on the value of the closing payment without taking into consideration of potential payments based on future performance. As a result of the performance failure of Guoyitang in 2021, the sellers ~~are~~were not eligible to receive any contingent payments.

The following summarizes the identified assets acquired and liabilities assumed pursuant to the Guoyitang Acquisition as of February 2, 2021:

Items	Amount			Amount
Assets
Cash	$	28,457
Accounts receivable, net		11,797
Cash and cash equivalents				$	28,457
Accounts receivable					11,797
Advances to suppliers		12,670			12,670
Amount due from related parties		41,598			41,598
Inventories, net		167,440
Inventories					167,440
Prepayments and other receivables		61,102			61,102
Property, plant and equipment, net		528,814
Property, plant and equipment					528,814
Right-of-use asset		441,150			441,150
Goodwill		7,154,393			7,154,393
Liabilities
Accounts payable, trade		(599,391	)		(599,391	)
Amount due to related parties		(183,796	)		(183,796	)
Taxes payable		(121	)		(121	)
Other payables and accrued liabilities		(231,375	)		(231,375	)
Lease liability-current		(161,707	)		(161,707	)
Lease liability-non-current		(354,912	)
Lease liability-non current					(354,912	)
Total-net assets	$	6,916,119		$	6,916,119

The fair value of all assets acquired and liabilities assumed iswas 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 determination of the share value was determined according to the closing price of the Company’s Common Stock on the day the shares were issued.

The value of the shares issued on February 2, 2021		3,820,000
Cash		3,096,119
Total consideration	$	6,916,119
Net assets		(238,274	)
Goodwill		7,154,393

6.	~~THE ACQUISITION OF THE ZHONGSHAN HOSPITAL~~

6. THE ACQUISITION OF THE ZHONGSHAN HOSPITAL

On December 15, 2020, the Company entered into an agreement to acquire Zhongshan, ~~Hospital,~~ a private hospital in the east region of China with 65 hospital beds. 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~~RMB 120,000,000. The cash consideration ~~approximately $6,100,723 (RMB 40,000,000)~~of RMB 40,000,000 (approximately $6,116,207) was paid to the seller in ~~cash at the closing and 400,000~~December 2020. On February 12, 2021, we issued 40,037 shares of Common Stock ~~were issued on February 2021.~~(post the Reverse Splits) then valued at RMB 40,000,000 (approximately $6,116,207) to the seller as part of the consideration. The balance of the purchase price in the amount of ~~approximately $6,100,723 (RMB 40,000,000)~~RMB 40,000,000 (approximately $6,116,207) was subject to post-closing adjustments based on the performance of Zhongshan ~~Hospital~~ in 2021 and 2022. The transaction closed on February 5, 2021. As the future performance of Zhongshan in 2021 and 2022 was uncertain, the total acquired consideration at the acquisition date was calculated based on the value of the closing payment without taking into consideration of potential payments based on future performance.

As a result of the performance failure of Zhongshan in the year ended December 31, 2021, the seller iswas not eligible to receive any contingent payments.

The following summarizes the identified assets acquired and liabilities assumed pursuant to the Zhongshan ~~Acquisition~~acquisition as of February 5, 2021:

Items	Amount
Assets
Cash and cash equivalents	$	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

Items Amount
Assets
Cash $ 46,748
Accounts receivable, net 92,900
Inventories, net 108,413
Prepayments and other receivables 432,231
Property, plant and equipment, net 344,208
Right-of-use asset 1,188,693
Goodwill 10,443,494
Liabilities
Short-term loans (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 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 determination of the share value was determined according to the closing price of the Company’s Common Stock on the day the shares were issued,

The value of the shares issued on February 12, 2021		3,480,000
Cash payment in December 2020		6,171,887
Total consideration	$	9,651,887
Net assets		(791,607	)
Goodwill		10,443,494

On December 28, 2022, we entered into an agreement to transfer 87% of the equity interests in Zhongshan to the prior owner. As consideration for the transfer and pursuant to an amendment to the original stock purchase agreement, the original seller agreed to return the 40,037 shares of Common Stock previously issued and RMB 40,000,000 in cash (approximately $6,116,207) previously paid upon the acquisition of Zhongshan. On September 1, 2023, 39,037 shares of Common Stock were returned to the Company. The remaining 1,000 shares were returned in the form of cash because the shares were sold by the original seller. The transaction is expected to close by December 31, 2023, at which time the cash paid at the time of the transaction will also be returned.

7.	~~THE ACQUISITION OF THE QIANGSHENG, EURASIA AND MINKANG HOSPITALS~~

7. THE ACQUISITION OF THE QIANGSHENG, EURASIA AND MINKANG HOSPITALS

On April 9, 2021, the Company and Chongqing Bimai entered into a stock purchase agreement to acquire ~~Qiangsheng, Eurasia and Minkang,~~ three private hospitals in the ~~PRC.~~PRC, Qiangsheng, Eurasia and 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)~~RMB162,000,000 (approximately $25,023,555) to paid by the issuance of ~~800,000~~80,000 shares of Common Stock(post the Reverse Splits), the value of which was agreed to be RMB 78 million or(approximately $12 ~~million~~million) and the payment of RMB 84,000,000 (approximately $13,008,734) in ~~cash.~~cash (the “Cash Consideration”). The first payment of the Cash Consideration was RMB 20,000,000 (approximately $3,097,317) ~~was made at the closing on May 6, 2021.~~. The second and third payments of the Cash Consideration of RMB 64,000,000 (approximately $9,911,416) were subject to post-closing adjustments based on the performance of ~~the three hospitals~~Qiangsheng, Eurasia and Minkang in 2021 and 2022. The sellers had the ~~right~~choice to receive the second and third payments in the form of the shares of Common Stock valued at ~~$15.00~~$15 per share (post the Reverse Splits) or in cash. The transaction closed on May 6, 2021; at which time the 16,000 shares of Common Stock (post the Reverse Splits) were issued. As the future performance of the three hospitals was uncertain, the total acquired consideration at the acquisition date was calculated based on the value of the closing payment without taking into consideration of potential payments based on future performance. As a result of the performance failure by the three hospitals for the year ended December 31, 2021, the sellers ~~are~~were not eligible to receive any contingent payments.

The following summarizes the identified assets acquired and liabilities assumed pursuant to the Qiangsheng, Eurasia and Minkang acquisitions as of May 6, 2021:

Items	Amount			Amount
Assets
Cash	$	12,341
Accounts receivable, net		41,836
Inventories, net		156,576
Cash and cash equivalents				$	12,341
Accounts receivable					41,836
Inventories					156,576
Advances and other receivables		40,620			40,620
Property, plant and equipment, net		653,104
Property, plant and equipment					653,104
Right of use assets		2,168,709			2,168,709
Goodwill		9,067,529			9,067,529
Liabilities
Accounts payable, trade		(355,980	)
Accounts payable					(355,980	)
Advances from customers		(36,798	)		(36,798	)
Taxes payable		(345,870	)
Tax payable					(345,870	)
Other payables and accrued liabilities		(311,174	)		(311,174	)
Lease liability-current		(365,788	)		(365,788	)
Lease liability-non-current		(1,988,195	)		(1,988,195	)
Total net assets	$	8,736,910		$	8,736,910

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~~Hospitals at the acquisition date.

The determination of the share value was determined according to the closing price of the Company’s Common Stock on the day the shares were issued.

The value of the shares issued on April 20, 2021		5,600,000
Cash payment on December 2021		3,136,910
Total consideration	$	8,736,910
Net assets		(330,619	)
Goodwill		9,067,529

On December 28, 2022, we entered into an agreement to transfer 90% of the equity interests in Qiangsheng, Minkang and Eurasia to the previous owners. As consideration for the transfer and pursuant to an amendment to the original stock purchase agreement, the original sellers agreed to return the 80,000 shares of Common Stock previously issued and RMB 20,000,000 (approximately $2,767,860) in cash previously paid upon the acquisition of the three hospitals. On December 9, 2022, 43,600 shares of Common Stock were returned to the Company and on September 1, 2023, 36,400 shares of Common Stock were returned to the Company. The sales of Qiangsheng, Minkang and Eurasia are expected to close by December 31, 2023 at which time the RMB 20,000,000 will also be returned.

8.	~~THE ACQUISITION OF ZHUODA~~

8. THE ACQUISITION OF ZHUODA

On September 10, 2021, Guanzan entered into an agreement to acquire Zhuoda. Pursuant to the agreement, Guanzan agreed to purchase all the issued and outstanding equity interests in Zhuoda in consideration of ~~$11,400,000 (RMB 75,240,000)~~RMB 75,240,000 (approximately $11,400,000). The entire purchase consideration was payable in shares of Common Stock. At the closing on September 22, 2021, ~~440,000~~44,000 shares of Common Stock (post the Reverse Splits) valued at RMB 43,560,000 ~~or $15.00 per share~~ (approximately $6,600,000) ~~was~~were issued as partial consideration for the purchase. The remainder of the purchase price of ~~approximately $4,800,000 (RMB 31,680,000)~~RMB 31,680,000 (approximately $4,800,000), iswas subject to post-closing adjustments based on the performance of Zhuoda in 2022 and 2023. The transaction closed on October 8, 2021. As the future performance of Zhuoda in 2022 and 2023 was uncertain, the total acquired consideration at the acquisition date and at December 31, 2021 was calculated based on the value of the closing payment without taking into consideration of potential payments based on future performance.

The following summarizes the identified assets acquired and liabilities assumed pursuant to the Zhuoda acquisition as of October 8, 2021:

Items	Amount			Amount
Assets
Cash	$	102,350
Accounts receivable, net		804,083
Inventories, net		131,456
Cash and cash equivalents				$	102,350
Accounts receivable					804,083
Inventories					131,456
Advances and other receivables		886,370			886,370
Property, plant and equipment, net		6,579
Property, plant and equipment					6,579
Right of use assets		17,160			17,160
Goodwill		924,740			924,740
Liabilities
Short-term loans		(773,737	)
Accounts payable, trade		(56,887	)
Short term loan					(773,737	)
Accounts payable					(56,887	)
Advances from customers		(3,778	)		(3,778	)
Taxes payable		(24,787	)
Tax payable					(24,787	)
Other payables and accrued liabilities		(493,868	)		(493,868	)
Lease liability-current		(7,217	)		(7,217	)
Lease liability-non-current		(14,265	)		(14,265	)
Total net assets	$	1,498,199		$	1,498,199

The fair value of all assets acquired, and liabilities assumed is the estimated book value of the Zhuoda. 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 Zhuoda at the acquisition date.

The determination of the share value was determined according to the closing price of the Company’s Common Stock on the day the shares were issued.

The value of the shares issued on September 6, 2021	$	1,498,200
Total consideration	$	1,498,200
Net assets		573,458
Goodwill	$	924,742

9.	~~ACCOUNTS RECEIVABLE~~

9. THE SALE OF ZHUODA

On October 19, 2022, the Company’s wholly owned Guanzan subsidiary agreed to sell its 100% equity interest in Zhuoda and Zhuoda’s wholly owned subsidiary, Qianmei, to the former owner. Guanzan had previously purchased Zhuoda for 44,000 shares of Common Stock (reflecting the December 1 to 10 reverse split). As consideration for the sale, the buyer agreed to return the 44,000 shares of Common Stock to the Company. The transaction closed effective November 23, 2022, when 100% of the equity interests in Zhuoda were transferred to the former owners and the 44,000 shares of Common Stock were returned to us.

The summarized operating results of the Zhuoda and its subsidiary in the Company’s condensed consolidated statements of operations for the period of January 1 to November 23, 2022, consisted of the following:

	For the period ended November 23, 2022
Revenues	$	2,713,818
Cost of revenues		2,314,877
Gross profit		398,941

Operating expense		392,875
Other income (expense)		(45,146	)
Loss before income taxes		(39,080	)

Income tax expense		1,425
Net income/(loss) from discontinued operations	$	(40,505	)

The assets and liabilities of the discontinued operations of Zhuoda consisted of the following items as of November 23, 2022, and December 31, 2021:

	November 23,		December 31,
	2022		2021
Assets from discontinued operations
Current assets
Cash and cash equivalents	$	13,922	$	100,678
Accounts receivable, net		1,951,997		984,030
Advances to suppliers		67,561		118,365
Amount due from related parties		-		-
Inventories, net		101,059		162,882
Prepayments and other receivables		720,365		725,881
Operating lease-right of use assets		-		-
Total current assets		2,854,904		2,091,836

Non-current assets
Deferred tax assets		-		-
Property, plant and equipment, net		1,442		2,507
Intangible assets, net		-		-
Operating lease-right of use assets		10,044		15,959
Goodwill		-		-
Long-term investment		-		-
Total non-current assets		11,486		18,466

Total assets from discontinued operations	$	2,866,390	$	2,110,302

Liabilities from discontinued operations
Current liabilities
Short-term loans	$	154,288	$	795,583
Long-term loans due within one year		-		-
Convertible promissory notes, net		-		-
Accounts payable, trade		1,301,712		265,731
Advances from customers		-		723
Amount due to related parties		-		-
Taxes payable		441		218
Other payables and accrued liabilities		162,362		468,970
Lease liability-current		7,693		8,102
Total current liabilities		1,626,496		1,539,327

Non-current liabilities
Lease liability-non current		6,976		12,727
Long-term loans – non-current		330,242		-
Total non-current liabilities		337,218		12,727

Total liabilities		1,963,714		1,552,054

10. THE ACQUISITION OF PHENIX

On July 5, 2022, we entered into a stock purchase agreement (as amended on February 27, 2023) with Mr. Fnu Oudom, the Chairman of our board of directors, whereby we agreed to acquire 100% of the equity interests in Phenix Bio Inc. (Phenix”), a developer and distributor of dietary supplements, in consideration of $1,800,000, consisting of $180,000 in cash (paid on July 7, 2022) and the issuance of 270,000 shares of Common Stock (reflecting the December 2022 reverse split). In a further amendment to the agreement dated February 27, 2023, we agreed to issue an additional 5,000,000 shares of Common Stock to Mr. Oudom if the aggregate net profit generated by Phenix is at least $2,500,000 in calendar year 2023 or in any fiscal quarter of 2023. Upon obtaining shareholder approval for the transaction, we issued 270,000 shares of Common Stock to Mr. Oudom on June 19, 2023. We agreed to issue 5,000,000 shares of Common Stock to Mr. Oudom in the event that Phenix will generate at least $2,500,000 in net profit in calendar year 2023 or in any fiscal quarter of 2023. Such performance target was met in the second quarter of 2023 and the 5,000,000 shares were issued to Mr. Oudom on December 6, 2023.

The Company’s healthcare products are developed and distributed by Phenix. Phenix owns its formulas and uses out-sourced facilities in the U.S. and Australia to manufacture its products. In the first nine months of 2023, Phenix sold all its products through one online sales platform. Most of the customers were from Asian countries. Phenix currently offers six categories of dietary supplements, a cardiovascular product, an anti-insomnia and depression product, a male aphrodisiac product, a woman’s menopausal syndrome product, a gout product, and an immunity enhancer.

The following summarizes the identified assets acquired and liabilities assumed pursuant to Phenix acquisition as of March 15, 2023:

Items	Amount
Assets
Cash and cash equivalents	$	1,511,220
Accounts receivable		346
Inventories		892,214
Advances and other receivables		386,965
Fixed assets		99,599
Intangible assets		500,000
Liabilities
Accounts payable		(6,650	)
Other payables and accrued liabilities		(13,883	)
Advance from customer		(1,028,004	)
Total net assets	$	2,341,807

The fair value of all assets acquired, and liabilities assumed is the estimated book value of the Phenix.

The determination of the share value was determined according to the closing price of the Company’s Common Stock on the day the shares were issued.

Cash payment on July 7,2022	$	180,000
The value of the 270,000 shares issued on June 19, 2023	$	291,600
Total consideration	$	471,600
Net assets	$	2,341,807
Additional paid in capital	$	1,870,207

11. THE DISPOSAL OF XINRONGXIN

On January 3, 2023, the Company deregistered Xinrongxin. The Company ~~offers several credit terms to our wholesale customers and to our authorized retailer stores.~~recognized a gain of $259,636 on the disposition of the former subsidiary.

The consolidated Xinrongxin balance sheet on January 3, 2023 consisted of the following:

Items	Amount
Assets
Cash and cash equivalents	$	4,137
Long-term Investment		42,767
Liabilities
Other payables and accrued liabilities		(306,540	)
Total net assets	$	(259,636	)

12. THE DISPOSAL OF LIAONING BOYI

On September 5, 2023, the Company deregistered Liaoning Boyi. The Company ~~routinely evaluates~~recognized a loss of $30,131 on the ~~need for allowance for doubtful accounts based~~disposition of the former subsidiary.

The consolidated Liaoning Boyi balance sheet on ~~specifically identified amounts that~~September 5, 2023 consisted of the ~~management believes to be uncollectible. If~~following:

Items	Amount
Assets
Cash and cash equivalents	$	128
Prepayments and other receivables		10,278
Fixed assets		9,758
Intangible assets		10,270
Liabilities
Other payables and accrued liabilities		(303	)
Total net assets	$	30,131

13. THE DISPOSAL OF DALIAN BOYI

On September 27, 2023, the ~~actual collection experience changes, revisions to~~Company deregistered Dalian Boyi. The Company recognized a gain of $75,335 on the ~~allowance may be required.~~ disposition of the former subsidiary.

The ~~majority~~consolidated Dalian Boyi balance sheet on September 27, 2023 consisted of the following:

Items	Amount
Assets
Cash and cash equivalents	$	531
Prepayments and other receivables		2,737
Fixed assets		678
Liabilities
Other payables and accrued liabilities		(79,281	)
Total net assets	$	(75,335	)

14. ACCOUNTS RECEIVABLE

The revenues of the Company’s pharmacy ~~retail revenues~~segment 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. ~~As of September 30, 2022, and December 31,2021, accounts receivable consisted~~

The revenues of the ~~following:~~Company’s wholesale pharmaceuticals segment are recognized when the goods are transferred to the customer, Generally, the receivables are collected within 30 to 60 days.

September 30,
2022 December 31,
2021
Accounts receivable, cost $ 7,381,356 $ 7,327,587
Less: allowance for doubtful accounts (288,767 ) (322,145 )
Accounts receivable, net $ 7,092,589 $ 7,005,442

The revenues of the Company’s wholesale medical devices segment are recognized when the goods are transferred to the customers, Generally, the receivables are collected within 30 to 60 days.

The revenues of the Company’s healthcare products segment are recognized when the goods are transferred to the customers. Payment terms generally provide for payment within 30 to 60 days.

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~~As of ~~$ 561 for the nine months ended,~~ September 30, 2023, and December 31, 2022, ~~respectively.~~accounts receivable consisted of the following:

	September 30, 2023			December 31, 2022
Accounts receivable, cost	$	8,019,335		$	4,813,160
Less: allowance for doubtful accounts		(3,903,371	)		(1,604,874	)
Accounts receivable, net	$	4,115,964		$	3,208,286

Movements of allowance for accounts receivable are as follows:

	September 30, 2023		December 31, 2022
Beginning balance	$	1,604,874	$	322,145
Additions		2,298,497		1,282,729
Ending Balance	$	3,903,371	$	1,604,874

15. ADVANCES TO SUPPLIERS

~~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 September 30, ~~2022~~2023, and December ~~31,2021,~~31, 2022, the Company reported advances to suppliers as follow:

September 30,
2022 December 31,
2021
Advances to suppliers, cost $ 4,460,024 $ 3,163,836
Advances to suppliers, net $ 4,460,024 $ 3,163,836

		September 30, 2023				December 31, 2022
Advances to suppliers		$	8,737,956			$	6,589,759

No bad debt expenses were accrued for doubtful accounts relating to advances to suppliers for the nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively.

~~11.~~

~~INVENTORIES~~

16. INVENTORIES

The Company’s inventories consist of medicine, ~~and~~ medical devices and healthcare products that ~~were purchased from third parties and~~are sold ~~in our~~either on a retail ~~pharmacy stores and~~or wholesale ~~to third party pharmacies, clinics, hospitals, etc.~~basis. Inventories consisted of the following:

	September 30, 2022			December 31, 2021			September 30, 2023			December 31, 2022
Pharmaceuticals	$	978,440		$	2,395,824		$	6,579,144		$	7,067,613
Healthcare products								319,075			-
Medical devices		344,554			347,237			215,347			614,231
Less: allowance for obsolete and expired inventory		(92,655	)		(103,178	)		(26,775	)		(27,602	)
Inventories, net	$	1,230,339		$	2,639,883
							$	7,086,791		$	7,654,242

Movements of inventory reserves are as follows:

	September 30, 2023			December 31, 2022
Beginning balance	$	27,602		$	103,178
Reversal		-			(75,576	)
Exchange rate variance		(827	)		-
Ending Balance	$	26,775		$	27,602

For the nine months ended September 30, ~~2022~~2023 and ~~2021, respectively,~~2022, the Company had accrued ~~an allowance~~allowances of ~~$92,655~~$26,775 and ~~$103,178~~$27,077, respectively, for obsolete and expired items.

~~12.~~

~~PREPAYMENTS AND OTHER RECEIVABLES~~

17. PREPAYMENTS AND OTHER RECEIVABLES

Prepayments and other receivables represent the amount that the Company prepaid as rent deposits for ~~both~~its retail stores, hospitals and office space, ~~premises,~~ 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 September 30, ~~2022,~~2023 and December 31, ~~2021, respectively.~~2022.

	September 30, 2022			December31, 2021			September 30, 2023			December 31, 2022
Deposit for rental	$	160,711		$	63,021
Deposit for online platform use-rights		14,085			-
Deposit for rentals							$	124,749		$	132,960
Prepaid expenses and improvements of offices		55,052			293,933			54,438			56,121
Prepaid for acquisition of Phenix								-			180,000
Deposit for purchase of medical devices		162,272						147,560			166,765
Deferred offering cost		794,444			1,227,778
Deposit for sales platform		22,127			-			21,533			24,337
Other receivables		1,799,346			766,197
Receivables form third party								87,048			66,986
VAT deductibles								830,193			881,014
Others		225,739			605,234			29,191			42,771
Less: allowance for doubtful accounts		(23,420	)		(26,080	)		(16,376	)		(23,875	)
Prepayments and other receivables	$	3,210,356			2,930,083
Prepayments and other receivables, net							$	1,278,336			1,527,079

Movements of allowance for doubtful accounts are as follows:

	September 30, 2023			December 31, 2022
Beginning balance	$	23,875		$	26,080
Reversal		(7,499	)		(2,205	)
Ending Balance	$	16,376		$	23,875

Management evaluates the recoverable value of these balances periodically ~~in accordance with~~according to the Company’s ~~policies.~~policy of credit and allowance for doubtful accounts. For the nine months ended September 30, 2023 and 2022, the Company recorded bad debt allowances of $16,376 and $23,420, respectively.

~~13.~~

~~PROPERTY, PLANT AND EQUIPMENT~~

18. PROPERTY, PLANT AND EQUIPMENT

Property, plant, and equipment consisted of the following:

	September 30, 2022			December 31, 2021			September 30, 2023			December 31, 2022
Building	$	735,253		$	818,757
Buildings							$	727,060		$	749,526
Office equipment		395,924			440,890			125,577			132,329
Electronic equipment		1,384,533			1,541,777			34,606			37,257
Furniture		54,250			60,411			41,264			30,764
Vehicle		206,681			220,430
Vehicles								229,482			168,512
Medical equipment		2,187,470			2,431,240			897,548			925,281
Leasehold improvements		1,700,655			1,928,538			525,959			598,677
Total		6,664,766			7,442,043
								2,581,496			2,642,346
Less: accumulated depreciation		(3,780,646	)		(3,920,642	)		(909,868	)		(938,926	)
Property, plant and equipment, net	$	2,884,120		$	3,521,401		$	1,671,628		$	1,703,420

Depreciation expense for the nine months ended September 30, 2023 and 2022 were $73,752 and ~~2021 were $157,646 and $175,749,~~$86,111, respectively.

Property, plant and equipment under operating leasing arrangements classified under fixed assets-cost and accumulated depreciation as of September 30, 2022 and December 2021 announced to $2,886,649 and $3,521,401, respectively. Details of such leased assets are disclosed in Note 15.

~~14.~~

~~INTANGIBLE ASSETS~~

19. INTANGIBLE ASSETS

	September 30, 2022			December 31, 2021			September 30, 2023			December 31, 2022
Software	$	19,303		$	21,495		$	6,233		$	19,679
Trademark use rights								500,000			-
Less: accumulated amortization		(3,429	)		(3,456	)		(38,070	)		(3,496	)
Intangible assets, net	$	15,874		$	18,039		$	468,163		$	16,183

The trademark use rights acquired in the nine months ended September 30, 2023, relate to the trademarks for products being sold by Phenix. The trademarks relate to nine healthcare products including, general recovery, cardiovascular and cerebrovascular disease prevention, male health care, female health care, and memory enhancement for the elderly.

Amortization expense for the nine months ended September 30, 2023 and 2022 were $37,500 and ~~2021 were $3,429 and $3,456,~~Nil, respectively.

~~15.~~

~~LEASES~~

20. LEASES

Balance sheet information related to the Company’s operating leases was as ~~follows:~~follows*:

	September 30, 2022		December 31, 2021		September 30, 2023		December 31, 2022
Operating Lease Assets
Operating lease	$	3,976,697	$	4,845,509	$	2,907,606	$	2,942,265
Total operating lease assets	$	3,976,697	$	4,845,509	$	2,907,606	$	2,942,265
Operating Lease Obligations

Current operating lease liabilities	$	836,871		954,182	$	726,309		532,630
Non-current operating lease liabilities	$	3,418,873		4,161,789	$	2,447,060		2,574,751
Total Lease Liabilities	$	4,255,744		5,115,971	$	3,173,369		3,107,381

*	The Company’s operating leases include the leases of operating companies only and do not include discontinued operations-held for sale.

Lease liability maturities as of September 30, ~~2022,~~2023, are as follows:

September 30,
2022
2023 998,042
2024 895,645
2025 847,209
2026 779,179
2027 and thereafter 1,753,634
Total minimum lease payments 5,273,709
Less: Amount representing interest (1,017,965 )
Total 4,255,744

	September 30, 2023
October 1, 2023 to September 30, 2024		809,424
October 1, 2024 to September 30, 2025		830,940
October 1, 2025 to September 30, 2026		785,644
October 1, 2026 to September 30, 2027		757,958
2027 and thereafter		320,075
Total minimum lease payments		3,504,041
Less: Amount representing interest		(330,672	)
Total		3,173,369

~~16.~~

21. GOODWILL

Changes in the carrying amount of goodwill consisted of the following:

	September 30,		December 31,
	2022		2021			September 30, 2023		December 31, 2022
Beginning balance	$	8,376,217	$	6,914,232		$	2,065,666	$	8,376,217
Addition during the year		-		27,590,156
Disposal of Zhuoda							-		(924,740	)
Impairment during the year		-		(26,128,171	)		-		(5,385,811	)
Goodwill	$	8,376,217	$	8,376,217		$	2,065,666	$	2,065,666

As a result of the impairments recognized on December 31, 2022, the remaining goodwill of the Company was related to the acquisitions of Guanzan and Zhongshan. The remaining goodwill ~~associated with~~of Guanzan was $1,392,449, and the ~~acquisition of: (i) Guanzan~~remaining goodwill of ~~$6,914,232; (ii) Guoyitang~~Zhongshan was $673,217 as of ~~$7,154,393; (iii) Zhongshan of $10,443,494, (iv) Minkang, Qiangsheng~~December 31, 2022 and ~~Eurasia of $9,067,529 and (v) Zhuoda of $924,740, were initially recognized at the acquisition closing dates.~~

September 30, 2023, respectively. As of September 30, ~~2022, and December 31, 2021,~~2023, the fair value of these businesses was at risk for future goodwill ~~was $8,376,217 and $8,376,217, respectively. Impairment losses~~impairments. The Company continues to monitor for ~~the nine months ended September 30, 2022, and 2021 was $Nil~~.potential impairment should impairment indicators arise.

~~17.~~

~~LOANS~~

22. LOANS

Short-term loans

September 30,
2022 December 31,
2021
Construction Bank of China $ 326,262 $ 544,630
Wuhu Yangzi Rural Commercial Bank 211,274 235,268
Industrial and Commercial Bank of China 42,255 94,107
Agricultural Bank of China - 156,846
China Minsheng Bank 112,679
-

Postal Savings Bank of China 690,160 768,543
Total $ 1,382,630 $ 1,799,394

	September 30, 2023		December 31, 2022
China Minsheng Bank	$	105,853	$	114,867
Postal Savings Bank of China		682,470		703,558
Pingan Bank of China		348,199		-
Total	$	1,136,522	$	818,425

For the nine months ended September 30, ~~2022,~~2023 and ~~2021,~~2022, interest expense on short-term loans amounted ~~is $64,005~~to $35,354 and ~~$16,538~~$35,743, respectively. ~~Zhongshan~~

Pusheng borrowed ~~$211,274~~$348,199 from ~~Chaohu Yangzi Rural Commercial~~Pingan Bank of China on ~~July 27, 2022.~~May 29, 2023. The loan is due on ~~July 27, 2023~~May 20, 2024, with an interest rate of ~~5.80%~~8.91%. ~~Chongqing Guanzan Technology~~Pusheng borrowed ~~$690,160 from Postal Savings Bank of China on November 29,2021. The loan is due on November 28, 2022 with an interest rate of 5.4%. Shude borrowed $112,679~~$105,853 from China Minsheng Banking Corp. Ltd. on March ~~17,~~24, 2023, which is due on March 21, 2024, with an interest rate of 5.50%. Guanzan borrowed $682,470 from Postal Savings Bank of China on December 22, 2022, which is due on ~~March 17,~~December 20, 2023, with interest of 6.2%. Zhuoda borrowed $42,255 from the Industrial and Commercial Bank of China on September 11, 2022, which is payable on December 30, 2022 at an interest rate of 3.7%. Zhuoda borrowed $281,698 from the Construction Bank of China on July 8,2022, which is payable on November 30, 2022 with an interest rate of ~~3.70%,. Qianmei borrowed $44,564 from China Construction Bank on November 23, 2021, which is payable on November 23, 2022 with an interest rate~~4.50% and the real estate right of ~~3.85% .~~Guanzan as the right holder provided a mortgage loan.

Long-term loans

September 30,
2022 December 31,
2021
Standard Chartered Bank $ 11,921 $ 68,723
China Minsheng Bank - 125,476
Construction bank of China - 33,565
Chongwing Nan’an Zhongyin Fuden Village Bank Co. Ltd. - 116,974
We Bank 575,636 562,455
China Construction Bank Chongqing Zhongxian Sub-branch 70,695 -
Subtotal of long-term loans 658,252 907,193
Less: current portion (183,203 ) (369,187 )
Long-term loans – noncurrent portion $ 475,049 $ 538,006

	September 30, 2023			December 31, 2022
China Construction Bank Chongqing Zhongxian, Sub-branch		-			59,926
We Bank		160,183			360,825
Subtotal of long-term loans		160,183			420,751
Less: current portion		(135,809	)		(105,965	)
Total Long-term loans – noncurrent portion	$	24,374		$	314,786

For the nine months ended September 30, 2023 and 2022, interest expense on long-term loans amounted to $29,507 and $51,682, respectively.

~~For the nine months ended September 30, 2022, and 2021, interest expense on long-term loans amounted to $59,003 and $60,953 respectively. Chongqing~~ Guanzan ~~Technology~~ borrowed ~~$84,509~~$912,500 from We Bank on ~~April 26,~~September 6, 2022, ~~which is due March 26,2024~~for a term of two years, with an interest rate of ~~9.45%~~14.40%. Guanzan borrowed $36,071 from Webank on December 26, 2020, which is due on December 26, 2022 with interest of 10.06%. Guanzan borrowed $59,496 from Webank on July 24, 2021, which is due on July 26, 2023 with interest of 13.68%. Guanzan borrowed $41,852$148,571 from Huaneng Guicheng Trust Co., LTD on October 7, 2021, which is due on ~~September~~December 26, 2023, with an interest rate of 12.96%~~. Chongqing~~ and the general manager of Guanzan ~~Technology~~provided a personal guarantee for the loan. Guanzan borrowed ~~$70,695~~$300,000 from ~~Chongwing Nan’an Zhongyin Fuden Village~~We Bank ~~Co. Ltd.~~ on ~~February 25,2021~~April 26, 2022, which is due on March 26, 2024, with an interest rate of 9.45%. Guanzan borrowed $39,839 from We Bank on July 24, 2021, for a term of two years, with an interest rate of 13.68%. Guanzan borrowed $243,154 from Fudan Bank on February ~~24,2024~~25, 2021, for a term of three years, with an interest rate of 8.00%. ~~Chongqing Shude borrowed $21,127 from Webank on December 10, 2020 which is due December 10, 2022 with an~~

The combined aggregate amount of interest ~~rate~~expenses for all long-term borrowings for each of ~~10.80%. Chongqing Shude borrowed $939 from Webank on December 10, 2020 which is due December 2 ,2022 at an interest rate~~the five years as of ~~8.64%. Chongqing Shude borrowed $11,796 from Webank on January 5, 2021 which is due January 2,~~September 30, 2023, with an interest rate of 12.24%. Chongqing Shude borrowed $11,921 from Standard Chartered Bank on December 3, 2020 which is due on December 3, 2022 with an interest rate of 12.35%. Chongqing Zhuoda borrowed $117,374 from We bank_on May 10, 2022 which is due on December 10, 2022 with an interest rate of 14.58%.are as follows:

	September 30, 2023
October 1, 2023 to September 30, 2024		3,592
October 1, 2024 to September 30, 2025		599
Total		4,191

~~18.~~

~~CONVERTIBLE PROMISSORY NOTES AND EMBEDDED DERIVATIVE INSTRUCTIONS~~

23. CONVERTIBLE PROMISSORY NOTES AND EMBEDDED DERIVATIVE INSTRUCTIONS

On May 18, 2020, we entered into a securities purchase agreement (the “May SPA”) with two institutional investors (the “Institutional Investors”) to sell convertible notes having a face amount of up to $6,550,000 at an aggregate original issue discount of 19.85% (the “2020 Notes”) and ranking senior to all outstanding and future indebtedness of the Company. The 2020 Notes dodid not bear interest except upon the occurrence of an event of default. Each Institutional Investor also received a warrant ~~(each an~~(the “Institutional Investor 2020 Warrant”) to purchase ~~325,000~~13,000 shares of Common Stock (post the Reverse Splits) at an initial exercise price of ~~$14.225~~$142.25 per share ~~(post-Split~~(post the Reverse Splits price ~~(as defined below)~~ and subject to the Event Market Price Adjustment). The placement agent for the private placement received a warrant (the “Placement Agent 2020 Warrant”, together with the Institutional Investor 2020 ~~Warrants,~~Warrant, the “2020 Warrants”) to purchase up to 10% of the aggregate number of shares of Common Stock ~~issued in the private placement~~ at an initial exercise price of ~~$14.225~~$142.25 per share ~~(post-Split~~(post the Reverse Splits price and subject to the Event Market Price Adjustment), subject to increase based on the number of shares Common Stock issued pursuant to the 2020 Notes.

Pursuant to the May SPA, two 2020 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 2020 Note. 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.

The May SPA, the 2020 Notes and the warrants ~~provide~~provided that each and every reference to share prices, shares of Common Stock and any other numbers therein that relate to the Common Stock will be automatically adjusted for any stock splits, stock dividends, stock combinations, recapitalizations or other similar transactions that occur with respect to the Common Stock (each, a “Stock Combination Event”, and such date thereof, the “Stock Combination Event Date”) thereafter. The May SPA, the 2020 Notes and the 2020 Warrants further ~~provide~~provided if after a Stock Combination Event, the Event Market Price is less than the conversion price (in the case of the Convertible Notes) or the exercise price (in the case of the warrants) then in effect (after giving effect to the above adjustments), then on the sixteenth ~~(16th)~~(16^th) trading day immediately following such Stock Combination Event Date, the conversion price or exercise then in effect on such sixteenth ~~(16th)~~(16^th) trading day (after giving effect to the above adjustments) will be reduced (but in no event increased) to the Event Market Price. “Event Market Price” means, with respect to any Stock Combination Event Date, the quotient determined by dividing (x) the sum of the dollar volume-weighted average price of the Common Stock for each of the five (5) trading days with the lowest dollar volume-weighted average price of the Common Stock during the fifteen (15) consecutive trading day period ending and including the trading day immediately preceding the sixteenth ~~(16th)~~(16^th) trading day after such Stock Combination Event Date, divided by (y) five (5). The price adjustment described in this paragraph is hereinafter referred to as the “Event Market Price Adjustment.”

The 2020 Notes, which matured on the eighteen-month anniversary of the issuance date, were payable in installments and convertible at the election of the investors at the conversion price of $12.95 per share (post-Split Price and subject to the Event Market Price Adjustment), subject to adjustment in the event of default. Each investor also received a warrant to purchase 130,000 shares of Common Stock at an initial exercise price of $14.23 per share (post-Split Price and subject to the Event Market Price Adjustment). The placement agent for the private placement received a warrant to purchase up to 34,369 shares of Common Stock at an initial exercise price of $14.23 per share (post-Split Price and subject to the Event Market Price Adjustment), 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 ~~152,000~~14,400 shares of Common Stock (post the Reverse Splits) at an initial exercise price of ~~$14.23~~$129.50 per share ~~(post-Split Price~~(post the Reverse Splits price and subject to the Event Market Price Adjustment). The placement agent for the private placement received a warrant to purchase up to ~~34,749~~3,475 shares of our Common Stock (post the Reverse Splits) at an initial exercise price of ~~$14.23~~$142.25 per share ~~post-Split~~((post the Reverse Splits Price and ~~(subject~~subject to the Event Market Price Adjustment), subject to increase based on the number of shares of Common Stock issued pursuant to the Additional Notes.

On November 18, 2021, we entered into a securities purchase agreement (the “November SPA”) with the same two Institutional Investors to sell them in a private placement a series of senior convertible notes (the “2021 Notes”) with an original issue discount of 20% and ranking senior to all outstanding and future indebtedness of the ~~Company in a private placement.~~Company. Each Institutional Investor paid $3,250,000 in cash for a 2021 Note in the face amount of $3,900,000. The November SPA also provided for the issuance of additional 2021 Notes in an aggregate original principal amount not to exceed $3,900,000 under certain circumstances. The November SPA also contains provisions about the Market Event Price. The 2021 Notes, which were issued on November 22, 2021, ~~mature~~matured on the eighteen-month anniversary of the issuance date, ~~are~~were payable by the Company in installments and ~~are~~ convertible at the election of the Institutional Investors at the conversion price of ~~$3.25 (post-Split Price~~$32.5 (post the Reverse Splits and subject to the Event Market Price Adjustment), which iswas subject to adjustment in the event of default. Each Institutional Investor also received a warrant (the “Institutional Investor 2021 Warrant”) to purchase 180,000 shares of Common Stock at an initial exercise price of ~~$3.55~~$35.5 per share ~~(subject~~(post the Reverse Splits and subject to the Event Market Price Adjustment). The placement agent for the private placement received a warrant (the “Placement Agent 2021 Warrant”, together with the Institutional Investor 2021 Warrant, the “2021 Warrants”) to purchase up to 8% of the aggregate number of shares of Common Stock ~~in the private placement~~ at an initial exercise price of ~~$3.55~~$35.5 per share ~~(post-Split Price~~(post the Reverse Splits and subject to the Event Market Price Adjustment), subject to increase based on the number of shares Common Stock issued pursuant to the 2021 Notes.

The Company implemented a reverse stock split ~~(the “Split”)~~ on February 2, 2022, at the ratio of 5 to 1. The 2020 Notes and Additional Notes were fully converted before the ~~Split,~~February reverse split, and therefore no price adjustment was ~~actually~~ implemented at the conversion, although the price information provided above about the 2020 Notes and Additional Notes was post-split price. The conversion price of the 2021 Notes and the exercise price of the 2020 Warrants and the 2021 Warrants will be adjusted pursuant to the Event Market Price formula upon conversion or exercise. ~~The outstanding balance for the convertible promissory notes as of September 30, 2022 is $6,320,075~~

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.

September 30,
2022 December 31,
2021
Convertible note – principal $ 7,800,000 $ 7,800,000
Convertible note – discount (1,479,925 ) (2,588,840 )
Total
$ 6,320,075 $ 5,211,160

	September 30, 2023		December 31, 2022
Convertible note – principal	$	-	$	1,108,785
	$	-	$	1,108,785

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 initial fair value of the embedded conversion option liability associated with each Note was valued using the Black-Scholes model. The assumptions used in the Black-Scholes option pricing model are as follows:

	September 30, 2022			December 31, 2021			September 30, 2023			December 31, 2022
Dividend yield	$	0	%	$	0	%	$	0	%	$	0	%
Expected volatility		171	%		171	%		171	%		171	%
Risk free interest rate		0.87	%		0.87	%		0.87	%		0.87	%
Expected life (year)		0.42			1.42
Expected life (years)								1.42			1.42

The value of the conversion option liability underlying the 2020 Notes, Additional Notes, and ~~Convertible~~2021 Notes as of September 30, ~~2022,~~2023 and December ~~31,2021~~31, 2022 were ~~nil~~Nil. The Company recognized a loss from the increase in the fair value of the conversion option liability in the amount of ~~nil~~Nil for the nine months ended September 30, 2023 and 2022.

Pursuant to the convertible note agreement between the Company and the Institutional Investors, the “Installment Conversion Price” is used for each note conversion except for conversions made when there is an Event of Default as defined in the convertible note agreement, in which event an Alternate Conversion Price is used.

“Installment Conversion Price” means, with respect to a particular date of determination, the lowest of (i) the conversion price fixed in the convertible note agreement, then in effect (the “Conversion Price”), (ii) the greater of (x) the floor price fixed in the note agreement (the “Floor Price”) and (y) 78% of the lowest VWAP of the Common Stock during the ten (10) consecutive trading day period ending and including the trading day immediately preceding the applicable conversion date (the “VWAP Price”).

For any particular conversion, if (y) becomes applicable (i.e. the VWAP Price is lower than the Conversion Price and the Floor Price), because of the mandatory application of the Floor Price, the Floor Price has to be used for the conversion. As a result, the note holder is entitled to a cash amount equal to the value of the difference between the number of shares of Common Stock the note holder would have received if the VWAP Price was used for the conversion, and the number of shares of Common Stock the note holder actually received due to the application of the application of the Floor Price (the “Conversion Installment Floor Amount”).

In 2022 and ~~2021.~~2023, instead of paying the Conversion Installment Floor Amount in cash, the Company paid such amount by issuing shares of Common Stock using the Conversion Price. (the “Floor Amount Issuance”) as provided for in the convertible note agreements.

As of December 31, 2022, one of the Institutional Investors had converted all of its 2021 Notes into shares of Common Stock while the other Institutional Investor held $3,000 of the 2021 Notes.

In 2022, one of the Institutional Investors received 275,000 shares of Common Stock having a then market value of $200,000 as a result of the application of the of the Floor Amount Issuance and the other Institutional Investor received 1,234,715 shares of Common Stock having a then market value of $493,886 as a result of the application of the Floor Amount Issuance.

In 2022, one of the institutional investors exercised 100,000 warrants on a cashless exercise basis into 44,445 shares of Common Stock having a then market value of $100,000.

During the nine months ended September 30, 2023, 2,420 shares of Common Stock were issued to one Institutional Investor upon conversion of $3,000 of the 2021 Notes. In addition, 891,762 shares of Common Stock having a value of $1,105,785 were issued to the other Institutional Investor due to the application of the Floor Amount Issuance.

During the nine months ended September 30, 2023, 414,044 shares of Common Stock were issued to two institutional investors upon exercise of 1,160,000 warrants.

~~19.~~

~~OTHER PAYABLES AND ACCRUED LIABILITIES~~

24. OTHER PAYABLES AND ACCRUED LIABILITIES

Other payables and accrued liabilities consisted of the following:

	September 30, 2022			December 31, 2021		September 30, 2023			December 31, 2022
Salary payable	$	686,062		$	947,911	$	475,217		$	411,043
Salary payable – related party ⁽¹⁾		1,653,333			1,005,832
Salary payable – related parties ⁽¹⁾							2,360,333			2,135,333
Accrued operating expenses		(900	)		175,215		(900	)		(900	)
Other payables		1,121,685			953,959		430,806			630,098
Long-term payable		102,879			-
Total	$	3,563,059		$	3,082,917
						$	3,265,456		$	3,175,574

The Company entered into an employment agreement with Mr. Tiewei Song dated October 1, 2019, to serve as its Chief Executive Officer for a term of two years commencing on October 1, 2019, with base annual cash compensation of $500,000. The agreement was renewed on October 28, 2021, for one year with an annual base salary of $1,000,000 in cash and annual stock compensation of 100,000 shares of the Company’s Common Stock (reflecting a 1-to-10 reverse stock split on December 9, 2022). The 100,000 shares of the Company’s Common Stock were issued on January 24, 2022. Mr. Song’s annual compensation was reduced to $300,000 in cash beginning in October 2022 pursuant to an amendment agreement dated June 9, 2022. As of September 30, 2023, the total accrued compensation payable to Mr. Song was $1.6 million.

~~(1)~~

The Company entered into an employment agreement with Mr. Tiewei Song dated October 1, 2019, as its Chief Executive Officer for a term of two years commencing October 1, 2019 with base annual cash compensation of $500,000. The agreement was renewed on October 28, 2021 for one year with an annual base salary of $1,000,000 in cash and an annual stock compensation of 1,000,000 shares of the Company’s Common Stock. On June 9, 2022, the Company amended the employment agreement with Mr. Song to, among other things, allow the term of his employment agreement to automatically renew every year unless both the Company and Mr. Song agree not to renew in writing and to adjust his annual base salary from $1,000,000 in cash plus 1 million shares of Common Stock to $300,000 in cash only going forward. The amendment also increased the change in control severance payment to Mr. Song from $10,000,000 to $20,000,000 in the event his employment is terminated in connection with a change of control. Mr. Song’s 2021 stock consideration was not subject to stock splits or reverse stock splits per the terms of his employment agreement. In connection with the signing of the amendment, Mr. Song agreed to waive such privileges with respect to his shares of Common Stock in all future stock splits, reverse stock splits and similar transactions.

The Company entered into the employment Agreement with Ms. Baiqun Zhong dated January 27, 2022 to serve as the Interim CFO of the Company from May 21, 2021 until July 14, 2021 with base annual cash compensation of $250,000.

On January 27, 2022, the Company entered into an employment agreement with Mr. Xiaping Wang to serve as Chief Operating Officer for a term of one year, effective January 1, 2022. Mr. Wang’s compensation will consist of an annual salary of $500,000 in cash and stock compensation of 500,000 shares of the Company’s Common Stock.

~~20.~~

~~RELATED PARTIES AND RELATED PARTIES TRANSACTIONS~~

The Company entered into the employment Agreement with Ms. Baiqun Zhong dated January 27, 2022, as the Interim CFO from May 21, 2021, until July 14, 2021. Ms. Zhong assumed such role once again on September 27, 2021, and her base annual compensation was set at $250,000. Since January 1, 2023, Ms. Baiqun Zhong has been paid a monthly salary of RMB 7,000. As of September 30, 2023, the accrued compensation payable to Ms. Zhong was $265,833. On January 27, 2022, the Company entered into an employment agreement with Mr. Xiaoping Wang for a term of one-year, effective January 1, 2022. Mr. Wang’s compensation consisted of an annual salary of $500,000 in cash and stock compensation of 10,000 shares of the Company’s Common Stock (post the Reverse Splits). We issued 10,000 shares of our Common Stock to Mr. Wang on February 1, 2022. We have not paid any cash compensation to Mr. Wang as of the date of this quarterly report. The Company did not renew the employment agreement with Mr. Wang for 2023. As of September 30, 2023, the accrued compensation payable to Mr. Wang was $500,000.

On December 23, 2022, Mr. Song and Mr. Wang provided written performance pledges to the Company, whereby they pledged to use their best efforts to ensure that the aggregate amount of the available cash (excluding cash received as loans or capital infusions or cash held in restricted accounts or otherwise unavailable for unrestricted use for any reason) of Chongqing Bimai Pharmaceutical Technology Group Co., Ltd., a subsidiary of Bimai Pharmaceutical (Chongqing) Co., Ltd., and its subsidiaries, as of December 31, 2023, held in bank accounts of financial banking institutions, as audited by the Company’s independent auditors will be not less than $2 million (the “Performance Target”). If the Performance Target is not met by December 31, 2023, Mr. Song will forfeit his unpaid cash salary accrued from October 1, 2021 to September 30, 2022 in the amount of $1 million, and Mr. Wang will forfeit all his unpaid cash salary accrued through the end of 2023 and will return to the Company the 50,000 shares of the Company’s Common Stock he previously received as salary.

25. RELATED PARTIES AND RELATED PARTY TRANSACTIONS

~~Amount~~Amounts due from ~~mid-level~~related parties and management ~~personnel~~team.

As of September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, the total amounts ~~due~~receivable from ~~certain~~related parties and mid-level management ~~personnel were $343,901~~team was $6,964 and ~~$622,554,~~Nil, respectively, which included:

As of September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, the ~~amount due~~amounts receivable from ~~Mr. Jiangjin Shen,~~Xunwei Zhang, the ~~Chief Executive Officer~~manager of ~~Minkang of $167,611~~Pusheng, were $6,964 and ~~$544,600~~Nil, respectively, which ~~loan carried no~~amounts were used for daily operations and do not bear any interest. ~~The Company received full repayment on this advance on April 13, 2022.~~

As of September 30, 2022, and December 31, 2021, the amount due from Mr. Zhiwei Shen, the Chief Executive Officer of Qiangsheng was $176,290 and $77,954, which loan carried no interest. The Company received full repayment on this advance on April 13, 2022.

Amounts due to related parties and ~~mid-level~~ management ~~personnel~~team.

As of September 30, ~~2022,~~2023 and December ~~31,2021,~~31, 2022, the total amounts payable to related parties and ~~mil-level~~mid-level management team was ~~$2,095,518~~$524,195 and ~~$730,285,~~$2,980,441, respectively, which included:

~~Amounts~~As of September 30, 2023 and December 31, 2022, the amount payable to Mr. Yongquan Bi, the former Chief Executive Officer and Chairman of the Board of directors of the Company ~~as of September 30, 2022,~~was Nil and ~~December 31, 2021, of $27,173 and $30,258,~~$27,699, respectively, free of interest and due on demand. ~~These amounts represent~~The $27,699 represents the remaining balance ~~of the funds~~ that Mr. ~~Yongquan~~ Bi advanced for third party services on behalf of ~~the Company~~Xinrongxin during the ordinary course of business of ~~the Company~~Xinrongxin since the beginning of 2018. As the amount was owed by Xinrongxin, which was dissolved as of January 3, 2023, the Company believes that it no longer has any liability for this debt.

~~Amount~~As of September 30, 2023 and December 31, 2022, the amounts payable to Mr. Li Zhou, the legal representative (general manager) of Guanzan, ~~of $248,179~~were Nil and ~~$477,128, as of September 30, 2022 and December 31, 2021, respectively, which amounts were advanced~~$248,690, respectively. The $248,690 was used for daily operations and ~~third party~~payment of third-party professional fees ~~free of interest.~~and were interest-free.

~~Amounts~~As of September 30, 2023 and December 31, 2022, the amounts payable to Mr. Fuqing Zhang, the Chief Executive Officer of Xinrongxin, ~~of $169,440~~were $Nil and ~~$188,684, as of September 30, 2022 and December 31, 2021, respectively,~~$172,730, respectively. The $172,730 was free of interest and due on demand. The amount due to Mr. Fuqing Zhang ~~is for~~represents reimbursable operating expenses that ~~the Company~~Xinrongxin owed to Mr. Zhang prior to the acquisition of ~~Boqi Zhengji.~~of Xinrongxin. As the amount was owed by Xinrongxin, which was dissolved as of January 3, 2023, the Company believes that it no longer has any liability for this debt.

~~Amounts~~As of September 30 2023 and December 31, 2022, the amounts payable to Mr. Youwei Xu, the former financial manager of Xinrongxin, ~~of $11,559~~were Nil and ~~$12,872, as of September 30, 2022 and December 31, 2021, respectively,~~$11,784, respectively. These sums are free of interest and due on demand. The ~~amount due~~outstanding amounts owed to Mr. Xu ~~relates to~~is in connection with reimbursable operating expenses that ~~was owed to Mr. Xu~~were incurred prior to the acquisition of ~~Boqi Zhengji.~~

of Xinrongxin, As the amounts were owed by Xinrongxin, which was dissolved as of January 3, 2023, the Company believes that it no longer has any liability for this debt.

~~Amounts~~As of September 30, 2023 and December 31, 2022, the amounts payable to Shaohui Zhuo, the general manager of Guoyitang, ~~of $4,582~~were $4,531 and ~~$5,102, as of September 30, 2022, and December 31, 2021,~~$4,671, respectively, ~~free of interest and due on demand. The amount due to Mr. Zhuo relates to reimbursable operating expenses that was owed to Mr. Zhuo~~which amounts were used for daily operations ~~of Guoyitang. prior to its acquisition.~~and do not bear any interest.

Amounts payable to Nanfang Xiao, a director of Guoyitang of $10,282 and $11,450, as of September 30, 2022 and December 31, 2021, respectively, free of interest and due on demand. The amount due to Mr. Xiao relates to reimbursable operating expenses that was owed to Mr. Xiao for daily operations of Guoyitang. prior to its acquisition..

Amounts payable to Jia Song, the manager of Guoyitang of $4,303 and $4,791, as of September 30, 2022 and December 31,2021 respectively, free of interest and due on demand. The amount due to Mr. Song relates to reimbursable operating expenses that was owed to Mr. Song. for daily operations of Guoyitang. prior to its acquisition.

~~21.~~6.

~~STOCK EQUITY~~As of September 30, 2023 and December 31, 2022, the amounts payable to Nanfang Xiao, a director of Guoyitang, were $10,167 and $10,482, respectively. These funds were used for daily operations and were not subject to any interest.

As of September 30, 2023 and December 31, 2022, the amounts payable to Jia Song, the manager of Guoyitang, were $4,255 and $4,385, respectively, which amounts were used for daily operations and do not bear any interest.

As of September 30, 2023 and December 31, 2022, the amounts payable to Xiaoping Wang, the Chief Operating Officer and the Director, were $5,242 and Nil, respectively, which amounts were used for daily operations and do not bear any interest.

	9.	As of December 31, 2022, we owed $2 million to Mr. Fnu Oudom pursuant to a $2 million convertible note that was issued on December 6, 2022. The convertible note provided for annual interest of 6%, which was payable together with the principal amount one year after the date of issuance. Mr. Oudom had a conversion right with respect to the principal and interest due on the note at a conversion price of $4.00 per share (reflecting a 1-to-10 reverse stock split on December 9, 2022). The (post reverse split) conversion price of $4.00 reflected a 60% premium on the closing price of the Common Stock on Nasdaq on the date of issuance of the note, which was $0.25. On February 27, 2023, the Company and Mr. Oudom entered into an agreement whereby the Company agreed to exercise its prepayment right under the convertible note by issuing shares of its Common Stock. In consideration of Mr. Oudom’s agreement to convert the convertible note into shares of Common Stock and to waive his right to any and all interest accrued and to be accrued, the Company agreed to issue 1,330,000 shares of Common Stock at a conversion price of $1.50 per share, subject to shareholder approval, as full payment of the $2,000,000 principal and accrued interest. Such issuance was approved by the Company’s shareholders on April 13, 2023, and the shares were issued to Mr. Oudom on June 19, 2023.
	10.	On July 18, 2022, 1,250,000 shares of Common Stock (reflecting the Reverse Splits) were issued to Mr. Oudom in consideration of the payment $5 million after obtaining the approval of shareholders at the Company’s 2022 annual meeting of shareholders.

	11.	On February 27, 2023, the Company entered into a stock purchase Agreement with Mr. Oudom, whereby the Company agreed to sell 2,000,000 shares of Common Stock to Mr. Oudom for $3,000,000 in cash, based on a purchase price of $1.50 per share, subject to shareholder approval of the issuance of such shares. The transaction was approved by the Company’s shareholders on April 13, 2023. As of September 30, 2023, the Company had received $1,600,000 in cash. The Company expects to receive the remaining $1,400,000 from Mr. Oudom and to issue the shares to him by December 31, 2023.

	12.	On July 5, 2022, we entered into a stock purchase agreement (as amended on February 27, 2023) with Mr. Fnu Oudom, whereby we agreed to acquire 100% of the equity interests in Phenix in consideration of $1,800,000. The transaction closed effective March 15, 2023. The aggregate purchase price for the equity interests in Phenix was $180,000 in cash, which was paid on July 7, 2022 and 270,000 shares of Common Stock (reflecting the Reverse Splits), which were issued to Mr. Oudom on June 19, 2023 after we obtained shareholder consent. We also agreed to issue an additional 5,000,000 shares of Common Stock if the aggregate net profit generated by Phenix is at least $2,500,000 in calendar year 2023 or in any fiscal quarter of 2023. Such performance target was met in the second quarter of 2023 and the 5,000,000 shares were issued to Mr. Oudom on December 6, 2023.

13.

On October 28, 2022, Mr. Song, the CEO of the Company, loaned the Company $500,000. The loan originally had a term of three months from November 3, 2022 to February 3, 2023. No interest was payable if the loan was repaid on time. This loan has not been repaid and pursuant to the agreement, the loan is automatically extended until the principal amount and all accrued interest is paid in full. 1% interest has accrued since March 3, 2023.

26. STOCKHOLDERS’ EQUITY

The Company is authorized to issue 200,000,000 shares of Common Stock, $0.001 par value. As of September 30, ~~2022,~~2023 and December ~~31,2021, it had 38,434,761~~31, 2022, there were 6,673,006 shares and ~~8,502,222~~3,764,780 shares outstanding, respectively.

From January 4, 2021, to February 9, 2021, Hudson Bay converted 2020 Notes in the aggregate principal amount of $ 2,150,000 ~~of the 2020 Notes~~ into 276,943 shares of Common Stock.

From January 4, 2021, to March 1, 2021, CVI converted 2020 Notes in the aggregate principal amount of $ 2,150,000 ~~of the 2020 Notes~~ into 227,731 shares of the Common Stock.

On February 2, 2021, the Company issued ~~400,000~~40,000 shares of Common Stock (reflecting the Reverse Splits) in connection with the ~~acquisition~~purchase of ~~Guoyitang.~~Guoyitang Hospital.

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 ~~$74,473~~$ 74,473 plus interest into 20,706 shares of Common Stock.

On February 11, 2021, the Company issued ~~50,000~~100 shares of Common Stock (reflecting the Reverse Splits) to Real Miracle Investments Limited in consideration for consulting services.

On March 26, 2021, the Company issued ~~400,000~~40,037 shares of Common Stock in(reflecting the ~~acquisition~~Reverse Splits) as part of ~~Zhongshan.~~the Zhongshan acquisition. On September 1, 2023, 39,037 shares of Common Stock were returned to the Company.

On April 20, 2021, the Company issued ~~800,000~~80,000 shares of Common Stock (reflecting the Reverse Splits) as partial consideration for the acquisition of the Minkang, Qiangsheng and Eurasia hospitals. On December 9, 2022, 43,600 shares of Common Stock were returned to the Company and on September 1, 2023, 36,400 shares of Common Stock were returned to the Company.

On April 29, 2021, the Company issued ~~100,000~~200 shares of Common Stock (reflecting the Reverse Splits) as payment for improvements to offices located in Chongqing.

On June 18, 2021, 32,500 shares of Common Stock were issued to ~~CVI~~an Institutional Investor with respect to its cashless exercise of 650,000 warrants that were issued in 2020.

On July 23, 2021, the Company issued ~~30,000~~600 shares of Common Stock (reflecting the Reverse Splits) as payment for salary to three employees.

From August 26, 2021, to November 30, 2021, ~~Hudson Bay~~an Institutional Investor converted $2,400,000 principal amount of the ~~Convertible~~2020 Notes and Additional Notes into 970,173 shares of Common Stock.

From August 26, 2021, to November 30, 2021, ~~CVI~~an Institutional Investor converted ~~$ 3,000,000~~$3,000,000 principal amount of the ~~Convertible~~2020 Notes ~~into1,183,251~~and Additional Notes into 1,183,251 shares of Common Stock.

On August 27, 2021, the Company issued ~~920,000~~92,000 shares of Common Stock (reflecting the Reverse Splits) in full payment of the balance of the post-closing consideration for the acquisition of Guanzan.

On September 22, 2021, the Company issued ~~440,000~~44,000 shares of Common Stock (reflecting the Reverse Split on February 3, 2022) as the initial consideration for the acquisition of Zhuoda.

On January 7, 2022, the Company issued ~~600,000~~60,000 shares of Common Stock (reflecting the Reverse Splits) as the initial consideration for the acquisition of Mali Hospital. On December 9, 2022, 52,000 shares of Common Stock were returned to the Company. And on September 1, 2023, the remaining 8,000 shares of Common Stock were returned to the Company.

On January 24, 2022, the Company issued ~~1,000,000~~100,000 shares of Common Stock (reflecting a 1-to-10 reverse stock split on December 9, 2022) to Mr. Song as part of his compensation.

On January 27, 2022, the Company the Company issued 10,000 shares of Common Stock (post the Reverse Splits) to Mr. Wang as part of his compensation.

On February 1, 2022, the Company issued 1,000 shares of Common Stock (post the Reverse Splits) to Chongqing Jinmujinyang (Jiulongpo) Law Firm (a/k/a in English: Chongqing Kingmoon & Kingyang (Jiulongpo) Law Firm) as payment for services under a legal consulting agreement dated January 1, 2022.

A 1-for-5 reverse stock split of the Company’s Common Stock became effective on February 3, 2022.

On July 18, 2022, the Company issued 1,250,000 shares of Common Stock (reflecting a 1-to-10 reverse stock split on December 9, 2022) to Mr. Oudom in consideration of an investment of $5 million after obtaining the approval of stockholders at the Company’s 2022 annual meeting of shareholders.

A 1-for-10 reverse stock split of the Company’s Common Stock became effective on December 9, 2022.

On November 23, 2022, the Zhuoda sale transaction closed, when 100% of the equity interests in Zhuoda were transferred to the buyers and 44,000 shares of the Company’s Common Stock (reflecting the Reverse Splits) were returned to the Company as the full consideration.

From January 1, 2022, to December 31, 2022, a converted 2021 Notes in the aggregate principal amount of $2,097,000 into 442,357 shares of Common Stock.

From January 1, 2022, to December 31, 2022, the Institutional Investors. converted $5,700,000 of the 2021 Notes into 1,138,248 shares of Common Stock.

In 2022, one Institutional Investor received 275,000 shares of Common Stock as a result of the ~~salary for Mr. Tiewei Song.~~Floor Amount Issuance and the other Institutional Investor received 1,234,715 shares; of Common Stock as a result of the Floor Amount Issuance.

~~The Company~~In 2022, an Institutional Investor exercised warrants into 44,445 shares of Common Stock.

On June 19, 2023, Mr. Oudom was issued ~~500,000~~270,000 shares of Common Stock (reflecting the Reverse Splits) as partial consideration for the Company’s acquisition of Phenix.

On June 19, 2023, 1,330,000 shares of Common Stock were issued to Mr. ~~Xiaping Wang~~Fnu Oudom pursuant to an agreement dated as ~~salary~~of February 27, 2023, in consideration for the prepayment of a $2,000,000 convertible promissory note sold by the Company to Mr. Oudom on ~~February 1,~~December 6, 2022.

~~On February 2, 2022, we completed a five (5) for one (1) reverse stock split (the “Reverse Split”)~~During the nine months ended September 30, 2023, 2,420 shares were issued to an Institutional Investor upon conversion of ~~our~~$3,000 of 2021 Notes. In addition, 891,762 shares were issued ~~and outstanding ordinary~~to the Institutional Investor due to the Floor Amount Issuance.

During the nine months ended September 30, 2023, 414,044 shares ~~par value $0.001 per share.~~ were issued to two institutional investors upon exercise of warrants.

From athe legal perspective, the ~~Reverse Split~~reverse splits applied to the issued shares of ~~the Company on the date~~Common Stock of the ~~Reverse Split and~~Company did not have any retroactive effect on the Company’s shares prior ~~that date.~~to those dates. However, for accounting purposes only, references to our ~~ordinary shares in this quarterly report~~Common Stock are stated as having been retroactively adjusted and restated to give effect to the ~~Reverse Split,~~reverse splits, as if itthe reverse splits had occurred by the relevant earlier date.

On July 18, 2022, 12,500,000 shares of Common Stock were issued to Mr. Fnu Oudom in consideration of $5 million upon the approval of stockholders at the Company’s 2022 annual meeting of shareholders.42

~~From January 1, 2022 to September 30, 2022, Hudson Bay converted $3,897,000 of Convertible Notes into 6,460,713 shares of Common Stock.~~

~~From January 1, 2022 to September 30, 2022, CVI converted $3,900,000 of Convertible Notes into 7,835,624 shares of Common Stock.~~

~~22.~~

~~NET LOSS PER SHARE~~

27. NET LOSS PER SHARE

Basic net loss per share is computed using the weighted average number of ~~common~~ shares of Common Stock outstanding during the year. The dilutive effect of potential ~~common~~ shares of Common Stock outstanding is included in diluted net loss per share. Due to the Company’s net loss from its continuing operations, all potential common share issuances had anti-dilutive effect on net loss per share. The following table sets forth the computation of basic and diluted net loss per share for the ~~year~~nine months ended September 30, ~~2022,~~2023 and ~~2021:~~2022:

For the nine months ended
September 30,
2022 2021
Total net loss attributable to common shareholders $ (10,945,797 ) $ (5,396,789 )

Weighted average common shares outstanding – Basic and diluted 16,816,256 22,864,269

Loss per shares – basic and diluted: $ (0.65 ) $ (0.23 )

	For the nine months ended September 30,
	2023			2022
Net loss from continuing operation attributable to common shareholders	$	(1,146,581	)	$	(12,214,648	)
Net loss from discontinued operation attributable to common shareholders		(259,820	)		(957,203	)
Total net loss attributable to common shareholders		(1,406,401	)		(13,171,851	)
Weighted average number of common shares outstanding – Basic and diluted		4,967,278			24,037,736
loss per share – basic and diluted:
Loss from continuing operations	$	(0.23	)	$	(0.51	)
Loss from discontinued operations		(0.05	)		(0.04	)
Total	$	(0.28	)	$	(0.55	)

~~23.~~

~~SEGMENTS~~

28. SEGMENTS

General Information of Reportable ~~Segments:~~Segments:

~~The~~As of September 30, 2023, the Company ~~operates in~~had four ~~reportable~~operating segments: retail pharmacy, wholesale pharmaceuticals, wholesale medical devices ~~wholesale pharmaceuticals, medical services,~~ and ~~retail pharmacy.~~healthcare products. The retail pharmacy segment sells prescription and OTC medicines, ~~traditional Chinese medicines (“TCM”),~~TCM, healthcare supplies and sundry items to retail customers through its ~~directly-owned~~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. Healthcare products include dietary supplements such as a cardiovascular product, an anti-insomnia and depression product, a male aphrodisiac product, a women’s menopausal syndrome product, a gout product, and an immunity product.

As of September 30, 2022, the Company had four reportable segments: wholesale medical devices, wholesale pharmaceuticals, medical services, and retail pharmacies. The wholesale medical devices segment distributes medical devices, including medical consumables to drug stores, private clinics, pharmaceutical dealers, and hospitals. 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~~included the hospitals acquired in ~~February 2021.~~2021.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.

To date, there ~~were no~~have limited inter-segment revenues between ~~the four segments.~~our segments, consisting of wholesale pharmaceuticals and retail pharmacies.

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 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 markets to distinct classes of customers.

Information about ~~Reported~~Operating 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 recourses 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 nine months ended September 30, 2023	Retail pharmacy			Wholesale medical devices			Wholesale pharmaceuticals			Healthcare products		Medical services			Others			Total
Revenues from external customers	$	467,280		$	1,399,622		$	4,091,936		$	5,319,658	$	-		$	-		$	11,278,496
Cost of revenues	$	28,182		$	1,464,530		$	3,877,363		$	1,213,495	$	-		$	5,450		$	6,589,020
Depreciation, depletion, and amortization expense	$	13,408		$	33,484		$	1,326		$	55,055	$	-		$	7,979		$	111,252
Profit (loss)	$	(244,266	)	$	(152,435	)	$	(2,651,051	)	$	3,737,249	$	(22,037	)	$	(1,814,041	)	$	(1,146,581	)
Total assets	$	316,902		$	2,595,356		$	11,585,991		$	6,212,077	$	999,315		$	7,807,997		$	29,517,638

For nine months ended September 30, 2022	Retail pharmacy			Wholesale medical devices			Wholesale pharmaceuticals			Medical services			Others			Total
Revenues from external customers	$	618,582		$	3,404,533		$	6,453,109		$	-		$	-		$	10,476,224
Cost of revenues	$	72,834		$	2,923,017		$	5,923,508		$	121		$	8,658		$	8,928,138
Depreciation, depletion, and amortization expense	$	15,057		$	35,552		$	177		$	-		$	35,325		$	86,111
Profit (loss)	$	(291,705	)	$	(145,570	)	$	(845,419	)	$	(73,921	)	$	(10,858,033	)	$	(12,214,648	)
Total assets	$	405,101		$	3,626,761		$	5,593,770		$	1,033,357		$	14,496,294		$	25,155,283

For nine months ended
September 30, 2022 Retail
pharmacy Medical
devices
wholesale Drugs
wholesale Medical
services Others Total
Revenues from external customers $ 618,582 $ 3,404,533 $ 8,956,141 $ 4,282,695 $ - $ 17,261,951
Cost of revenues $ 72,834 $ 2,923,017 $ 8,035,938 $ 1,950,611 $ 10,905 $ 12,993,304
Depreciation, depletion, and amortization expense $ 15,057 $ 35,552 $ 254 $ 79,054 $ 9,027 $ 138,944
Loss $ (291,705 ) $ (145,570 ) $ (1,142,654 ) $ (733,892 ) $ (8,287,238 ) $ (10,601,059 )
Total assets $ 405,101 $ 3,626,761 $ 7,654,393 $ 6,604,159 $ 14,712,961 $ 33,003,374

For nine months ended
September 30, 2021 Retail
pharmacy Medical
devices
wholesale Drugs
wholesale Medical
services Others Total
Revenues from external customers $ 375,045 $ 2,524,777 $ 14,978,955 $ 6,694,510 $ 629,198 $ 25,202,485
Cost of revenues $ 295,059 $ 1,831,089 $ 14,598,512 $ 3,334,306 $ 557,313 $ 20,616,279
Depreciation, depletion, and amortization expense $ 15,521 $ 23,683 $ 1,638 $ 205,317 $ 176 $ 246,335
Profit (loss) $ (463,211 ) $ 158,908 $ 152,044 $ 787,515 $ (5,911,497 ) $ (5,276,241 )
Total assets $ 287,074 $ 6,075,980 $ 18,774,282 $ 8,651,014 $ 30,497,860 $ 64,286,210

Reconciliations of Reportable Segment Revenues, Profit or Loss, and Assets, to the Consolidated Totals as of September 30, 2022, and September 30,2021 and for the Nine Months ended September 30, 2022 and 2021.

>>Revenues Nine months
ended
September 30,
2022
Total revenues from reportable segments $ 17,813,544
Other revenues -
Elimination of intersegments revenues (551,593 )
Total consolidated revenues $ 17,261,951

>> Profit or loss 　
Total loss from reportable segments $ (2,313,821 )
Elimination of intersegments profit or loss (565,433 )
Unallocated amount:
Amortization of discount of convertible notes (1,542,248 )
Other corporation expense (6,179,554 )
Total net loss $ (10,601,057 )

>>Assets
Total assets from reportable segments $ 41,598,014
Elimination of intersegments receivables (14,524,848 )
Unallocated amount:
Other unallocated assets – Phenix Bio Inc -
Other unallocated assets – Xinrongxin 4,087
Other unallocated assets – Liaoning Boyi 30,070
Other unallocated assets – Dalian Boyi 3,762
Other unallocated assets – Chongqing Bimai 1,142,687
Other unallocated assets – BIMI 4,749,603
Total consolidated assets $ 33,003,375

>>Revenues Nine months
ended
September 30,
2021
Total revenues from reportable segments $ 27,424,812
Other revenues 629,198
Elimination of intersegments revenues (2,851,525 )
Total consolidated revenues $ 25,202,485

>> Profit or loss 　
Total loss from reportable segments $ (1,303,167)
Elimination of intersegments profit or loss (667,910)
Unallocated amount:
Amortization of discount of convertible notes (2,639,374 )
Other corporation expense (665,790 )
Total net loss $ (5,276,241 )

>>Assets
Total assets from reportable segments $ 49,176,982
Elimination of intersegments receivables (14,180,718 )
Unallocated amount:
Other unallocated assets – Xinrongxin 12,386,406
Other unallocated assets – Liaoning Boyi 177,335
Other unallocated assets – Dalian Boyi 21,841
Other unallocated assets – Chongqing Bimai 12,058,313
Other unallocated assets – BIMI 4,646,051
Total consolidated assets $ 64,286,210

29.

ENTITY-WIDE INFORMATION AND CONCENTRATIONS OF RISK

~~25. ENTITY-WIDE INFORMATION AND CONCENTRATIONS OF RISK~~

Entity-Wide Information

(a)

Revenues from each type of products

For the nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively, the Company reported revenues for each ~~type of products and services~~segment as follows:

For the nine months ended
September 30,
2022 2021
Medical devices wholesale $ 3,404,533 $ 2,524,777
Medical services 4,282,695
6,694,510

Pharmaceutical wholesale
8,956,141 14,978,955
Pharmacy retail 618,582 375,045
Other - 629,198
Total $ 17,261,951 $ 25,202,485

	For the nine months ended September 30,
	2023		2022
Medical devices	$	1,399,622	$	3,404,533
Healthcare products		5,319,657		-
Wholesale pharmaceuticals		4,091,937		6,453,109
Pharmacy retail		467,280		618,582
Total	$	11,278,496	$	10,476,224

(b)

Geographic areas information

For the nine months ended September 30, 2023, all of the Company’s revenues were generated in the PRC and the United States, of which, Phenix accounted for $5.3 million of the revenues.

For the nine months ended September 30, 2022, ~~and 2021, respectively,~~ all the Company’s revenues were generated in the PRC. There were no long-lived assets located outside of the PRC as of September 30, ~~2022, and 2021.~~2022.

(c)

Major customers

For the nine months ended September 30, ~~2022, no~~2023, one customer accounted for more than 10% of the Company’s revenues. For the nine months ended September 30, 2021, no customer accounted for more than 10% of the Company’s total revenues. As of September 30, 2021, two customers accounted for more than 10% of the balance of accounts receivable which were 33.73% and 26.7%, respectively.revenues:

		For the nine months ended
		September 30, 2023
Customers	Segment	Revenue		Percentage of total Revenue
Customer A	Healthcare products	$	5,308,005		47.06	%

(d)

Major vendors

For the nine months ended September 30, ~~2021, no~~2023, one vendor accounted for more than 10% of the Company’s ~~total purchases. As of September 30, 2021, one vendor accounted for 50.25% of the Company’s purchases.~~purchases:

For the
nine months ended

As of
September 30,

September 30, 2023

2023

Vendors

Segment

Purchases

Percentage of
total purchases

Accounts
payable

Vendor A

Medical devices & Wholesale pharmaceuticals

1,284,554

21.33

~~For the nine months ended September 30, 2022, two vendors accounted for more than 10% of the Company’s purchases and its outstanding balances as at balance sheet dates:~~

For the nine months ended
September 30, 2022
Vendors Segment Purchases Percentage of
total purchases
Vendor A Medicines $ 2,152,995 17 %
Vendor B Medical devices $ 1,903,776 15 %

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.

(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 debt, and continually monitoring the effects of market changes in interest rates. As of September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively, the 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.

~~(e)~~

~~Enforcement risks~~

The PRC People’s Supreme Court adopted rules in 2010 which restrict parties who are subject to effective court enforcement orders for monetary judgements from extravagant spending until the monetary judgments have been satisfied. According to those rules, if a company becomes subject to a court enforcement order due to failure to satisfy a monetary judgement, the company’s name will appear on a defaulters’ list published by the Chinese courts and the company together with its legal representative and responsible person will be prohibited from using the company property for extravagant spending such as buying real property, vacationing and paying for children’s private school education, until, among other conditions, the monetary judgment has been satisfied. Boqi Zhengji and Nengfa Energy are currently on the defaulters’ list due to their failure to pay off several monetary judgments.

~~26.~~30. SUBSEQUENT EVENTS

On October 19, 2022, BIMI International Medical Inc. (the “Registrant” or the “Company”) entered into a Sale and Purchase Agreement (the “Agreement”) to sell its wholly-owned subsidiary, Chongqing Zhuoda Pharmaceutical Co., Ltd. (“Zhuoda”), a distributorSeptember 1, 2023, 39,037 shares of ~~pharmaceuticals and biologicals located in the People’s Republic of China (the “PRC”) to three citizens of the PRC who previously sold Zhuoda~~Common Stock were returned to the ~~Company. Pursuant~~Company by the prior owner of Zhongshan pursuant to an agreement dated December 28, 2022 whereby the ~~Agreement, the Company’s wholly-owned subsidiary Chongqing Guanzan Technology Co., Ltd. (“Guanzan”), will sell 100%~~Company agreed to transfer 87% of the equity interests in ~~Zhuoda that Guanzan previously purchased~~Zhongshan to the prior owner. Such shares were partial consideration for ~~440,000~~the transfer. 1,000 shares of Common Stock were returned in the ~~Company’s common stock, which purchase price was subject to post-closing payments based~~form of cash on ~~performance in 2022 and 2023. The 440,000~~September 30, 2023 because the 1,000 shares ~~will be~~were sold by the prior owner.

On September 1, 2023, 36,400 shares of Common Stock were returned to the Company asby the ~~full consideration~~prior owner of the ~~sale~~Qiangsheng, Eurasia and Minkang hospitals pursuant to an agreement dated December 28, 2022 whereby the agreed to transfer 90% of the equity interests in ~~Zhouda.~~the Qiangsheng, Eurasia and Minkang hospitals to their prior owners. Such shares were partial consideration for the transfer.

As of September 30, 2023, the Company received $1,600,000 in cash pursuant to a stock purchase Agreement with Mr. Oudom dated as of February 27, 2023 whereby the Company agreed to sell 2,000,000 shares of Common Stock to Mr. Oudom for $3,000,000 in cash, based on a purchase price of $1.50 per share, subject to shareholder approval of the issuance of such shares. The transaction was approved by the Company’s shareholders on April 13, 2023. The Company expects to receive the remaining $1,400,000 from Mr. Oudom and to issue the shares to him by December 31, 2023.

On December 6, 2023, 5,000,000 shares of Common Stock were issued to Mr. Oudom pursuant to a stock purchase agreement dated as of July 5, 2022 (as amended on February 27, 2023) where we agreed, among other things, to issue 5,000,000 shares of Common Stock to Mr. Oudom in the event that Phenix will generate at least $2,500,000 in net profit in calendar year 2023 or in any fiscal quarter of 2023. Such performance target was met in the second quarter of 2023, and the 5,000,000 shares were issued to Mr. Oudom on December 6, 2023.

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

We are Delaware holding company with operations conducted by our subsidiaries in the People’s Republic of China (“PRC” or “China”) and the Hong Kong Special Administrative Region of the PRC. Due to our operations in China, our business, results of operations, financial condition and prospects may be influenced to a significant degree by economic, political, legal and social conditions in the PRC or changes in government relations between China and the United States or other governments. There is significant uncertainty about the future relationship between the United States and China with respect to trade policies, treaties, government regulations and tariffs. China’s economy differs from the economies of other countries in many respects, including with respect to the level of development, growth rate, amount of government involvement, control of foreign exchange and allocation of resources. While China’s economy has experienced significant growth over the past four decades, growth has been uneven across different regions and among various economic sectors. The Chinese government has implemented various measures to encourage economic development and guide the allocation of resources. Some of these measures may benefit the overall Chinese economy, but may have a negative effect on us. In addition, in the past the Chinese government implemented certain measures, including interest rate increases, to manage the pace of economic growth and prevent the economy from overheating. These measures may cause decreased economic activity in China, which may adversely affect our business and results of operations.

Additionally, the Chinese government has published new policies that significantly affect certain industries such as the education and internet industries, and we cannot rule out the possibility that it will in the future release regulations or policies regarding our industry that could require us to obtain additional permission from Chinese authorities to continue to operate our business in China, which may adversely affect our business, financial condition and results of operations. Furthermore, statements made by the Chinese government have indicated an intent to increase the government’s oversight and control over offerings of companies with significant operations in China that are to be conducted in foreign markets.

In light of such developments, the SEC has imposed enhanced disclosure requirements on China-based companies seeking to register securities with the SEC. Any future PRC, U.S. or other rules and regulations that place restrictions on capital raising or other activities by companies with extensive operations in China could adversely affect our business and results of operations. Any such action, once taken by the Chinese government, could significantly limit or completely hinder our ability to offer or continue to offer our securities to investors, and could cause the value of our Common Stock to significantly decline or become worthless. If the business environment in China deteriorates from the perspective of domestic or international investment, or if relations between China and the United States or other governments deteriorate, our business in China and United States may also be adversely affected.

The PRC government’s significant authority in regulating our operations and its oversight could significantly limit or completely hinder our ability to conduct our business. Implementation of industry-wide regulations, including data security or anti-monopoly related regulations, may cause the value of our securities to significantly decline or be of little or no value.

~~History~~

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 ~~June 30,~~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~~Company 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.

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. As a result, all of the assets and liabilities of the NF Group were reclassified as assets and liabilities of a discontinued operation in the statement of position as of December 31, 2020, and 2019 and the results of the operation are presented under the line-item net loss from discontinued operations for the years ended December 31, 2020 and 2019. All of the assets and liabilities of Boqi Zhengji were reclassified as assets and liabilities of a discontinued operation in the statement of position as of December 31, 2020 and the results of the operation are presented under the line item net loss from discontinued operations for the year ended December 31, 2020.

On March 18, 2020, ~~we completed~~ the ~~acquisition~~Company through its wholly owned subsidiary, Xinrongxin, acquired 100% of the equity interests in Chongqing Guanzan Technology Co., Ltd. (“Guanzan”). Guanzan held an 80% equity interest in Chongqing Shude Pharmaceutical Co., Ltd. (“Shude”, and collectively with Guanzan, the “Guanzan Group”. On April 9, 2021, we increased our equity interest in Shude from 80% to 95.2% by making a direct capital investment in Shude.

In May 2020, Guanzan established Chongqing Lijiantang Pharmaceutical Co. Ltd., a ~~distributor of medical devices. The rationale for~~subsidiary which operates four retail pharmacy stores in China (collectively, the acquisition was for us to further expand our healthcare operation by acquiring a medical devices and pharmaceuticals distribution business. We believed that Guanzan has strong sales capabilities and procurement resources in the local area of Chongqing, the largest city in Southwest region of the PRC. The acquisition was 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.“Lijiantang Pharmacy Group”).

On February 2, 2021, we acquired ~~Chongqing~~ Guoyitang, ~~Hospital (“Guoyitang”),~~the owner and operator of a private general hospital in ~~Chongqing with 50 hospital beds and 98 employees.~~Chongqing. The Guoyitang acquisition was the first step in our efforts to build a hospital chain specializing in obstetrics and gynecology.

On February 8, 2021, we acquired ~~Chaohu~~ Zhongshan, ~~Minimally Invasive Hospital (“Zhongshan”),~~ a private hospital in the southeast region of China with 160 hospital beds (of which 110 beds were then in use) and 95 employees. 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.with. The Zhongshan acquisition ~~marks~~was the second step in our ~~efforts~~effort to establish a nationwide hospital chain specializing in obstetrics and gynecology.

On ~~May 6,~~April 9, 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.

Our hospitals performed poorly in 2022 due in great measure to the impact of COVID-19 and the PRC’s policies to combat its spread. In response to their poor performance, we entered into agreements to sell back the Zhongshan, Qiangsheng, Eurasia and Minkang ~~were owned by~~hospitals to their original owners and ceased the same owners. Qiangsheng has 20 hospital beds and is a general hospital locally known for its OB/GYN and Chinese traditional medicine specialties. Eurasia has 30 hospital beds. Minkang has 120 hospital beds and is a general hospital locally known for its OB/GYN and Chinese traditional medicine specialties.operation of Guoyitang.

On ~~October 8,~~December 28, 2022, we entered into an agreement to transfer 87% of the equity interests in Zhongshan to the prior owner and will retain 13% of the equity interests in Zhongshan. As consideration for the transfer and pursuant to an amendment to the original stock purchase agreement, the original seller agreed to return the 40,037 shares of Common Stock previously issued (reflecting the two reverse stock splits 1-for- 5 reverse split on February 3, 2022, and a 1-for- 10 reverse split on December 9, 2022 (the “Reverse Splits)) and RMB 40,000,000 in cash (approximately ($6,116,207) previously paid upon the acquisition of Zhongshan. The former owner also agreed to release the Company from any and all claims relating to two earn out payments that were payable under the original purchase agreement. The Company received a put option to sell part or all of its 13% interest in Zhongshan before December 31, 2032, based on a valuation determined by a reputable third-party appraisal firm jointly chosen by the two parties. On September 1, 2023, 39,037 shares of Common Stock were returned to the Company. The remaining 1,000 shares were returned in the form of a $3,055 cash payment because the shares were sold by the original seller. The transaction is expected to close by December 31, 2023, at which time the cash paid at the time of the acquisition will also be returned.

On December 28, 2022, we entered into an agreement to transfer 90% of the equity interests in the Qiangsheng, Eurasia and Minkang hospitals to their former owners and will retain 10% of the equity interests in each hospital. As consideration for the transfer and pursuant to an amendment to the original stock purchase agreement, the original sellers agreed to return the 80,000 shares of Common Stock previously issued (reflecting the Reverse Splits) and RMB 20,000,000 (approximately $2,767,860) in cash previously paid upon the acquisition of the three hospitals. The former owner also agreed to release the Company from any and all claims relating to two earn out payments that were payable under the original purchase agreement. The Company received a put option to sell part or all of its 10% interest in each of the three hospitals to the former owner before December 31, 2032, based on a valuation determined by a reputable third-party appraisal firm jointly chosen by the parties. On December 9, 2022, 43,600 shares of Common Stock were returned to us and on September 1, 2023, 36,400 shares of Common Stock were returned to us. The transaction is expected to close by December 31, 2023, at which time the cash paid at the time of the acquisitions will also be returned.

The actions taken to dispose of the majority of our ownership interests in the Zhongshan, Qiangsheng, Eurasia and Minkang hospitals resulted in our classifying these hospitals as held for sale operations according to ASC 205-20 Presentation of Financial Statements – Discontinued Operation. As a result, all of the assets and liabilities of the Zhongshan, Qiangsheng, Eurasia and Minkang hospitals were reclassified as assets and liabilities of held for sale operations in the statement of position as of December 31, 2022 and September 30, 2023 and the results of the operation are presented under the line item net loss from held for sale operations for the nine months ended September 30, 2023. The Company also hired a third party to perform annual valuation report for these assets. The impairment adjustment was performed based on the valuation report for the year ended December 31, 2022 as well.

On September 10, 2021, we acquired Chongqing Zhuoda Pharmaceutical Co., Ltd. (“Zhuoda”), a company engaged in the distribution of medical devices and pharmaceuticals, based in Chongqing, the largest city in Southwest region of the PRC. ~~Zhuoda primarily distributes pharmaceuticals. The majority of its customers are private pharmaceutical manufacturers and pharmaceutical wholesale companies in the PRC.~~

In response to the poor performance of Zhuoda, whose operations were impacted by COVID-19, we entered into a sale and purchase agreement to sell Zhuoda back to the former owners. Pursuant to the agreement, we sold 100% of the equity interests in Zhuoda in consideration for the return of the 44,000 shares of Common Stock (reflecting the Reverse Splits), previously issued to the former owners of Zhuoda. The transaction closed effective November 23, 2022, when the 44,000 shares of Common Stock were returned to us.

On ~~December 20, 2021,~~July 5, 2022, we entered into a stock purchase agreement (as amended on February 27, 2023) with Mr. Fnu Oudom, the Chairman of our board of directors, whereby we agreed to acquire ~~Bengbu Mali OB-GYN Hospital Co., Ltd.~~100% of the equity interests in Phenix Bio Inc. (“~~Mali Hospital”~~Phenix”), a ~~private OB-GYN specialty hospital with 199 beds located~~distributor of dietary supplements in ~~Bengbu city~~consideration of $1,800,000. The transaction closed effective March 15, 2023. The aggregate purchase price for the equity interests in Phenix was (i) $180,000 in cash paid on July 7, 2022 and (ii) 270,000 shares of Common Stock (reflecting the Reverse Splits) which were issued on June 19, 2023, following our obtaining shareholder approval the transaction. We also agreed to issue 5,000,000 shares of Common Stock to Mr. Oudom if the aggregate net profit for Phenix is at least $2,500,000 in calendar 2023, or in any fiscal quarter in 2023. Such performance target was met in the ~~southeast region~~second quarter of 2023 and the People’s Republic of China. Mali Hospital has 148 employees, including 26 doctors, 52 nurses, 11 other medical staff members and 59 nonmedical staff members. The acquisition of Mali Hospital has not closed as of the date of this report due5,000,000 shares were issued to ~~delays caused by COVID-19 and other logistical issues.~~Mr. Oudom on December 6, 2023.

~~BUSINESS SEGMENTS~~RESTATEMENTS

~~The Company currently operates~~We are in ~~four reportable segments: retail pharmacy, wholesale pharmaceuticals, wholesale medical devices~~the process of restating our financial statements for year ended December 31, 2022 and ~~medical services. The wholesale pharmaceuticals segment includes supplying prescription~~the quarterly periods ended March 31, 2022, June 30, 2022, September 30, 2022 and ~~OTC medicines, TCM, healthcare supplies and sundry items~~March 31, 2023, to ~~clinics, third party pharmacies, hospitals, and~~correct errors identified in our prior financial statements. We have concluded that the restatements do not materially affect our liquidity or our compliance with debt covenants or 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 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.financial obligations.

~~The Company’s reportable business segments~~(1) We 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. The segments’ accounting policies are the same as those described in the ~~summary~~process of ~~significant accounting policies.~~restating the Consolidated Statements of Equity for the quarterly periods ended June 30, 2022 and September 30, 2022. The ~~Company’s chief operating decision maker (“CODM”), who is~~restatement relates to the ~~CEO~~stockholders’ equity and noncontrolling interests presented in the consolidated balance sheets, as of June 30, 2022 and September 30, 2022, which had been presented in the form of a reconciliation of the beginning balance to the ending balance for each period for which a consolidated statement of comprehensive income was required to be filed. We will provide reconciliations for the interim periods covered by the Consolidated Statement of Equity for the periods ended June 30, 2022 and September 30, 2022. This restatement should not have any effect on net income, per-share amount, or retained earnings and other components of equity or net assets for prior filing and current filing. We have concluded that the restatement does not materially affect our liquidity or our compliance with debt covenants or other financial obligations.

(2) On June 9, 2022, the Company ~~evaluates performance~~issued a $5 million subordinated promissory note, which was converted into 1,250,000 shares of ~~each segment based~~the Company’s Common Stock (post the December 2022 1 to 10 reverse split) on ~~profit~~July 18, 2022, upon obtaining shareholder approval for the transaction. We erroneously reflected the proceeds of the promissory note in the Consolidated Statements of Cash Flows as “Issuance of Common Stock” for the nine month period ended September 30, 2022. We failed to reflect this promissory note as a note payable as of September 30, 2022. As a result, we are in the process of restating our financial statements for the quarterly period ended September 30, 2022. This restatement did not effect our net income, per-share amounts, retained earnings or ~~loss from continuing operations~~other components of equity or net ~~of income tax.~~assets for prior filings and the current filing. We have concluded that the restatement does not materially affect our liquidity or our compliance with debt covenants or other financial obligations.

GOING CONCERN

~~As reflected in the accompanying unaudited condensed consolidated financial statements, the Company~~We incurred net losses of ~~$10,533,868~~$22,318,056, $34,921,745 and ~~$5,276,241 for~~$1,406,401 in the years ended December 31, 2022 and 2021 the nine months ended September 30, ~~2022,~~2023, respectively and ~~2021, respectively. As of September 30, 2022, the Company~~ had an accumulated deficit of ~~$58.4 million. In addition, the Company continues to generate operating losses and has limited cash flow from its continuing operations.~~$71,429,357 as of September 30, 2023. 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~~our stockholders or external ~~financing,~~financing. Management believes that our existing stockholders will provide the additional cash necessary to meet our obligations as they become due, and (2) ~~further~~that we will be able to implement ~~management’s~~our business plan to ~~extend its~~expand our company’s operations and generate sufficient revenues ~~and cash flow~~ to meet ~~its~~our obligations. While ~~the Company believes~~we believe in the viability of ~~its~~our strategy to increase sales volume and in ~~its~~our ability to raise additional funds, there can be no assurance to that effect, nor that our company will be successful in securing sufficient funds to sustain the ~~Company will succeed in either respect.~~operations.

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.

~~COVID-19~~

During late 2019, a virus now known as the novel coronavirus or “COVID-19” appeared in Wuhan, PRC. By March 11, 2020, the World Health Organization (“WHO”) labeled COVID-19 as a pandemic and many countries around the world began closing borders and making efforts to either shelter-in-place or quarantine its population. During the first quarter of 2020, the PRC placed a mandatory quarantine on certain areas, specifically in Wuhan located in Hubei Province, which lasted for more than two months.

Our company and all of its operations are located in the PRC. Since the pandemic broke out, our operations have been materially impacted. At the beginning of February 2020, the PRC 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. Not until the beginning of April did we start to have a small skeleton crew working in our office and were able to perform those functions that could not be handled remotely.

We have incurred additional costs to ensure we meet the needs of our customers, including providing additional cleaning materials for our stores and other facilities. COVID-19 has also caused supply chain disruption which has resulted in higher supply chain costs to replenish inventory in our stores and distribution centers. Furthermore, we have experienced restricted stock availability in a number of key categories which negatively impacted us. Certain popular and high profit margin products could not be sold due to governmental restrictive orders, which also resulted in the expiration of a large quantify of our medicines that are otherwise in high demand in the winter season. The customer traffic in our retail pharmacy stores in Dalian dropped greatly due to the pandemic. Because of the lockdown order that lasted for more than two months, we suffered reduced sales and an operating loss in the first three quarters in 2020. Although some of the businesses in China have resumed their daily activities while the pandemic is under control, there have been relapses in certain regions of the country which caused temporary lockdowns. If similar lockdown orders or sales restrictions are implemented by the government, they may have greater impact on our business.

We are closely monitoring the impact of the COVID-19 pandemic on all aspects of our business, including how it will impact our customers, employees, suppliers, vendors, business partners and distribution channels. The COVID-19 pandemic has created significant volatility, uncertainty and economic disruption, which will adversely affect our business operations and may materially and adversely affect our results of operations, cash flows and financial position. In addition to volatility in consumer demand and buying habits, we may restrict the operations of our stores or distribution facilities if we deem it necessary or if recommended or mandated by governmental authorities which would have a further adverse impact on us. For the nine months ended September 30, 2022, our revenue decreased by approximately $8 million compared to the same period in 2021, which decrease was attributable in part to the impact of COVID-19 as the PRC government’s strict control measures have continued in 2022 based on each city’s situation.

The extent to which the COVID-19 pandemic impacts us will depend on numerous evolving factors and future developments that we are not able to predict, including: the severity of the virus; the duration of the outbreak; governmental, business and other actions (which could include limitations on our operations or mandates to provide products or services); the promotion of social distancing and the adoption of shelter-in-place orders affecting foot traffic in stores; the impacts on our supply chain; the impact of the pandemic on economic activity; the extent and duration of the effect on consumer confidence and spending, customer demand and buying patterns including spend on discretionary categories; the health of and the effect on our workforce and our ability to meet staffing needs in our stores, hospitals, wholesale operations and other critical functions, particularly if members of our work force are quarantined as a result of exposure; any impairment in value of our tangible or intangible assets which could be recorded as a result of a weaker economic conditions; and the potential effects on our internal controls including those over financial reporting as a result of changes in working environments such as shelter-in-place and similar orders that are applicable to our team members and business partners, among others. In addition, if the pandemic continues to create disruptions or turmoil in the credit or financial markets, it could adversely affect our ability to access capital on favorable terms and continue to meet our liquidity needs, all of which are highly uncertain and cannot be predicted. We cannot make any assurances that COVID-19 will not reappear with new infections and to the extent that COVID-19, or another virus appears, we may encounter prolonged operational lockdown measures which would disrupt our business operations.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

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.

●	Use of estimates

The preparation of our 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 for inventory obsolescence, 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.

●

Accounts receivable and allowance for doubtful accounts

Accounts ~~receivable~~receivables 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~~creditworthiness 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~~We do not have any off-balance-sheet credit exposure related to ~~its~~our customers. ~~As of September 30, 2022, and December 31, 2021, the allowance for doubtful accounts was $288,767 and $322,145, 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 will 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 September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, the allowance for doubtful accounts were ~~$Nil.~~Nil.

●

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 September 30, ~~2022,~~2023 and December 31, ~~2021,~~2022, the Company recorded an allowance for obsolete inventories, which mainly consists of expired medicine, of ~~$92,655~~$26,775 and ~~$103,178,~~$27,602, respectively.

●

Property, plant, and equipment

Items	Expected useful lives	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	%
Leasehold ~~Improvements~~Improvement	Shorter of lease term or useful life		5	%

●	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

useful
~~useful~~ lives

Software

10 years

●	Leases

On January 1, 2020, we adopted Accounting Standards Update (“ASU”) 2016-02. For all leases that were entered into prior to the effective date of ASC 842, we elected to apply the package of practical expedients. Based on this guidance, we did not reassess the following: (1) whether any expired or existing contracts are or contain leases; (2) the lease classification for any expired or existing leases; and (3) initial direct costs for any existing leases.

We determine 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 our 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 our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred. The terms may include options to extend or terminate the lease when it is reasonably certain that we 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~~consideration paid of an acquisition over the fair value of the net identifiable assets of the acquired subsidiary at the date of acquisition. Goodwill is not amortized, and is tested for impairment at least annually, more often when circumstances indicate impairment may have occurred. Goodwill is carried at cost less accumulated impairment losses. If impairment exists, goodwill is immediately written off to its fair value and the loss is recognized in the consolidated statements of operations and comprehensive loss. Impairment losses on goodwill are not reversed.

The Company reviews the carrying value of intangible assets not subject to amortization, including goodwill, to determine whether impairment may exist annually or more frequently if events and circumstances indicate that it is more likely than not that an impairment has occurred. The Company has the option to assess qualitative factors to determine whether it is necessary to perform the two-step in accordance with ASC 350-20. If the Company believes, as a result of the qualitative carrying amount, the two-step quantities impairment test described below is required.

The first step compares the fair value of each reporting unit to its carrying amount, including goodwill. If the fair value of each reporting unit exceeds its carrying amount, goodwill is not considered to be impaired and the second step will not be required.

If the carrying amount of a reporting unit exceeds its fair value, the second step compares the implied fair value of goodwill to the carrying value of a reporting unit’s goodwill. The implied fair value of goodwill is determined in a manner similar to accounting for a business acquisition with the allocation of the assessed fair value determined in the first step to the assets and liabilities of the reporting unit. The excess of the fair value of the reporting unit over the amounts assigned to the assets and liabilities is the implied fair value of goodwill. Estimating fair value is performed by utilizing various valuation techniques, with the ~~assets acquired~~primary technique being a discounted cash flow. The fair value of discounted cash flow is determined using management’s estimates 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.~~assumptions.

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.54

~~The Company identified reporting units at the lowest level within the entity at which goodwill is monitored for internal management purposes.~~ Management ~~evaluated~~evaluates the recoverability of goodwill, ~~by performing~~with the assistance of a ~~qualitative assessment before using a two-step impairment test approach at the reporting unit level.~~third-party evaluation firm. If ~~the Company reorganizes its~~we reorganize our reporting structure in a manner that ~~will~~ changes the composition of one or more of ~~its~~our reporting units, goodwill iswill be reassigned based on the relative fair value of each of the affected reporting units.

As of September 30, 2023 and December 31, 2022, the Company recorded impairments for goodwill of Nil and $5,385,811, respectively.

As a result of the impairments recognized on December 31, 2022, the remaining goodwill of the Company was related to the acquisitions of Guanzan and Zhongshan. The remaining goodwill of Guanzan was $1,392,449 and the remaining goodwill of Zhongshan was $673,217 as of December 31, 2022 and September 30, 2023. As of September 30, 2023, the fair value of these businesses was at risk for future goodwill impairments, based on the continuation of negative macroeconomic conditions, which could represent potential indicators of impairment requiring further impairment analysis in 2023. The Company continues to monitor for potential impairment should impairment indicators arise.

●	Impairment of long-lived assets and intangibles

●	Revenue recognition

We adopted Accounting Standard Codification (“ASC”) Topic 606, Revenues from Contract with Customers (“ASC 606”) for all periods ~~presented.~~presented with respect to each of our segments. Under ASC 606, revenue is recognized when control of the promised goods and services is transferred to the Company’s customers, which applied to retail pharmacy, medical device wholesale, drugs wholesale, healthcare products sales and medical service as well, 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.

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~~

~~The primary sources of the Group’s revenues are as follows:~~

~~(1)~~

~~Pharmacy retail sales~~

The physical pharmacies sell prescription drugs, over-the-counter (“OTC”) drugs, nutritional supplements, health foods, sundry products and medical devices. Revenue from sales of prescription medicine at drugstores is recognized when the prescription is filled, and the customer picks up and pays for the prescription. Revenue from sales of other merchandise at drugstores is recognized at the point of sale, which is when a customer pays for and receives the merchandise. Usually the majority merchandise, such as prescription and OTC drugs, are not refundable after the customers leave the counter. Returns of other products, such as sundry products, are minimal. Sales of drugs reimbursed by the local government medical insurance agency and receivables from the agency are recognized when a customer pays for the drugs at a store. The Company based on historical experience, a reserve for potential losses from denial of reimbursement on certain unqualified drugs is made to the receivables from the government agency.

~~(2)~~

~~Wholesale medical device~~

The Group sales of wholesale medical device mainly through Guanzan, The medical device business primarily involves purchasing wholesale medical device from the suppliers and then selling to customers. Upon obtaining purchase orders, the Company instructs warehouse agent to transfer ownership of products to customers. The transaction is normally completed within a short period of time, ranging from a few days to a month. The Company recognizes revenue from product sales when obligations under the terms of a contract with the customer are satisfied; generally, this occurs with the transfer of control of the goods to customers.

~~(3)~~

~~Wholesale pharmaceuticals~~

The Group sales of wholesale pharmaceuticals mainly through Shude, Pusheng and Zhuoda. The wholesale pharmaceuticals business primarily involves purchasing wholesale pharmaceuticals from the suppliers and then selling to customers. Upon obtaining purchase orders, the Company instructs warehouse agent to transfer ownership of products to customers. The transaction is normally completed within a short period of time, ranging from a few days to a month. The Company recognizes revenue from product sales when obligations under the terms of a contract with the customer are satisfied; generally, this occurs with the transfer of control of the goods to customers.

~~(4)~~

~~Medical services~~

The Company provides medical services through Guoyitang hospital, Zhongshan hospital, Qiangsheng hospital, Eurasia hospital and Mingkang hospital. Revenue from ancillary medical services is recognized when the related services have been rendered and includes outpatient and inpatient services.

For outpatient services, the patient normally receives outpatient treatment which contains various treatment components. Outpatient services contain more than one performance obligations, including (i) provision of consultation services and (ii) sale of pharmaceutical products. The Group allocates the transaction price to each performance obligation on relative stand-alone selling price basis. Both (i) provision of consultation services and (ii) sale of pharmaceutical products for which the control of services or pharmaceutical products is transferred at a point in time, revenue is recognized when the customer obtains the control of the completed services or pharmaceutical products, and the Group has satisfied its performance obligations with present right to payment and the collection of the consideration is probable.

For inpatient services, the customers normally receive inpatient treatment which contains various treatment components. Inpatient services contain more than one performance obligations, including (i) sale of pharmaceutical products and (ii) provision of inpatient healthcare services. The Group allocates the transaction price to each performance obligation on a relative stand-alone selling price basis.

For revenue from (i) sale of pharmaceutical products for which control of services or pharmaceutical products is transferred at a point in time, revenue is recognized when the customer obtains the control of the completed services or pharmaceutical products, and the Group has satisfied its performance obligations with present right to payment and the collection of the consideration is probable.

For revenue from (ii) provision of inpatient healthcare services, the corresponding revenue is recognized over the service period when customers simultaneously receive the services and consumes the benefits provided by the Group’s performance as the Group performs.authorities.

●	Businesses Held for Sale

In late 2022, we committed to a plan to dispose of the Zhongshan, Minkang, Eurasia, and Qiangsheng hospitals.

On December 28, 2022, we entered into an agreement to transfer 87% of the equity interests in Zhongshan to the prior owner and will retain 13% of the equity interests in Zhongshan. As consideration for the transfer and pursuant to an amendment to the original stock purchase agreement, the original seller agreed to return the 40,037 shares of Common Stock previously issued (reflecting the Reverse Splits) and RMB 40,000,000 in cash (approximately ($6,116,207) previously paid upon the acquisition of Zhongshan. The former owner also agreed to release the Company from any and all claims relating to two earn out payments that were payable under the original purchase agreement. The Company received a put option to sell part or all of its 13% interest in Zhongshan before December 31, 2032, based on a valuation determined by a reputable third-party appraisal firm jointly chosen by the two parties. On September 1, 2023, 39,037 shares of Common Stock were returned to us. The remaining 1,000 shares were returned in the form of cash because the shares were sold by the original seller. The transaction is expected to close by December 31, 2023, at which time the cash paid at the time of the acquisition will also be returned.

On December 28, 2022, we entered into an agreement to transfer 90% of the equity interests in the Qiangsheng, Eurasia and Minkang hospitals to their former owners and retain 10% of the equity interests in each hospital. As consideration for the transfer and pursuant to an amendment to the original stock purchase agreement, the original sellers agreed to return the 80,000 shares of Common Stock previously issued (reflecting the Reverse Splits) and RMB 20,000,000 (approximately $2,767,860) in cash previously paid upon the acquisition of the three hospitals. The former owner also agreed to release the Company from any and all claims relating to two earn out payments that were payable under the original purchase agreement. The Company received a put option to sell part or all of its 10% interest in each of the three hospitals to the former owner before December 31, 2032, based on a valuation determined by a reputable third-party appraisal firm jointly chosen by the parties. On December 9, 2022, 43,600 shares of Common Stock were returned to the us and on September 1, 2023, 36,400 shares of Common Stock were returned to us. The transaction is expected to close by December 31, 2023, at which time the cash paid at the time of the acquisitions will also be returned.

The Company determined that the plan and the subsequent actions taken to dispose of the four hospitals qualified as a held for sale operation under the criteria set forth in the ASC 205-20 Presentation of Financial Statements – Discontinued Operation.

●	Discontinued operations

On December 28, 2022, we entered into an agreement to transfer 90% of the equity interests in the Qiangsheng, Eurasia and Minkang hospitals to their former owners and retain 10% of the equity interests in each hospital. As consideration for the transfer and pursuant to an amendment to the original stock purchase agreement, the original sellers agreed to return the 80,000 shares of Common Stock previously issued (reflecting Two Reverse Splits) and RMB 20,000,000 (approximately $2,767,860) in cash previously paid upon the acquisition of the three hospitals. The former owner also agreed to release the Company from any and all claims relating to two earn out payments that were payable under the original purchase agreement. The Company received a put option to sell part or all of its 10% interest in each of the three hospitals to the former owner before December 31, 2032, based on a valuation determined by a reputable third-party appraisal firm jointly chosen by the parties. On December 9, 2022, 43,600 shares of Common Stock were returned to us and on September 1, 2023, 36,400 shares of Common Stock were returned to us. The transaction is expected to close by December 31, 2023, at which time the cash paid at the time of the acquisitions will also be returned.

On October 19, 2022, we entered into an agreement to sell Zhuoda to its former owners. Pursuant to the agreement, we agreed to sell 100% of the equity interests in Zhuoda that we previously purchased for 44,000 shares of Common Stock. The transaction closed in November 2022.

●	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.

●	Debt issuance costs and debt discounts

The Company may record debt issuance costs and/or debt discounts in connection with raising funds through the issuance of debt. These costs may be paid in the form of cash, or equity (such as warrants). These costs are amortized through the maturity of the debt. If a conversion of the underlying debt occurs prior to maturity a proportionate share of the unamortized amounts is immediately expensed.

●	Beneficial conversion feature

We evaluate the conversion feature of the convertible debt that we issue to determine whether it was beneficial as described in ASC 470-20. The intrinsic value of a beneficial conversion feature inherent to a convertible note payable, which is not bifurcated and accounted for separately from the convertible notes payable and may not be settled in cash upon conversion, is treated as a discount to the convertible notes payable. This discount is amortized over the period from the date of issuance to the date the notes is due using the effective interest method. If the notes payable are retired prior to the end of their contractual term, the unamortized discount is expensed in the period of retirement to interest expense. In general, the beneficial conversion feature is measured by comparing the effective conversion price, after considering the relative fair value of detachable instruments included in the financing transaction, if any, to the fair value of the shares of Common Stock at the commitment date to be received upon conversion.

●	Derivative instruments

We enter 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 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. 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.~~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~~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~~Common Stock and decreases in trading fair value during a given financial quarter result in the application of non-cash derivative income.

●	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 ~~the Company’s~~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 nine months ended September 30, ~~2022~~2023, the Company operated in four reportable segments: retail pharmacy, wholesale pharmaceuticals, wholesale medical devices and healthcare products. For the nine months ended September 30, 2022, the Company operated in four reportable segments: wholesale medical devices, wholesale pharmaceuticals, ~~and~~ medical services, and retail pharmacies.

The Company’s operating 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. The segments’ accounting policies are the same as those described in the ~~PRC.~~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.

●	Recent accounting pronouncements

~~Other accounting standards that have been issued or proposed by~~In October 2021, the FASB ~~or other standards-setting bodies~~issued ASU No. 2021-08, “‘Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers” (“ASU 2021-08”). This ASU requires entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination. The amendments improve comparability after the business combination by providing consistent recognition and measurement guidance for revenue contracts with customers acquired in a business combination and revenue contracts with customers not acquired in a business combination. The amendments are effective for the Company beginning after December 15, 2023, and are applied prospectively to business combinations that dooccur after the effective date. The Company does not ~~require~~expect the adoption ~~until a future date are not expected to~~of ASU 2021-04 will have a material ~~impact~~effect on the ~~Company’s~~ consolidated financial ~~statements upon adoption.~~statements.

~~2022 Developments~~RECENT DEVELOPMENTS

On ~~January 7, 2022, we issued 600,000 shares of Common Stock as the initial consideration for the acquisition of Mali.~~

~~On January 24, 2022, we issued 1,000,000 shares of Common Stock as the salary for Mr. Tiewei Song.~~

On January 27, 2022, we entered into an employment agreement with Mr. Xiaping Wang for a term of one (1) year, effective January 1, 2022. Under the agreement, Mr. Wang’s compensation will consist of an annual salary of $500,000 in cash and stock compensation of 500,000 shares of our Common Stock. We issued 500,000 shares of our Common Stock to Mr. Wang on February 1, 2022.

~~On February 1, 2022, we issued 50,000 shares of our Common Stock to a consultant as payment for legal consulting services.~~

On February 1, 2022, we entered into an Amendment and Settlement Agreement to amend the Stock Purchase Agreement relating to the acquisition of the Zhongshan hospital. The amendment reduced post-closing performance targets and payments and settled certain payments as a result of such amendment. Pursuant to the amendment, the purchase price was retroactively reduced by 50% from RMB 120,000,000 (currently approximately $18,864,957) to RMB 60,000,000 (currently approximately $9,432,479), the closing cash payment was retroactively reduced from RMB 40,000,000 to nil and the deferred closing stock payment was retroactively reduced from 400,000 shares of our Common Stock to 200,000 shares of Common Stock. The 2021 revenue target was also reduced by 50% from RMB 30,000,000 to RMB 15,000,000, the 2021 profit target was reduced from RMB 5,000,000 to RMB 2,500,000, the 2022 revenue target was reduced from RMB 33,000,000 to RMB 16,500,000 and the 2022 profit target was reduced from RMB 5,500,000 to RMB 2,750,000. The parties agreed that immediately after the signing of the amendment, the seller of Zhongshan hospital will execute and deliver all documents as requested by us in order to cause the return of 200,000 shares of our Common Stock on a post reverse split basis and that prior to December 31, 2022, the seller will return RMB 40,000,000 (approximately $5,618,135 ) to us in cash.

~~On February 2, 2022, we announced a 1-for-5 reverse split of our Common Stock, which began to trade on Nasdaq Capital Market on February 3, 2022 on a split adjusted basis.~~

~~On June 9,~~July 5, 2022, we entered into a stock purchase agreement (as amended on February 27, 2023) with ~~the Chairman~~Mr. Oudom, whereby we agreed to acquire 100% of the Board of the Company, Mr. Fnu Oudom, whereby Mr. Oudom agreed to purchase 12,500,000 shares of Common Stock for $5 million, or $0.40 per share (the “Chairman’s Shares”), subject to the approval of the stockholders of the Company. The purchase price per share reflects a 9% discount to the five-day average closing price of the Common Stock on NASDAQ before signing the SPA (the closing price of the Common Stock on Nasdaq on such date was $0.52). On June 9, 2022, Mr. Oudom provided the Company with $5 million as interim financingequity interests in consideration for the issuance of a $5 million subordinated promissory note (the “Chairman’s Note”), bearing no interest, which will become due and payable immediately if the sale of the Chairman’s Shares is not approved by the Company’s stockholders. The Company expects to seek stockholder approval of the sale at the upcoming annual meeting of stockholders. If approved and the Chairman’s Shares are issued, all obligations under the Chairman’s Note will have been performed and discharged in full without any payment of interest. The Company has no obligation to file a registration statement with the SEC for the resale of the Chairman’s Shares.

~~On July 5, 2022, the Company entered into a stock purchase agreement to acquire~~ Phenix Bio Inc. (“Phenix”), a ~~California based corporation that will distribute~~distributor of healthcare products, from Mr. Fnu Oudom, Chairman of the board of directors of the Company. Phenix is currently in the process of securing exclusive distribution rights for nine healthcare products to be developed by a third party that will target general recovery, cardiovascular and cerebrovascular disease prevention, male health care, female health care, and memory enhancementproducts. The transaction closed effective March 15, 2023. The aggregate purchase price for the ~~elderly. The products are to be sold by sub-distributors in various territories.~~

~~The Company agreed to purchase all the issued and outstanding~~ equity interests in Phenix ~~from Mr. Oudom~~was $180,000 in ~~consideration of $1,800,000. At the closing, the Company~~cash, which has been paid, $180,000 as a down payment, that was accounted for as a security deposit for the purchase of Phenix. The balance of the purchase price in the amount of $1,620,000 will be paid by the Company in the form of 2,700,000plus up to 5,270,000 shares of the Company’s Common Stock (,(reflecting the ~~value~~Reverse Splits), of which 270,000 shares were issued on June 19, 2023 and the ~~parties agreed to~~balance of 5,000,000 shares will be ~~$1,620,000, or $0.60 per share, as a deferred payment’, fifteen (15) days after approval of~~issued if the ~~issuance of the shares~~aggregate net profit generated by ~~the stockholders of the Company. If the stockholders’ approval has not been received by December 31, 2022, the Company will pay outstanding $1,620,000~~Phenix is at least $2,500,000 in ~~cash by January 15,~~calendar year 2023 or ~~such earlier or later date as~~in any fiscal quarter of 2023. This milestone was reached in the ~~parties may agree. The per share price~~second quarter of 2023 and the 5,000,000 shares of Common Stock are expected to be issued ~~reflects a 8% discount~~ to the five-day average closing price of the Common Stock on NASDAQ before the agreement was entered into. The audit committee and the board of directors of the Company unanimously approved the Company’s entry into the SPA. The closing of the transaction is expected to take placeMr. Oudom in the fourth quarter of ~~2022.~~ 2023. Such performance target was met in the second quarter of 2023 and the 5,000,000 shares were issued to Mr. Oudom on December 6, 2023.

On October 19, 2022, the Company entered into a Sale and Purchase Agreement to sell its wholly-owned subsidiary, Chongqing Zhuoda Pharmaceutical Co., Ltd., a distributor of pharmaceuticals and biologicals located in the PRC to the three citizens of the PRC who previously sold Zhuoda to the Company.

Pursuant to the agreement, the Company will sell 100% of the equity interests in Zhuoda that Guanzan previously purchased for 440,000 shares of the Company’s common stock, which purchase price was subject to post-closing payments based on performance in 2022 and 2023. The 440,000 shares will be returned to the Company as the full consideration of the sale of Zhouda. In connection with the execution of the agreement, the parties also agreed to terminate the original agreement and that none of the parties will have any debt, obligation or liability to the original sellers in connection with or resulting from the earnout payment under the original agreement.

RESULTS OF OPERATIONS

Comparison of the nine months ended September 30, ~~2022~~2023 and ~~2021 of consolidated results of operations:~~2022:

	For the Nine Months Ended September 30,									Comparison
	2022			% of Revenues			2021			Amount increase (decrease)			Percentage increase (decrease)			For the Nine Months Ended September 30,									Comparison
																2023			% of Revenues			2022			Amount increase (decrease)			Percentage increase (decrease)
Revenues	$	17,261,951			100	%	$	25,202,485		$	(7,940,534	)		(32	)%	$	11,278,496			100	%	$	10,476,224	*	$	802,272			8	%
Cost of revenues		12,993,304			75	%		20,616,279			(7,622,975	)		(37	)%		6,589,020			58	%		8,928,138	*		(2,339,118	)		(26	)%
Gross profit		4,268,647			25	%		4,586,206			(317,559	)		(7	)%		4,689,476			42	%		1,548,086	*		3,141,390			203	%
Operating expenses		12,196,369			70	%		9,522,372			2,673,997			28	%		5,884,629			52	%		8,877,097	*		(2,992,468	)		(34	)%
Other expenses, net		(2,643,119	)		(15	)%		(302,142	)		(2,340,977	)		775	%
Loss before income tax		(10,570,841	)		(60	)%		(5,238,308	)		(5,332,533	)		102	%
Other income (expenses), net																	48,572			0	%		(4,879,435	)*		4,928,007			(101	)%
Income (loss) before income tax																	(1,146,581	)		(10	)%		(12,208,446	)*		11,061,865			(91	)%
Income tax expense		30,216			0	%		37,933			(7,717	)		(20	)%		-			0	%		6,202			(6,202	)		(100	)%
Net loss		(10,601,057	)		(60	)%		(5,276,241	)		(5,324,816	)		101	%
Net income (loss) from continuing operations																	(1,146,581	)		(10	)%		(12,214,648	)*		11,068,067			(91	)%
Income (loss) from operations of discontinued operations																	(259,820	)		(2	)%		(957,203	)*		697,383			(73	)%
Less: non-controlling interest		(3,948	)		0	%		36,417			(40,365	)		(111	)%		(120,830	)		(1	)%		(3,948	)		(116,882	)		2961	%
Net Loss attributable to BIMI International Medical Inc.	$	(10,597,109	)		(60	)%	$	(5,312,658	)	$	(5,284,451	)		99	%
Net income (loss) attributable to BIMI International Medical Inc.																$	(1,285,571	)		(11	)%	$	(13,167,903	)*	$	11,882,332			(90	)%

●

Restated

Revenues

Revenues for the nine months ended September 30, 2023 and 2022 were $11,278,496 and ~~2021 were $17,261,951 and $25,202,485,~~$10,476,224, respectively. The revenues for the nine months ended September 30, ~~2022~~2023, were primarily attributable to sales of healthcare products by Phenix, which we acquired on March 15, 2023 and the revenues from the wholesale sales of ~~pharmaceuticals and~~ medical devices and ~~from medical services provided by hospitals purchased during the first three quarters in 2022.~~drugs. Compared with the same period in ~~2021,~~2022, revenue ~~decreased $7,940,534, mainly~~increased by $802,272, due to the ~~$5,866,363 decrease in sales~~inclusion of ~~pharmaceuticals,~~ the ~~$2,411,815 decline in medical services~~ revenues ~~offset in part by~~of Phenix. The revenues of the ~~$879,775 increase in medical devices revenues~~Zhongshan, Qiangsheng, Eurasia and ~~the $243,537 increase in pharmacy retail revenues.~~Minkang hospitals, that were held for sale, were accounted for separately.

Revenues from retail pharmacy segment for the nine months ended September 30, 2022 were $618,582, generated from four retail pharmacy stores in Chongqing. Revenues from retail pharmacy segment for the nine months ended September 30, 2021 were $ 375,045 which were generated from five retail pharmacy stores in Chongqing. The growth in the retail pharmacy segment in nine month ended September 30, 2022 was from the sales of Covid-19 related pharmacy products. With the loosened local Covid-19 restrictions, customers purchase Covid-19 related products for at home use, which resulted in the increase in sales.

Revenues from ~~the~~ wholesale medical devices segment for the nine months ended September 30, 2023 and 2022 were $1,399,622 and ~~2021 were~~ $3,404,533 ~~and $ 2,524,777,~~ respectively. The ~~increase is mainly due~~revenues declined as a result of our switch to ~~the high demand for medical devices during~~online sales in the first three ~~quarter.~~quarters in 2023 in an effort to improve our margins.

Revenues from the wholesale pharmaceuticals segment for the nine months ended September 30, 2023 and 2022 were $4,091,937 and ~~2021 were $8,956,141 and $14,978,955~~$6,453,109 respectively. The ~~main reason for the decrease in~~revenues declined as a result of our switch to online sales in the ~~2022 period was the change~~first three quarters in 2023 in an effort to improve our customer base, 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. Covid-19 and the local lockdown policy also had an adverse effect on our wholesale pharmaceutical business during the second quarter of 2022.margins.

Revenues from ~~the medical services~~retail pharmacy segment for the nine months ended September 30, 2023 and 2022 of $467,280 and ~~2021~~$618,582, respectively, were ~~$4,282,695 and $6,694,510, respectively.~~generated by our retail pharmacy stores in Chongqing. The decrease in the retail pharmacy segment in nine month ended September 30, 2023 was attributable to the decrease of Covid-19 related pharmacy products.

Revenues from the newly acquired healthcare products segment for the nine months ended September 30, 2023, were $5,319,657. These revenues reflect the revenues generated by ~~the Guoyitang and Zhongshan hospitals~~Phenix, which was acquired ~~in February 2021 and the Minkang, Eurasia and Qiangsheng hospitals acquired in May 2021. The decrease in revenues~~on March 15, 2023. Revenues in the ~~nine months ended September 30, 2022 was due~~third quarter were limited as the Company’s sole distributor continued to ~~fewer patient visits during~~make sales out of inventory. The Company has entered into additional distribution agreements and expects that revenues will grow in the ~~period resulting from the continued impact of Covid-19 and the reduced availability of doctors and nurses in our hospitals.~~fourth quarter.

Cost of revenues

Cost of revenues for the nine months ended September 30, 2023 and 2022 were $6,589,020 and ~~2021 were $12,993,304 and $20,616,279,~~$8,928,138, respectively. The decrease principally reflected the ~~impact~~decrease in the costs associated with the operations of the ~~reduced~~Guanzan Group as it switched to online sales ~~of our wholesale pharmaceuticals segment~~ and ~~reduced operations of our medical services segment.~~

~~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 nine months ended September 30, 2022 and 2021,~~low cost of revenues of our retail pharmacy segment were $72,834 and $295,059, respectively. The decrease in the cost of revenues was a result of the decrease in sales of medical devices and the receipt of significant discounts on Covid-19 related pharmaceuticals in the nine months ended September 30, 2022.associated with Phenix’s products.

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 nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, the cost of revenues of our wholesale medical devices segment ~~was~~were $1,464,530 and $2,923,017, ~~and $ 1,831,089.~~respectively. The ~~increase~~decrease is mainly ~~attributable~~due to the ~~increase~~decrease in ~~sales~~revenue in the current nine months ~~ended September 30,~~period compared to the same period in 2022. During the first three quarters of 2023, the demand for medical devices decreased as a result of the decreasing impact of Covid-19.

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 nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, the cost of revenues of our wholesale pharmaceuticals segment were ~~$8,035,938~~$3,877,363 and ~~$ 14,598,512,~~$5,923,629, respectively. The decrease is mainly due to the decrease in ~~sales~~the revenue in the current nine months ~~ended September 30,~~period compared to the same period in 2022.

Cost of revenues of our ~~medical services~~retail pharmacy segment consists primarily of the cost of ~~medicine, doctor~~the pharmaceuticals, medical devices, and ~~nurses’ salaries and rental expenses.~~other products that we sell to customers. For the nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, the cost of revenues of ~~the medical services~~our retail pharmacy segment were ~~$ 1,950,611~~$28,182 and ~~$ 3,334,306,~~$72,834, respectively. ~~The majority of the decrease was attributable to a decrease in doctor and nurses’ salaries in~~During the nine months ended September 30, ~~2022. In addition, there was a reduction in over-time payments and use~~2023, the demand for retail pharmacy decreased with the decreasing impact of ~~seasonal part time employees, which contributed to the decrease in the overall cost of revenues in the medical services segment.~~Covid-19.

Cost of revenues of our healthcare products segment primarily consists of our purchase of raw material and the costs associated with the production of our products by third-party manufacturers. For the nine months ended September 30, 2023, the cost of revenues of our newly acquired healthcare products segment was $1,213,495.

Gross profit (loss)

For the nine months ended September 30, 2023 and 2022, we achieved gross margins of 42% and ~~2021, we had a gross margin of 25% and 18%~~15%, respectively. For the nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, the gross profit ~~margins~~margin(s) of our:

(i) retail pharmacy segment were ~~88.2%~~93.97% and ~~21.3%~~88.23%, ~~respectively;~~ respectively. In 2022, due to Covid-19, there was very little activity in the retail pharmacy business, while in 2023, the market bounced back causing an increase in the gross margin;

(ii) wholesale medical devices segment were ~~14.1%~~(4.64)% and ~~27.5%~~14.14%, ~~respectively;~~ respectively. In 2022, due to increased market demand, the margin for medical devices increased, while in 2023, with the decline of Covid-19, the demand decreased causing a decrease in the gross margin;

(iii) wholesale pharmaceuticals segment were ~~11.4%~~5.24% and ~~2.5%; respectively, and (iv) medical services segment were 54.5% and 50.2%~~8.21%, respectively. In 2022, due to increased market demand, the margin for pharmaceuticals increased, while in 2023, with the decline of Covid-19, the demand decreased causing a decrease in the gross margin; and

(iv) healthcare products segment was 77.19% in the nine months ended September 30, 2023, reflecting the high gross margin of this new activity.

Operating expenses

Operating expenses consist mainly of general and administrative expenses including auditing and legal service fees, other professional service fees ~~directors’ and officers’ compensation expenses, meeting~~ and promotional expenses. Also included in operating expenses ~~changes in fair value of derivative liabilities, depreciation and amortization of items not associated with production, office rental fee and utilities.~~are any impairment charges.

Operating expenses ~~from continuing operations~~ were ~~$12,196,369~~$5,884,629 for the nine months ended September 30, ~~2022~~2023, as compared to ~~$9,522,372~~$8,877,097 for the same period in ~~2021, an increase~~2022, a decrease of ~~$2,673,997~~$2,992,468, or ~~28%~~34%. ~~The $2.7 million increase was due~~Operating expenses for the nine months ended September 30, 2023, consisted mainly of general and administrative expenses of $5,220,553 and selling expenses in the amount of $664,076 as compared to general and administrative expenses of $7,924,995 and selling expenses in the ~~payments to our CEO and COO in shares~~amount of ~~our Common Stock during~~$952,102 for the nine months ended September 30, 2022. ~~No such stock payments were made in the same period in 2021.~~

~~Operating~~The decrease is primarily due to reduced salary expenses of the retail pharmacy segment for the nine months ended September 30, 2022 and 2021 were $373,744 and $547,159, respectively. The decrease in operating expense was primarily attributable to a decrease in salaries, which resulted from reduced over-time payments and use of seasonal part time employees and the reduced number of storesour executive officers in the nine months ended September 30, ~~2022.~~2023 as the employment agreements with two executive officers were not renewed for 2023. We did not renew the employment agreement with our COO and stopped incurring salary expenses for the COO position as of January 1, 2023. We did not renew the employment agreement with our interim CFO but continued her employment as interim CFO at a reduced salary. The salary expense was reduced to $150,000 for our chief executive officer and $6,000 for our interim CFO in the period, as compared to $2.4 million in salary paid or accrued for the same period in 2022 for these officers.

Operating expenses of the wholesale medical devices segment for the nine months ended September 30, 2023 and 2022 were $214,584 and ~~2021 were~~ $436,227, ~~and $469,644,~~ respectively. The decrease in operating expenses was primarily attributable to a decrease in promotion expenses ~~as there was a higher demand for medical devices.~~and efforts to reduce expenses during the nine months ended September 30, 2023.

Operating expenses of the wholesale pharmaceuticals segment for the nine months ended September 30, 2023 and 2022 were $2,794,048 and ~~2021~~$637,795, respectively. The increase in operating expense was primarily attributable to an increase of $2.3 million in allowance for doubtful accounts due to long aging and low collectability.

Operating expenses of the retail pharmacy segment for the nine months ended September 30, 2023 and 2022 were ~~$1,278,165~~$402,167 and ~~$750,023,~~$373,744, respectively. The increase in operating expense was primarily attributable to an increase in salaries and other expenses, which resulted from increased over-time payments as ~~new business development teams were hired~~the economy returned to ~~develop relationships with larger wholesale pharmaceutical companies.~~normal and retail store hours increased in the nine months ended September 30, 2023.

Operating expenses of ~~medical services~~the healthcare products segment for the nine months ended September 30, ~~2022~~2023, amounted to $364,001, consisting solely of general and 2021 were $2,281,159 and $1,136,316, respectively. The increase in operating expenses was attributable to the increase in advertising and business development expense for $0.8 million- and third-party consulting fees of $0.2 million in the nine months ended September 30, 2022.administrative expenses.

Other ~~expenses~~income (expenses)

For the nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, we reported other income (expense) of $48,572 and ($4,879,435), respectively. The other income of $48,572 mainly consisted of the gain on disposition of three former subsidiaries (Xinrongxin, Liaoning Boyi and Dalian Boyi) in the amount of $304,840, whose net assets were negative $304,840, the payment of taxes and overdue fines for previous years of $146,004 and interest expense of $105,407. Other expenses of ~~$2,643,119 and $302,142, respectively. For~~$4,879,435 for the nine months ended September 30, 2022 ~~such expenses primarily~~mainly consisted of the amortization of convertible notes in the amount of ~~$2,270,792 and $79,595~~$2,313,372, the accumulated application of ~~interest expenses relating~~Floor Amount Issuance with respect to the ~~bank debt incurred by our operating subsidiaries in the PRC.~~convertible notes of $1,799,671 and interest expense of $131,756.

~~For~~Net loss from continuing operations

Net loss from continuing operations was $1,146,581 for the nine months ended September 30, ~~2021, we had $302,142~~2023, compared to a net loss of ~~other expenses, net that included $79,595~~$12,214,648 for the nine months ended September 30, 2022, a decrease of ~~other~~$11,068,067, which was primarily due to the decrease in cost of revenues, general and administrative expenses and ~~$222,547 of interest expenses from~~our recording other income for the ~~bank debt of the Guanzan Group and the Guoyitang and Zhongshan hospitals.~~nine months ended September 30, 2023.

~~Net loss~~Loss from discontinued operations

As a result of the ~~foregoing, our~~disposition of Zhuoda and its Qianmei subsidiary their businesses were recorded as discontinued operations in accordance with ASC 205-20 Presentation of Financial Statements – Discontinued Operation and the results of the operations of the Zhuoda and Qianmei are presented under the line-item net loss ~~increased by $5,324,816 to $10,601,057~~from discontinued operations for the nine months ended September 30, ~~2022~~2023.

As a result of the plans to dispose of the Zhongshan, Qiangsheng, Eurasia and Minkang hospitals and the actions taken to fulfill the plans, the businesses of the four hospitals are recorded as held for sale in accordance with ASC 205-20 Presentation of Financial Statements – Discontinued Operation and the results of the operations of the Zhongshan, Qiangsheng, Eurasia and Minkang are presented under the line item net loss from ~~$5,276,241~~discontinued operations of held for sale businesses for the nine months ended September 30, ~~2021.~~2023. Loss from the discontinued operation was $259,820 for the nine months ended September 30, 2023, compared to $957,203 for the nine months ended September 30, 2022. The decrease is mainly due to the sharp decrease in salary expense.

Foreign currency translation

We reported a negative foreign currency translation adjustment of $1,156,789 for the nine months ended September 30, 2023, compared to a negative foreign currency translation adjustment of $1,367,407 for the nine months ended September 30, 2022. The decrease was due to the significant change in the currency exchange rate and our increased activities in the US.

LIQUIDITY AND CAPITAL RESOURCES

AtOn September 30, ~~2022,~~2023, we had cash of ~~$1,046,876~~$994,131 and positive working capital of $4,208,695 as compared to cash of $2,336,636 and negative working capital of ~~$1,515,001 as compared to cash of $4,797,849 and negative working capital of $932,493 at~~$326,672 on December 31, 2022.

In order to fund our operations, we have entered into a number equity and convertible debt transactions and borrowed funds from banks and individuals affiliated with our company and its subsidiaries in recent years.

Beginning on September 27, 2019, we sold $1,534,250 of convertible notes to various investors that matured during the period beginning September 27, 2020 and ending on March 13, 2021. Each of these notes was issued for a term of 12 months, carrying 6% annual interest rate and convertible into 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 these notes were converted into shares of Common Stock during the year ended December 31, 2020.

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 80% owned subsidiary, Shude, for RMB 100,000,000 (approximately $14,285,714) to be paid by the issuance of 19,000 shares of Common Stock (reflecting the Reverse Splits), and the cash payment of RMB 80,000,000 (approximately $11,428,571.) On March 18, 2020, we closed the Guanzan acquisition by delivering 19,000 shares of Common Stock. In addition, we assumed bank indebtedness of $1,135,884 in connection with the acquisition. On April 9, 2021, we increased our equity interest in Shude from 80% to 95.2% by making a direct capital investment of $4,892,293 in Shude.

On May 18, 2020, we entered into a securities purchase agreement (the “May SPA”) with two institutional investors (the “Institutional Investors”) to sell convertible notes having a face amount of up to $6,550,000 at an aggregate original issue discount of 19.85% (the “2020 Notes”) and ranking senior to all outstanding and future indebtedness of the Company. Pursuant to the May SPA, two 2020 Notes each in the face amount of $2,225,000 were issued to two Institutional Investors in consideration of the payment of $1,750,000 in cash for each 2020 Note. The 2020 Notes dodid not bear interest except upon the occurrence of an event of default. Each Institutional Investor also received a warrant ~~(each an~~(the “Institutional Investor 2020 Warrant”) to purchase ~~325,000~~32,500 shares of Common Stock at an initial exercise price of ~~$14.225~~$142.25 per share ~~(post-Split price (as defined below)~~(post the Reverse Splits and subject to the Event Market Price ~~Adjustment)~~Adjustment mechanism applicable to the 2020 Notes). The placement agent for the private placement received a warrant (the “Placement Agent 2020 Warrant”, together with the Institutional ~~Investor~~Investors 2020 ~~Warrants,~~Warrant, the “2020 Warrants”) to purchase up to 10% of the aggregate number of shares of Common Stock at an initial exercise price of $14.225 per share ~~(post-Split price~~(post the Reverse Splits and subject to ~~adjustment)~~the Event Market Price Adjustment), subject to increase based on the number of shares Common Stock issued pursuant to the 2020 Notes.

Pursuant to the May SPA, two 2020 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 2020 Note.

The May SPA, the 2020 Notes and the ~~2020 Warrants provide~~warrants provided that each and every reference to share prices, shares of Common Stock and any other numbers therein that relate to the Common Stock will be automatically adjusted for any stock splits, stock dividends, stock combinations, recapitalizations or other similar transactions that occur with respect to the Common Stock (each, a “Stock Combination Event”, and such date thereof, the “Stock Combination Event Date”) thereafter. The May SPA, the 2020 Notes and the 2020 Warrants further ~~provide~~provided that if after a Stock Combination Event, the Event Market Price is less than the conversion price (in the case of the Convertible Notes) or the exercise price (in the case of the warrants) then in effect (after giving effect to the above adjustments), then on the sixteenth (16th) trading day immediately following such Stock Combination Event Date, the conversion price or exercise then in effect on such sixteenth (16th) trading day (after giving effect to the above adjustments) will be reduced (but in no event increased) to the Event Market Price. “Event Market Price” means, with respect to any Stock Combination Event Date, the quotient determined by dividing (x) the sum of the dollar volume-weighted average price of the Common Stock for each of the five (5) trading days with the lowest dollar volume-weighted average price of the Common Stock during the fifteen (15) consecutive trading day period ending and including the trading day immediately preceding the sixteenth (16th) trading day after such Stock Combination Event Date, divided by (y) five (5). The price adjustment described in this paragraph is hereinafter referred to as the “Event Market Price Adjustment.”

The 2020 Notes, which matured on the eighteen-month anniversary of the issuance date, were payable in installments and ~~are~~were convertible at the election of the investors at the conversion price of ~~$12.95~~$129.5 per share (post-Split Price and subject to the Event Market Price Adjustment), subject to adjustment in the event of default. Each investor also received a warrant to purchase ~~130,000~~13,000 shares of Common Stock (post the Reverse Splits) at an initial exercise price of ~~$14.23~~$142.25 per share ~~(post-Split Price~~(post the Reverse Splits price and subject to the Event Market Price Adjustment). The placement agent for the private placement received a warrant to purchase up to ~~34,369~~3,437 shares of Common Stock (post the Reverse Splits) at an initial exercise price of ~~$14.23~~$142.25 per share ~~(post-Split Price~~(post the Reverse Splits price and subject to the Event Market Price Adjustment), 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 June 23, 2020, we completed the disposition of the NF Group, at which time we received $10 million from the buyer.

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 two Institutional Investors, together with the issuance of warrants to acquire an aggregate of ~~152,000~~15,200 shares of Common Stock (post the Reverse Splits) at an initial exercise price of ~~$14.23~~$142.25 per share ~~(post-Split Price~~(post the Reverse Splits price and subject to the Event Market Price Adjustment). The placement agent for the private placement received a warrant to purchase up to ~~34,749~~3,475 shares of our Common Stock (post Two Reverse Splits) at an initial exercise price of ~~$14.23~~$142.25 per share ~~post-Split Price~~(post the Reverse Splits price and ~~(subject~~subject to the Event Market Price Adjustment), subject to increase based on the number of shares of Common Stock issued pursuant to the Additional Notes.

On November 18, 2021, we entered into a securities purchase agreement (the “November SPA”) with the same two Institutional Investors to sell them a series of senior convertible notes (the “2021 Notes”) with an original issue discount of 20% and ranking senior to all outstanding and future indebtedness of the Company in a private placement. Each Institutional Investor paid $3,250,000 in cash for a 2021 Note in the face amount of $3,900,000. The November SPA also provided for the issuance of additional 2021 Notes in an aggregate original principal amount not to exceed $3,900,000 under certain circumstances. The November SPA also ~~contains~~contained provisions about the Market Event Price. The 2021 Notes, which were issued on November 22, 2021, ~~mature~~matured on the eighteen-month anniversary of the issuance date, ~~are~~were payable by the Company in installments and ~~are~~ convertible at the election of the Institutional Investors at the conversion price of ~~$3.25 (post-Split Price~~$32.5 (post the Reverse Splits price and subject to the Event Market Price Adjustment)~~, which is subject to adjustment in the event of default.~~. Each Institutional Investor also received a warrant ~~(each an~~(the “Institutional Investor 2021 Warrant”) to purchase ~~180,000~~18,000 shares of Common Stock (post Two Reverse Splits) at an initial exercise price of ~~$3.55~~$35.5 per share ~~(subject~~(post the Reverse Splits price and subject to the Event Market Price Adjustment). The placement agent for the private placement received a warrant (the “Placement Agent 2021 Warrant”, together with the Institutional Investor 2021 Warrants, the “2021 Warrants”) to purchase up to 8% of the aggregate number of shares of Common Stock at an initial exercise price of ~~$3.55~~$35.5 per share ~~(post-Split Price~~(post the Reverse Splits price and subject to the Event Market Price Adjustment), subject to increase based on the number of shares Common Stock issued pursuant to the 2021 Notes.

~~On February 1,~~As of December 31, 2022, ~~the Company entered into an Amendment and Settlement Agreement to amend the stock purchase agreement relating to the acquisition~~one of the ~~Zhongshan. The amendment reduced post-closing performance targets and payments and settled certain payments~~Institutional Investors had converted all of its 2021 Notes into shares of Common Stock while the other Institutional Investor held $3,000 of the 2021 Notes.

In 2022, one of the Institutional Investors received 275,000 shares of Common Stock having a then market value of $200,000 as a result of ~~such amendment. Pursuant to~~ the ~~amendment,~~application of the purchase price was retroactively reduced by 50% from RMB 120,000,000 (currently approximately $18,864,957) to RMB 60,000,000 (currently approximately $9,432,479), the closing cash payment was retroactively reduced from RMB 40,000,000 to nilFloor Amount Issuance and the ~~deferred closing stock payment was retroactively reduced from 400,000 shares of our Common Stock to 200,000~~other Institutional Investor received 1,234,715 shares of Common Stock. The 2021 revenue target was also reduced by 50% from RMB 30,000,000 to RMB 15,000,000, the 2021 profit target was reduced from RMB 5,000,000 to RMB 2,500,000, the 2022 revenue target was reduced from RMB 33,000,000 to RMB 16,500,000 and the 2022 profit target was reduced from RMB 5,500,000 to RMB 2,750,000.AsStock as a result of ~~the amendments, the parties agreed that immediately after the signing~~this conversion feature having a then market value of the amendment, the seller of Zhongshan hospital will execute and deliver all documents as requested by us in order to cause the return of 200,000 shares of our Common Stock and that prior to December 31, 2022, the seller will return RMB 40,000,000 (approximately $5,627,224) to us in cash.$493,886.

~~Our PRC operating subsidiaries have individually incurred debt in connection with their operations.~~

~~Short-term loans~~

~~Zhongshan borrowed $211,274 from Chaohu Yangzi Rural Commercial Bank~~In 2022, one of the institutional investors exercised 100,000 warrants on ~~July 27, 2022. The loan is due on July 27, 2023 with an interest rate~~a cashless exercise basis into 44,445 shares of ~~5.80%. Chongqing Guanzan Technology loan $690,160 from Postal Savings Bank~~Common Stock having a then market value of China from November 29,2021 to November 28,2022 at an interest rate of 5.4%. Shude borrowed $112,679 from China Minsheng Banking Corp. Ltd. on March 17, 2022, which was due on March 17, 2023 with interest of 6.2%. Zhuoda borrowed $42,255 from the Industrial and Commercial Bank of China on September 11, 2022, which is payable on ~~December 30~~, 2022 at an interest rate of 3.7%. Zhuoda borrowed $281,698 from the Construction Bank of China on July 8,2022, which is payable on November 30,2022 at an interest rate of 3.70%. Qianmei borrowed $44,564 from China Construction Bank on November 23, 2021, which is payable on November 23, 2022 at an interest rate of 3.85% rate.$100,000.

~~Long-term loans~~

~~For~~During the nine months ended September 30, 2023, 2,420 shares of Common Stock were issued to one Institutional Investor upon conversion of $3,000 of the 2021 Notes. In addition, 891,762 shares of Common Stock having a value of $1,105,785 were issued to the other Institutional Investor due to the application of the Floor Amount Issuance.

During the nine months ended September 30, 2023, 414,044 shares of Common Stock were issued to two institutional investors upon exercise of 1,160,000 warrants.

In order to stem the losses that were incurred by Zhuoda and the Zhongshan, Qiangsheng, Eurasia and Minkang hospitals in 2022 because of the impact of Covid-19, we entered into agreements to divest our ownership of Zhouda and ~~2021, interest expense on long-term loans amounted~~our controlling interests in the four hospitals. We have completed the disposition of Zhouda and expect to ~~$59,003~~complete the sales of the controlling interests in the Zhongshan, Qiangsheng, Eurasia and ~~$60,953 respectively. Chongqing Guanzan Technology borrowed $84,509 from We Bank on April 26,~~Minkang hospitals in the fourth quarter of 2023.

On July 18, 2022, ~~which is due March 26,2024 with~~we issued 1,250,000 shares of Common Stock (post the Reverse Splits) to our Chairman, Mr. Oudom, in consideration of the conversion of a $5 million promissory note after obtaining the approval of shareholders at the Company’s 2022 annual meeting of shareholders.

On December 6, 2022, we sold a convertible promissory note to Mr. Oudom, for $2 million. The note carried an annual interest rate of ~~9.45%. Guanzan borrowed $36,071 from Webank~~6%, which was payable together with the principal amount one year after issuance. Mr. Oudom had the right to convert the Note into our Common Stock at a conversion price of $4.00 per share (reflecting a 1-to-10 reverse stock split on December ~~26, 2020,~~9, 2022). The (post December 2022 reverse split) conversion price of $4.00 reflected a 60% premium on the closing price of the Common Stock on NASDAQ on the date of issuance, which ~~is due on December 26, 2022 with~~was $0.25. On February 27, 2023, we and Mr. Oudom entered into an agreement whereby we agreed that we would exercise our prepayment right under the Note by issuing shares of Common Stock. In consideration of Mr. Oudom’s agreement to convert the Note into shares of Common Stock and to waive his right to any and all interest accrued and to be accrued under the Note, the Company agreed to issue 1,330,000 shares of Common Stock at a conversion price of $1.50 per share, subject to shareholder approval, as full payment of the $2,000,000 principal and accrued interest of ~~10.06%. Guanzan borrowed $59,496~~the note. The issuance was approved by the Company’s shareholders on April 13, 2023, and the shares were issued to Mr. Oudom on June 19, 2023.

On February 27, 2023, the Company entered into a stock purchase Agreement with Mr. Oudom, whereby the Company agreed to sell 2,000,000 shares of Common Stock to Mr. Oudom for $3,000,000 in cash, based on a purchase price of $1.50 per share, subject to shareholder approval of the issuance of such shares. The transaction was approved by the Company’s shareholders on April 13, 2023. As of September 30, 2023, the Company had received $1,600,000 in cash. The Company expects to receive the remaining $1,400,000 in cash from ~~Webank on July 24, 2021,~~Mr. Oudom and to issue the shares to him by December 31, 2023.

We also received a $500,000 loan from our Chief Executive Office, Mr. Song, in December 2022, which ~~is due on July 26, 2023 with~~remains outstanding and carries annual interest of 13.68%. Guanzan borrowed $41,852 from Huaneng Guicheng Trust Co., LTD on October 7, 2021, which is due on September 26, 2023 with interest of 12.96%. Chongqing Guanzan Technology borrowed $70,695 from Chongwing Nan’an Zhongyin Fuden Village Bank Co. Ltd. on February 25,2021 which is due February 24,2024 with an interest rate of 8.00%. Chongqing Shude borrowed $21,127 from Webank on December 10, 2020 which is due December 10, 2022 with an interest rate of 10.80%. Chongqing Shude borrowed $939 from Webank on December 10, 2020 which is due December 2, 2022 at an interest rate of 8.64%. Chongqing Shude borrowed $11,796 from Webank on January 5, 2021 which is due January 2, 2023 with an interest rate of 12.24%. Chongqing Shude borrowed $11,921 from Standard Chartered Bank on December 3, 2020 which is due on December 3, 2022 with an interest rate of 12.35%. Chongqing Zhuoda borrowed $117,374 from Webank_on May 10, 2022 which is due on December 10, 2022 with an interest rate of 14.58%1%.

The following is a summary of cash provided by or used in each of the indicated types of activities during the nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively.

For the nine months ended
September 30,
2022 2021
Net cash used in operating activities $ (7,330,007 ) $ (2,547,926 )
Net cash used in investing activities (180,000 ) (1,804,536 )
Net cash provided by (used in) financing activities 4,358,181 4,514,952
Exchange rate effect on cash (599,147 ) (83,355 )
Net cash inflow $ (3,750,973 ) $ 79,135

	For the nine months ended September 30,
	2023			2022
Net cash provided by (used in) operating activities	$	763,733		$	(6,591,318	)
Net cash used in investing activities		(603,892	)		(180,000	)
Net cash provided by (used in) financing activities		(804,081	)		4,157,910
Exchange rate effect on cash		(698,265	)		(995,684	)
Net cash outflow	$	(1,342,505	)	$	(3,609,092	)

Operating Activities

~~Our net loss from~~Net cash provided by our ~~operation (before non-cash adjustments)~~operating activities was $10.6 million for the nine months ended September 30, 2022, an increase of $5.32 million, compared to the net loss of $5.28 million incurred in the same period in 2021. We used $7,330,007 in our continuing operations$763,733 during the nine months ended September 30, ~~2022,~~2023, as compared to ~~$2,547,926~~net cash used in ~~continuing~~ operating activities ~~for~~of $6,591,318 in the nine months ended September 30, ~~2021.~~2022. During ~~pandemic,~~ the ~~Company focused on cash flow efficiency~~nine months ended September 30, 2023, the increase is attributable to a decrease in net loss of $11.8 million and ~~cut extra operations expense.~~a decrease in accounts receivable of $3.7 million.

Investing Activities

~~Cash~~Net cash used in our investing activities was $603,892 during the nine months ended September 30, 2023, as compared to net cash used in investing activities ~~was~~of $180,000 ~~for~~in the nine months ended September 30, 2022. During the nine months ended September 30, 2023, we purchased properties and trademark use rights amounting to $603,892, while during the nine months ended September 30, 2022, ~~as compared to $1,804,536 for the same period ended September 30, 2021. The~~we paid $180,000 ~~was used for a down payment deposit~~ for the acquisition of Phenix ~~in July 2022.~~Bio Inc.

Financing Activities

~~Cash~~Net cash used in our financing activities was ~~$4,358,181 for~~$804,081 during the nine months ended September 30, ~~2022,~~2023, as compared to ~~$4,514,952~~net cash provided by financing activities ~~for~~of $4,157,910 in the nine months ended September 30, ~~2021. For~~2022. During the nine months ended September 30, 2023, we repaid $290,412 of long-term loans and $2,463,210 of related party loans, obtained $347,941 of bank loans and $1,600,000 from a stock purchase by Mr. Oudom. During the nine months ended September 30, 2022, we obtained a $5,000,000 loan from Mr. Oudom that was converted into Common Stock in July 2022 and obtained $112,679 of short-term loans. During this period, we repaid ~~$665,705 from bank~~$366,315 of long-term loans and ~~received $23,886 from~~$254,768 of related party loans. For the nine months ended September 30, 2021, cash provided by our financing activities included $4,065,500 of net proceeds from the issuance of the notes, $73,541 from bank loans, $171,657 from related party loans, offset by the repayment of $34,201 of short -term loans.

Contractual Obligations

On ~~July 5,~~December 28, 2022, ~~BIMI International Medical Inc. (the “Company”)~~the Company entered into ~~a stock purchase~~an agreement to ~~acquire Phenix, a California based corporation that will distribute healthcare products, from Mr. Fnu Oudom, Chairman~~transfer 87% of the ~~board of directors of~~equity interests in Zhongshan to the Company. Phenix is currently in the process of securing exclusive distribution rights for nine healthcare products to be developed by a third party that will target general recovery, cardiovascular and cerebrovascular disease prevention, male health care, female health care, and memory enhancement for the elderly. The products are to be sold by sub-distributors in various territories.

prior owner. Pursuant to the agreement, the Company agreed to ~~purchase all~~transfer 87% of the ~~issued and outstanding~~ equity interests in ~~Phenix from Mr. Oudom~~Zhongshan to the former owner and will continue to own 13% of the equity interests in ~~consideration of $1,800,000. At the closing, the Company paid $180,000 in cash as partial~~Zhongshan. As consideration for the transfer and pursuant to an amendment to the original stock purchase agreement, the original seller agreed to return the 40,037 shares of ~~Phenix.~~Common Stock previously issued (reflecting the Reverse Splits) and RMB 40,000,000 in cash (approximately ($6,116,207) previously paid upon the acquisition of Zhongshan. The ~~balance~~former owner also agreed to release the Company from any and all claims relating to two earn out payments that were payable under the original purchase agreement. The Company received a put option to sell part or all of ~~the purchase price~~its 13% interest in ~~the amount of $1,620,000 will be paid~~Zhongshan before December 31, 2032, based on a valuation determined by a reputable third-party appraisal firm jointly chosen by the ~~Company~~two parties. On September 1, 2023, 39,037 shares of Common Stock were returned to the Company. The remaining 1,000 shares were returned in the form of ~~2,700,000~~cash because the shares of the Company’s Common Stock, the value of which the parties agreed to be $1,620,000, or $0.60 per share, such shares are to be issued within (15) days after the issuance of such shares has been approvedwere sold by the stockholders of the Company. If stockholder approval is not obtained by December 31, 2022, the Company will pay the outstanding balance in cash to Mr. Oudom by January 15, 2023, or such earlier or later date as the parties may agree.original seller. The per share price of the shares to be issued reflects an 8% discount to the five-day average closing price of the Common Stock on NASDAQ before the signing of the agreement. The audit committee and the board of directors of the Company unanimously approved the Company’s entry into the SPA. The closing of the transaction is expected to ~~take place~~close by December 31, 2023, at which time the cash paid at the time of the acquisition will be returned.

On December 28, 2022, the Company entered into an agreement to transfer 90% of the equity interests in the ~~fourth quarter~~Qiangsheng, Eurasia and Minkang hospitals to their former owners. Pursuant to the agreement, the Company will transfer 90% of ~~2022.~~the equity interests in each of the three hospitals and continue to own 10% of the equity interests in each hospital. As consideration for the transfer and pursuant to an amendment to the original stock purchase agreement, the original sellers agreed to return the 80,000 shares of Common Stock previously issued (reflecting the Reverse Splits) and RMB 20,000,000 (approximately $2,767,860) in cash previously paid upon the acquisition of the three hospitals. The former owner also agreed to release the Company from any and all claims relating to two earn out payments that were payable under the original purchase agreement. The Company received a put option to sell part or all of its 10% interest in each of the three hospitals to the former owner before December 31, 2032, based on a valuation determined by a reputable third-party appraisal firm jointly chosen by the parties. On December 9, 2022, 43,600 shares of Common Stock were returned to the Company and on September 1, 2023, 36,400 shares of Common Stock were returned to the Company. The transaction is expected to close by December 31, 2023, at which time the cash paid at the time of the acquisitions will be returned.

On July 5, 2022, we entered into a stock purchase agreement (as amended on February 27, 2023) with Mr. Oudom, the Chairman of our board of directors, whereby we agreed to acquire 100% of the equity interests in Phenix, a distributor of healthcare products. The transaction closed effective March 15, 2023. The aggregate purchase price for the equity interests in Phenix was $180,000 in cash, which has been paid, plus up to 5,270,000 shares of our company’s Common Stock (reflecting the Reverse Splits), of which 270,000 shares were issued upon obtaining the approval of our shareholders. The agreement provided that 5,000,000 shares will be issued if the aggregate net profit generated by Phenix is at least $2,500,000 in calendar year 2023 or in any fiscal quarter of 2023, subject to the approval of our shareholders. Such performance target was met in the second quarter of 2023 and the 5,000,000 shares were issued to Mr. Oudom on December 6, 2023.

On February 27, 2023, the Company entered into a stock purchase Agreement with Mr. Oudom, whereby the Company agreed to sell 2,000,000 shares of Common Stock to Mr. Oudom for $3,000,000 in cash, based on a purchase price of $1.50 per share, subject to shareholder approval of the issuance of such shares. The transaction was approved by the Company’s shareholders on April 13, 2023. The Company expects to receive the $3,000,000 in cash from Mr. Oudom and to issue the shares to him by December 2023. As of September 30, 2023, the Company had received $1,600,000 in cash.

Inflation and Seasonality

We do not believe that our operating results have been materially affected by inflation during ~~2022.~~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 ~~can~~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.

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).Not applicable.

Item 4. Controls and Procedures

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

~~We conducted an evaluation of the effectiveness of the design~~Our management is responsible for establishing 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 inmaintaining adequate 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, 2020, and during the period prior were not effective.

reporting. 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~~We are in the process of restating our financial statements for year ended December 31, 2022 and the quarterly periods ended March 31, 2022, June 30, 2022, September 30, 2022 and March 31, 2023, to correct errors identified in our prior financial statements. We have concluded that the restatements do not materially affect our liquidity or our compliance with debt covenants or other financial obligations.

(1) We are in the process of restating the Consolidated Statements of Equity for the quarterly periods ended June 30, 2022 and September 30, 2022. The restatement relates to the ~~Company’s limited resources,~~stockholders’ equity and noncontrolling interests presented in the consolidated balance sheets, as of June 30, 2022 and September 30, 2022, which had been presented in the form of a reconciliation of the beginning balance to the ending balance for each period for which a consolidated statement of comprehensive income was required to be filed. We will provide reconciliations for the interim periods covered by the Consolidated Statement of Equity for the periods ended June 30, 2022 and September 30, 2022. This restatement should not have any effect on net income, per-share amount, or retained earnings and other components of equity or net assets for prior filing and current filing. We have concluded that the restatement does not materially affect our liquidity or our compliance with debt covenants or other financial obligations.

(2) On June 9, 2022, the Company issued a $5 million subordinated promissory note, which was converted into 1,250,000 shares of the Company’s Common Stock (post the December 2022 1 to 10 reverse split) on July 18, 2022, upon obtaining shareholder approval for the transaction. We erroneously reflected the proceeds of the promissory note in the Consolidated Statements of Cash Flows as “Issuance of Common Stock” for the nine month period ended September 30, 2022. We failed to reflect this promissory note as a note payable as of September 30, 2022. As a result, we are in the process of restating our financial statements for the quarterly period ended September 30, 2022. This restatement did not effect our net income, per-share amounts, retained earnings or other components of equity or net assets for prior filings and the current filing. We have concluded that the restatement does not ~~have accounting personnel~~materially affect our liquidity or our compliance with ~~extensive experience in maintaining books and records and preparing~~debt covenants or other financial obligations.

(3) We restated our financial statements ~~in accordance with US GAAP which could lead to untimely identification~~for the year ended December 31, 2021 and ~~resolution of accounting matters inherent~~are in the ~~Company’s~~process of restating the our financial ~~transactions~~statements for the quarterly period ended September 30, 2022 to correct errors identified in ~~accordance~~our prior financial statements. In the year ended December 31, 2021 and the quarterly periods ended March 31, 2022, June 30, 2022 and September 30, 2022, we recorded amortization of convertible notes as a general and administrative expense in error. We have revised the financial statements for the year ended December 31, 2021 and the nine months ended September 30, 2022 and are in the process of revising our financial statements for the quarterly period ended March 31, 2022 and June 30, 2022 to record the amortization of convertible notes as an “other expense”. The impact of the restatement on our financial statements is the reclassification of such expense as an “other expense”. The reclassification also affected the classification of such expense in the Consolidated Statements of Cash Flows. We have also amended various footnotes to the financial statements. We restated our financial statements for the year ended December 31, 2021 and are in the process of restating the financial statements for the year ended December 31, 2022 and the quarterly periods ended March 31, 2022, June, 30, 2022 and September 30, 2022 to correct this issue. This restatement did not affect our net income (loss), net income (loss) per-share, retained earnings or other components of equity or net assets for our prior filings and the current filing. We have concluded that the restatement does not materially affect our liquidity or our compliance with ~~US GAAP.~~debt covenants or other financial obligations.

Management also determined that the Company has insufficient written policies and procedures for accounting and financial reporting, which hindered the financial statement closing process.

Management’s Remediation ~~plan~~Plan

The Company has taken steps to address the cause of the restatement and to improve our internal controls over financial reporting. The Company hired a consulting firm to assist our accounting department on internal controls and financial reporting. The Company is committed to maintaining the integrity of our financial statements and to providing accurate and transparent financial information to our investors.

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 ~~continuing~~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.

We expect to implement the following measures in 2023 to remediate the material weaknesses identified: (1) To establish additional written policies and procedures for accounting and financial reporting to improve the Company’s financial statement closing process; (2) To continue providing applicable training for our financial and accounting staff to enhance their understanding of U.S. GAAP and internal control over financial reporting; (3) To continue providing applicable training for our accounting manager to improve our internal review process.

Changes in Internal Control over Financial Reporting

~~Subject to the foregoing disclosure, there were no changes~~No change in our internal control over financial reporting occurred during the nine months ended September 30, ~~2022,~~2023 that has materially affected, or ~~are~~is reasonably likely to materially affect, our internal control over financial reporting.

PART II ---- OTHER INFORMATION

Item 1. Legal Proceedings.

~~Not applicable.~~

Item 1A. Risk Factors

~~Changes~~The loss of, or a material reduction in ~~the political and economic policies of the PRC government or in relations between China and the United States or other governments may~~orders from Phenix Bio Inc.’s sole customer, would materially and adversely affect our ~~business, financial condition, and~~ results of operations and ~~may result in our inability to sustain our growth and expansion strategies.~~financial condition.

~~We are Delaware holding company with operations conducted by~~Our new subsidiary, Phenix has generated all of its sales of dietary supplements in the nine months ended September 30, 2023 from one customer, Meta Time, an online seller of such products. The loss of this customer, or a material reduction in their purchases, would have a material adverse effect on our ~~subsidiaries in China. Due to our operations in China, our business, results of operations,~~ financial condition, and prospects may be influenced to a significant degree by economic, political, legal and social conditions in the PRC or changes in government relations between China and the United States or other governments. There is significant uncertainty about the future relationship between the United States and China with respect to trade policies, treaties, government regulations and tariffs. China’s economy differs from the economies of other countries in many respects, including with respect to the level of development, growth rate, amount of government involvement, control of foreign exchange and allocation of resources. While China’s economy has experienced significant growth over the past four decades, growth has been uneven across different regions and among various economic sectors. The Chinese government has implemented various measures to encourage economic development and guide the allocation of resources. Some of these measures may benefit the overall Chinese economy, but may have a negative effect on us. In addition, in the past the Chinese government implemented certain measures, including interest rate increases, to manage the pace of economic growth and prevent the economy from overheating. These measures may cause decreased economic activity in China, which may adversely affect our businessliquidity, and results of operations.

Our shares may be delisted under the Holding Foreign Companies Accountable Act t if the PCAOB is unable to inspect our auditors for three consecutive years beginning in 2021. Pending legislation would reduce the number of consecutive non-inspection years required for triggering the prohibitions from three years to two.

As part of a continued regulatory focus in the U.S. on access to audit and other information currently protected by national law, in particular China’s, the Holding Foreign Companies Accountable Act (the “HFCAA”) was signed into law on December 18, 2020. The HFCAA states if the SEC determines that if a company has filed audit reports issued by a registered public accounting firm that has not been subject to inspection by the Public Company Accounting Oversight Board (the “PCAOB”) for three consecutive years beginning in 2021, the SEC shall prohibit such company’s securities from being traded on a national securities exchange or in the over-the-counter trading market in the U.S. Accordingly, under the current law, this could happen in 2024 if the SEC makes this determination for three consecutive years.

~~On March 24, 2021, the SEC adopted interim final rules relating to the implementation of certain disclosure and documentation requirements~~ of the ~~HFCAA. A company will be required to comply with these rules if~~date of this filing, there have been no other material changes from the SEC identifies it as having a “non-inspection” year under a process to be subsequently established by the SEC. The SEC is assessing how to implement other requirements of the HFCAA, including the listing and trading prohibition requirements described above.

On June 22, 2021, the U.S. Senate passed a bill known as the Accelerating Holding Foreign Companies Accountable Act (the” AHFCAA”) to amend Section 104(i) of the Sarbanes-Oxley Act of 2002 to prohibit securities of any registrant from being listed on any of the U.S. securities exchanges or traded over-the-counter if the auditor of the registrant’s financial statements is not subject to PCAOB inspection for two consecutive years, instead of three consecutive years as currently enactedrisk factors disclosed in ~~the HFCAA.~~

Additionally, in October 2021, Nasdaq adopted additional listing criteria applicable to companies that primarily operate in jurisdictions where local regulators impose secrecy laws, national security laws or other laws that restrict U.S. regulators from accessing information relating to the issuer (a “Restrictive Market”). Under the new rule, whether a jurisdiction permits PCAOB inspection would be a factor in determining whether a jurisdiction is deemed by Nasdaq to be a Restrictive Market. China will likely be determined to be a Restrictive Market and, as a result, Nasdaq may impose on additional continued listing criteria or deny continued listing of our securities on Nasdaq, and we cannot assure you whether Nasdaq or regulatory authorities would apply additional and more stringent criteria to us after considering the effectiveness of our auditor’s audit procedures and quality control procedures, adequacy of personnel and training, or sufficiency of resources, geographic reach or experience as it relates to our audit.

On December 16, 2021, the PCAOB issued a determination report which found that the PCAOB is unable to inspect or investigate completely registered public accounting firms headquartered in: (i) China, and (ii) Hong Kong, because of positions taken by PRC authorities in those jurisdictions, and the PCAOB included in the report of its determination a list of the accounting firms that are headquartered in the PRC or Hong Kong. This report does not include our auditors, Audit Alliance LLP. Audit Alliance LLP is headquartered in Singapore and there are no limitations in Singapore on PCAOB inspections. However, to the extent that our auditor’s work papers may, in the future, become located in China, such work papers will not be subject to inspection by the PCAOB because the PCAOB is currently unable to conduct inspections without the approval of the Chinese authorities. Inspections of certain other firms that the PCAOB has conducted outside of China have identified deficiencies in those firms’ audit procedures and quality control procedures, which may be addressed as part of the inspection process to improve future audit quality. The inability of the PCAOB to conduct inspections of our auditors’ work papers in China would make it more difficult to evaluate the effectiveness of our auditor’s audit procedures or quality control procedures as compared to auditors outside of China that are subject to PCAOB inspections. As a result, our investors may be deprived of the benefits of the PCAOB’s oversight of our auditor through such inspections and they may lose confidencePart I, Item 1A (Risk Factors) contained in our ~~reported financial information and procedures and~~Annual Report on Form 10-K for the quality of our financial statements. We cannot assure you whether Nasdaq or other regulatory authorities will apply additional or more stringent criteria to us. Such uncertainty could cause the market price of our shares to be materially and adversely affected.

~~We will be required to comply with these rules if the SEC identifies us as having a “non-inspection”~~ year under a process to be subsequently established by the SEC. The SEC is assessing how to implement other requirements of the HFCAA, including the listing and trading prohibition requirements described above.

The SEC may propose additional rules or guidance that could impact us if our auditor is not subject to PCAOB inspection. Such uncertainty could cause the market price of our shares to be materially and adversely affected, and our securities could be delisted or prohibited from being traded on the national securities exchange earlier than would be required by the HFCAA. If our shares of Common Stock are unable to be listed on another securities exchange by then, such a delisting would substantially impair your ability to sell or purchase our shares when you wish to do so, and the risk and uncertainty associated with a potential delisting would have a negative impact on the price of our shares.

The potential enactment of the Accelerating Holding Foreign Companies Accountable Act or the America COMPETES Act would decrease the number of non-inspection years from three years to two, thus reducing the time period before our Common Stock may be prohibited from over-the-counter trading or delisted.

On June 22, 2021, the U.S. Senate passed a bill known as the Accelerating Holding Foreign Companies Accountable Act, to amend Section 104(i) of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7214(i)) to prohibit securities of any registrant from being listed on any of the U.S. securities exchanges or traded over-the-counter if the auditor of the registrant’s financial statements is not subject to PCAOB inspection for two consecutive years, instead of three consecutive years as currently enacted in the HFCAA.

On February 4, 2022, the U.S. House of Representatives passed the America Creating Opportunities for Manufacturing Pre-Eminence in Technology and Economic Strength (COMPETES) Act of 2022 (the “America COMPETES Act”), which similarly would amend the HFCAA to shorten the three-year period to two years. The America COMPETES Act, however, includes a broader range of legislation than the AHFCA Act in response to the U.S. Innovation and Competition Act (the “USICA”) passed by the U.S. Senate in 2021. In late July 2022, the U.S. House of Representatives and the U.S. Senate passed the Creating Helpful Incentives to Produce Semiconductors (“CHIPS”) for America Fund (the “CHIPS Act of 2022”), which is expected to be signed into law in Augustended December 31, 2022. ~~The CHIPS Act of 2022 includes a number of provisions from both the America COMPETES Act and the USICA but did not include a provision to amend the HFCAA to shorten the three-year period to two years.~~

Certain members of the U.S. Senate have mentioned that they intend to move forward with negotiating the remaining provisions from the AHFCA Act and the America Competes Act that were not included in the CHIPS Act of 2022 and there is a chance that a final bill from this negotiation, if approved, could amend the HFCAA to shorten the three-year period to two years. It is unclear if or when this amended bill will be signed into law. In the case that such bill becomes the law, it will reduce the time period before our Common Stock could be delisted from Nasdaq and prohibited from over-the-counter trading in the U.S. from 2024 to 2023.

While we expect to be able to comply with the AHFCA Act and the COMPETES Act, if they become law, we cannot assure you that the proposed legislation may be further revised , or that we will be in full compliance with such legislation. As a result, our securities may be prohibited from trading on Nasdaq or other U.S. stock exchanges and from over-the-counter trading in the U.S.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

~~On January 7, 2022,~~During the ~~Company issued 600,000 shares of Common Stock as the initial consideration for the acquisition of Mali Hospital.~~

~~On January 24, 2022, the Company issued 1,000,000 shares of Common Stock as the salary for Mr. Tiewei Song.~~

On January 27, 2022, the Company entered into an employment agreement with Mr. Xiaping Wang for a term of one (1) year, effective January 1, 2022. Under the agreement, Mr. Wang’s compensation will consist of an annual salary of $500,000 in cash and stock compensation of 500,000 shares of the Company’s common stock. The Company issued 500,000 shares of our common stock to Mr. Wang on February 1,2022.

~~On February 1,2022, the Company issued 50,000 shares of Common Stock to Kingmoon & Kingyang (Jiulongpo) Law Firm as payment for services under a legal consulting agreement dated January 1, 2022.~~

On June 9, 2022, the Company entered into a stock purchase agreement with the Chairman of the Board of the Company, Mr. Fnu Oudom, whereby Mr. Oudom agreed to purchase 12,500,000 shares of Common Stock for $5 million, or $0.40 per share, subject to the approval of the stockholders of the Company. On July 18, 2022, 12,500,000nine months ended September 30, 2023, 2,420 shares of Common Stock were issued to ~~Mr. Oudom~~one Institutional Investor upon conversion of $3,000 of convertible notes. In addition, 891,762 shares of Common Stock having a value of $1,105,785 were issued to the ~~approval~~other Institutional Investor due to the application of ~~stockholders at~~Floor Amount Issuance contained in the ~~Company’s 2022 annual meeting of shareholders.~~convertible notes.

~~From January 1, 2022 to~~During the nine months ended September 30, ~~2022, Hudson Bay converted convertible notes in the aggregate principal amount of $2,700,000 plus interest into 3,468,213~~2023, 414,044 shares of Common ~~Stock.~~

~~From January 1, 2022~~Stock were issued to ~~September 30, 2022, CVI converted convertible notes in the aggregate principal amount~~two institutional investors upon exercise of ~~$1,875,000 plus interest into 2,773,124 shares of Common Stock.~~1,160,000 warrants.

Item 3. Defaults upon Senior Securities.

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information.

None.

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~~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).

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: ~~November 21, 2022~~December 19, 2023	By:	/s/ Tiewei Song
		Tiewei Song
		Chief Executive Officer

Date: ~~November 21, 2022~~December 19, 2023	By:	/s/ Baiqun Zhong
		Baiqun Zhong
		Interim Chief Financial Officer
		(Principal Financial and Accounting Officer)

5574

~~0001213660 2021-02-26 2021-02-26~~ iso4217:USD xbrli:shares

	For the three months ended September 30,						For the nine months ended September 30,
	2022			2021			2022			2021

REVENUES	$	7,314,842		$	13,777,494		$	17,261,951		$	25,202,485

COST OF REVENUES		5,730,125			11,748,385			12,993,304			20,616,279

GROSS PROFIT		1,584,717			2,029,109			4,268,647			4,586,206

OPERATING EXPENSES:
Sales and marketing		1,104,541			1,202,387			2,563,949			2,429,401
General and administrative		3,572,304			2,372,056			9,632,420			7,092,971
Total operating expenses		4,676,845			3,574,443			12,196,369			9,522,372

LOSS FROM OPERATIONS		(3,092,128	)		(1,545,334	)		(7,927,722	)		(4,936,166	)

OTHER INCOME (EXPENSE)
Interest income		293			-			616			-
Interest expense		(97,373	)		(84,310	)		(316,692	)		(222,547	)
Bank service fees		(60,269	)					(60,239	)
Exchange loss		4,389			-			3,988			-
Other expense		(469,720	)		(74,302	)		(2,270,792	)		(79,595	)
Total other expense, net		(622,680	)		(158,612	)		(2,643,119	)		(302,142	)

LOSS BEFORE INCOME TAXES		(3,714,808	)		(1,703,946	)		(10,570,841	)		(5,238,308	)

PROVISION FOR INCOME TAXES (BENEFIT)		(575	)		5,930			30,216			37,933

NET LOSS FROM CONTINUING OPERATIONS		(3,714,233	)		(1,709,876	)		(10,601,057	)		(5,276,241	)

NET LOSS		(3,714,233	)		(1,709,876	)		(10,601,057	)		(5,276,241	)
Less: net loss attributable to non-controlling interest		(1,450	)		(6,444	)		(3,948	)		36,417
NET LOSS ATTRIBUTABLE TO BIMI INTERNATIONAL MEDICIAL INC.		(3,712,783	)		(1,703,432	)		(10,597,109	)		(5,312,658	)
OTHER COMPREHENSIVE LOSS
Foreign currency translation adjustment		(399,501	)		(128,005)			(1,367,404	)		(126,893	)
TOTAL COMPREHENSIVE LOSS		(4,113,734)			(1,837,881	)		(11,968,461	)		(5,403,134	)
Less: comprehensive loss attributable to noncontrolling interest		(487,621	)		(6,400)			(1,022,664	)		(6,345	)
COMPREHENSIVE LOSS ATTRIBUTABLE TO BIMI INTERNATIONAL MEDICIAL INC.	$	(3,626,113	)	$	(1,831,481	)	$	(10,945,797	)	$	(5,396,789	)

WEIGHTED AVERAGE NUMBER OF COMMON SHARES
Basic and diluted		23,193,842			27,084,325			16,816,256			22,864,269

LOSS PER SHARE
Basic and diluted		(0.16)			(0.06)			(0.63)			(0.23	)

	Common Stock				Additional Paid-in		Accumulated Other Comprehensive			Statutory		Non Controlling			Accumulated			Total Stockholders’
	Shares		Amount		Capital		Income			Reserves		Interests			Deficit			Equity

Balance as of December 31, 2021		8,502,222		8,502		55,220,130		1,601,870			2,263,857		142,997			(47,900,929	)		11,336,427

Issuance of common shares		29,932,539		29,933		10,539,582		-			-		-			-			10,569,515

Net loss		-		-		-		-			-		(1,022,664	)		(10,597,113	)		(11,619,777	)

Appropriated statutory surplus reserves		-		-		-		-			-		-			-			-

Foreign currency translation adjustment		-		-		-		(1,367,404	)		-		1,291,606			-			(75,798	)

Balance as of September 30, 2022		38,434,761		38,435		65,759,712		234,466			2,263,857		411,939			(58,498,042	)		10,210,367

The value of the shares issued on March 12, 2020		2,717,000
The value of the shares issued on November 30, 2020		839,000
The value of the shares issued on August 27, 2021		3,818,000
Total consideration	$	7,374,000

	September 30, 2022		December 31, 2021
Advances to suppliers, cost	$	4,460,024	$	3,163,836
Advances to suppliers, net	$	4,460,024	$	3,163,836

	September 30, 2022
2023		998,042
2024		895,645
2025		847,209
2026		779,179
2027 and thereafter		1,753,634
Total minimum lease payments		5,273,709
Less: Amount representing interest		(1,017,965	)
Total		4,255,744

	September 30, 2022		December 31, 2021
Construction Bank of China	$	326,262	$	544,630
Wuhu Yangzi Rural Commercial Bank		211,274		235,268
Industrial and Commercial Bank of China		42,255		94,107
Agricultural Bank of China		-		156,846
China Minsheng Bank		112,679		-
Postal Savings Bank of China		690,160		768,543
Total	$	1,382,630	$	1,799,394

	September 30, 2022			December 31, 2021
Standard Chartered Bank	$	11,921		$	68,723
China Minsheng Bank		-			125,476
Construction bank of China		-			33,565
Chongwing Nan’an Zhongyin Fuden Village Bank Co. Ltd.		-			116,974
We Bank		575,636			562,455
China Construction Bank Chongqing Zhongxian Sub-branch		70,695			-
Subtotal of long-term loans		658,252			907,193
Less: current portion		(183,203	)		(369,187	)
Long-term loans – noncurrent portion	$	475,049		$	538,006

For nine months ended September 30, 2022	Retail pharmacy			Medical devices wholesale			Drugs wholesale			Medical services			Others			Total
Revenues from external customers	$	618,582		$	3,404,533		$	8,956,141		$	4,282,695		$	-		$	17,261,951
Cost of revenues	$	72,834		$	2,923,017		$	8,035,938		$	1,950,611		$	10,905		$	12,993,304
Depreciation, depletion, and amortization expense	$	15,057		$	35,552		$	254		$	79,054		$	9,027		$	138,944
Loss	$	(291,705	)	$	(145,570	)	$	(1,142,654	)	$	(733,892	)	$	(8,287,238	)	$	(10,601,059	)
Total assets	$	405,101		$	3,626,761		$	7,654,393		$	6,604,159		$	14,712,961		$	33,003,374

>>Revenues	Nine months ended September 30, 2022
Total revenues from reportable segments	$	17,813,544
Other revenues		-
Elimination of intersegments revenues		(551,593	)
Total consolidated revenues	$	17,261,951

>> Profit or loss
Total loss from reportable segments	$	(2,313,821	)
Elimination of intersegments profit or loss		(565,433	)
Unallocated amount:
Amortization of discount of convertible notes		(1,542,248	)
Other corporation expense		(6,179,554	)
Total net loss	$	(10,601,057	)

>>Assets
Total assets from reportable segments	$	41,598,014
Elimination of intersegments receivables		(14,524,848	)
Unallocated amount:
Other unallocated assets – Phenix Bio Inc		-
Other unallocated assets – Xinrongxin		4,087
Other unallocated assets – Liaoning Boyi		30,070
Other unallocated assets – Dalian Boyi		3,762
Other unallocated assets – Chongqing Bimai		1,142,687
Other unallocated assets – BIMI		4,749,603
Total consolidated assets	$	33,003,375

>>Revenues	Nine months ended September 30, 2021
Total revenues from reportable segments	$	27,424,812
Other revenues		629,198
Elimination of intersegments revenues		(2,851,525	)
Total consolidated revenues	$	25,202,485

>> Profit or loss
Total loss from reportable segments	$	(1,303,167)
Elimination of intersegments profit or loss		(667,910)
Unallocated amount:
Amortization of discount of convertible notes		(2,639,374	)
Other corporation expense		(665,790	)
Total net loss	$	(5,276,241	)

>>Assets
Total assets from reportable segments	$	49,176,982
Elimination of intersegments receivables		(14,180,718	)
Unallocated amount:
Other unallocated assets – Xinrongxin		12,386,406
Other unallocated assets – Liaoning Boyi		177,335
Other unallocated assets – Dalian Boyi		21,841
Other unallocated assets – Chongqing Bimai		12,058,313
Other unallocated assets – BIMI		4,646,051
Total consolidated assets	$	64,286,210