Due to China's economic history of government centralization, almost all of China's major hospitals in urban areas are government owned. However, China's health care industry is now undergoing a profound reform from planned economics to market economics especially after China joined the World Trade Organization. The Chinese government is exploring different ways to run its hospitals more efficiently, including encouraging some of the government owned hospitals to convert to privately owned hospitals. The Chinese government now allows private entities to take control of hospitals and foreign entities to take a majority stake in these hospitals. Therefore, it is believed that a significant number of Chinese government-owned hospitals will be privatized or partially privatized.

The Chinese healthcare industry appears to be growing, as China's healthcare expenditure for 2000 is close to seven times that of 1990. China's gross domestic product, or GDP, has grown at an average of 9.65% for the last 20 years. The Chinese healthcare industry is expected to maintain a 20% growth rate until 2010, according to industry experts.

China's healthcare industry comprises only 5.3% of China's current GDP. In contrast, the healthcare industry in the United States comprises 14% of its GDP. Currently, the average healthcare expenditure per person, in China, per year is $31, which is far below the average healthcare expenditure per person, in the United States, per year of $4,090 and the average healthcare expenditure per person, in Germany, per year of $2,339. The healthcare expenditures in the United States and in Germany are 130 times and 70 times than that of China respectively. The share of health care services in GDP would rise to 8% or even 10% in the foreseeable future due to its strong economic growth according to Nobel Economics Prize winner, Professor Robert W. Fogel of the University of Chicago. Therefore, it is believed that China's healthcare industry has great room and potential to grow due to China's strong economy and low percentage weight of its current GDP.

On December 21, 2003, the Company’s predecessor signed an agreement with the Anqiu City Department of National Asset Management to acquire the Anqiu City People's Hospital. The Anqiu City People's Hospital is a Class AA educational hospital with 630 beds and 892 employees. As a term of the purchase agreement, the Management Company had to use some of the profits it generated from this hospital for the construction of a new building which has been completed. Additionally, the Management Company must continue to employ all existing employees of the hospital for one year at wages equal to at least their wages in 2002.

On July 16, 2004, the Management Company signed an agreement with the Mengzhou City National Department of Asset Management to acquire the Mengzhou City People's Hospital. The Mengzhou City People's Hospital is a Class AA educational hospital with 226 patient beds and 368 employees. As a term of the agreement, the Management Company agreed to continue to employ all existing employees of this hospital.

All of the hospitals the Company has acquired and plans to acquire are either general hospitals or acute hospitals that generally provide a broad range of medical and surgical services commonly available in hospitals in urban markets. Most of the hospitals also provide diagnostic and emergency services, as well as outpatient and ancillary services, including outpatient surgery, laboratory, rehabilitation, radiology, respiratory therapy and physical therapy. All of these hospitals are currently the primary providers of health care in the urban areas they serve and are located in Tianjing, Shandong, Heilongjiang, Henan, Liaoning, Hainan, and Beijing, China. Some of the hospitals engage in medical research and medical education programs and a number of these hospitals have an affiliation with medical schools and include the clinical rotation of medical students.

The cost of revenue for the six months ended June 30, 2004 was $2,957,233 compared to no cost of revenue for the six months ended June 30, 2003.

During the six months ended June 30, 2004, were incurred finance costs of $169,925 compared to no finance costs during the six months ended June 30, 2003.

Other expenses incurred during the six months ended June 30, 2004 were $27,651 compared to no other expenses for the six months ended June 20, 2003.

Net income during the six months ended June 30, 2004 was $126,083 compared to a net loss of $53,037 for the six months ended June 30, 2003.