SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Fiscal Year Ended December 31, 2008
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File No. - None
TONGJI HEALTHCARE GROUP, INC.
---------------------------------------------------------
(Name of Small Business Issuer in its charter)
Nevada None
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
No. 5 Beiji Road
Nanning, Guangxi, China N/A
--------------------------------------- --------
(Address of Principal Executive Office) Zip Code
Registrant's telephone number, including Area Code: 0086-771-2020000
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. [ ]
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act. [ ]
Indicate by check mark whether the registrant (1) has filed all reports to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Act): [ ] Yes [X] No
The aggregate market value of the voting stock held by non-affiliates of the
Company on June 30, 2008 was approximately $5,825,000.
As of March 25, 2009, the Company had 15,812,391 issued and outstanding shares
of common stock.
Documents incorporated by reference: None
ITEM 1. DESCRIPTION OF BUSINESS
We operate a general hospital with 105 licensed beds. Our hospital offers
care and treatment in the areas of surgery, internal medicine, ophthalmology,
orthopaedics, medical cosmetology, urology, dentistry, gynecology, pediatrics,
rehabilitation and emergency care.
Our emergency room is open 24 hours a day and all of our rooms are air
conditioned.
As is common in China, we generate revenues from providing both medical
treatment and the sale of drugs and medications. We purchase all drugs and
medications which we use and sell from Guangxi Tongji Medicine Co., Ltd., an
affiliated company, at prevailing market prices. Drugs and medications are sold
only to our patients.
Our hospital, which was originally owned by the Nanning Erqing Collective
Industrial Union, has been in operation since 1957. In September 2000, Li-Yu
Chen, one of our principal shareholders, and Guangxi Tongji Medicine Co., Ltd.,
a company controlled by our President, acquired the hospital. During 2006,
Guangxi Tongji Medicine Co., Ltd. distributed its shares in the hospital to its
shareholders. We redomiciled our company as a Nevada corporation since it was
our belief that being a U.S. corporation will be helpful since investors are
more familiar with U.S. corporations, and are more likely to invest in them, as
opposed to Chinese corporations.
Our hospital is certified as a provider of Medicare services by the
Nanning municipal government and the Guangxi provincial government. Maintaining
the qualifications for acceptance of Medicare patients is very important as
revenue from Medicare patients accounted for 41% of total hospital income in
2006. The Medicare accreditation is valid for only one year and must be renewed
on an annual basis.
Our Medicare agreements with the Nanning municipal government and the
Guangxi provincial government require that we adhere to prescribed standards for
patient care and treatment.
The amounts we are permitted to charge Medicare patients are based upon a
variety of factors, including our cost of providing services and fixed rates for
services and medications.
The majority of healthcare providers in China are government owned and
operate at a low level of efficiency. We believe many government-owned hospitals
will be privatized in future. In addition, and according to China Hospital
Administration Association, there are approximately 1500 private hospitals in
China, most of which are independent of each other. The high degree of
fragmentation presents an opportunity for acquisition and economies of scale.
We are building a new 600-bed hospital in Nanning, China. We expect the
new hospital to be completed by January 2011. The hospital is being built by
Guangxi Construction Engineering Group Corporation and when completed will be
leased by us from ______ for a twenty-year term. The lease payment will be
$381,000 during the first year of the lease. The annual lease payments will
gradually increase each year such that, during the final year of the lease, our
lease payments will be $801,783, based upon current exchange rates. Our
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agreement with Langdong 8th Group requires us to make payments of $_______
during the construction phase. As of December 31, 2008 we had paid $3,544,097
towards this amount.
When the new hospital is complete, we will continue to operate our
existing hospital.
We plan to acquire other hospitals and companies involved in the
healthcare industry in China using cash and shares of our common stock.
Substantial capital may be needed for these acquisitions and we may need to
raise additional funds through the sale of our common stock, debt financing or
other arrangements. We do not have any commitments or arrangements from any
person to provide us with any additional capital. Additional capital may not be
available to us, or if available, on acceptable terms, in which case we would
not be able to acquire other hospitals or businesses in the healthcare industry.
Competition
We compete with eleven government owned hospitals and three privately
owned hospitals in the city of Nanning. We believe that our ability to
effectively compete will be the result of:
o Providing advanced medical facilities and comfortable environments
o Maintaining the highest level of professional healthcare
o Maintaining competitive prices for medical treatment and drugs and
medications.
PRC Laws and Regulations Affecting Our Business
Healthcare providers in China are required to comply with many laws and
regulations at the national and local government levels. These laws and
regulations include the following:
o we must register with and maintain an operating license from the local
Administration of Health. We are subject to review by the local
administration of health at least once every three years. If we fail
to meet the standards listed below, our license may be revoked.
o the Licensed Physician Act requires that we only hire doctors who have
been licensed by he PRC government.
o all drugs and medications used in our hospital must be prepared,
transported, and used under the supervision of our internal Commission
of Drug Affairs Management.
o all waste material from our hospital must be properly collected,
sterilized, deposited, transported and disposed of. We are required to
keep records of the origin, type and amount of all waste materials
generated by our hospital.
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o We must have at least 20 beds and at least 14 medical professionals on
staff, including three doctors and five nurses.;
o We must provide medical services in a variety of areas, including:
o Surgery
o Internal Medicine
o Gynecology
o Emergency Care
o Ophthalmology
o Traditional Chinese Medicine
o Medical Imaging
o Physical Therapy
o we must establish and follow protocols to prevent medical malpractice.
The protocols require us to:
o insure that patients are adequately informed before they consent to
medical operations or procedures;
o maintain complete medical records which are available for review by
the patient, physicians and the courts;
o voluntarily report any event of malpractice to a local government
agency;
o support the medical services we provide in any administrative
investigation or litigation.
If we fail to comply with applicable laws and regulations, we could suffer
penalties, including the loss of our license to operate.
Before we can acquire a hospital or a company in the healthcare field in
China we will be required to submit an application to PRC Ministry of Commerce.
As part of the application we must submit a number of documents, including:
o our financial statements and the financial statements of the company
we propose to acquire.
o a copy of the business license of the company we propose to acquire,
o evidence that the shareholders of the company we propose to acquire
have approved the transaction,
o an appraisal, conducted by an independent party, of the value of the
company we propose to acquire.
Our agreements with the Nanning Municipal and the Guangxi Provincial
Medicare Funds requires us to:
o Timely deal with any patient complaints;
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o Follow the Basic Medical Treatment Insurance procedures of the City of
Nanning and the Guangxi Province;
o Report any accident to the Medicare Funds within 72 hours;
o Determine if patients are eligible for coverage by the Medicare Funds;
o Control costs by refraining from unnecessary treatments or procedures;
o Discharge inpatients when their medical condition allows so as not to
prolong their stay in the hospital.
Our agreements are renewed annually if approved by the Medicare funds.
The PRC Legal System
The PRC legal system is a civil law system. Unlike the common law system,
the civil law system is based on written statutes in which decided legal cases
have little value as precedents. In 1979, the PRC began to promulgate a
comprehensive system of laws and has since introduced many laws and regulations
to provide general guidance on economic and business practices in the PRC and to
regulate foreign investment. Progress has been made in the promulgation of laws
and regulations dealing with economic matters such as corporate organization and
governance, foreign investment, commerce, taxation and trade. The promulgation
of new laws, changes of existing laws and the abrogation of local regulations by
national laws could have a negative impact on our business and business
prospects. In addition, as these laws, regulations and legal requirements are
relatively recent, their interpretation and enforcement involve significant
uncertainty.
However, and subject to limitations on converting currency and statutory
reserve requirements, we do not believe there are any limitations concerning our
ability to access the assets held by Tongji Hospital, a PRC corporation which is
our wholly owned subsidiary.
Taxes
In accordance with the relevant laws and regulations of PRC our income tax
rate would typically be 33%. However we have received a waiver from the taxing
authorities in the PRC for corporate income tax for the years ended 2004, 2005
and 2006. In 2007 we were taxed at the normal rate of 33%.
In addition, we would normally be required to pay a tax of 5% of the
income derived from providing medical treatment plus city construction and
educational taxes equal to 7% and 3% respectively, of the business tax. We have
accrued these taxes for 2005 but are exempt from these taxes for 2006, 2007 and
2008.
Required Statutory Reserve Funds
In accordance with current Chinese laws, regulations and accounting
standards, we are required to set aside as a general reserve at least 10% of our
respective after-tax profits. Appropriations to the reserve account are not
required after these reserves have reached 50% of our registered capital. These
reserves are created to fund potential operating losses and are not
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distributable as cash dividends. We are also required to set aside between 5% to
10% of our after-tax profits to the statutory public welfare reserve. In
addition and at the discretion of our directors, we may set aside a portion of
our after-tax profits for enterprise expansion funds, staff welfare and bonus
funds and a surplus reserve. These statutory reserves and funds can only be used
for specific purposes and may not be used for dividends.
Political and Trade Relations with the United States
Political and trade relations between the U.S. and the PRC
government during the past five years have been volatile and may continue to be
in the future. There can be no assurance that the political and trade
ramifications of these causes of volatility or the emergence of new causes of
volatility will not cause difficulties in our operations in the PRC marketplace.
Economic Reform Issues
The PRC is transitioning from a planned economy to a market economy. While
the PRC government has pursued economic reforms since its adoption of the
open-door policy in 1978, a large portion of the PRC economy is still operating
under five-year plans and annual state plans. Through these plans and other
economic measures, such as control on foreign exchange, taxation and
restrictions on foreign participation in the domestic market of various
industries, the PRC government exerts considerable direct and indirect influence
on the economy. Many of the economic reforms carried out by the PRC government
are unprecedented or experimental, and are expected to be refined and improved.
Other political, economic and social factors can also lead to further
readjustment of such reforms. This refining and readjustment process may not
have a positive effect on our operations or future business development. Our
operating results may be adversely affected by changes in the PRC's economic and
social conditions as well as by changes in the policies of the PRC government,
such as changes in laws and regulations (or the interpretation of laws or
regulations), measures which may be introduced to control inflation, changes in
the interest rate or method of taxation, and the imposition of additional
restrictions on currency conversion.
There can be no assurance that the reforms to the PRC's economic system
will continue or that we will not be adversely affected by changes in the PRC's
political, economic, and social conditions and by changes in policies of the
government, such as changes in laws and regulations, measures which may be
introduced to control inflation, changes in the rate or method of taxation,
imposition of additional restrictions on currency conversion and remittance
abroad, and reduction in tariff protection and other import restrictions.
Currency Conversion and Exchange
The currency in the PRC is designated as the Renminbi ("RMB"). Although the
RMB/U.S. dollar exchange rate has been relatively stable in the past five years
there can be no assurance that the exchange rate will not become volatile or
that the RMB will not be officially devalued against the U.S. dollar by
direction of the PRC government.
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Exchange rate fluctuations, because of our foreign currency denominated
assets and liabilities, may reduce the value in U.S. dollars of our net fixed
assets and the amount of our earnings. We do not engage in any hedging
activities in order to minimize the effect of exchange rate risks.
The PRC government imposes control over the conversion of Renminbi into
foreign currencies. Under the current unified floating exchange rate system, the
People's Bank of China publishes an exchange rate, which we refer to as the PBOC
exchange rate, based on the previous day's dealings in the inter-bank foreign
exchange market. Financial institutions authorized to deal in foreign currency
may enter into foreign exchange transactions at exchange rates within an
authorized range above or below the PBOC exchange rate according to market
conditions.
Although we do not intend to pay dividends, any inability to convert RMB
into U.S.$ will limit our ability to pay dividends in the future.
Employees
As of March 25, 2009 we employed licensed physicians, nurses, medical
professionals, and employees in administration and finance. None of our
employees are represented by a labor union or similar collective bargaining
organization. We believe that our relations with our employees are good.
ITEM 1B. UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 2. PROPERTIES
We lease our two hospital buildings from Guangxi Tongji Medicine Co., Ltd,
a company controlled by our President. The lease on the buildings expires in
December 2013.
ITEM 3. LEGAL PROCEEDINGS
We are not involved in any legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASE OF EQUITY SECURITIES.
In November 2007 our common stock started trading on the OTC Bulletin
Board under the symbol "TONJ". The following shows the high and low prices for
our common stock for the periods indicated.
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Quarter Ended High Low
------------- ---- ---
12/31/07 $5.00 $0.90
3/31/08 $3.00 $1.15
6/30/08 $2.99 $0.50
9/30/08 $0.85 $0.17
12/31/08 $0.80 $0.15
As of March 25, 2009 we had 243 record shareholders and 15,812,391
outstanding shares of common stock. All of our outstanding shares are eligible
for sale pursuant to Rule 144.
In general, under Rule 144 as currently in effect, a person who is not one
of our officers, directors, or principal shareholders, and who has owned their
shares for at least six months, may sell their shares without limitation in the
public market.
Holders of common stock are entitled to receive dividends as may be
declared by our Board of Directors. The Board of Directors is not obligated to
declare a dividend and it is not anticipated that dividends will ever be paid.
During the year ended December 31, 2008 we did not purchase any shares of
our common stock from third parties in a private transaction or as a result of
any purchases in the open market. None of our officers or directors, nor any of
our principal shareholders purchased any shares of our common stock, on our
behalf, from third parties in a private transaction or as a result of purchases
in the open market during the year ended December 31, 2008.
ITEM 6. SELECTED FINANCIAL DATA
Not applicable.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
You should read the following discussion and analysis of our financial
condition and results of operations in conjunction with our financial statements
and the related notes included elsewhere in this report. Our financial
statements have been prepared in accordance with U.S. GAAP. In addition, our
financial statements and the financial data included in this report reflect our
reorganization and have been prepared as if our current corporate structure had
been in place throughout the relevant periods. The following discussion and
analysis contains forward-looking statements that involve risks and
uncertainties. Actual results could differ materially from those projected in
the forward-looking statements.
Overview
We were organized as a Nevada corporation on December 19, 2006. On
December 27, 2006 we issued 15,652,557 shares of our common stock to acquire all
outstanding shares of Nanning Tongji Hospital Co., Ltd., which we refer to as
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"Tongji Hospital," a PRC company which was formed in October 30, 2003. The
purpose of the transaction was to redomicile us as a Nevada corporation. Unless
otherwise indicated, all references to us throughout this report includes the
operations of Tongji Hospital.
Our critical accounting policies, as well as recent accounting
pronouncements which apply to us, are described in Note 2 to our financial
statements which are included as part of this report.
Results of Operation
- --------------------
Material changes of items in our Statement of Operations for the year
ended December 31, 2008, as compared to the year ended December 31, 2007, are
discussed below.
Patient Service Revenue: The increase in revenues was the result of more
patients being treated by our hospital, due to our increased reputation as being
a preferred provider of health care services in the region, and a change in our
patient mix. In 2008 the percentage of inpatients increased from 29% to 33%.
Generally, we receive greater revenue from an inpatient, as opposed to an
outpatient, due to the length of the stay and the services provided to an
inpatient.
Gross profit: The decline in our gross profit percentage in 2008 was the
result of higher salaries paid to our medical staff in 2008.
Operating Expenses: Selling expenses declined in 2008 due to tighter
controls over this category, plus legal and accounting fees were recorded in
this category in 2007, as opposed to being recorded as general and
administrative expenses. General and administrative expenses increased since we
treated more patients in 2008, plus legal and accounting expenses were recorded
in this category in 2008 as opposed to being recorded as selling expenses in
2007. Depreciation, amortization and expenses increased as a result of additions
to property, plant and equipment.
Material changes of items in our Statement of Operations for the year
ended December 31, 2007, as compared to the year ended December 31, 2006, are
discussed below.
Patient Service Revenue: The increase in revenues was the result of more
patients being treated by our hospital, due to our increased reputation as being
a preferred provider of health care services in the region, and a change in our
patient mix. In 2007 the percentage of inpatients increased from 26% to 29%.
Generally, we receive greater revenue from an inpatient, as opposed to an
outpatient, due to the length of the stay and the services provided to an
inpatient.
Gross profit: The decrease in our gross profit percentage in 2007 was the
result of higher cost of medical supplies.
Operating Expenses: Selling expenses increased due to more amounts spent
on promoting our service and products. General and administrative expenses
increased since we treated more patients in 2007. Depreciation, amortization and
expenses increased as a result of additions to property, plant and equipment.
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Trends, Events and Uncertainties
The China Ministry of Health, as well as other related agencies, have
proposed changes to the prices we can charge for medical services, drugs and
medications. We cannot predict the impact of these proposed changes since the
changes are not fully defined and we do not know whether those proposed changes
will ever be implemented or when they may take effect.
In accordance with the relevant laws and regulations of PRC our income tax
rate would typically be 33%. However we have received a waiver from the taxing
authorities in the PRC for corporate income tax for the years ended 2004, 2005
and 2006. In 2007 and 2008 we were taxed at the normal rate of 33%.
In addition, we would normally be required to pay a tax of 5% of the
income derived from providing medical treatment plus city construction and
educational taxes equal to 7% and 3% respectively, of the business tax. We
accrued these taxes for 2005 but were exempt from these taxes for 2006, 2007 and
2008.
We are building a new 600-bed hospital in Nanning, China. We expect the new
hospital to be completed by January 2011. The hospital is being built by Guangxi
Construction Engineering Group Corporation and, when completed, will be leased
by us for a twenty-year term. The lease payment will be $381,000 during the
first year of the lease. The annual lease payments will gradually increase each
year such that, during the final year of the lease, our lease payments will be
$801,783, based upon current exchange rates. Our agreement with Langdong 8th
Group requires us to make payments of approximately $5,600,000 to Langdong 8th
Group during the construction phase. As of December 31, 2008 we had paid
$3,544,097 towards this amount.
Other than the factors listed above we do not know of any trends, events
or uncertainties that have had or are reasonably expected to have a material
impact on our net sales or revenues or income from continuing operations. Our
business is not seasonal in nature.
Accounting Estimates
- --------------------
In the United States most hospitals have contracts with health insurance
companies which provide that patients with health insurance will be charged
reduced rates for healthcare services. Reduced rates are also charged for
Medicare and Medicaid patients. Although the patient is billed for the services
provided by the hospital at the higher rate normally charged to patients without
insurance the amount billed is reduced by the charges paid by the insurance
carrier and by the difference (sometimes known as the "contractual allowance")
between the normal rate for the services and the reduced rate which the hospital
estimates it will receive from Medicare, Medicaid and insurance companies.
For financial reporting purposes, hospitals in the United States record
revenues based upon established billing rates less adjustments for contractual
allowances. Revenues are recorded based upon the estimated amounts due from the
patients and third-party payors, including federal and state agencies (under the
Medicare and Medicaid programs) managed care health plans, health insurance
companies, and employers. Estimates of contractual allowances under third-party
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payor arrangements are based upon the payment terms specified in the related
contractual agreements. Third-party payor contractual payment terms are
generally based upon predetermined rates per diagnosis, per diem rates, or
discounted fee-for-service rates.
Due to the complexities involved in determining amounts ultimately due
under reimbursement arrangements with a large number of third-party payors,
which are often subject to interpretation, the reimbursement actually received
by U.S. hospitals for health care services is sometimes different from their
estimates.
The medical system in China is different than that in the United States.
Private medical insurance is not generally available to the Chinese population
and as a result services and medications provided by our hospital are usually
paid for in cash or by the Medicare agencies of the Nanning municipal government
and the Guangxi provincial government. Our billing system automatically
calculates the reimbursements to which we are entitled based upon regulations
promulgated by the Medicare agencies. We bill the Medicare agencies directly for
services provided to patients coved by the Medicare programs. Since we bill the
Medicare agencies directly, our gross revenues are not reduced by contractual
allowances.
Since we only deal with the Nanning municipal and the Guangxi provincial
Medicare agencies we are familiar with their regulations pertaining to
reimbursements. As a result, there is normally no material difference between
the amounts we bill and the amounts we receive for services provided to Medicare
patients.
Liquidity and Capital Resources
- -------------------------------
The following shows our material sources and (uses) of cash during the
periods presented:
December 31,
2008 2007
---- ----
Cash provided by operations $185,707 $397,701
Purchase of medical equipment (43,148) (42,973)
Sale of equipment 209 621,077
Construction of new hospital (2,344,590) (1,038,876)
Net advances (to) from related parties 2,471,083 91,123
Sale of common stock 76,788 --
Capital lease payments (308,037) (22,348)
Other 649 1,395
Future payments due on our material contractual obligations as of December 31,
2008 are as follows:
Item Total 2009 2010 2011 2012 2013 Thereafter
- ---- ----- ---- ---- ---- ---- ---- ----------
Medical Building Lease $141,964 $ 28,393 $ 28,393 $ 28,393 $ 28,393 $ 28,393 --
Capital Leases $702,895 $366,728 $336,167 -- -- -- --
Lease on New Hospital $11,332,357 -- -- $381,092 $395,749 $410,407 $10,145,109
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Except as shown above, as of December 31, 2008 we did not have any
material capital requirements.
Virtually all of our accounts receivable at December 31, 2008 and December
31, 2007 were due from the Nanning and Guangxi Medicare agencies. The age of our
account receivables as of December 31, 2008 and 2007 is shown below:
December 31,
2008 2007
---- ----
Less than 30 days old 33% 37%
31 to 60 days old 10% 26%
61 to 90 days old 2% 21%
Over 90 days old 54% 16%
As of December 31, 2008 our accounts receivable were approximately 10% of
our revenues for the year. In comparison, our accounts receivable at December
31, 2007 were 12% of our revenues for the year.
A receivable is recorded as a bad debt and is written off if it is more
than 90 days old and we consider it to be uncollectable. During the years ended
December 31, 2008 and 2007 we did not write off any bad debts.
Income from our operations has been, and is expected to be in the future,
our primary source of cash.
We do not have any off-balance sheet items reasonably likely to have a
material effect on our financial condition.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA
See the financial statements attached to and made a part of this report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Effective December 14, 2007 Michael Pollack CPA resigned as our certified
public accountant. Mr. Pollack audited our financial statements for the fiscal
years ended December 31, 2006 and 2005. The reports of Mr. Pollack for these
fiscal years did not contain an adverse opinion, or disclaimer of opinion and
were not qualified or modified as to audit scope, accounting principles or
uncertainty. During our two most recent fiscal years and subsequent interim
period ended December 14, 2007 there were no disagreements with Mr. Pollack on
any matter of accounting principles or practices, financial statement disclosure
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or auditing scope or procedures, which disagreements, if not resolved to the
satisfaction of Mr. Pollack, would have caused him to make reference to such
disagreements in his report.
Effective February 14, 2008 we hired Wen Jiang & Company PC as our
independent registered public accounting firm.
Wen Jiang & Company did not provide us with advice regarding the
application of accounting principles to a specified transaction, either
completed or proposed, or the type of audit opinion that might be rendered on
our financial statements, that was an important factor considered by us in
reaching a decision as to an accounting, auditing or financial reporting issue.
During the two most recent fiscal years and subsequent interim period ended
February 14, 2008, we did not consult with Wen Jiang & Company regarding any
matter that was the subject of a disagreement or a reportable event as defined
in the regulations of the Securities and Exchange Commission.
Effective February 21, 2008 Wen Jiang & Company resigned as our
independent certified public accountants since they did not believe they could
complete the audit of our financial statements prior to April 15, 2008. Wen
Jiang & Company did not audit our financial statements. During our two most
recent fiscal years and subsequent interim period ended February 21, 2008 there
were no disagreements with Wen Jiang & Company on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedures, which disagreements, if not resolved to the satisfaction of Wen
Jiang & Company, would have caused them to make reference to such disagreements
in any report they may have issued on our financial statements.
Effective February 29, 2008 we hired Kabani & Company, Inc. as our
independent registered public accounting firm.
Kabani & Company did not provide us with advice regarding the application
of accounting principles to a specified transaction, either completed or
proposed, or the type of audit opinion that might be rendered on our financial
statements, that was an important factor considered by us in reaching a decision
as to an accounting, auditing or financial reporting issue. During the two most
recent fiscal years and subsequent interim period ended February 29, 2008, we
did not consult with Kabani & Company regarding any matter that was the subject
of a disagreement or a reportable event as defined in the regulations of the
Securities and Exchange Commission.
ITEM 9A. CONTROLS AND PROCEDURES
Yun-hui Yu, our President and Chief Executive Officer and Wei-dong Huang,
our Chief Financial and Accounting Officer, have evaluated the effectiveness of
our disclosure controls and procedures as of the end of the period covered by
this report; and in their opinion our disclosure controls and procedures are
effective to ensure that material information relating to us, including our
consolidated subsidiaries, is made known to them by others within those
entities, particularly during the period in which this report is being prepared,
so as to allow timely decisions regarding required disclosure. There have been
no changes in our internal controls over financial reporting that occurred
during the quarter that have materially affected, or are reasonably likely to
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materially affect, our internal control over financial reporting. As a result,
no corrective actions with regard to significant deficiencies or material
weakness in our internal controls were required. Management's Report on Internal
Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal
control over financial reporting and for the assessment of the effectiveness of
internal control over financial reporting. As defined by the Securities and
Exchange Commission, internal control over financial reporting is a process
designed by, or under the supervision of our principal executive officer and
principal financial officer and implemented by our Board of Directors,
management and other personnel, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of our financial
statements in accordance with U.S. generally accepted accounting principles.
Our internal control over financial reporting includes those policies and
procedures that (1) pertain to the maintenance of records that, in reasonable
detail, accurately and fairly reflect our transactions and dispositions of our
assets; (2) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of our financial statements in accordance with
U.S. generally accepted accounting principles, and that our receipts and
expenditures are being made only in accordance with authorizations of our
management and directors; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use or disposition
of our assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
In connection with the preparation of our annual financial statements,
management has undertaken an assessment of the effectiveness of our internal
control over financial reporting as of December 31, 2008, based on criteria
established in Internal Control - Integrated Framework issued by the Committee
of Sponsoring Organizations of the Treadway Commission, or the COSO Framework.
Management's assessment included an evaluation of the design of our internal
control over financial reporting and testing of the operational effectiveness of
those controls.
Based on this evaluation, management has concluded that our internal control
over financial reporting was effective as of December 31, 2008.
This annual report does not include an attestation report of our independent
registered public accounting firm regarding internal control over financial
reporting. Management's report was not subject to attestation by our independent
registered public accounting firm pursuant to temporary rules of the SEC that
permit us to provide only management's report on internal control in this annual
report.
14
ITEM 9B. OTHER INFORMATION
Not applicable
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The names, ages and positions held by our executive officers and directors
are listed below.
Name Age Position
---- --- --------
Yun-hui Yu 45 President, Chief Executive Officer and Chairman
of the Board of Directors
Wei-dong Huang 38 Chief Financial and Accounting Officer
Jin-song Zhang 40 Chief Administrative Officer
Jing-xi Lv 62 Vice president and a Director
Jia-lin Zhang 67 Vice president and a Director
Lin Lin 62 Vice president and a Director
Xiang-wei Zeng 65 Vice president and a Director
Directors serve in such capacity until the next annual meeting of our
stockholders and until their successors have been elected and qualified. Our
officers serve at the discretion of our Board of Directors, until their death,
or until they resign or have been removed from office.
Yun-hui Yu is our founder and has been our Chief Executive Officer,
President and one of our directors since October 2003. Since October 1999 Mr. Yu
has also been the Chief Executive Officer and a director of Guangxi Tongji
Medicine Co., Ltd., an affiliated company which operates pharmacies in China.
Mr. Yu received his bachelor's degree in medicine from the First Military
Medical University of the People's Liberation Army of China in August 1984. Mr.
Yu holds a license as a physician from the Chinese Ministry of Health.
Wei-dong Huang has been our Chief Financial and Accounting Officer since
May of 2006. Between April 2005 and May 2006 Mr. Huang was vice project general
manager at the Capital Hotel Group. Between April 2004 and March 2005, Mr. Huang
was the financial director at the Changsha InBev Baisha Beer Group, a brewery in
China. Between November 2002 and April of 2004, Mr. Huang was vice president at
Jingfang Investment & Management Consulting Co., Ltd. Between November 1996 and
November 2002 Mr. Huang was the financial controller at Blue Ribbon Beer Brewery
Co., Ltd, a brewery in China. Mr. Huang received his master's degree from
Capital University of Economics and Business in July of 1995. Mr. Huang holds a
license as a certified public accountant from the Chinese Institute of Certified
Public Accountants and is licensed as a securities broker with the Securities
Association of China.
15
Jin-song Zhang has been our Chief Administrative Officer since February
2006. Between August 2000 and January 2006 Mr. Jing-song was a director in the
Naning New & High Tech Industrial Development Zone administration commission.
Mr. Zhang received his bachelor's degree in engineering from the Electronic
Engineering Institute of the Peoples Liberation Army in August 1987.
Jing-xi Lv has been one of our vice presidents since January 2004. In
October 2006 Mr. Lv became one of our directors. Between July 1973 and December
2003 Mr. Lv was an orthopaedic surgeon at the Nanning No.1 People's Hospital.
Mr. Lv received his bachelor's degree from Guangxi Medicine University in August
1968 and holds a license as a physician from the Chinese Ministry of Health.
Jia-lin Zhang has been one of our vice presidents since October 2004. In
October 2006 Mr. Zhang became one of our directors. Between 1964 and October
2004, Mr. Zhang was a surgeon at several hospitals, including the People's
Hospital of Du'an county and the Red Cross Hospital. Mr. Zhang received his
bachelor's degree from Guangxi Medicine University in August 1964 and holds a
license as physician from the Chinese Ministry of Health.
Lin Lin has been one of our vice presidents since May 2005. In October
2006 Mr. Lin became one of our directors. Between February 1977 and May 2005 Mr.
Lin was the director of Internal Medicine at the Guangxi Ethical Hospital. Mr.
Lin received a bachelor's degree from Guangxi Medicine University in July 1968
and holds a license as a physician from the Chinese Ministry of Health.
Xiang-wei Zeng has been one of our vice presidents since March 2005. In
October 2006 Mr. Zeng became one of our directors. Between 2000 and December
2004, Mr. Zeng was the director of physicians at the Guanxi Medicine University
Hospital. Mr. Zeng received his bachelor's degree from Guangxi Medicine
University in July of 1967 and holds a license as a physician from the Chinese
Ministry of Health.
None of our directors are independent as that term is defined by Section
803 of the Listing Standards of the NYSE Alternext US.
Yun-hui Yu and Li Yu Chen, one of our principal shareholders, may be
considered our parents and promoters, as those terms are defined by the
Seurities and Exchange Commission.
Compensation Committee Interlocks and Insider Participation
- -----------------------------------------------------------
Our directors act as our compensation committee. During the year ended
December 31, 2008, all of our directors participated in deliberations concerning
executive officer compensation.
During the year ended December 31, 2008, none of our officers was also a
member of the compensation committee or a director of another entity, which
other entity had one of its executive officers serving as one of our directors
or as a member of our compensation committee.
16
ITEM 11. EXECUTIVE COMPENSATION
Summary Compensation Table
The following table shows the compensation paid or accrued during the two
years ended December 31, 2008 to Yunhui Yu, Tongji' Chief Executive Officer.
None of our executive officers or directors received compensation in excess of
$100,000 during our past two fiscal years.
All
Other
Annual
Stock Option Compen-
Name and Principal Fiscal Salary Bonus Awards Awards sation
Position Year (1) (2) (3) (4) (5) Total
- ------------------ ------ ------ ----- ------ ------ ------- -----
Yunhui Yu, Chief 2008
Executive Officer 2007 -- -- -- -- -- --
(1) The dollar value of base salary (cash and non-cash) received.
(2) The dollar value of bonus (cash and non-cash) received.
(3) During the periods covered by the table, the value of our shares issued as
compensation for services to the persons listed in the table.
(4) The value of all stock options granted during the periods covered by the
table.
(5) All other compensation received that we could not properly report in any
other column of the table.
Stock Options. We have not granted any stock options to any of our
officers or directors and do not have any stock option plans in effect as of
March 25, 2009. In the future, we may grant stock options to our officers,
directors, employees or consultants.
Long-Term Incentive Plans. We do not provide our officers or employees
with pension, stock appreciation rights, long-term incentive or other plans and
have no intention of implementing any of these plans for the foreseeable future.
Employee Pension, Profit Sharing or other Retirement Plans. We do not have
a defined benefit, pension plan, profit sharing or other retirement plan,
although we may adopt one or more of such plans in the future.
Compensation of Directors. Our directors do not receive any compensation
pursuant to any standard arrangement for their services as directors.
17
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table shows, as of March 25, 2009, the common stock ownership
of (i) each person known by us to be the beneficial owner of five percent or
more of our common stock, (ii) each officer and director and (iii) all officers
and directors as a group. Except as otherwise indicated, each person has sole
voting and investment power with respect to the shares of common stock shown,
and all ownership is of record and beneficial.
Number Percent
Name and Address of Shares of Class
---------------- --------- --------
Yun-hui Yu 7,000,000 45%
No. 5 Beiji Road
Nanning, China 530011
Wei-dong Huang 32,600 *
No. 5 Beiji Road
Nanning, China 530011
Jin-song Zhang 72,000 *
No. 5 Beiji Road
Nanning, China 530011
Jing-xi Lv 10,000 *
Dormitories 32-402 of Nanning #1
Hospital, Jingwen Road
Nanning, China
Jia-lin Zhang 2,000 *
Longxiangju Num.201, Qingxiu Village,
Qingshan Road
Nanning, China
Lin Lin 1,000 *
Mingxiu East Road 232-15-1
Nanning, China
Xiang-wei Zeng -- --
Jiangnan District
Nanning, China
Li-Yu Chen 3,000,000 (1) 19.2%
Jinhu Road #22
Mingdu Park 32221
Nanning, China
18
All officers and directors as 7,117,600 45.5%
a group (7 persons)
(1) Li-Yu Chen is the wife of Yun-hui Yu.
* Less than 10%
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, DIRECTOR INDEPENDENCE
---------------------------------------------------------------------
In December 2006 we acquired all of the outstanding shares of Tongji
Hospital, a PRC corporation, in exchange for the issuance of 15,652,557 shares
of our common stock to the former shareholders of Tongji Hospital. The purpose
of this transaction was to redomicile us as a Nevada corporation. In connection
with this transaction, the following officers, directors and their affiliates
received shares of our common stock:
Name Number of Shares Received
---- -------------------------
Yun-hui Yu 7,000,000
Wei-dong Huang 32,600
Jin-song Zhang 72,000
Jing-xi Lv 10,000
Jia-lin Zhang 2,000
Lin Lin 1,000
Li-Yu Chen (1) 3,000,000
(1) Li-yu Chen is the wife of Yun-hui Yu.
We lease our two hospital buildings from Guangxi Tongji Medicine Co., Ltd.
The lease on the buildings expires in December 2013.
We also purchase all drugs and medications which we use and sell from
Guangxi Tongji Medicine Co., Ltd., at prevailing market prices.
We have advanced funds to Nanning Tongji Chain Pharmacy Co., Ltd. to assist
in their operations. As of December 31, 2008 and 2007 Nanning Tongji Chain
Pharmacy Co., Ltd. owed us $268,815 and $1,397,080 respectively.
Guangxi Tongji Medicince Co. Ltd. has loaned us money which we have used in
our operations. As of December 31, 2008 and 2007 we owed Guangxi Tongji Medicine
Co. Ltd., $213,504 and $118,946, respectively.
Yun-hui Yu, our Chief Executive Officer and one of our directors, has also
loaned us money which we have used in our operations. As of December 31, 2008
and 2007 we owed Mr. Yu $818,108 and $1,563,584, respectively.
19
The amounts we have advanced and borrowed accrue interest at a rate of 6%
per annum, which exceeds the interest rate in the PRC for similar borrowings.
Yun-Hui Yu owns 90% of the capital stock of Guangxi Tongji Medicince Co.
Ltd. Guangxi Tongji Medicine Co. owns 90% of Nanning Tongji Chain Pharmacy Co.,
Ltd.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Michael Pollack CPA, audited our financial statements for the fiscal year
ended December 31, 2006. The following table shows the aggregate fees billed to
us during the year ended December 31, 2007 by Mr. Pollack.
2007
----
Audit Fees $38,000
Audit-Related Fees --
All Other Fees --
Audit fees represent amounts billed for the audit of our annual financial
statements and the reviews of the financial statements included in our Forms
10-Q for the fiscal year. Before we engaged Mr. Pollack to render audit
services, the engagement was approved by our Directors.
Kabani & Company audited our financial statements for the fiscal year ended
December 31, 2008 and 2007. The following table shoes the aggregate fees billed
to us by Kabani & Company during the year ended December 31, 2008. Since we did
not hire Kabani & Company until February 2008, Kabani did not bill us for any
fees during 2007.
2008
----
Audit Fees $67,500
Audit-Related Fees $ 3,599
All Other Fees --
Audit fees represent amounts billed for the audit of our annual financial
statements and the reviews of the financial statements included in our Forms
10-Q for the fiscal year. Before we engaged Kabani & Company to render audit
services, the engagement was approved by our Directors.
20
ITEM 15. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES
Number Exhibit
- ------ -------
2 Plan of Merger *
3.1 Articles of Incorporation *
3.2 Bylaws *
10.1 Employment Contracts *
10.2 Hospital Lease *
10.3 Agreement with Guangxi Tongji Medicine Co., Ltd. *
10.4 Agreement for Medicare Service - The Management Center of
Social Medical Treatment Insurance of Nanning. *
10.5 Agreement for Medicare Service - Social Security Department
of Guangxi Zhuang Municipality *
21. Subsidiaries *
23.1 Rule 13a-14(a) Certifications
23.2 Section 1350 Certifications
* Incorporated by reference to the same exhibit filed with our registration
statement on Form SB-2 (File No. 333-140645).
21
TONGJI HEALTHCARE GROUP, INC.
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2008 AND 2007
TABLE OF CONTENTS
Report of Independent Registered Public Accounting Firm F-2
Consolidated Balance Sheets as of December 31, 2008 and 2007 F-3
Consolidated Statements of Operations for the years ended
December 31, 2008 and 2007 F-4
Consolidated Statements of Cash Flows for the years ended
December 31, 2008 and 2007 F-5
Consolidated Statements of Stockholders' Equity for the years
ended December 31, 2008 and 2007 F-6
Notes to Consolidated Financial Statements F-7
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Stockholders of
Tongji Healthcare Group, Inc.
We have audited the accompanying consolidated balance sheets of Tongji
Healthcare Group, Inc. as of December 31, 2008 and 2007, and the related
consolidated statements of operations, stockholders' deficit, and cash flows for
the years ended December 31, 2008 and 2007. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall consolidated financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Tongji Healthcare
Group, Inc. as of December 31, 2008 and 2007, and the results of its operations
and cash flows for the years ended December 31, 2008 and 2007, in conformity
with U.S. generally accepted accounting principles.
/s/ Kabani & Company, Inc.
Certified Public Accountants
Los Angeles, California
February 20, 2009
F-2
TONGJI HEALTHCARE GROUP, INC.
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2008 AND DECEMBER 31, 2007
December 31, December 31,
2008 2007
------------ ------------
ASSETS
Current Assets
Cash and cash equivalents $ 61,826 $ 23,165
Accounts receivable, net 267,574 287,593
Due from related parties 268,815 1,516,026
Inventory, net 144,746 152,242
Prepaid expenses and other current assets 128,761 32,779
------------ ------------
Total Current Assets 871,722 2,011,805
Property, Plant and Equipment, net 4,323,445 2,148,801
Other Assets
Capital Lease Deposit 153,903 143,945
------------ ------------
Total Other Assets 153,903 143,945
------------ ------------
TOTAL ASSETS $ 5,349,070 $ 4,304,551
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued expenses $ 240,528 $ 418,368
Due to related parties 3,367,857 1,563,842
Other payable 351,499 161,350
Short term bank loan - 411,270
Deferred gain on sale & lease back 111,547 104,329
Capital lease obligation-short term 343,527 293,394
------------ ------------
Total Current Liabilities 4,414,958 2,952,554
Long Term Liabilities
Capital lease obligation 343,922 642,968
Deferred gain on sale & lease back 101,936 199,964
------------ ------------
Total Long Term Liabilities 445,858 842,932
------------ ------------
Total Liabilities 4,860,816 3,795,486
STOCKHOLDERS' EQUITY
Preferred stocks; $0.001 par value,
20,000,000 shares authorized and 0
share issued and outstanding - -
Common stocks; $0.001 par value,
100,000,000 shares authorized and
15,812,391 and 15,652,557 shares
issued and outstanding as of Dec.31, 2008
and Dec. 31, 2007 respectively 15,813 15,653
Additional paid in capital 424,967 347,347
Statutory reserve 41,812 41,812
Accumulated deficit/(Retained earnings) (70,727) 61,079
Accumulated other comprehensive income 76,389 43,174
------------ ------------
Total Stockholders' Equity 488,254 509,065
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 5,349,070 $ 4,304,551
============ ============
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
TONGJI HEALTHCARE GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME
FOR THE TWELVE MONTH PERIODS ENDED
DECEMBER 31, 2008 AND 2007
For The Twelve Month Periods Ended
December 31
-------------------------------------
2008 2007
------------ ------------
PATIENT SERVICE REVENUE $ 2,604,579 $ 2,330,026
Cost of Revenue 1,546,401 1,279,636
------------ ------------
GROSS PROFIT 1,058,178 1,050,390
OPERATING EXPENSES
Selling expenses 331,622 660,350
General and administrative expenses 264,231 135,880
Depreciation expenses 398,059 168,300
------------ ------------
Total operating expenses 993,912 964,530
------------ ------------
INCOME FROM OPERATIONS 64,266 85,860
OTHER EXPENSE
Other expense (5,121) (6,129)
Interest expense, net of income (190,951) (20,090)
------------ ------------
Total Other Expense (196,072) (26,219)
------------ ------------
INCOME (LOSS) BEFORE INCOME TAXES (131,806) 59,641
Provision for Income Taxes - (10,002)
------------ ------------
NET INCOME (LOSS) (131,806) 49,639
Foreign currency translation gain 33,214 32,870
------------ ------------
COMPREHENSIVE INCOME (LOSS) $ (98,591) $ 82,509
============ ============
NET INCOME (LOSS) PER BASIC AND
DILUTED SHARES $ (0.008) $ 0.003
============ ============
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 15,759,550 15,652,557
============ ============
Weighted average number of shares for dilutive securities has not been taken
since the effect of dilutive securities is anti-dilutive
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
TONJI HEALTHCARE GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE TWELVE MONTH PERIODS ENDED DECEMBER 31, 2008 AND 2007
2008 2007
---- ----
Cash flows from operating activities:
Net income (loss) $ (131,806) $ 49,639
------------ ------------
Adjustments to reconcile net income (loss) to
Net cash provided by operating activities:
Depreciation and amortization 398,059 168,300
Allowance for doubtful accounts 1,623 37,579
Increase/(decrease) in assets and liabilities:
Accounts receivable 37,573 (32,337)
Inventory 17,703 (45,913)
Capital lease deposit - (143,945)
Prepaid expense and other current assets (144,451) 3,228
Accounts payable and accrued expenses (49,769) (38,234)
Unearned revenue (109,846) 292,263
Other payables 166,621 107,122
------------ ------------
Total adjustment 317,513 348,063
Net Cash Provided By Operating Activities 185,707 397,702
------------ ------------
Cash flows from investing activities:
(Acquisitions) of fixed assets (43,148) (42,973)
Disposals of fixed assets 209 621,077
Payments for construction and lease back (2,344,590) (1,038,876)
Decrease (increase) in due from related parties 1,381,765 1,007,937
------------ ------------
Net Cash Provided by (Used in) Investing Activities (1,005,764) 547,165
------------ ------------
Cash flows from financing activities:
(Payment) proceeds of note payable (431,795) 395,010
Issuance of stock 76,788 -
Payments of capital lease (308,037) (22,348
Due to related parties 1,521,113 (1,311,824)
------------ ------------
Net Cash Provided by (Used in) Financing Activities 858,069 (939,162)
------------ ------------
Effects of foreign currency translation 649 1,395
------------ ------------
Net Increase (decrease) in Cash and Cash Equivalents 38,661 7,100
Cash and Cash Equivalents-Beginning of Period 23,165 16,065
------------ ------------
Cash and Cash Equivalents-Ending of Period $ 61,826 $ 23,165
============ ============
Cash Paid During the Year for:
Income taxes $ - $ -
============ ============
Interest paid $ 101,039 $ 12,586
============ ============
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
TONGJI HEALTHCARE GROUP, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE TWELVE MONTH PERIODS ENDED DECEMBER 31, 2008, 2007 AND 2006
Accumulated
Additional Other Total
Number Paid In Statutory Retained Comprehensive Shareholders'
Of Shares Common Stock Capital Reserve Earning Income Equity
--------- ------------ ---------- --------- -------- ------------- -------------
Balance December 31, 2006 15,652,557 $ 15,653 $ 347,347 $ 36,848 $ 16,404 $ 10,304 $ 426,556
Transfer of statutory
reserves - - - 4,964 (4,964) - -
Net income for the
year ended
December 31, 2007 - - - - 49,639 32,870 82,509
---------- ------ ------- ------ ------ ------- --------
Balance December 31, 2007 15,652,557 15,653 347,347 41,812 61,079 43,174 509,065
Shares issued for cash 177,834 178 77,602 77,780
Shares cancelled (18,000) (18) 18 0
Transfer of statutory
reserves - - - - - -
Net income for the
year ended
December 31, 2008 - - - (131,806) 33,214 (98,591)
------------ ------------ ---------- ---------- --------- -------- -----------
Balance December 31, 2008 15,812,391 $ 15,813 $ 424,967 $ 41,812 $(70,727) $ 76,389 $ 488,254
============ ============ ========== ========== ========= ======== ===========
The accompanying notes are an integral part of these consolidated
financial statements.
F-6
TONGJI HEALTHCARE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2008 AND 2007
NOTE 1- ORGANIZATION AND BASIS OF PRESENTATION
Nanning Tongji Hospital, Inc. ("NTH") was established in Nanning in the province
of Guangxi of the Peoples Republic of China ("PRC") by the Nanning Tongji
Medical Co. Ltd. and an individual on October 30, 2003.
NTH is an assigned hospital for medical insurance in City of Nanning and Guangxi
Province. NTH contains specialties 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, the officers of NTH filed Articles of Incorporation in the
State of Nevada which was approved on December 19, 2006 to create Tongji
Healthcare Group, Inc. a Nevada corporation (the "Company") and also established
Tongji, Inc., a Colorado corporation ("Tongji") a wholly owned subsidiary of the
Company.
On December 27, 2006, Tongji acquired 100% of the equity in NTH pursuant to an
Agreement and Plan of. Pursuant to the acquisition of NTH, it became the wholly
owned subsidiary of Tongji. The Company incorporated with 50,000,000 shares of
common stock and 20,000,000 shares of preferred stock both with a par value of
$0.001. The Company issued 15,652,557 shares of common stock to the shareholders
of NTH in exchange for 100% of the issued and outstanding shares 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 shareholders 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 shall be
subject to register with the Administration of Health of the local government to
obtain their license for hospital service operation. The Company received its
renewed operation license from Nanning's government in May of 2005, and this
license remains valid until the next scheduled renewing date of May 2009.
Other existing regulations having material effects on the Company's business
include those dealing with physician's licensing, usage of medicine and
injection, public security in health and medical advertising.
F-7
As the Company maintains a facility with an excess of 100 beds, they must have
their license renewed at least every three years. The Company is also obligated
to provide free service or dispatch their physicians or employees for public
assistance. The Company has a very small percentage of their service for this
area.
NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of Tongji Healthcare
Group, Inc. and its wholly owned subsidiaries Tongji, Inc. and Nanning Tongji
Hospital, Inc. All significant intercompany accounts and transactions have been
eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. On an on-going basis, the Company evaluates its
estimates, including, but not limited to, those related to depreciation, bad
debts, income taxes and contingencies. Actual results could differ from those
estimates.
Foreign Currency Translation
The Company's functional currency is that of the PRC which 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 Company records these translation adjustments as accumulated other
comprehensive income (loss). Gains and losses from foreign currency transactions
are included in other income (expense) in the results of operations. For the
year ended December 31, 2008 and 2007, the Company recorded approximately
$33,214 and $32,870 in transaction gains as a result of currency translation.
F-8
Revenue Recognition
The Company's revenue recognition policies are in compliance with Staff
Accounting Bulletin (SAB) 104. Sales revenue is recognized at the date of
shipment to customers or services has been rendered when a formal arrangement
exists, the price is fixed or determinable, the delivery is completed, no other
significant obligations of the Company exist and collectibility 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 the individuals as well as third-party
payers, including PRC government programs and insurance providers, under which
the hospital is paid based upon several methodologies including established
charges, the cost of providing services, predetermined rates per diagnosis,
fixed per diem rates or discounts from established charges. Revenues are
recorded at estimated net amounts due from patients, third-party payers and
others for healthcare services provided at the time the service is provided.
Revenues for pharmaceutical drug sales are recognized upon the drug being
administered to a patient or at the time a prescription is filled for a patient
that contain an executed prescription slip by a registered physician.
Revenues are recorded at estimated net amounts due from patients and government
Medicare funds. The Company's accounting system calculates the expected amounts
payable by the government Medicare funds. The Company bills for services
provided to Medicare patients through a medical card (the US equivalent to an
insurance card). The Company normally receives 90% of the billed amount within
90 days with the remaining 10% upon approval by the end of the year by the PRC
government. However, there have not been significant differences between the
amounts the Company bills the government Medicare funds and the amounts
collected from the Medicare funds.
Accounts Receivable
Accounts receivable are recorded at the estimated net realizable amounts from
government units, insurance companies and patients. Generally, the third-party
payers reimburse the Company on a 30-day cycle, so collections for the Company
has historically not been considered to be an area that exposes the Company to
additional risk. Hospital staff does perform verification of patient coverage
prior to examinations and/or procedures taking place
For any Medicare patient who visits the hospital that is qualified for
acceptance, the hospital will only include the portion that the social insurance
organization in the accounts receivable and collects the self-pay portion in
cash at the time of the service. At times, the pre-determined rate the hospital
will charge may be different than the approved Medicare rate, thus the
likelihood of some bad debt can occur. Management continues to evaluate this
estimate on an ongoing basis.
The Company has established a reserve for uncollectibles of $59,975 and $54,549
as of December 31, 2008 and December 31, 2007.
F-9
Prepaid expenses and other current assets
Prepaid expenses and other current assets consisted of the following as of
December 31, 2008 and December 31, 2007:
2008 2007
----------------- ----------------
Other receivable $ 54,364 $ 935
Advance to suppliers 38,486 31,844
Prepaid expenses 35,910 0
------- -------
Total $128,761 $32,779
======== =======
Advertising Costs
The Company expenses the costs associated with advertising as incurred.
Advertising expenses for the years ended December 3, 2008 and 2007 of $184,484
and $400,251, respectively are included in selling and promotional expenses in
the statements of income. Advertising costs include marketing brochures and an
advertising campaign to the public.
Impairment of Long-Lived Assets
Effective January 1, 2002, the Company adopted Statement of Financial Accounting
Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets" ("SFAS 144"), which addresses financial accounting and reporting for the
impairment or disposal of long-lived assets and supersedes SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of," and the accounting and reporting provisions of APB Opinion No.
30, "Reporting the Results of Operations for a Disposal of a Segment of a
Business." The Company periodically evaluates the carrying value of long-lived
assets to be held and used in accordance with SFAS 144. SFAS 144 requires
impairment losses to be recorded on long-lived assets used in operations when
indicators of impairment are present and the undiscounted cash flows estimated
to be generated by those assets are less than the assets' carrying amounts. In
that event, a loss is recognized based on the amount by which the carrying
amount exceeds the fair market value of the long-lived assets. Loss on
long-lived assets to be disposed of is determined in a similar manner, except
that fair market values are reduced for the cost of disposal. Based on its
review, the Company believes that, as of December 31, 2008 and 2007 there were
no significant impairments of its long-lived assets.
Earnings (Loss) Per Share of Common Stock
Earnings per share is calculated in accordance with the Statement of financial
accounting standards No. 128 (SFAS No. 128), "Earnings per share". SFAS No. 128
superseded Accounting Principles Board Opinion No.15 (APB 15). Net loss per
share for all periods presented has been restated to reflect the adoption of
SFAS No. 128. Basic net loss per share is based upon the weighted average number
of common shares outstanding. Diluted net 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
F-10
thereby were used to purchase common stock at the average market price during
the period.
The Company has not granted any options or warrants during 2008 or 2007, and
there are no options or warrants outstanding as of December 31, 2008 and
December 31, 2007.
Income Taxes
The Company utilizes SFAS No. 109, "Accounting for Income Taxes," which requires
the recognition of deferred tax assets and liabilities for the expected future
tax consequences of events that have been included in the financial statements
or tax returns. Under this method, deferred income taxes are recognized for the
tax consequences in future years of differences between the tax bases of assets
and liabilities and their financial reporting amounts at each period end based
on enacted tax laws and statutory tax rates applicable to the periods in which
the differences are expected to affect taxable income. Valuation allowances are
established, when necessary, to reduce deferred tax assets to the amount
expected to be realized.
In accordance with the relevant tax laws and regulations of PRC and US, the
corporation income tax rate would typically be 33% in the PRC. The Company has
received a waiver (duty free certificate) from the taxing authorities in the PRC
for corporate enterprise income tax for the year ended 2004 through 2006.
Effective 2007, the Company will be taxed at the rate of 33%.
Beginning January 1, 2008, the new Enterprise Income Tax (EIT) law will replace
the existing laws for Domestic Enterprises (DES) and Foreign Invested
Enterprises (FIEs). The new standard EIT rate of 25% will replace the 33% rate
currently applicable to both DES and FIEs.
In addition, companies in the PRC are required to pay business taxes consisting
of 5% of income they derive from providing medical treatment and city
construction taxes, and educational taxes are based on 7% and 3% of the business
taxes, and the Company had accrued these taxes for 2005. The Company has
received notification that they are exempt from these taxes for the years ending
2006 through 2008.
Segment Information
Statement of Financial Accounting Standards No. 131 ("SFAS 131"), "Disclosure
About Segments of an Enterprise and Related Information" requires use of the
"management approach" model for segment reporting. The management approach model
is based on the way a company's management organizes segments within the company
for making operating decisions and assessing performance. Reportable segments
are based on products and services, geography, legal structure, management
structure, or any other manner in which management disaggregates a company. SFAS
131 has no effect on the Company's consolidated financial statements as the
Company consists of one reportable business segment. All revenue is from
customers in People's Republic of China. All of the Company's assets are located
in People's Republic of China.
F-11
Recent Accounting Pronouncements
In December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interests in
Consolidated Financial Statements", which is an amendment of Accounting Research
Bulletin ("ARB") No. 51. This statement clarifies that a noncontrolling interest
in a subsidiary is an ownership interest in the consolidated entity that should
be reported as equity in the consolidated financial statements. This statement
changes the way the consolidated income statement is presented, thus requiring
consolidated net income to be reported at amounts that include the amounts
attributable to both parent and the noncontrolling interest. This statement is
effective for the fiscal years, and interim periods within those fiscal years,
beginning on or after December 15, 2008. Based on current conditions, the
Company does not expect the adoption of SFAS 160 to have a significant impact on
its results of operations or financial position.
In December 2007, the FASB issued SFAS No. 141 (revised 2007), "Business
Combinations." This statement replaces FASB Statement No. 141, "Business
Combinations." This statement retains the fundamental requirements in SFAS 141
that the acquisition method of accounting (which SFAS 141 called the purchase
method) be used for all business combinations and for an acquirer to be
identified for each business combination. This statement defines the acquirer as
the entity that obtains control of one or more businesses in the business
combination and establishes the acquisition date as the date that the acquirer
achieves control. This statement requires an acquirer to recognize the assets
acquired, the liabilities assumed, and any noncontrolling interest in the
acquiree at the acquisition date, measured at their fair values as of that date,
with limited exceptions specified in the statement. This statement applies
prospectively to business combinations for which the acquisition date is on or
after the beginning of the first annual reporting period beginning on or after
December 15, 2008. The Company does not expect the adoption of SFAS 160 to have
a significant impact on its results of operations or financial position.
In March, 2008, the FASB issued FASB Statement No. 161, "Disclosures about
Derivative Instruments and Hedging Activities". The new standard is intended to
improve financial reporting about derivative instruments and hedging activities
by requiring enhanced disclosures to enable investors to better understand their
effects on an entity's financial position, financial performance, and cash
flows. It is effective for financial statements issued for fiscal years and
interim periods beginning after November 15, 2008, with early application
encouraged. The new standard also improves transparency about the location and
amounts of derivative instruments in an entity's financial statements; how
derivative instruments and related hedged items are accounted for under
Statement 133; and how derivative instruments and related hedged items affect
its financial position, financial performance, and cash flows.
FASB Statement No. 161 achieves these improvements by requiring disclosure of
the fair values of derivative instruments and their gains and losses in a
tabular format. It also provides more information about an entity's liquidity by
requiring disclosure of derivative features that are credit risk-related.
Finally, it requires cross-referencing within footnotes to enable financial
statement users to locate important. Based on current conditions, the Company
does not expect the adoption of SFAS 161 to have a significant impact on its
results of operations or financial position.
F-12
In May 0f 2008, FSAB issued SFASB No.162, The Hierarchy of Generally Accepted
Accounting Principles. The pronouncement mandates the GAAP hierarchy reside in
the accounting literature as opposed to the audit literature. This has the
practical impact of elevating FASB Statements of Financial Accounting Concepts
in the GAAP hierarchy. This pronouncement will become effective 60 days
following SEC approval. The company does not believe this pronouncement will
impact its financial statements.
In May of 2008, FASB issued SFASB No. 163, Accounting for Financial Guarantee
Insurance Contracts-an interpretation of FASB Statement No. 60. The scope of the
statement is limited to financial guarantee insurance (and reinsurance)
contracts. The pronouncement is effective for fiscal years beginning after
December 31, 2008. The company does not believe this pronouncement will impact
its financial statements.
NOTE 3- PROPERTY & EQUIPMENT
Property & equipment as of December 31, 2008 and 2007 comprised of following:
Estimated
Useful Lives
(Years) 2008 2007
- --------------------------------------------------------------------------------
Office equipment 5-10 $ 80,320 $ 67,652
Medical equipment 5 1,103,494 994,968
Fixtures 10 106,353 103,172
Vehicles 5 40,813 38,171
Construction in Progress 3,544,097 1,081,640
------------- ------------
4,875,077 2,285,603
Less: accumulated depreciation (551,632) (136,802)
------------- ------------
Property and equipment, net $ 4,323,445 $ 2,148,801
============= ============
Depreciation expense charged to operations was $398,059 and $168,300 for the
years ended December 31, 2008 and 2007, respectively.
NOTE 4- INVENTORIES
Inventories consisted of the following as of December 31, 2008 and 2007:
December 31, 2008 December 31,2007
Western medicine $ 3,543 $141,082
Traditional Chinese medicine 141,203 11,160
--------- ---------
Total $144,746 $152,242
========= =========
F-13
NOTE 5 - MAJOR CUSTOMERS AND SUPPLIERS
The Company had two suppliers that accounted for 20% and 15% of purchase for the
years ended December 31, 2008. Accounts payable from these major suppliers were
$27,995 and $4,686 as of December 31, 2008.
The Company does not have any major customers for the years ended December 31,
2008 as the customers are mostly patients.
NOTE 6- CAPITAL LEASE OBLIGATIONS:
Lease Deposit
The lease deposits as of December 31, 2008 and 2007 were $153,903 and $143,945
respectively. It is due in November 2010.
Deferred Gain on Sale and Lease Back
The total gain on sale and lease back was $334,640. According to SFAS 13
"Accounting for Leases" this gain is deferred and amortized over the Lease term
of 36 months. Accordingly, $109,846 and $8,350 were amortized for the years
ended December 31, 2008 and 2007 respectively.
The deferred revenue outstanding as of December 31, 2008 and 2007 were as
follows:
2008 2007
----------------- -----------------
Current $ 111,547 $ 104,329
Long term 101,936 199,964
----------- -----------
$ 213,483 $ 304,293
=========== ===========
Capital Lease Obligations
In 2007, the Company leased various equipments under capital leases expiring in
2010. The assets and liabilities under capital leases are recorded at the lower
of the present value of the minimum lease payments or the fair value of the
asset. The assets are depreciated over the lesser of their related lease terms
or their estimated productive lives. Depreciation of assets under capital leases
was included in depreciation expense for the year ended December 31, 2008.
Aggregate minimum future lease payments under capital leases for next five years
after December 31, 2008 are as follows:
F-14
2009 $392,098
2010 359,423
---------
Total $751,521
=========
Capital lease obligations represent the following at December 31, 2008 and 2007:
2008 2007
----------------- -----------------
Total minimum lease payments $ 751,521 $ 1,069,623
Less : Interest expense relating
to future periods (64,073) (133,261)
----------------- -----------------
Present value of the minimum lease 687,448 936,362
payments
Less: current portion 343,526 293,394
----------------- -----------------
Non-current portion $ 343,922 $ 642,968
================= =================
Following is a summary of fixed assets held under capital leases at December 31,
2008 and 2007:
2008 2007
----------------- -----------------
Medical Equipment $ 1,026,017 $ 959,630
Less: accumulated depreciation (376,977) (27,959)
----------------- -----------------
Capital leased fixed assets, Net 649,040 931,671
NOTE 7- OTHER PAYABLE
Other payable as of December 31, 2008 and 2007 consists of the following:
2008 2007
----------------- -----------------
Advance from customers $ 5,397 $ 17,325
Welfare payable 84,161 78,873
Other payable 261,941 65,152
--------- ----------
Total $351,499 $161,350
======== ========
NOTE 8- STOCKHOLDERS' EQUITY
Common Stock
As of December 31, 2008 and 2007, the Company has 100,000,000 shares of common
stock authorized with a par value of $0.001.
F-15
During the period ended December 31, 2008, the company issued 177,834 shares for
$77,780.and cancelled 18,000 previously issued shares issued in error.
The Company has not granted any options or warrants during 2008 or 2007, and
there are no options or warrants outstanding as of December 31, 2008 and 2007.
Preferred Stock
As of December 31, 2008 and 2007, 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.
Statutory Reserves
As stipulated by the Company Law of the People's Republic of China (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 of 5-10% of income after tax, as determined under PRC
accounting rules and regulations, to the Company's "Statutory common
welfare fund", which is established for the purpose of providing employee
facilities and other collective benefits to the Company's employees; and
iv. Allocations to the discretionary surplus reserve, if approved in the
stockholders' general meeting.
Pursuant to the new Corporate Law effective on January 1, 2006, there is now
only one "Statutory surplus reserve" requirement. The reserve is 10 percent of
income after tax, not to exceed 50 percent of registered capital.
The Company has appropriated $0 and $4,964 as reserve for the statutory surplus
reserve for the years ended December 31, 2008, and 2007.
NOTE 9- PROVISION FOR INCOME TAXES
In accordance with the relevant tax laws and regulations of PRC, the corporate
income tax rate is 25%. As noted, the corporate income tax for 2004 through 2006
was 0% due to the Company's receipt of a waiver (tax relief) from the PRC
government as they acquired a previous government-owned hospital and privatized
it and improved it. Commencing, 2008, the corporate tax rate will be 25%.
F-16
Income tax for the years ended December 31, 2008 and 2007 is summarized as
follows:
2008 2007
--------------------------
U.S. Federal and State Current $ - $ -
U.S. Federal and State Deferred - -
PRC - Current 7,916 26,694
------------ ------------
PRC - Deferred - -
------------ ------------
Less: Valuation allowance - -
------------ ------------
Income tax expense (benefit) $ 7,916 $ 26,694
============ ============
A reconciliation of the effective income tax rate is as follows:
2008 2007
---- ----
Tax at U.S. Federal rate 34% 34%
U.S. tax exemption (34)% (34)%
---- ----
0% 0%
PRC Tax rate 25% 33%
Valuation allowance - -
Current tax provision 25% 33%
The Company does not have any significant deferred tax asset or liabilities in
the PRC tax jurisdiction as of December 31, 2008.
NOTE 10- RELATED PARTY TRANSACTIONS
Due from/to Related Party
The Company has entered into agreements with Nanning Tongji Chain Pharmacy Co.
Ltd. and Guangxi Tongji Medicine Co. Ltd. whereby the Company from time to time
will advance amounts to assist them in their operations. The three companies
have common major shareholders. The advanced amounts accrue interest at a rate
of 6% per annum. The amount of receivable as of December 31, 2008 and 2007 were
$268,815 and $1,516,026. Interest incomes for the years ended December 31, 2008
and 2007 were $54,048 and $23,685, respectively.
The Company has entered into an agreement with the Chairman and the shareholder
of the Company whereby the Company from time to time will be advanced amounts to
assist them in their operations. The advanced amounts accrue interest at a rate
of 6% per annum. As of December 31, 2008 and 2007, $3,367,857, and $1,563,842
were payable to their Chairman, shareholder and Guangxi Tongji Medicine Co. Ltd.
respectively. Interest expenses for the years ended December 31, 2008 and 2007
were $144,147 and $104,655, respectively.
F-17
Rental
The Company has entered into a lease agreement for their hospital with Guangxi
Tongji Medicine Co. Ltd that expires December 2008. The Company renewed the
lease for additional 5 years at monthly rate of $2,366 (RMB16,439). Based on the
exchange rate at December 31, 2008, minimum future 5 years lease payments are as
follows:
2009 $ 28,393
2010 28,393
2011 28,393
2012 28,393
2013 28,393
-------------
Total $ 141,964
=============
F-18
SIGNATURES
In accordance with Section 13 or 15(a) of the Exchange Act, the Registrant
has caused this Report to be signed on its behalf by the undersigned, thereunto
duly authorized on the 30th day of March 2009.
TONGJI HEALTHCARE GROUP, INC.
By: /s/ Yun-hui Yu
-----------------------------------------
Yun-hui Yu, President and Chief Executive
Officer
By: /s/ Wei-dong Huang
------------------------------------------
Wei-dong Huang, Chief Financial and
Accounting Officer
Pursuant to the requirements of the Securities Act of l934, this Report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
Signature Title Date
/s/ Yun-hui Yu Director March 30, 2009
- --------------------------
Yun-hui Yu
/s/ Jing-xi Lv Director March 30, 2009
- --------------------------
Jing-xi Lv
/s/ Jia-lin Zhang Director March 30, 2009
- --------------------------
Jia-lin Zhang
/s/ Lin Lin Director March 30, 2009
- --------------------------
Lin Lin
/s/ Xiang-wei Zeng Director March 30, 2009
- --------------------------
Xiang-wei Zeng
TONGJI HEALTHCARE GROUP, INC.
FORM 10-K
EXHIBITS