Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Apr. 13, 2015 | Jun. 30, 2014 | |
Document And Entity Information | |||
Entity Registrant Name | Tongji Healthcare Group, Inc. | ||
Entity Central Index Key | 1389518 | ||
Document Type | 10-K | ||
Document Period End Date | 31-Dec-14 | ||
Amendment Flag | FALSE | ||
Current Fiscal Year End Date | -19 | ||
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 | ||
Public Float | $1,365,188 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2014 |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
ASSETS | ||
Cash | $9,606 | $7,793 |
Accounts receivable, net | 214,799 | 351,221 |
Due from related parties | 118,093 | 120,352 |
Medical supplies | 120,772 | 148,286 |
Prepaid expenses and other current assets | 8,155 | 10,690 |
Total Current Assets | 471,425 | 638,342 |
Equipment, net | 1,173,012 | 1,555,282 |
Construction in progress | 15,221,811 | 13,376,281 |
Deposit | 183,746 | 189,851 |
Intangible assets, net | 68,283 | 90,468 |
TOTAL ASSETS | 17,118,277 | 15,850,224 |
LIABILITIES AND STOCKHOLDERS' DEFICIT | ||
Accounts payable and accrued expenses | 869,924 | 633,061 |
Due to related parties | 15,988,370 | 14,232,773 |
Other payables | 650,714 | 612,800 |
Current portion of capital lease payable | 432,197 | 402,138 |
Total Current Liabilities | 17,941,205 | 15,880,772 |
Settlement payable | 1,334,209 | 0 |
Capital lease payable | 246,678 | 695,689 |
Total Liabilities | 19,522,092 | 16,576,461 |
Contingencies | 0 | 1,267,637 |
STOCKHOLDERS' DEFICIT | ||
Preferred stocks; $0.001 par value, 20,000,000 shares authorized and none issued and outstanding | 0 | 0 |
Common stocks; $0.001 par value, 50,000,000 shares authorized and 15,812,191 shares issued and outstanding as of December 31, 2014 and 2013 respectively | 15,812 | 15,812 |
Additional paid in capital | 440,368 | 439,510 |
Accumulated deficit | -2,977,005 | -2,515,021 |
Accumulated other comprehensive income | 117,010 | 65,825 |
Total Stockholders' Deficit | -2,403,815 | -1,993,874 |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | $17,118,277 | $15,850,224 |
CONDENSED_CONSOLIDATED_BALANCE1
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
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 $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
OPERATING REVENUE | ||
In-patient service revenue | $1,137,940 | $1,108,399 |
Out-patient service revenue | 1,384,296 | 1,268,624 |
Total operating revenue | 2,522,236 | 2,377,023 |
OPERATING EXPENSES | ||
Administrative expenses | 316,786 | 187,666 |
Depreciation and amortization expenses | 100,406 | 171,564 |
Contingency loss | 0 | 84,213 |
Impairment loss | 277,032 | 415,762 |
Medicine and supplies | 1,106,618 | 1,085,046 |
Other operating expenses | 310,943 | 358,500 |
Salary and fringes | 699,784 | 722,169 |
Total operating expenses | 2,811,569 | 3,024,920 |
LOSS FROM OPERATIONS | -289,333 | -647,897 |
OTHER INCOME (EXPENSE) | ||
Other income | 35,005 | 8,155 |
Interest expense, net | -207,656 | -89,943 |
Total Other Expense | -172,651 | -81,788 |
LOSS BEFORE INCOME TAXES | -461,984 | -729,685 |
Provision for income taxes | 0 | 0 |
NET LOSS | -461,984 | -729,685 |
OTHER COMPREHENSIVE INCOME(LOSS) | ||
Foreign currency translation gain (loss) | 51,185 | -60,652 |
NET COMPREHENSIVE LOSS | ($410,799) | ($790,337) |
Net loss per common stock-Basic and Diluted | ($0.03) | ($0.05) |
Weighted average common stock outstanding - Basic and Diluted | 15,812,191 | 15,812,191 |
CONSOLIDATED_STATEMENTS_OF_SHA
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT) (USD $) | Common Stock | Additional Paid-In Capital | Statutory Reserve | Accumulated Deficit | Accumulated Other Comprehensive Income/(Loss) | Total |
Begining Balance, Amount at Dec. 31, 2012 | $15,812 | $434,377 | $0 | ($1,785,336) | $126,477 | ($1,208,670) |
Begining Balance, Shares at Dec. 31, 2012 | 15,812,191 | |||||
Foreign exchange translation gain (loss) | -60,652 | -60,652 | ||||
Stock option | 5,133 | 5,133 | ||||
Net Loss | -729,685 | -729,685 | ||||
Ending Balance, Amount at Dec. 31, 2013 | 15,812 | 439,510 | 0 | -2,515,021 | 65,825 | -1,993,874 |
Ending Balance, Shares at Dec. 31, 2013 | 15,812,191 | |||||
Foreign exchange translation gain (loss) | 51,185 | 51,185 | ||||
Stock option | 858 | 858 | ||||
Net Loss | -461,984 | -461,984 | ||||
Ending Balance, Amount at Dec. 31, 2014 | $15,812 | $440,368 | $0 | ($2,977,005) | $117,010 | ($2,403,815) |
Ending Balance, Shares at Dec. 31, 2014 | 15,812,191 |
CONDENSED_CONSOLIDATED_STATEME1
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Operating activities: | ||
Net Loss | ($461,984) | ($729,685) |
Adjustments to reconcile net loss to Net cash provided by (used in) operating activities: | ||
Depreciation expense | 100,407 | 171,564 |
Provision for losses on accounts receivable | -12,004 | 0 |
Stock option expense | 858 | 5,133 |
Impairment loss | 277,032 | 415,762 |
Increase/(decrease) in operating assets and liabilities: | ||
Accounts receivable | 140,768 | 114,273 |
Medical supplies | 24,073 | -34,915 |
Prepaid expense and other current assets | 2,288 | -546 |
Deposit | 1,500 | 197 |
Accounts payable and accrued expenses | 254,004 | 287,887 |
Other payables | 53,184 | -180,186 |
Contingent liability | 98,075 | 98,573 |
Net Cash Provided By Operating Activities | 478,201 | 148,057 |
Investing activities: | ||
Acquisitions of fixed assets | -10,490 | -22,789 |
Acquisitions of intangible assets | 0 | -100,850 |
Construction in Progress | -2,185,861 | -1,691,531 |
Due from related parties | -673 | -8,114 |
Long term receivable | 0 | 0 |
Net Cash Used in Investing Activities | -2,197,024 | -1,823,284 |
Financing activities: | ||
Payments of capital lease | -394,965 | -359,490 |
Due to related parties | 2,116,281 | 1,959,229 |
Net Cash Provided by Financing Activities | 1,721,316 | 1,599,739 |
Effects of foreign currency translation | -680 | 2,146 |
Net increase (decrease) in Cash | 1,813 | -73,342 |
Cash - Beginning of Period | 7,793 | 81,135 |
Cash and Cash Equivalents-Ending of Period | 9,606 | 7,793 |
Cash paid during the period for: | ||
Income taxes | 0 | 0 |
Interest paid | $87,416 | $95,751 |
1_ORGANIZATION
1. ORGANIZATION | 12 Months Ended |
Dec. 31, 2014 | |
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 | 12 Months Ended | ||
Dec. 31, 2014 | |||
Accounting Policies [Abstract] | |||
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | BASIS OF PRESENTATION AND CONSOLIDATION | ||
The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) as promulgated in the United States of America. The consolidated financial statements include Tongji Healthcare, 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 and all variable interest entities to which we had a variable interest and effectively control the entity. | |||
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. All of the Company’s cash is held in bank accounts in the PRC and is not protected by Federal Deposit Insurance Corporation (FDIC) insurance or any other similar insurance. Cash held in China amounted to $9,606 as of December 31, 2014. 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. As of December 31, 2014 and 2013, we have no cash equivalents. | |||
USE OF ESTIMATES | |||
The preparation of these 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, stock based compensation, accrued expense, construction in progress, intangibles, and deposits, 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 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: | |||
31-Dec-14 | |||
Balance sheet | RMB 6.20 to US $1.00 | ||
Statement of income and other comprehensive income | RMB 6.16 to US $1.00 | ||
31-Dec-13 | |||
Balance sheet | RMB 6.05 to US $1.00 | ||
Statement of income and other comprehensive income | RMB 6.15 to US $1.00 | ||
RECLASSIFICATIONS | |||
Certain items previously reported under specific consolidated 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 once all of the following have occurred and services were rendered: a formal arrangement exists, the price is fixed or determinable and collection 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 charge rates. 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 any other revenue recognition criteria, as described above, has been met 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 as hospital staff verifies patient coverage prior to examinations and/or procedures. | |||
For any Medicare patient who visits the hospital and are 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 $31,000 and $44,000 as of December 31, 2014 and 2013, respectively. | |||
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 December 31, 2014 and 2013 the fair value of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, related party receivable and payable, capital lease payable, and other payables approximated carrying value due to the short maturity of the instruments, quoted market prices or interest rates which fluctuate with market rates. | |||
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 will be 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 are 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. | |||
ADVERTISING COSTS | |||
The Company expenses the costs associated with advertising as incurred. Advertising expenses for the twelve month periods ended December 31, 2014 and 2013 of approximately $7,000 and $27,000 are included in selling expenses in the consolidated statements of operations. Advertising costs include marketing brochures and a public advertising campaign. | |||
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. Impairment losses were $277,032 and $415,762 on long-lived assets for the years ended December 31, 2014 and 2013. | |||
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 year ended December 31, 2014. During the year ended December 31, 2014, 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 net loss position. Accordingly, the stock options were anti-dilutive and have not been included in the calculation of diluted earnings per share. | |||
INCOME TAXES | |||
The Company adopts FASB ASC Topic 740, "Income Taxes,” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated 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 consolidated 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. | |||
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 consolidated financial statements. | |||
Stock-based compensation costs that have been included in operating expenses amounted to $858 and $5,133, for years ended December 31, 2014 and 2013, respectively. | |||
COMPREHENSIVE INCOME | |||
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 consolidated financial statement that is displayed with the same prominence as other consolidated financial statements. | |||
Total comprehensive income 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 loss equals net 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 $410,799 and $790,337 for the years ended December 31, 2014 and 2013, 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 $117,010 and $65,825 as of December 31, 2014 and 2013, respectively. | |||
RECENT ACCOUNTING PRONOUNCEMENTS | |||
In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (ASU2014-09), which supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of ASU2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU2014-09 defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP. The standard is effective for annual periods beginning after December 15, 2016, and interim periods therein, using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU2014-09 recognized at the date of adoption (which includes additional footnote disclosures). Early adoption is not permitted. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements. | |||
In August 2014, the FASB issued Accounting Standards Update No. 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40), Disclosure of Uncertainties about an Entities Ability to Continue as a Going Concern (ASU 2014-15). The guidance in ASU 2014-15 sets forth management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern as well as required disclosures. ASU 2014-15 indicates that, when preparing financial statements for interim and annual financial statements, management should evaluate whether conditions or events, in the aggregate, raise substantial doubt about the entity's ability to continue as a going concern for one year from the date the financial statements are issued or are available to be issued. This evaluation should include consideration of conditions and events that are either known or are reasonably knowable at the date the financial statements are issued or are available to be issued, as well as whether it is probable that management's plans to address the substantial doubt will be implemented and, if so, whether it is probable that the plans will alleviate the substantial doubt. ASU 2014-15 is effective for annual periods ending after December 15, 2016, and interim periods and annual periods thereafter. Early application is permitted. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements | |||
GOING CONCERN | |||
The accompanying 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 $17,469,780, an accumulated deficit of $2,977,005, and shareholders’ deficit of $2,403,815 as of December 31, 2014. 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. Over the past years, the Company had been successful in raising funds from related parties to fund the operation and new hospital construction. 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 March of 2016, 3) plan to increase sales revenue with additional medical equipment, 4) the company intend to get more fund from related party who is controlled by the CEO to complete the construction of the new hospital. No assurances can be given that the steps taken will provide necessary capital for the Company to continue its operations. |
3_EQUIPMENT
3. EQUIPMENT | 12 Months Ended | |||||||||
Dec. 31, 2014 | ||||||||||
Property, Plant and Equipment [Abstract] | ||||||||||
NOTE 3 - EQUIPMENT | Equipment as of December 31, 2014 and 2013 comprised the following: | |||||||||
Estimated Useful Lives (Years) | 31-Dec-14 | 31-Dec-13 | ||||||||
Office equipment | 10-May | $ | 86,821 | $ | 88,985 | |||||
Medical equipment | 5 | 1,371,485 | 1,394,996 | |||||||
Capital lease equipment | 5 | 1,813,892 | 1,859,107 | |||||||
Fixtures | 10 | 114,194 | 117,040 | |||||||
Vehicles | 5 | 44,877 | 45,995 | |||||||
Total equipments | 3,431,269 | 3,506,123 | ||||||||
Less accumulated depreciation | (1,583,285 | ) | (1,528,620 | ) | ||||||
Less impairment of the equipment | (674,972 | ) | (422,221 | ) | ||||||
Equipment, net | $ | 1,173,012 | $ | 1,555,282 |
4_CONSTRUCTION_IN_PROGRESS
4. CONSTRUCTION IN PROGRESS | 12 Months Ended |
Dec. 31, 2014 | |
Notes to Financial Statements | |
NOTE 4 - CONSTRUCTION IN PROGRESS | The Company is constructing a new hospital building on leased land. The hospital building is being constructed by Guangxi Construction Engineering Corporation Langdong 8th Group (“Langdong 8th Group”). 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 $7,870,000 and any excess construction cost payments incurred during the construction phase. As of December 31, 2014, the Company had paid approximately $15,200,000 for the construction of the hospital. In addition to what it had paid for the hospital construction, we estimate the additional costs to complete the project to be $10,000,000. The land lease term will start upon completion of the new hospital construction. The new hospital is expected to be completed by March of 2016. |
The Company will amortize the cost of the hospital building over the life of the land lease of twenty years. Capitalized interest was approximately $598,000 as of December 31, 2014. |
5_LAWSUIT_SETTLEMENT_PAYABLE
5. LAWSUIT SETTLEMENT PAYABLE | 12 Months Ended |
Dec. 31, 2014 | |
Commitments and Contingencies Disclosure [Abstract] | |
NOTE 5- LAWSUIT SETTLEMENT PAYABLE | In September 2009, Guangxi Nanning Tingyouyuxiang Commercial Co., Ltd. (“Tingyouyuxiang”) filed a civil suit against Nanning Tongji Hospital, Inc. (“NTH”), a subsidiary of the Company 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 the Eighth Group of Langdong Village Committee, Nanhu Community Office, Qingxiu Districe, Nanning City (the “Village Committee”). One 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 approximately $320,000. On March 9, 2013, NTH appealed to the Intermediate Court, alleging, among other things, that NTH was never served. On June 6, 2013, the Intermediate Court remanded the case to the People’s Court. As of December 31 2013, pending the decision of the People’s Court, the Company had accrued approximately $1,268,000 as contingency liabilities. On April 16, 2014, the Intermediate Court dismissed Tingyouyuxiang’s appeal and affirmed the decision of the People’s Court. Upon settlement of the lawsuit, the Company had accrued approximately $1,334,000 in settlement payable as of December 31, 2014. |
6_MAJOR_SUPPLIERS_AND_CUSTOMER
6. MAJOR SUPPLIERS AND CUSTOMERS | 12 Months Ended |
Dec. 31, 2014 | |
Notes to Financial Statements | |
NOTE 6 - MAJOR SUPPLIERS AND CUSTOMERS | The Company purchases the majority of its medicine supplies from Guangxi Tongji Medicine Co. Ltd., a related party controlled by our Chief Executive Officer, Yunhui Yu. Medicine purchased accounted for 13% and 37% of all medicine purchases for year ended December 31, 2014 and 2013. The rest are from around 28 different suppliers, three of which accounted for more than 50% of our total purchases in 2014. |
The Company had three major customers for the years ended December 31, 2014 and 2013: Nanning Social Insurance Center, Guangxi Province Social Insurance Center, and China UMS. Nanning Social Insurance Center accounted for 33% and 32% of revenue for the years ended December 31, 2014 and 2013, respectively. Guangxi Province Social Insurance Center accounted for 5% and 11% of revenue for the years ended December 31, 2014 and 2013, respectively. China UMS accounted for 13% and 5% of revenue for the years ended December 31, 2014 and 2013, respectively. As of December 31, 2014, accounts receivable due from Nanning Social Insurance Center, China UMS and Guangxi Province Social Insurance Center was approximately $823,000, $332,000 and $115,000, respectively. |
7_CAPITAL_LEASE_OBLIGATIONS
7. CAPITAL LEASE OBLIGATIONS | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
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 $125,000 as of December 31, 2014. 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 as follows: | |||||
Year Ending December 31 | Amount | ||||
2015 | $ | 101,254 | |||
2016 | 33,751 | ||||
Total minimum lease payments | 135,005 | ||||
Less: interest payments | (9,539 | ) | |||
PV of minimum capital lease payments | 125,467 | ||||
Less: Current obligations under sales lease back | ( 92,441 | ) | |||
Long term sales lease back obligation | $ | 33,026 | |||
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 $1,430,000 is included in the Balance Sheet as property, plant, and equipment at December 31, 2014. Those equipment are to be placed in service upon usage approval from the Chinese government and hiring qualified personnel. As of December 31, 2014, the Company still has not received the approval. Impairment loss of the leased equipment at December 31, 2014 was approximately $227,000. Capital Lease Payable was approximately $553,000 as of December 31, 2014. | |||||
The lease has a term of 5 years and requires minimum annual rental payments as follows: | |||||
Year Ending December 31 | Amount | ||||
2015 | $ | 377,758 | |||
2016 | 220,359 | ||||
Total minimum lease payments | 598,116 | ||||
Less: interest payments | (44,708 | ) | |||
PV of minimum capital lease payments | 553,408 | ||||
Less: Current obligations under capital lease | (339,756 | ) | |||
Long term sales lease back obligation | $ | 213,652 |
8_OTHER_PAYABLES
8. OTHER PAYABLES | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Payables and Accruals [Abstract] | |||||||||
NOTE 8 - OTHER PAYABLES | Other payable as of December 31, 2014 and December 31, 2013 consists of the following: | ||||||||
31-Dec-14 | 31-Dec-13 | ||||||||
Advance from customers | $ | 29,166 | $ | 5,160 | |||||
Welfare payable | 8,517 | 31,343 | |||||||
Capital lease deposits paid by third party | 350,491 | 359,227 | |||||||
Lawsuit settlement payable | - | - | |||||||
Other payables | 262,540 | 217,070 | |||||||
Total | $ | 650,714 | $ | 612,800 |
9_STOCKHOLDERS_EQUITY
9. STOCKHOLDERS' EQUITY | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Accounting Policies [Abstract] | |||||||||||||
NOTE 9 - STOCKHOLDERS' DEFICIT | Preferred Stock | ||||||||||||
As of December 31, 2014 and December 31, 2013, the Company has 20,000,000 shares of preferred stock authorized with a par value of $0.001. There are no shares issued and outstanding as of December 31, 2014 and 2013. | |||||||||||||
Common Stock | |||||||||||||
As of December 31, 2014 and December 31, 2013, the Company has 50,000,000 shares of common stock authorized with a par value of $0.001. | |||||||||||||
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 December 31, 2014, the Company had accumulated deficits of $2,977,005. Therefore, the Company did not appropriate any fund for the statutory surplus reserve for the year ended December 31, 2014. | |||||||||||||
Stock Option | |||||||||||||
Stock-based compensation amounted to $858 and $5,133 for the years ended December 31, 2014 and 2013, respectively. | |||||||||||||
On March 3, 2011, an option to purchase 100,000 shares of common stock was granted to the Company’s CFO. The option vests in three equal installments starting on the first anniversary of grant and subsequent anniversaries thereafter, at an exercise price equivalent to the closing price per share of common stock on the date of grant. | |||||||||||||
The fair value of the option award is estimated on the date of grant using the Black Scholes model to be $15,400. The valuation was based on the assumptions noted in the following table. | |||||||||||||
Expected volatility | 105 | % | |||||||||||
Expected Dividends | 0 | % | |||||||||||
Stock price | $ | 0.24 | |||||||||||
Expected term (in years) | 3 years | ||||||||||||
Risk-free rate | 1.32 | % | |||||||||||
The risk-free interest rate is based on the U.S. Treasury yield curve in effect for the expected term of the option at the time of grant. The dividend yield on our common stock is assumed to be zero since we do not pay dividends and have no current plans to pay them in the future. The market price volatility of our common stock was based on historical volatility since May 13, 2010. The expected life of the options is based upon our anticipated expectations of exercise behavior since no options have been exercised in the past to provide relevant historical data. | |||||||||||||
The fair value of the option granted will be expensed according to following schedule: | |||||||||||||
Year | Expensed | ||||||||||||
2011 | $ | 4,262 | |||||||||||
2012 | 5,147 | ||||||||||||
2013 | 5,133 | ||||||||||||
2014 | 858 | ||||||||||||
Thereafter | - | ||||||||||||
Total | $ | 15,400 | |||||||||||
The following table summarizes stock option activity in the Company's stock-based compensation plans for the years ended December 31, 2014 and 2013. | |||||||||||||
Number of | Weighted | Aggregate | |||||||||||
Shares | Average | Intrinsic Value | |||||||||||
Exercise | (in thousands) | ||||||||||||
Price | |||||||||||||
Outstanding at January 1, 2013 | 100,000 | $ | 0.24 | $ | - | ||||||||
Granted | - | - | - | ||||||||||
Exercised | - | - | - | ||||||||||
Cancelled/expired | - | - | - | ||||||||||
Outstanding at December 31, 2013 | 100,000 | $ | 0.24 | $ | - | ||||||||
Granted | - | - | - | ||||||||||
Exercised | - | - | - | ||||||||||
Cancelled/expired | - | - | - | ||||||||||
Exercisable at December 31, 2014 | 100,000 | $ | 0.24 | $ | - | ||||||||
Expected to vest at December 31, 2014 | 100,000 | $ | 0.24 | $ | - | ||||||||
Outstanding at December 31, 2014 | 100,000 | $ | 0.24 | $ | - |
10_RELATED_PARTY_TRANSACTIONS_
10. RELATED PARTY TRANSACTIONS AND COMMITMENTS | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
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 through Guangxi Tongji Medicine Co. Ltd. The advanced amounts accrue interest at a rate of 1.5% per annum and due on demand. The account receivable from the three related parties as of December 31, 2014 and December 31, 2013 was $44,538 and $45,695, respectively. Interest income for the year ended December 31, 2014 and 2013 were approximately $673 and $675, respectively. As of December 31, 2014 and 2013, total due from all related parties amounted to $118,093 and $120,352, 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 for its operations. The advanced amounts accrue interest at a rate of 1.5% per annum and due on demand. As of December 31, 2014 and December 31, 2013, $12,964,815 and $11,421,363 were payable to these related parties, respectively. Interest expenses for the year ended December 31, 2014 and 2013 were $230,840 and $162,271, respectively. As of December 31, 2014 and 2013, total due to all related parties amounted to $15,988,370 and $14,232,773, respectively. | |||||||||||||
Rental Commitments | |||||||||||||
On March 1, 2015, the Company renewed the lease agreement for their hospital with Guangxi Tongji Medicine Co. Ltd that expires in December 2014. Monthly lease payment under the new lease is approximately $4,800 . The lease will expire on February 28, 2018. The Company is also in the process of building a new 600-bed hospital in Nanning, China. It expects the new hospital to be completed by March of 2016. The hospital is being constructed by Guangxi Construction Engineering Corporation Langdong 8th Group and, when completed, the land on which the hospital is located 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 December 31, 2014, minimum future lease payments are as follows: | |||||||||||||
Related Party | Non-Related Party | Total | |||||||||||
1-5 years | $ | 179,064 | $ | 2,756,691 | $ | 2,935,756 | |||||||
6-10 years | - | 3,159,618 | 3,159,618 | ||||||||||
11-15 years | - | 3,551,129 | 3,551,129 | ||||||||||
16-20 years | - | 1,466,654 | 1,466,654 | ||||||||||
Total | $ | 179,064 | $ | 10,934,092 | $ | 11,113,156 |
2_SUMMARY_OF_SIGNIFICANT_ACCOU1
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended | ||
Dec. 31, 2014 | |||
Notes to Financial Statements | |||
BASIS OF PRESENTATION AND CONSOLIDATION | The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) as promulgated in the United States of America. The consolidated financial statements include Tongji Healthcare, 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 and all variable interest entities to which we had a variable interest and effectively control the entity. | ||
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. All of the Company’s cash is held in bank accounts in the PRC and is not protected by Federal Deposit Insurance Corporation (FDIC) insurance or any other similar insurance. Cash held in China amounted to $9,606 as of December 31, 2014. 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. As of December 31, 2014 and 2013, we have no cash equivalents. | ||
USE OF ESTIMATES | The preparation of these 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, stock based compensation, accrued expense, construction in progress, intangibles, and deposits, 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 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: | |||
31-Dec-14 | |||
Balance sheet | RMB 6.20 to US $1.00 | ||
Statement of income and other comprehensive income | RMB 6.16 to US $1.00 | ||
31-Dec-13 | |||
Balance sheet | RMB 6.05 to US $1.00 | ||
Statement of income and other comprehensive income | RMB 6.15 to US $1.00 | ||
RECLASSIFICATIONS | Certain items previously reported under specific consolidated 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 once all of the following have occurred and services were rendered: a formal arrangement exists, the price is fixed or determinable and collection 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 charge rates. 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 any other revenue recognition criteria, as described above, has been met 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 as hospital staff verifies patient coverage prior to examinations and/or procedures. | ||
For any Medicare patient who visits the hospital and are 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 $31,000 and $44,000 as of December 31, 2014 and 2013, respectively. | |||
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 December 31, 2014 and 2013 the fair value of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, related party receivable and payable, capital lease payable, and other payables approximated carrying value due to the short maturity of the instruments, quoted market prices or interest rates which fluctuate with market rates. | ||
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 will be 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 are 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. | |||
ADVERTISING COSTS | The Company expenses the costs associated with advertising as incurred. Advertising expenses for the twelve month periods ended December 31, 2014 and 2013 of approximately $7,000 and $27,000 are included in selling expenses in the consolidated statements of operations. Advertising costs include marketing brochures and a public advertising campaign. | ||
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. Impairment losses were $277,032 and $415,762 on long-lived assets for the years ended December 31, 2014 and 2013. | |||
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 year ended December 31, 2014. During the year ended December 31, 2014, 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 net loss position. Accordingly, the stock options were anti-dilutive and have not been included in the calculation of diluted earnings per share. | ||
INCOME TAXES | The Company adopts FASB ASC Topic 740, "Income Taxes,” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated 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 consolidated 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. | |||
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 consolidated financial statements. | ||
Stock-based compensation costs that have been included in operating expenses amounted to $858 and $5,133, for years ended December 31, 2014 and 2013, respectively. | |||
COMPREHENSIVE INCOME | 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 consolidated financial statement that is displayed with the same prominence as other consolidated financial statements. | ||
Total comprehensive income 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 loss equals net 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 $410,799 and $790,337 for the years ended December 31, 2014 and 2013, 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 $117,010 and $65,825 as of December 31, 2014 and 2013, respectively. | |||
RECENT ACCOUNTING PRONOUNCEMENTS | In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (ASU2014-09), which supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of ASU2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU2014-09 defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP. The standard is effective for annual periods beginning after December 15, 2016, and interim periods therein, using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU2014-09 recognized at the date of adoption (which includes additional footnote disclosures). Early adoption is not permitted. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements. | ||
In August 2014, the FASB issued Accounting Standards Update No. 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40), Disclosure of Uncertainties about an Entities Ability to Continue as a Going Concern (ASU 2014-15). The guidance in ASU 2014-15 sets forth management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern as well as required disclosures. ASU 2014-15 indicates that, when preparing financial statements for interim and annual financial statements, management should evaluate whether conditions or events, in the aggregate, raise substantial doubt about the entity's ability to continue as a going concern for one year from the date the financial statements are issued or are available to be issued. This evaluation should include consideration of conditions and events that are either known or are reasonably knowable at the date the financial statements are issued or are available to be issued, as well as whether it is probable that management's plans to address the substantial doubt will be implemented and, if so, whether it is probable that the plans will alleviate the substantial doubt. ASU 2014-15 is effective for annual periods ending after December 15, 2016, and interim periods and annual periods thereafter. Early application is permitted. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements | |||
GOING CONCERN | The accompanying 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 $17,469,780, an accumulated deficit of $2,977,005, and shareholders’ deficit of $2,403,815 as of December 31, 2014. 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. Over the past years, the Company had been successful in raising funds from related parties to fund the operation and new hospital construction. 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 March of 2016, 3) plan to increase sales revenue with additional medical equipment, 4) the company intend to get more fund from related party who is controlled by the CEO to complete the construction of the new hospital. 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) | 12 Months Ended | |
Dec. 31, 2014 | ||
Summary Of Significant Accounting Policies Tables | ||
Schedule of Translation Adjustments | 31-Dec-14 | |
Balance sheet | RMB 6.20 to US $1.00 | |
Statement of income and other comprehensive income | RMB 6.16 to US $1.00 | |
31-Dec-13 | ||
Balance sheet | RMB 6.05 to US $1.00 | |
Statement of income and other comprehensive income | RMB 6.15 to US $1.00 |
3_EQUIPMENT_Tables
3. EQUIPMENT (Tables) | 12 Months Ended | |||||||||
Dec. 31, 2014 | ||||||||||
Equipment Tables | ||||||||||
Schedule of Equipment | Estimated Useful Lives (Years) | 31-Dec-14 | 31-Dec-13 | |||||||
Office equipment | 10-May | $ | 86,821 | $ | 88,985 | |||||
Medical equipment | 5 | 1,371,485 | 1,394,996 | |||||||
Capital lease equipment | 5 | 1,813,892 | 1,859,107 | |||||||
Fixtures | 10 | 114,194 | 117,040 | |||||||
Vehicles | 5 | 44,877 | 45,995 | |||||||
Total equipments | 3,431,269 | 3,506,123 | ||||||||
Less accumulated depreciation | (1,583,285 | ) | (1,528,620 | ) | ||||||
Less impairment of the equipment | (674,972 | ) | (422,221 | ) | ||||||
Equipment, net | $ | 1,173,012 | $ | 1,555,282 |
7_CAPITAL_LEASE_OBLIGATIONS_Ta
7. CAPITAL LEASE OBLIGATIONS (Tables) | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Capital Lease Obligations Tables | |||||
Sales lease back obligation | Year Ending December 31 | Amount | |||
2015 | $ | 101,254 | |||
2016 | 33,751 | ||||
Total minimum lease payments | 135,005 | ||||
Less: interest payments | (9,539 | ) | |||
PV of minimum capital lease payments | 125,467 | ||||
Less: Current obligations under sales lease back | ( 92,441 | ) | |||
Long term sales lease back obligation | $ | 33,026 | |||
Schedule of Capital Lease Obligations | Year Ending December 31 | Amount | |||
2015 | $ | 377,758 | |||
2016 | 220,359 | ||||
Total minimum lease payments | 598,116 | ||||
Less: interest payments | (44,708 | ) | |||
PV of minimum capital lease payments | 553,408 | ||||
Less: Current obligations under capital lease | (339,756 | ) | |||
Long term sales lease back obligation | $ | 213,652 |
8_OTHER_PAYABLES_Tables
8. OTHER PAYABLES (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Other Payables Tables | |||||||||
Schedule of Other Payables | 31-Dec-14 | 31-Dec-13 | |||||||
Advance from customers | $ | 29,166 | $ | 5,160 | |||||
Welfare payable | 8,517 | 31,343 | |||||||
Capital lease deposits paid by third party | 350,491 | 359,227 | |||||||
Lawsuit settlement payable | - | - | |||||||
Other payables | 262,540 | 217,070 | |||||||
Total | $ | 650,714 | $ | 612,800 |
9_STOCKHOLDERS_EQUITY_Tables
9. STOCKHOLDERS' EQUITY (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Stockholders Equity Tables | |||||||||||||
Stock Options, Valuation Assumptions | Expected volatility | 105 | % | ||||||||||
Expected Dividends | 0 | % | |||||||||||
Stock price | $ | 0.24 | |||||||||||
Expected term (in years) | 3 years | ||||||||||||
Risk-free rate | 1.32 | % | |||||||||||
Fair value of the option granted | Year | Expensed | |||||||||||
2011 | $ | 4,262 | |||||||||||
2012 | 5,147 | ||||||||||||
2013 | 5,133 | ||||||||||||
2014 | 858 | ||||||||||||
Thereafter | - | ||||||||||||
Total | $ | 15,400 | |||||||||||
Stock option activity | Number of | Weighted | Aggregate | ||||||||||
Shares | Average | Intrinsic Value | |||||||||||
Exercise | (in thousands) | ||||||||||||
Price | |||||||||||||
Outstanding at January 1, 2013 | 100,000 | $ | 0.24 | $ | - | ||||||||
Granted | - | - | - | ||||||||||
Exercised | - | - | - | ||||||||||
Cancelled/expired | - | - | - | ||||||||||
Outstanding at December 31, 2013 | 100,000 | $ | 0.24 | $ | - | ||||||||
Granted | - | - | - | ||||||||||
Exercised | - | - | - | ||||||||||
Cancelled/expired | - | - | - | ||||||||||
Exercisable at December 31, 2014 | 100,000 | $ | 0.24 | $ | - | ||||||||
Expected to vest at December 31, 2014 | 100,000 | $ | 0.24 | $ | - | ||||||||
Outstanding at December 31, 2014 | 100,000 | $ | 0.24 | $ | - |
10_RELATED_PARTY_TRANSACTIONS_1
10. RELATED PARTY TRANSACTIONS AND COMMITMENTS (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Related Party Transactions And Commitments Tables | |||||||||||||
Minimum future lease payments | Related Party | Non-Related Party | Total | ||||||||||
1-5 years | $ | 179,064 | $ | 2,756,691 | $ | 2,935,756 | |||||||
6-10 years | - | 3,159,618 | 3,159,618 | ||||||||||
11-15 years | - | 3,551,129 | 3,551,129 | ||||||||||
16-20 years | - | 1,466,654 | 1,466,654 | ||||||||||
Total | $ | 179,064 | $ | 10,934,092 | $ | 11,113,156 |
2_SUMMARY_OF_SIGNIFICANT_ACCOU3
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) | Dec. 31, 2014 | Dec. 31, 2013 |
BalanceSheetMember | RMBMember | ||
Exchange rates used to translate amounts in RMB into USD for the purposes of preparing the financial statements | 6.2 | 6.05 |
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 | 6.16 | 6.15 |
StatementOfOperationsAndOtherComprehensiveLossMember | USDollarMember | ||
Exchange rates used to translate amounts in RMB into USD for the purposes of preparing the financial statements | 1 | 1 |
2_SUMMARY_OF_SIGNIFICANT_ACCOU4
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Summary Of Significant Accounting Policies Details Narrative | |||
Cash and cash equivalents | $9,606 | $7,793 | $81,135 |
Estimated bad debt allowance | 31,000 | 44,000 | |
Advertising expenses | 7,000 | 27,000 | |
Dilutive securities not included in the calculation of the diluted earnings per share because they would be antidilutive | 100,000 | ||
Stock-based compensation costs | 858 | 5,133 | |
Comprehensive Income Loss | 410,799 | 790,337 | |
Accumulated other comprehensive income | 117,010 | 65,825 | |
Working capital | 17,469,780 | ||
Accumulated deficit | 2,977,005 | 2,515,021 | |
Stockholders deficit | $2,403,815 | $1,993,874 | $1,208,670 |
3_EQUIPMENT_Details
3. EQUIPMENT (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Office equipment | 86,821 | $88,985 |
Medical equipment | 1,371,485 | 1,394,996 |
Capital lease equipment | 1,813,892 | 1,859,107 |
Fixtures | 114,194 | 117,040 |
Vehicles | 44,877 | 45,995 |
Total equipments | 3,431,269 | 3,506,123 |
Less accumulated depreciation | -1,583,285 | -1,528,620 |
Less impairment of the equipment | -674,972 | -422,221 |
Equipment, net | 1,173,012 | $1,555,282 |
Office equipment | Minimum | ||
Useful Lives | 5 years | |
Office equipment | Maximum | ||
Useful Lives | 10 years | |
Medical equipment | ||
Useful Lives | 5 years | |
Capital lease equipment | ||
Useful Lives | 5 years | |
Fixtures | ||
Useful Lives | 10 years | |
Vehicles | ||
Useful Lives | 5 years |
4_CONSTRUCTION_IN_PROGRESS_Det
4. CONSTRUCTION IN PROGRESS (Details Narrative) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Construction In Progress Details Narrative | ||
Construction in progress | $15,221,811 | $13,376,281 |
Capitalized interest | $598,000 |
5_CONTINGENCIES_Details_Narrat
5. CONTINGENCIES (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Contingencies Details Narrative | ||
Accrued contingency | $1,334,000 | $1,268,000 |
6_MAJOR_SUPPLIERS_AND_CUSTOMER1
6. MAJOR SUPPLIERS AND CUSTOMERS (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Nanning Social Insurance Center | ||
Percentage of Revenue from major customers | 33.00% | 32.00% |
Accounts receivable from major cutomers | $823,000 | |
Guangxi Province Social Insurance Center | ||
Percentage of Revenue from major customers | 5.00% | 11.00% |
Accounts receivable from major cutomers | 115,000 | |
Guangxi Tongji Medicine Co. | ||
Percentage of medicine purchases | 13% | 37% |
China UMS | ||
Percentage of Revenue from major customers | 13.00% | 5.00% |
Accounts receivable from major cutomers | $332,000 |
7_CAPITAL_LEASE_OBLIGATION_Det
7. CAPITAL LEASE OBLIGATION (Details) (USD $) | Dec. 31, 2014 |
Capital Lease Future Minimum Payment Due | |
2015 | $101,254 |
2016 | 33,751 |
Total minimum lease payments | 135,005 |
Less: interest payments | -9,539 |
PV of minimum capital lease payments | 125,467 |
Less: Current obligations under sales lease back | -92,441 |
Long term sales lease back obligation | $33,026 |
7_CAPITAL_LEASE_OBLIGATIONS_De
7. CAPITAL LEASE OBLIGATIONS (Details 1) (USD $) | Dec. 31, 2014 |
Capital Lease Future Minimum Payment Due | |
2015 | $377,758 |
2016 | 220,359 |
Total minimum lease payments | 598,116 |
Less: interest payments | -44,708 |
PV of minimum capital lease payments | 553,408 |
Less: Current obligations under capital lease | -339,756 |
Long term capital lease obligation | $213,652 |
7_CAPITAL_LEASE_OBLIGATION_Det1
7. CAPITAL LEASE OBLIGATION (Details Narrative) (USD $) | Dec. 31, 2014 |
Capital Lease Obligation Details Narrative | |
Capital lease payable under sales lease back | $125,467 |
Cost of equipment under capital leases | 1,430,000 |
Impairment loss to equipment under lease | 227,000 |
Capital lease payable | $553,000 |
8_OTHER_PAYABLES_Details
8. OTHER PAYABLES (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Other Payables Details | ||
Advance from customers | $29,166 | $5,160 |
Welfare payable | 8,517 | 31,343 |
Capital lease deposits paid by third party | 350,491 | 359,227 |
Other payables | 262,540 | 217,070 |
Total | $650,714 | $612,800 |
9_STOCKHOLDERS_EQUITY_Details
9. STOCKHOLDERS' EQUITY (Details) (USD $) | 12 Months Ended |
Dec. 31, 2014 | |
Notes to Financial Statements | |
Expected volatility | 105.00% |
Expected Dividends | 0.00% |
Stock price | $0.24 |
Expected term (in years) | 3 years |
Risk-free rate | 1.32% |
9_STOCKHOLDERS_EQUITY_Details_
9. STOCKHOLDERS' EQUITY (Details 1) | Dec. 31, 2014 |
Notes to Financial Statements | |
2011 | 4,262 |
2012 | 5,147 |
2013 | 5,133 |
2014 | 858 |
Thereafter | 0 |
Total | 15,400 |
9_STOCKHOLDERS_EQUITY_Details_1
9. STOCKHOLDERS' EQUITY (Details 2) (USD $) | 12 Months Ended |
Dec. 31, 2014 | |
Number of Shares | |
Outstanding at beginning of period | 100,000 |
Granted | 0 |
Exercised | 0 |
Cancelled/expired | 0 |
Outstanding at end of the year | 100,000 |
Weighted Average Exercise Price | |
Outstanding at beginning of period | $0.24 |
Granted | $0 |
Exercised | $0 |
Cancelled/expired | $0 |
Outstanding at end of the year | $0.24 |
Aggregate Intrinsic Value | |
Outstanding at beginning of period | $0 |
Granted | 0 |
Exercised | 0 |
Cancelled/expired | 0 |
Outstanding at end of the year | $0 |
Number of Shares Exercisable | |
Outstanding at beginning of period | 0 |
Granted | 0 |
Exercised | 0 |
Cancelled/expired | 0 |
Outstanding at end of the year | 0 |
9_STOCKHOLDERS_EQUITY_Details_2
9. STOCKHOLDERS' EQUITY (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
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 | $2,977,005 | $2,515,021 |
Stock-based compensation costs | $858 | $5,133 |
10_RELATED_PARTY_TRANSACTIONS_2
10. RELATED PARTY TRANSACTIONS AND COMMITMENTS (Details) (USD $) | Dec. 31, 2014 |
1-5 years | $2,935,756 |
6-10 years | 3,159,618 |
11-15 years | 3,551,129 |
16-20 years | 1,466,654 |
21-25 years | 11,113,156 |
RelatedPartyMember | |
1-5 years | 179,064 |
6-10 years | 0 |
11-15 years | 0 |
16-20 years | 0 |
21-25 years | 179,064 |
NonRelatedPartyMember | |
1-5 years | 2,756,691 |
6-10 years | 3,159,618 |
11-15 years | 3,551,129 |
16-20 years | 1,466,654 |
21-25 years | $10,934,092 |
10_RELATED_PARTY_TRANSACTIONS_3
10. RELATED PARTY TRANSACTIONS AND COMMITMENTS (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Related Party Transactions And Commitments Details Narrative | ||
Amount receivable | $44,538 | $45,695 |
Interest income | 673 | 675 |
Amount Payable | 15,988,370 | 14,232,773 |
Interest expenses | $230,840 | $162,271 |