Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Dec. 31, 2014 | Feb. 09, 2015 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | CHINA JO-JO DRUGSTORES, INC. | |
Entity Central Index Key | 1413263 | |
Trading Symbol | cjjd | |
Current Fiscal Year End Date | -28 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 15,385,504 | |
Document Type | 10-Q | |
Document Period End Date | 31-Dec-14 | |
Amendment Flag | FALSE | |
Document Fiscal Year Focus | 2015 | |
Document Fiscal Period Focus | Q3 |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (USD $) | Dec. 31, 2014 | Mar. 31, 2014 |
CURRENT ASSETS | ||
Cash | $1,734,392 | $4,445,276 |
Restricted cash | 9,989,227 | 3,114,543 |
Notes receivable | 108,329 | |
Trade accounts receivable, net | 7,111,594 | 6,734,536 |
Inventories | 9,777,878 | 7,047,397 |
Other receivables, net | 988,640 | 149,546 |
Advances to suppliers, net | 3,666,492 | 4,577,194 |
Other current assets | 1,614,095 | 1,663,102 |
Total current assets | 34,990,647 | 27,731,594 |
PROPERTY AND EQUIPMENT, net | 9,378,160 | 9,412,688 |
OTHER ASSETS | ||
Farmland assets | 1,376,806 | 1,371,735 |
Long term deposits, landlord | 2,576,118 | 2,786,437 |
Other noncurrent assets | 2,767,155 | 3,036,930 |
Intangible assets, net | 3,140,358 | 1,569,443 |
Total other assets | 9,860,437 | 8,764,545 |
Total assets | 54,229,244 | 45,908,827 |
CURRENT LIABILITIES | ||
Short-term loan payable | 32,580 | 162,300 |
Accounts payable, trade | 13,366,998 | 14,554,726 |
Notes payable | 14,939,135 | 7,820,718 |
Other payables | 2,862,395 | 1,282,211 |
Other payables - related parties | 1,972,931 | 2,384,294 |
Loan from third parties | 215,843 | 294,042 |
Customer deposits | 3,693,298 | 3,185,885 |
Taxes payable | 450,340 | 373,501 |
Accrued liabilities | 678,751 | 1,208,242 |
Total current liabilities | 38,212,271 | 31,265,919 |
Purchase option and warrant liability | 329,990 | 278,916 |
Total liabilities | 38,542,261 | 31,544,835 |
COMMITMENTS AND CONTINGENCIES | ||
STOCKHOLDERS' EQUITY | ||
Preferred stock; $0.001 par value; 10,000,000 shares authorized; nil issued and outstanding as of December 31, 2014 and March 31, 2014 | ||
Common stock; $0.001 par value; 250,000,000 shares authorized; 15,385,504 and 14,416,022 shares issued and outstanding as of December 31, 2014 and March 31, 2014 | 15,386 | 14,416 |
Additional paid-in capital | 18,824,368 | 17,355,555 |
Statutory reserves | 1,309,109 | 1,309,109 |
Accumulated deficit | -8,517,159 | -8,260,767 |
Accumulated other comprehensive income | 4,016,336 | 3,905,136 |
Total stockholders' equity | 15,648,040 | 14,323,449 |
Noncontrolling interests | 38,943 | 40,543 |
Total equity | 15,686,983 | 14,363,992 |
Total liabilities and stockholders' equity | $54,229,244 | $45,908,827 |
CONDENSED_CONSOLIDATED_BALANCE1
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parentheticals) (USD $) | Dec. 31, 2014 | Mar. 31, 2014 |
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 | 15,385,504 | 14,416,022 |
Common stock, shares outstanding | 15,385,504 | 14,416,022 |
CONDENSED_CONSOLIDATED_STATEME
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED) (USD $) | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | |
Income Statement [Abstract] | ||||
REVENUES, NET | $21,320,039 | $17,833,072 | $56,223,336 | $50,025,012 |
COST OF GOODS SOLD | 18,138,006 | 17,653,988 | 47,765,427 | 43,296,356 |
GROSS PROFIT | 3,182,033 | 179,084 | 8,457,909 | 6,728,656 |
SELLING EXPENSES | 2,184,184 | 5,338,404 | 5,886,541 | 9,998,377 |
GENERAL AND ADMINISTRATIVE EXPENSES | 622,113 | 3,700,466 | 2,449,489 | 6,833,265 |
TOTAL OPERATING EXPENSES | 2,806,297 | 9,038,870 | 8,336,030 | 16,831,642 |
INCOME (LOSS) FROM OPERATIONS | 375,736 | -8,859,786 | 121,879 | -10,102,986 |
OTHER INCOME (LOSS), NET | -106,773 | 130,426 | -275,301 | 127,034 |
CHANGE IN FAIR VALUE OF DERIVATIVE LIABILITIES | -127,431 | -41,944 | -51,074 | -50,328 |
INCOME (LOSS) BEFORE INCOME TAXES | 141,532 | -8,771,304 | -204,496 | -10,026,280 |
PROVISION FOR INCOME TAXES | 14,007 | -35,887 | 52,828 | 43,222 |
NET INCOME (LOSS) | 127,525 | -8,735,417 | -257,324 | -10,069,502 |
LESS: NET INCOME (LOSS) ATTRIBUTABLE TO NONCONTROLLING INTEREST | -987 | 187 | 932 | 694 |
NET INCOME (LOSS) ATTRIBUTABLE TO CHINA JO-JO DRUGSTORES, INC. | 126,538 | -8,735,230 | -256,392 | -10,068,808 |
OTHER COMPREHENSIVE INCOME (LOSS) | ||||
Foreign currency translation adjustments | 52,740 | 259,814 | 111,200 | 1,019,605 |
COMPREHENSIVE INCOME (LOSS) | $179,278 | ($8,475,416) | ($145,192) | ($9,049,203) |
WEIGHTED AVERAGE NUMBER OF SHARES: | ||||
Basic (in shares) | 15,199,092 | 13,959,003 | 14,867,218 | 13,730,742 |
Diluted (in shares) | 15,596,554 | 13,959,003 | 14,867,218 | 13,730,742 |
LOSS PER SHARES: | ||||
Basic (in dollars per share) | $0.01 | ($0.64) | ($0.02) | ($0.73) |
Diluted (in dollars per share) | $0.01 | ($0.64) | ($0.02) | ($0.73) |
CONDENSED_CONSOLIDATED_STATEME1
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (USD $) | 9 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | ($257,324) | ($10,069,502) |
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 1,240,323 | 1,646,066 |
Stock compensation | 527,357 | 477,284 |
Bad debt recovery | -3,126,039 | -692,883 |
Inventory reserve | 277,603 | |
Change in fair value of purchase option and warrant liability | 51,074 | 86,379 |
Change in operating assets: | ||
Accounts receivable, trade | 1,566,629 | 2,278,341 |
Notes receivable | -108,096 | |
Inventories | -2,976,220 | -9,330,835 |
Other receivables | -619,695 | -259,339 |
Advances to suppliers | 1,916,591 | 10,706,963 |
Other current assets | 55,012 | -1,009,632 |
Long term deposit | 220,146 | |
Other noncurrent assets | 280,399 | 133,648 |
Change in operating liabilities: | ||
Accounts payable, trade | -1,236,808 | 5,099,673 |
Other payables and accrued liabilities | 390,535 | 1,074,755 |
Customer deposits | 494,570 | -909,992 |
Taxes payable | 75,296 | 82,942 |
Net cash used in operating activities | -1,228,647 | -686,132 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchase of equipment | -898,522 | -457,609 |
Increase in long-term deposits for land use right | -1,355,290 | |
Acquisition of business, net | -936,288 | |
Additions to leasehold improvements | -189,143 | -25,112 |
Payments on construction-in-progress | -96,636 | |
Net cash used in investing activities | -2,120,589 | -1,838,011 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from short-term bank loan | 32,510 | 162,280 |
Repayment of short-term bank loan | -162,550 | |
Repayment of third parties loan | -79,116 | |
Change in restricted cash | -6,848,423 | -999,814 |
Repayments of notes payable | -14,132,390 | 659,246 |
Issuance of notes payable | 21,206,663 | |
Change in other payables-related parties | 529,115 | 909,954 |
Net cash provided by financing activities | 545,809 | 731,666 |
EFFECT OF EXCHANGE RATE ON CASH | 92,543 | 375,042 |
DECREASE IN CASH | -2,710,884 | -1,417,435 |
CASH, beginning of period | 4,445,276 | 4,524,094 |
CASH, end of period | 1,734,392 | 3,106,659 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||
Cash paid for interest | 4,621 | |
Cash paid for income taxes | 59,755 | 9,529 |
Issuance of common stock in settlement of debts | $941,613 |
DESCRIPTION_OF_BUSINESS_AND_OR
DESCRIPTION OF BUSINESS AND ORGANIZATION | 9 Months Ended | ||||
Dec. 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) is, 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, which are operated by Hangzhou Jiuzhou Grand Pharmacy Chain Co., Ltd. (“Jiuzhou Pharmacy”), a company that the Company controls through contractual arrangements. One drugstore previously operated by Hangzhou Quannuo Grand Pharmacy Co., Ltd. (“Hangzhou Quannuo”) which closed as of March 31, 2013; however, as of December 31, 2014, Hangzhou Quannuo has not been dissolved although it had no operation. Hangzhou Quannuo is the wholly-owned subsidiary of Zhejiang Quannuo Internet Technology Co., Ltd. (“Quannuo Technology”), which is wholly-owned by Shouantang Technology. | |||||
The Company’s retail business also includes two 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. In addition, Jiuzhou Service established Hangzhou Shouantang Health Management Co. Ltd (“Shouantang Health”) in December 2013 and holds 51% equity interests in Shouantang Health. | |||||
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”). | |||||
On October 9, 2014, the Company, through Jiuzhou Pharmacy, acquired Sanhao Grand Pharmacy Chain Co., Ltd. (“Sanhao Pharmacy”), a local drugstore chain located in Hangzhou, for $1.56 million (RMB9.6 million). | |||||
On October 11, 2014, the Company, through Shouantang Technology, formed Shouantang Bio-technology Co., Ltd. (“Shouantang Bio”) by contributing $0.16 million (RMB1 million) as its register capital. Shouantang Technology is formed to sell nutritional supplements under its own brand name, Shouantang. | |||||
The accompanying consolidated financial statements reflect the activities of the Company and each of the following entities: | |||||
Entity Name | Background | Ownership | |||
Renovation | ● 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 | 100% | |||
● Registered capital of $20 million | |||||
● 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 herb farming business | |||||
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 operation and has closed and dissoluted | |||||
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 | |||||
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 | 100% | |||
● Registered capital of $2.6 million fully paid | |||||
● Currently has no operation | |||||
Shouantang Health | ● Established in the PRC on December 18, 2013 by Jiuzhou Service | VIE by contractual arrangements as a | |||
● Registered capital of RMB 500,000 fully paid | controlled entity of Jiuzhou Service (2) | ||||
● 51% held by Jiuzhou Service | |||||
● Currently has no operations | |||||
Sanhao Pharmacy | ● Established in the PRC on March 3, 2012 | VIE by contractual arrangements as a wholly-owned subsidiary of Jiuzhou Pharmacy (2) | |||
●Acquired by Jiuzhou Pharmacy on October 9, 2014 | |||||
● 100% held by Jiuzhou Pharmacy | |||||
● Currently has no operations | |||||
Shouantang Bio | ● Established in the PRC in October, 2014 by Shouantang Technology | 100% | |||
● 100% held by Shouantang Technology | |||||
● Sells nutritional supplements with its own brand name | |||||
-1 | Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service have been under the common control of Renovation (the “Owner”) since their respective establishment dates, pursuant to agreements amongst the Owner 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 Owner has operated these three companies in conjunction with one another since each company’s respective establishment date. Jiuxin Medicine is also deemed under the common control of the Owner as a subsidiary 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 Shouantang Health, the subsidiaries and entity under the control of Jiuzhou Service, are consolidated into the financial statements of the Company. |
LIQUIDITY
LIQUIDITY | 9 Months Ended |
Dec. 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. The remaining existing drugstores have historically been profitable and are not expected to require additional financing. In addition, the Company has relocated and remodeled eight stores acquired from Sanhao Pharmacy to new commercial area. With the licenses to accept government medical insurance payment, the eight new stores that have made good debut sales in their openings in January 2014 and are expected to generate positive cash flow in the near future. | |
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 three credit line agreements from three local banks as displayed in detail in Note 13. The three credit lines from Hangzhou United Bank (“HUB”), Bank of Hangzhou (“BOH”) and Industrial and Commercial Bank of China (“ICBC”) allow the Company to borrow up to $3.6 million in sum. 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 personal guarantees of some of its principal shareholders. | |
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 has closed unprofitable pharmacies last fiscal year 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 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 the future. The Company has gradually settled and collected certain aged accounts during the nine months ended December 31, 2014. The wholesale business is not expected to contribute a significant gross margin for the remaining of fiscal 2015, and sales have not been projected to increase in the future unless we are able to gain sales access to large local hospitals. Farming business is not expected to have any sales and may incur limited operating costs. Retail drugstores have been projected to increase as compared to the prior year with lower profit margins. During the nine months ended December 31, 2014, the drugstore sales have increased by 20.1% over the same period of last year. The rising sales contributed to our positive operating cash flow from operation. During the nine months ended December 31, 2014, the online pharmacy sales have increased by 100.3% over the same period of last year. As of December 31, 2014, approximately $3.63 million bank credit line has not been used and is still available for further borrowing. 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 the event the banks withdraw their credit lines with the Company, or the Company’s existing store performance suddenly deteriorate due to unexpected government policy change, or its 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 | 9 Months Ended | ||||
Dec. 31, 2014 | |||||
Accounting Policies [Abstract] | |||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Note 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||
Basis of presentation and consolidation | |||||
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles (“US GAAP”) for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included. These condensed consolidated financial statements and notes should be read in conjunction with the audited consolidated financial statements and footnotes included in the Company’s annual report on Form 10-K for the fiscal year ended March 31, 2014 filed with the SEC on June 27, 2014. Operating results for the three and nine months ended December 31, 2014 may not be necessarily indicative of the results that may be expected for the full year. | |||||
The condensed consolidated financial statements include the financial statements of the Company, its subsidiaries and VIEs. All significant inter-company transactions and balances between the Company, its subsidiaries and VIEs are eliminated upon consolidation. | |||||
Certain prior period amounts have been reclassified to conform to the current period presentation. These reclassifications had no effect on net income or cash flows as previously reported. | |||||
Consolidation of variable interest entities | |||||
In accordance with accounting standards regarding consolidation of variable interest entities, 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. | |||||
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 are 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. | |||||
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 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 others, 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. 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 unaudited condensed 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 unaudited condensed consolidated financial statements relate to the assessment of the carrying values of accounts receivable, advances to suppliers and related allowance for doubtful accounts, useful lives of property and equipment, inventory reserve and fair value of its purchase option derivative liability. 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 a 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 is made to the receivables from the government agency. | |||||
Revenue from medical services is recognized after the service has been rendered to a 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 a customer’s location. Any loss caused in a shipment will be reimbursed by the Company’s courier company. In addition, a proper sales discount is made to account for the potential loss from returns from customers. 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. The Company also reviews historical trend and will provide additional allowance if it determines a particular account has become uncollectible. The ability to collect is attributed to the steps taken prior to extending credit to customers. Account balances are written off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. To accommodate for potential loss in accounts receivable, the Company puts up a reserve for what we do not believe to be collectible, and most aged receivables have been reserved. 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, which is determined to be uncollectible after confirming with the appropriate bureau or program each month. Additionally, the Company also makes estimated reserves on related outstanding accounts receivable based on historical trend. | |||||
Inventories | |||||
Inventories are stated at the lower of cost or market value. Cost is determined by the first in first out (FIFO) method. Market value 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. Herbs that the Company farms are recorded at their costs, 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 costs. Since April 2014, amortization of farmland development costs has been expensed instead of allocated into inventory due to unpredictable future market value of planted gingko trees. All costs are accumulated until the time of harvest and then allocated to harvested herbs 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 & furniture | 3-5 years | ||||
Buildings | 35 years | ||||
Maintenance, repairs and minor renewals are charged to expenses 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 | ||||
Licenses | Indefinite | ||||
The Company evaluates intangible assets for impairment whenever events or changes in circumstances indicate that the assets might be impaired. | |||||
Goodwill | |||||
The excess of the cost of an acquired entity over the net of the amounts assigned to assets acquired and liabilities assumed is recognized as goodwill. Goodwill is tested for impairment at the reporting unit level on an annual basis in the fourth quarter or more frequently if there are indications of impairment. The Company has elected to early adopt the provisions of Accounting Standards Update ("ASU") 2011-08. Testing Goodwill for Impairment. Under this ASU, The Company may first assess qualitative factors to determine whether it is necessary to perform the two-step goodwill test. Calculating the fair value of the reporting units requires significant estimates and assumption by management. To the extent the carrying amount of a reporting unit exceeds the fair value of the reporting unit, there is an indication that the reporting unit goodwill may be impaired and a second step of the impairment test is performed to determine the amount of the impairment to be recognized, if any. After evaluating all qualitative factors, the Company has determined that the fair value of the indefinite lived intangible assets, including goodwill, is more than its carrying amount, and therefore no impairment was recorded. | |||||
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. | |||||
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. 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 periods ended December 31, 2014 and 2013. | |||||
Value added tax | |||||
Sales revenue represents the invoiced value of goods, net of VAT. All of the Company’s products are sold in the PRC and are subjected 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 standards 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 $158,686 and $3,542,412 for three months ended December 31, 2014 and 2013, respectively, and $289,925 and $3,598,945 for the nine months ended December 31, 2014 and 2013, respectively. Such costs consist primarily of print and promotional materials such as flyers to local communities. | |||||
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 7 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. In addition, 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 income 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 December 31, 2014 and March 31, 2014 were translated at 1 RMB to $0.1629 USD and at 1 RMB to $0.1623 USD, respectively. The average translation rates applied to income and cash flow statement amounts for the nine months ended December 31, 2014 and 2013 were at 1 RMB to $0.1626 USD and at 1 RMB to $0.1623 USD, respectively. | |||||
Concentrations and credit risk | |||||
Certain financial instruments, which subject the Company to concentration of credit risk, consist of cash and restricted cash. 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 December 31, 2014 and March 31, 2014, the Company had deposits totaling $11,272,978 and $7,204,626 that were not covered by insurance, respectively. To date, the Company has not experienced any losses in such accounts. | |||||
For the three months ended December 31, 2014, the two largest vendors accounted for 33% of the Company’s total purchases and one vendor accounted for 21% of total advances to suppliers. For the three months ended December 31, 2013, three vendors accounted for 33% of the Company’s total purchases and no vendor accounted for more than 10% of total advances to suppliers. | |||||
For the nine months ended December 31, 2014, the two largest vendors accounted for 30% of the Company’s total purchases and one vendor accounted for 21% of total advances to suppliers. For the nine months ended December 31, 2013, one vendor accounted for approximately 13%of the Company’s total purchases and another vendor accounted for more than 18% of total advances to suppliers. | |||||
For the three months ended December 31, 2014, no customer accounted for more than 10% of the Company’s total sales or accounts receivable. For the three months ended December 31, 2013, no customer accounted for more than 10% of the Company’s total sales and no customer accounted for more than 10% of total accounts receivable. | |||||
For the nine months ended December 31, 2014, no customer accounted for more than 10% of the Company’s total sales or accounts receivable. For the nine months ended December 31, 2013, no customer accounted for more than 10% of the Company’s total sales, and no customer accounted for more than 10% of total accounts receivable. | |||||
Noncontrolling interest | |||||
As of December 31, 2014, Yi Wang, an individual, owned 49% of the equity interests of Shouantang Health, which was not under the Company’s control. | |||||
Business combinations | |||||
The Company accounts for business combinations using the acquisition method of accounting. The acquisition method requires an acquirer to recognize the assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree at the acquisition date, measured at their fair values as of that date. | |||||
Recent Accounting Pronouncements | |||||
In April 2014, 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. | |||||
In August 2014, the FASB issued ASU No. 2014-15, “Disclosure of Uncertainties About an Entity’s Ability to Continue as a Going Concern”, which requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued and provides guidance on determining when and how to disclose going concern uncertainties in the financial statements. Certain disclosures will be required if conditions give rise to substantial doubt about an entity’s ability to continue as a going concern. ASU 2014-15 applies to all entities and is effective for annual and interim reporting periods ending after December 15, 2016, with early adoption permitted. Management is evaluating the effect, if any, on the Company’s financial position and results of operations. | |||||
In November 2014, FASB issued Accounting Standards Update No. 2014-16, Derivatives and Hedging (Topic 815): Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity (a consensus of the FASB Emerging Issues Task Force).The amendments permit the use of the Fed Funds Effective Swap Rate (also referred to as the Overnight Index Swap Rate, or OIS) as a benchmark interest rate for hedge accounting purposes. Public business entities are required to implement the new requirements in fiscal years (and interim periods within those fiscal years) beginning after December 15, 2015. All other types of entities are required to implement the new requirements in fiscal years beginning after December 15, 2015, and interim periods beginning after December 15, 2016. The Company does not expect the adoption of ASU 2014-16 to have material impact on the Company's consolidated financial statement. |
TRADE_ACCOUNTS_RECEIVABLE
TRADE ACCOUNTS RECEIVABLE | 9 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Accounts Receivable, Net [Abstract] | |||||||||
TRADE ACCOUNTS RECEIVABLE | Note 4 – TRADE ACCOUNTS RECEIVABLE | ||||||||
Trade accounts receivable consisted of the following: | |||||||||
December 31, | March 31, | ||||||||
2014 | 2014 | ||||||||
Accounts receivable | $ | 10,089,999 | $ | 11,869,866 | |||||
Less: allowance for doubtful accounts | (2,978,405 | ) | (5,135,330 | ) | |||||
Trade accounts receivable, net | $ | 7,111,594 | $ | 6,734,536 | |||||
For the three months ended December 31, 2014 and 2013, $64,087 and $100,847 in accounts receivable were directly written off respectively. For the nine months ended December 31, 2014 and 2013, $193,581 and $448,243 in accounts receivable were written off to expense. |
OTHER_CURRENT_ASSETS
OTHER CURRENT ASSETS | 9 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Assets, Current [Abstract] | |||||||||
OTHER CURRENT ASSETS | Note 5 – OTHER CURRENT ASSETS | ||||||||
Other current assets consisted of the following: | |||||||||
December 31, | March 31, | ||||||||
2014 | 2014 | ||||||||
Prepaid rental expenses | $ | 1,126,770 | $ | 1,165,633 | |||||
Lease rights transfer fees (1) | - | 11,939 | |||||||
Prepaids and other current assets | 487,325 | 485,530 | |||||||
Total | $ | 1,614,095 | $ | 1,663,102 | |||||
-1 | Lease rights transfer fees are paid by the Company to secure store rentals in coveted areas. These 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 | 9 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Property, Plant and Equipment [Abstract] | |||||||||
PROPERTY AND EQUIPMENT | Note 6 – PROPERTY AND EQUIPMENT | ||||||||
Property and equipment consisted of the following: | |||||||||
December 31, | March 31, | ||||||||
2014 | 2014 | ||||||||
Building | $ | 1,746,625 | $ | 1,139,412 | |||||
Leasehold improvements | 12,136,854 | 11,849,753 | |||||||
Farmland improvements | 1,041,046 | 1,037,212 | |||||||
Office equipment and furniture | 5,700,493 | 5,535,667 | |||||||
Motor vehicles | 644,238 | 579,834 | |||||||
Total | 21,269,256 | 20,141,878 | |||||||
Construction-in-Progress | 96,844 | - | |||||||
Less: Accumulated depreciation | (11,987,940 | ) | (10,729,190 | ) | |||||
Property and equipment, net | $ | 9,378,160 | $ | 9,412,688 | |||||
Total depreciation expense for property and equipment was $427,986 and $461,196 for the three months ended December 31, 2014 and 2013, respectively, and $1,258,750 and $1,522,951 for the nine months ended December 31, 2014 and 2013, respectively. |
ADVANCES_TO_SUPPLIERS
ADVANCES TO SUPPLIERS | 9 Months Ended | ||||||||
Dec. 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 its purchases on a timely basis. This amount is refundable and bears no interest. As of December 31, 2014 and March 31, 2014, advance to suppliers consist of the following: | |||||||||
December 31, | March 31, | ||||||||
2014 | 2014 | ||||||||
Advance to suppliers | $ | 9,283,317 | $ | 11,162,767 | |||||
Less: allowance for doubtful accounts | (5,616,825 | ) | (6,585,573 | ) | |||||
Advance to suppliers, net | $ | 3,666,492 | $ | 4,577,194 | |||||
For the three months ended December 31, 2014 and 2013, none of advances to suppliers were written off against the allowance for doubtful accounts, respectively. For the nine months ended December 31, 2014 and 2013, $0 and $452,246 of advances to suppliers were written off against the allowance for doubtful accounts, respectively. |
INVENTORY
INVENTORY | 9 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Inventory Disclosure [Abstract] | |||||||||
INVENTORY | Note 8 – INVENTORY | ||||||||
Inventory consisted of the following: | |||||||||
December 31, | March 31, | ||||||||
2014 | 2014 | ||||||||
Finished goods | $ | 10,833,648 | $ | 7,822,102 | |||||
Less: reserve for inventory | (1,055,770 | ) | (774,705 | ) | |||||
Inventory, net | $ | 9,777,878 | $ | 7,047,397 |
FARMLAND_ASSETS
FARMLAND ASSETS | 9 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Farmland Assets [Abstract] | |||||||||
FARMLAND ASSETS | Note 9 – FARMLAND ASSETS | ||||||||
Farmland assets are gingko trees planted in 2012 and expected to be harvested and sold in two or three years. As of December 31 and March 31, 2014, farmland assets consist of the following: | |||||||||
December 31, | March 31, | ||||||||
2014 | 2014 | ||||||||
Farmland assets | $ | 2,200,477 | $ | 2,192,372 | |||||
Less: impairments | (823,671 | ) | (820,637 | ) | |||||
Farmland assets, net | $ | 1,376,806 | $ | 1,371,735 |
LONG_TERM_DEPOSITS_LANDLORDS
LONG TERM DEPOSITS, LANDLORDS | 9 Months Ended |
Dec. 31, 2014 | |
Long Term Deposits [Abstract] | |
LONG TERM DEPOSITS, LANDLORDS | Note 10 – LONG TERM DEPOSITS, LANDLORDS |
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 | 9 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Other Assets, Noncurrent Disclosure [Abstract] | |||||||||
OTHER NONCURRENT ASSETS | Note 11 – OTHER NONCURRENT ASSETS | ||||||||
Other noncurrent assets consisted of the following: | |||||||||
December 31, | March 31, | ||||||||
2014 | 2014 | ||||||||
Prepayment for lease of land use right – noncurrent, net (1) | $ | 2,767,155 | $ | 2,878,687 | |||||
Long term prepaid expense | - | 158,243 | |||||||
Total | $ | 2,767,155 | $ | 3,036,930 | |||||
-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 $1,137,500, which will be refundable on the due date. 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 an impairment of $2,475,688 on the lease prepayment in fiscal 2014. | ||||||||
The amortization of the prepayment for the lease of land use right was approximately $16,827 and $40,840 for the three months ended December 31, 2014 and 2013, respectively. The amortization of the prepayment for the lease of land use right was approximately $50,344 and $121,725 for the nine months ended December 31, 2014 and 2013, respectively. | |||||||||
The Company’s amortization of the prepayment for lease of land use right for the next five years and thereafter are as follows: | |||||||||
Periods ending December 31, | Amount | ||||||||
2015 | $ | 67,270 | |||||||
2016 | 67,270 | ||||||||
2017 | 67,270 | ||||||||
2018 | 67,270 | ||||||||
2019 | 67,270 | ||||||||
Thereafter | $ | 1,290,503 |
INTANGIBLE_ASSETS
INTANGIBLE ASSETS | 9 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||
INTANGIBLE ASSETS | Note 12– INTANGIBLE ASSETS | ||||||||||||
As of December 31, 2014, the intangible assets with indefinite life consisted of the following, which were generated through acquisition of Sanhao Pharmacy (see note 21-Business Combination). There is no intangible asset with indefinite life as of March 31, 2014. | |||||||||||||
Preliminary | Currency translation adjustment | Net carrying | |||||||||||
Fair value | value | ||||||||||||
Licenses (1) | $ | 1,566,046 | $ | (577 | ) | $ | 1,565,469 | ||||||
Goodwill on acquisition of Sanhao Pharmacy | 23,560 | (9 | ) | 23,551 | |||||||||
$ | 1,589,606 | $ | (586 | ) | $ | 1,589,020 | |||||||
-1 | This represents the preliminary fair value of licenses of insurance applicable drugstores acquired from Sanhao Pharmacy. The license allows patients to pay by the insurance card at stores and the stores can get reimbursed from the Human Resource and Social Security Department of Hangzhou City. | ||||||||||||
Other intangible assets consisted of the following at: | |||||||||||||
December 31, | March 31, | ||||||||||||
2014 | 2014 | ||||||||||||
Land use rights (2) | $ | 1,588,528 | $ | 1,582,677 | |||||||||
Software | 475,841 | 474,088 | |||||||||||
Total other intangible assets | 2,064,369 | 2,056,765 | |||||||||||
Less: accumulated amortization | (513,031 | ) | (487,322 | ) | |||||||||
Other intangible assets, net | $ | 1,551,338 | $ | 1,569,443 | |||||||||
Amortization expense of other intangibles amounted to $9,210 and $44,284 for the three months ended December 31, 2014 and 2013, respectively, and $25,710 and $123,115 for the nine months ended December 31, 2014 and 2013, respectively. | |||||||||||||
-2 | In July 2013, 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, the Company does not expect completion of the plant in the near future. |
NOTES_PAYABLE
NOTES PAYABLE | 9 Months Ended | ||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||
Notes Payable [Abstract] | |||||||||||||||||||||
NOTES PAYABLE | Note 13 – NOTES PAYABLE | ||||||||||||||||||||
The Company has credit facilities with Hangzhou United Bank (“HUB”), Bank of Hangzhou (“BOH”) and Industrial and Commercial Bank of China (“ICBC”) that provided working capital in the form of the following bank acceptance notes at December 31 and March 31, 2014: | |||||||||||||||||||||
Origination | Maturity | December 31, | March 31, | ||||||||||||||||||
Beneficiary | Endorser | date | date | 2014 | 2014 | ||||||||||||||||
Jiuzhou Pharmacy(1) | ICBC | 12/27/13 | 6/26/14 | $ | - | $ | 1,351,959 | ||||||||||||||
Jiuzhou Pharmacy(1) | ICBC | 10/11/13 | 4/11/14 | - | 730,350 | ||||||||||||||||
Jiuzhou Pharmacy(2) | HUB | 10/8/13 | 4/8/14 | - | 486,900 | ||||||||||||||||
Jiuzhou Pharmacy(2) | HUB | 11/5/13 | 5/5/14 | - | 1,720,380 | ||||||||||||||||
Jiuzhou Pharmacy(2) | HUB | 12/26/13 | 6/26/14 | - | 117,960 | ||||||||||||||||
Jiuzhou Pharmacy(2) | HUB | 2/7/14 | 5/7/14 | - | 649,200 | ||||||||||||||||
Jiuzhou Pharmacy(2) | HUB | 2/7/14 | 8/7/14 | - | 985,161 | ||||||||||||||||
Jiuzhou Pharmacy(2) | HUB | 3/6/14 | 9/6/14 | - | 1,778,808 | ||||||||||||||||
Jiuzhou Pharmacy(3) | HUB | 8/4/14 | 2/4/15 | 1,482,390 | - | ||||||||||||||||
Jiuzhou Pharmacy(3) | HUB | 8/5/14 | 8/4/15 | 1,629,000 | - | ||||||||||||||||
Jiuzhou Pharmacy(3) | HUB | 9/3/14 | 3/3/15 | 1,808,190 | |||||||||||||||||
Jiuzhou Pharmacy(3) | HUB | 10/9/14 | 4/9/15 | 781,920 | |||||||||||||||||
Jiuzhou Pharmacy(3) | HUB | 10/9/14 | 4/9/15 | 1,184,283 | |||||||||||||||||
Jiuzhou Pharmacy(3) | HUB | 12/5/14 | 6/5/15 | 1,325,582 | |||||||||||||||||
Jiuzhou Pharmacy(3) | HUB | 12/26/14 | 6/26/15 | 1,596,420 | |||||||||||||||||
Jiuzhou Pharmacy(4) | BOH | 11/6/14 | 5/6/15 | 2,899,620 | |||||||||||||||||
Jiuzhou Pharmacy(1) | ICBC | 12/26/14 | 6/25/15 | 2,231,730 | - | ||||||||||||||||
Total | $ | 14,939,135 | $ | 7,820,718 | |||||||||||||||||
-1 | As of March 31, 2014, the Company had a total of $2,082,309 (RMB12,830,000) in notes payable from ICBC. 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 notes. All the outstanding notes payable have been repaid upon maturity. As of December 31, 2014, the Company had $2,231,730 (RMB 13,700,000) note payable from ICBC, with restricted cash of $669,519 (RMB 4,110,000) held at bank. | ||||||||||||||||||||
-2 | As of March 31, 2014, the Company had $5,738,409 (RMB35,356,800) notes payable from HUB. The Company is required to hold restricted cash of $2,489,851 (RMB15,341,040) with HUB as collateral against these bank notes. All the outstanding notes payable have been repaid upon maturity. | ||||||||||||||||||||
-3 | As of December 31, 2014, the Company had $9,807,785 (RMB60,207,400) notes payable from HUB. The Company is required to hold restricted cash of $5,263,498 (RMB32,311,220) with HUB as collateral against these bank notes. | ||||||||||||||||||||
-4 | As of December 31, 2014, the Company had $2,899,620 (RMB17,800,000) notes payable from BOH. The land use right of the farmland in Lin’An, Hangzhou is pledged as collateral for these bank acceptance notes (see Note 12). The Company is required to hold restricted cash of $1,449,810 (RMB8,900,000) with BOH as collateral against these bank notes. | ||||||||||||||||||||
As of December 31, 2014, the Company had a credit line of approximately $8.63 million (RMB 52.98 million) in the aggregate from HUB, BOH and ICBC. By putting up the restricted cash of $9.94 million deposited in the bank, the total credit line was increased to $18.57 million. As of December 31, 2014, we have approximately $14.94 million bank notes payable, and approximately $3.63 million bank credit line is still available for further borrowing. The bank notes are also secured by buildings owned by our major shareholders with a value of approximately $3,824,892 (RMB23,480,000) personally guaranteed by our major shareholders and guaranteed by Zhejiang JinQiao Guarantee Company. |
TAXES
TAXES | 9 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||
TAXES | Note 14 – 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 | ||||||||||||||||
The following table reconciles the U.S. statutory tax rates with the Company's effective tax rate for the three and nine months ended December 31, 2014 and 2013: | |||||||||||||||||
For the three months | For the nine months | ||||||||||||||||
ended December 31, | ended December 31, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
U.S. Statutory rates | 34 | % | 34 | % | 34 | % | 34 | % | |||||||||
Foreign income not recognized in the U.S. | (34.0 | ) | (34.0 | ) | (34.0 | ) | (34.0 | ) | |||||||||
China income taxes | 25 | 25 | 25 | 25 | |||||||||||||
Change in valuation allowance (1) | (15.1 | ) | (25.0 | ) | (55.3 | ) | (25.0 | ) | |||||||||
Non-deductible expenses-permanent difference (2) | 0 | 0.4 | 4.5 | (0.4 | ) | ||||||||||||
Effective tax rate | 9.9 | % | 0.4 | % | (25.8 | )% | (0.4 | )% | |||||||||
-1 | It represents non-taxable expense reversal due to decrease in allowance for accounts receivables and advance to suppliers. | ||||||||||||||||
-2 | The 0% and 0.4% rate adjustments for the three months ended December 31, 2014 and 2013, and the 4.5% and (0.4)% rate adjustments for the nine months ended December 31, 2014 and 2013 represents expenses primarily included legal, accounting and other expenses incurred by the Company that were not deductible for PRC income tax. | ||||||||||||||||
Jo-Jo Drugstores is incorporated in the U.S. and incurred a net operating loss for income tax purposes for three and nine months ended December 31, 2014 and 2013. As of December 31, 2014, the estimated net operating loss carryforwards for U.S. income tax purposes amounted to $1,430,000 which may be available to reduce future years’ taxable income. These carryforwards 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% valuation allowance at December 31, 2014. There was no net change in the valuation allowance for the three and nine months ended December 31, 2014 and 2013. Management reviews this valuation allowance periodically and makes adjustments as necessary. | |||||||||||||||||
Taxes payable at December 31, 2014 and March 31, 2014 consisted of the following: | |||||||||||||||||
31-Dec-14 | March 31, | ||||||||||||||||
2014 | |||||||||||||||||
VAT | $ | 399,637 | $ | 344,329 | |||||||||||||
Income tax | 7,983 | 7,851 | |||||||||||||||
Others | 42,720 | 21,321 | |||||||||||||||
Total taxes payable | $ | 450,340 | $ | 373,501 |
POSTRETIREMENT_BENEFITS
POSTRETIREMENT BENEFITS | 9 Months Ended |
Dec. 31, 2014 | |
Compensation and Retirement Disclosure [Abstract] | |
POSTRETIREMENT BENEFITS | Note 15– 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 $234,401 and $236,397 in employment benefits and pension for the three months ended December 31, 2014 and 2013, respectively, and $634,672 and $558,344 in employment benefits and pension for the nine months ended December 31, 2014 and 2013, respectively. |
RELATED_PARTY_TRANSACTIONS_AND
RELATED PARTY TRANSACTIONS AND ARRANGEMENTS | 9 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Related Party Transactions [Abstract] | |||||||||
RELATED PARTY TRANSACTIONS AND ARRANGEMENTS | Note 16– RELATED PARTY TRANSACTIONS AND ARRANGEMENTS | ||||||||
Amounts payable to related parties are summarized as follows: | |||||||||
December 31, | March 31, | ||||||||
2014 | 2014 | ||||||||
Due to cofounders (1): | $ | 578,951 | $ | 576,818 | |||||
Due to a director and CEO (2): | 1,393,980 | 1,807,476 | |||||||
Total | $ | 1,972,931 | $ | 2,384,294 | |||||
-1 | As of December 31, 2014 and March 31, 2014, amount due to cofounders represents contributions from the Owners to Jiuxin Management to enable Jiuxin Management to meet its approved PRC registered capital requirements. | ||||||||
-2 | Due to foreign exchange restrictions, the Company’s director and CEO, Mr. Lei Liu personally lent U.S. dollars to the Company to facilitate its payments of expenses in the United States. On July 2, 2014, the Company issued a total of 619,482 shares of common stock to Lei Liu, at $1.52 per share, the fair market value, or the closing stock price on Nasdaq on July 1, 2014, to offset the debts of $941,613 owed to Mr. Liu. | ||||||||
As of December 31, 2014 and March 31, 2014, notes payable totaling $2,922,002 and $5,738,409 were secured by the personal properties of certain of the Company’s shareholders, respectively. | |||||||||
The Company has a lease with Mr. Lei Liu for a retail space which expires in September 2015 and had a lease for corporate office which has expired in December 2013. Since the Company has moved its headquarter to a new location in Hangzhou in January 2014, the corporate office lease with Mr. Liu was terminated. Rent expense amounted to $24,383 and $48,702 for the three months ended December 31, 2014 and 2013, respectively, and $73,075 and $97,062 for the nine months ended December 31, 2014 and 2013. None was paid to Mr. Liu for the three and nine months ended December 31, 2014 and 2013. |
PURCHASE_OPTION_DERIVATIVE_LIA
PURCHASE OPTION DERIVATIVE LIABILITY | 9 Months Ended | ||||
Dec. 31, 2014 | |||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||
PURCHASE OPTION DERIVATIVE LIABILITY | Note 17– 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 commencing on October 23, 2010 and expires on April 22, 2015. | |||||
The Company is treating the common shares underlying the option as a derivative liability as 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 gain of $5,303 and $53,666 from the change in fair value of the option liability for the three and nine months ended December 31, 2014. The Company recognized a loss of $10,768 from the change in fair value of the option liability for the three months ended December 31, 2013, and a gain of$861 for the nine months ended December 31, 2013. | |||||
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 December 31, 2014 using the following assumptions: | |||||
Underwriter | |||||
Purchase Option | |||||
December 31, | |||||
2014 (1) | |||||
Stock price | $ | 2.9 | |||
Exercise price | $ | 6.25 | |||
Annual dividend yield | 0 | % | |||
Expected term (years) | 0.3 | ||||
Risk-free interest rate | 0.04 | ||||
Expected volatility | 103.02 | % | |||
-1 | As of December 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 their fair value measurement. Depending on the product and the terms of the transaction, the fair values 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 December 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 | 9 Months Ended | ||||
Dec. 31, 2014 | |||||
Warrants and Rights Note Disclosure [Abstract] | |||||
WARRANTS | Note 18 – 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 December 31, 2014 using the following assumptions: | |||||
Common Stock | |||||
Warrants | |||||
December 31, | |||||
2014 (1) | |||||
Stock price | $ | 2.9 | |||
Exercise price | $ | 1.2 | |||
Annual dividend yield | 0 | % | |||
Expected term (years) | 1.74 | ||||
Risk-free interest rate | 0.67 | % | |||
Expected volatility | 125.95 | % | |||
-1 | As of December 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 $122,128 and $94,134 from the change in fair value of the warrant liability for the three and nine months ended December 31, 2014, respectively. The Company recognized a loss of $31,777 and $51,190 from the change in fair value of the warrant liability for the three and nine months ended December 31, 2013. |
STOCKHOLDERS_EQUITY
STOCKHOLDERS' EQUITY | 9 Months Ended |
Dec. 31, 2014 | |
Stockholders Equity Note [Abstract] | |
STOCKHOLDERS' EQUITY | Note 19 – STOCKHOLDERS’ EQUITY |
Stock-based compensation | |
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 three and nine months ended December 31, 2014, $0 and $87,049 was recorded as a service compensation expense. For the three months and nine months ended December 31, 2013, $2,445 was recorded as service compensation expense. | |
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. $19,612 was charged to general and administrative expense and $6,636 was charged to selling expense for the three months ended December 31, 2014, and $ 58,623 and $ $10,268 for the nine months ended December 31, 2014, respectively. $19,612 and $7,226 were charged to general and administrative expense and selling expense, respectively, for the three months ended December 31, 2013, and $39,224 and $15,452 for the nine months ended December 31, 2013, respectively. | |
On November 18, 2014, the Company granted a total of 350,000 shares of restricted common stock to its directors and officers under the Plan. | |
The trading value of the Company’s common stock on November18, 2014 was $1.89. All such shares vested on February 18, 2015, and for the three months and nine months ended December 31, 2014, $661,500 was recorded as service compensation expense. | |
Stock option | |
On November 18, 2014, the Company granted a total of 967,000 shares of stock options under the Plan to a group of a total of 46 directors, officers and employees. The exercise price of the stock option is $2.50. The option vests in three years on November 18, 2017, provided that the employees are still employed by the Company on such date. The options will be exercisable for five years from the vesting date, or November 18, 2017 until November 17, 2022. For the three and nine months ended December 31, 2014, $58,449 was recorded as compensation expense. | |
Statutory reserves | |
Statutory reserves represent restricted retained earnings. Based on their legal formation, the Company is required to set aside 10% of its net income as reported in their statutory accounts 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 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 three and nine months ended December 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. |
EARNINGS_PER_SHARE
EARNINGS PER SHARE | 9 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||
EARNINGS PER SHARE | Note 20 – EARNINGS 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 earnings per share computation: | |||||||||||||||||
Three months ended | Nine months ended | ||||||||||||||||
December 31, | December 31, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Net income (loss) attributable to controlling interest | $ | 126,538 | $ | (8,735,230 | ) | $ | (256,392 | ) | $ | (10,068,808 | ) | ||||||
Weighted average shares used in basic computation | 15,199,092 | 13,959,003 | 14,867,218 | 13,730,742 | |||||||||||||
Diluted effect of purchase options and warrants | 221,310 | - | - | - | |||||||||||||
Diluted effect of restricted shares | 176,152 | - | - | - | |||||||||||||
Weighted average shares used in diluted computation | 15,596,554 | 13,959,003 | 14,867,218 | 13,730,742 | |||||||||||||
Income (loss) per share – Basic: | |||||||||||||||||
Net income (loss) before noncontrolling interest | $ | 0.01 | $ | (0.64 | ) | $ | (0.02 | ) | $ | (0.73 | ) | ||||||
Add: Net income (loss) attributable to noncontrolling interest | $ | - | $ | - | $ | - | $ | - | |||||||||
Net income (loss) attributable to controlling interest | $ | 0.01 | $ | (0.64 | ) | $ | (0.02 | ) | $ | (0.73 | ) | ||||||
Earnings (loss) per share – Diluted: | |||||||||||||||||
Net income (loss) before noncontrolling interest | $ | 0.01 | $ | (0.64 | ) | $ | (0.02 | ) | $ | (0.73 | ) | ||||||
Add: Net income (loss) attributable to noncontrolling interest | $ | - | $ | - | $ | - | $ | - | |||||||||
Net income (loss) attributable to controlling interest | $ | 0.01 | $ | (0.64 | ) | $ | (0.02 | ) | $ | (0.73 | ) | ||||||
For the three and nine months ended December 31, 2014 and 2013, the 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 and the warrant were anti-dilutive. |
BUSINESS_COMBINATION
BUSINESS COMBINATION | 9 Months Ended | ||||
Dec. 31, 2014 | |||||
Business Combinations [Abstract] | |||||
BUSINESS COMBINATION | Note 21 - BUSINESS COMBINATION | ||||
Sanhao Pharmacy | |||||
On October 9, 2014, Jiuzhou Pharmacy completed its acquisition of Sanhao Pharmacy. The Pharmacy is a local drugstore chain of eleven stores located in Hangzhou. Jiuzhou Pharmacy acquired all assets and assumed all liabilities of Sanhao Pharmacy. The consideration of the transaction included a cash payment of $1,564,416 (RMB 9,600,000), with the excess amount of cash payment over the fair value capitalized by the Company as goodwill of $ $23,551. Per the agreement, the Company is required to pay 20% in three business days after the Contract takes effect and to pay 40% after the registration of the change of ownership in the Administration for Industry and Commerce is completed. As of December 31, 2014, the Company had paid a total of 60%, or $938,650 (RMB 5,760,000). The remaining amount is expected to pay within next few months. In January 2015, eight stores of Sanhao Pharmacy were relocated to new locations (See Note 23 Subsequent Events). | |||||
The following table summarizes the preliminary fair value of the assets acquired and liabilities assumed at the date of acquisition: | |||||
Total purchase price | $ | 1,564,416 | |||
Allocation of the purchase price to assets and liabilities at fair value: | |||||
Cash and cash equivalents | $ | 31,930 | |||
Accounts receivable, net | 5,597 | ||||
Inventories | 53,587 | ||||
Advances on inventory purchases | 473 | ||||
Property, plant and equipment, net | 541 | ||||
Licenses | 1,566,046 | ||||
Total assets | 1,658,174 | ||||
Accounts payable | 37,215 | ||||
Tax receivable | (1,019 | ) | |||
Accrued liabilities and other liabilities, current | 81,122 | ||||
Total liabilities | 117,318 | ||||
Net assets acquired at fair value | $ | 1,540,856 | |||
Goodwill | $ | 23,560 |
SEGMENTS
SEGMENTS | 9 Months Ended | ||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||
SEGMENTS | Note 22 – SEGMENTS | ||||||||||||||||||||
The Company operates within four main reportable segments: retail drugstores, online pharmacy, drug wholesale and herb farming. Online pharmacy sells OTC drugs, dietary supplements, medical devices and sundry items to customers through several third-party platforms such as Alibaba’s Tmall, JD.com and Amazon.com, and the Company’s own platform all over China. The retail drugstores segment sells prescription and over-the-counter (“OTC”) medicines, TCM, dietary supplements, medical devices, and sundry items to retail customers. The drug wholesale segment includes supplying the Company’s own retail drugstores with prescription and OTC medicines, TCM, dietary supplement, medical devices and sundry items (which sales have been eliminated as intercompany transactions), and also selling them to other drug vendors and hospitals. The Company’s herb farming segment cultivates selected herbs for sales 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. | |||||||||||||||||||||
The segments' 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. Each segment is managed separately because they require different operations and markets to distinct classes of customers. | |||||||||||||||||||||
The following table presents summarized information by segment of the continuing operation for the three months ended December 31, 2014: | |||||||||||||||||||||
Retail drugstores | Online Pharmacy | Drug wholesale | Herb | Total | |||||||||||||||||
farming | |||||||||||||||||||||
Revenue | $ | 13,286,909 | $ | 4,395,501 | $ | 3,637,629 | $ | - | $ | 21,320,039 | |||||||||||
Cost of goods | 10,964,550 | 3,769,723 | 3,403,733 | - | 18,138,006 | ||||||||||||||||
Gross profit | $ | 2,322,359 | $ | 625,778 | $ | 233,896 | $ | - | $ | 3,182,033 | |||||||||||
Selling expenses | 1,699,422 | 369,348 | 115,414 | - | 2,184,184 | ||||||||||||||||
General and administrative expenses* | 1,516,194 | 201,861 | (1,184,567 | ) | 88,625 | 622,113 | |||||||||||||||
(Loss) income from operations | $ | (893,257 | ) | $ | 54,569 | $ | 1,303,049 | $ | (88,625 | ) | $ | 375,736 | |||||||||
Depreciation and amortization | $ | 291,295 | $ | 518 | $ | 34,525 | $ | 81,415 | $ | 407,753 | |||||||||||
Total capital expenditures | $ | 922,331 | $ | 2,862 | $ | 526 | $ | - | $ | 925,719 | |||||||||||
* include the accounts receivable and advance to suppliers allowance reversal of $1,490,787. | |||||||||||||||||||||
The following table presents summarized information of the continuing operations by segment for the three months ended December 31, 2013: | |||||||||||||||||||||
Retail | Online | Drug | Herb | Total | |||||||||||||||||
drugstores | pharmacy | wholesale | farming | ||||||||||||||||||
Revenue | $ | 11,122,297 | $ | 2,087,432 | $ | 4,623,343 | $ | - | $ | 17,833,072 | |||||||||||
Cost of goods | 9,018,873 | 1,751,150 | 6,883,965 | - | 17,653,988 | ||||||||||||||||
Gross profit | $ | 2,103,424 | $ | 336,282 | $ | (2,260,622 | ) | $ | - | $ | 179,084 | ||||||||||
Selling expenses | 5,146,496 | 86,175 | 105,733 | - | 5,338,404 | ||||||||||||||||
General and administrative expenses | 1,736,862 | 125,940 | 1,796,785 | 40,879 | 3,700,466 | ||||||||||||||||
Loss from operations | $ | (4,656,137 | ) | $ | 370 | $ | (4,163,140 | ) | $ | (40,879 | ) | $ | (8,859,786 | ) | |||||||
Depreciation and amortization | $ | 354,156 | $ | 17,135 | $ | 133,927 | $ | 262 | $ | 505,480 | |||||||||||
Total capital expenditures | $ | 227,586 | $ | - | $ | 64,375 | $ | - | $ | 291,961 | |||||||||||
The following table presents summarized information of the continuing operation by segment for the nine months ended December 31, 2014: | |||||||||||||||||||||
Retail | Online | Drug | Herb | Total | |||||||||||||||||
drugstores | pharmacy | wholesale | farming | ||||||||||||||||||
Revenue | $ | 36,288,706 | $ | 9,917,434 | $ | 10,017,196 | $ | - | $ | 56,223,336 | |||||||||||
Cost of goods | 29,946,958 | 8,400,439 | 9,418,030 | - | 47,765,427 | ||||||||||||||||
Gross profit | $ | 6,341,748 | $ | 1,516,995 | $ | 599,166 | $ | - | $ | 8,457,909 | |||||||||||
Selling expenses | 5,164,919 | 370,014 | 351,608 | - | 5,886,541 | ||||||||||||||||
General and administrative expenses* | 4,192,386 | 501,421 | (2,508,006 | ) | 263,688 | 2,449,489 | |||||||||||||||
(Loss) gain from operations | $ | (3,015,557 | ) | $ | 645,560 | $ | 2,755,564 | $ | (263,688 | ) | $ | 121,879 | |||||||||
Depreciation and amortization | $ | 784,141 | $ | 4,056 | $ | 210,106 | $ | 242,020 | $ | 1,240,323 | |||||||||||
Total capital expenditures | $ | 1,064,131 | $ | 6,375 | $ | 76,784 | $ | - | $ | 1,147,290 | |||||||||||
* include the accounts receivable and advance to suppliers allowance reversal of $3,125,674. | |||||||||||||||||||||
The following table presents summarized information of the continuing operation by segment for the nine months ended December 31, 2013: | |||||||||||||||||||||
Retail | Online | Drug | Herb | Total | |||||||||||||||||
drugstores | pharmacy | wholesale | farming | ||||||||||||||||||
Revenue | $ | 30,222,568 | $ | 4,952,493 | $ | 14,849,951 | $ | - | $ | 50,025,012 | |||||||||||
Cost of goods | 23,327,091 | 4,115,147 | 15,854,118 | - | 43,296,356 | ||||||||||||||||
Gross profit | $ | 6,895,477 | $ | 837,346 | $ | (1,004,167 | ) | $ | - | $ | 6,728,656 | ||||||||||
Selling expenses | 8,479,008 | 2,014 | 1,517,355 | - | 9,998,377 | ||||||||||||||||
General and administrative expenses | 4,347,125 | 347,526 | 1,992,349 | 146,265 | 6,833,265 | ||||||||||||||||
(Loss) gain from operations | $ | (5,722,447 | ) | $ | 279,597 | $ | (4,513,871 | ) | $ | (146,265 | ) | $ | (10,102,986 | ) | |||||||
Depreciation and amortization | $ | 1,221,994 | $ | 17,135 | $ | 406,152 | $ | 785 | $ | 1,646,066 | |||||||||||
Total capital expenditures | $ | 1,730,792 | $ | 308 | $ | 81,799 | $ | - | $ | 1,812,899 | |||||||||||
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 products is as follows: | |||||||||||||||||||||
Three months ended | Nine months ended | ||||||||||||||||||||
December 31, | December 31, | ||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||||
Prescription drugs | $ | 5,489,897 | $ | 5,348,544 | $ | 14,867,900 | $ | 15,272,807 | |||||||||||||
Over-the-counter drugs | 5,451,117 | 3,885,467 | 13,685,649 | 10,623,206 | |||||||||||||||||
Nutritional supplements | 536,306 | 603,541 | 1,707,449 | 1,355,712 | |||||||||||||||||
Traditional Chinese medicine | 1,287,598 | 1,040,085 | 4,474,344 | 2,468,598 | |||||||||||||||||
Sundry products | 388,561 | 229,921 | 1,248,344 | 317,018 | |||||||||||||||||
Medical devices | 133,429 | 14,739 | 305,020 | 185,227 | |||||||||||||||||
Total | $ | 13,286,908 | $ | 11,122,297 | $ | 36,288,706 | $ | 30,222,568 | |||||||||||||
The Company’s net revenue from external customers through online pharmacy by main products is as follows: | |||||||||||||||||||||
Three months ended | Nine months ended | ||||||||||||||||||||
December 31, | December 31, | ||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||||
Prescription drugs | $ | - | $ | - | $ | - | $ | - | |||||||||||||
Over-the-counter drugs | 1,422,863 | 1,331,997 | 2,942,461 | 2,609,434 | |||||||||||||||||
Nutritional supplements | 195,227 | 137,503 | 537,119 | 592,346 | |||||||||||||||||
Traditional Chinese medicine | - | - | - | - | |||||||||||||||||
Sundry products | 646,640 | 292,193 | 1,422,131 | 976,269 | |||||||||||||||||
Medical devices | 2,130,771 | 325,739 | 5,015,722 | 774,444 | |||||||||||||||||
Total | $ | 4,395,501 | $ | 2,087,432 | $ | 9,917,434 | $ | 4,952,493 | |||||||||||||
The Company’s net revenue from external customers through wholesale by main products is as follows: | |||||||||||||||||||||
Three months ended | Nine months ended | ||||||||||||||||||||
December 31, | December 31, | ||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||||
Prescription drugs | $ | 2,184,711 | $ | 3,407,773 | $ | 6,446,695 | $ | 11,057,448 | |||||||||||||
Over-the-counter drugs | 1,389,880 | 76,942 | 3,338,309 | 952,286 | |||||||||||||||||
Nutritional supplements | 35,320 | 820 | 69,270 | 261,954 | |||||||||||||||||
Traditional Chinese medicine | 121 | 6 | 89,389 | 929 | |||||||||||||||||
Sundry products | 11,791 | 1,137,780 | 18,568 | 2,570,591 | |||||||||||||||||
Medical devices | 15,806 | - | 54,965 | 6,743 | |||||||||||||||||
Total | $ | 3,637,629 | $ | 4,623,343 | $ | 10,017,196 | $ | 14,849,951 |
COMMITMENTS_AND_CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended | ||||||||||||||||||||
Dec. 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: | |||||||||||||||||||||
Periods ending December 31, | Retail | Online | Drug | Herb farming | Total | ||||||||||||||||
drugstores | pharmacy | wholesale | Amount | ||||||||||||||||||
2015 | $ | 3,736,545 | $ | 110,845 | $ | 182,908 | $ | - | $ | 4,030,298 | |||||||||||
2016 | 2,054,990 | 127,735 | 165,803 | - | 2,348,528 | ||||||||||||||||
2017 | 1,659,717 | 139,348 | 150,960 | - | 1,950,025 | ||||||||||||||||
2018 | 1,439,597 | 139,347 | 150,960 | - | 1,729,904 | ||||||||||||||||
2019 | 726,108 | 139,347 | 150,960 | - | 1,016,415 | ||||||||||||||||
Thereafter | 317,420 | 174,185 | 75,480 | - | 567,085 | ||||||||||||||||
Total | $ | 9,934,377 | $ | 830,807 | $ | 877,071 | $ | $ | 11,642,255 | ||||||||||||
Total rent expense amounted to $1,287,473 and $936,991 for the three months ended December 31, 2014 and 2013, respectively, and $3,685,249 and $2,826,141 for the nine months ended December 31, 2014 and 2013, respectively. |
SUBSEQUENT_EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Dec. 31, 2014 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | Note 24 – SUBSEQUENT EVENTS |
In January 2015, eight stores of Sanhao Pharmacy with the qualification of Social Health Insurance ("SHI"), have been relocated close to major resident areas with significant store improvements. These eight stores are now operating under the brand name “Jiuzhou Pharmacy”. | |
On January 8, 2015, Hangzhou Quannuo has terminated its business license with SAIC and officially closed its business. Hangzhou Quannuo had ceased its operation in fiscal 2014. |
SUMMARY_OF_SIGNIFICANT_ACCOUNT1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended | ||||
Dec. 31, 2014 | |||||
Accounting Policies [Abstract] | |||||
Basis of presentation and consolidation | Basis of presentation and consolidation | ||||
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles (“US GAAP”) for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included. These condensed consolidated financial statements and notes should be read in conjunction with the audited consolidated financial statements and footnotes included in the Company’s annual report on Form 10-K for the fiscal year ended March 31, 2014 filed with the SEC on June 27, 2014. Operating results for the three and nine months ended December 31, 2014 may not be necessarily indicative of the results that may be expected for the full year. | |||||
The condensed consolidated financial statements include the financial statements of the Company, its subsidiaries and VIEs. All significant inter-company transactions and balances between the Company, its subsidiaries and VIEs are eliminated upon consolidation. | |||||
Certain prior period amounts have been reclassified to conform to the current period presentation. These reclassifications had no effect on net income or cash flows as previously reported. | |||||
Consolidation of variable interest entities | Consolidation of variable interest entities | ||||
In accordance with accounting standards regarding consolidation of variable interest entities, 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. | |||||
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 are 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. | |||||
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 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 others, 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. 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 unaudited condensed 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 unaudited condensed consolidated financial statements relate to the assessment of the carrying values of accounts receivable, advances to suppliers and related allowance for doubtful accounts, useful lives of property and equipment, inventory reserve and fair value of its purchase option derivative liability. 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 a 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 is made to the receivables from the government agency. | |||||
Revenue from medical services is recognized after the service has been rendered to a 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 a customer’s location. Any loss caused in a shipment will be reimbursed by the Company’s courier company. In addition, a proper sales discount is made to account for the potential loss from returns from customers. 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. The Company also reviews historical trend and will provide additional allowance if it determines a particular account has become uncollectible. The ability to collect is attributed to the steps taken prior to extending credit to customers. Account balances are written off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. To accommodate for potential loss in accounts receivable, the Company puts up a reserve for what we do not believe to be collectible, and most aged receivables have been reserved. 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, which is determined to be uncollectible after confirming with the appropriate bureau or program each month. Additionally, the Company also makes estimated reserves on related outstanding accounts receivable based on historical trend. | |||||
Inventories | Inventories | ||||
Inventories are stated at the lower of cost or market value. Cost is determined by the first in first out (FIFO) method. Market value 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. Herbs that the Company farms are recorded at their costs, 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 costs. Since April 2014, amortization of farmland development costs has been expensed instead of allocated into inventory due to unpredictable future market value of planted gingko trees. All costs are accumulated until the time of harvest and then allocated to harvested herbs 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 & furniture | 3-5 years | ||||
Buildings | 35 years | ||||
Maintenance, repairs and minor renewals are charged to expenses 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 | ||||
Licenses | Indefinite | ||||
The Company evaluates intangible assets for impairment whenever events or changes in circumstances indicate that the assets might be impaired. | |||||
Goodwill | Goodwill | ||||
The excess of the cost of an acquired entity over the net of the amounts assigned to assets acquired and liabilities assumed is recognized as goodwill. Goodwill is tested for impairment at the reporting unit level on an annual basis in the fourth quarter or more frequently if there are indications of impairment. The Company has elected to early adopt the provisions of Accounting Standards Update ("ASU") 2011-08. Testing Goodwill for Impairment. Under this ASU, The Company may first assess qualitative factors to determine whether it is necessary to perform the two-step goodwill test. Calculating the fair value of the reporting units requires significant estimates and assumption by management. To the extent the carrying amount of a reporting unit exceeds the fair value of the reporting unit, there is an indication that the reporting unit goodwill may be impaired and a second step of the impairment test is performed to determine the amount of the impairment to be recognized, if any. After evaluating all qualitative factors, the Company has determined that the fair value of the indefinite lived intangible assets, including goodwill, is more than its carrying amount, and therefore no impairment was recorded. | |||||
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. | |||||
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. 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 periods ended December 31, 2014 and 2013. | |||||
Value added tax | Value added tax | ||||
Sales revenue represents the invoiced value of goods, net of VAT. All of the Company’s products are sold in the PRC and are subjected 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 standards 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 $158,686 and $3,542,412 for three months ended December 31, 2014 and 2013, respectively, and $289,925 and $3,598,945 for the nine months ended December 31, 2014 and 2013, respectively. Such costs consist primarily of print and promotional materials such as flyers to local communities. | |||||
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 7 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. In addition, 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 income 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 December 31, 2014 and March 31, 2014 were translated at 1 RMB to $0.1629 USD and at 1 RMB to $0.1623 USD, respectively. The average translation rates applied to income and cash flow statement amounts for the nine months ended December 31, 2014 and 2013 were at 1 RMB to $0.1626 USD and at 1 RMB to $0.1623 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. 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 December 31, 2014 and March 31, 2014, the Company had deposits totaling $11,272,978 and $7,204,626 that were not covered by insurance, respectively. To date, the Company has not experienced any losses in such accounts. | |||||
For the three months ended December 31, 2014, the two largest vendors accounted for 33% of the Company’s total purchases and one vendor accounted for 21% of total advances to suppliers. For the three months ended December 31, 2013, three vendors accounted for 33% of the Company’s total purchases and no vendor accounted for more than 10% of total advances to suppliers. | |||||
For the nine months ended December 31, 2014, the two largest vendors accounted for 30% of the Company’s total purchases and one vendor accounted for 21% of total advances to suppliers. For the nine months ended December 31, 2013, one vendor accounted for approximately 13%of the Company’s total purchases and another vendor accounted for more than 18% of total advances to suppliers. | |||||
For the three months ended December 31, 2014, no customer accounted for more than 10% of the Company’s total sales or accounts receivable. For the three months ended December 31, 2013, no customer accounted for more than 10% of the Company’s total sales and no customer accounted for more than 10% of total accounts receivable. | |||||
For the nine months ended December 31, 2014, no customer accounted for more than 10% of the Company’s total sales or accounts receivable. For the nine months ended December 31, 2013, no customer accounted for more than 10% of the Company’s total sales, and no customer accounted for more than 10% of total accounts receivable. | |||||
Noncontrolling interest | Noncontrolling interest | ||||
As of December 31, 2014, Yi Wang, an individual, owned 49% of the equity interests of Shouantang Health, which was not under the Company’s control. | |||||
Business combinations | Business combinations | ||||
The Company accounts for business combinations using the acquisition method of accounting. The acquisition method requires an acquirer to recognize the assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree at the acquisition date, measured at their fair values as of that date. | |||||
Recent Accounting Pronouncements | Recent Accounting Pronouncements | ||||
In April 2014, 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. | |||||
In August 2014, the FASB issued ASU No. 2014-15, “Disclosure of Uncertainties About an Entity’s Ability to Continue as a Going Concern”, which requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued and provides guidance on determining when and how to disclose going concern uncertainties in the financial statements. Certain disclosures will be required if conditions give rise to substantial doubt about an entity’s ability to continue as a going concern. ASU 2014-15 applies to all entities and is effective for annual and interim reporting periods ending after December 15, 2016, with early adoption permitted. Management is evaluating the effect, if any, on the Company’s financial position and results of operations. | |||||
In November 2014, FASB issued Accounting Standards Update No. 2014-16, Derivatives and Hedging (Topic 815): Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity (a consensus of the FASB Emerging Issues Task Force).The amendments permit the use of the Fed Funds Effective Swap Rate (also referred to as the Overnight Index Swap Rate, or OIS) as a benchmark interest rate for hedge accounting purposes. Public business entities are required to implement the new requirements in fiscal years (and interim periods within those fiscal years) beginning after December 15, 2015. All other types of entities are required to implement the new requirements in fiscal years beginning after December 15, 2015, and interim periods beginning after December 15, 2016. The Company does not expect the adoption of ASU 2014-16 to have material impact on the Company's consolidated financial statement. |
DESCRIPTION_OF_BUSINESS_AND_OR1
DESCRIPTION OF BUSINESS AND ORGANIZATION (Tables) | 9 Months Ended | ||||
Dec. 31, 2014 | |||||
Description Of Business and Organization [Abstract] | |||||
Schedule of activities of company and affiliates | Entity Name | Background | Ownership | ||
Renovation | ● 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 | 100% | |||
● Registered capital of $20 million | |||||
● 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 herb farming business | |||||
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 operation and has closed and dissoluted | |||||
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 | |||||
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 | 100% | |||
● Registered capital of $2.6 million fully paid | |||||
● Currently has no operation | |||||
Shouantang Health | ● Established in the PRC on December 18, 2013 by Jiuzhou Service | VIE by contractual arrangements as a | |||
● Registered capital of RMB 500,000 fully paid | controlled entity of Jiuzhou Service (2) | ||||
● 51% held by Jiuzhou Service | |||||
● Currently has no operations | |||||
Sanhao Pharmacy | ● Established in the PRC on March 3, 2012 | VIE by contractual arrangements as a wholly-owned subsidiary of Jiuzhou Pharmacy (2) | |||
●Acquired by Jiuzhou Pharmacy on October 9, 2014 | |||||
● 100% held by Jiuzhou Pharmacy | |||||
● Currently has no operations | |||||
Shouantang Bio | ● Established in the PRC in October, 2014 by Shouantang Technology | 100% | |||
● 100% held by Shouantang Technology | |||||
● Sells nutritional supplements with its own brand name | |||||
-1 | Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service have been under the common control of Renovation (the “Owner”) since their respective establishment dates, pursuant to agreements amongst the Owner 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 Owner has operated these three companies in conjunction with one another since each company’s respective establishment date. Jiuxin Medicine is also deemed under the common control of the Owner as a subsidiary 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 Shouantang Health, the subsidiaries and entity under the control of Jiuzhou Service, are consolidated into the financial statements of the Company. |
SUMMARY_OF_SIGNIFICANT_ACCOUNT2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended | ||||
Dec. 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 & 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 | ||||
Licenses | Indefinite | ||||
TRADE_ACCOUNTS_RECEIVABLE_Tabl
TRADE ACCOUNTS RECEIVABLE (Tables) | 9 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Accounts Receivable, Net [Abstract] | |||||||||
Schedule of trade accounts receivable | |||||||||
December 31, | March 31, | ||||||||
2014 | 2014 | ||||||||
Accounts receivable | $ | 10,089,999 | $ | 11,869,866 | |||||
Less: allowance for doubtful accounts | (2,978,405 | ) | (5,135,330 | ) | |||||
Trade accounts receivable, net | $ | 7,111,594 | $ | 6,734,536 | |||||
OTHER_CURRENT_ASSETS_Tables
OTHER CURRENT ASSETS (Tables) | 9 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Assets, Current [Abstract] | |||||||||
Schedule of other current assets | |||||||||
December 31, | March 31, | ||||||||
2014 | 2014 | ||||||||
Prepaid rental expenses | $ | 1,126,770 | $ | 1,165,633 | |||||
Lease rights transfer fees (1) | - | 11,939 | |||||||
Prepaids and other current assets | 487,325 | 485,530 | |||||||
Total | $ | 1,614,095 | $ | 1,663,102 | |||||
-1 | Lease rights transfer fees are paid by the Company to secure store rentals in coveted areas. These 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) | 9 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Property, Plant and Equipment [Abstract] | |||||||||
Schedule of property and equipment | |||||||||
December 31, | March 31, | ||||||||
2014 | 2014 | ||||||||
Building | $ | 1,746,625 | $ | 1,139,412 | |||||
Leasehold improvements | 12,136,854 | 11,849,753 | |||||||
Farmland improvements | 1,041,046 | 1,037,212 | |||||||
Office equipment and furniture | 5,700,493 | 5,535,667 | |||||||
Motor vehicles | 644,238 | 579,834 | |||||||
Total | 21,269,256 | 20,141,878 | |||||||
Construction-in-Progress | 96,844 | - | |||||||
Less: Accumulated depreciation | (11,987,940 | ) | (10,729,190 | ) | |||||
Property and equipment, net | $ | 9,378,160 | $ | 9,412,688 |
ADVANCES_TO_SUPPLIERS_Tables
ADVANCES TO SUPPLIERS (Tables) | 9 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Advances To Suppliers [Abstract] | |||||||||
Schedule of advance to suppliers | December 31, | March 31, | |||||||
2014 | 2014 | ||||||||
Advance to suppliers | $ | 9,283,317 | $ | 11,162,767 | |||||
Less: allowance for doubtful accounts | (5,616,825 | ) | (6,585,573 | ) | |||||
Advance to suppliers, net | $ | 3,666,492 | $ | 4,577,194 |
INVENTORY_Tables
INVENTORY (Tables) | 9 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Inventory Disclosure [Abstract] | |||||||||
Schedule of inventory | |||||||||
December 31, | March 31, | ||||||||
2014 | 2014 | ||||||||
Finished goods | $ | 10,833,648 | $ | 7,822,102 | |||||
Less: reserve for inventory | (1,055,770 | ) | (774,705 | ) | |||||
Inventory, net | $ | 9,777,878 | $ | 7,047,397 |
FARMLAND_ASSETS_Tables
FARMLAND ASSETS (Tables) | 9 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Farmland Assets [Abstract] | |||||||||
Schedule of farmland assets | December 31, | March 31, | |||||||
2014 | 2014 | ||||||||
Farmland assets | $ | 2,200,477 | $ | 2,192,372 | |||||
Less: impairments | (823,671 | ) | (820,637 | ) | |||||
Farmland assets, net | $ | 1,376,806 | $ | 1,371,735 |
OTHER_NONCURRENT_ASSETS_Tables
OTHER NONCURRENT ASSETS (Tables) | 9 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Other Assets, Noncurrent Disclosure [Abstract] | |||||||||
Schedule of other noncurrent assets | |||||||||
December 31, | March 31, | ||||||||
2014 | 2014 | ||||||||
Prepayment for lease of land use right – noncurrent, net (1) | $ | 2,767,155 | $ | 2,878,687 | |||||
Long term prepaid expense | - | 158,243 | |||||||
Total | $ | 2,767,155 | $ | 3,036,930 | |||||
-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 $1,137,500, which will be refundable on the due date. 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 an impairment of $2,475,688 on the lease prepayment in fiscal 2014. | ||||||||
Schedule of prepayment for lease of land use right | Periods ending December 31, | Amount | |||||||
2015 | $ | 67,270 | |||||||
2016 | 67,270 | ||||||||
2017 | 67,270 | ||||||||
2018 | 67,270 | ||||||||
2019 | 67,270 | ||||||||
Thereafter | $ | 1,290,503 |
INTANGIBLE_ASSETS_Tables
INTANGIBLE ASSETS (Tables) | 9 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||
Schedule of intangible assets with indefinite life generated through acquisition of Sanhao Pharmacy | Preliminary | Currency translation adjustment | Net carrying | ||||||||||
Fair value | value | ||||||||||||
Licenses (1) | $ | 1,566,046 | $ | (577 | ) | $ | 1,565,469 | ||||||
Goodwill on acquisition of Sanhao Pharmacy | 23,560 | (9 | ) | 23,551 | |||||||||
$ | 1,589,606 | $ | (586 | ) | $ | 1,589,020 | |||||||
-1 | This represents the preliminary fair value of licenses of insurance applicable drugstores acquired from Sanhao Pharmacy. The license allows patients to pay by the insurance card at stores and the stores can get reimbursed from the Human Resource and Social Security Department of Hangzhou City. | ||||||||||||
Schedule of net intangible assets | December 31, | March 31, | |||||||||||
2014 | 2014 | ||||||||||||
Land use rights (2) | $ | 1,588,528 | $ | 1,582,677 | |||||||||
Software | 475,841 | 474,088 | |||||||||||
Total other intangible assets | 2,064,369 | 2,056,765 | |||||||||||
Less: accumulated amortization | (513,031 | ) | (487,322 | ) | |||||||||
Other intangible assets, net | $ | 1,551,338 | $ | 1,569,443 | |||||||||
-2 | In July 2013, 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, the Company does not expect completion of the plant in the near future. |
NOTES_PAYABLE_Tables
NOTES PAYABLE (Tables) | 9 Months Ended | ||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||
Notes Payable [Abstract] | |||||||||||||||||||||
Schedule of credit facilities with bank | Origination | Maturity | December 31, | March 31, | |||||||||||||||||
Beneficiary | Endorser | date | date | 2014 | 2014 | ||||||||||||||||
Jiuzhou Pharmacy(1) | ICBC | 12/27/13 | 6/26/14 | $ | - | $ | 1,351,959 | ||||||||||||||
Jiuzhou Pharmacy(1) | ICBC | 10/11/13 | 4/11/14 | - | 730,350 | ||||||||||||||||
Jiuzhou Pharmacy(2) | HUB | 10/8/13 | 4/8/14 | - | 486,900 | ||||||||||||||||
Jiuzhou Pharmacy(2) | HUB | 11/5/13 | 5/5/14 | - | 1,720,380 | ||||||||||||||||
Jiuzhou Pharmacy(2) | HUB | 12/26/13 | 6/26/14 | - | 117,960 | ||||||||||||||||
Jiuzhou Pharmacy(2) | HUB | 2/7/14 | 5/7/14 | - | 649,200 | ||||||||||||||||
Jiuzhou Pharmacy(2) | HUB | 2/7/14 | 8/7/14 | - | 985,161 | ||||||||||||||||
Jiuzhou Pharmacy(2) | HUB | 3/6/14 | 9/6/14 | - | 1,778,808 | ||||||||||||||||
Jiuzhou Pharmacy(3) | HUB | 8/4/14 | 2/4/15 | 1,482,390 | - | ||||||||||||||||
Jiuzhou Pharmacy(3) | HUB | 8/5/14 | 8/4/15 | 1,629,000 | - | ||||||||||||||||
Jiuzhou Pharmacy(3) | HUB | 9/3/14 | 3/3/15 | 1,808,190 | |||||||||||||||||
Jiuzhou Pharmacy(3) | HUB | 10/9/14 | 4/9/15 | 781,920 | |||||||||||||||||
Jiuzhou Pharmacy(3) | HUB | 10/9/14 | 4/9/15 | 1,184,283 | |||||||||||||||||
Jiuzhou Pharmacy(3) | HUB | 12/5/14 | 6/5/15 | 1,325,582 | |||||||||||||||||
Jiuzhou Pharmacy(3) | HUB | 12/26/14 | 6/26/15 | 1,596,420 | |||||||||||||||||
Jiuzhou Pharmacy(4) | BOH | 11/6/14 | 5/6/15 | 2,899,620 | |||||||||||||||||
Jiuzhou Pharmacy(1) | ICBC | 12/26/14 | 6/25/15 | 2,231,730 | - | ||||||||||||||||
Total | $ | 14,939,135 | $ | 7,820,718 | |||||||||||||||||
-1 | As of March 31, 2014, the Company had a total of $2,082,309 (RMB12,830,000) in notes payable from ICBC. 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 notes. All the outstanding notes payable have been repaid upon maturity. As of December 31, 2014, the Company had $2,231,730 (RMB 13,700,000) note payable from ICBC, with restricted cash of $669,519 (RMB 4,110,000) held at bank. | ||||||||||||||||||||
-2 | As of March 31, 2014, the Company had $5,738,409 (RMB35,356,800) notes payable from HUB. The Company is required to hold restricted cash of $2,489,851 (RMB15,341,040) with HUB as collateral against these bank notes. All the outstanding notes payable have been repaid upon maturity. | ||||||||||||||||||||
-3 | As of December 31, 2014, the Company had $9,807,785 (RMB60,207,400) notes payable from HUB. The Company is required to hold restricted cash of $5,263,498 (RMB32,311,220) with HUB as collateral against these bank notes. | ||||||||||||||||||||
-4 | As of December 31, 2014, the Company had $2,899,620 (RMB17,800,000) notes payable from BOH. The land use right of the farmland in Lin’An, Hangzhou is pledged as collateral for these bank acceptance notes (see Note 12). The Company is required to hold restricted cash of $1,449,810 (RMB8,900,000) with BOH as collateral against these bank notes. |
TAXES_Tables
TAXES (Tables) | 9 Months Ended | ||||||||||||||||
Dec. 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 reconciles the U.S. statutory tax rates with company's effective tax rate | For the three months | For the nine months | |||||||||||||||
ended December 31, | ended December 31, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
U.S. Statutory rates | 34 | % | 34 | % | 34 | % | 34 | % | |||||||||
Foreign income not recognized in the U.S. | (34.0 | ) | (34.0 | ) | (34.0 | ) | (34.0 | ) | |||||||||
China income taxes | 25 | 25 | 25 | 25 | |||||||||||||
Change in valuation allowance (1) | (15.1 | ) | (25.0 | ) | (55.3 | ) | (25.0 | ) | |||||||||
Non-deductible expenses-permanent difference (2) | 0 | 0.4 | 4.5 | (0.4 | ) | ||||||||||||
Effective tax rate | 9.9 | % | 0.4 | % | (25.8 | )% | (0.4 | )% | |||||||||
-1 | It represents non-taxable expense reversal due to decrease in allowance for accounts receivables and advance to suppliers. | ||||||||||||||||
-2 | The 0% and 0.4% rate adjustments for the three months ended December 31, 2014 and 2013, and the 4.5% and (0.4)% rate adjustments for the nine months ended December 31, 2014 and 2013 represents expenses primarily included legal, accounting and other expenses incurred by the Company that were not deductible for PRC income tax. | ||||||||||||||||
Schedule of taxes payable | |||||||||||||||||
December 31, 2014 | March 31, | ||||||||||||||||
2014 | |||||||||||||||||
VAT | $ | 399,637 | $ | 344,329 | |||||||||||||
Income tax | 7,983 | 7,851 | |||||||||||||||
Others | 42,720 | 21,321 | |||||||||||||||
Total taxes payable | $ | 450,340 | $ | 373,501 |
RELATED_PARTY_TRANSACTIONS_AND1
RELATED PARTY TRANSACTIONS AND ARRANGEMENTS (Tables) | 9 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Related Party Transactions [Abstract] | |||||||||
Schedule of amounts payable to related parties | December 31, | March 31, | |||||||
2014 | 2014 | ||||||||
Due to cofounders (1): | $ | 578,951 | $ | 576,818 | |||||
Due to a director and CEO (2): | 1,393,980 | 1,807,476 | |||||||
Total | $ | 1,972,931 | $ | 2,384,294 | |||||
-1 | As of December 31, 2014 and March 31, 2014, amount due to cofounders represents contributions from the Owners to Jiuxin Management to enable Jiuxin Management to meet its approved PRC registered capital requirements. | ||||||||
-2 | Due to foreign exchange restrictions, the Company’s director and CEO, Mr. Lei Liu personally lent U.S. dollars to the Company to facilitate its payments of expenses in the United States. On July 2, 2014, the Company issued a total of 619,482 shares of common stock to Lei Liu, at $1.52 per share, the fair market value, or the closing stock price on Nasdaq on July 1, 2014, to offset the debts of $941,613 owed to Mr. Liu. |
PURCHASE_OPTION_DERIVATIVE_LIA1
PURCHASE OPTION DERIVATIVE LIABILITY (Tables) | 9 Months Ended | ||||
Dec. 31, 2014 | |||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||
Schedule of fair value assumption using Black-Scholes Option Pricing Model | |||||
Underwriter | |||||
Purchase Option | |||||
December 31, | |||||
2014 (1) | |||||
Stock price | $ | 2.9 | |||
Exercise price | $ | 6.25 | |||
Annual dividend yield | 0 | % | |||
Expected term (years) | 0.3 | ||||
Risk-free interest rate | 0.04 | ||||
Expected volatility | 103.02 | % | |||
-1 | As of December 31, 2014, the option to purchase 105,000 shares of common stock had not been exercised. |
WARRANTS_Tables
WARRANTS (Tables) | 9 Months Ended | ||||
Dec. 31, 2014 | |||||
Warrants and Rights Note Disclosure [Abstract] | |||||
Schedule of estimated fair value of warrants | Common Stock | ||||
Warrants | |||||
December 31, | |||||
2014 (1) | |||||
Stock price | $ | 2.9 | |||
Exercise price | $ | 1.2 | |||
Annual dividend yield | 0 | % | |||
Expected term (years) | 1.74 | ||||
Risk-free interest rate | 0.67 | % | |||
Expected volatility | 125.95 | % | |||
-1 | As of December 31, 2014, the warrant had not been exercised. |
EARNINGS_PER_SHARE_Tables
EARNINGS PER SHARE (Tables) | 9 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||
Schedule of reconciliation of the basic and diluted earnings per share computation | Three months ended | Nine months ended | |||||||||||||||
December 31, | December 31, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Net income (loss) attributable to controlling interest | $ | 126,538 | $ | (8,735,230 | ) | $ | (256,392 | ) | $ | (10,068,808 | ) | ||||||
Weighted average shares used in basic computation | 15,199,092 | 13,959,003 | 14,867,218 | 13,730,742 | |||||||||||||
Diluted effect of purchase options and warrants | 221,310 | - | - | - | |||||||||||||
Diluted effect of restricted shares | 176,152 | - | - | - | |||||||||||||
Weighted average shares used in diluted computation | 15,596,554 | 13,959,003 | 14,867,218 | 13,730,742 | |||||||||||||
Income (loss) per share – Basic: | |||||||||||||||||
Net income (loss) before noncontrolling interest | $ | 0.01 | $ | (0.64 | ) | $ | (0.02 | ) | $ | (0.73 | ) | ||||||
Add: Net income (loss) attributable to noncontrolling interest | $ | - | $ | - | $ | - | $ | - | |||||||||
Net income (loss) attributable to controlling interest | $ | 0.01 | $ | (0.64 | ) | $ | (0.02 | ) | $ | (0.73 | ) | ||||||
Earnings (loss) per share – Diluted: | |||||||||||||||||
Net income (loss) before noncontrolling interest | $ | 0.01 | $ | (0.64 | ) | $ | (0.02 | ) | $ | (0.73 | ) | ||||||
Add: Net income (loss) attributable to noncontrolling interest | $ | - | $ | - | $ | - | $ | - | |||||||||
Net income (loss) attributable to controlling interest | $ | 0.01 | $ | (0.64 | ) | $ | (0.02 | ) | $ | (0.73 | ) |
BUSINESS_COMBINATION_Tables
BUSINESS COMBINATION (Tables) | 9 Months Ended | ||||
Dec. 31, 2014 | |||||
Business Combinations [Abstract] | |||||
Schedule of preliminary fair value of the assets acquired and liabilities assumed at the date of acquisition | |||||
Total purchase price | $ | 1,564,416 | |||
Allocation of the purchase price to assets and liabilities at fair value: | |||||
Cash and cash equivalents | $ | 31,930 | |||
Accounts receivable, net | 5,597 | ||||
Inventories | 53,587 | ||||
Advances on inventory purchases | 473 | ||||
Property, plant and equipment, net | 541 | ||||
Licenses | 1,566,046 | ||||
Total assets | 1,658,174 | ||||
Accounts payable | 37,215 | ||||
Tax receivable | (1,019 | ) | |||
Accrued liabilities and other liabilities, current | 81,122 | ||||
Total liabilities | 117,318 | ||||
Net assets acquired at fair value | $ | 1,540,856 | |||
Goodwill | $ | 23,560 |
SEGMENTS_Tables
SEGMENTS (Tables) | 9 Months Ended | ||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||||||||||
Schedule of information by segment | The following table presents summarized information by segment of the continuing operation for the three months ended December 31, 2014: | ||||||||||||||||||||
Retail drugstores | Online Pharmacy | Drug wholesale | Herb | Total | |||||||||||||||||
farming | |||||||||||||||||||||
Revenue | $ | 13,286,909 | $ | 4,395,501 | $ | 3,637,629 | $ | - | $ | 21,320,039 | |||||||||||
Cost of goods | 10,964,550 | 3,769,723 | 3,403,733 | - | 18,138,006 | ||||||||||||||||
Gross profit | $ | 2,322,359 | $ | 625,778 | $ | 233,896 | $ | - | $ | 3,182,033 | |||||||||||
Selling expenses | 1,699,422 | 369,348 | 115,414 | - | 2,184,184 | ||||||||||||||||
General and administrative expenses* | 1,516,194 | 201,861 | (1,184,567 | ) | 88,625 | 622,113 | |||||||||||||||
(Loss) income from operations | $ | (893,257 | ) | $ | 54,569 | $ | 1,303,049 | $ | (88,625 | ) | $ | 375,736 | |||||||||
Depreciation and amortization | $ | 291,295 | $ | 518 | $ | 34,525 | $ | 81,415 | $ | 407,753 | |||||||||||
Total capital expenditures | $ | 922,331 | $ | 2,862 | $ | 526 | $ | - | $ | 925,719 | |||||||||||
* include the accounts receivable and advance to suppliers allowance reversal of $1,490,787. | |||||||||||||||||||||
The following table presents summarized information of the continuing operations by segment for the three months ended December 31, 2013: | |||||||||||||||||||||
Retail | Online | Drug | Herb | Total | |||||||||||||||||
drugstores | pharmacy | wholesale | farming | ||||||||||||||||||
Revenue | $ | 11,122,297 | $ | 2,087,432 | $ | 4,623,343 | $ | - | $ | 17,833,072 | |||||||||||
Cost of goods | 9,018,873 | 1,751,150 | 6,883,965 | - | 17,653,988 | ||||||||||||||||
Gross profit | $ | 2,103,424 | $ | 336,282 | $ | (2,260,622 | ) | $ | - | $ | 179,084 | ||||||||||
Selling expenses | 5,146,496 | 86,175 | 105,733 | - | 5,338,404 | ||||||||||||||||
General and administrative expenses | 1,736,862 | 125,940 | 1,796,785 | 40,879 | 3,700,466 | ||||||||||||||||
Loss from operations | $ | (4,656,137 | ) | $ | 370 | $ | (4,163,140 | ) | $ | (40,879 | ) | $ | (8,859,786 | ) | |||||||
Depreciation and amortization | $ | 354,156 | $ | 17,135 | $ | 133,927 | $ | 262 | $ | 505,480 | |||||||||||
Total capital expenditures | $ | 227,586 | $ | - | $ | 64,375 | $ | - | $ | 291,961 | |||||||||||
The following table presents summarized information of the continuing operation by segment for the nine months ended December 31, 2014: | |||||||||||||||||||||
Retail | Online | Drug | Herb | Total | |||||||||||||||||
drugstores | pharmacy | wholesale | farming | ||||||||||||||||||
Revenue | $ | 36,288,706 | $ | 9,917,434 | $ | 10,017,196 | $ | - | $ | 56,223,336 | |||||||||||
Cost of goods | 29,946,958 | 8,400,439 | 9,418,030 | - | 47,765,427 | ||||||||||||||||
Gross profit | $ | 6,341,748 | $ | 1,516,995 | $ | 599,166 | $ | - | $ | 8,457,909 | |||||||||||
Selling expenses | 5,164,919 | 370,014 | 351,608 | - | 5,886,541 | ||||||||||||||||
General and administrative expenses* | 4,192,386 | 501,421 | (2,508,006 | ) | 263,688 | 2,449,489 | |||||||||||||||
(Loss) gain from operations | $ | (3,015,557 | ) | $ | 645,560 | $ | 2,755,564 | $ | (263,688 | ) | $ | 121,879 | |||||||||
Depreciation and amortization | $ | 784,141 | $ | 4,056 | $ | 210,106 | $ | 242,020 | $ | 1,240,323 | |||||||||||
Total capital expenditures | $ | 1,064,131 | $ | 6,375 | $ | 76,784 | $ | - | $ | 1,147,290 | |||||||||||
* include the accounts receivable and advance to suppliers allowance reversal of $3,125,674. | |||||||||||||||||||||
The following table presents summarized information of the continuing operation by segment for the nine months ended December 31, 2013: | |||||||||||||||||||||
Retail | Online | Drug | Herb | Total | |||||||||||||||||
drugstores | pharmacy | wholesale | farming | ||||||||||||||||||
Revenue | $ | 30,222,568 | $ | 4,952,493 | $ | 14,849,951 | $ | - | $ | 50,025,012 | |||||||||||
Cost of goods | 23,327,091 | 4,115,147 | 15,854,118 | - | 43,296,356 | ||||||||||||||||
Gross profit | $ | 6,895,477 | $ | 837,346 | $ | (1,004,167 | ) | $ | - | $ | 6,728,656 | ||||||||||
Selling expenses | 8,479,008 | 2,014 | 1,517,355 | - | 9,998,377 | ||||||||||||||||
General and administrative expenses | 4,347,125 | 347,526 | 1,992,349 | 146,265 | 6,833,265 | ||||||||||||||||
(Loss) gain from operations | $ | (5,722,447 | ) | $ | 279,597 | $ | (4,513,871 | ) | $ | (146,265 | ) | $ | (10,102,986 | ) | |||||||
Depreciation and amortization | $ | 1,221,994 | $ | 17,135 | $ | 406,152 | $ | 785 | $ | 1,646,066 | |||||||||||
Total capital expenditures | $ | 1,730,792 | $ | 308 | $ | 81,799 | $ | - | $ | 1,812,899 | |||||||||||
Retail drugstores | |||||||||||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||||||||||
Schedule of net revenue from external customers by main products | |||||||||||||||||||||
Three months ended | Nine months ended | ||||||||||||||||||||
December 31, | December 31, | ||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||||
Prescription drugs | $ | 5,489,897 | $ | 5,348,544 | $ | 14,867,900 | $ | 15,272,807 | |||||||||||||
Over-the-counter drugs | 5,451,117 | 3,885,467 | 13,685,649 | 10,623,206 | |||||||||||||||||
Nutritional supplements | 536,306 | 603,541 | 1,707,449 | 1,355,712 | |||||||||||||||||
Traditional Chinese medicine | 1,287,598 | 1,040,085 | 4,474,344 | 2,468,598 | |||||||||||||||||
Sundry products | 388,561 | 229,921 | 1,248,344 | 317,018 | |||||||||||||||||
Medical devices | 133,429 | 14,739 | 305,020 | 185,227 | |||||||||||||||||
Total | $ | 13,286,908 | $ | 11,122,297 | $ | 36,288,706 | $ | 30,222,568 | |||||||||||||
Online Pharmacy | |||||||||||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||||||||||
Schedule of net revenue from external customers by main products | Three months ended | Nine months ended | |||||||||||||||||||
December 31, | December 31, | ||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||||
Prescription drugs | $ | - | $ | - | $ | - | $ | - | |||||||||||||
Over-the-counter drugs | 1,422,863 | 1,331,997 | 2,942,461 | 2,609,434 | |||||||||||||||||
Nutritional supplements | 195,227 | 137,503 | 537,119 | 592,346 | |||||||||||||||||
Traditional Chinese medicine | - | - | - | - | |||||||||||||||||
Sundry products | 646,640 | 292,193 | 1,422,131 | 976,269 | |||||||||||||||||
Medical devices | 2,130,771 | 325,739 | 5,015,722 | 774,444 | |||||||||||||||||
Total | $ | 4,395,501 | $ | 2,087,432 | $ | 9,917,434 | $ | 4,952,493 | |||||||||||||
Drug wholesale | |||||||||||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||||||||||
Schedule of net revenue from external customers by main products | Three months ended | Nine months ended | |||||||||||||||||||
December 31, | December 31, | ||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||||
Prescription drugs | $ | 2,184,711 | $ | 3,407,773 | $ | 6,446,695 | $ | 11,057,448 | |||||||||||||
Over-the-counter drugs | 1,389,880 | 76,942 | 3,338,309 | 952,286 | |||||||||||||||||
Nutritional supplements | 35,320 | 820 | 69,270 | 261,954 | |||||||||||||||||
Traditional Chinese medicine | 121 | 6 | 89,389 | 929 | |||||||||||||||||
Sundry products | 11,791 | 1,137,780 | 18,568 | 2,570,591 | |||||||||||||||||
Medical devices | 15,806 | - | 54,965 | 6,743 | |||||||||||||||||
Total | $ | 3,637,629 | $ | 4,623,343 | $ | 10,017,196 | $ | 14,849,951 |
COMMITMENTS_AND_CONTINGENCIES_
COMMITMENTS AND CONTINGENCIES (Tables) | 9 Months Ended | ||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||
Schedule of company's commitments for minimum rental payments | Periods ending December 31, | Retail | Online | Drug | Herb farming | Total | |||||||||||||||
drugstores | pharmacy | wholesale | Amount | ||||||||||||||||||
2015 | $ | 3,736,545 | $ | 110,845 | $ | 182,908 | $ | - | $ | 4,030,298 | |||||||||||
2016 | 2,054,990 | 127,735 | 165,803 | - | 2,348,528 | ||||||||||||||||
2017 | 1,659,717 | 139,348 | 150,960 | - | 1,950,025 | ||||||||||||||||
2018 | 1,439,597 | 139,347 | 150,960 | - | 1,729,904 | ||||||||||||||||
2019 | 726,108 | 139,347 | 150,960 | - | 1,016,415 | ||||||||||||||||
Thereafter | 317,420 | 174,185 | 75,480 | - | 567,085 | ||||||||||||||||
Total | $ | 9,934,377 | $ | 830,807 | $ | 877,071 | $ | $ | 11,642,255 |
DESCRIPTION_OF_BUSINESS_AND_OR2
DESCRIPTION OF BUSINESS AND ORGANIZATION - Summary of consolidated financial statements of various entities (Details) | 9 Months Ended | 9 Months Ended | ||||||||||||||||||||
Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Jul. 16, 2010 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | |||||||
Renovation Investment (Hong Kong) Co., Ltd. ("Renovation") | Jiuxin Management | Shouantang Technology | Shouantang Technology | Qianhong Agriculture | Quannuo Technology | Hangzhou Quannuo | Jiuzhou Pharmacy | Jiuzhou Clinic | Jiuzhou Service | Jiuxin Medicine | Jiutong Medical | Shouantang Health | Sanhao Pharmacy | Shouantang Bio | ||||||||
USD ($) | USD ($) | USD ($) | CNY | CNY | CNY | CNY | CNY | CNY | USD ($) | CNY | ||||||||||||
Schedule Of Activities Of Company and Affiliates [Line Items] | ||||||||||||||||||||||
Description of background of entities | ● Incorporated in Hong Kong SAR on September 2, 2008 | ● Established in the PRC on October 14, 2008 | ● Established in the PRC on July 16, 2010 by Renovation | ● Established in the PRC on August 10, 2010 by Jiuxin Management | ● Established in the PRC on July 7, 2009 | ● Established in the PRC on July 8, 2010 by Quannuo Technology | ● Established in the PRC on September 9, 2003 | [1] | ● Established in the PRC as a general partnership on October 10, 2003 | [1] | ● Established in the PRC on November 2, 2005 | [1] | ● Established in PRC on December 31, 2003 | ● Established in the PRC on December 20, 2011 by Renovation | ● Established in the PRC on December 18, 2013 by Jiuzhou Service | ● Established in the PRC on March 3, 2012 | ● Established in the PRC in October, 2014 by Shouantang Technology | |||||
● Deemed a wholly foreign owned enterprise (“WFOE”) under PRC law | ● 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 800,000 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 | ● Acquired by Jiuzhou Pharmacy in August 2011 | ● Registered capital of $2.6 million fully paid | ● Registered capital of RMB 500,000 fully paid | ●Acquired by Jiuzhou Pharmacy on October 9, 2014 | ● 100% held by Shouantang Technology | ||||||||||
● Registered capital of $4.5 million fully paid | ● Registered capital requirement reduced by the SAIC to $11 million in July 2012 and is fully paid | ● Carries out herb farming business | ● Acquired by Shouantang Technology in November 2010 | ● Currently has no operation and has closed, pending dissolution | ● Operates the “Jiuzhou Grand Pharmacy” stores in Hangzhou | ● Operates a medical clinic adjacent to one of Jiuzhou Pharmacy’s stores | ● Registered capital of RMB 10 million fully paid | ● Currently has no operation | ● 51% held by Jiuzhou Service | ● 100% held by Jiuzhou Pharmacy | ● Sells nutritional supplements with its own brand name | |||||||||||
● 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 | ● Currently has no operations | ||||||||||||||||||
● Invests and finances the working capital of Quannuo Technology | ||||||||||||||||||||||
Description of ownership percentage of entities | VIE by contractual arrangements | [1],[2] | VIE by contractual arrangements | [1],[2] | VIE by contractual arrangements | [1],[2] | VIE by contractual arrangements as a wholly-owned subsidiary of Jiuzhou Pharmacy | [2] | VIE by contractual arrangements as a controlled entity of Jiuzhou Service | [2] | VIE by contractual arrangements as a wholly-owned subsidiary of Jiuzhou Pharmacy | [2] | ||||||||||
Percentage of ownership held in subsidiary | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | ||||||||||||||
Fully paid up registered capital | $4,500,000 | $20,000,000 | 10,000,000 | 10,000,000 | 800,000 | 5,000,000 | [1] | 500,000 | [1] | 10,000,000 | $2,600,000 | 500,000 | ||||||||||
Decrease in registered capital | $11,000,000 | |||||||||||||||||||||
Percentage of ownership held in subsidiary by other entity | 100.00% | 51.00% | 100.00% | 100.00% | ||||||||||||||||||
[1] | Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service have been under the common control of Renovation (the "Owner") since their respective establishment dates, pursuant to agreements amongst the Owner 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 Owner has operated these three companies in conjunction with one another since each company's respective establishment date. Jiuxin Medicine is also deemed under the common control of the Owner as a subsidiary 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 Shouantang Health, the subsidiaries and entity under the control of Jiuzhou Service, are consolidated into the financial statements of the Company. |
DESCRIPTION_OF_BUSINESS_AND_OR3
DESCRIPTION OF BUSINESS AND ORGANIZATION (Detail Textuals) | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Oct. 11, 2014 | Oct. 11, 2014 | Sep. 17, 2009 | Oct. 09, 2014 | Oct. 09, 2014 | |
Clinic | Jiuzhou Service | Jiuzhou Service | Shouantang Bio-technology Co., Ltd. | Shouantang Bio-technology Co., Ltd. | Renovation Investment (Hong Kong) Co., Ltd. ("Renovation") | Sanhao Grand Pharmacy Chain Co., Ltd. | Sanhao Grand Pharmacy Chain Co., Ltd. | ||
CNY | USD ($) | CNY | Common Stock | USD ($) | CNY | ||||
Business Acquisition [Line Items] | |||||||||
Issuance of equity consideration (in shares) | 7,900,000 | ||||||||
Percentage of capital stock in exchange transaction | 100.00% | ||||||||
Number of medical clinics owned | 2 | ||||||||
Percentage of ownership held | 51.00% | ||||||||
Business acquisition, transaction costs | $1,560,000 | 9,600,000 | |||||||
Registered capital | 500,000 | [1] | $160,000 | 1,000,000 | |||||
[1] | Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service have been under the common control of Renovation (the "Owner") since their respective establishment dates, pursuant to agreements amongst the Owner 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 Owner has operated these three companies in conjunction with one another since each company's respective establishment date. Jiuxin Medicine is also deemed under the common control of the Owner as a subsidiary of Jiuzhou Pharmacy, as is Shouantang Health as a subsidiary of Jiuzhou Service. |
LIQUIDITY_Detail_Textuals
LIQUIDITY (Detail Textuals) (USD $) | 9 Months Ended |
In Millions, unless otherwise specified | Dec. 31, 2014 |
Retail drugstores | |
Line of Credit Facility [Line Items] | |
Percentage of increased in sales | 20.10% |
Online Pharmacy | |
Line of Credit Facility [Line Items] | |
Percentage of increased in sales | 100.30% |
Line of Credit | |
Line of Credit Facility [Line Items] | |
Number of credit line agreements | 3 |
Number of local banks | 3 |
Line of credit facility, maximum borrowing capacity | 18.57 |
Bank facilities available for future borrowing | 3.63 |
Line of Credit | Hangzhou United Bank And Bank Of Hangzhou And Industrial And Commercial Bank Of China | |
Line of Credit Facility [Line Items] | |
Number of credit line agreements | 3 |
Line of credit facility, maximum borrowing capacity | 3.6 |
SUMMARY_OF_SIGNIFICANT_ACCOUNT3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Summary of estimated useful lives of property and equipment (Details) | 9 Months Ended |
Dec. 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 & 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) | 9 Months Ended |
Dec. 31, 2014 | |
Licenses | |
Intangible Assets [Line Items] | |
Indefinite lived intangible asset useful life | Indefinite |
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) | 3 Months Ended | 9 Months Ended | ||||||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2014 | |
USD ($) | USD ($) | USD ($) | CNY | 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% | ||||||
Value added tax, percentage | 17.00% | 17.00% | ||||||
Advertising and promotion costs | $158,686 | $3,542,412 | $289,925 | $3,598,945 | ||||
Foreign currency exchange rate for translated amounts with exception of equity for balance sheet | $0.16 | $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 $) | 3 Months Ended | 9 Months Ended | |||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | |
Vendor | Vendor | Vendor | Vendor | ||
Concentration Risk [Line Items] | |||||
Deposits not covered by insurance | 11,272,978 | 11,272,978 | $7,204,626 | ||
Supplier Concentration Risk | Total purchases | |||||
Concentration Risk [Line Items] | |||||
Number of vendors | 2 | 3 | 2 | 1 | |
Concentration risk, percentage | 33.00% | 33.00% | 30.00% | 13.00% | |
Supplier Concentration Risk | Total advances | |||||
Concentration Risk [Line Items] | |||||
Number of vendors | 1 | 1 | |||
Concentration risk, percentage | 21.00% | 10.00% | 21.00% | 18.00% | |
Concentration risk, Supplier | no vendor accounted for more than 10% of total advances to suppliers | vendor accounted for more than 18% of total advances to suppliers | |||
Customer Concentration Risk | Total sales | |||||
Concentration Risk [Line Items] | |||||
Concentration risk, percentage | 10.00% | 10.00% | 10.00% | 10.00% | |
Concentration risk, Customer | no customer accounted for more than 10% of the Company's total sales | no customer accounted for more than 10% of the Company's total sales | no customer accounted for more than 10% of the Company's total sales | no customer accounted for more than 10% of the Company's total sales | |
Customer Concentration Risk | Total accounts receivable | |||||
Concentration Risk [Line Items] | |||||
Concentration risk, percentage | 10.00% | 10.00% | 10.00% | 10.00% | |
Concentration risk, Customer | no customer accounted for more than 10% of the Company's accounts receivable | no customer accounted for more than 10% of the Company's accounts receivable | no customer accounted for more than 10% of the Company's accounts receivable | no customer accounted for more than 10% of the Company's accounts receivable |
SUMMARY_OF_SIGNIFICANT_ACCOUNT7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Detail Textuals 2) | 9 Months Ended |
Dec. 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 | 7 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) (Noncontrolling interest, Yi Wang) | Dec. 31, 2014 |
Noncontrolling interest | Yi Wang | |
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 $) | Dec. 31, 2014 | Mar. 31, 2014 |
Accounts Receivable, Net [Abstract] | ||
Accounts receivable | $10,089,999 | $11,869,866 |
Less: allowance for doubtful accounts | -2,978,405 | -5,135,330 |
Trade accounts receivable, net | $7,111,594 | $6,734,536 |
TRADE_ACCOUNTS_RECEIVABLE_Deta
TRADE ACCOUNTS RECEIVABLE (Detail Textuals) (USD $) | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | |
Accounts Receivable, Net [Abstract] | ||||
Accounts receivable written off | $64,087 | $100,847 | $193,581 | $448,243 |
OTHER_CURRENT_ASSETS_Summary_o
OTHER CURRENT ASSETS - Summary of components of other current assets (Details) (USD $) | Dec. 31, 2014 | Mar. 31, 2014 | ||
Assets, Current [Abstract] | ||||
Prepaid rental expenses | $1,126,770 | $1,165,633 | ||
Lease rights transfer fees | [1] | 11,939 | [1] | |
Prepaids and other current assets | 487,325 | 485,530 | ||
Total | $1,614,095 | $1,663,102 | ||
[1] | Lease rights transfer fees are paid by the Company to secure store rentals in coveted areas. These 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 $) | Dec. 31, 2014 | Mar. 31, 2014 |
Property, Plant and Equipment [Line Items] | ||
Total | $21,269,256 | $20,141,878 |
Construction-in-Progress | 96,844 | |
Less: Accumulated depreciation | -11,987,940 | -10,729,190 |
Property and equipment, net | 9,378,160 | 9,412,688 |
Building | ||
Property, Plant and Equipment [Line Items] | ||
Total | 1,746,625 | 1,139,412 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Total | 12,136,854 | 11,849,753 |
Farmland improvements | ||
Property, Plant and Equipment [Line Items] | ||
Total | 1,041,046 | 1,037,212 |
Office equipment and furniture | ||
Property, Plant and Equipment [Line Items] | ||
Total | 5,700,493 | 5,535,667 |
Motor vehicles | ||
Property, Plant and Equipment [Line Items] | ||
Total | $644,238 | $579,834 |
PROPERTY_AND_EQUIPMENT_Detail_
PROPERTY AND EQUIPMENT (Detail Textuals) (USD $) | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | |
Property, Plant and Equipment [Abstract] | ||||
Total depreciation expense for property and equipment | $427,986 | $461,196 | $1,258,750 | $1,522,951 |
ADVANCES_TO_SUPPLIERS_Summary_
ADVANCES TO SUPPLIERS - Summary of components of advance to suppliers (Details) (USD $) | Dec. 31, 2014 | Mar. 31, 2014 |
Advances To Suppliers [Abstract] | ||
Advance to suppliers | $9,283,317 | $11,162,767 |
Less: allowance for doubtful accounts | -5,616,825 | -6,585,573 |
Advance to suppliers, net | $3,666,492 | $4,577,194 |
ADVANCES_TO_SUPPLIERS_Detail_T
ADVANCES TO SUPPLIERS (Detail Textuals) (USD $) | 9 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Advances To Suppliers [Abstract] | ||
Advances to suppliers written off against previous allowance for doubtful accounts | $0 | $452,246 |
INVENTORY_Summary_of_Inventory
INVENTORY - Summary of Inventory (Details) (USD $) | Dec. 31, 2014 | Mar. 31, 2014 |
Inventory Disclosure [Abstract] | ||
Finished goods | $10,833,648 | $7,822,102 |
Less: reserve for inventory | -1,055,770 | -774,705 |
Inventory, net | $9,777,878 | $7,047,397 |
FARMLAND_ASSETS_Summary_of_far
FARMLAND ASSETS -Summary of farmland assets (Details) (USD $) | Dec. 31, 2014 | Mar. 31, 2014 |
Farmland Assets [Abstract] | ||
Farmland assets | $2,200,477 | $2,192,372 |
Less: impairments | -823,671 | -820,637 |
Farmland assets, net | $1,376,806 | $1,371,735 |
FARMLAND_ASSETS_Detail_Textual
FARMLAND ASSETS (Detail Textuals) | 9 Months Ended |
Dec. 31, 2014 | |
Farmland Assets [Abstract] | |
Description of farmland assets | Farmland assets are gingko trees planted in 2012 and expected to be harvested and sold in two or three years. |
OTHER_NONCURRENT_ASSETS_Summar
OTHER NONCURRENT ASSETS - Summary of components of other noncurrent assets (Details) (USD $) | Dec. 31, 2014 | Mar. 31, 2014 | ||
Other Assets, Noncurrent Disclosure [Abstract] | ||||
Prepayment for lease of land use right - noncurrent, net | $2,767,155 | [1] | $2,878,687 | [1] |
Long term prepaid expense | 158,243 | |||
Total | $2,767,155 | $3,036,930 | ||
[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 $1,137,500, which will be refundable on the due date. 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 an impairment of $2,475,688 on the lease prepayment in fiscal 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 $) | Dec. 31, 2014 |
Land use right | |
Schedule Of Other Assets Noncurrent [Line Items] | |
2015 | $67,270 |
2016 | 67,270 |
2017 | 67,270 |
2018 | 67,270 |
2019 | 67,270 |
Thereafter | $1,290,503 |
OTHER_NONCURRENT_ASSETS_Detail
OTHER NONCURRENT ASSETS (Detail Textuals) (USD $) | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | |
Schedule Of Other Assets Noncurrent [Line Items] | ||||
Deposit includes prepayment | $1,137,500 | $1,137,500 | ||
Land | ||||
Schedule Of Other Assets Noncurrent [Line Items] | ||||
Term of agreement for operating land lease | 30 years | |||
Amortization of prepayment for lease right | 16,827 | 40,840 | 50,344 | 121,725 |
Impairment of leasehold | $2,475,688 |
INTANGIBLE_ASSETS_Intangible_a
INTANGIBLE ASSETS - Intangible assets with indefinite life (Details) (Sanhao Pharmacy, USD $) | 9 Months Ended | |
Dec. 31, 2014 | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Goodwill | $23,560 | |
Goodwill, currency translation adjustment | -9 | |
Goodwill, net carrying value | 23,551 | |
Preliminary fair value, including goodwill | 1,589,605 | |
Currency translation adjustment including goodwill | -586 | |
Net carrying value including goodwill | 1,589,020 | |
Licenses | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Preliminary fair value, excluding goodwill | 1,566,046 | [1] |
Currency translation adjustment excluding goodwill | -577 | [1] |
Net carrying value excluding goodwill | $1,565,469 | [1] |
[1] | This represents the preliminary fair value of licenses of insurance applicable drugstores acquired from Sanhao Pharmacy. The license allows patients to pay by the insurance card at stores and the stores can get reimbursed from the Human Resource and Social Security Department of Hangzhou City. |
INTANGIBLE_ASSETS_Summary_of_c
INTANGIBLE ASSETS - Summary of components of net intangible assets (Details 1) (USD $) | Dec. 31, 2014 | Mar. 31, 2014 | ||
Intangible Assets [Line Items] | ||||
Total other intangible assets | $2,064,369 | $2,056,765 | ||
Less: accumulated amortization | -513,031 | -487,322 | ||
Other intangible assets, net | 1,551,338 | 1,569,443 | ||
Land use rights | ||||
Intangible Assets [Line Items] | ||||
Total other intangible assets | 1,588,528 | [1] | 1,582,677 | [1] |
Software | ||||
Intangible Assets [Line Items] | ||||
Total other intangible assets | $475,841 | $474,088 | ||
[1] | In July 2013, 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, the Company does not expect completion of the plant in the near future. |
INTANGIBLE_ASSETS_Detail_Textu
INTANGIBLE ASSETS (Detail Textuals) (USD $) | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization expense of intangibles | $9,210 | $44,284 | $25,710 | $123,115 |
NOTES_PAYABLE_Summary_of_notes
NOTES PAYABLE - Summary of notes payable (Details) (USD $) | Dec. 31, 2014 | Mar. 31, 2014 | ||
Short-term Debt [Line Items] | ||||
Notes Payable, Current, Total | $14,939,135 | $7,820,718 | ||
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] | 1,351,959 | [1] | |
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 | [1] | 730,350 | [1] | |
Jiuzhou Pharmacy | Line of bank credit | Industrial and Commercial Bank of China ("ICBC") | 12/26/14 | 06/25/15 | ||||
Short-term Debt [Line Items] | ||||
Notes Payable, Current, Total | 2,231,730 | [1] | [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 | [2] | 486,900 | [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 | [2] | 1,720,380 | [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 | [2] | 117,960 | [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 | [2] | 649,200 | [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 | [2] | 985,161 | [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 | [2] | 1,778,808 | [2] | |
Jiuzhou Pharmacy | Line of bank credit | Hangzhou United Bank ("HUB") | 08/04/14 | 02/04/15 | ||||
Short-term Debt [Line Items] | ||||
Notes Payable, Current, Total | 1,482,390 | [3] | [3] | |
Jiuzhou Pharmacy | Line of bank credit | Hangzhou United Bank ("HUB") | 08/05/14 | 08/04/15 | ||||
Short-term Debt [Line Items] | ||||
Notes Payable, Current, Total | 1,629,000 | [3] | [3] | |
Jiuzhou Pharmacy | Line of bank credit | Hangzhou United Bank ("HUB") | 09/03/14 | 03/03/15 | ||||
Short-term Debt [Line Items] | ||||
Notes Payable, Current, Total | 1,808,190 | [3] | [3] | |
Jiuzhou Pharmacy | Line of bank credit | Hangzhou United Bank ("HUB") | 10/09/14 | 04/09/15 | ||||
Short-term Debt [Line Items] | ||||
Notes Payable, Current, Total | 781,920 | [3] | [3] | |
Jiuzhou Pharmacy | Line of bank credit | Hangzhou United Bank ("HUB") | 10/09/14 | 04/09/15 | ||||
Short-term Debt [Line Items] | ||||
Notes Payable, Current, Total | 1,184,283 | [3] | [3] | |
Jiuzhou Pharmacy | Line of bank credit | Hangzhou United Bank ("HUB") | 12/05/14 | 06/05/15 | ||||
Short-term Debt [Line Items] | ||||
Notes Payable, Current, Total | 1,325,582 | [3] | [3] | |
Jiuzhou Pharmacy | Line of bank credit | Hangzhou United Bank ("HUB") | 12/26/14 | 06/26/15 | ||||
Short-term Debt [Line Items] | ||||
Notes Payable, Current, Total | 1,596,420 | [3] | [3] | |
Jiuzhou Pharmacy | Line of bank credit | Bank of Hangzhou ("BOH") | 11/06/14 | 05/06/15 | ||||
Short-term Debt [Line Items] | ||||
Notes Payable, Current, Total | $2,899,620 | [4] | [4] | |
[1] | As of March 31, 2014, the Company had a total of $2,082,309 (RMB12,830,000) in notes payable from ICBC. 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 notes. All the outstanding notes payable have been repaid upon maturity. As of December 31, 2014, the Company had $2,231,730 (RMB 13,700,000) note payable from ICBC, with restricted cash of $669,519 (RMB 4,110,000) held at bank. | |||
[2] | As of March 31, 2014, the Company had $5,738,409 (RMB35,356,800) notes payable from HUB. The Company is required to hold restricted cash of $2,489,851 (RMB15,341,040) with HUB as collateral against these bank notes. All the outstanding notes payable have been repaid upon maturity. | |||
[3] | As of December 31, 2014, the Company had $9,807,785 (RMB60,207,400) notes payable from HUB. The Company is required to hold restricted cash of $5,263,498 (RMB32,311,220) with HUB as collateral against these bank notes. | |||
[4] | As of December 31, 2014, the Company had $2,899,620 (RMB17,800,000) notes payable from BOH. The land use right of the farmland in Lin'An, Hangzhou is pledged as collateral for these bank acceptance notes (see Note 12). The Company is required to hold restricted cash of $1,449,810 (RMB8,900,000) with BOH as collateral against these bank notes. |
NOTES_PAYABLE_Detail_Textuals
NOTES PAYABLE (Detail Textuals) | Dec. 31, 2014 | Mar. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 |
USD ($) | USD ($) | Line of Credit | Line of Credit | Line of Credit | Line of Credit | Line of Credit | Line of Credit | Line of Credit | Notes Payable | Notes Payable | Notes Payable | Notes Payable | Notes Payable | Notes Payable | Notes Payable | Notes Payable | Notes Payable | Notes Payable | |
USD ($) | Industrial And Commercial Bank Of China | Industrial And Commercial Bank Of China | Hangzhou United Bank | Hangzhou United Bank | Bank of Hangzhou | Bank of Hangzhou | Industrial And Commercial Bank Of China | Industrial And Commercial Bank Of China | Industrial And Commercial Bank Of China | Industrial And Commercial Bank Of China | Hangzhou United Bank | Hangzhou United Bank | Hangzhou United Bank | Hangzhou United Bank | Bank of Hangzhou | Bank of Hangzhou | |||
USD ($) | CNY | USD ($) | CNY | USD ($) | CNY | USD ($) | CNY | USD ($) | CNY | USD ($) | CNY | USD ($) | CNY | USD ($) | CNY | ||||
Debt Instrument [Line Items] | |||||||||||||||||||
Notes payable | $2,231,730 | 13,700,000 | $2,082,309 | 12,830,000 | $9,807,785 | 60,207,400 | $5,738,409 | 35,356,800 | $2,899,620 | 17,800,000 | |||||||||
Guaranteed amount for credit line | 3,824,892 | 23,480,000 | |||||||||||||||||
Percentage of restricted cash as collateral for notes payable | 30% | 30% | |||||||||||||||||
Aggregate restricted cash deposited at banks as collateral | 9,989,227 | 3,114,543 | 669,519 | 4,110,000 | 5,263,498 | 32,311,220 | 2,489,851 | 15,341,040 | 1,449,810 | 8,900,000 | |||||||||
Aggregate maximum line of credit amount | 18,570,000 | 8,630,000 | 52,980,000 | 8,630,000 | 52,980,000 | 8,630,000 | 52,980,000 | ||||||||||||
Bank facilities available for future borrowing | 3,630,000 | ||||||||||||||||||
Bank notes payable | $14,939,135 | $7,820,718 |
TAXES_Summary_of_reconciliatio
TAXES - Summary of reconciliation of U.S. statutory tax rates with effective tax rate (Details) | 3 Months Ended | 9 Months Ended | ||||||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | |||||
Income Tax Disclosure [Abstract] | ||||||||
U.S. Statutory rates | 34.00% | 34.00% | 34.00% | 34.00% | ||||
Foreign income not recognized in the U.S. | -34.00% | -34.00% | -34.00% | -34.00% | ||||
China income taxes | 25.00% | 25.00% | 25.00% | 25.00% | ||||
Change in valuation allowance | -15.10% | [1] | -25.00% | [1] | -55.30% | [1] | -25.00% | [1] |
Non-deductible expenses-permanent difference | 0.00% | [2] | 0.40% | [2] | 4.50% | [2] | -0.40% | [2] |
Effective tax rate | 9.90% | 0.40% | -25.80% | -0.40% | ||||
[1] | It represents non-taxable expense reversal due to decrease in allowance for accounts receivables and advance to suppliers. | |||||||
[2] | The 0% and 0.4% rate adjustments for the three months ended December 31, 2014 and 2013, and the 4.5% and (0.4)% rate adjustments for the nine months ended December 31, 2014 and 2013 represents expenses primarily included legal, accounting and other expenses incurred by the Company that were not deductible for PRC income tax. |
TAXES_Summary_of_taxes_payable
TAXES - Summary of taxes payable (Details 1) (USD $) | Dec. 31, 2014 | Mar. 31, 2014 |
Income Tax Disclosure [Abstract] | ||
VAT | $399,637 | $344,329 |
Income tax | 7,983 | 7,851 |
Others | 42,720 | 21,321 |
Total taxes payable | $450,340 | $373,501 |
TAXES_Detail_Textuals
TAXES (Detail Textuals) (USD $) | 3 Months Ended | 9 Months Ended | ||||||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | |||||
Income Tax Disclosure [Abstract] | ||||||||
Non-deductible expenses-permanent difference | 0.00% | [1] | 0.40% | [1] | 4.50% | [1] | -0.40% | [1] |
Estimated net operating loss carryforwards for U.S. income tax purposes | $1,430,000 | $1,430,000 | ||||||
[1] | The 0% and 0.4% rate adjustments for the three months ended December 31, 2014 and 2013, and the 4.5% and (0.4)% rate adjustments for the nine months ended December 31, 2014 and 2013 represents expenses primarily included legal, accounting and other expenses incurred by the Company that were not deductible for PRC income tax. |
POSTRETIREMENT_BENEFITS_Detail
POSTRETIREMENT BENEFITS (Detail Textuals) (USD $) | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | |
Compensation and Retirement Disclosure [Abstract] | ||||
Employment benefits and pension | $234,401 | $236,397 | $634,672 | $558,344 |
RELATED_PARTY_TRANSACTIONS_AND2
RELATED PARTY TRANSACTIONS AND ARRANGEMENTS - Amounts payable to related parties (Details) (USD $) | Dec. 31, 2014 | Mar. 31, 2014 | ||
Related Party Transaction [Line Items] | ||||
Total | $1,972,931 | $2,384,294 | ||
Due to cofounders | ||||
Related Party Transaction [Line Items] | ||||
Total | 578,951 | [1] | 576,818 | [1] |
Due to a director and CEO | ||||
Related Party Transaction [Line Items] | ||||
Total | $1,393,980 | [2] | $1,807,476 | [2] |
[1] | As of December 31, 2014 and March 31, 2014, amount due to cofounders represents contributions from the Owners to Jiuxin Management to enable Jiuxin Management to meet its approved PRC registered capital requirements. | |||
[2] | Due to foreign exchange restrictions, the Company's director and CEO, Mr. Lei Liu personally lent U.S. dollars to the Company to facilitate its payments of expenses in the United States. On July 2, 2014, the Company issued a total of 619,482 shares of common stock to Lei Liu, at $1.52 per share, the fair market value, or the closing stock price on Nasdaq on July 1, 2014, to offset the debts of $941,613 owed to Mr. Liu. |
RELATED_PARTY_TRANSACTIONS_AND3
RELATED PARTY TRANSACTIONS AND ARRANGEMENTS (Detail Textuals) (USD $) | 0 Months Ended | 3 Months Ended | 9 Months Ended | |||
Jul. 02, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | |
Related Party Transaction [Line Items] | ||||||
Notes payable secured by the personal properties of certain shareholder's | $2,922,002 | $2,922,002 | $5,738,409 | |||
Due to officer | 1,972,931 | 1,972,931 | 2,384,294 | |||
Mr. Lei Liu | ||||||
Related Party Transaction [Line Items] | ||||||
Rent expense | 24,383 | 48,702 | 73,075 | 97,062 | ||
Number of shares issued in exchange of debt | 619,482 | |||||
Shares issued price per share (in dollars per share) | $1.52 | |||||
Due to officer | $941,613 |
PURCHASE_OPTION_DERIVATIVE_LIA2
PURCHASE OPTION DERIVATIVE LIABILITY - Summary of assumptions to estimate fair value (Details) (Underwriter Purchase Option, USD $) | 9 Months Ended | |
Dec. 31, 2014 | ||
Underwriter Purchase Option | ||
Derivative [Line Items] | ||
Stock price | $2.90 | [1] |
Exercise price | $6.25 | [1] |
Annual dividend yield | 0.00% | [1] |
Expected term (years) | 3 months 18 days | [1] |
Risk-free interest rate | 0.04% | [1] |
Expected volatility | 103.02% | [1] |
[1] | As of December 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 | 3 Months Ended | 9 Months Ended | |||
Apr. 22, 2010 | Apr. 28, 2010 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | |
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 | $5,303 | $10,768 | $53,666 | $861 |
WARRANTS_Details
WARRANTS (Details) (Common Stock Warrants, USD $) | 9 Months Ended | |
Dec. 31, 2014 | ||
Common Stock Warrants | ||
Class of Warrant or Right [Line Items] | ||
Stock price | $2.90 | [1] |
Exercise price | $1.20 | [1] |
Annual dividend yield | 0.00% | [1] |
Expected term (years) | 1 year 8 months 27 days | [1] |
Risk-free interest rate | 0.67% | [1] |
Expected volatility | 125.95% | [1] |
[1] | As of December 31, 2014, the warrant had not been exercised. |
WARRANTS_Detail_Textuals
WARRANTS (Detail Textuals) (Common Stock Warrants, USD $) | 3 Months Ended | 9 Months Ended | |||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Sep. 26, 2013 | |
Class of Warrant or Right [Line Items] | |||||
Fair value estimation method | Black-Scholes Model | ||||
Fair value of warrants | $33,606 | ||||
Gain (loss) from changes in fair value of warrant liability | $122,128 | $31,777 | $94,134 | $51,190 | |
Consulting firm | |||||
Class of Warrant or Right [Line Items] | |||||
Number of common stock called by warrants | 150,000 | ||||
Stock purchase price per share (in dollars per share) | $1.20 |
STOCKHOLDERS_EQUITY_Detail_Tex
STOCKHOLDER'S EQUITY (Detail Textuals) (USD $) | 1 Months Ended | 3 Months Ended | 9 Months Ended | 0 Months Ended | 1 Months Ended | ||
Sep. 26, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Jan. 16, 2012 | Nov. 18, 2014 | |
Employee | |||||||
Restricted Stock | Financial consulting firm | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Number of restricted awards granted | 350,000 | ||||||
Trading value of common stock, per share (in dollars per share) | $0.51 | ||||||
Service compensation expense for additional shares of common stock | $0 | $2,445 | $87,049 | $2,445 | |||
Term of service agreement | 1 year | ||||||
Group of 46 employees | Restricted Stock | Stock incentive plan | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Number of restricted awards granted | 297,000 | ||||||
Number of employees in a group | 46 | ||||||
Group of 46 employees | Restricted Stock | Stock incentive plan | General and Administrative Expense | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Share based compensation expense | 19,612 | 19,612 | 58,623 | 39,224 | |||
Group of 46 employees | Restricted Stock | Stock incentive plan | Selling Expense | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Share based compensation expense | 6,636 | 7,226 | 10,268 | 15,452 | |||
Directors and officers | Restricted Stock | Stock incentive plan | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Number of restricted awards granted | 350,000 | ||||||
Trading value of common stock, per share (in dollars per share) | $1.89 | ||||||
Service compensation expense for additional shares of common stock | 661,500 | 661,500 | |||||
Group of 46 officers and employees | Stock option | Stock incentive plan | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Share based compensation expense | $58,449 | $58,449 | |||||
Number of directors, officers and employees in a group | 46 | ||||||
Number of options granted | 967,000 | ||||||
Exercise price of stock option | $2.50 | ||||||
Vesting period of options | 3 years | ||||||
Period for options exercisable from the vesting date | 5 years |
STOCKHOLDERS_EQUITY_Detail_Tex1
STOCKHOLDER'S EQUITY (Detail Textuals 1) | 9 Months Ended |
Dec. 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% |
EARNINGS_PER_SHARE_Details_Sum
EARNINGS PER SHARE (Details) - Summary of reconciliation of basic and diluted earnings per share computation (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | |
Earnings Per Share [Abstract] | ||||
Net income (loss) attributable to controlling interest | $126,538 | ($8,735,230) | ($256,392) | ($10,068,808) |
Weighted average shares used in basic computation (in shares) | 15,199,092 | 13,959,003 | 14,867,218 | 13,730,742 |
Diluted effect of purchase options and warrants (in shares) | 221,310 | |||
Diluted effect of restricted shares (in shares) | 176,152 | |||
Weighted average shares used in diluted computation (in shares) | 15,596,554 | 13,959,003 | 14,867,218 | 13,730,742 |
Income (loss) per share - Basic: | ||||
Net income (loss) before noncontrolling interest (in dollars per share) | $0.01 | ($0.64) | ($0.02) | ($0.73) |
Add: Net income (loss) attributable to noncontrolling interest (in dollars per share) | ||||
Net income (loss) attributable to controlling interest | $0.01 | ($0.64) | ($0.02) | ($0.73) |
Earnings (loss) per share - Diluted: | ||||
Net income (loss) before noncontrolling interest (in dollars per share) | $0.01 | ($0.64) | ($0.02) | ($0.73) |
Add: Net income (loss) attributable to noncontrolling interest (in dollars per share) | ||||
Net income (loss) attributable to controlling interest | $0.01 | ($0.64) | ($0.02) | ($0.73) |
EARNINGS_PER_SHARE_Detail_Text
EARNINGS PER SHARE (Detail Textuals) (Options and Warrants) | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | |
Options and Warrants | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from calculation of diluted earnings per share | 105,000 | 150,000 | 105,000 | 150,000 |
BUSINESS_COMBINATION_Summary_o
BUSINESS COMBINATION - Summary of preliminary fair value of the assets acquired and liabilities assumed at the date of acquisition (Details) (Sanhao Pharmacy) | Dec. 31, 2014 | Oct. 09, 2014 | Oct. 09, 2014 |
USD ($) | Jiuzhou Pharmacy | Jiuzhou Pharmacy | |
USD ($) | CNY | ||
Business Acquisition [Line Items] | |||
Total purchase price | $1,564,416 | 9,600,000 | |
Allocation of the purchase price to assets and liabilities at fair value: | |||
Cash and cash equivalents | 31,930 | ||
Accounts receivable, net | 5,597 | ||
Inventories | 53,587 | ||
Advances on inventory purchases | 473 | ||
Property, plant and equipment, net | 541 | ||
Licenses | 1,566,046 | ||
Total assets | 1,658,174 | ||
Accounts payable | 37,215 | ||
Tax receivable | -1,019 | ||
Accrued liabilities and other liabilities, current | 81,122 | ||
Total liabilities | 117,318 | ||
Net assets acquired at fair value | 1,540,856 | ||
Goodwill | $23,560 | $23,560 |
BUSINESS_COMBINATION_Detail_Te
BUSINESS COMBINATION (Detail Textuals) (Sanhao Pharmacy) | Dec. 31, 2014 | Oct. 09, 2014 | Oct. 09, 2014 | Dec. 31, 2014 | Dec. 31, 2014 |
USD ($) | Jiuzhou Pharmacy | Jiuzhou Pharmacy | Jiuzhou Pharmacy | Jiuzhou Pharmacy | |
USD ($) | CNY | USD ($) | CNY | ||
Business Combinations [Abstract] | |||||
Goodwill, net carrying value | $23,551 | ||||
Business Acquisition [Line Items] | |||||
Total purchase price | 1,564,416 | 9,600,000 | |||
Goodwill | 23,560 | 23,560 | |||
Percentage paid after contract takes effect | 20.00% | 20.00% | |||
Percentage paid after registration of change of ownership | 40.00% | 40.00% | |||
Total percentage paid till date | 60.00% | 60.00% | |||
Consideration amount paid till date | $938,650 | 5,760,000 |
SEGMENTS_Summarized_informatio
SEGMENTS - Summarized information by segment of continuing operation (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | |||
Segment Reporting Information [Line Items] | ||||||
Revenue | $21,320,039 | $17,833,072 | $56,223,336 | $50,025,012 | ||
Cost of goods | 18,138,006 | 17,653,988 | 47,765,427 | 43,296,356 | ||
Gross profit | 3,182,033 | 179,084 | 8,457,909 | 6,728,656 | ||
Selling expenses | 2,184,184 | 5,338,404 | 5,886,541 | 9,998,377 | ||
General and administrative expenses | 622,113 | 3,700,466 | 2,449,489 | 6,833,265 | ||
(Loss) income from operations | 375,736 | -8,859,786 | 121,879 | -10,102,986 | ||
Depreciation and amortization | 1,240,323 | 1,646,066 | ||||
Operating Segments | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenue | 21,320,039 | 17,833,072 | 56,223,336 | 50,025,012 | ||
Cost of goods | 18,138,006 | 17,653,988 | 47,765,427 | 43,296,356 | ||
Gross profit | 3,182,033 | 179,084 | 8,457,909 | 6,728,656 | ||
Selling expenses | 2,184,184 | 5,338,404 | 5,886,541 | 9,998,377 | ||
General and administrative expenses | 622,113 | [1] | 3,700,466 | 2,449,489 | [2] | 6,833,265 |
(Loss) income from operations | 375,736 | -8,859,786 | 121,879 | -10,102,986 | ||
Depreciation and amortization | 407,753 | 505,480 | 1,240,323 | 1,646,066 | ||
Total capital expenditures | 925,719 | 291,961 | 1,147,290 | 1,812,899 | ||
Operating Segments | Retail drugstores | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenue | 13,286,909 | 11,122,297 | 36,288,706 | 30,222,568 | ||
Cost of goods | 10,964,550 | 9,018,873 | 29,946,958 | 23,327,091 | ||
Gross profit | 2,322,359 | 2,103,424 | 6,341,748 | 6,895,477 | ||
Selling expenses | 1,699,422 | 5,146,496 | 5,164,919 | 8,479,008 | ||
General and administrative expenses | 1,516,194 | [1] | 1,736,862 | 4,192,386 | [2] | 4,347,125 |
(Loss) income from operations | -893,257 | -4,656,137 | -3,015,557 | -5,722,447 | ||
Depreciation and amortization | 291,295 | 354,156 | 784,141 | 1,221,994 | ||
Total capital expenditures | 922,331 | 227,586 | 1,064,131 | 1,730,792 | ||
Operating Segments | Online Pharmacy | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenue | 4,395,501 | 2,087,432 | 9,917,434 | 4,952,493 | ||
Cost of goods | 3,769,723 | 1,751,150 | 8,400,439 | 4,115,147 | ||
Gross profit | 625,778 | 336,282 | 1,516,995 | 837,346 | ||
Selling expenses | 369,348 | 86,175 | 370,014 | 2,014 | ||
General and administrative expenses | 201,861 | [1] | 125,940 | 501,421 | [2] | 347,526 |
(Loss) income from operations | 54,569 | 370 | 645,560 | 279,597 | ||
Depreciation and amortization | 518 | 17,135 | 4,056 | 17,135 | ||
Total capital expenditures | 2,862 | 6,375 | 308 | |||
Operating Segments | Drug wholesale | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenue | 3,637,629 | 4,623,343 | 10,017,196 | 14,849,951 | ||
Cost of goods | 3,403,733 | 6,883,965 | 9,418,030 | 15,854,118 | ||
Gross profit | 233,896 | -2,260,622 | 599,166 | -1,004,167 | ||
Selling expenses | 115,414 | 105,733 | 351,608 | 1,517,355 | ||
General and administrative expenses | -1,184,567 | [1] | 1,796,785 | -2,508,006 | [2] | 1,992,349 |
(Loss) income from operations | 1,303,049 | -4,163,140 | 2,755,564 | -4,513,871 | ||
Depreciation and amortization | 34,525 | 133,927 | 210,106 | 406,152 | ||
Total capital expenditures | 526 | 64,375 | 76,784 | 81,799 | ||
Operating Segments | Herb farming | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenue | ||||||
Cost of goods | ||||||
Gross profit | ||||||
Selling expenses | ||||||
General and administrative expenses | 88,625 | [1] | 40,879 | 263,688 | [2] | 146,265 |
(Loss) income from operations | -88,625 | -40,879 | -263,688 | -146,265 | ||
Depreciation and amortization | 81,415 | 262 | 242,020 | 785 | ||
Total capital expenditures | ||||||
[1] | include the accounts receivable and advance to suppliers allowance reversal of $1,490,787. | |||||
[2] | include the accounts receivable and advance to suppliers allowance reversal of $3,125,674. |
SEGMENTS_Summary_of_net_revenu
SEGMENTS - Summary of net revenue from external customers (Details 1) (Operating Segments, USD $) | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | |
Retail drugstores | ||||
Revenue from External Customer [Line Items] | ||||
Net revenue from external customers | $13,286,908 | $11,122,297 | $36,288,706 | $30,222,568 |
Retail drugstores | Prescription drugs | ||||
Revenue from External Customer [Line Items] | ||||
Net revenue from external customers | 5,489,897 | 5,348,544 | 14,867,900 | 15,272,807 |
Retail drugstores | Over-the-counter drugs | ||||
Revenue from External Customer [Line Items] | ||||
Net revenue from external customers | 5,451,117 | 3,885,467 | 13,685,649 | 10,623,206 |
Retail drugstores | Nutritional supplements | ||||
Revenue from External Customer [Line Items] | ||||
Net revenue from external customers | 536,306 | 603,541 | 1,707,449 | 1,355,712 |
Retail drugstores | Traditional Chinese medicine | ||||
Revenue from External Customer [Line Items] | ||||
Net revenue from external customers | 1,287,598 | 1,040,085 | 4,474,344 | 2,468,598 |
Retail drugstores | Sundry products | ||||
Revenue from External Customer [Line Items] | ||||
Net revenue from external customers | 388,561 | 229,921 | 1,248,344 | 317,018 |
Retail drugstores | Medical devices | ||||
Revenue from External Customer [Line Items] | ||||
Net revenue from external customers | 133,429 | 14,739 | 305,020 | 185,227 |
Online Pharmacy | ||||
Revenue from External Customer [Line Items] | ||||
Net revenue from external customers | 4,395,501 | 2,087,432 | 9,917,434 | 4,952,493 |
Online Pharmacy | Prescription drugs | ||||
Revenue from External Customer [Line Items] | ||||
Net revenue from external customers | ||||
Online Pharmacy | Over-the-counter drugs | ||||
Revenue from External Customer [Line Items] | ||||
Net revenue from external customers | 1,422,863 | 1,331,997 | 2,942,461 | 2,609,434 |
Online Pharmacy | Nutritional supplements | ||||
Revenue from External Customer [Line Items] | ||||
Net revenue from external customers | 195,227 | 137,503 | 537,119 | 592,346 |
Online Pharmacy | Traditional Chinese medicine | ||||
Revenue from External Customer [Line Items] | ||||
Net revenue from external customers | ||||
Online Pharmacy | Sundry products | ||||
Revenue from External Customer [Line Items] | ||||
Net revenue from external customers | 646,640 | 292,193 | 1,422,131 | 976,269 |
Online Pharmacy | Medical devices | ||||
Revenue from External Customer [Line Items] | ||||
Net revenue from external customers | 2,130,771 | 325,739 | 5,015,722 | 774,444 |
Drug wholesale | ||||
Revenue from External Customer [Line Items] | ||||
Net revenue from external customers | 3,637,629 | 4,623,343 | 10,017,196 | 14,849,951 |
Drug wholesale | Prescription drugs | ||||
Revenue from External Customer [Line Items] | ||||
Net revenue from external customers | 2,184,711 | 3,407,773 | 6,446,695 | 11,057,448 |
Drug wholesale | Over-the-counter drugs | ||||
Revenue from External Customer [Line Items] | ||||
Net revenue from external customers | 1,389,880 | 76,942 | 3,338,309 | 952,286 |
Drug wholesale | Nutritional supplements | ||||
Revenue from External Customer [Line Items] | ||||
Net revenue from external customers | 35,320 | 820 | 69,270 | 261,954 |
Drug wholesale | Traditional Chinese medicine | ||||
Revenue from External Customer [Line Items] | ||||
Net revenue from external customers | 121 | 6 | 89,389 | 929 |
Drug wholesale | Sundry products | ||||
Revenue from External Customer [Line Items] | ||||
Net revenue from external customers | 11,791 | 1,137,780 | 18,568 | 2,570,591 |
Drug wholesale | Medical devices | ||||
Revenue from External Customer [Line Items] | ||||
Net revenue from external customers | $15,806 | $54,965 | $6,743 |
SEGMENTS_Detail_Textuals
SEGMENTS (Detail Textuals) (USD $) | 3 Months Ended | 9 Months Ended |
Dec. 31, 2014 | Dec. 31, 2014 | |
Segment | ||
Segment Reporting [Abstract] | ||
Number of operating segments | 4 | |
Accounts receivable and advance to customer allowance reversal | $1,490,787 | $3,125,674 |
COMMITMENTS_AND_CONTINGENCIES_1
COMMITMENTS AND CONTINGENCIES - Summary of minimum rental payments under leases (Details) (USD $) | Dec. 31, 2014 |
Commitments and Contingencies [Line Items] | |
2015 | $4,030,298 |
2016 | 2,348,528 |
2017 | 1,950,025 |
2018 | 1,729,904 |
2019 | 1,016,415 |
Thereafter | 567,085 |
Total | 11,642,255 |
Retail drugstores | |
Commitments and Contingencies [Line Items] | |
2015 | 3,736,545 |
2016 | 2,054,990 |
2017 | 1,659,717 |
2018 | 1,439,597 |
2019 | 726,108 |
Thereafter | 317,420 |
Total | 9,934,377 |
Online Pharmacy | |
Commitments and Contingencies [Line Items] | |
2015 | 110,845 |
2016 | 127,735 |
2017 | 139,348 |
2018 | 139,347 |
2019 | 139,347 |
Thereafter | 174,185 |
Total | 830,807 |
Drug wholesale | |
Commitments and Contingencies [Line Items] | |
2015 | 182,908 |
2016 | 165,803 |
2017 | 150,960 |
2018 | 150,960 |
2019 | 150,960 |
Thereafter | 75,480 |
Total | 877,071 |
Herb farming | |
Commitments and Contingencies [Line Items] | |
2015 | |
2016 | |
2017 | |
2018 | |
2019 | |
Thereafter | |
Total |
COMMITMENTS_AND_CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES (Detail Textuals) (USD $) | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | |
Commitments and Contingencies Disclosure [Abstract] | ||||
Total rent expense | $1,287,473 | $936,991 | $3,685,249 | $2,826,141 |
SUBSEQUENT_EVENTS_Detail_Textu
SUBSEQUENT EVENTS (Detail Textuals) (Subsequent Event, Sanhao Grand Pharmacy Chain Co., Ltd) | Jan. 31, 2015 |
Store | |
Subsequent Event | Sanhao Grand Pharmacy Chain Co., Ltd | |
Subsequent Event [Line Items] | |
Number of stores | 8 |