Report of Independent Registered Public Accounting Firm

To the Board of Directors and

Shareholders of CHAOHU ZHONGSHAN MINIMALLY INVASIVE HOSPITAL

Opinion on the Financial Statements

We have audited the accompanying combined balance sheets of CHAOHU ZHONGSHAN MINIMALLY INVASIVE HOSPITAL (the “Company”) as of December 31, 2020, 2019 and 2018 and the related combined statements of operations, comprehensive income, stockholders’ equity and cash flows for the years ended December 31, 2020, 2019 and 2018, and related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the combined financial position of the Company at December 31, 2020, 2019 and 2018, and the combined results of its operations and its cash flows for the years ended December 31, 2020 ,2019 and 2018, in conformity with accounting principles generally accepted in the United States of America.

Substantial doubt about the Company’s ability to continue as a going concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has suffered recurring significant losses and has accumulated deficiency in stockholders’ equity.

These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to this matter are also discussed in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Audit Alliance LLP.

Singapore

June 2, 2021

We have served as the Company’s auditor since 2021

The accompanying notes are an integral part of the combined financial statements

The accompanying notes are an integral part of the combined financial statements

The accompanying notes are an integral part of the financial statements

The accompanying notes are an integral part of the combined financial statements

CHAOHU ZHONGSHAN MINIMALLY INVASIVE HOSPITAL
NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION AND BUSINESS BACKGROUND

CHAOHU ZHONGSHAN MINIMALLY INVASIVE HOSPITAL (“Zhongshan Hospital”) was incorporated under the laws of the People’s Republic of China (“China” or the “PRC”)on September 28, 2005 in Chaohu City, Anhui Province. Zhongshan Hospital is a modern comprehensive minimally invasive hospital approved by Anhui Provincial Department of Health. Mr. Yu Xiang, a citizen of the PRC was the record owner of 100% of the equity interests of Zhongshan Hospital.

2. GOING CONCERN UNCERTAINTIES

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the discharge of liabilities in the normal course of business for the foreseeable future.

As reflected in the accompanying consolidated financial statements the Company incurred a comprehensive loss of $90,393 in the year ended December 31, 2020. As of December 31, 2020, the Company had an accumulated deficit of $1,330,216 and a working capital deficit of $1,303,701. Management believes these factors raise substantial doubt about the Company’s ability to continue as a going concern for the next twelve months.

The continuation of the Company as a going concern through the next twelve months is dependent upon (1) the continued financial support from its stockholders or its ability to obtain external financing, and (2) further implement management’s business plan to extend its operations and generate sufficient revenues to meet its obligations. While the Company believes in the viability of its strategy to increase sales volume and in its ability to raise additional funds, there can be neither any assurances to that effect, nor any assurance that the Company will be successful in securing sufficient funds to sustain the operations.

These conditions raise substantial doubt about the Company’s ability to continue as a going concern. These financial statements do not include any adjustments to reflect the possible future effect on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the outcome of these uncertainties. Management believes that the actions presently being taken to obtain additional funding and implement its strategic plan provides the opportunity for the Company to continue as a going concern.

CHAOHU ZHONGSHAN MINIMALLY INVASIVE HOSPITAL
NOTES TO FINANCIAL STATEMENTS

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”).

The preparation of the financial statements in conformity with US GAAP requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates and judgments on historical experience and on various other assumptions and information that are believed to be reasonable under the circumstances. Estimates and assumptions of future events and their effects cannot be perceived with certainty and, accordingly, these estimates may change as new events occur, as more experience is acquired, as additional information is obtained and as our operating environment changes. Significant estimates and assumptions made by management include, among others, useful lives and impairment of long-lived assets, collectability of accounts receivable, advance to suppliers allowance for doubtful accounts and reserve of inventory. While the Company believes that the estimates and assumptions used in the preparation of the financial statements are appropriate, actual results could differ from those estimates. Estimates and assumptions are periodically reviewed and the effects of revisions are reflected in the financial statements in the period they are determined to be necessary.

Cash consist primarily of cash on hand and cash in banks. The Company maintains cash in accounts with various financial institutions in the PRC, which accounts are uninsured. The Company has not experienced any losses with respect to its bank accounts and believes it is not exposed to any risk on its cash held in its bank accounts.

Accounts receivable mainly represents the amount due from the Company’s customers that sales of medical and service of hospital outpatient. Accounts receivable are reported on net realizable value consisting of carrying amount, which representing of the invoiced amount, less allowance for doubtful amounts, if necessary. At the end of each period, the Company specifically evaluates individual customer’s financial condition, credit history, and the current economic conditions to monitor the progress of the collection of accounts receivables. The Company will consider the allowance for doubtful accounts for any estimated losses resulting from the inability of its customers to make required payments. For those receivables that are past due or not being paid according to payment terms, the appropriate actions are taken to exhaust all means of collection, including seeking legal resolution in a court of law. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any off-balance-sheet credit exposure related to its customers. As of December 31, 2020, 2019 and 2018, the allowance for doubtful accounts were all $0.

Advances to suppliers consist of prepayments to our vendors, such as pharmaceutical manufacturers, medical device manufactures and other upper stream distributors. Such advances depend on the situation, such as the nature of the goods, the supplier-demand relationship, the negotiation with the vendors and delivery time to receive products from vendors after making prepayments. We continuously monitor delivery from, and payments to, our vendors while maintaining a provision for estimated credit losses based upon historical experience and any specific supplier issues, such as discontinuing of inventory supply, that have been identified. If we have difficulty receiving products from a vendor, we take the following steps: cease purchasing products from such vendor, ask for return of our prepayment promptly, and if necessary, take legal action. No legal actions were initiated during the reporting periods. If all of these steps are unsuccessful, management then determines whether the prepayments should be reserved or written off. The balance of allowance for doubtful accounts relating to advances to suppliers were all $0 as of December 31, 2020, 2019 and 2018.

Inventories are stated at the lower of cost or net realizable value. Cost is determined using the weighted average method. The Company reviews historical sales activity quarterly to determine excess, slow moving items, potentially obsolete items or expired items. The Company provides an inventory reserve based on the excess quantities on hand equal to the difference, if any, between the cost of the inventory and its estimated market value, potential obsolescence of inventories determined principally by customer demand and the expiration dates of the items. Any expired medicines are written off immediately.

 CHAOHU ZHONGSHAN MINIMALLY INVASIVE HOSPITAL
NOTES TO FINANCIAL STATEMENTS

Property, plant and equipment are stated at cost less accumulated depreciation and impairment, if any. Depreciation is calculated on the straight-line basis over the following expected useful lives from the date on which they become fully operational and after taking into account their estimated residual values:

Expenditures for repairs and maintenance are expensed as incurred. When assets have been retired or sold, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in the results of operations.

On January 1, 2020 the Company adopted Accounting Standards Update (“ASU”) 2016-02. For all leases that were entered into prior to the effective date of ASC 842, we elected to apply the package of practical expedients. Based on this guidance we will not reassess the following: (1) whether any expired or existing contracts are or contain leases; (2) the lease classification for any expired or existing leases; and (3) initial direct costs for any existing leases.

The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, current portion of obligations under operating leases, and obligations under operating leases, non-current on the Company’s consolidated balance sheets. Finance leases are included in property and equipment, net, current portion of obligations under capital leases, and obligations under capital leases, non-current on our consolidated balance sheets.

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date, adjusted by the deferred rent liabilities at the adoption date. As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred. The Company’s terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Operating lease expense is recognized on a straight-line basis over the lease term.

In accordance with the provisions of ASC Topic 360, “Impairment or Disposal of Long-Lived Assets”, all long-lived assets such as property, plant and equipment held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is evaluated by a comparison of the carrying amount of an asset to its estimated future undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amounts of the assets exceed the fair value of the assets.

The Company adopted Accounting Standard Codification (“ASC”) Topic 606, Revenues from Contract with Customers (“ASC 606”) for all periods presented. Under ASC 606, revenue is recognized when control of the promised goods and services is transferred to the Company’s customers, in an amount that reflects the consideration that the Company expects to be entitled to in exchange for those goods and services, net of value-added tax. The Company determines revenue recognition through the following steps:

The transaction price is allocated to each performance obligation on a relative standalone selling price basis. The transaction price allocated to each performance obligation is recognized when that performance obligation is satisfied by the transfer of the promised goods to the customers, at a point in time or over time as appropriate.

The Company’s revenue is net of value added tax (“VAT”) collected on behalf of PRC tax authorities in respect to the sales of merchandise. VAT collected from customers, net of VAT paid for purchases, is recorded as a liability in the accompanying combined balance sheets until it is paid to the relevant PRC tax authorities

CHAOHU ZHONGSHAN MINIMALLY INVASIVE HOSPITAL
NOTES TO FINANCIAL STATEMENTS

ASC Topic 220, “Comprehensive Income”, establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive income as defined includes all changes in equity during a period from non-owner sources. Accumulated other comprehensive income, as presented in the accompanying combined statement of stockholders’ equity, consists of changes in unrealized gains and losses on foreign currency translation. This comprehensive income is not included in the computation of income tax expense or benefit.

Income taxes are determined in accordance with the provisions of ASC Topic 740, “Income Taxes” (“ASC 740”). Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts.

The Company conducts all of its businesses in the PRC and is subject to tax in this jurisdiction.

Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the statement of operations.

The reporting currency of the Company is the United States Dollar (“US$”). The Company maintains its books and records in the local currency, the Renminbi Yuan (“RMB”), which is the functional currency of the Company as being the primary currency of the economic environment in which the Company operates.

In general, for consolidation purposes, assets and liabilities of a company whose functional currency is not the US$ are translated into US$, in accordance with ASC Topic 830-30, “Translation of Financial Statement”, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of foreign subsidiaries are recorded as a separate component of accumulated other comprehensive income within the statement of stockholders’ equity.

Parties, which can be a corporation or individuals, are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operational decisions. Companies are also considered to be related if they are subject to common control or common significant influence.

ASC Topic 280, “Segment Reporting” establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organization structure as well as information about geographical areas, business segments and major customers in financial statements. For the years ended December 31, 2020,2019 and 2018, the Company operates in one reportable operating segment in the PRC.

The Company follows the guidance of the ASC Topic 820-10, “Fair Value Measurements and Disclosures” (“ASC 820-10”), with respect to financial assets and liabilities that are measured at fair value. ASC 820-10 establishes a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair value as follows:

The carrying value of the Company’s financial instruments: cash, accounts receivable, prepayments and other receivables, accounts payable, tax payable, amount due to a related party, other payables and accrued liabilities approximate at their fair values because of the short-term nature of these financial instruments (Level 1).

Fair value estimates are made at a specific point in time based on relevant market information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

CHAOHU ZHONGSHAN MINIMALLY INVASIVE HOSPITAL

NOTES TO FINANCIAL STATEMENTS

In December 2019, the FASB issued ASU 2019-12 - Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This ASU provides an exception to the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year. This update also (1) requires an entity to recognize a franchise tax (or similar tax) that is partially based on income as an income-based tax and account for any incremental amount incurred as a non-income-based tax, (2) requires an entity to evaluate when a step-up in the tax basis of goodwill should be considered part of the business combination in which goodwill was originally recognized for accounting purposes and when it should be considered a separate transaction, and (3) requires that an entity reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date. The standard is effective for the Company for fiscal years beginning after December 15, 2020, with early adoption permitted. The Company is currently in the process of evaluating the impact of the adoption on its consolidated financial statements.

A variety of proposed or otherwise potential accounting standards are currently under study by standard setting organizations and various regulatory agencies. Due to the tentative and preliminary nature of those proposed standards, we have not determined whether implementation of such proposed standards would be material to our consolidated financial statements.

During the years ended December 31, 2020, 2019 and 2018, no allowance for doubtful accounts was accrued for accounts receivable.

The Company accrued the impairment reserve or expense for slow moving, obsolete or expired inventory items in the amounts of $1,977, $3,086, $1,431 for the years ended December 31, 2020, 2019 and 2018, respectively.

6. PREPAYMENTS AND OTHER RECEIVABLES

Prepayments and other receivables present the rental prepayment for the office, renovation expense and others. The table below set forth the balances as of December 31, 2020, 2019 and 2018. 

Management evaluates the recoverable value of these balances periodically according to the Company’s policy of credit and allowance for doubtful accounts. During the years ended December 31, 2020, 2019 and 2018, no allowance for doubtful accounts was accrued for other receivable.

The Company’s accrued depreciation expense for the years ended December 31, 2020, 2019 and 2018 were $185,775, $161,199 and $229,133, respectively.

CHAOHU ZHONGSHAN MINIMALLY INVASIVE HOSPITAL
NOTES TO FINANCIAL STATEMENTS

8. Lease

As of December 31, 2020, the Company has two hospital leases with expiration dates through May 2027 and March 2032. For the years ended December 31, 2020, 2019 and 2018, the lease expenses were $116,876, $116,861 and $121,825, respectively. Balance sheet information related to the Company’s operating leases as of December 31, 2020, 2019 and 2018 was as follows:

Lease liability maturities as of December 31, 2020, 2019 and 2018, are as follows:

9. LOANS

Short-term loans

Short-term loans consist of the following:

For the years ended December 31, 2020, 2019 and 2018, interest expense on short-term loans amounted to $481, $0 and $0, respectively.

12. AMOUNT DUE TO RELATED PARTY

As of December 31, 2020, 2019 and 2018, the total amounts payable to related parties was $215,179, $580,340 and $ 709,983, respectively.

The amount due to related party were shareholder loans from Mr. Yu Xiang. The loans bear no interest and have no maturity date.

The Loans payable are loans to third parties. As of December 31, 2020, 2019 and 2018, the balance of loans payable by the company to individual A was USD 157,857, USD 180,614 and USD 183,588, respectively. From the effective date of this agreement, the interest will be calculated at 1% per month. The company shall return the principal of RMB 30,000 every three months, and pay the interest until all the money is paid off. As of December 31, 2020, December 31, 2019 and December 31, 2018, the company’s loans payable to individual B were USD 76,630, USD 86,007 and USD 145,705, respectively. The interest rate is 2% per month, and the loan term is one year, which will be renewed in the second year.

14. TAXES

PRC Income Taxes

The Company operates in the PRC and is subject to the Corporate Income Tax Law of the PRC at a unified income tax rate of 25%

The reconciliation of income tax rate to the effective income tax rate for the years ended December 31, 2020,2019 and 2018 is as follows:

CHAOHU ZHONGSHAN MINIMALLY INVASIVE HOSPITAL
NOTES TO FINANCIAL STATEMENTS

15. STOCKHOLDERS’ EQUITY

Zhongshan Hospital was incorporated under the laws of the PRC on September 28, 2005 in Chaohu City, Anhui Province with registered capital of RMB 5,000,000 (or appropriately US$ 766,295). The shareholders of Zhongshan Hospital paid in capital of RMB 4,634,700 (or appropriately US$ 685,687).

16. CONCENTRATIONS OF RISK

The following is a discussion of concentrations ricks to which the Company might be exposed:

(a) Major customers

The Company provides the service of hospital and retail sales to individual customers, none of which accounted for a significant percentage of the Company’s revenues.

(b) Major venders

For the year ended December 31, 2020, two vendors accounted for 10% or more of the Company’s purchases and their outstanding balances as at balance sheet date, are presented as follows:

Exhibit 99.2

UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION

The acquisition by BOQI International Medical Inc. (the “Company”) of Chaohu Zhongshan Minimally Invasive Hospital (“Zhongshan Hospital”), a company organized under the laws of the People’s Republic of China (“China” or the “PRC”), closed on February 5, 2021.

On December 15, 2020, the Company entered into a stock purchase agreement (the “Zhongshan SPA”) to acquire Zhongshan Hospital, a private hospital in the southeast region of China with 160 hospital beds and 95 employees, including 20 doctors, 48 nurses, 10 other medical staff and 17 non-medical staff. Pursuant to the Zhongshan SPA, the Company agreed to purchase all the issued and outstanding equity interests in Zhongshan Hospital (the “Zhongshan Shares”) for RMB 120,000,000 (approximately $18,348,623), to be paid by the issuance of 2,000,000 shares of the Common Stock and the payment of RMB 80,000,000 in cash.

The cash consideration of RMB 40,000,000 (approximately US$6,116,207) was paid to the seller in December 2020. On February 12, 2021, 2,000,000 shares of the Common Stock valued at RMB 40,000,000 (approximately $6,116,207) were issued to the Zhongshan Hospital seller as part of the post-closing consideration. The balance of the purchase price in the amount of RMB 40,000,000 (approximately $6,116,207) will be paid subject to post-closing adjustments based on the performance of Zhongshan Hospital in 2021 and 2022, respectively.

The unaudited pro forma condensed combined balance sheet combines the Company’s and Zhongshan Hospital’s balance sheets as of December 31, 2020, giving pro forma effect to the above transaction as if it had occurred on December 31, 2020. The unaudited pro forma condensed combined statement of operations combines the Company’s and Zhongshan Hospital’s operations for the year ended December 31, 2020, giving effect to the transaction as described on a pro forma basis as if the transaction had been completed on January 1, 2020.

The unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X. These pro forma financial statements should be read in conjunction with the audited historical financial statements of the Company and the related financial statements for Zhongshan Hospital, which are included elsewhere in this current report on Form 8-K.

The unaudited pro forma condensed combined financial information is presented for illustrative purposes only and is not necessarily indicative of the operating results or financial position that would have occurred had the acquisition of Zhongshan Hospital by the Company occurred on the indicated date, or during the operational periods presented, nor is it necessarily indicative of the future financial position or operating results.

A preliminary allocation of the purchase price has been made to major categories of assets and liabilities in the accompanying pro forma financial statements based on available information. The actual allocation of the purchase price and the resulting effect on income from operations may differ significantly from the pro forma amounts included herein. These pro forma adjustments represent the Company’s preliminary determination of purchase accounting adjustments and are based upon available information and certain assumptions that the Company believes to be reasonable. Consequently, the amounts reflected in the pro forma financial statements are subject to change, and the final amounts may differ substantially.

BOQI INTERNATIONAL MEDICAL, INC.

PRO FORMA CONDENSED COMBINED BALANCE SHEETS

AS OF DECEMBER 31, 2020

(UNAUDITED)

See accompanying notes to the unaudited pro forma condensed combined financial statements 

BOQI INTERNATIONAL MEDICAL, INC.

PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

FOR THE YEAR ENDED DECEMBER 31, 2020

(UNAUDITED)

See accompanying notes to the unaudited pro forma condensed combined financial statements

BOQI International Medical, Inc. and Subsidiaries

Notes to Unaudited Pro Forma Condensed Combined Financial Statements

1. Basis of Presentation

The unaudited pro forma condensed combined financial statements were prepared using the acquisition method of accounting under the provision of ASC 805 on the basis of BOQI International Medical Inc. and subsidiaries (“the Company”) as the accounting acquirer of Chongqing Zhongshan Technology Ltd., and its subsidiary (“Zhongshan Hospital”). Under the acquisition method, the acquisition date fair value of the gross consideration paid by the Company to close the acquisition was allocated to the assets acquired and liabilities assumed based on their estimated fair value. Management has made significant estimates and assumptions in determining the preliminary allocation of the gross consideration transferred in the unaudited pro forma condensed combined financial information. As the unaudited pro forma condensed combined financial information has been prepared based on these preliminary estimates, the final amount recorded may differ materially from the information presented.

The pro forma adjustments reflecting the consummation of the acquisition are based on certain currently available information and certain assumptions and methodologies that the Company believes are reasonable under the circumstances. The unaudited condensed pro forma adjustments may be revised as additional information becomes available and alternative valuation methodologies are evaluated. Therefore, it is likely that the actual adjustments will differ from the pro forma adjustments and it is possible the differences may be material. The Company believes that its assumptions and methodologies provided a reasonable basis for presenting all the significant effects of the acquisition contemplated based on information available to management at the time and that the pro forma adjustments give appropriate effect to those assumptions and are properly applied in the unaudited pro forma condensed combined financial information.

The unaudited pro forma condensed combined balance sheet combines the Company’s and Zhongshan Hospital’s balance sheets as of December 31, 2020 as if the acquisition had occurred on December 31, 2020. The unaudited pro forma condensed combined statement of operations combines the Company’s and Zhongshan Hospital’s operations for the year ended December 31, 2020, presented as if the acquisition had been completed on January 1, 2020. These unaudited pro forma combined condensed financial statements are based upon the historical financial statements of the Company and Zhongshan Hospital after considering the effect of the adjustments described in these footnotes.

The accompanying unaudited pro forma combined financial statements do not give effect to any cost savings, revenue synergies or restructuring costs which may result from the integration of the Company and Zhongshan Hospital operations. Further, actual results may be different from these unaudited pro forma combined financial statements. They should be read in conjunction with the historical financial statements and notes thereto of the Company and Zhongshan Hospital.

2. Estimated Preliminary Purchase Price Allocation

The preliminary consideration and allocation of the purchase price to the fair value of Zhongshan Hospital’s assets acquired and liabilities assumed as if the acquisition date was December 31, 2020 is presented below:

Goodwill represents the excess of the purchase price over the amounts assigned to the fair value of the assets acquired and the liabilities assumed of Zhongshan Hospital.

The Company has not completed the detailed valuation necessary to estimate the fair value of the assets acquired and the liabilities assumed and, accordingly, the adjustments to record the assets acquired and liabilities assumed at fair value reflect the best estimate of the Company based on the information currently available and are subject to change once additional analyses are completed. Furthermore, the cash portion of purchase price has not been paid in full yet and the final purchase price may be subject to the certain closing adjustment items pursuant to the Stock Purchase Agreement.

As the goodwill calculation above assumed full payment of the purchase price, the final amount recorded may differ materially from the information presented.

3. Proforma Adjustments

The unaudited pro forma condensed combined financial information has been prepared to illustrate the effect of the acquisition and has been prepared for informational purposed only.

The historical financial statements have been adjusted in the unaudited pro forma condensed combined financial information to give pro forma effect to events that are directly attributable to the acquisition, factually supportable, and with respect to the statements of operations, expected to have a continuing impact on the results of the Company.

The pro forma adjustments are comprised of the following elements: