UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2017
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT |
For the transition period from ______________ to _____________
Commission file number: 333-140645
333-140645
(Exact name of registrant as specified in its charter)
Nevada | 99-0364697 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
3651 Lindell Road Las Vegas, Nevada | ||
(Address of principal executive offices) | (Zip Code) |
(702) 479-3016
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report) |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
None | N/A | N/A |
Indicate by check mark whether the registrant (1) has filed reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ☒[ ] No ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes ☒[X] No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”,filer,” “accelerated filer”filer,” “smaller reporting company,” and “smaller reporting“emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | Accelerated filer | |||
Non-accelerated filer | [X] | Smaller reporting company | [X] | |
Emerging growth company | [ ] | |||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐[ ] No ☒
Indicate the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date:
As of August 15, 2017,19, 2020, there were 15,812,19145,812,191 shares of $0.001 par value common stock issued and outstanding.
FORM 10-Q
TONGJI HEALTHCARE GROUP, INC.
INDEX
2 |
TONGJI HEALTHCARE GROUP, INC. | ||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
June 30, 2017 | December 31, 2016 | |
(Unaudited) | ||
ASSETS | ||
Current Assets | ||
Cash | $37,490 | $47,597 |
Accounts receivable, net | 171,823 | 239,377 |
Due from related parties | 189,841 | 185,365 |
Other current receivable | 6,403,635 | 7,243,028 |
Medical supplies | 81,472 | 52,357 |
Prepaid expenses and other current assets | 13,403 | 13,087 |
Total Current Assets | 6,897,664 | 7,780,811 |
Equipment, net | 358,972 | 386,158 |
Other non-current receivable (Deposit) | 174,239 | 171,476 |
Intangible assets, net | 21,339 | 25,301 |
TOTAL ASSETS | $7,452,214 | $8,363,746 |
LIABILITIES AND STOCKHOLDERS' DEFICIT | ||
Current Liabilities | ||
Accounts payable and accrued expenses | $1,045,482 | $997,040 |
Due to related parties | 10,724,039 | 10,371,235 |
Other payable | 727,470 | 1,269,176 |
Settlement payable | 1,443,722 | 1,366,639 |
Current portion of capital lease payable | 534,998 | 522,384 |
Total Current Liabilities | 14,475,711 | 14,526,474 |
Total Liabilities | 14,475,711 | 14,526,474 |
STOCKHOLDERS' DEFICIT | ||
Preferred stock; $0.001 par value, 20,000,000 shares authorized and none issued and outstanding | - | - |
Common stock; $0.001 par value, 50,000,000 shares authorized and 15,812,191 shares issued and outstanding as of June 30, 2017 and December 31, 2016 respectively | 15,812 | 15,812 |
Additional paid in capital | 440,368 | 440,368 |
Accumulated deficit | (7,908,824) | (7,206,416) |
Accumulated other comprehensive income | 429,147 | 587,508 |
Total Stockholders' Deficit | (7,023,497) | (6,162,728) |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | $7,452,214 | $8,363,746 |
The accompanying notes are an integral part of these consolidated financial statements. |
TONGJI HEALTHCARE GROUP, INC. | ||||
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS | ||||
(Unaudited) | ||||
For the Six Months Ended June 30 | For the Three Months Ended June 30 | |||
2017 | 2016 | 2017 | 2016 | |
OPERATING REVENUE | ||||
In-patient service revenue | $342,162 | $591,299 | $147,536 | $333,397 |
Out-patient service revenue | 315,537 | 469,627 | 171,767 | 225,863 |
Total operating revenue | 657,699 | 1,060,926 | 319,303 | 559,260 |
OPERATING EXPENSES | ||||
Administrative expenses | 138,097 | 100,539 | 72,868 | 54,623 |
Depreciation and amortization expenses | 40,531 | 36,269 | 20,277 | 18,292 |
Medicine and supplies | 392,392 | 500,413 | 248,342 | 259,111 |
Other operating expenses | 108,999 | 143,682 | 59,250 | 70,429 |
Salary and fringes | 294,234 | 356,637 | 154,340 | 181,478 |
Total operating expenses | 974,253 | 1,137,537 | 555,077 | 583,930 |
LOSS FROM OPERATIONS | (316,554) | (76,611) | (235,774) | (24,670) |
OTHER INCOME (EXPENSE) | ||||
Other income | 14,305 | 14,222 | 7,856 | 6,771 |
Interest expense, net | (158,773) | (90,388) | (69,915) | (9,573) |
Total Other Expense | (144,468) | (76,166) | (62,059) | (2,802) |
LOSS BEFORE INCOME TAXES | (461,022) | (152,777) | (297,833) | (27,472) |
Provision for income taxes | - | - | - | - |
EXTRAORDINARY ITEMS | ||||
Net gain (loss) on sale of assets | (159,258) | - | (159,258) | - |
VAT and other related taxes on assets disposition | (82,128) | - | (82,128) | - |
Extraordinary items after tax | (241,386) | - | (241,386) | - |
NET LOSS | (702,408) | (152,777) | (539,219) | (27,472) |
OTHER COMPREHENSIVE INCOME(LOSS) | ||||
Foreign currency translation gain (loss) | (158,361) | 75,218 | (104,770) | 90,279 |
NET COMPREHENSIVE INCOME (LOSS) | $(860,769) | $(77,559) | $(643,989) | $62,807 |
Net loss per common stock-Basic and Diluted | $(0.054) | $(0.005) | $(0.041) | $0.004 |
Weighted average common stock outstanding | ||||
Basic and Diluted | 15,812,191 | 15,812,191 | 15,812,191 | 15,812,191 |
The accompanying notes are an integral part of these consolidated financial statements. |
TONJI HEALTHCARE GROUP, INC. | ||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
FOR THE SIX MONTH ENDED JUNE 30 | ||
(Unaudited) | ||
2017 | 2016 | |
Operating activities: | ||
Net loss | $(702,408) | $(152,777) |
Adjustments to reconcile net loss to | ||
Net cash provided by (used in) operating activities: | ||
Depreciation expense | 40,532 | 36,269 |
Net loss on sales of assets | 241,386 | - |
Increase/(decrease) in operating assets and liabilities: | ||
Accounts receivable | 72,350 | (29,993) |
Medical supplies | (27,477) | (66,278) |
Prepaid expense and other current assets | - | 2,821 |
Other receivable | 760,656 | (2,385) |
Accounts payable and accrued expenses | 24,039 | 146,854 |
Other payables | (564,674) | (3,709) |
Settlement payable | 43,491 | 45,983 |
Net Cash Used in Operating Activities | (112,105) | (23,215) |
Investing activities: | ||
Acquisitions of fixed assets | - | (15,302) |
Construction in progress | - | (88,846) |
Net Cash Used in Investing Activities | - | (104,148) |
Financing activities: | ||
Advance from related parties | 100,997 | 154,316 |
Net Cash Provided by Financing Activities | 100,997 | 154,316 |
Effects of foreign currency translation | 1,001 | (711) |
Net increase in Cash | (10,107) | 26,242 |
Cash-Beginning of Period | 47,597 | 10,300 |
Cash-Ending of Period | $37,490 | $36,542 |
Cash Paid During the Year for: | ||
Income taxes | $- | $- |
Interest paid | $6,583 | $6,922 |
The accompanying notes are an integral part of these consolidated financial statements. |
BALANCE SHEETS
June 30, 2020 | December 31, 2019 | |||||||
Unaudited | ||||||||
ASSETS | ||||||||
CURRENT ASSETS | ||||||||
Cash | $ | - | $ | - | ||||
TOTAL CURRENT ASSETS | - | - | ||||||
TOTAL ASSETS | $ | - | $ | - | ||||
LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
LIABILITIES | ||||||||
Current Liabilities: | ||||||||
Accounts payable | $ | - | $ | 30,753 | ||||
Due to related parties | - | 15,488 | ||||||
Total Current Liabilities | - | 46,241 | ||||||
Total Liabilities | - | 46,241 | ||||||
STOCKHOLDERS’ DEFICIT | ||||||||
Preferred stock; $0.001 par value, 50,000,000 shares authorized and none issued and outstanding at June 30, 2020 December 31, 2019, respectively | - | - | ||||||
Common stock; $0.001 par value, 500,000,000 shares authorized and 45,812,191 shares issued and outstanding at June 30, 2020 December 31, 2019, respectively | 45,812 | 45,812 | ||||||
Additional paid-in capital | 486,909 | 440,368 | ||||||
Accumulated deficit | (1,120,229 | ) | (1,119,929 | ) | ||||
Accumulated other comprehensive income | 587,508 | 587,508 | ||||||
Total Stockholders’ Deficit | - | (46,241 | ) | |||||
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | - | $ | - |
The accompanying notes are an integral part of these unaudited financial statements.
3 |
STATEMENTS OF OPERATIONS
(Unaudited)
For the three months ended June 30, | For the six months ended June 30, | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
REVENUE | $ | - | $ | - | $ | - | $ | - | ||||||||
OPERATING EXPENSES: | ||||||||||||||||
General and administrative expenses | - | 13,665 | 300 | 13,911 | ||||||||||||
TOTAL OPERATING EXPENSES | - | 13,665 | 300 | 13,911 | ||||||||||||
LOSS FROM OPERATIONS | - | (13,665 | ) | (300 | ) | (13,911 | ) | |||||||||
Provision for income taxes | - | - | - | - | ||||||||||||
NET LOSS | $ | - | $ | (13,665 | ) | $ | (300 | ) | $ | (13,911 | ) | |||||
Net loss per share basic and diluted earnings | $ | - | $ | (0.001 | ) | $ | (0.000 | ) | $ | (0.001 | ) | |||||
Weighted average common stock outstanding Basic and Diluted | 15,812,191 | 15,812,191 | 15,812,191 | 15,812,191 |
The accompanying notes are an integral part of these unaudited financial statements.
4 |
STATEMENT OF CHANGES IN STOCKHOLDERS’ DEFICIT
Unaudited
Additional | Accumulated Other | |||||||||||||||||||||||||||
Common Stock | Paid-in | Statutory | Accumulated | Comprehensive | ||||||||||||||||||||||||
Shares | Amount | Capital | Reserve | Deficit | Income/(Loss) | Total | ||||||||||||||||||||||
FOR THE THREE MONTHS ENDED June 30, 2020 and 2019 | ||||||||||||||||||||||||||||
Balance at March 31, 2019 | 15,812,191 | $ | 15,812 | $ | 440,368 | $ | - | $ | (1,045,411 | ) | $ | 587,508 | (1,723 | ) | ||||||||||||||
Net loss | - | - | - | - | (13,665 | ) | - | (13,665 | ) | |||||||||||||||||||
Balance at June 30, 2019 | 15,812,191 | $ | 15,812 | $ | 440,368 | $ | - | $ | (1,059,076 | ) | $ | 587,508 | (15,388 | ) | ||||||||||||||
Balance at March 31, 2020 | 45,812,191 | $ | 45,812 | $ | 440,368 | $ | 0 | $ | (1,120,229 | ) | $ | 587,508 | (46,541 | ) | ||||||||||||||
Forgiveness of debt by shareholders | - | - | 46,541 | - | - | - | 46,541 | |||||||||||||||||||||
Net loss | - | - | - | - | - | - | - | |||||||||||||||||||||
Balance at June 30, 2020 | 45,812,191 | $ | 45,812 | $ | 486,909 | $ | - | $ | (1,120,229 | ) | $ | 587,508 | - | |||||||||||||||
FOR THE SIX MONTHS ENDED June 30, 2020 and 2019 | ||||||||||||||||||||||||||||
Balance at December 31, 2018 | 15,812,191 | $ | 15,812 | $ | 440,368 | $ | - | $ | (1,045,165 | ) | $ | 587,508 | (1,477 | ) | ||||||||||||||
Net loss | - | - | - | (13,911 | ) | - | (13,911 | ) | ||||||||||||||||||||
Balance at June 30, 2019 | 15,812,191 | $ | 15,812 | $ | 440,368 | $ | - | $ | (1,059,076 | ) | $ | 587,508 | (15,388 | ) | ||||||||||||||
Balance at December 31, 2019 | 45,812,191 | 45,812 | 440,368 | - | (1,119,929 | ) | 587,508 | (46,241 | ) | |||||||||||||||||||
Forgiveness of debt by shareholders | - | - | 46,541 | - | - | - | 46,541 | |||||||||||||||||||||
Net loss | - | - | - | (300 | ) | - | (300 | ) | ||||||||||||||||||||
Balance at June 30, 2020 | 45,812,191 | 45,812 | 486,909 | - | $ | (1,120,229 | ) | $ | 587,508 | - |
The accompanying notes are an integral part of these unaudited financial statements.
5 |
STATEMENTS OF CASH FLOWS
Unaudited
For the six months ended June 30, | ||||||||
2020 | 2019 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
Net loss | $ | (300 | ) | $ | (13,911 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Increase (decrease) in operating assets and liabilities: | ||||||||
Increase (decrease) accounts payable | (11,950 | ) | 100 | |||||
Increase (decrease) accrued expenses | - | 2,333 | ||||||
NET CASH PROVIDED BY (USED) IN OPERATING ACTIVITIES | (12,250 | ) | (11,478 | ) | ||||
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES | - | - | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
Proceeds from related party debt | 12,250 | 11,478 | ||||||
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | 12,250 | 11,478 | ||||||
NET INCREASE (DECREASE) IN CASH | - | - | ||||||
Cash-Beginning of Period | - | - | ||||||
Cash-End of Period | $ | - | $ | - | ||||
SUPPLEMENTAL CASH FLOW INFORMATION: | ||||||||
Cash paid for interest | $ | - | $ | - | ||||
Cash paid for income taxes | $ | - | $ | - | ||||
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES | ||||||||
Forgiveness of debt by related party | $ | 46,541 | $ | - |
The accompanying notes are an integral part of these financial statements.
6 |
TONGJI HEALTHCARE GROUP, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2017
NOTE 1-1 - ORGANIZATION
Nanning Tongji Hospital, Inc. ("NTH"(“NTH”) was established in Nanning in the province of Guangxi of the People’s Republic of China ("PRC"(“PRC” or “China”) by the Nanning Tongji Medical Co. Ltd. and an individual on October 30, 2003.
NTH iswas a designated hospital for medical insurance in the city of Nanning and Guangxi province. NTH specializes in the areas of internal medicine, surgery, gynecology, pediatrics, emergency medicine, ophthalmology, medical cosmetology, rehabilitation, dermatology, otolaryngology, traditional Chinese medicine, medical imaging, anesthesia, acupuncture, physical therapy, health examination, and prevention.
On December 19, 2006, NTH filed the Articles of Incorporation in the State of Nevada to establish Tongji Healthcare Group, Inc. (the "Company"“Company”). On the same day, Tongji, Inc., a wholly owned subsidiary of the Company, was incorporated in the State of Colorado. Tongji Inc. was later dissolved on March 25, 2011.
On December 27, 2006, Tongji Inc. acquired 100% of the equity in NTH pursuant to an Agreement and Plan of Merger, pursuant to which NTH became a wholly owned subsidiary of Tongji Inc. Pursuant to the Agreement and Plan of Merger, the Company issued 15,652,557 shares of common stock to the stockholders of NTH in exchange for 100% of the issued and outstanding shares of common stock of NTH. Thereafter and for purposes of these consolidated financial statements the "Company"“Company” and "NTH"“NTH” are used to refer to the operations of NTH. The acquisition of NTH was accounted for as a reverse acquisition under the purchase method of accounting since the stockholders of NTH obtained control of the consolidated entity. Accordingly, the reorganization of the two companies was recorded as a recapitalization of NTH, with NTH being treated as the continuing operating entity.
The Company is authorized to issue 50,000,000 shares of common stock, par value $0.001 per share and 20,000,000 shares of preferred stock, par value $0.001 per share.
Effective December 31, 2017, under the terms of a Bill of Sale, the Company agreed to sell, transfer convey and assign forever all of its rights, title and interest in its equity ownership interest in its subsidiary, NTH, organized under the laws of the Peoples Republic of China to Placer Petroleum Co., LLC, an Arizona limited liability company. Pursuant to the PRC RegulationBill of Sale, consideration for this sale, transfer conveyance and assignment is Placer Petroleum Co, LLC assuming all assets and liabilities of NTH as of December 31, 2017, which was filed as Exhibit 99.1 to the Company’s September 30, 2017 Quarterly Report on Form 10-Q. As a result of the Bill of Sale, the related assets and liabilities of Nanning Tongji Hospital, Inc. is being reported as discontinued operations effective December 31, 2017.
On May 20, 2019, the eight judicial District Court of Clark County, Nevada, entered and Order Granting Application of Joseph Arcaro as Custodian of Tongji Healthcare Institutions, hospitals are subjectGroup, Inc. Pursuant to registrationNRS 78.347(1)(b), pursuant to which Joseph Arcaro was appointed custodian of the Company and given authority to reinstate the Company with the health departmentState of Nevada under NRS 78.347.
On May 23, 2019, Joseph Arcaro filed a Certificate of Reinstatement of the local governmentCompany with the Secretary of State of the State of Nevada. The foregoing description of the Reinstatement is qualified in its entirety by reference to obtain business licensesuch Reinstatement, which is filed hereto as Exhibit 3.3, and incorporated herein by reference. In addition, on May 23, 2019, Joseph Arcaro filed an Annual List of the Company with the Secretary of State of the State of Nevada, designating himself as President, Secretary, Treasurer and Director of the Company for hospital services. We received our renewed business license from Nanning municipal government in November 2007,the filing period of 2017 to 2019.
On May 29, 2020, Joseph Arcaro, through his ownership of Algonquin Partners Inc. (“Algonquin”), of 65% of the Company’s common stock, entered into a Stock Purchase Agreement by and this licenseamong West of Hudson Group, Inc. (“WOHG”), the Company, Algonquin, and Mr. Arcaro. The Stock Purchase Agreement, as subsequently amended, is valid until November, 2020. Other existing regulations having material effects on our business include regulations dealing with physician's licensing, usage of medicine and injection, and public security in health and medical advertising.
7 |
On June 25, 2020, Board of Directors approved an amendment and restatement of the Company’s bylaws.
On July 7, 2020, the Company filed a facilityCertificate of Amendment with over 100 beds. NTH is subjectthe Secretary of State of Nevada applicable to review by the local health department at least once every three years. If NTH failsCompany’s articles of incorporation. The Certificate of Amendment had the effect of increasing the authorized capital stock of the Company to meet their standards, NTH’s business license may be revoked. NTH is also obligated to provide free services or dispatch our physicians or other employees in the event550,000,000, comprised of a need for public assistance. NTH dedicates a very small percentage500,000,000 shares of its resources to providing free public services.
NOTE 2-2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited condensed consolidated financial statements have been prepared by management without audit pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted as allowed by such rules and regulations, and management believes that the disclosures are adequate to make the information presented not misleading. These condensed consolidated financial statements include all of the adjustments, which, in the opinion of management, are necessary to a fair presentation of financial position and results of operations. All such adjustments are of a normal and recurring nature. Interim results are not necessarily indicative of results for a full year. The condensed consolidated balance sheet information as of December 31, 2016 was derived from the audited consolidated financial statements included in the Form 10-K. These condensed consolidated financial statements should be read in conjunction with the audited financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended on December 31, 2016(“Form 10-K”), filed with the Commission on April 17, 2017.
This summary of significant accounting policies of the Company is presented to assist in understanding the Company’s consolidated financial statements. The consolidated financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. These accounting policies conform to generally accepted accounting principles and have been consistently applied in the preparation of the condensed consolidated financial statements and the Form 10-K.
BASIS OF PRESENTATION AND CONSOLIDATION
These financial statements present the Company’s results of operations, financial position and cash flows on a consolidated basis. The consolidated financial statements include the Company and its wholly owned subsidiaries. Intercompany transactions and accounts have been eliminated in consolidation. Our policy is to consolidate all subsidiaries in which a greater than 50% voting interest is owned. The Company operates in one segment in accordance with the accounting guidance FASB ASC topic 280, “Segment Reporting”.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash on hand and cash in time deposits, certificates of the statements of cash flows, the Company considersdeposit and all highly liquid debt instruments purchased with a maturityoriginal maturities of three months or less to be cash equivalents. A substantial amount of the Company’s cash is held in bank accounts in the PRC and is not protected by Federal Deposit Insurance Corporation (FDIC) insurance or any other similar insurance. Cash held in China amounted to $37,490 as of June 30, 2017. Given the current economic environment and the financial condition of the banking industry, there is a risk that the deposits may not be readily available or covered by such insurance. The Company has had no loss of cash in domestic or foreign banks in past years.
USE OF ESTIMATES
The preparation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported assets and liabilities, disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of net revenues and expenses during the reporting period. Actual results may differ from those estimates and such differences may be material. The more significant estimates and assumptions by management include, among others, useful lives and residual values of fixed assets, valuation of inventories, accounts receivable, stock based compensation, and allowance for bad debt. The current economic environment has increased the degree of uncertainty inherent in these estimates and assumptions.
NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES- continued
The Company applies the provisions of FASB ASC Topic 825, which requires all entities to disclose the fair value of financial instruments, both assets and liabilities recognized and not recognized on the balance sheet, for which it is practicable to estimate fair value, and defines fair value of a financial instrument as the amount at which the instrument could be exchanged in a current transaction between willing parties. As of June 30, 20172020 and December 31, 20162019 the fair value of cash and cash equivalents, accounts receivable, other current receivable, accounts payable and accrued expenses, settlement payable, lease payable, notes payable and other payables approximated the carrying value due to the short maturity of the instruments, quoted market prices or interest rates which fluctuate with market rates except for related party debt or receivables for which it is not practicable to estimate fair value.
8 |
FAIR VALUE MEASUREMENTS
FASB ASC Topic 820, “Fair Value Measurements and Disclosures”, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements.
Various inputs are considered when determining the fair value of the Company’s investments, and long-term debt. The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in these securities. These inputs are summarized in the three broad levels listed below.
Level 1 – observable market inputs that are unadjusted quoted prices for identical assets or liabilities in active markets. | ||
Level 2 – other significant observable inputs (including quoted prices for similar securities, interest rates, credit risk, etc.). | ||
Level 3 – significant unobservable inputs (including the Company’s own assumptions in determining the fair value of investments). |
The carrying value of financial assets and liabilities recorded at fair value is measured on a recurring or non-recurring basis. Financial assets and liabilities measured on a non-recurring basis are those that are adjusted to fair value when a significant event occurs. The Company had no financial assets or liabilities carried and measured on a nonrecurring basis during the reporting periods. Financial assets and liabilities measured on a recurring basis are those that are adjusted to fair value each time a financial statement is prepared. The Company had no financial assets and liabilities carried at fair value on a recurring basis.
The availability of inputs observable in the market varies from instrument to instrument and depends on a variety of factors including the type of instrument, whether the instrument is actively traded, and other characteristics particular to the transaction. For many financial instruments, pricing inputs are readily observable in the market, the valuation methodology used is widely accepted by market participants, and the valuation does not require significant management discretion. For other financial instruments, pricing inputs are less observable in the market and may require management judgment.
NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES- continued
Earnings per share (EPS) is calculated in accordance with the FASB ASC Topic 260, “Earnings Per Share.” Basic net income (loss) per share is based upon the weighted average number of common shares outstanding. Diluted net income (loss) per share is based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. Potentially dilutive securities to purchase 100,000 shares of common stock were not included in the calculation of the diluted earnings per share as their effect would be anti-dilutive for the three months ended June 30, 2017. During the three month period ended June 30, 2017,2020. During the period ended June 30, 2020, the average market price of the common stock was less than the exercise price of the stock options and the Company was in net loss position. Accordingly, the stock options were anti-dilutive and have not been included in the calculation of diluted earnings per share.
INCOME TAXES
The Company follows Section 740-10-30 of the FASB ASC Topic 740, "Income Taxes”Accounting Standards Codification, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxestax assets and liabilities are recognized forbased on the tax consequences in future years of differences between the financial statement and tax bases of assets and liabilities and their financial reporting amounts at each period end based onusing enacted tax laws and statutory tax rates applicable toin effect for the periodsfiscal year in which the differences are expected to affectreverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income. Valuation allowancesincome in the fiscal years in which those temporary differences are established, when necessary,expected to reducebe recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Statements of Income in the period that includes the enactment date.
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The Company adopted section 740-10-25 of the FASB Accounting Standards Codification (“Section 740-10-25”) with regards to uncertainty in income taxes. Section 740-10-25 addresses the amountdetermination of whether tax benefits claimed or expected to be realized.
ADOPTION OF NEW ACCOUNTING STANDARDS
In March 2016, the FASB issued ASU 2016-02, Leases (“ASU 2016-02”), which that threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not threshold should be derecognized in the first subsequent financial reporting period in which that threshold is no longer met.
The Company continually assesses any new accounting pronouncements to determine their applicability to the Company. Where it is determined that a comprehensive review of its portfolio of tax positions in accordance with recognition standards established by ASC 740-10 and has not recognized any material uncertain tax positions.
The Company reports comprehensive income in accordance with FASB ASC Topic 220 “Comprehensive Income,"” which established standards for reporting and displaying comprehensive income and its components in a financial statement that is displayed with the same prominence as other financial statements.
Total comprehensive income is defined as all changes in stockholders'stockholders’ equity during a period, other than those resulting from investments by and distributions to stockholders (i.e., issuance of equity securities and dividends). Generally, for the Company, total comprehensive income (loss) equals net income (loss) plus or minus adjustments for currency translation. Total comprehensive income (loss) represents the activity for a period net of related tax and was a loss of $860,769and was a loss of $77,559 for the six month periods ended June 30, 2017 and 2016, respectively.
While total comprehensive income is the activity in a period and is largely driven by net earnings in that period, accumulated other comprehensive income or loss (“AOCI”) represents the cumulative balance of other comprehensive income as of the balance sheet date. For the Company, AOCI is primarily the cumulative balance related to the currency adjustments and increased overall equity by $429,147$587,508 and $587,508 as of June 30, 20172020 and December 31, 2016,2019, respectively.
GOING CONCERN
The accompanying consolidated financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate continuation of the Company as a going concern. However, as of June 30, 2020, the Company hashad negative working capital of $7,578,047,$0, an accumulated deficit of $7,908,824,$1,120,229, and a stockholders’ deficit of $7,023,497$0 and as of June 30, 2017.December 31, 2019, the Company had negative working capital of $46,241, an accumulated deficit of $1,119,929, and a stockholders’ deficit of $46,241. The Company’s ability to continue as a going concern ultimately is dependent on the management’s ability to obtain equity or debt financing, attain further operating efficiencies, and achieve profitable operations. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company not be able to continue as a going concern.
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NOTE 3- EQUIPMENT
Estimated Useful Lives (Years) | June 30, 2017 | December 31, 2016 | |
Office equipment | 5-10 | $79,461 | $77,587 |
Medical equipment | 5 | 1,270,632 | 1,240,674 |
Capital lease equipment | 5 | 1,660,123 | 1,620,982 |
Fixtures | 10 | 104,513 | 102,049 |
Vehicles | 5 | 41,072 | 40,104 |
Total equipment | 3,155,801 | 3,081,396 | |
Less accumulated depreciation | (1,398,184) | (1,329,569) | |
Less impairment of the equipment | (1,398,645) | (1,365,669) | |
Property and equipment, net | $358,972 | $386,158 |
Preferred Stock
As of June 30, 2017, we received payment of approximately $5,400,000. By estimation, we incurred value-added tax (VAT) and other taxes liability of RMB 4,530,000 (approximately $682,227) related to this transaction in 2016. The amount is included in other payables.
June 30, 2017 | December 31, 2016 | |
Advance from Customers | 0 | 555 |
Accrued Salary | 54,411 | 53,128 |
Taxes Payable | 42,442 | 694,039 |
Other Payable | 630,617 | 521,454 |
Total | 727,470 | 1,269,176 |
Common Stock
As of June 30, 20172020, and December 31, 2016,2019, the Company hashad 50,000,000 shares of common stock authorized with a par value of $0.001.There are 15,812,191 shares$0.001. There were 45,812,191 and 45,812,191shares issued and outstanding as of June 30, 20172020 and December 31, 2016.
Stock Issuance
On September 6, 2019, the Company Lawissued 30,000,000 shares of common stock to Joseph Arcaro, Chief Executive Officer, of which 15,000,000 shares were issued for repayment of related party debt totaling $15,000 and 15,000,000 shares were issued for consulting services totaling $15,000.
Authorized shares
On July 7, 2020, the Company filed a Certificate of Amendment with the Secretary of State of Nevada applicable to the Company’s articles of incorporation. The Certificate of Amendment had the effect of increasing the authorized capital stock of the PRC, net income after taxation can only be distributed as dividends after appropriation has been madeCompany to 550,000,000, comprised of 500,000,000 shares of common stock, par value $0.001 and 50,000,000 shares of preferred stock, par value $0.001.
NOTE 4 – RELATED PARTY TRANSACTIONS
During the year ended December 31, 2019, Joseph Arcaro, the Company’s Chief Executive Officer, paid expenses on behalf of the Company totaling $30,488 to revive the Company’s operations. On September 6, 2019, the Company issued 30,000,000 shares of common stock to Joseph Arcaro, Chief Executive Officer, of which 15,000,000 shares were issued for the following:
As of June 30, 2017,2020, Joseph Arcaro forgave all the Company had accumulated deficitsrelated party payables owed to him of $7,908,824. Therefore,$46,541 before the Company did not appropriate any fund for the statutory surplus reserve for the six month period ended June 30, 2017.
Number of Shares | Weighted Average Exercise Price | Aggregate Intrinsic Value (in thousands) | |
Outstanding at January 1, 2017 | 100,000 | $0.24 | $- |
Granted | - | - | - |
Exercised | - | - | - |
Cancelled/expired | - | - | - |
Outstanding and exercisable at June 30, 2017 | 100,000 | $0.24 | $- |
As of June 30, 20172020, and December 31, 2016, total due from all related parties amounted to $189,841 and $185,365, respectively.
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Related Party | Total | |
2017 | $26,551 | $26,551 |
2018 | 8,850 | 8,850 |
Total | $35,402 | $35,402 |
You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our condensed consolidated financial statements and the related condensed notes included elsewhere in this report. Our financial statements have been prepared in accordance with U.S. GAAP. 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
Nanning Tongji Hospital, Inc. ("NTH"(“NTH” or “Tongji Hospital”) was established in Nanning city Guangxi province of the Peoples’ Republic of China ("PRC"(“PRC”) by the Guangxi Tongji Medical Co. Ltd. and an individual on October 30, 2003.
NTH is a designated hospital for medical insurance in city of Nanning and Guangxi province. NTH specializes in the areas of internal medicine, surgery, gynecology, pediatrics, emergency medicine, ophthalmology, medical cosmetology, rehabilitation, dermatology, otolaryngology, traditional Chinese medicine, medical imaging, anesthesia, acupuncture, physical therapy, health examination, and prevention.
On December 27, 2006, we, through our wholly-owned subsidiary, Tongji, Inc., a Colorado company, acquired 100% of the equity in NTH pursuant to an Agreement and Plan of Merger. We 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. Accordingly, NTH became a wholly owned subsidiary of Tongji, Inc. We have been in the business of operating hospitals and providing healthcare services in Nanning, Guangxi province of the PRC.
The acquisition of NTH was accounted for as a reverse acquisition under the purchase method of accounting since the shareholders of NTH obtained control of the consolidated entity. Accordingly, the reorganization of the two companies was recorded as a recapitalization of NTH. We treated NTH as the continuing operating entity. We have two sources of operating revenues: in-patient service revenues and out-patient service revenues. In addition to provide services to our patients, we also sell pharmaceutical drugs to our patients. Revenues from such sales are included in either our in-patient service revenues or our out-patient service revenues. Our revenues come from individuals as well as third-party payers, including PRC government programs and insurance providers, under which the hospital is paid based upon local government established charges. Revenues are recorded at estimated net amounts due from patients or third-party payers. Revenues from pharmaceutical drug sales are recognized upon the drug being administered to a patient or at the time a prescription by a registered physician is filled.
Patient revenues are recorded based on pre-established rates set by the local government. The Company bills for services provided to Medicare patients through a medical card (the US equivalent of an insurance card). Historically, there have been no significant differences between the amounts the Company has billed the government Medicare funds and the amounts collected from the Medicare funds.
In March 2016, we sold our construction-in-progress hospital building to Guangxi Yida Friendship Hospital Management, Inc. for RMB 86,000,000 (approximately $13,000,000). The hospital building is being constructed by Guangxi Construction Engineering Corporation Langdong 8th Group (“Langdong 8th Group”). Costs capitalized primarily consists of payments for construction costs, acquisition cost, land rights cost, development expenditure, professional fees, and capitalized interest. As of the date of disposal, we had accrued approximately $15,000,000 for the construction of the hospital. As a result of the sale, we increased the other receivables to approximately $13,000,000. Concurrently, the remaining balance results in an extraordinary loss in the approximate amount of $2,000,000 in 2016
By estimation, we incurred value-added tax (VAT) and other taxes liability of RMB 4,530,000 (approximately $682,227) related to this transaction in 2016. The amount is included in other payables.
At the closing in May 2017, Guangxi Yida Friendship Hospital Management, Inc. agreed that the sale price and VAT totaled RMB 90,000,000 (approximately $13,100,437) and paid VAT of RMB 5,094,340 (approximately $741,534) and other taxes expenses of RMB 696,838 (approximately $101,366). The final sale price changes to RMB 84,905,660 (approximately $12,358,902), and the final value-added tax (VAT) and other taxes liability is RMB 5,094,340 (approximately $741,534). The differences between the actual amount and estimated amount resulted in an additional net loss on sale of assets of RMB 1,094,340 (approximately $159,258) and VAT and other taxes expense of RMB 5,094,340 (approximately $82,128) in extraordinary items. As of JuneSeptember 30, 2017, we received payment of approximately $5,400,000.The rest is expected
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Effective December 31, 2017, under the terms of a Bill of Sale, the Company agreed to be receivedsell, transfer convey and assign forever all of its rights, title and interest in full by December 30, 2017.
On May 20, 2019, the eight judicial District Court of Clark County, Nevada, entered and Order Granting Application of Joseph Arcaro as Custodian of Tongji Healthcare Group, Inc. Pursuant to NRS 78.347(1)(b), pursuant to which Joseph Arcaro was appointed custodian of the amounts we receiveCompany and given authority to reinstate the Company with the State of Nevada under NRS 78.347. On May 23, 2019, Joseph Arcaro filed a Certificate of Reinstatement of the Company with the Secretary of State of the State of Nevada. In addition, on May 23, 2019, Joseph Arcaro filed an Annual List of the Company with the Secretary of State of the State of Nevada, designating himself as President, Secretary, Treasurer and Director of the Company for services providedthe filing period of 2017 to Medicare patients.
On May 23, 2019, Joseph Arcaro filed a Certificate of Reinstatement of the Company with the Secretary of State of the State of Nevada. The foregoing description of the Reinstatement is qualified in its entirety by reference to such Reinstatement, which is filed hereto as Exhibit 3.3, and incorporated herein by reference. In addition, on May 23, 2019, Joseph Arcaro filed an Annual List of the Company with the Secretary of State of the State of Nevada, designating himself as President, Secretary, Treasurer and Director of the Company for the filing period of 2017 to 2019.
On May 29, 2020, Joseph Arcaro, through his ownership of Algonquin Partners Inc. (“Algonquin”), of 65% of the Company’s common stock, entered into a Stock Purchase Agreement by and among West of Hudson Group, Inc. (“WOHG”), the Company, Algonquin, and Mr. Arcaro. The Stock Purchase Agreement, as subsequently amended, is referred to herein as the “SPA.” Pursuant to the terms of the SPA, WOHG agreed to purchase, and Algonquin agreed to sell, 30,000,000 shares of the Company’s common stock in exchange for payment by WOHG to Algonquin of $240,000 (the “Stock Purchase”). The Stock Purchase closed on June 18, 2020. Mr. Arcaro resigned from any and all officer and director positions with the Company.
On June 25, 2020, Board of Directors approved an amendment and restatement of the Company’s bylaws.
On July 7, 2020, the Company filed a Certificate of Amendment with the Secretary of State of Nevada applicable to the Company’s articles of incorporation. The Certificate of Amendment had the effect of increasing the authorized capital stock of the Company to 550,000,000, comprised of 500,000,000 shares of common stock, par value $0.001 and 50,000,000 shares of preferred stock, par value $0.001.
Results of OperationOperations - Three Months Ended June 30, 20172020 and 2016
Operating Revenues - Operating revenue for the three months period ended June 30, 2020 and 2019, was $0.
Operating Expenses – During the three months period ended June 30, 2020 and 2019, total operating expenses is $0 and $13,665. Operating expenses consists of items in our Statementgeneral and administrative expenses of Operations$0 and $13,665 for the three months ended June 30, 2017, as compared to the three months ended June 30, 2016, are discussed below.
Operating Expenses -Operating expenses were $555,077 for the three-month period ended June 30, 2017, a decrease of 5% as compared to $583,930 for the same period in 2016. The decrease was primarily due to a decrease in salaries and medicine and supplies expenses.
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Results of OperationOperations - Six Months Ended June 30, 20172020 and 2016
Operating Revenues - Operating revenue for the six months period ended June 30, 2020 and 2019, was $0.
Operating Expenses – During the six months period ended June 30, 2020 and 2019, total operating expenses is $300 and $13,911. Operating expenses consists of items in our Statementgeneral and administrative expenses of Operations$300 and $13,911 for the six months ended June 30, 2017, as compared to the six months ended June 30, 2016, are discussed below.
Operating RevenuesNet Loss - Operating revenue for the six-month period ended June 30, 2017, which resulted primarily from in-patient service and out-patient service, was $657,699, a decrease of $403,227 or 38%, as compared with the operating revenue of $1,060,926 for the same period of 2016. Our in-patient service revenue was $342,162 for the six-month period ended June 30, 2016, as compared to $591,299 for the same period in 2016, a decrease of $249,137 or 42%. The decrease in the in-patient service revenue was primarily due to the resignation of physicians especially in orthopedic inpatient department. Our out-patient service revenue was $315,537 for the six-month period ended June 30, 2016, a decrease of $154,090 or 33% as compared to $469,627 for the same period in 2016. The decrease in the out-patient service revenue was primarily due to the elimination of our prepaid health department and the resignation of physicians.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations- continued
2017 | 2016 | |
Cash provided by (used in) operating activities | $(108,625) | $(23,215) |
Cash (used in) investing activities | $0 | $(104,148) |
Cash provided by financing activities | $97,517 | $154,316 |
We are dependent on related partiesupon interim funding provided by Management or an affiliated party to pay professional fees and expenses. Our Management and an affiliated party have agreed to provide working capital and pay our management team until such timefunding as our operations are profitable. There can be no assurances that related parties will continue to provide additional capital. Without additional capital, we may be forcedrequired to cease operations and liquidate.
If we require additional financing, activities primarily consists of proceeds from related party loans.
Related Party | Total | |
2017 | $26,551 | $26,551 |
2018 | 8,850 | 8,850 |
Total | $35,402 | $35,402 |
Going Concern
The accompanying consolidated financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate continuation of the Company as a going concern. However, the Company has negative working capital of $7,578,047,had an accumulated deficit of $7,908,824, and a stockholders’ deficit of $7,023,497$1,120,229 as of June 30, 2017.2020. The Company’s ability to continue as a going concern ultimately is dependent on the management’s ability to obtain equity or debt financing, attain further operating efficiencies, and achieve profitable operations. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company not be able to continue as a going concern.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet items reasonably likely to have a material effect on our financial condition.
Not applicable.
Evaluation of Disclosure Controls
Our management maintains disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are designed to provide reasonable assurance that the material information required to be disclosed by us in our periodic reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
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As of June 30, 2017,2020, our management, under the supervision of and with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as required by Rules 13a-15(b) and 15d-15(b) under the Exchange Act. Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of June 30, 20172020 as a result of the material weaknesses identified in our internal control over financial reporting, which are discussed below. Our management considers our internal control over financial reporting to be an integral part of our disclosure controls and procedures.
Our management will continue to monitor and evaluate the effectiveness of its disclosure controls and procedures, as well as its internal control over financial reporting, on an ongoing basis, and is committed to taking further action and implementing additional improvements, as necessary and as funds allow. However, our management cannot guarantee that the measures taken or any future measures will remediate the material weaknesses identified or that any additional material weaknesses or significant deficiencies will not arise in the future due to a failure to implement and maintain adequate internal control over financial reporting.
Notwithstanding the material weaknesses described above, our management believes that there are no material inaccuracies or omissions of material fact and, to the best of its knowledge, believes that the consolidated financial statements included in this annual report present fairly, in all material respects, our financial position, results of operations, and cash flows for the periods presented in conformity with accounting principles generally accepted in the United States.
Item 4. Controls and Procedures- continued
No changes in the Company'sCompany’s internal control over financial reporting has come to management'smanagement’s attention during the Company'sCompany’s last fiscal quarter that have materially affected, or are likely to materially affect, the Company'sCompany’s internal control over financial reporting.
In September 2009, Guangxi Nanning Tingyouyuxiang Commercial Co., Ltd. (“Tingyouyuxiang”) filed a civil suit against Nanning Tongji Hospital, Inc. (“NTH”), a subsidiaryItem 1. Legal Proceedings.
None.
Not Applicable.
Item 2. Unregistered Sales of the Company in the People’s Court. In the complaint, Tingyouyuxiang asserted a breachEquity Securities and Use of contract claim against NTH, alleging that NTH had failed to make timely and total payment of RMB 5,050,000 (approximately $800,000) under certain Supplement Agreement by and among NTH, Tingyouyuxiang and the Eighth Group of Langdong Village Committee, Nanhu Community Office, Qingxiu District, Nanning City (the “Village Committee”). One December 30, 2009, the People’s Court ruled that NTH shall pay to Tingyouyuxiang damages of RMB 5,050,000 (approximately $800,000) plus interest and the court hearing fee approximately $320,000. On March 9, 2013, NTH appealed to the Intermediate Court, alleging, among other things, that NTH was never served. On September 6, 2013, the Intermediate Court remanded the case to the People’s Court. On April 16, 2014, the Intermediate Court dismissed Tingyouyuxiang’s appeal and affirmed the decision of the People’s Court.Proceeds.
None.
Item 3. Defaults Upon settlement of the lawsuit, the Company had accrued approximately $Senior Securities.
None.
1,443,722Item 4. Mine Safety Disclosures. in settlement payable as of June 30, 2017.
Not applicable.
Copies of the following documents are included as exhibits to this report pursuant to Item 601 of Regulation S-K.
* Filed herewith.
** Furnished herewith.
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SIGNATURES
Pursuant to the requirements of the securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
TONGJI HEALTHCARE GROUP, INC. | ||
Date: August | By: | /s/ |
Amir Ben-Yohanan Chief Executive Officer (Principal Executive Officer, Principal Financial Officer, and Principal Accounting Officer) |
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