EDGAR 10-K Filing

Company CIK: 1597892
Filing Year: 2023
Filename: 1597892_10-K_2023_0001213900-23-030047.json

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ITEM 1. BUSINESS
ITEM 1. BUSINESS
Corporate Structure
JRSIS Health Care Corporation (the “Company” or “JRSS”) was incorporated on November 20, 2013 under the laws of the State of Florida. In December 2013, JRSS acquired 100% of the equity in JRSIS Health Care Limited (“JHCL”), which is a privately held Limited Liability Company registered in British Virgin Island (“BVI”) on February 25, 2013. JHCL owns 100% of the equity in Runteng Medical Group Co., Ltd (“Runteng”), a limited liability company registered in Hong Kong on September 17, 2012. Until March 31, 2022, Runteng owned 70% of the equity in Harbin Jiarun Hospital Co., Ltd (“Jiarun”). a for-profit hospital incorporated in Harbin City of Heilongjiang, China in February 2006. The remaining 30% equity in Jiarun was owned by Junsheng Zhang, who is the Chairman of the Board of JRSIS Health Care Corporation until April 28, 2022.Jiarun operates a private hospital serving patients on a municipal and county level and providing both Western and Chinese medical practices to the residents of Harbin.
On April 12, 2022, Runteng organized and acquired 100% of the equity in Laidian Technology (Zhongshan) Co., Ltd (“Laidian”), a wholly foreign-owned enterprise (“WFOE”) subsidiary. The Company established Laidian to engage in the business of providing charging services to electric vehicles with the headquarter in Zhongshan City of Guangdong, China.
On April 28, 2022 JRSIS completed the spin-off of its subsidiary Jiarun. as Runteng transferred its 70% equity interest in Jiarun to Zhang Junsheng (the “Spin-Off”). In exchange for the 70% equity interest in Jiarun, Zhang Junsheng transferred 5,392,000 shares of JRSIS’ common stock to Runteng, which surrendered the shares to the JRSIS treasury.
After the Spin-Off, JRSIS does not beneficially own any equity interest in Jiarun. According to spin-off agreement on April 28, 2022, the effective date of spin-off was April 1, 2022.
Our present corporate structure is as follows:
Our Business
Until April 28, 2022, we operated Jiarun Hospital and its two branch hospitals, collectively being a private hospital with 950 beds located in Harbin, the capital of Heilongjiang Province in northeastern China. Jiarun Hospital offers patients care and pharmaceuticals in the areas of both Western and Chinese medical practices.
On April 28, 2022 JRSIS completed the spin-off of its subsidiary Jiarun. On April 12, 2022, Runteng organized and acquired 100% of the equity in Laidian Technology (Zhongshan) Co., Ltd (“Laidian”), a wholly foreign-owned enterprise (“WFOE”) subsidiary. The Company established Laidian to engage in the business of providing charging services to electric vehicles with the headquarter in Zhongshan City of Guangdong, China.
Laidian was organized in 2022 to engage in the business of constructing and operating charging stations for electric vehicles (“EV”). The Company’s Board of Directors appointed Zhuowei Zhong as the Company’s Chief Executive Officer primarily because he has extensive experience in the business of distributing and operating EV charging stations. Our ambition is to build Laidian into a central participant in this growing industry.
In this, our first year of operation, we are focusing our efforts on building a group of consulting clients who are themselves distributors of charging stations. We are undertaking this top-down approach to the industry in part because we lack sufficient financial resources to compete directly with the major participant in the industry. But of equal importance is the opportunity for market impact that we will gain by positioning ourselves as leaders in the charging station industry. As those to whom we provide our services and guidance spread throughout the EV world, they will advertise our brand as their authoritative source for technological and commercial knowledge about the charging station industry, and so our brand will gain value among the relevant participants in the EV world. Our goal is that, when we have secured the financing necessary to compete in the charging station community, we will already be known and identified with quality and know-how related to charging stations.
Our main business at this time, therefore, is to provide consulting services relating to the planning and design of new energy charging piles to customer in Guangzhou City, the capital of Guangdong Province of the PRC. Our customers are enterprises that are either initiating their participation in this industry in general or expanding their operations to Guangzhou. In either case, a customer who engages Laidian, will receive, among other things:
● a survey report on the distribution of new energy charging piles that have been built and are under construction in the district of Guangzhou City in which the customer intends to distribute its stations;,
● a business plan based upon an analysis of the existing distribution of charging piles in the target market;
● a site selection plan identifying prospective locations where charging piles can be built;
● a plan of the electric equipment design plus the type of charging piles to be used;
● a plan of the construction and the construction method; as well as
● the design and sample drawings of the foundation for the piles,
Customers
At present, the Company's primary customer is Zhongke Kuaichong (Guangzhou) New Energy Co., Ltd. The Company is increasing its marketing efforts and is negotiating consulting agreements with a number of customers. The company's professional services have won high praise from existing and potential customers.
The Charging Station Industry in China
In recent decades, China’s rapid economic growth has enabled more and more consumers to buy their own cars. The result has been the creation of the largest automotive market in the world-but also serious urban air pollution, high greenhouse gas emissions, and growing dependence on oil imports. To counteract those troubling trends, the Chinese government has imposed policies to encourage the adoption of plug-in electric vehicles (EVs). Since buying an EV costs more than buying a conventional internal combustion engine vehicle, in 2009 the government began to provide generous subsidies for EV purchases. As a result, China became the world’s largest market for EV’s, accounting for approximately 50% of global sales. In 2020 1.1 million EVs were produced and sold in China. The central government’s “New Energy Vehicle Industry Development Plan (2021 - 2035) predicted that sales of new energy vehicles would account for 20% of car sales in China in 2025. In fact, during 2022, EV sales represented 22% of new car sales.
As the number of EV purchases grew, paying for the subsidies became extremely costly for the government. As a result, beginning in 2020, China’s government began to phase out the subsidies and instead rely on a mandate imposed on car manufacturers. The mandate requires that a certain percent of all vehicles sold by a manufacturer each year must be battery-powered. To avoid financial penalties, every year manufacturers must earn a stipulated number of points, which are awarded for each EV produced based on a complex formula that takes into account range, energy efficiency, performance, and more. The requirements get tougher over time, with a goal of having EVs make up 40% of all car sales in China by 2030.
The mandate on vehicle manufacturers to produce EVs is supplemented by a number of Chinese government policies:
● Tax exemptions. The Chinese government exempts electric vehicles from consumption and sales taxes, which can save purchasers tens of thousands of RMB (equivalent to thousands of dollars). It also waives 50% of vehicle registration fees for electric vehicles.
● Procurement. The Chinese government also uses its procurement power to promote electric vehicles. A May 2016 order required that half of new vehicles purchased by China’s central government be new energy vehicles within five years.
● New auto factory requirements. Chinese regulations strongly discourage the construction of factories for manufacturing internal combustion engine vehicles only. Subject to exceptions that are difficult to satisfy, any new vehicle factory is required to include capacity for the construction of electric vehicles.
Since EVs will be useless without charging stations, the Chinese central government has promoted the development of EV charging infrastructure as a matter of national policy. As the central government has withdrawn subsidies for purchase of EVs, it has redirected a significant portion of those funds to support the development of EV infrastructure, primarily charging stations. In November 2020, the General Office of the State Council promulgated its “Development Plan of the New Energy Vehicle Industry (2021 - 2035), in which it mandated financial support for the construction of charging stations and proposed preferential policies with respect to allocation of space in parking lots to charging stations. China State Grid and China Southern Grid, China’s two state-owned electric utilities, both have programs to promote the development of electric vehicle charging infrastructure.
Guangdong Province has also been aggressive in support of EVs and EV infrastructure. During 2022 the number of EVs sold in Guangdong Province doubled compared to sales in 2021, and now one-eighth of the EVs manufactured in the PRC are manufactured in Guangdong Province. To support this push toward EVs, Guangdong Province now has more charging stations than any other province in China - and three times as many charging facilities as are located in the entire United States. The Province subsidizes certain purchases of EVs, and encourages insurance companies to provide preferential premiums for EVs. The government of Guangdong Province gives every indication that it will continue to support the expansion of the charging station network indefinitely, with an ultimate goal of maximizing the conversion of vehicular traffic to electric.
Competition
The Company is operating in the growing market of new energy charging piles, which is becoming increasingly competitive due to the growing demand for electric vehicles and the government's push towards cleaner energy. The competition the Company is facing can be broadly categorized into the following:
1. Established players: The new energy charging pile market is already populated with a number of established players such as State Grid, Southern Power Grid, and other major energy companies. These companies have a strong brand presence, financial resources, and expertise in the energy sector. They also have established relationships with customers and are likely to be strong competitors for the Company.
2. New entrants: The market for new energy charging piles is attracting a growing number of new entrants, ranging from start-ups to established companies diversifying into the market. These competitors are also likely to be aggressive in pursuing market share and have the potential to disrupt the market.
3. Technological changes: The charging technology for electric vehicles is constantly evolving, and competitors are investing heavily in developing new charging technologies such as wireless charging, fast charging, and ultra-fast charging. These technological changes could lead to new entrants and disrupt existing market players.
4. Regulatory environment: The regulatory environment for the new energy charging pile market is evolving rapidly, and competitors are likely to be affected by changes in regulations and policies related to the development of the new energy industry. These changes could favor some players and disadvantage others.
In summary, the Company is operating in a highly competitive market, facing competition from established players, new entrants, technological changes, and regulatory environment changes. The Company are developing a strong value proposition and endeavoring to build a competitive advantage to succeed in the market.
Marketing
The Company is developing a brand identity that reflects the Company's values and mission. This includes developing a unique logo, website, and marketing materials that are visually appealing and clearly communicate the Company's value proposition. The Company also plans to further strengthen our marketing efforts and improve our brand awareness through the following actions:
1. Leverage social media: Social media platforms such as WeChat, Weibo, and LinkedIn can be used to build awareness of our brand, share Company news and updates, and engage with potential customers. The Company can also consider partnering with influencers in the electric vehicle or sustainability space to reach a wider audience.
2. Attend industry events: The Company will attend industry events such as trade shows, conferences, and seminars to network with potential customers and partners. These events can also provide valuable insights into industry trends and customer needs.
3. Foster partnerships: The Company is seeking out partnerships with property developers, government agencies, and other companies in the new energy space. By partnering with these organizations, Laidian can expand its reach and access new customer segments.
4. Overall, by developing a brand identity, leveraging social media, attending industry events, and fostering partnerships, The Company can build awareness of its brand and generate leads in the highly competitive market.
PRC Laws and Regulations Affecting Our Business
There are several PRC laws and regulations that could affect the Company's business, including:
1. Regulations on new energy vehicles: The Chinese government has implemented a number of regulations and policies aimed at promoting the development and adoption of new energy vehicles, including electric vehicles. These policies could create opportunities for the Company as demand for electric vehicle charging infrastructure increases.
2. Intellectual property laws: The Company may be subject to intellectual property laws related to patents, trademarks, and copyrights. This could impact the company's ability to protect its intellectual property and may affect its competitive position.
It is important for Laidian to stay up-to-date with any changes or developments in these and other relevant laws and regulations in order to ensure compliance and mitigate any potential risks or challenges to its business operations.
Taxes
Enterprise income tax is defined under the Provisional Regulations of PRC Concerning Income Tax on Enterprises promulgated by the PRC. Income tax is payable by enterprises at a rate of 25% of their taxable income.
Employees
As of December 31, 2022, we had 3 employees, None of our employees are represented by a labor union or similar collective bargaining organization.

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ITEM 1A. RISK FACTORS
ITEM 1A. RISK FACTORS.
An investment in our common stock involves a high degree of risk. You should carefully consider the following risk factors and other information in this 10K before deciding to invest in our Company. If any of the following risks actually occur, our business, financial condition and results of operations could be seriously harmed. As a result, the trading price of our common stock could decline and you could lose all or part of your investment.
Risks Related to Our Business
Laidian will face intense competition. It will not achieve market share and customers if it fails to compete effectively.
The demand for charging stations in China is strong, and the barriers to entry into the supply market are not great. So there are many enterprises competing to meet the demand. Laidian’s competitors will include international giants such as Tesla, as well as several major Chinese suppliers of charging stations, as well as many low volume suppliers similar to Laidian. Increased competition may adversely affect its margins, market share and brand recognition, or result in significant losses. When Laidian sets prices for energy, it has to consider how competitors have set prices, since electricity is fungible. When they cut prices or offer additional benefits to compete with Laidian, Laidian may have to lower its own prices or offer additional benefits or risk losing market share, either of which could harm our financial condition and results of operations.
Some of the competitors will have longer operating histories, greater brand recognition, better supplier relationships, larger customer bases and greater financial, technical and marketing resources than Laidian has. These and other smaller companies may receive investment from or enter into strategic relationships with well-established and well-financed companies or investors, which would help enhance their competitive positions. Some of the competitors may be able to secure more favorable terms from suppliers, devote greater resources to marketing and promotional campaigns, adopt more aggressive pricing policies and devote substantially more resources to their website, mobile application and systems development. We cannot assure you that Laidian will be able to compete successfully against current or future competitors, and competitive pressures may have a material and adverse effect on its business, financial condition and results of operations.
If we are unable to hire, retain or motivate qualified personnel, consultants, and advisors, we may not be able to grow effectively.
At the present time, we have only three employees: our management team. Our ability to grow as a public company will be largely dependent on our ability to recruit highly skilled individuals. Future success depends on our continuing ability to identify, hire, develop, motivate and retain highly qualified personnel for all areas of our organization. Competition for such qualified employees is intense. If we do not succeed in attracting excellent personnel or in retaining or motivating them, we may be unable to grow effectively. In addition, all future success depends largely on our ability to retain key consultants and advisors. We cannot assure that any skilled individuals will agree to become an employee or consultant for the Company. Our inability to retain their services could negatively impact our business and our ability to execute our business strategy.
We may not be able to obtain additional funding to meet our requirements.
Our ability to enter into the business of constructing and distributing EV charging stations depends upon our ability to obtain financing through equity financing, debt financing (including credit facilities) or the sale or syndication of some or all of our interests in certain projects or other assets. If our access to existing credit facilities is not available, and if other funding does not become available, there could be a material adverse effect on our business.
The EV charging market is characterized by rapid technological change, which requires Laidian to continue to develop new products and product innovations. Any delays in such development could adversely affect market adoption of its products and Laidian’s financial results.
Continuing technological changes in battery and other EV technologies could adversely affect adoption of current EV charging technology and/or Laidian’s products. Laidian’s future success will depend upon its ability to develop and introduce a variety of new product offerings to address the changing needs of the EV charging market. As new products are introduced, gross margins tend to decline in the near term and improve as the product become more mature and with a more efficient manufacturing process.
As EV technologies change, Laidian may need to upgrade or adapt its charging station technology and introduce new products and services in order to serve vehicles that have the latest technology, in particular battery cell technology, which could involve substantial costs. Even if Laidian is able to keep pace with changes in technology and develop new products and services, its research and development expenses could increase, its gross margins could be adversely affected in some periods and its prior products could become obsolete more quickly than expected.
If Laidian is unable to devote adequate resources to develop products or cannot otherwise successfully develop products or services that meet customer requirements on a timely basis or that remain competitive with technological alternatives, its products and services could lose market share, its revenue will decline, it may experience higher operating losses and its business and prospects will be adversely affected.
Our success depends on our personnel. Loss of key personnel may adversely affect our business.
Our success depends to a significant extent on the performance of our management personnel. In particular, we will depend on the services of Zhuowei Zhong, Chairman of the Board and President, Huang, Zhifei, Chief Executive Officer, and Chen, Zhuowen, Chief Financial Officer. The loss of the services of key persons could have a material adverse effect on the Company’s business, operating results and financial condition.
Risks Related to Doing Business in China
SAFE regulations relating to offshore investment activities by PRC residents may increase our administrative burdens and restrict our overseas and cross-border investment activity. If our shareholders and beneficial owners who are PRC residents fail to make any required applications, registrations, and filings under such regulations, we may be unable to distribute profits and may become subject to liability under PRC laws.
China’s State Administration of Foreign Exchange (“SAFE”) has promulgated several regulations, including Notice on Relevant Issues Concerning Foreign Exchange Administration for PRC Residents to Engage in Financing and Inbound Investment via Oversea Special Purpose Vehicles, or “Circular No. 75,” issued on October 21, 2005 and effective as of November 1, 2005 and certain implementation rules issued in subsequent years, requiring registrations with, and approvals from, PRC government authorities in connection with direct or indirect offshore investment activities by PRC residents and PRC corporate entities. These regulations apply to our shareholders and beneficial owners who are PRC residents, and may affect any offshore acquisitions that we make in the future.
SAFE Circular No. 75 requires PRC residents, including both PRC legal person residents and/or natural person residents to register with the local SAFE branch before establishing or controlling any company outside of China for the purpose of equity financing with assets or equities of PRC companies, referred to in the notice as an “offshore special purpose company.” In addition, any PRC resident who is a direct or indirect shareholder of an offshore company is required to update his registration with the relevant SAFE branches, with respect to that offshore company, in connection with any material change involving an increase or decrease of capital, transfer or swap of shares, merger, division, equity or debt investment or creation of any security interest. Moreover, the PRC subsidiaries of that offshore company are required to coordinate and supervise the filing of SAFE registrations by the offshore company’s shareholders who are PRC residents in a timely manner. If a PRC shareholder with a direct or indirect stake in an offshore parent company fails to make the required SAFE registration, the PRC subsidiaries of such offshore parent company may be prohibited from making distributions of profit to the offshore parent and from paying the offshore parent proceeds from any reduction in capital, share transfer or liquidation in respect of the PRC subsidiaries, and the offshore parent company may also be prohibited from injecting additional capital into its PRC subsidiaries. Furthermore, failure to comply with the various SAFE registration requirements described above may result in liability for the PRC shareholders and the PRC subsidiaries under PRC law for foreign exchange registration evasion.
Although we have requested our PRC shareholders to complete the SAFE Circular No. 75 registration, we cannot be certain that all of our PRC resident beneficial owners will comply with the SAFE regulations. The failure or inability of our PRC shareholders to receive any required approvals or make any required registrations may subject us to fines and legal sanctions, restrict our overseas or cross-border investment activities, prevent us from making capital injection into our PRC subsidiaries, limit our PRC subsidiaries’ ability to make distributions or pay dividends or affect our ownership structure, as a result of which our acquisition strategy and business operations and our ability to distribute profits to you could be materially and adversely affected.
Changes in current policies of the PRC government could have a significant impact upon the business we conduct in the PRC and the profitability of our operations.
Current policies adopted by the PRC government indicate that it seeks to encourage a market-oriented economy. We believe that the PRC government will continue to develop policies that strengthen its economic and trading relationships with foreign countries and as a consequence, business development in the PRC will follow current market forces. While we believe that this trend will continue, we cannot assure you that such beneficial policies will not change in the future. A change in the current policies of the PRC government could result in confiscatory taxation, restrictions on currency conversion, or the expropriation or nationalization of private enterprises, all of which would have a negative impact on our current corporate structure and our operations. The PRC laws and regulations governing our current business operations are sometimes vague and uncertain. Any changes in such PRC laws and regulations may have a material and adverse effect on our business.
There are substantial uncertainties regarding the interpretation and application of PRC laws and regulations, including, but not limited to, those laws and regulations governing our business and those relating to the enforcement and operation of our contractual arrangements. At this time, we believe that the relevant PRC laws and regulations validate our current contractual arrangements and that our corporate structure is in keeping with such laws. However, no assurance can be given that PRC court rulings to be decided in the future will be consistent with our current interpretations. Further, new laws or regulations may be enacted which could have a negative impact on foreign investors. We cannot predict what effect the interpretation of existing or new PRC laws or regulations may have on our business and no assurance can be given that our operations will not be affected by such laws and/or regulations.
Interference by the Chinese Government with the efforts of the PCAOB to inspect our auditor could lead to our common stock being delisted from its trading platform.
As an auditor of companies that are publicly traded in the United States and a firm registered with the Public Company Accounting Oversight Board (“PCAOB”), our independent registered public accounting firm is required under the laws of the United States to undergo regular inspections by the PCAOB. However, because substantially all of our operations are conducted within China, our independent registered public accounting firm’s audit documentation related to their audit report included in this annual report on Form 10-K is located in China. The PCAOB is currently unable to conduct full inspections in China or review audit documentation located within China without the approval of Chinese authorities, which has not been granted.
The Holding Foreign Companies Accountable Act, or the HFCAA, was enacted by the U.S. Congress on December 18, 2020. Pursuant to the HFCAA, if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspection by the Public Company Accounting Oversight Board (the “PCAOB”), for three consecutive years beginning in 2021 or any year thereafter, the SEC will prohibit our shares from being traded on a national securities exchange or in the over-the-counter trading market in the United States. On December 16, 2021, the PCAOB issued a report to notify the SEC of its determination that the PCAOB was unable to inspect or investigate completely registered public accounting firms headquartered in mainland China and Hong Kong, which includes our auditor. On May 13, 2022, the SEC conclusively listed us as a Commission-Identified Issuer under the HFCAA following the filing of our 2021 Form 10-K. On December 15, 2022, the PCAOB removed mainland China and Hong Kong from the list of jurisdictions where it is unable to inspect or investigate completely registered public accounting firms. Each year, the PCAOB will determine whether it can inspect and investigate completely audit firms in mainland China and Hong Kong, among other jurisdictions. If the PCAOB determines in the future that it no longer has full access to inspect and investigate accounting firms in mainland China and Hong Kong and we continue to use an accounting firm headquartered in these jurisdictions to conduct audit work, we would be identified as a Commission-Identified Issuer following the filing of the annual report for the relevant fiscal year. If we were so identified for three consecutive years, we would become subject to the prohibition on trading under the HFCAA.
The delisting of our common stock, or the threat of being delisted, may materially and adversely affect the value of your investment. If our shares are prohibited from trading in the United States, the impact on the market for our shares outside the United States is highly uncertain, and there is no certainty we will be able to list on any non-U.S. exchange to facilitate the trading in our securities. Such a prohibition would substantially impair your ability to sell or purchase our shares when you wish to do so, and the risk and uncertainty associated with delisting would have a negative impact on the price of our shares. Also, such a prohibition would significantly affect our ability to raise capital on terms acceptable to us, or at all, which would have a material adverse impact on our business, financial condition, and prospects.
We may be restricted from freely converting the Renminbi to other currencies in a timely manner.
At the present time, the RMB is not a freely convertible currency. We receive all of our revenue in RMB, which may need to be converted to other currencies, primarily U.S. dollars, in order to be remitted outside of the PRC. Foreign currency “current account” transactions by foreign investment enterprises require a ministerial review, according to the Administration of the Settlement, Sale and Payment of Foreign Exchange Provisions promulgated in 1996 (the “FX regulations”). “Current account” items include international commercial transactions, which occur on a regular basis, such as those relating to trade and provision of services. Distributions to joint venture parties also are considered “current account transactions.” Other non-current account items, known as “capital account” items, remain subject to SAFE approval. Under current regulations, we can obtain foreign currency in exchange for RMB from swap centers authorized by the government. We do not anticipate problems in obtaining foreign currency to satisfy our requirements; however, no assurance can be given that foreign currency shortages or changes in currency exchange laws and regulations by the PRC government will not restrict us from freely converting RMB in a timely manner.
Fluctuations in the exchange rate could have an adverse effect upon our business and reported financial results.
We conduct our business in Renminbi (“RMB”), thus our functional currency is the RMB, while our reporting currency is the U.S. dollar. The value of the RMB against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, the political situation as well as economic policies and conditions. There remains significant international pressure on the significant appreciation of the RMB against the U.S. dollar. Since our future revenues will be denominated in currencies other than the United States dollar, we will be subject to increased risks relating to foreign currency exchange rate fluctuations which could have a material adverse effect on our financial condition and operating results since operating results are reported in United States dollars and significant changes in the exchange rate could materially impact our reported earnings.
Because our principal assets are located outside of the United States and all of our directors and officers reside outside of the United States, it may be difficult for an investor to enforce any right founded on U.S. Federal Securities Laws against us and/or our officers and directors, or to enforce a judgment rendered by a United States court against us or our officers and directors.
Our operations and principal assets are located in the PRC, and our officers and directors are non-residents of the United States. Therefore, it may be difficult to effect service of process on such persons in the United States, and it may be difficult to enforce any judgments rendered against us or our officers and/or directors. As a result, it may be difficult or impossible for you to bring an action against us or against these individuals in China in the event that you believe that your rights have been infringed under the securities laws or otherwise. Even if you are successful in bringing an action of this kind, the laws of the PRC may render you unable to enforce a judgment against our assets or the assets of our directors and officers. As a result of all of the above, our shareholders may have more difficulty in protecting their interests through actions against our management, directors or major shareholders compared to shareholders of a corporation doing business entirely within the United States.
Risks Relating to Our Common Stock
Because we are subject to “penny stock” rules, the level of trading activity in our stock may be reduced.
Broker-dealer practices in connection with transactions in “penny stocks” are regulated by penny stock rules adopted by the Securities and Exchange Commission. Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on some national securities exchanges). The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and, if the broker-dealer is the sole market maker, the broker-dealer must disclose this fact and the broker-dealer’s presumed control over the market, and monthly account statements showing the market value of each penny stock held in the customer’s account. In addition, broker-dealers who sell these securities to persons other than established customers and “accredited investors” must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. Consequently, these requirements may have the effect of reducing the level of trading activity, if any, in the secondary market for a security subject to the penny stock rules. If a trading market does develop for our common stock, these regulations will likely be applicable, and investors in our common stock may find it difficult to sell their shares.
FINRA sales practice requirements may limit a stockholder’s ability to buy and sell our stock.
FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low-priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may have the effect of reducing the level of trading activity in our common stock. As a result, fewer broker-dealers may be willing to make a market in our common stock, reducing a stockholder’s ability to resell shares of our common stock.
Our insiders beneficially own a significant portion of our stock, and accordingly, may have control over stockholder matters, the Company’s business and management.
As of December 31, 2022, Zhong, Zhuowei, the Chairman of the Board of JRSIS Health Care Corporation, owns 80.75% of the Company’s outstanding common stock. As a result, Mr. Zhong will have significant influence to:
● Elect or defeat the election of our directors;
● Amend or prevent amendment of our articles of incorporation or bylaws;
● Effect or prevent a merger, sale of assets or other corporate transaction; and
● Affect the outcome of any other matter submitted to the stockholders for vote.
Moreover, because of the significant ownership position held by our insiders, new investors will not be able to effect a change in the Company’s business or management, and therefore, shareholders would be subject to decisions made by management and the majority shareholder.
In addition, sales of significant amounts of shares held by our directors and executive officers, or the prospect of these sales, could adversely affect the market price of our common stock. Management’s stock ownership may discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of us, which in turn could reduce our stock price or prevent our stockholders from realizing a premium over our stock price.
The sale of securities by us in any equity or debt financing could result in dilution to our existing stockholders and have a material adverse effect on our earnings.
Our Board of Directors is authorized to issue up to 100,000,000 shares of common stock, of which 58,366,569 shares are issued and outstanding. Our Board of Directors has the authority to cause us to issue additional shares of common stock without consent of any of our stockholders. Any sale of common stock by us in a future private placement offering could result in dilution to the existing stockholders as a direct result of our issuance of additional shares of our capital stock. In addition, our business strategy may include expansion through internal growth by acquiring complementary businesses, acquiring, or licensing additional brands, or establishing strategic relationships with targeted customers and suppliers. In order to do so, or to finance the cost of our other activities, we may issue additional equity securities that could dilute our stockholders’ stock ownership. We may also assume additional debt and incur impairment losses related to goodwill and other tangible assets, and this could negatively impact our earnings and results of operations.
If securities or industry analysts do not publish research or reports about our business, or if they downgrade their recommendations regarding our common stock, our stock price and trading volume could decline.
The trading market for our common stock may be influenced by the research and reports that industry or securities analysts publish about us or our business. If any of the analysts who cover us downgrade our common stock, our common stock price would likely decline. If analysts cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause our common stock price or trading volume to decline.
If we continue to fail to maintain an effective system of internal controls, we might not be able to report our financial results accurately or prevent fraud; in that case, our stockholders could lose confidence in our financial reporting, which could negatively impact the price of our stock.
Effective internal controls are necessary for us to provide reliable financial reports and prevent fraud. In addition, Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, requires us to evaluate and report on our internal control over financial reporting for all our current operations. The process of implementing our internal controls and complying with Section 404 will be expensive and time - consuming and will require significant attention of management. We cannot be certain that these measures will ensure that we implement and maintain adequate controls over our financial processes and reporting in the future. Even if we conclude, and our independent registered public accounting firm concurs, that our internal control over financial reporting provides reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles, because of its inherent limitations, internal control over financial reporting may not prevent or detect fraud or misstatements. Failure to implement required new or improved controls, or difficulties encountered in their implementation, could harm our operating results or cause us to fail to meet our reporting obligations. If we or our independent registered public accounting firm discover a material weakness or a significant deficiency in our internal control, the disclosure of that fact, even if quickly remedied, could reduce the market’s confidence in our financial statements and harm our stock price. In addition, a delay in compliance with Section 404 could subject us to a variety of administrative sanctions, including ineligibility for short form resale registration, action by the Securities and Exchange Commission, and the inability of registered broker-dealers to make a market in our common stock, which could further reduce our stock price and harm our business.
Because we do not intend to pay any dividends on our common stock in the near future, holders of our common stock must rely on stock appreciation for any return on their investment.
There are no restrictions in our Articles of Incorporation or Bylaws that prevent us from declaring dividends. The Florida Revised Statutes, however, do prohibit us from declaring dividends where, after giving effect to the distribution of the dividend we would not be able to pay our debts as they become due in the usual course of business; or our total assets would be less than the sum of our total liabilities plus the amount that would be needed to satisfy the rights of shareholders who have preferential rights superior to those receiving the distribution. We do not anticipate paying dividends for the foreseeable future, but will invest our cash resources in the growth of the Company. Accordingly, holders of our common stock will have to rely on capital appreciation, if any, to earn a return on their investment in our common stock.
As a result of these and other factors, our operating results may not meet the expectations of investors or public market analysts who choose to follow our company. Our failure to meet market expectations would likely result in decreases in the trading price of our common stock.

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ITEM 1B. UNRESOLVED STAFF COMMENTS
Item 1B. Unresolved Staff Comments
Not applicable.

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ITEM 2. PROPERTIES
Item 2. Properties.
In March 2022, Laidian leased office space under non-cancellable operating lease agreements. Under terms of the lease agreement, from April 2022, Laidian is committed to make lease payments of approximately $1,528 (RMB 9,900) per month for 23 months.

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ITEM 3. LEGAL PROCEEDINGS
Item 3. Legal Proceedings.
We are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.

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ITEM 4. MINE SAFETY DISCLOSURE
Item 4. Mine Safety Disclosure
Not applicable.
PART II

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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Market Information
The Company’s common stock is quoted on the OTC Pink Market under the symbol "JRSS". The quotations reported on the OTC Pink Market reflect inter-dealer prices without retail markup, markdown or commissions, and may not necessarily represent actual transactions.
The Company's common stock is thinly traded. The quoted bid and asked prices for the Common Stock vary significantly from week to week. An investor holding shares of the Company's Common Stock may find it difficult to sell the shares and may find it impossible to sell more than a small number of shares at the quoted bid price.
Holders of Securities
As of the date of filing of this report, we had 133 shareholders of record and 58,366,569 outstanding shares of common stock, par value $0.001.
Dividends
We have not declared or paid any cash dividends on our common stock since our inception, and our board of directors currently intends to retain all earnings for use in the business for the foreseeable future. Any future payment of dividends will depend upon our results of operations, financial condition, cash requirements and other factors deemed relevant by our board of directors. There are currently no restrictions that limit our ability to declare cash dividends on its common stock.
Securities Authorized for Issuance Under Equity Compensation Plans
We have no equity compensation plans.
Sales of Unregistered Securities
The Company did not make any sale of unregistered securities during the fiscal year 2022 except for the following transactions:
On March 17, 2022, the company entered into an Agreement on the Establishment of Laidian Technology (Zhongshan) Co., Ltd. (“Laidian”) with Zhong Zhuowei. The agreement contains a covenant by Zhong Zhuowei to fund the operations of Laidian which is 100% owned by Runteng Medical, in consideration of Mr. Zhong’s financial commitment and commitment to provide management services, the company agreed to issue 39,130,000 shares of its common stock to Zhong Zhuowei upon the initiation of operations of Laidian. On May 5, 2022, the company issued 39,130,000 shares of its common stock to Zhong Zhuowei.
On May 17, 2022, the Company issued a total of 6,000,000 share of common stock for US$60,000 at US$0.01 per share to six non-US shareholders.
Repurchase of Equity Securities
The Company did not repurchase any shares of its common stock during the fiscal year 2022 except for the following transaction:
On April 28, 2022, Runteng entered into an agreement regarding a transfer of Harbin Jiarun Hospital Co., Ltd.’s Equity (the “Transfer Agreement”) with Zhang Junsheng. Pursuant to the Transfer Agreement, Runteng transferred to Mr. Zhang equity in Harbin Jiarun Hospital Co., Ltd. (“Jiarun Hospital”) representing 70% of the total equity in Jiarun Hospital and Mr. Zhang transferred to Runteng 5,392,000 shares of the Company’s common stock. On May 27, 2022, the Company cancelled 5,392,000 shares of its common stock from Zhang Junsheng.

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ITEM 6. SELECTED FINANCIAL DATA
Item 6. [Reserved]

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements and the notes thereto included elsewhere in this Annual Report on Form 10-K, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of such financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses. On an ongoing basis, we evaluate these estimates, including those related to useful lives of real estate assets, bad debts, impairment, contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. There can be no assurance that actual results will not differ from those estimates. The analysis set forth below is provided pursuant to applicable SEC regulations and is not intended to serve as a basis for projections of future events.
Overview
Harbin Jiarun Hospital Company Limited (“Jiarun”) was established in Harbin in the Province of Heilongjiang of the People’s Republic of China (“PRC”) by the owner Junsheng Zhang on February 17, 2006.
Harbin Jiarun Hospital Co., Ltd Nanjing Road Branch (“NRB Hospital”) was established in Harbin in the Province of Heilongjiang of the People’s Republic of China (“PRC”) by Jiarun on October 30, 2017.
Harbin Jiarun Hospital Co., Ltd 2nd Branch (“2nd Branch Hospital”) was established in Harbin in the Province of Heilongjiang of the People’s Republic of China (“PRC”) by Jiarun on November 2, 2017.
Harbin Jiarun Hospital Co., Ltd Harbin New District Branch (“3rd Branch Hospital”), a third hospital branch of Jiarun, incorporated in Harbin City of Heilongjiang, China in April 2021.
On November 20, 2013, Junsheng Zhang, the senior officer of Jiarun, established JRSIS Health Care Corporation, a Florida corporation (“JRSS” or the “Company”). On February 25, 2013, the officer of Jiarun established JRSIS Health Care Limited (“JHCL”), as a wholly owned subsidiary of the Company, and on September 17, 2012, the officer of Jiarun Hospital established Runteng Medical Group Co., Ltd (“Runteng”), as a wholly owned subsidiary of JHCL. Until April 28, 2022 Runteng, a Hong Kong registered Investment Company, held 70% equity interest in Jiarun.
On December 20, 2013, the Company acquired 100% of the issued and outstanding capital stock of JHCL, for 12,000,000 shares of its common stock. JHCL, through its wholly owned subsidiary, Runteng Medical Group Co., Ltd, holds majority ownership in Jiarun, a company duly incorporated, organized and validly existing under the laws of China. As the parent company, JRSS relied on Jiarun to conduct 100% of our businesses and operations.
On March 17, 2022, the Company entered into an agreement on the establishment of Laidian Technology (Zhongshan) Co., Ltd. (“Laidian”) with Zhong Zhuowei. The agreement contains a covenant by Zhong Zhuowei to fund the operations of Laidian which is 100% owned by Runteng, in consideration of Mr. Zhong’s financial commitment and commitment to provide management services, the Company agreed to issue 39,130,000 shares of its common stock to Zhong Zhuowei upon the initiation of operations of Laidian.
On April 12, 2022, Runteng has setup and owned 100% of the equity in Laidian, a wholly-owned subsidiary to engage in the business of providing charging services to electric vehicles incorporated in Zhongshan City of Guangdong, China.
On April 28, 2022 JRSS completed the spin-off of its subsidiary Jiarun as JRSS’s subsidiary Runteng transferred its 70% equity interest in Jiarun to Zhang Junsheng (the “Spin-Off”). In exchange for the 70% equity interest in Jiarun, Zhang Junsheng transferred to Runteng 5,392,000 shares of JRSS common stock.
On May 5, 2022, JRSS issued 39,130,000 shares of its common stock to Zhong Zhuowei. Under “Agreement on the establishment of Laidian technology (Zhongshan) Co., Ltd.” to serve as a management and set up the Laidian. As Mr. Zhong had previously acquired 8,000,000 shares in private transactions, he owned 47,130,000 shares (80.7%) of JRSS’ common stock as on May 5, 2022.
On May 17, 2022, the Company issued a total of 6,000,000 share of common stock for US$60,000 at US$0.01 per share to six non-US shareholders.
Critical Accounting Policies and Management Estimates
In preparing our financial statements we are required to formulate accounting policies regarding valuation of our assets and liabilities and to develop estimates of those values. In our preparation of the financial statements for the year ended December 31, 2022, there were no estimates made which were (a) subject to a high degree of uncertainty and (b) material to our results.
Results of Operations for the Years Ended December 31, 2022 and 2021
The following table shows key components of the results of operations during the years ended December 31, 2022 and 2021:
For The
Year Ended
December 31,
Change
Amount %
Revenue:
Consultation 89,166 - 89,166 n/a
Total Revenue 89,166 - 89,166 n/a
Operating costs and expenses:
Salaries and benefits 14,712 - 14,712 n/a
Stock-based compensation 245,465 - 245,465 n/a
Office supplies 37,582 7,242 30,340 419 %
Rentals and leases 14,712 - 14,712 n/a
Professional fee 96,795 97,701 (906 ) (1 )%
Change in fair value of warrant liability (7 ) (1,142 ) 1,135 (99 )%
Depreciation 5,796 - 5,796 n/a
Total operating costs and expenses 415,055 103,801 311,254 300 %
Loss from operations before other income and income taxes (325,889 ) (103,801 ) (222,088 ) 214 %
Other income / (expenses) (1,741 ) - (1,741 ) n/a
Loss from operations before income taxes (327,630 ) (103,801 ) (223,829 ) 216 %
Income taxes - - - -
Loss from continued operations (327,630 ) (103,801 ) (223,829 ) 216 %
Net income (loss) from discontinued operations (33,393,670 ) 3,292,746 (36,686,416 ) (1114 )%
Net income (loss) $ (33,721,300 ) $ 3,188,945 $ (36,910,245 ) (1157 )%
Comprehensive income (Loss):
Foreign currency translation adjustment from continued operations 17,396 55,624 (38,228 ) (69 )%
Foreign currency translation adjustment from discontinued operations 301,922 875,758 (573,836 ) (66 )%
Comprehensive income (loss) $ (33,401,982 ) $ 4,120,327 $ (37,522,309 ) (911 )%
Revenue
In April 2022 the Company, through its newly-organized subsidiary, Laidian, commenced the business of providing consulting services to enterprises seeking to develop and commercialize EV charging stations in Guangzhou City. Operating revenue for the year ended December 31, 2022 was the fees paid to the Company’s consulting services as well as planning and design of charging stations for Laidian’s customer.
Operating costs and expenses
The Company’s continued operations for the year ended December 31, 2022 consisted of organizing its subsidiary Laidian, initiating the delivery of consulting services related to installation of EV charging stations, and collecting the equipment, facilities and personnel that will be needed for the expansion of Laidian’s operations into proprietary development and operation of charging stations. Total operating costs and expenses were $415,055 for the year ended December 31, 2022.
59% of the costs and expenses for 2022 were attributable to stock-based compensation. In April 2022 the Company issued 39,130,000 shares of its common stock to Zhong Zhuowei in consideration of his commitment to provide managerial services for the development of the Laidian’s charging station business and to provide such funds to Laidian as would be required to initiate its operations. These shares had a negotiated value of $1,056,510, of which $74,652 was reimbursement for Mr. Zhong’s payment of Laidian’s paid in capital. The remaining $981,858 was capitalized as deferred expenses and will be amortized as stock-based compensation over the three years commencing in April of 2022. For the year ended December 31, 2022, the Company record $246,465 stock-based compensation expense by virtue of this amortization.
The other significant operating expense was professional fees of $96,795 for the year ended December 31, 2022. These fees were primarily accounting and legal fees related to the Company’s U.S. reporting obligations. Professional fees for the year ended December 31, 2021 totaled $97,701.
Loss from operations and net loss
Loss from continuing operations was $327,630 for the year ended December 31, 2022, primarily attributable to the $245,465 stock-based compensation expense. Loss from continuing operations for the year ended December 31, 2021 totaled $103,801, which represented expenses incurred in that year by the parent Florida corporation, as all other expenses incurred in 2021 related to the operations of Jiarun and have been associated with discontinued operations.
On April 28, 2022, the Company completed the spin-off of its subsidiary Jiarun, and reclassified the results of Jiarun’s operations as discontinued operations recorded $33,393,670 net loss.
For the year ended December 31 2022, the Company’s net loss from discontinued operations was $33,393,670, most of which represented the book value of Jiarun on April 28, 2022 less the market value of the shares delivered to the Company in exchange for Jiarun. For the year ended December 31, 2021, the Company realized net income from discontinued operations of $3,292,746, which represented the net income earned by Jiarun during that year.
After deducting the provision for income tax, the Company’s net loss for the year ended December 31, 2022 was $33,721,300, primarily representing the net loss incurred as a result of the Spin-off of Jiarun. Net income for 2021 was $3,188,945.
Foreign Currency Translation Adjustment.
Our reporting currency is the U.S. dollar. Our local currency, Renminbi (RMB), is our functional currency. Results of operations and cash flows are translated at average exchange rates during the year, and assets and liabilities are translated at the unified exchange rate as quoted by the People’s Bank of China at the end of the year. Translation adjustments resulting from this process are included in accumulated other comprehensive income in the statement of stockholders’ equity. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred. For the years ended December 31, 2022 and 2021, foreign currency translation adjustments of $17,396 and $55,624, respectively, have been reported as other comprehensive income in the consolidated statements of operations and comprehensive income (loss).
Liquidity and Capital Resources
Our cash flows for the year ended December 31, 2022 and 2021 are summarized below:
The Year Ended
December 31,
Net cash provided by operating activities $ 3,066,645 $ 8,233,016
Net cash used in investing activities (2,827,685 ) (5,500,437 )
Net cash used in financing activities (738,241 ) (2,798,024 )
Effect of exchange rate fluctuation on cash and cash equivalents (298,074 ) 76,589
Net increase (decrease) in cash and cash equivalents (797,355 ) 11,144
Cash and cash equivalents, beginning of year 855,971 844,827
Cash and cash equivalents, ending of year $ 58,616 $ 855,971
As of December 31, 2022, the Company had $58,616 of cash and cash equivalents, a decrease of $797,355 from our cash and cash equivalents balance (included discontinued operations) at December 31, 2021. The decrease was primarily caused by the Spin-off, as cash held by Jiarun was removed from our consolidated statement.
Our working capital at December 31, 2022 was $755,619, an increase of $ 4,490,898 from our $3,733,571 in working capital deficit at December 31, 2021. The increase was primarily attributable to the Company spin-off of Jiarun hospital, which resulted in a decrease of $2,240,486 in the working capital deficit from December 31, 2021.
The primary non-cash component of our working capital at December 31, 2022 was deferred expenses totaling $736,393. This balance represents the net market value of the Company’s grant of 39,130,000 shares of its common stock to Zhong Zhuowei upon the initiation of the operations of Laidian. In April 2022, when Laidian initiated operations, these shares had a negotiated value of $1,056,510, of which $981,858 was attributed to services that Mr. Zhong committed to provide to the Company during the 3 years following April of 2022. For the year ended December 31, 2022, the Company record $ 245,465 stock-based compensation expense.
Although our current resources and cash flows are adequate to pay our current ongoing obligations, we anticipate that our future liquidity requirements will arise from the need to fund our growth and future capital expenditures. The primary sources of funding for such growth requirements are expected to be additional funds raised from the sale of equity and/or debt financing. However, we can provide no assurances that we will be able to obtain additional financing on terms satisfactory to us.
Net Cash Provided by Operating Activities
For the year ended December 31, 2022, we had cash flow from operating activities of $3,066,645, a decrease of $5,166,371 from $8,233,016 of cash flow for the year ended December 31, 2021. Cash flow from operations decreased primarily because Jiarun hospital spun off from the Company resulting in $978,387 cash outflow from the Company at April 1, 2022.
Net Cash Used in Investing Activities
Net cash used in investing activities for the year ended December 31, 2022 was $2,827,685, compared to net cash used in investing activities of $5,500,437 for the year ended December 31, 2021. The cash used in investing activities of continuing operations for the year ended December 31, 2022 was mainly used for the purchase of equipment.
Net Cash Used in Financing Activities
Net cash used in financing activities for the year ended December 31, 2022 was $738,241, as compared to net cash used in financing activities of $2,798,024 for the year ended December 31, 2021. The cash provided by financing activities for the year ended December 31, 2022 was mainly because the Company acquired Laidian in April 2022. In addition, the Company issued 6,000,000 shares of its common stock to six shareholders for sales of $60,000, and payment for lease obligation $867,508 in discontinued operations.
Trends, Events and Uncertainties
We do not know of any trends, events or uncertainties that have had or are reasonably expected to have a material impact on our net sales or revenues or income from continuing operations. Our business is not seasonal in nature.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet items reasonably likely to have a material effect on our financial condition.
Recent Accounting Pronouncements
Recent accounting pronouncements issued by the FASB, the AICPA or the SEC did not, or are not believed by management to, have a material effect on the Company’s present or future consolidated financial statements.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Item 7A. Quantitative and Qualitative Disclosures about Market Risk.
Smaller reporting companies are not required to provide information required under this item.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Item 8. Financial Statements and Supplementary Data.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
JRSIS HEALTH CARE CORPORATION
Report of Independent Registered Public Accounting Firm (PCAOB ID # 2769)
Consolidated Balance Sheets as of December 31, 2022 and 2021
Consolidated Statements of Income and Comprehensive Income for the years ended December 31, 2022 and 2021
Consolidated Statement of Shareholders’ Equity for the years ended December 31, 2022 and 2021
Consolidated Statements of Cash Flows for the years ended December 31, 2022 and 2021
Notes to Consolidated Financial Statements -
中正達會計師事務所
Centurion ZD CPA & Co.
Certified Public Accountants (Practising)
Unit 1304, 13/F, Two Harbourfront, 22 Tak Fung Street, Hunghom, Hong Kong.
香港 紅磡 德豐街22號 海濱廣場二期 13樓1304室
Tel 電話: (852) 2126 2388 Fax 傳真: (852) 2122 9078
Email 電郵: info@czdcpa.com
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To: the Board of Directors and Stockholders of
JRSIS Health Care Corporation
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of JRSIS Health Care Corporation and subsidiaries (“the Company”) as of December 31, 2022 and 2021, and the related consolidated statements of income and comprehensive income, change in stockholders’ equity and cash flows for each of the years in the two-year period ended December 31, 2022, and the related notes (collectively referred to as the “financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of JRSIS Health Care Corporation as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 13 to the financial statements, the Company has suffered substantial losses from operations and has a significant accumulated deficits. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 13. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and 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 audit in accordance with 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. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatements 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 audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the Board of Directors (Those Charged with Governance) that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgements. We determined that there are no critical matters.
/s/ Centurion ZD CPA & Co.
Centurion ZD CPA & Co.
We have served as the Company’s auditor since 2015.
Hong Kong, China
April 17, 2023
JRSIS HEALTH CARE CORPORATION
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN USD, EXCEPT SHARES)
December 31, December 31,
Assets
Current Assets:
Cash and cash equivalents $ 58,616 $ 29,847
Other receivables 2,987 -
Amount due from related parties -
Deferred expenses 736,393 -
Current assets of discontinued operations -
13,836,084
Total current assets 798,850 13,865,931
Property and equipment, net 38,989 -
Right-of-use assets 18,138 -
Non-current assets of discontinued operations -
61,826,821
Total assets $ 855,977 $ 75,692,752
Liabilities and shareholders’ equity
Current Liabilities:
Accounts payable $ 24,711 $ 66,000
Amount due to related parties -
1,456,919
Other payable -
Payroll payable 1,812 -
Lease liabilities - current 16,708 -
Current liabilities of discontinued operations -
16,076,570
Total current liabilities 43,231 17,599,502
Warrant liability -
Lease liabilities - non-current 1,430 -
Non-current liabilities of discontinued operations -
24,991,063
Total liabilities $ 44,661 $ 42,590,572
Shareholders’ equity
Common stock; $0.001 par value, 100,000,000 shares authorized; 58,366,569 and 18,628,569 issued and outstanding at December 31, 2022 and 2021, respectively 58,366 18,628
Additional paid-in capital 24,452,501 23,381,121
Accumulated deficits (23,705,746 ) (1,877,296 )
Other comprehensive income 6,195 545,449
Total shareholders’ equity 811,316 22,067,902
Non-controlling interest -
11,034,278
Total shareholders’ equity 811,316 33,102,180
Total liabilities and shareholders’ equity $ 855,977 $ 75,692,752
See notes to consolidated financial statements
JRSIS HEALTH CARE CORPORATION
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(AMOUNTS IN USD, EXCEPT SHARES)
For The Year Ended
December 31,
Revenue:
Consultation 89,166 -
Total revenue 89,166 -
Operating costs and expenses:
Salaries and benefits 14,712 -
Stock-based compensation 245,465 -
Office supplies 37,582 7,242
Right-of-use assets amortization 13,312 -
Lease liabilities interest expense 1,400 -
Professional fee 96,795 97,701
Change in fair value of warrant liability (7 ) (1,142 )
Depreciation 5,796 -
Total operating costs and expenses 415,055 103,801
Loss from operations before other income and income taxes (325,889 ) (103,801 )
Other income/(expenses) (1,741 ) -
Loss from operations before income taxes (327,630 ) (103,801 )
Income taxes -
-
Net loss from continued operations (327,630 ) (103,801 )
Net income (loss) from discontinued operations (33,393,670 ) 3,292,746
Net income (loss) $ (33,721,300 ) $ 3,188,945
Comprehensive income (loss):
Foreign currency translation adjustment from continued operations 17,396 55,624
Foreign currency translation adjustment from discontinued operations 301,922 875,758
Comprehensive income (loss) $ (33,401,982 ) $ 4,120,327
Net loss from continuing operations per share of common stock
Basic earnings per share $ (0.0073 ) $ (0.0056 )
Diluted earnings per share $ (0.0073 ) $ (0.0056 )
Net income(loss) from discontinuing operations per share of common stock
Basic earnings per share $ (0.7440 ) $ 0.1785
Diluted earnings per share $ (0.7440 ) $ 0.1764
Net income (loss) per share of common stock
Basic earnings per share $ (0.7513 ) $ 0.1728
Diluted earnings per share $ (0.7513 ) $ 0.1709
Weighted average number of shares outstanding (Basic) 44,885,402 18,451,588
Weighted average number of shares outstanding (Diluted) 44,885,402 18,661,588
See notes to consolidated financial statements
JRSIS HEALTH CARE CORPORATION
CONSOLIDATED STATEMENT OF SHARESHOLDERS’ EQUITY
(AMOUNTS IN USD, EXCEPT SHARES)
Common stock Accumulated Other
comprehensive Additional paid-in Non-Controlling Total
Shareholders’
Quantity Amount Deficits income capital Interest equity
Balance at December 31, 2020 18,246,331 $ 18,246 $ (4,109,557 ) $ (111,016 ) $ 23,240,075 $ 9,802,677 $ 28,840,425
Net income - -
2,232,261 -
-
956,684 3,188,945
Shares issued 382,238 -
-
141,046 -
141,428
Foreign currency translation adjustment - -
-
656,465 -
274,917 931,382
Balance at December 31, 2021 18,628,569 $ 18,628 $ (1,877,296 ) $ 545,449 $ 23,381,121 $ 11,034,278 $ 33,102,180
Discontinued Operations adjustment - -
12,579,582 (694,556 ) -
(11,885,026 ) -
Loss from discontinuing operations - -
(35,949,892 ) -
965,168 -
(34,984,724 )
Net income - -
1,541,860 -
-
791,645 2,333,505
Shares issued for officer compensation 39,130,000 39,130 -
-
1,017,380 -
1,056,510
Shares issued for private placement 6,000,000 6,000 -
-
54,000 -
60,000
Shares repurchase and cancelled (5,392,000 ) (5,392 ) -
-
(965,168 ) -
(970,560 )
Foreign currency translation adjustment - -
-
155,302 -
59,103 214,405
Balance at December 31, 2022 58,366,569 $ 58,366 $ (23,705,746 ) $ 6,195 $ 24,452,501 $ -
$ 811,316
See notes to consolidated financial statements
JRSIS HEALTH CARE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(AMOUNTS IN USD, EXCEPT SHARES)
For The Year Ended
December 31
Cash Flows From Operating Activities
Net income (loss) $ (33,721,300 ) $ 3,188,945
Less: Net income (loss) from discontinued operations (33,393,670 ) 3,292,746
Net loss from continued operations (327,630 ) (103,801 )
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation 5,796 -
Right-of-use assets amortization 13,312 -
Lease liabilities interest expense 1,400 -
Change in fair value of warranty liability (7 ) (1,142 )
Stock-based compensation 245,465 -
Changes in operating assets and liabilities:
Amount due from related parties (854 ) -
Other receivables (2,987 ) -
Accounts payable (41,289 ) (2,000 )
Amount due to related parties - (2,298 )
Payroll payable 1,812 -
Net cash used in operating activities from continued operations (104,982 ) (109,241 )
Net cash provided by operating activities from discontinued operations 3,171,627 8,342,256
Net cash provided by operating activities 3,066,645 8,233,016
Cash Flows From Investing Activities
Purchases of property and equipment (44,644 ) -
Net cash used in investing activities from continued operations (44,644 ) -
Net cash used in investing activities from discontinued operations (2,783,041 ) (5,500,437 )
Net cash used in investing activities (2,827,685 ) (5,500,437 )
Cash Flows From Financing Activities
Non-cash issuance of common stock 69,260 141,428
Proceeds from issuance of common stock 60,000 -
Derivative financial instruments 1,142
Net cash provided by financing activities from continued operations 129,267 -
Net cash used in financing activities from discontinued operations (867,508 ) (2,940,594 )
Net cash provided by (used in) financing activities (738,241 ) (2,798,024 )
Effect of exchange rate fluctuation on cash and cash equivalents (298,074 ) 76,589
Net decrease in cash and cash equivalents (797,355 ) 11,144
Cash and cash equivalents, beginning of period 855,971 844,827
Cash and cash equivalents, ending of period $ 58,616 $ 855,971
Analysis of cash and cash equivalents
Included in cash and cash equivalents per consolidated balance sheets $ 58,616 $ 29,847
Included in cash and cash equivalents of discontinued operations -
826,124
Cash and cash equivalents, end of year $ 58,616 $ 855,971
Supplemental disclosure of cash flow information
Continuing operations:
Cash paid for income taxes $ -
$ -
Cash paid for interest $ -
$ -
Discontinued operations:
Cash paid for income taxes $ (13,086 ) $ 25,275
Cash paid for interest $ (406,544 ) $ (1,381,761 )
Supplemental disclosure of non-cash activities
Shares issued for officer compensation $ (1,056,510 ) $ -
Shares repurchase $ (970,560 ) $ -
See notes to consolidated financial statements
JRSIS HEALTH CARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN USD)
NOTE 1. DESCRIPTION OF BUSINESS AND ORGANIZATION
JRSIS Health Care Corporation (the “Company” or “JRSS”) was incorporated on November 20, 2013 under the laws of the State of Florida. In December 2013 JRSS acquired 100% of the equity in JRSIS Health Care Limited (“JHCL”), which is a Limited Liability Company registered in British Virgin Island (“BVI”) on February 25, 2013. JHCL owns 100% of the equity in Runteng Medical Group Co., Ltd (“Runteng”), a limited liability company registered in Hong Kong on September 17, 2012. Until March 31, 2022, Runteng owned 70% of the equity in Harbin Jiarun Hospital Co., Ltd (“Jiarun”), a for-profit hospital incorporated in Harbin City of Heilongjiang, China in February 2006. The remaining 30% of the equity in Jiarun was owned by Junsheng Zhang, who is the Chairman of the Board of JRSIS Health Care Corporation.
On April 12, 2022, Runteng organized and acquired 100% of the equity in Laidian Technology (Zhongshan) Co., Ltd (“Laidian”), a wholly foreign-owned enterprise (“WFOE”) subsidiary. The Company organized Laidian to engage in the business of providing charging services to electric vehicles operating in Zhongshan City of Guangdong, China.
Spin-Off of Harbin Jiarun Hospital Co., Ltd.
On April 28, 2022 JRSIS Health Care Corporation completed the spin-off of its subsidiary Harbin Jiarun Hospital Co., Ltd. as JRSIS’s subsidiary Runteng Medical Group Co., Ltd. transferred its 70% equity interest in Jiarun to Zhang Junsheng (the “Spin-Off”). In exchange for the 70% interest in Jiarun, Zhang Junsheng transferred to Runteng 5,392,000 shares of JRSIS common stock.
After the Spin-Off, JRSIS does not beneficially own any equity interest in Jiarun and will no longer consolidate Jiarun financial results with the financial results of JRSIS as on April 1, 2022. According to spin-off agreement on April 28, 2022, the effective date of spin-off was April 1, 2022, Commencing on the second quarter of fiscal year 2022, Jiarun’s historical financial results for periods prior to April 1, 2022 has been reclassified and reflected in JRSIS’s consolidated financial statements as a discontinued operation for comparative purposes.
NOTE 2. SUMMARIES OF SIGNIFICANT ACCOUNTING POLICIES
A. Basis of presentation
The consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”).
JRSIS HEALTH CARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN USD)
NOTE 2. SUMMARIES OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
B. Principles of consolidation
The consolidated financial statements include the accounts of the Company and its subsidiaries. All inter-company transactions and balances have been eliminated in consolidation.
C. Use of estimates
The preparation of audited consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting periods. Management makes these estimates using the best information available at the time the estimates are made; however actual results could differ from those estimates. Significant items subject to such estimates and assumptions include valuation allowances for receivables and recoverability of carrying amount and the estimated useful lives of long-lived assets. These estimates are often based on complex judgments and assumptions that management believes to be reasonable but are inherently uncertain and unpredictable. Actual results could differ from these estimates.
D. Functional currency and foreign currency translation
JRSS and JHCL’s functional currency is the United States dollar (“US$”). Runteng’s functional currency is the Hong Kong dollar (“HK$”). The functional currency of Laidian and Jiarun is the Renminbi (“RMB”).
The Company’s reporting currency is US$. Assets and liabilities of Runteng, Laidian and Jiarun are translated at the current exchange rate at the balance sheet dates, revenues and expenses are translated at the average exchange rates during the reporting periods, and equity accounts are translated at historical rates. Translation adjustments are reported in other comprehensive income.
The exchange rates used for foreign currency translation are as follows:
For the Year Ended December 31 ,
(USD to RMB/USD to HKD) (USD to RMB/USD to HKD)
Assets and liabilities period end exchange rate 6.8972 / 7.8015 6.3588 / 7.7971
Revenue and expenses period average 6.7290 / 7.8306 6.4499 / 7.7723
E. Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk are cash, accounts receivable and other receivables arising from its normal business activities. The Company places its cash in what it believes to be credit-worthy financial institutions. The majority of sales are either cash receipt in advance or cash receipt upon delivery. As of December 31, 2022 and 2021, no customer accounted for more than 5% of net accounts receivable. For those credit sales, the Company routinely assesses the financial strength of its customers and, based upon factors surrounding the credit risk, establishes an allowance, if required, for uncollectible accounts and, as a consequence, believes that its accounts receivable credit risk exposure beyond such allowance is limited. For the year ended December 31, 2022, one customer accounted for 100% of total revenue. For the year ended December 31, 2021, no customers accounted for more than 5% of total revenue.
F. Cash and cash equivalents
Cash and cash equivalents include all cash, deposits in banks and other liquid investments with initial maturities of three months or less.
JRSIS HEALTH CARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN USD)
NOTE 2. SUMMARIES OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
G. Property and equipment
Property and equipment are stated at cost. Expenditures for maintenance and repairs are charged to operations when incurred, while additions and betterments are capitalized. Depreciation is recorded on a straight-line basis reflective of the useful lives of the assets. When assets are retired or disposed, the asset’s original cost and related accumulated depreciation are eliminated from accounts and any gain or loss is reflected in income.
The estimated useful lives for property and equipment categories are as follows:
Transportation instrument 5 years
Office equipment 5 years
H. Leases
In February 2016, the FASB issued ASU 2016-02-Leases (Topic 842), which increases transparency and comparability among organizations by recognizing right-of-use (“ROU”) lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The ASU maintains a distinction between finance leases and operating leases, which is substantially similar to the classification criteria for distinguishing between capital leases and operating leases in the previous lease guidance. Retaining this distinction allows the recognition, measurement and presentation of expenses and cash flows arising from a lease to remain similar to the previous accounting treatment. A lessee is permitted to make an accounting policy election by class of underlying asset to exclude from balance sheet recognition any lease assets and lease liabilities with a term of 12 months or less, and instead to recognize lease expense on a straight-line basis over the lease term. For both financing and operating leases, the ROU asset and lease liability is initially measured at the present value of the lease payments in the consolidated balance sheet. In July 2018, the FASB issued ASU 2018-11 which provides entities with the option to initially apply the new lease standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption, if necessary. As discussed in Note 8, we adopted ASU 2016-02-Leases (Topic 842) effective January 1, 2019 utilizing the transition option provided by ASU 2018-11.
I. Fair Value Measurement
The Company applies the provisions of ASC Subtopic 820-10, Fair Value Measurements, for fair value measurements of financial assets and financial liabilities and for fair value measurements of nonfinancial items that are recognized or disclosed at fair value in the financial statements. ASC 820 also establishes a framework for measuring fair value and expands disclosures about fair value measurements.
Fair value is defined as the price that would be received when selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining the fair value for the assets and liabilities required or permitted to be recorded, the Company considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability.
ASC 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes three levels of inputs that may be used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:
JRSIS HEALTH CARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN USD)
NOTE 2. SUMMARIES OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
I. Fair Value Measurement (continued)
Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
Level 2: Quoted prices in markets that are not active, or inputs that is observable, either directly or indirectly, for substantially the full term of the asset or liability;
Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).
The following table sets forth by level within the fair value hierarchy our financial assets and liabilities that were accounted for at fair value on a recurring basis:
Carrying
Value at
December 31,
Fair Value Measurement at
December 31, 2022
Level 1
Level 2
Level 3
Warrant liability
$ -
$ -
$ -
$ -
A summary of changes in Warrant liability for the period ended December 31, 2022 was as follows:
Balance at January 1, 2022
$
Change in fair value of warrant liability
(7 )
Balance at December 31, 2022
-
The fair value of the outstanding warrants was calculated using the Binomial Option Pricing Model, as of the date of filling this report, there was no outstanding warrants.
Cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities are reflected in the accompanying consolidated financial statements at amounts that approximate fair value because of the short-term nature of these instruments. The fair value of the Company’s capital lease obligations also approximates carrying value as they bear interest at current market rates.
J. Segment and geographic information
An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, and is identified on the basis of the internal financial reports that are provided to and regularly reviewed by the Group’s chief operating decision maker in order to allocate resources and assess performance of the segment.
In accordance with ASC (“Accounting Standard Codification”) 280, Segment Reporting, operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”), or decision-making group, in deciding how to allocate resources and in assessing performance. The Group uses the “management approach” in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Group’s chief operating decision maker for making operating decisions and assessing performance as the source for determining the Group’s reportable segments. The Group’s CODM has been identified as the chief executive officer (the “CEO”), who reviews consolidated results when making decisions about allocating resources and assessing performance of the Group.
The Group has determined that there is only one reportable operating segment since all of the services provided are viewed as an integrated business process and allocation of the resources and assessment of the performance are not separately evaluated by the Group’s CODM.
K. Revenue recognition
The Company recognizes revenue when the contract and performance obligations are identified with a customer, the transaction price are determined and allocated to the performance obligations in the contract for which the amount of revenue can be reliably measured. The Company will recognize revenue when the entity satisfies a performance obligation, it is probable that economic benefits will flow to the entity, and specific criteria have been met for each of the Company’s activities.
JRSIS HEALTH CARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN USD)
NOTE 2. SUMMARIES OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
L. Shares Issued for Officer’s Compensation
The Company accounts for stock-based compensation in accordance with ASC 718-10 “Compensation-Stock Compensation” which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors including employee stock options, restricted stock units, and stock appreciation rights are based on estimated fair values. Stock-based compensation expense recognized during the period is based on the value of the portion of share-based payment awards that is ultimately expected to vest during the period.
The Company accounts for non-employee stock-based awards at fair value in accordance with the measurement and recognition criteria of ASC 505-50 “Equity-Based Payments to Non-Employees.
Share-based payment awards granted to a customer shall be measured and classified according to the terms of award. A share-based payment transaction shall be measured based on the fair value.
On May 5, 2022, the Company issued 39,130,000 shares of its common stock to Zhong Zhuowei in compensation for his undertaking to provide management services and financing in connection with the initiation of operations of Laidian. These shares had a negotiated value of $1,056,510. $74,652 of that sum was treated as reimbursement for Mr. Zhong’s contribution of Laidian’s paid in capital. The remaining $981,858 was classified as share-based compensation and capitalized as a deferred expense to be amortized over the three years commencing in April of 2022. For the year ended December 31, 2022, the Company recorded $245,465 compensation expenses.
M. Income taxes
The Company has adopted FASB ASC Topic 740, “Income Taxes,” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
In July 2006, the FASB issued FIN 48 (ASC 740-10), Accounting for Uncertainty in Income Taxes-An Interpretation of FASB Statement No. 109 (ASC 740), which requires income tax positions to meet a more-likely-than-not recognition threshold to be recognized in the financial statements. Under FIN 48 (ASC 740-10), tax positions that previously failed to meet the more-likely-than-not threshold should be recognized in the first subsequent financial reporting period in which that threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not threshold should be derecognized in the first subsequent financial reporting period in which that threshold is no longer met.
The application of tax laws and regulations is subject to legal and factual interpretation, judgment and uncertainty. Tax laws and regulations themselves are subject to change as a result of changes in fiscal policy, changes in legislation, the evolution of regulations and court rulings. Therefore, the actual liability may be materially different from our estimates, which could result in the need to record additional tax liabilities or potentially reverse previously recorded tax liabilities or deferred tax asset valuation allowance.
As a result of the implementation of FIN 48 (ASC 740-10), the Company made a comprehensive review of its portfolio of tax positions in accordance with recognition standards established by FIN 48 (ASC 740-10). The Company recognized no material adjustments to liabilities or shareholder’s equity as a result of the implementation. The adoption of FIN 48 did not have a material impact on the Company’s consolidated financial statements.
Enterprise income tax is determined under the Provisional Regulations of PRC Concerning Income Tax on Enterprises promulgated by the PRC, income tax is payable by enterprises at a rate of 25% of their taxable income.
JRSIS HEALTH CARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN USD)
NOTE 2. SUMMARIES OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
N. Earnings per share
Basic earnings per common share is computed by using net income divided by the weighted average number of shares of common stock outstanding for the periods presented. Diluted earnings per share is computed by dividing net income by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding for the periods presented. The dilutive earnings per share will not be computed if the effect would be anti-dilutive.
O. Reclassification
The comparative figures before April 1, 2022 have been reclassified to conform to current year presentation to reflect the disposal of a component of business derived from the recognition of a spin-off transaction on April 28, 2022.
P. Recently adopted accounting pronouncements
The FASB has issued Accounting Standards Update (ASU) No. 2019-01, Leases (Topic 842): Codification Improvements. The new ASU aligns the guidance for fair value of the underlying asset by lessors that are not manufacturers or dealers in Topic 842 with that of existing guidance. As a result, the fair value of the underlying asset at lease commencement is its cost, reflecting any volume or trade discounts that may apply. However, if there has been a significant lapse of time between when the underlying asset is acquired and when the lease commences, the definition of fair value (in Topic 820, Fair Value Measurement) should be applied.
The ASU also requires lessors within the scope of Topic 942, Financial Services-Depository and Lending, to present all “principal payments received under leases” within investing activities.
Finally, the ASU exempts both lessees and lessors from having to provide certain interim disclosures in the fiscal year in which a company adopts the new leases standard.
We do not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the consolidated financial position, statements of operations and cash flows.
NOTE 3. DISCONTINUED OPERATIONS
At the beginning of 2022, the board of directors of the Company committed to a plan to dispose of Jiarun. On April 28, 2022 the subsidiary of JRSS, Runteng Medical Group Co., Ltd., entered into an Agreement Regarding a Transfer of Harbin Jiarun Hospital Co., Ltd.’s Equity with Zhang Junsheng, who was the Chairman of JRSS until April 28, 2022. Pursuant to the Transfer Agreement, Runteng transferred to Mr. Zhang equity in Harbin Jiarun Hospital Co., Ltd. representing 70% of the total equity in Jiarun Hospital and Mr. Zhang transferred to Runteng 5,392,000 shares of the Registrant’s common stock.
After the Spin-Off, JRSIS does not beneficially own any equity in Jiarun and will no longer consolidate Jiarun financial results with financial results of JRSS on April 1, 2022. Commencing on the second quarter of fiscal year 2022, Jiarun hospital’s historical financial results for periods prior to April 1, 2022 will be reclassified and reflected in JRSS’s consolidated financial statements as a discontinued operation.
Since this transaction required certain authoritative approval before effective, the publication of these transactions were delay so as to obtain all parties consent and advance authoritative approval.
JRSIS HEALTH CARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN USD)
NOTE 3. DISCONTINUED OPERATIONS (Continued)
The following table presents the components of discontinued operations in relation to Jiarun Hospital reported in the consolidated statements of operations:
For The Year Ended
December 31,
Net sales 15,619,411 44,391,171
Operating costs and expenses 12,023,149 40,184,262
Income from operations before other loss and income taxes 3,596,262 4,206,909
Other income (loss) (36,061,556 ) 266,957
Income (loss) from operations before income taxes (32,465,294 ) 4,473,866
Income taxes 928,376 1,181,120
Net income (loss) from discontinued operations (33,393,670 ) 3,292,746
The following table presents the major classes of assets and liabilities of discontinued operations of Jiarun hospital reported in the consolidated balance sheets:
December 31
Cash and cash equivalents $ -
$ 826,124
Accounts receivable, net -
7,544,033
Inventories -
1,771,158
Other receivables -
83,685
Prepayments -
2,812,156
Amount due from related parties -
337,597
Deferred expenses -
461,331
Current assets of discontinued operations -
13,836,084
Construction in progress -
3,240,774
Property and equipment, net -
33,162,817
Long term deferred expenses -
2,117,763
Deposits for capital leases -
967,950
Right-of-use assets -
22,337,517
Non-current assets of discontinued operations -
61,826,821
Accounts payable $ -
$ 12,366,017
Notes payable -
629,050
Deposits received -
3,894
Amount due to related parties -
(1,455,677 )
Other payable -
68,425
Deferred tax payable -
308,491
Tax payable -
420,796
Payroll payable -
1,058,618
Lease liabilities - current -
2,676,956
Current liabilities of discontinued operations -
16,076,570
Lease liabilities - non-current -
20,380,899
Deferred tax payable - 3,993,209
Other capital lease payable -
616,955
Non-current liabilities of discontinued operations -
24,991,063
JRSIS HEALTH CARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN USD)
NOTE 4. PROPERTY AND EQUIPMENT
At December 31, 2022 and 2021, property and equipment, at cost, consist of:
December 31
Transportation equipment $ 43,873 $ -
Office equipment and others -
Total fixed assets at cost 44,644 -
Accumulated depreciation (5,655 ) -
Total fixed assets, net $ 38,989 $ -
The Company recorded depreciation expense of $5,796 and $nil for the years ended December 31, 2022 and 2021, respectively.
NOTE 5. RIGHT-OF-USE ASSETS AND LEASE LIABILITIES
On January 1, 2019, the Company adopted Accounting Standards Codification (“ASC”) Topic 842, “Leases” (“new lease standard”). The new lease standard was adopted using the optional transition method approach that allows for the cumulative effect adjustment to be recorded without restating prior periods. The Company has elected the practical expedient package related to the identification, classification and accounting for initial direct costs whereby prior conclusions do not have to be reassessed for leases that commenced before the effective date. As the Company will not reassess such conclusions, the Company has not adopted the practical expedient to use hindsight to determine the likelihood of whether a lease will be extended or terminated or whether a purchase option will be exercised.
Operating lease
In March 2022 Laidian leased office space under non-cancellable operating lease agreements. Under terms of the lease agreement, from April 2022, Laidian is committed to make lease payments of approximately $1,528 per month for 23 months. This office is used as office for Laidian.
The Company’s adoption of the new lease standard included new processes and controls regarding asset financing transactions, financial reporting and a system-related implementation required for the new lease standard. The Company’s accounting for finance leases (formerly referred to as capital leases prior to the adoption of the new lease standard) remained substantially unchanged. The impact of the adoption of the new lease standard included the recognition of right-of-use (“ROU”) assets and lease liabilities. The adoption of the new lease standard resulted in additional net lease assets and net lease liabilities of $18,138 and $18,138, respectively, as of December 31, 2022.
As of December 31, 2022, the Company has the following amounts recorded on the Company’s consolidated balance sheet:
December 31,
Assets
Right-of-use assets $ 18,138
Total $ 18,138
Liabilities
Lease liabilities- Current 16,708
Lease liabilities- Non-current 1,430
Total $ 18,138
JRSIS HEALTH CARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN USD)
NOTE 5. RIGHT-OF-USE ASSETS AND LEASE LIABILITIES (Continued)
Future annual minimum lease payments, for non-cancellable operating leases are as follows:
Year ending December 31, Amount
$ -
16,708
1,430
Total $ 18,138
The Company has recorded operating lease expense of $14,712 and $ 1,155,662 ($nil for the Company, $ 1,155,662 for discontinued operations) for the years ended December 31 2022 and 2021, respectively.
NOTE 6. DERIVATIVE FINANCIAL INSTRUMENTS
The Company has adopted the provisions of ASC subtopic 825-10, Financial Instruments (“ASC 825-10”). ASC 825-10 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. ASC 825-10 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
Warrant liability - In 2019 the Company issued a common stock purchase warrant (the “warrant”) to purchase 21,000 shares of the registrant’s common stock to Auctus Fund, LLC. The warrant contains certain reset provisions. The accounting treatment of derivative financial instruments requires that the Company record fair value of the derivative as of the inception date (issuance date) and to record changes in fair value as of each subsequent reporting date. As of the date of filling this report, there were no outstanding warrants.
NOTE 7. REVENUE
For the Year Ended
December 31,
Consultation $ 89,166 $ -
Total Revenue $ 89,166 $ -
The Company’s revenue for the year ended December 31, 2022 derived from its provision to a customer of consulting services as well as plans and designs for charging piles.
JRSIS HEALTH CARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN USD)
NOTE 8. INCOME TAX EXPENSE
The Company uses the asset-liability method of accounting for income taxes prescribed by ASC 740 Income Taxes. The Company and its subsidiaries each file their taxes individually.
United States
JRSS is subject to the United States of America tax law at tax rate of 21%. No provision for the US federal income taxes has been made as the Company had no US taxable income for the periods presented, and its earnings are planned to be reinvested indefinitely into the operations of the Company in the PRC.
The following table shows the components of the provision for US income tax recorded for 2022:
Amounts
Income before income tax $ 619,840
Tax rate at 21% 130,166
Non-taxable income (130,166 )
Income tax expense $ -
BVI
JHCL was incorporated in the BVI and, under the current laws of the BVI, it is not subject to income tax.
Hong Kong
Runteng was incorporated in Hong Kong and is subject to Hong Kong profits tax. Runteng is subject to Hong Kong taxation on its activities conducted in Hong Kong and income arising in or derived from Hong Kong. The applicable statutory tax rate is 16.5%.
The following table shows the components of the provision for Hong Kong income tax recorded for 2022:
Amounts
Loss before income tax $ (49,987 )
Tax rate at 16.5% (8,248 )
Allowance on tax losses 8,248
Income tax expense $ -
PRC
Corporate Income Tax (CIT) is determined under the Provisional Regulations of PRC Concerning Income Tax on Enterprises promulgated by the PRC, income tax is payable by enterprises at a rate of 25% of their taxable income.
The following table shows the components of the allowance for PRC income tax recorded for 2022:
Amounts
Loss before income tax $ (34,738 )
Tax rate at 25% (8,685 )
Allowance on tax losses 8,685
Income tax expense $ -
JRSIS HEALTH CARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN USD)
NOTE 9. RELATED PARTY TRANSACTIONS
The following is the list of the related parties with which the Company had transactions:
Amount due from related parties
Amount due from related parties consisted of the following as of the periods indicated:
December 31,
Name of related parties
Zhuowei Zhong $ 854 $ -
$ 854 $ -
Amounts due from Zhuowei Zhong, the Chairman of the Company, represented excess reimbursement by the Company of amounts paid by Mr. Zhong for the daily operation of the Company. The excess has been repaid in 2023.
Amount due to related parties
Amount due to related parties consisted of the following as of the periods indicated:
December 31,
Name of related parties
Harbin Jiarun Hospital Co., Ltd. $ -
$ 1,456,919
$ -
$ 1,456,919
Amounts due to Harbin Jiarun Hospital Co., Ltd. (“Jiarun”) represented the operating expenses paid by Jiarun on behalf of the Company.
Related parties’ transactions
Related party transaction consisted of the following:
For The Year Ended
December 31,
Stock-based compensation paid to:
Zhong Zhuowei (#1) $ 245,465 $ -
(#1) Zhong Zhuowei is the majority shareholder of JRSIS, holding 80.7% and 0% of the Company’s issued and outstanding common stock as of December 31, 2022 and 2021, respectively. On May 5, 2022, the Company issued 39,130,000 shares of its common stock to Zhong Zhuowei under the “Agreement on the establishment of Laidian technology (Zhongshan) Co., Ltd.” in compensation for his undertaking to provide management services and financing in connection with the initiation of operations of Laidian. These shares had a negotiated value of $1,056,510. $74,652 of that sum was treated as reimbursement for Mr. Zhong’s contribution of Laidian’s paid-in capital. The remaining $981,858 was classified as share-based compensation and capitalized as a deferred expense to be amortized over the three years commencing in April of 2022. For the year ended December 31, 2022, the Company recorded $245,465 compensation expenses by reason of the amortization of the deferred expense.
JRSIS HEALTH CARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN USD)
NOTE 10. BASIC AND DILUTED EARNINGS PER SHARE
Basic net income per share is computed using the weighted average number of common shares outstanding during the period. Diluted net income per share is computed using the weighted average number of common shares and, if dilutive, potential common shares outstanding during the period. Potential common shares comprise shares issuable upon the exercise of share-based awards, using the treasury stock method. The reconciliation of the numerators and denominators of the basic and diluted earnings per share computations for income from continuing operations is shown as follows:
For The Year Ended
December 31,
Numerator:
Net income (loss) available to common stockholders $ (33,721,300 ) $ 3,188,945
Net loss from continued operations (327,630 ) (103,801 )
Net income (loss) from discontinued operations (33,393,670 ) 3,292,746
Denominator:
Basic weighted-average number of shares outstanding 44,885,402 18,451,588
Diluted weighted-average number of shares outstanding 44,885,402 18,661,588
Net income(loss) per share:
Net income (loss) per share of common stock
Basic EPS (0.7513 ) 0.1728
Diluted EPS (0.7513 ) 0.1709
Net loss from continuing operations per share of common stock
Basic EPS (0.0073 ) (0.0056 )
Diluted EPS (0.0073 ) (0.0056 )
Net income (loss) from discontinuing operations per share of common stock
Basic EPS $ (0.7440 ) $ 0.1785
Diluted EPS $ (0.7440 ) $ 0.1764
The dilutive earnings per share will not be computed if the effect would be anti-dilutive.
NOTE 11. CONTINGENCIES AND COMMITMENT
Certain conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company’s management and legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company’s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought. There was no contingency of this type as of December 31, 2022 and 2021.
If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material would be disclosed. There was no contingency of this type as of December 31, 2022 and 2021.
Loss contingencies considered to be remote by management are generally not disclosed unless they involve guarantees, in which case the guarantee would be disclosed.
JRSIS HEALTH CARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN USD)
NOTE 12. COMMON STOCK
On March 17, 2022, the company entered into an Agreement on the Establishment of Laidian Technology (Zhongshan) Co., Ltd. (“Laidian”) with Zhong Zhuowei. The agreement contains a covenant by Zhong Zhuowei to fund the operations of Laidian which is 100% owned by Runteng Medical, in consideration of Mr. Zhong’s financial commitment and commitment to provide management services, the company agreed to issue 39,130,000 shares of its common stock to Zhong Zhuowei upon the initiation of operations of Laidian. On May 5, 2022, the company issued 39,130,000 shares of its common stock to Zhong Zhuowei. As Mr. Zhong had previously acquired 8,000,000 shares in private transactions, he owned 47,130,000 shares (80.7%) of the Company’s common stock as on May 5, 2022.
On May 17, 2022, the Company issued a total of 6,000,000 share of common stock for US$60,000 at US$0.01 per share to six non-US shareholders.
On April 28, 2022, Runteng entered into an agreement regarding a transfer of Harbin Jiarun Hospital Co., Ltd.’s Equity (the “Transfer Agreement”) with Zhang Junsheng. Pursuant to the Transfer Agreement, Runteng transferred to Mr. Zhang equity in Harbin Jiarun Hospital Co., Ltd. (“Jiarun Hospital”) representing 70% of the total equity in Jiarun Hospital and Mr. Zhang transferred to Runteng 5,392,000 shares of the Company’s common stock. On May 27, 2022, the Company cancelled 5,392,000 shares of its common stock from Zhang Junsheng. Since this transaction required certain authoritative approval before effective, the publication of these transactions was delayed so as to obtain all parties’ consent and advance authoritative approval. As of May 27, 2022, the issued share balance of the Company was 58,366,569, the balance of the number of shares of Mr. Zhang and Mr. Zhong were nil (0%) and 47,130,000 (80.7%), respectively.
There were 58,366,569 and 18,628,569 shares of common stock issued and outstanding at December 31, 2022 and 2021 respectively.
NOTE 13. GOING CONCERN
As reflected in the accompanying consolidated financial statements, the Company had a substantial loss of $33,701,300 and a $23,705,746 negative retained earnings or accumulated deficit as of December 31, 2022. These factors raised substantial doubt about its ability to continue as a going concern. In view of the matter described above, recoverability of a major portion of the recorded asset amounts shown in the accompanying balance sheet is dependent upon continued operations of the Company, which in turn is dependent upon the Company’s ability to raise additional capital, obtain financing and succeed in its future operations. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
To continue as a going concern, the Company is actively pursuing additional funding and strategic partners to enable it to implement its business plan. In addition, the Company is also working to devote more efforts to improve its operation and generate more profits. The Company may also consider raise fund through private placement from current shareholders. Besides, the major shareholder will continuously provide financial support to the Company. Management believes that these actions will allow the Company to continue its operations through the next fiscal year.
NOTE 14. SUBSEQUENT EVENTS
The Management of the Company has determined that there were no material subsequent events required to be disclosed or because of which adjustments are needed.

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None.

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ITEM 9A. CONTROLS AND PROCEDURES
Item 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management team, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended, as of December 31, 2022. Based on this evaluation, Management determined that the following material weakness existed in our internal control over financial reporting:
● The relatively small number of employees who are responsible for accounting functions prevents us from segregating duties within our internal control system. The Company may engage more employees when more financial resources are available.
● Our internal financial staff lack expertise in identifying and addressing complex accounting issued under U.S. Generally Accepted Accounting Principles. Currently, we are relying on external consultants to assist us complying with the US GAAP financial reporting process.
● We are trying to improve our documentation system concerning our existing financial processes, risk assessment and internal controls so as to provide sufficient and adequate records for the preparation and disclosure of financial reporting process. Currently, we are relying on external consultants to assist us complying with the financial reporting process.
● We do not presently have an audit committee. The Company will setup an audit committee when more financial resources are available.
Based on their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the Company’s system of disclosure controls and procedures was not effective as of December 31, 2022 for the purposes described in this paragraph.
Management’s Report on Internal Control over Financial Reporting
The Company’s management is responsible for establishing and maintaining adequate internal control over our financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act. The Company’s management is also required to assess and report on the effectiveness of the Company’s internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 (“Section 404”). Internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of the Company’s financial reporting for external purposes in accordance with generally accepted accounting principles. Internal control over financial reporting includes policies and procedures that: (i) pertain to maintaining records that in reasonable detail accurately and fairly reflect the Company’s transactions; (ii) provide reasonable assurance that transactions are recorded as necessary for preparation of the Company’s financial statements and that receipts and expenditures of company assets are made in accordance with management authorization; and (iii) provide reasonable assurance that unauthorized acquisition, use or disposition of company assets that could have a material effect on our financial statements would be prevented or detected on a timely basis.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.
As of December 31, 2022, our management, under the supervision of and with the participation of the Chief Executive Officer and the Chief Financial Officer, evaluated the effectiveness of our internal control over financial reporting as required by Rules 13a-15(c) and 15d-15(c) under the Exchange Act. In making this assessment, Management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control - Integrated Framework (1992), including the following five framework components: i) control environment, ii) risk assessment, iii) control activities, iv) information and communications, and v) monitoring. In the course of making our assessment of the effectiveness of internal controls over financial reporting, we identified three material weaknesses in our internal control over financial reporting. These material weaknesses consisted of the three material weaknesses identified above under the heading “Evaluation of Disclosure Controls and Procedures.”
Management does not believe that the current level of the Company’s operations warrants a remediation of the weaknesses identified in this assessment. However, because of the above condition, management’s assessment is that the Company’s internal controls over financial reporting were not effective as of December 31, 2022.
This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to an exemption for non-accelerated filers from the internal control audit requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002.
Changes in Internal Control over Financial Reporting
During the period covered by this report, there has been no change in our internal control over financial reporting that has materially affected or is reasonably likely to materially affect our internal control over financial reporting.

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ITEM 9B. OTHER INFORMATION
Item 9B. Other Information.
None.

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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Item 10. Directors, Executive Officers and Corporate Governance.
On April 12, 2022, Runteng organized and acquired 100% of the equity in Laidian to engage in the business of providing charging services to electric vehicles. On April 28, 2022 JRSIS completed the spin-off of Jiarun. As a result, JRSIS does not beneficially own any equity interest in Jiarun. According to the spin-off agreement on April 28, 2022, the effective date of spin-off was April 1, 2022. In connection with the spin-off of Jiarun, all of the directors and executive officers then in office resigned from their positions and the Company organized a new board and executive team.
The following table sets forth certain information concerning our current directors and executive officers:
Name
Age
Position
On Board
Periods
Zhong, Zhuowei
President, Chairman of the Board and Director
Since April 2022
Huang, Zhifei
Chief Executive Officer and Director
Since April 2022
Chen, Zhuowen
Chief Financial Officer and Director
Since April 2022
Zhong, Zhuowei, Mr. Zhong has been appointed to the Board to bring his extensive experience in corporate management, specifically in the business of EV charging services, and his familiarity with U.S. securities laws and practices. Since 2017 Mr. Zhong has served as Chairman of Zhongshan Wanqi Investment Consulting Co., Ltd. Mr. Zhong holds a Master’s Degree in Business Administration awarded by Tsinghua University. He is 50 years old.
Huang, Zhifei Mr. Huang has been appointed to the Board to bring his experience in corporate management and project design. From 2017 through 2021 Mr. Huang was employed as Chief Executive Officer of Zhongshan Yuandian Industrial Development Co., Ltd. Mr. Huang holds a Master’s Degree in Business Administration awarded by Sun Yat-Sen University. He is 46 years old.
Chen, Zhuowen Mr. Chen has been appointed to the Board to bring his experience in financial management. Mr. Chen has been employed since 1998 in positions with responsibility for financial accounting. In particular, from 2017 through 2021 Mr. Chen was employed as Chief Financial Officer of Zhongshan Yuandian Industrial Development Co., Ltd. From 2006 to 2016 Mr. Chen was employed as Chief Financial Officer of Shanghai FuDi Company. Mr. Chen was awarded a Master’s Degree in Business Administration. He is 59 years old.
Legal Proceedings Involving Officers and Directors
To our knowledge, during the last ten years, none of our directors and executive officers (including those of our subsidiaries) has:
● Had a bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time.
● Been convicted in a criminal proceeding or been subject to a pending criminal proceeding, excluding traffic violations and other minor offenses.
● Been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities.
● Been found by a court of competent jurisdiction (in a civil action), the SEC, or the Commodities Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.
● Been the subject to, or a party to, any sanction or order, not subsequently reverse, suspended or vacated, of any self-regulatory organization, any registered entity, or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
Board Committees
Audit Committee
We do not presently have an audit committee. Our Board of Directors currently acts as our Audit committee.
Compensation Committee
We do not presently have a compensation committee. Our Board of Directors currently acts as our compensation committee.
Nominating Committee
We do not presently have a nominating committee. Our Board of Directors currently acts as our nominating committee.
Code of Ethics
We do not presently have a code of ethics. However, we intend to adopt such a code of ethics in the future.

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ITEM 11. EXECUTIVE COMPENSATION
Item 11. Executive Compensation.
Executive Compensation
The following table sets forth information with respect to compensation paid by us to our executive officers for services during the presented years. There was no cash compensation paid to executive officers in 2022 since our business scale was small. We will consider the payment of cash compensation to our executive officers after the company is enlarged or new enterprises are merged in the future.
Non-Equity Non-qualified
Incentive Deferred All
Stock Option Plan Comp. Other
Salary Bonus Awards Awards Comp. Earnings Comp. Total
Name and Principal Position Year ($) ($) ($) ($) ($) ($) ($) ($)
Zhong, Zhuowei - - 245,465 #1 - - - - 245,465
President - - - - - - - -
Huang Zhifei - - - - - - - -
CEO - - - - - - - -
Chen, Zhuowen - - - - - - - -
CFO - - - - - - - -
Sun, Lihua #2 2022 - - - - - - - -
CFO/Director 26,334 - - - - - - 26,334
(#1) The Company issued 39,130,000 shares of its common stock to Zhong Zhuowei in compensation for his undertaking to provide management services and financing in connection with the initiation of operations of Laidian. These shares had a negotiated value of $1,056,510. $74,652 of that sum was treated as reimbursement for Mr. Zhong’s contribution of Laidian’s paid in capital. The remaining $981,858 was classified as share-based compensation and capitalized as a deferred expense to be amortized over the three years commencing in April of 2022. For the year ended December 31, 2022, the Company recorded $245,465 compensation expenses.
(#2) Sun Lihua resigned as the Chief Finanical Office along with the spin-off of Jiarun.
Outstanding Equity Awards
No individual grants of stock options or other equity incentive awards have been made to any executive officer or any director since our inception.
Employment Contracts, Termination of Employment, Change-in-Control Arrangements
We have not entered into any employment or other contracts or arrangements with our executive officers. There are no compensation plans or arrangements, including payments to be made by us, with respect to our officers, directors or consultants that would result from the resignation, retirement or any other termination of such directors, officers or consultants from us. There are no arrangements for directors, officers, employees or consultants that would result from a change-in-control.
Compensation of Directors
We have no formal plan for compensating our directors for their services in their capacity as directors. Directors are entitled to reimbursement for reasonable travel and other out-of-pocket expenses incurred in connection with attendance at meetings of our Board of Directors. The Board of Directors may award special remuneration to any director undertaking any special services on behalf of JRSIS Health Care Corporation other than services ordinarily required of a director. To date, we have paid no compensation to any person for services as a member of the Company’s Board of Directors.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The following table sets forth certain information regarding our shares of common stock beneficially owned as of the date hereof for (i) each stockholder known to be the beneficial owner of 5% or more of our outstanding shares of common stock, (ii) each named executive officer and director, and (iii) all executive officers and directors as a group. A person is considered to beneficially own any shares: (i) over which such person, directly or indirectly, exercises sole or shared voting or investment power, or (ii) of which such person has the right to acquire beneficial ownership at any time within 60 days through an exercise of stock options or warrants or otherwise. Unless otherwise indicated, voting and investment power relating to the shares shown in the table for our directors and executive officers is exercised solely by the beneficial owner or shared by the owner and the owner’s spouse or children.
For purposes of this table, a person or group of persons is deemed to have “beneficial ownership” of any shares of common stock that such person has the right to acquire within 60 days as of the date hereof. For purposes of computing the percentage of outstanding shares of our common stock held by each person or group of persons named above, any shares that such person or persons has the right to acquire within 60 days are deemed to be outstanding, but are not deemed to be outstanding for the purpose of computing the percentage ownership of any other person. The inclusion herein of any shares listed as beneficially owned does not constitute an admission of beneficial ownership.
The percentage ownership information shown in the table below is calculated based on 58,366,569 shares of our common stock issued and outstanding.
Amount and
Nature of
Beneficial
Title of Class Name of Beneficial Owner Ownership Percentage
Common Stock Zhong, Zhuowei 47,130,000 80.75 %
President, Chairman of the board. Direct
Common Stock Huang, Zhifei - -
CEO, Director
Common Stock Chen, Zhuowen - -
CFO, Director
Common Stock All Officers and Directors as a Group (3 persons) 47,130,000 80.75 %
As a result of the ownership by our Chairman of 80.75% of the outstanding shares, our Chairman will have significant influence to:
● Elect or defeat the election of our directors;
● Amend or prevent amendment of our articles of incorporation or bylaws;
● Effect or prevent a merger, sale of assets or other corporate transaction; and
● Determine the outcome of any other matter submitted to the stockholders for vote.
Moreover, because of the significant ownership position held by our insiders, new investors will not be able to effect a change in the Company’s business or management, and therefore, shareholders would be subject to decisions made by management and the majority shareholder.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Item 13. Certain Relationships and Related Transactions, and Director Independence.
There have been no transactions since the beginning of the 2022 fiscal year, or any currently proposed transaction, in which we were or are to be a participant and the amount involved exceeded or exceeds the lesser of $120,000 or one percent of the average of our total assets at year-end for the last two completed fiscal years, and in which any related person had or will have a direct or indirect material interest (other than compensation described under “Executive Compensation”), except as follows:
On May 5, 2022, we issued 39,130,000 shares of its common stock to Zhong Zhuowei. Under “Agreement on the establishment of Laidian technology (Zhongshan) Co., Ltd.” Mr. Zhong agreed to provide management services and financing in connection with the initiation of operations of Laidian. As Mr. Zhong had previously acquired 8,000,000 shares in private transactions, he owned 47,130,000 shares (80.75%) of the Company’s common stock as on May 5, 2022.
Independent Directors
No director will be considered “independent” unless the Board affirmatively determines that the director has no direct or indirect relationship with the Company that, in the opinion of the Company’s board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.
The Board of Directors has determined that none of the three current members of the Board is independent.

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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Item 14. Principal Accounting Fees and Services.
We were billed by our independent public accounting firm, Centurion ZD CPA & Co., for the following professional services it performed for us during the years ended December 31, 2022 and 2021 as set forth in the table below.
Year Ended
December 31,
Audit fees(1)
$ 112,000 $ 84,000
Audit-related fees(2) $ 6,429
$ -
Tax fees $ - $ -
All other fees $ - $ -
(1) “Audit Fees” consisted of the aggregate fees billed for professional services rendered for the audit of our annual financial statements and the reviews of the financial statements included in our Forms 10-Q and for any other services that were normally provided in connection with our statutory and regulatory filings or engagements.
(2) “Audit-related Fees” consisted of the aggregate fees billed for professional services rendered for the audit of our annual financial statements and the reviews of the financial statements included in our Forms 10-Q and for assurance and related services by the principal accountant that are traditionally performed by the principal accountant and which are “reasonably related to the performance of the audit or review of the registrant’s financial statements.” Operational audits would not be related to the audit or review of the financial statements and, therefore, the fees for these services should be included in “All Other Fees.” As required by the rules, the registrant would need to include a narrative description of the services included in the “All Other Fees” category.
Our Board of Directors pre-approves all audit and non-audit services performed by the Company’s auditor and the fees to be paid in connection with such services.
PART IV

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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Item 15. Exhibits, Financial Statements Schedules
Name
Exhibit
3.1
Articles of Incorporation of Registrant (1)
3.2
Amended and Restated Bylaws of the Registrant - filed as an exhibit to the Current Report on Form 8-K filed on September 6, 2018 and incorporated herein by reference.
3.5
Certificate of Incumbency on January 22, 2014 (1)
4.6
Description of Common Stock - filed as an exhibit to the Annual Report on Form 10-K filed on April 15, 2022 and incorporated herein by reference.
10.1
Agreement on Establishment of Laidian Technology (Zhongshan) Co., Ltd. dated March 17, 2022 between JRSIS Health Care Corporation and Zhong Zhuowei - filed as an exhibit to the Current Report on Form 8-K filed on June 9, 2022 and incorporated herein by reference.
Subsidiaries of the Company *
31.1
Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *
31.2
Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *
32.1
Certification of the Principal Executive Officer pursuant to U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *
32.2
Certification of the Principal Financial Officer pursuant to U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *
101.INS
Inline XBRL Instance Document
101.SCH
Inline XBRL Taxonomy Extension Schema Document
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document
Cover Page Interactive Data File (formatted as Inline XBRL) and contained in Exhibit 101
(1) Incorporated by reference to the same exhibit filed with our registration statement on Form S-1, as amended (File No. 333-194359).
* Filed herewith.