JRSIS HEALTH CARE CORPORATION The following discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements and the notes thereto included elsewhere in this Annual Report on Form 10-K, which have been prepared in accordance with accounting principles generally accepted inthe United States . The preparation of such financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses. On an ongoing basis, we evaluate these estimates, including those related to useful lives of real estate assets, bad debts, impairment, contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. There can be no assurance that actual results will not differ from those estimates. The analysis set forth below is provided pursuant to applicableSEC regulations and is not intended to serve as a basis for projections of future events. Overview
Harbin Jiarun Hospital Company Limited ("Jiarun") was established inHarbin in the Province ofHeilongjiang ofthe People's Republic of China ("PRC") by the ownerJunsheng Zhang onFebruary 17, 2006 .
Harbin Jiarun Hospital Co., Ltd Nanjing Road Branch ("
Harbin Jiarun Hospital Co., Ltd Harbin New District Branch ("3rd
OnNovember 20, 2013 ,Junsheng Zhang , the senior officer of Jiarun, establishedJRSIS Health Care Corporation , aFlorida corporation ("JRSS" or the "Company"). OnFebruary 25, 2013 , the officer of Jiarun establishedJRSIS Health Care Limited ("JHCL"), as a wholly owned subsidiary of the Company, and onSeptember 17, 2012 , the officer ofJiarun Hospital establishedRunteng Medical Group Co., Ltd ("Runteng"), as a wholly owned subsidiary of JHCL. UntilApril 28, 2022 Runteng, aHong Kong registered Investment Company, held 70% equity interest in Jiarun. OnDecember 20, 2013 , the Company acquired 100% of the issued and outstanding capital stock of JHCL, for 12,000,000 shares of its common stock. JHCL, through its wholly owned subsidiary,Runteng Medical Group Co., Ltd , holds majority ownership in Jiarun, a company duly incorporated, organized and validly existing under the laws ofChina . As the parent company, JRSS relied on Jiarun to conduct 100% of our businesses and operations. OnMarch 17, 2022 , the Company entered into an agreement on the establishment ofLaidian Technology (Zhongshan) Co., Ltd. ("Laidian") withZhong Zhuowei . The agreement contains a covenant byZhong Zhuowei to fund the operations of Laidian which is 100% owned by Runteng, in consideration ofMr. Zhong's financial commitment and commitment to provide management services, the Company agreed to issue 39,130,000 shares of its common stock toZhong Zhuowei upon the initiation of operations of Laidian. OnApril 12, 2022 , Runteng has setup and owned 100% of the equity in Laidian, a wholly-owned subsidiary to engage in the business of providing charging services to electric vehicles incorporated in ZhongshanCity of Guangdong, China . 13 OnApril 28, 2022 JRSS completed the spin-off of its subsidiary Jiarun as JRSS's subsidiary Runteng transferred its 70% equity interest in Jiarun toZhang Junsheng (the "Spin-Off"). In exchange for the 70% equity interest in Jiarun,Zhang Junsheng transferred to Runteng 5,392,000 shares of JRSS common stock. OnMay 5, 2022 , JRSS issued 39,130,000 shares of its common stock toZhong Zhuowei . Under "Agreement on the establishment of Laidian technology (Zhongshan) Co., Ltd." to serve as a management and set up the Laidian. AsMr. Zhong had previously acquired 8,000,000 shares in private transactions, he owned 47,130,000 shares (80.7%) of JRSS' common stock as onMay 5, 2022 .
On
Critical Accounting Policies and Management Estimates
In preparing our financial statements we are required to formulate accounting policies regarding valuation of our assets and liabilities and to develop estimates of those values. In our preparation of the financial statements for the year endedDecember 31, 2022 , there were no estimates made which were (a) subject to a high degree of uncertainty and (b) material to our results.
Results of Operations for the Years Ended
The following table shows key components of the results of operations during the
years ended
For The
Year Ended
December 31, Change
2022 2021 Amount %
Revenue:
Consultation 89,166 - 89,166 n/a
Total Revenue 89,166 - 89,166 n/a
Operating costs and expenses:
Salaries and benefits 14,712 - 14,712 n/a
Stock-based compensation 245,465 -
245,465 n/a
Office supplies 37,582 7,242 30,340 419 %
Rentals and leases 14,712 - 14,712 n/a
Professional fee 96,795 97,701 (906 ) (1 )%
Change in fair value of warrant
liability (7 ) (1,142 ) 1,135 (99 )%
Depreciation 5,796 - 5,796 n/a
Total operating costs and expenses 415,055 103,801 311,254 300 %
Loss from operations before other income
and income taxes (325,889 ) (103,801 ) (222,088 ) 214 %
Other income / (expenses) (1,741 ) - (1,741 ) n/a
Loss from operations before income taxes (327,630 ) (103,801 ) (223,829 ) 216 %
Income taxes - - - -
Loss from continued operations (327,630 ) (103,801 ) (223,829 ) 216 %
Net income (loss) from discontinued
operations (33,393,670 ) 3,292,746 (36,686,416 ) (1114 )%
Net income (loss) $ (33,721,300 ) $ 3,188,945 $ (36,910,245 ) (1157 )%
Comprehensive income (Loss):
Foreign currency translation adjustment
from continued operations 17,396 55,624 (38,228 ) (69 )%
Foreign currency translation adjustment
from discontinued operations 301,922 875,758 (573,836 ) (66 )%
Comprehensive income (loss) $ (33,401,982 ) $ 4,120,327 $ (37,522,309 ) (911 )% 14 Revenue
InApril 2022 the Company, through its newly-organized subsidiary, Laidian, commenced the business of providing consulting services to enterprises seeking to develop and commercialize EV charging stations inGuangzhou City. Operating revenue for the year endedDecember 31, 2022 was the fees paid to the Company's consulting services as well as planning and design of charging stations for
Laidian's customer. Operating costs and expenses The Company's continued operations for the year endedDecember 31, 2022 consisted of organizing its subsidiary Laidian, initiating the delivery of consulting services related to installation of EV charging stations, and collecting the equipment, facilities and personnel that will be needed for the expansion of Laidian's operations into proprietary development and operation of charging stations. Total operating costs and expenses were$415,055 for the
year endedDecember 31, 2022 . 59% of the costs and expenses for 2022 were attributable to stock-based compensation. InApril 2022 the Company issued 39,130,000 shares of its common stock toZhong Zhuowei in consideration of his commitment to provide managerial services for the development of the Laidian's charging station business and to provide such funds to Laidian as would be required to initiate its operations. These shares had a negotiated value of$1,056,510 , of which$74,652 was reimbursement forMr. Zhong's payment of Laidian's paid in capital. The remaining$981,858 was capitalized as deferred expenses and will be amortized as stock-based compensation over the three years commencing in April of 2022. For the year endedDecember 31, 2022 , the Company record$246,465 stock-based compensation expense by virtue of this amortization. The other significant operating expense was professional fees of$96,795 for the year endedDecember 31, 2022 . These fees were primarily accounting and legal fees related to the Company'sU.S. reporting obligations. Professional fees for the year endedDecember 31, 2021 totaled$97,701 .
Loss from operations and net loss
Loss from continuing operations was$327,630 for the year endedDecember 31, 2022 , primarily attributable to the$245,465 stock-based compensation expense. Loss from continuing operations for the year endedDecember 31, 2021 totaled$103,801 , which represented expenses incurred in that year by the parentFlorida corporation, as all other expenses incurred in 2021 related to the operations of Jiarun and have been associated with discontinued operations. OnApril 28, 2022 , the Company completed the spin-off of its subsidiary Jiarun, and reclassified the results of Jiarun's operations as discontinued operations recorded$33,393,670 net loss. For the year endedDecember 31 2022 , the Company's net loss from discontinued operations was$33,393,670 , most of which represented the book value of Jiarun onApril 28, 2022 less the market value of the shares delivered to the Company in exchange for Jiarun. For the year endedDecember 31, 2021 , the Company realized net income from discontinued operations of$3,292,746 , which represented the net income earned by Jiarun during that year. After deducting the provision for income tax, the Company's net loss for the year endedDecember 31, 2022 was$33,721,300 , primarily representing the net loss incurred as a result of the Spin-off of Jiarun. Net income for 2021 was$3,188,945 .
Foreign Currency Translation Adjustment.
Our reporting currency is theU.S. dollar. Our local currency, Renminbi (RMB), is our functional currency. Results of operations and cash flows are translated at average exchange rates during the year, and assets and liabilities are translated at the unified exchange rate as quoted by thePeople's Bank of China at the end of the year. Translation adjustments resulting from this process are included in accumulated other comprehensive income in the statement of stockholders' equity. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred. For the years endedDecember 31, 2022 and 2021, foreign currency translation adjustments of$17,396 and$55,624 , respectively, have been reported as other comprehensive income in the consolidated statements of operations and comprehensive income (loss). 15
Liquidity and Capital Resources
Our cash flows for the year endedDecember 31, 2022 and 2021 are summarized below: The Year Ended December 31, 2022 2021 Net cash provided by operating activities$ 3,066,645 $ 8,233,016 Net cash used in investing activities (2,827,685 ) (5,500,437 ) Net cash used in financing activities (738,241 ) (2,798,024 ) Effect of exchange rate fluctuation on cash and cash equivalents (298,074 ) 76,589 Net increase (decrease) in cash and cash equivalents (797,355 ) 11,144 Cash and cash equivalents, beginning of year 855,971 844,827 Cash and cash equivalents, ending of year$ 58,616 $ 855,971 As ofDecember 31, 2022 , the Company had$58,616 of cash and cash equivalents, a decrease of$797,355 from our cash and cash equivalents balance (included discontinued operations) atDecember 31, 2021 . The decrease was primarily caused by the Spin-off, as cash held by Jiarun was removed from our consolidated statement.
Our working capital at
The primary non-cash component of our working capital atDecember 31, 2022 was deferred expenses totaling$736,393 . This balance represents the net market value of the Company's grant of 39,130,000 shares of its common stock toZhong Zhuowei upon the initiation of the operations of Laidian. InApril 2022 , when Laidian initiated operations, these shares had a negotiated value of$1,056,510 , of which$981,858 was attributed to services thatMr. Zhong committed to provide to the Company during the 3 years following April of 2022. For the year endedDecember 31, 2022 , the Company record$ 245,465 stock-based compensation expense. Although our current resources and cash flows are adequate to pay our current ongoing obligations, we anticipate that our future liquidity requirements will arise from the need to fund our growth and future capital expenditures. The primary sources of funding for such growth requirements are expected to be additional funds raised from the sale of equity and/or debt financing. However, we can provide no assurances that we will be able to obtain additional financing on terms satisfactory to us.
Net Cash Provided by Operating Activities
For the year endedDecember 31, 2022 , we had cash flow from operating activities of$3,066,645 , a decrease of$5,166,371 from$8,233,016 of cash flow for the year endedDecember 31, 2021 . Cash flow from operations decreased primarily because Jiarun hospital spun off from the Company resulting in$978,387 cash outflow from the Company atApril 1, 2022 . 16
Net cash used in investing activities for the year endedDecember 31, 2022 was$2,827,685 , compared to net cash used in investing activities of$5,500,437 for the year endedDecember 31, 2021 . The cash used in investing activities of continuing operations for the year endedDecember 31, 2022 was mainly used
for the purchase of equipment.
Net cash used in financing activities for the year endedDecember 31, 2022 was$738,241 , as compared to net cash used in financing activities of$2,798,024 for the year endedDecember 31, 2021 . The cash provided by financing activities for the year endedDecember 31, 2022 was mainly because the Company acquired Laidian inApril 2022 . In addition, the Company issued 6,000,000 shares of its common stock to six shareholders for sales of$60,000 , and payment for lease obligation$867,508 in discontinued operations.
Trends, Events and Uncertainties
We do not know of any trends, events or uncertainties that have had or are reasonably expected to have a material impact on our net sales or revenues or income from continuing operations. Our business is not seasonal in nature.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet items reasonably likely to have a material effect on our financial condition.
Recent Accounting Pronouncements
Recent accounting pronouncements issued by the FASB, the AICPA or the
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