1. ORGANIZATION AND BUSINESS BACKGROUND BOQI International Medical, Inc. (the "Company" or "BIMI") was incorporated in the State of Delaware in the name of Galli Process, Inc. on October 31, 2000. On February 7, 2002, the Company changed its name to Global Broadcast Group, Inc. On November 12, 2004, the Company changed its name to Diagnostic Corporation of America. On March 15, 2007, we changed our name to NF Energy Saving Corporation of America, and on August 24, 2009, the Company changed its name to NF Energy Saving Corporation. On December 16, 2019, the Company changed its name to BOQI International Medical Inc., to reflect the Company's refocus of its business from the energy saving industry to the health care industry. Since March 7, 2012, the common stock of the Company has been traded on the Nasdaq Capital Market. Until October 14, 2019, the Company, through NF Energy Saving Investment Limited and its subsidiaries (the "NF Group"), has operated in the energy saving enhancement technology industry in the People's Republic of China ("the PRC"). The Company focused on providing services relating to energy saving technology, optimization design, energy saving reconstruction of pipeline networks and contractual energy management for the electric power, petrochemical, coal, metallurgy, construction, and municipal infrastructure development industries in the PRC and the manufacture and sales of energy-saving flow control equipment. In late 2019, the Company committed to a plan to dispose of all its equity interests in the NF Group. On March 31, 2020, the Company entered into a stock purchase agreement (the "NF SPA") to sell the NF Group (the "NF Group Disposition"). When the NF Group Disposition is closed, the Company will no longer be involved in the energy efficiency enhancement business. Please refer to NOTE 5 for more information related to the NF Group Disposition. As of the date of this report, the NF Group Disposition has not been closed. On October 14, 2019, the Company acquired 100% of the equity interests in Lasting Wisdom Holdings Limited ("Lasting"), a limited company incorporated under the laws of the British Virgin Islands ("BVI"). Lasting has limited operating activities since incorporation except for holding the ownership interest in Pukung Limited ("Pukung"), a company organized under the laws of Hong Kong. Pukung owns 100% of the equity interest in Beijing Xinrongxin Industrial Development Co., Ltd. ("Xinrongxin"), a company organized under the laws of the PRC. Xinrongxin owns all the ownership interest of Dalian Boqi Zhengji Pharmacy Chain Co., Ltd., ("Boqi Zhengji"). Boqi Zhengji has a wholly-owned inactive subsidiary, Dalian Boqi Zhengji Bio-Technology Limited. Lasting, Pukung, Xinrongxin and Boqi Zhengji are hereinafter collectively reference as the "Pharmacy Group". The Company, through the Pharmacy Group, engages in both retail and wholesale distribution of pharmaceutical and other healthcare products in the PRC. The Pharmacy Group sells its pharmaceutical and other healthcare products to customers through its directly-owned stores and authorized retailer stores. The Pharmacy Group offers a wide range of products, including prescription and OTC drugs, nutritional supplements, traditional Chinese medicines, personal and family care products and medical devices, as well as miscellaneous items. All the Pharmacy Group's retail pharmacies are located in Dalian City, Liaoning Province, PRC. The Pharmacy Group also distributes its products to third party pharmacies, hospitals and authorized retailers. On November 20, 2019, Boqi Zhengji was declared by China People's court as a defaulter and has been included in the national Defaulters List in China. Description of subsidiaries Name Place of incorporation and kind of legal entity Principal activities and place of operation Effective interest held NF Energy Saving Investment Limited ("NF Investment") British Virgin Island, a limited liability company Investment holding 100 % NF Energy Equipment Limited ("NF Equipment") Hong Kong, a limited liability company Investment holding 100 % Liaoning Nengfa Weiye Energy Technology Co., Ltd. ("Nengfa Energy") The PRC, a limited liability company Production of a variety of industrial valve components which are widely used in water supply and sewage system, coal and gas fields, power generation stations, petroleum and chemical industries in the PRC 100 % Liaoning Nengfa Tiefa Import &amp; Export Co., Ltd. ("Nengfa Tiefa Import &amp; Export") The PRC, a limited liability company Development and production of hi-tech and automatic-intelligence valve products 57 % Lasting Wisdom Holdings Limited ("Lasting") British Virgin Island, a limited liability company Investment holding 100 % Pukung Limited ("Pukung") Hong Kong, a limited liability company Investment holding 100 % Beijing Xinrongxin Industrial Development Co., Ltd. ("Xinrongxin") The PRC, a limited liability company Investment holding 100 % Boqi Zhengji Pharmacy Chain Co., Ltd. ("Boqi Zhengji") The PRC, a limited liability company Retail and wholesale distribution of pharmaceutical and other healthcare products in the PRC 100 %