Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Sep. 30, 2013 | Nov. 13, 2013 | |
Document And Entity Information | ' | ' |
Entity Registrant Name | 'Tongji Healthcare Group, Inc. | ' |
Entity Central Index Key | '0001389518 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 30-Sep-13 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Is Entity a Well-known Seasoned Issuer? | 'No | ' |
Is Entity a Voluntary Filer? | 'No | ' |
Is Entity's Reporting Status Current? | 'Yes | ' |
Entity Filer Category | 'Smaller Reporting Company | ' |
Entity Common Stock, Shares Outstanding | ' | 15,812,191 |
Document Fiscal Period Focus | 'Q3 | ' |
Document Fiscal Year Focus | '2013 | ' |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
ASSETS | ' | ' |
Cash | $8,533 | $81,135 |
Accounts receivable, net | 383,778 | 448,923 |
Due from related parties | 57,520 | 107,710 |
Medicine supplies | 108,372 | 108,399 |
Prepaid expenses and other current assets | 11,004 | 9,710 |
Total Current Assets | 569,207 | 755,877 |
Equipment, net | 2,043,777 | 2,033,536 |
Construction in progress | 12,736,923 | 11,200,724 |
Deposit | 187,990 | 182,619 |
Intangible assets, net | 94,553 | ' |
TOTAL ASSETS | 15,632,450 | 14,172,756 |
LIABILITIES AND STOCKHOLDERS' DEFICIT | ' | ' |
Accounts payable and accrued expenses | 500,866 | 327,324 |
Due to related parties | 13,536,007 | 11,762,403 |
Other payables | 616,938 | 764,542 |
Current portion of capital lease payable | 388,281 | 349,050 |
Total Current Liabilities | 15,042,092 | 13,203,319 |
Capital lease payable | 791,233 | 1,056,415 |
Total Liabilities | 15,833,325 | 14,259,734 |
Contingencies | 1,253,905 | 1,121,692 |
STOCKHOLDERS' DEFICIT | ' | ' |
Preferred stocks; $0.001 par value, 20,000,000 shares authorized and none issued and outstanding | ' | ' |
Common stocks; $0.001 par value, 50,000,000 shares authorized and 15,812,191 shares issued and outstanding as of September 30, 2013 and December 31, 2012 respectively | 15,812 | 15,812 |
Additional paid in capital | 438,216 | 434,377 |
Accumulated deficit | -1,997,919 | -1,785,336 |
Accumulated other comprehensive income | 89,111 | 126,477 |
Total Stockholders' Deficit | -1,454,780 | -1,208,670 |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | $15,632,450 | $14,172,756 |
CONDENSED_CONSOLIDATED_BALANCE1
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Stockholders equity: | ' | ' |
Preferred stock, par value | $0.00 | $0.00 |
Preferred stock, authorized shares | 20,000,000 | 20,000,000 |
Preferred stock, issued shares | 0 | 0 |
Preferred stock, outstanding shares | 0 | 0 |
Common stock, par value | $0.00 | $0.00 |
Common stock, authorized shares | 50,000,000 | 50,000,000 |
Common stock, issued shares | 15,812,191 | 15,812,191 |
Common stock, outstanding shares | 15,812,191 | 15,812,191 |
CONDENSED_CONSOLIDATED_STATEME
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
OPERATING REVENUE | ' | ' | ' | ' |
In-patient service revenue | $269,061 | $423,991 | $806,988 | $1,189,553 |
Out-patient service revenue | 338,177 | 276,219 | 913,813 | 890,404 |
Total operating revenue | 607,238 | 700,210 | 1,720,801 | 2,079,957 |
OPERATING EXPENSES | ' | ' | ' | ' |
Administrative expenses | 53,145 | 24,010 | 108,397 | 93,254 |
Depreciation and amortization expenses | 30,692 | -80,323 | 76,611 | 139,638 |
Contingency loss | 25,500 | 1,120,376 | 83,955 | 1,120,376 |
Medicine and supplies | 266,512 | 331,343 | 775,357 | 1,010,071 |
Other operating expenses | 122,872 | 62,458 | 278,526 | 185,659 |
Salary and fringes | 184,425 | 180,387 | 541,213 | 543,306 |
Total operating expenses | 683,146 | 1,638,251 | 1,864,059 | 3,092,304 |
LOSS FROM OPERATIONS | -75,908 | -938,041 | -143,258 | -1,012,347 |
OTHER INCOME (EXPENSE) | ' | ' | ' | ' |
Other income | 4,333 | 6,028 | 18,947 | 27,344 |
Interest expense, net | -13,045 | -51,027 | -88,272 | -126,659 |
Total Other Expense | -8,712 | -44,999 | -69,325 | -99,315 |
LOSS BEFORE INCOME TAXES | -84,620 | -983,040 | -212,583 | -1,111,662 |
Provision for income taxes | ' | ' | ' | ' |
NET LOSS | -84,620 | -983,040 | -212,583 | -1,111,662 |
OTHER COMPREHENSIVE INCOME(LOSS) | ' | ' | ' | ' |
Foreign currency translation gain (loss) | -7,939 | 1,735 | -37,366 | -731 |
NET COMPREHENSIVE LOSS | ($92,559) | ($981,305) | ($249,949) | ($1,112,393) |
Net loss per common stock-Basic and Diluted | ($0.01) | ($0.06) | ($0.02) | ($0.07) |
Weighted average common stock outstanding - Basic and Diluted | 15,812,191 | 15,812,191 | 15,812,191 | 15,812,191 |
CONDENSED_CONSOLIDATED_STATEME1
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (USD $) | 9 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Operating activities: | ' | ' |
Net Loss | ($212,583) | ($1,111,662) |
Adjustments to reconcile net loss to Net cash provided by (used in) operating activities: | ' | ' |
Depreciation expense | 76,612 | 139,638 |
Stock option expense | 3,839 | 3,852 |
Increase/(decrease) in operating assets and liabilities: | ' | ' |
Accounts receivable | 77,836 | -103,240 |
Medicine supplies | 3,210 | 12,406 |
Prepaid expense and other current assets | -970 | -10,521 |
Accounts payable and accrued expenses | 162,616 | 165,354 |
Other payables | -168,937 | 132,132 |
Contingent liability | 98,270 | 957,554 |
Net Cash Provided By (Used In) Operating Activities | 39,891 | 185,513 |
Investing activities: | ' | ' |
Acquisitions of fixed assets | -20,353 | -15,936 |
Acquisitions of intangible assets | -100,541 | ' |
Construction in Progress | -1,195,636 | -1,811,953 |
Due from related parties | 52,973 | -503 |
Net Cash Used in Investing Activities | -1,263,557 | -1,828,392 |
Financing activities: | ' | ' |
Payments of capital lease | -265,517 | -227,395 |
Due to related parties | 1,414,749 | 1,871,403 |
Net Cash Provided by Financing Activities | 1,149,232 | 1,644,008 |
Effects of foreign currency translation | 1,830 | 181 |
Net increase (decrease) in Cash | -72,602 | 1,310 |
Cash - Beginning of Period | 81,135 | 32,126 |
Cash and Cash Equivalents-Ending of Period | 8,533 | 33,436 |
Cash paid during the period for: | ' | ' |
Income taxes | ' | ' |
Interest paid | $86,575 | $127,984 |
1_ORGANIZATION
1. ORGANIZATION | 9 Months Ended |
Sep. 30, 2013 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' |
NOTE 1 - ORGANIZATION | ' |
Nanning Tongji Hospital, Inc. ("NTH") was established in Nanning in the province of Guangxi of the People’s Republic of China ("PRC") by the Nanning Tongji Medical Co. Ltd. and an individual on October 30, 2003. | |
NTH is a designated hospital for medical insurance in the city of Nanning and Guangxi province. NTH specializes in the areas of internal medicine, surgery, gynecology, pediatrics, emergency medicine, ophthalmology, medical cosmetology, rehabilitation, dermatology, otolaryngology, traditional Chinese medicine, medical imaging, anesthesia, acupuncture, physical therapy, health examination, and prevention. | |
On December 19, 2006, NTH filed Articles of Incorporation in the State of Nevada to establish Tongji Healthcare Group, Inc. (the "Company"). On the same day, Tongji, Inc., a wholly owned subsidiary of the Company, was incorporated in the State of Colorado. Tongji Inc. was dissolved on March 25, 2011. | |
On December 27, 2006, Tongji Inc. acquired 100% of the equity in NTH pursuant to an Agreement and Plan of Merger, pursuant to which NTH became a wholly owned subsidiary of Tongji. The Company was authorized to issue 50,000,000 shares of common stock, par value $0.001 per share and 20,000,000 shares of preferred stock, par value $0.001 per share. The Company issued 15,652,557 shares of common stock to the stockholders of NTH in exchange for 100% of the issued and outstanding shares of common stock of NTH. Thereafter and for purposes of these consolidated financial statements the "Company" and "NTH" are used to refer to the operations of Nanning Tongji Hospital Co. Ltd. The acquisition of NTH was accounted for as a reverse acquisition under the purchase method of accounting since the stockholders of NTH obtained control of the consolidated entity. Accordingly, the reorganization of the two companies was recorded as a recapitalization of NTH, with NTH being treated as the continuing operating entity. | |
According to the PRC Regulation of Healthcare Institutions, hospitals are subject to registration with the health department of the local government to obtain business license for hospital services. We received our renewed business license from Nanning municipal government in November 2007, and this license is valid until November, 2020. Other existing regulations having material effects on our business include regulations dealing with physician's licensing, usage of medicine and injection, and public security in health and medical advertising. | |
NTH must register with and maintain an operating license from the local health department, due to the fact that NTH currently maintains a facility with over 100 beds. NTH is subject to review by the local health department at least once every three years. If NTH fails to meet their standards, NTH’s business license may be revoked. NTH is also obligated to provide free services or dispatch our physicians or other employees in the event of a need for public assistance. NTH dedicates a very small percentage of its resources to providing free public services. |
2_SUMMARY_OF_SIGNIFICANT_ACCOU
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended | ||
Sep. 30, 2013 | |||
Accounting Policies [Abstract] | ' | ||
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' | ||
The accompanying unaudited condensed consolidated financial statements have been prepared by management without audit pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted as allowed by such rules and regulations, and management believes that the disclosures are adequate to make the information presented not misleading. These condensed consolidated financial statements include all of the adjustments, which, in the opinion of management, are necessary to a fair presentation of financial position and results of operations. All such adjustments are of a normal and recurring nature. Interim results are not necessarily indicative of results for a full year. The condensed consolidated balance sheet information as of December 31, 2012 was derived from the audited consolidated financial statements included in the Form 10-K. These condensed consolidated financial statements should be read in conjunction with the audited financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended on December 31, 2012 (“Form 10-K”), filed with the Commission on April 1, 2013. | |||
This summary of significant accounting policies of the Company is presented to assist in understanding the Company’s consolidated financial statements. The consolidated financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. These accounting policies conform to generally accepted accounting principles and have been consistently applied in the preparation of the condensed consolidated financial statements and the Form 10-K. | |||
BASIS OF PRESENTATION AND CONSOLIDATION | |||
These unaudited condensed consolidated financial statements present the Company’s results of operations, financial position and cash flows on a consolidated basis. The consolidated financial statements include Tongji Healthcare Group, Inc. and its wholly-owned subsidiaries. Intercompany transactions and accounts have been eliminated in consolidation. Our policy is to consolidate all subsidiaries in which a greater than 50% voting interest is owned. The Company operates in one segment in accordance with the accounting guidance FASB ASC topic 280, “Segment Reporting”. | |||
CASH AND CASH EQUIVALENTS | |||
For purposes of the statements of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. A substantial amount of the Company’s cash is held in bank accounts in the People’s Republic of China (“PRC” or China) and is not protected by Federal Deposit Insurance Corporation (FDIC) insurance or any other similar insurance. Cash held in China amounted to $8,533 as of September 30, 2013. Given the current economic environment and the financial condition of the banking industry, there is a risk that the deposits may not be readily available or covered by such insurance. The Company has had no loss of cash in domestic or foreign banks in past years. | |||
USE OF ESTIMATES | |||
The preparation of these condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported assets and liabilities, disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of net revenues and expenses during the reporting period. Actual results may differ from those estimates and such differences may be material. The more significant estimates and assumptions by management include, among others, useful lives and residual values of equipment, valuation of medical supplies, accounts receivable, intangible assets, construction in progress, stock based compensation, and allowance for bad debt. The current economic environment has increased the degree of uncertainty inherent in these estimates and assumptions. | |||
TRANSLATION ADJUSTMENT | |||
The Company's functional currency is the Chinese Renminbi (RMB). The reporting currency is that of the US Dollar. Capital accounts of the condensed consolidated financial statements are translated into United States dollars from RMB at their historical exchange rates when the capital transactions occurred. Assets and liabilities are translated at the exchange rates as of the balance sheet date. Income and expenditures are translated at the average exchange rate of the year. The RMB is not freely convertible into foreign currency and all foreign currency exchange transactions must take place through authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into US dollar at the rates used in translation. | |||
The exchange rates used to translate amounts in RMB into USD for the purposes of preparing the financial statements were as follows: | |||
30-Sep-13 | |||
Balance sheet | RMB 6.12 to US $1.00 | ||
Statement of operations and other comprehensive loss | RMB 6.17 to US $1.00 | ||
31-Dec-12 | |||
Balance sheet | RMB 6.30 to US $1.00 | ||
Statement of operations and other comprehensive loss | RMB 6.30 to US $1.00 | ||
30-Sep-12 | |||
Statement of operations and other comprehensive loss | RMB 6.32 to US $1.00 | ||
RECLASSIFICATIONS | |||
Certain items previously reported under specific financial statement captions have been reclassified to conform to the current year presentation. | |||
REVENUE RECOGNITION | |||
The Company's revenue recognition policies are in compliance with Staff Accounting Bulletin 104 (ASC 605). Service revenue is recognized on the dates services were rendered. When a formal arrangement exists, the price is fixed or determinable. When the service is completed, no other significant obligations of the Company exist and collectability is reasonably assured. Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as unearned revenue. | |||
The Company generates revenue from individual patients as well as third-party payers, including PRC government programs and insurance providers, under which the hospital is paid based upon government established charges. Revenues for pharmaceutical drug sales are recognized upon the drug being administered to a patient. | |||
Patient revenues are recorded based on pre-established rates set by the local government. The Company bills for services provided to Medicare patients through a medical card (the US equivalent of an insurance card). There have not been significant differences between the amounts the Company has billed the government Medicare funds and the amounts collected from the Medicare funds. | |||
ACCOUNTS RECEIVABLE | |||
Accounts receivable are recorded at the estimated net realizable amounts from government fund, insurance companies and patients. Collections have not been considered an area that exposes the Company to additional risk. Hospital staff verifies patient coverage prior to examinations and/or procedures. | |||
For any Medicare patient who visits the hospital and is qualified for acceptance, the hospital will only include the portion that the social insurance organization will pay in the accounts receivable and collects the self-pay portion in cash at the time of service. Management continues to estimate the likelihood of bad debt on an ongoing basis. | |||
The Company has estimated a bad debt allowance of approximately $43,000 as of September 30, 2013 and December 31, 2012. | |||
FAIR VALUE OF FINANCIAL INSTRUMENTS | |||
The Company applies the provisions of FASB ASC Topic 825, which requires all entities to disclose the fair value of financial instruments, both assets and liabilities recognized and not recognized on the balance sheet, for which it is practicable to estimate fair value, and defines fair value of a financial instrument as the amount at which the instrument could be exchanged in a current transaction between willing parties. As of September 30, 2013 and December 31, 2012 the fair value of cash, accounts receivable, accounts payable and accrued expenses, capital lease payable and other payables approximated the carrying value due to the short maturity of the instruments, quoted market prices or interest rates which fluctuate with market rates except for related party debt or receivables for which it is not practicable to estimate fair value. | |||
FAIR VALUE MEASUREMENTS | |||
FASB ASC Topic 820, “Fair Value Measurements and Disclosures”, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements. | |||
Various inputs are considered when determining the fair value of the Company’s investments, and long-term debt. The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in these securities. These inputs are summarized in the three broad levels listed below. | |||
● | Level 1 – observable market inputs that are unadjusted quoted prices for identical assets or liabilities in active markets. | ||
● | Level 2 – other significant observable inputs (including quoted prices for similar securities, interest rates, credit risk, etc.). | ||
● | Level 3 – significant unobservable inputs (including the Company’s own assumptions in determining the fair value of investments). | ||
The carrying value of financial assets and liabilities recorded at fair value is measured on a recurring or non-recurring basis. Financial assets and liabilities measured on a non-recurring basis are those that are adjusted to fair value when a significant event occurs. The Company had no financial assets or liabilities carried and measured on a nonrecurring basis during the reporting periods. Financial assets and liabilities measured on a recurring basis are those that are adjusted to fair value each time a financial statement is prepared. The Company had no financial assets and liabilities carried at fair value on a recurring basis. | |||
The availability of inputs observable in the market varies from instrument to instrument and depends on a variety of factors including the type of instrument, whether the instrument is actively traded, and other characteristics particular to the transaction. For many financial instruments, pricing inputs are readily observable in the market, the valuation methodology used is widely accepted by market participants, and the valuation does not require significant management discretion. For other financial instruments, pricing inputs are less observable in the market and may require management judgment. | |||
CONCENTRATIONS, RISKS, AND UNCERTAINTIES | |||
All of the Company’s operations are located in the PRC. There can be no assurance that the Company will be able to successfully continue to operate and failure to do so would have a material adverse effect on the Company’s financial position, results of operations and cash flows. In addition, the success of the Company’s operations is subject to numerous contingencies, some of which are beyond management’s control. These contingencies include general economic conditions, the price of medicine, competition, governmental and political conditions, and changes in regulations. Because the Company is dependent on the domestic market of the PRC, the Company is subject to various additional political, economic and other uncertainties. Among other risks, the Company’s operations will be subject to risk of restrictions on the transfer of funds, domestic policy changes, changing taxation policies, foreign exchange restrictions, and political and governmental regulations. | |||
CONTINGENCIES | |||
Certain conditions may exist as of the date the consolidated financial statements are issued. These conditions may result in a future 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. | |||
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. 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. Loss contingencies considered to be remote by management are generally not disclosed unless they involve guarantees, in which case the guarantee would be disclosed. | |||
MEDICAL SUPPLIES | |||
Medical supplies include both western and traditional Chinese medicine, are valued on the lower of weighted average cost or market basis. Inventory includes product cost and inbound freight. Management compares the cost of medical supplies with the market value and allowance is made for writing down their inventories to market value, if such value is lower. | |||
EQUIPMENT | |||
Equipment is recorded at cost. Depreciation is computed over the estimated useful lives of the related asset type using the straight-line method. Maintenance and repairs are expensed as incurred and the costs of additions and betterments that increase the useful lives of the assets are capitalized. When equipment is disposed, the cost and related accumulated depreciation are removed from the accounts and any gain or loss is included in other income or expenses. | |||
CONSTRUCTION-IN-PROGRESS | |||
A hospital facility currently under development is accounted for as construction-in-progress. Construction-in-progress is recorded at acquisition cost, including land rights cost, development expenditure, and professional fees capitalized during the course of construction for the purpose of financing the project. Upon completion of the project, the cost of construction-in-progress will be transferred to fixed assets, at which time depreciation will commence. | |||
CAPITALIZATION OF INTEREST | |||
Interest cost is capitalized for qualifying assets when the portion of the interest cost incurred during the assets' acquisition periods could have been avoided if expenditures for the assets had not been made. The amount capitalized in an accounting period is determined by applying the capitalization rate to the average amount of accumulated expenditures for the asset during the period. The capitalization rates used in an accounting period is based on the rates applicable to borrowings outstanding during the period (also see Note 4). | |||
Capitalization period covers the duration of the activities required to get the asset ready for its intended use, provided that expenditures for the asset have been made and interest cost is being incurred. Interest capitalization continues as long as those activities and the incurrence of interest cost continue. | |||
IMPAIRMENT OF LONG-LIVED ASSETS | |||
The Company’s long-lived assets are reviewed for impairment in accordance with the guidance of FASB Topic ASC 360, “Property, Plant, and Equipment”, and FASB ASC Topic 205 “Presentation of Financial Statements”. The Company tests for impairment losses on long-lived assets used in operations whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Whenever any such impairment exists, an impairment loss will be recognized for the amount by which the carrying value exceeds the fair value. | |||
The Company tests long-lived assets for recoverability at least annually or more frequently upon the occurrence of an event or when circumstances indicate that the net carrying amount is greater than its fair value. Assets are grouped and evaluated at the lowest level for their identifiable cash flows that are largely independent of the cash flows of other groups of assets. The Company considers historical performance and future estimated results in its evaluation of potential impairment and then compares the carrying amount of the asset to the future estimated cash flows expected to result from the use of the asset. If the carrying amount of the asset exceeds estimated expected undiscounted future cash flows, the Company measures the amount of impairment by comparing the carrying amount of the asset to its fair value. The estimation of fair value is generally measured by discounting expected future cash flows at the rate the Company utilizes to evaluate potential investments. The Company estimates fair value based on the information available in making whatever estimates, judgments and projections are considered necessary. There was no impairment of long-lived assets and intangibles for the periods ended September 30, 2013 and 2012. | |||
BASIC AND DILUTED EARNINGS PER SHARE | |||
Earnings per share (EPS) is calculated in accordance with the FASB ASC Topic 260, “Earnings Per Share.” Basic net income (loss) per share is based upon the weighted average number of common shares outstanding. Diluted net income (loss) per share is based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. Potentially dilutive securities to purchase 100,000 shares of common stock were not included in the calculation of the diluted earnings per share as their effect would be anti-dilutive for the period ended September 30, 2013. During the Nine Months period ended September 30, 2013, the average market price of the common stock during the year was less than the exercise price of the stock options and the Company was in a loss position. Accordingly, the stock options were anti-dilutive and have not been included in the calculation of diluted earnings per share. | |||
INCOME TAXES | |||
FASB ASC Topic 740, "Income Taxes” 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 accordance with ASC Topic 740-10, “Accounting for Uncertainty in Income Taxes — An Interpretation of FASB ASC Topic 740” , which requires income tax positions to meet a more-likely-than-not recognition threshold to be recognized in the financial statements. 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. | |||
The Company has made a comprehensive review of its portfolio of tax positions in accordance with recognition standards established by ASC 740-10 and has not recognized any material uncertain tax positions. | |||
In addition, companies in the PRC are required to pay business taxes consisting of 5% of income they derive from providing medical treatment, as well as city construction taxes and educational taxes which are 7% and 3%, respectively, of the business taxes. In April 2010, the Company was granted an exemption from these taxes until further notice from the tax bureau. | |||
The Company had accrued approximately $40,000 for failure to file US tax returns and Form 5472 between the years 2006 to 2009. The Company is current with its required filings. In addition, the Company does not accrue United States income taxes on unremitted earnings from foreign operations, as it is the Company’s intention to invest these earnings in the foreign operations indefinitely. | |||
STATEMENT OF CASH FLOWS | |||
In accordance with FASB ASC Topic 230, "Statement of Cash Flows," cash flows from the Company's operations are calculated based upon the local currencies. As a result, amounts related to assets and liabilities reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheet. | |||
EMPLOYEE BENEFIT COSTS | |||
The Company contributes to a defined contribution retirement plan organized by the municipal government in the province in which the Company’s subsidiary is registered. The Company makes contributes for qualified employees that are eligible to participate in the plan. Contributions to the plan are calculated at 30% of the employees’ salaries above a fixed threshold amount; employees contribute 8% and the Company’s subsidiary contributes the balance of 22%. The Chinese government is responsible for the benefit liability to retired employees. The Company has no other material obligation for the payment of retirement beyond the annual contribution. | |||
STOCK-BASED COMPENSATION | |||
For purposes of determining the variables used in the calculation of stock compensation expense under the provisions of FASB ASC Topic 505, “Equity” and FASB ASC Topic 718, “Compensation — Stock Compensation,” we perform an analysis of current market data and historical Company data to calculate an estimate of implied volatility, the expected term of the option and the expected forfeiture rate. With the exception of the expected forfeiture rate, which is not an input, we use these estimates as variables in the Black Scholes model. Depending upon the number of stock options granted, any fluctuations in these calculations could have a material effect on the results presented in our consolidated statement of operations. In addition, any differences between estimated forfeitures and actual forfeitures could also have a material impact on our financial statements. | |||
Stock-based compensation costs that have been included in operating expenses amounted to $3,839 and $3,852, for the nine month periods ended September 30, 2013 and 2012, respectively. | |||
COMPREHENSIVE LOSS | |||
The Company reports comprehensive income in accordance with FASB ASC Topic 220 “Comprehensive Income," which established standards for reporting and displaying comprehensive income and its components in a financial statement that is displayed with the same prominence as other financial statements. | |||
Total comprehensive loss is defined as all changes in stockholders' equity during a period, other than those resulting from investments by and distributions to stockholders (i.e., issuance of equity securities and dividends). Generally, for the Company, total comprehensive income (loss) equals net income (loss) plus or minus adjustments for currency translation. Total comprehensive loss represents the activity for a period net of related tax and was a loss of $92,559 and $981,305 for the three months periods ended September 30, 2013 and 2012, respectively. Total comprehensive loss represents the activity for a period net of related tax and was a loss of $249,949 and 1,112,393 for the nine months periods ended September 30, 2013 and 2012, respectively. | |||
While total comprehensive income is the activity in a period and is largely driven by net earnings in that period, accumulated other comprehensive income or loss (“AOCI”) represents the cumulative balance of other comprehensive income as of the balance sheet date. For the Company, AOCI is primarily the cumulative balance related to the currency adjustments and increased overall equity by $89,111 and $126,477 as of September 30, 2013 and December 31, 2012, respectively. | |||
RECENT ACCOUNTING PRONOUNCEMENTS | |||
Recent accounting pronouncements issued by the FASB, the AICPA and 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. | |||
GOING CONCERN | |||
The accompanying condensed consolidated financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate continuation of the Company as a going concern. However, the Company has negative working capital of $14,472,885, an accumulated deficit of $1,997,919, and a stockholders’ deficit of $1,454,780 as of September 30, 2013. The Company’s ability to continue as a going concern ultimately is dependent on the management’s ability to obtain equity or debt financing, attain further operating efficiencies, and achieve profitable operations. The consolidated 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 not be able to continue as a going concern. | |||
Management has taken certain restructuring steps to provide the necessary capital to continue its operations. These steps included: 1) plan to convert existed related parties’ loans into equity, 2) to complete construction of the new hospital and begin generating revenue by the end of the next year, 3) plan to increase sales revenue with additional medical equipments. No assurances can be given that the steps taken will provide necessary capital for the Company to continue its operations. | |||
3_EQUIPMENT
3. EQUIPMENT | 9 Months Ended | |||||||||
Sep. 30, 2013 | ||||||||||
Property, Plant and Equipment [Abstract] | ' | |||||||||
NOTE 3 - EQUIPMENT | ' | |||||||||
Equipment as of September 30, 2013 (Unaudited) and December 31, 2012 comprised the following: | ||||||||||
Estimated Useful Lives (Years) | September 30, | December 31, | ||||||||
2013 | 2012 | |||||||||
Office equipment | 10-May | $ | 88,021 | $ | 85,491 | |||||
Medical equipment | 5 | 3,216,465 | 3,104,102 | |||||||
Fixtures | 10 | 115,772 | 112,445 | |||||||
Vehicles | 5 | 45,497 | 44,190 | |||||||
Total equipment | 3,465,755 | 3,346,228 | ||||||||
Less accumulated depreciation | (1,421,978 | ) | (1,312,692 | ) | ||||||
Equipment, net | $ | 2,043,777 | $ | 2,033,536 | ||||||
The Company purchased and started depreciating certain medical equipments at the beginning of 2012. Those equipments are to be placed in service upon receiving usage approval from the Chinese government and hiring qualified personnel. As of September 30, 2013, the Company still has not received the approval. On September 30, 2012, the company adjusted depreciation expenses and stopped depreciating on those medical equipments. The Company has been working with Nanning Municipal Health Bureau to obtain the approval to place the equipments in service and making great efforts to recruit qualified personnel. The Company expects to be able to place the assets in service in December 2013. If the Company is unsuccessful in being able to place the assets in service we will assess the need to record an impairment charge for the assets. Therefore, depreciation expense charged to operations was $30,692 and $(80,323) for the three month periods ended September 30, 2013 and 2012, respectively. Depreciation expense charged to operations was $76,611 and $139,638 for the nine month periods ended September 30, 2013 and 2012, respectively. |
4_CONSTRUCTION_IN_PROGRESS
4. CONSTRUCTION IN PROGRESS | 9 Months Ended |
Sep. 30, 2013 | |
Notes to Financial Statements | ' |
NOTE 4 - CONSTRUCTION IN PROGRESS | ' |
The Company is constructing a new hospital building on leased land. Costs capitalized primarily consists of payments for construction costs, acquisition cost, land rights cost, development expenditure, professional fees, and capitalized interest. The Company is required to make payments for construction costs of approximately $7,587,300 and any excess construction cost payments incurred during the construction phase. As of September 30, 2013, the Company had paid approximately $12,737,000 for the construction of the hospital building. In addition to what it had paid for the hospital construction, the Company estimates the additional costs to complete the project to be $31,000,000. The land lease term will start upon completion of the new hospital building. The new hospital building is expected to be completed by the middle of 2014. | |
The Company will amortize the cost of the hospital building over the life of the land lease of twenty years. Capitalized interest was approximately $345,000 as of September 30, 2013. |
5_CONTINGENCIES
5. CONTINGENCIES | 9 Months Ended |
Sep. 30, 2013 | |
Commitments and Contingencies Disclosure [Abstract] | ' |
NOTE 5- CONTINGENCIES | ' |
On August 3, 2011, Guangxi Jingjian Real Estate Development Company (“Jingjian”) filed a civil suit against NTH, a subsidiary of the Company, in the People’s Court in Qingxiu District, Nanning City, People’s Republic of China (“People’s Court”). In its complaint, Jingjian asserts a breach of contract claim against NTH, alleging that NTH has failed to make timely and total payment of the project transfer fee under certain Business Building Project Agreement between NTH and Jingjian. Jingjian seeks a total of RMB 3,162,500 (approximately $498,000) in the complaint, including payment of the remaining RMB 800,000 (approximately $126,000) project transfer fee and liquidated damages of RMB 2,362,500 (approximately $372,000) for late payment of such fee. On February 1, 2012, the People’s Court ruled that NTH shall pay approximately $176,000 to Jingjian, including the remaining project transfer fee and a late fee of such payment. On August 14, 2012, Jingjian appealed the decision to the Intermediate People’s Court in Nanning City, People’s Republic of China (“Intermediate Court”), disputing the calculation of the damages of the People’s Court. On September 9, 2012, the Intermediate Court affirmed the decision of the People’s Court. On March 1, 2013, NTH borrowed fund from a related party and paid RMB 1,096,922 (approximately $174,000) to Jianjian pursuant to the final judgment. | |
In September 2009, Guangxi Nanning Tingyouyuxiang Commercial Co., Ltd. (“Tingyouyuxiang”) filed a civil suit against NTH in the People’s Court. In the complaint, Tingyouyuxiang asserted a breach of contract claim against NTH, alleging that NTH had failed to make timely and total payment of RMB 5,050,000 (approximately $800,000) under certain Supplement Agreement by and among NTH, Tingyouyuxiang and Langdong 8th Group. On December 30, 2009, the People’s Court ruled that NTH shall pay to Tingyouyuxiang damages of RMB 5,050,000 (approximately $800,000) plus interest and the court hearing fee of approximately $320,000. On March 9, 2012, NTH appealed to the Intermediate People’s Court in Nanning City, People’s Republic of China (“Intermediate Court”), alleging, among other things, that NTH was never served. On June 6, 2012, the Intermediate Court remanded the case to the People’s Court. On June 20, 2013, the People’s Court dismissed the action. On October 21, 2013, Tingyouyuxiang appealed the dismissal to the Intermediate Court and the Intermediate Court accepted the appeal on October 21, 2013. No decision has been made by the Intermediate Court as of the date of this Report. The Company had accrued approximately $1,250,000 as of September 30, 2013. |
6_MAJOR_SUPPLIERS_AND_CUSTOMER
6. MAJOR SUPPLIERS AND CUSTOMERS | 9 Months Ended |
Sep. 30, 2013 | |
Notes to Financial Statements | ' |
NOTE 6 - MAJOR SUPPLIERS AND CUSTOMERS | ' |
The Company had two major suppliers for the nine month period ended September 30, 2013 and 2012: Guangxi East Dragon Century Pharmaceutical Co., Ltd.; and Guangxi Tongji Medicine Co. Ltd., a related party with common majority stockholders. Medicine purchased from Guangxi East Dragon Century Pharmaceutical Co., Ltd. accounted for 20% and 14% of all medicine purchases for nine month period ended September 30, 2013 and 2012. Medicine purchased from Guangxi Tongji Medicine Co. Ltd. accounted for 45% and 47% of all medicine purchases for nine month period ended September 30, 2013 and 2012. Total amount due to Guangxi East Dragon Century Pharmaceutical Co., Ltd. at September 30, 2013 and 2012 were approximately $185,000 and $50,000 respectively. Total amount due to Guangxi Tongji Medicine Co. Ltd. at September 30, 2013 and 2012 were approximately $1,000,000 and $958,000 respectively. | |
The Company had one major customer Nanning Social Insurance Center accounted for 10% of revenue for the nine month period ended September 30, 2013, and two major customers, Nanning Social Insurance Center and Guangxi Province Social Insurance Center, accounted for 14% and 6% of revenue for the nine month period ended September 30, 2012. As of September 30, 2013 and 2012, accounts receivable due from Nanning Social Insurance Center was approximately $405,000 and $518,000 respectively. As of September 30, 2013 and 2012, accounts receivable due from Guangxi Province Social Insurance Center was approximately $21,000 and $178,000. |
7_CAPITAL_LEASE_OBLIGATIONS
7. CAPITAL LEASE OBLIGATIONS | 9 Months Ended | ||||
Sep. 30, 2013 | |||||
Debt Disclosure [Abstract] | ' | ||||
NOTE 7 - CAPITAL LEASE OBLIGATIONS | ' | ||||
Sale and Lease Back | |||||
On March 25, 2011, the Company completed a financing arrangement with an independent third party to sell and leaseback certain machinery and equipment. The net carrying value of the machinery and equipment sold was $262,683. The machinery and equipment was sold for $371,517, of which $334,365 was received in cash and $37,152 was held as refundable deposit. The transaction has been accounted for as a financing arrangement, wherein the property remains on the Company’s books and will continue to be depreciated. A financing obligation in the amount of $371,517, representing the proceeds, has been recorded under “Capital Lease Payable” in the Company’s Balance Sheet, and is being reduced based on payments under the lease. Capital lease payable was approximately $231,000 as of September 30, 2013. The lease does not contain an option to renew. There is also no contingent rent or concessions, or any leasehold improvement incentives. | |||||
The lease has a term of 5 years and requires minimum annual rental payments including principal and interest as follows: | |||||
Year Ending December 31 | Amount | ||||
2013 | $ | 25,664 | |||
2014 | 102,654 | ||||
2015 | 102,654 | ||||
2016 | 34,218 | ||||
Total minimum lease payments | 265,190 | ||||
Less: interest payments | 33,818 | ||||
PV of minimum capital lease payments | 231,372 | ||||
Less: current obligations under capital lease | 82,233 | ||||
Long term capital lease obligation | $ | 149,139 | |||
In October 2011, the Company entered into an agreement to lease certain machinery and equipment that are classified as capital leases. The cost of equipment under capital leases of approximately $1,450,000 is included in the Balance Sheet equipment at September 30, 2013. Accumulated depreciation of the leased equipment at September 30, 2013 was approximately $126,000. Depreciation of assets under capital leases is included in depreciation expense. Capital lease payable was $948,142as of September 30, 2013. | |||||
The lease has a term of 5 years and requires minimum annual rental payments including principal and interest as follows: | |||||
Year Ending December 31 | Amount | ||||
2013 | $ | 95,745 | |||
2014 | 382,980 | ||||
2015 | 382,980 | ||||
2016 | 223,405 | ||||
Total minimum lease payments | 1,085,110 | ||||
Less: interest payments | 136,967 | ||||
PV of minimum capital lease payments | 948,142 | ||||
Less: current obligations under capital lease | 306,048 | ||||
Long term capital lease obligation | $ | 642,094 | |||
8_OTHER_PAYABLES
8. OTHER PAYABLES | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Payables and Accruals [Abstract] | ' | ||||||||
NOTE 8 - OTHER PAYABLES | ' | ||||||||
Other payables as of September 30, 2013 and December 31, 2012 consist of the following: | |||||||||
30-Sep-13 | 31-Dec-12 | ||||||||
Advance from customers | $ | 6,042 | $ | -4,778 | |||||
Welfare payable | 33,564 | 47,310 | |||||||
Capital lease deposits paid by third party | 352,006 | 354,409 | |||||||
Lawsuit settlement payable | - | 177,024 | |||||||
Other payables | 225,326 | 190,577 | |||||||
Total | $ | 616,938 | $ | 764,542 |
9_STOCKHOLDERS_EQUITY
9. STOCKHOLDERS' EQUITY | 9 Months Ended | |
Sep. 30, 2013 | ||
Accounting Policies [Abstract] | ' | |
NOTE 9 - STOCKHOLDERS' EQUITY | ' | |
Preferred Stock | ||
As of September 30, 2013 and December 31, 2012, the Company has 20,000,000 shares of preferred stock authorized with a par value of $0.001 per share. There are no shares issued and outstanding as of September 30, 2013. | ||
Common Stock | ||
As of September 30, 2013 and December 31, 2012, the Company has 50,000,000 shares of common stock authorized with a par value of $0.001 per share. | ||
Statutory Reserves | ||
As stipulated by the Company Law of the PRC, net income after taxation can only be distributed as dividends after appropriation has been made for the following: | ||
i. | Making up cumulative prior years’ losses, if any; | |
ii. | Allocations to the “Statutory surplus reserve” of at least 10% of income after tax, as determined under PRC accounting rules and regulations, until the fund amounts to 50% of the Company’s registered capital; | |
iii. | Allocations to the discretionary surplus reserve, if approved in the stockholders’ general meeting. | |
As of September 30, 2013, the Company had accumulated deficits of $1,997,919. Therefore, the Company did not appropriate a reserve for the statutory surplus reserve for the Nine Months period ended September 30, 2013. |
10_RELATED_PARTY_TRANSACTIONS_
10. RELATED PARTY TRANSACTIONS AND COMMITMENTS | 9 Months Ended | ||||||||||||
Sep. 30, 2013 | |||||||||||||
Related Party Transactions [Abstract] | ' | ||||||||||||
NOTE 10 - RELATED PARTY TRANSACTIONS AND COMMITMENTS | ' | ||||||||||||
Due from/to Related Parties | |||||||||||||
The Company has entered into agreements with Nanning Tongji Chain Pharmacy Co. Ltd., Guangxi Tongji Medicine Co. Ltd., and Nanning Switch Factory whereby the Company from time to time will advance amounts to assist them in their operations. The three companies have common major stockholders. The advanced amounts accrue interest at a rate of 1.5% per annum. The amount receivable as of September 30, 2013 and December 31, 2012 was $57,520 and $107,710, respectively. Interest income for the three month periods ended September 30, 2013 and 2012 was approximately $168 and $165, respectively. Interest income for the nine month periods ended September 30, 2013 and 2012 was approximately $502 and $500, respectively. | |||||||||||||
The Company has entered into an agreement with the Chairman and a stockholder of the Company, Nanning Tongji Chain Pharmacy Co. Ltd., Guangxi Tongji Medicine Co. Ltd., and Nanning Tongji Electric Coating Factory, whereby the Company from time to time will be advanced amounts to assist us in our operations. The advanced amounts accrue interest at a rate of 1.5% per annum. As of September 30, 2013 and December 31, 2012, $13,536,007 and $11,762,403 were payable to these related parties respectively. Interest expense for the three month periods ended September 30, 2013 and 2012 was $43,396 and $37,173 respectively. Interest expense for the nine month periods ended September 30, 2013 and 2012 was $118,075 and $113,255 respectively. | |||||||||||||
Rental Commitments | |||||||||||||
The Company entered into a lease agreement for their hospital with Guangxi Tongji Medicine Co. Ltd that expires December 2014. The monthly lease payment is approximately $2,500. The Company also in the process of cooperating with Guangxi Construction Engineering Corporation Langdong 8th Group in building a new 600-bed hospital in Nanning, China. It expects the new hospital to be completed by the middle of 2014. The hospital is being constructed by Guangxi Construction Engineering Corporation Langdong 8th Group and, when completed, the land will be leased by the Company for a twenty-year term. The annual lease payments will gradually increase each year. Based on the exchange rate at September 30, 2013, minimum future lease payments are as follows: | |||||||||||||
Related Party | Non-Related Party | Total | |||||||||||
1-5 years | $ | 40,292 | $ | 2,299,836 | $ | 2,340,128 | |||||||
6-10 years | - | 2,941,176 | 2,941,176 | ||||||||||
11-15 years | - | 3,349,673 | 3,349,673 | ||||||||||
16-20 years | - | 3,684,641 | 3,684,641 | ||||||||||
21-25 years | - | 371,732 | 371,732 | ||||||||||
Total | $ | 40,292 | $ | 12,647,058 | $ | 12,687,350 | |||||||
2_SUMMARY_OF_SIGNIFICANT_ACCOU1
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended | ||
Sep. 30, 2013 | |||
Notes to Financial Statements | ' | ||
BASIS OF PRESENTATION AND CONSOLIDATION | ' | ||
These unaudited condensed consolidated financial statements present the Company’s results of operations, financial position and cash flows on a consolidated basis. The consolidated financial statements include Tongji Healthcare Group, Inc. and its wholly-owned subsidiaries. Intercompany transactions and accounts have been eliminated in consolidation. Our policy is to consolidate all subsidiaries in which a greater than 50% voting interest is owned. The Company operates in one segment in accordance with the accounting guidance FASB ASC topic 280, “Segment Reporting”. | |||
CASH AND CASH EQUIVALENTS | ' | ||
For purposes of the statements of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. A substantial amount of the Company’s cash is held in bank accounts in the People’s Republic of China (“PRC” or China) and is not protected by Federal Deposit Insurance Corporation (FDIC) insurance or any other similar insurance. Cash held in China amounted to $8,533 as of September 30, 2013. Given the current economic environment and the financial condition of the banking industry, there is a risk that the deposits may not be readily available or covered by such insurance. The Company has had no loss of cash in domestic or foreign banks in past years. | |||
USE OF ESTIMATES | ' | ||
The preparation of these condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported assets and liabilities, disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of net revenues and expenses during the reporting period. Actual results may differ from those estimates and such differences may be material. The more significant estimates and assumptions by management include, among others, useful lives and residual values of equipment, valuation of medical supplies, accounts receivable, intangible assets, construction in progress, stock based compensation, and allowance for bad debt. The current economic environment has increased the degree of uncertainty inherent in these estimates and assumptions. | |||
TRANSLATION ADJUSTMENT | ' | ||
The Company's functional currency is the Chinese Renminbi (RMB). The reporting currency is that of the US Dollar. Capital accounts of the condensed consolidated financial statements are translated into United States dollars from RMB at their historical exchange rates when the capital transactions occurred. Assets and liabilities are translated at the exchange rates as of the balance sheet date. Income and expenditures are translated at the average exchange rate of the year. The RMB is not freely convertible into foreign currency and all foreign currency exchange transactions must take place through authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into US dollar at the rates used in translation. | |||
The exchange rates used to translate amounts in RMB into USD for the purposes of preparing the financial statements were as follows: | |||
30-Sep-13 | |||
Balance sheet | RMB 6.12 to US $1.00 | ||
Statement of operations and other comprehensive loss | RMB 6.17 to US $1.00 | ||
31-Dec-12 | |||
Balance sheet | RMB 6.30 to US $1.00 | ||
Statement of operations and other comprehensive loss | RMB 6.30 to US $1.00 | ||
30-Sep-12 | |||
Statement of operations and other comprehensive loss | RMB 6.32 to US $1.00 | ||
RECLASSIFICATIONS | ' | ||
Certain items previously reported under specific financial statement captions have been reclassified to conform to the current year presentation. | |||
REVENUE RECOGNITION | ' | ||
The Company's revenue recognition policies are in compliance with Staff Accounting Bulletin 104 (ASC 605). Service revenue is recognized on the dates services were rendered. When a formal arrangement exists, the price is fixed or determinable. When the service is completed, no other significant obligations of the Company exist and collectability is reasonably assured. Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as unearned revenue. | |||
The Company generates revenue from individual patients as well as third-party payers, including PRC government programs and insurance providers, under which the hospital is paid based upon government established charges. Revenues for pharmaceutical drug sales are recognized upon the drug being administered to a patient. | |||
Patient revenues are recorded based on pre-established rates set by the local government. The Company bills for services provided to Medicare patients through a medical card (the US equivalent of an insurance card). There have not been significant differences between the amounts the Company has billed the government Medicare funds and the amounts collected from the Medicare funds. | |||
ACCOUNTS RECEIVABLE | ' | ||
Accounts receivable are recorded at the estimated net realizable amounts from government fund, insurance companies and patients. Collections have not been considered an area that exposes the Company to additional risk. Hospital staff verifies patient coverage prior to examinations and/or procedures. | |||
For any Medicare patient who visits the hospital and is qualified for acceptance, the hospital will only include the portion that the social insurance organization will pay in the accounts receivable and collects the self-pay portion in cash at the time of service. Management continues to estimate the likelihood of bad debt on an ongoing basis. | |||
The Company has estimated a bad debt allowance of approximately $43,000 as of September 30, 2013 and December 31, 2012. | |||
FAIR VALUE OF FINANCIAL INSTRUMENTS | ' | ||
The Company applies the provisions of FASB ASC Topic 825, which requires all entities to disclose the fair value of financial instruments, both assets and liabilities recognized and not recognized on the balance sheet, for which it is practicable to estimate fair value, and defines fair value of a financial instrument as the amount at which the instrument could be exchanged in a current transaction between willing parties. As of September 30, 2013 and December 31, 2012 the fair value of cash, accounts receivable, accounts payable and accrued expenses, capital lease payable and other payables approximated the carrying value due to the short maturity of the instruments, quoted market prices or interest rates which fluctuate with market rates except for related party debt or receivables for which it is not practicable to estimate fair value. | |||
FAIR VALUE MEASUREMENTS | ' | ||
FASB ASC Topic 820, “Fair Value Measurements and Disclosures”, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements. | |||
Various inputs are considered when determining the fair value of the Company’s investments, and long-term debt. The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in these securities. These inputs are summarized in the three broad levels listed below. | |||
● | Level 1 – observable market inputs that are unadjusted quoted prices for identical assets or liabilities in active markets. | ||
● | Level 2 – other significant observable inputs (including quoted prices for similar securities, interest rates, credit risk, etc.). | ||
● | Level 3 – significant unobservable inputs (including the Company’s own assumptions in determining the fair value of investments). | ||
The carrying value of financial assets and liabilities recorded at fair value is measured on a recurring or non-recurring basis. Financial assets and liabilities measured on a non-recurring basis are those that are adjusted to fair value when a significant event occurs. The Company had no financial assets or liabilities carried and measured on a nonrecurring basis during the reporting periods. Financial assets and liabilities measured on a recurring basis are those that are adjusted to fair value each time a financial statement is prepared. The Company had no financial assets and liabilities carried at fair value on a recurring basis. | |||
The availability of inputs observable in the market varies from instrument to instrument and depends on a variety of factors including the type of instrument, whether the instrument is actively traded, and other characteristics particular to the transaction. For many financial instruments, pricing inputs are readily observable in the market, the valuation methodology used is widely accepted by market participants, and the valuation does not require significant management discretion. For other financial instruments, pricing inputs are less observable in the market and may require management judgment. | |||
CONCENTRATIONS, RISKS, AND UNCERTAINTIES | ' | ||
All of the Company’s operations are located in the PRC. There can be no assurance that the Company will be able to successfully continue to operate and failure to do so would have a material adverse effect on the Company’s financial position, results of operations and cash flows. In addition, the success of the Company’s operations is subject to numerous contingencies, some of which are beyond management’s control. These contingencies include general economic conditions, the price of medicine, competition, governmental and political conditions, and changes in regulations. Because the Company is dependent on the domestic market of the PRC, the Company is subject to various additional political, economic and other uncertainties. Among other risks, the Company’s operations will be subject to risk of restrictions on the transfer of funds, domestic policy changes, changing taxation policies, foreign exchange restrictions, and political and governmental regulations. | |||
CONTINGENCIES | ' | ||
Certain conditions may exist as of the date the consolidated financial statements are issued. These conditions may result in a future 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. | |||
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. 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. Loss contingencies considered to be remote by management are generally not disclosed unless they involve guarantees, in which case the guarantee would be disclosed. | |||
MEDICAL SUPPLIES | ' | ||
Medical supplies include both western and traditional Chinese medicine, are valued on the lower of weighted average cost or market basis. Inventory includes product cost and inbound freight. Management compares the cost of medical supplies with the market value and allowance is made for writing down their inventories to market value, if such value is lower. | |||
EQUIPMENT | ' | ||
Equipment is recorded at cost. Depreciation is computed over the estimated useful lives of the related asset type using the straight-line method. Maintenance and repairs are expensed as incurred and the costs of additions and betterments that increase the useful lives of the assets are capitalized. When equipment is disposed, the cost and related accumulated depreciation are removed from the accounts and any gain or loss is included in other income or expenses. | |||
CONSTRUCTION-IN-PROGRESS | ' | ||
A hospital facility currently under development is accounted for as construction-in-progress. Construction-in-progress is recorded at acquisition cost, including land rights cost, development expenditure, and professional fees capitalized during the course of construction for the purpose of financing the project. Upon completion of the project, the cost of construction-in-progress will be transferred to fixed assets, at which time depreciation will commence. | |||
CAPITALIZATION OF INTEREST | ' | ||
Interest cost is capitalized for qualifying assets when the portion of the interest cost incurred during the assets' acquisition periods could have been avoided if expenditures for the assets had not been made. The amount capitalized in an accounting period is determined by applying the capitalization rate to the average amount of accumulated expenditures for the asset during the period. The capitalization rates used in an accounting period is based on the rates applicable to borrowings outstanding during the period (also see Note 4). | |||
Capitalization period covers the duration of the activities required to get the asset ready for its intended use, provided that expenditures for the asset have been made and interest cost is being incurred. Interest capitalization continues as long as those activities and the incurrence of interest cost continue. | |||
IMPAIRMENT OF LONG-LIVED ASSETS | ' | ||
The Company’s long-lived assets are reviewed for impairment in accordance with the guidance of FASB Topic ASC 360, “Property, Plant, and Equipment”, and FASB ASC Topic 205 “Presentation of Financial Statements”. The Company tests for impairment losses on long-lived assets used in operations whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Whenever any such impairment exists, an impairment loss will be recognized for the amount by which the carrying value exceeds the fair value. | |||
The Company tests long-lived assets for recoverability at least annually or more frequently upon the occurrence of an event or when circumstances indicate that the net carrying amount is greater than its fair value. Assets are grouped and evaluated at the lowest level for their identifiable cash flows that are largely independent of the cash flows of other groups of assets. The Company considers historical performance and future estimated results in its evaluation of potential impairment and then compares the carrying amount of the asset to the future estimated cash flows expected to result from the use of the asset. If the carrying amount of the asset exceeds estimated expected undiscounted future cash flows, the Company measures the amount of impairment by comparing the carrying amount of the asset to its fair value. The estimation of fair value is generally measured by discounting expected future cash flows at the rate the Company utilizes to evaluate potential investments. The Company estimates fair value based on the information available in making whatever estimates, judgments and projections are considered necessary. There was no impairment of long-lived assets and intangibles for the periods ended September 30, 2013 and 2012. | |||
BASIC AND DILUTED EARNINGS PER SHARE | ' | ||
Earnings per share (EPS) is calculated in accordance with the FASB ASC Topic 260, “Earnings Per Share.” Basic net income (loss) per share is based upon the weighted average number of common shares outstanding. Diluted net income (loss) per share is based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. Potentially dilutive securities to purchase 100,000 shares of common stock were not included in the calculation of the diluted earnings per share as their effect would be anti-dilutive for the period ended September 30, 2013. During the Nine Months period ended September 30, 2013, the average market price of the common stock during the year was less than the exercise price of the stock options and the Company was in a loss position. Accordingly, the stock options were anti-dilutive and have not been included in the calculation of diluted earnings per share. | |||
INCOME TAXES | ' | ||
FASB ASC Topic 740, "Income Taxes” 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 accordance with ASC Topic 740-10, “Accounting for Uncertainty in Income Taxes — An Interpretation of FASB ASC Topic 740” , which requires income tax positions to meet a more-likely-than-not recognition threshold to be recognized in the financial statements. 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. | |||
The Company has made a comprehensive review of its portfolio of tax positions in accordance with recognition standards established by ASC 740-10 and has not recognized any material uncertain tax positions. | |||
In addition, companies in the PRC are required to pay business taxes consisting of 5% of income they derive from providing medical treatment, as well as city construction taxes and educational taxes which are 7% and 3%, respectively, of the business taxes. In April 2010, the Company was granted an exemption from these taxes until further notice from the tax bureau. | |||
The Company had accrued approximately $40,000 for failure to file US tax returns and Form 5472 between the years 2006 to 2009. The Company is current with its required filings. In addition, the Company does not accrue United States income taxes on unremitted earnings from foreign operations, as it is the Company’s intention to invest these earnings in the foreign operations indefinitely. | |||
STATEMENT OF CASH FLOWS | ' | ||
In accordance with FASB ASC Topic 230, "Statement of Cash Flows," cash flows from the Company's operations are calculated based upon the local currencies. As a result, amounts related to assets and liabilities reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheet. | |||
EMPLOYEE BENEFIT COSTS | ' | ||
The Company contributes to a defined contribution retirement plan organized by the municipal government in the province in which the Company’s subsidiary is registered. The Company makes contributes for qualified employees that are eligible to participate in the plan. Contributions to the plan are calculated at 30% of the employees’ salaries above a fixed threshold amount; employees contribute 8% and the Company’s subsidiary contributes the balance of 22%. The Chinese government is responsible for the benefit liability to retired employees. The Company has no other material obligation for the payment of retirement beyond the annual contribution. | |||
STOCK-BASED COMPENSATION | ' | ||
For purposes of determining the variables used in the calculation of stock compensation expense under the provisions of FASB ASC Topic 505, “Equity” and FASB ASC Topic 718, “Compensation — Stock Compensation,” we perform an analysis of current market data and historical Company data to calculate an estimate of implied volatility, the expected term of the option and the expected forfeiture rate. With the exception of the expected forfeiture rate, which is not an input, we use these estimates as variables in the Black Scholes model. Depending upon the number of stock options granted, any fluctuations in these calculations could have a material effect on the results presented in our consolidated statement of operations. In addition, any differences between estimated forfeitures and actual forfeitures could also have a material impact on our financial statements. | |||
Stock-based compensation costs that have been included in operating expenses amounted to $3,839 and $3,852, for the nine month periods ended September 30, 2013 and 2012, respectively. | |||
COMPREHENSIVE LOSS | ' | ||
The Company reports comprehensive income in accordance with FASB ASC Topic 220 “Comprehensive Income," which established standards for reporting and displaying comprehensive income and its components in a financial statement that is displayed with the same prominence as other financial statements. | |||
Total comprehensive loss is defined as all changes in stockholders' equity during a period, other than those resulting from investments by and distributions to stockholders (i.e., issuance of equity securities and dividends). Generally, for the Company, total comprehensive income (loss) equals net income (loss) plus or minus adjustments for currency translation. Total comprehensive loss represents the activity for a period net of related tax and was a loss of $92,559 and $981,305 for the three months periods ended September 30, 2013 and 2012, respectively. Total comprehensive loss represents the activity for a period net of related tax and was a loss of $249,949 and 1,112,393 for the nine months periods ended September 30, 2013 and 2012, respectively. | |||
While total comprehensive income is the activity in a period and is largely driven by net earnings in that period, accumulated other comprehensive income or loss (“AOCI”) represents the cumulative balance of other comprehensive income as of the balance sheet date. For the Company, AOCI is primarily the cumulative balance related to the currency adjustments and increased overall equity by $89,111 and $126,477 as of September 30, 2013 and December 31, 2012, respectively. | |||
RECENT ACCOUNTING PRONOUNCEMENTS | ' | ||
Recent accounting pronouncements issued by the FASB, the AICPA and 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. | |||
GOING CONCERN | ' | ||
The accompanying condensed consolidated financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate continuation of the Company as a going concern. However, the Company has negative working capital of $14,472,885, an accumulated deficit of $1,997,919, and a stockholders’ deficit of $1,454,780 as of September 30, 2013. The Company’s ability to continue as a going concern ultimately is dependent on the management’s ability to obtain equity or debt financing, attain further operating efficiencies, and achieve profitable operations. The consolidated 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 not be able to continue as a going concern. | |||
Management has taken certain restructuring steps to provide the necessary capital to continue its operations. These steps included: 1) plan to convert existed related parties’ loans into equity, 2) to complete construction of the new hospital and begin generating revenue by the end of the next year, 3) plan to increase sales revenue with additional medical equipments. No assurances can be given that the steps taken will provide necessary capital for the Company to continue its operations. |
2_SUMMARY_OF_SIGNIFICANT_ACCOU2
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended | |
Sep. 30, 2013 | ||
Summary Of Significant Accounting Policies Tables | ' | |
Schedule of Translation Adjustments | ' | |
The exchange rates used to translate amounts in RMB into USD for the purposes of preparing the financial statements were as follows: | ||
30-Sep-13 | ||
Balance sheet | RMB 6.12 to US $1.00 | |
Statement of operations and other comprehensive loss | RMB 6.17 to US $1.00 | |
31-Dec-12 | ||
Balance sheet | RMB 6.30 to US $1.00 | |
Statement of operations and other comprehensive loss | RMB 6.30 to US $1.00 | |
30-Sep-12 | ||
Statement of operations and other comprehensive loss | RMB 6.32 to US $1.00 |
3_EQUIPMENT_Tables
3. EQUIPMENT (Tables) | 9 Months Ended | |||||||||
Sep. 30, 2013 | ||||||||||
Equipment Tables | ' | |||||||||
Schedule of Equipment | ' | |||||||||
Equipment as of September 30, 2013 (Unaudited) and December 31, 2012 comprised the following: | ||||||||||
Estimated Useful Lives (Years) | September 30, | December 31, | ||||||||
2013 | 2012 | |||||||||
Office equipment | 10-May | $ | 88,021 | $ | 85,491 | |||||
Medical equipment | 5 | 3,216,465 | 3,104,102 | |||||||
Fixtures | 10 | 115,772 | 112,445 | |||||||
Vehicles | 5 | 45,497 | 44,190 | |||||||
Total equipment | 3,465,755 | 3,346,228 | ||||||||
Less accumulated depreciation | (1,421,978 | ) | (1,312,692 | ) | ||||||
Equipment, net | $ | 2,043,777 | $ | 2,033,536 |
7_CAPITAL_LEASE_OBLIGATIONS_Ta
7. CAPITAL LEASE OBLIGATIONS (Tables) | 9 Months Ended | ||||
Sep. 30, 2013 | |||||
Capital Lease Obligations Tables | ' | ||||
Schedule of Capital Lease Obligations | ' | ||||
The lease has a term of 5 years and requires minimum annual rental payments including principal and interest as follows: | |||||
Year Ending December 31 | Amount | ||||
2013 | $ | 25,664 | |||
2014 | 102,654 | ||||
2015 | 102,654 | ||||
2016 | 34,218 | ||||
Total minimum lease payments | 265,190 | ||||
Less: interest payments | 33,818 | ||||
PV of minimum capital lease payments | 231,372 | ||||
Less: current obligations under capital lease | 82,233 | ||||
Long term capital lease obligation | $ | 149,139 | |||
The lease has a term of 5 years and requires minimum annual rental payments including principal and interest as follows: | |||||
Year Ending December 31 | Amount | ||||
2013 | $ | 95,745 | |||
2014 | 382,980 | ||||
2015 | 382,980 | ||||
2016 | 223,405 | ||||
Total minimum lease payments | 1,085,110 | ||||
Less: interest payments | 136,967 | ||||
PV of minimum capital lease payments | 948,142 | ||||
Less: current obligations under capital lease | 306,048 | ||||
Long term capital lease obligation | $ | 642,094 |
8_OTHER_PAYABLES_Tables
8. OTHER PAYABLES (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Other Payables Tables | ' | ||||||||
Schedule of Other Payables | ' | ||||||||
Other payables as of September 30, 2013 and December 31, 2012 consist of the following: | |||||||||
30-Sep-13 | 31-Dec-12 | ||||||||
Advance from customers | $ | 6,042 | $ | -4,778 | |||||
Welfare payable | 33,564 | 47,310 | |||||||
Capital lease deposits paid by third party | 352,006 | 354,409 | |||||||
Lawsuit settlement payable | - | 177,024 | |||||||
Other payables | 225,326 | 190,577 | |||||||
Total | $ | 616,938 | $ | 764,542 |
10_RELATED_PARTY_TRANSACTIONS_1
10. RELATED PARTY TRANSACTIONS AND COMMITMENTS (Tables) | 9 Months Ended | ||||||||||||
Sep. 30, 2013 | |||||||||||||
Related Party Transactions And Commitments Tables | ' | ||||||||||||
Minimum future lease payments | ' | ||||||||||||
Based on the exchange rate at September 30, 2013, minimum future lease payments are as follows: | |||||||||||||
Related Party | Non-Related Party | Total | |||||||||||
1-5 years | $ | 40,292 | $ | 2,299,836 | $ | 2,340,128 | |||||||
6-10 years | - | 2,941,176 | 2,941,176 | ||||||||||
11-15 years | - | 3,349,673 | 3,349,673 | ||||||||||
16-20 years | - | 3,684,641 | 3,684,641 | ||||||||||
21-25 years | - | 371,732 | 371,732 | ||||||||||
Total | $ | 40,292 | $ | 12,647,058 | $ | 12,687,350 |
2_SUMMARY_OF_SIGNIFICANT_ACCOU3
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2012 |
BalanceSheetMember | RMBMember | ' | ' | ' |
Exchange rates used to translate amounts in RMB into USD for the purposes of preparing the financial statements | 6.12 | 6.3 | ' |
BalanceSheetMember | USDollarMember | ' | ' | ' |
Exchange rates used to translate amounts in RMB into USD for the purposes of preparing the financial statements | 1 | 1 | ' |
StatementOfOperationsAndOtherComprehensiveLossMember | RMBMember | ' | ' | ' |
Exchange rates used to translate amounts in RMB into USD for the purposes of preparing the financial statements | 6.17 | 6.3 | 6.32 |
StatementOfOperationsAndOtherComprehensiveLossMember | USDollarMember | ' | ' | ' |
Exchange rates used to translate amounts in RMB into USD for the purposes of preparing the financial statements | 1 | 1 | 1 |
2_SUMMARY_OF_SIGNIFICANT_ACCOU4
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) (USD $) | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | Dec. 31, 2011 | |
Accounting Policies [Abstract] | ' | ' | ' | ' | ' | ' |
Cash and cash equivalents | $8,533 | $33,436 | $8,533 | $33,436 | $81,135 | $32,126 |
Estimated bad debt allowance | 43,000 | ' | 43,000 | ' | 43,000 | ' |
Dilutive seciruities not included in the calculation of the diluted earnings per share | ' | ' | 100,000 | ' | ' | ' |
Stock-based compensation costs | ' | ' | 3,839 | 3,852 | ' | ' |
Comprehensive Income Loss | 92,559 | 981,305 | 249,949 | 1,112,393 | ' | ' |
Accumulated other comprehensive income | 89,111 | ' | 89,111 | ' | 126,477 | ' |
Working capital | -14,472,885 | ' | -14,472,885 | ' | ' | ' |
Accumulated deficit | 1,997,919 | ' | 1,997,919 | ' | 1,785,336 | ' |
Stockholders deficit | $1,454,780 | ' | $1,454,780 | ' | $1,208,670 | ' |
3_EQUIPMENT_Details
3. EQUIPMENT (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Equipment Details | ' | ' |
Office equipment | $88,021 | $85,491 |
Medical equipment | 3,216,465 | 3,104,102 |
Fixtures | 115,772 | 112,445 |
Vehicles | 45,497 | 44,190 |
Total equipments | 3,465,755 | 3,346,228 |
Less accumulated depreciation | -1,421,978 | -1,312,692 |
Equipment, net | $2,043,777 | $2,033,536 |
Useful Lives: | ' | ' |
Office equipment minimum | '5 years | ' |
Office equipment maximum | '10 years | ' |
Medical equipment | '5 years | ' |
Fixtures | '10 years | ' |
Vehicles | '5 years | ' |
3_EQUIPMENT_Details_Narrative
3. EQUIPMENT (Details Narrative) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Property, Plant and Equipment [Abstract] | ' | ' | ' | ' |
Depreciation expenses | $30,692 | ($80,323) | $76,611 | $139,638 |
4_CONSTRUCTION_IN_PROGRESS_Det
4. CONSTRUCTION IN PROGRESS (Details Narrative) (USD $) | Sep. 30, 2013 |
Construction In Progress Details Narrative | ' |
Construction cost paid | $12,737,000 |
Capitalized interest | $345,000 |
5_CONTINGENCIES_Details_Narrat
5. CONTINGENCIES (Details Narrative) (USD $) | Sep. 30, 2013 |
Contingencies Details Narrative | ' |
Accrued contingency | $1,250,000 |
6_MAJOR_SUPPLIERS_AND_CUSTOMER1
6. MAJOR SUPPLIERS AND CUSTOMERS (Details Narrative) (USD $) | 9 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Guangxi East Dragon Century Pharmaceutical | ' | ' |
Percentage of medicine purchases | '20% | '14% |
Amounts due | $185,000 | $50,000 |
Guangxi Tongji Medicine Co. | ' | ' |
Percentage of medicine purchases | '45% | '47% |
Amounts due | 1,000,000 | 958,000 |
Nanning Social Insurance Center | ' | ' |
Percentage of Revenue from major customers | 10.00% | 14.00% |
Accounts receivable from major cutomers | 405,000 | 518,000 |
Guangxi Province Social Insurance Center | ' | ' |
Percentage of Revenue from major customers | ' | 6.00% |
Accounts receivable from major cutomers | $21,000 | $178,000 |
7_CAPITAL_LEASE_OBLIGATION_Det
7. CAPITAL LEASE OBLIGATION (Details) (USD $) | Dec. 31, 2012 |
Capital Lease Future Minimum Payment Due | ' |
2013 | $25,664 |
2014 | 102,654 |
2015 | 102,654 |
2016 | 34,218 |
Total minimum lease payments | 265,190 |
Less: interest payments | 33,818 |
PV of minimum capital lease payments | 231,372 |
Less: Current obligations under sales lease back | 82,233 |
Long term sales lease back obligation | $149,139 |
7_CAPITAL_LEASE_OBLIGATIONS_De
7. CAPITAL LEASE OBLIGATIONS (Details 1) (USD $) | Sep. 30, 2013 |
Capital Lease Future Minimum Payment Due | ' |
2013 | $95,745 |
2014 | 382,980 |
2015 | 382,980 |
2016 | 223,405 |
Total minimum lease payments | 1,085,110 |
Less: interest payments | 136,967 |
PV of minimum capital lease payments | 948,142 |
Less: Current obligations under capital lease | 306,048 |
Long term capital lease obligation | $642,094 |
7_CAPITAL_LEASE_OBLIGATION_Det1
7. CAPITAL LEASE OBLIGATION (Details Narrative) (USD $) | Sep. 30, 2013 |
Capital Lease Obligation Details Narrative | ' |
Notes payable | $231,000 |
Cost of equipment under capital leases | 1,450,000 |
Accumulated depreciation of leased equipment | 126,000 |
Lease Payable | $948,142 |
8_OTHER_PAYABLES_Details
8. OTHER PAYABLES (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Other Payables Details | ' | ' |
Advance from customers | $6,042 | ($4,778) |
Welfare payable | 33,564 | 47,310 |
Capital lease deposits paid by third party | 352,006 | 354,409 |
Lawsuit settlement payable | ' | 177,024 |
Other payables | 225,326 | 190,577 |
Total | $616,938 | $764,542 |
9_STOCKHOLDERS_EQUITY_Details_
9. STOCKHOLDERS' EQUITY (Details Narrative) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Stockholders Equity Details Narrative | ' | ' |
Preferred stock authorized | 20,000,000 | 20,000,000 |
Preferred stock par value | $0.00 | $0.00 |
Preferred stock shares issued | 0 | 0 |
Preferred stock shares outstanding | 0 | 0 |
Common Stock shares Authorized | 50,000,000 | 50,000,000 |
Common Stock par value | $0.00 | $0.00 |
Accumulated deficits | $1,997,919 | $1,785,336 |
10_RELATED_PARTY_TRANSACTIONS_2
10. RELATED PARTY TRANSACTIONS AND COMMITMENTS (Details) (USD $) | Sep. 30, 2013 |
1-5 years | $2,340,128 |
6-10 years | 2,941,176 |
11-15 years | 3,349,673 |
16-20 years | 3,684,641 |
21-25 years | 371,732 |
Total | 12,687,350 |
RelatedPartyMember | ' |
1-5 years | 40,292 |
6-10 years | ' |
11-15 years | ' |
16-20 years | ' |
21-25 years | ' |
Total | 40,292 |
NonRelatedPartyMember | ' |
1-5 years | 2,299,836 |
6-10 years | 2,941,176 |
11-15 years | 3,349,673 |
16-20 years | 3,684,641 |
21-25 years | 371,732 |
Total | $12,647,058 |
10_RELATED_PARTY_TRANSACTIONS_3
10. RELATED PARTY TRANSACTIONS AND COMMITMENTS (Details Narrative) (USD $) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | |
Related Party Transactions And Commitments Details Narrative | ' | ' | ' | ' | ' |
Amount receivable | $57,520 | ' | $57,520 | ' | $107,710 |
Interest income | 168 | 165 | 502 | 500 | ' |
Amount Payable | 13,536,007 | ' | 13,536,007 | ' | 11,762,403 |
Interest expenses | $43,396 | $37,173 | $118,075 | $113,255 | ' |