What changed in Zhongchao Inc.'s 20-F — 2023 vs 2024
vs
Paragraph-level year-over-year comparison of Zhongchao Inc.'s 2023 and 2024 20-F annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.
+447 added−457 removedSource: 20-F (2025-04-25) vs 20-F (2024-04-30)
Top changes in Zhongchao Inc.'s 2024 20-F
447 paragraphs added · 457 removed · 354 edited across 5 sections
- Item 3. Legal Proceedings+171 / −166 · 143 edited
- Item 4. Mine Safety Disclosures+130 / −145 · 98 edited
- Item 5. Market for Registrant's Common Equity+81 / −75 · 57 edited
- Item 6. [Reserved]+51 / −54 · 47 edited
- Item 7. Management's Discussion & Analysis+14 / −17 · 9 edited
Item 3. Legal Proceedings
Legal Proceedings — active lawsuits and investigations
143 edited+28 added−23 removed554 unchanged
Item 3. Legal Proceedings
Legal Proceedings — active lawsuits and investigations
143 edited+28 added−23 removed554 unchanged
2023 filing
2024 filing
Biggest changeSelected Condensed Consolidated Balance Sheets Data December 31, 2023 Parent Subsidiaries VIE and Its Subsidiaries Elimination Total Cash and cash equivalents $ 150,071 $ 1,955,061 $ 5,443,562 $ - $ 7,548,694 Short-term investment 5,241,677 656,132 - - 5,897,809 Accounts receivable - - 2,552,738 - 2,552,738 Other current assets 143,208 8,909 2,559,688 - 2,711,805 Total current assets 5,534,956 2,620,102 10,555,988 - 18,711,046 Investment in subsidiaries, VIE and VIE’s subsidiaries 5,756,419 - - (5,756,419 ) - Property and equipment, net - 1,524,676 1,697,576 - 3,222,252 Total non-current assets 5,756,419 1,690,547 4,015,050 (5,756,419 ) 5,705,597 Amount due from the Company and its subsidiaries 7,948,307 - - (7,948,307 ) - Total Assets $ 19,239,682 $ 4,310,649 $ 14,571,038 $ (13,704,726 ) $ 24,416,643 Total current liabilities $ - $ 3,389 $ 2,674,972 $ - $ 2,678,361 Total non-current liabilities - - 700,112 - 700,112 Amounts due to the Company and its subsidiaries - 6,884,124 564,652 (7,448,776 ) - Total Liabilities - 6,887,513 3,939,736 (7,448,776 ) 3,378,473 Total Shareholders’ Equity (Deficit) 19,239,682 (2,576,864 ) 10,631,302 (6,255,950 ) 21,038,170 Total Liabilities and Shareholders’ Equity $ 19,239,682 $ 4,310,649 $ 14,571,038 $ (13,704,726 ) $ 24,416,643 4 December 31, 2022 Parent Subsidiaries VIE and Its Subsidiaries Elimination Total Cash and cash equivalents $ 4,110,216 $ 2,909,858 $ 4,500,379 $ - $ 11,520,453 Accounts receivable - - 6,772,988 - 6,772,988 Total current assets 4,110,216 5,291,289 13,302,655 - 22,704,160 Investment in subsidiaries, VIE and VIE’s subsidiaries 16,906,213 - - (16,906,213 ) - Property and equipment, net - 779,230 3,111,717 - 3,890,947 Total non-current assets 16,906,213 928,072 14,982,113 (16,906,213 ) 15,910,185 Amount due from the Company and its subsidiaries 9,423,617 - - (9,423,617 ) - Total Assets $ 30,440,046 $ 6,219,361 $ 28,284,768 $ (26,329,830 ) $ 38,614,345 Total current liabilities $ - $ 3,816 $ 4,161,219 $ - $ 4,165,035 Total non-current liabilities - - 1,430,045 - 1,430,045 Amounts due to the Company and its subsidiaries - 8,193,902 762,962 (8,956,864 ) - Total Liabilities - 8,197,718 6,354,226 (8,956,864 ) 5,595,080 Total Shareholders’ Equity (Deficit) 30,440,046 (1,978,357 ) 21,930,542 (17,372,966 ) 33,019,265 Total Liabilities and Shareholders’ Equity $ 30,440,046 $ 6,219,361 $ 28,284,768 $ (26,329,830 ) $ 38,614,345 Selected Condensed Consolidated Statements of Operations Data For the year ended December 31, 2023 Parent Subsidiaries VIE and its Subsidiaries Elimination Total Revenues $ - $ - $ 19,433,945 $ - $ 19,433,945 Share of loss of subsidiaries, VIE and VIE’s subsidiaries $ (11,440,721 ) $ - $ - $ 11,440,721 $ - Net loss $ (11,335,911 ) $ (631,262 ) $ (10,780,772 ) $ 11,440,706 $ (11,307,239 ) For the year ended December 31, 2022 Parent Subsidiaries VIE and its Subsidiaries Elimination Total Revenues $ - $ - $ 14,151,516 $ - $ 14,151,516 Share of loss of subsidiaries, VIE and VIE’s subsidiaries $ (2,919,423 ) $ - $ - $ 2,919,423 $ - Net loss $ (2,940,891 ) $ (1,373,555 ) $ (1,427,296 ) $ 2,919,423 $ (2,822,319 ) For the year ended December 31, 2021 Parent Subsidiaries VIE and its Subsidiaries Elimination Total Revenues $ - $ 200,001 $ 16,096,769 $ - $ 16,296,770 Share of income of subsidiaries, VIE and VIE’s subsidiaries $ 266,775 $ - $ - $ (266,775 ) $ - Net income (loss) $ 238,665 $ (572,063 ) $ 838,838 $ (266,775 ) $ 238,665 5 Selected Condensed Consolidated Cash Flows Data For the year ended December 31, 2023 Parent Subsidiaries VIE and its Subsidiaries Elimination Total Net cash provided by (used in) operating activities $ (193,778 ) $ (2,351,918 ) $ 1,124,613 $ 1,475,312 $ 54,229 Net cash used in investing activities $ (3,766,367 ) $ 1,530,264 $ (43,240 ) $ (1,475,312 ) $ (3,754,655 ) Net cash provided by financing activities $ - $ - $ - $ - $ - For the year ended December 31, 2022 Parent Subsidiaries VIE and its Subsidiaries Elimination Total Net cash provided by (used in) operating activities $ 139,309 $ (1,198,586 ) $ 397,537 $ - $ (661,740 ) Net cash used in investing activities $ (1,638,455 ) $ (509,185 ) $ (2,837,473 ) $ 1,638,455 $ (3,346,658 ) Net cash provided by financing activities $ 1,850,744 $ 1,638,455 $ - $ (1,638,455 ) $ 1,850,744 For the year ended December 31, 2021 Parent Subsidiaries VIE and its Subsidiaries Elimination Total Net cash provided by (used in) operating activities $ 3,737 $ (823,321 ) $ 3,681,432 $ - $ 2,861,848 Net cash used in investing activities $ (3,400,000 ) $ (820,982 ) $ (3,196,302 ) $ 3,400,000 $ (4,017,284 ) Net cash provided by financing activities $ - $ 3,400,000 $ - $ (3,400,000 ) $ - A. [Reserved] B.
Biggest changeSelected Condensed Consolidated Balance Sheets Data December 31, 2024 Parent Subsidiaries WFOE VIE and its Subsidiaries Elimination Total Cash and cash equivalents $ 1,088,565 $ 2,392,807 $ 5,280 $ 4,354,654 $ - $ 7,841,306 Short-term investment 4,040,000 1,202,441 - - - 5,242,441 Accounts receivable - - - 4,682,320 - 4,682,320 Other current assets 54,383 27,853 - 858,914 - 941,150 Total current assets 5,182,948 3,623,101 5,280 9,895,888 - 18,707,217 Investment in subsidiaries, VIE and VIE’s subsidiaries 5,113,612 - - (5,113,612 ) - Property and equipment, net - 1,661,000 - 4,206,154 - 5,867,154 Total non-current assets 5,113,612 1,661,000 - 5,516,736 (5,113,612 ) 7,177,736 Amount due from the Company and its subsidiaries 12,247,807 - 27,400 - (12,275,207 ) - Total Assets $ 22,544,367 $ 5,284,101 $ 32,680 $ 15,412,624 $ (17,388,819 ) $ 25,884,953 Total current liabilities $ - $ 16,226 $ - $ 1,514,204 $ - $ 1,530,430 Total non-current liabilities - - - 203,470 - 203,470 Amounts due to the Company and its subsidiaries - 11,056,078 - 483,800 (11,539,878 ) - Total Liabilities - 11,072,304 - 2,201,474 (11,539,878 ) 1,733,900 Total Shareholders’ Equity (Deficit) 22,544,367 (5,788,203 ) 32,680 13,211,150 (5,848,941 ) 24,151,053 Total Liabilities and Shareholders’ Equity $ 22,544,367 $ 5,284,101 $ 32,680 $ 15,412,624 $ (17,388,819 ) $ 25,884,953 5 December 31, 2023 Parent Subsidiaries WFOE VIE and its Subsidiaries Elimination Total Cash and cash equivalents $ 150,071 $ 1,948,232 $ 6,829 $ 5,443,562 $ - $ 7,548,694 Short-term investment 5,241,677 656,132 - - - 5,897,809 Accounts receivable - - - 2,552,738 - 2,552,738 Other current assets 143,208 8,909 - 2,559,688 - 2,711,805 Total current assets 5,534,956 2,613,273 6,829 10,555,988 - 18,711,046 Investment in subsidiaries, VIE and VIE’s subsidiaries 5,756,419 - - (5,756,419 ) - Property and equipment, net - 1,524,676 - 1,697,576 - 3,222,252 Total non-current assets 5,756,419 1,690,547 - 4,015,050 (5,756,419 ) 5,705,597 Amount due from the Company and its subsidiaries 7,948,307 - 26,760 - (7,975,067 ) - Total Assets $ 19,239,682 $ 4,303,820 $ 33,589 $ 14,571,038 $ (13,731,486 ) $ 24,416,643 Total current liabilities $ - $ 3,389 $ - $ 2,674,972 $ - $ 2,678,361 Total non-current liabilities - - - 700,112 - 700,112 Amounts due to the Company and its subsidiaries - 6,910,884 - 564,652 (7,475,536 ) - Total Liabilities - 6,914,273 - 3,939,736 (7,475,536 ) 3,378,473 Total Shareholders’ Equity (Deficit) 19,239,682 (2,610,453 ) 33,589 10,631,302 (6,255,950 ) 21,038,170 Total Liabilities and Shareholders’ Equity $ 19,239,682 $ 4,303,820 $ 33,589 $ 14,571,038 $ (13,731,486 ) $ 24,416,643 Selected Condensed Consolidated Statements of Operations Data For the year ended December 31, 2024 Parent Subsidiaries WFOE VIE and its Subsidiaries Elimination Total Revenues $ - $ - $ - $ 15,864,773 $ - $ 15,864,773 Costs of revenue $ - $ - $ - $ 6,952,560 $ - $ 6,952,560 Gross profit $ - $ - $ - $ 8,912,213 $ - $ 8,912,213 Share of (loss) income of subsidiaries, VIE and VIE’s subsidiaries $ (642,807 ) $ 2,532,747 $ 2,532,739 $ - $ (4,422,679 ) $ - Net (loss) income $ (643,229 ) $ (642,807 ) $ 2,532,747 $ 2,902,555 $ (4,422,679 ) $ (273,413 ) For the year ended December 31, 2023 Parent Subsidiaries WFOE VIE and its Subsidiaries Elimination Total Revenues $ - $ - $ - $ 19,433,945 $ - $ 19,433,945 Costs of revenue $ - $ - $ - $ (10,921,753 ) $ - $ (10,921,753 ) Gross profit $ - $ - $ - $ 8,512,192 $ - $ 8,512,192 Share of loss of subsidiaries, VIE and VIE’s subsidiaries $ (11,440,721 ) $ (10,809,427 ) $ (10,809,444 ) $ - $ 33,059,592 $ - Net loss $ (11,335,911 ) $ (11,440,721 ) $ (10,809,427 ) $ (10,780,772 ) $ 33,059,592 $ (11,307,239 ) 6 For the year ended December 31, 2022 Parent Subsidiaries WFOE VIE and its Subsidiaries Elimination Total Revenues $ - $ - $ - $ 14,151,516 $ - $ 14,151,516 Costs of revenue $ - $ - $ - $ (7,794,852 ) $ - $ (7,794,852 ) Gross profit $ - $ - $ - $ 6,356,664 $ - $ 6,356,664 Share of loss of subsidiaries, VIE and VIE’s subsidiaries $ (2,919,423 ) $ (1,545,868 ) $ (1,545,868 ) $ - $ 6,011,159 $ - Net loss $ (2,940,891 ) $ (2,919,423 ) $ (1,545,868 ) $ (1,427,296 ) $ 6,011,159 $ (2,822,319 ) Selected Condensed Consolidated Cash Flows Data For the year ended December 31, 2024 Parent Subsidiaries WFOE VIE and its Subsidiaries Elimination Total Net cash provided by (used in) operating activities $ 198,117 $ 878,538 $ (1,382 ) $ 1,528,919 $ (4,077,435 ) $ (1,473,243 ) Net cash used in investing activities $ (3,097,823 ) $ (521,865 ) $ - $ (2,487,565 ) $ 4,299,500 $ (1,807,753 ) Net cash provided by financing activities $ 3,838,200 $ - $ - $ - $ - $ 3,838,200 For the year ended December 31, 2023 Parent Subsidiaries WFOE VIE and its Subsidiaries Elimination Total Net cash (used in) provided by operating activities $ (193,778 ) $ (2,351,935 ) $ 17 $ 1,124,613 $ 1,475,312 $ 54,229 Net cash (used in) provided by investing activities $ (3,766,367 ) $ 1,530,264 $ - $ (43,240 ) $ (1,475,312 ) $ (3,754,655 ) Net cash provided by financing activities $ - $ - $ - $ - $ - $ - For the year ended December 31, 2022 Parent Subsidiaries WFOE VIE and its Subsidiaries Elimination Total Net cash provided by (used in) operating activities $ 139,309 $ (1,198,586 ) $ 13,660 $ 383,877 $ $ (661,740 ) Net cash used in investing activities $ (1,638,455 ) $ (509,185 ) $ - $ (2,837,473 ) $ 1,638,455 $ (3,346,658 ) Net cash provided by financing activities $ 1,850,744 $ 1,638,455 $ - $ - $ (1,638,455 ) $ 1,850,744 A. [Reserved] B.
We are currently not required to obtain approval from Chinese authorities to list or continue to list on U.S. exchanges nor for the execution of VIE agreements, however, if the VIE or the holding company were required to obtain approval and were denied permission from Chinese authorities to list or continue to list on U.S. exchanges, we will not be able to continue listing on U.S. exchange or continue to offer securities to investors, which could materially affect the interest of the investors and cause the value of our Class A Ordinary Shares to significantly decline or be worthless.” Permission Required from the PRC Authorities to Issue Our Securities to Foreign Investors 1 PRC laws and regulations governing our current business operations are sometimes vague and uncertain, and therefore, these risks may result in a material change in our operations, significant depreciation of the value of our Class A Ordinary Shares, or a complete hindrance of our ability to offer or continue to offer our securities to investors and cause the value of such securities to significantly decline or be worthless.
We are currently not required to obtain approval from Chinese authorities to list or continue to list on U.S. exchanges nor for the execution of VIE agreements, however, if the VIE or the holding company were required to obtain approval and were denied permission from Chinese authorities to list or continue to list on U.S. exchanges, we will not be able to continue listing on U.S. exchange or continue to offer securities to investors, which could materially affect the interest of the investors and cause the value of our Class A Ordinary Shares to significantly decline or be worthless..” 1 Permission Required from the PRC Authorities to Issue Our Securities to Foreign Investors PRC laws and regulations governing our current business operations are sometimes vague and uncertain, and therefore, these risks may result in a material change in our operations, significant depreciation of the value of our Class A Ordinary Shares, or a complete hindrance of our ability to offer or continue to offer our securities to investors and cause the value of such securities to significantly decline or be worthless.
In particular, we cannot rule out the possibility that PRC regulatory authorities, courts or arbitral tribunals may in the future adopt a different or contrary interpretation or take a view that is inconsistent with the opinion of our PRC legal counsel.
In particular, we cannot rule out the possibility that PRC regulatory authorities, courts or arbitral tribunals may in the future adopt a different or contrary interpretation or take a view that is inconsistent with the opinion of our PRC legal counsel.
As the Trial Measures were newly published, there are substantial uncertainties as to the implementation and interpretation, and how they will affect our current listing, and future offering or financing.
As the Trial Measures were newly published, there are substantial uncertainties as to the implementation and interpretation, and how they will affect our current listing, and future offering or financing.
If we are required by the Trial Measures for any future offering or any other financing activities to file with the CSRC, we cannot assure you that we will be able to complete such filings in a timely manner, or even at all.
If we are required by the Trial Measures for any future offering or any other financing activities to file with the CSRC, we cannot assure you that we will be able to complete such filings in a timely manner, or even at all.
The PRC operating entities may incur increased costs necessary to comply with existing and newly adopted laws and regulations or penalties for any failure to comply.
The PRC operating entities may incur increased costs necessary to comply with existing and newly adopted laws and regulations or penalties for any failure to comply.
According to the Trial Measures, among other requirements, (1) domestic companies that seek to offer or list securities overseas, both directly and indirectly, should fulfil the filing procedures with the CSRC; if a domestic company fails to complete the filing procedure or conceals any material fact or falsifies any major content in its filing documents, such domestic company may be subject to administrative penalties; (2) if the issuer meets both of the following conditions, the overseas offering and listing shall be determined as an indirect overseas offering and listing by a domestic company: (i) any of the total assets, net assets, revenues or profits of the domestic operating entities of the issuer in the most recent accounting year accounts for more than 50% of the corresponding figure in the issuer’s audited consolidated financial statements for the same period; (ii) its major operational activities are carried out in China or its main places of business are located in China, or the senior managers in charge of operation and management of the issuer are mostly Chinese citizens or are domiciled in China; (3) where a domestic company seeks to indirectly offer and list securities in an overseas market, the issuer shall designate a major domestic operating entity responsible for all filing procedures with the CSRC, and such filings shall be submitted to the CSRC within three business days after the submission of the overseas offering and listing application; and (4) if the issuer issues securities in the same overseas market after the initial issuance and listing, it shall submit filings with the CSRC within three business days after the completion of the issuance.
According to the Trial Measures, among other requirements, (1) domestic companies that seek to offer or list securities overseas, both directly and indirectly, should fulfil the filing procedures with the CSRC; if a domestic company fails to complete the filing procedure or conceals any material fact or falsifies any major content in its filing documents, such domestic company may be subject to administrative penalties; (2) if the issuer meets both of the following conditions, the overseas offering and listing shall be determined as an indirect overseas offering and listing by a domestic company: (i) any of the total assets, net assets, revenues or profits of the domestic operating entities of the issuer in the most recent accounting year accounts for more than 50% of the corresponding figure in the issuer’s audited consolidated financial statements for the same period; (ii) its major operational activities are carried out in China or its main places of business are located in China, or the senior managers in charge of operation and management of the issuer are mostly Chinese citizens or are domiciled in China; (3) where a domestic company seeks to indirectly offer and list securities in an overseas market, the issuer shall designate a major domestic operating entity responsible for all filing procedures with the CSRC, and such filings shall be submitted to the CSRC within three business days after the submission of the overseas offering and listing application; and (4) if the issuer issues securities in the same overseas market after the initial issuance and listing, it shall submit filings with the CSRC within three business days after the completion of the issuance.
Existing Issuers are not required to complete the filing procedures immediately but shall carry out filing procedures as required if they conduct refinancing or are involved in other circumstances that require filing with the CSRC.
Existing Issuers are not required to complete the filing procedures immediately but shall carry out filing procedures as required if they conduct refinancing or are involved in other circumstances that require filing with the CSRC.
The officials from the CSRC have also confirmed that for the PRC domestic companies that seek to list overseas with VIE structure, the CSRC will solicit opinions from relevant regulatory authorities and complete the filing of the overseas listing of companies with VIE structure which meet the compliance requirements.
The officials from the CSRC have also confirmed that for the PRC domestic companies that seek to list overseas with VIE structure, the CSRC will solicit opinions from relevant regulatory authorities and complete the filing of the overseas listing of companies with VIE structure which meet the compliance requirements.
However, whether the PCAOB will continue to be able to satisfactorily conduct inspections of PCAOB-registered public accounting firms headquartered in mainland China and Hong Kong is subject to uncertainty and depends on a number of factors out of our, and our auditor’s, control.
However, whether the PCAOB will continue to be able to satisfactorily conduct inspections of PCAOB-registered public accounting firms headquartered in mainland China and Hong Kong is subject to uncertainty and depends on a number of factors out of our, and our auditor’s, control.
In addition, our management consists of five officers who are all located in China and three independent directors, among which two are located in the United States and one is located in China.
In addition, our management consists of five officers who are all located in China and three independent directors, among which two are located in the United States and one is located in China.
We may not be able to obtain these government approvals or complete such registrations on a timely basis, if at all, with respect to future capital contributions or foreign loans by us to our PRC subsidiaries.
We may not be able to obtain these government approvals or complete such registrations on a timely basis, if at all, with respect to future capital contributions or foreign loans by us to our PRC subsidiaries.
Risk Factors— Risks Related to Doing Business in China—The PRC operating entities’ failure to obtain, maintain or renew other licenses, approvals, permits, registrations or filings necessary to conduct their operations in China could have a material adverse impact on our business, financial conditions and results of operations.” 2 We have been advised by our PRC legal counsel, Han Kun Law Offices, based on their understanding of the current PRC laws, rules and regulations, that (i) the structure for operating our business in China (including our corporate structure and VIE Arrangements with Zhongchao Shanghai, Zhongchao Shanghai and their shareholders), as of the date of this Annual Report, do not result in any violation of PRC laws or regulations currently in effect; and (ii) the Contractual Arrangements among Zhongchao WFOE and Zhongchao Shanghai and their shareholders governed by PRC law are valid, binding and enforceable in accordance with the terms of each of the VIE Arrangements, and do not result in any violation of PRC laws or regulations currently in effect.
Risk Factors— Risks Related to Doing Business in China—The PRC operating entities’ failure to obtain, maintain or renew other licenses, approvals, permits, registrations or filings necessary to conduct their operations in China could have a material adverse impact on our business, financial conditions and results of operations.” We have been advised by our PRC legal counsel, Han Kun Law Offices, based on their understanding of the current PRC laws, rules and regulations, that (i) the structure for operating our business in China (including our corporate structure and VIE Arrangements with Zhongchao Shanghai, Zhongchao Shanghai and their shareholders), as of the date of this Annual Report, do not result in any violation of PRC laws or regulations currently in effect; and (ii) the Contractual Arrangements among Zhongchao WFOE and Zhongchao Shanghai and their shareholders governed by PRC law are valid, binding and enforceable in accordance with the terms of each of the VIE Arrangements, and do not result in any violation of PRC laws or regulations currently in effect.
These risks and challenges include, among others: ● the uncertainties associated with the PRC operating entities’ ability to continue their growth and maintain profitability; ● preserving the PRC operating entities’ competitive position in the healthcare information, education, and training services industry in China; ● offering consistent and high-quality services to retain and attract customers; ● implementing PRC operating entities’ strategy and modifying it from time to time to respond effectively to competition and changes in client preferences; ● managing PRC operating entities’ expanding operations and successfully expanding their solution and service offerings; ● responding in a timely manner to technological or other changes in the healthcare information, education, and training services industry; ● managing risks associated with intellectual property; and ● recruiting, training, developing and retaining qualified managerial and other personnel.
These risks and challenges include, among others: ● the uncertainties associated with the PRC operating entities’ ability to continue their growth and maintain profitability; ● preserving the PRC operating entities’ competitive position in the healthcare information, education, and training services industry in China; ● offering consistent and high-quality services to retain and attract customers; ● implementing PRC operating entities’ strategy and modifying it from time to time to respond effectively to competition and changes in client preferences; 16 ● managing PRC operating entities’ expanding operations and successfully expanding their solution and service offerings; ● responding in a timely manner to technological or other changes in the healthcare information, education, and training services industry; ● managing risks associated with intellectual property; and ● recruiting, training, developing and retaining qualified managerial and other personnel.
We are currently not required to obtain approval from Chinese authorities to list on U.S. exchanges nor for the execution of VIE agreements, however, if the VIE or the holding company were required to obtain approval and were denied permission from Chinese authorities to list on U.S. exchanges, we will not be able to continue listing on U.S. exchange or continue to offer securities to investors, which could materially affect the interest of the investors and cause the value of our Class A Ordinary Shares to significantly decline or be worthless .” on page 30 of this Annual Report. ● If the PRC operating entities fail to comply with any regulatory requirements, including obtaining any required licenses, approvals, permits or filings in a timely manner or at all, the PRC operating entities’ continued business operations may be disrupted and the PRC operating entities may be subject to various penalties or be unable to continue their operations, all of which will materially and adversely affect our business, financial condition and results of operations.
We are currently not required to obtain approval from Chinese authorities to list or continue to list on U.S. exchanges nor for the execution of VIE agreements, however, if the VIE or the holding company were required to obtain approval and were denied permission from Chinese authorities to list or continue to list on U.S. exchanges, we will not be able to continue listing on U.S. exchange or continue to offer securities to investors, which could materially affect the interest of the investors and cause the value of our Class A Ordinary Shares to significantly decline or be worthless .” on page 34 of this Annual Report. ● If the PRC operating entities fail to comply with any regulatory requirements, including obtaining any required licenses, approvals, permits or filings in a timely manner or at all, the PRC operating entities’ continued business operations may be disrupted and the PRC operating entities may be subject to various penalties or be unable to continue their operations, all of which will materially and adversely affect our business, financial condition and results of operations.
If we determine to pay dividends on any of our Class A Ordinary Shares in the future, as a holding company, we will be dependent on receipt of funds from our Hong Kong subsidiary, Zhongchao Group Limited (“Zhongchao HK”), unless we receive proceeds from future offerings. Zhongchao WFOE’s ability to distribute dividends is based upon its distributable earnings.
If we determine to pay dividends on any of our Class A Ordinary Shares in the future, as a holding company, we will be dependent on receipt of funds from our Hong Kong subsidiary, Zhongchao Group Limited (“Zhongchao HK”), unless we receive proceeds from future offerings. 3 Zhongchao WFOE’s ability to distribute dividends is based upon its distributable earnings.
We also did not have adequately designed and documented management review controls to properly detect and prevent certain accounting errors and omitted disclosures in the footnotes to the consolidated financial statements; and ● The Company lacked sufficient resources and expertise with US GAAP and the SEC reporting experiences in the accounting department to provide accurate information in a timely manner.
We also did not have adequately designed and documented management review controls to properly detect and prevent certain accounting errors and omitted disclosures in the footnotes to the consolidated financial statements; and 22 ● The Company lacked sufficient resources and expertise with US GAAP and the SEC reporting experiences in the accounting department to provide accurate information in a timely manner.
In addition, a number of comprehensive legislative and regulatory privacy proposals are now under consideration by federal, state and local governments in the United States. The PRC operating entities’ future growth depends on the further acceptance of the Internet and particularly the mobile Internet as an effective platform for assessing healthcare training services and content.
In addition, a number of comprehensive legislative and regulatory privacy proposals are now under consideration by federal, state and local governments in the United States. 24 The PRC operating entities’ future growth depends on the further acceptance of the Internet and particularly the mobile Internet as an effective platform for assessing healthcare training services and content.
In addition, insurance for some risks is difficult, impossible or too costly to obtain, and as a result, the PRC operating entities may not be able to purchase insurance for some types of risks. 20 Healthcare reforms and the cost of regulatory compliance could negatively affect the PRC operating entities’ business. The healthcare industry is heavily regulated in China.
In addition, insurance for some risks is difficult, impossible or too costly to obtain, and as a result, the PRC operating entities may not be able to purchase insurance for some types of risks. Healthcare reforms and the cost of regulatory compliance could negatively affect the PRC operating entities’ business. The healthcare industry is heavily regulated in China.
Risk Factors— Risks Related to Doing Business in China—PRC regulation of loans and direct investment by offshore holding companies to PRC entities may delay or prevent us from using the proceeds of the initial public offering or any subsequent offerings to make loans or additional capital contributions to our PRC subsidiary, which could materially and adversely affect our liquidity and our ability to fund and expand our business.” Financial Information Related to the VIE The following tables present selected condensed consolidated statements of income and comprehensive income, and cash flows for the years ended December 31, 2023 and 2022, and the selected condensed consolidated balance sheets as of December 31, 2023 and 2022, which showing financial information for parent company, Zhongchao Cayman, its subsidiaries (Zhongchao Group Inc.
Risk Factors— Risks Related to Doing Business in China—PRC regulation of loans and direct investment by offshore holding companies to PRC entities may delay or prevent us from using the proceeds of the initial public offering or any subsequent offerings to make loans or additional capital contributions to our PRC subsidiary, which could materially and adversely affect our liquidity and our ability to fund and expand our business.” 4 Financial Information Related to the VIE The following tables present selected condensed consolidated statements of income and comprehensive income, and cash flows for the years ended December 31, 2024, 2023 and 2022, and the selected condensed consolidated balance sheets as of December 31, 2024 and 2023, which showing financial information for parent company, Zhongchao Cayman, its subsidiaries (Zhongchao Group Inc.
As a holding company with no material operations of our own, we, through the contractual arrangements (the “Contractual Arrangements”), between Beijing Zhongchao Zhongxing Technology Limited (“Zhongchao WFOE”), a wholly subsidiary of Zhongchao Cayman incorporated in the PRC, and a variable interest entity (the “VIE”), Zhongchao Medical Technology (Shanghai) Co., Ltd.
As a holding company with no material operations of our own, we, through the contractual arrangements (the “Contractual Arrangements”), between Beijing Zhongchao Zhongxing Technology Limited (“Zhongchao WFOE”), a wholly owned subsidiary of Zhongchao Cayman incorporated in the PRC, and a variable interest entity (the “VIE”), Zhongchao Medical Technology (Shanghai) Co., Ltd.
If the PRC operating entities fail to do so, the PRC operating entities’ business, financial conditions and operational results may be materially and adversely affected. 40 Failure to comply with PRC regulations in relation to lease property may subject us to penalty. Certain PRC operating entities’ actual operating addresses are different from their registered addresses.
If the PRC operating entities fail to do so, the PRC operating entities’ business, financial conditions and operational results may be materially and adversely affected. Failure to comply with PRC regulations in relation to lease property may subject us to penalty. Certain PRC operating entities’ actual operating addresses are different from their registered addresses.
In addition, if the chops are misused by unauthorized persons, the PRC operating entities could experience disruption to their normal business operations. The PRC operating entities may have to take corporate or legal action, which could involve significant time and resources to resolve while distracting management from our operations. 48
In addition, if the chops are misused by unauthorized persons, the PRC operating entities could experience disruption to their normal business operations. The PRC operating entities may have to take corporate or legal action, which could involve significant time and resources to resolve while distracting management from our operations.
Capitalization and Indebtedness Not applicable. C. Reasons for the Offer and Use of Proceeds Not applicable. D. Risk Factors SUMMARY OF RISK FACTORS You should carefully consider the following risk factors, together with all of the other information included in this Annual Report. Investment in our securities involves a high degree of risk.
Capitalization and Indebtedness Not applicable. C. Reasons for the Offer and Use of Proceeds Not applicable. D. Risk Factors 7 SUMMARY OF RISK FACTORS You should carefully consider the following risk factors, together with all of the other information included in this Annual Report. Investment in our securities involves a high degree of risk.
If online and mobile networks do not achieve adequate acceptance in the market, the PRC operating entities’ growth prospects, results of operations and financial condition could be harmed. 21 PRC laws that protect individual information may limit our plans to collect, use and disclose that information.
If online and mobile networks do not achieve adequate acceptance in the market, the PRC operating entities’ growth prospects, results of operations and financial condition could be harmed. PRC laws that protect individual information may limit our plans to collect, use and disclose that information.
If the PRC operating entities are unsuccessful in addressing any of these risks or challenges, their business may be materially and adversely affected. 13 The PRC operating entities’ profitability will suffer if they are not able to maintain their resource utilization levels or continue to improve their productivity levels.
If the PRC operating entities are unsuccessful in addressing any of these risks or challenges, their business may be materially and adversely affected. The PRC operating entities’ profitability will suffer if they are not able to maintain their resource utilization levels or continue to improve their productivity levels.
The PRC operating entities may need to spend significant resources to protect against security breaches or to alleviate problems caused by any breaches. We cannot assure you that the PRC operating entities can prevent all cyber security breaches. We depend significantly on the strength of the PRC operating entities’ brand and reputation.
The PRC operating entities may need to spend significant resources to protect against security breaches or to alleviate problems caused by any breaches. We cannot assure you that the PRC operating entities can prevent all cyber security breaches. 18 We depend significantly on the strength of the PRC operating entities’ brand and reputation.
New laws and regulations that affect existing and proposed future businesses may also be applied retroactively. We cannot predict what effect the interpretation of existing or new PRC laws or regulations may have on our business. The PRC legal system is a civil law system based on written statutes.
New laws and regulations that affect existing and proposed future businesses may also be applied retroactively. We cannot predict what effect the interpretation of existing or new PRC laws or regulations may have on our business. 35 The PRC legal system is a civil law system based on written statutes.
If we were deemed to be subject to the Investment Company Act, compliance with these additional regulatory burdens would require additional expense for which we have not accounted. RISKS RELATED TO OUR CORPORATE STRUCTURE We will likely not pay dividends in the foreseeable future.
If we were deemed to be subject to the Investment Company Act, compliance with these additional regulatory burdens would require additional expense for which we have not accounted. 26 RISKS RELATED TO OUR CORPORATE STRUCTURE We will likely not pay dividends in the foreseeable future.
As a result, the time period before our Class A Ordinary Shares may be prohibited from trading or delisted will be reduced. 34 On November 5, 2021, the SEC approved the PCAOB’s Rule 6100, Board Determinations Under the Holding Foreign Companies Accountable Act.
As a result, the time period before our Class A Ordinary Shares may be prohibited from trading or delisted will be reduced. On November 5, 2021, the SEC approved the PCAOB’s Rule 6100, Board Determinations Under the Holding Foreign Companies Accountable Act.
See “Business -- Intellectual Property Rights” for a more complete discussion of the potential effects of this liability on the PRC operating entities’ business. Any reduction in the regulation of continuing education and training in the healthcare industry may adversely affect the PRC operating entities’ business.
See “Business -- Intellectual Property Rights” for a more complete discussion of the potential effects of this liability on the PRC operating entities’ business. 20 Any reduction in the regulation of continuing education and training in the healthcare industry may adversely affect the PRC operating entities’ business.
The Archives Rules also stipulate that a domestic company that provides accounting archives or copies of accounting archives to any entities including securities companies, securities service providers and overseas regulators and individuals shall fulfill due procedures in compliance with applicable national regulations. 33 As we have completed our public offering before the effective date of the Trial Measures (i.e., March 31, 2023), we believe we are not required to complete the filing procedures with the CSRC for our current listing.
The Archives Rules also stipulate that a domestic company that provides accounting archives or copies of accounting archives to any entities including securities companies, securities service providers and overseas regulators and individuals shall fulfill due procedures in compliance with applicable national regulations. 37 As we have completed our public offering before the effective date of the Trial Measures (i.e., March 31, 2023), we believe we are not required to complete the filing procedures with the CSRC for our current listing.
We and our non-PRC resident investors may be at risk of being required to file a return and being taxed under Circular 7, and we may be required to expend valuable resources to comply with the Circular on Issues of Enterprise Income Tax on Indirect Transfers of Assets by Non-PRC Resident Enterprises, or Bulletin 37, or to establish that we should not be taxed under Circular 7 and Bulletin 37. 46 In addition to the uncertainty in how the new resident enterprise classification could apply, it is also possible that the rules may change in the future, possibly with retroactive effect.
We and our non-PRC resident investors may be at risk of being required to file a return and being taxed under Circular 7, and we may be required to expend valuable resources to comply with the Circular on Issues of Enterprise Income Tax on Indirect Transfers of Assets by Non-PRC Resident Enterprises, or Bulletin 37, or to establish that we should not be taxed under Circular 7 and Bulletin 37. 49 In addition to the uncertainty in how the new resident enterprise classification could apply, it is also possible that the rules may change in the future, possibly with retroactive effect.
See “Risk Factor — PRC regulations relating to the establishment of offshore special purpose companies by PRC residents may subject our PRC resident shareholders to personal liability and limit our ability to acquire PRC companies or to inject capital into our PRC subsidiary, limit our PRC subsidiary ability to distribute profits to us, or otherwise materially and adversely affect us .” on page 43 of this Annual Report. ● The PRC government imposes control on the convertibility of the RMB into foreign currencies and, in certain cases, the remittance of currency out of China.
See “Risk Factor — PRC regulations relating to the establishment of offshore special purpose companies by PRC residents may subject our PRC resident shareholders to personal liability and limit our ability to acquire PRC companies or to inject capital into our PRC subsidiary, limit our PRC subsidiary ability to distribute profits to us, or otherwise materially and adversely affect us .” on page 46 of this Annual Report. ● The PRC government imposes control on the convertibility of the RMB into foreign currencies and, in certain cases, the remittance of currency out of China.
For the years ended December 31, 2023 and 2022, none of our subsidiaries, the consolidated VIE, or the subsidiaries of the VIE have made any dividends or distributions to Zhongchao Cayman. For the years ended December 31, 2023 and 2022, no dividends or distributions have been made to any U.S. investors.
For the years ended December 31, 2024, 2023 and 2022, none of our subsidiaries, the consolidated VIE, or the subsidiaries of the VIE have made any dividends or distributions to Zhongchao Cayman. For the years ended December 31, 2024, 2023 and 2022, no dividends or distributions have been made to any U.S. investors.
See “Risk Factor — Governmental control of currency conversion may limit our ability to use our revenues effectively and the ability of our PRC subsidiaries to obtain financing .” on page 45 of this Annual Report. ● On December 15, 2022, the PCAOB determined that the PCAOB was able to secure complete access to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong and voted to vacate its previous determinations to the contrary.
See “Risk Factor — Governmental control of currency conversion may limit our ability to use our revenues effectively and the ability of our PRC subsidiaries to obtain financing .” on page 48 of this Annual Report. ● On December 15, 2022, the PCAOB determined that the PCAOB was able to secure complete access to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong and voted to vacate its previous determinations to the contrary.
See “Risk Factor — Adverse changes in political, economic and other policies of the Chinese government could have a material adverse effect on the overall economic growth of China, which could materially and adversely affect the growth of the PRC operating entities’ business and their competitive position .” on page 28 of this Annual Report. ● The Chinese government has exercised and continues to exercise substantial control over virtually every sector of the Chinese economy through regulation and state ownership.
See “Risk Factor — Adverse changes in political, economic and other policies of the Chinese government could have a material adverse effect on the overall economic growth of China, which could materially and adversely affect the growth of the PRC operating entities’ business and their competitive position .” on page 32 of this Annual Report. ● The Chinese government has exercised and continues to exercise substantial control over virtually every sector of the Chinese economy through regulation and state ownership.
Additionally, the inability of the PCAOB to conduct inspections deprives our investors with the benefits of such inspections. 35 The above recent developments may have added uncertainties to our ability to continue to list on Nasdaq or to offer our securities and we cannot assure you whether Nasdaq or regulatory authorities would apply additional and more stringent criteria to us since we are an emerging growth company and substantial all of our operations are conducting in China.
Additionally, the inability of the PCAOB to conduct inspections deprives our investors with the benefits of such inspections. 39 The above recent developments may have added uncertainties to our ability to continue to list on Nasdaq or to offer our securities and we cannot assure you whether Nasdaq or regulatory authorities would apply additional and more stringent criteria to us since we are an emerging growth company and substantial all of our operations are conducting in China.
As of the date of this Annual Report, no explicit local rules or guideline on regulation of online private training institutions related to our operation have been promulgated in Shanghai, where the operating entity of the online platform and the VIE, Zhongchao Shanghai, was incorporated. 29 The PRC operating entities operate online platform that provides online training programs through the internet, and the PRC operating entities of the online platform are registered with local counterparts of the competent PRC government authorities as for-profit enterprises.
As of the date of this Annual Report, no explicit local rules or guideline on regulation of online private training institutions related to our operation have been promulgated in Shanghai, where the operating entity of the online platform and the VIE, Zhongchao Shanghai, was incorporated. 33 The PRC operating entities operate online platform that provides online training programs through the internet, and the PRC operating entities of the online platform are registered with local counterparts of the competent PRC government authorities as for-profit enterprises.
Providers are also obliged to provide security maintenance for their products and services and shall comply with provisions regarding the protection of personal information as stipulated under the relevant laws and regulations. 37 The Civil Code of the PRC (issued by the PRC National People’s Congress on May 28, 2020 and effective from January 1, 2021) provides legal basis for privacy and personal information infringement claims under the Chinese civil laws.
Providers are also obliged to provide security maintenance for their products and services and shall comply with provisions regarding the protection of personal information as stipulated under the relevant laws and regulations. 41 The Civil Code of the PRC (issued by the PRC National People’s Congress on May 28, 2020 and effective from January 1, 2021) provides legal basis for privacy and personal information infringement claims under the Chinese civil laws.
Recently, the PRC government initiated a series of regulatory actions and statements to regulate business operations in China with little advance notice, including cracking down on illegal activities in the securities market, enhancing supervision over the use of variable interest entities for overseas listing, adopting new measures to extend the scope of cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement.
The PRC government has initiated a series of regulatory actions and statements to regulate business operations in China with little advance notice, including cracking down on illegal activities in the securities market, enhancing supervision over the use of variable interest entities for overseas listing, adopting new measures to extend the scope of cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement.
See “Risk Factor — PRC laws and regulations governing our current business operations are sometimes vague and uncertain and any changes in such laws and regulations may impair our ability to operate profitably .” on page 32 of this Annual Report. ● Circular on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents’ Offshore Investment and Financing and Roundtrip Investment Through Special Purpose Vehicles, or SAFE Circular 37 requires PRC residents (including PRC individuals and PRC corporate entities as well as foreign individuals that are deemed as PRC residents for foreign exchange administration purpose) to register with SAFE or its local branches in connection with their direct or indirect offshore investment activities.
See “Risk Factor — PRC laws and regulations governing our current business operations are sometimes vague and uncertain and any changes in such laws and regulations may impair our ability to operate profitably .” on page 35 of this Annual Report. 9 ● Circular on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents’ Offshore Investment and Financing and Roundtrip Investment Through Special Purpose Vehicles, or SAFE Circular 37 requires PRC residents (including PRC individuals and PRC corporate entities as well as foreign individuals that are deemed as PRC residents for foreign exchange administration purpose) to register with SAFE or its local branches in connection with their direct or indirect offshore investment activities.
In addition, the failure by The PRC operating entities’ content partners to deliver high-quality content and to continuously upgrade their content in response to user demand and evolving healthcare advances and trends could result in user dissatisfaction and inhibit the PRC operating entities’ ability to attract users. 10 If the PRC operating entities fail to provide high-quality and reliable content in a cost-effective manner, they may not be able to attract and retain users to remain competitive.
In addition, the failure by The PRC operating entities’ content partners to deliver high-quality content and to continuously upgrade their content in response to user demand and evolving healthcare advances and trends could result in user dissatisfaction and inhibit the PRC operating entities’ ability to attract users. 13 If the PRC operating entities fail to provide high-quality and reliable content in a cost-effective manner, they may not be able to attract and retain users to remain competitive.
In connection with audits of our financial statements for the fiscal years ended December 31, 2023 and 2022, our management identified below material weaknesses in the design and operation of our internal controls: ● The Company lacked the key monitoring mechanisms such as an internal control department to oversee and monitor the Company’s risk management, business strategies and financial reporting procedure.
In connection with audits of our financial statements for the fiscal years ended December 31, 2024and 2023, our management identified below material weaknesses in the design and operation of our internal controls: ● The Company lacked the key monitoring mechanisms such as an internal control department to oversee and monitor the Company’s risk management, business strategies and financial reporting procedure.
We cannot assure you that the registration process will not delay or prevent our conversion of Renminbi for use outside of China. 45 We may be classified as a “resident enterprise” for PRC enterprise income tax purposes; such classification could result in unfavorable tax consequences to us and our non-PRC shareholders.
We cannot assure you that the registration process will not delay or prevent our conversion of Renminbi for use outside of China. 48 We may be classified as a “resident enterprise” for PRC enterprise income tax purposes; such classification could result in unfavorable tax consequences to us and our non-PRC shareholders.
Our status as a controlled company could cause our Class A Ordinary Share to look less attractive to certain investors or otherwise harm our trading price. 24 We depend upon the VIE Arrangements in consolidating the financial results of the PRC operating entities, which may not be as effective as direct ownership.
Our status as a controlled company could cause our Class A Ordinary Share to look less attractive to certain investors or otherwise harm our trading price. 28 We depend upon the VIE Arrangements in consolidating the financial results of the PRC operating entities, which may not be as effective as direct ownership.
These developments could add uncertainties to our offering .” on page 34 of this Annual Report. ● The business of the PRC operating entities involves collecting and retaining certain internal and customer data. We also maintain information about various aspects of our operations as well as regarding our employees.
These developments could add uncertainties to our offering .” on page 38 of this Annual Report. ● The business of the PRC operating entities involves collecting and retaining certain internal and customer data. We also maintain information about various aspects of our operations as well as regarding our employees.
Our financial position could be materially and adversely affected if the VIE’s or its subsidiaries’ tax liabilities increase or if it is required to pay late payment fees and other penalties. 25 We conduct our business through Zhongchao Shanghai and its subsidiaries by means of VIE Arrangements.
Our financial position could be materially and adversely affected if the VIE’s or its subsidiaries’ tax liabilities increase or if it is required to pay late payment fees and other penalties. 29 We conduct our business through Zhongchao Shanghai and its subsidiaries by means of VIE Arrangements.
Our current independent accounting firm, Prager Metis CPAs, LLC (“Prager Metis”), and our former independent accounting firm Marcum Asia CPAs LLP (“MarcumAsia” formerly known as “Marcum Bernstein & Pinchuk LLP”), both of whose audit report is included in this Annual Report on Form 20-F, are headquartered in New York, New York.
Our current independent accounting firm, Prager Metis CPAs, LLC (“Prager Metis”), whose audit report is included in this Annual Report on Form 20-F, and our former independent accounting firm Marcum Asia CPAs LLP (“MarcumAsia” formerly known as “Marcum Bernstein & Pinchuk LLP”), are headquartered in New York, New York.
See “Risk Factor — We may be liable for improper use or appropriation of personal information provided by our customers .” on page 37 of this Annual Report. ● The majority of the operations of the PRC operating entities conducted outside of the U.S.
See “Risk Factor — We may be liable for improper use or appropriation of personal information provided by our customers .” on page 41 of this Annual Report. ● The majority of the operations of the PRC operating entities conducted outside of the U.S.
See “Risk Factor — We face risks associated with uncertainties surrounding the PRC laws and regulations governing the education industry in general, and the online for-profit private training in particular .” on page 29 of this Annual Report. 7 ● There are substantial uncertainties regarding the interpretation and application of PRC laws and regulations including, but not limited to, the laws and regulations governing our business and the enforcement and performance of our arrangements with customers in certain circumstances.
See “Risk Factor — We face risks associated with uncertainties surrounding the PRC laws and regulations governing the education industry in general, and the online for-profit private training in particular .” on page 33 of this Annual Report. ● There are substantial uncertainties regarding the interpretation and application of PRC laws and regulations including, but not limited to, the laws and regulations governing our business and the enforcement and performance of our arrangements with customers in certain circumstances.
Further, the PRC government authorities may have wide discretion in the interpretation and enforcement of these laws. 36 On June 10, 2021, the Standing Committee of the National People’s Congress promulgated the Data Security Law which took effect on September 1, 2021.
Further, the PRC government authorities may have wide discretion in the interpretation and enforcement of these laws. 40 On June 10, 2021, the Standing Committee of the National People’s Congress promulgated the Data Security Law which took effect on September 1, 2021.
The Opinions and any related implementing rules to be enacted may subject us to compliance requirement in the future. 32 New rules for China-based companies seeking for securities offerings in foreign stock markets was released by the CSRC recently.
The Opinions and any related implementing rules to be enacted may subject us to compliance requirement in the future. 36 New rules for China-based companies seeking for securities offerings in foreign stock markets was released by the CSRC recently.
The PRC operating entities have initiated their online operations in the recent 12 years and are developing its ability to provide its courses and education systems on a transactional basis over the Internet.
The PRC operating entities have initiated their online operations in the recent 13 years and are developing its ability to provide its courses and education systems on a transactional basis over the Internet.
If the PRC operating entities are subject to fines, our financial condition and results of operations may be adversely affected. 47 If the number of dispatched workers of the PRC operating entities exceeds statutory limit, the PRC operating entities may be subject to penalties.
If the PRC operating entities are subject to fines, our financial condition and results of operations may be adversely affected. 50 If the number of dispatched workers of the PRC operating entities exceeds statutory limit, the PRC operating entities may be subject to penalties.
See “Risk Factor — U.S. regulators’ ability to conduct investigations or enforce rules in China is limited. ” on page 41 of this Annual Report. 8 RISKS RELATED TO THE BUSINESS AND INDUSTRY OF THE PRC OPERATING ENTITIES The PRC operating entities may be unable to effectively manage their rapid growth, which could place significant strain on their management personnel, systems and resources.
See “Risk Factor — U.S. regulators’ ability to conduct investigations or enforce rules in China is limited. ” on page 44 of this Annual Report. 10 RISKS RELATED TO THE BUSINESS AND INDUSTRY OF THE PRC OPERATING ENTITIES The PRC operating entities may be unable to effectively manage their rapid growth, which could place significant strain on their management personnel, systems and resources.
However, due to the lack of further interpretations, the exact scope of what constitutes a “CIIO” remains unclear. As of the date of this prospectus, we have not received any notice from any authorities identifying us as a CIIO or requiring us to undertake a cybersecurity review by the CAC.
However, due to the lack of further interpretations, the exact scope of what constitutes a “CIIO” remains unclear. As of the date of this Annual Report, we have not received any notice from any authorities identifying us as a CIIO or requiring us to undertake a cybersecurity review by the CAC.
Any failure of us or the PRC operating entities to fully comply with new regulatory requirements may significantly limit or completely hinder our ability to continue to offer our Class A Ordinary Shares, cause significant disruption to our business operations, severely damage our reputation, materially and adversely affect our financial condition and results of operations and cause our Class A Ordinary Shares to significantly decline in value or become worthless.
Any failure of us to fully comply with new regulatory requirements may significantly limit or completely hinder our ability to continue to offer our Class A Ordinary Shares, cause significant disruption to our business operations, severely damage our reputation, materially and adversely affect our financial condition and results of operations and cause our Class A Ordinary Shares to significantly decline in value or become worthless.
Distributions of earnings generated before January 1, 2008, are exempt from PRC withholding tax. 41 The State Administration of Taxation (“SAT”) has promulgated several rules and notices to tighten the scrutiny over acquisition transactions in recent years, including the Interim Measures for the Administration of Remittance of Income Tax for Non-Resident Enterprise Withheld at Source (the “Interim Measures”) which became effective on January 1, 2009, the Notice of the SAT on Strengthening the Administration of Enterprise Income Tax on Gain Derived from Equity Transfer Made by Non-Resident Enterprise (the “Notice”) which became effective on January 1, 2008 and was amended on July 19, 2015, the Announcement of the SAT on Issues Concerning the Withholding of Non-resident Enterprise Income Tax at Source (the “SAT Circular 37”) which was promulgated on October 17, 2017, became effective on December 1, 2017 and was amended on June 15, 2018, and the Public Notice of the SAT Regarding Certain Enterprise Income Tax Matters on Indirect Transfer of Properties by Non-Resident Enterprises (the “Public Notice 7”) which became effective on February 3, 2015 and was amended on December 1, 2017 and December 29, 2017.
The State Administration of Taxation (“SAT”) has promulgated several rules and notices to tighten the scrutiny over acquisition transactions in recent years, including the Interim Measures for the Administration of Remittance of Income Tax for Non-Resident Enterprise Withheld at Source (the “Interim Measures”) which became effective on January 1, 2009, the Notice of the SAT on Strengthening the Administration of Enterprise Income Tax on Gain Derived from Equity Transfer Made by Non-Resident Enterprise (the “Notice”) which became effective on January 1, 2008 and was amended on July 19, 2015, the Announcement of the SAT on Issues Concerning the Withholding of Non-resident Enterprise Income Tax at Source (the “SAT Circular 37”) which was promulgated on October 17, 2017, became effective on December 1, 2017 and was amended on June 15, 2018, and the Public Notice of the SAT Regarding Certain Enterprise Income Tax Matters on Indirect Transfer of Properties by Non-Resident Enterprises (the “Public Notice 7”) which became effective on February 3, 2015 and was amended on December 1, 2017 and December 29, 2017.
For the years ended December 31, 2023, 2022 and 2021, we wrote off $1,247,907, $543,315 and $1,449,827, respectively, against accounts receivable. Since the PRC operating entities generally do not require collateral or other security from their customers, they establish an allowance for doubtful accounts based upon estimates, historical experience and other factors surrounding the credit risk of specific customers.
For the years ended December 31, 2024, 2023 and 2022, we wrote off $20,767, $1,247,907 and $543,315, respectively, against accounts receivable. Since the PRC operating entities generally do not require collateral or other security from their customers, they establish an allowance for doubtful accounts based upon estimates, historical experience and other factors surrounding the credit risk of specific customers.
Our ability to operate in China may be harmed by changes in its laws and regulations, including those relating to taxation, environmental regulations, land use rights, property and other matters. See “Risk Factor — The Chinese government exerts substantial influence over the manner in which we must conduct our business activities.
Our ability to operate in China may be harmed by changes in its laws and regulations, including those relating to taxation, environmental regulations, land use rights, property and other matters. See “Risk Factor — The Chinese government exerts substantial influence over the manner in which the PRC operating entities must conduct their business activities.
As of the date of this prospectus, we have not received any notice from any authorities identifying us as a CIIO or requiring us to undertake a cybersecurity review by the CAC.
As of the date of this Annual Report, we have not received any notice from any authorities identifying us as a CIIO or requiring us to undertake a cybersecurity review by the CAC.
The PRC operating entities had been seeking business expansion countrywide, and, in consideration of cost, operation efficiency and business development need, established additional offices at shared workspace in 7 cities (Chongqing, Tianjin, Wuhan, Shenyang, Chengdu, Shijiazhuang and Baotou )] accommodating a total of 38 employees as of the date of this Annual Report.
The PRC operating entities had been seeking business expansion countrywide, and, in consideration of cost, operation efficiency and business development need, established additional offices at shared workspace in 6 cities (Chongqing, Tianjin, Wuhan, Chengdu, Shijiazhuang and Baotou ) accommodating a total of 39 employees as of the date of this Annual Report.
Dividend Distributions or Transfers of Cash among the Holding Company, Its Subsidiaries, and the Consolidated VIE For the year ended December 31, 2023, Zhongchao Cayman made cash transfer of $0.1 million to Zhongchao USA. For the year ended December 31, 2022, Zhongchao Cayman made cash transfer of $1.5 million to Zhongchao USA.
Dividend Distributions or Transfers of Cash among the Holding Company, Its Subsidiaries, and the Consolidated VIE For the year ended December 31, 2024, Zhongchao Cayman made cash transfer of $4.4 million to Zhongchao USA. For the year ended December 31, 2023, Zhongchao Cayman made cash transfer of $0.1 million to Zhongchao USA.
We depend on the healthcare industry for a significant portion of our revenues. Our revenues could seriously decrease if there were adverse developments in the healthcare industry. Our near-term and long-term prospects depend upon selling the PRC operating entities’ services to the healthcare industry. In 2023, 52.5% of our revenues were derived from services provided to pharmaceutical enterprises.
We depend on the healthcare industry for a significant portion of our revenues. Our revenues could seriously decrease if there were adverse developments in the healthcare industry. Our near-term and long-term prospects depend upon selling the PRC operating entities’ services to the healthcare industry. In 2024, 35.2% of our revenues were derived from services provided to pharmaceutical enterprises.
This may restrict our ability to implement our acquisition strategy and could adversely affect our business and prospects. 43 PRC regulation of loans and direct investment by offshore holding companies to PRC entities may delay or prevent us from using the proceeds of the initial public offering or any subsequent offerings to make loans or additional capital contributions to our PRC subsidiary, which could materially and adversely affect our liquidity and our ability to fund and expand our business.
PRC regulation of loans and direct investment by offshore holding companies to PRC entities may delay or prevent us from using the proceeds of the initial public offering or any subsequent offerings to make loans or additional capital contributions to our PRC subsidiary, which could materially and adversely affect our liquidity and our ability to fund and expand our business.
If these third-party distribution platforms change their terms and conditions in a manner that is detrimental to us, or refuse to distribute the PRC operating entities’ application, or if any other major distribution channel with which they would like to seek collaboration refuses to collaborate with us in the future on commercially favorable terms, the PRC operating entities’ business, financial condition and results of operations may be materially and adversely affected.
If these third-party distribution platforms change their terms and conditions in a manner that is detrimental to us, or refuse to distribute the PRC operating entities’ application, or if any other major distribution channel with which they would like to seek collaboration refuses to collaborate with us in the future on commercially favorable terms, the PRC operating entities’ business, financial condition and results of operations may be materially and adversely affected. 23 The PRC operating entities’ activities may expose them to malpractice liability and other liability inherent in healthcare delivery.
If the PRC operating entities are unable to keep up with changing technology and other factors related to their market, they may be unable to attract and retain users and advertisers, which would reduce our revenues.
The PRC operating entities may lose business if they are unable to keep up with rapid technological or other changes. If the PRC operating entities are unable to keep up with changing technology and other factors related to their market, they may be unable to attract and retain users and advertisers, which would reduce our revenues.
In 2022, 33.1% of our revenues were derived from services provided to pharmaceutical enterprises. Accordingly, our success is highly dependent on the sales and marketing expenditures of pharmaceutical enterprises and The PRC operating entities’ ability to attract these expenditures.
In 2023, 52.5% of our revenues were derived from services provided to pharmaceutical enterprises. Accordingly, our success is highly dependent on the sales and marketing expenditures of pharmaceutical enterprises and The PRC operating entities’ ability to attract these expenditures.
Further, as of the date of this prospectus, we have not been subject to any penalties, fines, suspensions, or investigations from any competent authorities for violation of the regulations or policies that have been issued by the CAC.
Further, as of the date of this Annual Report, we or the PRC operating entities have not been subject to any penalties, fines, suspensions, or investigations from any competent authorities for violation of the regulations or policies that have been issued by the CAC.
Any failure or delay in the completion of the cybersecurity review procedures or any other non-compliance with the related laws and regulations may result in fines or other penalties, including suspension of business, website closure, removal of our app from the relevant app stores, and revocation of prerequisite licenses, as well as reputational damage or legal proceedings or actions against us, which may have material adverse effect on our business, financial condition or results of operations. 38 On June 10, 2021, the SCNPC promulgated the PRC Data Security Law, which took effect in September 2021.
Any failure or delay in the completion of the cybersecurity review procedures or any other non-compliance with the related laws and regulations may result in fines or other penalties, including suspension of business, website closure, removal of our app from the relevant app stores, and revocation of prerequisite licenses, as well as reputational damage or legal proceedings or actions against us, which may have material adverse effect on our business, financial condition or results of operations.
In addition, in order to address the material weakness in internal control over financial reporting of the Company, we have: (a) hired an experienced outside consultant with adequate experience with US GAAP and the SEC reporting and compliance requirements; (b) continued our efforts to provide ongoing training courses in US GAAP to existing personnel, including our Chief Financial Officer; (c) continued our efforts to setup the internal audit department, and enhance the effectiveness of the internal control system; and (d) continued our efforts to implement necessary review and controls at related levels and the submission of all important documents and contracts to the office of our Chief Executive Officer for retention. 19 All internal control systems, no matter how well designed, have inherent limitations including the possibility of human error and the circumvention or overriding of controls.
In addition, in order to address the material weakness in internal control over financial reporting of the Company, we have: (a) hired an experienced outside consultant with adequate experience with US GAAP and the SEC reporting and compliance requirements; (b) continued our efforts to provide ongoing training courses in US GAAP to existing personnel, including our Chief Financial Officer; (c) continued our efforts to setup the internal audit department, and enhance the effectiveness of the internal control system; and (d) continued our efforts to implement necessary review and controls at related levels and the submission of all important documents and contracts to the office of our Chief Executive Officer for retention.
The shareholder who holds shares of Class B Ordinary Shares holds approximately 96.54% of the voting power of our outstanding ordinary shares, assuming the exercise of the HF Warrant.
The shareholder who holds shares of Class B Ordinary Shares holds approximately 68.9% of the voting power of our outstanding ordinary shares, assuming the exercise of the HF Warrant.
However, there remains uncertainty as to how the Review Measures Draft will be interpreted or implemented and whether the PRC regulatory agencies, including the CAC, may adopt new laws, regulations, rules, or detailed implementation and interpretation related to the Review Measures Draft.
There remains uncertainty as to how the Review Measures and the Regulations on the Network Data Security Management will be interpreted or implemented and whether the PRC regulatory agencies, including the CAC, may adopt new laws, regulations, rules, or detailed implementation and interpretation related to the Review Measures and the Regulations on the Network Data Security Management.
We cannot assure you that we or the PRC operating entities will be able to comply with these new laws and regulations in all respects, and we may be ordered to rectify, suspend or terminate any actions or services that are deemed illegal by the regulatory authorities and become subject to material penalties, which may materially harm our business, financial condition, results of operations and prospects.
We cannot assure you that we or the PRC operating entities will be able to comply with these new laws and regulations in all respects, and we may be ordered to rectify, suspend or terminate any actions or services that are deemed illegal by the regulatory authorities and become subject to material penalties, which may materially harm our business, financial condition, results of operations and prospects. 32 The PRC operating entities may face risks and uncertainties with respect to the licensing requirement for internet audio-visual programs.
The Chinese government may exert more oversight and control over overseas public offerings conducted by China-based issuers, which could significantly limit or completely hinder our ability to offer or continue to offer our Class A Ordinary Shares to investors and could cause the value of our Class A Ordinary Shares to significantly decline or become worthless.” for more information.
The Chinese government may exert more oversight and control over overseas public offerings conducted by China-based issuers, which could significantly limit or completely hinder our ability to offer or continue to offer our Class A Ordinary Shares to investors and could cause the value of our Class A Ordinary Shares to significantly decline or become worthless.” for more information. 2 Permission Required from the PRC Authorities for Our and PRC Operating Entities’ Operation in China.
As of the date of this Annual Report, Zhongchao Shanghai maintains 11 subsidiaries and 3 branches, of which are located in China (Beijing, Shanghai, Hainan, Liaoning and Chongqing) to serve different customers in various geographic locations. As of the date of this Annual Report, the PRC entities have 142 full-time employees and a few contractors from the third party.
As of the date of this Annual Report, Zhongchao Shanghai maintains 10 subsidiaries and 1 branch, of which are located in China (Beijing, Shanghai, Hainan and Chongqing) to serve different customers in various geographic locations. As of the date of this Annual Report, the PRC entities have 111 full-time employees and a few contractors from the third party.
On March 15, 2019, the National People’s Congress approved the Foreign Investment Law, which became effect on January 1, 2020. Since it is relatively new, uncertainties exist in relation to its interpretation and its implementation rules that are yet to be issued.
Our current corporate structure and business operations may be affected by the Foreign Investment Law. On March 15, 2019, the National People’s Congress approved the Foreign Investment Law, which became effect on January 1, 2020. Since it is relatively new, uncertainties exist in relation to its interpretation and its implementation rules that are yet to be issued.
The PRC operating entities may face intellectual property infringement claims that could be time-consuming and costly to defend. If the PRC operating entities fail to defend themselves against such claims, they may lose significant intellectual property rights and may be unable to continue providing their existing services.
If the PRC operating entities fail to defend themselves against such claims, they may lose significant intellectual property rights and may be unable to continue providing their existing services.
Except as otherwise disclosed above, for the years ended December 31, 2023 and 2022, no other cash transfer or transfer of other assets have occurred between Zhongchao Cayman, its subsidiaries, the consolidated VIE and the subsidiaries of the VIE.
For the year ended December 31, 2022, Zhongchao Cayman made cash transfer of $1.5 million to Zhongchao USA. Except as otherwise disclosed above, for the years ended December 31, 2024, 2023 and 2022, no other cash transfer or transfer of other assets have occurred between Zhongchao Cayman, its subsidiaries, the consolidated VIE and the subsidiaries of the VIE.
… 114 more changes not shown on this page.
Item 4. Mine Safety Disclosures
Mine Safety Disclosures — required of mining issuers
98 edited+32 added−47 removed341 unchanged
Item 4. Mine Safety Disclosures
Mine Safety Disclosures — required of mining issuers
98 edited+32 added−47 removed341 unchanged
2023 filing
2024 filing
Biggest changeRegulations on Investments in Private Funds On August 21, 2014, the SRC promulgated the Interim Measures for the Supervision and Administration of Private Investment Funds which defines the accredited investors of private funds as those entities and individuals with corresponding risk identification and risk-taking capabilities who invest in a single private fund an amount not less than RMB 1 million and accord with the following standards: with respect to entities, their net assets shall not be less than RMB 10 million; and with respect to individuals, their financial assets shall not be less than RMB 3 million or their personal average annual income in the last three years shall not be less than RMB 0.5 million. 81 Legal Regulations on Intellectual Property in the PRC Copyright Pursuant to the Copyright Law of the PRC, which was first promulgated by the Standing Committee of the National People’s Congress on September 7, 1990 and became effective from June 1, 1993, and was last amended on November 11, 2020 and became effective as of June 1, 2021, copyrights include personal rights such as the right of publication and that of attribution as well as property rights such as the right of production and that of distribution.
Biggest changeRegulations on Investments in Private Funds On August 21, 2014, the SRC promulgated the Interim Measures for the Supervision and Administration of Private Investment Funds which defines the accredited investors of private funds as those entities and individuals with corresponding risk identification and risk-taking capabilities who invest in a single private fund an amount not less than RMB 1 million and accord with the following standards: with respect to entities, their net assets shall not be less than RMB 10 million; and with respect to individuals, their financial assets shall not be less than RMB 3 million or their personal average annual income in the last three years shall not be less than RMB 0.5 million.
In addition, if the competent PRC government authorities determine that the PRC operating entities’ business operations of health information, healthcare education and training services are subject to the licensing requirements for internet audio-visual programming, internet culture business operating and online publishing (See “Risk Factor—Risks Related to Doing Business in China— The PRC operating entities may face risks and uncertainties with respect to the licensing requirement for internet audio-visual programs ”, and “Risk Factors—Risks Related to Doing Business in China— The PRC operating entities failure to obtain, maintain or renew other licenses, approvals, permits, registrations or filings necessary to conduct their operations in China could have a material adverse impact on our business, financial conditions and results of operations .”), the PRC operating entities may be required to obtain the Online Transmission of Audio-Visual Programs License, Internet Culture Business Operating License and Online Publishing License, which fall into the category of prohibited foreign investment.
In addition, if the competent PRC government authorities determine that the PRC operating entities’ business operations of health information, healthcare education and training services are subject to the licensing requirements for internet audio-visual programming, internet culture business operating and online publishing (See “Risk Factor—Risks Related to Doing Business in China— The PRC operating entities may face risks and uncertainties with respect to the licensing requirement for internet audio-visual programs ”, and “Risk Factors—Risks Related to Doing Business in China— The PRC operating entities’ failure to obtain, maintain or renew other licenses, approvals, permits, registrations or filings necessary to conduct their operations in China could have a material adverse impact on our business, financial conditions and results of operations .”), the PRC operating entities may be required to obtain the Online Transmission of Audio-Visual Programs License, Internet Culture Business Operating License and Online Publishing License, which fall into the category of prohibited foreign investment.
However, there are still significant uncertainties relating to the interpretation and implementation of the Audio-Visual Program Provisions, in particular, the scope of “internet audio-visual programs.” On March 16, 2018, the SAPPRFT promulgated the Notice on Further Regulating the Transmission Order of Internet Audio-Visual Program Services, providing that the classic literary works, radio, film and television programs, internet original audio-visual programs shall not be re-edited, re-dubbed, re-subtitled or partly captured and consolidated as a new program without authorizations and providers of internet audio-visual program services shall strictly manage and supervise such re-edited programs uploaded by the internet users and shall not provide any transmission channel for those internet audio-visual programs which have political orientation issues, copyright issues or content issues.
However, there are still significant uncertainties relating to the interpretation and implementation of the Audio-Visual Program Provisions, in particular, the scope of “internet audio-visual programs.” 72 On March 16, 2018, the SAPPRFT promulgated the Notice on Further Regulating the Transmission Order of Internet Audio-Visual Program Services, providing that the classic literary works, radio, film and television programs, internet original audio-visual programs shall not be re-edited, re-dubbed, re-subtitled or partly captured and consolidated as a new program without authorizations and providers of internet audio-visual program services shall strictly manage and supervise such re-edited programs uploaded by the internet users and shall not provide any transmission channel for those internet audio-visual programs which have political orientation issues, copyright issues or content issues.
The PRC operating entities currently organize their professional information by the following medical specialty and subject areas, including but not limited to: ● Internal Medicine Department: cardiology, respiratory medicine, nephrology, neurology, gastroenterology, hematology, endocrinology ● Surgery Department: general surgical, neurosurgery, breast surgery, urology, hepatobiliary surgery, cardiothoracic surgery, plastic surgery ● Oncology Department: general oncology, surgical radiotherapy, oncology ● Gynaecology Department: Gynecologic endocrine 53 ● Pediatrics Department: respiratory medicine, nephrology, neurology, gastroenterology, hematology, endocrinology ● Oral Cavity Department: oral and maxillofacial surgery, Restorative Dentistry, orthodontics ● Skin Beauty Department: Pharmacology, aesthetic health care ● Mental Psychology Department: depression, sensory disturbance, schizophrenia The PRC operating entities plan to expand into new medical specialty areas that appeal to their current users base and attract new users.
The PRC operating entities currently organize their professional information by the following medical specialty and subject areas, including but not limited to: ● Internal Medicine Department: cardiology, respiratory medicine, nephrology, neurology, gastroenterology, hematology, endocrinology ● Surgery Department: general surgical, neurosurgery, breast surgery, urology, hepatobiliary surgery, cardiothoracic surgery, plastic surgery ● Oncology Department: general oncology, surgical radiotherapy, oncology ● Gynaecology Department: Gynecologic endocrine ● Pediatrics Department: respiratory medicine, nephrology, neurology, gastroenterology, hematology, endocrinology ● Oral Cavity Department: oral and maxillofacial surgery, Restorative Dentistry, orthodontics ● Skin Beauty Department: Pharmacology, aesthetic health care ● Mental Psychology Department: depression, sensory disturbance, schizophrenia The PRC operating entities plan to expand into new medical specialty areas that appeal to their current users base and attract new users.
In addition, the Foreign Investment Law also provides several protective rules and principles for foreign investors and their investments in the PRC, including, among others, that a foreign investor may freely transfer into or out of China, in Renminbi or a foreign currency, its contributions, profits, capital gains, income from disposition of assets, royalties of intellectual property rights, indemnity or compensation lawfully acquired, and income from liquidation, among others, within China; local governments shall abide by their commitments to the foreign investors; governments at all levels and their departments shall enact local normative documents concerning foreign investment in compliance with laws and regulations and shall not impair legitimate rights and interests, impose additional obligations onto FIEs, set market access restrictions and exit conditions, or intervene with the normal production and operation activities of FIEs; except for special circumstances, in which case statutory procedures shall be followed and fair and reasonable compensation shall be made in a timely manner, expropriation or requisition of the investment of foreign investors is prohibited; and mandatory technology transfer is prohibited. 88 C.
In addition, the Foreign Investment Law also provides several protective rules and principles for foreign investors and their investments in the PRC, including, among others, that a foreign investor may freely transfer into or out of China, in Renminbi or a foreign currency, its contributions, profits, capital gains, income from disposition of assets, royalties of intellectual property rights, indemnity or compensation lawfully acquired, and income from liquidation, among others, within China; local governments shall abide by their commitments to the foreign investors; governments at all levels and their departments shall enact local normative documents concerning foreign investment in compliance with laws and regulations and shall not impair legitimate rights and interests, impose additional obligations onto FIEs, set market access restrictions and exit conditions, or intervene with the normal production and operation activities of FIEs; except for special circumstances, in which case statutory procedures shall be followed and fair and reasonable compensation shall be made in a timely manner, expropriation or requisition of the investment of foreign investors is prohibited; and mandatory technology transfer is prohibited. 94 C.
The principal regulations governing the distribution of dividends by foreign holding companies include the Company Law of the PRC, which was promulgated by SCNPC on December 29, 1993 and became effective on July 1, 1994 and subsequently amended on December 25,1999, August 28, 2004, October 27, 2005, December 28, 2013 and October 26, 2018, the Foreign Investment Enterprise Law (1986) and its detailed rules, Foreign Investment Law, which was promulgated by SCNPC on March 15, 2019 and became effective on January 1, 2020.
The principal regulations governing the distribution of dividends by foreign holding companies include the Company Law of the PRC, which was promulgated by SCNPC on December 29, 1993 and became effective on July 1, 1994 and subsequently amended on December 25,1999, August 28, 2004, October 27, 2005, December 28, 2013, October 26, 2018, and December 29, 2023, the Foreign Investment Enterprise Law (1986) and its detailed rules, Foreign Investment Law, which was promulgated by SCNPC on March 15, 2019 and became effective on January 1, 2020.
Ltd 21587258 Approved Category 5: Pharmaceutical preparations; Vaccines; Analgesics; Medical drugs; Medical tea; Medical ointments (cut-off) 2028.01.20 China 6 Shanghai Zhongxun Medical Technology Co., Ltd. 47286982 Approved Category 41: Education; Providing of training, Providing of educational information; Arranging and conducting of conferences, congresses and symposiums; Organization of exhibitions for cultural or educational purposes; Arranging and conducting of training; Publication of books and texts (cut-off) 2031.02.12 China 7 Beijing Zhongchao Boya Medical Technology Co., Ltd. 59485462 Approved Category 41: Providing of training, Arranging of experts conferences, Mobile libraries; text publishing (except advertising texts); E-books and magazines publishing; Providing non-downloadable global computer network online publishing; Publishing electronic newspapers through global computer network; Providing global network publishing Editing website publishing; Publishing and distributing medical technology related scientific paper (cut-off) 2032.03.13 China 8 Beijing Zhongchao Boya Medical Technology Co., Ltd. 59474281 Approved Category 44: Medical clinic services; Healthcare; Therapeutic services; Medical equipment rental; Health counseling; Diet nutrition guidance; Art therapy methods; Dispensing; Beauty services; Massage (cut-off) 2032.03.13 China 66 No.
Ltd 21587258 Approved Category 5: Pharmaceutical preparations; Vaccines; Analgesics; Medical drugs; Medical tea; Medical ointments (cut-off) 2028.01.20 China 6 Shanghai Zhongxun Medical Technology Co., Ltd. 47286982 Approved Category 41: Education; Providing of training, Providing of educational information; Arranging and conducting of conferences, congresses and symposiums; Organization of exhibitions for cultural or educational purposes; Arranging and conducting of training; Publication of books and texts (cut-off) 2031.02.12 China 7 Beijing Zhongchao Boya Medical Technology Co., Ltd. 59485462 Approved Category 41: Providing of training, Arranging of experts conferences, Mobile libraries; text publishing (except advertising texts); E-books and magazines publishing; Providing non-downloadable global computer network online publishing; Publishing electronic newspapers through global computer network; Providing global network publishing Editing website publishing; Publishing and distributing medical technology related scientific paper (cut-off) 2032.03.13 China 8 Beijing Zhongchao Boya Medical Technology Co., Ltd. 59474281 Approved Category 44: Medical clinic services; Healthcare; Therapeutic services; Medical equipment rental; Health counseling; Diet nutrition guidance; Art therapy methods; Dispensing; Beauty services; Massage (cut-off) 2032.03.13 China 69 No.
The screenshots below illustrate the content in the Opening Course: 51 Commencing from the fourth quarter of 2018, in addition to providing training and education courses through the platforms, the PRC operating entities have been engaged by certain customers on a project basis to establish individual columns on the MDMOOC online platform to provide training and knowledge of certain drug treatment for healthcare professionals and patients.
The screenshots below illustrate the content in the Opening Course: Commencing from the fourth quarter of 2018, in addition to providing training and education courses through the platforms, the PRC operating entities have been engaged by certain customers on a project basis to establish individual columns on the MDMOOC online platform to provide training and knowledge of certain drug treatment for healthcare professionals and patients.
All public medical institutions shall participate in the centralized volume-based drug procurement. 72 Regulations Relating To Online Drug Information Services According to the Measures Regarding the Administration of Drug Information Service over the Internet, promulgated by the CFDA on July 8, 2004 and amended on November 17, 2017, the Internet drug information service refers to the activities of providing medical information (including medical devices) and other services to Internet users through the Internet, and where any website intends to provide Internet drug information services, it shall, prior to applying for an operation permit or record-filing from the State Council’s department in charge of information industry or the telecom administrative authority at the provincial level, file an application with the provincial FDA, and shall be subject to the examination and approval thereof for obtaining the qualifications for providing Internet drug information services.
All public medical institutions shall participate in the centralized volume-based drug procurement. 76 Regulations Relating To Online Drug Information Services According to the Measures Regarding the Administration of Drug Information Service over the Internet, promulgated by the CFDA on July 8, 2004 and amended on November 17, 2017, the Internet drug information service refers to the activities of providing medical information (including medical devices) and other services to Internet users through the Internet, and where any website intends to provide Internet drug information services, it shall, prior to applying for an operation permit or record-filing from the State Council’s department in charge of information industry or the telecom administrative authority at the provincial level, file an application with the provincial FDA, and shall be subject to the examination and approval thereof for obtaining the qualifications for providing Internet drug information services.
Xinjiang Pharmaceutical’s Customers Xinjiang Pharmaceutical’s customers are primarily pharmaceutical agents. 59 Branding and Marketing The PRC operating entities believe that their rich content and satisfactory user experience have contributed to the expansion of their user base and the increase in user engagement, leading to a strong word-of-mouth effect that strengthens their brand awareness.
Xinjiang Pharmaceutical’s Customers Xinjiang Pharmaceutical’s customers are primarily pharmaceutical agents. Branding and Marketing The PRC operating entities believe that their rich content and satisfactory user experience have contributed to the expansion of their user base and the increase in user engagement, leading to a strong word-of-mouth effect that strengthens their brand awareness.
In addition, foreign-invested enterprises are not allowed to engage in the above-mentioned services except online music. 69 Regulation Related to Online Publishing On June 27, 2002, the SAPPRFT and the MIIT jointly promulgated the Tentative Internet Publishing Administrative Measures, or the Internet Publishing Measures, which took effect on August 1, 2002.
In addition, foreign-invested enterprises are not allowed to engage in the above-mentioned services except online music. Regulation Related to Online Publishing On June 27, 2002, the SAPPRFT and the MIIT jointly promulgated the Tentative Internet Publishing Administrative Measures, or the Internet Publishing Measures, which took effect on August 1, 2002.
The PRC operating entities’ MDMOOC WeChat subscription account features similar interfaces and functions as their mobile app. It serves as additional access points to the PRC operating entities’ platform. MDMOOC Website Users can access online healthcare information, education and training content and the services through the PRC operating entities’ website MDMOOC.org.
The PRC operating entities’ MDMOOC WeChat subscription account features similar interfaces and functions as their mobile app. It serves as additional access points to the PRC operating entities’ platform. 55 MDMOOC Website Users can access online healthcare information, education and training content and the services through the PRC operating entities’ website MDMOOC.org.
Additionally, the Basic Standards for Internet Hospitals (Trial) as attached to the Measures for the Administration of Internet Hospitals (Trial) sets forth specific requirements for diagnosis and treatment items, departments, personnel, buildings and device and equipment, and rules and regulations of Internet hospitals. 74 On February 3, 2019, The Health Commission of Guangdong and the Bureau of Traditional Chinese Medicine of Guangdong issued a notice on the forwarding of three documents including The Construction Standards of Internet Hospitals (Trial), which states that articles 8 and 9 of the Measures for the Administration of Internet Diagnosis and Treatment (Trial) shall apply when a physical medical institution newly applied for establishment or a physical medical institution that has obtained the Practicing License for Medical Institutions applies for the establishment of an internet hospital.
Additionally, the Basic Standards for Internet Hospitals (Trial) as attached to the Measures for the Administration of Internet Hospitals (Trial) sets forth specific requirements for diagnosis and treatment items, departments, personnel, buildings and device and equipment, and rules and regulations of Internet hospitals. 78 On February 3, 2019, The Health Commission of Guangdong and the Bureau of Traditional Chinese Medicine of Guangdong issued a notice on the forwarding of three documents including The Construction Standards of Internet Hospitals (Trial), which states that articles 8 and 9 of the Measures for the Administration of Internet Diagnosis and Treatment (Trial) shall apply when a physical medical institution newly applied for establishment or a physical medical institution that has obtained the Practicing License for Medical Institutions applies for the establishment of an internet hospital.
The PRC operating entities believe that after attending these programs, the participants would acquire the basic capacity to lead a wound-management department in a hospital. The PRC operating entities believe the combination of online and onsite services would provide their end-users the greatest convenience.
The PRC operating entities believe that after attending these programs, the participants would acquire the basic capacity to lead a wound-management department in a hospital. 57 The PRC operating entities believe the combination of online and onsite services would provide their end-users the greatest convenience.
Pursuant to the Special Administrative Measures for Entrance of Foreign Investment (Negative List) (2021 Version), or the Catalog, which is the principal regulation governing foreign investment activities in China, foreign investments in pre-school education institutions, ordinary senior high schools and institutions of higher education fall within the foreign restricted category (limited to the form of sino-foreign cooperative joint ventures), and such joint ventures shall be led by the Chinese party, which means the principal or the key administrative person-in-charge shall be a PRC national, the number of Chinese members of the council, board of directors or joint administrative committee shall account for at least half of the total.
Pursuant to the Special Administrative Measures for Entrance of Foreign Investment (Negative List) (2024 Version), or the Catalog, which is the principal regulation governing foreign investment activities in China, foreign investments in pre-school education institutions, ordinary senior high schools and institutions of higher education fall within the foreign restricted category (limited to the form of sino-foreign cooperative joint ventures), and such joint ventures shall be led by the Chinese party, which means the principal or the key administrative person-in-charge shall be a PRC national, the number of Chinese members of the council, board of directors or joint administrative committee shall account for at least half of the total.
A medical practitioner who practices for multiple institutions at the same place of practice shall determine one institution as the main practicing institution where he or she practices, and apply for registration to the administrative department of health and family planning approving the practice of such institution; and, for other institutions where the medical practitioner is to practice, respectively apply for recordation to the administrative health and family planning authority. 76 Protection of Patients’ Information Internet hospitals shall strictly comply with the relevant laws and regulations in the PRC on information security and confidentiality of medical data, and appropriately keep patients’ information, and shall not illegally trade or disclose patients’ information.
A medical practitioner who practices for multiple institutions at the same place of practice shall determine one institution as the main practicing institution where he or she practices, and apply for registration to the administrative department of health and family planning approving the practice of such institution; and, for other institutions where the medical practitioner is to practice, respectively apply for recordation to the administrative health and family planning authority. 80 Protection of Patients’ Information Internet hospitals shall strictly comply with the relevant laws and regulations in the PRC on information security and confidentiality of medical data, and appropriately keep patients’ information, and shall not illegally trade or disclose patients’ information.
If the domain name holder fails to pay the corresponding fees as required, the original domain name registrar shall write it off and notify the holder of the domain name in written form. 82 Regulations on Labor Protection in the PRC According to the Labor Law of the PRC, or the Labor Law, which was promulgated by the Standing Committee of the NPC on July 5, 1994, came into effect on January 1, 1995, and was most recently amended on December 29, 2018, an employer shall develop and improve its rules and regulations to safeguard the rights of its workers.
If the domain name holder fails to pay the corresponding fees as required, the original domain name registrar shall write it off and notify the holder of the domain name in written form. 87 Regulations on Labor Protection in the PRC According to the Labor Law of the PRC, or the Labor Law, which was promulgated by the Standing Committee of the NPC on July 5, 1994, came into effect on January 1, 1995, and was most recently amended on December 29, 2018, an employer shall develop and improve its rules and regulations to safeguard the rights of its workers.
The qualified medical inspection institutions and medical service institutions shall be encouraged to collaborate with internet enterprises to develop gene testing, disease prevention and other health service modes. 73 In April 2018, the Opinions on Promoting the Development of “Internet Plus Health Care” issued by the General Office of the State Council encouraged medical institutions to apply the internet and other information technologies to expand the space and content of medical services, developed an online and offline integrated medical service model that covers the whole process of medical service.
The qualified medical inspection institutions and medical service institutions shall be encouraged to collaborate with internet enterprises to develop gene testing, disease prevention and other health service modes. 77 In April 2018, the Opinions on Promoting the Development of “Internet Plus Health Care” issued by the General Office of the State Council encouraged medical institutions to apply the internet and other information technologies to expand the space and content of medical services, developed an online and offline integrated medical service model that covers the whole process of medical service.
On February 20, 2024, upon the shareholders’ approvals at the extraordinary general meeting of shareholders, the Company adopted the amended and restated memorandum and articles of association to effectuate a 1-for-10 share consolidation (the “2024 Share Consolidation”). 49 Upon the effectiveness of the 2024 Share Consolidation, every ten (10) Class A Ordinary Shares with a par value of US$0.0001 each will be consolidated into one (1) Class A Ordinary Share with a par value of US$0.001 each, and every ten (10) Class B Ordinary Shares with a par value of $0.0001 each will be consolidated into one (1) Class B Ordinary Share with a par value of $0.001 each.
On February 20, 2024, upon the shareholders’ approvals at the extraordinary general meeting of shareholders, the Company adopted the amended and restated memorandum and articles of association to effectuate a 1-for-10 share consolidation (the “2024 Share Consolidation”). 52 Upon the effectiveness of the 2024 Share Consolidation, every ten (10) Class A Ordinary Shares with a par value of US$0.0001 each will be consolidated into one (1) Class A Ordinary Share with a par value of US$0.001 each, and every ten (10) Class B Ordinary Shares with a par value of $0.0001 each will be consolidated into one (1) Class B Ordinary Share with a par value of $0.001 each.
The Implementation Rules for the Drug Administration Law of the PRC, was promulgated by the State Council in August 2002 and amended in 2016 and 2019, which emphasized the detailed implementation rules of drugs administration.
The Implementation Rules for the Drug Administration Law of the PRC, was promulgated by the State Council in August 2002 and amended in 2016, 2019 and 2024, which emphasized the detailed implementation rules of drugs administration.
At the bottom are the latest medical articles written or recommended by the PRC operating entities’ medical editors, and the users are able to add bookmarks categorized by different types of cancers to the main page for easy access to relevant articles in the future. 57 The screenshot below shows the main page of Zhongxin Health mini program: Medication management page primarily provides information of medication information and the PRC operating entities’ patient management projects.
At the bottom are the latest medical articles written or recommended by the PRC operating entities’ medical editors, and the users are able to add bookmarks categorized by different types of cancers to the main page for easy access to relevant articles in the future. 60 The screenshot below shows the main page of Zhongxin Health mini program: Medication management page primarily provides information of medication information and the PRC operating entities’ patient management projects.
Ltd 21587230 Approved Category 44: health care; medical assistance; rental of medical equipment; treatment services; health counseling; dietary and nutritional guidance; dispensing; art therapy; massage; beauty services (deadline) 2027.11.27 China 65 No. Current Owner Mark Registration Number Status Class/Description Expiration Date Country of Registration 5 Zhongchao Medical Technology (Shanghai) Corp.
Ltd 21587230 Approved Category 44: health care; medical assistance; rental of medical equipment; treatment services; health counseling; dietary and nutritional guidance; dispensing; art therapy; massage; beauty services (deadline) 2027.11.27 China 68 No. Current Owner Mark Registration Number Status Class/Description Expiration Date Country of Registration 5 Zhongchao Medical Technology (Shanghai) Corp.
The PRC operating entities’ experienced and large pool of in-house editors incubate original ideas and present them in video format and collaborate closely with medical professionals in the content creation process. 55 ● Featured Articles -- The PRC operating entities’ in-house content team and resources of well-known healthcare professionals bring the PRC operating entities’ assessment and analysis of the latest medical theories and information to the PRC operating entities’ users through featured articles.
The PRC operating entities’ experienced and large pool of in-house editors incubate original ideas and present them in video format and collaborate closely with medical professionals in the content creation process. 58 ● Featured Articles -- The PRC operating entities’ in-house content team and resources of well-known healthcare professionals bring the PRC operating entities’ assessment and analysis of the latest medical theories and information to the PRC operating entities’ users through featured articles.
The PRC operating entities have been seeking business expansion countrywide, and in consideration of cost, operation efficiency and business development need, established additional offices at shared workspace in 6 cities (Tianjin, Wuhan, Shenyang, Chengdu, Shijiazhuang and Baotou) accommodating a total of 38 employees as of the date of this Annual Report.
The PRC operating entities have been seeking business expansion countrywide, and in consideration of cost, operation efficiency and business development need, established additional offices at shared workspace in 6 cities (Tianjin, Wuhan, Shenyang, Chengdu, Shijiazhuang and Baotou) accommodating a total of 39 employees as of the date of this Annual Report.
Internet diagnosis and treatment activities shall not be allowed for any patient receiving initial diagnosis. 75 Management of Prescription and Medical Records Internet hospitals who provide internet diagnosis and treatment activities shall strictly comply with the Measures for the Administration of Prescriptions and other provisions on the administration of prescriptions.
Internet diagnosis and treatment activities shall not be allowed for any patient receiving initial diagnosis. 79 Management of Prescription and Medical Records Internet hospitals who provide internet diagnosis and treatment activities shall strictly comply with the Measures for the Administration of Prescriptions and other provisions on the administration of prescriptions.
Any increase in the amount of the total investment and registered capital must be approved by the PRC Ministry of Commerce or its local counterpart. 85 The dividends paid by the subsidiary to its shareholder are deemed shareholder income and are taxable in China.
Any increase in the amount of the total investment and registered capital must be approved by the PRC Ministry of Commerce or its local counterpart. 90 The dividends paid by the subsidiary to its shareholder are deemed shareholder income and are taxable in China.
As of the date of the Annual Report, the VIE holds the Internet Content Provider License, and it falls within the restricted foreign investment for value-added telecommunications services that foreign ownership may not be more than 50%.
As of the date of the Annual Report, the PRC subsidiary of the VIE holds the Internet Content Provider License, and it falls within the restricted foreign investment for value-added telecommunications services that foreign ownership may not be more than 50%.
In addition to trademark protection, the PRC operating entities own 40 URL designations and domain names, including www.mdmooc.org, www.mdmooc.com, www.zhongxun.online, ygjkclass.com, zxylmd.com, which are important to our business. 64 As of the date of this Annual Report, we have registered 36 trademarks. The following is a list of trademarks we have registered that are important to our business: No.
In addition to trademark protection, the PRC operating entities own 26 URL designations and domain names, including www.mdmooc.org, www.mdmooc.com, www.zhongxun.online, ygjkclass.com, zxylmd.com, which are important to our business. As of the date of this Annual Report, we have registered 36 trademarks. The following is a list of trademarks we have registered that are important to our business: No.
Users could check the projects status they applied for by providing their names and identification numbers to track their application status, prescription amount, delivery status and other relevant matters. The screenshot below shows the main page of Zhongxin Health mini program: 58 The users could sign up and log in on the account page.
Users could check the projects status they applied for by providing their names and identification numbers to track their application status, prescription amount, delivery status and other relevant matters. 61 The screenshot below shows the main page of Zhongxin Health mini program: 62 The users could sign up and log in on the account page.
For the fiscal year ended December 31, 2023, we generated revenue of MDMOOC business from a total of 73 customers, of which 26 customers were NFP and 47 customers were pharmaceutical enterprises.
For the fiscal year ended December 31, 2023, we generated revenue of service business from a total of 73 customers, of which 26 customers were NFP and 47 customers were pharmaceutical enterprises.
According to the Interim Measures for Participation in the Social Insurance System by Foreigners Working within the Territory of China, which was promulgated by the Ministry of Human Resources and Social Security on September 6, 2011, and became effective on October 15, 2011, employers who employ foreigners shall participate in the basic pension insurance, unemployment insurance, basic medical insurance, occupational injury insurance, and maternity leave insurance in accordance with the relevant law, with the social insurance premiums to be contributed respectively by the employers and foreigner employees as required.
According to the Interim Measures for Participation in the Social Insurance System by Foreigners Working within the Territory of China, which was promulgated by the Ministry of Human Resources and Social Security on September 6, 2011, and became effective on October 15, 2011, was later amended on December 23, 2024, employers who employ foreigners shall participate in the basic pension insurance, unemployment insurance, basic medical insurance, occupational injury insurance, and maternity leave insurance in accordance with the relevant law, with the social insurance premiums to be contributed respectively by the employers and foreigner employees as required.
Distributions of earnings generated before January 1, 2008, are exempt from PRC withholding tax. 84 The State Administration of Taxation (“SAT”) has promulgated several rules and notices to tighten the scrutiny over acquisition transactions in recent years, including the Interim Measures for the Administration of Remittance of Income Tax for Non-Resident Enterprise Withheld at Source (the “Interim Measures”) which became effective on January 1, 2009, the Notice of the SAT on Strengthening the Administration of Enterprise Income Tax on Gain Derived from Equity Transfer Made by Non-Resident Enterprise (the “Notice”) which became effective on January 1, 2008 and was amended on July 19, 2015, the Announcement of the SAT on Issues Concerning the Withholding of Non-resident Enterprise Income Tax at Source (the “SAT Circular 37”) which was promulgated on October 17, 2017, became effective on December 1, 2017 and was amended on June 15, 2018, and the Public Notice of the SAT Regarding Certain Enterprise Income Tax Matters on Indirect Transfer of Properties by Non-Resident Enterprises (the “Public Notice 7”) which became effective on February 3, 2015 and was amended on December 1, 2017 and December 29, 2017.
The State Administration of Taxation (“SAT”) has promulgated several rules and notices to tighten the scrutiny over acquisition transactions in recent years, including the Interim Measures for the Administration of Remittance of Income Tax for Non-Resident Enterprise Withheld at Source (the “Interim Measures”) which became effective on January 1, 2009, the Notice of the SAT on Strengthening the Administration of Enterprise Income Tax on Gain Derived from Equity Transfer Made by Non-Resident Enterprise (the “Notice”) which became effective on January 1, 2008 and was amended on July 19, 2015, the Announcement of the SAT on Issues Concerning the Withholding of Non-resident Enterprise Income Tax at Source (the “SAT Circular 37”) which was promulgated on October 17, 2017, became effective on December 1, 2017 and was amended on June 15, 2018, and the Public Notice of the SAT Regarding Certain Enterprise Income Tax Matters on Indirect Transfer of Properties by Non-Resident Enterprises (the “Public Notice 7”) which became effective on February 3, 2015 and was amended on December 1, 2017 and December 29, 2017.
Xinjiang Pharmaceutical commenced its pharmaceutical business from the second half of 2022. For the year ended December 31, 2023 and 2022, Xinjiang Pharmaceutical generated revenues of approximately $9.03 million and $1.22 million from sales of patented drugs, respectively.
Xinjiang Pharmaceutical commenced its pharmaceutical business from the second half of 2022. For the year ended December 31, 2024, 2023 and 2022, Xinjiang Pharmaceutical generated revenues of approximately $2.15 million, $9.03 million and $1.22 million from sales of patented drugs, respectively.
As of the date of this Annual Report, we have established nearly 22 courses for cancer-related drug treatment, including drug treatment for lung cancer, liver cancer, and extended blood cancer, and 7 columns for drug treatment of rare diseases, including drug treatment for pulmonary fibrosis, multiple sclerosis, systemic lupus erythematosus, Crohn’s disease and skin diseases.
As of the date of this Annual Report, we have established nearly 25 courses for cancer-related drug treatment, including drug treatment for lung cancer, liver cancer, and extended blood cancer, and 12 columns for drug treatment of rare diseases, including drug treatment for pulmonary fibrosis, multiple sclerosis, systemic lupus erythematosus, Crohn’s disease and skin diseases.
As of the date of this Annual Report, we have established nearly 22 columns for cancer-related drug treatment, including drug treatment for lung cancer, liver cancer, and extended blood cancer, and 7 columns for drug treatment of rare diseases, including drug treatment for pulmonary fibrosis, multiple sclerosis, systemic lupus erythematosus, Crohn’s disease, and skin diseases.
As of the date of this Annual Report, we have established nearly 25 columns for cancer-related drug treatment, including drug treatment for lung cancer, liver cancer, and extended blood cancer, and 12 columns for drug treatment of rare diseases, including drug treatment for pulmonary fibrosis, multiple sclerosis, systemic lupus erythematosus, Crohn’s disease, and skin diseases.
The infringer shall, according to the circumstances of the case, undertake to cease the infringement, take remedial action, and offer an apology, pay damages, etc. The Computer Software Copyright Registration Measures, or the Software Copyright Measures, promulgated by the National Copyright Administration on February 20, 2002, regulates registrations of software copyright, exclusive licensing contracts for software copyright and assignment agreements.
The infringer shall, according to the circumstances of the case, undertake to cease the infringement, take remedial action, and offer an apology, pay damages, etc. 86 The Computer Software Copyright Registration Measures, or the Software Copyright Measures, promulgated by the National Copyright Administration on February 20, 2002, amended on July 1, 2004, regulates registrations of software copyright, exclusive licensing contracts for software copyright and assignment agreements.
The total number of patients covered under these patient-aid projects has reached nearly 125,970 by the end of 2023. Sunshine Health Forums-Healthcare Information and Education for the Public The PRC operating entities’ goal is not only provide continuing education and training to healthcare professionals but to promote healthy lifestyle and provide healthcare knowledge to the public.
The total number of patients covered under these patient-aid projects has reached nearly 159,981 by the end of 2024. Sunshine Health Forums-Healthcare Information and Education for the Public The PRC operating entities’ goal is not only provide continuing education and training to healthcare professionals but to promote healthy lifestyle and provide healthcare knowledge to the public.
Current Owner Mark Registration Number Status Class/Description Expiration Date Country of Registration 9 Shanghai Zhongxun Medical Technology Co., Ltd. 47299361 Approved Category 44: Hospitals; Healthcare; Dispensing Consulting; Telemedicine services; Health consulting; Therapeutic services; Diet nutrition guidance; Providing medication information for patient; Medical information; Medical counseling (cut-off) 2031.02.20 China 10 Shanghai Zhongxin Medical Technology Co., Ltd 59477566 Approved Category 44: Medical clinic services; Medical assistance; Therapeutic services; Medical equipment rental; Health consulting; Diet nutrition guidance; Art therapy measures; Dispensing; Beauty services; Massage (cut-off) 2032.03.13 China 11 Chongqing Xinjiang Pharmaceutical Co., Ltd. 65011381 Approved Category 5: Medical drugs; human drugs; Chinese patent medicines; medical nutrition products; dietary fiber; mineral dietary supplements; Medical ; Veterinary medications; Dental fillings; Tablets (cut-off) 2032.11,23 China 12 Chongqing Xinjiang Pharmaceutical Co., Ltd. 64995408 Approved Category 42: Implementation of early evaluation in the field of new drugs; Drug evaluation; Pharmaceutical research; Computer software maintenance for Internet use; Medical planning computer programming; Computer software design; Computer hardware design and development consulting; Computer system analysis; Provision of Internet search engines; Cloud calculate(cut-off) 2032.11.13 China 13 Chongqing Xinjiang Pharmaceutical Co., Ltd. 64988009 Category 35: Displaying merchandise on communication media for retail purposes; Advertising; Commercial information offered through website; Franchising business management; Import and export agency; Promoting for others; Systemizing computer database information; Seeking sponsorship; Retail sale of pharmaceutical, veterinary, hygienic preparations and medical supplies (cut-off) 2033.01.20 China 67 The following is a list of our patent applications: No.
Current Owner Mark Registration Number Status Class/Description Expiration Date Country of Registration 9 Shanghai Zhongxun Medical Technology Co., Ltd. 47299361 Approved Category 44: Hospitals; Healthcare; Dispensing Consulting; Telemedicine services; Health consulting; Therapeutic services; Diet nutrition guidance; Providing medication information for patient; Medical information; Medical counseling (cut-off) 2031.02.20 China 10 Shanghai Zhongxin Medical Technology Co., Ltd 59477566 Approved Category 44: Medical clinic services; Medical assistance; Therapeutic services; Medical equipment rental; Health consulting; Diet nutrition guidance; Art therapy measures; Dispensing; Beauty services; Massage (cut-off) 2032.03.13 China 11 Chongqing Xinjiang Pharmaceutical Co., Ltd. 65011381 Approved Category 5: Medical drugs; human drugs; Chinese patent medicines; medical nutrition products; dietary fiber; mineral dietary supplements; Medical ; Veterinary medications; Dental fillings; Tablets (cut-off) 2032.11,23 China 12 Chongqing Xinjiang Pharmaceutical Co., Ltd. 64995408 Approved Category 42: Implementation of early evaluation in the field of new drugs; Drug evaluation; Pharmaceutical research; Computer software maintenance for Internet use; Medical planning computer programming; Computer software design; Computer hardware design and development consulting; Computer system analysis; Provision of Internet search engines; Cloud calculate(cut-off) 2032.11.13 China 13 Chongqing Xinjiang Pharmaceutical Co., Ltd. 64988009 Category 35: Displaying merchandise on communication media for retail purposes; Advertising; Commercial information offered through website; Franchising business management; Import and export agency; Promoting for others; Systemizing computer database information; Seeking sponsorship; Retail sale of pharmaceutical, veterinary, hygienic preparations and medical supplies (cut-off) 2033.01.20 China 70 As of the date of this Annual Report, the PRC operating entities owns 37 copyrights that have been approved.
We conduct our business through the VIE, Zhongchao Medical Technology (Shanghai) Corp., or Zhongchao Shanghai, a PRC company, and through 11 subsidiaries of Zhongchao Shanghai, including Shanghai Zhongxun, Shanghai Zhongxin, Maidemu Health, Beijing Boya, Shanghai Xinyuan, Hainan Muxin, Shanghai Huijing, Xinjiang Pharmaceutical, Beijing Yisuizhen, West Angel and Liaoning Zhixun, each a PRC company.
We conduct our business through the VIE, Zhongchao Medical Technology (Shanghai) Corp., or Zhongchao Shanghai, a PRC company, and through 10 subsidiaries of Zhongchao Shanghai, including Shanghai Zhongxun, Shanghai Zhongxin, Maidemu Health, Beijing Boya, , Hainan Muxin, Shanghai Huijing, Xinjiang Pharmaceutical, Beijing Yisuizhen, West Angel, and Shanghai Zhongxuan, each a PRC company.
Most of the drug treatments are cancer-related or rare disease-related. The PRC operating entities establish online columns to facilitate qualified patients to obtain free drug treatment from not-for-profit organizations (“NFPs”) till the earlier of the expiration of contract period or the free drugs are completely delivered.
The PRC operating entities establish online columns to facilitate qualified patients to obtain free drug treatment from not-for-profit organizations (“NFPs”) till the earlier of the expiration of contract period or the free drugs are completely delivered.
The Law for Promoting Private Education and its Implementing Rules On December 28, 2002, the SCNPC promulgated the Law for Promoting Private Education, or the Private Education Law and was later amended on June 29, 2013, November 7, 2016 and December 29, 2018, the amendment of which took effect on December 29,2018.
Such amendments took effect on April 30, 2021. 84 The Law for Promoting Private Education and its Implementing Rules On December 28, 2002, the SCNPC promulgated the Law for Promoting Private Education, or the Private Education Law and was later amended on June 29, 2013, November 7, 2016 and December 29, 2018, the amendment of which took effect on December 29,2018.
On April 29, 2021, the Education Law was further amended by SCNPC to emphasize the illegal acts in recruiting students and replacing the admission qualifications obtained by others. Such amendments took effect on April 30, 2021.
On April 29, 2021, the Education Law was further amended by SCNPC to emphasize the illegal acts in recruiting students and replacing the admission qualifications obtained by others.
As of the date of this Annual Report, we have 4 researchers in the product development team and 3 developers in our technology support team. The PRC operating entities’ product development team is focused on market research and product development. The PRC operating entities develop and update their products and services based on market conditions and government policies.
As of the date of this Annual Report, we have 5 researchers in the product development team. The PRC operating entities’ product development team is focused on market research and product development. The PRC operating entities develop and update their products and services based on market conditions and government policies.
In addition, in accordance with Regulations on Supervision and Administration of Medical Devices, promulgated by the State Council on February 9, 2021 and effective as of June 1, 2021, Class II and Class III medical devices shall be registered with the NMPA or its local branches, while Class I medical devices shall be filed with the competent local MPA.
In addition, in accordance with Regulations on Supervision and Administration of Medical Devices, promulgated by the State Council on February 9, 2021 and effective as of June 1, 2021, was amended on December 6, 2024 and took effect on January 1, 2025, Class II and Class III medical devices shall be registered with the NMPA or its local branches, while Class I medical devices shall be filed with the competent local MPA.
Besides, pursuant to the PRC Regulations on Sino-foreign Cooperative Education (2019 Revision) and other education-related laws and regulations in China, foreign education institutions and other foreign organizations or individuals may not by themselves alone establish schools or other education institutions within China which mainly enroll Chinese citizens, and sino-foreign cooperative education institutions shall have corresponding qualifications and relatively high education quality. 79 Education Law of China On March 18, 1995, the PRC National People’s Congress promulgated the PRC Education Law, or the Education Law.
Besides, pursuant to the PRC Regulations on Sino-foreign Cooperative Education (2019 Revision) and other education-related laws and regulations in China, foreign education institutions and other foreign organizations or individuals may not by themselves alone establish schools or other education institutions within China which mainly enroll Chinese citizens, and sino-foreign cooperative education institutions shall have corresponding qualifications and relatively high education quality.
During fiscal years 2023, 2022 and 2021, our R&D expenses were approximately $514,411, $411,524 and $758,878, respectively, representing 2.6%, 2.9% and 4.7% of our total revenues for fiscal years 2023, 2022 and 2021, respectively. Intellectual Property The PRC has domestic laws for the protection of rights in copyrights, trademarks and trade secrets.
During fiscal years 2024, 2023 and 2022, our R&D expenses were approximately $252,451, $514,411 and $411,524, respectively, representing 1.6%, 2.6% and 2.9% of our total revenues for fiscal years 2024, 2023 and 2022, respectively. Intellectual Property The PRC has domestic laws for the protection of rights in copyrights, trademarks and trade secrets.
Users can also explore various medical courses by medical specialty and subject areas. 50 Below are screenshots of the PRC operating entities’ mobile app main entrance interface: Opening Course is a collection of video courses of various medical fields and topics. The courses are often presented by medical experts. Most of the courses are free to users.
Below are screenshots of the PRC operating entities’ mobile app main entrance interface: 54 Opening Course is a collection of video courses of various medical fields and topics. The courses are often presented by medical experts. Most of the courses are free to users.
The PRC operating entities’ product development team is focused on market research and product development. The PRC operating entities develop and update their products and services based on market conditions and government policies.
The PRC operating entities’ R&D consists of product development and technology support. The PRC operating entities’ product development team is focused on market research and product development. The PRC operating entities develop and update their products and services based on market conditions and government policies.
For the fiscal year ended December 31, 2022, we generated revenue of MDMOOC business from a total of 76 customers, of which 34 customers were NFP and 42 customers were pharmaceutical enterprises.
For the fiscal year ended December 31, 2022, we generated revenue of service business from a total of 76 customers, of which 34 customers were NFP and 42 customers were pharmaceutical enterprises. We generate the revenues from a relatively small number of customers.
Pursuant to the Ninth Amendment to the Criminal Law issued by the SCNPC in August 2015, which became effective in November 2015, any person or entity that fails to fulfill the obligations related to internet information security administration as required by applicable laws and refuses to rectify upon orders is subject to criminal penalty for the result of (i) any dissemination of illegal information in large scale; (ii) any severe effect due to the leakage of the client’s information; (iii) any serious loss of criminal evidence; or (iv) other severe situation, and any individual or entity that (i) sells or provides personal information to others in a way violating the applicable law, or (ii) steals or illegally obtain any personal information is subject to criminal penalty in severe situation.
Any violation of the above decision or order may subject the internet information service provider to warnings, fines, confiscation of illegal gains, revocation of licenses, cancellation of filings, closedown of websites or even criminal liabilities. 82 Pursuant to the Ninth Amendment to the Criminal Law issued by the SCNPC in August 2015, which became effective in November 2015, any person or entity that fails to fulfill the obligations related to internet information security administration as required by applicable laws and refuses to rectify upon orders is subject to criminal penalty for the result of (i) any dissemination of illegal information in large scale; (ii) any severe effect due to the leakage of the client’s information; (iii) any serious loss of criminal evidence; or (iv) other severe situation, and any individual or entity that (i) sells or provides personal information to others in a way violating the applicable law, or (ii) steals or illegally obtain any personal information is subject to criminal penalty in severe situation.
Pursuant to the Notice on Further Simplifying and Improving Policies for the Foreign Exchange Administration of Direct Investment (the “SAFE Circular 13”), which was promulgated by SAFE on February 13, 2015, became effective on June 1, 2015 and partially repealed on December 30, 2019, the power to accept foreign exchange registration was delegated from local foreign exchange bureau to local commercial banks where the assets or interest in the domestic entity was located.
Pursuant to the Notice on Further Simplifying and Improving Policies for the Foreign Exchange Administration of Direct Investment (the “SAFE Circular 13”), which was promulgated by SAFE on February 13, 2015, became effective on June 1, 2015 and partially repealed on December 30, 2019, the power to accept foreign exchange registration was delegated from local foreign exchange bureau to local commercial banks where the assets or interest in the domestic entity was located. 91 Regulation Related to Overseas Listings On February 17, 2023, CSRC promulgated the Trial Measures, and five supporting guidelines, which became effective on March 31, 2023.
As users scroll down, courses that are most popular among the healthcare professionals, courses recommended by the PRC operating entities’ medical editors, and the latest healthcare news appear.
As users scroll down, courses that are most popular among the healthcare professionals, courses recommended by the PRC operating entities’ medical editors, and the latest healthcare news appear. Users can also explore various medical courses by medical specialty and subject areas.
For the fiscal years ended December 31, 2023, 2022 and 2021, the PRC operating entities’ pharmaceutical enterprise customers accounted for 13.1%, 33.1% and 11.7% of our total revenues, respectively. For the fiscal years ended December 31, 2023, 2022 and 2021, the PRC operating entities’ NFP customers accounted for 39.2%, 58.0% and 86.2%, of our total revenues, respectively.
For the fiscal years ended December 31, 2024, 2023 and 2022, the PRC operating entities’ pharmaceutical enterprise customers accounted for 21.8%, 13.1% and 33.1% of our total revenues, respectively. For the fiscal years ended December 31, 2024, 2023 and 2022, the PRC operating entities’ NFP customers accounted for 61.5%, 39.2% and 58.0%, of our total revenues, respectively.
Facility Lease (L)/ Own (O) Location Space Lease Terms 1 Beijing Office L Chaoyang District, Beijing, China 435.16 square meters 1/16/2022 -6/15/2028 2 Shanghai Office L Jing’An District, Shanghai, China 286.8 square meters 9/1/2023-12/31/2024 3 Tianjin Office L Tianjin, China 42.81 square meters 5/16/2023-5/31/2024 4 Chongqing Office L Chongqing, China 243.37 square meters 4/1/2022 -4/10/2024 5 Shijiazhuang Office L Shijiazhuang, Hebei Province China 185.22 square meters 8/24/2023-1/7/2025 6 Japan Houses O Japan 272.21 square meters - 7 Tongzhou House O Tongzhou District, Beijing, China 214.31 - 8 Tangshan Dorm O Tangshan, Hebei Province, China 136.81 square meters - 9 Manhattan Condo O New York, U.S. 594 ft. - 10 Wangjing Office O Chaoyang District, Beijing, China 736.31 square meters - 11 Chongqing Dorm L Chongqing, China 85.35 square meters 4/1/2023-3/31/2024 12 Beijing Dorm L Xicheng District, Beijing, China 122.00 square meters 1/1/2021-12/31/2026 Item 4A.
Facility Lease (L)/ Own (O) Location Space Lease Terms 1 Beijing Office O Chaoyang District, Beijing, China 736.31 square meters - 2 Shanghai Office O Jing’An District, Shanghai, China 166.23 square meters - 3 Tianjin Office L Tianjin, China Shared office 6/1/2024-6/1/2025 4 Chongqing Office L Chongqing, China 243.37 square meters 4/10/2024-4/10/2026 5 Shijiazhuang Office L Shijiazhuang, Hebei Province, China 143.01 square meters 1/7/2025-8/23/2025 6 Japan Houses O Japan 347.29 square meters - 7 Tongzhou House O Tongzhou District, Beijing, China 214.31 square meters - 8 Tangshan Dorm O Tangshan, Hebei Province, China 136.81 square meters - 9 Manhattan Condo O New York, U.S. 594 ft. - 10 Chongqing Dorm L Chongqing, China 85.35 square meters 4/1/2024-3/31/2025 11 Beijing Dorm L Xicheng District, Beijing, China 122.00 square meters 1/1/2021-12/31/2026 Item 4A.
Value-Added Tax According to the Temporary Regulations on Value-added Tax, which was most recently amended on November 19, 2017, and the Detailed Implementing Rules of the Temporary Regulations on Value-added Tax, which was amended on October 28, 2011, and became effective on November 1, 2011, all taxpayers selling goods, providing processing, repair or replacement services or importing goods within the PRC shall pay Value-Added Tax.
In addition, Public Notice 7 provides clear criteria on how to assess reasonable commercial purposes. 89 Value-Added Tax According to the Temporary Regulations on Value-added Tax, which was most recently amended on November 19, 2017, and the Detailed Implementing Rules of the Temporary Regulations on Value-added Tax, which was amended on October 28, 2011, and became effective on November 1, 2011, all taxpayers selling goods, providing processing, repair or replacement services or importing goods within the PRC shall pay Value-Added Tax.
In addition, if future laws, administrative regulations or provisions prescribed by the State Council mandate further actions to be taken by companies with respect to existing VIE Arrangements, the PRC operating entities may face substantial uncertainties as to whether the PRC operating entities can complete such actions in a timely manner, or at all.
In addition, if future laws, administrative regulations or provisions prescribed by the State Council mandate further actions to be taken by companies with respect to existing VIE Arrangements, the PRC operating entities may face substantial uncertainties as to whether the PRC operating entities can complete such actions in a timely manner, or at all. 93 According to the Foreign Investment Law, the State Council will publish or approve to publish the “negative list” for special administrative measures concerning foreign investment.
The PRC operating entities’ primary trademark portfolio consists of 36 registered trademarks. The PRC operating entities’ trademarks are valuable assets that reinforce the brand and their consumers’ favorable perception of their products.
The PRC operating entities’ trademarks are valuable assets that reinforce the brand and their consumers’ favorable perception of their products.
According to the Foreign Investment Law, the State Council will publish or approve to publish the “negative list” for special administrative measures concerning foreign investment. The Foreign Investment Law grants national treatment to foreign-invested entities (“FIEs”), except for those FIEs that operate in industries deemed to be either “restricted” or “prohibited” in the “negative list”.
The Foreign Investment Law grants national treatment to foreign-invested entities (“FIEs”), except for those FIEs that operate in industries deemed to be either “restricted” or “prohibited” in the “negative list”.
In addition, an information processor shall take technical measures and other necessary measures to ensure the security of the personal information that is collected and stored and to prevent the information from being divulged, tampered with or lost; where personal information has been or may be divulged, tampered with or lost, the information processor shall take remedial measures in a timely manner, inform the natural person concerned in accordance with the provisions and report the case to the relevant competent department.
In addition, an information processor shall take technical measures and other necessary measures to ensure the security of the personal information that is collected and stored and to prevent the information from being divulged, tampered with or lost; where personal information has been or may be divulged, tampered with or lost, the information processor shall take remedial measures in a timely manner, inform the natural person concerned in accordance with the provisions and report the case to the relevant competent department. 83 On August 20, 2021, the Standing Committee of the National People’s Congress promulgated the Personal Information Protection Law of the PRC, or the Personal Information Protection Law, which took effect on November 1, 2021.
Pursuant to the PRC Civil Code which was approved by the National People’s Congress on May 28, 2020, and came into effect on January 1, 2021, the personal information of a natural person shall be protected by the law.
Network data processing activities refers to the collection, retention, use, processing, transmission, provision, disclosure, deletion, and other activities of network data. Pursuant to the PRC Civil Code which was approved by the National People’s Congress on May 28, 2020, and came into effect on January 1, 2021, the personal information of a natural person shall be protected by the law.
Restrictions on Foreign Direct Investment in Value-Added Telecommunications Services Foreign direct investment in telecommunications companies in China is governed by the Provisions on the Administration of Foreign-Invested Telecommunications Enterprises (2016 Revision), which was promulgated on December 11, 2001 and amended on September 10, 2008 and February 6, 2016 by the State Council.
Foreign-invested enterprises would need to submit relevant foreign investment materials to MIIT for the establishment or change of telecommunication operating permits. 74 Restrictions on Foreign Direct Investment in Value-Added Telecommunications Services Foreign direct investment in telecommunications companies in China is governed by the Provisions on the Administration of Foreign-Invested Telecommunications Enterprises (2016 Revision), which was promulgated on December 11, 2001 and amended on September 10, 2008 and February 6, 2016 by the State Council.
Government Regulation Regulation Related to Online Services Regulation Related to Online Transmission of Audio-Visual Programs The Measures for the Administration of Publication of Audio-Visual Programs through Internet or Other Information Network, or the Audio-Visual Measures, promulgated by the SARFT, on July 6, 2004 and put into effect on October 11, 2004, and ceased to be effect apply to the activities relating to the opening, broadcasting, integration, transmission or download of audio-visual programs using internet or other information network.
Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors. 71 Government Regulation Regulation Related to Online Services Regulation Related to Online Transmission of Audio-Visual Programs The Measures for the Administration of Publication of Audio-Visual Programs through Internet or Other Information Network, or the Audio-Visual Measures, promulgated by the SARFT, on July 6, 2004 and put into effect on October 11, 2004, and ceased to be effect apply to the activities relating to the opening, broadcasting, integration, transmission or download of audio-visual programs using internet or other information network.
In addition, the National Medical Insurance Plan in the 14th Five-year Plan, issued by the General Office of the State Council on September 23, 2021, intends to take a series of measures to achieve the high-quality development of the basic medical insurance system, insecure people’s health and promote common wealth, including encouraging the innovation of insurance products, adjusting and optimizing the medical insurance catalog on a dynamic basis, and improve direct settlement services for medical treatment in different places.
In addition, the National Medical Insurance Plan in the 14th Five-year Plan, issued by the General Office of the State Council on September 23, 2021, intends to take a series of measures to achieve the high-quality development of the basic medical insurance system, insecure people’s health and promote common wealth, including encouraging the innovation of insurance products, adjusting and optimizing the medical insurance catalog on a dynamic basis, and improve direct settlement services for medical treatment in different places. 81 Regulations Related to Internet Information Security and Privacy Protection PRC government authorities have enacted laws and regulations with respect to internet information security and protection of personal information from any abuse or unauthorized disclosure.
The Telecom License Measures further prescribes types of VATS Licenses required for operation of different value-added telecommunications services together with qualifications and procedures for obtaining such VATS Licenses. 70 Pursuant to the Administrative Measures on Internet Information Services, promulgated on September 25, 2000 and amended on January 8, 2011 by the State Council, commercial internet information services providers, which means providers of information or services to internet users with charge, shall obtain a VATS License with the business scope of internet information services, namely the Internet Content Provider License or the ICP License, from competent regulatory authorities before providing any commercial internet content services within the PRC.
Pursuant to the Administrative Measures on Internet Information Services, promulgated on September 25, 2000 and amended on January 8, 2011 and December 6, 2024 by the State Council, commercial internet information services providers, which means providers of information or services to internet users with charge, shall obtain a VATS License with the business scope of internet information services, namely the Internet Content Provider License or the ICP License, from competent regulatory authorities before providing any commercial internet content services within the PRC.
Based on the Notice regarding the Strengthening of Ongoing and Post Administration of Foreign Investment Telecommunication Enterprises issued by the MIIT in October 2020, the MIIT no longer issues Examination Letters for Foreign Investment in Telecommunication Business. Foreign-invested enterprises would need to submit relevant foreign investment materials to MIIT for the establishment or change of telecommunication operating permits.
Based on the Notice regarding the Strengthening of Ongoing and Post Administration of Foreign Investment Telecommunication Enterprises issued by the MIIT in October 2020, the MIIT no longer issues Examination Letters for Foreign Investment in Telecommunication Business.
The PRC operating entities’ business activities other than the above mentioned are not set out in the Negative List or any encouraged catalogue. 87 The Foreign Investment Law On March 15, 2019, the National People’s Congress approved the Foreign Investment Law, which took effect on January 1, 2020 and replaced three existing laws on foreign investments in China, namely, the PRC Equity Joint Venture Law, the PRC Cooperative Joint Venture Law and the Wholly Foreign-owned Enterprise Law, together with their implementation rules and ancillary regulations.
The Foreign Investment Law On March 15, 2019, the National People’s Congress approved the Foreign Investment Law, which took effect on January 1, 2020 and replaced three existing laws on foreign investments in China, namely, the PRC Equity Joint Venture Law, the PRC Cooperative Joint Venture Law and the Wholly Foreign-owned Enterprise Law, together with their implementation rules and ancillary regulations.
As more internet users shift to mobile ends, the PRC operating entities’ website mainly serves a comprehensive knowledge base targeting users who are in the process of researching for specific medical courses, articles, or news. 52 Below are screenshots of MDMOOC.org website: The PRC operating entities designed their professional website to meet the needs of their users in a personalized and easy-to-use manner.
As more internet users shift to mobile ends, the PRC operating entities’ website mainly serves a comprehensive knowledge base targeting users who are in the process of researching for specific medical courses, articles, or news.
Such notice provides that the industry expression in the name of the private culture education institutions shall typically include “training school /center,” such as “curriculum training school/center,” “extra-class education school/center,” “self-learning school/center,” “tutorship school/center,” “extra tutoring for examinations school/center” and “extra tutoring school/center” and such industry expression is allowed to embody the disciplines and characteristics of such education institution. 80 In August 2018, the State Council issued the Opinion on the Regulation of the Development of Extracurricular Training Institutions, or the New Opinion, which primarily regulates extracurricular training institutions targeting K-12 students.
Such notice provides that the industry expression in the name of the private culture education institutions shall typically include “training school /center,” such as “curriculum training school/center,” “extra-class education school/center,” “self-learning school/center,” “tutorship school/center,” “extra tutoring for examinations school/center” and “extra tutoring school/center” and such industry expression is allowed to embody the disciplines and characteristics of such education institution.
We have no substantive operations other than holding all of the issued and outstanding shares of Zhongchao Group Inc., or Zhongchao BVI, established under the laws of the British Virgin Islands on April 23, 2019.
We have no substantive operations other than holding all of the issued and outstanding shares of Zhongchao Group Inc., or Zhongchao BVI, established under the laws of the British Virgin Islands on April 23, 2019. 51 Zhongchao BVI is also a holding company holding all of the outstanding equity of Zhongchao Group Limited, or Zhongchao HK, which was established in Hong Kong on May 14, 2019.
With more choices of the forms of healthcare education, the PRC operating entities enrich the learning experience of their end-users. 54 New Plug-in to Certain Programs- Assistance in Patient-Aid Projects The PRC operating entities have been engaged by certain customers on a project basis to establish individual columns on the MDMOOC online platform to provide training and knowledge of certain drug treatment for healthcare professionals and patients.
New Plug-in to Certain Programs- Assistance in Patient-Aid Projects The PRC operating entities have been engaged by certain customers on a project basis to establish individual columns on the MDMOOC online platform to provide training and knowledge of certain drug treatment for healthcare professionals and patients. Most of the drug treatments are cancer-related or rare disease-related.
The valid term of the Pharmaceutical Operation License is five years and shall be renewed through application six months prior to its expiration date. 71 According to the Measures on Prescription Drugs and OTC Drugs Classification Management (Trial) and the Interim Provisions on the Circulation of Prescription and OTC Drugs, which were both promulgated by the State Drug Administration, which was restructured and integrated into the CFDA, and became effective in January 2000, drugs are divided into prescription drugs and over-the-counter drugs, or OTC drugs.
According to the Measures on Prescription Drugs and OTC Drugs Classification Management (Trial) and the Interim Provisions on the Circulation of Prescription and OTC Drugs, which were both promulgated by the State Drug Administration, which was restructured and integrated into the CFDA, and became effective in January 2000, drugs are divided into prescription drugs and over-the-counter drugs, or OTC drugs.
Regulation Related to Online and Distance Education Pursuant to the Interim Administrative Regulations on Educational Websites and Online and Distance Education Schools issued by the MOE, on July 5, 2000, educational websites may provide educational services in relation to higher education, elementary education, pre-school education, teaching education, occupational education, adult education, other education and public educational information services.
Additionally, the New Opinion requests that competent local authorities formulate relevant local standards for extracurricular training institutions within their administrative area. 85 Regulation Related to Online and Distance Education Pursuant to the Interim Administrative Regulations on Educational Websites and Online and Distance Education Schools issued by the MOE, on July 5, 2000, educational websites may provide educational services in relation to higher education, elementary education, pre-school education, teaching education, occupational education, adult education, other education and public educational information services.
The PRC is also a signatory to all of the world’s major intellectual property conventions, including: ● Convention establishing the World Intellectual Property Organization (June 3, 1980); ● Paris Convention for the Protection of Industrial Property (March 19, 1985); ● Patent Cooperation Treaty (January 1, 1994); and ● Agreement on Trade-Related Aspects of Intellectual Property Rights (November 11, 2001). 63 The PRC Trademark Law, adopted in 1982 and was most recently amended on April 23, 2019 and will become effective on November 1, 2019, with its implementation rules adopted in 2014, protects registered trademarks.
The PRC is also a signatory to all of the world’s major intellectual property conventions, including: ● Convention establishing the World Intellectual Property Organization (June 3, 1980); ● Paris Convention for the Protection of Industrial Property (March 19, 1985); ● Patent Cooperation Treaty (January 1, 1994); and ● Agreement on Trade-Related Aspects of Intellectual Property Rights (November 11, 2001).
MDMOOC-Healthcare Information, Education, and Training for Professionals The MDMOOC Online Platform of the PRC Operating Entities The MDMOOC online platform of the PRC operating entities’ is realized through various products, including MDMOOC mobile App, MOOC Medical WeChat subscription account, and MDMOOC website, where users can access our rich media content and engaging Community of Practice Share (COPS) on MDMOOC website.
Xinjiang Pharmaceutical cooperates with Zhixun Internet Hospital and other internet hospitals to build a 2B2C (to business and to customer) pharmaceutical procurement platform and streamline the delivery of medications from pharmaceutical factories to retail ends. 53 MDMOOC-Healthcare Information, Education, and Training for Professionals The MDMOOC Online Platform of the PRC Operating Entities The MDMOOC online platform of the PRC operating entities’ is realized through various products, including MDMOOC mobile App, MOOC Medical WeChat subscription account, and MDMOOC website, where users can access our rich media content and engaging Community of Practice Share (COPS) on MDMOOC website.
According to the Administrative Measures for the Supervision and Administration of Circulation of Pharmaceuticals, promulgated by the CFDA in January 2007 and effective in May 2007, pharmaceutical manufacture and operation enterprises and medical institutions shall be responsible for the quality of pharmaceuticals they manufacture, provide or use. The operation of prescription drugs is highly regulated under these rules.
The pharmaceutical wholesale enterprises distributing prescription drugs and/or OTC drugs, as well as pharmaceutical retail enterprises selling prescription drugs and/or Class-A OTC drugs are required to obtain the Pharmaceutical Operation License. 75 According to the Administrative Measures for the Supervision and Administration of Circulation of Pharmaceuticals, promulgated by the CFDA in January 2007 and effective in May 2007, pharmaceutical manufacture and operation enterprises and medical institutions shall be responsible for the quality of pharmaceuticals they manufacture, provide or use.
The PRC operating entities generate the revenue on a case-by-case or project-by-project basis and by providing their customers with healthcare information, education, and training services, including the production of online medical training materials, the arrangement of onsite training programs or academic conferences, and the development of medical education software to their targeted end users.
The PRC operating entities generate the revenue on a case-by-case or project-by-project basis and by providing their customers with healthcare information, education, and training services, including the production of online medical training materials, the arrangement of onsite training programs or academic conferences, and the development of medical education software to their targeted end users. 63 Sunshine Health Forums’ Users Unlike MDMOOC online platform which require the users to register with their healthcare qualification and some of the PRC operating entities’ programs are limited to certain registered users of the platform, the Sunshine Health Forums is accessible to the public without limitation.
The officials from the CSRC have also confirmed that for the PRC domestic companies that seek to list overseas with VIE structure, the CSRC will solicit opinions from relevant regulatory authorities and complete the filing of the overseas listing of companies with VIE structure which meet the compliance requirements. 86 On February 24, 2023, the CSRC, Ministry of Finance of the PRC, National Administration of State Secrets Protection and National Archives Administration of China promulgated the Archives Rules, which took effect on March 31, 2023.
The officials from the CSRC have also confirmed that for the PRC domestic companies that seek to list overseas with VIE structure, the CSRC will solicit opinions from relevant regulatory authorities and complete the filing of the overseas listing of companies with VIE structure which meet the compliance requirements.
These agreements also provide that any confidential or proprietary information disclosed to third parties in the course of the PRC operating entities’ business must be kept confidential by such third parties. In the event of trademark infringement, the State Administration for Industry and Commerce has the authority to fine the infringer and to confiscate or destroy the infringing products.
These agreements also provide that any confidential or proprietary information disclosed to third parties in the course of the PRC operating entities’ business must be kept confidential by such third parties.
However, the Audio-Visual Measures was repealed according to the Administrative Provisions on Audio-Visual Program Service through Special Network and Directed Transmission that was promulgated by the State Administration of Press, Publication, Radio, Film and Television, or the SAPPRFT (currently known as the National Radio and Television Administration of China, or the NRTA), on April 25, 2016, effective as of June 1, 2016 and amend on March 23, 2021. 68 To further regulate the provision of audio-visual program services to the public via the internet, including through mobile networks, within the territory of China, the SARFT and the MIIT jointly promulgated the Administrative Provisions on Internet Audio-Visual Program Service, or the Audio-Visual Program Provisions, on December 20, 2007, which came into effect on January 31, 2008 and was last amended on August 28, 2015.
However, the Audio-Visual Measures was repealed according to the Administrative Provisions on Audio-Visual Program Service through Special Network and Directed Transmission that was promulgated by the State Administration of Press, Publication, Radio, Film and Television, or the SAPPRFT (currently known as the National Radio and Television Administration of China, or the NRTA), on April 25, 2016, effective as of June 1, 2016 and amend on March 23, 2021.
In accordance with such Interim Measures, the social insurance administrative agencies shall exercise their right to supervise and examine the legal compliance of foreign employees and employers and the employers who do not pay social insurance premiums in conformity with the laws shall be subject to the administrative provisions provided in the Social Insurance Law and the relevant regulations and rules mentioned above. 83 According to the Reform Plan of the State Tax and Local Tax Collection Administration System ( the “Reform Plan”), which was issued by the General Office of the Communist Party of China and the General Office of the State Council of the PRC On July 20, 2018.
In accordance with such Interim Measures, the social insurance administrative agencies shall exercise their right to supervise and examine the legal compliance of foreign employees and employers and the employers who do not pay social insurance premiums in conformity with the laws shall be subject to the administrative provisions provided in the Social Insurance Law and the relevant regulations and rules mentioned above.
… 97 more changes not shown on this page.
Item 5. Market for Registrant's Common Equity
Market for Common Equity — stock, dividends, buybacks
57 edited+24 added−18 removed73 unchanged
Item 5. Market for Registrant's Common Equity
Market for Common Equity — stock, dividends, buybacks
57 edited+24 added−18 removed73 unchanged
2023 filing
2024 filing
Biggest changeFor the Years Ended December 31, 2023 2022 2021 Revenues $ $ $ Service 10,406,734 12,935,420 16,296,770 Product 9,027,211 1,216,096 - Total revenues 19,433,945 14,151,516 16,296,770 Cost of revenues Service (5,162,425 ) (7,166,871 ) (6,857,944 ) Product (5,759,329 ) (627,981 ) - Total cost of revenues (10,921,753 ) (7,794,852 ) (6,857,944 ) Gross Profit 8,512,192 6,356,664 9,438,826 Operating Expenses Selling and marketing expenses (6,710,757 ) (2,099,968 ) (3,137,316 ) General and administrative expenses (6,697,309 ) (6,799,634 ) (5,863,373 ) Research and development expenses (514,411 ) (411,524 ) (758,878 ) Loss from disposal of property and equipment (1,719,442 ) - - Impairment of goodwill (5,617,865 ) - - Impairment of intangible assets (536,206 ) - - Total Operating Expenses (21,795,990 ) (9,311,126 ) (9,759,567 ) Loss from Operations (13,283,798 ) (2,954,462 ) (320,741 ) Interest income, net 237,054 142,014 175,987 Other income, net 1,069,745 262,442 34,001 Loss Before Income Taxes (11,976,999 ) (2,550,006 ) (110,753 ) Income tax benefits (expenses) 669,760 (272,313 ) 349,418 Net (Loss) Income $ (11,307,239 ) $ (2,822,319 ) $ 238,665 Year ended December 31, 2023 compared to year ended December 31, 2022 Revenues We generate revenues from pharmaceutical enterprise customers and NFP from design and production of online medical courses, organizing offline medical training services, consulting and academic support services and patient management services for patient-aid projects.
Biggest changeFor the Years Ended December 31, 2024 2023 2022 Revenues $ $ $ Service 13,712,964 10,406,734 12,935,420 Product 2,151,809 9,027,211 1,216,096 Total revenues 15,864,773 19,433,945 14,151,516 Cost of revenues Service (5,510,088 ) (5,162,425 ) (7,166,871 ) Product (1,442,472 ) (5,759,328 ) (627,981 Total cost of revenues (6,952,560 ) (10,921,753 ) (7,794,852 ) Gross Profit 8,912,213 8,512,192 6,356,664 Operating Expenses Selling and marketing expenses (4,010,382 ) (6,710,757 ) (2,099,968 ) General and administrative expenses (4,989,784 ) (6,697,309 ) (6,799,634 ) Research and development expenses (252,451 ) (514,411 ) (411,524 ) Loss from disposal of property and equipment (863 ) (1,719,442 ) - Impairment of goodwill - (5,617,865 ) - Impairment of intangible assets - (536,206 ) - Total Operating Expenses (9,253,480 ) (21,795,990 ) (9,311,126 ) Loss from Operations (341,267 ) (13,283,798 ) (2,954,462 ) Interest income, net 243,008 237,054 142,014 Other income, net 160,015 1,069,745 262,442 Income (Loss) Before Income Taxes 61,756 (11,976,999 ) (2,550,006 ) Income tax (expenses) benefits (335,169 ) 669,760 (272,313 ) Net Loss $ (273,413 ) $ (11,307,239 ) $ (2,822,319 ) Year ended December 31, 2024 compared to year ended December 31, 2023 Revenues We generate revenues from pharmaceutical enterprise customers and NFP from design and production of online medical courses, organizing offline medical training services, consulting and academic support services and patient management services for patient-aid projects.
Cost of revenues incurred for preparation of online medical training courses and offline education seminars and patient management services in patient-aid projects was comprised of direct related costs incurred for preparation of online medical training courses and offline education seminars and patient management services in 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, and salary and welfare expenses incurred by the key members of the editorial, design and production team and patient-aid projects, as well as outsourced labor cost in patient-aid projects.
Cost of revenues incurred for preparation of online medical training courses and offline education seminars and patient management services in patient-aid projects was comprised of direct related costs incurred for preparation of online medical training courses and offline education seminars and patient management services in 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, and salary and welfare expenses incurred by the key members of the editorial, design and production team and patient-aid projects, as well as outsourced labor cost in patient-aid projects.
The travelling and accommodation expenses, including but not limited to the transportation expenses and hotel accommodation expenses, represented the costs arising from lecturers’ attendance and participation of the offline seminars. Other travelling 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.
The travelling and accommodation expenses, including but not limited to the transportation expenses and hotel accommodation expenses, represented the costs arising from lecturers’ attendance and participation of the offline seminars. Other travelling 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.
Investing activities For the fiscal year ended December 31, 2023, we had net cash used in investing activities of $3,754,655 which was primarily attributable to purchase of properties and equipment of $839,736, investments of $6,317,257 in certain short-term investments, and loans of $833,226 made to third parties.
For the fiscal year ended December 31, 2023, we had net cash used in investing activities of $3,754,655 which was primarily attributable to purchase of properties and equipment of $839,736, investments of $6,317,257 in certain short-term investments, and loans of $833,226 made to third parties.
Financing activities For the fiscal year ended December 31, 2023, we had no cash provided by or used in financing activities. For the fiscal year ended December 31, 2022, we had net cash provided by financing activities of $1,850,744 from offering 1,060,000 Class A ordinary shares in a shelf offering.
For the fiscal year ended December 31, 2023, we had no cash provided by or used in financing activities. For the fiscal year ended December 31, 2022, we had net cash provided by financing activities of $1,850,744 from offering 1,060,000 Class A ordinary shares in a shelf offering.
We believe the following accounting estimates involve the most significant judgments used in the preparation of our financial statements. 100 Revenue recognition 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.
We believe the following accounting estimates involve the most significant judgments used in the preparation of our financial statements. Revenue recognition 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.
Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Item 3. Key Information—D. Risk Factors” or in other parts of this annual report on Form 20-F. 90 A.
Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Item 3. Key Information—D. Risk Factors” or in other parts of this annual report on Form 20-F. A.
The decrease in assistance in patient-aid projects is primarily attributable to the Company discontinued some low margin projects during fiscal year 2023 to improve overall profitability. For the fiscal years ended December 31, 2023 and 2022, we earned a gross profit margin of 43.8% and 44.9%, respectively.
The decrease in assistance in patient-aid projects is primarily attributable to the Company discontinued some low margin projects during fiscal year 2023 to improve overall profitability. 100 For the fiscal years ended December 31, 2023 and 2022, we earned a gross profit margin of 43.8% and 44.9%, respectively.
These travelling and accommodation 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. 94 Cost of revenues incurred for patented drugs was primarily comprised of purchase cost of drugs.
These travelling and accommodation 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. Cost of revenues incurred for patented drugs was primarily comprised of purchase cost of drugs.
The Company recognized revenues upon sales of patented drugs upon acceptance of goods by customers. 101 Other revenues The Company also provides consulting services to its customers, including drafting research papers and providing other academic supports, and facilitation services for hospitals and patients through online platform.
The Company recognized revenues upon sales of patented drugs upon acceptance of goods by customers. Other revenues The Company also provides consulting services to its customers, including drafting research papers and providing other academic supports, and facilitation services for hospitals and patients through online platform.
For the year ended December 31, 2022, Zhongchao Shanghai and Beijing Branch of Shanghai Zhongxun is subject to PRC 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%.
For the year ended December 31, 2022, Zhongchao Shanghai and Beijing Branch of Shanghai Zhongxun were subject to PRC 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%.
Our PRC subsidiaries have not paid dividends and will not be able to pay dividends until they generate accumulated profits and meet the requirements for statutory reserve funds. 99 C. Research and development, Patents and License, etc.
Our PRC subsidiaries have not paid dividends and will not be able to pay dividends until they generate accumulated profits and meet the requirements for statutory reserve funds. C. Research and development, Patents and License, etc.
Recent Accounting Pronouncements A list of recently issued accounting pronouncements that are relevant to us is included in Footnote 2 of our audited consolidated financial statements included elsewhere in this annual report.
Recent Accounting Pronouncements A list of recently issued accounting pronouncements that are relevant to us is included in Footnote 2 of our audited consolidated financial statements included elsewhere in this annual report. 109
We believe the following factors drive our success: - Acknowledged by leading pharmaceutical enterprises - Reliable Professional Content Production - Well Organized and Easy-To-Use Websites and Apps 91 Results of Operations The following table sets forth a summary of our consolidated results of operations for the periods presented.
We believe the following factors drive our success: - Acknowledged by leading pharmaceutical enterprises - Reliable Professional Content Production - Well Organized and Easy-To-Use Websites and Apps 97 Results of Operations The following table sets forth a summary of our consolidated results of operations for the periods presented.
Tabular Disclosure of Contractual Obligations Commitments and 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.
Tabular Disclosure of Contractual Obligations Commitments and Contingencies From time to time, we may be subject to certain legal proceedings, claims and disputes that arise in the ordinary course of business.
SMEs are entitled to a reduced EIT rate of 20%, 75% reduction of taxable income for the first RMB 3,000,000 and no reduction for the remaining taxable income for the year ended December 31, 2023; a reduced EIT rate of 20%, 87.5% reduction of taxable income for the first RMB1,000,000 taxable income and 75% reduction of taxable income between RMB 1,000,000 and RMB 3,000,000, and no reduction for the remaining taxable income for the year ended December 31, 2022; 87.5% reduction of taxable income for the first RMB1,000,000 taxable income and 50% reduction of taxable income between RMB 1,000,000 and RMB 3,000,000, and no reduction for the remaining taxable income for the year ended December 31, 2021.
SMEs are entitled to a reduced EIT rate of 20%, 75% reduction of taxable income for the first RMB 3,000,000 and no reduction for the remaining taxable income for the year ended December 31, 2024 and 2023; a reduced EIT rate of 20%, 87.5% reduction of taxable income for the first RMB1,000,000 taxable income and 75% reduction of taxable income between RMB 1,000,000 and RMB 3,000,000, and no reduction for the remaining taxable income for the year ended December 31, 2022.
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.
British Virgin Islands Under the current tax laws of BVI, our subsidiary incorporated in the BVI is not subject to tax on income or capital gains.
The EIT rate for companies operating in the PRC is 25%. The Company’s other subsidiary and the VIE’s subsidiaries that are located in the PRC were qualified as SMEs.
The EIT rate for companies operating in the PRC is 25%. Our other subsidiary and the VIE’s subsidiaries that are located in the PRC were qualified as SMEs.
The decrease was mainly due to combined effects of i) we incurred net operating losses in more of our subsidiaries leading to a decrease of current income tax expenses, and ii) certain the VIE’s subsidiaries qualified as Small and Micro-sized Enterprises (“SMEs”) in the year of 2022, which were entitled to preferential income tax rate, leading to a decrease of current income tax expenses.
The decrease was mainly due to combined effects of i) we incurred net operating losses in some of our subsidiaries leading to a decrease of current income tax expenses, and ii) certain the VIE’s subsidiaries qualified as Small and Micro-sized Enterprises (“SMEs”) in the year of 2024, which were entitled to preferential income tax rate, leading to a decrease of current income tax expenses.
Cash Flows The following table sets forth a summary of our cash flows for the fiscal years ended December 31, 2023, 2022 and 2021.
Cash Flows The following table sets forth a summary of our cash flows for the fiscal years ended December 31, 2024, 2023 and 2022.
E. Critical Accounting Estimates Critical Accounting Estimates We prepare our consolidated financial statements in accordance with U.S. GAAP. The preparation of financial statements in conformity with U.S.
E. Critical Accounting Policies and Estimates We prepare our consolidated financial statements in accordance with U.S. GAAP. The preparation of financial statements in conformity with U.S.
We are continued to commit to work on the development and maintenance in our platform and database as we intend to provide professionals and consumers with Internet-based access to our courses and education software and enhance the consumer experience. For more information, see “Item 4.B. Business Overview – Research and Development (“R&D”)” and ” – Intellectual Property.” D.
We will continue to commit to work on the development and maintenance in our platform and database as we intend to provide professionals and consumers with Internet-based access to our courses and education software and enhance the consumer experience. For more information, see “Item 4.B. Business Overview – Research and Development (“R&D”) and – Intellectual Property.” 107 D.
According to the National Bureau of Statistics of China, the year-over-year percent changes in the consumer price index for December 2021, 2022 and 2023 were increases of 0.9% and 0.2%, respectively.
According to the National Bureau of Statistics of China, the year-over-year percent changes in the consumer price index for December 2022, 2023 and 2024 were increases of 0.2% and 0.2%, respectively.
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.
Although the outcomes of these legal proceedings cannot be predicted, we do not believe these actions, in the aggregate, will have a material adverse impact on its financial position, results of operations or liquidity.
For the fiscal year ended December 31, 2022, we had net cash used in investing activities of $3,346,658 which was primarily attributable to purchase of properties and equipment of $1,615,905, payment of $3,055,432 in acquisition of subsidiaries, investments of $996,638 in certain short-term investments, and loans of $1,032,219 made to third parties, partially offset by proceeds of $1,112,440 from sales of one property, proceeds of $533,891 from redemption of short-term investments, and collection of loans of $1,806,772 from third parties.
The cash used in investing activities is partially offset by proceeds of $1,592,844 from redemption of short-term investments, collection of loans of $2,390,776 from third parties and collection of loans from related parties of $220,310. 106 For the fiscal year ended December 31, 2022, we had net cash used in investing activities of $3,346,658 which was primarily attributable to purchase of properties and equipment of $1,615,905, payment of $3,055,432 in acquisition of subsidiaries, investments of $996,638 in certain short-term investments, and loans of $1,032,219 made to third parties, partially offset by proceeds of $1,112,440 from sales of one property, proceeds of $533,891 from redemption of short-term investments, and collection of loans of $1,806,772 from third parties.
Year ended December 31, 2022 compared to year ended December 31, 2021 Revenues We generate revenues from pharmaceutical enterprise customers and NFP from design and production of online medical courses, organizing offline medical training services, consulting and academic support services and patient management services for patient-aid projects.
Year ended December 31, 2023 compared to year ended December 31, 2022 Revenues We generate revenues from pharmaceutical enterprise customers and NFP from design and production of online medical courses, organizing offline medical training services, consulting and academic support services and patient management services for patient-aid projects. We also generate revenues from sales of patented drugs.
Net income As a result of the foregoing, we reported a net loss of $2,822,319 for the year ended December 31, 2022, as compared with a net income of $238,665 for the year ended December 31, 2021. 95 Off-balance Sheet Arrangements We have not entered into any derivative contracts that are indexed to our shares and classified as shareholders’ equity or that are not reflected in our consolidated financial statements.
Net income As a result of the foregoing, we reported a net loss of $11,307,239 for the year ended December 31, 2023, as compared with a net loss of $2,822,319 for the year ended December 31, 2022. 102 Off-balance Sheet Arrangements We have not entered into any derivative contracts that are indexed to our shares and classified as shareholders’ equity or that are not reflected in our consolidated financial statements.
Japan Under the current tax laws of Japan, Zhongchao Japan is incorporated in Japan is subject to an income tax rate of 30%. 96 PRC For the year ended December 31, 2023, Zhongchao Shanghai is subject to PRC Enterprise Income Tax (“EIT”) on the taxable income in accordance with the relevant PRC income tax laws.
Japan Under the current tax laws of Japan, Zhongchao Japan is incorporated in Japan is subject to an income tax rate of 30%. PRC For the years ended December 31, 2024 and 2023, Zhongchao Shanghai was subject to PRC Enterprise Income Tax (“EIT”) on the taxable income in accordance with the relevant PRC income tax laws.
We intend to continue to use these funds to grow our business primarily by: ● Strengthen our brand awareness of MDMOOC and Zhongxin Health ● Expand and enhancement of medical course content ● Grow medical professional user community ● Recruit more experienced editorial staff, and ● Development of multiple revenues streams such as online bookstore ● Explore the business in services for cancer patients support 97 Although we consolidate the results of the PRC operating entities and its subsidiaries, we only have access to cash balances or future earnings of the PRC operating entities through our VIE Arrangements with the PRC operating entities.
We intend to continue to use these funds to grow our business primarily by: ● Strengthen our brand awareness of MDMOOC and Zhongxin Health ● Expand and enhancement of medical course content 104 ● Grow medical professional user community ● Recruit more experienced editorial staff, and ● Develop new teaching platforms ● Explore the business in services for cancer patients support Although we consolidate the results of the PRC operating entities and its subsidiaries, we only have access to cash balances or future earnings of the PRC operating entities through our VIE Arrangements with the PRC operating entities.
We also generate revenues from sales of patented drugs. Revenues increased by $5,282,429, or 37.3% from $14,151,516 for the fiscal year ended December 31, 2022 to $19,433,945 for the fiscal year ended December 31, 2023.
Revenues increased by $5,282,429, or 37.3% from $14,151,516 for the fiscal year ended December 31, 2022 to $19,433,945 for the fiscal year ended December 31, 2023.
For service sales, we earned a gross profit margin of 50.4% as compared to 44.6% for the fiscal year ended December 31, 2022.
For service sales, we earned a gross profit margin of 59.8% as compared to 50.4% for the fiscal year ended December 31, 2023.
As of December 31, 2023, our future lease payments totaled $884,276. Taxation 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.
As of December 31, 2024, our future lease payments totaled $59,414. Taxation Cayman Islands Under the current tax laws of the Cayman Islands, we are 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.
Our research and development expenses were $ 514,411, $411,524 and $758,878 for the fiscal years ended December 31, 2023, 2022 and 2021, respectively.
Our research and development expenses were $252,451, $514,411 and $411,524 for the fiscal years ended December 31, 2024, 2023 and 2022, respectively.
Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior SAFE approval as long as certain routine procedural requirements are fulfilled.
We expect that a substantial majority of our future revenues will be denominated in Renminbi. Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior SAFE approval as long as certain routine procedural requirements are fulfilled.
Holding Company Structure Zhongchao Inc. is a holding company with no material operations of its own. We conduct our operations primarily through our PRC subsidiary and the PRC operating entities in China. As a result, Zhongchao Inc.’s ability to pay dividends depends upon dividends paid by our PRC subsidiary.
We conduct our operations primarily through our PRC subsidiary and the PRC operating entities in China. As a result, Zhongchao Inc.’s ability to pay dividends depends upon dividends paid by our PRC subsidiary.
To utilize the proceeds we received from the IPO and over-allotment, we may make additional capital contributions to our PRC subsidiary, establish new PRC subsidiaries and make capital contributions to these new PRC subsidiaries, or make loans to the PRC subsidiaries. However, most of these uses are subject to PRC regulations.
To utilize the proceeds, we received from the private placement for the fiscal year ended December 31, 2024, we may make additional capital contributions to our PRC subsidiary, establish new PRC subsidiaries and make capital contributions to these new PRC subsidiaries, or make loans to the PRC subsidiaries. However, most of these uses are subject to PRC regulations.
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.
The Company identifies a single performance obligation from contracts. The Company recognizes revenue at the point when the service was rendered. 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.
Loss from disposal of property and equipment For the year ended December 31, 2023, we recognized loss from disposal of property and equipment of $1,719,442 as compared to $nil in the year ended December 31, 2022.
General and administrative expenses in terms of RMB maintained at the similar level in the fiscal year ended December 31, 2023 as compared to the fiscal year ended December 31, 2022. 101 Loss from disposal of property and equipment For the year ended December 31, 2023, we recognized loss from disposal of property and equipment of $1,719,442 as compared to $nil in the year ended December 31, 2022.
For the Years Ended December 31, 2023 2022 2021 Net cash provided by (used in) operating activities $ 54,229 $ (661,740 ) $ 2,861,848 Net cash used in investing activities (3,754,655 ) (3,346,658 ) (4,017,284 ) Net cash provided by financing activities - 1,850,744 - Effect of exchange rate changes on cash and cash equivalents (271,333 ) (236,875 ) (2,529 ) Net decrease in cash and cash equivalents (3,971,759 ) (2,394,529 ) (1,157,965 ) Cash and cash equivalents at beginning of year 11,520,453 13,914,982 15,072,947 Cash and cash equivalents at end of year $ 7,548,694 $ 11,520,453 $ 13,914,982 Operating activities Fiscal Years Ended December 31, 2023 and 2022 Net cash provided in operating activities was $54,229 for the fiscal year ended December 31, 2023, a change of $715,970 from net cash used in operating activities of $661,740 for the fiscal year ended December 31, 2022.
For the Years Ended December 31, 2024 2023 2022 Net cash (used in) provided by operating activities $ (1,473,243 ) $ 54,229 $ (661,740 ) Net cash used in investing activities (1,807,753 ) (3,754,655 ) (3,346,658 ) Net cash provided by financing activities 3,838,200 - 1,850,744 Effect of exchange rate changes on cash and cash equivalents (264,592 ) (271,333 ) (236,875 ) Net change in cash and cash equivalents 292,612 (3,971,759 ) (2,394,529 ) Cash and cash equivalents at beginning of year 7,548,694 11,520,453 13,914,982 Cash and cash equivalents at end of year $ 7,841,306 $ 7,548,694 $ 11,520,453 105 Operating activities Fiscal Years Ended December 31, 2024 and 2023 Net cash used in operating activities was $1,473,243 for the fiscal year ended December 31, 2024, a change of $1,527,472 from net cash provided by operating activities of $54,229 for the fiscal year ended December 31, 2023.
Net income As a result of the foregoing, we reported a net loss of $11,307,239 for the year ended December 31, 2023, as compared with a net loss of $2,822,319 for the year ended December 31, 2022.
Net income As a result of the foregoing, we reported a net loss of approximately $0.3 million for the year ended December 31, 2024, as compared with a net loss of approximately $11.3 million for the year ended December 31, 2023.
Contractual obligations As of December 31, 2023, our contractual obligation primarily comprised of operating lease payments, which is presented in below table: For the year ended December 31, 2024 $ 268,046 For the year ended December 31, 2025 184,128 For the year ended December 31, 2026 172,841 For the year ended December 31, 2027 172,841 For the year ended December 31, 2028 and thereafter 86,420 Total lease payments 884,276 (1) We lease offices which are classified as operating leases in accordance with ASC Topic 842.
Contractual obligations As of December 31, 2024, our contractual obligation primarily comprised of operating lease payments, which is presented in below table: For the year ended December 31, 2025 $ 53,597 For the year ended December 31, 2026 5,817 Total lease payments 59,414 (1) We lease offices which are classified as operating leases in accordance with ASC Topic 842.
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.
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.
Due to West Angel’s operating results are significantly below our original anticipation, we performed impairment assessment of the intangible assets acquired as part of the West Angel acquisition and concluded all the related intangible assets are impaired. 93 Other income, net For the fiscal year ended December 31, 2023, other income, net was primarily consisted of $654,980 gain from changes in fair value of our short-term investments and $81,265 upward adjustments to our long-term investments in an equity security as well as $148,862 government subsidies.
Other income, net For the fiscal year ended December 31, 2023, other income, net was primarily consisted of $654,980 gain from changes in fair value of our short-term investments and $81,265 upward adjustments to our long-term investments in an equity security as well as $148,862 government subsidies.
The increase in gross profit margin for service sales is mainly due to we terminated certain low margin projects to improve overall profitability. 92 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 management services in patient-aid projects and cost of patented drugs.
The increase in gross profit margin for service sales was mainly due to a shift in the mix of services sold, with the fiscal year of 2024 we providing more consulting and academic support services, which had higher profit margins. 98 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 management services in patient-aid projects and cost of patented drugs.
For the fiscal year ended December 31, 2021, we had no cash provided by or used in financing activities. Based on the current operating plan, management believes that the above-mentioned measures collectively will provide sufficient liquidity for us to meet our future liquidity and capital requirement for at least 12 months from the date of this annual report.
Based on the current operating plan, management believes that the above-mentioned measures collectively will provide sufficient liquidity for us to meet our future liquidity and capital requirement for at least 12 months from the date of this annual report. Holding Company Structure Zhongchao Inc. is a holding company with no material operations of its own.
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.
We 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.
Due to significantly lower than expected operating results of West Angel, we performed impairment assessment of goodwill and intangible assets acquired as part of our acquisition of West Angel and concluded both the goodwill and intangible assets were fully impaired in 2023. 98 Fiscal Years Ended December 31, 2022 and 2021 Net cash used in operating activities was $661,740 for the fiscal year ended December 31, 2022, a change of $3,523,588 from net cash provided by operating activities of $2,861,848 for the fiscal year ended December 31, 2021.
Due to significantly lower than expected operating results of West Angel, we performed impairment assessment of goodwill and intangible assets acquired as part of our acquisition of West Angel and concluded both the goodwill and intangible assets were fully impaired in 2023.
The cash used in investing activities is partially offset by proceeds of $1,592,844 from redemption of short-term investments, collection of loans of $2,390,776 from third parties and collection of loans from related parties of $220,310.
The cash used in investing activities was partially offset by proceeds of $11,421,047 from redemption of short-term investments, collection of loans of $277,944 from third parties and proceeds of $195,169 from redemption of equity investment.
To date, we have financed our operations primarily through cash flows from operations, and equity financing. During the year ended December 31, 2023, 2022 and 2021, the Company generated net (loss) income of $(11,307,239), $(2,822,319) and $238,665, respectively. In the year of 2022, we raised proceeds of $1,850,744 from a shelf offering of 1,060,000 of our Class A ordinary shares.
To date, we have financed our operations primarily through cash flows from operations, and equity financing. During the years ended December 31, 2024, 2023 and 2022, we had a net loss of approximately $0.3 million, $11.3 million and $2.8 million, respectively.
USA Zhongchao USA is incorporated in the United States and is subject to a federal tax rate of 21%.
Under Hong Kong tax laws, Zhongchao HK is exempted from income tax on its foreign-derived income and there is no withholding taxed in Hong Kong on remittance of dividends. 103 USA Zhongchao USA is incorporated in the United States and is subject to a federal tax rate of 21%.
Selling and marketing expenses Selling and marketing expenses decreased by $1,037,348, or 33.1%, from $3,137,316 for the fiscal year ended December 31, 2021 to $2,099,968 for the fiscal year ended December 31, 2022.
Selling and marketing expenses Selling and marketing expenses decreased by approximately $2.7 million, or 40.2%, from approximately $6.7 million for the fiscal year ended December 31, 2023 to approximately $4.0 million for the fiscal year ended December 31, 2024.
We incurred net loss of $2,822,319 for the fiscal year ended December 31, 2022, a change of $3,030,984, from net income of $238,665 for the fiscal year ended December 31, 2021.
We incurred net loss of $273,413 for the fiscal year ended December 31, 2024, a change of $11,033,826, from net loss of $11,307,239 for the fiscal year ended December 31, 2023.
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 when the service was rendered.
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. 108 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”).
For the fiscal year ended December 31, 2021, other income, net was primarily consisted of government subsidies of $55,807 and rental income of $50,543 earned from leasing our properties in Japan, partially offset by loss of $13,758 from equity investment in a limited partnership and a decrease of $58,412 in fair value of short-term investments.
For the fiscal year ended December 31, 2023, other income, net was primarily consisted of approximately $0.7 million gain from changes in fair value of our short-term investments and approximately $0.1 million upward adjustments to our long-term investments in an equity security as well as approximately $0.1 million government subsidies.
Deferred income tax benefits decreased from $1,346,616 for the fiscal year ended December 31, 2021 to deferred income tax expenses of $134,125 for the fiscal year ended December 31, 2022.
Current income tax expenses decreased by $21,949 from $69,467 for the fiscal year ended December 31, 2023 to $47,518 for the fiscal year ended December 31, 2024.
Income tax expenses We had income tax expenses of $272,313 for the fiscal year ended December 31, 2022, as compared to tax benefits of $349,418 for the fiscal year ended December 31, 2021. Current income tax expenses decreased by $859,010 from $997,198 for the fiscal year ended December 31, 2021 to $138,188 for the fiscal year ended December 31, 2022.
Income tax expenses We had income tax expense of approximately $0.3 million for the fiscal year ended December 31, 2024, as compared to tax benefit of approximately $0.7 million for the fiscal year ended December 31, 2023.
The Company’s other subsidiary and the VIE’s subsidiaries that are located in the PRC were qualified as SMEs. For the year ended December 31, 2021, Zhongchao Shanghai, Shanghai Maidemu, Shanghai Zhongxun, Shanghai Zhongxin, Huijing are subject to EIT rate of 25%. Hainan Zhongteng, located in Hainan Province, is subject to 15%.
Our other subsidiary and the VIE’s subsidiaries that are located in the PRC were qualified as SMEs.
Removed
General and administrative expenses in terms of RMB maintained at the similar level in the fiscal year ended December 31, 2023 as compared to the fiscal year ended December 31, 2022.
Added
We also generate revenues from sales of patented drugs. Revenues decreased by approximately $3.6 million, or 18.4%, from approximately $19.4 million for the fiscal year ended December 31, 2023 to approximately $15.9 million for the fiscal year ended December 31, 2024.
Removed
Revenues decreased by $2,145,254, or 13.2% from $16,296,770 for the fiscal year ended December 31, 2021 to $14,151,516 for the fiscal year ended December 31, 2022.
Added
The overall revenue decrease was primarily caused by a decrease of approximately $6.9 million in revenues from sales of drugs. These drugs, introduced in the second half of 2022, quickly reached peak sales in 2023 during the spread of COVID-19. However, demand for the drugs normalized in 2024, leading to the lower sales.
Removed
The decrease was primarily caused by a decrease of $2,149,633 in revenues from medical training and education services, which was attributable decreased orders from the PRC operating entities’ NFP customers as affected by governmental regulations against centralized purchase of medical related products, a decrease of $1,054,741 in revenues from patient management services in patient-aid projects as the PRC operating entities’ customers reduced patient-aid projects as affected by lock-down policies under COVID-19 pandemic, partially offset by an increase of $1,216,096 from sales of patented drugs which was launched in the year of 2022.
Added
The decrease in revenue was partially offset by the increase in revenue from medical training and education services of approximately $1.3 million as we held more offline education seminars in 2024 due to the absence of COVID-19 related disruptions.
Removed
For the fiscal years ended December 31, 2022 and 2021, we earned a gross profit margin of 44.9% and 57.9%, respectively. Our gross profit margin decreased as a result of decreased service orders from our NFP customers for patient-aid projects while the labor cost was stable over period.
Added
The decrease in revenue was also offset by the increase of patient management services of approximately $1.9 million as we provided assistance in patient-aid projects on more rare diseases in 2024. For the fiscal years ended December 31, 2024 and 2023, we earned a gross profit margin of 56.2% and 43.8%, respectively.
Removed
With China has lifted its “zero-COVID” policy over COVID-19 pandemic, the Company expected to an increase in service orders from NFP and maintain the high profit margin in the future.
Added
For product sales, we earned a gross profit margin of 33.0% in the fiscal year ended December 31, 2024 as compared to 36.2% for the fiscal year ended December 31, 2023. The slight decrease in gross margin for product sales was primarily due to the decrease of unit selling prices and the unchanged cost.
Removed
Cost of revenues increased by $936,908, or 13.7%, from $6,857,944 for the fiscal year ended December 31, 2021 to $7,794,852 for the fiscal year ended December 31, 2022.
Added
Cost of revenues decreased by approximately $4.0 million, or 36.3%, from approximately $10.9 million for the fiscal year ended December 31, 2023 to approximately $6.9 million for the fiscal year ended December 31, 2024. The decrease was mainly attributable to a decrease of approximately $4.3 million in cost of patented drugs, consistent with the decrease in sales.
Removed
The increase was mainly attributable to an increase of $627,981 in cost of patented drugs as we commenced sales of patented drugs in the year of 2022, and an increase of $308,927 in cost of revenues from our MDMOOC services primarily because held more onsite medical training courses than ever which cost far higher than online courses.
Added
The decrease was partially offset by the increase of approximately $0.3 million in cost of revenue for medical training, education services and assistance in patient-aid projects.
Removed
The decrease was mainly attributable to a decrease of $1,214,333 in advertising expenses as the Company gained reputation in medical healthcare industry and decreased related expenditure, partially offset by an increase of $218,252 in salary and welfare expenses as the PRC operating entities accrued bonus for their sales persons so as to incentivize our sales persons to develop its business and maintain current customers; General and administrative expenses General and administrative expenses increased by $936,261, or 16.0%, from $5,863,373 for the fiscal year ended December 31, 2021 to $6,799,634 for the fiscal year ended December 31, 2022.
Added
The decrease was mainly attributable to: i) a decrease of approximately $1.5 million in advertising and promotion expenses as the Company gained reputation in medical healthcare industry and decreased domestic related expenditure, ii) a decrease of approximately $0.9 million in sales commission paid to third parties as the Company’s patented drug sales decreased, and iii) a decrease of approximately $0.4 million in salary and welfare expenses due to sales force reduction as the Company experienced a decrease in patented drug sales.
Removed
The increase was mainly attributable to an increase of $1,095,032 in salary and welfare expenses which was primarily because the PRC operating entities accrued bonus for their employees and charged certain labor costs from cost of revenues to general and administrative expenses with decrease orders from patient management services in patient-aid projects, and an increase of $577,767 in professional and consulting service expenses because the company closed an acquisition of subsidiaries in the year of 2022, partially offset by a decrease of $696,380 in provision against doubtful accounts receivable.
Added
The decrease was partially offset by the increase of approximately $0.1 million in other selling and marketing expenses. General and administrative expenses General and administrative expenses decreased by approximately $1.7 million, or 25.5%, from approximately $6.7 million for the fiscal year ended December 31, 2023 to approximately $5.0 million for the fiscal year ended December 31, 2024.
Removed
Other income, net For the fiscal year ended December 31, 2022, other income, net was primarily consisted of government subsidies of $221,711, other income of $183,957 from provision of consulting services, gain of $96,921 from sales of property and equipment, and rental income of $51,861 earned from leasing our properties in Japan, partially offset by a decrease of $240,489 in fair value of short-term investments.
Added
The decrease was mainly attributable to: i) a decrease of approximately $1.2 million in bad debt expenses as the Company enhanced their collection efforts in 2024, ii) a decrease of approximately $0.8 million in salary and welfare expenses as a result of decreased personnel number, and iii) a decrease of approximately $0.3 million in depreciation and amortization expenses .
Removed
The change was mainly because certain of the VIE’s subsidiaries, including those loss making subsidiaries, qualified as SMEs which were entitled to preferential income tax rate, leading to a decrease of deferred tax assets arising from net operating losses.
Added
The decrease was partially offset by an increase of approximately $0.6 million in professional service expenses mostly related to business development. 99 Research and development expenses Research and development expenses decreased by approximately $0.2 million, or 50.9%, from approximately $0.5 million for the fiscal year ended December 31, 2023 to approximately $0.3 million for the fiscal year ended December 31, 2024.
Removed
Beijing Boya, Shanghai Xinyuan and Hainan Muxin qualify as SMEs. Liaoning Zhixun was not qualified as a SMEs until fiscal year 2021.
… 19 more changes not shown on this page.
Item 6. [Reserved]
Selected Financial Data — reserved (removed by SEC in 2021)
47 edited+4 added−7 removed94 unchanged
Item 6. [Reserved]
Selected Financial Data — reserved (removed by SEC in 2021)
47 edited+4 added−7 removed94 unchanged
2023 filing
2024 filing
Biggest changeAs such, it is important for us to have our Chief Executive Officer serve on the board as he plays key roles in the risk oversight or the Company. As a smaller reporting company with a small board of directors, we believe it is appropriate to have the involvement and input of all of our directors in risk oversight matters.
Biggest changeOur board plays a significant role in our risk oversight. The board makes all relevant Company decisions. As such, it is important for us to have our Chief Executive Officer serve on the board as he plays key roles in the risk oversight or the Company.
The term of the agreement shall expire on August 6, 2022, which term will automatically extend for additional 3-year periods unless a party to the agreement terminates it upon 1-month’ notice or proposes to re-negotiate the terms of the employment with the other party within 3 months prior to the expiration of the applicable term, or unless the employment is terminated earlier pursuant to the terms of the agreement.
The term of the agreement shall expire on August 6, 2022, which term will automatically extend for additional 3-year periods unless a party to the agreement terminates it upon 1-month’ notice or proposes to re-negotiate the terms of the employment with the other party within 3 months prior to the expiration of the applicable term, or unless the employment is terminated earlier pursuant to the terms of the agreement.
The term of the agreement shall expire on August 6, 2022, which term will automatically extend for additional 3-year periods unless a party to the agreement terminates it upon 1-month’ notice or proposes to re-negotiate the terms of the employment with the other party within 3 months prior to the expiration of the applicable term, or unless the employment is terminated earlier pursuant to the terms of the agreement.
The term of the agreement shall expire on August 6, 2022, which term will automatically extend for additional 3-year periods unless a party to the agreement terminates it upon 1-month’ notice or proposes to re-negotiate the terms of the employment with the other party within 3 months prior to the expiration of the applicable term, or unless the employment is terminated earlier pursuant to the terms of the agreement.
If the executive’s employment with the Company is terminated for any reason, the Company will pay to such executive any unpaid portion of his salary through the date of his termination, and any unpaid bonus through the date of termination, as well as any unpaid or unused portions of his benefits under the agreement.
If the executive’s employment with the Company is terminated for any reason, the Company will pay to such executive any unpaid portion of his salary through the date of his termination, and any unpaid bonus through the date of termination, as well as any unpaid or unused portions of his benefits under the agreement.
If his employment is terminated at our election without cause or by him, the Company shall provide 1-month’ advanced notice or payment of 1-month’ salary in lieu of the notice.
If his employment is terminated at our election without cause or by him, the Company shall provide 1-month’ advanced notice or payment of 1-month’ salary in lieu of the notice.
The term of the agreement shall expire on August 6, 2022, which term will automatically extend for additional 3-year periods unless a party to the agreement terminates it upon 1-month’ notice or proposes to re-negotiate the terms of the employment with the other party within 3 months prior to the expiration of the applicable term, or unless the employment is terminated earlier pursuant to the terms of the agreement.
The term of the agreement shall expire on August 6, 2022, which term will automatically extend for additional 3-year periods unless a party to the agreement terminates it upon 1-month’ notice or proposes to re-negotiate the terms of the employment with the other party within 3 months prior to the expiration of the applicable term, or unless the employment is terminated earlier pursuant to the terms of the agreement.
If the executive’s employment with the Company is terminated for any reason, the Company will pay to such executive any unpaid portion of his salary through the date of his termination, and any unpaid bonus through the date of termination, as well as any unpaid or unused portions of his benefits under the agreement.
If the executive’s employment with the Company is terminated for any reason, the Company will pay to such executive any unpaid portion of his salary through the date of his termination, and any unpaid bonus through the date of termination, as well as any unpaid or unused portions of his benefits under the agreement.
If his employment is terminated at our election without cause or by him, the Company shall provide 1-month’ advanced notice or payment of 1-month’ salary in lieu of the notice.
If his employment is terminated at our election without cause or by him, the Company shall provide 1-month’ advanced notice or payment of 1-month’ salary in lieu of the notice.
The term of the agreement shall expire on August 6, 2022, which term will automatically extend for additional 3-year periods unless a party to the agreement terminates it upon 1-month’ notice or proposes to re-negotiate the terms of the employment with the other party within 3 months prior to the expiration of the applicable term, or unless the employment is terminated earlier pursuant to the terms of the agreement.
The term of the agreement shall expire on August 6, 2022, which term will automatically extend for additional 3-year periods unless a party to the agreement terminates it upon 1-month’ notice or proposes to re-negotiate the terms of the employment with the other party within 3 months prior to the expiration of the applicable term, or unless the employment is terminated earlier pursuant to the terms of the agreement.
If the executive’s employment with the Company is terminated for any reason, the Company will pay to such executive any unpaid portion of her salary through the date of her termination, and any unpaid bonus through the date of termination, as well as any unpaid or unused portions of her benefits under the agreement.
If the executive’s employment with the Company is terminated for any reason, the Company will pay to such executive any unpaid portion of her salary through the date of her termination, and any unpaid bonus through the date of termination, as well as any unpaid or unused portions of her benefits under the agreement.
If her employment is terminated at our election without cause or by her, the Company shall provide 1-month’ advanced notice or payment of 1-month’ salary in lieu of the notice.
If her employment is terminated at our election without cause or by her, the Company shall provide 1-month’ advanced notice or payment of 1-month’ salary in lieu of the notice.
The number of Class A Ordinary Shares issuable as a share payment shall be determined by the Committee and may be based upon satisfaction of such specific criteria as determined appropriate by the Committee, including specified dates for electing to receive such share payment at a later date and the date on which such share payment is to be made. 108 Change in Control If there is a merger or consolidation of us with or into another corporation or a sale of substantially all of our ordinary shares, or, collectively, a Change in Control, the Company as determined in the sole discretion of the Committee and without the consent of the grantee may take any of the following actions: (i) accelerate or not accelerate the vesting, in whole or in part, of any award, or some or all awards, of any grantee, some grantees or all grantees; (ii) purchase any award for an amount of cash or ordinary shares equal to the value that could have been attained upon the exercise of such award or realization of the grantee’s rights had such award been currently exercisable or payable or fully vested (and, for the avoidance of doubt, if as of such date the Committee determines in good faith that no amount would have been attained upon the exercise of such award or realization of the grantee’s rights, then such award may be terminated by the Company without payment); or (iii) provide for the assumption, conversion or replacement of any award by the successor or surviving company or a parent or subsidiary of the successor or surviving company with other rights (including cash) or property selected by the Committee in its sole discretion or the assumption or substitution of such award by the successor or surviving company, or a parent or subsidiary thereof, with such appropriate adjustments as to the number and kind of ordinary shares and prices as the Committee deems, in its sole discretion, reasonable, equitable and appropriate.
The number of Class A Ordinary Shares issuable as a share payment shall be determined by the Committee and may be based upon satisfaction of such specific criteria as determined appropriate by the Committee, including specified dates for electing to receive such share payment at a later date and the date on which such share payment is to be made. 116 Change in Control If there is a merger or consolidation of us with or into another corporation or a sale of substantially all of our ordinary shares, or, collectively, a Change in Control, the Company as determined in the sole discretion of the Committee and without the consent of the grantee may take any of the following actions: (i) accelerate or not accelerate the vesting, in whole or in part, of any award, or some or all awards, of any grantee, some grantees or all grantees; (ii) purchase any award for an amount of cash or ordinary shares equal to the value that could have been attained upon the exercise of such award or realization of the grantee’s rights had such award been currently exercisable or payable or fully vested (and, for the avoidance of doubt, if as of such date the Committee determines in good faith that no amount would have been attained upon the exercise of such award or realization of the grantee’s rights, then such award may be terminated by the Company without payment); or (iii) provide for the assumption, conversion or replacement of any award by the successor or surviving company or a parent or subsidiary of the successor or surviving company with other rights (including cash) or property selected by the Committee in its sole discretion or the assumption or substitution of such award by the successor or surviving company, or a parent or subsidiary thereof, with such appropriate adjustments as to the number and kind of ordinary shares and prices as the Committee deems, in its sole discretion, reasonable, equitable and appropriate.
Chen served D&S, a Chinese public relation corporation, as medical director. Mr. Chen holds a bachelor degree in Clinical Medicine Science from Shanxi Medical University and a master degree in pharmacology from Harbin University of Commerce. Baoqian Tian has been serving as our Chief Sales Officer of Zhongchao Inc. and Deputy General Manager of Sales of Zhongchao Shanghai.
Chen served D&S, a Chinese public relation corporation, as medical director. Mr. Chen holds a bachelor degree in Clinical Medicine Science from Shanxi Medical University and a master degree in pharmacology from Harbin University of Commerce. 110 Baoqian Tian has been serving as our Chief Sales Officer of Zhongchao Inc. and Deputy General Manager of Sales of Zhongchao Shanghai.
Types of Awards The 2019 Plan permits the granting of any or all of the following types of awards to all grantees: ● share options, including incentive share options, or ISOs; ● share appreciation rights, or SARs; ● restricted shares; ● restricted share units; and ● share payments 107 Awards granted under the 2019 Plan may, in the discretion of the Committee, be granted alone or in addition to, in tandem with or in substitution for, any other award under the 2019 Plan.
Types of Awards The 2019 Plan permits the granting of any or all of the following types of awards to all grantees: ● share options, including incentive share options, or ISOs; ● share appreciation rights, or SARs; ● restricted shares; ● restricted share units; and ● share payments Awards granted under the 2019 Plan may, in the discretion of the Committee, be granted alone or in addition to, in tandem with or in substitution for, any other award under the 2019 Plan.
The material terms of each Award will be set forth in a written award agreement between the grantee and us. Share Options and SARs The Committee is authorized to grant SARs and share options (including ISOs except that an ISO may only be granted to an employee of ours or one of our subsidiary corporations).
The material terms of each Award will be set forth in a written award agreement between the grantee and us. 115 Share Options and SARs The Committee is authorized to grant SARs and share options (including ISOs except that an ISO may only be granted to an employee of ours or one of our subsidiary corporations).
Audit Committee The Audit Committee is responsible for, among other matters: ● appointing, compensating, retaining, evaluating, terminating, and overseeing our independent registered public accounting firm; ● discussing with our independent registered public accounting firm the independence of its members from its management; 110 ● reviewing with our independent registered public accounting firm the scope and results of their audit; ● approving all audit and permissible non-audit services to be performed by our independent registered public accounting firm; ● overseeing the financial reporting process and discussing with management and our independent registered public accounting firm the interim and annual financial statements that we file with the SEC; ● reviewing and monitoring our accounting principles, accounting policies, financial and accounting controls, and compliance with legal and regulatory requirements; ● coordinating the oversight by our board of directors of our code of business conduct and our disclosure controls and procedures ● establishing procedures for the confidential and or anonymous submission of concerns regarding accounting, internal controls or auditing matters; and ● reviewing and approving related-party transactions.
Audit Committee The Audit Committee is responsible for, among other matters: ● appointing, compensating, retaining, evaluating, terminating, and overseeing our independent registered public accounting firm; ● discussing with our independent registered public accounting firm the independence of its members from its management; ● reviewing with our independent registered public accounting firm the scope and results of their audit; 118 ● approving all audit and permissible non-audit services to be performed by our independent registered public accounting firm; ● overseeing the financial reporting process and discussing with management and our independent registered public accounting firm the interim and annual financial statements that we file with the SEC; ● reviewing and monitoring our accounting principles, accounting policies, financial and accounting controls, and compliance with legal and regulatory requirements; ● coordinating the oversight by our board of directors of our code of business conduct and our disclosure controls and procedures ● establishing procedures for the confidential and or anonymous submission of concerns regarding accounting, internal controls or auditing matters; and ● reviewing and approving related-party transactions.
Our board of directors may exercise all the powers of the company to borrow money and to mortgage or charge our undertakings and property or any part thereof, to issue debentures, debenture stock and other securities whenever money is borrowed or as security for any debt, liability or obligation of the company or of any third party.
Our board of directors may exercise all the powers of the company to borrow money and to mortgage or charge our undertakings and property or any part thereof, to issue debentures, debenture stock and other securities whenever money is borrowed or as security for any debt, liability or obligation of the company or of any third party. D.
None of our employee is represented by a labor union or covered by collective bargaining agreements. We have not experienced any work stoppages. 113 E. Share Ownership See Item 7 below. F. Disclosure of Action to Recover Erroneously Awarded Compensation. Not applicable.
None of our employee is represented by a labor union or covered by collective bargaining agreements. We have not experienced any work stoppages. E. Share Ownership See Item 7 below. F. Disclosure of Action to Recover Erroneously Awarded Compensation. Not applicable.
A general notice or disclosure to the board or otherwise contained in the minutes of a meeting or a written resolution of the board or any committee of the board that a director is a shareholder, director, officer or trustee of any specified firm or company and is to be regarded as interested in any transaction with such firm or company will be sufficient disclosure, and, after such general notice, it will not be necessary to give special notice relating to any particular transaction. 112 Remuneration and Borrowing The directors may receive such remuneration as our board of directors may determine from time to time.
A general notice or disclosure to the board or otherwise contained in the minutes of a meeting or a written resolution of the board or any committee of the board that a director is a shareholder, director, officer or trustee of any specified firm or company and is to be regarded as interested in any transaction with such firm or company will be sufficient disclosure, and, after such general notice, it will not be necessary to give special notice relating to any particular transaction. 120 Remuneration and Borrowing The directors may receive such remuneration as our board of directors may determine from time to time.
Xuejun Chen has agreed not to compete with us for 2 years after the termination of his employment; he also executed certain non-solicitation, confidentiality and other covenants customary for agreements of this nature. 105 Baoqian Tian Employment Agreement On August 7, 2019, we entered into an employment agreement with Baoqian Tian pursuant to which he agreed to serve as our Chief Sales Officer.
Xuejun Chen has agreed not to compete with us for 2 years after the termination of his employment; he also executed certain non-solicitation, confidentiality and other covenants customary for agreements of this nature. 113 Baoqian Tian Employment Agreement On August 7, 2019, we entered into an employment agreement with Baoqian Tian pursuant to which he agreed to serve as our Chief Sales Officer.
Nominating Committee The Nominating Committee is responsible for, among other matters: ● selecting or recommending for selection candidates for directorships; ● evaluating the independence of directors and director nominees; 111 ● reviewing and making recommendations regarding the structure and composition of our board and the board committees; ● developing and recommending to the board corporate governance principles and practices; ● reviewing and monitoring the Company’s Code of Business Conduct and Ethics; and ● overseeing the evaluation of the Company’s management Our Nominating Committee consists of consists of John C.
Nominating Committee The Nominating Committee is responsible for, among other matters: ● selecting or recommending for selection candidates for directorships; ● evaluating the independence of directors and director nominees; ● reviewing and making recommendations regarding the structure and composition of our board and the board committees; 119 ● developing and recommending to the board corporate governance principles and practices; ● reviewing and monitoring the Company’s Code of Business Conduct and Ethics; and ● overseeing the evaluation of the Company’s management Our Nominating Committee consists of consists of John C.
Yang served as the first Chinese board member on the Global Alliance for Medical Education (GAME), a non-for-profit organization dedicated to the advancement of innovation in medical education throughout the world. From October 2015 to July 2012, Mr. Yang was the general manager at Medwork, a continuing medical education company. Mr.
Yang served as the first Chinese board member on the Global Alliance for Medical Education (GAME), a non-for-profit organization dedicated to the advancement of innovation in medical education throughout the world. From October 2010 to July 2012, Mr. Yang was the general manager at Medwork, a continuing medical education company. Mr.
He holds a bachelor degree in liberal arts from Denison University and a master degree in business administration from the Tuck School of Business at Dartmouth College. 103 Dan Li is an independent director of the Company. Ms.
He holds a bachelor degree in liberal arts from Denison University and a master degree in business administration from the Tuck School of Business at Dartmouth College. 111 Dan Li is an independent director of the Company. Ms.
Compensation Executive Compensation Summary Compensation Table The following table shows the annual compensation paid by us for the years ended 2023.
Compensation Executive Compensation Summary Compensation Table The following table shows the annual compensation paid by us for the years ended 2024.
(2) Appointed CFO effective as of August 2019 (3) Appointed Chief Medical Officer effective as of August 2019. (4) Appointed Chief Sales Officer effective as of August 2019. (5) Appointed Chief Operating Officer effective as of August 2019.
(2) Appointed CFO effective as of August 2019 (3) Appointed Chief Medical Officer effective as of August 2019. (4) Appointed Chief Sales Officer effective as of August 2019.
Each of the non-employee directors is entitled to receive annual cash compensation in the amount of $24,000, payable quarterly, and stock option to purchase certain amount of Class A Ordinary Shares under Company’s 2019 Equity Incentive Plan. On October 10, 2023, we compensated each of three independent directors, John C.
Each of the non-employee directors is entitled to receive annual cash compensation in the amount of $24,000, payable quarterly, and stock option to purchase certain amount of Class A Ordinary Shares under Company’s 2019 Equity Incentive Plan. On December 27, 2024, we compensated each of three independent directors, John C.
The number of Class A Ordinary Shares that may be issued under the Plan is the maximum aggregate number of Class A Ordinary Shares reserved and available pursuant to this Plan shall be the aggregate of (i) 9,7088 Class A Ordinary Shares and (ii) on each January 1, starting with January 1, 2020 until December 31, 2025, an additional number of shares equal to the lesser of (A) 2% of the outstanding number of Class A Ordinary Shares (on a fully-diluted basis) on the immediately preceding December 31, and (B) such lower number of Class A Ordinary Shares as may be determined by the Committee, subject in all cases to adjustment as provided in.
The number of Class A Ordinary Shares that may be issued under the Plan is the maximum aggregate number of Class A Ordinary Shares reserved and available pursuant to this Plan shall be the aggregate of (i) 97,088 (giving effect to the 2024 Share Consolidation) Class A Ordinary Shares and (ii) on each January 1, starting with January 1, 2020 until December 31, 2025, an additional number of shares equal to the lesser of (A) 2% of the outstanding number of Class A Ordinary Shares (on a fully-diluted basis) on the immediately preceding December 31, and (B) such lower number of Class A Ordinary Shares as may be determined by the Committee, subject in all cases to adjustment as provided in.
Name Age Position Weiguang Yang 41 President, Chief Executive Officer, and Chairman of the Board Pei Xu 41 Chief Financial Officer, Secretary, and Director Xuejun Chen 44 Chief Medical Officer Baoqian Tian 39 Chief Sales Officer Shuang Wu 40 Chief Operating Officer John C.
Name Age Position Weiguang Yang 43 President, Chief Executive Officer, and Chairman of the Board Pei Xu 43 Chief Financial Officer, Secretary, and Director Xuejun Chen 46 Chief Medical Officer Baoqian Tian 41 Chief Sales Officer Shuang Wu 41 Chief Operating Officer John C.
General (1)(4) 61 Independent director Kevin Dean Vassily (2) 57 Independent director Dan Li (3) 47 Independent director (1) Chair of the Audit Committee. (2) Chair of the Compensation Committee. (3) Chair of the Nominating Committee. (4) Audit Committee financial expert. Weiguang Yang is the founder of Zhongchao Inc. and Zhongchao Shanghai.
General (1)(4) 63 Independent director Kevin Dean Vassily (2) 59 Independent director Dan Li (3) 49 Independent director (1) Chair of the Audit Committee. (2) Chair of the Compensation Committee. (3) Chair of the Nominating Committee. (4) Audit Committee financial expert. Weiguang Yang is the founder of Zhongchao Inc. and Zhongchao Shanghai.
Under Chinese law, we may only terminate employment agreements without cause and without penalty by providing notice of non-renewal one month prior to the date on which the employment agreement is scheduled to expire.
(5) Appointed Chief Operating Officer effective as of August 2019. 112 Under Chinese law, we may only terminate employment agreements without cause and without penalty by providing notice of non-renewal one month prior to the date on which the employment agreement is scheduled to expire.
Officers are elected by, and serve at the discretion of, the board of directors. 109 There is no formal requirement under the Company’s Amended and Restated Memorandum and Articles of Association mandating that we hold an annual meeting of our shareholders.
Except as noted above, there are no family relationships between any of our executive officers and directors. Officers are elected by, and serve at the discretion of, the board of directors. 117 There is no formal requirement under the Company’s Amended and Restated Memorandum and Articles of Association mandating that we hold an annual meeting of our shareholders.
General, Kevin Dean Vassily, and Dan Li, 600 Class A Ordinary Shares (giving effective to the 1-for-10 2024 Share Consolidation) for their services provided to the Company as members of the Board and the Board’s committees. 106 2019 Equity Incentive Plan (the “2019 Plan”) We have adopted a 2019 Equity Incentive Plan (the “Plan”).
General, Kevin Dean Vassily, and Dan Li, 13,000 Class A Ordinary Shares for their services provided to the Company as members of the Board and the Board’s committees. 114 2019 Equity Incentive Plan (the “2019 Plan”) We have adopted a 2019 Equity Incentive Plan (the “Plan”).
Employees As of the date of this Annual Report, we had a total of 142 full-time employees, of which 7 are in research and development, 29 are in sales and marketing, 88 are in technical and customer services, and 18 are in general administration.
Employees As of the date of this Annual Report, we had a total of 111 full-time employees, of which 5 are in research and development, 19 are in sales and marketing, 74 are in technical and customer services, and 13 are in general administration.
He also serves as an advisor at Prometheus Fund, responsible to provide strategic, due diligence, and opportunity sourcing for Shanghai based merchant bank/PE firm focused on the “green” economy from July 2018 to present. Mr.
Since July 2018 he has served as an advisor at Prometheus Fund, responsible to provide strategic, due diligence, and opportunity sourcing for Shanghai based merchant bank/PE firm focused on the “green” economy. Prior to joining iPower, from 2019 to January 2021, Mr.
In making this determination, our board considered the relationships that each of these non-employee directors has with us and all other facts and circumstances our board deemed relevant in determining their independence.
General, Kevin Dean Vassily, and Dan Li is “independent” within the meaning of the NASDAQ rules. In making this determination, our board considered the relationships that each of these non-employee directors has with us and all other facts and circumstances our board deemed relevant in determining their independence.
Name/principal position Salary Equity Compensation All Other Compensation Total Paid Weiguang Yang/ CEO (1) $ 123,945 $ - $ - $ 123,945 Pei Xu / CFO (2) $ 45,634 $ - - $ 45,634 Xuejun Chen / Chief Medical Officer (3) $ 102,211 $ - $ - $ 102,211 Baoqian Tian / Chief Sales Officer (4) $ 91,642 $ - $ - $ 91,642 Shuang Wu / Chief Operating Officer (5) $ 32,113 $ - $ - $ 32,113 (1) Appointed Chairman and CEO effective as of August 2019.
Name/principal position Salary Equity Compensation All Other Compensation Total Paid Weiguang Yang/ CEO (1) $ 66,707 $ - $ - $ 66,707 Pei Xu / CFO (2) $ 45,839 $ - - $ 45,839 Xuejun Chen / Chief Medical Officer (3) $ 63,371 $ - $ - $ 63,371 Baoqian Tian / Chief Sales Officer (4) $ 83,438 $ - $ - $ 83,438 Shuang Wu / Chief Operating Officer (5) $ 31,686 $ - $ - $ 31,686 (1) Appointed Chairman and CEO effective as of August 2019.
The business address for our directors and officers is Nanxi Creative Center, Suite 216, 841 Yan’An Middle Road, Jing’An District, Shanghai, China 200040.
The business address for our directors and officers is Room 2504, OOCL Tower, 841 Yan’An Middle Road, Jing’An District, Shanghai, China 200040.
Xu holds a bachelor degree in finance from Jiangxi University of Finance and Economics. 102 Xuejun Chen is the Chief Medical Officer of Zhongchao Inc. and Deputy General Manager of Medicine of Zhongchao Shanghai.
From September 2008 to August 2013, Ms. Xu worked for Otsuka (China) Investment Co., Ltd. as a financial director. Ms. Xu holds a bachelor degree in finance from Jiangxi University of Finance and Economics. Xuejun Chen is the Chief Medical Officer of Zhongchao Inc. and Deputy General Manager of Medicine of Zhongchao Shanghai.
Vassily has served as an independent director of Tungray Technologies Inc (NASDAQ: TRSG), an engineer-to-order company that provides customized industrial manufacturing solutions to Original Equipment Manufactures in semiconductors, printers, electronics, and home appliances industries. Mr. Vassily also serves as an independent director for three special purpose acquisition companies listing on Nasdaq, including (i) Denali Capital Acquisition Corp.
Vassily has served as an independent director of Tungray Technologies Inc (NASDAQ: TRSG), an engineer-to-order company that provides customized industrial manufacturing solutions to Original Equipment Manufactures in semiconductors, printers, electronics, and home appliances industries. Since August 2024, Mr. Vassily has served as an independent director of Autozi Internet Technology (Global) Ltd.
(formerly, TradeUp Acquisition Corp. prior to the completion of its business combination), a preclinical-stage biopharmaceutical company. From September 2013 to January 2016, Ms. Xu served as the financial director of Zhongchao Shanghai. From September 2008 to August 2013, Ms. Xu worked for Otsuka (China) Investment Co., Ltd. as a financial director. Ms.
She has been serving as our CFO of Zhongchao Shanghai since January 2016. Since September 2023, Ms. Xu has served as the director of Estrella Immunopharma, Inc. (formerly, TradeUp Acquisition Corp. prior to the completion of its business combination), a preclinical-stage biopharmaceutical company. From September 2013 to January 2016, Ms. Xu served as the financial director of Zhongchao Shanghai.
We are, however, permitted to terminate an employee for cause without penalty to our company, where the employee has committed a crime or the employee’s actions or inactions have resulted in a material adverse effect to us. 104 Employment Agreements Weiguang Yang Employment Agreement On August 7, 2019, we entered into an employment agreement with Weiguang Yang pursuant to which he agreed to serve as our Chief Executive Officer.
We are, however, permitted to terminate an employee for cause without penalty to our company, where the employee has committed a crime or the employee’s actions or inactions have resulted in a material adverse effect to us.
He serves as an advisor at Go Capture, responsible to provide strategic, business development, and product development advisory work for emerging “Data as a Service” platform from July 2018 to present.
Vassily served as Vice President of Market Development for Facteus, a financial analytics company focused on the Asset Management industry. From July 2018 to January 2020, he served as an advisor at Go Capture, responsible to provide strategic, business development, and product development advisory work for emerging “Data as a Service” platform. Mr.
A director will be removed from office automatically if, among other things, the director becomes bankrupt or makes any arrangement or composition with his creditors, or becomes physically or mentally incapable of acting as director. Except as noted above, there are no family relationships between any of our executive officers and directors.
General, Kevin Dean Vassily, Dan Li, expires on December 18, 2029. A director will be removed from office automatically if, among other things, the director becomes bankrupt or makes any arrangement or composition with his creditors, or becomes physically or mentally incapable of acting as director.
Yang obtained a bachelor degree in Clinical Medicine Science (traumatic surgery) from Gannan Medical University in 2005. Mr. Yang attended the master course of Social Medicine and Health Management as continuing education from 2006 to 2008 in Capital Medical University of China. From 2010 to 2012, Mr.
Yang attended the master course of Social Medicine and Health Management as continuing education from 2006 to 2008 in Capital Medical University of China. From 2010 to 2012, Mr. Yang took part in the master course of Integrated Marketing Communication in Tsinghua University. Pei Xu is the CFO of Zhongchao Inc. and Zhongchao Shanghai.
The agreement provides for an annual base salary of USD$69,593 payable in accordance with the Company’s ordinary payroll practices.
Employment Agreements Weiguang Yang Employment Agreement On August 7, 2019, we entered into an employment agreement with Weiguang Yang pursuant to which he agreed to serve as our Chief Executive Officer. The agreement provides for an annual base salary of USD$69,593 payable in accordance with the Company’s ordinary payroll practices.
(NASDAQ: DECA) since April 2022, (ii) Feutune Light Acquisition Corp. (NASDAQ: FLV) since June 2022, and (iii) Aimfinity Investment Corp. I (NASDAQ: AIMA) since March 2023. In January 2021, he was appointed Chief Financial Officer, and in March 2021, became a member of the board of directors of iPower Inc. (NASDAQ: IPW), a leading online hydroponic equipment retailer and supplier.
In January 2021, he was appointed Chief Financial Officer, and in March 2021, became a member of the board of directors of iPower Inc. (NASDAQ: IPW), an online provider of consumer home products and B2B ecommerce services.
Director Independence Our board has reviewed the independence of our directors, applying the NASDAQ independence standards. Based on this review, the board determined that each of John C. General, Kevin Dean Vassily, and Dan Li is “independent” within the meaning of the NASDAQ rules.
As a smaller reporting company with a small board of directors, we believe it is appropriate to have the involvement and input of all of our directors in risk oversight matters. Director Independence Our board has reviewed the independence of our directors, applying the NASDAQ independence standards. Based on this review, the board determined that each of John C.
Removed
Yang took part in the master course of Integrated Marketing Communication in Tsinghua University. Pei Xu is the CFO of Zhongchao Inc. and Zhongchao Shanghai. She has been serving as our CFO of Zhongchao Shanghai since January 2016. Since September 2023, Ms. Xu has served as the director of Estrella Immunopharma, Inc.
Added
Yang a master’s degree in business administration from the School of Economics and Management of Tsinghua University in 2024 and obtained a bachelor’s degree in Clinical Medicine Science (traumatic surgery) from Gannan Medical University in 2005. Mr.
Removed
Prior to joining iPower, from 2019 to January 2021, Mr. Vassily served as Vice President of Market Development for Facteus, a financial analytics company focused on the Asset Management industry.
Added
(NASDAQ: AZI), a provider of automotive products and services in China. Mr. Vassily also serves as an independent director for two special purpose acquisition companies listing on Nasdaq, including (i) Denali Capital Acquisition Corp. (NASDAQ: DECA) since April 2022, and (ii) Aimfinity Investment Corp. I (NASDAQ: AIMA) since March 2023. Mr.
Removed
The Class I Directors shall stand elected for a term expiring at the Company’s initial meeting after the adoption of the Amended and Restated Memorandum and Articles of Association and the Class II Directors shall stand elected for a term expiring at the Company’s third annual general meeting following the initial meeting.
Added
Vassily served as an independent directors of Feutune Light Acquisition Corp. (NASDAQ: FLV), previously a special purpose acquisition company, from June 2022 till June 2024, when Feutune Light Acquisition consummated the business combination with Thunder Power Holdings Limited, and Mr. Vassily has served as an independent director of Thunder Power Holdings Limited (NASDAQ: AIEV).
Removed
Directors elected to succeed those Class I Directors whose terms expire shall be elected for a term of office to expire at the first annual general meeting following their election and directors elected to succeed those Class II Directors whose terms expire shall be elected for a term of office to expire at the third annual general meeting following their election.
Added
The Class I Directors shall stand elected for a one year term, and the term of the current Class I Directors, consisting of Weiguang Yang and Pei Xu, expires on December 18, 2025 The Class II Directors shall stand elected for a five-year term and the term of the current Class II Directors, consisting of John C.
Removed
The initial members of Class I Directors are John C. General, Kevin Dean Vassily, Dan Li. The initial members of Class II Directors are Weiguang Yang and Pei Xu.
Removed
However, notwithstanding the foregoing, we intend to hold such meetings on our annual meeting to, among other things, elect our directors. Our board plays a significant role in our risk oversight. The board makes all relevant Company decisions.
Removed
Board Diversity Matrix Board Diversity Matrix (As of April 30, 2024) Country of Principal Executive Offices People’s Republic of China Foreign Private Issuer Yes Disclosure Prohibited Under Home Country Law No Total Number of Directors 5 Part I: Gender Identity Female Male Non-Binary Did Not Disclose Gender Directors 2 3 0 0 Part II: Demographic Background Underrepresented Individual in Home Country Jurisdiction 0 LGBTQ+ 0 Did Not Disclose Demographic Background 0 D.
Item 7. Management's Discussion & Analysis
Management's Discussion & Analysis (MD&A) — revenue / margin commentary
9 edited+5 added−8 removed9 unchanged
Item 7. Management's Discussion & Analysis
Management's Discussion & Analysis (MD&A) — revenue / margin commentary
9 edited+5 added−8 removed9 unchanged
2023 filing
2024 filing
Biggest changeThe beneficial ownership of our Class A Ordinary Shares is determined in accordance with the rules of the SEC and generally includes any shares over which a person exercises sole or shared voting or investment power, and includes the Class A Ordinary Shares issuable upon the conversion of the outstanding Class B Ordinary Shares and the Class A Ordinary Shares issuable pursuant to share options that are exercisable within 60 days of the date of this Annual Report.
Biggest changeMajor Shareholders The following tables set forth certain information with respect to the beneficial ownership of our Class A Ordinary Shares (including Class A Ordinary Shares issuable upon the conversion of outstanding Class B Ordinary Shares) for: ● each shareholder known by us to be the beneficial owner of more than 5% of our outstanding Class A Ordinary Shares or Class B Ordinary Shares; ● each of our directors; ● each of our named executive officers; and ● all of our directors and executive officers as a group. 121 The beneficial ownership of our Class A Ordinary Shares is determined in accordance with the rules of the SEC and generally includes any shares over which a person exercises sole or shared voting or investment power, and includes the Class A Ordinary Shares issuable upon the conversion of the outstanding Class B Ordinary Shares and the Class A Ordinary Shares issuable pursuant to share options that are exercisable within 60 days of the date of this Annual Report.
To our knowledge, no other shareholder beneficially owns more than 5% of our shares. Our company is not owned or controlled directly or indirectly by any government or by any corporation or by any other natural or legal person severally or jointly. Our major shareholders do not have any special voting rights. 115 B.
To our knowledge, no other shareholder beneficially owns more than 5% of our shares. Our company is not owned or controlled directly or indirectly by any government or by any corporation or by any other natural or legal person severally or jointly. Our major shareholders do not have any special voting rights. B.
For more details of the HF Warrant, see “Our Corporate History and Structure” on page 49) and 549,772 Class B Ordinary Shares outstanding as of the date of this Annual Report.
For more details of the HF Warrant, see “Our Corporate History and Structure” on page 51) and 549,772 Class B Ordinary Shares outstanding as of the date of this Annual Report.
Name and Address of Beneficial Owner Class A Ordinary Shares Class B Ordinary shares % of Voting % of Total Voting Shares Power Shares Power* Directors, Named Executive Officers, and 5% Beneficial Owner Weiguang Yang (1)(9) - - 549,772 96.54 % Pei Xu (2) (10) 29,292 * - - Xuejun Chen (3) (10) 59,099 * - - Baoqian Tian (4) (10) 17,138 * - - Shuang Wu (5) (10) 55,887 * - - John C.
Name and Address of Beneficial Owner Class A Ordinary Shares Class B Ordinary shares % of Voting % of Total Voting Shares Power Shares Power* Directors and Executive Officers Weiguang Yang (1)(9) - - 549,772 69.0 % Pei Xu (2) (10) 29,292 * - - Xuejun Chen (3) (10) 59,099 * - - Baoqian Tian (4) (10) 17,138 * - - Shuang Wu (5) (10) 55,887 * - - John C.
The percentage of beneficial ownership owned is based on 2,054,943 Class A Ordinary Shares (including 135,007 Class A Ordinary Shares to be issued upon exercise of the HF Warrant the Company issued to HF Capital.
The percentage of beneficial ownership owned is based on 24,839,131 Class A Ordinary Shares (including 135,007 Class A Ordinary Shares to be issued upon exercise of the HF Warrant the Company issued to HF Capital.
According to our charter, each Class A Ordinary Shares entitles to 1 vote and each Class B Ordinary Share entitles to 100 votes. ● Unless otherwise indicated, the business address of each of the individuals is Zhongchao, Nanxi Creative Center, Suite 216, 841 Yan’An Middle Road, Jing’An District, Shanghai, China 200040. (1) Mr.
According to our charter, each Class A Ordinary Shares entitles to 1 vote and each Class B Ordinary Share entitles to 100 votes. 122 ● Unless otherwise indicated, the business address of each of the individuals is Zhongchao, Room 2504, OOCL Tower, 841 Yan’An Middle Road, Jing’An District, Shanghai, China 200040. (1) Mr.
General (6) 2,400 * Dan Li (7) 2,400 * Kevin Dean Vassily (8) 2,400 * More Healthy Holdings Limited (9) - 549,772 96.54 % Worthy Health Limited Partnership (10) 256,954 * - - All directors and executive officers as a group (8 persons) 168,616 * 549,772 96.54 % * Represents less than 1%. 114 ● Represents the voting power with respect to all of our Class A Ordinary Shares and Class B Ordinary Shares, voting as a single class.
General (6) 15,400 * Dan Li (7) 15,400 * Kevin Dean Vassily (8) 15,400 * Worthy Health Limited Partnership (10) 256,954 * - - All directors and executive officers as a group (8 persons) 207,616 * 549,772 69.0 % 5% Holders More Healthy Holdings Limited (9) - 549,772 69.0 % CLOUDCHASER INTERNATIONAL HOLDING LIMITED (11) 1,470,000 1.8 % - - DREAM WEAVERS HOLDING LIMITED (12) 1,470,000 1.8 % - - GREEN TREES HOLDING LIMITED (13) 1,470,000 1.8 % - - ROADVENTURES HOLDING LIMITED (14) 1,470,000 1.8 % - - * Represents less than 1%. ● Represents the voting power with respect to all of our Class A Ordinary Shares and Class B Ordinary Shares, voting as a single class.
The principal office address of Worthy Health is at Craigmuir Chambers, P.O. Box 71, Road Town, Tortola, VG 1110, British Virgin Islands. As of the date of this Annual Report, there were 5 holders of record entered in our Class A ordinary share register and 1 holder of record entered in our Class B ordinary share register.
As of the date of this Annual Report, there were 25 holders of record entered in our Class A ordinary share register and 1 holder of record entered in our Class B ordinary share register.
The Company received the full payment of the loans during the year ended December 31, 2023. 116 VIE Arrangements with the VIE and its Shareholders See “Corporate History and Structure— VIE Arrangements.” Policies and Procedures for Related Party Transactions Our board of directors has created an audit committee which will be tasked with review and approval of all related party transactions.
Compensation.” 123 Policies and Procedures for Related Party Transactions Our board of directors has created an audit committee which will be tasked with review and approval of all related party transactions. C. Interests of Experts and Counsel Not applicable.
Removed
Major Shareholders The following tables set forth certain information with respect to the beneficial ownership of our Class A Ordinary Shares (including Class A Ordinary Shares issuable upon the conversion of outstanding Class B Ordinary Shares) for: ● each shareholder known by us to be the beneficial owner of more than 5% of our outstanding Class A Ordinary Shares or Class B Ordinary Shares; ● each of our directors; ● each of our named executive officers; and ● all of our directors and executive officers as a group.
Added
The principal office address of Worthy Health is at Craigmuir Chambers, P.O. Box 71, Road Town, Tortola, VG 1110, British Virgin Islands. (11) CLOUDCHASER INTERNATIONAL HOLDING LIMITED is a British Virgin Islands company, over which the person having voting, dispositive or investment powers is Zhengbo Ma. The business address is Wickhams Cay II, Road Town, Tortola VG1110, British Virgin Islands.
Removed
Related Party Transactions Name Relationship with the Company Yang Weiguang Chairman of the Board, Chief Executive Officer Beijing Ougaini Trading Co., Ltd (“Beijing Ougaini”) Controlled by an immediate family member of Mr.
Added
(12) DREAM WEAVERS HOLDING LIMITED is a British Virgin Islands company, over which the person having voting, dispositive or investment powers over is Wei Zheng. The business address is Wickhams Cay II, Road Town, Tortola VG1110, British Virgin Islands.
Removed
Yang Weiguang (1) Purchase from a related party For the Years Ended December 31, 2023 2022 2021 Beijing Ougaini $ 112,980 $ 19,696 $ - During the year ended December 31, 2022, the Company prepaid $112,980 to Beijing Ourgaini for purchase of products for employee welfare and marketing promotion. The Company has received the purchased on January 2023.
Added
(13) GREEN TREES HOLDING LIMITED is a British Virgin Islands company, over which the person having voting, dispositive or investment powers over is Xiaoyin Zheng. The business address is Wickhams Cay II, Road Town, Tortola VG1110, British Virgin Islands.
Removed
(2) Balances with related parties As of December 31, 2023 and 2022, the balances with related parties were as follows: December 31, 2023 December 31, 2022 Prepayments Beijing Ougaini $ - $ 115,989 Due from related parties Yang Weiguang (i) - 226,178 $ - $ 226,178 (i) As of December 31, 2022, the Company had a balance of $226,178 due from Mr.
Added
(14) ROADVENTURES HOLDING LIMITED is a British Virgin Islands company, over which the person having voting, dispositive or investment powers over is Xiaolin Wen. The business address is Wickhams Cay II, Road Town, Tortola VG1110, British Virgin Islands.
Removed
Yang Weiguang. The balance was comprised of the following: - A balance of $144,986 arising from transfer of 6.67% equity interest of Shanghai Zhongxin to four former shareholders of West Angel, who paid consideration to Mr. Yang. (Note 4) - A balance of $81,192 as tuition paid on behalf of to Mr. Yang. In 2023, Mr.
Added
Related Party Transactions Employment Agreements and Indemnification Agreements See the section entitled “Item 6. Directors, Senior Management and Employees — B. Compensation.” Share Incentive Plan See the section entitled “Item 6. Directors, Senior Management and Employees—B.
Removed
Yang has repaid the above outstanding balances to the Company. In each year of 2023, 2022 and 2021, we compensated each of three independent directors, John C. General, Kevin Dean Vassily, and Dan Li, 600 Class A Ordinary Shares for their services provided to the Company as members of the Board and the Board’s committees.
Removed
During the year ended December 31, 2022, the Company made short term interest-free loans to three unaffiliated third parties in the aggregated amount of approximately $1.03 million and Mr. Weiguang Yang provides irrevocable guarantee over such outstanding loans.
Removed
C. Interests of Experts and Counsel Not applicable.