GlobeNewswire Inc | Oct 19, 2020 08:30AM EDT

October 19, 2020

NEW YORK, Oct. 19, 2020 (GLOBE NEWSWIRE) -- BOQI International Medical Inc. (NASDAQ: BIMI) (BIMI or the Company) today announced its financial results for the second quarter and six months ended June 30, 2020.

Second Quarter 2020 Financial Highlights:

-- Total revenues increased by 1026 % in the three months ended June 30, 2020 compared to the three months ended June 30, 2019. -- Gross profit margin increased to 22.77% during the three months ended June 30, 2020 compared to 4.35% for the three months ended June 30, 2019. -- Net income increased by 629% in the three months ended June 30, 2020 compared to the three months ended June 30, 2019.

We are pleased with our results in the second quarter and the concerted efforts of our team across our wholesale business in medical devices and medicine, said Mr. Tiewei Song, Chief Executive Officer and President of BOQI International Medical Inc. We acquired Guanzan Group this year, which allows us to better align with the current environment and positions us for future growth. As more healthcare facilities re-opened for business and resumed patient treatment in the second half of the year, we believe our products can meet the expected rising customer demand, meanwhile bring benefit to our shareholders.

Revenues

Revenues for the three months ended June 30, 2020 and 2019 were $3,790,847 and $336,690, respectively. The Companys revenues for the three months ended June 30, 2020 were principally attributable to the newly acquired Guanzan Groups wholesale sales of medical devices and generic drugs. The Companys revenues for the three months ended June 30, 2019 were attributable to the sales of products manufactured by the NF Group and from energy saving technical services and product collaboration processing services performed by the NF Group, which the Company sold in June 2020. Revenues from the wholesale medical devices segment and the wholesale medicine segment for the three months ended June 30, 2020 were $2,059,189 and $1,730,175, respectively. During the second quarter of 2020, the Guanzan Group benefitted from the recovery from COVID-19 in the PRC.

Revenues for the six months ended June 30, 2020 and 2019 were $4,226,378 and $912,402, respectively. The 363% increase in revenues is attributable to the acquisition of the Guanzan Group in late March 2020. Revenues from the wholesale medicine segment for the six months ended June 30, 2020 were $2,307,311 and revenues from the wholesale medical device segment for the six months ended June 30, 2020 were $1,896,733. The Companys revenue for the six months ended June 30, 2019 were attributable to the sales of products manufactured by the NF Group and from energy saving technical services and product collaboration processing services performed by the NF Group.

Cost of Revenues

Cost of revenues for the three months ended June 30, 2020 and 2019 were $2,941,955 and $319,172, respectively, reflecting the impact of the acquisition of the Guanzan Group. Cost of revenues for the three months ended June 30, 2019 consisted primarily of material costs, direct labor, depreciation, and manufacturing overhead, which were directly attributable to the manufacturing of products and the rendering of services by the NF Group.

Cost of revenues for the six months ended June 30, 2020 and 2019 were $3,407,169 and $749,848, respectively. Cost of revenues for the six months ended June 30, 2019 were attributable to the manufacturing of products and the rendering of services by the NF Group.

Gross Profit

For the three months ended June 30, 2020, the Company had a gross profit margin of 22.77% compared with a gross profit margin of 4.35% in the quarter ended June 30, 2019. The improvement in the gross profit margin in the three months ended June 30, 2020 is mainly due to the inclusion of a full quarter of revenues from the wholesale medical devices and wholesale medicine segments. The gross profit margin of the wholesale medical devices and wholesale medicine segments for three months ended June 30, 2020 were 23.22% and 25.56%, respectively. The gross profit for the Company in the three months ended June 30, 2019 was related to the operations of the NF Group. For the six months ended June 30, 2020, the Company had a gross profit margin of 19.38% compared with a gross profit margin of 17.82% in the first six months of 2019. The improvement in the gross profit margin in the six months ended June 30, 2020 is mainly due to the inclusion of the revenues from the wholesale medical devices and wholesale medicine segments since the acquisition in March 2020. The gross profit margin of the wholesale medical devices and wholesale medicine segments for six months ended June 30, 2020 were 22.78% and 25.16%, respectively. The gross profit for the Company in the six months ended June 30, 2019 was related to the operations of the NF Group.

Operating Expenses

Operating expenses were $2,922,868 for the three months ended June 30, 2020 compared to $726,940 for the same period in 2019, an increase of $2,195,928. The increase is mainly due to the additional amortization of the discounted convertible notes, meeting and promotional expenses, pharmaceutical and medical device industry compliance management expenses and professional expenses. The Companys operating expenses for the three months ended June 30, 2019 consisted primarily of general and administrative expenses, and selling and marketing expenses of the NF Group.

Operating expenses were $4,893,723 for the six months ended June 30, 2020 compared to $1,248,456 for the same period in 2019, an increase of $3,645,267, or 292%. The Companys operating expenses for the six months ended June 30, 2019 consisted primarily of general and administrative expenses, and selling and marketing expenses of the NF Group.

Other Income

For the three months ended June 30, 2020, the Company reported other income of $6,986,587 and other interest expense of $195,486. For the six months ended June 30, 2020, the Company reported other income of $6,944,469 and other interest expense of $377,466. Other income in both periods includes the gain generated from the disposal of the NF Group. Other expense in both periods consisted of interest expense.

Net Profit

For the three months ended June 30, 2020, the Company reported a net profit of $4,673,854 compared to a net loss of $883,245 for the same period of 2019. For the six months ended June 30, 2020 the Company reported a net profit of $2,471,663 compared to a net loss of $1,425,693 for the same period of 2019. The net profit in both periods is attributable to the gain generated from the disposal of the NF Group.

Liquidity and Capital Resources

At June 30, 2020, the Company had cash of $109,402 and negative working capital of $0.59 million as compared to cash of $36,674 and negative working capital of $500,765 at December 31, 2019.

About BOQI International Medical Inc.

BOQI International Medical Inc. (formerly known as NF Energy Saving Corporation) (NASDAQ: BIMI) was founded in 2006. In February 2019, the Board of Directors of the company was reorganized with a focus on the health industry. The Company is now exclusively a healthcare products provider, offering a broad range of healthcare products and related services. For more information about BOQI International Medical, please visit www.usbimi.com.

Safe Harbor Statement

Certain matters discussed in this news release are forward-looking statements that involve a number of risks and uncertainties including, but not limited to, the Companys ability to achieve profitable operations, its ability to continue to operate as a going concern, its ability to continue to meet NASDAQ continued listing requirements, the effects of the spread of the Coronavirus (COVID-19), the demand for the Companys products and the Companys customers economic condition, risk of operations in the Peoples Republic of China, general economic conditions and other risk factors detailed in the Companys annual report and other filings with the United States Securities and Exchange Commission. Investors are urged to read the Companys Quarterly Report on Form 10-Q for the three months ended March 31, 2020 for further information about the Companys financial results, liquidity and capital resources.

IR Contact:

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

BOQI INTERNATIONAL MEDICAL, INC. AND ITS SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS

June 30, December31, 2020 2019 (Unaudited) ASSETS CURRENT ASSETS Cash $ 96,312 $ 36,363 Restricted cash 13,090 311 Accounts receivable, net 3,118,402 24,840 Advances to suppliers 2,197,249 1,252 Amount due from related parties 49,776 1,350 Inventories, net 2,523,075 707,526 Prepayments and other receivables 14,407,373 59,333 Assets from discontinued operations - 21,218,983 Total current assets 22,405,277 22,049,958 NON-CURRENT ASSETS Deferred tax assets 244,351 - Property, plant and equipment, net 756,712 38,641 Intangible assets, net 7,458,486 7,973,179 Goodwill 6,443,170 - Total non-current assets 14,902,719 8,011,820 TOTAL ASSETS $ 37,307,996 $ 30,061,778 LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term loans $ 834,028 $ - Long-term loans due within one year 219,554 - Convertible promissory notes, net 3,852,890 107,383 Derivative liability 1,329,842 1,272,871 Accounts payable, trade 3,757,567 641,927 Advances from customers 828,939 67,975 Amount due to related parties 649,059 305,760 Taxes payable 317,010 861 Other payables and accrued liabilities 11,208,548 6,044,378 Liabilities from discontinued operations - 13,108,038 Total current liabilities 22,997,437 21,549,193 Long-term loans - noncurrent portion 163,920 - TOTAL LIABILITIES 23,161,357 21,549,193 COMMITMENTS AND CONTINGENCIES EQUITY Common stock, $0.001 par value; 50,000,000shares authorized; 10,384,433 and 9,073,289 10,384 9,073 shares issued and outstanding as of March31, 2020 and December 31, 2019, respectivelyAdditional paid-in capital 22,626,434 15,643,825 Statutory reserves - 2,227,634 Accumulated deficit (8,436,279 ) (10,881,667 )Accumulated other comprehensive income (128,737 ) 1,683,770 (loss)Total BOQI International Medical Inc.?s 14,071,802 8,682,635 equity NON-CONTROLLING INTERESTS 74,837 (170,050 ) Total equity 14,146,639 8,512,585 Total liabilities and equity $ 37,307,996 $ 30,061,778

BOQI INTERNATIONAL MEDICAL, INC. AND ITS SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (GAIN)/LOSS(UNAUDITED)

For the Three Months Ended For the Six Months Ended June 30, June 30, 2020 2019 2020 2019 REVENUES 3,790,847 336,690 4,226,378 912,402 COST OF REVENUES 2,941,955 319,172 3,407,169 749,848 GROSS PROFIT 848,892 14,518 819,209 162,554 OPERATING EXPENSES: Sales and marketing 531,923 48,851 650,769 86,724 General and 2,390,945 678,089 4,242,954 1,161,732 administrativeTotal operating 2,922,868 726,940 4,893,723 1,248,456 expenses LOSS FROM (2,073,976 ) (712,422 ) (4,074,514 ) (1,085,902 )OPERATIONS OTHER INCOME (EXPENSE)Interest expense (195,486 ) (173,526 ) (377,446 ) (292,094 )Other income 6,986,587 2,703 6,968,162 (47,697 )(expense)Total other income 6,791,101 (170,823 ) 6,590,716 (339,791 )(expense), net INCOME (LOSS) 4,717,125 (883,245 ) 2,516,202 (1,425,693 )BEFORE INCOME TAXES PROVISION FOR 43,271 ? 44,539 ? INCOME TAXES NET INCOME (LOSS) 4,673,854 (883,245 ) 2,471,663 (1,425,693 )Less: net income(loss) attributable 33,590 (21,149 ) 26,274 3,997 tonon-controllinginterestNET INCOME (LOSS)ATTRIBUTE TO BOQI $ 4,640,264 $ (862,096 ) $ 2,445,389 $ (1,429,690 )INTERATIONALMEDICAL INC.OTHER COMPREHENSIVE INCOME(LOSS)Foreign currencytranslation 263,239 (205,602 ) 143,038 26,325 adjustmentTOTAL COMPREHENSIVE 4,937,093 (1,088,847 ) 2,614,701 (1,339,368 )INCOME(LOSS)Less: comprehensiveincome (loss)attributable to 2,334 (8,831 ) (2,601 ) 4,546 non-controllinginterestsCOMPREHENSIVEINCOME (LOSS)ATTRIBUTABLE TO $ 4,934,759 $ (1,080,016 ) $ 2,617,302 $ (1,403,914 )BOQI INTERNATIONALMEDICAL INC. WEIGHTED AVERAGENUMBER OF COMMON SHARESBasic and diluted 10,203,861 7,831,531 9,728,861 7,703,123 INCOME (LOSS) PER SHAREBasic and diluted $ 0.46 $ (0.11 ) $ 0.25 $ (0.19 )

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

For the Six Months Ended June 30, 2020 2019 CASH FLOWS FROM OPERATING ACTIVITIES: Net Income (Loss ) $ 2,471,663 $ (1,425,693 )Adjustments to reconcile net loss to cash used in operating activities:Depreciation and amortization 512,460 497,476 (Profit) on disposal of NF Group (6,944,469 ) - Allowance for doubtful accounts 79,061 157,310 Amortization of discount of convertible 1,075,171 - promissory notesChange in derivative liabilities 107,340 - Impairment loss from construction in - 25,071 progressAllowance for inventory provision 187,942 - Change in operating assets and liabilitiesAccounts receivable (1,301,929 ) 942,687 Advances to suppliers (958,804 ) - Inventories (1,012,881 ) (214,739 )Prepayments and other receivables 930,314 (74,919 )Accounts payable, trade 1,760,102 (318,384 )Advances from customers (602,416 ) Taxes payable (80,818 ) 19,339 Other payables and accrued liabilities 347,751 365,443 Net cash provided by (used in) (3,429,513 ) (26,409 )operating activities CASH FLOWS FROM INVESTING ACTIVITIES: Cash received from acquisition of 95,220 - Guanzan GroupNet cash provided by investing 95,220 - activities CASH FLOWS FROM FINANCING ACTIVITIES: Issuance of common stock 126,841 Net proceeds from issuance of 3,457,325 - convertible promissory notesProceeds from short-term loans 5,899,009 Repayment of short-term loans (34,100 ) (5,900,484 )Repayment of long-term loans (21,497 ) Amount financed by related parties 598,803 Net cash provided by financing 4,000,531 125,366 activities EFFECT OF EXCHANGE RATE ON CASH (593,510 ) 20,569 INCREASE IN CASH 72,728 78,388 CASH AND CASH EQUIVALENTS, beginning of 36,674 197,356 period CASH AND CASH EQUIVALENTS, end of $ 109,402 $ 275,744 period SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid for income tax $ 56,396 $ - Cash paid for interest expense, net of $ 34,902 $ 284,092 capitalized interest NON-CASH TRANSACTIONS OF INVESTING AND FINANCING ACTIVITIESIssuance of common shares for theequity acquisition of Chongqing Guanzan $ 2,717,000 $ - Technology Co., Ltd.Goodwill recognized from the equity $ 6,443,170 $ - acquisition of the Boqi GroupOutstanding payment for the equityacquisition of Chongqing Guanzan $ 4,414,119 $ - Technology Co., Ltd.Outstanding receivable for disposal of $ 10,000,000 $ - NF GroupIssuance of common shares upon $ 1,008,067 $ - conversion of convertible notes