-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Pg1KlYgJoeBKTk0/gm7uIAuX9V8+c6+Lpq+h/mmiY/GdTSR0jXD0BzBqdY/mQ4j1 P6Oq8AnWgmueXN57oYlnsQ== 0001004878-07-000024.txt : 20070213 0001004878-07-000024.hdr.sgml : 20070213 20070212202504 ACCESSION NUMBER: 0001004878-07-000024 CONFORMED SUBMISSION TYPE: SB-2 PUBLIC DOCUMENT COUNT: 11 FILED AS OF DATE: 20070213 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Tongji Healthcare Group, Inc. CENTRAL INDEX KEY: 0001389518 IRS NUMBER: 000000000 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SB-2 SEC ACT: 1933 Act SEC FILE NUMBER: 333-140645 FILM NUMBER: 07605508 BUSINESS ADDRESS: STREET 1: NO.5 BEIJI ROAD, NANNING, CHINA CITY: NANNING STATE: F4 ZIP: ----- BUSINESS PHONE: 0086-771-2020000 MAIL ADDRESS: STREET 1: NO.5 BEIJI ROAD, NANNING, CHINA CITY: NANNING STATE: F4 ZIP: ----- SB-2 1 sb2feb07.txt As filed with the Securities and Exchange Commission on _________, 2007 Registration No. -________ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM SB-2 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 TONGJI HEALTHCARE GROUP, INC. ----------------------------- (Name of small business issuer in its charter) Nevada 8062 None ----------------------- ---------------- --------------- (State or jurisdiction of (Primary Standard (I.R.S. Employer incorporation or Industrial I.D. Number) organization) Classification Code Number) No.5 Beiji Road, Nanning, China 0086-771-2020000 ------------------------- (Address and telephone number of principal executive offices) No.5 Beiji Road, Nanning, China 0086-771-2020000 ------------------------- (Address of principal place of business or intended principal place of business) William T. Hart Hart & Trinen, LLP 1624 Washington St. Denver, CO 80203 (303) 839-0061 ------------------------------------- (Name, address and telephone number of agent for service) Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement. If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. |_| If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. |_| If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. |_| If delivery of the prospectus is expected to be made pursuant to Rule 434, check the following box. |_| CALCULATION OF REGISTRATION FEE - -------------------------------------------------------------------------------- Proposed Proposed Amount of Maximum Maximum Registration Title of Each Class of Amount to Offering Aggregate Fee Securities to be Be Price Offering Registered Registered Per Share (1) Price - -------------------------------------------------------------------------------- Common stock 2,000,000 Shares$1.00 $2,000,000 $215 - -------------------------------------------------------------------------------- (1) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457. The per share offering price was calculated based upon a price of $1.00 per share, which is the price that the shares will be offered prior to the time that a market develops for the Company's common stock. The Company hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until it shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. 2 2,000,000 shares of common stock TONGJI HEALTHCARE GROUP, INC. This prospectus covers the resale of 2,000,000 shares of our common stock held by our selling stockholders for whom information is provided under the "Selling Shareholder" section of this prospectus. The shares will be offered by the selling stockholders initially at $1.00 per share and thereafter, if the shares are listed for quotation on the OTC Bulletin Board, at prevailing market prices or at privately negotiated prices. The offering will terminate on the earlier of the date all of the shares are sold or one year from the date of this prospectus. We will not receive any proceeds from the sale of shares offered by the selling stockholders. There is no market for our common stock and a market may never develop in the future. INVESTING IN OUR COMMON STOCK INVOLVES SUBSTANTIAL RISKS. SEE "RISK FACTORS" BEGINNING ON PAGE 5. The Securities and Exchange Commission and state securities regulators have not approved or disapproved these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. The date of this prospectus is February __, 2007. 3 ABOUT THIS PROSPECTUS You should rely only on the information contained in this prospectus as we have not authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not making an offer to sell these securities in any jurisdiction where an offer or sale is not permitted. PROSPECTUS SUMMARY This summary highlights material information regarding us and the offering described in this prospectus. You should read the entire prospectus carefully, including the financial information and related notes, before making an investment decision. Tongji Healthcare Group, Inc. was 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 of the outstanding shares of Nanning Tongji Hospital Co., Ltd., which we refer to as "Tongji Hospital," a PRC company located in Nanning, China. Unless otherwise indicated, all references to us throughout this prospectus includes the operations of Tongji Hospital. The purpose of the transaction was to redomicile us as a U.S. corporation. We operate a 105 bed hospital in Nanning, China. We do not have a website. Our principal executive offices are located at No. 5 Beiji Road, Nanning, China. Our telephone number is 0086-771-2020000. The Offering Securities offered by selling stockholders: 2,000,000 shares of common stock. Price per share $1.00 Securities outstanding prior to and after the offering: 15,652,557 shares of common stock. Use of proceeds: We will not receive any proceeds from the sale of the common stock offered by the selling stockholders. By means of this prospectus, we are registering the resale of 2,000,000 shares of our common stock which are held by ten selling shareholders, all of whom exchanged their shares of Tongji Hospital for the 2,000,000 shares we issued to them. All selling shareholders are residents and citizens of China. 4 Conventions Which Apply to This Prospectus Except as otherwise indicated and for purposes of this prospectus only: o "we", "us" and "our" refer to: Our company - Tongji Healthcare Group, Inc., as well as Tongji Hospital, a PRC company that was merged into us in December 2006, o "China" or "PRC" refers to the People's Republic of China, excluding Taiwan, Hong Kong and Macau; and o all references to "RMB" or "Renminbi" are to the legal currency of China and all references to "$", "U.S. dollars," "dollars" and "US$" are to the legal currency of the United States. o unless otherwise indicated, all financial information in this prospectus is in U.S. dollars. Forward Looking Statements This prospectus includes forward-looking statements. We have based these forward-looking statements on our current expectations about future events. These forward-looking statements are subject to risks, uncertainties and assumptions about us which are discussed in the Risk Factors section above as well as throughout this prospectus. In light of these risks, uncertainties and assumptions, any forward-looking events discussed in this prospectus might not occur. RISK FACTORS The shares of common stock offered by this prospectus involve a high degree of risk and represent a highly speculative investment. You should not purchase these shares if you cannot afford the loss of your entire investment. In addition to the other information contained in this prospectus, you should carefully consider the following risk factors in evaluating an investment in our common stock. The value of our common stock could decline if any of the risks discussed below should occur. The Chinese health care industry is extensively regulated and there is a possibility we may not be able to comply with all regulations. The healthcare industry in China is subject to extensive governmental laws and regulations relating to licensure, conduct of operations, ownership of facilities, addition of facilities and services, and fees for services. Any determination that we violated any laws, rules or regulations, could have a material adverse effect on our business. 5 Government regulation of healthcare businesses in China is undergoing reforms which are unpredictable. Chinese regulations pertaining to hospitals are currently undergoing reform by the Chinese government. New policies and regulations which may be promulgated in the near future may have a negative impact on our businesses. It may cost more to operate our hospital in the future due to compliance with any new regulations. We may not be able to successfully implement our growth strategies, which would adversely affect our business. After the date of this prospectus we will attempt 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. The issuance of additional shares of our common stock will dilute the equity ownership of our shareholders and may depress the price for our common stock, should a market ever develop. 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, in which case we would not be able to acquire other hospitals or businesses in the healthcare industry. Our operations will depend, in part, on recruiting and retaining physicians. Since physicians generally direct the majority of hospital admissions, our success, in part, is dependent upon the number and quality of our physicians, the admissions practices of our physicians and the maintenance of good relations with our physicians. The loss of physicians, our inability to recruit and retain physicians or our inability to maintain good relations with our physicians could have a material adverse effect on our business. Changes in policies could materially affect our revenue. Pursuant to current policy, hospitals can sell drugs and medications to patients at a price between prevailing retail and wholesale prices. During the year ended December 31, 2006 approximately 50% of our revenues were derived from the sales of drugs and medications. If future regulations prevented us from selling drugs and medications our revenues would decline substantially. 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. 6 We could face substantial liability due to medical malpractice. We may face liability claims in the event our physicians, nurses or staff are negligent in the treatment of a patient. Although we carry insurance for medical malpractice the successful prosecution of a medical malpractice case against us could have a material adverse effect on us if the amount of any judgment exceeds our issuance coverage. Our bank accounts are not insured or protected against loss. We maintain our cash with various banks and trust companies located in China. Our cash accounts are not insured or otherwise protected. Should any bank or trust company holding our cash deposits become insolvent, or if we are otherwise unable to withdraw funds, we would lose the cash on deposit with that particular bank or trust company. We are subject to international economic and political risks over which we have little or no control and may be unable to alter our business practice in time to avoid the possibility of reduced revenues. All of our business is conducted in the PRC. Doing business outside the United States, particularly in the PRC, subjects us to various risks, including changing economic and political conditions, major work stoppages, exchange controls, currency fluctuations, armed conflicts and unexpected changes in U.S. and foreign laws relating to tariffs, trade restrictions, transportation regulations, foreign investments and taxation. We have no control over most of these risks and may be unable to anticipate changes in international economic and political conditions and, therefore, unable to alter out business practice in time to avoid the possibility of reduced revenues. If relations between the United States and the PRC worsen, investors may be unwilling to hold or buy our stock and if our securities become qualified for quotation on an exchange, our stock price may decrease. At various times during recent years, the U.S. and the PRC have had significant disagreements over political and economic issues. Controversies may arise in the future between these two countries. Any political or trade controversies between the United States and the PRC, whether or not directly related to our business, could reduce the price of our common stock if our stock is publicly traded. The PRC government could change its policies toward private enterprise or even nationalize or expropriate private enterprises, which could result in the total loss of our and your investment. Our business is subject to significant political and economic uncertainties and may be affected by political, economic and social developments in the PRC. Over the past several years, the PRC government has pursued economic reform policies including the encouragement of private economic activity and greater economic decentralization. The PRC government may not continue to pursue these policies or may significantly alter them to our detriment from time to time with little, if any, prior notice. 7 Changes in policies, laws and regulations or in their interpretation or the imposition of confiscatory taxation, restrictions on currency conversion, restrictions or prohibitions on dividend payments to stockholders, or devaluations of currency could cause a decline in the price of our common stock, should a market for our common stock ever develop. Nationalization or expropriation could even result in the total loss of our investment in the PRC and in the total loss of your investment. The nature and application of many PRC laws create an uncertain environment for business operations and they could have a negative effect on us. 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 could cause a decline in the price of our common stock, should a market for our common stock ever develop. In addition, as these laws, regulations and legal requirements are relatively recent, their interpretation and enforcement involve significant uncertainty. Fluctuations in exchange rates could reduce our revenues. Although we use the United States dollar for financial reporting purposes, all of the transactions effected by our operating subsidiary are denominated in the PRC's RMB. The exchange rate of the RMB may fluctuate wildly against the U.S. dollar. We do not currently engage in hedging activities to protect against foreign currency risks. Even if we chose to engage in such hedging activates, we may not be able to do so effectively. Future movements in the exchange rate of the RMB could reduce our revenues. You may experience difficulties in attempting to enforce liabilities based upon U.S. federal securities laws against our non-u.s operating subsidiary and its non-u.s. resident directors and officers Our operating subsidiary and its assets are located in the PRC. Our directors and executive officers are foreign citizens and do not reside in the U.S. It may be difficult for courts in the U.S. to obtain jurisdiction over these foreign assets or persons, and it may be very difficult or impossible for you to enforce judgments rendered against us or our directors or executive officers in U.S. courts. In addition, the courts in China may not permit the enforcement of judgments arising out of the U.S. and state securities or similar laws. 8 Sales of our common stock could reduce the price of our stock. There are 15,652,557 shares of our common stock outstanding. Once the registration statement we have filed with the Securities and Exchange Commission is effective, all of our outstanding shares will be freely tradable, either by virtue of the registration statement or by Rule 144 of the Securities and Exchange Commission. The availability for sale of substantial amounts of common stock under this prospectus or under Rule 144 could reduce prevailing prices for our common stock. Investors in this offering may have difficulty selling our shares since there is no current market for our common stock and a market may never develop. There is no public market for our common stock an active public market may never develop in the future. Trades of our common stock, should a market ever develop, will be subject to Rule 15g-9 of the Securities Exchange Act of 1934, which rule imposes certain requirements on broker/dealers who sell securities subject to the rule to persons other than established customers and accredited investors. For transactions covered by the rule, brokers/dealers must make a special suitability determination for purchasers of the securities and receive the purchaser's written agreement to the transaction prior to sale. The Securities and Exchange Commission also has rules that regulate broker/dealer practices in connection with transactions in "penny stocks". Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in that security is provided by the exchange or system). The penny stock rules require a broker/ dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document prepared by the Commission that provides information about penny stocks and the nature and level of risks in the penny stock market. The broker/dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker/dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer's account. The bid and offer quotations, and the broker/dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer's confirmation. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for our common stock. As a result of these rules, investors in this offering, should a market for our shares ever develop, may find it difficult to sell their shares. MARKET FOR OUR COMMON STOCK. As of the date of this prospectus our common stock was not quoted on any exchange and there was no public trading market. As of January 31, 2007 we had 243 record shareholders. As of January 31, 2007, we had 15,652,557 outstanding shares of common stock, of which 2,000,000 shares are being registered by this prospectus and will be freely tradable on and after the date of this prospectus. In June 2007 these 2,000,000 shares, as well as the other shares owned by the selling shareholders, will be eligible for sale under Rule 144. 9 The remaining outstanding shares are eligible for sale pursuant to Rule 144(k). In general, under Rule 144 as currently in effect, a person, or persons whose shares are aggregated, who owns shares that were purchased from us, or any affiliate, at least one year previously, including a person who may be deemed our affiliate, is entitled to sell within any three month period, a number of shares that does not exceed the greater of: o 1% of the then outstanding shares of our common stock; or o The average weekly trading volume of our common stock during the four calendar weeks preceding the date on which notice of the sale is filed with the Securities and Exchange Commission. Sales under Rule 144 are also subject to manner of sale provisions, notice requirements and the availability of current public information about us. Any person who is not deemed to have been our affiliate at any time during the 90 days preceding a sale, and who owns shares within the definition of "restricted securities" under Rule 144 under the Securities Act that were purchased from us, or any affiliate, at least two years previously, is entitled to sell such shares under Rule 144(k) without regard to the volume limitations, manner of sale provisions, public information requirements or notice requirements. 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. Our Articles of Incorporation authorize our Board of Directors to issue up to 20,000,000 shares of preferred stock. The provisions in the Articles of Incorporation relating to the preferred stock allow our directors to issue preferred stock with multiple votes per share and dividend rights which would have priority over any dividends paid with respect to the holders of our common stock. The issuance of preferred stock with these rights may make the removal of management difficult even if the removal would be considered beneficial to shareholders generally, and will have the effect of limiting shareholder participation in certain transactions such as mergers or tender offers if these transactions are not favored by our management. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATION 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 prospectus. Our financial statements have been prepared in accordance with U.S. GAAP. In addition, our financial statements and the financial data included in this prospectus reflect our reorganization and have been prepared as if our current corporate structure 10 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 "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 prospectus 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 prospectus. Results of Operation Material changes of items in our Statement of Operations for the year ended December 31, 2006, as compared to the year ended December 31, 2005, 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 2006 the percentage of inpatients increased from 26% to 38%. Generally, we receive greater revenue from an inpatient, as ooposed to an oupatient, due to the length of the stay and the services provided to an inpatient. Gross profit: The increase in gross profit was the result of higher gross revenues and a decrease in the cost of medical supplies. Operating Expenses: Selling and promotion expenses decreased due to less amounts spent on meals and entertainment. General and administrative fees declined due to technological upgrades, allowing us to reduce the number of employees in administration. Depreciation, amortization and expenses increased mainly due to the depreciation and amortization of new medical equipment. 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. Beginning in 2007, we will be taxed at the normal rate of 33%. 11 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. 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. Liquidity and Capital Resources Our material sources and (uses) of cash during the years ended December 31, 2006 and 2005 were: 2006 2005 ---- ---- Cash provided by operations $134,656 $459,300 Purchase of medical equipment (54,706) (647,085) Net loans (to) or from related parties (99,319) 197,786 Future payments due on our material contractual obligations as of December 31, 2006 are as follows: Item Total 2007 2008 - ---- ----- ---- ---- Medical Buildings Lease $50,442 $25,221 $25,221 Except as shown above, as of December 31, 2006 we did not have any material capital requirements. 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. 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. We receive revenues from Medicare funds and self-pay patients. We believe our hospital has some of the most modern medical equipment in the Nanning, China area. In 2006 55,773 patients were treated at our hospital, in contrast to 53,682 in 2005. The increase is primarily attributable to additional Medicare patients. 12 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. Our hospital is certified as a provider of Medicare services by the Nanning municipal government and the Guangxi province 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. If we do not maintain high standards for patient care the social insurance bureau, which administers the Medicare program, has the authority to terminate our ability to receive reimbursement from Medicade funds. Statistical information concerning our hospital is shown in the following tables: 2006 2005 Revenues Medicare-patients 41% 29% Self-pay-patients 59% 71% ----- ----- 100% 100% Patients Treated Medicare 40% 40% Self-pay 60% 60% ----- ----- 100% 100% Patients Treated Inpatients 38% 26% Outpatients 62% 74% ----- ----- 100% 100% 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. After the date of this prospectus we will attempt 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. 13 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, as in most other populous countries, are required to comply with many laws and regulations at the national and local government levels. These laws and regulations relate to: licensing; the conduct of operations; the relationships among hospitals and their affiliated providers; the ownership of facilities; the addition of facilities and services; maintenance and confidential treatment of medical records; billing for services; and prices for services. If we fail to comply with applicable laws and regulations, we could suffer penalties, including the loss of our license to operate. In addition, further healthcare legislative reform is likely and could adversely affect our business in the event we do not comply or if the cost of compliance is expensive. The above list of regulated areas is not exhaustive and it is not possible to anticipate the exact nature of future healthcare legislative reform in China. Depending on the priorities determined by the Chinese Ministry of Health, the political climate at any given time, the continued development of the Chinese healthcare system and many other factors, future legislative reforms may be highly diverse, including stringent infection control policies and increased regulation of the distribution of drugs and medications. 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. 14 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. Beginning in 2007, we will be 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 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. 15 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. Exchange rate fluctuations may adversely affect our financial performance because of our foreign currency denominated assets and liabilities, and may reduce the value, translated or converted, as applicable into U.S. dollars, of our net fixed assets, our earnings and our declared dividends. We do not engage in any hedging activities in order to minimize the effect of exchange rate risks. As of December 31, 2006 the currency exchange rate was approximately 8.82 RMB for each U.S. dollar. 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 January 31, 2007, we had 154 full time employees consisting of 49 licensed physicians, 52 nurses, 11 medical professionals and 42 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. 16 Facilities We lease our two hospital buildings from Tongji Healthcare Group. The lease on the buildings expires in December 2008. Based on the exchange rate at December 31, 2006 minimum lease payments are $25,221 annually in both 2007 and 2008. MANAGEMENT Name Age Position Yun-hui Yu 44 President, Chief Executive Officer and Chairman of the Board of Directors Wei-dong Huang 37 Chief Financial and Accounting Officer Jin-song Zhang 39 Chief Administrative Officer Jing-xi Lv 61 Vice president and a Director Jia-lin Zhang 66 Vice president and a Director Lin Lin 61 Vice president and a Director Xiang-wei Zeng 64 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 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. 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. 17 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 Rule 4200 of the NASDAQ Marketplace Rules. Summary Compensation Table The following table shows the compensation paid or accrued during the two years ended December 31, 2006 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 2006 -- -- -- -- -- -- Executive Officer 2005 -- -- -- -- -- -- (1) The dollar value of base salary (cash and non-cash) received. (2) The dollar value of bonus (cash and non-cash) received. 18 (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. The terms of the employment agreements which we have with our officers are shown below. The table also shows the amount of time these officers expect to devote to our business during the year ending December 31, 2007 Approximate Time Monthly To Be Devoted Name Salary Expiration Our Business ---- --------- ---------- --------------------- Wei-dong Huang $625 5/7/08 100% Jin-song Zhang $625 2/3/08 100% Jing-xi Lv $375 12/30/07 100% Jia-lin Zhang $500 12/30/07 100% Lin Lin $375 12/30/07 100% Xiang-wei Zeng $500 12/30/07 100% We do not have an employment agreement with Yun-hui, our Chief Executive Officer. During the year ending December 31, 2007 we do not plan to compensate Mr. Yu. During 2007 Mr. Yu plans to devote substantially all of his time to our business. 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 January 31, 2007. 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. Transactions with related parties and recent sales of unregistered securities. 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 19 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 Tongji Healthcare Group. The lease on the buildings expires in December 2008. We 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, 2006 and 2005 Nanning Tongji Chain Pharmacy Co., Ltd. owed us $122,649 and $161,751, respectively. Nanning Tongji Healthcare Co. Ltd. has loaned us money which we have used in our operations. As of December 31, 2006 and 2005 we owed Nanning Tongji Healthcare Co. Ltd, $328,614 and $399,997, 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, 2006 and 2005 we owed Mr. Yu $91,168 and $180,766, respectively. The amounts we have borrowed and received accrue interest at a rate of 6% per annum, which exceeds the interest rate in the PRC for similar borrowings. Tongji Healthcare Group, Inc., Guangxi Tongji Medicince Co. Ltd. Nanning Tongji Chain Pharmacy Co., Ltd., and Nanning Tongji Healthcare Co., Ltd., are controlled by Yun-hui Yu. PRINCIPAL SHAREHOLDERS The following table shows, as of the date of this prospectus, 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 20 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 All officers and directors as a 7,117,600 45.5% group (7 persons) (1) Li-Yu Chen is the wife of Yun-hui Yu. * Less than 10% As indicated in the "Selling Shareholder" section of this prospectus, Li-yu Chen is selling some of her shares by means of this prospectus. 21 SELLING SHAREHOLDERS The persons listed in the following table plan to offer the shares shown opposite their respective names by means of this prospectus. The owners of the common stock to be sold by means of this prospectus are referred to as the "selling shareholders". The selling shareholders acquired their shares in exchange for their shares of Tongji Hospital, a PRC corporation which we acquired in December 2006. We will not receive any proceeds from the sale of the shares by the selling shareholders. Although we will pay all costs of registering the shares offered by the selling shareholders the selling shareholders will pay all sales commissions and other costs of the sale of the shares offered by them. Shares to be Shares ownership Shares sold in this after this Offering Name Owned Offering Number % - ---- ------- --------- ------ ------ Li-yu Chen 3,000,000 1,500,000 1,500,000 10.4% Hong Qian 316,667 100,000 216,667 1.0% Mei-hui Lin 266,667 50,000 216,667 1.0% Bai-yun Hou 228,334 50,000 178,334 1.0% Yi-li Li 200,000 50,000 150,000 0.9% Ying Gong 200,000 50,000 150,000 0.9% Qing Huang 166,667 50,000 116,667 0.7% Xiu-qiong Huang 253,333 50,000 203,333 1.2% Chong-bo Xu 135,000 50,000 85,000 0.5% Zhan Huang 130,000 50,000 80,000 0.5% Plan of Distribution The shares of our common stock which the selling stockholders or their pledgees, donees, transferees or other successors in interest may offer for resale will be sold initially at a price of $1.00 per share and thereafter if the shares are listed for trading on the OTC Bulletin Board or any other stock exchange at then prevailing market prices or privately negotiated prices in one or more of the following transactions: o Block transactions; o Transactions on the OTC Bulletin Board or on such other market on which our common stock may from time to time be trading; o Privately negotiated transactions; o Through the writing of options on the shares; o Short sales; or o Any combination of these transactions. 22 The sale price to the public in these transactions may be: o The market price prevailing at the time of sale; o A price related to the prevailing market price; o Negotiated prices; or o Such other price as the selling stockholders determine from time to time. In the event that we permit or cause this prospectus to lapse, the selling stockholders may only sell shares of our common stock pursuant to Rule 144 under the Securities Act of 1933. The selling stockholders will have the sole and absolute discretion not to accept any purchase offer or make any sale of these shares of our common stock if they deem the purchase price to be unsatisfactory at any particular time. The selling stockholders or their pledges, donees, transferees or other successors in interest, may also sell these shares of our common stock directly to market makers and/or broker-dealers acting as agents for their customers. These broker-dealers may receive compensation in the form of discounts, concessions or commissions from the selling stockholders and/or the purchasers of these shares of our common stock for whom such broker-dealers may act as agents. As to a particular broker-dealer, this compensation might be in excess of customary commissions. Market makers and block purchasers purchasing these shares of our common stock may do so for their own account and at their own risk. It is possible that a selling stockholder will attempt to sell shares of our common stock in block transactions to market makers or other purchasers at a price per share which may be below the prevailing market price of our common stock. There can be no assurance that all or any of these shares of our common stock offered hereby will be issued to, or sold by, the selling stockholders. Upon effecting the sale of any of these shares of our common stock offered under this prospectus, the selling stockholders and any brokers, dealers or agents, hereby, may be deemed "underwriters" as that term is defined under the Securities Act of 1933 or the Securities Exchange Act of 1934, or the rules and regulations thereunder. Alternatively, the selling stockholders may sell all or any part of the shares of our common stock offered hereby through an underwriter. No selling stockholder has entered into any agreement with a prospective underwriter and there is no assurance that any such agreement will be entered into. If a selling stockholder enters into an agreement or agreements with an underwriter, then the relevant details will be set forth in a post-effective amendment to the registration statement of which this prospectus is a part. The selling shareholders may also sell their shares pursuant to Rule 144 of the Securities and Exchange Commission. The selling stockholders and any other persons participating in the sale or distribution of these shares of our common stock will be subject to applicable provisions of the Securities Exchange Act of 1934 and the rules and regulations thereunder including, without limitation, Regulation M. These provisions may restrict activities of, and limit the timing of purchases and sales of any of these shares of our common stock by, the selling stockholders. Furthermore, pursuant to Regulation M, a person engaged in a distribution of securities is 23 prohibited from bidding for, purchasing or attempting to induce any person to bid for or purchase our securities for a period beginning five business days prior to the date of this prospectus until such person is no longer a selling stockholder. These regulations may affect the marketability of these shares of our common stock. None of the selling shareholders are broker/dealers or are affiliated with broker/dealers. DESCRIPTION OF CAPITAL STOCK General We are authorized to issue 50,000,000 shares of our common stock, $.001 par value per share, and 20,000,000 shares of preferred stock, $.001 par value per share. See "Business-PRC Laws and Regulations Affecting our Business" for information concerning PRC laws and regulations which could impact the rights of our shareholders or limit our ability to pay dividends. Common Stock The holders of common stock are entitled to one vote per share on all matters submitted to a vote of stockholders, including the election of directors. There is no right to cumulate votes in the election of directors. The holders of common stock are entitled to any dividends that may be declared by the Board of Directors out of funds legally available therefor subject to the prior rights of holders of preferred stock and any contractual restrictions we have against the payment of dividends on common stock. In the event of our liquidation or dissolution, holders of common stock are entitled to share ratably in all assets remaining after payment of liabilities and the liquidation preferences of any outstanding shares of preferred stock. The currency in the PRC is designated as the Renminbi ("RMB"). The PRC government imposes control over the conversion of Renminbi into foreign currencies. 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. Holders of common stock have do not have preemptive rights and do not have the right to convert their common stock into any other securities. Preferred Stock We are authorized to issue 20,000,000 shares of $.001 par value preferred stock in one or more series with such designations, voting powers, if any, preferences and relative, participating, optional or other special rights, and such qualifications, limitations and restrictions, as are determined by resolution of our Board of Directors. The issuance of preferred stock may have the effect of delaying, deferring or preventing a change in control of our company without further action by stockholders and could adversely affect the rights and powers, including voting rights, of the holders of common stock. In 24 certain circumstances, the issuance of preferred stock could depress the market price of the common stock. There are no shares of preferred stock outstanding. EXPERTS Our financial statements included in this prospectus as of and for the years ended December 31, 2006 and 2005 have been included in reliance on the report of Michael Pollack C.P.A., a independent registered certified public accountant, given on the authority of Mr. Pollack as a expert in accounting and auditing. INDEMNIFICATION The Nevada Revised Statutes authorize indemnification of any of our directors, officers, employees or agents against expenses incurred in connection with any action, suit, or proceeding to which he or she is named a party by reason of having acted or served in such capacity, except for liabilities arising from his or her own misconduct or negligence in the performance of his or her duties. In addition, even a director, officer, employee, or agent who was found liable for misconduct or negligence in the performance of his or her duties may obtain such indemnification if, in view of all the circumstances in the case, a court of competent jurisdiction determines such person is fairly and reasonably entitled to indemnification. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers, or persons controlling us pursuant to the foregoing provisions, we have been informed that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Act and is therefore unenforceable. ADDITIONAL INFORMATION We have filed with the Securities and Exchange Commission, Washington, D.C. 20549, a registration statement on Form SB-2 under the Securities Act of 1933 with respect to the common stock offered by this prospectus. This prospectus does not contain all of the information in the registration statement and the exhibits to the registration statement. For further information with respect to our Company and the common stock offered by this prospectus, reference is made to the registration statement and the exhibits filed as part of the registration statement. Following the effective date of the registration statement, we will be required to file periodic reports with the Securities and Exchange Commission, including quarterly reports, annual reports which include our audited financial statements and proxy statements. The registration statement, including exhibits thereto, and all of our periodic reports may be inspected without charge at the Securities and Exchange Commission's principal office in Washington, D.C., and copies of all or any part thereof may be obtained from the Public Reference Section of the Securities and Exchange Commission, 100 F Street N.E., Washington, D.C. 20549. You may obtain additional information regarding the operation of the Public Reference Section by calling the Securities and Exchange Commission at 1-800-SEC-0330. The Securities and Exchange Commission also maintains a web site which provides online access to reports, proxy and information statements and other information regarding registrants that file electronically with the Securities and Exchange Commission at the address: http://www.sec.gov. 25 Transfer Agent Our transfer agent is: Island Stock Transfer 100 Second Avenue, South, Suite 300N St. Petersburg, FL 33701 (727) 289-0010 (727) 289-0069 - Fax www.islandstocktransfer.com 26 TONGJI HEALTHCARE GROUP, INC. CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2006 AND 2005 INDEX TO FINANCIAL STATEMENTS Page(s) Report of Independent Registered Public Accounting Firm 1 Consolidated Balance Sheets as of December 31, 2006 and 2005 2 Consolidated Statements of Operations and Accumulated Other Comprehensive Income for the Years Ended December 31, 2006 and 2005 3 Consolidated Statements of Changes in Stockholders' Equity for the Years Ended December 31, 2006 and 2005 4 Consolidated Statements of Cash Flows for the Years Ended December 31, 2006 and 2005 5 Notes to Consolidated Financial Statements 6-19 MICHAEL POLLACK CPA 46 EQUESTRIAN LANE CHERRY HILL, NJ 08003 TEL (215) 588-5299 FAX (609) 482-8018 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors Tongji Healthcare Group, Inc. I have audited the accompanying consolidated balance sheets of Tongji Healthcare Group, Inc. (the "Company") as of December 31, 2006 and 2005 and the related consolidated statements of operations and accumulated other comprehensive income, changes in stockholders' equity, and cash flows for the years ended December 31, 2006 and 2005. These consolidated financial statements are the responsibility of the Company's management. My responsibility is to express an opinion on these consolidated financial statements based on my audits. I conducted my audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that I plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. I was not engaged to perform an audit of the Company's internal control over financial reporting. My audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, I express no such opinion. 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 financial statement presentation. I believe that my audits provide a reasonable basis for my opinion. In my opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Tongji Healthcare Group, Inc. as of December 31, 2006 and 2005, and the results of its consolidated statements of operations and accumulated other comprehensive income, changes in stockholders' equity, and cash flows for the years ended December 31, 2006 and 2005 in conformity with U.S. generally accepted accounting principles. /s/ Michael Pollack CPA Cherry Hill, NJ February 5, 2007 TONGJI HEALTHCARE GROUP, INC. CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2006 AND 2005 (IN US$) ASSETS 2006 2005 Current Assets: Cash and cash equivalents 16,065 $ 28,425 Accounts receivable, net 273,298 98,579 Due from related party 140,079 170,210 Inventories 97,399 129,469 Other receivables 1,908 7,028 Prepaid expenses and other current assets 26,271 1,729 ------- ------- Total Current Assets 555,020 435,440 ------- -------- Fixed assets, net of depreciation 825,033 904,214 ---------- --------- TOTAL ASSETS $1,380,053 $1,339,654 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ LIABILITIES Current Liabilities: Accounts payable and accrued expenses $ 417,729 $ 443,560 Accrued taxes 56,025 51,596 Due to related parties 479,743 609,193 ---------- --------- Total Current Liabilities 953,497 1,104,349 Total Liabilities 953,497 1,104,349 ---------- --------- STOCKHOLDERS' EQUITY Preferred stock, $0.001 Par Value; 20,000,000 shares authorized and 0 shares issued and outstanding - - Common stock, $0.001 Par Value; 50,000,000 shares authorized and 15,652,557 and 3,000,000 shares issued and outstanding, respectively 15,653 363,000 Additional paid-in capital 347,347 - Statutory reserves 36,848 - Retained earnings 16,404 (130,990) Accumulated other comprehensive income 10,304 3,295 ---------- --------- Total Stockholders' Equity 426,556 235,305 ---------- --------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,380,053 $1,339,654 ========== ========== The accompanying notes are an integral part of the consolidated financial statements. 2 TONGJI HEALTHCARE GROUP, INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND ACCUMULATED OTHER COMPREHENSIVE INCOME 2006 2005 PATIENT SERVICE REVENUE $ 1,666,641 $1,363,265 ----------- ---------- DIRECT COST OF PROVIDING PATIENT SERVICE REVENUE Inventory, beginning of period 129,469 59,642 Purchases of medical supplies, pharmaceuticals and labor 762,961 628,510 Inventory, end of period (97,399) (129,469) ----------- ---------- Total Cost of Sales 795,031 558,683 ----------- ---------- GROSS PROFIT 871,610 804,582 ----------- ---------- OPERATING EXPENSES Selling and promotion 412,746 549,817 General and administrative fees 109,919 122,640 Bad debt expense 9,444 5,128 Depreciation, amortization and impairment 133,887 73,596 ---------- ---------- Total Operating Expenses 665,996 751,181 ---------- ---------- INCOME BEFORE OTHER INCOME (EXPENSE) 205,614 53,401 OTHER INCOME (EXPENSE) Interest expense, net of interest income 21,372 19,595 ----------- ---------- Total Other Income (Expense) 21,372 19,595 ----------- ---------- NET INCOME BEFORE PROVISION FOR INCOME TAXES 184,242 33,806 Provision for Income Taxes - (50,105) ----------- ---------- NET INCOME APPLICABLE TO COMMON SHARES $184,242 $ (16,299) =========== ========== NET INCOME PER BASIC AND DILUTED SHARES $ 0.01 $ (0.00) =========== ========== WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 15,652,557 15,652,557 =========== ========== COMPREHENSIVE INCOME Net income $ 184,242 $ (16,299) =========== ========== Other comprehensive income Currency translation adjustments 7,009 3,295 ----------- ---------- Comprehensive income $ 191,251 $ (13,004) =========== ========== The accompanying notes are an integral part of the consolidated financial statements. 3 TONGJI HEALTHCARE GROUP, INC. CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005 (IN US $) Accumulated Additional Retained Other Common Stock Paid-in Statutory Earnings Comprehensive Shares Amount Reserves Reserves (Deficit) Income Total --------------------------------------------------------------------------------- Balance January 1, 2005 3,000,000 $ 363,000 $ - $ - $ (114,691) $ - $ 248,309 Net loss for the year ended December 31, 2005 - - - - (16,299) 3,295 (13,004) Balance December 31, 2005 3,000,000 363,000 - - (130,990) 3,295 235,305 Shares cancelled in merger with Tongji, Inc. (3,000,000) (363,000) - - - - (363,000) Shares issued in reverse merger with Tongji Healthcare Group, Inc. 15,652,557 15,653 347,347 - - - 363,000 Allocation of statutory reserves - - - 36,848 (36,848) - - Net income for the year ended December 31, 2006 - - - - 184,242 7,009 191,251 ------------ ----------- ---------- --------- ---------- --------- ---------- Balance December 31, 2006 15,652,557 $ 15,653 $ 347,347 $ 36,848 $ 16,404 $ 10,304 $ 426,556 ============ =========== ========== ========= ========== ========= ==========
The accompanying notes are an integral part of the consolidated financial statements. 4 TONGJI HEALTHCARE GROUP, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005 (IN US $) 2006 2005 -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $ 184,242 $ (16,299) ------------- ------------ Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation, amortization and impairment 133,887 73,596 Allowance for doubtful accounts 9,196 5,188 Changes in assets and liabilities (Increase) in accounts receivable (183,915) (79,540) (Increase) decrease in inventory 32,070 (69,827) (Increase) decrease in other receivables 5,120 (6,494) (Increase) decrease in prepaid expenses and other current assets (24,542) 106,341 Increase (decrease) in accounts payable and and accrued expenses (21,402) 446,335 ------------- ------------ Total adjustments (49,586) 475,599 ------------- ------------ Net cash provided by operating activities 134,656 459,300 ------------- ------------ CASH FLOWS FROM INVESTING ACTIVITIES (Acquisitions) of fixed assets (54,706) (647,085) Net advancements to/from related parties 30,131 (52,682) ------------- ------------ Net cash (used in) investing activities (24,575) (699,767) ------------- ------------ CASH FLOWS FROM FINANCING ACTIVITES Net advancements from/to related parties (129,450) 250,468 ------------- ------------ Net cash provided by (used in) financing activities (129,450) 250,468 ------------- ------------ Effect of foreign currency translation 7,009 3,295 ------------- ------------ NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (12,360) 13,296 CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 28,425 15,129 ------------- ------------ CASH AND CASH EQUIVALENTS - END OF PERIOD $ 16,065 $ 28,425 ============= ============ CASH PAID DURING THE YEAR FOR: Income taxes $ - $ - ============= ============ The accompanying notes are an integral part of the consolidated financial statements. 5 TONGJI HEALTHCARE GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2006 AND 2005 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 the largest private hospital modernized and comprehensive in combining medical treatment, scientific research, teaching, prevention, and health care together. It is an assigned hospital for medical insurance in Nanning and Guangxi. 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. NTH is a 105-bed modern hospital containing 4 operating rooms, with Paramount beds installed from Japan, as well as the most advanced medical equipment worldwide from Japan, USA, Germany and France. On December 19, 2006, the officers of NTH filed Articles of Incorporation in the State of Nevada which was approved December 19, 2006 to create Tongji Healthcare Group, Inc. a Nevada corporation (the "Company") and also established Tongji, Inc., a Colorado corporation ("Tongji") and wholly owned subsidiary of the Company. On December 27, 2006, NTH merged into and with Tongji and became the surviving entity and wholly owned subsidiary of the Company. 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. For accounting purposes, the Company accounted for the acquisition of NTH as a recapitalization. The transaction involved entities under common control as defined in Statement of Financial Standard 141, "Business Combinations". As such, the net assets of NTH were acquired at their carrying values at the time of the acquisition. The comparative figures for 2005 are those of NTH. NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ------------------------------------------ Principles of Consolidation --------------------------- The consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. 6 TONGJI HEALTHCARE GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2006 AND 2005 NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) ------------------------------------------------------ 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 bad debts, income taxes and contingencies. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates. Economic and Political Risks ---------------------------- The Company's operations are conducted in the PRC. Accordingly, the Company's business, financial condition and results of operations may be influenced by the political, economic and legal environment in the PRC, and by the general state of the PRC economy. The Company's operations in the PRC are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Company's results may be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation, among other things. Cash and Cash Equivalents ------------------------- The Company considers all highly liquid debt instruments and other short-term investments with an initial maturity of three months or less to be cash equivalents. The Company maintained $2,782 and $4,962 as of December 31, 2006 and 2005, respectively in cash on hand. The remainder of the cash was in financial institutions. 7 TONGJI HEALTHCARE GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2006 AND 2005 NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) ------------------------------------------------------ Comprehensive Income -------------------- The Company adopted Statement of Financial Accounting Standards No, 130, "Reporting Comprehensive Income," (SFAS No. 130). SFAS No. 130 requires the reporting of comprehensive income in addition to net income from operations. Comprehensive income is a more inclusive financial reporting methodology that includes disclosure of information that historically has not been recognized in the calculation of net income. Inventory --------- Inventory is valued at the lower of cost or market (using the weighted average method) and net realizable value. Inventory consists of Chinese and western medicines and pharmaceuticals. The net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion, selling expenses and related taxes. Fair Value of Financial Instruments ----------------------------------- The carrying amounts reported in the balance sheets for cash and cash equivalents, accounts receivable, other receivables and payables and accounts payable approximate fair value because of the immediate or short-term maturity of these financial instruments. 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 year end RMB to US dollar as of December 31, 2006 and 2005 were 7.8217 and 8.0702, respectively, and the average yearly RMB to the US dollar for 2006 and 2005 were 7.9487 and 8.1734, respectively. 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 years ended December 31, 2006 and 2005, the Company recorded approximately $7,009 and $3,295 in transaction gains as a result of currency translation. 8 TONGJI HEALTHCARE GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2006 AND 2005 NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) ------------------------------------------------------ Retirement Benefits ------------------- Retirement benefits in the form of contributions under defined contribution retirement plans to the relevant authorities are charged to the statements of operations as incurred. Revenue Recognition ------------------- 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 2008. 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. 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. In the US this is commonly referred to as charity care. The Company has a very small percentage of their service for this area. 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. The Company's customers consist primarily of individuals, government units and insurance companies. Third-party payers include, the Nanning Social Medicare Management Center, a license that took effect in November of 2003, which works like the US Medicare system. The hospital is reimbursed most of the charges for the services provided with the exception of a self-pay portion (like Medicare Part B); the hospital also has a license with the Guangxi Province Medicare Center, which was initially entered into in May of 2004, which works similar to that of Nanning. 9 TONGJI HEALTHCARE GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2006 AND 2005 NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) ------------------------------------------------------ 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 has spent a great deal of time estimating this likelihood and has determined that a reserve estimating 5% of their total accounts receivable does accurately account for their bad debt. Management continues to evaluate this estimate on an ongoing basis. The Company has established a reserve for uncollectibles of $14,384 and $5,188 as of December 31, 2006 and 2005, respectively. Advertising Costs ----------------- The Company expenses the costs associated with advertising as incurred. Advertising expenses for the years ended December 31, 2006 and 2005 of $84,960 and $4,733, respectively are included in selling and promotional expenses in the statements of operation. Advertising costs include marketing brochures and an advertising campaign to the public. Advance to Suppliers -------------------- Advances to suppliers represent the cash paid in advance for purchasing materials utilized in the hospital as well as pharmaceuticals. 10 TONGJI HEALTHCARE GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2006 AND 2005 NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) ------------------------------------------------------ Fixed Assets ------------ Fixed assets are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, net of the estimated residual values; equipment - 5 to 10 years (3 to 5% residual value) and vehicles - 5 years (3% residual value). When assets are retired or otherwise disposed of, the costs and related accumulated depreciation are removed from the accounts, and any resulting gain or loss is recognized in income for the period. The cost of maintenance and repairs is charged to income as incurred; significant renewals and betterments are capitalized. Deduction is made for retirements resulting from renewals or betterments. Land Use Rights --------------- According to the laws of China, the government owns all the land in China. Companies or individuals are authorized to possess and use the land only through land use rights granted by the Chinese government. Land use rights would be amortized using the straight-line method over the respective lease term. The Company does not have nay land use rights as they lease the land and building from a related party. Construction in Progress ------------------------ Construction in progress represents direct costs of construction or acquisition and design fees incurred, as well as interest charges directly related to debt incurred on behalf of particular construction projects. Capitalization of these costs ceases and the construction in progress is transferred to fixed assets (building or equipment) when substantially all the activities necessary to prepare the assets for their intended use are completed. No depreciation is provided until it is completed and ready for intended use. There were no such costs for the Company in the years ended December 31, 2006 and 2005, respectively. 11 TONGJI HEALTHCARE GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2006 AND 2005 NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) ------------------------------------------------------ Impairment of Long-Lived Assets ------------------------------- Long-lived assets, primarily fixed assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets might not be recoverable. The Company does perform a periodic assessment of assets for impairment in the absence of such information or indicators. Conditions that would necessitate an impairment assessment include a significant decline in the observable market value of an asset, a significant change in the extent or manner in which an asset is used, or a significant adverse change that would indicate that the carrying amount of an asset or group of assets is not recoverable. For long-lived assets to be held and used, the Company recognizes an impairment loss only if its carrying amount is not recoverable through its undiscounted cash flows and measures the impairment loss based on the difference between the carrying amount and estimated fair value. Earnings Per Share of Common Stock ---------------------------------- Basic net earnings per common share is computed using the weighted average number of common shares outstanding. Diluted earnings per share (EPS) includes additional dilution from common stock equivalents, such as stock issuable pursuant to the exercise of stock options and warrants. Common stock equivalents are not included in the computation of diluted earnings per share when the Company reports a loss because to do so would be antidilutive for periods presented. The Company did not have a loss for either period. The following is a reconciliation of the computation for basic and diluted EPS: December 31, December 31, 2006 2005 ------------ ------------ Net income (loss) $ 184,242 $ (16,299) Weighted-average common shares Outstanding (Basic) 15,652,557 15,652,557 Weighted-average common stock Equivalents Stock options - - Warrants - - Weighted-average common shares Outstanding (Diluted) 15,652,557 15,652,557 12 TONGJI HEALTHCARE GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2006 AND 2005 NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) ------------------------------------------------------ Income Taxes ------------ The Company accounts for income tax using an asset and liability approach and allows for recognition of deferred tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future realization is uncertain. 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%. 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 construct taxes, and educational taxes are based on 7% and 3% of the business taxes, and the Company has accrued these taxes for 2005. The Company has received notification that they are exempt from these taxes for the years ending 2006 through 2008. Stock-Based Compensation ------------------------ The Company follows FASB 123R in accounting for its stock based compensation (see Recent Accounting Pronouncements). This measures compensation expense for its employee stock-based compensation using the intrinsic-value method. Under the intrinsic-value method of accounting for stock-based compensation, when the exercise price of options granted to employees and common stock issuances are less than the estimated fair value of the underlying stock on the date of grant, deferred compensation is recognized and is amortized to compensation expense over the applicable vesting period. The Company for 2006 and 2005 did not grant any options or warrants that would need to be valued under such method. The following represents the effect on net income attributable to common shareholders per share if the fair value method had been applied to all awards. 13 TONGJI HEALTHCARE GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2006 AND 2005 NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) ------------------------------------------------------ Stock-Based Compensation (Continued) ------------------------------------ Years Ended December 31, 2006 2005 ---- ---- Net income (loss): As reported $184,242 ($16,299) Add: Stock-based employee compensation expense included in reported net loss, net of related tax effects - - Less: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects ( -) ( -) ---------- ---------- Pro forma $184,242 ($16,299) Net earnings (loss) per share: As reported: Basic $0.01 ($0.00) Diluted $0.01 ($0.00) Pro forma: Basic $0.01 ($0.00) Diluted $0.01 ($0.00) The Company measures compensation expense for its non-employee stock-based compensation under the Financial Accounting Standards Board (FASB) Emerging Issues Task Force (EITF) Issue No. 96-18, "Accounting for Equity Instruments that are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services". The fair value of the option issued is used to measure the transaction, as this is more reliable than the fair value of the services received. The fair value is measured at the value of the Company's common stock on the date that the commitment for performance by the counterparty has been reached or the counterparty's performance is complete. The fair value of the equity instrument is charged directly to compensation expense and additional paid-in capital. Segment Information ------------------- The Company follows the provisions of SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information". This standard requires that companies disclose operating segments based on the manner in which management disaggregates the Company in making internal operating decisions. For 2006 and 2005, the Company operated in one segment and one geographical location. 14 TONGJI HEALTHCARE GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2006 AND 2005 NOTE 3- FIXED ASSETS ------------ Fixed assets as of December 31, 2006 and 2005 were as follows: Estimated Useful Lives 2006 2005 (Years) Office equipment 5-10 $ 179,005 $ 159,675 Medical equipment 5 785,377 747,722 Fixtures 10 92,052 89,109 Vehicles 5 35,599 34,461 ---------- ----------- 1,092,033 1,030,967 Less: accumulated depreciation 267,000 126,753 ---------- ----------- Property and equipment, net $ 825,033 $ 904,214 ========== =========== There was $133,887 and $73,596 charged to operations for depreciation expense for the years ended December 31, 2006 and 2005, respectively. There was no impairment for these assets during the years ended December 31, 2006 and 2005. The Company leases the building and land from a related party, under an arms length agreement. Rent expense included in selling and promotional expenses for the years ended December 31, 2006 and 2005 were $24,817 and $24,131 (197,266 RMB each year), respectively. The lease term runs from October 2003 to December 2008. NOTE 4- INVENTORIES ----------- Inventories consisted of the following as of December 31, 2006 and 2005: 2006 2005 ------ ------ Medicines and pharmaceuticals $97,399 $129,469 Less: provision for write-down of inventory - - Inventory, net $97,399 $129,469 ======= ======== There was no obsolescence of inventory or write-downs of inventory for the years ended December 31, 2006 and 2005. 15 TONGJI HEALTHCARE GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2006 AND 2005 NOTE 5- STOCKHOLDERS' EQUITY -------------------- Common Stock ------------ As of December 31, 2006, the Company has 50,000,000 shares of common stock authorized with a par value of $0.001. The Company 15,652,557 shares of common stock in exchange of 100% of the authorized capital of Nanning Tongji Hospital Co. Ltd. (CHINA). Nanning Tongji Hospital Co. Ltd. (CHINA) in 2003 issued 3,000,000 shares. The Company has not granted any options or warrants during 2006 or 2005. Preferred Stock --------------- As of December 31, 2006, 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 ------------------ The Company is required to make appropriations to reserve funds, comprising the statutory surplus reserve, statutory welfare fund and discretionary surplus reserve, based on after-tax net income determined in accordance with generally accepted accounting principles of the PRC ("PRC GAAP"). Appropriation to the statutory surplus reserve is required to be at least 10% of the after tax net income determined in accordance with the PRC GAAP until the reserve is equal to 50% of the entities' registered capital. Appropriations to the statutory public welfare fund is required to be 10% of the after-tax net income determined in accordance with the PRC GAAP. Appropriations to the discretionary surplus reserve are made at the discretion of the Board of Directors. The statutory reserve fund is non-distributable other than during liquidation and can be used to fund previous years' losses, if any, and may be utilized for business expansion or converted into share capital by issuing new shares to existing shareholders in proportion to their shareholding or by increasing the par value of the shares currently held by them, providing that the remaining reserve balance after such issue is not less than 25% of the registered capital. The statutory welfare reserve can only be utilized on capital items for the collective benefit of the Company's employees, such as construction of dormitories, cafeteria facilities, and other staff welfare facilities. This fund is non-distributable other than liquidation. The transfer to this fund must be made before distribution of any dividend to shareholders. 16 TONGJI HEALTHCARE GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2006 AND 2005 NOTE 5- STOCKHOLDERS' EQUITY (CONTINUED) -------------------------------- Statutory Reserves ------------------ The discretionary surplus fund may be used to acquire fixed assets or to increase the working capital to expend on production and operation of the business. The Company's Board of Directors decided not to make appropriations to this reserve. NOTE 6- PROVISION FOR INCOME TAXES -------------------------- Corporate Income Taxes ---------------------- In accordance with the relevant tax laws and regulations of PRC, the corporate income tax rate is 33%. 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, 2007, the corporate tax rate will be 33%. Business Taxes -------------- In accordance with the relevant tax laws and regulations of PRC, the Company is required to pay business taxes of 5% of income they derive from providing medical treatment and then 7% and 3%, respectively for city construct taxes and educational taxes. As noted, the Company has received a waiver for these taxes for the years ending 2006 through 2008. At December 31, 2006 and 2005, corporate income and business taxes consist of the following: 2006 2005 ------ ------ Corporate income tax $ - $ - Business taxes including city construct and educational taxes - 50,105 -------- -------- $ - $ 50,105 ======== ======== A reconciliation of the PRC enterprise income tax and business tax rate to the effective income tax rate is as follows: 2006 2005 ------ ------ Statutory rate - corporate income tax 0% 0% Business taxes 0% 149% ---- ---- 0% 149% ==== ==== 17 TONGJI HEALTHCARE GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2006 AND 2005 NOTE 6- PROVISION FOR INCOME TAXES (CONTINUED) -------------------------------------- Deferred income taxes are determined using the liability method for the temporary differences between the financial reporting basis and income tax basis of the Company's assets and liabilities. Deferred income taxes are measured based on the tax rates expected to be in effect when the temporary differences are included in the Company's tax return. Deferred tax assets and liabilities are recognized based on anticipated future tax consequences attributable to differences between financial statement carrying amounts of assets and liabilities and their respective tax bases. The Company has no temporary or permanent differences. Therefore, no deferred tax assets and liabilities have been recognized and no valuation allowance has been established. The depreciation methods and lives the Company utilizes are identical for book and tax purposes. Additionally, there is no income or expense included in books not included in tax. NOTE 7- RELATED PARTY TRANSACTIONS -------------------------- Due from Related Party ---------------------- The Company has entered into an agreement with Nanning Tongji Chain Pharmacy Co. Ltd. whereby the Company from time to time will advance amounts to Nanning Tongji Chain Pharmacy Co., Ltd. to assist them in their operations. The two companies have common shareholders. The advanced amounts accrue interest at a rate of 6% per annum which exceeds the interest rates in the PRC for similar borrowings. The Company as of December 31, 2006 and 2005 is owed, $122,649 and $161,751, respectively. Accrued interest receivable on this agreement of $17,430 and $8,459 as of December 31, 2006 and 2005, respectively, is included in due from related party. Due to Related Parties ---------------------- The Company has entered into an agreement with Nanning Tongji Healthcare Co. Ltd. whereby the Company from time to time will be advanced amounts to assist them in their operations. The two companies have common shareholders. The advanced amounts accrue interest at a rate of 6% per annum which exceeds the interest rates in the PRC for similar borrowings. The Company as of December 31, 2006 and 2005 is indebted to Nanning Tongji Healthcare Co. Ltd, in the amounts of $328,614 and $399,997, respectively. Accrued interest payable on this agreement of $40,788 and $17,941 as of December 31, 2006 and 2005, respectively, is included in due from related party. 18 TONGJI HEALTHCARE GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2006 AND 2005 NOTE 7- RELATED PARTY TRANSACTIONS (CONTINUED) -------------------------------------- Due to Related Parties (Continued) ---------------------------------- The Company has entered into an agreement with the Chairman of the Company, Mr. Yunhui Yu whereby the Company from time to time will be advanced amounts to assist it in their operations. The advanced amounts accrue interest at a rate of 6% per annum which exceeds the interest rates in the PRC for similar borrowings. The Company as of December 31, 2006 and 2005 is indebted to their Chairman in the amounts of $91,168 and $180,766, respectively. Accrued interest payable on this agreement of $19,173 and $10,489 as of December 31, 2006 and 2005, respectively, is included in due from related party. Rental ------ The Company has entered into a lease agreement for their hospital with Tongji Healthcare Group that expires December 2008. Monthly rentals are 16,438.86 per month (RMB). Based on the exchange rate at December 31, 2006, minimum lease payments are as follows: Year ending December 31, 2007 $25,221 2008 25,221 19 TONGJI HEALTHCARE GROUP, INC. No dealer salesman or other person has been authorized to give any information or to make any representations, other than those contained in this prospectus. Any information or representation not contained in this prospectus must not be relied upon as having been authorized by us. This prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, the securities offered hereby in any state or other jurisdiction to any person to whom it is unlawful to make such offer or solicitation. Neither the delivery of this prospectus nor any sale made hereunder shall, under any circumstances, create an implication that there has been no change in our affairs since the date of this prospectus. TABLE OF CONTENTS Page Prospectus Summary .......................................... Risk Factors ................................................. Market for Our Common Stock .................................. Management's Discussion and Analysis of Results of Operation . Business ..................................................... Management ................................................... Principal Shareholders ....................................... Selling Shareholders ......................................... Description of Capital Stock.................................. Experts ...................................................... Indemnification .............................................. Additional Information ....................................... Financial Statements ......................................... Until ________________, ____ (90 days from the date of this prospectus), all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions. PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Our Articles of Incorporation provide for indemnification of our officers, directors and controlling persons to the full extent provided by Nevada law. Our Articles of Incorporation also provide that no director is personally liable to us or our stockholders for monetary damages for any breach of fiduciary duty by such person as a director or officer except for (i) a breach of the director's duty of loyalty to us or our stockholders, (ii) acts or omissions not in good faith or which involve intentional misconduct, fraud or a knowing violation of law, (iii) a transaction from which the director received an improper benefit or (iv) an act or omission for which the liability of a director is expressly provided under Nevada law. Under the Nevada corporate statutes, Nevada corporations are permitted to indemnify their officers and directors for liability to stockholders, so long as such indemnification does not include the items set forth in the previous paragraph under (i) through (iv). ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION SEC Registration Fees $ 215 Legal Fees $ 40,000 Accounting Fees $ 30,000 Miscellaneous Expenses $ 4,785 ---------- Total $ 75,000 ========== (1) All expenses, except the SEC registration fee, are estimated. ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES. The only shares which the Company has issued were 15,652,557 shares issued in December 2006 to 243 persons in connection with the acquisition of Nanning Tongji Hospital Co., Ltd., a Chinese corporation. These shares were all issued to non-U.S. persons who reside outside of the United States. The negotiations and agreements relating to the issuance of these shares were made by the Company's officers (who were all Chinese citizens) from China. There is no market for the Company's securities in the United States and none of the securities have been transferred since their issuance. The issuance of these shares was exempt from the registration requirements of the Securities Act of 1933 pursuant to Rule 901 of the Securities and Exchange Commission. 1 ITEM 27. EXHIBIT INDEX. Number Exhibit - ------ ------- 2 Plan of Merger 3.1 Articles of Incorporation 3.2 Bylaws 5 Opinion of Counsel 10.1 Employment Contracts 10.2 Hospital Lease 10.3 Agreement with Guangxi Tongji Medicine Co., Ltd. 21. Subsidiaries 23.1 Consent of Attorneys 23.2 Consent of Accountants * Filed with initial registration statement. ITEM 28. UNDERTAKINGS. (a) The small business issuer will: (1) File, during any period in which it offers or sells securities, a post-effective amendment to this Registration Statement to. (i) Include any Prospectus required by Section l0 (a)(3) of the Securities Act: (ii) Reflect in the prospectus any facts or events which, individually or together, represent a fundamental change in the information in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; and 2 (iii) Include any additional or changed material information on the plan of distribution. (2) For determining liability under the Securities Act, treat each post-effective amendment as a new registration statement of the securities offered, and the offering of the securities at that time to be the initial bona fide offering. (3) File a post-effective amendment to remove from registration any of the securities that remain unsold at the end of the offering. (4) For determining liability of the undersigned small business issuer under the Securities Act to any purchaser in the initial distribution of the securities, the undersigned small business issuer undertakes that in a primary offering of securities of the undersigned small business issuer pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned small business issuer will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser: (i) Any preliminary prospectus or prospectus of the undersigned small business issuer relating to the offering required to be filed pursuant to Rule 424; (ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned small business issuer or used or referred to by the undersigned small business issuer; (iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned small business issuer or its securities provided by or on behalf of the undersigned small business issuer; and (iv) Any other communication that is an offer in the offering made by the undersigned small business issuer to the purchaser. (b) Insofar as indemnification for liabilities arising under the Securities Act of l933 (the "Act") may be permitted to directors, officers and controlling persons of the Small Business Issuer pursuant to the foregoing provisions or otherwise, the Small Business Issuer has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Small Business Issuer of expenses incurred or paid by a director, officer or controlling person of the Small Business Issuer in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Small Business Issuer will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. (c) That, for the purpose of determining liability under the Securities Act to any purchaser: 3 (1) If the small business issuer is relying on Rule 430B: (i) Each prospectus filed by the undersigned small business issuer pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and (ii) Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information required by section 10(a) of the Securities Act shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date; or (2) If the small business issuer is subject to Rule 430C, include the following: Each prospectus filed pursuant to Rue 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use. 4 SIGNATURES Pursuant to the requirements of the Securities Act, as amended, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements of filing Form SB-2 and has caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the city of Xi'an, China on February 12, 2007. 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, as amended, this Registration Statement has been signed below by the following persons. Name Position Date /s/ Yun-hui Yu - -------------------------- Director February 12, 2007 Yun-hui Yu /s/ Jing-xi Lv - --------------------------- Director February 12, 2007 Jing-xi Lv /s/ Jia-lin Zhang - --------------------------- Director February 12, 2007 Jia-lin Zhang /s/ Lin Lin - --------------------------- Director February 12, 2007 Lin Lin /s/ Xiang-wei Zeng - --------------------------- Director February 12, 2007 Xiang-wei Zeng EXHIBITS TONGJI HEALTHCARE GROUP, INC. REGISTRATION STATEMENT ON FORM SB-2 EX-2 2 sb2feb07ex2.txt AGREEMENT AND PLAN OF MERGER EXHIBIT 2 AGREEMENT AND PLAN OF MERGER AGREEMENT AND PLAN OF MERGER ("Agreement") made this 27th day of December, 2006 by and between Tongji Healthcare Group, Inc., a Nevada corporation (the "Company"), Nanning Tongji Hospital, Co. Ltd., a People's Republic of China corporation ("NTH"), and Tongji, Inc., a Colorado corporation ("Tongji"). WHEREAS the Company owns all of the issued and outstanding shares of Tongji, and WHEREAS, the Directors of the Company, NTH and Tongji deem it advisable and in the best interests of their respective stockholders to consummate, and have approved, the business combination transaction provided for herein in which NTH would merge with and into Tongji and NTH would become a wholly owned subsidiary of the Company (the "Merger") NOW THEREFORE, as the parties agree as follows: 1. Tongji shall be merged with and into NTH in accordance with the statutory provisions of Nevada and Colorado law. 2. NTH shall be the Surviving Corporation and the corporate identity, existence, purposes, powers, franchises, rights, and immunities of NTH shall continue unaffected and unimpaired by the Merger. The Articles of Association and any other similar document pertaining to the formation and or organization of NTH shall continue in force and will not be impaired or affected by the Merger. The corporate identity, existence, purposes, powers, franchises, rights and immunities of Tongji shall be merged into NTH and NTH shall be fully vested therewith. 3. The time at which the Articles of Merger are filed with the Secretary of State of Nevada shall be the "Effective Time" of the Merger. 4. Except insofar as specifically otherwise provided by law, Tongji shall cease to exist at the Effective Time, whereupon the separate existence of Tongji and NTH shall become a single corporation, that being NTH. 5. At the Effective Time, without any action by the holder thereof, each issued and outstanding share of NTH's common stock shall be deemed cancelled and converted into one share of the Company's common stock. 6. At the Effective Time, without any action by the holder thereof, each issued and outstanding share of Tongji shall be converted into and become one fully paid and nonassessable share of NTH. 7. Each option to purchase shares of NTH (collectively, the "NTH Option") that is outstanding immediately prior to the Effective Time, without regard to whether such option is then exercisable, shall, by virtue of the Merger and without any further action on the part of the holder thereof, be assumed by the Company and converted into an option (a "Substitute Option") to purchase that number of shares of the Company's common stock equal to the number of shares subject to such NTH Option immediately prior to the Effective Time in at an exercise price per share equal to the exercise price per share of such NTH Option immediately prior to the Effective Time. The terms and conditions of each Substitute Option, including any acceleration of vesting and/or exercisability thereof, shall otherwise be the same as the related NTH Option. 8. The address of each party to this Agreement and Plan of Merger is: Tongji Healthcare Group, Inc. (a Nevada Corporation) No. 5 Beiji Road Nanning, Guangxi 530011 PRC Nanning Tongji Hospital Co., Ltd. (a People's Republic of China Corporation) No. 5 Beiji Road Nanning, Guangxi 530011 PRC Tongji, Inc. (a Colorado Corporation) 1624 Washington St. Denver, CO 80203 AGREED TO AND ACCEPTED: TONGJI HEALTHCARE GROUP, INC. (a Nevada Corporation) By: /s/ Yun-hui Yu ------------------------------- Yun-hui Yu, Chairman of Board NANNING TONGJI HOSPITAL CO., LTD. (a People's Republic of China Corporation) By: /s/ Yun-hui Yu ------------------------------- Yun-hui Yu, President TONGJI, INC. (a Colorado Corporation) By: /s/ Yun-hui Yu -------------------------------- Yun-hui Yu, President EX-3.(I) 3 sb2feb07ex31.txt EXHIBIT 3.1 Entity # E0927562006-6 Document Number: 20060814098-58 Date Filed: 12/19/2006 3:16:19 PM Articles of Incorporation In the office of Dean Heller Secretary of State 1. Name of Corporation: Tongji Healthcare Group, Inc. 2. Resident Agent Name and Street Address: Resident Agents of Nevada, Inc. 711 S. Carson St., Suite #4 Carson City, Nevada 89701 3. Shares: 70,000,000 4. Names and Addresses of Board of Directors/Trustees: William T. Hart 1624 Washington Street Denver, CO 80203 5. Purpose: All lawful purposes. 6. Names, Address and Signature of incorporator: Sandra L. Miller 711 S. Carson St., Suite #4 Carson City, Nevada 89701 7. Certificate of Acceptance of Appointment of Resident Agent: I hereby accept appointment as Resident Agent for the above named corporation. OPTIONAL PROVISIONS TO ARTICLES OF INCORPORATION OF TONGJI HEALTHCARE GROUP, INC. A. The period of duration of the Corporation shall be perpetual. B. The authorized capital stock of the Corporation shall be divided into 50,000,000 shares of common stock and 20,000,000 shares of preferred stock. Subject to the laws of the state of Nevada, the directors of the Corporation have the authority to issue the preferred shares in one or more series and to designate the rights, preferences and limitations of each series. C. No share of common stock shall have any preference over or limitation in respect to any other share of common stock. All shares of the common stock shall have equal rights and privileges. D. Each outstanding share of common stock shall be entitled to one vote at stockholders' meetings, either in person or by proxy. E. Cumulative voting shall not be allowed in elections of directors or for any other purpose. F. No holders of shares of the common stock of the Corporation shall be entitled, as such, to any preemptive or preferential right to subscribe to any unissued stock or any other securities which the Corporation may now or hereafter be authorized to issue. The Board of Directors of the Corporation, however, in its discretion by resolution, may determine that any unissued securities of the Corporation shall be offered for subscription solely to the holders of the common stock of the Corporation, or solely to the holders of any class or classes of such stock, which the Corporation may now or hereafter be authorized to issue, in such proportions based on stock ownership as said board in its discretion may determine. G. The Board of Directors may restrict the transfer of any of the Corporation's stock issued by giving the Corporation or any stockholder "first right of refusal to purchase" the stock, by making the stock redeemable, or by restricting the transfer of the stock under such terms and in such manner as the directors may deem necessary and as are not inconsistent with the laws of Nevada. Any stock so restricted must carry a conspicuous legend noting the restriction and the place where such restriction may be found in the records of the Corporation. H. The judgment of the Board of Directors as to the adequacy of any consideration received or to be received for any shares, options, or any other securities which the Corporation at any time may be authorized to issue or sell or otherwise dispose of shall be conclusive in the absence of fraud and any applicable law. I. The number of directors shall be fixed by or in the manner provided in the By-laws of the Corporation, as may be amended from time to time, except as to the number constituting the initial board which number shall be one. J. No contract or other transaction between the Corporation and any other corporation, whether or not a majority of the shares of the capital stock of such other corporation is owned by the Corporation, and no act of the Corporation shall in any way be affected or invalidated by the fact that any of the directors of the Corporation are pecuniarily or otherwise interested in, or are directors or officers of, such other corporation. Any director of the corporation, individually, or any firm with which such director is affiliated may be a party to or may be pecuniarily or otherwise interested in any contract or transaction of the Corporation; provided, however, that the fact that he or such firm is so interested shall be disclosed or shall have been known to the Board of Directors of the Corporation, or a majority thereof, at or before the entering into such contract or transaction; and any director of the Corporation who is also a director or officer of such other corporation, or who is so interested, may be counted in determining the existence of a quorum at any meeting of the Board of Directors of the Corporation which shall authorize such contract or transaction, with like force and effect as if he were not such director or officer of such other corporation or not so interested. K. No director of the Corporation shall have liability to the Corporation or to its stockholders or to other security holders for monetary damages for breach of fiduciary duty as a director; provided, however, that such provisions shall not eliminate or limit the liability of a director to the Corporation or to its shareholders or other security holders for monetary damages for: (i) any breach of the director's duty of loyalty to the Corporation or to its shareholders or other security holders; (ii) acts or omissions of the director not in good faith or which involve intentional misconduct or a knowing violation of the law by such director; (iii) acts by such director as specified by Nevada law; or (iv) any transaction from which such director derived an improper personal benefit. No officer or director shall be personally liable for any injury to person or property arising out of a tort committed by an employee of the Corporation unless such officer or director was personally involved in the situation giving rise to the injury or unless such officer or director committed a criminal offense. The protection afforded in the preceding sentence shall not restrict other common law protections and rights that an officer or director may have. The word "director" shall include at least the following, unless limited by Nevada law: an individual who is or was a director of the Corporation and an individual who, while a director of a Corporation is or was serving at the Corporation's request as a director, officer, partner, trustee, employee or agent of any other foreign or domestic corporation or of any partnership, joint venture, trust, other enterprise or employee benefit plan. A director shall be considered to be serving an employee benefit plan at the Corporation's request if his duties to the Corporation also impose duties on or otherwise involve services by him to the plan or to participants in or beneficiaries of the plan. To the extent allowed by Nevada law, the word "director" shall also include the heirs and personal representatives of all directors. This Corporation shall be empowered to indemnify its officers and directors to the fullest extent provided by law. EX-3.(II) 4 sb2feb07ex32.txt EXHIBIT 3.2 BYLAWS OF TONGJI HEALTHCARE GROUP, INC. ARTICLE I OFFICES Section l. Offices: - ------------------- The principal office of the Corporation shall be determined by the Board of Directors, and the Corporation shall have other offices at such places as the Board of Directors may from time to time determine. ARTICLE II STOCKHOLDER'S MEETINGS Section l. Place: - ----------------- The place of stockholders' meetings shall be the principal office of the Corporation unless another location shall be determined and designated from time to time by the Board of Directors. Section 2. Annual Meeting: - -------------------------- The annual meeting of the stockholders of the Corporation for the election of directors to succeed those whose terms expire, and for the transaction of such other business as may properly come before the meeting, shall be held each year on a date to be determined by the Board of Directors. Section 3. Special Meetings: - ---------------------------- Special meetings of the stockholders for any purpose or purposes may be called by the President, the Board of Directors, or the holders of ten percent (l0%) or more of all the shares entitled to vote at such meeting, by the giving of notice in writing as hereinafter described. Section 4. Voting: - ------------------ At all meetings of stockholders, voting may be viva voce; but any qualified voter may demand a stock vote, whereupon such vote shall be taken by ballot and the Secretary shall record the name of the stockholder voting, the number of shares voted, and, if such vote shall be by proxy, the name of the proxy holder. Voting may be in person or by proxy appointed in writing, manually signed by the stockholder or his duly authorized attorney-in-fact. No proxy shall be valid after eleven months from the date of its execution, unless otherwise provided therein. One third of the outstanding shares of the Corporation entitled to vote, represented in person or by proxy, shall constitute a quorum at a meeting of stockholders. Each stockholder shall have such rights to vote as the Articles of Incorporation provide for each share of stock registered in his name on the books of the Corporation, except where the transfer books of the Corporation shall have been closed or a date shall have been fixed as a record date, not to exceed, in any case, fifty (50) days preceding the meeting, for the determination of stockholders entitled to vote. The Secretary of the Corporation shall make, at least ten (10) days before each meeting of stockholders, a complete list of the stockholders entitled to vote at such meeting or any adjournment thereof, arranged in alphabetical order, with the address of and the number of shares held by each, which list, for a period of ten (10) days prior to such meeting, shall be kept on file at the principal office of the Corporation and shall be subject to inspection by any stockholder at any time during usual business hours. Such list shall also be produced and kept open at the time and place of the meeting and shall be subject to the inspection of any stockholder during the whole time of the meeting. Section 5. Order of Business: - ----------------------------- The order of business at any meeting of stockholders shall be as follows: l. Calling the meeting to order. 2. Calling of roll. 3. Proof of notice of meeting. 4. Report of the Secretary of the stock represented at the meeting and the existence or lack of a quorum. 5. Reading of minutes of last previous meeting and disposal of any unapproved minutes. 6. Reports of officers. 7. Reports of committees. 8. Election of directors, if appropriate. 9. Unfinished business. 10 New business. 11. Adjournment. 12. To the extent that these Bylaws do not apply, Roberts' Rules of Order shall prevail. 2 Section 6. Notices: - -------------------- Written or printed notice stating the place, day, and hour of the meeting and, in case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than ten (10) nor more than fifty (50) days before the date of the meeting, either personally or by mail, by or at the direction of the President, the Secretary, or the officer or persons calling the meeting, to each stockholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail addressed to the shareholder at his address as it appears on the stock transfer books of the Corporation, with postage thereon prepaid. Section 7. Quorum: - ------------------- A quorum at any annual or special meeting shall consist of the representation in person or by proxy of one-third in number of shares of the outstanding capital stock of the Corporation entitled to vote at such meeting. In the event a quorum not be present, the meeting may be adjourned by those present for a period not to exceed sixty (60) days at any one adjournment; and no further notice of the meeting or its adjournment shall be required. The stockholders entitled to vote, present either in person or by proxy at such adjourned meeting, shall, if equal to a majority of the shares entitled to vote at the meeting, constitute a quorum, and the votes of a majority of those present in numbers of shares entitled to vote shall be deemed the act of the shareholders at such adjourned meeting. ARTICLE III BOARD OF DIRECTORS Section l. Organization and Powers: - ----------------------------------- The Board of Directors shall constitute the policy-making or legislative authority of the Corporation. Management of the affairs, property, and business of the Corporation shall be vested in the Board of Directors, which shall consist of not less than one nor more than ten members, who shall be elected at the annual meeting of stockholders by a plurality vote for a term of one (l) year, and shall hold office until their successors are elected and qualify. The number of directors shall be established from time-to-time by a resolution of the directors. Directors need not be stockholders. Directors shall have all powers with respect to the management, control, and determination of policies of the Corporation that are not limited by these Bylaws, the Articles of Incorporation, or by statute, and the enumeration of any power shall not be considered a limitation thereof. Section 2. Vacancies: - --------------------- Any vacancy in the Board of Directors, however caused or created, shall be filled by the affirmative vote of a majority of the remaining directors, though less than a quorum of the Board, or at a special meeting of the stockholders called for that purpose. The directors elected to fill vacancies shall hold office for the unexpired term and until their successors are elected and qualify. 3 Section 3. Regular Meetings: - ---------------------------- A regular meeting of the Board of Directors shall be held, without other notice than this Bylaw, immediately after and at the same place as the annual meeting of stockholders or any special meeting of stockholders at which a director or directors shall have been elected. The Board of Directors may provide by resolution the time and place, either within or without the State of Colorado, for the holding of additional regular meetings without other notice than such resolution. Section 4. Special Meetings: - ---------------------------- Special meetings of the Board of Directors may be held at the principal office of the Corporation, or such other place as may be fixed by resolution of the Board of Directors for such purpose, at any time on call of the President or of any member of the Board, or may be held at any time and place without notice, by unanimous written consent of all the members, or with the presence and participation of all members at such meeting. A resolution in writing signed by all the directors shall be as valid and effectual as if it had been passed at a meeting of the directors duly called, constituted, and held. Section 5. Notices: - ------------------- Notices of both regular and special meetings, save when held by unanimous consent or participation, shall be mailed by the Secretary to each member of the Board not less than three days before any such meeting and notices of special meetings may state the purposes thereof. No failure or irregularity of notice of any regular meeting shall invalidate such meeting or any proceeding thereat. Section 6. Quorum and Manner of Acting: - --------------------------------------- A quorum for any meeting of the Board of Directors shall be a majority of the Board of Directors as then constituted. Any act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors. Any action of such majority, although not at a regularly called meeting, and the record thereof, if assented to in writing by all of the other members of the Board, shall always be as valid and effective in all respects as if otherwise duly taken by the Board of Directors. Section 7. Executive Committee: - ------------------------------- The Board of Directors may by resolution of a majority of the Board designate two (2) or more directors to constitute an executive committee, which committee, to the extent provided in such resolution, shall have and may exercise all of the authority of the Board of Directors in the management of the Corporation; but the designation of such committee and the delegation of authority thereto shall not operate to relieve the Board of Directors, or any member thereof, of any responsibility imposed on it or him by law. 4 Section 8. Order of Business: - ----------------------------- The order of business at any regular or special meeting of the Board of Directors, unless otherwise prescribed for any meeting by the Board, shall be as follows: l. Reading and disposal of any unapproved minutes. 2. Reports of officers and committees. 3. Unfinished business. 4. New business. 5. Adjournment. 6. To the extent that these Bylaws do not apply, Roberts' Rules of Order shall prevail. ARTICLE IV OFFICERS Section l. Titles: - ------------------ The officers of the Corporation shall consist of a President, one or more Vice Presidents, a Secretary, and a Treasurer, who shall be elected by the directors at their first meeting following the annual meeting of stockholders. Such officers shall hold office until removed by the Board of Directors or until their successors are elected and qualify. The Board of Directors may appoint from time to time such other officers as it deems desirable who shall serve during such terms as may be fixed by the Board at a duly held meeting. The Board, by resolution, shall specify the titles, duties and responsibilities of such officers. Section 2. President: - --------------------- The President shall preside at all meetings of stockholders and, in the absence of a, or the, Chairman of the Board of Directors, at all meetings of the directors. He shall be generally vested with the power of the chief executive officer of the Corporation and shall countersign all certificates, contracts, and other instruments of the Corporation as authorized by the Board of Directors or required by law. He shall make reports to the Board of Directors and stockholders and shall perform such other duties and services as may be required of him from time to time by the Board of Directors. Section 3. Vice President: - -------------------------- The Vice President shall perform all the duties of the President if the President is absent or for any other reason is unable to perform his duties and shall have such other duties as the Board of Directors shall authorize or direct. 5 Section 4. Secretary: - --------------------- The Secretary shall issue notices of all meetings of stockholders and directors, shall keep minutes of all such meetings, and shall record all proceedings. He shall have custody and control of the corporate records and books, excluding the books of account, together with the corporate seal. He shall make such reports and perform such other duties as may be consistent with his office or as may be required of him from time to time by the Board of Directors. Section 5. Treasurer: - --------------------- The Treasurer shall have custody of all moneys and securities of the Corporation and shall have supervision over the regular books of account. He shall deposit all moneys, securities, and other valuable effects of the Corporation in such banks and depositories as the Board of Directors may designate and shall disburse the funds of the Corporation in payment of just debts and demands against the Corporation, or as they may be ordered by the Board of Directors, shall render such account of his transactions as may be required of him by the President or the Board of Directors from time to time and shall otherwise perform such duties as may be required of him by the Board of Directors. The Board of Directors may require the Treasurer to give a bond indemnifying the Corporation against larceny, theft, embezzlement, forgery, misappropriation, or any other act of fraud or dishonesty resulting from his duties as Treasurer of the Corporation, which bond shall be in such amount as appropriate resolution or resolutions of the Board of Directors may require. Section 6. Vacancies or Absences: - --------------------------------- If a vacancy in any office arises in any manner, the directors then in office may choose, by a majority vote, a successor to hold office for the unexpired term of the officer. If any officer shall be absent or unable for any reason to perform his duties, the Board of Directors, to the extent not otherwise inconsistent with these Bylaws, may direct that the duties of such officer during such absence or inability shall be performed by such other officer or subordinate officer as seems advisable to the Board. ARTICLE V STOCK Section 1. Regulations: - ----------------------- The Board of Directors shall have power and authority to take all such rules and regulations as they deem expedient concerning the issue, transfer, and registration of certificates for shares of the capital stock of the Corporation. The Board of Directors may appoint a Transfer Agent and/or a Registrar and may require all stock certificates to bear the signature of such Transfer Agent and/or Registrar. 6 Section 2. Restrictions on Stock: - --------------------------------- The Board of Directors may restrict any stock issued by giving the Corporation or any stockholder "first right of refusal to purchase" the stock, by making the stock redeemable or by restricting the transfer of the stock, under such terms and in such manner as the directors may deem necessary and as are not inconsistent with the Articles of Incorporation or by statute. Any stock so restricted must carry a stamped legend setting out the restriction or conspicuously noting the restriction and stating where it may be found in the records of the Corporation. ARTICLE VI DIVIDENDS AND FINANCES Section l. Dividends: - --------------------- Dividends may be declared by the directors and paid out of any funds legally available therefore, as may be deemed advisable from time to time by the Board of Directors of the Corporation. Before declaring any dividends, the Board of Directors may set aside out of net profits or earned or other surplus such sums as the Board may think proper as a reserve fund to meet contingencies or for other purposes deemed proper and to the best interests of the Corporation. Section 2. Monies: - ------------------ The monies, securities, and other valuable effects of the Corporation shall be deposited in the name of the Corporation in such banks or trust companies as the Board of Directors shall designate and shall be drawn out or removed only as may be authorized by the Board of Directors from time to time. Section 3. Fiscal Year: - ----------------------- The Board of Directors by resolution shall determine the fiscal year of the Corporation. ARTICLE VII AMENDMENTS These Bylaws may be altered, amended, or repealed by the Board of Directors by resolution of a majority of the Board. ARTICLE VIII INDEMNIFICATION The Corporation shall indemnify any and all of its directors or officers, or former directors or officers, or any person who may have served at its request as a director or officer of another corporation in which this Corporation owns shares of capital stock or of which it is a creditor and the personal representatives of all such persons, against expenses actually and necessarily incurred in connection with the defense of any action, suit, or 7 proceeding in which they, or any of them, were made parties, or a party, by reason of being or having been directors or officers or a director or officer of the Corporation, or of such other corporation, except in relation to matters as to which any such director or officer or person shall have been adjudged in such action, suit, or proceeding to be liable for negligence or misconduct in the performance of any duty owed to the Corporation. Such indemnification shall not be deemed exclusive of any other rights to which those indemnified may be entitled, independently of this Article, by law, under any Bylaw agreement, vote of stockholders, or otherwise. ARTICLE IX CONFLICTS OF INTEREST No contract or other transaction of the Corporation with any other persons, firms or corporations, or in which the Corporation is interested, shall be affected or invalidated by the fact that any one or more of the directors or officers of the Corporation is interested in or is a director or officer of such other firm or corporation; or by the fact that any director or officer of the Corporation, individually or jointly with others, may be a party to or may be interested in any such contract or transaction. 8 EX-5 5 sb2feb07ex5.txt EXHIBIT 5 HART & TRINEN 1624 Washington St Denver, CO 80203 (303) 839-0061 (303) 839-5414 - Fax harttrinen@aol.com - email February 7, 2007 Tongji Healthcare Group, Inc. No. 5 Beiji Road Nanning, Guangxi 530011 PRC This letter will constitute an opinion upon the legality of the sale by certain selling shareholders of Tongji Healthcare Group, Inc., a Nevada corporation (the "Company"), of up to 2,000,000 shares of common stock, all as referred to in the Registration Statement on Form SB-2 filed by the Company with the Securities and Exchange Commission. We have examined the Articles of Incorporation and the minutes of the Board of Directors of the Company and the applicable laws of the Nevada. In our opinion, the Company has duly authorized the issuance of the shares of stock mentioned above and such shares of common stock are legally issued, fully paid and non-assessable. Very Truly Yours, HART & TRINEN, L.L.P. William T. Hart EX-10 6 sb2feb07ex101.txt EXH. 10.1 - EMPLOYMENT CONTRACTS EXHIBIT 10.1 Employment Contract No. A (employer): Nanning Tongji Hospital Co. Ltd Address: No.5 Beiji Road Legal representative: Yun-hui Yu Character: Corporation limited B (employee): Jin-song Zhang Gender: Male Birthday: 1967.2.2 Address: Gaoxin Park 12-2-203, Keyuan Street of Nanning City ID number: 450106196702090536 In order to establish the work relationship and make clear the rights and obligations, both A and B agree willingly to sign this employment contract and stick to it together. Article 1: Term of Employment 1. The term of employment is 2 years. 2. The term of employment shall be commencing from February 3td, 2006 to February 3td, 2008. 3. The trial period for B is ______ months, from _______ to _________. Article 2: B's responsibilities 1. According to the demand of the work, B is employed to work in the and takes the position of chief administration officer. A should offer necessary working environment to B. B should follow the instruction by A and be responsible for A. 2. A has the rights to adjust the position of B according to the actual situation of A and B. 3. B should complete the work with stipulated quantity and quality according to the demand of A in that position. Article 3: Disciplines 1. A establishes and perfects the internal regulations and disciplines and standardize the behavior of B according to laws. 2. B should strictly comply with the regulations of A and follow the instruction of A. Article 4: Remuneration 1. During the employment, A should pay a salary to B according to the regulation on the lowest salary of the city together with the salary management system of A. During trial period the salary of B is Yuan per month. During apprenticeship the salary of B is Yuan per month. After the apprenticeship expires, the salary of B is 5000 Yuan per month. After examination when the trial period expires, the salary on achievement will be increased according to A. 2. Basic salary is the basic income for B and will be paid every month. The salary on achievement will be paid according to the achievement of B after examination and acceptance. 3. A will pay the salary mentioned above to B on 15th in next month. Under the condition that B has completed the tasks required by A, A must pay fully the basic salary to B on time with the statutory money wages. The salary for achievement can be paid according to different situation. Article 5: Variation Both A and B can make variations to the contract under one of the conditions as follows: 1. Both A and B agree through negotiation. 2. B is not qualified to the task in the contract. 3. The contract can not be implemented because of force majeure or other important variations of the situations that the contract bases on. The important variations mentioned here refer to adjustment of work, restructuring, combination withdrawal and so forth. Article 6: Expiration The contract will expire under any conditions as follows: 1. The term of the contract expires. 2. B suffers from infectious disease. 3. Other conditions agreed by both sides. Article 7: Termination 1. Both A and B can terminate the contract after negotiation. 2. A can terminate the contract at any time if B has any behaviors as follows: 1) Seriously violate the disciplines or regulations established by A. 2) Continuously absent from work for more than 7 days, accumulative total of more than 15 days in a year. 3) Bring great loss to the interests of A because of neglecting duties and practicing embezzlement and fraud for personal gain. 4) be punished through labor by judicial institutions and indicted for criminal liability. 5) Play deceit in signing the contract. Article 8: After the contract expires or terminates, A should help B to go through related procedures in time and should not delay or deny without any reasons. Article 9: Renewal The contract can be renewed after the term of the contract expires. Both sides should sign another employment contract if A continues to employ B. Article 10: Other items agreed by both sides 1. B should obey when A needs to change the position of B for meeting the demand of operation. The variation of position should be in accordance with the notice of work transferring given by human resources department of A. At the same time the salary will also change with the variation of position and should be in accordance with the notice given by A. 2. B should work in accordance with the regulations of medical treatment, health and safety. 3. B should take good care of the properties of A and offer necessary maintenance to the equipment or tools used by B. 4. B should study further to improve the professional ability dealing with different kinds of work. If A sends B to go for probation or further study, both sides should sign another contract. 5. B should offer services politely, warmly receive patients or other people and fulfill the duty for patients. 6. B should stick to the system of requiring leave and instructions and reporting back. If the individual has some other things to do, it is a must to require leave in advance and report back afterwards. If some difficulties are met in the work, it is a must to require instructions towards leaders and directors in order to make those difficulties properly solved. If A sends B to go for probation or further study, both sides should sign another contract. 7. During the term of contract, it is a must to be approved by A if B asks for resignation. The resignation should be submitted to A more than 30 days in advance. Special positions should be 60 days in advance. If B asks for resignation in advance before the term of the contract, B can leave after consultation and approval of A but should compensate the economic loss of A. The compensation should be paid according to the total salary of the month before resignation. 8. If B leaves the job without the permission of A, A has the rights to ask B to return and pay the compensation for the economic loss brought to A. The compensation (Including employment training, education, vacancy etc.) is the total salary of three months before B leaves the job. If A sends B to go for probation or further study, B should compensate A for the cost of training according to training agreement signed by both sides. 9. After the expiration of contract, B must inform A of not continuing the contract 1 month in advance. Otherwise A has the rights to take off B's salary on achievement. 10. When contract expires, B must keep in contact with A within three months after leaving. Otherwise A has the rights to take off B's salary on achievement. If the contact is kept and the contract is fully complied with after 3 months, A should pay all the remaining salary on achievement to B. Article 11: Those items not mentioned in the contract should be agreed by both sides through consultation. During the term of contract, if any items settled in the contract violate the new laws, regulations and constitutions enacted by the state, both sides should follow the new regulations. Article 12: If A and B achieve agreements of supplement or variation on items concerned, both sides should sign a written agreement of supplement or variation. Article 13 The contract is in duplicate. Each of the two parties has one. Both of the copies have the same legal effect. The contract will take effect since it is signed and sealed by the two sides. A (seal): Nanning Tongji Hospital Co. Ltd B (seal): Jin-song Zhang Legal representative: ID number: 450106196702090536 Or Attorney (seal): Date: February 3td, 2006 Employment Contract No. A (employer): Nanning Tongji Hospital Co. Ltd Address: No.5 Beiji Road Legal representative: Yun-hui Yu Character: Corporation limited B (employee): Wei-dong Huang Gender: Male Birthday: 1969.11.15 Address: Dormitory of Tongji Hospital, Beiji Road Num.5 Nanning city ID number: 13070519691115063X In order to establish the work relationship and make clear the rights and obligations, both A and B agree willingly to sign this employment contract and stick to it together. Article 1: Term of Employment 1. The term of employment is 2 years. 2. The term of employment shall be commencing from May 8th, 2006 to May 7th, 2008. 3. The trial period for B is months, from to . Article 2: B's responsibilities 1. According to the demand of the work, B is employed to work in the financial department and takes the position of chief financial officer. A should offer necessary working environment to B. B should follow the instruction by A and be responsible for A. 2. A has the rights to adjust the position of B according to the actual situation of A and B. 3. B should complete the work with stipulated quantity and quality according to the demand of A in that position. Article 3: Disciplines 1. A establishes and perfects the internal regulations and disciplines and standardize the behavior of B according to laws. 2. B should strictly comply with the regulations of A and follow the instruction of A. Article 4: Remuneration 1. During the employment, A should pay a salary to B according to the regulation on the lowest salary of the city together with the salary management system of A. During trial period the salary of B is Yuan per month. During apprenticeship the salary of B is Yuan per month. After the apprenticeship expires, the salary of B is 5000 Yuan per month. After examination when the trial period expires, the salary on achievement will be increased according to A. 2. Basic salary is the basic income for B and will be paid every month. The salary on achievement will be paid according to the achievement of B after examination and acceptance. 3. A will pay the salary mentioned above to B on 15th in next month. Under the condition that B has completed the tasks required by A, A must pay fully the basic salary to B on time with the statutory money wages. The salary for achievement can be paid according to different situation. Article 5: Variation Both A and B can make variations to the contract under one of the conditions as follows: 1. Both A and B agree through negotiation. 2. B is not qualified to the task in the contract. 3. The contract can not be implemented because of force majeure or other important variations of the situations that the contract bases on. The important variations mentioned here refer to adjustment of work, restructuring, combination withdrawal and so forth. Article 6: Expiration The contract will expire under any conditions as follows: 1. The term of the contract expires. 2. B suffers from infectious disease. 3. Other conditions agreed by both sides. Article 7: Termination 1. Both A and B can terminate the contract after negotiation. 2. A can terminate the contract at any time if B has any behaviors as follows: 1) Seriously violate the disciplines or regulations established by A. 2) Continuously absent from work for more than 7 days, accumulative total of more than 15 days in a year. 3) Bring great loss to the interests of A because of neglecting duties and practicing embezzlement and fraud for personal gain. 4) be punished through labor by judicial institutions and indicted for criminal liability. 5) Play deceit in signing the contract. Article 8: After the contract expires or terminates, A should help B to go through related procedures in time and should not delay or deny without any reasons. Article 9: Renewal The contract can be renewed after the term of the contract expires. Both sides should sign another employment contract if A continues to employ B. Article 10: Other items agreed by both sides 1. B should obey when A needs to change the position of B for meeting the demand of operation. The variation of position should be in accordance with the notice of work transferring given by human resources department of A. At the same time the salary will also change with the variation of position and should be in accordance with the notice given by A. 2. B should work in accordance with the regulations of medical treatment, health and safety. 3. B should take good care of the properties of A and offer necessary maintenance to the equipment or tools used by B. 4. B should study further to improve the professional ability dealing with different kinds of work. If A sends B to go for probation or further study, both sides should sign another contract. 5. B should offer services politely, warmly receive patients or other people and fulfill the duty for patients. 6. B should stick to the system of requiring leave and instructions and reporting back. If the individual has some other things to do, it is a must to require leave in advance and report back afterwards. If some difficulties are met in the work, it is a must to require instructions towards leaders and directors in order to make those difficulties properly solved. If A sends B to go for probation or further study, both sides should sign another contract. 7. During the term of contract, it is a must to be approved by A if B asks for resignation. The resignation should be submitted to A more than 30 days in advance. Special positions should be 60 days in advance. If B asks for resignation in advance before the term of the contract, B can leave after consultation and approval of A but should compensate the economic loss of A. The compensation should be paid according to the total salary of the month before resignation. 8. If B leaves the job without the permission of A, A has the rights to ask B to return and pay the compensation for the economic loss brought to A. The compensation (Including employment training, education, vacancy etc.) is the total salary of three months before B leaves the job. If A sends B to go for probation or further study, B should compensate A for the cost of training according to training agreement signed by both sides. 9. After the expiration of contract, B must inform A of not continuing the contract 1 month in advance. Otherwise A has the rights to take off B's salary on achievement. 10. When contract expires, B must keep in contact with A within three months after leaving. Otherwise A has the rights to take off B's salary on achievement. If the contact is kept and the contract is fully complied with after 3 months, A should pay all the remaining salary on achievement to B. Article 11: Those items not mentioned in the contract should be agreed by both sides through consultation. During the term of contract, if any items settled in the contract violate the new laws, regulations and constitutions enacted by the state, both sides should follow the new regulations. Article 12: If A and B achieve agreements of supplement or variation on items concerned, both sides should sign a written agreement of supplement or variation. Article 13: The contract is in duplicate. Each of the two parties has one. Both of the copies have the same legal effect. The contract will take effect since it is signed and sealed by the two sides. A (seal): Nanning Tongji Hospital Co. Ltd B (seal): Wei-dong Huang Legal representative: ID number: 13070519691115063X Or Attorney (seal): Date: February 3td, 2006 Employment Contract No. A (employer): Nanning Tongji Hospital Co. Ltd Address: No.5 Beiji Road Legal representative: Yu Yunhui Character: Corporation limited B (employee): Jing-xi Lv Gender: Male Birthday: 1945.2.15 Address: Qingxiu district, Nanning ID number: 450102450215101 In order to establish the work relationship and make clear the rights and obligations, both A and B agree willingly to sign this employment contract and stick to it together. Article 1: Term of Employment 1. The term of employment is 2 years. 2. The term of employment shall be commencing from January 1st, 2006 to December 30th, 2007. 3. The trial period for B is months, from to . Article 2: B's responsibilities 1. According to the demand of the work, B is employed to work in the office of president and takes the position of marketing vice president. A should offer necessary working condition to B. B should follow the instruction by A and be responsible for A. 2. A has the rights to adjust the position of B according to the actual situation of A and B. 3. B should complete the work with stipulated quantity and quality according to the demand of A in that position. Article 3: Disciplines 1. A establishes and perfects the internal regulations and disciplines and standardize the behavior of B according to laws. 2. B should strictly comply with the regulations of A and follow the instruction of A. Article 4: Remuneration 1. During the employment, A should pay a salary to B according to the regulation on the lowest salary of the city together with the salary management system of A. 1) During trial period the salary of B is Yuan per month. During apprenticeship the salary of B is Yuan per month. After the apprenticeship expires, the salary of B is 3000 Yuan per month. After examination when the trial period expires, the salary on achievement will be increased according to A. 2) During trial period the salary of B is Yuan per month. When the trial period expires, the salary of B is Yuan per month. The salary on achievement will be increased according to A. 2. Basic salary is the basic income for B and will be paid every month. The salary on achievement will be paid according to the achievement of B after examination and acceptance. 3. A will pay the salary mentioned above to B on 15th in next month. Under the condition that B has completed the tasks according to A, A must pay fully the basic salary to B on time with the statutory money wages. The salary on achievement can be paid according to different situation. Article 5: Variation Both A and B can make variations to the contract under one of the conditions as follows: 1. Both A and B agree through negotiation. 2. B is not qualified to the task in the contract. 3. The contract can not be implemented because of force majeure or other important variations of the situations that the contract bases on. The important variations mentioned here refer to adjustment of work, restructuring, combination withdrawal and so forth. Article 6: Expiration The contract will expire under any conditions as follows: 1. The term of the contract expires. 2. B suffers from infectious disease. 3. Other conditions agreed by both sides. Article 7: Termination 1. Both A and B can terminate the contract after consultation. 2. A can terminate the contract at any time if B has any behaviors as follows: 1) Seriously violate the disciplines or regulations established by A. 2) Continuously absent from work for more than 7 days, accumulative total of more than 15 days in a year. 3) Bring great loss to the interests of A because of neglecting duties and practicing embezzlement and fraud for personal gain. 4) Nurtured through labor and prosecuted for criminal liability. 5) Play deceit in signing the contract. Article 8: After the contract expires or terminates, A should help B to go through related procedures in time and should not delay or deny without any reasons. Article 9: Renewal The contract can be renewed after the term of the contract expires. Both sides should sign another employment contract if A continues to employ B. Article 10: Other items agreed by both sides 1. B should obey when A needs to change the position of B for meeting the demand of operation. The variation of position should be in accordance with the notice of work transferring given by human resources department of A. At the same time the salary will also change with the variation of position and should be in accordance with the notice given by A. 2. B should work in accordance with the regulations of medical treatment, health and safety. 3. B should take good care of the properties of A and offer necessary maintenance to the equipment or tools used by B. 4. B should study further to improve the professional ability dealing with different kinds of work. If A sends B to go for probation or further study, both sides should sign another contract. 5. B should offer services politely, warmly receive patients or other people and fulfill the duty for patients. 6. B should stick to the system of requiring leave and instructions and reporting back. If the individual has some other things to do, it is a must to require leave in advance and report back afterwards. If some difficulties are met in the work, it is a must to require instructions towards leaders and directors in order to make those difficulties properly solved. If A sends B to go for probation or further study, both sides should sign another contract. 7. During the term of contract, it is a must to be approved by A if B asks for resignation. The resignation should be submitted to A more than 30 days in advance. Special positions should be 60 days in advance. If B asks for resignation in advance before the term of the contract, B can leave after consultation and approval of A but should compensate the economic loss of A. The compensation should be paid according to the total salary of the month before resignation. 8. If B leaves the job without the permission of A, A has the rights to ask B to return and pay the compensation for the economic loss brought to A. The compensation (Including employment training, education, vacancy etc.) is the total salary of three months before B leaves the job. If A sends B to go for probation or further study, B should compensate A for the cost of training according to training agreement signed by both sides. 9. After the term of the contract expires, B must inform A of not continuing the contract 1 month in advance. Otherwise A has the rights to take off B's salary on achievement. 10. When the term of contract expires, B must keep contact with A in three months after resignation. Otherwise A has the rights to take off B's salary on achievement. If the contact is kept and the contract is fully complied with after 3 months, A should pay all the remaining salary on achievement to B. Article 11: Those items not mentioned in the contract should be agreed by both sides through consultation. During the term of contract, if any items settled in the contract violate the new laws, regulations and constitutions enacted by the state, both sides should follow the new regulations. Article 12: If A and B achieve agreements of supplement or variation on items concerned, both sides should sign a written agreement of supplement or variation. Article 13: The contract is in duplicate. Each of the two parties has one. Both of the copies have the same legal effect. The contract will take effect since it is signed and sealed by the two sides. A (seal): Nanning Tongji Hospital Co. Ltd B (seal): Lv Jingxi Legal representative: ID number: 450102450215101 Or Attorney (seal): Date: January 1st, 2006 Employment Contract No. A (employer): Nanning Tongji Hospital Co. Ltd Address: No.5 Beiji Road Legal representative: Yun-hui Yu Character: Corporation limited B (employee): Xiang-wei Zeng Gender: Male Birthday: 1942.9.25 Address: Jiangnan district, Nanning ID number: 450104420925005 In order to establish the work relationship and make clear the rights and obligations, both A and B agree willingly to sign this employment contract and stick to it together. Article 1: Term of Employment 1. The term of employment is 2 years. 2. The term of employment shall be commencing from January 1st, 2006 to December 30th, 2007. 3. The trial period for B is months, from to . Article 2: B's Duties 1. According to the demand of the work, B is employed to work in the department of orthopaedics and takes the position of vice president. A should offer necessary working environment to B. B should follow the instruction by A and be responsible for A. 2. A has the rights to adjust the position of B according to the actual situation of A and B. 3. B should complete the work with stipulated quantity and quality according to the demand of A in that position. Article 3: Disciplines 1. A establishes and perfects the internal regulations and disciplines and standardize the behavior of B according to laws. 2. B should strictly comply with the regulations of A and follow the instruction of A. Article 4: Remuneration 1. During the employment, A should pay a salary to B according to the regulation on the lowest salary of the city together with the salary management system of A. 1) During trial period the salary of B is Yuan per month. During apprenticeship the salary of B is Yuan per month. After the apprenticeship expires, the salary of B is 4000 Yuan per month. After examination when the trial period expires, the salary on achievement will be increased according to A. 2) During trial period the salary of B is Yuan per month. When the trial period expires, the salary of B is Yuan per month. The salary on achievement will be increased according to A. 2. Basic salary is the basic income for B and will be paid every month. The salary on achievement will be paid according to the achievement of B after examination and acceptance. 3. A will pay the salary mentioned above to B on 15th in next month. Under the condition that B has completed the tasks according to A, A must pay fully the basic salary to B on time with the statutory money wages. The salary on achievement can be paid according to different situation. Article 5: Variation Both A and B can make variations to the contract under one of the conditions as follows: 1. Both A and B agree through negotiation. 2. B is not qualified to the task in the contract. 3. The contract can not be implemented because of force majeure or other important variations of the situations that the contract bases on. The important variations mentioned here refer to adjustment of work, restructuring, combination withdrawal and so forth. Article 6: Expiration The contract will expire under any conditions as follows: 1. The term of the contract expires. 2. B suffers from infectious disease. 3. Other conditions agreed by both sides. Article 7: Termination 1. Both A and B can terminate the contract after consultation. 2. A can terminate the contract at any time if B has any behaviors as follows: 1) Seriously violate the disciplines or regulations established by A. 2) Continuously absent from work for more than 7 days, accumulative total of more than 15 days in a year. 3) Bring great loss to the interests of A because of neglecting duties and practicing embezzlement and fraud for personal gain. 4) Nurtured through labor and prosecuted for criminal liability. 5) Play deceit in signing the contract. Article 8: After the contract expires or terminates, A should help B to go through related procedures in time and should not delay or deny without any reasons. Article 9: Renewal The contract can be renewed after the term of the contract expires. Both sides should sign another employment contract if A continues to employ B. Article 10: Other items agreed by both sides 1. B should obey when A needs to change the position of B for meeting the demand of operation. The variation of position should be in accordance with the notice of work transferring given by human resources department of A. At the same time the salary will also change with the variation of position and should be in accordance with the notice given by A. 2. B should work in accordance with the regulations of medical treatment, health and safety. 3. B should take good care of the properties of A and offer necessary maintenance to the equipment or tools used by B. 4. B should study further to improve the professional ability dealing with different kinds of work. If A sends B to go for probation or further study, both sides should sign another contract. 5. B should offer services politely, warmly receive patients or other people and fulfill the duty for patients. 6. B should stick to the system of requiring leave and instructions and reporting back. If the individual has some other things to do, it is a must to require leave in advance and report back afterwards. If some difficulties are met in the work, it is a must to require instructions towards leaders and directors in order to make those difficulties properly solved. If A sends B to go for probation or further study, both sides should sign another contract. 7. During the term of contract, it is a must to be approved by A if B asks for resignation. The resignation should be submitted to A more than 30 days in advance. Special positions should be 60 days in advance. If B asks for resignation in advance before the term of the contract, B can leave after consultation and approval of A but should compensate the economic loss of A. The compensation should be paid according to the total salary of the month before resignation. 8. If B leaves the job without the permission of A, A has the rights to ask B to return and pay the compensation for the economic loss brought to A. The compensation (Including employment training, education, vacancy etc.) is the total salary of three months before B leaves the job. If A sends B to go for probation or further study, B should compensate A for the cost of training according to training agreement signed by both sides. 9. After the term of the contract expires, B must inform A of not continuing the contract 1 month in advance. Otherwise A has the rights to take off B's salary on achievement. 10. When the term of contract expires, B must keep contact with A in three months after resignation. Otherwise A has the rights to take off B's salary on achievement. If the contact is kept and the contract is fully complied with after 3 months, A should pay all the remaining salary on achievement to B. Article 11: Those items not mentioned in the contract should be agreed by both sides through consultation. During the term of contract, if any items settled in the contract violate the new laws, regulations and constitutions enacted by the state, both sides should follow the new regulations. Article 12: If A and B achieve agreements of supplement or variation on items concerned, both sides should sign a written agreement of supplement or variation. Article 13: The contract is in duplicate. Each of the two parties has one. Both of the copies have the same legal effect. The contract will take effect since it is signed and sealed by the two sides. A (seal): Nanning Tongji Hospital Co. Ltd B (seal): Xiang-wei Zeng Legal representative: ID number: 450104420925005 Or Attorney (seal): Date: January 1st, 2006 Employment Contract No. A (employer): Nanning Tongji Hospital Co. Ltd Address: No.5 Beiji Road Legal representative: Yu Yunhui Character: Corporation limited B (employee): Lin Lin Gender: Male Birthday: 1945.11.24 Address: Mingxiu East Road, Xi Xiangtang district, Nanning ID number: 450104451124051 In order to establish the work relationship and make clear the rights and obligations, both A and B agree willingly to sign this employment contract and stick to it together. Article 1 Term of Employment 1. The term of employment is 2 years. 2. The term of employment shall be commencing from January 1st, 2006 to December 30th, 2007. 3. The trial period for B is months, from to . Article 2 B's responsibilities 1. According to the demand of the work, B is employed to work in the department of internal medicine and takes the position of vice president. A should offer necessary working environment to B. B should follow the instruction by A and be responsible for A. 2. A has the rights to adjust the position of B according to the actual situation of A and B. 3. B should complete the work with stipulated quantity and quality according to the demand of A in that position. Article 3 Disciplines 1. A establishes and perfects the internal regulations and disciplines and standardize the behavior of B according to laws. 2. B should strictly comply with the regulations of A and follow the instruction of A. Article 4 Remuneration 1. During the employment, A should pay a salary to B according to the regulation on the lowest salary of the city together with the salary management system of A. 1) During trial period the salary of B is Yuan per month. During apprenticeship the salary of B is Yuan per month. After the apprenticeship expires, the salary of B is 3000 Yuan per month. After examination when the trial period expires, the salary on achievement will be increased according to A. 2) During trial period the salary of B is Yuan per month. When the trial period expires, the salary of B is Yuan per month. The salary on achievement will be increased according to A. 2. Basic salary is the basic income for B and will be paid every month. The salary on achievement will be paid according to the achievement of B after examination and acceptance. 3. A will pay the salary mentioned above to B on 15th in next month. Under the condition that B has completed the tasks required by A, A must pay fully the basic salary to B on time with the statutory money wages. The salary for achievement can be paid according to different situation. Article 5 Variation Both A and B can make variations to the contract under one of the conditions as follows: 1. Both A and B agree through negotiation. 2. B is not qualified to the task in the contract. 3. The contract can not be implemented because of force majeure or other important variations of the situations that the contract bases on. The important variations mentioned here refer to adjustment of work, restructuring, combination withdrawal and so forth. Article 6 Expiration The contract will expire under any conditions as follows: 1. The term of the contract expires. 2. B suffers from infectious disease. 3. Other conditions agreed by both sides. Article 7 Termination 1. Both A and B can terminate the contract after negotiation. 2. A can terminate the contract at any time if B has any behaviors as follows: 1) Seriously violate the disciplines or regulations established by A. 2) Continuously absent from work for more than 7 days, accumulative total of more than 15 days in a year. 3) Bring great loss to the interests of A because of neglecting duties and practicing embezzlement and fraud for personal gain. 4) be punished through labor by judicial institutions and indicted for criminal liability. 5) Play deceit in signing the contract. Article 8 After the contract expires or terminates, A should help B to go through related procedures in time and should not delay or deny without any reasons. Article 9 Renewal The contract can be renewed after the term of the contract expires. Both sides should sign another employment contract if A continues to employ B. Article 10 Other items agreed by both sides 1. B should obey when A needs to change the position of B for meeting the demand of operation. The variation of position should be in accordance with the notice of work transferring given by human resources department of A. At the same time the salary will also change with the variation of position and should be in accordance with the notice given by A. 2. B should work in accordance with the regulations of medical treatment, health and safety. 3. B should take good care of the properties of A and offer necessary maintenance to the equipment or tools used by B. 4. B should study further to improve the professional ability dealing with different kinds of work. If A sends B to go for probation or further study, both sides should sign another contract. 5. B should offer services politely, warmly receive patients or other people and fulfill the duty for patients. 6. B should stick to the system of requiring leave and instructions and reporting back. If the individual has some other things to do, it is a must to require leave in advance and report back afterwards. If some difficulties are met in the work, it is a must to require instructions towards leaders and directors in order to make those difficulties properly solved. If A sends B to go for probation or further study, both sides should sign another contract. 7. During the term of contract, it is a must to be approved by A if B asks for resignation. The resignation should be submitted to A more than 30 days in advance. Special positions should be 60 days in advance. If B asks for resignation in advance before the term of the contract, B can leave after consultation and approval of A but should compensate the economic loss of A. The compensation should be paid according to the total salary of the month before resignation. 8. If B leaves the job without the permission of A, A has the rights to ask B to return and pay the compensation for the economic loss brought to A. The compensation (Including employment training, education, vacancy etc.) is the total salary of three months before B leaves the job. If A sends B to go for probation or further study, B should compensate A for the cost of training according to training agreement signed by both sides. 9. After the expiration of contract, B must inform A of not continuing the contract 1 month in advance. Otherwise A has the rights to take off B's salary on achievement. 10. When contract expires, B must keep in contact with A within three months after leaving. Otherwise A has the rights to take off B's salary on achievement. If the contact is kept and the contract is fully complied with after 3 months, A should pay all the remaining salary on achievement to B. Article 11 Those items not mentioned in the contract should be agreed by both sides through consultation. During the term of contract, if any items settled in the contract violate the new laws, regulations and constitutions enacted by the state, both sides should follow the new regulations. Article 12 If A and B achieve agreements of supplement or variation on items concerned, both sides should sign a written agreement of supplement or variation. Article 13 The contract is in duplicate. Each of the two parties has one. Both of the copies have the same legal effect. The contract will take effect since it is signed and sealed by the two sides. A (seal): Nanning Tongji Hospital Co. Ltd B (seal): Lin Lin Legal representative: ID number: 450104451124051 Or Attorney (seal): Date: January 1st, 2006 Employment Contract No. A (employer): Nanning Tongji Hospital Co. Ltd Address: No.5 Beiji Road Legal representative: Yu Yunhui Character: Corporation limited B (employee): Jia-lin Zhang Gender: Male Birthday: 1940.11.25 Address: Qingxiu district, Nanning ID number: 450103401125155 In order to establish the work relationship and make clear the rights and obligations, both A and B agree willingly to sign this employment contract and stick to it together. Article 1 Term of Employment 1. The term of employment is 2 years. 2. The term of employment shall be commencing from January 1st, 2006 to December 30th, 2007. 3. The trial period for B is months, from to . Article 2 B's Duties 1. According to the demand of the work, B is employed to work in the department of ophthalmology and takes the position of vice president. A should offer necessary working environment to B. B should follow the instruction by A and be responsible for A. 2. A has the rights to adjust the position of B according to the actual situation of A and B. 3. B should complete the work with stipulated quantity and quality according to the demand of A in that position. Article 3 Disciplines 1. A establishes and perfects the internal regulations and disciplines and standardize the behavior of B according to laws. 2. B should strictly comply with the regulations of A and follow the instruction of A. Article 4 Remuneration 1. During the employment, A should pay a salary to B according to the regulation on the lowest salary of the city together with the salary management system of A. 1) During trial period the salary of B is Yuan per month. During apprenticeship the salary of B is Yuan per month. After the apprenticeship expires, the salary of B is 4000 Yuan per month. After examination when the trial period expires, the salary on achievement will be increased according to A. 2) During trial period the salary of B is Yuan per month. When the trial period expires, the salary of B is Yuan per month. The salary on achievement will be increased according to A. 2. Basic salary is the basic income for B and will be paid every month. The salary on achievement will be paid according to the achievement of B after examination and acceptance. 3. A will pay the salary mentioned above to B on 15th in next month. Under the condition that B has completed the tasks according to A, A must pay fully the basic salary to B on time with the statutory money wages. The salary on achievement can be paid according to different situation. Article 5 Variation Both A and B can make variations to the contract under one of the conditions as follows: 1. Both A and B agree through negotiation. 2. B is not qualified to the task in the contract. 3. The contract can not be implemented because of force majeure or other important variations of the situations that the contract bases on. The important variations mentioned here refer to adjustment of work, restructuring, combination withdrawal and so forth. Article 6 Expiration The contract will expire under any conditions as follows: 1. The term of the contract expires. 2. B suffers from infectious disease. 3. Other conditions agreed by both sides. Article 7 Termination 1. Both A and B can terminate the contract after consultation. 2. A can terminate the contract at any time if B has any behaviors as follows: 1) Seriously violate the disciplines or regulations established by A. 2) Continuously absent from work for more than 7 days, accumulative total of more than 15 days in a year. 3) Bring great loss to the interests of A because of neglecting duties and practicing embezzlement and fraud for personal gain. 4) Nurtured through labor and prosecuted for criminal liability. 5) Play deceit in signing the contract. Article 8 After the contract expires or terminates, A should help B to go through related procedures in time and should not delay or deny without any reasons. Article 9 Renewal The contract can be renewed after the term of the contract expires. Both sides should sign another employment contract if A continues to employ B. Article 10 Other items agreed by both sides 1. B should obey when A needs to change the position of B for meeting the demand of operation. The variation of position should be in accordance with the notice of work transferring given by human resources department of A. At the same time the salary will also change with the variation of position and should be in accordance with the notice given by A. 2. B should work in accordance with the regulations of medical treatment, health and safety. 3. B should take good care of the properties of A and offer necessary maintenance to the equipment or tools used by B. 4. B should study further to improve the professional ability dealing with different kinds of work. If A sends B to go for probation or further study, both sides should sign another contract. 5. B should offer services politely, warmly receive patients or other people and fulfill the duty for patients. 6. B should stick to the system of requiring leave and instructions and reporting back. If the individual has some other things to do, it is a must to require leave in advance and report back afterwards. If some difficulties are met in the work, it is a must to require instructions towards leaders and directors in order to make those difficulties properly solved. If A sends B to go for probation or further study, both sides should sign another contract. 7. During the term of contract, it is a must to be approved by A if B asks for resignation. The resignation should be submitted to A more than 30 days in advance. Special positions should be 60 days in advance. If B asks for resignation in advance before the term of the contract, B can leave after consultation and approval of A but should compensate the economic loss of A. The compensation should be paid according to the total salary of the month before resignation. 8. If B leaves the job without the permission of A, A has the rights to ask B to return and pay the compensation for the economic loss brought to A. The compensation (Including employment training, education, vacancy etc.) is the total salary of three months before B leaves the job. If A sends B to go for probation or further study, B should compensate A for the cost of training according to training agreement signed by both sides. 9. After the term of the contract expires, B must inform A of not continuing the contract 1 month in advance. Otherwise A has the rights to take off B's salary on achievement. 10. When the term of contract expires, B must keep contact with A in three months after resignation. Otherwise A has the rights to take off B's salary on achievement. If the contact is kept and the contract is fully complied with after 3 months, A should pay all the remaining salary on achievement to B. Article 11 Those items not mentioned in the contract should be agreed by both sides through consultation. During the term of contract, if any items settled in the contract violate the new laws, regulations and constitutions enacted by the state, both sides should follow the new regulations. Article 12 If A and B achieve agreements of supplement or variation on items concerned, both sides should sign a written agreement of supplement or variation. Article 13 The contract is in duplicate. Each of the two parties has one. Both of the copies have the same legal effect. The contract will take effect since it is signed and sealed by the two sides. A (seal): Nanning Tongji Hospital Co. Ltd B (seal): Jialin Zhang Legal representative: ID number: 450103401125155 Or Attorney (seal): Date: January 1st, 2006 EX-10 7 sb2feb07ex102.txt EXH. 10.2 - TENANCY AGREEMENT EXHIBIT 10.2 TENANCY AGREEMENT WHEREAS Guangxi Tongji Medicine Co., Ltd. has the property right of depot in No. 5 Beiji Road (5479.62 m^2), Nanning Tonhgji Hospital Co., Ltd. became the tenant of Tongji Medicine co., Ltd. and both parties agree to the following terms and conditions: 1. Rental period is from October 1, 2003 to December 31, 2008. 2. Standard rental fee is 3RMB/month. 3. Nanning Tongji Hospital Co., Ltd. has the rental preferential treatment after expiration. 4. Rent list: Rent Sq.m. Per Amounts/sq.m Months Total Amounts ---- ------- ---------------- ------ ------------- 2003 5479.62 3 2 32,877.72 2004 5479.62 3 12 197,266.32 2005 5479.62 3 12 197,266.32 2006 5479.62 3 12 197,266.32 2007 5479.62 3 12 197,266.32 2008 5479.62 3 12 197,266.32 Total 1,019,209.32 Guangxi Tongji Medicine Co., Ltd. Nanning Tongji Hospital Co., Ltd. By: /s/ By: /s/ --------------------------------- ------------------------------- Authorized Officer Authorized Officer Date: 11/01/2003 Date: 11/01/2003 EX-10 8 sb2feb07ex103.txt EXH. 10.3 - SALE CONTRACT EXHIBIT 10.3 SALE CONTRACT OF GUANGXI TONGJI MEDICINE CO. LTD. Contract No. ______ The Supplier (part A): Guangxi Tongji Medicine Co. Ltd The Demander (part B): Nanning Tongji Hospital Co. Ltd Place: Nanning Date: October 1, 2003 In accordance with the Contract act of the People's Republic of China and in order to reduce the purchase cost of the hospital, all the medicine of Nanning Tongji Hospital Co. Ltd will be purchased by Guangxi Tongji Medicine Co. Ltd. The contract is signed by both sides through consultation. 1. Products Name of Unit price Volume commodity Standard Manufacturer Quantity Unit including tax of Tax Remark A batch of Supply according medicine to cost price (delivery in batches according to needs of the demander) - ----------------------------------------------------------------------------------------- Total value:
2. Terms on quality. 1) The commodities of the supplier should be in accordance with the quality standards of the nation and other demands concerned. 2) The whole packing should include the qualification certificate. 3) As to commodity import, the supplier must offer Register Certificate of Import Commodity or Register Certificate of Medical Product in accordance with regulations and the Examination Report of Import Commodity or Paper of Import Commodity Passing Custom given by the examination station on port. 4) The packing of the commodities should be in accordance with regulations concerned and the demand of cargo transport. 3. Responsibility of quality. A should stock the products according to regulations concerned. If the products are unqualified because of improper storage and maintenance during the term of validity, A should take full responsibility. 4. Place of delivery: Drugstore of the Demander. Arrival date: The same date informed by telephone. 5. Term of payment and deadline: Settle the account in a month after the goods arrival. 6. Term of transportation and freight: Supplier in charge. 7. Inspection, acceptance and deadline: Demander inspects and accepts the products in 3 days after receiving the goods. If any objection is raised about the products, the demander should give a written proposal in 3 days after receiving the goods. The products will be considered qualified after the deadline. 8. Responsibility on break of contract: Both sides should strictly stick to the terms mentioned above. If there is any breach of contract, the party breaking the contract should pay compensation to the other party for economic loss. If the demander pays the cost after the deadline, the compensation for breach of contract will be paid according to 0.5% of the cost for each day. 9. Terms resolving disputes: arbitration of the court in Nanning, the place of supplier. 10. Other items agreed: Supplier offers the products in cost price. 11. Term of the contract: From October 1, 2003 to October 1, 2008 ---------------- --------------- Remark: 1. The contract will take legal effect after it is signed and must be fully implemented by both sides. Any party is not allowed to vary or terminate the contract without permission. When the variation is needed for some reasons, both sides should sign another contract according to laws after consultation. 2. The contract is in duplicate and each party holds one. It will take effect after being Signature Supplier: Guangxi Tongji Medicine Demander: Nanning Tongji Hospital Co. Ltd Co. Ltd By: /s/ By: /s/ -------------------------------- ----------------------------- Authorized Officer Authorized Officer Address : No.20 Beiji Road,Nanning; Address & No.5 Beiji Road,Nanning; Postal code: 530011 Postal code: 530011 Legal Legal representative: Yun-hui Yu representative: Yun-hui Yu Tel: 0771-2020063/13707882498 Tel: 0771-2020077 Fax: 0771-2020130/0771-2020065 Fax: 0771-2020011 EX-21 9 sb2feb07ex21.txt EXHIBIT 21 SUBSIDIARIES The Company has one subsidiary which was incorporated under the Peoples Republic of China. This subsidiary, Nanning Tongji Hospital, Co. Ltd., does business under its own name. EX-23 10 sb2feb07ex231.txt EXH. 23.1 - CONSENT OF ATTORNEYS EXHIBIT 23.1 CONSENT OF ATTORNEYS Reference is made to the Registration Statement of Tongji Healthcare Group, Inc. on Form SB-2 whereby certain shareholders of the Company propose to sell up to 2,000,000 shares of the Company's common stock. Reference is also made to Exhibit 5 included in the Registration Statement relating to the validity of the securities proposed to be sold. We hereby consent to the use of our opinion concerning the validity of the securities to be sold. Very truly yours, HART & TRINEN, L.L.P. /s/ William T. Hart --------------------------------- William T. Hart Denver, Colorado February 7, 2007 EX-23 11 sb2feb07ex232.txt EXH. 23.2 - CONSENT OF ACCOUNTANT EXHIBIT 23.2 Consent of Independent Registered Certified Public Accountants February 12, 2007 Tongi Healthcare Group, Inc. No.5 Beiji Road Nanning, China We consent to the inclusion in this Registration Statement on Form SB-2 of Tongji Healthcare Group, Inc., a Nevada corporation, of our report dated February 5, 2007 relating to the financial statements of the Company for the years ended December 31, 2006 and 2005. Very truly yours /s/ Michael Pollack Michael Pollack CPA Cherry Hill, New Jersey Tongji SB-2 Feb 06 FINAL 2-12-07 -----END PRIVACY-ENHANCED MESSAGE-----