Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
In Millions, except Share data, unless otherwise specified | Mar. 31, 2014 | Jun. 24, 2014 | Sep. 30, 2013 |
Document and Entity Information [Abstract] | ' | ' | ' |
Entity Registrant Name | 'CHINA JO-JO DRUGSTORES, INC. | ' | ' |
Entity Central Index Key | '0001413263 | ' | ' |
Trading Symbol | 'CJJD | ' | ' |
Entity Current Reporting Status | 'Yes | ' | ' |
Entity Voluntary Filers | 'No | ' | ' |
Current Fiscal Year End Date | '--03-31 | ' | ' |
Entity Filer Category | 'Smaller Reporting Company | ' | ' |
Entity Well-known Seasoned Issuer | 'No | ' | ' |
Entity Common Stock, Shares Outstanding | ' | 14,416,022 | ' |
Entity Public Float | ' | ' | $5.31 |
Document Type | '10-K | ' | ' |
Document Period End Date | 31-Mar-14 | ' | ' |
Amendment Flag | 'false | ' | ' |
Document Fiscal Year Focus | '2014 | ' | ' |
Document Fiscal Period Focus | 'FY | ' | ' |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Mar. 31, 2014 | Mar. 31, 2013 |
CURRENT ASSETS | ' | ' |
Cash | $4,445,276 | $4,524,094 |
Restricted cash | 3,114,543 | 2,162,837 |
Trade accounts receivables, net | 6,734,536 | 12,978,808 |
Inventories, net | 8,419,132 | 8,586,999 |
Other receivables, net | 149,546 | 157,849 |
Advances to suppliers, net | 4,577,194 | 15,523,034 |
Other current assets | 1,663,102 | 1,221,499 |
Total current assets | 29,103,329 | 45,155,120 |
PROPERTY AND EQUIPMENT, NET | 9,412,688 | 13,288,652 |
OTHER ASSETS | ' | ' |
Long term deposits | 2,786,437 | 2,760,665 |
Other noncurrent assets | 3,036,930 | 5,431,326 |
Intangible assets, net | 1,569,443 | 1,202,258 |
Total other assets | 7,392,810 | 9,394,249 |
Total assets | 45,908,827 | 67,838,021 |
CURRENT LIABILITIES | ' | ' |
Short-term bank loan | 162,300 | ' |
Notes payable | 7,820,718 | 7,186,453 |
Accounts payable, trade | 14,554,726 | 13,780,211 |
Other payables | 1,282,211 | 1,327,454 |
Other payables - related parties | 2,384,294 | 1,224,417 |
Loan from third parties | 294,042 | ' |
Customer deposits | 3,185,885 | 4,828,293 |
Taxes payable | 373,501 | 371,633 |
Accrued liabilities | 1,208,242 | 956,342 |
Total current liabilities | 31,265,919 | 29,674,803 |
Purchase option and warrant liability | 278,916 | 15,609 |
Total liabilities | 31,544,835 | 29,690,412 |
COMMITMENTS AND CONTINGENCIES | ' | ' |
EQUITY | ' | ' |
Preferred stock; $0.001 par value; 10,000,000 shares authorized; nil issued and outstanding as of March 31, 2014 and 2013 | ' | ' |
Common stock; $0.001 par value; 250,000,000 shares authorized; 14,416,022 and 13,609,002 shares issued and outstanding as of March 31, 2014 and 2013 | 14,416 | 13,609 |
Additional paid-in capital | 17,355,555 | 16,609,747 |
Statutory reserves | 1,309,109 | 1,309,109 |
Retained earnings (deficit) | -8,260,767 | 17,095,369 |
Accumulated other comprehensive income | 3,905,136 | 3,121,654 |
Total stockholders' equity | 14,323,449 | 38,149,488 |
Noncontrolling interests | 40,543 | -1,879 |
Total equity | 14,363,992 | 38,147,609 |
Total liabilities and equity | $45,908,827 | $67,838,021 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parentheticals) (USD $) | Mar. 31, 2014 | Mar. 31, 2013 |
Statement Of Financial Position [Abstract] | ' | ' |
Preferred stock, par value (in dollars per share) | $0.00 | $0.00 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | ' | ' |
Preferred stock, shares outstanding | ' | ' |
Common stock, par value (in dollars per share) | $0.00 | $0.00 |
Common stock, shares authorized | 250,000,000 | 250,000,000 |
Common stock, shares issued | 14,416,022 | 13,609,002 |
Common stock, shares outstanding | 14,416,022 | 13,609,002 |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (USD $) | 12 Months Ended | |||
Mar. 31, 2014 | Mar. 31, 2013 | |||
Income Statement [Abstract] | ' | ' | ||
REVENUES, NET | $66,154,587 | $89,495,546 | ||
COST OF GOODS SOLD | 60,427,101 | 74,860,553 | ||
GROSS PROFIT | 5,727,486 | 14,634,993 | ||
SELLING EXPENSES | 13,688,771 | 12,216,984 | ||
GENERAL AND ADMINISTRATIVE EXPENSES | 11,268,857 | 15,000,364 | ||
TOTAL OPERATING EXPENSES | 24,957,628 | 27,217,348 | ||
LOSS FROM OPERATIONS | -19,230,142 | -12,582,355 | ||
OTHER (EXPENSE) INCOME, NET | -8,412 | 56,428 | ||
IMPAIRMENT OF GOODWILL | ' | -1,473,606 | ||
IMPAIRMENT OF LONG-LIVED ASSETS | -4,995,012 | ' | ||
IMPAIRMENT OF AGRICULTURAL INVENTORY | -820,637 | ' | ||
CHANGE IN FAIR VALUE OF PURCHASE OPTION AND WARRANT LIABILITY | -257,097 | 18,810 | ||
LOSS BEFORE INCOME TAXES | -25,311,300 | -13,980,723 | ||
PROVISION FOR INCOME TAXES | 44,870 | [1] | 353,802 | [1] |
NET LOSS | -25,356,170 | -14,334,525 | ||
ADD: NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTEREST | 34 | 794 | ||
NET LOSS ATTRIBUTABLE TO CHINA JO-JO DRUGSTORES, INC. | -25,356,136 | -14,333,731 | ||
OTHER COMPREHENSIVE LOSS | ' | ' | ||
Foreign currency translation adjustments | 784,184 | 374,081 | ||
COMPREHENSIVE LOSS | -24,571,986 | -13,960,444 | ||
Less: Comprehensive loss attributable to noncontrolling interest | -668 | 806 | ||
COMPREHENSIVE LOSS ATTRIBUTABLE TO CHINA JO-JO DRUGSTORES, INC. | ($24,572,654) | ($13,959,638) | ||
WEIGHTED AVERAGE NUMBER OF SHARES: | ' | ' | ||
Basic and diluted (in shares) | 13,880,190 | 13,580,731 | ||
LOSS PER SHARES: | ' | ' | ||
Basic and diluted (in dollars per share) | ($1.83) | ($1.06) | ||
[1] | The current income tax provision for the year ended March 31, 2014 represents prepaid tax expenses incurred by the Company which were not refundable. |
CONSOLIDATED_STATEMENTS_OF_CHA
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (USD $) | Common Stock | Additional Paid-in capital | Retained Earnings Statutory reserves | Retained Earnings Unrestricted | Accumulated other comprehensive income/(loss) | Noncontrolling interest | Total |
BALANCE at Mar. 31, 2012 | $13,589 | $16,853,039 | $1,309,109 | $31,429,100 | $2,747,561 | ($1,073) | $52,351,325 |
BALANCE (in shares) at Mar. 31, 2012 | 13,589,621 | ' | ' | ' | ' | ' | ' |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ' | ' | ' | ' | ' | ' | ' |
Closing of VIE Jiuying Pharmacy | ' | -406,546 | ' | ' | ' | ' | -406,546 |
Stock based compensation | 20 | 163,254 | ' | ' | ' | ' | 163,274 |
Stock based compensation (in shares) | 19,381 | ' | ' | ' | ' | ' | ' |
Net loss | ' | ' | ' | -14,333,731 | ' | -794 | -14,334,525 |
Foreign currency translation gain (loss) | ' | ' | ' | ' | 374,093 | -12 | 374,081 |
BALANCE at Mar. 31, 2013 | 13,609 | 16,609,747 | 1,309,109 | 17,095,369 | 3,121,654 | -1,879 | 38,147,609 |
BALANCE (in shares) at Mar. 31, 2013 | 13,609,002 | ' | ' | ' | ' | ' | 13,609,002 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ' | ' | ' | ' | ' | ' | ' |
Stock based compensation | 807 | 746,621 | ' | ' | ' | ' | 747,428 |
Stock based compensation (in shares) | 807,020 | ' | ' | ' | ' | ' | ' |
Net loss | ' | ' | ' | -25,356,136 | ' | -34 | -25,356,170 |
Start-up of Shouantang Health | ' | ' | ' | ' | ' | 39,837 | 39,837 |
Closing of Shanghai Zhongxin | ' | -813 | ' | ' | ' | 1,917 | 1,104 |
Foreign currency translation gain (loss) | ' | ' | ' | ' | 783,482 | 702 | 784,184 |
BALANCE at Mar. 31, 2014 | $14,416 | $17,355,555 | $1,309,109 | ($8,260,767) | $3,905,136 | $40,543 | $14,363,992 |
BALANCE (in shares) at Mar. 31, 2014 | 14,416,022 | ' | ' | ' | ' | ' | 14,416,022 |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 12 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ' | ' |
Net loss | ($25,356,170) | ($14,334,525) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ' | ' |
Bad debt write-off and provision - trade accounts receivables, advance to suppliers and other receivables | 4,387,765 | 8,184,909 |
Depreciation and amortization | 3,234,169 | 2,764,144 |
Inventory reserve and write-off | 1,776,067 | ' |
Agricultural inventory impairment | 820,637 | ' |
Impairment of goodwill | ' | 1,473,606 |
Impairment of leasehold improvement | 480,771 | ' |
Impairment of intangible - license and permit | 1,126,981 | ' |
Impairment of prepayment of lease use right | 2,481,792 | ' |
Impairment of land and road improvement | 905,468 | ' |
Leasehold improvement write-off | 145,040 | 2,269,288 |
Stock compensation | 748,907 | 163,274 |
Change in fair value of purchase option derivative liability and warrant liability | 263,307 | -18,810 |
Change in operating assets: | ' | ' |
Trade accounts receivables | 5,211,707 | -1,045,689 |
Inventories | -2,272,013 | -1,646,583 |
Other receivables | 289,545 | -503,613 |
Advances to suppliers | 7,863,565 | -3,584,443 |
Other current assets | -420,126 | 1,646,935 |
Long term deposits | 24,499 | 134,493 |
Other noncurrent assets | 16,026 | 390,869 |
Change in operating liabilities: | ' | ' |
Accounts payable, trade | 524,778 | -239,313 |
Other payables and accrued liabilities | 169,752 | 665,735 |
Customer deposits | -1,733,448 | 3,467,706 |
Taxes payable | -4,903 | -101,323 |
Net cash provided by (used in) operating activities | 684,116 | -313,340 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ' | ' |
Acquisition of equipment | -322,624 | -415,152 |
Acquisition of land use right | -1,585,139 | ' |
Additions to leasehold improvements | -205,278 | -1,989,207 |
Net cash used in investing activities | -2,113,041 | -2,404,359 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ' | ' |
Proceeds from short-term bank loan | 162,600 | ' |
Proceeds from third parties loan | 294,586 | ' |
Change in restricted cash | -914,044 | 675,380 |
Proceeds from notes payable | 8,209,154 | 7,150,386 |
Repayments of notes payable | -7,704,703 | -4,222,240 |
Proceeds from other payables-related parties | 1,159,909 | 68,836 |
Payment to other payables-related parties | ' | -303,240 |
Net cash provided by financing activities | 1,207,502 | 3,369,122 |
EFFECT OF EXCHANGE RATE ON CASH | 142,605 | 39,455 |
INCREASE (DECREASE) IN CASH | -78,818 | 690,878 |
CASH, beginning of year | 4,524,094 | 3,833,216 |
CASH, end of year | 4,445,276 | 4,524,094 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ' | ' |
Cash paid for interest | 8,764 | ' |
Cash paid for income taxes | 39,754 | 70,725 |
Transfer from construction-in-progress to leasehold improvement | 111,890 | 2,707,183 |
Goods receipts against accounts receivables and offset | $5,394,919 | ' |
DESCRIPTION_OF_BUSINESS_AND_OR
DESCRIPTION OF BUSINESS AND ORGANIZATION | 12 Months Ended | ||||||
Mar. 31, 2014 | |||||||
Description Of Business and Organization [Abstract] | ' | ||||||
DESCRIPTION OF BUSINESS AND ORGANIZATION | ' | ||||||
Note 1 – DESCRIPTION OF BUSINESS AND ORGANIZATION | |||||||
China Jo-Jo Drugstores, Inc. (“Jo-Jo Drugstores” or the “Company”), was incorporated in Nevada on December 19, 2006, originally under the name “Kerrisdale Mining Corporation.” On September 24, 2009, the Company changed its name to “China Jo-Jo Drugstores, Inc.” in connection with a share exchange transaction as described below. | |||||||
On September 17, 2009, the Company completed a share exchange transaction with Renovation Investment (Hong Kong) Co., Ltd. (“Renovation”), whereby 7,900,000 shares of common stock were issued to the stockholders of Renovation in exchange for 100% of the capital stock of Renovation. The completion of the share exchange transaction resulted in a change of control. The share exchange transaction was accounted for as a reverse acquisition and recapitalization and, as a result, the consolidated financial statements of the Company (the legal acquirer) are, in substance, those of Renovation (the accounting acquirer), with the assets and liabilities, and revenues and expenses, of the Company being included effective from the date of the share exchange transaction. Renovation has no substantive operations of its own except for its holdings of Zhejiang Jiuxin Investment Management Co., Ltd. (“Jiuxin Management”), Zhejiang Shouantang Medical Technology Co., Ltd. (“Shouantang Technology”) and Hangzhou Jiutong Medical Technology Co., Ltd (“Jiutong Medical”), its wholly-owned subsidiaries. | |||||||
The Company is a retail and wholesale distributor of pharmaceutical and other healthcare products in the People’s Republic of China (“China” or the “PRC”). The Company’s retail business is comprised primarily of pharmacies, a majority of which are operated by Hangzhou Jiuzhou Grand Pharmacy Chain Co., Ltd. (“Jiuzhou Pharmacy”), a company that the Company controls through contractual arrangements. | |||||||
The Company’s retail business also includes four medical clinics through Hangzhou Jiuzhou Clinic of Integrated Traditional and Western Medicine (“Jiuzhou Clinic”) and Hangzhou Jiuzhou Medical and Public Health Service Co., Ltd. (“Jiuzhou Service”), both of which are also controlled by the Company through contractual arrangements. On December 18, 2013, Jiuzhou Service established, and currently holds 51% of, Hangzhou Shouantang Health Management Co., Ltd. (“Shouantang Health”), a PRC company licensed to sell health care products. | |||||||
The Company’s wholesale business is primarily conducted through Zhejiang Jiuxin Medicine Co., Ltd. (“Jiuxin Medicine”), which is licensed to distribute prescription and non-prescription pharmaceutical products throughout China. Jiuzhou Pharmacy acquired Jiuxin Medicine on August 25, 2011. | |||||||
The Company’s herb farming business is conducted by Hangzhou Qianhong Agriculture Development Co., Ltd. (“Qianhong Agriculture”), a wholly-owned subsidiary of Jiuxin Management, which operates a cultivation project of herbal plants used for traditional Chinese medicine (“TCM”). | |||||||
Tonglu Lydia Agriculture Development Co., Ltd. (“Tonglu Lydia”), a wholly-owned subsidiary of Shouantang Technology, was closed on August 1, 2012. Prior to its closure, Tonglu Lydia did not have any operations. | |||||||
The accompanying consolidated financial statements reflect the activities of the Company and each of the following entities: | |||||||
Entity Name | Background | Ownership | |||||
Renovation HK | ● Incorporated in Hong Kong SAR on September 2, 2008 | 100% | |||||
Jiuxin Management | ● Established in the PRC on October 14, 2008 | 100% | |||||
● Deemed a wholly foreign owned enterprise (“WFOE”) under PRC law | |||||||
● Registered capital of $4.5 million fully paid | |||||||
Shouantang Technology | ● Established in the PRC on July 16, 2010 by Renovation with registered capital of $20 million | 100% | |||||
● Registered capital requirement reduced by the SAIC to $11 million in July 2012 and is fully paid | |||||||
● Deemed a WFOE under PRC law | |||||||
● Invests and finances the working capital of Quannuo Technology | |||||||
Qianhong Agriculture | ● Established in the PRC on August 10, 2010 by Jiuxin Management | 100% | |||||
● Registered capital of RMB 10 million fully paid | |||||||
● Carries out cultivation of TCM herbal plants | |||||||
Quannuo Technology | ● Established in the PRC on July 7, 2009 | 100% | |||||
● Registered capital of RMB 10 million fully paid | |||||||
● Acquired by Shouantang Technology in November 2010 | |||||||
● Operates the Company’s online pharmacy website and provide software and technical support | |||||||
Hangzhou Quannuo | ● Established in the PRC on July 8, 2010 by Quannuo Technology | 100% | |||||
● Registered capital of RMB 800,000 fully paid | |||||||
● Currently has no operations | |||||||
Jiuzhou Pharmacy (1) | ● Established in the PRC on September 9, 2003 | VIE by contractual arrangements (2) | |||||
● Registered capital of RMB 5 million fully paid | |||||||
● Operates the “Jiuzhou Grand Pharmacy” stores in Hangzhou | |||||||
Jiuzhou Clinic (1) | ● Established in the PRC as a general partnership on October 10, 2003 | VIE by contractual arrangements (2) | |||||
● Operates a medical clinic adjacent to one of Jiuzhou Pharmacy’s stores | |||||||
Jiuzhou Service (1) | ● Established in the PRC on November 2, 2005 | VIE by contractual arrangements (2) | |||||
● Registered capital of RMB 500,000 fully paid | |||||||
● Operates a medical clinic adjacent to one of Jiuzhou Pharmacy’s stores | |||||||
Shanghai Lydia | ● Established in the PRC on January 31, 2011 by Jiuzhou Pharmacy | VIE by contractual arrangements as a wholly-owned subsidiary of Jiuzhou Pharmacy (2) | |||||
● Registered capital of RMB 1 million fully paid | |||||||
● Operates the “Lydia Grand Pharmacy” and “Chaling Grand Pharmacy” stores in Shanghai | |||||||
Jiuxin Medicine | ● Established in PRC on December 31, 2003 | VIE by contractual arrangements as a wholly-owned subsidiary of Jiuzhou Pharmacy (2) | |||||
● Acquired by Jiuzhou Pharmacy in August 2011 | |||||||
● Registered capital of RMB 10 million fully paid | |||||||
● Carries out pharmaceutical distribution services | |||||||
Jiutong Medical | ● Established in the PRC on December 20, 2011 by Renovation Registered capital of $2.6 million fully paid | 100% | |||||
● Currently has no operation | |||||||
Shouantang Health | ● Established in the PRC on December 18, 2013 by Jiuzhou Service | VIE by contractual arrangements as a controlled entity of Jiuzhou Service (2) | |||||
● Registered capital of RMB 500,000 fully paid | |||||||
● 51% held by Jiuzhou Service | |||||||
● Currently has no operations | |||||||
(1) | Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service have been under the common control of the Renovation (“Owners”) since their respective establishment dates, pursuant to agreements amongst the Owners to vote their interests in concert as memorialized in a voting agreement. Based on such voting agreement, the Company has determined that common control exists among these three companies. Operationally, the Owners have operated these three companies in conjunction with one another since each company’s respective establishment date. Shanghai Lydia, Shanghai Zhongxing, Lydia Trading, Shanghai Zhenguang and Jiuxin Medicine were also deemed under the common control of the Owners as subsidiaries of Jiuzhou Pharmacy, as is Shouantang Health as a subsidiary of Jiuzhou Service. | ||||||
(2) | To comply with certain foreign ownership restrictions of pharmacy and medical clinic operators, Jiuxin Management entered into a series of contractual arrangements with Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service on August 1, 2009. These contractual arrangements are comprised of five agreements: consulting services agreement, operating agreement, equity pledge agreement, voting rights agreement and option agreement. As a result of these agreements, which obligate Jiuxin Management to absorb all of the risks of loss from the activities of Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service, and enable the Company (through Jiuxin Management) to receive all of their expected residual returns, the Company accounts for all three companies (as well as the two subsidiaries of Jiuzhou Pharmacy) as a variable interest entity (“VIE”) under the accounting standards of the Financial Accounting Standards Board (“FASB”). Accordingly, the financial statements of Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service, as well as the subsidiaries and entity under the control of Jiuzhou Pharmacy (Shanghai Lydia, Jiuxin Medicine, Shanghai Zhongxing, Leilian Trading ,Shanghai Zhenguang and Shouantang Health), are consolidated into the financial statements of the Company. |
LIQUIDITY
LIQUIDITY | 12 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Liquidity [Abstract] | ' | ||||||||
LIQUIDITY | ' | ||||||||
Note 2 – LIQUIDITY | |||||||||
Our accounts have been prepared in accordance with U.S. GAAP on a going concern basis. The going concern basis assumes that assets are realized and liabilities are extinguished in the ordinary course of business at amounts disclosed in the financial statements. Our ability to continue as a going concern depends upon aligning our sources of funding (debt and equity) with our expenditure requirements and repayment of the short-term debts as and when they become due. | |||||||||
The drug retail business is a highly competitive industry in PRC. Several large drugstore chains and a variety of single stores operate in Hangzhou City and Zhejiang Province. The Company closed unprofitable stores, including those in Shanghai in fiscal 2013 and 2014. Existing drugstores have historically been profitable and are not expected to require additional financing. | |||||||||
As reflected in the Company’s consolidated financial statements, the Company had a net loss and negative cash flows from operating activities for the year ended March 31, 2014. As of March 31, 2014, the Company’s current liabilities exceed current assets by $2.16 million. In assessing its liquidity, management monitors and analyzes the Company’s cash balance, its ability to renew bank facilities, and its operating and capital expenditure commitments. Its principal liquidity needs are to meet its working capital requirements, operating expenses and capital expenditure obligations. As of the date of this report, the Company has obtained the following financial support: | |||||||||
Line of bank credit | |||||||||
Banks | Amount of | Unused Amount of | Expiration Date | ||||||
Line of Credit as | Line of Credit as | ||||||||
of June 27, 2014 | of June 27, 2014 | ||||||||
(in millions) | (in millions) | ||||||||
Hangzhou United Bank | $ | 1.38 | $ | - | 7-Nov-14 | ||||
Hangzhou United Bank | 0.81 | 0.42 | 2-Apr-15 | ||||||
Hangzhou United Bank | 1.17 | - | 23-Oct-15 | ||||||
Bank of Hangzhou | 1.81 | 0.51 | 12-Jun-15 | ||||||
Bank of Hangzhou | 2.86 | 2.86 | 12-Jul-15 | ||||||
Total | $ | 8.03 | $ | 3.79 | |||||
The Company’s principal sources of liquidity consist of existing cash, bank facilities from local banks as well as personal loans from its principal shareholders if necessary. The Company has two credit line agreements from two local banks and one expired credit line from another local bank that is expected to be renewed in the near future as displayed in detail in Note 14. Two credit lines from Hangzhou United Bank and Bank of Hangzhou to borrow up to $8.03 million, while the credit line from Industrial and Commercial Bank of China (ICBC) to borrow up to $1.95 million has expired and is expected to be renewed within the next twelve months. Any borrowing therefrom is guaranteed by a third-party guarantor company, and secured by the Company’s assets pursuant to a collateral agreement, as well as the personal guarantees of some of its principal shareholders. | |||||||||
As reflected in the consolidated financial statements, the Company had a net loss for the year ended March 31, 2014. The Company has taken measures to reduce its losses and generate positive cash flow by accelerating cash or goods collections from suppliers against advances, and attracting talent to improve and enhance traditional retail pharmacy plus in-store clinic business. In its retail sector, the Company closed five unprofitable pharmacies and is looking to open additional in-store clinics to attract customer traffic. The remaining stores are considered profitable and are currently generating positive cash flow. The Company is actively negotiating with several large suppliers including Pfizer to obtain more purchase discounts and financial support. Moreover, the Company is actively developing its high profit margin product line of high-grade nutritional supplements such as Ginseng under its own trademark of Shouantang. As healthcare products have become more popular in China, the Company anticipates a reasonable positive gross margin driving profitability. The drug wholesale industry is usually marked with low profit margin. However, as the Company is strengthening its customer and supplier credit policy and ceased extremely low profit margin transactions that cannot cover related overhead, it does not expect a significant loss in next year. Additionally, the Company has actively searched for experienced talent to manage our healthcare center under Jiuyingtang. | |||||||||
The detailed analysis of the Company’s estimated cash flows items are listed below. | |||||||||
Cash inflow | |||||||||
(outflow) | |||||||||
(in millions) | |||||||||
For the | |||||||||
twelve months | |||||||||
ended | |||||||||
March 31, | |||||||||
2015 | |||||||||
Current liabilities over current assets as of March 31, 2014 | $ | (2.16 | ) | ||||||
Projected cash financing and outflows: | |||||||||
Cash provided by line of credit from banks | 3.79 | ||||||||
Cash projected to be used in operations in the twelve months ended March 31, 2015 | (1.18 | ) | |||||||
Cash projected to be used for financing cost in the twelve months ended March 31, 2015 | (0.20 | ) | |||||||
Net projected change in cash for the twelve months ended March 31, 2015 | $ | 0.25 | |||||||
The Company is projected to have negative cash flows of $1.18 million from its three operating segments. Wholesale business is not expected to contribute a significant gross margin to support overhead in fiscal 2015, and sales have been projected to be approximately the same as the prior year. Herbs farming business is not expected to have any sales and may incur limited operating costs, including capitalized expenditures have been reflected in the herb farming’s projections. Retail drugstores and online sales have been projected to slightly increase as compared to the prior year with similar profit margins. | |||||||||
Management believes that the foregoing measures collectively will provide sufficient liquidity for the Company to meet its future liquidity and capital obligations in the next twelve months. | |||||||||
However, in case the banks withdraw their credit lines with us, or our existing store performance suddenly deteriorate due to unexpected government policy change, or our operating license is cancelled as a result of violation of industry regulation, the Company may or may not obtain alternative financing resources to support its continuing operation. At that time, the Company may not be able to continue to present itself on a going concern basis. |
SUMMARY_OF_SIGNIFICANT_ACCOUNT
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended | |
Mar. 31, 2014 | ||
Accounting Policies [Abstract] | ' | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' | |
Note 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Basis of presentation and consolidation | ||
The accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). The consolidated financial statements include the financial statements of the Company, its wholly-owned subsidiaries and VIEs. All significant inter-company transactions and balances between the Company, its subsidiaries and VIEs are eliminated upon consolidation. | ||
Consolidation of variable interest entities | ||
In accordance with accounting standards regarding consolidation of variable interest entities (“VIEs”), VIEs are generally entities that lack sufficient equity to finance their activities without additional financial support from other parties or whose equity holders lack adequate decision making ability. All VIEs with which the Company is involved must be evaluated to determine the primary beneficiary of the risks and rewards of the VIE. The primary beneficiary is required to consolidate the VIE for financial reporting purposes. | ||
The Company has concluded, based on the contractual arrangements, that Jiuzhou Pharmacy (including its subsidiaries and controlled entities), Jiuzhou Clinic and Jiuzhou Service are each a VIE and that the Company’s wholly-owned subsidiary, Jiuxin Management, absorbs a majority of the risk of loss from the activities of these companies, thereby enabling the Company, through Jiuxin Management, to receive a majority of their respective expected residual returns. Based on our evaluation of the VIEs, we are the primary beneficiary of their risks and rewards; therefore, we consolidate the VIEs for financial reporting purposes. | ||
Additionally, as Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service are under common control, the consolidated financial statements have been prepared as if the transactions had occurred retroactively as to the beginning of the reporting period of these consolidated financial statements. | ||
Control and common control is defined under the accounting standards as “an individual, enterprise, or immediate family members who hold more than 50 percent of the voting ownership interest of each entity.” Because the Owners collectively own 100% of Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service, and have agreed to vote their interests in concert since the establishment of each of these three companies as memorialized the Voting Rights Proxy Agreement, the Company believes that the Owners collectively have control and common control of the three companies. Accordingly, the Company believes that Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service were constructively held under common control by Jiuxin Management as of the time the Contractual Agreements were entered into, establishing Jiuxin Management as their primary beneficiary. Jiuxin Management, in turn, is owned by Renovation, which is owned by the Company. | ||
Although the Company has determined that the accounting standards regarding consolidation of VIEs do not provide for retroactive accounting treatment, each of Jiuzhou Pharmacy, Jiuzhou Clinic, and Jiuzhou Service was in substance controlled on its establishment date of September 9, 2003, October 10, 2003, and November 2, 2005, respectively, by the Owners. Such common control conditions resulted in the share exchange transaction to be a capital transaction in substance, reflected as a recapitalization, and the Company has accordingly recorded the consolidation at its historical cost. | ||
Risks and Uncertainties | ||
The operations of the Company are located in the PRC. Accordingly, the Company’s business, financial condition, and results of operations may be influenced by the political, economic, and legal environments in the PRC, as well as 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 other factors, the political, economic and legal environment and foreign currency exchange. The Company’s results may be adversely affected by changes in the political, regulatory and social conditions in the PRC, and by changes in governmental policies or interpretations with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation, among other things. Although the Company has not experienced losses from these situations and believes that it is in compliance with existing laws and regulations including its organization and structure disclosed in Note 1, this may not be indicative of future results. | ||
The Company has significant cash deposits with suppliers in order to obtain and maintain inventory. The Company’s ability to obtain products and maintain inventory at existing and new locations is dependent upon its ability to post and maintain significant cash deposits with its suppliers. In the PRC, many vendors are unwilling to extend credit terms for product sales that require cash deposits to be made. The Company does not generally receive interest on any of its supplier deposits, and such deposits are subject to loss as a result of the creditworthiness or bankruptcy of the party who holds such funds, as well as the risk from illegal acts such as conversion, fraud, theft or dishonesty associated with the third party. If these circumstances were to arise, the Company would find it difficult or impossible, due to the unpredictability of legal proceedings in China, to recover all or a portion of the amount on deposit with its vendors or landlords. | ||
Members of the current management team own controlling interests in the Company and are also the Owners of the VIEs in the PRC. The Company only controls the VIEs through contractual arrangements which obligate it to absorb the risk of loss and to receive the residual expected returns. As such, the controlling shareholders of the Company and the VIEs could cancel these agreements or permit them to expire at the end of the agreement terms, as a result of which the Company would not retain control of the VIEs. | ||
Use of estimates | ||
The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, 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. The significant estimates made in the preparation of the accompanying consolidated financial statements relate primarily to the assessment of the carrying values of accounts receivable and advances to suppliers, and related allowance for doubtful accounts, useful lives of property and equipment as well as intangible assets, fair value of purchase option derivative liability and impairment of goodwill. Because of the use of estimates inherent in the financial reporting process, actual results could materially differ from those estimates. | ||
Revenue recognition | ||
Revenue from sales of prescription medicine at the drugstores is recognized when the prescription is filled and the customer picks up and pays for the prescription. | ||
Revenue from sales of other merchandise at the drugstores is recognized at the point of sale, which is when the customer pays for and receives the merchandise. Sales of drugs reimbursed by the local government medical insurance agency and receivables from the agency are recognized when a customer pays for the drugs at a store. Based on historical experience, a reserve for potential loss from denial of reimbursement on certain unqualified drugs was made to the receivables from the government agency. | ||
Revenue from medical services is recognized after the service has been rendered to the customer. | ||
Revenue from online pharmacy sales is recognized when merchandise is delivered to customers. While most deliveries take one day, certain deliveries may take longer depending on the customer’s location. Any loss caused in the shipment will be reimbursed by the courier company. A proper sales discount is made to account for the potential loss from returns. Historically, sales returns have been minimal. | ||
Revenue from sales of merchandise to non-retail customers is recognized when the following conditions are met: (1) persuasive evidence of an arrangement exists (sales agreements and customer purchase orders are used to determine the existence of an arrangement); (2) delivery of goods has occurred and risks and benefits of ownership have been transferred, which is when the goods are received by the customer at its designated location in accordance with the sales terms; (3) the sales price is fixed or determinable; and (4) collectability is probable. Historically, sales returns have been minimal. | ||
The Company’s revenue is net of value added tax (“VAT”) collected on behalf of PRC tax authorities in respect to the sales of merchandise. VAT collected from customers, net of VAT paid for purchases, is recorded as a liability in the accompanying consolidated balance sheets until it is paid to the relevant PRC tax authorities. | ||
Restricted cash | ||
The Company’s restricted cash consists of cash in a bank as security for its notes payable. The Company has notes payable outstanding with the bank and is required to keep certain amounts on deposit that are subject to withdrawal restrictions. The notes payable are generally short term in nature due to their short maturity period of six to nine months; thus, restricted cash is classified as a current asset. | ||
Accounts receivable | ||
Accounts receivable represents the following: (1) amounts due from banks relating to retail sales that are paid or settled by the customers’ debit or credit cards, (2) amounts due from government social security bureaus and commercial health insurance programs relating to retail sales of drugs, prescription medicine, and medical services that are paid or settled by the customers’ medical insurance cards, and (3) amounts due from non-retail customers for sales of merchandise. | ||
Accounts receivable are recorded at net realizable value consisting of the carrying amount less an allowance for uncollectible accounts, as necessary. In its wholesale business, the Company uses the aging method to estimate the allowance for anticipated uncollectible receivable balances. Under the aging method, bad debt percentages are determined by management, based on historical experience and the current economic climate, are applied to customers’ balances categorized by the number of months the underlying invoices have remained outstanding. At each reporting period, the allowance balance is adjusted to reflect the amount computed as a result of the aging method. When facts subsequently become available to indicate that the allowance provided requires an adjustment, a corresponding adjustment is made to the allowance account as a change in estimate. | ||
In its retail business, accounts receivable mainly consist of reimbursements due from the government insurance bureaus and commercial health insurance programs, and are usually collected within two or three months. The Company directly writes off delinquent account balances that are determined to be uncollectable after confirming with the appropriate bureau or program each month. Additionally, the Company also makes an estimated reserve on related outstanding accounts receivable based on historical trends. | ||
Inventories | ||
Inventories are stated at the lower of cost or market. Cost is determined using the first in first out (FIFO) method. Market is the lower of replacement cost or net realizable value. The Company carries out physical inventory counts on a monthly basis at each store and warehouse location. Herbs that the Company farms are recorded at their cost, which includes direct costs such as seed selection, fertilizer, and labor costs that are spent in growing herbs on the leased farmland, and indirect costs such as amortization of farmland development cost. All the costs are accumulated until the time of harvest and then allocated to harvested herbs costs when they are sold. The Company periodically reviews its inventory and records write-downs to inventories for shrinkage losses and damaged merchandise that are identified. The Company provides a reserve for estimated inventory obsolescence or excess quantities on hand equal to the difference between the cost of the inventory and its estimated realizable value. | ||
Property and equipment | ||
Property and equipment are stated at cost, net of accumulated depreciation or amortization. Depreciation is calculated on the straight-line method over the estimated useful lives of the assets, taking into consideration the assets’ estimated residual value. Leasehold improvements are amortized over the shorter of lease term or remaining lease period of the underlying assets. Following are the estimated useful lives of the Company’s property and equipment: | ||
Estimated Useful Life | ||
Leasehold improvements | 3-10 years | |
Motor vehicles | 3-5 years | |
Office equipment and furniture | 3-5 years | |
Buildings | 35 years | |
Maintenance, repairs and minor renewals are charged to expense as incurred. Major additions and betterment to property and equipment are capitalized. | ||
Intangibles | ||
Intangible assets are acquired individually or as part of a group of assets, and are initially recorded at their fair value. The cost of a group of assets acquired in a transaction is allocated to the individual assets based on their relative fair values. | ||
The estimated useful lives of the Company’s intangible assets are as follows: | ||
Estimated Useful Life | ||
Land use right | 50 years | |
Software | 3 years | |
The Company evaluates intangible assets for impairment whenever events or changes in circumstances indicate that the assets might be impaired. | ||
Impairment of long-lived assets | ||
The Company evaluates long-lived tangible and intangible assets for impairment, whenever events or changes in circumstances indicate that the carrying value may not be recoverable from its estimated future cash flows. Recoverability is measured by comparing the assets’ net book value to the related projected undiscounted cash flows from these assets, considering a number of factors, including past operating results, budgets, economic projections, market trends and product development cycles. If the net book value of the asset exceeds the related undiscounted cash flows, the asset is considered impaired, and a second test is performed to measure the amount of impairment loss. There were $480,771 leasehold improvement, $2,481,792 prepayment of lease use right, $905,468 land and road improvement, and $1,126,981 intangible assets impaired as of March 31 2014 (See Notes 6 and 11). | ||
Notes payable | ||
During the normal course of business, the Company regularly issues bank acceptance bills as a payment method to settle outstanding accounts payables with various material suppliers. The Company records such bank acceptance bills as notes payable. Such notes payable are generally short term in nature due to their short maturity period of six to nine months. | ||
Income taxes | ||
The Company records income taxes pursuant to the accounting standards for income taxes. These standards require the recognition of deferred income tax liabilities and assets for the expected future tax consequences of temporary differences between income tax basis and financial reporting basis of assets and liabilities. The provision for income taxes consists of taxes currently due and the net change in deferred taxes. A valuation allowance is recognized if it is more likely than not that some portion, or all of, a deferred tax asset will not be realized. | ||
The accounting standards clarify the accounting and disclosure requirements for uncertain tax positions and prescribe a recognition threshold and measurement attribute for recognition and measurement of a tax position taken or expected to be taken in a tax return. The accounting standards also provide guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosures, and transition. No significant penalties, uncertain tax provisions or interest relating to income taxes were incurred during the years ended March 31, 2014 and 2013. | ||
Since its inception, all of the tax returns of the Company have been and remain subject to examination by the tax authorities. | ||
Value added tax | ||
Sales revenue represents the invoiced value of goods, net of value added tax (“VAT”). All of the Company’s products are sold in the PRC and are subject to a VAT on the gross sales price. The VAT rates range up to 17%, depending on the type of products sold. The VAT may be offset by VAT paid by the Company on raw materials and other materials included in the cost of producing or acquiring its finished products. The Company recorded a VAT payable net of payments in the accompanying financial statements. | ||
Stock based compensation | ||
The Company follows the provisions of ASC 718, “Compensation — Stock Compensation,” which establishes accounting for non-employee and employee stock-based awards. Under the provisions of ASC 718, the fair value of stock issued is used to measure the fair value of services received as the Company believes such approach is a more reliable method of measuring the fair value of the services. For non-employee stock-based awards, fair value is measured based on 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 calculated and then recognized as compensation expense over the requisite performance period. For employee stock-based awards, share-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense with graded vesting on a straight–line basis over the requisite service period for the entire award. | ||
Advertising and promotion costs | ||
Advertising and promotion costs are expensed as incurred, and amounted to $4,637,276 and $767,795 for years ended March 31, 2014 and 2013, respectively. Such costs consist primarily of gifts to members and advertisements, and increased dramatically year over year due to rewards such as products gifts given to members, advertisements through various media and promotion activities expenses during the Company’s ten-year anniversary promotional campaign in fiscal 2014. | ||
Operating leases | ||
The Company leases premises for retail drugstores, offices and wholesale warehouse under non-cancelable operating leases. Operating lease payments are expensed over the term of lease. A majority of the Company’s retail drugstore leases have a 3 to 8-year term with a renewal option upon the expiration of the lease; the wholesale warehouse lease has a 10-year term with a renewal option upon the expiration of the lease. The Company has historically been able to renew a majority of its drugstores leases. Under the terms of the lease agreements, the Company has no legal or contractual asset retirement obligations at the end of the lease. Land leased from the government is amortized on a straight-line basis over a 30-year term. | ||
Foreign currency translation | ||
The Company uses the United States dollar (“U.S. dollars” or “USD”) for financial reporting purposes. The Company’s subsidiaries and VIEs maintain their books and records in their functional currency the Renminbi (“RMB”), the currency of the PRC. | ||
In general, for consolidation purposes, the Company translates the assets and liabilities of its subsidiaries and VIEs into U.S. dollars using the applicable exchange rates prevailing at the balance sheet date, and the statements of operations and cash flows are translated at average exchange rates during the reporting period. As a result, amounts related to assets and liabilities reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheet. Equity accounts are translated at historical rates. Adjustments resulting from the translation of the financial statements of the subsidiaries and VIEs are recorded as accumulated other comprehensive income. | ||
The balance sheet amounts, with the exception of equity, at March 31, 2014 and 2013 were translated at 1 RMB to $0.1623 USD and at 1 RMB to $0.1594 USD, respectively. The average translation rates applied to income and cash flow statement amounts for the years ended March 31, 2014 and 2013 were at 1 RMB to $0.1626 USD and at 1 RMB to $0.1586 USD, respectively. | ||
Concentrations and credit risk | ||
Certain financial instruments, which subject the Company to concentration of credit risk, consist of cash and restricted cash, accounts receivable, advance to suppliers, accounts payable and other liabilities. The Company has cash balances at financial institutions located in Hong Kong and PRC. Balances at financial institutions in Hong Kong may, from time to time, exceed Hong Kong Deposit Protection Board’s insured limits. Balances at financial institutions and state-owned banks within the PRC are not covered by insurance. As of March 31, 2014 and 2013, the Company had deposits totaling $7,204,626 and $6,230,011 that were not covered by insurance, respectively. To date, the Company has not experienced any losses in such accounts. | ||
For the fiscal year ended March 31, 2014, one vendor accounted for 11% of the Company’s total purchases and another vendor accounted for more than 10% of total advances to suppliers. For the fiscal year ended March 31, 2013, one vendor collectively accounted for 10% of the Company’s total purchases and 33% of total advances to suppliers. | ||
For the fiscal year ended March 31, 2014, no customer accounted for more than 10% of the Company’s total sales and one customer accounted for 28% of total accounts receivable. For the fiscal year ended March 31, 2013, one customer accounted for 11% or more of the Company’s total sales while two customers collectively accounted for 30% of total accounts receivable. | ||
Non-controlling interest | ||
As of March 31, 2014, Wang Yi, an individual, owned 49% of the equity interests of Shouantang Health, and so was not under the Company’s control. | ||
Recent Accounting Pronouncements | ||
In April 2014, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("ASU") No. 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity ("ASU No. 2014-08"). Under ASU No. 2014-08, only disposals representing a strategic shift in operations should be presented as discontinued operations. ASU No. 2014-08 also requires disclosure of the pre-tax income attributable to a disposal of a significant part of an organization that does not qualify for discontinued operations reporting. The amendments in ASU No. 2014-08 are effective in the first quarter of 2015 for public business entities with annual periods beginning on or after December 15, 2014. Early adoption is permitted. The Company does not expect that the adoption of ASU No. 2014-08 will have a significant impact on the Company’s consolidated financial statements. | ||
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers: Topic 606. This Update affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets, unless those contracts are within the scope of other standards. The guidance in this Update supersedes the revenue recognition requirements in Topic 605, Revenue Recognition and most industry-specific guidance. The core principle of the guidance is that an entity should recognize revenue to illustrate the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new guidance also includes a cohesive set of disclosure requirements that will provide users of financial statements with comprehensive information about the nature, amount, timing, and uncertainty of revenue and cash flows arising from a reporting organization’s contracts with customers. This ASU is effective for fiscal years, and interim periods within those years beginning after December 15, 2016 for public companies and 2017 for non-public entities. Management is evaluating the effect, if any, on the Company’s financial position and results of operations. | ||
Reclassification | ||
Certain prior period amounts have been reclassified to conform to the current period presentation. Such reclassifications had no effect on net income or cash flows as previously reported. |
TRADE_ACCOUNTS_RECEIVABLE
TRADE ACCOUNTS RECEIVABLE | 12 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Accounts Receivable, Net [Abstract] | ' | ||||||||
TRADE ACCOUNTS RECEIVABLE | ' | ||||||||
NOTE 4 – TRADE ACCOUNTS RECEIVABLE | |||||||||
Trade accounts receivable consisted of the following: | |||||||||
March 31, | March 31, | ||||||||
2014 | 2013 | ||||||||
Accounts receivable | $ | 11,869,866 | $ | 18,007,051 | |||||
Less: allowance for doubtful accounts | (5,135,330 | ) | (5,028,243 | ) | |||||
Trade accounts receivable, net | $ | 6,734,536 | $ | 12,978,808 | |||||
For the years ended March 31, 2014 and 2013, $644,049 and $846,094 in accounts receivable were directly written off, respectively. Additionally, for the year ended March 31, 2014 and 2013, $367,706 and $0 of accounts receivable were written off against previous allowance for doubtful accounts, respectively. For the year ended March 31, 2014, the Company collected goods of approximately $1.4 million against accounts receivable as a result of settling accounts with certain customers that discontinued their business with the Company following the transition of a new sales and management team for the Company’s wholesale segment. |
OTHER_CURRENT_ASSETS
OTHER CURRENT ASSETS | 12 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Assets, Current [Abstract] | ' | ||||||||
OTHER CURRENT ASSETS | ' | ||||||||
Note 5 – OTHER CURRENT ASSETS | |||||||||
Other current assets consisted of the following: | |||||||||
March 31, | March 31, | ||||||||
2014 | 2013 | ||||||||
Prepaid rental expenses | $ | 1,165,633 | $ | 647,489 | |||||
Lease rights transfer fees, current portion (1) | 11,939 | 247,789 | |||||||
Prepaids and other current assets | 485,530 | 326,221 | |||||||
Total | $ | 1,663,102 | $ | 1,221,499 | |||||
(1) | Lease rights transfer fees are paid by the Company to secure store rentals in coveted areas. The additional costs of acquiring the right to lease new store locations are capitalized and amortized over the period of the initial lease term. |
PROPERTY_AND_EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Property, Plant and Equipment [Abstract] | ' | ||||||||
PROPERTY AND EQUIPMENT | ' | ||||||||
Note 6 – PROPERTY AND EQUIPMENT | |||||||||
Property and equipment consisted of the following: | |||||||||
March 31, | March 31, | ||||||||
2014 | 2013 | ||||||||
Building | $ | 1,139,412 | $ | 1,119,053 | |||||
Leasehold improvements | 12,329,637 | 12,050,278 | |||||||
Farmland development cost | 1,941,010 | 1,906,327 | |||||||
Office equipment and furniture | 5,535,667 | 5,264,996 | |||||||
Motor vehicles | 579,834 | 424,958 | |||||||
Total | 21,525,560 | 20,765,612 | |||||||
Less: Accumulated depreciation | (10,729,190 | ) | (7,476,960 | ) | |||||
Impairment | (1,383,682 | ) | - | ||||||
Property and equipment, net | $ | 9,412,688 | $ | 13,288,652 | |||||
Total depreciation expense for property and equipment was $3,121,960 and $2,609,717 for the years ended March 31, 2014 and 2013, respectively. For the year ended March 31, 2014, $480,771 of leasehold improvement and office equipment in Jiuyingtang and $905,468 of land and road improvement in Qianhong Agriculture were impaired due to the estimated fair value being lower than the carrying value, and $145,040 of property and equipment were written off due to our five Shanghai drugstores closing. For the year ended March 31, 2013, $2,269,288 of leasehold improvements was written off due to fifteen Jiuzhou Pharmacy stores closings and one Jiuying drugstore closing. |
ADVANCES_TO_SUPPLIERS
ADVANCES TO SUPPLIERS | 12 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Advances To Suppliers [Abstract] | ' | ||||||||
ADVANCES TO SUPPLIERS | ' | ||||||||
Note 7 – ADVANCES TO SUPPLIERS | |||||||||
Advances to suppliers consist of deposits with or advances to outside vendors for future inventory purchases. Most of the Company’s vendors require a certain amount of money to be deposited with them as a guarantee that the Company will receive purchases on a timely basis. This amount is refundable and bears no interest. As of March 31, 2014 and 2013, advance to suppliers consists of the following: | |||||||||
March 31, | March 31, | ||||||||
2014 | 2013 | ||||||||
Advance to suppliers | $ | 11,162,767 | $ | 19,119,231 | |||||
Less: allowance for doubtful accounts | (6,585,573 | ) | (3,596,197 | ) | |||||
Advance to suppliers, net | $ | 4,577,194 | $ | 15,523,034 | |||||
For the years ended March 31, 2014 and 2013, $456,089 and $0 of advances to suppliers were written off against previous allowance for doubtful accounts, respectively. For the year ended March 31, 2014, the Company collected goods of approximately $5.3 million against advances to vendors as a result of settling accounts with certain vendors that discontinued their business with the Company following the transition of a new sales and management team for the Company’s wholesale segment. |
INVENTORY
INVENTORY | 12 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Inventory Disclosure [Abstract] | ' | ||||||||
INVENTORY | ' | ||||||||
Note 8 – INVENTORY | |||||||||
Inventory consisted of the following: | |||||||||
March 31, | March 31, | ||||||||
2014 | 2013 | ||||||||
Finished goods | $ | 7,822,102 | $ | 7,224,976 | |||||
Work-in-process | 2,192,372 | 1,362,023 | |||||||
Total inventory | $ | 10,014,474 | $ | 8,586,999 | |||||
Less: reserve for inventory (1) | (1,595,342 | ) | - | ||||||
Inventory, net | $ | 8,419,132 | $ | 8,586,999 | |||||
-1 | The inventory reserves for finished goods and herb farming agricultural assets (work-in-process) were $774,705 and $820,637, respectively, as of March 31, 2014. In addition, the Company recorded a loss of $1,000,376 in fiscal 2014 for products that the Company decided not to continue expending significant efforts to sell in the future. |
LONG_TERM_DEPOSITS
LONG TERM DEPOSITS | 12 Months Ended |
Mar. 31, 2014 | |
Long Term Deposits [Abstract] | ' |
LONG TERM DEPOSITS | ' |
Note 9 – LONG TERM DEPOSITS | |
As of March 31, 2014 and March 31, 2013, long term deposits amounted to $2,786,437 and $2,760,665, respectively. Long term deposits are money deposited with or advanced to landlords for securing retail store leases for which the Company does not anticipate applying or being returned within the next twelve months. Most of the Company’s landlords require a minimum of nine months’ rent being paid upfront plus additional deposits. |
OTHER_NONCURRENT_ASSETS
OTHER NONCURRENT ASSETS | 12 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Other Assets, Noncurrent Disclosure [Abstract] | ' | |||||||
OTHER NONCURRENT ASSETS | ' | |||||||
Note 10 – OTHER NONCURRENT ASSETS | ||||||||
Other noncurrent assets consisted of the following: | ||||||||
March 31, | March 31, | |||||||
2014 | 2013 | |||||||
Prepayment for lease of land use right- noncurrent (1) | $ | 5,355,899 | $ | 5,419,600 | ||||
Lease rights transfer fees - noncurrent (2) | - | 11,726 | ||||||
Long term prepaid expense | 158,243 | - | ||||||
Total | 5,514,142 | 5,431,326 | ||||||
Less: impairment of prepayment for lease of land use right (3) | (2,477,212 | ) | - | |||||
Other noncurrent assets, net | $ | 3,036,930 | $ | 5,431,326 | ||||
(1) | This is a payment made to a local government in connection with entering into a 30-year operating land lease agreement. The land is currently used to cultivate Ginkgo trees. This prepayment includes a deposit of $1,136,100, which will be refundable at the due date. The amortization of the lease is added to value of Ginkgo trees. | |||||||
(2) | Lease rights transfer fees are paid by the Company to secure store rentals in coveted areas. The additional costs of acquiring the right to lease new store locations are capitalized and amortized over the period of the initial lease term. | |||||||
(3) | Based on expected output from planted Gingko trees such as expected fruit production and tree market value, the fair value of the lease prepayment was lower than carrying cost. As a result, the Company recorded on impairment of $2,481,792 on lease prepayment for the year ended March 31, 2014. | |||||||
The amortization of prepayment for lease of land use right was $162,600 and $158,600 for the year ended March 31, 2014 and 2013, respectively. Such amounts were capitalized and recorded as work-in-process inventory. | ||||||||
The Company’s amortizations of prepayment for lease of land use right for the next five years and thereafter are as follows: | ||||||||
Years ending March 31, | Amount | |||||||
2015 | $ | 67,146 | ||||||
2016 | 67,146 | |||||||
2017 | 67,146 | |||||||
2018 | 67,146 | |||||||
2019 | 67,146 | |||||||
Thereafter | 1,406,858 |
INTANGIBLE_ASSETS
INTANGIBLE ASSETS | 12 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Finite-Lived Intangible Assets, Net [Abstract] | ' | |||||||
INTANGIBLE ASSETS | ' | |||||||
Note 11 – INTANGIBLE ASSETS | ||||||||
Net intangible assets consisted of the following at: | ||||||||
March 31, | March 31, | |||||||
2014 | 2013 | |||||||
Land use rights (1) | 1,582,677 | - | ||||||
Licenses and permits (2) | - | 1,104,801 | ||||||
Software | 474,088 | 466,071 | ||||||
Total intangible assets | 2,056,765 | 1,570,872 | ||||||
Less: accumulated amortization | (487,322 | ) | (368,614 | ) | ||||
Intangible assets, net | $ | 1,569,443 | $ | 1,202,258 | ||||
Amortization expense of intangible assets for the years ended March 31, 2014 and 2013 amounted to $112,209 and $154,427, respectively. | ||||||||
-1 | During the year ended March 31, 2014, the Company purchased the land use right of a plot of farmland in Lin’An, Hangzhou, intended for the establishment of an herb processing plant in the future. However, as our farming business in Lin’an has not grown, we do not expect completion of the plant in near future. | |||||||
-2 | The impairment of intangible assets was made after the Company estimated the implied fair value of the licenses and permits was lower than the carrying value. The following table presents the recognition and impairment of intangible assets. | |||||||
March 31, | March 31, | |||||||
2014 | 2013 | |||||||
Licenses and permits at the beginning of period | $ | 1,104,801 | $ | 1,095,792 | ||||
Less: Impairment of licenses and permits | (1,126,981 | ) | - | |||||
Exchange adjustment | 22,180 | 9,009 | ||||||
Licenses and permits at the end of period | $ | - | $ | 1,104,801 |
ASSET_IMPAIRMENTS
ASSET IMPAIRMENTS | 12 Months Ended |
Mar. 31, 2014 | |
Asset Impairment Charges [Abstract] | ' |
ASSET IMPAIRMENTS | ' |
Note 12 – ASSET IMPAIRMENTS | |
Jiuxin Medicine has experienced continuous losses since its acquisition. The reserves against its large outstanding advances to vendors and accounts receivable shed additional doubt on its profitability in the near future. As a result, the Company wrote off the excessive value of $1,126,981 allocated to licenses and permits in its acquisition of Jiuxin Medicine. Additionally, in fiscal 2013, approximately $1,474,000 goodwill arising in the acquisition of Jiuxin Medicine has been written down. | |
As of March 31, 2014, the book value of the Ginkgo trees planted in Qianhong Agriculture’s farmland, including their cultivation cost and land lease amortization expense, is approximately $2,192,372. Based on an independent appraisal report, the value of the Ginkgo trees is approximately $1,371,735. As a result, the Company recorded an agricultural inventory impairment of $820,637. | |
The Company made advances to the farmland leased from local government and had an unamortized amount of approximately $4,219,800 (RMB 26 million) as of March 31, 2014. In fiscal 2013, more expending are spent on farmland improvement such as road and irrigation system. The unamortized farmland improvement as of March 31, 2014 amounted to approximately $1,539,571 (RMB 9,485,959). Based on expected output from planted Gingko trees such as expected fruit production and tree market value, the lease prepayment and investment in farmland improvement may not be fully reimbursed. As a result, the Company recorded impairment of $2,477,212 and $905,468 on lease prepayment and farmland improvement, respectively. | |
As Jiuyingtang, the healthcare center set up in fiscal 2012, has continuously incurred losses since its inception, we made impairments of $480,771 in immovable leasehold improvements and immovable fixed assets attached to buildings such as fire-fighting equipment. |
SHORTTERM_BANK_LOAN
SHORT-TERM BANK LOAN | 12 Months Ended |
Mar. 31, 2014 | |
Debt Disclosure [Abstract] | ' |
SHORT-TERM BANK LOAN | ' |
Note 13 – SHORT-TERM BANK LOAN | |
As of March 31, 2014, our short-term loan consisted of a loan of $162,300 (RMB1,000,000) from Industrial and Commercial Bank of China, due on May 9, 2014 with annual interest of 6.6%. This loan is guaranteed by Hangzhou SME Guaranty Co., Ltd., which is not related to or affiliated with the Company. |
NOTES_PAYABLE
NOTES PAYABLE | 12 Months Ended | ||||||||||||||
Mar. 31, 2014 | |||||||||||||||
Notes Payable [Abstract] | ' | ||||||||||||||
NOTES PAYABLE | ' | ||||||||||||||
Note 14 – NOTES PAYABLE | |||||||||||||||
The Company has credit facilities with Hangzhou United Bank (“HUB”) and Industrial and Commercial Bank of China (“ICBC”) that provided working capital in the form of the following bank acceptance notes at March 31, 2014 and 2013: | |||||||||||||||
Origination | Maturity | March 31, | March 31, | ||||||||||||
Beneficiary | Endorser | date | date | 2014 | 2013 | ||||||||||
Jiuzhou Pharmacy(1) | HUB | 11/6/12 | 5/6/13 | $ | - | $ | 1,152,462 | ||||||||
Jiuzhou Pharmacy(1) | HUB | 11/15/12 | 5/15/13 | - | 374,590 | ||||||||||
Jiuzhou Pharmacy(1) | HUB | 11/29/12 | 5/29/13 | - | 846,542 | ||||||||||
Jiuzhou Pharmacy(1) | HUB | 12/6/12 | 6/6/13 | - | 478,200 | ||||||||||
Jiuzhou Pharmacy(1) | HUB | 12/20/12 | 6/20/13 | - | 497,328 | ||||||||||
Jiuzhou Pharmacy(1) | HUB | 12/27/12 | 6/27/13 | - | 318,800 | ||||||||||
Jiuzhou Pharmacy(1) | HUB | 1/10/13 | 7/10/13 | - | 293,870 | ||||||||||
Jiuzhou Pharmacy(1) | HUB | 1/22/13 | 7/22/13 | - | 781,060 | ||||||||||
Jiuzhou Pharmacy(1) | HUB | 2/28/13 | 5/28/13 | - | 478,200 | ||||||||||
Jiuzhou Pharmacy(1) | HUB | 2/28/13 | 8/28/13 | - | 988,280 | ||||||||||
Jiuzhou Pharmacy(1) | HUB | 3/26/13 | 6/26/13 | - | 977,121 | ||||||||||
Jiuzhou Pharmacy(2) | ICBC | 12/27/13 | 6/26/14 | 1,351,959 | - | ||||||||||
Jiuzhou Pharmacy(2) | ICBC | 10/11/13 | 4/11/14 | 730,350 | - | ||||||||||
Jiuzhou Pharmacy(3) | HUB | 10/8/13 | 4/8/14 | 486,900 | - | ||||||||||
Jiuzhou Pharmacy(3) | HUB | 11/5/13 | 5/5/14 | 1,720,380 | - | ||||||||||
Jiuzhou Pharmacy(3) | HUB | 12/26/13 | 6/26/14 | 117,960 | - | ||||||||||
Jiuzhou Pharmacy(3) | HUB | 2/7/14 | 5/7/14 | 649,200 | - | ||||||||||
Jiuzhou Pharmacy(3) | HUB | 2/7/14 | 8/7/14 | 985,161 | - | ||||||||||
Jiuzhou Pharmacy(3) | HUB | 3/6/14 | 9/6/14 | 1,778,808 | - | ||||||||||
Total | $ | 7,820,718 | $ | 7,186,453 | |||||||||||
-1 | As of March 31, 2013, notes payable consisted of notes of $7,186,453 (RMB45,084,400) from HUB, with maturity within 180 days. The credit line was guaranteed by Zhejiang Jin Qiao Guarantee Company, which is further secured by buildings owned by the Company’s major shareholders and personally guaranteed by our major shareholders with a value of approximately $6,613,725 (RMB40,750,000). The Company is required to hold 30-50% of amounts borrowed as restricted cash with HUB as additional collateral against these bank acceptance notes. All the outstanding notes payable have been repaid upon maturity. | ||||||||||||||
-2 | As of March 31, 2014, the Company had a total of $2,082,309 (RMB12,830,000) in notes from Industrial and Commercial Bank of China. A third party Hangzhou Small and Medium sized Guarantee CO., Ltd signed loan guarantee agreements with the bank to guarantee these borrowings. In addition, the Company is required to hold 30% of amounts borrowed as restricted cash with ICBC as additional collateral against these bank acceptance notes. All the outstanding notes payable have been repaid upon maturity. | ||||||||||||||
-3 | As of March 31, 2014, the Company had $5,734,409 (RMB35,356,800) notes from HUB. The Company is required to hold restricted cash of $2,489,851 (RMB15,341,040) with HUB as collateral against these bank acceptance notes. | ||||||||||||||
As of June 27, 2014, the Company had a credit line of approximately $3.36 million (RMB 20.7 million) in the aggregate from HUB, which are secured by buildings owned by our major shareholders, personally guaranteed by our major shareholders and guaranteed by Zhejiang Jin Qiao Guarantee Company. The Company also deposited 30-60% in restricted cash of amounts borrowed as and collateral for these notes payables. | |||||||||||||||
In addition, in June 2014, the Company were approved for a credit line of up to an aggregate of approximately $4.67 million (RMB 28.78 million) from Bank of Hangzhou. This credit line was secured by land use right of Jiutong Medicine and guaranteed by Jiuxin Medicine. The Company also deposited 30% cash as restricted cash as collateral for these notes payables. |
TAXES
TAXES | 12 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Income Tax Disclosure [Abstract] | ' | ||||||||
TAXES | ' | ||||||||
Note 15 – TAXES | |||||||||
Income tax | |||||||||
The Company is subject to income taxes on an entity basis on income arising in or derived from the tax jurisdiction in which each entity is domiciled. | |||||||||
Entity | Income Tax Jurisdiction | ||||||||
Jo-Jo Drugstores | United States | ||||||||
Renovation | Hong Kong, PRC | ||||||||
All other entities | Mainland, PRC | ||||||||
Jo-Jo Drugstores is incorporated in the U.S. and has incurred a net operating loss for income tax purposes for 2014 and 2013. As of March 31, 2014, the estimated net operating loss carry forwards for U.S. income tax purposes amounted to approximately $1,430,000 which may be available to reduce future years’ taxable income. These carry forwards will expire, if not utilized by 2032. Management believes that the realization of the benefits arising from this loss appears to be uncertain due to the Company’s limited operating history and continuing losses for U.S. income tax purposes. Accordingly, the Company has provided a 100% deferred tax asset valuation allowance at March 31, 2014 and no deferred tax asset benefit has been recorded. The valuation allowance at March 31, 2014 was $486,000. The net change in the valuation allowance was an increase of $19,000. The Company’s management reviews this valuation allowance periodically and makes adjustments as necessary. | |||||||||
Significant components of the income tax provision were as follows for the years ended March 31, 2014 and 2013: | |||||||||
Years ended | |||||||||
March 31, | |||||||||
2014 | 2013 | ||||||||
Current tax provision | |||||||||
Federal | $ | - | $ | - | |||||
State | - | - | |||||||
Foreign | 44,870 | 58,380 | |||||||
44,870 | 58,380 | ||||||||
Deferred tax provision | |||||||||
Federal | $ | - | $ | - | |||||
State | - | - | |||||||
Foreign | - | 295,422 | |||||||
- | 295,422 | ||||||||
Income tax provision (a) | $ | 44,870 | $ | 353,802 | |||||
(a) | The current income tax provision for the year ended March 31, 2014 represents prepaid tax expenses incurred by the Company which were not refundable. | ||||||||
Income from continuing operations before income taxes was allocated between the United States and foreign components for the years ended March 31, 2014 and 2013 as follows: | |||||||||
Years ended | |||||||||
March 31, | |||||||||
2014 | 2013 | ||||||||
United States | $ | (1,034,223 | ) | $ | (303,442 | ) | |||
Foreign | (24,277,077 | ) | (13,677,281 | ) | |||||
$ | (25,311,300 | ) | $ | (13,980,723 | ) | ||||
The Company files U.S. federal and state income tax returns. With few exceptions, the Company was subject to the U.S. federal and state income tax examinations by tax authorities for years on or after 2007. | |||||||||
The Company’s subsidiaries and VIEs in China file income tax returns with both the state and local tax bureaus in the PRC. Such income tax returns are subject to examinations by these foreign tax authorities and have passed all examinations since each subsidiary’s and VIE’s inception date. | |||||||||
The following table reconciles the U.S. statutory tax rates with the Company's effective tax rate for the years ended March 31, 2014 and 2013: | |||||||||
2014 | 2013 | ||||||||
U.S. Statutory rates | 34 | % | 34 | % | |||||
Foreign income not recognized in the U.S. | (34.0 | ) | (34.0 | ) | |||||
China income taxes | 25 | 25 | |||||||
Change in valuation allowance | (24.9 | ) | (27.4 | ) | |||||
Others (a) | (0.4 | ) | (0.1 | ) | |||||
Effective tax rate | (0.3 | )% | (2.5 | )% | |||||
(a) | The (0.4)% for the year ended March 31, 2014 and the (0.1)% for the year ended March 31, 2013 represent the combined effect of expenses incurred by the Company that were not deductible for PRC income tax and PRC income tax exemptions. | ||||||||
The temporary differences and carry forwards gave rise to the following deferred tax assets at March 31, 2014 and 2013: | |||||||||
Years ended | |||||||||
March 31, | |||||||||
2014 | 2013 | ||||||||
Current deferred tax assets: | |||||||||
Allowance for doubtful accounts | $ | 2,759,144 | $ | 1,911,450 | |||||
Inventory reserve | 193,676 | - | |||||||
Payroll accrual | 63,214 | 62,346 | |||||||
Valuation allowance | (3,016,034 | ) | (1,973,796 | ) | |||||
Total current deferred tax assets | $ | - | $ | - | |||||
Long-term deferred tax assets: | |||||||||
Long-lived assets impairment | $ | 792,432 | $ | 370,774 | |||||
Long-term lease reserve | 619,303 | - | |||||||
Depreciation and amortization | 323,547 | 261,960 | |||||||
Net operating loss carry forward | 410,592 | 47,418 | |||||||
Valuation allowance | (2,145,874 | ) | (680,152 | ) | |||||
Total current deferred tax assets | $ | - | $ | - | |||||
Total | $ | - | $ | - | |||||
Management believes that the realization of the benefits arising from these temporary differences and carry forwards appears to be uncertain since, due to the Company’s significant operating loss in 2014, the Company has made a full valuation allowance against its net deferred tax assets at March 31, 2014. Management reviews this valuation allowance periodically and makes adjustments as necessary. Future reversal of the valuation allowance will be recognized either when the benefit is realized or when it has been determined that it is more likely than not that the benefit will be realized through future earnings. | |||||||||
Value added tax | |||||||||
VAT on sales and on purchases amounted to $16,045,706 and $15,069,655 for the year ended March 31, 2014, and $19,189,325 and $18,441,552 for the year ended March 31, 2013, respectively. | |||||||||
Sales and purchases are recorded net of VAT collected and paid as the Company acts as an agent for the government. VAT taxes are not impacted by the income tax holiday. | |||||||||
Taxes payable at March 31, 2014 and 2013 consisted of the following: | |||||||||
March 31, | March 31, | ||||||||
2014 | 2013 | ||||||||
VAT | $ | 344,329 | $ | 334,833 | |||||
Income tax | 7,851 | 7,628 | |||||||
Others | 21,321 | 29,172 | |||||||
Total taxes payable | $ | 373,501 | $ | 371,633 |
POSTRETIREMENT_BENEFITS
POSTRETIREMENT BENEFITS | 12 Months Ended |
Mar. 31, 2014 | |
Compensation and Retirement Disclosure [Abstract] | ' |
POSTRETIREMENT BENEFITS | ' |
Note 16 – POSTRETIREMENT BENEFITS | |
Regulations in the PRC require the Company to contribute to a defined contribution retirement plan for all permanent employees. The contribution for each employee is based on a percentage of the employee’s current compensation as required by the local government. The Company contributed $663,837 and $634,453 in employment benefits and pension for the years ended March 31, 2014 and 2013, respectively. |
RELATED_PARTY_TRANSACTIONS_AND
RELATED PARTY TRANSACTIONS AND ARRANGEMENTS | 12 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Related Party Transactions [Abstract] | ' | |||||||
RELATED PARTY TRANSACTIONS AND ARRANGEMENTS | ' | |||||||
Note 17 – RELATED PARTY TRANSACTIONS AND ARRANGEMENTS | ||||||||
Amounts payable to related parties are summarized as follows: | ||||||||
March 31, | March 31, | |||||||
2014 | 2013 | |||||||
Due to cofounders (1): | $ | 576,818 | $ | 576,818 | ||||
Due to director (2): | 1,807,476 | 647,599 | ||||||
Total | $ | 2,384,294 | $ | 1,224,417 | ||||
(1) | As of March 31, 2014 and 2013, the amount due to cofounders represents loans from the owners to Jiuxin Management to enable Jiuxin Management to meet its approved PRC registered capital requirements. | |||||||
-2 | Mr. Lei Liu lent approximately $600,000 to the Company for the purchase of a land use right. The Company leases Mr. Lei Liu’s houses for its business operations in the amount of approximately $171,000, with no payments to Mr. Lei Liu. In addition, Mr. Lei Liu personally lent approximately $389,000 to the Company to facilitate its payments of professional fees in the United States. | |||||||
As of March 31, 2014 and 2013, notes payable totaling $5,738,409 and $7,186,453, respectively, were secured by the personal properties of certain of the Company’s shareholders. | ||||||||
The Company leases from Mr. Lei Liu a retail space which expires in August 2014., It also leased from him a corporate office, which lease expired in December 2013.The Company relocated its corporate office in January 2014 pursuant to a lease agreement entered into with a third party. Rent expense amounted to $170,730 and $163,851 for the years ended March 31, 2014 and 2013, respectively. $0 was paid to Mr. Liu for the years ended March 31, 2014 and 2013. |
PURCHASE_OPTION_DERIVATIVE_LIA
PURCHASE OPTION DERIVATIVE LIABILITY | 12 Months Ended | ||||
Mar. 31, 2014 | |||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ' | ||||
PURCHASE OPTION DERIVATIVE LIABILITY | ' | ||||
Note 18 – PURCHASE OPTION DERIVATIVE LIABILITY | |||||
In connection with the public offering of the Company’s common stock that closed on April 28, 2010, the Company issued to its underwriters, Madison Williams and Company and Rodman & Renshaw, LLC, an option for $100 to purchase up to a total of 105,000 shares of common stock (3% of the shares sold in the public offering) at $6.25 per share (125% of the price of the shares sold in the public offering). The option is exercisable from October 23, 2010 to April 22, 2015. | |||||
The Company is treating the common shares underlying the option as a derivative liability because the strike price of the option is denominated in U.S. dollars, a currency other than the Company’s functional currency, the Chinese RMB. As a result, the option is not considered indexed to the Company’s own stock, and as such, all future changes in the fair value of the option are recognized currently in earnings until such time as the option is exercised or expired. | |||||
On April 22, 2010, the issue date of the option, the Company classified the fair value of this option as a liability resulting in a decrease of additional paid-in capital of $402,451 and the establishment of a $402,451 in liability to recognize the option’s fair value. The Company recognized a loss of $36,994 from the change in fair value of the option liability for year ended March 31, 2014. | |||||
This option does not trade in an active securities market, and as such, the Company estimates its fair value using the Black-Scholes Option Pricing Model (the “Black-Scholes Model”) on the date that the option was originally issued and as of March 31, 2014 using the following assumptions: | |||||
March 31, | |||||
2014 (1) | |||||
Stock price | $ | 2.07 | |||
Exercise price | $ | 6.25 | |||
Annual dividend yield | 0 | % | |||
Expected term (years) | 1.05 | ||||
Risk-free interest rate | 0.13 | % | |||
Expected volatility | 132.55 | % | |||
(1) | As of March 31, 2014, the option to purchase 105,000 shares of common stock had not been exercised. | ||||
Expected volatility is based on historical volatility. Historical volatility is computed using daily pricing observations for recent periods that correspond to the term of the option. The Company believes this method produces an estimate that is representative of future volatility over the expected term of this option. The expected life is based on the remaining term of the option. The risk-free interest rate is based on U.S. Treasury securities according to the remaining term of the option. | |||||
Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Depending on the product and the terms of the transaction, the fair value of option liability are modeled using a series of techniques, including closed-form analytic formula such as the Black-Scholes Model, which does not entail material subjectivity because the methodology employed does not necessitate significant judgment, and the pricing inputs are observed from actively quoted markets. | |||||
The fair value of the 105,000 shares underlying the option outstanding as of March 31, 2014 was determined using the Black-Scholes Model, with certain inputs significant to the valuation methodology as level 2 inputs, and the Company recorded the change in fair value in earnings. As a result, the option liability is carried on the consolidated balance sheets at fair value. |
WARRANTS
WARRANTS | 12 Months Ended | ||||
Mar. 31, 2014 | |||||
Warrants and Rights Note Disclosure [Abstract] | ' | ||||
WARRANTS | ' | ||||
Note 19 – WARRANTS | |||||
On September 26, 2013, as annual compensation for its financial advisory service, the Company issued a warrant to a financial consulting firm to purchase up to 150,000 shares of common stock at $1.20 per share. The warrant is exercisable from September 26, 2013 to September 25, 2016. | |||||
Because the warrant is denominated in U.S. dollars and the Company’s functional currency is the RMB, it does not meet the requirements of the accounting standard to be indexed only to the Company’s stock. Accordingly, it is accounted for at fair value as derivative liabilities and marked to market price each period. | |||||
The warrant does not trade in an active securities market, and as such, the Company estimates its fair value using the Black-Scholes Model on the date that the warrant was originally issued and as of March 31, 2014 using the following assumptions: | |||||
Common Stock | |||||
Warrants | |||||
March 31, | |||||
2014 (1) | |||||
Stock price | $ | 2.07 | |||
Exercise price | $ | 1.2 | |||
Annual dividend yield | 0 | % | |||
Expected term (years) | 2.49 | ||||
Risk-free interest rate | 0.67 | % | |||
Expected volatility | 114.15 | % | |||
-1 | As of March 31, 2014, the warrant had not been exercised. | ||||
On September 26, 2013, the issue date of the warrant, the Company classified its fair value as a liability of $33,606. The Company recognized a loss of $220,103 from the change in fair value of the warrant liability for the year ended March 31, 2014. |
STOCKHOLDERS_EQUITY
STOCKHOLDERS' EQUITY | 12 Months Ended |
Mar. 31, 2014 | |
Stockholders Equity Note [Abstract] | ' |
STOCKHOLDERS' EQUITY | ' |
Note 20 – STOCKHOLDERS’ EQUITY | |
Stock-based compensation | |
On December 31, 2013, the Company granted a total of 350,000 shares of restricted common stock to its directors and officers under the Company’s stock incentive plan (the “Plan”). The trading value of the Company’s common stock on December 31, 2013 was $0.96. All such shares vested on the grant date, and for the year ended March 31, 2014, $336,000 was recorded as a service compensation expense. The shares were issued in January 2014. | |
On September 26, 2013, the Company agreed to grant a total of 350,000 shares of restricted common stock to a financial consulting firm for its financial advisory services. The term of the service agreement is one year. The trading value of the Company’s common stock on September 26, 2013 was $0.51. For the year ended March 31, 2014, $91,451 was recorded as a service compensation expense. The Company evaluated the performance and services provided by the consultant at the end of 6 months and granted an additional 100,000 shares of restricted common stock as a bonus on March 12, 2014. The trading value of the Company’s common stock on March 12, 2014 was $2.07. For the twelve months ended March 31, 2014, $207,000 was recorded as a service compensation expense. | |
The Company has agreed to issue 2,340 shares of common stock every six months to its former legal counsel, who resigned on March 31, 2014, as partial payment for legal services. The trading value of the Company’s common stock on November 1, 2012, May 1, 2013, and November 1, 2013 was $0.72, $0.66 and $0.99, respectively. $4,102 and $4,546 was recorded as a service compensation expense for the years ended March 31, 2014 and 2013, respectively. | |
On January 16, 2012, the Company granted a total of 297,000 shares of restricted common stock under the Plan to a group of 46 employees. These restricted shares will vest on January 16, 2015, provided that the employees are still employed by the Company on such date. $78,022 and $30,736 was charged to general and administrative expense and selling expense for the year ended March 31, 2014, respectively. $78,235 and $30,578 were charged to general and administrative expense and selling expense, respectively, for the year ended March 31, 2013. | |
Statutory reserve | |
Statutory reserves represent restricted retained earnings. Based on their legal formation, the Company is required to set aside 10% of the net income of each VIE and subsidiary in the PRC as reported in its statutory account on an annual basis to the Statutory Surplus Reserve Fund (the “Reserve Fund”). Once the total amount set aside in the Reserve Fund reaches 50% of the entity’s registered capital, further appropriations become discretionary. The Reserve Fund can be used to increase the entity’s registered capital upon approval by relevant government authorities or to eliminate its future losses under PRC GAAP upon a resolution by its board of directors. The Reserve Fund is not distributable to shareholders, as cash dividend or otherwise, except in the event of liquidation. | |
Appropriations to the Reserve Fund are accounted for as a transfer from unrestricted earnings to statutory reserves. During the years ended March 31, 2014 and 2013, the Company did not make appropriations to the statutory reserves. | |
There are no legal requirements in the PRC to fund the Reserve Fund by transfer of cash to any restricted accounts, and the Company does not do so. |
LOSS_PER_SHARE
LOSS PER SHARE | 12 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Earnings Per Share [Abstract] | ' | |||||||
LOSS PER SHARE | ' | |||||||
Note 21 – LOSS PER SHARE | ||||||||
The Company reports earnings per share in accordance with the provisions of the FASB’s related accounting standard. This standard requires presentation of basic and diluted earnings per share in conjunction with the disclosure of the methodology used in computing such earnings per share. Basic earnings per share excludes dilution, but includes vested restricted stocks and is computed by dividing income available to common stockholders by the weighted average common shares outstanding during the period. Diluted earnings per share takes into account the potential dilution that could occur if securities or other contracts to issue common stock were exercised and converted into common stock. | ||||||||
The following is a reconciliation of the basic and diluted loss per share computation: | ||||||||
Years ended | ||||||||
March 31, | ||||||||
2014 | 2013 | |||||||
Net loss attributable to controlling interest | $ | (25,356,136 | ) | $ | (14,333,731 | ) | ||
Weighted average shares used in basic computation | 13,880,190 | 13,580,731 | ||||||
Diluted effect of restricted shares | - | - | ||||||
Weighted average shares used in diluted computation | 13,880,190 | 13,580,731 | ||||||
Loss per share – Basic: | ||||||||
Net loss before noncontrolling interest | $ | (1.83 | ) | $ | (1.06 | ) | ||
Add: Net loss attributable to noncontrolling interest | $ | - | $ | - | ||||
Net loss attributable to controlling interest | $ | (1.83 | ) | $ | (1.06 | ) | ||
Loss per share – Diluted: | ||||||||
Net loss before noncontrolling interest | $ | (1.83 | ) | $ | (1.06 | ) | ||
Add: Net loss attributable to noncontrolling interest | $ | - | $ | - | ||||
Net loss attributable to controlling interest | $ | (1.83 | ) | $ | (1.06 | ) | ||
For the year ended March 31, 2014 and 2013, both 105,000 and 150,000 shares, underlying outstanding purchase options and a warrant respectively, were excluded from the calculation of diluted loss per share as the options were anti-dilutive. |
SEGMENTS
SEGMENTS | 12 Months Ended | ||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||
Segment Reporting [Abstract] | ' | ||||||||||||||||
SEGMENTS | ' | ||||||||||||||||
Note 22 – SEGMENTS | |||||||||||||||||
The Company operates within three main reportable segments: retail drugstores, drug wholesale and herb farming. The retail drugstores segment sells prescription and OTC medicines, TCM, dietary supplements, medical devices, and sundry items to retail customers. The drug wholesale segment supplies the retail drugstores and sells prescription and OTC medicines, TCM, dietary supplements, medical devices and sundry items in batches to other drug vendors and hospitals. The Company’s herb farming segment cultivates selected herbs for sale to other drug vendors. The Company is also involved in online sales and clinic services that do not meet the quantitative thresholds for reportable segments and are included in the retail drugstores segment. | |||||||||||||||||
Each segment’s accounting policies are the same as those described in the summary of significant accounting policies. The Company evaluates performance based on profit or loss from operations before interest and income taxes not including nonrecurring gains and losses. | |||||||||||||||||
The Company's reportable business segments are strategic business units that offer different products and services. Since they require different operations and market to distinct classes of customers, each segment is managed separately. | |||||||||||||||||
The following table presents summarized information by segment of the continuing operations for the year ended March 31, 2014: | |||||||||||||||||
Retail | Drug | Herb | |||||||||||||||
drugstores | wholesale | farming (a) | Total | ||||||||||||||
Revenue | $ | 47,656,916 | $ | 18,497,671 | $ | - | $ | 66,154,587 | |||||||||
Cost of goods | $ | 39,947,714 | $ | 20,479,387 | $ | - | $ | 60,427,101 | |||||||||
Gross profit | $ | 7,709,202 | $ | (1,981,716 | ) | $ | - | $ | 5,727,486 | ||||||||
Selling expenses | $ | 13,164,777 | $ | 523,994 | $ | - | $ | 13,688,771 | |||||||||
General and administrative expenses | $ | 6,694,190 | $ | 4,127,733 | $ | 446,934 | $ | 11,268,857 | |||||||||
Loss from operations | $ | (12,149,765 | ) | $ | (6,633,443 | ) | $ | (446,934 | ) | $ | (19,230,142 | ) | |||||
Depreciation and amortization | $ | 2,638,552 | $ | 594,500 | $ | 1,117 | $ | 3,234,169 | |||||||||
Total capital expenditures | $ | 391,678 | $ | 135,761 | $ | 1,585,602 | $ | 2,113,041 | |||||||||
-1 | The negative wholesale gross margin for the year ended March 31, 2014 was primarily due to the discounted sales of certain products that the Company’s new wholesale team has decided not to continue expending significant efforts to sell in the future. While the total discounted sales amount was approximately $0.7 million, the cost of the products sold was approximately $2.1 million, which resulted in a net loss of $1.4 million from such sales and negative gross margin in fiscal 2014. | ||||||||||||||||
-2 | To commemorate Jiuzhou Pharmacy’s ten-year anniversary and to foster member loyalty, Jiuzhou Pharmacy rewarded its members with complimentary gifts during the year ended March 31, 2014, at a cost of approximately $2.97 million. | ||||||||||||||||
The following table presents summarized information by segment of the continuing operations for the year ended March 31, 2013: | |||||||||||||||||
Retail | Drug | Herb | Total | ||||||||||||||
drugstores | wholesale | farming | |||||||||||||||
Revenue | $ | 40,726,080 | $ | 46,235,086 | $ | 2,534,380 | $ | 89,495,546 | |||||||||
Cost of goods | $ | 30,791,464 | $ | 43,846,081 | $ | 223,008 | $ | 74,860,553 | |||||||||
Gross profit | $ | 9,934,616 | $ | 2,389,005 | $ | 2,311,372 | $ | 14,634,993 | |||||||||
Selling expenses | $ | 11,666,876 | $ | 550,108 | $ | - | $ | 12,216,984 | |||||||||
General and administrative expenses | $ | 6,584,185 | $ | 8,022,317 | $ | 393,862 | $ | 15,000,364 | |||||||||
Income (loss) from operations | $ | (8,316,445 | ) | $ | (6,183,420 | ) | $ | 1,917,510 | $ | (12,582,355 | ) | ||||||
Depreciation and amortization | $ | 2,469,723 | $ | 55,980 | $ | 238,441 | $ | 2,764,144 | |||||||||
Total capital expenditures | $ | 489,704 | $ | 8,328 | $ | 1,906,327 | $ | 2,404,359 | |||||||||
The Company does not have long-lived assets located outside the PRC. In accordance with the enterprise-wide disclosure requirements of FASB’s accounting standard, the Company's net revenue from external customers through its retail stores by main product categories for the years ended March 31, 2014 and 2013 is as follows: | |||||||||||||||||
Years ended | |||||||||||||||||
March 31, | |||||||||||||||||
2014 | 2013 | ||||||||||||||||
Prescription drugs | $ | 19,781,547 | $ | 16,489,103 | |||||||||||||
OTC drugs | 17,270,104 | 14,032,854 | |||||||||||||||
Nutritional supplements | 2,736,808 | 4,263,849 | |||||||||||||||
TCM | 3,230,645 | 3,679,689 | |||||||||||||||
Sundry products | 1,896,163 | 1,101,934 | |||||||||||||||
Medical devices | 2,741,649 | 1,158,651 | |||||||||||||||
Total | $ | 47,656,916 | $ | 40,726,080 | |||||||||||||
The Company’s net revenue from external customers through its wholesale business by main product categories for the years ended March 31, 2014 and 2013 is as follows: | |||||||||||||||||
Years ended | |||||||||||||||||
March 31, | |||||||||||||||||
2014 | 2013 | ||||||||||||||||
Prescription drugs | $ | 13,746,053 | $ | 27,156,460 | |||||||||||||
OTC drugs | 1,012,630 | 9,049,439 | |||||||||||||||
Nutritional supplements | 262,470 | 8,455,686 | |||||||||||||||
TCM | 931 | 215,505 | |||||||||||||||
Sundry products | 3,468,832 | 1,268,723 | |||||||||||||||
Medical devices | 6,755 | 89,273 | |||||||||||||||
Total | $ | 18,497,671 | $ | 46,235,086 | |||||||||||||
The Company’s net revenue from external customers through its Chinese herb farming business by main product categories for the years ended March 31, 2014 and 2013 is as follows: | |||||||||||||||||
Years ended | |||||||||||||||||
March 31, | |||||||||||||||||
2014 | 2013 | ||||||||||||||||
Prescription drugs | $ | - | $ | - | |||||||||||||
OTC drugs | - | - | |||||||||||||||
Nutritional supplements | - | - | |||||||||||||||
TCM | - | 2,534,380 | |||||||||||||||
Sundry products | - | - | |||||||||||||||
Medical devices | - | - | |||||||||||||||
Total | $ | - | $ | 2,534,380 |
COMMITMENTS_AND_CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended | ||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | ' | ||||||||||||||||
COMMITMENTS AND CONTINGENCIES | ' | ||||||||||||||||
Note 23 – COMMITMENTS AND CONTINGENCIES | |||||||||||||||||
Operating lease commitments | |||||||||||||||||
The Company recognizes lease expense on a straight line basis over the term of its leases in accordance with the relevant accounting standards. The Company has entered into various tenancy agreements for its store premises and for the land leased from a local government to farm herbs. | |||||||||||||||||
The Company’s commitments for minimum rental payments under its leases for the next five years and thereafter are as follows: | |||||||||||||||||
Retail | Drug | Herb | Total | ||||||||||||||
Years ending March 31, | drugstores | wholesale | farming | amount | |||||||||||||
2015 | $ | 4,060,065 | $ | 228,578 | $ | - | $ | 4,288,643 | |||||||||
2016 | 2,415,389 | 250,313 | - | 2,665,702 | |||||||||||||
2017 | 1,143,379 | 284,589 | - | 1,427,968 | |||||||||||||
2018 | 851,632 | 290,397 | - | 1,142,029 | |||||||||||||
2019 | 674,323 | 290,397 | - | 964,720 | |||||||||||||
Thereafter | 173,089 | 580,794 | - | 753,883 | |||||||||||||
Total rent expense amounted to $4,563,376 and $4,861,835 for years ended March 31, 2014 and 2013, respectively. |
SUBSEQUENT_EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Mar. 31, 2014 | |
Subsequent Events [Abstract] | ' |
SUBSEQUENT EVENTS | ' |
Note 24 – SUBSEQUENT EVENTS | |
In June 2014, Bank of Hangzhou awarded a one-year credit line of up to an aggregate of approximately $4.67 million (RMB 28.78 million) to Jiuzhou Pharmacy, as described in Note 2. | |
In April 2014, Lydia Trading and Shanghai Zhenguang cancelled their registrations with local SAIC. The two stores controlled by the two subsidiaries ceased operations in February 2014. On June 1, 2014, Jiuzhou Pharmacy opened a new store in Hangzhou. |
SUMMARY_OF_SIGNIFICANT_ACCOUNT1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended | |
Mar. 31, 2014 | ||
Accounting Policies [Abstract] | ' | |
Basis of presentation and consolidation | ' | |
Basis of presentation and consolidation | ||
The accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). The consolidated financial statements include the financial statements of the Company, its wholly-owned subsidiaries and VIEs. All significant inter-company transactions and balances between the Company, its subsidiaries and VIEs are eliminated upon consolidation. | ||
Consolidation of variable interest entities | ' | |
Consolidation of variable interest entities | ||
In accordance with accounting standards regarding consolidation of variable interest entities (“VIEs”), VIEs are generally entities that lack sufficient equity to finance their activities without additional financial support from other parties or whose equity holders lack adequate decision making ability. All VIEs with which the Company is involved must be evaluated to determine the primary beneficiary of the risks and rewards of the VIE. The primary beneficiary is required to consolidate the VIE for financial reporting purposes. | ||
The Company has concluded, based on the contractual arrangements, that Jiuzhou Pharmacy (including its subsidiaries and controlled entities), Jiuzhou Clinic and Jiuzhou Service are each a VIE and that the Company’s wholly-owned subsidiary, Jiuxin Management, absorbs a majority of the risk of loss from the activities of these companies, thereby enabling the Company, through Jiuxin Management, to receive a majority of their respective expected residual returns. Based on our evaluation of the VIEs, we are the primary beneficiary of their risks and rewards; therefore, we consolidate the VIEs for financial reporting purposes. | ||
Additionally, as Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service are under common control, the consolidated financial statements have been prepared as if the transactions had occurred retroactively as to the beginning of the reporting period of these consolidated financial statements. | ||
Control and common control is defined under the accounting standards as “an individual, enterprise, or immediate family members who hold more than 50 percent of the voting ownership interest of each entity.” Because the Owners collectively own 100% of Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service, and have agreed to vote their interests in concert since the establishment of each of these three companies as memorialized the Voting Rights Proxy Agreement, the Company believes that the Owners collectively have control and common control of the three companies. Accordingly, the Company believes that Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service were constructively held under common control by Jiuxin Management as of the time the Contractual Agreements were entered into, establishing Jiuxin Management as their primary beneficiary. Jiuxin Management, in turn, is owned by Renovation, which is owned by the Company. | ||
Although the Company has determined that the accounting standards regarding consolidation of VIEs do not provide for retroactive accounting treatment, each of Jiuzhou Pharmacy, Jiuzhou Clinic, and Jiuzhou Service was in substance controlled on its establishment date of September 9, 2003, October 10, 2003, and November 2, 2005, respectively, by the Owners. Such common control conditions resulted in the share exchange transaction to be a capital transaction in substance, reflected as a recapitalization, and the Company has accordingly recorded the consolidation at its historical cost. | ||
Risks and Uncertainties | ' | |
Risks and Uncertainties | ||
The operations of the Company are located in the PRC. Accordingly, the Company’s business, financial condition, and results of operations may be influenced by the political, economic, and legal environments in the PRC, as well as 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 other factors, the political, economic and legal environment and foreign currency exchange. The Company’s results may be adversely affected by changes in the political, regulatory and social conditions in the PRC, and by changes in governmental policies or interpretations with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation, among other things. Although the Company has not experienced losses from these situations and believes that it is in compliance with existing laws and regulations including its organization and structure disclosed in Note 1, this may not be indicative of future results. | ||
The Company has significant cash deposits with suppliers in order to obtain and maintain inventory. The Company’s ability to obtain products and maintain inventory at existing and new locations is dependent upon its ability to post and maintain significant cash deposits with its suppliers. In the PRC, many vendors are unwilling to extend credit terms for product sales that require cash deposits to be made. The Company does not generally receive interest on any of its supplier deposits, and such deposits are subject to loss as a result of the creditworthiness or bankruptcy of the party who holds such funds, as well as the risk from illegal acts such as conversion, fraud, theft or dishonesty associated with the third party. If these circumstances were to arise, the Company would find it difficult or impossible, due to the unpredictability of legal proceedings in China, to recover all or a portion of the amount on deposit with its vendors or landlords. | ||
Members of the current management team own controlling interests in the Company and are also the Owners of the VIEs in the PRC. The Company only controls the VIEs through contractual arrangements which obligate it to absorb the risk of loss and to receive the residual expected returns. As such, the controlling shareholders of the Company and the VIEs could cancel these agreements or permit them to expire at the end of the agreement terms, as a result of which the Company would not retain control of the VIEs. | ||
Use of estimates | ' | |
Use of estimates | ||
The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, 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. The significant estimates made in the preparation of the accompanying consolidated financial statements relate primarily to the assessment of the carrying values of accounts receivable and advances to suppliers, and related allowance for doubtful accounts, useful lives of property and equipment as well as intangible assets, fair value of purchase option derivative liability and impairment of goodwill. Because of the use of estimates inherent in the financial reporting process, actual results could materially differ from those estimates. | ||
Revenue recognition | ' | |
Revenue recognition | ||
Revenue from sales of prescription medicine at the drugstores is recognized when the prescription is filled and the customer picks up and pays for the prescription. | ||
Revenue from sales of other merchandise at the drugstores is recognized at the point of sale, which is when the customer pays for and receives the merchandise. Sales of drugs reimbursed by the local government medical insurance agency and receivables from the agency are recognized when a customer pays for the drugs at a store. Based on historical experience, a reserve for potential loss from denial of reimbursement on certain unqualified drugs was made to the receivables from the government agency. | ||
Revenue from medical services is recognized after the service has been rendered to the customer. | ||
Revenue from online pharmacy sales is recognized when merchandise is delivered to customers. While most deliveries take one day, certain deliveries may take longer depending on the customer’s location. Any loss caused in the shipment will be reimbursed by the courier company. A proper sales discount is made to account for the potential loss from returns. Historically, sales returns have been minimal. | ||
Revenue from sales of merchandise to non-retail customers is recognized when the following conditions are met: (1) persuasive evidence of an arrangement exists (sales agreements and customer purchase orders are used to determine the existence of an arrangement); (2) delivery of goods has occurred and risks and benefits of ownership have been transferred, which is when the goods are received by the customer at its designated location in accordance with the sales terms; (3) the sales price is fixed or determinable; and (4) collectability is probable. Historically, sales returns have been minimal. | ||
The Company’s revenue is net of value added tax (“VAT”) collected on behalf of PRC tax authorities in respect to the sales of merchandise. VAT collected from customers, net of VAT paid for purchases, is recorded as a liability in the accompanying consolidated balance sheets until it is paid to the relevant PRC tax authorities. | ||
Restricted cash | ' | |
Restricted cash | ||
The Company’s restricted cash consists of cash in a bank as security for its notes payable. The Company has notes payable outstanding with the bank and is required to keep certain amounts on deposit that are subject to withdrawal restrictions. The notes payable are generally short term in nature due to their short maturity period of six to nine months; thus, restricted cash is classified as a current asset. | ||
Accounts receivable | ' | |
Accounts receivable | ||
Accounts receivable represents the following: (1) amounts due from banks relating to retail sales that are paid or settled by the customers’ debit or credit cards, (2) amounts due from government social security bureaus and commercial health insurance programs relating to retail sales of drugs, prescription medicine, and medical services that are paid or settled by the customers’ medical insurance cards, and (3) amounts due from non-retail customers for sales of merchandise. | ||
Accounts receivable are recorded at net realizable value consisting of the carrying amount less an allowance for uncollectible accounts, as necessary. In its wholesale business, the Company uses the aging method to estimate the allowance for anticipated uncollectible receivable balances. Under the aging method, bad debt percentages are determined by management, based on historical experience and the current economic climate, are applied to customers’ balances categorized by the number of months the underlying invoices have remained outstanding. At each reporting period, the allowance balance is adjusted to reflect the amount computed as a result of the aging method. When facts subsequently become available to indicate that the allowance provided requires an adjustment, a corresponding adjustment is made to the allowance account as a change in estimate. | ||
In its retail business, accounts receivable mainly consist of reimbursements due from the government insurance bureaus and commercial health insurance programs, and are usually collected within two or three months. The Company directly writes off delinquent account balances that are determined to be uncollectable after confirming with the appropriate bureau or program each month. Additionally, the Company also makes an estimated reserve on related outstanding accounts receivable based on historical trends. | ||
Inventories | ' | |
Inventories | ||
Inventories are stated at the lower of cost or market. Cost is determined using the first in first out (FIFO) method. Market is the lower of replacement cost or net realizable value. The Company carries out physical inventory counts on a monthly basis at each store and warehouse location. Herbs that the Company farms are recorded at their cost, which includes direct costs such as seed selection, fertilizer, and labor costs that are spent in growing herbs on the leased farmland, and indirect costs such as amortization of farmland development cost. All the costs are accumulated until the time of harvest and then allocated to harvested herbs costs when they are sold. The Company periodically reviews its inventory and records write-downs to inventories for shrinkage losses and damaged merchandise that are identified. The Company provides a reserve for estimated inventory obsolescence or excess quantities on hand equal to the difference between the cost of the inventory and its estimated realizable value. | ||
Property and equipment | ' | |
Property and equipment | ||
Property and equipment are stated at cost, net of accumulated depreciation or amortization. Depreciation is calculated on the straight-line method over the estimated useful lives of the assets, taking into consideration the assets’ estimated residual value. Leasehold improvements are amortized over the shorter of lease term or remaining lease period of the underlying assets. Following are the estimated useful lives of the Company’s property and equipment: | ||
Estimated Useful Life | ||
Leasehold improvements | 3-10 years | |
Motor vehicles | 3-5 years | |
Office equipment and furniture | 3-5 years | |
Buildings | 35 years | |
Maintenance, repairs and minor renewals are charged to expense as incurred. Major additions and betterment to property and equipment are capitalized. | ||
Intangibles | ' | |
Intangibles | ||
Intangible assets are acquired individually or as part of a group of assets, and are initially recorded at their fair value. The cost of a group of assets acquired in a transaction is allocated to the individual assets based on their relative fair values. | ||
The estimated useful lives of the Company’s intangible assets are as follows: | ||
Estimated Useful Life | ||
Land use right | 50 years | |
Software | 3 years | |
The Company evaluates intangible assets for impairment whenever events or changes in circumstances indicate that the assets might be impaired. | ||
Impairment of long-lived assets | ' | |
Impairment of long-lived assets | ||
The Company evaluates long-lived tangible and intangible assets for impairment, whenever events or changes in circumstances indicate that the carrying value may not be recoverable from its estimated future cash flows. Recoverability is measured by comparing the assets’ net book value to the related projected undiscounted cash flows from these assets, considering a number of factors, including past operating results, budgets, economic projections, market trends and product development cycles. If the net book value of the asset exceeds the related undiscounted cash flows, the asset is considered impaired, and a second test is performed to measure the amount of impairment loss. There were $480,771 leasehold improvement, $2,481,792 prepayment of lease use right, $905,468 land and road improvement, and $1,126,981 intangible assets impaired as of March 31 2014 (See Notes 6 and 11). | ||
Notes payable | ' | |
Notes payable | ||
During the normal course of business, the Company regularly issues bank acceptance bills as a payment method to settle outstanding accounts payables with various material suppliers. The Company records such bank acceptance bills as notes payable. Such notes payable are generally short term in nature due to their short maturity period of six to nine months. | ||
Income taxes | ' | |
Income taxes | ||
The Company records income taxes pursuant to the accounting standards for income taxes. These standards require the recognition of deferred income tax liabilities and assets for the expected future tax consequences of temporary differences between income tax basis and financial reporting basis of assets and liabilities. The provision for income taxes consists of taxes currently due and the net change in deferred taxes. A valuation allowance is recognized if it is more likely than not that some portion, or all of, a deferred tax asset will not be realized. | ||
The accounting standards clarify the accounting and disclosure requirements for uncertain tax positions and prescribe a recognition threshold and measurement attribute for recognition and measurement of a tax position taken or expected to be taken in a tax return. The accounting standards also provide guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosures, and transition. No significant penalties, uncertain tax provisions or interest relating to income taxes were incurred during the years ended March 31, 2014 and 2013. | ||
Since its inception, all of the tax returns of the Company have been and remain subject to examination by the tax authorities. | ||
Value added tax | ' | |
Value added tax | ||
Sales revenue represents the invoiced value of goods, net of value added tax (“VAT”). All of the Company’s products are sold in the PRC and are subject to a VAT on the gross sales price. The VAT rates range up to 17%, depending on the type of products sold. The VAT may be offset by VAT paid by the Company on raw materials and other materials included in the cost of producing or acquiring its finished products. The Company recorded a VAT payable net of payments in the accompanying financial statements. | ||
Stock based compensation | ' | |
Stock based compensation | ||
The Company follows the provisions of ASC 718, “Compensation — Stock Compensation,” which establishes accounting for non-employee and employee stock-based awards. Under the provisions of ASC 718, the fair value of stock issued is used to measure the fair value of services received as the Company believes such approach is a more reliable method of measuring the fair value of the services. For non-employee stock-based awards, fair value is measured based on 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 calculated and then recognized as compensation expense over the requisite performance period. For employee stock-based awards, share-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense with graded vesting on a straight–line basis over the requisite service period for the entire award. | ||
Advertising and promotion costs | ' | |
Advertising and promotion costs | ||
Advertising and promotion costs are expensed as incurred, and amounted to $4,637,276 and $767,795 for years ended March 31, 2014 and 2013, respectively. Such costs consist primarily of gifts to members and advertisements, and increased dramatically year over year due to rewards such as products gifts given to members, advertisements through various media and promotion activities expenses during the Company’s ten-year anniversary promotional campaign in fiscal 2014. | ||
Operating leases | ' | |
Operating leases | ||
The Company leases premises for retail drugstores, offices and wholesale warehouse under non-cancelable operating leases. Operating lease payments are expensed over the term of lease. A majority of the Company’s retail drugstore leases have a 3 to 8-year term with a renewal option upon the expiration of the lease; the wholesale warehouse lease has a 10-year term with a renewal option upon the expiration of the lease. The Company has historically been able to renew a majority of its drugstores leases. Under the terms of the lease agreements, the Company has no legal or contractual asset retirement obligations at the end of the lease. Land leased from the government is amortized on a straight-line basis over a 30-year term. | ||
Foreign currency translation | ' | |
Foreign currency translation | ||
The Company uses the United States dollar (“U.S. dollars” or “USD”) for financial reporting purposes. The Company’s subsidiaries and VIEs maintain their books and records in their functional currency the Renminbi (“RMB”), the currency of the PRC. | ||
In general, for consolidation purposes, the Company translates the assets and liabilities of its subsidiaries and VIEs into U.S. dollars using the applicable exchange rates prevailing at the balance sheet date, and the statements of operations and cash flows are translated at average exchange rates during the reporting period. As a result, amounts related to assets and liabilities reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheet. Equity accounts are translated at historical rates. Adjustments resulting from the translation of the financial statements of the subsidiaries and VIEs are recorded as accumulated other comprehensive income. | ||
The balance sheet amounts, with the exception of equity, at March 31, 2014 and 2013 were translated at 1 RMB to $0.1623 USD and at 1 RMB to $0.1594 USD, respectively. The average translation rates applied to income and cash flow statement amounts for the years ended March 31, 2014 and 2013 were at 1 RMB to $0.1626 USD and at 1 RMB to $0.1586 USD, respectively. | ||
Concentrations and credit risk | ' | |
Concentrations and credit risk | ||
Certain financial instruments, which subject the Company to concentration of credit risk, consist of cash and restricted cash, accounts receivable, advance to suppliers, accounts payable and other liabilities. The Company has cash balances at financial institutions located in Hong Kong and PRC. Balances at financial institutions in Hong Kong may, from time to time, exceed Hong Kong Deposit Protection Board’s insured limits. Balances at financial institutions and state-owned banks within the PRC are not covered by insurance. As of March 31, 2014 and 2013, the Company had deposits totaling $7,204,626 and $6,230,011 that were not covered by insurance, respectively. To date, the Company has not experienced any losses in such accounts. | ||
For the fiscal year ended March 31, 2014, one vendor accounted for 11% of the Company’s total purchases and another vendor accounted for more than 10% of total advances to suppliers. For the fiscal year ended March 31, 2013, one vendor collectively accounted for 10% of the Company’s total purchases and 33% of total advances to suppliers. | ||
For the fiscal year ended March 31, 2014, no customer accounted for more than 10% of the Company’s total sales and one customer accounted for 28% of total accounts receivable. For the fiscal year ended March 31, 2013, one customer accounted for 11% or more of the Company’s total sales while two customers collectively accounted for 30% of total accounts receivable. | ||
Non-controlling interest | ' | |
Non-controlling interest | ||
As of March 31, 2014, Wang Yi, an individual, owned 49% of the equity interests of Shouantang Health, and so was not under the Company’s control. | ||
Recent Accounting Pronouncements | ' | |
Recent Accounting Pronouncements | ||
In April 2014, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("ASU") No. 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity ("ASU No. 2014-08"). Under ASU No. 2014-08, only disposals representing a strategic shift in operations should be presented as discontinued operations. ASU No. 2014-08 also requires disclosure of the pre-tax income attributable to a disposal of a significant part of an organization that does not qualify for discontinued operations reporting. The amendments in ASU No. 2014-08 are effective in the first quarter of 2015 for public business entities with annual periods beginning on or after December 15, 2014. Early adoption is permitted. The Company does not expect that the adoption of ASU No. 2014-08 will have a significant impact on the Company’s consolidated financial statements. | ||
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers: Topic 606. This Update affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets, unless those contracts are within the scope of other standards. The guidance in this Update supersedes the revenue recognition requirements in Topic 605, Revenue Recognition and most industry-specific guidance. The core principle of the guidance is that an entity should recognize revenue to illustrate the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new guidance also includes a cohesive set of disclosure requirements that will provide users of financial statements with comprehensive information about the nature, amount, timing, and uncertainty of revenue and cash flows arising from a reporting organization’s contracts with customers. This ASU is effective for fiscal years, and interim periods within those years beginning after December 15, 2016 for public companies and 2017 for non-public entities. Management is evaluating the effect, if any, on the Company’s financial position and results of operations. | ||
Reclassification | ' | |
Reclassification | ||
Certain prior period amounts have been reclassified to conform to the current period presentation. Such reclassifications had no effect on net income or cash flows as previously reported. |
DESCRIPTION_OF_BUSINESS_AND_OR1
DESCRIPTION OF BUSINESS AND ORGANIZATION (Tables) | 12 Months Ended | ||||||
Mar. 31, 2014 | |||||||
Description Of Business and Organization [Abstract] | ' | ||||||
Schedule of activities of company and affiliates | ' | ||||||
Entity Name | Background | Ownership | |||||
Renovation HK | ● Incorporated in Hong Kong SAR on September 2, 2008 | 100% | |||||
Jiuxin Management | ● Established in the PRC on October 14, 2008 | 100% | |||||
● Deemed a wholly foreign owned enterprise (“WFOE”) under PRC law | |||||||
● Registered capital of $4.5 million fully paid | |||||||
Shouantang Technology | ● Established in the PRC on July 16, 2010 by Renovation with registered capital of $20 million | 100% | |||||
● Registered capital requirement reduced by the SAIC to $11 million in July 2012 and is fully paid | |||||||
● Deemed a WFOE under PRC law | |||||||
● Invests and finances the working capital of Quannuo Technology | |||||||
Qianhong Agriculture | ● Established in the PRC on August 10, 2010 by Jiuxin Management | 100% | |||||
● Registered capital of RMB 10 million fully paid | |||||||
● Carries out cultivation of TCM herbal plants | |||||||
Quannuo Technology | ● Established in the PRC on July 7, 2009 | 100% | |||||
● Registered capital of RMB 10 million fully paid | |||||||
● Acquired by Shouantang Technology in November 2010 | |||||||
● Operates the Company’s online pharmacy website and provide software and technical support | |||||||
Hangzhou Quannuo | ● Established in the PRC on July 8, 2010 by Quannuo Technology | 100% | |||||
● Registered capital of RMB 800,000 fully paid | |||||||
● Currently has no operations | |||||||
Jiuzhou Pharmacy (1) | ● Established in the PRC on September 9, 2003 | VIE by contractual arrangements (2) | |||||
● Registered capital of RMB 5 million fully paid | |||||||
● Operates the “Jiuzhou Grand Pharmacy” stores in Hangzhou | |||||||
Jiuzhou Clinic (1) | ● Established in the PRC as a general partnership on October 10, 2003 | VIE by contractual arrangements (2) | |||||
● Operates a medical clinic adjacent to one of Jiuzhou Pharmacy’s stores | |||||||
Jiuzhou Service (1) | ● Established in the PRC on November 2, 2005 | VIE by contractual arrangements (2) | |||||
● Registered capital of RMB 500,000 fully paid | |||||||
● Operates a medical clinic adjacent to one of Jiuzhou Pharmacy’s stores | |||||||
Shanghai Lydia | ● Established in the PRC on January 31, 2011 by Jiuzhou Pharmacy | VIE by contractual arrangements as a wholly-owned subsidiary of Jiuzhou Pharmacy (2) | |||||
● Registered capital of RMB 1 million fully paid | |||||||
● Operates the “Lydia Grand Pharmacy” and “Chaling Grand Pharmacy” stores in Shanghai | |||||||
Jiuxin Medicine | ● Established in PRC on December 31, 2003 | VIE by contractual arrangements as a wholly-owned subsidiary of Jiuzhou Pharmacy (2) | |||||
● Acquired by Jiuzhou Pharmacy in August 2011 | |||||||
● Registered capital of RMB 10 million fully paid | |||||||
● Carries out pharmaceutical distribution services | |||||||
Jiutong Medical | ● Established in the PRC on December 20, 2011 by Renovation Registered capital of $2.6 million fully paid | 100% | |||||
● Currently has no operation | |||||||
Shouantang Health | ● Established in the PRC on December 18, 2013 by Jiuzhou Service | VIE by contractual arrangements as a controlled entity of Jiuzhou Service (2) | |||||
● Registered capital of RMB 500,000 fully paid | |||||||
● 51% held by Jiuzhou Service | |||||||
● Currently has no operations | |||||||
(1) | Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service have been under the common control of the Renovation (“Owners”) since their respective establishment dates, pursuant to agreements amongst the Owners to vote their interests in concert as memorialized in a voting agreement. Based on such voting agreement, the Company has determined that common control exists among these three companies. Operationally, the Owners have operated these three companies in conjunction with one another since each company’s respective establishment date. Shanghai Lydia, Shanghai Zhongxing, Lydia Trading, Shanghai Zhenguang and Jiuxin Medicine were also deemed under the common control of the Owners as subsidiaries of Jiuzhou Pharmacy, as is Shouantang Health as a subsidiary of Jiuzhou Service. | ||||||
(2) | To comply with certain foreign ownership restrictions of pharmacy and medical clinic operators, Jiuxin Management entered into a series of contractual arrangements with Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service on August 1, 2009. These contractual arrangements are comprised of five agreements: consulting services agreement, operating agreement, equity pledge agreement, voting rights agreement and option agreement. As a result of these agreements, which obligate Jiuxin Management to absorb all of the risks of loss from the activities of Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service, and enable the Company (through Jiuxin Management) to receive all of their expected residual returns, the Company accounts for all three companies (as well as the two subsidiaries of Jiuzhou Pharmacy) as a variable interest entity (“VIE”) under the accounting standards of the Financial Accounting Standards Board (“FASB”). Accordingly, the financial statements of Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service, as well as the subsidiaries and entity under the control of Jiuzhou Pharmacy (Shanghai Lydia, Jiuxin Medicine, Shanghai Zhongxing, Leilian Trading ,Shanghai Zhenguang and Shouantang Health), are consolidated into the financial statements of the Company. |
LIQUIDITY_Tables
LIQUIDITY (Tables) | 12 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Liquidity [Abstract] | ' | ||||||||
Schedule of different types of financial supports | ' | ||||||||
Banks | Amount of | Unused Amount of | Expiration Date | ||||||
Line of Credit as | Line of Credit as | ||||||||
of June 27, 2014 | of June 27, 2014 | ||||||||
(in millions) | (in millions) | ||||||||
Hangzhou United Bank | $ | 1.38 | $ | - | 7-Nov-14 | ||||
Hangzhou United Bank | 0.81 | 0.42 | 2-Apr-15 | ||||||
Hangzhou United Bank | 1.17 | - | 23-Oct-15 | ||||||
Bank of Hangzhou | 1.81 | 0.51 | 12-Jun-15 | ||||||
Bank of Hangzhou | 2.86 | 2.86 | 12-Jul-15 | ||||||
Total | $ | 8.03 | $ | 3.79 | |||||
Schedule of detailed breakdown of estimated cash flows items | ' | ||||||||
Cash inflow | |||||||||
(outflow) | |||||||||
(in millions) | |||||||||
For the | |||||||||
twelve months | |||||||||
ended | |||||||||
March 31, | |||||||||
2015 | |||||||||
Current liabilities over current assets as of March 31, 2014 | $ | (2.16 | ) | ||||||
Projected cash financing and outflows: | |||||||||
Cash provided by line of credit from banks | 3.79 | ||||||||
Cash projected to be used in operations in the twelve months ended March 31, 2015 | (1.18 | ) | |||||||
Cash projected to be used for financing cost in the twelve months ended March 31, 2015 | (0.20 | ) | |||||||
Net projected change in cash for the twelve months ended March 31, 2015 | $ | 0.25 |
SUMMARY_OF_SIGNIFICANT_ACCOUNT2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended | |
Mar. 31, 2014 | ||
Accounting Policies [Abstract] | ' | |
Schedule of estimated useful lives of property and equipment | ' | |
Estimated Useful Life | ||
Leasehold improvements | 3-10 years | |
Motor vehicles | 3-5 years | |
Office equipment and furniture | 3-5 years | |
Buildings | 35 years | |
Schedule of estimated useful lives of intangible assets | ' | |
Estimated Useful Life | ||
Land use right | 50 years | |
Software | 3 years |
TRADE_ACCOUNTS_RECEIVABLE_Tabl
TRADE ACCOUNTS RECEIVABLE (Tables) | 12 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Accounts Receivable, Net [Abstract] | ' | ||||||||
Schedule of trade accounts receivable | ' | ||||||||
March 31, | March 31, | ||||||||
2014 | 2013 | ||||||||
Accounts receivable | $ | 11,869,866 | $ | 18,007,051 | |||||
Less: allowance for doubtful accounts | (5,135,330 | ) | (5,028,243 | ) | |||||
Trade accounts receivable, net | $ | 6,734,536 | $ | 12,978,808 |
OTHER_CURRENT_ASSETS_Tables
OTHER CURRENT ASSETS (Tables) | 12 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Assets, Current [Abstract] | ' | ||||||||
Schedule of other current assets | ' | ||||||||
March 31, | March 31, | ||||||||
2014 | 2013 | ||||||||
Prepaid rental expenses | $ | 1,165,633 | $ | 647,489 | |||||
Lease rights transfer fees, current portion (1) | 11,939 | 247,789 | |||||||
Prepaids and other current assets | 485,530 | 326,221 | |||||||
Total | $ | 1,663,102 | $ | 1,221,499 | |||||
(1) | Lease rights transfer fees are paid by the Company to secure store rentals in coveted areas. The additional costs of acquiring the right to lease new store locations are capitalized and amortized over the period of the initial lease term. |
PROPERTY_AND_EQUIPMENT_Tables
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Property, Plant and Equipment [Abstract] | ' | ||||||||
Schedule of property and equipment | ' | ||||||||
March 31, | March 31, | ||||||||
2014 | 2013 | ||||||||
Building | $ | 1,139,412 | $ | 1,119,053 | |||||
Leasehold improvements | 12,329,637 | 12,050,278 | |||||||
Farmland development cost | 1,941,010 | 1,906,327 | |||||||
Office equipment and furniture | 5,535,667 | 5,264,996 | |||||||
Motor vehicles | 579,834 | 424,958 | |||||||
Total | 21,525,560 | 20,765,612 | |||||||
Less: Accumulated depreciation | (10,729,190 | ) | (7,476,960 | ) | |||||
Impairment | (1,383,682 | ) | - | ||||||
Property and equipment, net | $ | 9,412,688 | $ | 13,288,652 |
ADVANCES_TO_SUPPLIERS_Tables
ADVANCES TO SUPPLIERS (Tables) | 12 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Advances To Suppliers [Abstract] | ' | ||||||||
Schedule of advance to suppliers | ' | ||||||||
March 31, | March 31, | ||||||||
2014 | 2013 | ||||||||
Advance to suppliers | $ | 11,162,767 | $ | 19,119,231 | |||||
Less: allowance for doubtful accounts | (6,585,573 | ) | (3,596,197 | ) | |||||
Advance to suppliers, net | $ | 4,577,194 | $ | 15,523,034 |
INVENTORY_Tables
INVENTORY (Tables) | 12 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Inventory Disclosure [Abstract] | ' | ||||||||
Schedule of inventory | ' | ||||||||
March 31, | March 31, | ||||||||
2014 | 2013 | ||||||||
Finished goods | $ | 7,822,102 | $ | 7,224,976 | |||||
Work-in-process | 2,192,372 | 1,362,023 | |||||||
Total inventory | $ | 10,014,474 | $ | 8,586,999 | |||||
Less: reserve for inventory (1) | (1,595,342 | ) | - | ||||||
Inventory, net | $ | 8,419,132 | $ | 8,586,999 | |||||
-1 | The inventory reserves for finished goods and herb farming agricultural assets (work-in-process) were $774,705 and $820,637, respectively, as of March 31, 2014. In addition, the Company recorded a loss of $1,000,376 in fiscal 2014 for products that the Company decided not to continue expending significant efforts to sell in the future. |
OTHER_NONCURRENT_ASSETS_Tables
OTHER NONCURRENT ASSETS (Tables) | 12 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Other Assets, Noncurrent Disclosure [Abstract] | ' | |||||||
Schedule of other noncurrent assets | ' | |||||||
March 31, | March 31, | |||||||
2014 | 2013 | |||||||
Prepayment for lease of land use right- noncurrent (1) | $ | 5,355,899 | $ | 5,419,600 | ||||
Lease rights transfer fees - noncurrent (2) | - | 11,726 | ||||||
Long term prepaid expense | 158,243 | - | ||||||
Total | 5,514,142 | 5,431,326 | ||||||
Less: impairment of prepayment for lease of land use right (3) | (2,477,212 | ) | - | |||||
Other noncurrent assets, net | $ | 3,036,930 | $ | 5,431,326 | ||||
(1) | This is a payment made to a local government in connection with entering into a 30-year operating land lease agreement. The land is currently used to cultivate Ginkgo trees. This prepayment includes a deposit of $1,136,100, which will be refundable at the due date. The amortization of the lease is added to value of Ginkgo trees. | |||||||
(2) | Lease rights transfer fees are paid by the Company to secure store rentals in coveted areas. The additional costs of acquiring the right to lease new store locations are capitalized and amortized over the period of the initial lease term. | |||||||
(3) | Based on expected output from planted Gingko trees such as expected fruit production and tree market value, the fair value of the lease prepayment was lower than carrying cost. As a result, the Company recorded on impairment of $2,481,792 on lease prepayment for the year ended March 31, 2014. | |||||||
Schedule of prepayment for lease of land use right | ' | |||||||
Years ending March 31, | Amount | |||||||
2015 | $ | 67,146 | ||||||
2016 | 67,146 | |||||||
2017 | 67,146 | |||||||
2018 | 67,146 | |||||||
2019 | 67,146 | |||||||
Thereafter | 1,406,858 |
INTANGIBLE_ASSETS_Tables
INTANGIBLE ASSETS (Tables) | 12 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Finite-Lived Intangible Assets, Net [Abstract] | ' | |||||||
Schedule of net intangible assets | ' | |||||||
March 31, | March 31, | |||||||
2014 | 2013 | |||||||
Land use rights (1) | 1,582,677 | - | ||||||
Licenses and permits (2) | - | 1,104,801 | ||||||
Software | 474,088 | 466,071 | ||||||
Total intangible assets | 2,056,765 | 1,570,872 | ||||||
Less: accumulated amortization | (487,322 | ) | (368,614 | ) | ||||
Intangible assets, net | $ | 1,569,443 | $ | 1,202,258 | ||||
-1 | During the year ended March 31, 2014, the Company purchased the land use right of a plot of farmland in Lin’An, Hangzhou, intended for the establishment of an herb processing plant in the future. However, as our farming business in Lin’an has not grown, we do not expect completion of the plant in near future. | |||||||
-2 | The impairment of intangible assets was made after the Company estimated the implied fair value of the licenses and permits was lower than the carrying value. | |||||||
Schedule of recognition and impairment of intangible assets | ' | |||||||
March 31, | March 31, | |||||||
2014 | 2013 | |||||||
Licenses and permits at the beginning of period | $ | 1,104,801 | $ | 1,095,792 | ||||
Less: Impairment of licenses and permits | (1,126,981 | ) | - | |||||
Exchange adjustment | 22,180 | 9,009 | ||||||
Licenses and permits at the end of period | $ | - | $ | 1,104,801 |
NOTES_PAYABLE_Tables
NOTES PAYABLE (Tables) | 12 Months Ended | ||||||||||||||
Mar. 31, 2014 | |||||||||||||||
Notes Payable [Abstract] | ' | ||||||||||||||
Schedule of credit facilities with bank | ' | ||||||||||||||
Origination | Maturity | March 31, | March 31, | ||||||||||||
Beneficiary | Endorser | date | date | 2014 | 2013 | ||||||||||
Jiuzhou Pharmacy(1) | HUB | 11/6/12 | 5/6/13 | $ | - | $ | 1,152,462 | ||||||||
Jiuzhou Pharmacy(1) | HUB | 11/15/12 | 5/15/13 | - | 374,590 | ||||||||||
Jiuzhou Pharmacy(1) | HUB | 11/29/12 | 5/29/13 | - | 846,542 | ||||||||||
Jiuzhou Pharmacy(1) | HUB | 12/6/12 | 6/6/13 | - | 478,200 | ||||||||||
Jiuzhou Pharmacy(1) | HUB | 12/20/12 | 6/20/13 | - | 497,328 | ||||||||||
Jiuzhou Pharmacy(1) | HUB | 12/27/12 | 6/27/13 | - | 318,800 | ||||||||||
Jiuzhou Pharmacy(1) | HUB | 1/10/13 | 7/10/13 | - | 293,870 | ||||||||||
Jiuzhou Pharmacy(1) | HUB | 1/22/13 | 7/22/13 | - | 781,060 | ||||||||||
Jiuzhou Pharmacy(1) | HUB | 2/28/13 | 5/28/13 | - | 478,200 | ||||||||||
Jiuzhou Pharmacy(1) | HUB | 2/28/13 | 8/28/13 | - | 988,280 | ||||||||||
Jiuzhou Pharmacy(1) | HUB | 3/26/13 | 6/26/13 | - | 977,121 | ||||||||||
Jiuzhou Pharmacy(2) | ICBC | 12/27/13 | 6/26/14 | 1,351,959 | - | ||||||||||
Jiuzhou Pharmacy(2) | ICBC | 10/11/13 | 4/11/14 | 730,350 | - | ||||||||||
Jiuzhou Pharmacy(3) | HUB | 10/8/13 | 4/8/14 | 486,900 | - | ||||||||||
Jiuzhou Pharmacy(3) | HUB | 11/5/13 | 5/5/14 | 1,720,380 | - | ||||||||||
Jiuzhou Pharmacy(3) | HUB | 12/26/13 | 6/26/14 | 117,960 | - | ||||||||||
Jiuzhou Pharmacy(3) | HUB | 2/7/14 | 5/7/14 | 649,200 | - | ||||||||||
Jiuzhou Pharmacy(3) | HUB | 2/7/14 | 8/7/14 | 985,161 | - | ||||||||||
Jiuzhou Pharmacy(3) | HUB | 3/6/14 | 9/6/14 | 1,778,808 | - | ||||||||||
Total | $ | 7,820,718 | $ | 7,186,453 | |||||||||||
-1 | As of March 31, 2013, notes payable consisted of notes of $7,186,453 (RMB45,084,400) from HUB, with maturity within 180 days. The credit line was guaranteed by Zhejiang Jin Qiao Guarantee Company, which is further secured by buildings owned by the Company’s major shareholders and personally guaranteed by our major shareholders with a value of approximately $6,613,725 (RMB40,750,000). The Company is required to hold 30-50% of amounts borrowed as restricted cash with HUB as additional collateral against these bank acceptance notes. All the outstanding notes payable have been repaid upon maturity. | ||||||||||||||
-2 | As of March 31, 2014, the Company had a total of $2,082,309 (RMB12,830,000) in notes from Industrial and Commercial Bank of China. A third party Hangzhou Small and Medium sized Guarantee CO., Ltd signed loan guarantee agreements with the bank to guarantee these borrowings. In addition, the Company is required to hold 30% of amounts borrowed as restricted cash with ICBC as additional collateral against these bank acceptance notes. All the outstanding notes payable have been repaid upon maturity. | ||||||||||||||
-3 | As of March 31, 2014, the Company had $5,734,409 (RMB35,356,800) notes from HUB. The Company is required to hold restricted cash of $2,489,851 (RMB15,341,040) with HUB as collateral against these bank acceptance notes. |
TAXES_Tables
TAXES (Tables) | 12 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Income Tax Disclosure [Abstract] | ' | ||||||||
Schedule of income arising in or derived from tax jurisdiction in which each entity is domiciled | ' | ||||||||
Entity | Income Tax Jurisdiction | ||||||||
Jo-Jo Drugstores | United States | ||||||||
Renovation | Hong Kong, PRC | ||||||||
All other entities | Mainland, PRC | ||||||||
Schedule of significant components of income tax provision | ' | ||||||||
Years ended | |||||||||
March 31, | |||||||||
2014 | 2013 | ||||||||
Current tax provision | |||||||||
Federal | $ | - | $ | - | |||||
State | - | - | |||||||
Foreign | 44,870 | 58,380 | |||||||
44,870 | 58,380 | ||||||||
Deferred tax provision | |||||||||
Federal | $ | - | $ | - | |||||
State | - | - | |||||||
Foreign | - | 295,422 | |||||||
- | 295,422 | ||||||||
Income tax provision (a) | $ | 44,870 | $ | 353,802 | |||||
(a) | The current income tax provision for the year ended March 31, 2014 represents prepaid tax expenses incurred by the Company which were not refundable. | ||||||||
Schedule of income from continuing operations before income taxes | ' | ||||||||
Years ended | |||||||||
March 31, | |||||||||
2014 | 2013 | ||||||||
United States | $ | (1,034,223 | ) | $ | (303,442 | ) | |||
Foreign | (24,277,077 | ) | (13,677,281 | ) | |||||
$ | (25,311,300 | ) | $ | (13,980,723 | ) | ||||
Schedule of reconciles the U.S. statutory tax rates with company's effective tax rate | ' | ||||||||
2014 | 2013 | ||||||||
U.S. Statutory rates | 34 | % | 34 | % | |||||
Foreign income not recognized in the U.S. | (34.0 | ) | (34.0 | ) | |||||
China income taxes | 25 | 25 | |||||||
Change in valuation allowance | (24.9 | ) | (27.4 | ) | |||||
Others (a) | (0.4 | ) | (0.1 | ) | |||||
Effective tax rate | (0.3 | )% | (2.5 | )% | |||||
(a) | The (0.4)% for the year ended March 31, 2014 and the (0.1)% for the year ended March 31, 2013 represent the combined effect of expenses incurred by the Company that were not deductible for PRC income tax and PRC income tax exemptions. | ||||||||
Schedule of deferred tax assets | ' | ||||||||
Years ended | |||||||||
March 31, | |||||||||
2014 | 2013 | ||||||||
Current deferred tax assets: | |||||||||
Allowance for doubtful accounts | $ | 2,759,144 | $ | 1,911,450 | |||||
Inventory reserve | 193,676 | - | |||||||
Payroll accrual | 63,214 | 62,346 | |||||||
Valuation allowance | (3,016,034 | ) | (1,973,796 | ) | |||||
Total current deferred tax assets | $ | - | $ | - | |||||
Long-term deferred tax assets: | |||||||||
Long-lived assets impairment | $ | 792,432 | $ | 370,774 | |||||
Long-term lease reserve | 619,303 | - | |||||||
Depreciation and amortization | 323,547 | 261,960 | |||||||
Net operating loss carry forward | 410,592 | 47,418 | |||||||
Valuation allowance | (2,145,874 | ) | (680,152 | ) | |||||
Total current deferred tax assets | $ | - | $ | - | |||||
Total | $ | - | $ | - | |||||
Schedule of taxes payable | ' | ||||||||
March 31, | March 31, | ||||||||
2014 | 2013 | ||||||||
VAT | $ | 344,329 | $ | 334,833 | |||||
Income tax | 7,851 | 7,628 | |||||||
Others | 21,321 | 29,172 | |||||||
Total taxes payable | $ | 373,501 | $ | 371,633 |
RELATED_PARTY_TRANSACTIONS_AND1
RELATED PARTY TRANSACTIONS AND ARRANGEMENTS (Tables) | 12 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Related Party Transactions [Abstract] | ' | |||||||
Schedule of amounts payable to related parties | ' | |||||||
March 31, | March 31, | |||||||
2014 | 2013 | |||||||
Due to cofounders (1): | $ | 576,818 | $ | 576,818 | ||||
Due to director (2): | 1,807,476 | 647,599 | ||||||
Total | $ | 2,384,294 | $ | 1,224,417 | ||||
(1) | As of March 31, 2014 and 2013, the amount due to cofounders represents loans from the owners to Jiuxin Management to enable Jiuxin Management to meet its approved PRC registered capital requirements. | |||||||
-2 | Mr. Lei Liu lent approximately $600,000 to the Company for the purchase of a land use right. The Company leases Mr. Lei Liu’s houses for its business operations in the amount of approximately $171,000, with no payments to Mr. Lei Liu. In addition, Mr. Lei Liu personally lent approximately $389,000 to the Company to facilitate its payments of professional fees in the United States. |
PURCHASE_OPTION_DERIVATIVE_LIA1
PURCHASE OPTION DERIVATIVE LIABILITY (Tables) | 12 Months Ended | ||||
Mar. 31, 2014 | |||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ' | ||||
Schedule of fair value assumption using Black-Scholes Option Pricing Model | ' | ||||
March 31, | |||||
2014 (1) | |||||
Stock price | $ | 2.07 | |||
Exercise price | $ | 6.25 | |||
Annual dividend yield | 0 | % | |||
Expected term (years) | 1.05 | ||||
Risk-free interest rate | 0.13 | % | |||
Expected volatility | 132.55 | % | |||
(1) | As of March 31, 2014, the option to purchase 105,000 shares of common stock had not been exercised. |
WARRANTS_Tables
WARRANTS (Tables) | 12 Months Ended | ||||
Mar. 31, 2014 | |||||
Warrants and Rights Note Disclosure [Abstract] | ' | ||||
Schedule of estimated fair value of warrants | ' | ||||
Common Stock | |||||
Warrants | |||||
March 31, | |||||
2014 (1) | |||||
Stock price | $ | 2.07 | |||
Exercise price | $ | 1.2 | |||
Annual dividend yield | 0 | % | |||
Expected term (years) | 2.49 | ||||
Risk-free interest rate | 0.67 | % | |||
Expected volatility | 114.15 | % | |||
-1 | As of March 31, 2014, the warrant had not been exercised. |
LOSS_PER_SHARE_Tables
LOSS PER SHARE (Tables) | 12 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Earnings Per Share [Abstract] | ' | |||||||
Schedule of reconciliation of the basic and diluted earnings per share computation | ' | |||||||
Years ended | ||||||||
March 31, | ||||||||
2014 | 2013 | |||||||
Net loss attributable to controlling interest | $ | (25,356,136 | ) | $ | (14,333,731 | ) | ||
Weighted average shares used in basic computation | 13,880,190 | 13,580,731 | ||||||
Diluted effect of restricted shares | - | - | ||||||
Weighted average shares used in diluted computation | 13,880,190 | 13,580,731 | ||||||
Loss per share – Basic: | ||||||||
Net loss before noncontrolling interest | $ | (1.83 | ) | $ | (1.06 | ) | ||
Add: Net loss attributable to noncontrolling interest | $ | - | $ | - | ||||
Net loss attributable to controlling interest | $ | (1.83 | ) | $ | (1.06 | ) | ||
Loss per share – Diluted: | ||||||||
Net loss before noncontrolling interest | $ | (1.83 | ) | $ | (1.06 | ) | ||
Add: Net loss attributable to noncontrolling interest | $ | - | $ | - | ||||
Net loss attributable to controlling interest | $ | (1.83 | ) | $ | (1.06 | ) |
SEGMENTS_Tables
SEGMENTS (Tables) | 12 Months Ended | ||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||
Segment Reporting [Abstract] | ' | ||||||||||||||||
Schedule of information by segment | ' | ||||||||||||||||
The following table presents summarized information by segment of the continuing operations for the year ended March 31, 2014: | |||||||||||||||||
Retail | Drug | Herb | |||||||||||||||
drugstores | wholesale | farming (a) | Total | ||||||||||||||
Revenue | $ | 47,656,916 | $ | 18,497,671 | $ | - | $ | 66,154,587 | |||||||||
Cost of goods | $ | 39,947,714 | $ | 20,479,387 | $ | - | $ | 60,427,101 | |||||||||
Gross profit | $ | 7,709,202 | $ | (1,981,716 | ) | $ | - | $ | 5,727,486 | ||||||||
Selling expenses | $ | 13,164,777 | $ | 523,994 | $ | - | $ | 13,688,771 | |||||||||
General and administrative expenses | $ | 6,694,190 | $ | 4,127,733 | $ | 446,934 | $ | 11,268,857 | |||||||||
Loss from operations | $ | (12,149,765 | ) | $ | (6,633,443 | ) | $ | (446,934 | ) | $ | (19,230,142 | ) | |||||
Depreciation and amortization | $ | 2,638,552 | $ | 594,500 | $ | 1,117 | $ | 3,234,169 | |||||||||
Total capital expenditures | $ | 391,678 | $ | 135,761 | $ | 1,585,602 | $ | 2,113,041 | |||||||||
-1 | The negative wholesale gross margin for the year ended March 31, 2014 was primarily due to the discounted sales of certain products that the Company’s new wholesale team has decided not to continue expending significant efforts to sell in the future. While the total discounted sales amount was approximately $0.7 million, the cost of the products sold was approximately $2.1 million, which resulted in a net loss of $1.4 million from such sales and negative gross margin in fiscal 2014. | ||||||||||||||||
-2 | To commemorate Jiuzhou Pharmacy’s ten-year anniversary and to foster member loyalty, Jiuzhou Pharmacy rewarded its members with complimentary gifts during the year ended March 31, 2014, at a cost of approximately $2.97 million. | ||||||||||||||||
The following table presents summarized information by segment of the continuing operations for the year ended March 31, 2013: | |||||||||||||||||
Retail | Drug | Herb | Total | ||||||||||||||
drugstores | wholesale | farming | |||||||||||||||
Revenue | $ | 40,726,080 | $ | 46,235,086 | $ | 2,534,380 | $ | 89,495,546 | |||||||||
Cost of goods | $ | 30,791,464 | $ | 43,846,081 | $ | 223,008 | $ | 74,860,553 | |||||||||
Gross profit | $ | 9,934,616 | $ | 2,389,005 | $ | 2,311,372 | $ | 14,634,993 | |||||||||
Selling expenses | $ | 11,666,876 | $ | 550,108 | $ | - | $ | 12,216,984 | |||||||||
General and administrative expenses | $ | 6,584,185 | $ | 8,022,317 | $ | 393,862 | $ | 15,000,364 | |||||||||
Income (loss) from operations | $ | (8,316,445 | ) | $ | (6,183,420 | ) | $ | 1,917,510 | $ | (12,582,355 | ) | ||||||
Depreciation and amortization | $ | 2,469,723 | $ | 55,980 | $ | 238,441 | $ | 2,764,144 | |||||||||
Total capital expenditures | $ | 489,704 | $ | 8,328 | $ | 1,906,327 | $ | 2,404,359 | |||||||||
Retail drugstores | ' | ||||||||||||||||
Segment Reporting Information [Line Items] | ' | ||||||||||||||||
Schedule of net revenue from external customers by main products | ' | ||||||||||||||||
Years ended | |||||||||||||||||
March 31, | |||||||||||||||||
2014 | 2013 | ||||||||||||||||
Prescription drugs | $ | 19,781,547 | $ | 16,489,103 | |||||||||||||
OTC drugs | 17,270,104 | 14,032,854 | |||||||||||||||
Nutritional supplements | 2,736,808 | 4,263,849 | |||||||||||||||
TCM | 3,230,645 | 3,679,689 | |||||||||||||||
Sundry products | 1,896,163 | 1,101,934 | |||||||||||||||
Medical devices | 2,741,649 | 1,158,651 | |||||||||||||||
Total | $ | 47,656,916 | $ | 40,726,080 | |||||||||||||
Drug wholesale | ' | ||||||||||||||||
Segment Reporting Information [Line Items] | ' | ||||||||||||||||
Schedule of net revenue from external customers by main products | ' | ||||||||||||||||
Years ended | |||||||||||||||||
March 31, | |||||||||||||||||
2014 | 2013 | ||||||||||||||||
Prescription drugs | $ | 13,746,053 | $ | 27,156,460 | |||||||||||||
OTC drugs | 1,012,630 | 9,049,439 | |||||||||||||||
Nutritional supplements | 262,470 | 8,455,686 | |||||||||||||||
TCM | 931 | 215,505 | |||||||||||||||
Sundry products | 3,468,832 | 1,268,723 | |||||||||||||||
Medical devices | 6,755 | 89,273 | |||||||||||||||
Total | $ | 18,497,671 | $ | 46,235,086 | |||||||||||||
Chinese herbs farming | ' | ||||||||||||||||
Segment Reporting Information [Line Items] | ' | ||||||||||||||||
Schedule of net revenue from external customers by main products | ' | ||||||||||||||||
Years ended | |||||||||||||||||
March 31, | |||||||||||||||||
2014 | 2013 | ||||||||||||||||
Prescription drugs | $ | - | $ | - | |||||||||||||
OTC drugs | - | - | |||||||||||||||
Nutritional supplements | - | - | |||||||||||||||
TCM | - | 2,534,380 | |||||||||||||||
Sundry products | - | - | |||||||||||||||
Medical devices | - | - | |||||||||||||||
Total | $ | - | $ | 2,534,380 |
COMMITMENTS_AND_CONTINGENCIES_
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended | ||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | ' | ||||||||||||||||
Schedule of company's commitments for minimum rental payments | ' | ||||||||||||||||
Retail | Drug | Herb | Total | ||||||||||||||
Years ending March 31, | drugstores | wholesale | farming | amount | |||||||||||||
2015 | $ | 4,060,065 | $ | 228,578 | $ | - | $ | 4,288,643 | |||||||||
2016 | 2,415,389 | 250,313 | - | 2,665,702 | |||||||||||||
2017 | 1,143,379 | 284,589 | - | 1,427,968 | |||||||||||||
2018 | 851,632 | 290,397 | - | 1,142,029 | |||||||||||||
2019 | 674,323 | 290,397 | - | 964,720 | |||||||||||||
Thereafter | 173,089 | 580,794 | - | 753,883 |
DESCRIPTION_OF_BUSINESS_AND_OR2
DESCRIPTION OF BUSINESS AND ORGANIZATION - Summary of consolidated financial statements of various entities (Details) | 12 Months Ended | 12 Months Ended | 12 Months Ended | ||||||||||||||||||
Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Jul. 16, 2010 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | |||||||
Renovation HK | Jiuxin Management | Shouantang Technology | Shouantang Technology | Qianhong Agriculture | Quannuo Technology | Hangzhou Quannuo | Jiuzhou Pharmacy | Jiuzhou Clinic | Jiuzhou Service | Shanghai Lydia | Jiuxin Medicine | Jiutong Medical | Shouantang Health | ||||||||
USD ($) | USD ($) | USD ($) | CNY | CNY | CNY | CNY | CNY | CNY | CNY | USD ($) | CNY | ||||||||||
Schedule Of Activities Of Company and Affiliates [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||||
Description of background of entities | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | [1] | ' | ' | ' | ' | ' | |||||
· Incorporated in Hong Kong SAR on September 2, 2008 | · Established in the PRC on October 14, 2008 | · Established in the PRC on August 10, 2010 by Jiuxin Management | · Established in the PRC on July 7, 2009 | · Established in the PRC on September 9, 2003 | · Established in the PRC as a general partnership on October 10, 2003 | · Established in the PRC on November 2, 2005 | · Established in the PRC on January 31, 2011 by Jiuzhou Pharmacy | · Established in PRC on December 31, 2003 | ● Established in the PRC on December 20, 2011 by Renovation Registered capital of $2.6 million fully paid | · Established in the PRC on December 18, 2013 by Jiuzhou Service | |||||||||||
· Deemed a wholly foreign owned enterprise (“WFOE”) under PRC law | Established in the PRC on July 16, 2010 by Renovation with registered capital of $20 million | · Registered capital of RMB 10 million fully paid | · Registered capital of RMB 10 million fully paid | · Registered capital of RMB 5 million fully paid | · Operates a medical clinic adjacent to one of Jiuzhou Pharmacy’s stores | · Registered capital of RMB 500,000 fully paid | · Registered capital of RMB 1 million fully paid | · Acquired by Jiuzhou Pharmacy in August 2011 | ● $ Currently has no operation. | · Registered capital of RMB 500,000 fully paid | |||||||||||
· Registered capital of $4.5 million fully paid | Registered capital requirement reduced by the SAIC to $11 million in July 2012, which is fully paid | · Carries out herb farming business | · Acquired by Shouantang Technology in November 2010 | · Operates the “Jiuzhou Grand Pharmacy” stores in Hangzhou | · Operates a medical clinic adjacent to one of Jiuzhou Pharmacy’s stores | · Operates the “Lydia Grand Pharmacy” and “Chaling Grand Pharmacy” stores in Shanghai | · Registered capital of RMB 10 million fully paid | · 51% held by Jiuzhou Service | |||||||||||||
Deemed a WFOE under PRC law | · Operates the Company’s online pharmacy website and provide software and technical support | · Carries out pharmaceutical distribution services | · Currently has no operations | ||||||||||||||||||
Invests and finances the working capital of Quannuo Technology | |||||||||||||||||||||
Description of ownership percentage of entities | ' | ' | ' | ' | ' | ' | ' | ' | ' | [1],[2] | ' | [1],[2] | ' | [1],[2] | ' | [2] | ' | [2] | ' | ' | [2] |
VIE by contractual arrangements | VIE by contractual arrangements | VIE by contractual arrangements | VIE by contractual arrangements as a wholly-owned subsidiary of Jiuzhou Pharmacy | VIE by contractual arrangements as a wholly-owned subsidiary of Jiuzhou Pharmacy | VIE by contractual arrangements as a controlled entity of Jiuzhou Service | ||||||||||||||||
Percentage of ownership held in subsidiary | ' | 100.00% | 100.00% | 100.00% | ' | 100.00% | 100.00% | 100.00% | ' | ' | ' | ' | ' | 100.00% | ' | ||||||
Fully paid up registered capital | ' | ' | $4,500,000 | $11,000,000 | $20,000,000 | 10,000,000 | 10,000,000 | 800,000 | 5,000,000 | [1] | ' | 500,000 | [1] | 1,000,000 | 10,000,000 | $2,600,000 | 500,000 | ||||
Percentage of ownership held in subsidiary by other entity | 100.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 51.00% | ||||||
[1] | Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service have been under the common control of the Renovation ("Owners") since their respective establishment dates, pursuant to agreements amongst the Owners to vote their interests in concert as memorialized in a voting agreement. Based on such voting agreement, the Company has determined that common control exists among these three companies. Operationally, the Owners have operated these three companies in conjunction with one another since each company's respective establishment date. Shanghai Lydia, Shanghai Zhongxing, Lydia Trading, Shanghai Zhenguang and Jiuxin Medicine were also deemed under the common control of the Owners as subsidiaries of Jiuzhou Pharmacy, as is Shouantang Health as a subsidiary of Jiuzhou Service. | ||||||||||||||||||||
[2] | To comply with certain foreign ownership restrictions of pharmacy and medical clinic operators, Jiuxin Management entered into a series of contractual arrangements with Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service on August 1, 2009. These contractual arrangements are comprised of five agreements: consulting services agreement, operating agreement, equity pledge agreement, voting rights agreement and option agreement. As a result of these agreements, which obligate Jiuxin Management to absorb all of the risks of loss from the activities of Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service, and enable the Company (through Jiuxin Management) to receive all of their expected residual returns, the Company accounts for all three companies (as well as the two subsidiaries of Jiuzhou Pharmacy) as a variable interest entity ("VIE") under the accounting standards of the Financial Accounting Standards Board ("FASB"). Accordingly, the financial statements of Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service, as well as the subsidiaries and entity under the control of Jiuzhou Pharmacy (Shanghai Lydia, Jiuxin Medicine, Shanghai Zhongxing, Leilian Trading ,Shanghai Zhenguang and Shouantang Health), are consolidated into the financial statements of the Company. |
DESCRIPTION_OF_BUSINESS_AND_OR3
DESCRIPTION OF BUSINESS AND ORGANIZATION (Detail Textuals) | 12 Months Ended | 1 Months Ended | ||
Mar. 31, 2014 | Mar. 31, 2014 | Dec. 18, 2013 | Sep. 17, 2009 | |
Jiuzhou Clinic | Jiuzhou Service | Renovation HK | ||
Clinic | Common Stock | |||
Business Acquisition [Line Items] | ' | ' | ' | ' |
Issuance of equity consideration (in shares) | ' | ' | ' | 7,900,000 |
Percentage of capital stock in exchange transaction | ' | ' | ' | 100.00% |
Percentage of ownership held in subsidiary by other entity | 100.00% | ' | ' | ' |
Number of medical clinics owned | ' | 4 | ' | ' |
Percentage of ownership held | ' | ' | 51.00% | ' |
LIQUIDITY_Summary_of_line_of_b
LIQUIDITY - Summary of line of bank credit (Details) (Subsequent Event, Line of bank credit) | Jun. 27, 2014 | Jun. 27, 2014 | Jun. 27, 2014 | Jun. 27, 2014 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 27, 2014 | Jun. 27, 2014 |
In Millions, unless otherwise specified | USD ($) | Hangzhou United Bank | Hangzhou United Bank | Hangzhou United Bank | Bank of Hangzhou | Bank of Hangzhou | Bank of Hangzhou | Bank of Hangzhou |
7-Nov-14 | 2-Apr-15 | 23-Oct-15 | USD ($) | CNY | 12-Jun-15 | 12-Jul-15 | ||
USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | ||||
Line of Credit Facility [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' |
Line of Credit | $8.03 | $1.38 | $0.81 | $1.17 | $4.67 | 28.78 | $1.81 | $2.86 |
Unused Amount of Line of Credit | $3.79 | ' | $0.42 | ' | ' | ' | $0.51 | $2.86 |
LIQUIDITY_Summary_of_estimated
LIQUIDITY - Summary of estimated cash flows (Details 1) (USD $) | Mar. 31, 2014 | Mar. 31, 2015 |
In Millions, unless otherwise specified | Forecast | |
Liquidity [Line Items] | ' | ' |
Current liabilities over current assets as of March 31, 2014 | ($2.16) | ' |
Projected cash financing and outflows: | ' | ' |
Cash provided by line of credit from banks | ' | 3.79 |
Cash projected to be used in operations in the twelve months ended March 31, 2015 | ' | -1.18 |
Cash projected to be used for financing cost in the twelve months ended March 31, 2015 | ' | -0.2 |
Net projected change in cash for the twelve months ended March 31, 2015 | ' | $0.25 |
LIQUIDITY_Detail_Textuals
LIQUIDITY (Detail Textuals) (USD $) | 12 Months Ended | |
In Millions, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Line of Credit Facility [Line Items] | ' | ' |
Working capital deficit | ($2.16) | ' |
Number of operating segments | 3 | ' |
Line of Credit | ' | ' |
Line of Credit Facility [Line Items] | ' | ' |
Number of credit line agreements | 2 | ' |
Number of local banks | 2 | ' |
Line of Credit | Hangzhou United Bank and Bank of Hangzhou | ' | ' |
Line of Credit Facility [Line Items] | ' | ' |
Number of credit line agreements | 2 | ' |
Line of credit facility, maximum borrowing capacity | 8.03 | ' |
Line of Credit | Industrial And Commercial Bank Of China | ' | ' |
Line of Credit Facility [Line Items] | ' | ' |
Line of credit facility, maximum borrowing capacity | ' | $1.95 |
Line of credit facility, borrowing capacity description | ' | ' |
the credit line from Industrial and Commercial Bank of China (ICBC) to borrow up to $1.95 million has expired and is expected to be renewed within the next twelve months. |
SUMMARY_OF_SIGNIFICANT_ACCOUNT3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Summary of estimated useful lives of property and equipment (Details) | 12 Months Ended |
Mar. 31, 2014 | |
Leasehold improvements | ' |
Property, Plant and Equipment [Line Items] | ' |
Estimated useful life | '3-10 years |
Motor vehicles | ' |
Property, Plant and Equipment [Line Items] | ' |
Estimated useful life | '3-5 years |
Office equipment and furniture | ' |
Property, Plant and Equipment [Line Items] | ' |
Estimated useful life | '3-5 years |
Buildings | ' |
Property, Plant and Equipment [Line Items] | ' |
Estimated useful life | '35 years |
SUMMARY_OF_SIGNIFICANT_ACCOUNT4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Summary of estimated useful lives of intangible assets (Details 1) | 12 Months Ended |
Mar. 31, 2014 | |
Land use right | ' |
Intangible Assets [Line Items] | ' |
Estimated useful life | '50 years |
Software | ' |
Intangible Assets [Line Items] | ' |
Estimated useful life | '3 years |
SUMMARY_OF_SIGNIFICANT_ACCOUNT5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Detail Textuals) | 12 Months Ended | |||
Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2013 | |
USD ($) | CNY | USD ($) | CNY | |
Accounting Policies [Abstract] | ' | ' | ' | ' |
Benchmark percentage of the voting ownership interest for control and common control | 50.00% | 50.00% | ' | ' |
Percentage of ownership held in subsidiary by other entity | 100.00% | 100.00% | ' | ' |
Impairment of leasehold improvement | $480,771 | ' | ' | ' |
Impairment of prepayment of lease use right | 2,481,792 | ' | ' | ' |
Impairment of land and road improvement | 905,468 | ' | ' | ' |
Impairment of intangible - license and permit | 1,126,981 | ' | ' | ' |
Value added tax, percentage | 17.00% | 17.00% | ' | ' |
Advertising and promotion costs | $4,637,276 | ' | $767,795 | ' |
Foreign currency exchange rate for translated amounts with exception of equity for balance sheet | $0.16 | 1 | $0.16 | 1 |
Average translation rates applied to income and cash flow statement amounts | $0.16 | 1 | $0.16 | 1 |
SUMMARY_OF_SIGNIFICANT_ACCOUNT6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Detail Textuals 1) (USD $) | 12 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Vendor | Vendor | |
Concentration Risk [Line Items] | ' | ' |
Deposits not covered by insurance | 7,204,626 | 6,230,011 |
Supplier Concentration Risk | Total purchases | ' | ' |
Concentration Risk [Line Items] | ' | ' |
Number of vendors | 1 | 1 |
Concentration risk, percentage | 11.00% | 10.00% |
Supplier Concentration Risk | Total advances | ' | ' |
Concentration Risk [Line Items] | ' | ' |
Number of vendors | 1 | 1 |
Concentration risk, percentage | 10.00% | 33.00% |
SUMMARY_OF_SIGNIFICANT_ACCOUNT7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Detail Textuals 2) | 12 Months Ended |
Mar. 31, 2014 | |
Retail drugstore leases | Minimum | ' |
Operating Leased Assets [Line Items] | ' |
Term of agreement for operating leases | '3 years |
Retail drugstore leases | Maximum | ' |
Operating Leased Assets [Line Items] | ' |
Term of agreement for operating leases | '8 years |
Wholesale warehouse lease | ' |
Operating Leased Assets [Line Items] | ' |
Term of agreement for operating leases | '10 years |
Land | ' |
Operating Leased Assets [Line Items] | ' |
Term of agreement for operating leases | '30 years |
SUMMARY_OF_SIGNIFICANT_ACCOUNT8
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Detail Textuals 3) (Customer Concentration Risk) | 12 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Customer | ||
Total sales | ' | ' |
Concentration Risk [Line Items] | ' | ' |
Number of customers | ' | 1 |
Concentration risk, percentage | 10.00% | 11.00% |
Accounts receivable | ' | ' |
Concentration Risk [Line Items] | ' | ' |
Number of customers | 1 | 2 |
Concentration risk, percentage | 28.00% | 30.00% |
SUMMARY_OF_SIGNIFICANT_ACCOUNT9
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Detail Textuals 4) (Noncontrolling interest, Wang Yi) | Jun. 30, 2014 |
Noncontrolling interest | Wang Yi | ' |
Noncontrolling Interest [Line Items] | ' |
Percentage of ownership held | 49.00% |
TRADE_ACCOUNTS_RECEIVABLE_Summ
TRADE ACCOUNTS RECEIVABLE - Summary of components of trade accounts receivable (Details) (USD $) | Mar. 31, 2014 | Mar. 31, 2013 |
Accounts Receivable, Net [Abstract] | ' | ' |
Accounts receivable | $11,869,866 | $18,007,051 |
Less: allowance for doubtful accounts | -5,135,330 | -5,028,243 |
Trade accounts receivable, net | $6,734,536 | $12,978,808 |
TRADE_ACCOUNTS_RECEIVABLE_Deta
TRADE ACCOUNTS RECEIVABLE (Detail Textuals) (USD $) | 12 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Accounts Receivable, Net [Abstract] | ' | ' |
Accounts receivable written off | $644,049 | $846,094 |
Accounts receivable written off against previous allowance for doubtful accounts | 367,706 | 0 |
Value of goods collected in settlement of accounts receivable | $1,400,000 | ' |
OTHER_CURRENT_ASSETS_Summary_o
OTHER CURRENT ASSETS - Summary of components of other current assets (Details) (USD $) | Mar. 31, 2014 | Mar. 31, 2013 | ||
Assets, Current [Abstract] | ' | ' | ||
Prepaid rental expenses | $1,165,633 | $647,489 | ||
Lease rights transfer fees, current portion | 11,939 | [1] | 247,789 | [1] |
Prepaid and other current assets | 485,530 | 326,221 | ||
Total | $1,663,102 | $1,221,499 | ||
[1] | Lease rights transfer fees are paid by the Company to secure store rentals in coveted areas. The additional costs of acquiring the right to lease new store locations are capitalized and amortized over the period of the initial lease term. |
PROPERTY_AND_EQUIPMENT_Summary
PROPERTY AND EQUIPMENT - Summary of components of property and equipment (Details) (USD $) | Mar. 31, 2014 | Mar. 31, 2013 |
Property, Plant and Equipment [Line Items] | ' | ' |
Total | $21,525,560 | $20,765,612 |
Less: Accumulated depreciation | -10,729,190 | -7,476,960 |
Impairment | -1,383,682 | ' |
Property and equipment, net | 9,412,688 | 13,288,652 |
Building | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' |
Total | 1,139,412 | 1,119,053 |
Leasehold improvements | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' |
Total | 12,329,637 | 12,050,278 |
Farmland development cost | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' |
Total | 1,941,010 | 1,906,327 |
Office equipment and furniture | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' |
Total | 5,535,667 | 5,264,996 |
Motor vehicles | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' |
Total | $579,834 | $424,958 |
PROPERTY_AND_EQUIPMENT_Detail_
PROPERTY AND EQUIPMENT (Detail Textuals) (USD $) | 12 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Property, Plant and Equipment [Line Items] | ' | ' |
Total depreciation expense for property and equipment | $3,121,960 | $2,609,717 |
Leasehold improvement and office equipment in Jiuyingtang | 480,771 | ' |
Land and road improvement in Qianhong Agriculture | 905,468 | ' |
Leasehold improvement write-off | $145,040 | $2,269,288 |
Jiuzhou Pharmacy | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' |
Number of stores closed | ' | 15 |
Jiuying Drugstore | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' |
Number of stores closed | ' | 1 |
Shanghai Drugstores | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' |
Number of stores closed | 5 | ' |
ADVANCES_TO_SUPPLIERS_Summary_
ADVANCES TO SUPPLIERS - Summary of components of advance to suppliers (Details) (USD $) | Mar. 31, 2014 | Mar. 31, 2013 |
Advances To Suppliers [Abstract] | ' | ' |
Advance to suppliers | $11,162,767 | $19,119,231 |
Less: allowance for doubtful accounts | -6,585,573 | -3,596,197 |
Advance to suppliers, net | $4,577,194 | $15,523,034 |
ADVANCES_TO_SUPPLIERS_Detail_T
ADVANCES TO SUPPLIERS (Detail Textuals) (USD $) | 12 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Advances To Suppliers [Abstract] | ' | ' |
Advances to suppliers written off against previous allowance for doubtful accounts | $456,089 | $0 |
Advances to suppliers | $5,300,000 | ' |
INVENTORY_Summary_of_Inventory
INVENTORY - Summary of Inventory (Details) (USD $) | Mar. 31, 2014 | Mar. 31, 2013 | ||
Inventory Disclosure [Abstract] | ' | ' | ||
Finished goods | $7,822,102 | $7,224,976 | ||
Work-in-process | 2,192,372 | 1,362,023 | ||
Total inventory | 10,014,474 | 8,586,999 | ||
Less: reserve for inventory | -1,595,342 | [1] | ' | [1] |
Inventory, net | $8,419,132 | $8,586,999 | ||
[1] | The inventory reserves for finished goods and herb farming biological assets (work-in-process) were $676,108 and $820,637, respectively, as of March 31, 2014. In addition, the Company recorded a loss of $1,000,376 in fiscal 2014 for products that the Company decided not to continue expending significant efforts to sell in the future. |
INVENTORY_Summary_of_Inventory1
INVENTORY - Summary of Inventory (Parentheticals) (Details) (USD $) | 12 Months Ended |
Mar. 31, 2014 | |
Inventory Disclosure [Abstract] | ' |
Inventory adjustment for finished goods | $774,705 |
Inventory adjustment for work-in-process | 820,637 |
Loss on products deemed unmarketable | $1,000,376 |
LONG_TERM_DEPOSITS_Detail_Text
LONG TERM DEPOSITS (Detail Textuals) (USD $) | Mar. 31, 2014 | Mar. 31, 2013 |
Long Term Deposits [Abstract] | ' | ' |
Long term deposits | $2,786,437 | $2,760,665 |
OTHER_NONCURRENT_ASSETS_Summar
OTHER NONCURRENT ASSETS - Summary of components of other noncurrent assets (Details) (USD $) | Mar. 31, 2014 | Mar. 31, 2013 | ||
Other Assets, Noncurrent Disclosure [Abstract] | ' | ' | ||
Prepayment for lease of land use right- noncurrent | $5,355,899 | [1] | $5,419,600 | [1] |
Lease rights transfer fees - noncurrent | ' | [2] | 11,726 | [2] |
Long term prepaid expense | 158,243 | ' | ||
Total | 5,514,142 | 5,431,326 | ||
Less: impairment of prepayment for lease of land use right | -2,477,212 | [3] | ' | [3] |
Other noncurrent assets, net | $3,036,930 | $5,431,326 | ||
[1] | This is a payment made to a local government in connection with entering into a 30-year operating land lease agreement. The land is currently used to cultivate Ginkgo trees. This prepayment includes a deposit of $1,136,100, which will be refundable at the due date. The amortization of the lease is added to value of Ginkgo trees. | |||
[2] | Lease rights transfer fees are paid by the Company to secure store rentals in coveted areas. The additional costs of acquiring the right to lease new store locations are capitalized and amortized over the period of the initial lease term. | |||
[3] | Based on expected output from planted Gingko trees such as expected fruit production and tree market value, the fair value of the lease prepayment was lower than carrying cost. As a result, the Company recorded on impairment of $2,481,792 on lease prepayment for the year ended March 31, 2014. |
OTHER_NONCURRENT_ASSETS_Summar1
OTHER NONCURRENT ASSETS - Summary of amortizations of prepayment for lease of land use right for next five years (Details 1) (Land use right, USD $) | Mar. 31, 2014 |
Land use right | ' |
Schedule Of Other Assets Noncurrent [Line Items] | ' |
2015 | $67,146 |
2016 | 67,146 |
2017 | 67,146 |
2018 | 67,146 |
2019 | 67,146 |
Thereafter | $1,406,858 |
OTHER_NONCURRENT_ASSETS_Detail
OTHER NONCURRENT ASSETS (Detail Textuals) (USD $) | 12 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Schedule Of Other Assets Noncurrent [Line Items] | ' | ' |
Impairment of prepayment of lease use right | $2,481,792 | ' |
Deposit includes prepayment | 1,136,100 | ' |
Land | ' | ' |
Schedule Of Other Assets Noncurrent [Line Items] | ' | ' |
Term of agreement for operating land lease | '30 years | ' |
Amortization of prepayment for lease right | $162,600 | $158,600 |
INTANGIBLE_ASSETS_Summary_of_c
INTANGIBLE ASSETS - Summary of components of net intangible assets (Details) (USD $) | Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2012 | ||
Intangible Assets [Line Items] | ' | ' | ' | ||
Total intangible assets | $2,056,765 | $1,570,872 | ' | ||
Less: accumulated amortization | -487,322 | -368,614 | ' | ||
Intangible assets, net | 1,569,443 | 1,202,258 | ' | ||
Land use rights | ' | ' | ' | ||
Intangible Assets [Line Items] | ' | ' | ' | ||
Total intangible assets | 1,582,677 | [1] | ' | [1] | ' |
Licenses and permits | ' | ' | ' | ||
Intangible Assets [Line Items] | ' | ' | ' | ||
Total intangible assets | ' | [2] | 1,104,801 | [2] | 1,095,792 |
Software | ' | ' | ' | ||
Intangible Assets [Line Items] | ' | ' | ' | ||
Total intangible assets | $474,088 | $466,071 | ' | ||
[1] | During the year ended March 31, 2014, the Company purchased the land use right of a plot of farmland in Lin'An, Hangzhou, intended for the establishment of an herb processing plant in the future. However, as our farming business in Lin'an has not grown, we do not expect completion of the plant in near future. | ||||
[2] | The impairment of intangible assets was made after the Company estimated the implied fair value of the licenses and permits was lower than the carrying value. The following table presents the recognition and impairment of intangible assets. |
INTANGIBLE_ASSETS_Parenthetica
INTANGIBLE ASSETS (Parentheticals) (Details) (USD $) | 12 Months Ended | |||
Mar. 31, 2014 | Mar. 31, 2013 | |||
Finite-Lived Intangible Assets [Line Items] | ' | ' | ||
Intangible assets at the beginning of period | $1,570,872 | ' | ||
Less: Impairment of licenses and permits | 1,126,981 | ' | ||
Intangible assets at the end of period | 2,056,765 | 1,570,872 | ||
Licenses and permits | ' | ' | ||
Finite-Lived Intangible Assets [Line Items] | ' | ' | ||
Intangible assets at the beginning of period | 1,104,801 | [1] | 1,095,792 | |
Less: Impairment of licenses and permits | -1,126,981 | ' | ||
Exchange adjustment | 22,180 | 9,009 | ||
Intangible assets at the end of period | ' | [1] | $1,104,801 | [1] |
[1] | The impairment of intangible assets was made after the Company estimated the implied fair value of the licenses and permits was lower than the carrying value. The following table presents the recognition and impairment of intangible assets. |
INTANGIBLE_ASSETS_Detail_Textu
INTANGIBLE ASSETS (Detail Textuals) (USD $) | 12 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | ' | ' |
Amortization expense of intangibles | $112,209 | $154,427 |
ASSET_IMPAIRMENTS_Detail_Textu
ASSET IMPAIRMENTS (Detail Textuals) | 12 Months Ended | 12 Months Ended | ||||||
Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | |||
USD ($) | USD ($) | CNY | Jiuxin Medicine | Jiuxin Medicine | Qianhong Agriculture | |||
USD ($) | USD ($) | USD ($) | ||||||
Schedule Of Activities Of Company and Affiliates [Line Items] | ' | ' | ' | ' | ' | ' | ||
Amount of goodwill written down | ' | $1,473,606 | ' | ' | $1,474,000 | ' | ||
Long lived, tangible assets | ' | ' | ' | ' | ' | 1,371,735 | ||
Land lease amortization expense | ' | ' | ' | ' | ' | 2,192,372 | ||
Impairment of inventory | 820,637 | ' | ' | ' | ' | 820,637 | ||
Impairment of intangible - license and permit | 1,126,981 | ' | ' | 1,126,981 | ' | ' | ||
Impairment of prepayment for lease of land use right | 2,477,212 | [1] | ' | [1] | ' | ' | ' | ' |
Impairment of farmland improvement | 905,468 | ' | ' | ' | ' | ' | ||
Unamortized advances to the farmland leased | 4,219,800 | ' | 26,000,000 | ' | ' | ' | ||
Unamortized farmland improvement | 1,539,571 | ' | 9,485,959 | ' | ' | ' | ||
Impairment of leasehold | $480,771 | ' | ' | ' | ' | ' | ||
[1] | Based on expected output from planted Gingko trees such as expected fruit production and tree market value, the fair value of the lease prepayment was lower than carrying cost. As a result, the Company recorded on impairment of $2,481,792 on lease prepayment for the year ended March 31, 2014. |
SHORTTERM_BANK_LOAN_Detail_Tex
SHORT-TERM BANK LOAN (Detail Textuals) | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 |
USD ($) | Short term loan | Short term loan | |
Industrial And Commercial Bank Of China | Industrial And Commercial Bank Of China | ||
USD ($) | CNY | ||
Short-term Debt [Line Items] | ' | ' | ' |
Short term loan | $162,300 | $162,300 | 1,000,000 |
Percentage of interest rate on short term loan | ' | 6.60% | 6.60% |
NOTES_PAYABLE_Details_Summary_
NOTES PAYABLE (Details) - Summary of notes payable (USD $) | Mar. 31, 2014 | Mar. 31, 2013 | ||
Short-term Debt [Line Items] | ' | ' | ||
Notes Payable, Current, Total | $7,820,718 | $7,186,453 | ||
Jiuzhou Pharmacy | Line of bank credit | Hangzhou United Bank ("HUB") | 11/06/12 | 05/06/13 | ' | ' | ||
Short-term Debt [Line Items] | ' | ' | ||
Notes Payable, Current, Total | ' | [1] | 1,152,462 | [1] |
Jiuzhou Pharmacy | Line of bank credit | Hangzhou United Bank ("HUB") | 11/15/12 | 05/15/13 | ' | ' | ||
Short-term Debt [Line Items] | ' | ' | ||
Notes Payable, Current, Total | ' | [1] | 374,590 | [1] |
Jiuzhou Pharmacy | Line of bank credit | Hangzhou United Bank ("HUB") | 11/29/12 | 05/29/13 | ' | ' | ||
Short-term Debt [Line Items] | ' | ' | ||
Notes Payable, Current, Total | ' | [1] | 846,542 | [1] |
Jiuzhou Pharmacy | Line of bank credit | Hangzhou United Bank ("HUB") | 12/06/12 | 06/06/13 | ' | ' | ||
Short-term Debt [Line Items] | ' | ' | ||
Notes Payable, Current, Total | ' | [1] | 478,200 | [1] |
Jiuzhou Pharmacy | Line of bank credit | Hangzhou United Bank ("HUB") | 12/20/12 | 06/20/13 | ' | ' | ||
Short-term Debt [Line Items] | ' | ' | ||
Notes Payable, Current, Total | ' | [1] | 497,328 | [1] |
Jiuzhou Pharmacy | Line of bank credit | Hangzhou United Bank ("HUB") | 12/27/12 | 06/27/13 | ' | ' | ||
Short-term Debt [Line Items] | ' | ' | ||
Notes Payable, Current, Total | ' | [1] | 318,800 | [1] |
Jiuzhou Pharmacy | Line of bank credit | Hangzhou United Bank ("HUB") | 01/10/13 | 07/10/13 | ' | ' | ||
Short-term Debt [Line Items] | ' | ' | ||
Notes Payable, Current, Total | ' | [1] | 293,870 | [1] |
Jiuzhou Pharmacy | Line of bank credit | Hangzhou United Bank ("HUB") | 01/22/13 | 07/22/13 | ' | ' | ||
Short-term Debt [Line Items] | ' | ' | ||
Notes Payable, Current, Total | ' | [1] | 781,060 | [1] |
Jiuzhou Pharmacy | Line of bank credit | Hangzhou United Bank ("HUB") | 02/28/13 | 05/28/13 | ' | ' | ||
Short-term Debt [Line Items] | ' | ' | ||
Notes Payable, Current, Total | ' | [1] | 478,200 | [1] |
Jiuzhou Pharmacy | Line of bank credit | Hangzhou United Bank ("HUB") | 02/28/13 | 08/28/13 | ' | ' | ||
Short-term Debt [Line Items] | ' | ' | ||
Notes Payable, Current, Total | ' | [1] | 988,280 | [1] |
Jiuzhou Pharmacy | Line of bank credit | Hangzhou United Bank ("HUB") | 03/26/13 | 06/26/13 | ' | ' | ||
Short-term Debt [Line Items] | ' | ' | ||
Notes Payable, Current, Total | ' | [1] | 977,121 | [1] |
Jiuzhou Pharmacy | Line of bank credit | Hangzhou United Bank ("HUB") | 10/08/13 | 04/08/14 | ' | ' | ||
Short-term Debt [Line Items] | ' | ' | ||
Notes Payable, Current, Total | 486,900 | [2] | ' | [2] |
Jiuzhou Pharmacy | Line of bank credit | Hangzhou United Bank ("HUB") | 11/05/13 | 05/05/14 | ' | ' | ||
Short-term Debt [Line Items] | ' | ' | ||
Notes Payable, Current, Total | 1,720,380 | [2] | ' | [2] |
Jiuzhou Pharmacy | Line of bank credit | Hangzhou United Bank ("HUB") | 12/26/13 | 06/26/14 | ' | ' | ||
Short-term Debt [Line Items] | ' | ' | ||
Notes Payable, Current, Total | 117,960 | [2] | ' | [2] |
Jiuzhou Pharmacy | Line of bank credit | Hangzhou United Bank ("HUB") | 02/07/14 | 05/07/14 | ' | ' | ||
Short-term Debt [Line Items] | ' | ' | ||
Notes Payable, Current, Total | 649,200 | [2] | ' | [2] |
Jiuzhou Pharmacy | Line of bank credit | Hangzhou United Bank ("HUB") | 02/07/14 | 08/07/14 | ' | ' | ||
Short-term Debt [Line Items] | ' | ' | ||
Notes Payable, Current, Total | 985,161 | [2] | ' | [2] |
Jiuzhou Pharmacy | Line of bank credit | Hangzhou United Bank ("HUB") | 03/06/14 | 09/06/14 | ' | ' | ||
Short-term Debt [Line Items] | ' | ' | ||
Notes Payable, Current, Total | 1,778,808 | [2] | ' | [2] |
Jiuzhou Pharmacy | Line of bank credit | Industrial and Commercial Bank of China ("ICBC") | 12/27/13 | 06/26/14 | ' | ' | ||
Short-term Debt [Line Items] | ' | ' | ||
Notes Payable, Current, Total | 1,351,959 | [3] | ' | [3] |
Jiuzhou Pharmacy | Line of bank credit | Industrial and Commercial Bank of China ("ICBC") | 10/11/13 | 04/11/14 | ' | ' | ||
Short-term Debt [Line Items] | ' | ' | ||
Notes Payable, Current, Total | $730,350 | [3] | ' | [3] |
[1] | As of March 31, 2013, notes payable consisted of notes of $7,186,453 (RMB45,084,400) from HUB, with maturity within 180 days. The credit line was guaranteed by Zhejiang Jin Qiao Guarantee Company, which is further secured by buildings owned by the Company's major shareholders and personally guaranteed by our major shareholders with a value of approximately $6,613,725 (RMB40,750,000). The Company is required to hold 30-50% of amounts borrowed as restricted cash with HUB as additional collateral against these bank acceptance notes. All the outstanding notes payable have been repaid upon maturity. | |||
[2] | As of March 31, 2014, the Company had $5,734,409 (RMB35,356,800) notes from HUB. The Company is required to hold restricted cash of $2,489,851 (RMB15,341,040) with HUB as collateral against these bank acceptance notes. | |||
[3] | As of March 31, 2014, the Company had a total of $2,082,309 (RMB12,830,000) in notes from Industrial and Commercial Bank of China. A third party Hangzhou Small and Medium sized Guarantee CO., Ltd signed loan guarantee agreements with the bank to guarantee these borrowings. In addition, the Company is required to hold 30% of amounts borrowed as restricted cash with ICBC as additional collateral against these bank acceptance notes. All the outstanding notes payable have been repaid upon maturity. |
NOTES_PAYABLE_Detail_Textuals
NOTES PAYABLE (Detail Textuals) | Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2014 | Jun. 27, 2014 | Jun. 27, 2014 | Jun. 30, 2014 | Jun. 30, 2014 |
USD ($) | USD ($) | Notes Payable | Notes Payable | Notes Payable | Notes Payable | Notes Payable | Notes Payable | Notes Payable | Notes Payable | Notes Payable | Notes Payable | |
Industrial And Commercial Bank Of China | Industrial And Commercial Bank Of China | Hangzhou United Bank | Hangzhou United Bank | Hangzhou United Bank | Hangzhou United Bank | Hangzhou United Bank | Hangzhou United Bank | Bank of Hangzhou | Bank of Hangzhou | |||
USD ($) | CNY | USD ($) | CNY | USD ($) | CNY | Subsequent Event | Subsequent Event | Subsequent Event | Subsequent Event | |||
USD ($) | CNY | USD ($) | CNY | |||||||||
Debt Instrument [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Notes payable | ' | ' | $2,082,309 | 12,830,000 | $7,186,453 | 45,084,400 | $5,734,409 | 35,356,800 | ' | ' | ' | ' |
Line of credit period | ' | ' | ' | ' | '180 days | '180 days | ' | ' | ' | ' | ' | ' |
Guaranteed amount for credit line | ' | ' | ' | ' | 6,613,725 | 40,750,000 | ' | ' | ' | ' | ' | ' |
Percentage of restricted cash as collateral for notes payable | ' | ' | '30% | '30% | '30-50% | '30-50% | ' | ' | '30-60% | '30-60% | '30% | '30% |
Restricted cash | 3,114,543 | 2,162,837 | ' | ' | ' | ' | 2,489,851 | 15,341,040 | ' | ' | ' | ' |
Aggregate maximum line of credit amount | ' | ' | ' | ' | ' | ' | ' | ' | $3,360,000 | 20,700,000 | $4,670,000 | 28,780,000 |
TAXES_Summary_of_components_of
TAXES - Summary of components of income tax provision (Details) (USD $) | 12 Months Ended | |||
Mar. 31, 2014 | Mar. 31, 2013 | |||
Current tax provision | ' | ' | ||
Federal | ' | ' | ||
State | ' | ' | ||
Foreign | 44,870 | 58,380 | ||
Current income tax expense (benefit) | 44,870 | 58,380 | ||
Deferred tax provision | ' | ' | ||
Federal | ' | ' | ||
State | ' | ' | ||
Foreign | ' | 295,422 | ||
Deferred income tax expense (benefit) | ' | 295,422 | ||
Income tax provision | $44,870 | [1] | $353,802 | [1] |
[1] | The current income tax provision for the year ended March 31, 2014 represents prepaid tax expenses incurred by the Company which were not refundable. |
TAXES_Income_from_continuing_o
TAXES - Income from continuing operations before income taxes (Details 1) (USD $) | 12 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Income Tax Disclosure [Abstract] | ' | ' |
United States | ($1,034,223) | ($303,442) |
Foreign | -24,277,077 | -13,677,281 |
LOSS BEFORE INCOME TAXES | ($25,311,300) | ($13,980,723) |
TAXES_Summary_of_reconciliatio
TAXES - Summary of reconciliation of U.S. statutory tax rates with effective tax rate (Details 2) | 12 Months Ended | |||
Mar. 31, 2014 | Mar. 31, 2013 | |||
Income Tax Disclosure [Abstract] | ' | ' | ||
U.S. Statutory rates | 34.00% | 34.00% | ||
Foreign income not recognized in the U.S. | -34.00% | -34.00% | ||
China income taxes | 25.00% | 25.00% | ||
Change in valuation allowance | -24.90% | -27.40% | ||
Others | -0.40% | [1] | -0.10% | [1] |
Effective tax rate | -0.30% | -2.50% | ||
[1] | The (0.4)% for the year ended March 31, 2014 and the (0.1)% for the year ended March 31, 2013 represent the combined effect of expenses incurred by the Company that were not deductible for PRC income tax and PRC income tax exemptions. |
TAXES_Summary_of_temporary_dif
TAXES - Summary of temporary differences and carryforwards gave rise to deferred tax asset (Details 3) (USD $) | Mar. 31, 2014 | Mar. 31, 2013 |
Current deferred tax assets: | ' | ' |
Allowance for doubtful accounts | $2,759,144 | $1,911,450 |
Inventory reserve | 193,676 | ' |
Payroll accrual | 63,214 | 62,346 |
Valuation allowance | -3,016,034 | -1,973,796 |
Total current deferred tax assets | ' | ' |
Long-term deferred tax assets: | ' | ' |
Long-lived assets impairment | 792,432 | 370,774 |
Long-term lease reserve | 619,303 | ' |
Depreciation and amortization | 323,547 | 261,960 |
Net operating loss carry forward | 410,592 | 47,418 |
Valuation allowance | -2,145,874 | -680,152 |
Total current deferred tax assets | ' | ' |
Total | ' | ' |
TAXES_Summary_of_taxes_payable
TAXES - Summary of taxes payable (Details 4) (USD $) | Mar. 31, 2014 | Mar. 31, 2013 |
Income Tax Disclosure [Abstract] | ' | ' |
VAT | $344,329 | $334,833 |
Income tax | 7,851 | 7,628 |
Others | 21,321 | 29,172 |
Total taxes payable | $373,501 | $371,633 |
TAXES_Detail_Textuals
TAXES (Detail Textuals) (USD $) | 12 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Income Tax Disclosure [Abstract] | ' | ' |
Estimated net operating loss carryforwards for U.S. income tax purposes | $1,430,000 | ' |
Valuation allowance, amount | 486,000 | ' |
Net increase in the valuation allowance | 19,000 | ' |
Expenses incurred but not deductible for PRC income tax and PRC income tax exemptions | -0.40% | -0.10% |
VAT on sales | 16,045,706 | 15,069,655 |
VAT on purchase | $19,189,325 | $18,441,552 |
POSTRETIREMENT_BENEFITS_Detail
POSTRETIREMENT BENEFITS (Detail Textuals) (USD $) | 12 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Compensation and Retirement Disclosure [Abstract] | ' | ' |
Employment benefits and pension | $663,837 | $634,453 |
RELATED_PARTY_TRANSACTIONS_AND2
RELATED PARTY TRANSACTIONS AND ARRANGEMENTS - Amounts payable to related parties (Details) (USD $) | Mar. 31, 2014 | Mar. 31, 2013 | ||
Related Party Transaction [Line Items] | ' | ' | ||
Total | $2,384,294 | $1,224,417 | ||
Cofounders | ' | ' | ||
Related Party Transaction [Line Items] | ' | ' | ||
Total | 576,818 | [1] | 576,818 | [1] |
Director | ' | ' | ||
Related Party Transaction [Line Items] | ' | ' | ||
Total | $1,807,476 | [2] | $647,599 | [2] |
[1] | The inventory reserves for finished goods and herb farming agricultural assets (work-in-process) were $774,705 and $820,637, respectively, as of March 31, 2014. In addition, the Company recorded a loss of $1,000,376 in fiscal 2014 for products that the Company decided not to continue expending significant efforts to sell in the future. | |||
[2] | Mr. Lei Liu lent approximately $600,000 to the Company for the purchase of a land use right. The Company leases Mr. Lei Liu's houses for its business operations in the amount of approximately $171,000, with no payments to Mr. Lei Liu. In addition, Mr. Lei Liu personally lent approximately $389,000 to the Company to facilitate its payments of professional fees in the United States. |
RELATED_PARTY_TRANSACTIONS_AND3
RELATED PARTY TRANSACTIONS AND ARRANGEMENTS (Detail Textuals) (USD $) | 12 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Related Party Transaction [Line Items] | ' | ' |
Rent expense | $170,730 | $163,851 |
Mr. Lei Liu | ' | ' |
Related Party Transaction [Line Items] | ' | ' |
Amount received from related party debt to purchase a land use right | 600,000 | ' |
Operating lease contractual amount | 171,000 | ' |
Proceeds from related party for payments of professional fees | 389,000 | ' |
Notes payable secured by the personal properties of certain shareholder's | 5,738,409 | 7,186,453 |
Rent expense paid to Mr. Liu | $0 | $0 |
PURCHASE_OPTION_DERIVATIVE_LIA2
PURCHASE OPTION DERIVATIVE LIABILITY - Summary of assumptions to estimate fair value (Details) (Underwriter Purchase Option, USD $) | 12 Months Ended | |
Mar. 31, 2014 | ||
Underwriter Purchase Option | ' | |
Derivative [Line Items] | ' | |
Stock price | $2.07 | [1] |
Exercise price | $6.25 | [1] |
Annual dividend yield | 0.00% | [1] |
Expected term (years) | '1 year 18 days | [1] |
Risk-free interest rate | 0.13% | [1] |
Expected volatility | 132.55% | [1] |
[1] | As of March 31, 2014, the option to purchase 105,000 shares of common stock had not been exercised. |
PURCHASE_OPTION_DERIVATIVE_LIA3
PURCHASE OPTION DERIVATIVE LIABILITY (Detail Textuals) (Underwriter Purchase Option, USD $) | 1 Months Ended | 12 Months Ended | |
Apr. 22, 2010 | Apr. 28, 2010 | Mar. 31, 2014 | |
Underwriter Purchase Option | ' | ' | ' |
Derivative [Line Items] | ' | ' | ' |
Fair valuation techniques | ' | ' | 'Black-Scholes Option Pricing Model |
Option issued to purchase common stock | ' | $100 | ' |
Number of option issued to underwriters (in shares) | ' | 105,000 | 105,000 |
Percent shares sold in public offering | ' | 3.00% | ' |
Exercise price (in dollar per share) | ' | $6.25 | ' |
Percent price of shares sold in public offering | ' | 125.00% | ' |
Option as a liability decrease in additional paid-in capital | 402,451 | ' | ' |
Liability recognize option's fair value | 402,451 | ' | ' |
Gain (loss) on change in fair value option | ' | ' | ($36,994) |
WARRANTS_Details
WARRANTS (Details) (Common Stock Warrants, USD $) | 12 Months Ended | |
Mar. 31, 2014 | ||
Common Stock Warrants | ' | |
Class of Warrant or Right [Line Items] | ' | |
Stock price | $2.07 | [1] |
Exercise price | $1.20 | [1] |
Annual dividend yield | 0.00% | [1] |
Expected term (years) | '2 years 5 months 27 days | [1] |
Risk-free interest rate | 0.67% | [1] |
Expected volatility | 114.15% | [1] |
[1] | As of March 31, 2014, the warrant had not been exercised. |
WARRANTS_Detail_Textuals
WARRANTS (Detail Textuals) (Common Stock Warrants, USD $) | 12 Months Ended | |
Mar. 31, 2014 | Sep. 26, 2013 | |
Class of Warrant or Right [Line Items] | ' | ' |
Fair value estimation method | 'Black-Scholes Model | ' |
Fair value of warrants | ' | $33,606 |
Loss from changes in fair value of warrant liability | $220,103 | ' |
Consulting firm | ' | ' |
Class of Warrant or Right [Line Items] | ' | ' |
Number of common stock called by warrants | ' | 150,000 |
Stock purchase price per share | ' | 1.2 |
STOCKHOLDERS_EQUITY_Detail_Tex
STOCKHOLDER'S EQUITY (Detail Textuals) (USD $) | 0 Months Ended | 1 Months Ended | 12 Months Ended | 12 Months Ended | 0 Months Ended | 12 Months Ended | 1 Months Ended | 12 Months Ended | |||||||
Mar. 12, 2014 | Sep. 26, 2013 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2013 | Nov. 01, 2013 | 1-May-13 | Nov. 01, 2012 | Mar. 31, 2014 | Mar. 31, 2013 | Jan. 16, 2012 | Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 | Mar. 31, 2014 | |
Restricted Stock | Restricted Stock | Restricted Stock | Legal Counsel | Legal Counsel | Legal Counsel | Legal Counsel | Legal Counsel | Group of 46 employees | Group of 46 employees | Group of 46 employees | Group of 46 employees | Group of 46 employees | Directors and officers | Directors and officers | |
Financial consulting firm | Financial consulting firm | Financial consulting firm | Common Stock | Common Stock | Common Stock | Common Stock | Common Stock | Restricted Stock | Restricted Stock | Restricted Stock | Restricted Stock | Restricted Stock | Restricted Stock | Restricted Stock | |
Stock incentive plan | Stock incentive plan | Stock incentive plan | Stock incentive plan | Stock incentive plan | Stock incentive plan | Stock incentive plan | |||||||||
General and Administrative Expense | General and Administrative Expense | Selling Expense | Selling Expense | Selling Expense | |||||||||||
Employee | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of restricted awards granted | 100,000 | 350,000 | ' | ' | ' | ' | ' | ' | ' | ' | 297,000 | ' | ' | 350,000 | ' |
Trading value of common stock, per share (in dollars per share) | $2.07 | $0.51 | ' | ' | ' | $0.99 | $0.66 | $0.72 | ' | ' | ' | ' | ' | $0.96 | ' |
Share based compensation expense | ' | ' | $91,451 | $4,102 | $4,546 | ' | ' | ' | $78,022 | $78,235 | ' | $30,736 | $30,578 | ' | $336,000 |
Service compensation expense for additional shares of common stock | ' | ' | $207,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Term of service agreement | ' | '1 year | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Common stock issuable for services every six month (in shares) | ' | ' | ' | 2,340 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of employees in a group | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 46 | ' | ' | ' | ' |
STOCKHOLDERS_EQUITY_Detail_Tex1
STOCKHOLDER'S EQUITY (Detail Textuals 1) | 12 Months Ended |
Mar. 31, 2014 | |
Stockholders Equity Note [Abstract] | ' |
Percentage of net income set aside by subsidiaries and VIEs in PRC | 10.00% |
Threshold limit for total amount set aside in the reserve fund of registered capital by subsidiaries and VIEs in PRC | 50.00% |
LOSS_PER_SHARE_Summary_of_reco
LOSS PER SHARE - Summary of reconciliation of basic and diluted earnings per share computation (Details) (USD $) | 12 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Earnings Per Share [Abstract] | ' | ' |
Net loss attributable to controlling interest | ($25,356,136) | ($14,333,731) |
Weighted average shares used in basic computation (in shares) | 13,880,190 | 13,580,731 |
Diluted effect of restricted shares (in shares) | ' | ' |
Weighted average shares used in diluted computation (in shares) | 13,880,190 | 13,580,731 |
Loss per share - Basic: | ' | ' |
Net loss before noncontrolling interest (in dollars per share) | ($1.83) | ($1.06) |
Add: Net loss attributable to noncontrolling interest (in dollars per share) | ' | ' |
Net loss attributable to controlling interest | ($1.83) | ($1.06) |
Loss per share - Diluted: | ' | ' |
Net loss before noncontrolling interest (in dollars per share) | ($1.83) | ($1.06) |
Add: Net loss attributable to noncontrolling interest (in dollars per share) | ' | ' |
Net loss attributable to controlling interest | ($1.83) | ($1.06) |
LOSS_PER_SHARE_Detail_Textuals
LOSS PER SHARE (Detail Textuals) (Options and Warrants) | 12 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Options and Warrants | ' | ' |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' |
Antidilutive securities excluded from calculation of diluted earnings per share | 105,000 | 105,000 |
SEGMENTS_Summarized_informatio
SEGMENTS - Summarized information by segment of continuing operation (Details) (USD $) | 12 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Segment Reporting Information [Line Items] | ' | ' |
Revenue | $66,154,587 | $89,495,546 |
Cost of goods | 60,427,101 | 74,860,553 |
Gross profit | 5,727,486 | 14,634,993 |
Selling expenses | 13,688,771 | 12,216,984 |
General and administrative expenses | 11,268,857 | 15,000,364 |
Income (loss) from operations | -19,230,142 | -12,582,355 |
Depreciation and amortization | 3,234,169 | 2,764,144 |
Operating Segments | ' | ' |
Segment Reporting Information [Line Items] | ' | ' |
Revenue | 66,154,587 | 89,495,546 |
Cost of goods | 60,427,101 | 74,860,553 |
Gross profit | 5,727,486 | 14,634,993 |
Selling expenses | 13,688,771 | 12,216,984 |
General and administrative expenses | 11,268,857 | 15,000,364 |
Income (loss) from operations | -19,230,142 | -12,582,355 |
Depreciation and amortization | 3,234,169 | 2,764,144 |
Total capital expenditures | 2,113,041 | 2,404,359 |
Operating Segments | Retail drugstores | ' | ' |
Segment Reporting Information [Line Items] | ' | ' |
Revenue | 47,656,916 | 40,726,080 |
Cost of goods | 39,947,714 | 30,791,464 |
Gross profit | 7,709,202 | 9,934,616 |
Selling expenses | 13,164,777 | 11,666,876 |
General and administrative expenses | 6,694,190 | 6,584,185 |
Income (loss) from operations | -12,149,765 | -8,316,445 |
Depreciation and amortization | 2,638,552 | 2,469,723 |
Total capital expenditures | 391,678 | 489,704 |
Operating Segments | Drug wholesale | ' | ' |
Segment Reporting Information [Line Items] | ' | ' |
Revenue | 18,497,671 | 46,235,086 |
Cost of goods | 20,479,387 | 43,846,081 |
Gross profit | -1,981,716 | 2,389,005 |
Selling expenses | 523,994 | 550,108 |
General and administrative expenses | 4,127,733 | 8,022,317 |
Income (loss) from operations | -6,633,443 | -6,183,420 |
Depreciation and amortization | 594,500 | 55,980 |
Total capital expenditures | 135,761 | 8,328 |
Operating Segments | Herb farming | ' | ' |
Segment Reporting Information [Line Items] | ' | ' |
Revenue | ' | 2,534,380 |
Cost of goods | ' | 223,008 |
Gross profit | ' | 2,311,372 |
Selling expenses | ' | ' |
General and administrative expenses | 446,934 | 393,862 |
Income (loss) from operations | -446,934 | 1,917,510 |
Depreciation and amortization | 1,117 | 238,441 |
Total capital expenditures | $1,585,602 | $1,906,327 |
SEGMENTS_Summary_of_net_revenu
SEGMENTS - Summary of net revenue from external customers (Details 1) (Operating Segments, USD $) | 12 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Retail drugstores | ' | ' |
Revenue from External Customer [Line Items] | ' | ' |
Net revenue from external customers | $47,656,916 | $40,726,080 |
Retail drugstores | Prescription drugs | ' | ' |
Revenue from External Customer [Line Items] | ' | ' |
Net revenue from external customers | 19,781,547 | 16,489,103 |
Retail drugstores | OTC drugs | ' | ' |
Revenue from External Customer [Line Items] | ' | ' |
Net revenue from external customers | 17,270,104 | 14,032,854 |
Retail drugstores | Nutritional supplements | ' | ' |
Revenue from External Customer [Line Items] | ' | ' |
Net revenue from external customers | 2,736,808 | 4,263,849 |
Retail drugstores | TCM | ' | ' |
Revenue from External Customer [Line Items] | ' | ' |
Net revenue from external customers | 3,230,645 | 3,679,689 |
Retail drugstores | Sundry products | ' | ' |
Revenue from External Customer [Line Items] | ' | ' |
Net revenue from external customers | 1,896,163 | 1,101,934 |
Retail drugstores | Medical devices | ' | ' |
Revenue from External Customer [Line Items] | ' | ' |
Net revenue from external customers | 2,741,649 | 1,158,651 |
Drug wholesale | ' | ' |
Revenue from External Customer [Line Items] | ' | ' |
Net revenue from external customers | 18,497,671 | 46,235,086 |
Drug wholesale | Prescription drugs | ' | ' |
Revenue from External Customer [Line Items] | ' | ' |
Net revenue from external customers | 13,746,053 | 27,156,460 |
Drug wholesale | OTC drugs | ' | ' |
Revenue from External Customer [Line Items] | ' | ' |
Net revenue from external customers | 1,012,630 | 9,049,439 |
Drug wholesale | Nutritional supplements | ' | ' |
Revenue from External Customer [Line Items] | ' | ' |
Net revenue from external customers | 262,470 | 8,455,686 |
Drug wholesale | TCM | ' | ' |
Revenue from External Customer [Line Items] | ' | ' |
Net revenue from external customers | 931 | 215,505 |
Drug wholesale | Sundry products | ' | ' |
Revenue from External Customer [Line Items] | ' | ' |
Net revenue from external customers | 3,468,832 | 1,268,723 |
Drug wholesale | Medical devices | ' | ' |
Revenue from External Customer [Line Items] | ' | ' |
Net revenue from external customers | 6,755 | 89,273 |
Chinese herbs farming | ' | ' |
Revenue from External Customer [Line Items] | ' | ' |
Net revenue from external customers | ' | 2,534,380 |
Chinese herbs farming | Prescription drugs | ' | ' |
Revenue from External Customer [Line Items] | ' | ' |
Net revenue from external customers | ' | ' |
Chinese herbs farming | OTC drugs | ' | ' |
Revenue from External Customer [Line Items] | ' | ' |
Net revenue from external customers | ' | ' |
Chinese herbs farming | Nutritional supplements | ' | ' |
Revenue from External Customer [Line Items] | ' | ' |
Net revenue from external customers | ' | ' |
Chinese herbs farming | TCM | ' | ' |
Revenue from External Customer [Line Items] | ' | ' |
Net revenue from external customers | ' | 2,534,380 |
Chinese herbs farming | Sundry products | ' | ' |
Revenue from External Customer [Line Items] | ' | ' |
Net revenue from external customers | ' | ' |
Chinese herbs farming | Medical devices | ' | ' |
Revenue from External Customer [Line Items] | ' | ' |
Net revenue from external customers | ' | ' |
SEGMENTS_Detail_Textuals
SEGMENTS (Detail Textuals) (USD $) | 12 Months Ended |
In Millions, unless otherwise specified | Mar. 31, 2014 |
Segment | |
Segment Reporting [Abstract] | ' |
Number of operating segments | 3 |
Total discounted sales | $0.70 |
Cost of product sold | 2.1 |
Gross profit | 1.4 |
Complimentary gifts rewarded | $2.97 |
COMMITMENTS_AND_CONTINGENCIES_1
COMMITMENTS AND CONTINGENCIES - Summary of minimum rental payments under leases (Details) (USD $) | Mar. 31, 2014 |
Commitments and Contingencies [Line Items] | ' |
2015 | $4,288,643 |
2016 | 2,665,702 |
2017 | 1,427,968 |
2018 | 1,142,029 |
2019 | 964,720 |
Thereafter | 753,883 |
Retail drugstores | ' |
Commitments and Contingencies [Line Items] | ' |
2015 | 4,060,065 |
2016 | 2,415,389 |
2017 | 1,143,379 |
2018 | 851,632 |
2019 | 674,323 |
Thereafter | 173,089 |
Drug wholesale | ' |
Commitments and Contingencies [Line Items] | ' |
2015 | 228,578 |
2016 | 250,313 |
2017 | 284,589 |
2018 | 290,397 |
2019 | 290,397 |
Thereafter | 580,794 |
Herb farming | ' |
Commitments and Contingencies [Line Items] | ' |
2015 | ' |
2016 | ' |
2017 | ' |
2018 | ' |
2019 | ' |
Thereafter | ' |
COMMITMENTS_AND_CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES (Detail Textuals) (USD $) | 12 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Commitments and Contingencies Disclosure [Abstract] | ' | ' |
Total rent expense | $4,563,376 | $4,861,835 |
SUBSEQUENT_EVENTS_Detail_Textu
SUBSEQUENT EVENTS (Detail Textuals) | 1 Months Ended | 1 Months Ended | ||
In Millions, unless otherwise specified | Feb. 28, 2014 | Apr. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2014 |
Store | Subsequent Event | Subsequent Event | Subsequent Event | |
Subsidiary | Bank of Hangzhou | Bank of Hangzhou | ||
Jiuzhou Pharmacy | Jiuzhou Pharmacy | |||
USD ($) | CNY | |||
Subsequent Event [Line Items] | ' | ' | ' | ' |
Aggregate maximum line of credit amount | ' | ' | $4.67 | 28.78 |
Line of credit period | ' | ' | '1 year | '1 year |
Number of stores ceased | 2 | ' | ' | ' |
Number of subsidiaries of ceased operations | ' | 2 | ' | ' |