Document And Entity Information
Document And Entity Information | 12 Months Ended |
Dec. 31, 2020shares | |
Document Information Line Items | |
Entity Registrant Name | Zhongchao Inc. |
Document Type | 20-F/A |
Current Fiscal Year End Date | --12-31 |
Amendment Flag | true |
Amendment Description | Zhongchao Inc. (the “Company”) is filing this Amendment No. 1 (this “Form 20-F/A”) to its Annual Report on Form 20-F for the fiscal year ended December 31, 2020 (the “Original Form 20-F”), as originally filed with the Securities and Exchange Commission on April 30, 2021. This Form 20-F/A, which replaces in its entirety the Original Form 20-F, is being filed solely for the purpose of including a management’s report assessing internal control over financial reporting within Item 15 of the Original Form 20-F. This Form 20-F/A includes new certifications as required by Rule 12b-15 under the Securities Exchange Act of 1934, as amended, from our Chief Executive Officer and Chief Financial Officer, dated as of the date of filing of this Form 20-F/A.
This Form 20-F/A reflects information as of the original filing date of the Original Form 20-F, does not reflect events occurring after that date and does not modify or update in any way disclosures made in the Original Form 20-F, except as specifically noted above. Among other things, forward-looking statements made in the Original Form 20-F have not been revised to reflect events, results, or developments that have occurred or facts that have become known to us after the date of the Original Form 20-F (other than as discussed above), and such forward-looking statements should be read in their historical context. Accordingly, this Amendment No. 1 should be read in conjunction with our filings made with the Securities and Exchange Commission subsequent to the filing of the Original Form 20-F. |
Entity Central Index Key | 0001785566 |
Entity Current Reporting Status | Yes |
Entity Voluntary Filers | No |
Entity Filer Category | Non-accelerated Filer |
Entity Well-known Seasoned Issuer | No |
Document Period End Date | Dec. 31, 2020 |
Document Fiscal Year Focus | 2020 |
Document Fiscal Period Focus | FY |
Entity Emerging Growth Company | true |
Entity Shell Company | false |
Entity Ex Transition Period | false |
Document Annual Report | true |
Document Shell Company Report | false |
Document Transition Report | false |
Entity File Number | 001-39229 |
Entity Incorporation, State or Country Code | E9 |
Entity Interactive Data Current | Yes |
Class A Ordinary Shares | |
Document Information Line Items | |
Entity Common Stock, Shares Outstanding | 19,435,423 |
Class B Ordinary Shares | |
Document Information Line Items | |
Entity Common Stock, Shares Outstanding | 5,497,715 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Current Assets | ||
Cash and cash equivalents | $ 15,072,947 | $ 7,832,552 |
Short-term investments | 2,032,928 | |
Accounts receivable | 10,321,837 | 5,078,419 |
Prepayments | 554,298 | 325,496 |
Due from a related party | 14,364 | |
Other current assets | 1,613,408 | 1,258,040 |
Total Current Assets | 29,595,418 | 14,508,871 |
Investment in a limited partnership | 1,258,787 | |
Property and equipment, net | 1,997,761 | 1,889,973 |
Deposit for property | 700,884 | |
Prepayments for lease of land | 367,588 | 366,409 |
Intangible assets, net | 34,973 | 37,323 |
Right of use assets | 65,137 | 245,982 |
Deferred tax assets | 795,547 | 688,994 |
Total Assets | 34,816,095 | 17,737,552 |
Current Liabilities | ||
Accounts payable | 408,426 | 117,064 |
Advances from customers | 6,760 | 73,961 |
Deferred government grants, current portion | 323,192 | |
Income tax payable | 1,523,175 | 897,892 |
Operating lease liabilities, current portion | 62,160 | 210,219 |
Accrued expenses and other liabilities | 981,433 | 735,334 |
Total Current Liabilities | 2,981,954 | 2,357,662 |
Operating lease liabilities, noncurrent portion | 41,363 | |
Total Liabilities | 2,981,954 | 2,399,025 |
Commitments and Contingencies | ||
Equity | ||
Class A Ordinary Share (par value $0.0001 per share, 450,000,000 shares authorized; 19,435,423 and 16,102,420 shares issued and outstanding at December 31, 2020 and 2019, respectively) | 1,944 | 1,610 |
Class B Ordinary Share (par value $0.0001 per share, 50,000,000 shares authorized; 5,497,715 and 5,497,715 shares issued and outstanding at December 31, 2020 and 2019, respectively) | 550 | 550 |
Additional paid-in capital | 22,775,154 | 12,044,855 |
Statutory reserve | 801,502 | 415,813 |
Retained earnings | 7,339,778 | 3,267,087 |
Accumulated other comprehensive income (loss) | 915,213 | (344,771) |
Total Zhongchao Inc.’s Shareholders’ Equity | 31,834,141 | 15,385,144 |
Noncontrolling interests | (46,617) | |
Total Equity | 31,834,141 | 15,338,527 |
Total Liabilities and Equity | $ 34,816,095 | $ 17,737,552 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parentheticals) - $ / shares | Dec. 31, 2020 | Dec. 31, 2019 |
Class A Ordinary Shares | ||
Ordinary Share par value (in Dollars per share) | $ 0.0001 | $ 0.0001 |
Ordinary Share authorized | 450,000,000 | 450,000,000 |
Ordinary Share issued | 19,435,423 | 16,102,420 |
Ordinary Share outstanding | 19,435,423 | 16,102,420 |
Class B Ordinary Share | ||
Ordinary Share par value (in Dollars per share) | $ 0.0001 | $ 0.0001 |
Ordinary Share authorized | 50,000,000 | 50,000,000 |
Ordinary Share issued | 5,497,715 | 5,497,715 |
Ordinary Share outstanding | 5,497,715 | 5,497,715 |
Consolidated Statements of Inco
Consolidated Statements of Income and Comprehensive Income - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Income Statement [Abstract] | |||
Revenues | $ 17,989,788 | $ 14,882,763 | $ 12,865,870 |
Cost of revenues | (6,117,640) | (4,655,827) | (4,456,353) |
Gross Profit | 11,872,148 | 10,226,936 | 8,409,517 |
Operating Expenses | |||
Selling and marketing expenses | (3,441,941) | (3,196,469) | (2,261,258) |
General and administrative expenses | (3,124,301) | (2,524,003) | (1,425,663) |
Research and development expenses | (816,553) | (864,320) | (1,447,949) |
Total Operating Expenses | (7,382,795) | (6,584,792) | (5,134,870) |
Income from Operations | 4,489,353 | 3,642,144 | 3,274,647 |
Interest income, net | 146,965 | 211,479 | 191,609 |
Other income, net | 305,566 | 534,020 | 37,364 |
Income Before Income Taxes | 4,941,884 | 4,387,643 | 3,503,620 |
Income tax expenses | (484,787) | (387,144) | (502,131) |
Net Income | 4,457,097 | 4,000,499 | 3,001,489 |
Net loss attributable to noncontrolling interests | 1,283 | 46,171 | 17,834 |
Net Income Attributable to Zhongchao Inc.’s shareholders | 4,458,380 | 4,046,670 | 3,019,323 |
Other Comprehensive Income (Loss) | |||
Foreign currency translation adjustment | 1,259,984 | (173,604) | (379,520) |
Comprehensive Income | 5,717,081 | 3,826,895 | 2,621,969 |
Total comprehensive loss attributable to noncontrolling interests | 1,283 | 46,171 | 17,834 |
Total comprehensive income attributable to Zhongchao Inc.’s shareholders | $ 5,718,364 | $ 3,873,066 | $ 2,639,803 |
Weighted average number of ordinary share outstanding | |||
Basic and Diluted (in Shares) | 24,425,637 | 21,600,135 | 20,764,245 |
Earnings per share | |||
Basic and Diluted (in Dollars per share) | $ 0.183 | $ 0.187 | $ 0.145 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Equity - USD ($) | Class A Ordinary Share | Class B Ordinary Share | Additional paid-in capital | Statutory Reserve | (Accumulated Deficit) Retained earning | Accumulated other comprehensive (loss) income | Non-controlling interest | Total |
Balance at Dec. 31, 2017 | $ 1,475 | $ 550 | $ 8,380,337 | $ (3,383,093) | $ 208,353 | $ (10,002) | $ 5,197,620 | |
Balance (in Shares) at Dec. 31, 2017 | 14,752,420 | 5,497,715 | ||||||
Capital contributions from shareholders | $ 135 | 3,580,125 | 3,580,260 | |||||
Capital contributions from shareholders (in Shares) | 1,350,000 | |||||||
Reversal of share-based compensation expenses | (14,483) | (14,483) | ||||||
Net income (loss) | 3,019,323 | (17,834) | 3,001,489 | |||||
Appropriation of statutory reserve | 20,539 | (20,539) | ||||||
Foreign currency translation adjustments | (379,520) | (379,520) | ||||||
Balance at Dec. 31, 2018 | $ 1,610 | $ 550 | 11,945,979 | 20,539 | (384,309) | (171,167) | (27,836) | 11,385,366 |
Balance (in Shares) at Dec. 31, 2018 | 16,102,420 | 5,497,715 | ||||||
Share-based compensation expenses | 159,984 | 159,984 | ||||||
Buy out of a non-controlling interests | (61,108) | 27,390 | (33,718) | |||||
Net income (loss) | 4,046,670 | (46,171) | 4,000,499 | |||||
Appropriation of statutory reserve | 395,274 | (395,274) | ||||||
Foreign currency translation adjustments | (173,604) | (173,604) | ||||||
Balance at Dec. 31, 2019 | $ 1,610 | $ 550 | 12,044,855 | 415,813 | 3,267,087 | (344,771) | (46,617) | 15,338,527 |
Balance (in Shares) at Dec. 31, 2019 | 16,102,420 | 5,497,715 | ||||||
Share-based compensation expenses | 168,350 | 168,350 | ||||||
Issuance of Class A Ordinary Shares pursuant to initial public offering, net of issuance costs | $ 332 | 10,609,851 | 10,610,183 | |||||
Issuance of Class A Ordinary Shares pursuant to initial public offering, net of issuance costs (in Shares) | 3,315,003 | |||||||
Issuance of restricted Class A Ordinary Shares to non-executive directors | $ 2 | (2) | ||||||
Issuance of restricted Class A Ordinary Shares to non-executive directors (in Shares) | 18,000 | |||||||
Buy out of a non-controlling interests | (47,900) | 47,900 | ||||||
Net income (loss) | 4,458,380 | $ (1,283) | 4,457,097 | |||||
Appropriation of statutory reserve | 385,689 | (385,689) | ||||||
Foreign currency translation adjustments | 1,259,984 | 1,259,984 | ||||||
Balance at Dec. 31, 2020 | $ 1,944 | $ 550 | $ 22,775,154 | $ 801,502 | $ 7,339,778 | $ 915,213 | $ 31,834,141 | |
Balance (in Shares) at Dec. 31, 2020 | 19,435,423 | 5,497,715 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Cash Flows from Operating Activities: | |||
Net income | $ 4,457,097 | $ 4,000,499 | $ 3,001,489 |
Adjustments to reconcile net income to net cash (used in) provided by operating activities: | |||
Write off against accounts receivable | 336,367 | ||
Depreciation and amortization expenses | 202,325 | 102,905 | 38,699 |
Amortization of right of use assets | 222,353 | 159,259 | |
Recognition (reversal) of share-based compensation expenses | 168,350 | 159,984 | (14,483) |
Deferred tax (benefits) expenses | (58,424) | (318,087) | 60,975 |
Equity investment loss | 25,622 | ||
Changes in fair value of short-term investments | 10,331 | ||
Changes in operating assets and liabilities: | |||
Accounts receivable | (5,486,914) | (3,134,065) | (792,031) |
Prepayments | (197,402) | 231,894 | (583,613) |
Other current assets | (1,143,200) | 119,523 | (659,145) |
Accounts payable | 260,350 | 94,461 | (548,507) |
Advances from customers | 6,398 | (476,261) | (125,872) |
Income tax payable | 535,981 | 618,120 | 296,904 |
Accrued expenses and other liabilities | 179,738 | 408,725 | 85,954 |
Lease liabilities | (230,819) | (153,616) | |
Deferred government grants | (325,992) | (405,321) | 552,277 |
Net Cash (Used in) Provided by Operating Activities | (1,037,839) | 1,408,020 | 1,312,647 |
Cash Flows from Investing Activities: | |||
Purchases of property and equipment | (160,602) | (1,312,941) | (668,067) |
Payments of deposits for property purchase | (688,267) | ||
Payment for land use rights | (418,520) | ||
Investments in short-term investments | (2,043,259) | (2,460,879) | (2,920,260) |
Investment in a limited partnership | (1,217,039) | ||
Release from short-term investments | 3,618,940 | 3,502,799 | |
Buy out of a non-controlling interests | (33,718) | ||
Loan repayment from (provided to) a related party | 14,489 | (14,476) | |
Net Cash Used in Investing Activities | (4,094,678) | (203,074) | (504,048) |
Cash Flows from Financing Activities: | |||
Proceeds from issuance of common stocks in connection with initial public offering, net of offering cost | 11,886,363 | ||
Payment of expenses relating to initial public offerings | (388,709) | (468,328) | |
Capital contribution from shareholders | 3,580,260 | ||
Proceeds from bank borrowings | 756,544 | ||
Repayment of bank borrowings | (723,788) | ||
Net Cash Provided by (Used in) Financing Activities | 11,497,654 | (1,192,116) | 4,336,804 |
Effect of exchange rate changes on cash and cash equivalents | 875,258 | (98,953) | (205,243) |
Net increase (decrease) in cash and cash equivalents | 7,240,395 | (86,123) | 4,940,160 |
Cash and cash equivalents at beginning of year | 7,832,552 | 7,918,675 | 2,978,515 |
Cash and cash equivalents at end of year | 15,072,947 | 7,832,552 | 7,918,675 |
Supplemental Cash Flow Information | |||
Cash paid for interest expense | 30,312 | 5,840 | |
Cash paid for income tax | 2,642 | 87,111 | 144,252 |
Noncash investing activities | |||
Right of use assets obtained in exchange for operating lease obligations | $ 37,919 | $ 419,362 |
Organization and Principal Acti
Organization and Principal Activities | 12 Months Ended |
Dec. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION AND PRINCIPAL ACTIVITIES | 1. ORGANIZATION AND PRINCIPAL ACTIVITIES Zhongchao Inc. (“Zhongchao Cayman”, or the “Company”) is a holding company incorporated on April 16, 2019, under the laws of the Cayman Islands. The Company commenced operations in August 17, 2012, through its variable interest entity (“VIE”), Zhongchao Medical Technology (Shanghai) Limited (“Zhongchao Shanghai”), a limited liability company established under the laws of the PRC. The Company provides customized medical courses and customized medical training services to pharmaceutical enterprises, and not-for-profit organizations (“NFPs”) including medical associations, medical institutions, medical journals, medical foundations, hospitals and etc. in the PRC. The accompanying consolidated financial statements reflect the activities of Zhongchao Shanghai and each of the following entities: Name Background Ownership Zhongchao Group Inc. (“Zhongchao BVI”) ● A BVI company ● Incorporated on April 23, 2019 ● A holding company 100% owned by Zhongchao Cayman Zhongchao Group Limited (“Zhongchao HK”) ● A Hong Kong company ● Incorporated on May 14, 2019 ● A holding company 100% owned by Zhongchao BVI Beijing Zhongchao Zhongxing Technology Limited (“Zhongchao WFOE”) ● A PRC company and deemed a wholly foreign owned enterprise ● Incorporated on May 29, 2019 ● Registered capital of $10 million ● A holding company 100% owned by Zhongchao HK Zhongchao Shanghai ● A PRC limited liability company ● Incorporated on August 17, 2012 ● Registered capital of RMB 20,250,067 (approximately $3,064,272) with registered capital fully paid-up ● Engaged in technology development, technology transfer, and technical services in the field of medical technology, technical consulting in the field of network technology, and medical information consulting VIE of Beijing Zhongchao Zhongxing Technology Limited Shanghai Maidemu Cultural Communication Corp. (“Shanghai Maidemu”) ● A PRC limited liability company ● Incorporated on March 12, 2015 ● Registered capital of $1,597,087 (RMB 10 million) with registered capital fully paid-up ● Planning for cultural and artistic exchanges, designing, producing, acting for and publishing various kinds of advertisements, and medical consultation (no medical diagnosis and treatment activities allowed). 100% owned by Zhongchao Shanghai Shanghai Zhongxun Medical Technology Co., Ltd. (“Shanghai Zhongxun”) ● A PRC limited liability company ● Incorporated on May 27, 2017 ● Registered capital of $1,021,525 (RMB 7 million) with registered capital fully paid-up ● Engaged in technology development, transfer, service and consulting in the fields of medical technology and computer technology (no medical diagnosis and treatment activities allowed). 100% owned by Zhongchao Shanghai Shanghai Zhongxin Medical Technology Co., Ltd (formerly known as “Shanghai Jingyi Medical Technology Co., Ltd.,”) (“Shanghai Jingyi”) ● A PRC limited liability company ● Incorporated on October 10, 2018 ● Registered capital of $1,530,784 (RMB 10 million) with registered capital of $1,491,749 to be funded ● Engaged in technology development, transfer, service and consulting in the fields of medical technology and computer technology, market information consulting and investigating. 100% owned by Shanghai Zhongxun* Shanghai Huijing Information Technology Co., Ltd., (“Shanghai Huijing”) ● A PRC limited liability company ● Incorporated on September 28, 2016 ● Registered capital of $149,948 (RMB 1 million) with registered capital of $74,974 to be funded ● Engaged in technology development, transfer, service and consulting in the fields of computer technology, graphic designing, website page designing, planning cultural and artistic exchanges. 100% owned by Shanghai Maidemu Beijing Zhongchao Boya Medical Technology Co., Ltd. (“Beijing Boya”) ● A PRC limited liability company ● Incorporated on April 27, 2020 ● Registered capital of $141,185 (RMB 1 million) with registered capital of $141,185 to be funded ● Engaged in technology development, transfer, service and consulting in the fields of medical technology and computer technology, market information consulting and investigating. 70% owned by Zhongchao Shanghai, and 30% owned by Mr. Zhengbo Ma on behalf of Zhongchao Shanghai Zhixun Internet Hospital (Liaoning) Co., Ltd. (“Liaoning Zhixun”) ● A PRC limited liability company ● Incorporated on July 6, 2020 ● Registered capital of $426,642 (RMB 3 million) with registered capital of $426,642 to be funded ● Engaged in online hospital services, medical services, elderly nursing services, remote healthcare management services, healthcare consulting services, sales of medical appliances and other medical products. 100% owned by Shanghai Zhongxin * 51% of the equity interest owned by Shanghai Zhongxun before November 2020. Through certain entrustment agreements, Mr. Weiguang Yang, Beijing Zhongchao Yixin Management Consulting Partnership, LLP (“Zhongchao Yixin”), and Beijing Zhongren Yixin Management Consulting Partnership, LLP (“Zhongren Yixin”), hold 19%, 20% and 10% of the equity interest of Shanghai Jingyi on behalf of Shanghai Zhongxun, respectively. As a result, Shanghai Zhongxun owns 100% of Shanghai Zhongxin’s equity interest. On August 14, 2019, Zhongchao WFOE entered into a series of agreements (the “VIE Agreements”) with Zhongchao Shanghai and the shareholders of Zhongchao Shanghai. The VIE Agreements are designed to provide Zhongchao WFOE with the power, rights and obligations equivalent in all material respects to those it would possess as the sole equity holder of Zhongchao Shanghai, including absolute control rights and the rights to the management, operations, assets, property and revenue of Zhongchao Shanghai. The purpose of the VIE Agreements is solely to give Zhongchao WFOE the exclusive control over Zhongchao Shanghai’s management and operations. On August 14, 2019, Zhongchao Cayman completed a reorganization of entities under common control of Weiguang Yang, who owned a majority of the voting power of Zhongchao Cayman prior to the reorganization. Zhongchao Cayman, Zhongchao Group Inc. (“Zhongchao BVI”), and Zhongchao Group Limited (“Zhongchao HK”) were established as the holding companies of Zhongchao WFOE. Zhongchao WFOE is the primary beneficiary of Zhongchao Shanghai and its subsidiaries, and all of these entities are under common control which results in the consolidation of Zhongchao Shanghai and subsidiaries which have been accounted for as a reorganization of entities under common control at carrying value. The consolidated financial statements are prepared on the basis as if the reorganization became effective as of the beginning of the first period presented in the consolidated financial statements. Total assets and liabilities presented on the Company’s consolidated balance sheets and revenues, expenses, net incomes presented on consolidated statements of incomes as well as the cash flows from operating, investing and financing activities presented on the consolidated statements of cash flows are substantially the financial positions, operations and cash flows of Zhongchao Shanghai and its subsidiaries. On August 15, 2019, HF Capital Management Delta, Inc. (“HF Capital”), a 6.25 % shareholder of Zhongchao Shanghai, planned to withdraw its equity interest in Zhongchao Shanghai (which is representative of 1,350,068 shares in Zhongchao Shanghai, among which 675,068 shares were issued by Zhongchao Shanghai and the remaining 675,000 shares were purchased from two existing shareholders), and to contribute the same amount of capital to Zhongchao Cayman directly. The Company and HF Capital entered into a certain warrant agreement to purchase ordinary shares of the Company, pursuant to which the Company granted a warrant to HF Capital, who expects to exercise the warrant and receive the ordinary shares of the Company before the effective date and closing of the offering because these conditions are considered to be administrative procedures and there is no uncertainties of going through them. The warrant entitled HF Capital to purchase 1,350,068 Class A Ordinary Shares, representing 6.25% economic beneficial interest, or 1.37% of the voting ownership interest of the Company as of December 31, 2019, or 5.42% economic beneficial interest, or 1.33% of the voting ownership interest of the Company after the Company’s initial public offering in February 2020, from the Company, if the following conditions are met: 1) All PRC governmental consent and approval required for HF Capital to exercise the warrant and payment of the capital contribution have been obtained, including without limitation, any approval or filing with respect to HF Capital’s investment into the Company, and payment by HF Capital of the capital contribution to the Company, and reasonable evidence thereof shall have been provided to the Company; 2) HF Capital has fully paid the capital contribution to Zhongchao Cayman; and 3) The Company released the paid-in capital of HF Capital from Zhongchao Shanghai The practice is solely a result of tax planning from HF Capital. As the warrant does not cause the Company to transfer or receive any assets, or exchange any other financial instruments on potentially favorable or unfavorable terms with shareholder. The warrant does not meet the definition of a financial instrument as defined in ASC 480 Distinguishing Liabilities from Equity On December 2, 2019, the registration of HF Capital’s withdrawal of its capital contribution in Zhongchao Shanghai was completed with local State Administration for Industry and Commerce. The paid-in capital of HF Capital in an amount of RMB20 million (approximately US$2.9 million) is currently being held in the corporate bank account of Zhongchao Shanghai and is to be deposited in a designated bank account mutually controlled by Zhongchao Shanghai and HF Capital after the completion of HF Capital’s ODI procedures and to be released as HF Capital’s capital contribution in Zhongchao Cayman. Class A Ordinary Shares issued and outstanding presented on the financial statements is reconciled with the number of shares legally as follows: December 31, 2020 December 31, 2019 Number of Class A Ordinary Shares legally issued and outstanding 18,085,355 14,752,352 Class A Ordinary Shares committed to be issued to HF Capital 1,350,068 1,350,068 Number of Class A Ordinary Shares outstanding and issued presented on the financial statements 19,435,423 16,102,420 VIE Agreements with Zhongchao Shanghai Due to the restrictions imposed by PRC laws and regulations on foreign ownership of companies engaged in value-added telecommunication services and certain other businesses, the Company operates its businesses in which foreign investment is restricted or prohibited in the PRC through certain PRC domestic companies. As such, Zhongchao Shanghai is controlled through VIE Arrangements in lieu of direct equity ownership by the Company or any of its subsidiaries. Such VIE Arrangements consist of a series of six agreements (collectively, the “VIE Arrangements”), which were signed on August 14, 2019. The significant terms of the VIE Arrangements by and among the Company’s wholly-owned subsidiary, Zhongchao WFOE, its consolidated variable interest entity, Zhongchao Shanghai, and the shareholders of Zhongchao Shanghai are as follows: Agreements that Provide Us Effective Control over Zhongchao Shanghai The Company’s PRC Wholly Foreign Owned Entity, Zhongchao WFOE, has entered into the following agreements with Zhongchao Shanghai and its shareholders. Equity Interest Pledge Agreement Pursuant to the equity interest pledge agreement dated August 14, 2019, each shareholder of Zhongchao Shanghai (collectively “Shareholder”) has pledged all of its equity interest in Zhongchao Shanghai to guarantee the shareholder’s and Zhongchao Shanghai’s performance of their obligations under the master exclusive service agreement, business cooperation agreement, exclusive option agreement and proxy agreement and power of attorney. If Zhongchao Shanghai or any of its shareholders breaches their contractual obligations under these agreements, Zhongchao WFOE, as pledgee, will be entitled to dispose the pledged equity interest entirely or partially. Each of the shareholders of Zhongchao Shanghai agrees that, during the term of the equity interest pledge agreement, it will not dispose of the pledged equity interests or create or allow any encumbrance on the pledged equity interests without the prior written consent of Zhongchao WFOE. In addition, Zhongchao WFOE has the right to collect dividends generated by the pledged equity interest during the term of the pledge. The term of the initial equity interest pledge agreement is 20 years. After the expiration of the term of initial pledge registration, Zhongchao WFOE may at its sole discretion require the Shareholders to extend the term of the equity interest registration. Proxy Agreement and Power of Attorney Pursuant to the proxy agreement and power of attorney dated August 14, 2019, each shareholder of Zhongchao Shanghai has irrevocably appointed Zhongchao WFOE to act as such shareholder’s exclusive attorney-in-fact to exercise all shareholder rights, including, but not limited to, voting on all matters of Zhongchao Shanghai requiring shareholder approval, disposing of all or part of the shareholder’s equity interest in Zhongchao Shanghai, oversee and review Zhongchao Shanghai’s operation and financial information. Zhongchao WFOE is entitled to designate any person to act as such shareholder’s exclusive attorney-in-fact without notifying or the approval of such shareholder, and if required by PRC law, Zhongchao WFOE shall designate a PRC citizen to exercise such right. Each proxy agreement power of attorney will remain in force for so long as the Zhongchao Shanghai exists. The shareholders of Zhongchao Shanghai do not have the right to terminate this agreement or revoke the appointment of the attorney-in-fact without the prior written consent of Zhongchao WFOE Spouse Consent Letters Pursuant to the Spouse Consent Letters dated August 14, 2019, the spouse of each married shareholder of Zhongchao Shanghai, unconditionally and irrevocably agreed not to assert any rights over the equity interest in Zhongchao Shanghai held by and registered in the name of their spouse. In addition, each of them agreed to be bound by the VIE Arrangements described here if the spouse obtains any equity interest in Zhongchao Shanghai for any reason. Master Exclusive Service Agreement Under the master exclusive service agreement between Zhongchao WFOE and Zhongchao Shanghai dated August 14, 2019, Zhongchao WFOE has the exclusive right to provide Zhongchao Shanghai with technical support, consulting services and other services. Zhongchao WFOE has the right to designate and appoint, at its sole discretion, any entities affiliated with the Zhongchao WFOE to provide any and all services. The service fees are calculated and paid on a yearly basis and at the amount that equals to 100% of the consolidated net profits of Zhongchao Shanghai. Zhongchao WFOE may adjust the service fee at its discretion after taking into account multiple factors, such as the difficulty of the services provided, the time consumed, the content and commercial value of services provided and the market price of comparable services. Zhongchao WFOE owns the intellectual property rights arising out of the performance of this agreements. Zhongchao Shanghai shall seek approval from Zhongchao WFOE prior to entering into any contracts obtaining the same or similar services as provided under the Master Exclusive Service Agreement. This agreement will remain effective as long as Zhongchao Shanghai exists, unless Zhongchao WFOE advance written notice to Zhongchao Shanghai and its shareholders or upon the transfer of all the equity interest held by Zhongchao Shanghai’s shareholders to Zhongchao WFOE and/or a third party designated by Zhongchao WFOE. Business Cooperation Agreement Under the business cooperation agreement dated August 14, 2019, without Zhongchao WFOE’s prior written consent, Zhongchao Shanghai agrees not to engage in any transaction which may materially affect its asset, obligation, right or operation, including but not limited to: any activities not within its normal business scope, merger and acquisition, offering any loan to any third party and incurring any debt from any third party. Zhongchao Shanghai shall seek approval from Zhongchao WFOE prior to entering into any material contract, except the contracts executed in the ordinary course of business. Zhongchao Shanghai shall cause the persons designated by Zhongchao WFOE to be the directors and executive officers of Zhongchao Shanghai. This agreement will remain effective as long as Zhongchao Shanghai exists, unless Zhongchao WFOE advance written notice to Zhongchao Shanghai and its shareholders or upon the transfer of all the equity interest held by Zhongchao Shanghai’s shareholders to Zhongchao WFOE and/or a third party designated by Zhongchao WFOE Agreements that Provide Us with the Option to Purchase the Equity Interest in Zhongchao Shanghai Exclusive Option Agreement Pursuant to the exclusive option agreement dated August 14, 2019, each shareholder of Zhongchao Shanghai has irrevocably granted Zhongchao WFOE an exclusive option to purchase, or have its designated person or persons to purchase, at its discretion, to the extent permitted under PRC law, all or part of the shareholder’s equity interests in Zhongchao Shanghai. The purchase price is equal to the lowest price allowable under PRC laws and regulations at the time of the transfer. Zhongchao Shanghai has agreed that without Zhongchao WFOE’s prior written consent, Zhongchao Shanghai shall cause the persons designated by Zhongchao WFOE to be the directors and executive officers of Zhongchao Shanghai, not amend its articles of association, increase or decrease the registered capital, sell or otherwise dispose of its assets or beneficial interest, create or allow any encumbrance on its assets or other beneficial interests, provide any loans to any third parties, enter into any material contract, merge with or acquire any other persons or make any investments, or distribute dividends to the shareholders. The shareholders of Zhongchao Shanghai have agreed that, without Zhongchao WFOE’s prior written consent, they will not dispose of their equity interests in Zhongchao Shanghai or create or allow any encumbrance on their equity interests. Moreover, without Zhongchao WFOE’s prior written consent, no dividend will be distributed to Zhongchao Shanghai’s shareholders, and if any of the shareholders receives any profit, interest, dividend or proceeds of share transfer or liquidation, the shareholder must give such profit, interest, dividend and proceeds to Zhongchao WFOE. These agreements will remain effective as long as Zhongchao Shanghai exists unless Zhongchao WFOE advance written notice to Zhongchao Shanghai and the shareholders or upon the transfer of all the equity interest held by the shareholders to Zhongchao WFOE and/or its designee. The Company has concluded that the Company is the primary beneficiary of Zhongchao Shanghai and its subsidiaries, and should consolidate their financial statements. The Company is the primary beneficiary based on the Proxy Agreement and Power of Attorney entered into as part of the VIE Agreements that each equity holder of Zhongchao Shanghai assigned their rights as a shareholder of Zhongchao Shanghai to Zhongchao WOFE. These rights include, but are not limited to, voting on all matters of Zhongchao Shanghai requiring shareholder approval, disposing of all or part of the shareholder’s equity interest in Zhongchao Shanghai, oversee and review Zhongchao Shanghai’s operation and financial information. As such, the Company, through Zhongchao WOFE, is deemed to hold all of the voting equity interest in Zhongchao Shanghai and its subsidiaries. For the periods presented, the Company has not provided any financial or other support to either Zhongchao Shanghai or its subsidiaries. However, pursuant to the Master Exclusive Services Agreement, the Company may provide complete technical support, consulting services and other services during the term of the VIE agreements. Though not explicit in the VIE agreements, the Company may provide financial support to Zhongchao Shanghai and its subsidiaries to meet its working capital requirements and capitalization purposes. The terms of the VIE Agreements and the Company’s plan of financial support to the VIEs were considered in determining that the Company is the primary beneficiary of the VIEs. Accordingly, the financial statements of the VIEs are consolidated in the Company’s consolidated financial statements. Based on the foregoing VIE Agreements, Zhongchao WFOE has effective control of Zhongchao Shanghai and its subsidiaries, which enables Zhongchao WFOE to receive all of their expected residual returns and absorb the expected losses of the VIE and its subsidiaries. Accordingly, the Company consolidates the accounts of Zhongchao Shanghai and its subsidiaries for the periods presented herein, in accordance with Accounting Standards Codification, or ASC, 810-10, Consolidation. New VIE Agreements On August 1, 2020, all shareholders of Zhongchao Shanghai, except Mr. Yang and Shanghai Xingzhong, decided to withdraw their capital contribution from Zhongchao Shanghai (the “Capital Reduction”). Given the effect of the Capital Reduction, Mr. Yang became the 76.4% shareholder of Zhongchao Shanghai with the remaining equity interests held by Shanghai Xingzhong. On September 10, 2020, Zhongchao WFOE, and Zhongchao Shanghai, and its shareholders signed a confirmation agreement to confirm that the VIE Agreements entered on August 14, 2019 have been terminated because of the Capital Reduction. Accordingly, on September 10, 2020, to clarify the legal effect of the Capital Reduction and to sustain the effective control over Zhongchao Shanghai by the Company, Mr. Yang and Shanghai Xingzhong, as the shareholders of Zhongchao Shanghai, signed a series of VIE agreements with Zhongchao WFOE, the terms of which are substantially the same as those of the Original VIE Agreements except the number of shareholders of Zhongchao Shanghai reduced to two (the “New VIE Agreements”). Upon entry into the New VIE Agreements, the Original VIE Agreements, except for the Master Exclusive Service Agreement, were expired. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Basis of presentation The accompanying audited consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). (b) Principal of consolidation The consolidated financial statements include the accounts of the Company, its wholly and majority owned subsidiaries, and consolidated VIE and its subsidiaries for which the Company is the primary beneficiary. During the year ended December 31, 2020, Beijing Boya was established, over which the Company and Mr. Weiguang Yang owned 70% and 30% equity interest, respectively. Mr. Weiguang Yang owned the equity interest on behalf of Zhongchao Shanghai. Beijing Boya is therefore 100% consolidated in the Company’s consolidated financial statements. All transactions and balances among the Company, its subsidiaries and consolidated VIE have been eliminated upon consolidation. (c) Non-controlling interest Non-controlling interests represent the equity interests in the subsidiaries of the VIE that are not attributable, either directly or indirectly, to the Company. As of December 31, 2019, non-controlling equity holders held 49% equity interest in Shanghai Jingyi. Non-controlling equity holders held 49% equity interest in Shanghai Jingyi before November 2020. Through certain entrustment agreements, Mr. Weiguang Yang, Zhongchao Yixin and Zhongren Yixin hold 19%, 20% and 10% of the equity interest of Shanghai Jingyi on behalf of Shanghai Zhongxun, respectively, after November 2020. As a result, the Company owns 100% of Shanghai Zhongxin’s equity interest. (d) Foreign currency translation Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing on 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 on the date of the balance sheet. The resulting exchange differences are recorded in the statement of operations. The reporting currency of the Company and its subsidiaries is U.S. dollars (“US$”) and the accompanying consolidated financial statements have been expressed in US$. In general, for consolidation purposes, assets and liabilities of the Company and its subsidiaries whose functional currency is not the US$, are translated into US$, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of the Company and its subsidiaries are recorded as a separate component of accumulated other comprehensive income within the statement of shareholders’ equity. Translation of amounts from RMB into US$ has been made at the following exchange rates for the respective periods: December 31, 2020 December 31, 2019 Balance sheet items, except for equity accounts 6.5326 6.9618 For the Years Ended December 31, 2019 2019 2018 Items in the statements of income and comprehensive income, and statements of cash flows 6.9020 6.9081 6.6090 No representation is made that the RMB amounts could have been, or could be, converted into U.S. dollars at the rates used in translation. (e) Use of estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities on the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. On an ongoing basis, management reviews these estimates and assumptions using the currently available information. Changes in facts and circumstances may cause the Company to revise its estimates. The Company bases its estimates on past experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Estimates are used when accounting for items and matters including, but not limited to, equity value of the Company, determinations of the useful lives and valuation of long-lived assets, estimates of allowances for doubtful accounts, valuation of deferred tax assets, and other provisions and contingencies. (f) Fair value of financial instruments The Company’s financial instruments are accounted for at fair value on a recurring basis. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The three levels of the fair value hierarchy are described below: Level 1 – inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 – inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments. Level 3 – inputs to the valuation methodology are unobservable and significant to the fair value. As of December 31, 2020 and 2019, financial instruments of the Company comprised primarily current assets and current liabilities including cash and cash equivalents, accounts receivable, other receivables, short-term borrowings and other payables, which approximate their fair values because of the short-term nature of these instruments. Short-term investments are trading securities with observable market price in active market. They are classified as level 1 investment and are measured at fair value. (g) Cash and cash equivalents Cash and cash equivalents primarily consist of bank deposits, as well as highly liquid investments, with original maturities of three months or less, which are unrestricted as to withdrawal and use. (h) Short-term investments Short-term investments comprised of certain listed equity securities purchased through various open market transactions. Equity securities not measured by the equity method are carried at fair value with unrealized gains and losses recorded in the consolidated statements of income and comprehensive income, according to ASC 321 “Investments — Equity Securities”. During the year ended December 31, 2020, the Company purchased certain listed equity securities and accounted for such investments as “short-term investments” and subsequently measure the investments at fair value in the account of “other income, net”. (i) Accounts receivable Accounts receivable are recorded at the gross amount less an allowance for any uncollectible accounts and do not bear interest. The Company provides customers with credit term ranging between one to six months, depending on credit assessment of customers. Management reviews the adequacy of the allowance for doubtful accounts on an ongoing basis, using historical collection trends and aging of receivables. Management also periodically evaluates individual customer’s financial condition, credit history and the current economic conditions to make adjustments in the allowance when necessary. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. During the year ended December 31, 2020, the Company wrote off $336,367 against accounts receivable as the Company evaluated it is remote to collect the balance. As of December 31, 2020 and 2019, there were no allowances for doubtful accounts for accounts receivable. (j) Prepayments Prepayments represent amounts advanced to suppliers for providing services to the Company. The suppliers usually require advance payments when the Company orders service and the prepayments will be utilized to offset the Company’s future payments. These amounts are unsecured, non-interest bearing and generally short-term in nature. (k) Investment in a limited partnership The Company accounts for the investment in a limited partnership in which the Company holds more than minor equity interest (3% - 5%) in accordance with ASC 970-323-25-6 under the equity method of accounting. The Company applies the equity method to account for investment in a limited partnership, according to ASC 323 “Investments — Equity Method and Joint Ventures”, over which it has significant influence but does not own a controlling financial interest. Under the equity method, the Company’s share of the post-acquisition profits or losses of the equity investee is recognized in the consolidated statements of income and comprehensive income. The Company records its share of the results of the equity investees on a one quarter in arrears basis. The excess of the carrying amount of the investment over the underlying equity in net assets of the equity investee generally represents goodwill and intangible assets acquired. When the Company’s share of losses of the equity investee equals or exceeds its interest in the equity investee, the Company does not recognize further losses, unless the Company has incurred obligations or made payments or guarantees on behalf of the equity investee. The Company continually reviews its investments in equity investees to determine whether a decline in fair value below the carrying value is other-than-temporary. The primary factors the Company considers in its determination include the financial condition, operating performance and the prospects of the equity investee; other company specific information such as recent financing rounds; the geographic region, market and industry in which the equity investee operates, including consideration of the impact of the COVID-19 pandemic; and the length of time that the fair value of the investment is below its carrying value. If the decline in fair value is deemed to be other-than-temporary, the carrying value of the equity investee is written down to fair value. No impairment of was recognized for the years ended December 31, 2020, 2019 and 2018. (k) Property and equipment Property and equipment primarily consist of office equipment, vehicle and construction in progress. Office equipment and vehicles are stated at cost less accumulated depreciation less any provision required for impairment in value. Depreciation is computed using the straight-line method with residual value rate of 5% based on the estimated useful lives as follows: Building 20 years Office equipment 3 years Vehicle 4 years Construction in progress represents buildings and related premises under construction, which is stated at construction cost less any impairment loss. In addition to cost under the construction contracts, interest cost and external costs directly related to the construction of such facilities, including equipment installation and shipping costs, are capitalized. Construction in progress is transferred to the respective category of property and equipment when completed and ready for its intended use. Costs of repairs and maintenance are expensed as incurred and asset improvements are capitalized. The cost and related accumulated depreciation of assets disposed of or retired are removed from the accounts, and any resulting gain or loss is reflected in the consolidated statement of income and comprehensive income. (l) Prepayments for lease of land Prepayments for lease of land represent prepayments to the lessee for sub-lease of two land use rights. Prepayments for lease of land are carried at cost less accumulated amortization and any impairment loss. Amortization is provided against the cost of lease prepayments on a straight-line basis over the period of the rights which are 16 years and 32 years, respectively. (m) Intangible assets, net Purchased intangible assets are recognized and measured at fair value upon acquisition. Separately identifiable intangible assets that have determinable lives continue to be amortized over their estimated useful lives using the straight-line method based on their estimated useful lives as follows: Trademarks 10 years License 10 years Software 10 years (n) Impairment of long-lived assets The Company reviews long-lived assets 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 measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. No impairment of long-lived assets was recognized for the years ended December 31, 2020, 2019 and 2018. (o) Revenue recognition The Company adopted ASC 606, Revenue from Contracts with Customers (“ASC 606”) on January 1, 2017, using the modified retrospective approach. ASC 606 establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts to provide goods or services to customers. The core principle requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to receive in exchange for those goods or services recognized as performance obligations are satisfied. In accordance with ASC 606, revenues are recognized when control of the promised services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services. The Company identified each distinct service, or each series of distinct services that are substantially the same and that have the same pattern of transfer to the customer, as a performance obligation. Transaction price is allocated among different performance obligations identified in one contract, by using expected cost plus margin approach, if the standalone selling price of each performance obligation is not observable. Timing of revenue recognition may differ from the timing of invoicing to customers. Accounts receivable consisted of amounts invoiced and amounts for which revenue recognized prior to invoicing when the Company has satisfied its performance obligation and has the unconditional right to payment. Advances from customers consists of payments received related to unsatisfied performance obligations at the end of the period. The Company applied a practical expedient to expense costs as incurred for costs to obtain a contract with a customer when the amortization period would have been one year or less. The Company has no material incremental costs for obtaining contracts with customers that the Company expects the benefit of those costs to be longer than one year. Medical training and education services The Company designs and provides medical training and education courses in both online and offline formats to physicians and allied healthcare professionals (the “training and education services”). The Company identifies a single performance obligation from contracts. The Company recognizes revenue at the point of provision of services. Payments received in advance from customers are recorded as “advance from customers” in the consolidated balance sheets. Advance from customers is recognized as revenue when the Company delivers the courses to its customers. Such advance payment received are non-refundable. In cases where fees are collected after the sales, revenue and accounts receivable are recognized upon delivery of medical training and education courses to the Company. The fees are fixed and determinable at the inception of the services. Offline medical training and education services courses – though customers can benefit from each service commitment, including design, production and presentation of medical courses, together with other readily available resources. The promises in the contracts with customers is integration of all of these service commitments. The Company concludes that these service commitments are highly dependent with each other, in the context of the contract term. Thus, these service commitments are not distinct from each other, and the Company combines all service commitments performed as a single performance obligation. In cases where the Company engages third party experts to provide presentation in medical courses, as the Company determines the contents and the participants, it has the ability to direct these experts to provide medical training services for the Company. Therefore the Company is primarily responsible for fulfilling the promise to provide the medial courses and has the discretion in establishing the transaction price. The Company is a principal in the provision of services and recognizes revenues on a gross basis. Online medical training and education services courses – the promises in the contracts with customers consist of provision of online courses and presentation of the courses online for users to access for a period of time. The performance obligation of presentation of the courses online for users for a period of time is immaterial in the context of the contract because presentation of each course incurred no significant additional cost, nor will it occupy any significant resources of the Company, except for little digital space on the Company’s server, which is inconsequential. Therefore, the Company combines all service commitments performed as a single performance obligation. Assistance in patient-aid projects The Company is engaged by NFPs to assist in the operation of patient-aid projects with a purpose to facilitate qualified patients to obtain free drug treatment from NFPs. The Company is responsible to provide doctors with access to training courses or training materials in connection with the drug treatment, review the completeness of application documents from patients, and other ad-hoc works (such programs with these plug-in features are hereinafter referred as the “patient-aid projects”). The arrangements are structured as fixed price contracts. The price is determined as stated in contracts and does not include any variable consideration. The Company identifies a single performance obligation from contracts and recognizes revenue over a period of time during which the Company provides the assistance to the NFPs till the earlier of the expiration of contract period or the free drugs are completely delivered. The Company uses an input-based method to measure the progress, by reference to the cost incurred in performing the obligation. The fees are fixed at the inception of the services and are collected either in advance or after the services are provided. Other consulting services The Company also provides consulting services to its customers, including drafting research papers and providing other academic supports. The consulting services are accounted for as a single performance obligation and was recognized as revenue when the Company delivers services to the customers. Fees are generally collected after provision of services. For the years ended December 31, 2020, 2019, and 2018, the Company generated minimal amount from other consulting services. (p) Cost of revenues Cost of revenues was comprised of direct related costs incurred for preparation of online medical training courses and offline education seminars and patient-aid projects, including expenses of travelling and accommodation, seminar site-rental, video production and backdrop production, professional service fees charged by experts who provide online and offline seminars, salary and welfare expenses incurred by the key members of the editorial, design and production team, and labor cost for patient-aid projects. The travelling and accommodation expenses, including but not limited to the air-ticket expenses and hotel accommodation expenses, represented the costs arising from lecturers’ attendance and participation of the offline seminars. Other media expenses were incurred by the Company’s medical department for videos production, live streaming of the offline seminars, and materials collection to create online courses. These travelling, accommodation and media expenses are well budgeted before any agreements entered into by the Company and the customers. Therefore, such expenses are well covered by the customers under those agreements. The Company is not reimbursed by the customers separately. (q) Employee benefits The full-time employees of the Company are entitled to staff welfare benefits including medical care, housing fund, pension benefits, unemployment insurance and other welfare, which are government mandated defined contribution plans. The Company is required to accrue for these benefits based on certain percentages of the employees’ respective salaries, subject to certain ceilings, in accordance with the relevant PRC regulations, and make cash contributions to the state-sponsored plans out of the amounts accrued. Total expenses for the plans were $310,637, and $497,402, and $476,765 for the years ended December 31, 2020, 2019 and 2018, respectively. (r) Research and development costs Research and development costs are mainly comprised of salary and welfare expenses for the Company’s IT department employees who work for the development of the Company’s platform and database, and software and related intellectual property expenses which were used to develop an extensive library of licensed content and medical database. (s) Advertising expenses Advertising expenses primarily include advertisement for the Company’s platform for online medical courses. Advertising costs are expensed as incurred and the total amounts charged to “selling and marketing expenses” in the consolidated statements of income and comprehensive income were $2,851,648, $2,670,397 and $1,989,895 for the years ended December 31, 2020, 2019 and 2018, respectively. (t) Government grants Government grants include cash subsidies as well as other subsidies received from various government agencies by the VIE and its subsidiaries of the Company. Government grants are recognized as other income when all conditions attached to the grants are fulfilled and recorded in the consolidated statements of income and comprehensive income. During the years ended December 31, 2020, 2019 and 2018, the Company received government grants of $nil, $101,330 and $552,277, respectively, in connection with the Company’s development of medical database and online medical lectures sharing application and cloud system. However the conditions attached to the grants would not be fulfilled until passing quality check by local government. These grants are recognized as deferred government grant when received and will be charged as a reduction of specific costs and expenses upon the Company passing the quality check, or recorded as an income if the specific costs and expenses were incurred in prior periods. For the years ended December 31, 2020, 2019, and 2018, in connection with the Company’s development of medical database and online medical lectures sharing application and cloud system, the Company recognized government grant income of $325,992, $506,652 and $nil, respectively, included in the “other income, net” in the consolidated statement of income and comprehensive income. Other immaterial government grants are recognized as current period income when received. (u) Share-based compensation Share-based awards granted to the Company’s employees and one non-employee are measured at fair value on grant date and measurement date, respectively, and share-based compensation expense is recognized (i) immediately at the grant date if no vesting conditions are required, or (ii) using the accelerated attribution method, net of estimated forfeitures, over the requisite service period. The fair value of restricted shares is determined with reference to the fair value of the underlying shares. At each date of measurement, the Company reviews internal and external sources of information to assist in the estimation of various attributes to determine the fair value of the share-based awards granted by the Company, including but not limited to the fair value of the equity value of the Company (Note 16), expected life, expected volatility and expected forfeiture rates. The Company is required to consider many factors and make certain assumptions during this assessment. If any of the assumptions used to determine the fair value of the share-based awards changes significantly, share-based compensation expense may differ materially in the future from that recorded in the current reporting period. Moreover, the estimates of fair value of the awards are not intended to predict actual future events or the value that ultimately will be realized by grantees who receive share-based awards, and subsequent events are not indicative of the reasonableness of the original estimates of fair value made by the Company for accounting purposes. (v) Value added tax The Company is subject to value added tax (“VAT”) and related surcharges on the revenues earned for services provided in the PRC. The applicable rate of value added tax is 6%. The related surcharges for revenues derived from provision medical courses are deducted from gross receipts to arrive at net revenues. (w) Income taxes The Company accounts for income taxes in accordance with the U.S. GAAP for income taxes. Under the asset and liability method as required by this accounting standard, the recognition of deferred income tax liabilities and assets for the expected future tax consequences of temporary differences between the income tax basis and financial reporting basis of assets and liabilities. Provision for income taxes consists of taxes currently due plus deferred taxes. The charge for taxation is based on the results for the year as adjusted for items which are non-assessable or disallowed. It is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax basis. Deferred tax assets are recognized to the extent that it is more likely than not these items will be utilized against taxable income in the future. Deferred tax is calculated using tax rates that are expected to apply to the period when the asset is realized or the liability is settled. Deferred tax is charged or credited in the income statement, except when it is related to items credited or charged directly to equity. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Current income taxes are provided for in accordance with the laws of the relevant taxing authorities. An uncertain tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred. As of December 31, 2020, income tax returns for the tax years ended December 31, 2015 through December 31, 2019 remain open for statutory examination. (x) Earnings per share Basic earnings per ordinary share is computed by dividing net earnings attributable to ordinary shareholders by the weighted-average number of ordinary shares outstanding during the period. Diluted earnings per share is computed by dividing net income attributable to ordinary shareholders by the sum of the weighted average number of ordinary share outstanding and of potential ordinary share (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential ordinary share that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted earnings per share. (y) Comprehensive income A Comprehensive income includes net income and other comprehensive income arising from foreign currency adjustments. Comprehensive income is reported in the consolidated statements of income and comprehensive income. (z) Commitments and contingencies In the normal course of business, the Company is subject to loss contingencies, such as legal proceedings and claims arising out of its business, that cover a wide range of matters, including, among others, government investigations and tax matters. In accordance with ASC No. 450 Sub topic 20, “Loss Contingencies”, the Company records accruals for such loss contingencies when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. (aa) Operating lease In February 2016, the Financial Accounting Standards Board (the “FASB”) issued ASU 2016-02, Leases (Topic 842), which is effective for annual reporting periods (including interim periods) beginning after December 15, 2018, and early adoption is permitted. The Company adopted the Topic 842 on January 1, 2019 using a modified retrospective approach reflecting the application of the standard to leases existing at, or entered into after January 1, 2019. The Company leases its offices which are classified as operating leases in accordance with Topic 842. Under Topic 842, lessees are required to recognize the following for all leases (with the exception of short-term leases) on the commencement date: (i) lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (ii) right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. At the commencement date, the Company recognizes the lease liability at the present value of the lease payments not yet paid, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company’s incremental borrowing rate for the same term as the underlying lease. The right-of-use asset is recognized initially at cost, which primarily comprises the initial amount of the lease liability, plus any initial direct costs incurred, consisting mainly of brokerage commissions, less any lease incentives received. All right-of-use assets are reviewed for impairment. No impairment for right-of-use lease assets as of December 31, 2020. (bb) Segment reporting Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker (the “CODM”), which is comprised of certain members of the Company’s management team. Consequently, the Company has determined that it has only one reportable operating segment. (cc) Recently issued accounting pronouncements In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses Measurement of Credit Losses on Financial Instruments The Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material impact on its the consolidated financial position, statements of operations and cash flows. (dd) Significant risks and uncertainties 1) Credit risk Assets that potentially subject the Company to significant concentration of credit risk primarily consist of cash and cash equivalents. The maximum exposure of such assets to credit risk is their carrying amount as at the balance sheet dates. As of December 31, 2020, the Company held cash and cash equivalents of $15,072,947, among which were $6,717,940 was deposited in financial institutions located in Mainland China, and each bank accounts is insured by the government authority with the maximum limit of RMB 500,000 (equivalent to approximately $76,500). In addition, the Company maintains certain bank accounts in Hong Kong and Cayman, which are not insured by Federal Deposit Insurance Corporation (“FDIC”) insurance or other insurance. To limit exposure to credit risk relating to depo |
Variable Interest Entities and
Variable Interest Entities and Other Consolidation Matters | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
VARIABLE INTEREST ENTITIES AND OTHER CONSOLIDATION MATTERS | 3. VARIABLE INTEREST ENTITIES AND OTHER CONSOLIDATION MATTERS On August 14, 2019, Zhongchao WFOE entered into VIE Agreements with Zhongchao Shanghai and its shareholders. The key terms of these VIE Agreements are summarized in “Note 1 - Organization and Principal Activities” above. VIE is an entity that has either a total equity investment that is insufficient to permit the entity to finance its activities without additional subordinated financial support, or whose equity investors lack the characteristics of a controlling financial interest, such as through voting rights, right to receive the expected residual returns of the entity or obligation to absorb the expected losses of the entity. The variable interest holder, if any, that has a controlling financial interest in a VIE is deemed to be the primary beneficiary and must consolidate the VIE. Zhongchao WFOE is deemed to have a controlling financial interest and be the primary beneficiary of Zhongchao Shanghai, because it has both of the following characteristics: 1. power to direct activities of Zhongchao Shanghai that most significantly impact the its economic performance, and 2. obligation to absorb losses of the entity that could potentially be significant to Zhongchao Shanghai or right to receive benefits from the entity that could potentially be significant to Zhongchao Shanghai. In addition, as all of these VIE agreements are governed by PRC law and provide for the resolution of disputes through arbitration in the PRC, they would be interpreted in accordance with PRC law and any disputes would be resolved in accordance with PRC legal procedures. The legal environment in the PRC is not as developed as in other jurisdictions, such as the United States. As a result, uncertainties in the PRC legal system could further limit the Company’s ability to enforce these VIE agreements. Furthermore, these contracts may not be enforceable in China if PRC government authorities or courts take a view that such contracts contravene PRC laws and regulations or are otherwise not enforceable for public policy reasons. In the event the Company is unable to enforce these VIE Agreements, it may not be able to exert effective control over Zhongchao Shanghai and its ability to conduct its business may be materially and adversely affected. All of the Company’s main current operations are conducted through Zhongchao Shanghai and its subsidiaries. Current regulations in China permit Zhongchao Shanghai to pay dividends to the Company only out of its accumulated distributable profits, if any, determined in accordance with their articles of association and PRC accounting standards and regulations. The ability of Zhongchao Shanghai to make dividends and other payments to the Company may be restricted by factors including changes in applicable foreign exchange and other laws and regulations. Risks of variable interest entity structure In the opinion of management, (i) the corporate structure of the Company is in compliance with existing PRC laws and regulations; (ii) the VIE Arrangements are valid and binding, and do not result in any violation of PRC laws or regulations currently in effect; and (iii) the business operations of WFOE and the VIE are in compliance with existing PRC laws and regulations in all material respects. However, there are substantial uncertainties regarding the interpretation and application of current and future PRC laws and regulations. Accordingly, the Company cannot be assured that PRC regulatory authorities will not ultimately take a contrary view to the foregoing opinion of its management. If the current corporate structure of the Company or the VIE Arrangements is found to be in violation of any existing or future PRC laws and regulations, the Company may be required to restructure its corporate structure and operations in the PRC to comply with changing and new PRC laws and regulations. In the opinion of management, the likelihood of loss in respect of the Company’s current corporate structure or the VIE Arrangements is remote based on current facts and circumstances. The following significant amounts of Zhongchao Shanghai and its subsidiaries are included in the accompanying consolidated financial statements for the years ended December 31, 2020 and 2019: December 31, 2020 December 31, 2019 ASSETS Cash and cash equivalents $ 6,717,940 $ 7,739,422 Accounts receivable 10,321,837 5,078,419 Due from Zhongchao Inc.* 108,518 - Other current assets 2,167,706 1,692,928 Investment in a limited partnership 1,258,787 - Property and equipment, net 1,997,761 1,889,973 Other noncurrent assets 1,491,321 1,338,708 Total Assets $ 24,063,870 $ 17,739,450 LIABILITIES Advances from customers $ 6,760 $ 73,962 Deferred income - 323,192 Income tax payable 1,523,175 897,892 Operating lease liabilities 62,160 251,582 Due to Zhongchao Inc.* 748,630 - Other current liabilities 1,389,860 852,398 Total Liabilities $ 3,730,585 $ 2,399,026 For the years ended December 31, 2020 2019 2018 Revenues $ 17,989,788 $ 14,882,763 $ 12,865,870 Income from Operations $ 4,525,855 $ 3,642,265 $ 3,274,647 Net Income $ 4,484,029 $ 4,000,620 $ 3,001,489 * The balances due from/to Zhongchao Inc., are eliminated on consolidation. |
Short-Term Investments
Short-Term Investments | 12 Months Ended |
Dec. 31, 2020 | |
Short-term Investments [Abstract] | |
SHORT-TERM INVESTMENTS | 4. SHORT-TERM INVESTMENTS During the year ended December 31, 2019 and 2018, the Company made investments in various financial products from Chinese banks and wealth management companies, with variable return rate and with maturities between three months and one year. The Company classified these financial assets as held-to-maturity financial assets and recorded the assets at amortized cost, which approximates fair value. As of December 31, 2019, the Company collected the balance all short-term investments from Chinese banks and wealth management companies. For the years ended December 31, 2019 and 2018, the Company earned interest income of $56,512 and $103,687, respectively, from the short-term investments. As of December 31, 2020, the balance of short-term investments represented certain listed equity securities purchased through various open market transactions invested by the Company during the year ended December 31, 2020. The short-term investments are trading securities. They are initially recorded at cost, and subsequently measured at fair value with the changes in fair value recorded in other income, net in the consolidated statement of income and comprehensive income. Loss from such short-term investment amounted to $10,331 for the years ended December 31, 2020. |
Other Current Assets
Other Current Assets | 12 Months Ended |
Dec. 31, 2020 | |
Disclosure Text Block Supplement [Abstract] | |
OTHER CURRENT ASSETS | 5. OTHER CURRENT ASSETS Other current assets consist of the following: December 31, 2020 December 31, 2019 Deferred offering costs (i) $ - $ 461,710 Prepaid advertising expense (ii) 1,033,280 426,901 Deferred contract costs (iii) 272,804 189,572 Office rental deposit 86,287 71,752 Interest receivable 32,416 72,671 Prepaid rental fees 15,827 15,598 Prepaid consulting service fees 78,627 3,160 Others 94,167 16,676 $ 1,613,408 $ 1,258,040 (i) As of December 31, 2019, the balance of deferred offering costs represented the expenses directly related to the initial public offerings, which was deducted against additional paid-in capital upon initial public offering in February 2020. (ii) As of December 31, 2020 and 2019, the balance of prepaid advertising expenses represents payments of advertising expenses to three and one vendors respectively. Among the balance of $1,033,280 as of December 31, 2020, $459,235 was subsequently refunded from the vendor to the Company as the Company suspended cooperation with the vendor. (iii) As of December 31, 2020 and 2019, the balances of deferred contract costs represented the travel and media expenses which were directly related to certain contracts with customers. The costs and expenses were incurred so as the Company would fulfil its performance obligation committed to its customers and were expected to be recovered. |
Property and Equipment, Net
Property and Equipment, Net | 12 Months Ended |
Dec. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT, NET | 6. PROPERTY AND EQUIPMENT, NET Property and equipment, net consist of the following: December 31, 2020 December 31, 2019 Building $ 1,828,092 $ - Office equipment 449,246 392,010 Vehicle 34,351 32,233 Less: accumulated depreciation (313,928 ) (119,976 ) 1,997,761 304,267 Construction in progress - 1,585,706 $ 1,997,761 $ 1,889,973 As of December 31, 2019, the construction in progress primarily consisted of the construction in progress of an office campus and facilities in Beijing on leased land (Note 7). The construction was completed in January 2020. As of December 31, 2020, the balance of property was comprised of office campus and facilities in Beijing of $1,828,092. Depreciation expenses totaled $176,111, $75,021 and $23,655 for the years ended December 31, 2020, 2019 and 2018, respectively. |
Prepayments for Lease of Land
Prepayments for Lease of Land | 12 Months Ended |
Dec. 31, 2020 | |
Prepayments For Lease Of Land [Abstract] | |
PREPAYMENTS FOR LEASE OF LAND | 7. PREPAYMENTS FOR LEASE OF LAND Prepayments for lease of land consist of the followings: December 31, 2020 December 31, 2019 Prepayments for lease of land 423,415 $ 397,311 Less: accumulated amortization (55,827 ) (30,902 ) $ 367,588 $ 366,409 Amortization expenses totaled $21,670, $21,650 and $9,921 for the years ended December 31, 2020, 2019 and 2018, respectively. |
Intangible Assets, Net
Intangible Assets, Net | 12 Months Ended |
Dec. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS, NET | 8. INTANGIBLE ASSETS, NET Intangible assets, net consist of the following: December 31, 2020 December 31, 2019 Trademark and license 11,755 $ 11,030 Software 43,780 41,082 Less: accumulated amortization (20,562 ) (14,789 ) $ 34,973 $ 37,323 For the years ended December 31, 2020 and 2019 and 2018, amortization expense totaled $4,544, $6,234 and $5,123, respectively. |
Investment in A Limited Partner
Investment in A Limited Partnership | 12 Months Ended |
Dec. 31, 2020 | |
Investment Company, Financial Highlights [Abstract] | |
INVESTMENT IN A LIMITED PARTNERSHIP | 9. INVESTMENT IN A LIMITED PARTNERSHIP As of December 31, 2020, the Company’s investment in a limited partnership was as the following: Investment % of ownership Investment dates Ningbo Meishan Xinaishan Equity Investment Limited Partnership (“limited partnership”) $ 1,285,859 28 % November 5, 2020 Less: share of operating loss of limited partnership (27,071 ) 1,258,788 On November 5, 2020, the Company entered into a five-year partnership agreement to invest $1,217,039, for 28% partnership interest in the limited partnership. The funds raised by the limited partnership are invested in one PRC private company engaged in immunotherapy. For the year ended December 31, 2020, equity investment loss of $25,622 has been recorded in other income, net for the Company’s share of the operating loss of the limited partnership. As of December 31, 2020, no significant impairment indicators have been noted in connection with the investment. |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 12 Months Ended |
Dec. 31, 2020 | |
Disclosure Text Block Supplement [Abstract] | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | 10. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Accrued expenses and other current liabilities consist of the following: December 31, 2020 December 31, 2019 Other tax payable $ 777,810 $ 390,403 Accrued payroll 159,350 168,818 Deposits from sub-lessors of land use rights (i) - 124,393 Other current liabilities 44,273 51,720 $ 981,433 $ 735,334 (i) The Company leased two pieces of land use rights (Note 7) from certain sub-lessors and required of deposits from these sub-lessors and would release the deposits upon sub-lessors’ issuance of invoices to the Company. The Company released deposits in the year ended December 31, 2020 upon receiving invoices from the sub-lessors. Other tax payable Other tax payables consist of the following: December 31, 2020 December 31, 2019 Value added tax payable $ 740,894 $ 366,535 Local taxes payable 36,916 23,868 $ 777,810 $ 390,403 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | 11. INCOME TAXES Cayman Islands Under the current tax laws of the Cayman Islands, the Company is not subject to tax on income or capital gain. Additionally, upon payments of dividends to the shareholders, no Cayman Islands withholding tax will be imposed. British Virgin Islands Under the current tax laws of BVI, the Company’s subsidiary incorporated in the BVI is not subject to tax on income or capital gains. Hong Kong Zhongchao HK is incorporated in Hong Kong and is subject to Hong Kong Profits Tax on the taxable income as reported in its statutory financial statements adjusted in accordance with relevant Hong Kong tax laws. The applicable tax rate for the first HKD$2 million of assessable profits is 8.25% and assessable profits above HKD$2 million will continue to be subject to the rate of 16.5% for corporations in Hong Kong, effective from the year of assessment 2018/2019. Before that, the applicable tax rate was 16.5% for corporations in Hong Kong. The Company did not make any provisions for Hong Kong profit tax as there were no assessable profits derived from or earned in Hong Kong since inception. Under Hong Kong tax laws, Zhongchao HK is exempted from income tax on its foreign-derived income and there are no withholding taxed in Hong Kong on remittance of dividends. PRC Zhongchao WFOE, Zhongchao Shanghai, Shanghai Maidemu are subject to PRC Enterprise Income Tax (“EIT”) on the taxable income in accordance with the relevant PRC income tax laws. The EIT rate for companies operating in the PRC is 25%. Shanghai Zhongxun, Shanghai JingyiShanghai, Huijing, Beijing Boya, Zhongchao Shanghai Beijing Branch and Shanghai Zhongxun Beijing Branch qualify as Small and Low Profit Enterprises, and are subject to a preferential EIT of 10%. Liaoning Zhixun was not qualified as a tax payer until fiscal year 2021. Entities qualifying as Software Development Enterprises enjoy a preferential tax treatment of income tax exemption for the first two years, and 50% reduction of rate (i.e. 12.5%) for the next three years. Entities qualifying as High and New Technology Enterprises enjoy a preferential tax rate of 15%. Qualified as a Software Development Enterprise and a High and New Technology Enterprise, Zhongchao Shanghai received the preferential tax treatments from the year ended December 31, 2016, and was exempted from income taxes for the years ended December 31, 2016 and 2017, applied a preferential income tax rate of 12.5% for the years ended December 2018 through 2020, and a preferential income tax rate of 15% from the year ended December 31, 2021 and thereafter. In September 2018, the State Taxation Administration of the PRC announced a preferential tax treatment for research and development expenses. Qualified entities is entitled to deduct 175% research and development expenses against income to reach a net operating income. Income tax expenses consist of the following: For the Years Ended December 31, 2020 2019 2018 Current income tax expenses $ (543,211 ) $ (705,231 ) $ (441,156 ) Deferred income tax benefits (expenses) 58,424 318,087 (60,975 ) Income tax expenses $ (484,787 ) $ (387,144 ) $ (502,131 ) Below is a reconciliation of the statutory tax rate to the effective tax rate: For the Years Ended December 31, 2020 2019 2018 PRC statutory income tax rate 25 % 25 % 25 % Effect of preferential tax benefits (13.96 )% (14.23 )% (7.30 )% Effect of non-deductible expenses 0.35 % 0.39 % 0.22 % Effect of research and development credits (1.47 )% (2.25 )% (3.28 )% Effect of deferred tax rate change for share based compensation (0.11 )% (0.09 )% (0.31 )% Effective tax rate 9.81 % 8.82 % 14.33 % Deferred tax assets as of December 31, 2020 and 2019 consist of the following: December 31, 2020 December 31, 2019 Excess advertising expense 699,717 $ 608,131 Deferred Intangible assets amortization 22,983 24,165 Net operating loss carrying forward 7,666 20,543 Share-based compensation 65,181 36,155 $ 795,547 $ 688,994 As of December 31, 2020 and 2019, the Company had net operating loss carryforwards of $36,538 and $209,345, respectively. The Company utilized the net operating loss carryforwards during the year ended December 31, 2020. The Company reviews deferred tax assets for a valuation allowance based upon whether it is more likely than not that the deferred tax asset will be fully realized. As of December 31, 2020 and 2019, the Company did not record valuation allowance against the deferred tax assets based upon management’s assessment that it is more likely than not that there will be realization of the deferred tax asset. The Company evaluates its valuation allowance requirements at end of each reporting period by reviewing all available evidence, both positive and negative, and considering whether, based on the weight of that evidence, a valuation allowance is needed. When circumstances cause a change in management’s judgement about the recoverability of deferred tax assets, the impact of the change on the valuation allowance is generally reflected in income from operations. The future realization of the tax benefit of an existing deductible temporary difference ultimately depends on the existence of sufficient taxable income of the appropriate character within the carryforward period available under applicable tax law. Uncertain tax positions The Company evaluates each uncertain tax position (including the potential application of interest and penalties) based on the technical merits, and measure the unrecognized benefits associated with the tax positions. As of December 31, 2020 and 2019, the Company did not have any significant unrecognized uncertain tax positions or any unrecognized liabilities, interest or penalties associated with unrecognized tax benefit. The Company does not believe that its uncertain tax benefits position will materially change over the next twelve months. |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Dec. 31, 2020 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | 12. EARNINGS PER SHARE The following table sets forth the computation of basic and diluted loss per ordinary share for the years ended December 31, 2020, 2019 and 2018, respectively: For the Years Ended December 31, 2020 2019 2018 Net Income Attributable to Zhongchao Inc.’s shareholders $ 4,458,380 $ 4,046,670 $ 3,019,323 Weighted average number of ordinary share outstanding Basic and Diluted 24,425,637 21,600,135 20,764,245 Earnings per share Basic and Diluted $ 0.183 $ 0.187 $ 0.145 On August 14, 2019, Zhongchao Cayman completed a reorganization of entities under common control of its then existing shareholders, who collectively owned a majority of the equity interests of Zhongchao Cayman prior to the reorganization. All references to numbers of common shares and per-share data in the accompanying consolidated financial statements have been adjusted to reflect such issuance of shares on a retrospective basis. In addition, the contingently issuable ordinary shares of 1,350,068 shares of Class A ordinary share underlying the warrant (Note 1) issued to one existing shareholder of Zhongchao Shanghai is included in calculation of basic and diluted weighted average number of ordinary share outstanding, as the Company does not expect any circumstances under which those shares would not be issued. Potential ordinary share that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted earnings per share. For the years ended December 31, 2020, 2019 and 2018, the Company had no dilutive shares. |
Related Party Transactions and
Related Party Transactions and Balanes | 12 Months Ended |
Dec. 31, 2020 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS AND BALANES | 13. RELATED PARTY TRANSACTIONS AND BALANES As of December 31, 2019, the Company had a balance of $14,364 due from Shanghai Xingzhong Investment Management Limited Partnership, which was a platform for certain officers and employees holding the Company shares. The balance was an operating expense paid on behalf of the related party, and was collected during the year ended December 31, 2020. On February 28, 2019, Mr. Weiguang Yang transferred 1.0% and 4.75% of equity interest of Shanghai Xingzhong Investment Management LLP, which was equivalent to 29,970 and 142,229 shares of ordinary share of Zhongchao Shanghai, to Ms. Pei Xu, the Chief Financial Officer of the Company, and Ms. Shuang Wu, the Chief Operation Officer of the Company, respectively. The ordinary shares will vest after a ten-year service period is fulfilled. The fair value of these ordinary shares aggregated $827,413 (Note 16) which is to compensate the services to be rendered by the employee. The value of the shares of $827,413 transferred were charged to expenses over the ten years request service period starting from each of the grant date in the Company’s consolidated statements of income and comprehensive income with a corresponding credit to additional paid-in capital. |
Equity
Equity | 12 Months Ended |
Dec. 31, 2020 | |
Stockholders' Equity Note [Abstract] | |
EQUITY | 14. EQUITY Capital contribution from shareholders During the year ended December 31, 2018, a new shareholder made additional cash paid-in capital of $3,580,260 to Zhongchao Shanghai, and in return obtained equity interest of 6.25% economic beneficial interests in Zhongchao Shanghai in aggregate. Ordinary share The Company’s authorized share capital is 500,000,000 ordinary shares consisting of 450,000,000 Class A Ordinary Shares and 50,000,000 Class B ordinary shares, par value $0.0001 per share (each, a “Class B Ordinary Share”; collectively, “Class B Ordinary Shares”). On April 16, 2019, the Company issued 10,000 Class B Ordinary Shares. On August 14, 2019, the Company issued 14,752,352 Class A Ordinary Shares and 5,497,715 Class B Ordinary Shares. Holders of Class A Ordinary Shares and Class B Class A Ordinary Shares have the same rights except for voting and conversion rights. In respect of matters requiring a shareholder vote, each Class A Ordinary Share will be entitled to 1 vote and each Class B Ordinary Share will be entitled to 15 votes. The Class A Ordinary Shares are not convertible into shares of any other class. The Class B Ordinary Shares are convertible into Class A Ordinary Shares at any time after issuance at the option of the holder on a one to one basis. In addition, the Company was committed to issue 1,350,068 Class A Ordinary Shares to a 6.25 % shareholder of Zhongchao Shanghai, who is now in the progress of changing from a shareholder of Zhongchao Shanghai to a direct investor of Zhongchao Cayman (Note 1). The 1,350,068 Class A Ordinary Shares, representing 6.25% economic beneficial interest, or 1.37% of the voting ownership interest of the Company as of December 31, 2020, or 5.42% economic beneficial interest, or 1.33% of the voting ownership interest of the Company as of the issuance date of the consolidated financial statements for the year ended December 31, 2020, will be issued to the shareholder upon its capital contribution in Zhongchao Cayman and the Company released its paid-in capital in Zhongchao Shanghai. The shareholder expected to exercise the warrant and receive the ordinary shares of the Company before the effective date and closing of the offering because these conditions are considered to be administrative procedures and there is no uncertainties of going through them. Such ordinary shares are included in the shares issued and outstanding as of December 31, 2020 and 2019 and in the calculation of earnings per share as such commitment to issue the shares is considered to be part the reorganization, and the shares are considered to be in existence from the time this shareholder made the investment or January 1, 2017, whichever is earlier. In connection with reorganization, all references to numbers of ordinary shares and per-share data in the consolidated financial statements have been adjusted to reflect such reorganization have been retroactively stated as if it occurred on January 1, 2017, other than the number of ordinary share issued to the shareholders who made capital contribution for the period from January 1, 2017 to December 31, 2018 as introduced in the note “Capital contribution from shareholders”. On February 26, 2020, the Company closed its initial public offering (IPO) on the Nasdaq Global Market. The Company offered 3,000,000 Class A Ordinary Shares in the IPO, par value $0.0001 per share, at $4.00 per share. In addition, the underwriters of the Company’s IPO have exercised in full their over-allotment option to purchase additional 315,000 Class A Ordinary Shares, at $4.00 per share. Gross proceeds of the Company’s IPO, including the proceeds from the sale of the over-allotment shares, totaled $13.26 million, before deducting underwriting discounts and other related expenses. On July 13, 2020, the Company granted an aggregation of 18,000 Class A Ordinary Shares to three non-executive directors as compensations for one year from March 31, 2020. Restricted net assets The Company’s ability to pay dividends is primarily dependent on the Company receiving distributions of funds from its subsidiary or VIE. Relevant PRC statutory laws and regulations permit payments of dividends by Zhongchao WFOE, Zhongchao Shanghai and its subsidiaries including, Shanghai Maidemu, Shanghai Zhongxun, Horgos Zhongchao, Shanghai Jingyi and Shanghai Huijing only out of its retained earnings, if any, as determined in accordance with PRC accounting standards and regulations and after it has met the PRC requirements for appropriation to statutory reserves. Paid in capital of the PRC subsidiary and VIE and VIE’s subsidiaries included in the Company’s consolidated net assets are also non-distributable for dividend purposes. The results of operations reflected in the accompanying consolidated financial statements prepared in accordance with U.S. GAAP differ from those reflected in the statutory financial statements of Zhongchao WFOE, Zhongchao Shanghai and its subsidiaries. The Company is required to set aside at least 10% of their after-tax profits each year, if any, to fund certain statutory reserve funds until such reserve funds reach 50% of its registered capital. In addition, the Company may allocate a portion of its after-tax profits based on PRC accounting standards to enterprise expansion fund and staff bonus and welfare fund at its discretion. The statutory reserve funds and the discretionary funds are not distributable as cash dividends. During the year ended December 31, 2018, 2019 and 2020 the Company accrued statutory reserve funds of $20,539, $395,274 and $385,689, respectively, which is 10% of the retained earnings of PRC subsidiaries, VIE or VIE’s subsidiaries as of December 31, 2018, 2019 and 2020, respectively. As of December 31, 2020 and 2019, the Company had statutory reserve of $801,502 and $415,813, respectively. As of December 31, 2020 and 2019, the Company had net assets restricted in the aggregate, which include paid-in capital and statutory reserve of the Company’s PRC subsidiary and VIE and VIE’s subsidiaries that are included in the Company’s consolidated net assets, were approximately $23,579,150 and $12,462,828, respectively. The current PRC Enterprise Income Tax (“EIT”) Law also imposed a 10% withholding income tax for dividends distributed by a foreign invested enterprise to its immediate holding company outside China. A lower withholding tax rate will be applied if there is a tax treaty arrangement between mainland China and the jurisdiction of the foreign holding company. Holding companies in Hong Kong, for example, will be subject to a 5% withholding tax rate, subject to approval from the related PRC tax authorities. The ability of the Company’s PRC subsidiary and VIE and VIE’s subsidiaries to make dividends and other payments to the Company may also be restricted by changes in applicable foreign exchange and other laws and regulations. Foreign currency exchange regulation in China is primarily governed by the following rules: ● Foreign Exchange Administration Rules (1996), as amended in August 2008, or the Exchange Rules; ● Administration Rules of the Settlement, Sale and Payment of Foreign Exchange (1996), or the Administration Rules. Currently, under the Administration Rules, Renminbi is freely convertible for current account items, including the distribution of dividends, interest payments, trade and service related foreign exchange transactions, but not for capital account items, such as direct investments, loans, repatriation of investments and investments in securities outside of China, unless the prior approval of the State Administration of Foreign Exchange (the “SAFE”) is obtained and prior registration with the SAFE is made. Foreign-invested enterprises like Rise King WFOE that need foreign exchange for the distribution of profits to its shareholders may effect payment from their foreign exchange accounts or purchase and pay foreign exchange rates at the designated foreign exchange banks to their foreign shareholders by producing board resolutions for such profit distribution. Based on their needs, foreign-invested enterprises are permitted to open foreign exchange settlement accounts for current account receipts and payments of foreign exchange along with specialized accounts for capital account receipts and payments of foreign exchange at certain designated foreign exchange banks. Although the current Exchange Rules allow the convertibility of Chinese Renminbi into foreign currency for current account items, conversion of Chinese Renminbi into foreign exchange for capital items, such as foreign direct investment, loans or securities, requires the approval of SAFE, which is under the authority of the People’s Bank of China. These approvals, however, do not guarantee the availability of foreign currency conversion. The Company cannot be sure that it will be able to obtain all required conversion approvals for its operations or the Chinese regulatory authorities will not impose greater restrictions on the convertibility of Chinese Renminbi in the future. Currently, most of the Company’s retained earnings are generated in Renminbi. Any future restrictions on currency exchanges may limit the Company’s ability to use its retained earnings generated in Renminbi to make dividends or other payments in U.S. dollars or fund possible business activities outside China. As of December 31, 2020 and 2019, there was $nil retained earnings in the aggregate, respectively, which was generated by the Company’s VIE and its subsidiaries in Renminbi included in the Company’ consolidated net assets, aside from $801,502 and $415,813 statutory reserve funds as of December 31, 2020 and 2019, that may be affected by increased restrictions on currency exchanges in the future and accordingly may further limit the Company’s PRC subsidiary and VIE and VIE’s subsidiaries’ ability to make dividends or other payments in U.S. dollars to the Company, in addition to $$23,627,050 and $12,462,828 restricted net assets as of December 31, 2020 and 2019, respectively, as discussed above. |
Concentration Risk
Concentration Risk | 12 Months Ended |
Dec. 31, 2020 | |
Risks and Uncertainties [Abstract] | |
CONCENTRATION RISK | 15. CONCENTRATION RISK The Company has a concentration of its account receivables with specific customers. As of December 31, 2020, two customers accounted for 22.6% and 19.2% of net accounts receivable, respectively. As of December 31, 2019, three customers accounted for 31.4%, 15.9% and 11.7% of net accounts receivable, respectively. For the year ended December 31, 2020, two customers accounted for approximately 26.9% and 19.7% of the total revenue, respectively. For the year ended December 31, 2019, three customers accounted for approximately 25.5%, 15.1% and 14.1% of the total revenue, respectively. For the year ended December 31, 2018, two customers accounted for approximately 37.7% and 10.9% of the total revenue, respectively. As of December 31, 2020 and 2019, the Company had insignificant balance of accounts payable and did not further assess the concentration risk of accounts payable. For the year ended December 31, 2020, no supplier accounted for more than 10% of the total cost of revenue. For the year ended December 31, 2019, one supplier accounted for approximately 18.7% of the total cost of revenue. For the year ended December 31, 2018, two suppliers accounted for approximately 44.7% and 14.7% of the total cost of revenue, respectively. |
Stock Based Compensation
Stock Based Compensation | 12 Months Ended |
Dec. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
STOCK BASED COMPENSATION | 16. STOCK BASED COMPENSATION The following table summarizes our unvested restricted share units: Number of shares Weighted- Grant-Date Unvested at December 31, 2017 338,662 $ 2.46 Vested (64,436 ) $ (2.67 ) Forfeited (154,346 ) $ (2.67 ) Unvested at December 31, 2018 119,880 $ 2.08 Granted 304,196 $ 2.72 Unvested at December 31, 2019 424,076 $ 2.54 Granted 18,000 $ 2.42 Vested (15,000 ) $ 2.42 Unvested at December 31, 2020 427,076 2.54 In November and December 2018, two employees resigned from the Company and forfeited the unvested 154,346 shares of ordinary share. Accordingly, the Company reversed the expenses which was previously charged to the statement of income. On January 3, 2019, Zhongchao Shanghai granted 101,997 shares of restricted share units to three of its employees and 30,000 shares to one non-employee for the consulting services rendered. The restricted share units will vest after a five-year service period is fulfilled. The grant-date value of each restricted share units was $2.72, and the total fair value of these restricted share units aggregated $359,032. On February 28, 2019, Zhongchao Shanghai granted 29,970 shares and 142,229 shares of restricted share units to Ms. Pei Xu, the Chief Financial Officer of the Company, and Ms. Shuang Wu, the Chief Operation Officer of the Company, respectively. The restricted share units will vest after a 10-year service period is fulfilled. The grant-date value of each restricted share units was $2.72, and the total fair value of these restricted share units aggregated $468,381. The fair value of restricted share units granted on January 3, 2019 and February 28, 2019 were assessed using discounted cash flow method under income approach, with a discount for lack of marketability given that the equity interests underlying the awards were not publicly traded at the time of grant. Significant estimates and assumptions used included revenue growth rate ranging from 8.6% to 39.4%, terminal growth rate of 3%, and discount rate of 16%. The above shares grant was contributed by Mr. Weiguang Yang from the equity interest of Shanghai Xingzhong Investment Management LLP owned by himself, which represented the ordinary shares of the Company. (see Note 13). The shares had been issued and outstanding before transferred from Mr. Yang to the employees and non-employee, thus these shares will not impact the calculation of earnings per share. On July 13, 2020, the Company granted and issued 18,000 shares of restricted Class A Ordinary Shares For the years ended December 31, 2020, 2019 and 2018, the Company had stock-based compensation expenses of $168,350, $159,984 and reversal of stock-based compensation of $14,483, respectively. As of December 31, 2020, the Company expected to incur stock based compensation expenses of $790,794 over a weighted average period of 4.6 years. The following table summarizes share-based compensation expenses charged to (reversal from) operating expenses: For the Years Ended December 31, 2020 2019 2018 Selling and marketing expenses 93,439 92,885 (14,483 ) General and administrative expenses 74,911 67,099 - Total charges (reversals) of share-based compensation expenses $ 168,350 $ 159,984 $ (14,483 ) |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | 17. COMMITMENTS AND CONTINGENCIES Contingencies From time to time, the Company may be subject to certain legal proceedings, claims and disputes that arise in the ordinary course of business. Although the outcomes of these legal proceedings cannot be predicted, the Company does not believe these actions, in the aggregate, will have a material adverse impact on its financial position, results of operations or liquidity. Lease commitment As of December 31, 2020, the Company leases offices space under four non-cancelable operating lease arrangements, three of which had a term over 12 months. The Company considers those renewal or termination options that are reasonably certain to be exercised in the determination of the lease term and initial measurement of right of use assets and lease liabilities. Lease expense for lease payment is recognized on a straight-line basis over the lease term. The Company determines whether a contract is or contains a lease at inception of the contract and whether that lease meets the classification criteria of a finance or operating lease. When available, the Company discounted lease payments based on an estimate of its incremental borrowing rate to present value. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. The table below presents the operating lease related assets and liabilities recorded on the balance sheet. December 31, 2020 December 31, 2019 Rights of use lease assets $ 65,137 $ 245,982 Operating lease liabilities, current 62,160 210,219 Operating lease liabilities, noncurrent - 41,363 Total operating lease liabilities $ 62,160 $ 251,582 As of December 31, 2020 and 2019, the weighted average remaining lease term was 0.39 years and 1.19 years, respectively, and discount rates were 4.75% for all of the operating leases. Rental expense for the years ended December 31, 2020, 2019, 2018 and 2017 were $312,675, $307,864 and $195,326, respectively. The following is a schedule, by years, of maturities of lease liabilities as of December 31, 2020: 2021 $ 62,801 2022 and thereafter - Total lease payments 62,801 Less: imputed interest (641 ) Present value of lease liabilities $ 62,160 Capital commitment As of December 31, 2020, the Company paid a deposit of $465,143 for three office rooms in Japan with remaining balance of $628,083 to be paid. As of the issuance date of this consolidated financial statements, the Company fully paid the remaining balance. Such office rooms will be used for the Company’s operation to be developed in Japan. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2020 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | 18. SUBSEQUENT EVENTS In February 2021, the Company entered into a loan agreement with an unrelated third party, to provide loans to the unrelated party with a principal of $900,000, a loan term of 12 months and an interest rate of 2% per annum. The principal and interest will be repaid upon maturity. The loan was made for the purpose of making use of idle cash. During the year ended December 31, 2020, the Company made a deposit of $223,124 to attend in an auction for a foreclosure property. As of the issuance date of this consolidated financial statements, the Company paid additional $1,213,076 to acquire such foreclosure property for office of its operations. The Company evaluated subsequent events through April 30, 2021, the date on which these financial statements were issued, and the management determined that other than those that have been disclosed in the consolidated financial statements and subsequent events disclosed above, no subsequent events that require recognition and disclosure in the consolidated financial statements. |
Condensed financial information
Condensed financial information of the parent company | 12 Months Ended |
Dec. 31, 2020 | |
Condensed Financial Information Disclosure [Abstract] | |
CONDENSED FINANCIAL INFORMATION OF THE PARENT COMPANY | 19. CONDENSED FINANCIAL INFORMATION OF THE PARENT COMPANY The subsidiary did not pay any dividend to the parent company for the periods presented. For the purpose of presenting parent only financial information, the parent company records its investment in its subsidiary under the equity method of accounting. Such investment is presented on the separate condensed balance sheets of the parent company as “Investment in subsidiaries and the income of the subsidiary is presented as “share of income of subsidiary”. Certain information and footnote disclosures generally included in financial statements prepared in accordance with U.S. GAAP have been condensed and omitted. The parent company did not have significant capital and other commitments, long-term obligations, or guarantees as of December 31, 2020 and 2019. PARENT COMPANY BALANCE SHEETS December 31, December 31, ASSETS Cash and cash equivalents $ 7,154,881 $ 48,100 Due from subsidiaries 713,106 6,800 Investment in subsidiaries 24,021,154 15,385,144 Total Assets $ 31,889,141 $ 15,440,044 LIABILITIES AND EQUITY Total Liabilities $ 55,000 $ 55,000 Commitments and Contingencies Shareholders’ Equity Class A Ordinary Share (par value $0.0001 per share, 450,000,000 shares authorized; 19,435,423 and 16,102,420 shares issued and outstanding at December 31, 2020 and 2019, respectively) 1,944 1,610 Class B Ordinary Share (par value $0.0001 per share, 50,000,000 shares authorized; 5,497,715 and 5,497,715 shares issued and outstanding at December 31, 2020 and 2019, respectively) 550 550 Additional paid-in capital 22,775,154 12,044,855 Retained earnings 8,141,280 3,682,800 Accumulated other comprehensive income (loss) 915,213 (344,771 ) Total Shareholders’ Equity 31,834,141 15,385,044 Total Liabilities and Shareholders’ Equity $ 31,889,141 $ 15,440,044 PARENT COMPANY STATEMENTS OF INCOME AND COMPREHENSIVE INCOME For the Years Ended December 31, 2020 2019 2018 Equity in gain of subsidiaries $ 4,470,613 $ 4,046,770 $ 3,019,323 General and administrative expenses (12,233 ) (100 ) - Net Income 4,458,380 4,046,670 3,019,323 Other Comprehensive (Loss) Income Foreign currency translation adjustment 1,259,984 (173,604 ) (379,520 ) Comprehensive Income $ 5,718,364 $ 3,873,066 $ 2,639,803 PARENT COMPANY STATEMENTS OF CASH FLOWS For the Years Ended December 31, 2020 2019 2018 Cash Flows from Operating Activities: Net Cash Provided by Operating Activities $ (700,873 ) $ 48,100 $ - Cash Flows from Investing Activities: Investment in a subsidiary (3,690,000 ) - - Net Cash Used Investing Activities (3,690,000 ) - - Cash Flows from Financing Activities: Proceeds from issuance of common stocks in connection with initial public offering, net off issuance cost 11,497,654 - - Net Cash Used Financing Activities 11,497,654 - - Net increase in cash and cash equivalents 7,106,781 48,100 - Cash and cash equivalents at beginning of year 48,100 - - Cash and cash equivalents at end of year $ 7,154,881 $ 48,100 $ - |
Accounting Policies, by Policy
Accounting Policies, by Policy (Policies) | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Basis of presentation | (a) Basis of presentation The accompanying audited consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). |
Principal of consolidation | (b) Principal of consolidation The consolidated financial statements include the accounts of the Company, its wholly and majority owned subsidiaries, and consolidated VIE and its subsidiaries for which the Company is the primary beneficiary. During the year ended December 31, 2020, Beijing Boya was established, over which the Company and Mr. Weiguang Yang owned 70% and 30% equity interest, respectively. Mr. Weiguang Yang owned the equity interest on behalf of Zhongchao Shanghai. Beijing Boya is therefore 100% consolidated in the Company’s consolidated financial statements. All transactions and balances among the Company, its subsidiaries and consolidated VIE have been eliminated upon consolidation. |
Non-controlling interest | (c) Non-controlling interest Non-controlling interests represent the equity interests in the subsidiaries of the VIE that are not attributable, either directly or indirectly, to the Company. As of December 31, 2019, non-controlling equity holders held 49% equity interest in Shanghai Jingyi. Non-controlling equity holders held 49% equity interest in Shanghai Jingyi before November 2020. Through certain entrustment agreements, Mr. Weiguang Yang, Zhongchao Yixin and Zhongren Yixin hold 19%, 20% and 10% of the equity interest of Shanghai Jingyi on behalf of Shanghai Zhongxun, respectively, after November 2020. As a result, the Company owns 100% of Shanghai Zhongxin’s equity interest. |
Foreign currency translation | (d) Foreign currency translation Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing on 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 on the date of the balance sheet. The resulting exchange differences are recorded in the statement of operations. The reporting currency of the Company and its subsidiaries is U.S. dollars (“US$”) and the accompanying consolidated financial statements have been expressed in US$. In general, for consolidation purposes, assets and liabilities of the Company and its subsidiaries whose functional currency is not the US$, are translated into US$, 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 the Company and its subsidiaries are recorded as a separate component of accumulated other comprehensive income within the statement of shareholders’ equity. Translation of amounts from RMB into US$ has been made at the following exchange rates for the respective periods: December 31, 2020 December 31, 2019 Balance sheet items, except for equity accounts 6.5326 6.9618 For the Years Ended December 31, 2019 2019 2018 Items in the statements of income and comprehensive income, and statements of cash flows 6.9020 6.9081 6.6090 No representation is made that the RMB amounts could have been, or could be, converted into U.S. dollars at the rates used in translation. |
Use of estimates | (e) Use of estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities on the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. On an ongoing basis, management reviews these estimates and assumptions using the currently available information. Changes in facts and circumstances may cause the Company to revise its estimates. The Company bases its estimates on past experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Estimates are used when accounting for items and matters including, but not limited to, equity value of the Company, determinations of the useful lives and valuation of long-lived assets, estimates of allowances for doubtful accounts, valuation of deferred tax assets, and other provisions and contingencies. |
Fair value of financial instruments | (f) Fair value of financial instruments The Company’s financial instruments are accounted for at fair value on a recurring basis. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The three levels of the fair value hierarchy are described below: Level 1 – inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 – inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments. Level 3 – inputs to the valuation methodology are unobservable and significant to the fair value. As of December 31, 2020 and 2019, financial instruments of the Company comprised primarily current assets and current liabilities including cash and cash equivalents, accounts receivable, other receivables, short-term borrowings and other payables, which approximate their fair values because of the short-term nature of these instruments. Short-term investments are trading securities with observable market price in active market. They are classified as level 1 investment and are measured at fair value. |
Cash and cash equivalents | (g) Cash and cash equivalents Cash and cash equivalents primarily consist of bank deposits, as well as highly liquid investments, with original maturities of three months or less, which are unrestricted as to withdrawal and use. |
Short-term investments | (h) Short-term investments Short-term investments comprised of certain listed equity securities purchased through various open market transactions. Equity securities not measured by the equity method are carried at fair value with unrealized gains and losses recorded in the consolidated statements of income and comprehensive income, according to ASC 321 “Investments — Equity Securities”. During the year ended December 31, 2020, the Company purchased certain listed equity securities and accounted for such investments as “short-term investments” and subsequently measure the investments at fair value in the account of “other income, net”. |
Accounts receivable | (i) Accounts receivable Accounts receivable are recorded at the gross amount less an allowance for any uncollectible accounts and do not bear interest. The Company provides customers with credit term ranging between one to six months, depending on credit assessment of customers. Management reviews the adequacy of the allowance for doubtful accounts on an ongoing basis, using historical collection trends and aging of receivables. Management also periodically evaluates individual customer’s financial condition, credit history and the current economic conditions to make adjustments in the allowance when necessary. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. During the year ended December 31, 2020, the Company wrote off $336,367 against accounts receivable as the Company evaluated it is remote to collect the balance. As of December 31, 2020 and 2019, there were no allowances for doubtful accounts for accounts receivable. |
Prepayments | (j) Prepayments Prepayments represent amounts advanced to suppliers for providing services to the Company. The suppliers usually require advance payments when the Company orders service and the prepayments will be utilized to offset the Company’s future payments. These amounts are unsecured, non-interest bearing and generally short-term in nature. |
Investment in a limited partnership | (k) Investment in a limited partnership The Company accounts for the investment in a limited partnership in which the Company holds more than minor equity interest (3% - 5%) in accordance with ASC 970-323-25-6 under the equity method of accounting. The Company applies the equity method to account for investment in a limited partnership, according to ASC 323 “Investments — Equity Method and Joint Ventures”, over which it has significant influence but does not own a controlling financial interest. Under the equity method, the Company’s share of the post-acquisition profits or losses of the equity investee is recognized in the consolidated statements of income and comprehensive income. The Company records its share of the results of the equity investees on a one quarter in arrears basis. The excess of the carrying amount of the investment over the underlying equity in net assets of the equity investee generally represents goodwill and intangible assets acquired. When the Company’s share of losses of the equity investee equals or exceeds its interest in the equity investee, the Company does not recognize further losses, unless the Company has incurred obligations or made payments or guarantees on behalf of the equity investee. The Company continually reviews its investments in equity investees to determine whether a decline in fair value below the carrying value is other-than-temporary. The primary factors the Company considers in its determination include the financial condition, operating performance and the prospects of the equity investee; other company specific information such as recent financing rounds; the geographic region, market and industry in which the equity investee operates, including consideration of the impact of the COVID-19 pandemic; and the length of time that the fair value of the investment is below its carrying value. If the decline in fair value is deemed to be other-than-temporary, the carrying value of the equity investee is written down to fair value. No impairment of was recognized for the years ended December 31, 2020, 2019 and 2018. |
Property and equipment | (k) Property and equipment Property and equipment primarily consist of office equipment, vehicle and construction in progress. Office equipment and vehicles are stated at cost less accumulated depreciation less any provision required for impairment in value. Depreciation is computed using the straight-line method with residual value rate of 5% based on the estimated useful lives as follows: Building 20 years Office equipment 3 years Vehicle 4 years Construction in progress represents buildings and related premises under construction, which is stated at construction cost less any impairment loss. In addition to cost under the construction contracts, interest cost and external costs directly related to the construction of such facilities, including equipment installation and shipping costs, are capitalized. Construction in progress is transferred to the respective category of property and equipment when completed and ready for its intended use. Costs of repairs and maintenance are expensed as incurred and asset improvements are capitalized. The cost and related accumulated depreciation of assets disposed of or retired are removed from the accounts, and any resulting gain or loss is reflected in the consolidated statement of income and comprehensive income. |
Prepayments for lease of land | (l) Prepayments for lease of land Prepayments for lease of land represent prepayments to the lessee for sub-lease of two land use rights. Prepayments for lease of land are carried at cost less accumulated amortization and any impairment loss. Amortization is provided against the cost of lease prepayments on a straight-line basis over the period of the rights which are 16 years and 32 years, respectively. |
Intangible assets, net | (m) Intangible assets, net Purchased intangible assets are recognized and measured at fair value upon acquisition. Separately identifiable intangible assets that have determinable lives continue to be amortized over their estimated useful lives using the straight-line method based on their estimated useful lives as follows: Trademarks 10 years License 10 years Software 10 years |
Impairment of long-lived assets | (n) Impairment of long-lived assets The Company reviews long-lived assets 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 measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. No impairment of long-lived assets was recognized for the years ended December 31, 2020, 2019 and 2018. |
Revenue recognition | (o) Revenue recognition The Company adopted ASC 606, Revenue from Contracts with Customers (“ASC 606”) on January 1, 2017, using the modified retrospective approach. ASC 606 establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts to provide goods or services to customers. The core principle requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to receive in exchange for those goods or services recognized as performance obligations are satisfied. In accordance with ASC 606, revenues are recognized when control of the promised services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services. The Company identified each distinct service, or each series of distinct services that are substantially the same and that have the same pattern of transfer to the customer, as a performance obligation. Transaction price is allocated among different performance obligations identified in one contract, by using expected cost plus margin approach, if the standalone selling price of each performance obligation is not observable. Timing of revenue recognition may differ from the timing of invoicing to customers. Accounts receivable consisted of amounts invoiced and amounts for which revenue recognized prior to invoicing when the Company has satisfied its performance obligation and has the unconditional right to payment. Advances from customers consists of payments received related to unsatisfied performance obligations at the end of the period. The Company applied a practical expedient to expense costs as incurred for costs to obtain a contract with a customer when the amortization period would have been one year or less. The Company has no material incremental costs for obtaining contracts with customers that the Company expects the benefit of those costs to be longer than one year. Medical training and education services The Company designs and provides medical training and education courses in both online and offline formats to physicians and allied healthcare professionals (the “training and education services”). The Company identifies a single performance obligation from contracts. The Company recognizes revenue at the point of provision of services. Payments received in advance from customers are recorded as “advance from customers” in the consolidated balance sheets. Advance from customers is recognized as revenue when the Company delivers the courses to its customers. Such advance payment received are non-refundable. In cases where fees are collected after the sales, revenue and accounts receivable are recognized upon delivery of medical training and education courses to the Company. The fees are fixed and determinable at the inception of the services. Offline medical training and education services courses – though customers can benefit from each service commitment, including design, production and presentation of medical courses, together with other readily available resources. The promises in the contracts with customers is integration of all of these service commitments. The Company concludes that these service commitments are highly dependent with each other, in the context of the contract term. Thus, these service commitments are not distinct from each other, and the Company combines all service commitments performed as a single performance obligation. In cases where the Company engages third party experts to provide presentation in medical courses, as the Company determines the contents and the participants, it has the ability to direct these experts to provide medical training services for the Company. Therefore the Company is primarily responsible for fulfilling the promise to provide the medial courses and has the discretion in establishing the transaction price. The Company is a principal in the provision of services and recognizes revenues on a gross basis. Online medical training and education services courses – the promises in the contracts with customers consist of provision of online courses and presentation of the courses online for users to access for a period of time. The performance obligation of presentation of the courses online for users for a period of time is immaterial in the context of the contract because presentation of each course incurred no significant additional cost, nor will it occupy any significant resources of the Company, except for little digital space on the Company’s server, which is inconsequential. Therefore, the Company combines all service commitments performed as a single performance obligation. Assistance in patient-aid projects The Company is engaged by NFPs to assist in the operation of patient-aid projects with a purpose to facilitate qualified patients to obtain free drug treatment from NFPs. The Company is responsible to provide doctors with access to training courses or training materials in connection with the drug treatment, review the completeness of application documents from patients, and other ad-hoc works (such programs with these plug-in features are hereinafter referred as the “patient-aid projects”). The arrangements are structured as fixed price contracts. The price is determined as stated in contracts and does not include any variable consideration. The Company identifies a single performance obligation from contracts and recognizes revenue over a period of time during which the Company provides the assistance to the NFPs till the earlier of the expiration of contract period or the free drugs are completely delivered. The Company uses an input-based method to measure the progress, by reference to the cost incurred in performing the obligation. The fees are fixed at the inception of the services and are collected either in advance or after the services are provided. Other consulting services The Company also provides consulting services to its customers, including drafting research papers and providing other academic supports. The consulting services are accounted for as a single performance obligation and was recognized as revenue when the Company delivers services to the customers. Fees are generally collected after provision of services. For the years ended December 31, 2020, 2019, and 2018, the Company generated minimal amount from other consulting services. |
Cost of revenues | (p) Cost of revenues Cost of revenues was comprised of direct related costs incurred for preparation of online medical training courses and offline education seminars and patient-aid projects, including expenses of travelling and accommodation, seminar site-rental, video production and backdrop production, professional service fees charged by experts who provide online and offline seminars, salary and welfare expenses incurred by the key members of the editorial, design and production team, and labor cost for patient-aid projects. The travelling and accommodation expenses, including but not limited to the air-ticket expenses and hotel accommodation expenses, represented the costs arising from lecturers’ attendance and participation of the offline seminars. Other media expenses were incurred by the Company’s medical department for videos production, live streaming of the offline seminars, and materials collection to create online courses. These travelling, accommodation and media expenses are well budgeted before any agreements entered into by the Company and the customers. Therefore, such expenses are well covered by the customers under those agreements. The Company is not reimbursed by the customers separately. |
Employee benefits | (q) Employee benefits The full-time employees of the Company are entitled to staff welfare benefits including medical care, housing fund, pension benefits, unemployment insurance and other welfare, which are government mandated defined contribution plans. The Company is required to accrue for these benefits based on certain percentages of the employees’ respective salaries, subject to certain ceilings, in accordance with the relevant PRC regulations, and make cash contributions to the state-sponsored plans out of the amounts accrued. Total expenses for the plans were $310,637, and $497,402, and $476,765 for the years ended December 31, 2020, 2019 and 2018, respectively. |
Research and development costs | (r) Research and development costs Research and development costs are mainly comprised of salary and welfare expenses for the Company’s IT department employees who work for the development of the Company’s platform and database, and software and related intellectual property expenses which were used to develop an extensive library of licensed content and medical database. |
Advertising expenses | (s) Advertising expenses Advertising expenses primarily include advertisement for the Company’s platform for online medical courses. Advertising costs are expensed as incurred and the total amounts charged to “selling and marketing expenses” in the consolidated statements of income and comprehensive income were $2,851,648, $2,670,397 and $1,989,895 for the years ended December 31, 2020, 2019 and 2018, respectively. |
Government grants | (t) Government grants Government grants include cash subsidies as well as other subsidies received from various government agencies by the VIE and its subsidiaries of the Company. Government grants are recognized as other income when all conditions attached to the grants are fulfilled and recorded in the consolidated statements of income and comprehensive income. During the years ended December 31, 2020, 2019 and 2018, the Company received government grants of $nil, $101,330 and $552,277, respectively, in connection with the Company’s development of medical database and online medical lectures sharing application and cloud system. However the conditions attached to the grants would not be fulfilled until passing quality check by local government. These grants are recognized as deferred government grant when received and will be charged as a reduction of specific costs and expenses upon the Company passing the quality check, or recorded as an income if the specific costs and expenses were incurred in prior periods. For the years ended December 31, 2020, 2019, and 2018, in connection with the Company’s development of medical database and online medical lectures sharing application and cloud system, the Company recognized government grant income of $325,992, $506,652 and $nil, respectively, included in the “other income, net” in the consolidated statement of income and comprehensive income. Other immaterial government grants are recognized as current period income when received. |
Share-based compensation | (u) Share-based compensation Share-based awards granted to the Company’s employees and one non-employee are measured at fair value on grant date and measurement date, respectively, and share-based compensation expense is recognized (i) immediately at the grant date if no vesting conditions are required, or (ii) using the accelerated attribution method, net of estimated forfeitures, over the requisite service period. The fair value of restricted shares is determined with reference to the fair value of the underlying shares. At each date of measurement, the Company reviews internal and external sources of information to assist in the estimation of various attributes to determine the fair value of the share-based awards granted by the Company, including but not limited to the fair value of the equity value of the Company (Note 16), expected life, expected volatility and expected forfeiture rates. The Company is required to consider many factors and make certain assumptions during this assessment. If any of the assumptions used to determine the fair value of the share-based awards changes significantly, share-based compensation expense may differ materially in the future from that recorded in the current reporting period. Moreover, the estimates of fair value of the awards are not intended to predict actual future events or the value that ultimately will be realized by grantees who receive share-based awards, and subsequent events are not indicative of the reasonableness of the original estimates of fair value made by the Company for accounting purposes. |
Value added tax | (v) Value added tax The Company is subject to value added tax (“VAT”) and related surcharges on the revenues earned for services provided in the PRC. The applicable rate of value added tax is 6%. The related surcharges for revenues derived from provision medical courses are deducted from gross receipts to arrive at net revenues. |
Income taxes | (w) Income taxes The Company accounts for income taxes in accordance with the U.S. GAAP for income taxes. Under the asset and liability method as required by this accounting standard, the recognition of deferred income tax liabilities and assets for the expected future tax consequences of temporary differences between the income tax basis and financial reporting basis of assets and liabilities. Provision for income taxes consists of taxes currently due plus deferred taxes. The charge for taxation is based on the results for the year as adjusted for items which are non-assessable or disallowed. It is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax basis. Deferred tax assets are recognized to the extent that it is more likely than not these items will be utilized against taxable income in the future. Deferred tax is calculated using tax rates that are expected to apply to the period when the asset is realized or the liability is settled. Deferred tax is charged or credited in the income statement, except when it is related to items credited or charged directly to equity. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Current income taxes are provided for in accordance with the laws of the relevant taxing authorities. An uncertain tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred. As of December 31, 2020, income tax returns for the tax years ended December 31, 2015 through December 31, 2019 remain open for statutory examination. |
Earnings per share | (x) Earnings per share Basic earnings per ordinary share is computed by dividing net earnings attributable to ordinary shareholders by the weighted-average number of ordinary shares outstanding during the period. Diluted earnings per share is computed by dividing net income attributable to ordinary shareholders by the sum of the weighted average number of ordinary share outstanding and of potential ordinary share (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential ordinary share that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted earnings per share. |
Comprehensive income | (y) Comprehensive income A Comprehensive income includes net income and other comprehensive income arising from foreign currency adjustments. Comprehensive income is reported in the consolidated statements of income and comprehensive income. |
Commitments and contingencies | (z) Commitments and contingencies In the normal course of business, the Company is subject to loss contingencies, such as legal proceedings and claims arising out of its business, that cover a wide range of matters, including, among others, government investigations and tax matters. In accordance with ASC No. 450 Sub topic 20, “Loss Contingencies”, the Company records accruals for such loss contingencies when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. |
Operating lease | (aa) Operating lease In February 2016, the Financial Accounting Standards Board (the “FASB”) issued ASU 2016-02, Leases (Topic 842), which is effective for annual reporting periods (including interim periods) beginning after December 15, 2018, and early adoption is permitted. The Company adopted the Topic 842 on January 1, 2019 using a modified retrospective approach reflecting the application of the standard to leases existing at, or entered into after January 1, 2019. The Company leases its offices which are classified as operating leases in accordance with Topic 842. Under Topic 842, lessees are required to recognize the following for all leases (with the exception of short-term leases) on the commencement date: (i) lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (ii) right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. At the commencement date, the Company recognizes the lease liability at the present value of the lease payments not yet paid, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company’s incremental borrowing rate for the same term as the underlying lease. The right-of-use asset is recognized initially at cost, which primarily comprises the initial amount of the lease liability, plus any initial direct costs incurred, consisting mainly of brokerage commissions, less any lease incentives received. All right-of-use assets are reviewed for impairment. No impairment for right-of-use lease assets as of December 31, 2020. |
Segment reporting | (bb) Segment reporting Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker (the “CODM”), which is comprised of certain members of the Company’s management team. Consequently, the Company has determined that it has only one reportable operating segment. |
Recently issued accounting pronouncements | (cc) Recently issued accounting pronouncements In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses Measurement of Credit Losses on Financial Instruments The Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material impact on its the consolidated financial position, statements of operations and cash flows. |
Significant risks and uncertainties | (dd) Significant risks and uncertainties 1) Credit risk Assets that potentially subject the Company to significant concentration of credit risk primarily consist of cash and cash equivalents. The maximum exposure of such assets to credit risk is their carrying amount as at the balance sheet dates. As of December 31, 2020, the Company held cash and cash equivalents of $15,072,947, among which were $6,717,940 was deposited in financial institutions located in Mainland China, and each bank accounts is insured by the government authority with the maximum limit of RMB 500,000 (equivalent to approximately $76,500). In addition, the Company maintains certain bank accounts in Hong Kong and Cayman, which are not insured by Federal Deposit Insurance Corporation (“FDIC”) insurance or other insurance. To limit exposure to credit risk relating to deposits, the Company primarily place cash and cash equivalent deposits with large financial institutions in China which management believes are of high credit quality and the Company also continually monitors their credit worthiness. The Company’s operations are carried out in China. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environments in the PRC as well as by the general state of the PRC’s economy. In addition, the Company’s business may be influenced by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, rates and methods of taxation among other factors. 2) Liquidity risk The Company is also exposed to liquidity risk which is risk that it is unable to provide sufficient capital resources and liquidity to meet its commitments and business needs. Liquidity risk is controlled by the application of financial position analysis and monitoring procedures. When necessary, the Company will turn to other financial institutions and the shareholders to obtain short-term funding to meet the liquidity shortage. 3) Foreign currency risk Substantially all of the Company’s operating activities and the Company’s assets and liabilities are denominated in RMB, which is not freely convertible into foreign currencies. All foreign exchange transactions take place either through the Peoples’ Bank of China (“PBOC”) or other authorized financial institutions at exchange rates quoted by PBOC. Approval of foreign currency payments by the PBOC or other regulatory institutions requires submitting a payment application form together with suppliers’ invoices and signed contracts. The value of RMB is subject to changes in central government policies and to international economic and political developments affecting supply and demand in the China Foreign Exchange Trading System market. 4) Other risk The Company’s business, financial condition and results of operations may also be negatively impacted by risks related to natural disasters, extreme weather conditions, health epidemics and other catastrophic incidents, such as the COVID-19 outbreak and spread, which could significantly disrupt the Company’s operations. |
Organization and Principal Ac_2
Organization and Principal Activities (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Condensed Financial Statements [Table Text Block] | Name Background Ownership Zhongchao Group Inc. (“Zhongchao BVI”) ● A BVI company ● Incorporated on April 23, 2019 ● A holding company 100% owned by Zhongchao Cayman Zhongchao Group Limited (“Zhongchao HK”) ● A Hong Kong company ● Incorporated on May 14, 2019 ● A holding company 100% owned by Zhongchao BVI Beijing Zhongchao Zhongxing Technology Limited (“Zhongchao WFOE”) ● A PRC company and deemed a wholly foreign owned enterprise ● Incorporated on May 29, 2019 ● Registered capital of $10 million ● A holding company 100% owned by Zhongchao HK Zhongchao Shanghai ● A PRC limited liability company ● Incorporated on August 17, 2012 ● Registered capital of RMB 20,250,067 (approximately $3,064,272) with registered capital fully paid-up ● Engaged in technology development, technology transfer, and technical services in the field of medical technology, technical consulting in the field of network technology, and medical information consulting VIE of Beijing Zhongchao Zhongxing Technology Limited Shanghai Maidemu Cultural Communication Corp. (“Shanghai Maidemu”) ● A PRC limited liability company ● Incorporated on March 12, 2015 ● Registered capital of $1,597,087 (RMB 10 million) with registered capital fully paid-up ● Planning for cultural and artistic exchanges, designing, producing, acting for and publishing various kinds of advertisements, and medical consultation (no medical diagnosis and treatment activities allowed). 100% owned by Zhongchao Shanghai Shanghai Zhongxun Medical Technology Co., Ltd. (“Shanghai Zhongxun”) ● A PRC limited liability company ● Incorporated on May 27, 2017 ● Registered capital of $1,021,525 (RMB 7 million) with registered capital fully paid-up ● Engaged in technology development, transfer, service and consulting in the fields of medical technology and computer technology (no medical diagnosis and treatment activities allowed). 100% owned by Zhongchao Shanghai Shanghai Zhongxin Medical Technology Co., Ltd (formerly known as “Shanghai Jingyi Medical Technology Co., Ltd.,”) (“Shanghai Jingyi”) ● A PRC limited liability company ● Incorporated on October 10, 2018 ● Registered capital of $1,530,784 (RMB 10 million) with registered capital of $1,491,749 to be funded ● Engaged in technology development, transfer, service and consulting in the fields of medical technology and computer technology, market information consulting and investigating. 100% owned by Shanghai Zhongxun* Shanghai Huijing Information Technology Co., Ltd., (“Shanghai Huijing”) ● A PRC limited liability company ● Incorporated on September 28, 2016 ● Registered capital of $149,948 (RMB 1 million) with registered capital of $74,974 to be funded ● Engaged in technology development, transfer, service and consulting in the fields of computer technology, graphic designing, website page designing, planning cultural and artistic exchanges. 100% owned by Shanghai Maidemu Beijing Zhongchao Boya Medical Technology Co., Ltd. (“Beijing Boya”) ● A PRC limited liability company ● Incorporated on April 27, 2020 ● Registered capital of $141,185 (RMB 1 million) with registered capital of $141,185 to be funded ● Engaged in technology development, transfer, service and consulting in the fields of medical technology and computer technology, market information consulting and investigating. 70% owned by Zhongchao Shanghai, and 30% owned by Mr. Zhengbo Ma on behalf of Zhongchao Shanghai Zhixun Internet Hospital (Liaoning) Co., Ltd. (“Liaoning Zhixun”) ● A PRC limited liability company ● Incorporated on July 6, 2020 ● Registered capital of $426,642 (RMB 3 million) with registered capital of $426,642 to be funded ● Engaged in online hospital services, medical services, elderly nursing services, remote healthcare management services, healthcare consulting services, sales of medical appliances and other medical products. 100% owned by Shanghai Zhongxin * 51% of the equity interest owned by Shanghai Zhongxun before November 2020. Through certain entrustment agreements, Mr. Weiguang Yang, Beijing Zhongchao Yixin Management Consulting Partnership, LLP (“Zhongchao Yixin”), and Beijing Zhongren Yixin Management Consulting Partnership, LLP (“Zhongren Yixin”), hold 19%, 20% and 10% of the equity interest of Shanghai Jingyi on behalf of Shanghai Zhongxun, respectively. As a result, Shanghai Zhongxun owns 100% of Shanghai Zhongxin’s equity interest. |
Schedule of financial statements is reconciled | December 31, 2020 December 31, 2019 Number of Class A Ordinary Shares legally issued and outstanding 18,085,355 14,752,352 Class A Ordinary Shares committed to be issued to HF Capital 1,350,068 1,350,068 Number of Class A Ordinary Shares outstanding and issued presented on the financial statements 19,435,423 16,102,420 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Schedule of Intercompany Foreign Currency Balances [Table Text Block] | December 31, 2020 December 31, 2019 Balance sheet items, except for equity accounts 6.5326 6.9618 For the Years Ended December 31, 2019 2019 2018 Items in the statements of income and comprehensive income, and statements of cash flows 6.9020 6.9081 6.6090 |
Schedule of property and equipment useful lives | Building 20 years Office equipment 3 years Vehicle 4 years |
Schedule of Finite-Lived Intangible Assets [Table Text Block] | Trademarks 10 years License 10 years Software 10 years |
Variable Interest Entities an_2
Variable Interest Entities and Other Consolidation Matters (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Schedule of Variable Interest Entities [Table Text Block] | December 31, 2020 December 31, 2019 ASSETS Cash and cash equivalents $ 6,717,940 $ 7,739,422 Accounts receivable 10,321,837 5,078,419 Due from Zhongchao Inc.* 108,518 - Other current assets 2,167,706 1,692,928 Investment in a limited partnership 1,258,787 - Property and equipment, net 1,997,761 1,889,973 Other noncurrent assets 1,491,321 1,338,708 Total Assets $ 24,063,870 $ 17,739,450 LIABILITIES Advances from customers $ 6,760 $ 73,962 Deferred income - 323,192 Income tax payable 1,523,175 897,892 Operating lease liabilities 62,160 251,582 Due to Zhongchao Inc.* 748,630 - Other current liabilities 1,389,860 852,398 Total Liabilities $ 3,730,585 $ 2,399,026 For the years ended December 31, 2020 2019 2018 Revenues $ 17,989,788 $ 14,882,763 $ 12,865,870 Income from Operations $ 4,525,855 $ 3,642,265 $ 3,274,647 Net Income $ 4,484,029 $ 4,000,620 $ 3,001,489 * The balances due from/to Zhongchao Inc., are eliminated on consolidation. |
Other Current Assets (Tables)
Other Current Assets (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Disclosure Text Block Supplement [Abstract] | |
Schedule of Other Current Assets [Table Text Block] | December 31, 2020 December 31, 2019 Deferred offering costs (i) $ - $ 461,710 Prepaid advertising expense (ii) 1,033,280 426,901 Deferred contract costs (iii) 272,804 189,572 Office rental deposit 86,287 71,752 Interest receivable 32,416 72,671 Prepaid rental fees 15,827 15,598 Prepaid consulting service fees 78,627 3,160 Others 94,167 16,676 $ 1,613,408 $ 1,258,040 (i) As of December 31, 2019, the balance of deferred offering costs represented the expenses directly related to the initial public offerings, which was deducted against additional paid-in capital upon initial public offering in February 2020. (ii) As of December 31, 2020 and 2019, the balance of prepaid advertising expenses represents payments of advertising expenses to three and one vendors respectively. Among the balance of $1,033,280 as of December 31, 2020, $459,235 was subsequently refunded from the vendor to the Company as the Company suspended cooperation with the vendor. (iii) As of December 31, 2020 and 2019, the balances of deferred contract costs represented the travel and media expenses which were directly related to certain contracts with customers. The costs and expenses were incurred so as the Company would fulfil its performance obligation committed to its customers and were expected to be recovered. |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment [Table Text Block] | December 31, 2020 December 31, 2019 Building $ 1,828,092 $ - Office equipment 449,246 392,010 Vehicle 34,351 32,233 Less: accumulated depreciation (313,928 ) (119,976 ) 1,997,761 304,267 Construction in progress - 1,585,706 $ 1,997,761 $ 1,889,973 |
Prepayments for Lease of Land (
Prepayments for Lease of Land (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Prepayments For Lease Of Land [Abstract] | |
Schedule of prepayments for lease of land | December 31, 2020 December 31, 2019 Prepayments for lease of land 423,415 $ 397,311 Less: accumulated amortization (55,827 ) (30,902 ) $ 367,588 $ 366,409 |
Intangible Assets, Net (Tables)
Intangible Assets, Net (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Impaired Intangible Assets [Table Text Block] | December 31, 2020 December 31, 2019 Trademark and license 11,755 $ 11,030 Software 43,780 41,082 Less: accumulated amortization (20,562 ) (14,789 ) $ 34,973 $ 37,323 |
Investment in A Limited Partn_2
Investment in A Limited Partnership (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Investment Company, Financial Highlights [Abstract] | |
Schedule of Subsidiary of Limited Liability Company or Limited Partnership, Description [Table Text Block] | Investment % of ownership Investment dates Ningbo Meishan Xinaishan Equity Investment Limited Partnership (“limited partnership”) $ 1,285,859 28 % November 5, 2020 Less: share of operating loss of limited partnership (27,071 ) 1,258,788 |
Accrued Expenses and Other Cu_2
Accrued Expenses and Other Current Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Disclosure Text Block Supplement [Abstract] | |
Schedule of Accounts Payable and Accrued Liabilities [Table Text Block] | December 31, 2020 December 31, 2019 Other tax payable $ 777,810 $ 390,403 Accrued payroll 159,350 168,818 Deposits from sub-lessors of land use rights (i) - 124,393 Other current liabilities 44,273 51,720 $ 981,433 $ 735,334 |
Schedule of other tax payables | December 31, 2020 December 31, 2019 Value added tax payable $ 740,894 $ 366,535 Local taxes payable 36,916 23,868 $ 777,810 $ 390,403 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Schedule of Components of Income Tax Expense (Benefit) [Table Text Block] | For the Years Ended December 31, 2020 2019 2018 Current income tax expenses $ (543,211 ) $ (705,231 ) $ (441,156 ) Deferred income tax benefits (expenses) 58,424 318,087 (60,975 ) Income tax expenses $ (484,787 ) $ (387,144 ) $ (502,131 ) |
Schedule of Effective Income Tax Rate Reconciliation [Table Text Block] | For the Years Ended December 31, 2020 2019 2018 PRC statutory income tax rate 25 % 25 % 25 % Effect of preferential tax benefits (13.96 )% (14.23 )% (7.30 )% Effect of non-deductible expenses 0.35 % 0.39 % 0.22 % Effect of research and development credits (1.47 )% (2.25 )% (3.28 )% Effect of deferred tax rate change for share based compensation (0.11 )% (0.09 )% (0.31 )% Effective tax rate 9.81 % 8.82 % 14.33 % |
Schedule of Deferred Tax Assets and Liabilities [Table Text Block] | December 31, 2020 December 31, 2019 Excess advertising expense 699,717 $ 608,131 Deferred Intangible assets amortization 22,983 24,165 Net operating loss carrying forward 7,666 20,543 Share-based compensation 65,181 36,155 $ 795,547 $ 688,994 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] | For the Years Ended December 31, 2020 2019 2018 Net Income Attributable to Zhongchao Inc.’s shareholders $ 4,458,380 $ 4,046,670 $ 3,019,323 Weighted average number of ordinary share outstanding Basic and Diluted 24,425,637 21,600,135 20,764,245 Earnings per share Basic and Diluted $ 0.183 $ 0.187 $ 0.145 |
Stock Based Compensation (Table
Stock Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Share-based Compensation Arrangements by Share-based Payment Award, Restricted Stock Units, Vested and Expected to Vest [Table Text Block] | Number of shares Weighted- Grant-Date Unvested at December 31, 2017 338,662 $ 2.46 Vested (64,436 ) $ (2.67 ) Forfeited (154,346 ) $ (2.67 ) Unvested at December 31, 2018 119,880 $ 2.08 Granted 304,196 $ 2.72 Unvested at December 31, 2019 424,076 $ 2.54 Granted 18,000 $ 2.42 Vested (15,000 ) $ 2.42 Unvested at December 31, 2020 427,076 2.54 |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Table Text Block] | For the Years Ended December 31, 2020 2019 2018 Selling and marketing expenses 93,439 92,885 (14,483 ) General and administrative expenses 74,911 67,099 - Total charges (reversals) of share-based compensation expenses $ 168,350 $ 159,984 $ (14,483 ) |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Lessee, Operating Lease, Disclosure [Table Text Block] | December 31, 2020 December 31, 2019 Rights of use lease assets $ 65,137 $ 245,982 Operating lease liabilities, current 62,160 210,219 Operating lease liabilities, noncurrent - 41,363 Total operating lease liabilities $ 62,160 $ 251,582 |
Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block] | 2021 $ 62,801 2022 and thereafter - Total lease payments 62,801 Less: imputed interest (641 ) Present value of lease liabilities $ 62,160 |
Condensed financial informati_2
Condensed financial information of the parent company (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Condensed Financial Information Disclosure [Abstract] | |
Condensed Balance Sheet [Table Text Block] | December 31, December 31, ASSETS Cash and cash equivalents $ 7,154,881 $ 48,100 Due from subsidiaries 713,106 6,800 Investment in subsidiaries 24,021,154 15,385,144 Total Assets $ 31,889,141 $ 15,440,044 LIABILITIES AND EQUITY Total Liabilities $ 55,000 $ 55,000 Commitments and Contingencies Shareholders’ Equity Class A Ordinary Share (par value $0.0001 per share, 450,000,000 shares authorized; 19,435,423 and 16,102,420 shares issued and outstanding at December 31, 2020 and 2019, respectively) 1,944 1,610 Class B Ordinary Share (par value $0.0001 per share, 50,000,000 shares authorized; 5,497,715 and 5,497,715 shares issued and outstanding at December 31, 2020 and 2019, respectively) 550 550 Additional paid-in capital 22,775,154 12,044,855 Retained earnings 8,141,280 3,682,800 Accumulated other comprehensive income (loss) 915,213 (344,771 ) Total Shareholders’ Equity 31,834,141 15,385,044 Total Liabilities and Shareholders’ Equity $ 31,889,141 $ 15,440,044 |
Condensed Income Statement [Table Text Block] | For the Years Ended December 31, 2020 2019 2018 Equity in gain of subsidiaries $ 4,470,613 $ 4,046,770 $ 3,019,323 General and administrative expenses (12,233 ) (100 ) - Net Income 4,458,380 4,046,670 3,019,323 Other Comprehensive (Loss) Income Foreign currency translation adjustment 1,259,984 (173,604 ) (379,520 ) Comprehensive Income $ 5,718,364 $ 3,873,066 $ 2,639,803 |
Condensed Cash Flow Statement [Table Text Block] | For the Years Ended December 31, 2020 2019 2018 Cash Flows from Operating Activities: Net Cash Provided by Operating Activities $ (700,873 ) $ 48,100 $ - Cash Flows from Investing Activities: Investment in a subsidiary (3,690,000 ) - - Net Cash Used Investing Activities (3,690,000 ) - - Cash Flows from Financing Activities: Proceeds from issuance of common stocks in connection with initial public offering, net off issuance cost 11,497,654 - - Net Cash Used Financing Activities 11,497,654 - - Net increase in cash and cash equivalents 7,106,781 48,100 - Cash and cash equivalents at beginning of year 48,100 - - Cash and cash equivalents at end of year $ 7,154,881 $ 48,100 $ - |
Organization and Principal Ac_3
Organization and Principal Activities (Details) ¥ in Millions, $ in Millions | Aug. 14, 2020 | Aug. 15, 2019 | Dec. 31, 2020shares | Nov. 30, 2020 | Aug. 01, 2020 | Dec. 31, 2019shares | Dec. 02, 2019USD ($) | Dec. 02, 2019CNY (¥) |
Organization and Principal Activities (Details) [Line Items] | ||||||||
HF capital management, description | HF Capital Management Delta, Inc. (“HF Capital”), a 6.25 % shareholder of Zhongchao Shanghai, planned to withdraw its equity interest in Zhongchao Shanghai (which is representative of 1,350,068 shares in Zhongchao Shanghai, among which 675,068 shares were issued by Zhongchao Shanghai and the remaining 675,000 shares were purchased from two existing shareholders), and to contribute the same amount of capital to Zhongchao Cayman directly. The Company and HF Capital entered into a certain warrant agreement to purchase ordinary shares of the Company, pursuant to which the Company granted a warrant to HF Capital, who expects to exercise the warrant and receive the ordinary shares of the Company before the effective date and closing of the offering because these conditions are considered to be administrative procedures and there is no uncertainties of going through them. The warrant entitled HF Capital to purchase 1,350,068 Class A Ordinary Shares, representing 6.25% economic beneficial interest, or 1.37% of the voting ownership interest of the Company as of December 31, 2019, or 5.42% economic beneficial interest, or 1.33% of the voting ownership interest | |||||||
Amount of paid-in capital of HF capital | $ 2.9 | ¥ 20 | ||||||
Equity Interest Pledge Agreement [Member] | ||||||||
Organization and Principal Activities (Details) [Line Items] | ||||||||
Equity interest term | 20 years | |||||||
Master Exclusive Service Agreement [Member] | ||||||||
Organization and Principal Activities (Details) [Line Items] | ||||||||
Net profit percentage | 100.00% | |||||||
Shanghai Zhongxun [Member] | ||||||||
Organization and Principal Activities (Details) [Line Items] | ||||||||
Equity interest percentage | 100.00% | 51.00% | ||||||
Mr. Weiguang Yang [Member] | ||||||||
Organization and Principal Activities (Details) [Line Items] | ||||||||
Equity interest percentage | 19.00% | |||||||
Beijing Zhongchao Yixin Management Consulting Partnership [Member] | ||||||||
Organization and Principal Activities (Details) [Line Items] | ||||||||
Equity interest percentage | 20.00% | |||||||
LLP (“Zhongchao Yixin”), and Beijing Zhongren Yixin Management Consulting [Member] | ||||||||
Organization and Principal Activities (Details) [Line Items] | ||||||||
Equity interest percentage | 10.00% | |||||||
Mr.Yang [Member] | ||||||||
Organization and Principal Activities (Details) [Line Items] | ||||||||
Equity interest percentage | 76.40% | |||||||
Class A Ordinary Shares [Member] | ||||||||
Organization and Principal Activities (Details) [Line Items] | ||||||||
Ordinary shares would not be issued (in Shares) | 1,350,068 | 1,350,068 | ||||||
Ordinary shares outstanding (in Shares) | 1,350,068 | 1,350,068 |
Organization and Principal Ac_4
Organization and Principal Activities (Details) - Schedule of financial statements of Zhongchao Shanghai | 12 Months Ended |
Dec. 31, 2008 | |
Zhongchao Group Inc. ("Zhongchao BVI") [Member] | |
Condensed Financial Statements, Captions [Line Items] | |
Name | Zhongchao Group Inc. ("Zhongchao BVI") |
Background | A BVI company Incorporated on April 23, 2019 A holding company |
Ownership | 100% owned by Zhongchao Cayman |
Zhongchao Group Limited ("Zhongchao HK") [Member] | |
Condensed Financial Statements, Captions [Line Items] | |
Name | Zhongchao Group Limited ("Zhongchao HK") |
Background | A Hong Kong company Incorporated on May 14, 2019 A holding company |
Ownership | 100% owned by Zhongchao BVI |
Beijing Zhongchao Zhongxing Technology Limited ("Zhongchao WFOE") [Member] | |
Condensed Financial Statements, Captions [Line Items] | |
Name | Beijing Zhongchao Zhongxing Technology Limited ("Zhongchao WFOE") |
Background | A PRC company and deemed a wholly foreign owned enterprise Incorporated on May 29, 2019 Registered capital of $10 million A holding company |
Ownership | 100% owned by Zhongchao HK |
Zhongchao Shanghai [Member] | |
Condensed Financial Statements, Captions [Line Items] | |
Name | Zhongchao Shanghai |
Background | A PRC limited liability company Incorporated on August 17, 2012 Registered capital of RMB 20,250,067 (approximately $3,064,272) with registered capital fully paid-up Engaged in technology development, technology transfer, and technical services in the field of medical technology, technical consulting in the field of network technology, and medical information consulting |
Ownership | VIE of Beijing Zhongchao Zhongxing Technology Limited |
Shanghai Maidemu Cultural Communication Corp. ("Shanghai Maidemu") [Member] | |
Condensed Financial Statements, Captions [Line Items] | |
Name | Shanghai Maidemu Cultural Communication Corp. ("Shanghai Maidemu") |
Background | A PRC limited liability company Incorporated on March 12, 2015 Registered capital of $1,597,087 (RMB 10 million) with registered capital fully paid-up Planning for cultural and artistic exchanges, designing, producing, acting for and publishing various kinds of advertisements, and medical consultation (no medical diagnosis and treatment activities allowed). |
Ownership | 100% owned by Zhongchao Shanghai |
Shanghai Zhongxun Medical Technology Co., Ltd. (“Shanghai Zhongxun”) [Member] | |
Condensed Financial Statements, Captions [Line Items] | |
Name | Shanghai Zhongxun Medical Technology Co., Ltd. ("Shanghai Zhongxun") |
Background | A PRC limited liability company Incorporated on May 27, 2017 Registered capital of $1,021,525 (RMB 7 million) with registered capital fully paid-up Engaged in technology development, transfer, service and consulting in the fields of medical technology and computer technology (no medical diagnosis and treatment activities allowed). |
Ownership | 100% owned by Zhongchao Shanghai |
Shanghai Zhongxin Medical Technology Co., Ltd (formerly known as “Shanghai Jingyi Medical Technology Co., Ltd.,”) (“Shanghai Jingyi”) [Member] | |
Condensed Financial Statements, Captions [Line Items] | |
Name | Shanghai Zhongxin Medical Technology Co., Ltd (formerly known as "Shanghai Jingyi Medical Technology Co., Ltd.,") ("Shanghai Jingyi") |
Background | A PRC limited liability company Incorporated on October 10, 2018 Registered capital of $1,530,784 (RMB 10 million) with registered capital of $1,491,749 to be funded Engaged in technology development, transfer, service and consulting in the fields of medical technology and computer technology, market information consulting and investigating. |
Ownership | 100% owned by Shanghai Zhongxun* |
Shanghai Huijing Information Technology Co., Ltd., ("Shanghai Huijing") [Member] | |
Condensed Financial Statements, Captions [Line Items] | |
Name | Shanghai Huijing Information Technology Co., Ltd., ("Shanghai Huijing") |
Background | A PRC limited liability company Incorporated on September 28, 2016 Registered capital of $149,948 (RMB 1 million) with registered capital of $74,974 to be funded Engaged in technology development, transfer, service and consulting in the fields of computer technology, graphic designing, website page designing, planning cultural and artistic exchanges. |
Ownership | 100% owned by Shanghai Maidemu |
Beijing Zhongchao Boya Medical Technology Co., Ltd. (“Beijing Boya”) [Member] | |
Condensed Financial Statements, Captions [Line Items] | |
Name | Beijing Zhongchao Boya Medical Technology Co., Ltd. ("Beijing Boya") |
Background | A PRC limited liability company Incorporated on April 27, 2020 Registered capital of $141,185 (RMB 1 million) with registered capital of $141,185 to be funded Engaged in technology development, transfer, service and consulting in the fields of medical technology and computer technology, market information consulting and investigating. |
Ownership | 70% owned by Zhongchao Shanghai, and 30% owned by Mr. Zhengbo Ma on behalf of Zhongchao Shanghai |
Zhixun Internet Hospital (Liaoning) Co., Ltd. (“Liaoning Zhixun”) [Member] | |
Condensed Financial Statements, Captions [Line Items] | |
Name | Zhixun Internet Hospital (Liaoning) Co., Ltd. ("Liaoning Zhixun") |
Background | A PRC limited liability company Incorporated on July 6, 2020 Registered capital of $426,642 (RMB 3 million) with registered capital of $426,642 to be funded Engaged in online hospital services, medical services, elderly nursing services, remote healthcare management services, healthcare consulting services, sales of medical appliances and other medical products. |
Ownership | 100% owned by Shanghai Zhongxin |
Organization and Principal Ac_5
Organization and Principal Activities (Details) - Schedule of financial statements is reconciled - Class A Ordinary Shares [Member] - shares | Dec. 31, 2020 | Dec. 31, 2019 |
Organization and Principal Activities (Details) - Schedule of financial statements is reconciled [Line Items] | ||
Number of Class A Ordinary Shares legally issued and outstanding | 18,085,355 | 14,752,352 |
Class A Ordinary Shares committed to be issued to HF Capital | 1,350,068 | 1,350,068 |
Number of Class A Ordinary Shares outstanding and issued presented on the financial statements | 19,435,423 | 16,102,420 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) | 1 Months Ended | 12 Months Ended | ||
Nov. 30, 2020 | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | |
Summary of Significant Accounting Policies (Details) [Line Items] | ||||
Consolidated financial statements, percentage | 100.00% | |||
Equity interest percentage, description | Mr. Weiguang Yang, Zhongchao Yixin and Zhongren Yixin hold 19%, 20% and 10% of the equity interest of Shanghai Jingyi on behalf of Shanghai Zhongxun, respectively, after November 2020. As a result, the Company owns 100% of Shanghai Zhongxin’s equity interest. | |||
Wrote off against accounts receivables | $ 336,367 | |||
Minority equity interest | $ (46,617) | |||
Depreciation | 5.00% | |||
Employee benefits | $ 310,637 | 497,402 | $ 476,765 | |
Research and development costs | 816,553 | 864,320 | 1,447,949 | |
Advertising expenses | 2,851,648 | 2,670,397 | 1,989,895 | |
Government grants | 101,330 | 552,277 | ||
Government grant income | $ 325,992 | $ 506,652 | ||
Value added tax | 6.00% | |||
Uncertain tax position | An uncertain tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred. | |||
Number of reportable segments | 1 | |||
Cash and cash equivalents | $ 15,072,947 | |||
Deposited in financial institutions | $ 6,717,940 | |||
Mr. Weiguang Yang [Member] | ||||
Summary of Significant Accounting Policies (Details) [Line Items] | ||||
Equity interest percentage | 19.00% | |||
Shanghai Jingyi [Member] | ||||
Summary of Significant Accounting Policies (Details) [Line Items] | ||||
Non-controlling equity interest | 49.00% | 49.00% | ||
Maximum [Member] | ||||
Summary of Significant Accounting Policies (Details) [Line Items] | ||||
Minority equity interest | $ 0.05 | |||
Maximum [Member] | Mr. Weiguang Yang [Member] | ||||
Summary of Significant Accounting Policies (Details) [Line Items] | ||||
Equity interest percentage | 70.00% | |||
Minimum [Member] | ||||
Summary of Significant Accounting Policies (Details) [Line Items] | ||||
Minority equity interest | $ 0.03 | |||
Minimum [Member] | Mr. Weiguang Yang [Member] | ||||
Summary of Significant Accounting Policies (Details) [Line Items] | ||||
Equity interest percentage | 30.00% |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - Schedule of exchange rates | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Schedule of exchange rates [Abstract] | |||
Balance sheet items, except for equity accounts | 6.5326 | 6.9618 | |
Items in the statements of income and comprehensive income, and statements of cash flows | 6.9020 | 6.9081 | 6.6090 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details) - Schedule of property and equipment useful lives | 12 Months Ended |
Dec. 31, 2020 | |
Building [Member] | |
Summary of Significant Accounting Policies (Details) - Schedule of property and equipment useful lives [Line Items] | |
Property and equipment useful lives | 20 years |
Office equipment [Member] | |
Summary of Significant Accounting Policies (Details) - Schedule of property and equipment useful lives [Line Items] | |
Property and equipment useful lives | 3 years |
Vehicle [Member] | |
Summary of Significant Accounting Policies (Details) - Schedule of property and equipment useful lives [Line Items] | |
Property and equipment useful lives | 4 years |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies (Details) - Schedule of amortized over their estimated useful lives | 12 Months Ended |
Dec. 31, 2020 | |
Trademarks [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated useful lives | 10 years |
License [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated useful lives | 10 years |
Software [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated useful lives | 10 years |
Variable Interest Entities an_3
Variable Interest Entities and Other Consolidation Matters (Details) - Schedule of consolidated financial statements - USD ($) | 12 Months Ended | |||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | ||
ASSETS | ||||
Cash and cash equivalents | $ 6,717,940 | $ 7,739,422 | ||
Accounts receivable | 10,321,837 | 5,078,419 | ||
Due from Zhongchao Inc. | [1] | 108,518 | ||
Other current assets | 2,167,706 | 1,692,928 | ||
Investment in a limited partnership | 1,258,787 | |||
Property and equipment, net | 1,997,761 | 1,889,973 | ||
Other noncurrent assets | 1,491,321 | 1,338,708 | ||
Total Assets | 24,063,870 | 17,739,450 | ||
LIABILITIES | ||||
Advances from customers | 6,760 | 73,962 | ||
Deferred income | 323,192 | |||
Income tax payable | 1,523,175 | 897,892 | ||
Operating lease liabilities | 62,160 | 251,582 | ||
Due to Zhongchao Inc. | [1] | 748,630 | ||
Other current liabilities | 1,389,860 | 852,398 | ||
Total Liabilities | 3,730,585 | 2,399,026 | ||
Revenues | 17,989,788 | 14,882,763 | $ 12,865,870 | |
Income from Operations | 4,525,855 | 3,642,265 | 3,274,647 | |
Net Income | $ 4,484,029 | $ 4,000,620 | $ 3,001,489 | |
[1] | The balances due from/to Zhongchao Inc., are eliminated on consolidation. |
Short-Term Investments (Details
Short-Term Investments (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Short-term Investments [Abstract] | |||
Interest income short-term investments | $ 56,512 | $ 103,687 | |
Loss on short-term investment | $ 10,331 |
Other Current Assets (Details)
Other Current Assets (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Disclosure Text Block Supplement [Abstract] | ||
Prepaid advertising expenses | $ 1,033,280 | $ 459,235 |
Other Current Assets (Details)
Other Current Assets (Details) - Schedule of other current assets - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 | |
Schedule of other current assets [Abstract] | |||
Deferred offering costs | [1] | $ 461,710 | |
Prepaid advertising expense | [2] | 1,033,280 | 426,901 |
Deferred contract costs | [3] | 272,804 | 189,572 |
Office rental deposit | 86,287 | 71,752 | |
Interest receivable | 32,416 | 72,671 | |
Prepaid rental fees | 15,827 | 15,598 | |
Prepaid consulting service fees | 78,627 | 3,160 | |
Others | 94,167 | 16,676 | |
Total | $ 1,613,408 | $ 1,258,040 | |
[1] | As of December 31, 2019, the balance of deferred offering costs represented the expenses directly related to the initial public offerings, which was deducted against additional paid-in capital upon initial public offering in February 2020. | ||
[2] | As of December 31, 2020 and 2019, the balance of prepaid advertising expenses represents payments of advertising expenses to three and one vendors respectively. Among the balance of $1,033,280 as of December 31, 2020, $459,235 was subsequently refunded from the vendor to the Company as the Company suspended cooperation with the vendor. | ||
[3] | As of December 31, 2020 and 2019, the balances of deferred contract costs represented the travel and media expenses which were directly related to certain contracts with customers. The costs and expenses were incurred so as the Company would fulfil its performance obligation committed to its customers and were expected to be recovered. |
Property and Equipment, Net (De
Property and Equipment, Net (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |||
Comprised of office campus and facilities | $ 1,828,092 | ||
Depreciation expenses | $ 176,111 | $ 75,021 | $ 23,655 |
Property and Equipment, Net (_2
Property and Equipment, Net (Details) - Schedule of Property and equipment, net - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Schedule of Property and equipment, net [Abstract] | ||
Building | $ 1,828,092 | |
Office equipment | 449,246 | 392,010 |
Vehicle | 34,351 | 32,233 |
Less: accumulated depreciation | (313,928) | (119,976) |
Property plant and equipment gross | 1,997,761 | 304,267 |
Construction in progress | 1,585,706 | |
Property and equipment, net | $ 1,997,761 | $ 1,889,973 |
Prepayments for Lease of Land_2
Prepayments for Lease of Land (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Prepayments For Lease Of Land [Abstract] | |||
Amortization expenses | $ 21,670 | $ 21,650 | $ 9,921 |
Prepayments for Lease of Land_3
Prepayments for Lease of Land (Details) - Schedule of prepayments for lease of land - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Schedule of prepayments for lease of land [Abstract] | ||
Prepayments for lease of land | $ 423,415 | $ 397,311 |
Less: accumulated amortization | (55,827) | (30,902) |
Total | $ 367,588 | $ 366,409 |
Intangible Assets, Net (Details
Intangible Assets, Net (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Amortization expense | $ 4,544 | $ 6,234 | $ 5,123 |
Intangible Assets, Net (Detai_2
Intangible Assets, Net (Details) - Schedule of Intangible Assets - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Intangible Assets, Net (Details) - Schedule of Intangible Assets [Line Items] | ||
INTANGIBLE ASSETS NET | $ 34,973 | $ 37,323 |
Less: accumulated amortization | (20,562) | (14,789) |
Trademark and license [Member] | ||
Intangible Assets, Net (Details) - Schedule of Intangible Assets [Line Items] | ||
INTANGIBLE ASSETS NET | 11,755 | 11,030 |
Software [Member] | ||
Intangible Assets, Net (Details) - Schedule of Intangible Assets [Line Items] | ||
INTANGIBLE ASSETS NET | $ 43,780 | $ 41,082 |
Investment in A Limited Partn_3
Investment in A Limited Partnership (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Nov. 05, 2020 | |
Investment Company, Financial Highlights [Abstract] | ||
Investment amount | $ 1,217,039 | |
Partnership interest percentage | 28.00% | |
Investment loss | $ 25,622 |
Investment in A Limited Partn_4
Investment in A Limited Partnership (Details) - Schedule of company’s investment in a limited partnership | 12 Months Ended |
Dec. 31, 2020USD ($) | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Less: share of operating loss of limited partnership | $ (27,071) |
Total | 1,258,788 |
Ningbo Meishan Xinaishan Equity Investment Limited Partnership [Member] | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Investment | $ 1,285,859 |
% of ownership | 28.00% |
Investment dates | November 5, 2020 |
Accrued Expenses and Other Cu_3
Accrued Expenses and Other Current Liabilities (Details) - Schedule of accrued expenses and other current liabilities - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 | |
Schedule of accrued expenses and other current liabilities [Abstract] | |||
Other tax payable | $ 777,810 | $ 390,403 | |
Accrued payroll | 159,350 | 168,818 | |
Deposits from sub-lessors of land use rights | [1] | 124,393 | |
Other current liabilities | 44,273 | 51,720 | |
Accrued expenses and other current liabilities | $ 981,433 | $ 735,334 | |
[1] | The Company leased two pieces of land use rights (Note 7) from certain sub-lessors and required of deposits from these sub-lessors and would release the deposits upon sub-lessors’ issuance of invoices to the Company. The Company released deposits in the year ended December 31, 2020 upon receiving invoices from the sub-lessors. |
Accrued Expenses and Other Cu_4
Accrued Expenses and Other Current Liabilities (Details) - Schedule of other tax payables - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Schedule of other tax payables [Abstract] | ||
Value added tax payable | $ 740,894 | $ 366,535 |
Local taxes payable | 36,916 | 23,868 |
Other tax payable | $ 777,810 | $ 390,403 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2020 | Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |||
Applicable tax rate, description | The applicable tax rate for the first HKD$2 million of assessable profits is 8.25% and assessable profits above HKD$2 million will continue to be subject to the rate of 16.5% for corporations in Hong Kong, effective from the year of assessment 2018/2019. Before that, the applicable tax rate was 16.5% for corporations in Hong Kong. | ||
Enterprise income tax rate, description | The EIT rate for companies operating in the PRC is 25%. Shanghai Zhongxun, Shanghai JingyiShanghai, Huijing, Beijing Boya, Zhongchao Shanghai Beijing Branch and Shanghai Zhongxun Beijing Branch qualify as Small and Low Profit Enterprises, and are subject to a preferential EIT of 10%. | ||
Income tax exemption, description | preferential tax treatment of income tax exemption for the first two years, and 50% reduction of rate (i.e. 12.5%) for the next three years. Entities qualifying as High and New Technology Enterprises enjoy a preferential tax rate of 15%. Qualified as a Software Development Enterprise and a High and New Technology Enterprise, Zhongchao Shanghai received the preferential tax treatments from the year ended December 31, 2016, and was exempted from income taxes for the years ended December 31, 2016 and 2017, applied a preferential income tax rate of 12.5% for the years ended December 2018 through 2020, and a preferential income tax rate of 15% from the year ended December 31, 2021 and thereafter. | ||
Research and development expenses, percentage | 175.00% | ||
Net operating loss carryforwards | $ 36,538 | $ 209,345 |
Income Taxes (Details) - Schedu
Income Taxes (Details) - Schedule of income tax expenses - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Schedule of income tax expenses [Abstract] | |||
Current income tax expenses | $ (543,211) | $ (705,231) | $ (441,156) |
Deferred income tax benefits (expenses) | 58,424 | 318,087 | (60,975) |
Income tax (expenses) benefits | $ (484,787) | $ (387,144) | $ (502,131) |
Income Taxes (Details) - Sche_2
Income Taxes (Details) - Schedule of reconciliation of statutory tax rate to effective tax rate | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Schedule of reconciliation of statutory tax rate to effective tax rate [Abstract] | |||
PRC statutory income tax rate | 25.00% | 25.00% | 25.00% |
Effect of preferential tax benefits | (13.96%) | (14.23%) | (7.30%) |
Effect of non-deductible expenses | 0.35% | 0.39% | 0.22% |
Effect of research and development credits | (1.47%) | (2.25%) | (3.28%) |
Effect of deferred tax rate change for share based compensation | (0.11%) | (0.09%) | (0.31%) |
Effective tax rate | 9.81% | 8.82% | 14.33% |
Income Taxes (Details) - Sche_3
Income Taxes (Details) - Schedule of deferred tax assets - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Schedule of deferred tax assets [Abstract] | ||
Excess advertising expense | $ 699,717 | $ 608,131 |
Deferred Intangible assets amortization | 22,983 | 24,165 |
Net operating loss carrying forward | 7,666 | 20,543 |
Share-based compensation | 65,181 | 36,155 |
Total | $ 795,547 | $ 688,994 |
Earnings Per Share (Details)
Earnings Per Share (Details) | Aug. 14, 2019USD ($) |
Class A Ordinary Share | |
Earnings Per Share (Details) [Line Items] | |
Stock issued | $ 1,350,068 |
Earnings Per Share (Details) -
Earnings Per Share (Details) - Schedule of basic and diluted loss per ordinary share - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Schedule of basic and diluted loss per ordinary share [Abstract] | |||
Net Income Attributable to Zhongchao Inc.’s shareholders | $ 4,458,380 | $ 4,046,670 | $ 3,019,323 |
Weighted average number of ordinary share outstanding | |||
Basic and Diluted | 24,425,637 | 21,600,135 | 20,764,245 |
Earnings per share | |||
Basic and Diluted | $ 0.183 | $ 0.187 | $ 0.145 |
Related Party Transactions an_2
Related Party Transactions and Balanes (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |
Feb. 28, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | |
Related Party Transactions and Balanes (Details) [Line Items] | |||
Fair value of compensate service rendered by the employee | $ 827,413 | ||
Service period term | 10 years | ||
Ten Years Request Service Period [Member] | |||
Related Party Transactions and Balanes (Details) [Line Items] | |||
Transferred expenses | $ 827,413 | ||
Shanghai Xingzhong Investment Management LLP [Member] | |||
Related Party Transactions and Balanes (Details) [Line Items] | |||
Related party transaction balance | $ 14,364 | ||
Minimum [Member] | Shanghai Xingzhong Investment Management LLP [Member] | |||
Related Party Transactions and Balanes (Details) [Line Items] | |||
Transferred of equity interest | 1.00% | ||
Number of ordinary shares (in Shares) | 29,970 | ||
Maximum [Member] | Shanghai Xingzhong Investment Management LLP [Member] | |||
Related Party Transactions and Balanes (Details) [Line Items] | |||
Transferred of equity interest | 4.75% | ||
Number of ordinary shares (in Shares) | 142,229 |
Equity (Details)
Equity (Details) - USD ($) | 1 Months Ended | 12 Months Ended | ||||
Feb. 26, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Aug. 14, 2019 | Apr. 16, 2019 | |
Equity (Details) [Line Items] | ||||||
Capital contribution from shareholders | $ 3,580,260 | |||||
Equity interest | 6.25% | |||||
Ordinary share authorized (in Shares) | 500,000,000 | |||||
Ordinary shares, description | Holders of Class A Ordinary Shares and Class B Class A Ordinary Shares have the same rights except for voting and conversion rights. In respect of matters requiring a shareholder vote, each Class A Ordinary Share will be entitled to 1 vote and each Class B Ordinary Share will be entitled to 15 votes. | |||||
Issue of ordinary shares, description | the Company was committed to issue 1,350,068 Class A Ordinary Shares to a 6.25 % shareholder of Zhongchao Shanghai, who is now in the progress of changing from a shareholder of Zhongchao Shanghai to a direct investor of Zhongchao Cayman (Note 1). The 1,350,068 Class A Ordinary Shares, representing 6.25% economic beneficial interest, or 1.37% of the voting ownership interest of the Company as of December 31, 2020, or 5.42% economic beneficial interest, or 1.33% of the voting ownership interest | |||||
Sale of stock, description | the Company closed its initial public offering (IPO) on the Nasdaq Global Market. The Company offered 3,000,000 Class A Ordinary Shares in the IPO, par value $0.0001 per share, at $4.00 per share. In addition, the underwriters of the Company’s IPO have exercised in full their over-allotment option to purchase additional 315,000 Class A Ordinary Shares, at $4.00 per share. Gross proceeds of the Company’s IPO, including the proceeds from the sale of the over-allotment shares, totaled $13.26 million, before deducting underwriting discounts and other related expenses | |||||
Aggregate number of shares (in Shares) | 18,000 | |||||
After-tax profits, percentage | 10.00% | |||||
Reserve funds, percentage | 50.00% | |||||
Accrued statutory reserve | $ 385,689 | $ 395,274 | $ 20,539 | |||
Percentage of retained earnings | 10.00% | 10.00% | 10.00% | |||
Statutory reserve funds | $ 801,502 | $ 415,813 | ||||
Net assets | $ 23,579,150 | |||||
PRC enterprise income tax, description | The current PRC Enterprise Income Tax (“EIT”) Law also imposed a 10% withholding income tax for dividends distributed by a foreign invested enterprise to its immediate holding company outside China. A lower withholding tax rate will be applied if there is a tax treaty arrangement between mainland China and the jurisdiction of the foreign holding company. Holding companies in Hong Kong, for example, will be subject to a 5% withholding tax rate, subject to approval from the related PRC tax authorities. | |||||
Class B Ordinary Share | ||||||
Equity (Details) [Line Items] | ||||||
Ordinary share stock issued (in Shares) | 5,497,715 | 10,000 | ||||
VIE [Member] | ||||||
Equity (Details) [Line Items] | ||||||
Statutory reserve funds | $ 801,502 | 415,813 | ||||
Net assets | 12,462,828 | |||||
Retained earnings | ||||||
Restricted net assets | $ 23,627,050 | $ 12,462,828 | ||||
Class A Ordinary Shares [Member] | ||||||
Equity (Details) [Line Items] | ||||||
Ordinary share authorized (in Shares) | 450,000,000 | 450,000,000 | ||||
Ordinary share par value (in Dollars per share) | $ 0.0001 | $ 0.0001 | ||||
Ordinary share stock issued (in Shares) | 19,435,423 | 16,102,420 | ||||
Class B Ordinary Shares [Member] | ||||||
Equity (Details) [Line Items] | ||||||
Ordinary share authorized (in Shares) | 50,000,000 | 50,000,000 | ||||
Ordinary share par value (in Dollars per share) | $ 0.0001 | $ 0.0001 | ||||
Ordinary share stock issued (in Shares) | 5,497,715 | 5,497,715 | ||||
Class A Ordinary Share | ||||||
Equity (Details) [Line Items] | ||||||
Ordinary share stock issued (in Shares) | 14,752,352 |
Concentration Risk (Details)
Concentration Risk (Details) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Customer A [Member] | Accounts Receivable [Member] | |||
Concentration Risk (Details) [Line Items] | |||
Concentration risk, percentage | 22.60% | 31.40% | |
Customer B [Member] | Accounts Receivable [Member] | |||
Concentration Risk (Details) [Line Items] | |||
Concentration risk, percentage | 19.20% | 15.90% | |
Customer C [Member] | Accounts Receivable [Member] | |||
Concentration Risk (Details) [Line Items] | |||
Concentration risk, percentage | 11.70% | ||
Revenue [Member] | |||
Concentration Risk (Details) [Line Items] | |||
Concentration risk, percentage | 10.00% | ||
Revenue [Member] | Supplier A [Member] | |||
Concentration Risk (Details) [Line Items] | |||
Concentration risk, percentage | 18.70% | ||
Revenue [Member] | Supplier B [Member] | |||
Concentration Risk (Details) [Line Items] | |||
Concentration risk, percentage | 14.70% | ||
Revenue [Member] | Supplier A [Member] | |||
Concentration Risk (Details) [Line Items] | |||
Concentration risk, percentage | 44.70% | ||
Revenue [Member] | Customer A [Member] | |||
Concentration Risk (Details) [Line Items] | |||
Concentration risk, percentage | 26.90% | 25.50% | 37.70% |
Revenue [Member] | Customer B [Member] | |||
Concentration Risk (Details) [Line Items] | |||
Concentration risk, percentage | 19.70% | 15.10% | 10.90% |
Revenue [Member] | Customer C [Member] | |||
Concentration Risk (Details) [Line Items] | |||
Concentration risk, percentage | 14.10% |
Stock Based Compensation (Detai
Stock Based Compensation (Details) | Jul. 13, 2020$ / sharesshares | Jan. 03, 2019 | Nov. 30, 2018shares | Dec. 31, 2020USD ($)shares | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($)shares |
Stock Based Compensation (Details) [Line Items] | ||||||
Number of employees | 2 | 2 | ||||
Unvested shares of ordinary share (in Shares) | 154,346 | 15,000 | 154,346 | |||
Restricted shares, description | Zhongchao Shanghai granted 101,997 shares of restricted share units to three of its employees and 30,000 shares to one non-employee for the consulting services rendered. The restricted share units will vest after a five-year service period is fulfilled. The grant-date value of each restricted share units was $2.72, and the total fair value of these restricted share units aggregated $359,032. On February 28, 2019, Zhongchao Shanghai granted 29,970 shares and 142,229 shares of restricted share units to Ms. Pei Xu, the Chief Financial Officer of the Company, and Ms. Shuang Wu, the Chief Operation Officer of the Company, respectively. The restricted share units will vest after a 10-year service period is fulfilled. The grant-date value of each restricted share units was $2.72, and the total fair value of these restricted share units aggregated $468,381. | |||||
Terminal growth rate | 3.00% | |||||
Discount rate | 16.00% | |||||
Number of non-executive directors | 3 | |||||
Compensation date | Mar. 1, 2020 | |||||
Grant-date value of restricted per share (in Dollars per share) | $ / shares | $ 2.42 | |||||
Aggregation shares of ordinary share (in Shares) | 43,560 | |||||
Accrual of (Reversal of) share-based compensation expenses (in Dollars) | $ | $ 168,350 | $ 159,984 | $ (14,483) | |||
Incur stock based compensation expenses (in Dollars) | $ | $ 790,794 | |||||
Weighted average period | 4 years 219 days | |||||
Minimum [Member] | ||||||
Stock Based Compensation (Details) [Line Items] | ||||||
Revenue growth rate | 8.60% | |||||
Maximum [Member] | ||||||
Stock Based Compensation (Details) [Line Items] | ||||||
Revenue growth rate | 39.40% | |||||
Class A Ordinary Share [Member] | ||||||
Stock Based Compensation (Details) [Line Items] | ||||||
Aggregation shares of restricted share units (in Shares) | 18,000 |
Stock Based Compensation (Det_2
Stock Based Compensation (Details) - Schedule of unvested restricted share units - $ / shares | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Schedule of unvested restricted share units [Abstract] | |||
Number of Shares Beginning balance, Unvested | 424,076 | 119,880 | 338,662 |
Weighted Average Grant-Date Fair Value, Beginning balance, Unvested | $ 2.54 | $ 2.08 | $ 2.46 |
Number of Shares, Vested | (15,000) | (64,436) | |
Weighted Average Grant-Date Fair Value, Vested | $ 2.42 | $ (2.67) | |
Number of Shares, Forfeited | (154,346) | ||
Weighted Average Grant-Date Fair Value, Forfeited | $ (2.67) | ||
Number of Shares, Ending balance, Unvested | 427,076 | 424,076 | 119,880 |
Weighted Average Grant-Date Fair Value, Ending balance , Unvested | $ 2.54 | $ 2.54 | $ 2.08 |
Number of Shares, Granted | 18,000 | 304,196 | |
Weighted Average Grant-Date Fair Value. Granted | $ 2.42 | $ 2.72 |
Stock Based Compensation (Det_3
Stock Based Compensation (Details) - Schedule of share based compensation operating expenses - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Schedule of share based compensation operating expenses [Abstract] | |||
Selling and marketing expenses | $ 93,439 | $ 92,885 | $ (14,483) |
General and administrative expenses | 74,911 | 67,099 | |
Total charges (reversals) of share-based compensation expenses | $ 168,350 | $ 159,984 | $ (14,483) |
Commitments and Contingencies_2
Commitments and Contingencies (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |||
Weighted average remaining lease term | 142 days | 1 year 69 days | |
Operating leases discount rates | 4.75% | ||
Rental expense | $ 312,675 | $ 307,864 | $ 195,326 |
Description of capital commitment | the Company paid a deposit of $465,143 for three office rooms in Japan with remaining balance of $628,083 to be paid. As of the issuance date of this consolidated financial statements, the Company fully paid the remaining balance |
Commitments and Contingencies_3
Commitments and Contingencies (Details) - Schedule of operating lease related assets and liabilities - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Schedule of operating lease related assets and liabilities [Abstract] | ||
Rights of use lease assets | $ 65,137 | $ 245,982 |
Operating lease liabilities, current | 62,160 | 210,219 |
Operating lease liabilities, noncurrent | 41,363 | |
Total operating lease liabilities | $ 62,160 | $ 251,582 |
Commitments and Contingencies_4
Commitments and Contingencies (Details) - Schedule of maturities of lease liabilities | Dec. 31, 2020USD ($) |
Schedule of maturities of lease liabilities [Abstract] | |
2021 | $ 62,801 |
2022 and thereafter | |
Total lease payments | 62,801 |
Less: imputed interest | (641) |
Present value of lease liabilities | $ 62,160 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | 1 Months Ended | |
Feb. 28, 2021 | Dec. 31, 2020 | |
Subsequent Events (Details) [Line Items] | ||
Cash deposit | $ 223,124 | |
Additional paid amount | $ 1,213,076 | |
Subsequent Event [Member] | ||
Subsequent Events (Details) [Line Items] | ||
Principal amount | $ 900,000 | |
Long term | 12 years | |
Interest rate | 2% |
Condensed financial informati_3
Condensed financial information of the parent company (Details) - Schedule of parent company balance sheet - Parent Company [Member] - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
ASSETS | ||
Cash and cash equivalents | $ 7,154,881 | $ 48,100 |
Other current assets | 713,106 | 6,800 |
Investment in subsidiaries | 24,021,154 | 15,385,144 |
Total Assets | 31,889,141 | 15,440,044 |
LIABILITIES AND EQUITY | ||
Total Liabilities | 55,000 | 55,000 |
Commitments and Contingencies | ||
Shareholders’ Equity | ||
Class A Ordinary Share (par value $0.0001 per share, 450,000,000 shares authorized; 16,102,420 and 16,102,420 shares issued and outstanding at December 31, 2019 and 2018, respectively) | 1,944 | 1,610 |
Class B Ordinary Share (par value $0.0001 per share, 50,000,000 shares authorized; 5,497,715 and 5,497,715 shares issued and outstanding at December 31, 2019 and 2018, respectively) | 550 | 550 |
Additional paid-in capital | 22,775,154 | 12,044,855 |
Retained earnings (Accumulated deficit) | 8,141,280 | 3,682,800 |
Accumulated other comprehensive loss | 915,213 | (344,771) |
Total Shareholders' Equity | 31,834,141 | 15,385,044 |
Total Liabilities and Shareholders' Equity | $ 31,889,141 | $ 15,440,044 |
Condensed financial informati_4
Condensed financial information of the parent company (Details) - Schedule of parent company balance sheet (Parentheticals) - Parent Company [Member] - $ / shares | Dec. 31, 2020 | Dec. 31, 2019 |
Class A Ordinary Shares | ||
Condensed Balance Sheet Statements, Captions [Line Items] | ||
Ordinary Share par value (in Dollars per share) | $ 0.0001 | $ 0.0001 |
Ordinary Share authorized | 450,000,000 | 450,000,000 |
Ordinary Share issued | 19,435,423 | 16,102,420 |
Ordinary Share outstanding | 19,435,423 | 16,102,420 |
Class B Ordinary Shares | ||
Condensed Balance Sheet Statements, Captions [Line Items] | ||
Ordinary Share par value (in Dollars per share) | $ 0.0001 | $ 0.0001 |
Ordinary Share authorized | 50,000,000 | 50,000,000 |
Ordinary Share issued | 5,497,715 | 5,497,715 |
Ordinary Share outstanding | 5,497,715 | 5,497,715 |
Condensed financial informati_5
Condensed financial information of the parent company (Details) - Schedule of parent company statements of income and comprehensive income - Parent Company [Member] - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Condensed Income Statements, Captions [Line Items] | |||
Equity in gain of subsidiaries | $ 4,470,613 | $ 4,046,770 | $ 3,019,323 |
General and administrative expenses | (12,233) | (100) | |
Net Income | 4,458,380 | 4,046,670 | 3,019,323 |
Other Comprehensive (Loss) Income | |||
Foreign currency translation adjustment | 1,259,984 | (173,604) | (379,520) |
Comprehensive Income | $ 5,718,364 | $ 3,873,066 | $ 2,639,803 |
Condensed financial informati_6
Condensed financial information of the parent company (Details) - Schedule of parent company statements of cash flows - Parent Company [Member] - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Cash Flows from Operating Activities: | |||
Net Cash Provided by Operating Activities | $ (700,873) | $ 48,100 | |
Cash Flows from Investing Activities: | |||
Investment in a subsidiary | (3,690,000) | ||
Net Cash Used Investing Activities | (3,690,000) | ||
Cash Flows from Financing Activities: | |||
Proceeds from issuance of common stocks in connection with initial public offering, net off issuance cost | 11,497,654 | ||
Net Cash Used Financing Activities | 11,497,654 | ||
Net increase in cash and cash equivalents | 7,106,781 | 48,100 | |
Cash and cash equivalents at beginning of year | 48,100 | ||
Cash and cash equivalents at end of year | $ 7,154,881 | $ 48,100 |