ZHONGCHAO : UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS - Form 6-K

ZHONGCHAO INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

As of June 30, 2023 and December 31, 2022

(Expressed in U.S. dollar, except for the number of shares and per share data)

		June 30, 2023			December 31, 2022
ASSETS
Current Assets
Cash and cash equivalents		$	11,286,821			$	11,520,453
Short-term investments			936,098				518,416
Accounts receivable, net			3,364,768				6,772,988
Inventories			513,457				189,106
Prepayments			1,127,732				1,027,989
Prepayments - related parties			1,048				115,989
Loans receivable			275,813				1,840,000
Due from affiliates			-				226,179
Other current assets			1,048,364				493,040
Total Current Assets			18,554,101				22,704,160
Investment in equity method investees			1,121,783				1,179,300
Investment in an equity security			84,606				84,606
Goodwill			5,485,862				5,767,504
Property and equipment, net			2,390,737				3,890,947
Deposit and prepayment for properties			11,722				239,481
Prepayments for lease of land			279,591				304,787
Intangible assets, net			711,487				912,054
Right of use assets			1,373,612				1,666,777
Deferred tax assets			512,622				1,864,729
Total Assets		$	30,526,123			$	38,614,345
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable		$	6,475			$	140,834
Advances from customers			384,981				395,263
Income tax payable			130,514				2,292,765
Operating lease liabilities, current portion			386,133				480,633
Accrued expenses and other liabilities			832,839				855,540
Total Current Liabilities			1,740,942				4,165,035
Operating lease liabilities, noncurrent portion			1,056,764				1,221,845
Deferred tax liabilities			556,044				208,200
Total Liabilities			3,353,750				5,595,080
Commitments and Contingencies
Equity
Class A Ordinary Share (par value $0.0001 per share, 450,000,000 shares authorized; 20,531,423 and 20,531,423 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively)			2,054				2,054
Class B Ordinary Share (par value $0.0001 per share, 50,000,000 shares authorized; 5,497,715 and 5,497,715 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively)			550				550
Additional paid-in capital			25,060,797				24,998,388
Statutory reserve			1,315,017				1,315,017
(Accumulated deficits) Retained earnings			(597,553	)			4,124,037
Accumulated other comprehensive loss			(1,492,919	)			(511,824	)
Total Zhongchao Inc. Shareholders' Equity			24,287,946				29,928,222
Non-controlling interests			2,884,427				3,091,043
Total Equity			27,172,373				33,019,265
Total Liabilities and Equity		$	30,526,123			$	38,614,345

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ZHONGCHAO INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

For the Six Months Ended June 30, 2023 and 2022

(Expressed in U.S. dollar, except for the number of shares and per share data)

		For the Six Months Ended June 30,
		2023			2022
Revenues:
Services		$	4,856,333			$	7,295,439
Products			5,519,837				-
Total revenues			10,376,170				7,295,439
Cost of revenues:
Services			(2,710,770	)			(2,236,718	)
Products			(3,342,061	)			-
Total cost of revenues			(6,052,831	)			(2,236,718	)
Gross Profit			4,323,339				5,058,721
Operating Expenses
Selling and marketing expenses			(3,945,328	)			(1,316,733	)
General and administrative expenses			(4,639,182	)			(3,046,045	)
Research and development expenses			(298,987	)			(153,290	)
Impairment of property and equipment			(1,464,413	)			-
Total Operating Expenses			(10,347,910	)			(4,516,068	)
(Loss) Income from Operations			(6,024,571	)			542,653
Interest income, net			57,430				82,913
Other income (expenses), net			784,979				(247,327	)
(Loss) Income Before Income Taxes			(5,182,162	)			378,239
Income tax benefits (expenses)			402,304				(284,695	)
Net (Loss) Income			(4,779,858	)			93,544
Less: net loss attributable to noncontrolling interests			58,268				-
Net (Loss) Income Attributable to Zhongchao Inc.'s shareholders			(4,721,590	)			93,544
Other Comprehensive Loss
Foreign currency translation adjustment			(1,129,443	)			(1,328,591	)
Comprehensive Loss			(5,909,301	)			(1,235,047	)
Less: comprehensive loss attributable to noncontrolling interests			206,616				-
Net Loss Attributable to Zhongchao Inc.'s shareholders		$	(5,702,685	)		$	(1,235,047	)
Weighted average number of ordinary share outstanding
Basic and Diluted			26,029,138				25,976,000
(Loss) Earnings per share
Basic and Diluted		$	(0.18	)		$	0.00

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ZHONGCHAO INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Expressed in U.S. dollar, except for the number of shares)

For the Six Months Ended June 30, 2023

											(Accumulated			Accumulated other
		Ordinary share			Additional						Deficit)			comprehensive			Non-
		Class A			Class B			paid-in			Statutory			Retained			(loss)			controlling			Total
		Shares			Amount			Shares			Amount			capital			Reserve			earning			income			interest			equity
Balance as of December 31, 2022			20,531,423			$	2,054				5,497,715			$	550			$	24,998,388			$	1,315,017			$	4,124,037			$	(511,824	)		$	3,091,043			$	33,019,265
Share-based compensation expenses			-				-				-				-				62,409				-				-				-				-				62,409
Net loss			-				-				-				-				-				-				(4,721,590	)			-				(58,268	)			(4,779,858	)
Foreign currency translation adjustments			-				-				-				-				-				-				-				(981,095	)			(148,348	)			(1,129,443	)
Balance as of June 30, 2023			20,531,423			$	2,054				5,497,715			$	550			$	25,060,797			$	1,315,017			$	(597,553	)		$	(1,492,919	)		$	2,884,427			$	27,172,373

For the Six Months Ended June 30, 2022

		Ordinary share			Additional									Accumulated other
		Class A			Class B			paid-in			Statutory			Retained			comprehensive			Total
		Shares			Amount			Shares			Amount			capital			Reserve			earning			Income (loss)			equity
Balance as of December 31, 2021			19,435,423			$	1,946				5,497,715			$	550			$	22,986,975			$	1,199,054			$	7,180,891			$	1,197,006			$	32,566,422
Ordinary shares issued in a shelf offering			1,060,000				106				-				-				1,850,368				-				-				-				1,850,474
Share-based compensation expenses			-				-				-				-				85,703				-				-				-				85,703
Net income			-				-				-				-				-				-				93,544				-				93,544
Foreign currency translation adjustments			-				-				-				-				-				-				-				(1,328,591	)			(1,328,591	)
Balance as of June 30, 2022			20,513,423			$	2,052				5,497,715			$	550			$	24,923,046			$	1,199,054			$	7,274,435			$	(131,585	)		$	33,267,552

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ZHONGCHAO INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Six Months Ended June 30, 2023 and 2022

(Expressed in U.S. dollar, except for the number of shares)

		For the Six Months Ended June 30,
		2023			2022
Cash Flows from Operating Activities:
Net (loss) income		$	(4,779,858	)		$	93,544
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Depreciation and amortization expenses			276,391				128,356
Writing off accounts receivable			1,286,280				-
Reversal of provision of doubtful accounts			(72,605	)			-
Loss from disposal of property and equipment			1,466,469				-
Amortization of right of use assets			259,883				183,132
Recognition of share-based compensation expenses			62,409				85,703
Deferred tax expenses (benefits)			(378,162	)			(29,296	)
Equity investment loss			(74	)			61,774
Changes in fair value of short-term investments			(592,141	)			234,652
Changes in operating assets and liabilities:
Accounts receivable			2,007,725				(942,164	)
Prepayments			(151,410	)			(813,023	)
Prepayments - related party			114,372				-
Inventories			(349,138	)			-
Other current assets			(613,086	)			79,119
Accounts payable			(133,425	)			(13,515	)
Advances from customers			9,440				20,991
Income tax payable			(78,043	)			235,956
Accrued expenses and other liabilities			35,179				(30,266	)
Lease liabilities			(222,909	)			(91,584	)
Net Cash Used in Operating Activities			(1,853,153	)			(796,621	)
Cash Flows from Investing Activities:
Purchases of property and equipment			(12,269	)			(25,291	)
Purchases of intangible assets			-				(15,434	)
Prepayments for a long-term investment			-				(617,370	)
Loans to third parties			(288,671	)			(971,712	)
Repayment of loans from third parties			1,840,000				1,165,041
Due from affiliates			225,163				(2,233,335	)
Investments in short-term investments			(522,920	)			(996,638	)
Proceeds from redemption of short-term investments			697,379				533,747
Net Cash Provided by (Used in) Investing Activities			1,938,682				(3,160,992	)
Cash Flows from Financing Activities:
Proceeds from issuance of ordinary shares in connection with a shelf offering			-				1,850,474
Net Cash Provided by Financing Activities			-				1,850,474
Effect of exchange rate changes on cash and cash equivalents			(319,161	)			(326,486	)
Net decrease in cash and cash equivalents			(233,632	)			(2,433,625	)
Cash and cash equivalents at beginning of period			11,520,453				13,914,982
Cash and cash equivalents at end of period		$	11,286,821			$	11,481,357
Supplemental Cash Flow Information
Cash paid for income tax		$	78,043			$	78,034
Noncash investing activities
Right of use assets obtained in exchange for operating lease obligations		$	16,436			$	1,771,361
Addition of property and equipment from deposit and prepayment for properties		$	238,406			$	-
Net off deferred tax assets with income tax payable		$	2,067,833			$	-

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