Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Mar. 31, 2015 | Jun. 11, 2015 | Sep. 30, 2014 | |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | CHINA JO-JO DRUGSTORES, INC. | ||
Entity Central Index Key | 1,413,263 | ||
Trading Symbol | cjjd | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Current Fiscal Year End Date | --03-31 | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Common Stock, Shares Outstanding | 15,650,504 | ||
Entity Public Float | $ 17 | ||
Document Type | 10-K | ||
Document Period End Date | Mar. 31, 2015 | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2,015 | ||
Document Fiscal Period Focus | FY |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Mar. 31, 2015 | Mar. 31, 2014 |
CURRENT ASSETS | ||
Cash | $ 4,023,581 | $ 4,445,276 |
Restricted cash | 8,992,101 | $ 3,114,543 |
Financial assets available for sale | 1,307,200 | |
Notes receivable | 138,952 | |
Trade accounts receivable, net | 9,237,743 | $ 6,734,536 |
Inventories | 10,538,591 | 7,047,397 |
Other receivables, net | 1,130,264 | 149,546 |
Advances to suppliers, net | 4,717,352 | 4,577,194 |
Other current assets | 2,200,838 | 1,663,102 |
Total current assets | 42,286,622 | 27,731,594 |
PROPERTY AND EQUIPMENT, net | 7,056,781 | 9,412,688 |
OTHER ASSETS | ||
Farmland assets | 1,704,359 | 1,371,735 |
Long term deposits | 2,584,025 | 2,786,437 |
Other noncurrent assets | 2,734,798 | 3,036,930 |
Intangible assets, net | 3,142,003 | 1,569,443 |
Total other assets | 10,165,185 | 8,764,545 |
Total assets | 59,508,588 | 45,908,827 |
CURRENT LIABILITIES | ||
Short-term loan payable | 32,680 | 162,300 |
Accounts payable, trade | 15,915,915 | 14,554,726 |
Notes payable | 15,752,969 | 7,820,718 |
Other payables | 2,931,869 | 1,282,211 |
Other payables - related parties | 2,729,740 | 2,384,294 |
Loan from third parties | 294,042 | |
Customer deposits | 3,759,050 | 3,185,885 |
Taxes payable | 328,111 | 373,501 |
Accrued liabilities | 509,537 | 1,208,242 |
Total current liabilities | 41,959,871 | 31,265,919 |
Purchase option and warrant liability | 315,327 | 278,916 |
Total liabilities | $ 42,275,198 | $ 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 March 31, 2015 and 2014 | ||
Common stock; $0.001 par value; 250,000,000 shares authorized; 15,650,504 and 14,416,022 shares issued and outstanding as of March 31, 2015 and 2014 | $ 15,651 | $ 14,416 |
Additional paid-in capital | 19,301,233 | 17,355,555 |
Statutory reserves | 1,309,109 | 1,309,109 |
Accumulated deficit | (7,404,210) | (8,260,767) |
Accumulated other comprehensive income | 3,972,543 | 3,905,136 |
Total stockholders' equity | 17,194,326 | 14,323,449 |
Noncontrolling interests | 39,064 | 40,543 |
Total equity | 17,233,390 | 14,363,992 |
Total liabilities and stockholders' equity | $ 59,508,588 | $ 45,908,827 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parentheticals) - $ / shares | Mar. 31, 2015 | Mar. 31, 2014 |
Statement Of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
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) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 250,000,000 | 250,000,000 |
Common stock, shares issued | 15,650,504 | 14,416,022 |
Common stock, shares outstanding | 15,650,504 | 14,416,022 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) - USD ($) | 12 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | ||
Income Statement [Abstract] | |||
REVENUES, NET | $ 76,895,732 | $ 66,154,587 | |
COST OF GOODS SOLD | 64,457,707 | 60,427,101 | |
GROSS PROFIT | 12,438,025 | 5,727,486 | |
SELLING EXPENSES | 10,416,451 | 13,688,771 | |
GENERAL AND ADMINISTRATIVE EXPENSES | 313,390 | 11,268,857 | |
TOTAL OPERATING EXPENSES | 10,729,841 | 24,957,628 | |
INCOME (LOSS) FROM OPERATIONS | 1,708,184 | (19,230,142) | |
OTHER (EXPENSE) INCOME, NET | $ 295,018 | $ (8,412) | |
IMPAIRMENT OF GOODWILL | |||
IMPAIRMENT OF LONG-LIVED ASSETS | $ (1,053,765) | $ (4,995,012) | |
IMPAIRMENT OF AGRICULTURAL INVENTORY | (820,637) | ||
CHANGE IN FAIR VALUE OF PURCHASE OPTION AND WARRANTS LIABILITY | (36,411) | (257,097) | |
INCOME (LOSS) BEFORE INCOME TAXES | 913,026 | (25,311,300) | |
PROVISION FOR INCOME TAXES | [1] | 57,398 | 44,870 |
NET INCOME (LOSS) | 855,628 | (25,356,170) | |
ADD: NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTEREST | 929 | 34 | |
NET INCOME (LOSS) ATTRIBUTABLE TO CHINA JO-JO DRUGSTORES, INC. | 856,557 | (25,356,136) | |
NET INCOME (LOSS) | 855,628 | (25,356,170) | |
OTHER COMPREHENSIVE INCOME | |||
Foreign currency translation adjustments | 66,857 | 784,184 | |
COMPREHENSIVE INCOME (LOSS) | 922,485 | (24,571,986) | |
Less: Comprehensive income (loss) attributable to noncontrolling interest | (1,479) | (668) | |
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO CHINA JO-JO DRUGSTORES, INC. | $ 921,006 | $ (24,572,654) | |
WEIGHTED AVERAGE NUMBER OF SHARES: | |||
Basic (in shares) | 14,960,522 | 13,880,190 | |
Diluted (in shares) | 15,156,423 | 13,880,190 | |
EARNINGS (LOSS) PER SHARES: | |||
Basic (in dollars per share) | $ 0.06 | $ (1.83) | |
Diluted (in dollars per share) | $ 0.06 | $ (1.83) | |
[1] | The current income tax provision for the year ended March 31, 2015 excludes those incomes related to accounts receivables and advance to suppliers allowance reversals, and inventory reserve reversal, which are non-taxable. |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - USD ($) | Common Stock | Paid-in capital | Retained Earnings Statutory reserves | Retained Earnings Unrestricted | Accumulated other comprehensive income/(loss) | Noncontrolling interest | Total |
BALANCE at Mar. 31, 2013 | $ 13,609 | $ 16,609,747 | $ 1,309,109 | $ 17,095,369 | $ 3,121,654 | $ (1,879) | $ 38,147,609 |
BALANCE (in shares) at Mar. 31, 2013 | 13,609,002 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Stock based compensation | $ 807 | 746,621 | 747,428 | ||||
Stock based compensation (in shares) | 807,020 | ||||||
Net income (loss) | (25,356,136) | (34) | (25,356,170) | ||||
Start-up of Shouantang Health | 39,837 | 39,837 | |||||
Closing of Shanghai Zhongxin | (813) | 1,917 | 1,104 | ||||
Foreign currency translation gain (loss) | 783,482 | 702 | 784,184 | ||||
BALANCE at Mar. 31, 2014 | $ 14,416 | 17,355,555 | 1,309,109 | (8,260,767) | 3,905,136 | 40,543 | $ 14,363,992 |
BALANCE (in shares) at Mar. 31, 2014 | 14,416,022 | 14,416,022 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Stock based compensation | $ 615 | 1,003,872 | $ 1,004,487 | ||||
Stock based compensation (in shares) | 615,000 | ||||||
Net income (loss) | 856,557 | (929) | 855,628 | ||||
Issuance of common stocks in exchange of debts | $ 620 | 941,806 | 942,426 | ||||
Issuance of common stocks in exchange of debts (in shares) | 619,482 | ||||||
Foreign currency translation gain (loss) | 67,407 | (550) | 66,857 | ||||
BALANCE at Mar. 31, 2015 | $ 15,651 | $ 19,301,233 | $ 1,309,109 | $ (7,404,210) | $ 3,972,543 | $ 39,064 | $ 17,233,390 |
BALANCE (in shares) at Mar. 31, 2015 | 15,650,504 | 15,650,504 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income (loss) | $ 855,628 | $ (25,356,170) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Bad debt direct write-off and provision | (7,461,802) | 4,387,765 |
Depreciation and amortization | 2,820,489 | 3,234,169 |
Inventory reserve and write-off | (775,660) | 1,776,067 |
Agricultural inventory impairment | 820,637 | |
Leasehold improvement and fixed assets impairment | 1,053,765 | 480,771 |
Impairment of intangible - license and permit | 1,126,981 | |
Impairment of prepayment of lease use right | 2,481,792 | |
Impairment of land and road improvement | 905,468 | |
Leasehold improvement write-off | 145,040 | |
Stock compensation | 1,004,487 | 748,907 |
Change in fair value of purchase option derivative liability | 36,411 | 263,307 |
Change in operating assets: | ||
Accounts receivable, trade | (410,498) | 5,211,707 |
Notes receivable | (138,187) | |
Inventories and biological assets | (2,970,350) | (2,272,013) |
Other receivables | (920,961) | 289,545 |
Advances to suppliers | 5,266,390 | 7,863,565 |
Other current assets | (523,585) | (420,126) |
Long term deposit | 220,079 | 24,499 |
Other noncurrent assets | 320,938 | 16,026 |
Change in operating liabilities: | ||
Accounts payable, trade | 1,255,589 | 524,778 |
Other payables and accrued liabilities | 929,608 | 169,752 |
Customer deposits | 548,534 | (1,733,448) |
Taxes payable | (47,657) | (4,903) |
Net cash provided by operating activities | 1,063,218 | 684,116 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Increase in financial assets available for sale | (1,307,200) | |
Acquisition of equipment | (1,283,997) | (322,624) |
Acquisition of land use right | (1,585,139) | |
Increase in intangible assets-acquisition of Sanhao Pharmacy | (1,585,118) | |
Additions to leasehold improvements | (189,135) | (205,278) |
Net cash (used in) investing activities | (4,365,450) | (2,113,041) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from short-term bank loan | 32,500 | 162,600 |
Repayment of short-term bank loan | (162,500) | |
Repayment of (Proceeds from) third parties loan | (294,405) | 294,586 |
Change in restricted cash | (5,824,192) | (914,044) |
Proceeds from notes payable | 28,169,765 | 8,209,154 |
Repayment of notes payable | (20,333,918) | (7,704,703) |
Changes in other payables-related parties | 1,280,997 | 1,159,909 |
Net cash provided by financing activities | 2,868,247 | 1,207,502 |
EFFECT OF EXCHANGE RATE ON CASH | 12,290 | 142,605 |
(DECREASE) IN CASH | (421,695) | (78,818) |
CASH, beginning of year | 4,445,276 | 4,524,094 |
CASH, end of year | 4,023,581 | 4,445,276 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||
Cash paid for interest | 56,366 | 8,764 |
Cash paid for income taxes | 65,567 | 39,754 |
Issuance of common stocks in exchange of debts | $ 941,613 | |
Non-cash financing activities | ||
Transfer from construction-in-progress to leasehold improvement | 111,890 | |
Goods receipts against accounts receivables and offset | $ 5,394,919 |
DESCRIPTION OF BUSINESS AND ORG
DESCRIPTION OF BUSINESS AND ORGANIZATION | 12 Months Ended |
Mar. 31, 2015 | |
Description Of Business and Organization [Abstract] | |
DESCRIPTION OF BUSINESS AND ORGANIZATION | Note 1 – DESCRIPTION OF BUSINESS AND ORGANIZATION China Jo-Jo Drugstores, Inc. (“Jo-Jo Drugstores” or the “Company”), was incorporated in Nevada on December 19, 2006, originally under the name “Kerrisdale Mining Corporation.” On September 24, 2009, the Company changed its name to “China Jo-Jo Drugstores, Inc.” in connection with a share exchange transaction as described below. On September 17, 2009, the Company completed a share exchange transaction with Renovation Investment (Hong Kong) Co., Ltd. (“Renovation”), whereby 7,900,000 shares of common stock were issued to the stockholders of Renovation in exchange for 100% of the capital stock of Renovation. The completion of the share exchange transaction resulted in a change of control. The share exchange transaction was accounted for as a reverse acquisition and recapitalization and, as a result, the consolidated financial statements of the Company (the legal acquirer) are, in substance, those of Renovation (the accounting acquirer), with the assets and liabilities, and revenues and expenses, of the Company being included effective from the date of the share exchange transaction. Renovation has no substantive operations of its own except for its holdings of Zhejiang Jiuxin Investment Management Co., Ltd. (“Jiuxin Management”), Zhejiang Shouantang Medical Technology Co., Ltd. (“Shouantang Technology”) and Hangzhou Jiutong Medical Technology Co., Ltd (“Jiutong Medical”), its wholly-owned subsidiaries. The Company is a retail, both online and offline and wholesale distributor of pharmaceutical and other healthcare products in the People’s Republic of China (“China” or the “PRC”). The Company’s offline retail business is comprised primarily of pharmacies, a majority of which are operated by Hangzhou Jiuzhou Grand Pharmacy Chain Co., Ltd. (“Jiuzhou Pharmacy”), a company that the Company controls through contractual arrangements. The Company’s offline retail business also includes four medical clinics through Hangzhou Jiuzhou Clinic of Integrated Traditional and Western Medicine (“Jiuzhou Clinic”) and Hangzhou Jiuzhou Medical and Public Health Service Co., Ltd. (“Jiuzhou Service”), both of which are also controlled by the Company through contractual arrangements. On December 18, 2013, Jiuzhou Service established, and held 51% of, Hangzhou Shouantang Health Management Co., Ltd. (“Shouantang Health”), a PRC company licensed to sell health care products. Shouantang Health was closed in April 2015. The Company’s online pharmacy license remains with Jiuzhou Pharmacy and its online retail pharmacy business is primarily conducted through Zhejiang Quannuo Internet Technology Co., Ltd. (“Quannuo Technology”), which provides technical, sales and logistic supports. 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”). The accompanying consolidated financial statements reflect the activities of the Company and each of the following entities: Entity Name Background Ownership Renovation HK • Incorporated in Hong Kong SAR on September 2, 2008 100% Jiuxin Management • Established in the PRC on October 14, 2008 • Deemed a wholly foreign owned enterprise (“WFOE”) under PRC law • Registered capital of $4.5 million fully paid 100% Shouantang Technology • Established in the PRC on July 16, 2010 by Renovation with 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 100% Qianhong Agriculture • Established in the PRC on August 10, 2010 by Jiuxin Management • Registered capital of RMB 10 million fully paid • Carries out cultivation of TCM herbal plants 100% Quannuo Technology • Established in the PRC on July 7, 2009 • 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 100% Hangzhou Quannuo • Established in the PRC on July 8, 2010 by Quannuo Technology • Registered capital of RMB 800,000 fully paid • Cancelled its business registration in April 2015 100% Jiuzhou Pharmacy (1) • Established in the PRC on September 9, 2003 • Registered capital of RMB 5 million fully paid • Operates the “Jiuzhou Grand Pharmacy” stores in Hangzhou including the eight stores of Sanhao Grand Pharmacy Chain Co., Ltd. Jiuzhou Pharmacy acquired in October 2014 which operate under “Jiuzhou Grand Pharmacy” after the acquisition VIE by contractual arrangements (2) Jiuzhou Clinic (1) • Established in the PRC as a general partnership on October 10, 2003 • Operates a medical clinic adjacent to one of Jiuzhou Pharmacy’s stores VIE by contractual arrangements (2) Jiuzhou Service (1) • Established in the PRC on November 2, 2005 • Registered capital of RMB 500,000 fully paid • Operates a medical clinic adjacent to one of Jiuzhou Pharmacy’s stores VIE by contractual arrangements (2) Jiuxin Medicine • Established in PRC on December 31, 2003 • Acquired by Jiuzhou Pharmacy in August 2011 • Registered capital of RMB 10 million fully paid • Carries out pharmaceutical distribution services VIE by contractual arrangements as a wholly-owned subsidiary of Jiuzhou Pharmacy (2) Jiutong Medical • Established in the PRC on December 20, 2011 by Renovation Registered capital of $2.6 million fully paid • Currently has no operation 100% Shouantang Health • Established in the PRC on December 18, 2013 by Jiuzhou Service • Registered capital of RMB 500,000 fully paid • 51% held by Jiuzhou Service • Closed in April 2015 VIE by contractual arrangements as a controlled entity of Jiuzhou Service (2) Shouantang Bio • Established in the PRC in October, 2014 by Shouantang Technology • 100% held by Shouantang Technology • Sells nutritional supplements under its own brand name 100% (1) Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service have been under the common control of the three shareholders ofRenovation (the “Owners”) since their respective establishment dates, pursuant to agreements among the Owners to vote their interests in concert as memorialized in a voting agreement. Based on such voting agreement, the Company has determined that common control exists among these three companies. Operationally, the Owners have operated these three companies in conjunction with one another since each company’s respective establishment date. Jiuxin Medicine is also deemed under the common control of the Owners 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 one subsidiary of Jiuzhou Pharmacy) as a variable interest entity (“VIE”) under the accounting standards of the Financial Accounting Standards Board (“FASB”). Accordingly, the financial statements of Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service, as well as the subsidiary under the control of Jiuzhou Pharmacy (Shouantang Health), are consolidated into the financial statements of the Company. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Mar. 31, 2015 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Note 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of presentation and consolidation The accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). The consolidated financial statements include the financial statements of the Company, its wholly-owned subsidiaries and VIEs. All significant inter-company transactions and balances between the Company, its subsidiaries and VIEs are eliminated upon consolidation. Consolidation of variable interest entities In accordance with accounting standards regarding consolidation of variable interest entities (“VIEs”), VIEs are generally entities that lack sufficient equity to finance their activities without additional financial support from other parties or whose equity holders lack adequate decision making ability. All VIEs with which the Company is involved must be evaluated to determine the primary beneficiary of the risks and rewards of the VIE. The primary beneficiary is required to consolidate the VIE for financial reporting purposes. The Company has concluded, based on the contractual arrangements, that Jiuzhou Pharmacy (including its subsidiaries and controlled entities), Jiuzhou Clinic and Jiuzhou Service are each a VIE and that the Company’s wholly-owned subsidiary, Jiuxin Management, absorbs a majority of the risk of loss from the activities of these companies, thereby enabling the Company, through Jiuxin Management, to receive a majority of their respective expected residual returns. Based on our evaluation of the VIEs, we are the primary beneficiary of their risks and rewards; therefore, we consolidate the VIEs for financial reporting purposes. Additionally, as Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service are under common control, the consolidated financial statements have been prepared as if the transactions had occurred retroactively as to the beginning of the reporting period of these consolidated financial statements. Control and common control is defined under the accounting standards as “an individual, enterprise, or immediate family members who hold more than 50 percent of the voting ownership interest of each entity.” Because the Owners collectively own 100% of Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service, and have agreed to vote their interests in concert since the establishment of each of these three companies as memorialized the Voting Rights Proxy Agreement, the Company believes that the Owners collectively have control and common control of the three companies. Accordingly, the Company believes that Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service were constructively held under common control by Jiuxin Management as of the time the Contractual Agreements were entered into, establishing Jiuxin Management as their primary beneficiary. Jiuxin Management, in turn, is owned by Renovation, which is owned by the Company. Although the Company has determined that the accounting standards regarding consolidation of VIEs do not provide for retroactive accounting treatment, each of Jiuzhou Pharmacy, Jiuzhou Clinic, and Jiuzhou Service was in substance controlled on its establishment date of September 9, 2003, October 10, 2003, and November 2, 2005, respectively, by the Owners. Such common control conditions resulted in the share exchange transaction to be a capital transaction in substance, reflected as a recapitalization, and the Company has accordingly recorded the consolidation at its historical cost. Risks and Uncertainties The operations of the Company are located in the PRC. Accordingly, the Company’s business, financial condition, and results of operations may be influenced by the political, economic, and legal environments in the PRC, as well as by the general state of the PRC economy. The Company’s operations in the PRC are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among other factors, the political, economic and legal environment and foreign currency exchange. The Company’s results may be adversely affected by changes in the political, regulatory and social conditions in the PRC, and by changes in governmental policies or interpretations with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation, among other things. Although the Company has not experienced losses from these situations and believes that it is in compliance with existing laws and regulations including its organization and structure disclosed in Note 1, this may not be indicative of future results. The Company has significant cash deposits with suppliers in order to obtain and maintain inventory. The Company’s ability to obtain products and maintain inventory at existing and new locations is dependent upon its ability to post and maintain significant cash deposits with its suppliers. In the PRC, many vendors are unwilling to extend credit terms for product sales that require cash deposits to be made. The Company does not generally receive interest on any of its supplier deposits, and such deposits are subject to loss as a result of the creditworthiness or bankruptcy of the party who holds such funds, as well as the risk from illegal acts such as conversion, fraud, theft or dishonesty associated with the third party. If these circumstances were to arise, the Company would find it difficult or impossible, due to the unpredictability of legal proceedings in China, to recover all or a portion of the amount on deposit with its vendors or landlords. Members of the current management team own controlling interests in the Company and are also the Owners of the VIEs in the PRC. The Company only controls the VIEs through contractual arrangements which obligate it to absorb the risk of loss and to receive the residual expected returns. As such, the controlling shareholders of the Company and the VIEs could cancel these agreements or permit them to expire at the end of the agreement terms, as a result of which the Company would not retain control of the VIEs. Use of estimates The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. The significant estimates made in the preparation of the accompanying consolidated financial statements relate primarily to the assessment of the carrying values of accounts receivable and advances to suppliers, and related allowance for doubtful accounts, useful lives of property and equipment as well as intangible assets, fair value of purchase option derivative liability and warranty liability and impairment of goodwill. Because of the use of estimates inherent in the financial reporting process, actual results could materially differ from those estimates. Fair value measurements Accounting Standards Codification Topic (ASC) 820-10, Fair Value Accounting (ASC 820), provides a common definition of fair value and establishes a framework to make the measurement of fair value in U.S. GAAP more consistent and comparable. This guidance also requires expanded disclosures to provide information about the extent to which fair value is used to measure assets and liabilities, the methods and assumptions used to measure fair value, and the effect of fair value measures on earnings. Fair value is defined as the amount that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants and requires that assets and liabilities carried at fair value be classified and disclosed in the following three categories: • Level 1-Quoted prices for identical instruments in active markets. • Level 2-Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. • Level 3-Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. The Company's financial assets and liabilities, which include financial instruments as defined by ASC 820, include cash and cash equivalents, accounts receivable, accounts payable, long-term debt and derivatives. The carrying amounts of cash and cash equivalents, Financial assets available for sales, accounts receivable, notes receivables, notes payable and accounts payable are a reasonable approximation of fair value due to the short maturities of these instruments. The carrying amount of long term debt approximates fair value based on borrowing rates currently available to the Company. The carrying amount of the Company's derivative instruments is recorded at fair value and is determined based on observable inputs that are corroborated by market data (Level 2). As of March 31, 2015 and March 31, 2014, the fair values of our derivative instruments that were carried at fair value. Revenue recognition Revenue from sales of prescription medicine at the drugstores is recognized when the prescription is filled and the customer picks up and pays for the prescription. Revenue from sales of other merchandise at the drugstores is recognized at the point of sale, which is when the customer pays for and receives the merchandise. Sales of drugs reimbursed by the local government medical insurance agency and receivables from the agency are recognized when a customer pays for the drugs at a store. Based on historical experience, a reserve for potential loss from denial of reimbursement on certain unqualified drugs was made to the receivables from the government agency. Revenue from medical services is recognized after the service has been rendered to the customer. Revenue from online pharmacy sales is recognized when merchandise is delivered to customers. While most deliveries take one day, certain deliveries may take longer depending on the customer’s location. Any loss caused in the shipment will be reimbursed by the courier company. A proper sales discount is made to account for the potential loss from returns. Historically, sales returns have been minimal. Revenue from sales of merchandise to non-retail customers is recognized when the following conditions are met: (1) persuasive evidence of an arrangement exists (sales agreements and customer purchase orders are used to determine the existence of an arrangement); (2) delivery of goods has occurred and risks and benefits of ownership have been transferred, which is when the goods are received by the customer at its designated location in accordance with the sales terms; (3) the sales price is fixed or determinable; and (4) collectability is probable. Historically, sales returns have been minimal. The Company’s revenue is net of value added tax (“VAT”) collected on behalf of PRC tax authorities in respect to the sales of merchandise. VAT collected from customers, net of VAT paid for purchases, is recorded as a liability in the accompanying consolidated balance sheets until it is paid to the relevant PRC tax authorities. Restricted cash The Company’s restricted cash consists of cash in a bank as security for its notes payable. The Company has notes payable outstanding with the banks and is required to keep certain amounts on deposit that are subject to withdrawal restrictions. The notes payable are generally short term in nature due to their short maturity period of six to nine months; thus, restricted cash is classified as a current asset. Accounts receivable Accounts receivable represents the following: (1) amounts due from banks relating to retail sales that are paid or settled by the customers’ debit or credit cards, (2) amounts due from government social security bureaus and commercial health insurance programs relating to retail sales of drugs, prescription medicine, and medical services that are paid or settled by the customers’ medical insurance cards, and (3) amounts due from non-retail customers for sales of merchandise. Accounts receivable are recorded at net realizable value consisting of the carrying amount less an allowance for uncollectible accounts, as necessary. In its wholesale business, the Company uses the aging method to estimate the allowance for anticipated uncollectible receivable balances. Under the aging method, bad debt percentages are determined by management, based on historical experience and the current economic climate, are applied to customers’ balances categorized by the number of months the underlying invoices have remained outstanding. At each reporting period, the allowance balance is adjusted to reflect the amount computed as a result of the aging method. When facts subsequently become available to indicate that the allowance provided requires an adjustment, a corresponding adjustment is made to the allowance account as a change in estimate. In its retail business, accounts receivable mainly consist of reimbursements due from the government insurance bureaus and commercial health insurance programs, and are usually collected within two or three months. The Company directly writes off delinquent account balances that are determined to be uncollectable after confirming with the appropriate bureau or program each month. Additionally, the Company also makes an estimated reserve on related outstanding accounts receivable based on historical trends. Inventories Inventories are stated at the lower of cost or market. Cost is determined using the first in first out (FIFO) method. Market is the lower of replacement cost or net realizable value. The Company carries out physical inventory counts on a monthly basis at each store and warehouse location. Herbs that the Company farms are recorded at their cost, which includes direct costs such as seed selection, fertilizer, and labor costs that are spent in growing herbs on the leased farmland, and indirect costs such as amortization of farmland development cost. All the costs are accumulated until the time of harvest and then allocated to harvested herbs costs when they are sold. The Company periodically reviews its inventory and records write-downs to inventories for shrinkage losses and damaged merchandise that are identified. The Company provides a reserve for estimated inventory obsolescence or excess quantities on hand equal to the difference between the cost of the inventory and its estimated realizable value. Property and equipment Property and equipment are stated at cost, net of accumulated depreciation or amortization. Depreciation is calculated on the straight-line method over the estimated useful lives of the assets, taking into consideration the assets’ estimated residual value. Leasehold improvements are amortized over the shorter of lease term or remaining lease period of the underlying assets. Following are the estimated useful lives of the Company’s property and equipment: Estimated Useful Life Leasehold improvements 3-10 years Motor vehicles 3-5 years Office equipment and furniture 3-5 years Buildings 35 years Maintenance, repairs and minor renewals are charged to expense as incurred. Major additions and betterment to property and equipment are capitalized. Intangibles Intangible assets are acquired individually or as part of a group of assets, and are initially recorded at their fair value. The cost of a group of assets acquired in a transaction is allocated to the individual assets based on their relative fair values. The estimated useful lives of the Company’s intangible assets are as follows: Estimated Useful Life Land use right 50 years Software 3 years The Company evaluates intangible assets for impairment whenever events or changes in circumstances indicate that the assets might be impaired. Impairment of long-lived assets The Company evaluates long-lived tangible and intangible assets for impairment, whenever events or changes in circumstances indicate that the carrying value may not be recoverable from its estimated future cash flows. Recoverability is measured by comparing the assets’ net book value to the related projected undiscounted cash flows from these assets, considering a number of factors, including past operating results, budgets, economic projections, market trends and product development cycles. If the net book value of the asset exceeds the related undiscounted cash flows, the asset is considered impaired, and a second test is performed to measure the amount of impairment loss. There were $1,053,765 fixed assets impaired in the year ended March 31, 2015 (See Note 6). Notes payable During the normal course of business, the Company regularly issues bank acceptance bills as a payment method to settle outstanding accounts payables with various material suppliers. The Company records such bank acceptance bills as notes payable. Such notes payable are generally short term in nature due to their short maturity period of six to nine months. Income taxes The Company records income taxes pursuant to the accounting standards for income taxes. These standards require the recognition of deferred income tax liabilities and assets for the expected future tax consequences of temporary differences between income tax basis and financial reporting basis of assets and liabilities. The provision for income taxes consists of taxes currently due and the net change in deferred taxes. A valuation allowance is recognized if it is more likely than not that some portion, or all of, a deferred tax asset will not be realized. The accounting standards clarify the accounting and disclosure requirements for uncertain tax positions and prescribe a recognition threshold and measurement attribute for recognition and measurement of a tax position taken or expected to be taken in a tax return. The accounting standards also provide guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosures, and transition. No significant penalties, uncertain tax provisions or interest relating to income taxes were incurred during the years ended March 31, 2015 and 2014. Since its inception, all of the tax returns of the Company have been and remain subject to examination by the tax authorities. Value added tax Sales revenue represents the invoiced value of goods, net of value added tax (“VAT”). All of the Company’s products are sold in the PRC and are subject to a VAT on the gross sales price. The VAT rates range up to 17%, depending on the type of products sold. The VAT may be offset by VAT paid by the Company on raw materials and other materials included in the cost of producing or acquiring its finished products. The Company recorded a VAT payable net of payments in the accompanying financial statements. Stock based compensation The Company follows the provisions of ASC 718, “Compensation — Stock Compensation,” which establishes accounting for non-employee and employee stock-based awards. Under the provisions of ASC 718, the fair value of stock issued is used to measure the fair value of services received as the Company believes such approach is a more reliable method of measuring the fair value of the services. For non-employee stock-based awards, fair value is measured based on the value of the Company’s common stock on the date that the commitment for performance by the counterparty has been reached or the counterparty’s performance is complete. The fair value of the equity instrument is calculated and then recognized as compensation expense over the requisite performance period. For employee stock-based awards, share-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense with graded vesting on a straight–line basis over the requisite service period for the entire award. Advertising and promotion costs Advertising and promotion costs are expensed as incurred, and amounted to $412,535 and $4,637,276 for years ended March 31, 2015 and 2014, 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 8-year term with a renewal option upon the expiration of the lease; the wholesale warehouse lease has a 10-year term with a renewal option upon the expiration of the lease. The Company has historically been able to renew a majority of its drugstores leases. Under the terms of the lease agreements, the Company has no legal or contractual asset retirement obligations at the end of the lease. Land leased from the government is amortized on a straight-line basis over a 30-year term. Foreign currency translation The Company uses the United States dollar (“U.S. dollars” or “USD”) for financial reporting purposes. The Company’s subsidiaries and VIEs maintain their books and records in their functional currency the Renminbi (“RMB”), the currency of the PRC. In general, for consolidation purposes, the Company translates the assets and liabilities of its subsidiaries and VIEs into U.S. dollars using the applicable exchange rates prevailing at the balance sheet date, and the statements of operations and cash flows are translated at average exchange rates during the reporting period. As a result, amounts related to assets and liabilities reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheet. Equity accounts are translated at historical rates. Adjustments resulting from the translation of the financial statements of the subsidiaries and VIEs are recorded as accumulated other comprehensive income. The balance sheet amounts, with the exception of equity, at March 31, 2015 and 2014 were translated at 1 RMB to $0.1634 USD and at 1 RMB to $0.1623 USD, respectively. The average translation rates applied to income and cash flow statement amounts for the years ended March 31, 2014 and 2013 were at 1 RMB to $0.1625 USD and at 1 RMB to $0.1626 USD, respectively. Concentrations and credit risk Certain financial instruments, which subject the Company to concentration of credit risk, consist of cash and restricted cash, accounts receivable, advance to suppliers, accounts payable and other liabilities. The Company has cash balances at financial institutions located in Hong Kong and PRC. Balances at financial institutions in Hong Kong may, from time to time, exceed Hong Kong Deposit Protection Board’s insured limits. Balances at financial institutions and state-owned banks within the PRC are not covered by insurance. As of March 31, 2015 and 2014, the Company had deposits totaling $12,563,579 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 fiscal year ended March 31, 2015, two vendors collectively accounted for 28% of the Company’s total purchases and no supplier accounted for more than 10% of total advances to suppliers. For the fiscal year ended March 31, 2014, one vendor accounted for 11% of the Company’s total purchases and another vendor accounted for more than 10% of total advances to suppliers. For the fiscal year ended March 31, 2015, no customer accounted for more than 10% of the Company’s total sales and more than 10% of total accounts receivable. For the fiscal year ended March 31, 2014, no customer accounted for more than 10% of the Company’s total sales and one customer accounted for 28% of total accounts receivable. Non-controlling interest As of March 31, 2015, Wang Yi, an individual, owned 49% of the equity interests of Shouantang Health, which was not under the Company’s control. In April 2015, Shouantang Health was closed. Recent Accounting Pronouncements In April 2014, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("ASU") No. 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity ("ASU No. 2014-08"). Under ASU No. 2014-08, only disposals representing a strategic shift in operations should be presented as discontinued operations. ASU No. 2014-08 also requires disclosure of the pre-tax income attributable to a disposal of a significant part of an organization that does not qualify for discontinued operations reporting. The amendments in ASU No. 2014-08 are effective in the first quarter of 2015 for public business entities with annual periods beginning on or after December 15, 2014. Early adoption is permitted. The Company does not expect that the adoption of ASU No. 2014-08 will have a significant impact on the Company’s consolidated financial statements. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers: Topic 606. This Update affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets, unless those contracts are within the scope of other standards. The guidance in this Update supersedes the revenue recognition requirements in Topic 605, Revenue Recognition and most industry-specific guidance. The core principle of the guidance is that an entity should recognize revenue to illustrate the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new guidance also includes a cohesive set of disclosure requirements that will provide users of financial statements with comprehensive information about the nature, amount, timing, and uncertainty of revenue and cash flows arising from a reporting organization’s contracts with customers. This ASU is effective for fiscal years, and interim periods within those years beginning after December 15, 2016 for public companies and 2017 for non-public entities. Management is evaluating the effect, if any, on the Company’s financial position and results of operations. 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 ASU 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. Reclassification Certain prior period amounts have been reclassified to conform to the current period presentation. Such reclassifications had no effect on net income or cash flows as previously reported. |
FINANCIAL ASSETS AVAILABLE FOR
FINANCIAL ASSETS AVAILABLE FOR SALE | 12 Months Ended |
Mar. 31, 2015 | |
Available-for-sale Securities [Abstract] | |
FINANCIAL ASSETS AVAILABLE FOR SALE | NOTE 3 – FINANCIAL ASSETS AVAILABLE FOR SALE As of March 31, 2015 and 2014, financial assets available for sale amounted to $1,307,200 and $0, respectively. On February 4, 2015, the Company purchased from Bank of Hangzhou a wealth-management product called “Fortune 99”, which bears the interest rate of 5.45% and is due on August 4, 2015. The total principal is $1,307,200 (RMB 8,000,000). |
TRADE ACCOUNTS RECEIVABLE
TRADE ACCOUNTS RECEIVABLE | 12 Months Ended |
Mar. 31, 2015 | |
Accounts Receivable, Net [Abstract] | |
TRADE ACCOUNTS RECEIVABLE | NOTE 4 – TRADE ACCOUNTS RECEIVABLE Trade accounts receivable consisted of the following: March 31, March 31, 2015 2014 Accounts receivable $ 12,108,561 $ 11,869,866 Less: allowance for doubtful accounts (2,870,818 ) (5,135,330 ) Trade accounts receivable, net $ 9,237,743 $ 6,734,536 For the years ended March 31, 2015 and 2014, $253,193 and $644,049 in accounts receivable were directly written off, respectively. Additionally, for the years ended March 31, 2015 and 2014, $0 and $367,706 of accounts receivable were written off against previous allowance for doubtful accounts, respectively. |
OTHER CURRENT ASSETS
OTHER CURRENT ASSETS | 12 Months Ended |
Mar. 31, 2015 | |
Assets, Current [Abstract] | |
OTHER CURRENT ASSETS | Note 5 – OTHER CURRENT ASSETS Other current assets consisted of the following: March 31, March 31, 2015 2014 Prepaid rental expenses (1) $ 1,712,018 $ 1,165,633 Lease rights transfer fees, current portion (2) - 11,939 Prepaids and other current assets $ 488,820 485,530 Total $ 2,200,838 $ 1,663,102 (1) As the Company opened new stores in Fiscal 2015, prepaid rental expenses increased. (2) Lease rights transfer fees are paid by the Company to secure store rentals in coveted areas. The additional costs of acquiring the right to lease new store locations are capitalized and amortized over the period of the initial lease term. The rising of B2C e-commerce, which is decentralized in terms its regulations in China, cuts the overall demand on store rental. As the store rental market has become favorable to tenants, the Company was no longer required to pay lease rights transfer fees when renting new store spaces in fiscal 2015. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Mar. 31, 2015 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | Note 6 – PROPERTY AND EQUIPMENT Property and equipment consisted of the following: March 31, March 31, 2015 2014 Building $ 1,751,986 $ 1,139,412 Leasehold improvements 12,792,714 12,329,637 Farmland development cost 1,954,165 1,941,010 Office equipment and furniture 5,949,193 5,535,667 Motor vehicles 667,428 579,834 Total 23,115,486 21,525,560 Less: Accumulated depreciation (13,606,043 ) (10,729,190 ) Impairment (2,452,662 ) (1,383,682 ) Property and equipment, net $ 7,056,781 $ 9,412,688 Total depreciation expense for property and equipment was $2,788,691 and $3,121,960 for the years ended March 31, 2015 and 2014, respectively. For the year ended March 31, 2015, $1,053,765 of fixed assets in Jiuyingtang were impaired due to the estimated fair value being lower than the carrying value. For the year ended March 31, 2014, $480,771 of leasehold improvement and office equipment in Jiuyingtang and $905,468 of land and road improvement in Qianhong Agriculture were impaired due to the estimated fair value being lower than the carrying value, and $145,040 of property and equipment were written off due to the five Shanghai drugstores closing. |
ADVANCES TO SUPPLIERS
ADVANCES TO SUPPLIERS | 12 Months Ended |
Mar. 31, 2015 | |
Advances To Suppliers [Abstract] | |
ADVANCES TO SUPPLIERS | Note 7 – ADVANCES TO SUPPLIERS Advances to suppliers consist of deposits with or advances to outside vendors for future inventory purchases. Most of the Company’s vendors require a certain amount of money to be deposited with them as a guarantee that the Company will receive purchases on a timely basis. This amount is refundable and bears no interest. As of March 31, 2015 and 2014, advance to suppliers consisted of the following: March 31, March 31, 2015 2014 Advance to suppliers $ 5,942,866 $ 11,162,767 Less: allowance for doubtful accounts (1,225,514 ) (6,585,573 ) Advance to suppliers, net $ 4,717,352 $ 4,577,194 For the years ended March 31, 2015 and 2014, $0 and $456,089 of advances to suppliers were written off against previous allowance for doubtful accounts, respectively. For the year ended March 31, 2015, the Company collected goods of approximately $3.3 million and cash of $2.1 million against advances to vendors as a result of settling accounts with certain vendors that discontinued their business with the Company. |
INVENTORY
INVENTORY | 12 Months Ended |
Mar. 31, 2015 | |
Inventory Disclosure [Abstract] | |
INVENTORY | Note 8 – INVENTORY Inventory consisted of the following: March 31, March 31, 2015 2014 Finished goods $ 10,538,591 $ 7,822,102 Less: reserve for inventory (1) - (774,705 ) Inventory, net $ 10,538,591 $ 7,047,397 (1) As of March 31,2014, the Company recorded a reserve of $774,705 for those products that were estimated to be obsolete. As of March 31,2015, all those goods had been sold. As a result, no such reserve was made as of March 31,2015. |
FARMLAND ASSETS
FARMLAND ASSETS | 12 Months Ended |
Mar. 31, 2015 | |
Farmland Assets [Abstract] | |
FARMLAND ASSETS | Note 9 – FARMLAND ASSETS Farmland assets are ginkgo trees planted in 2012 and expected to be harvested and sold in several years. As of March 31, 2015 and 2014, farmland assets consisted of the following: March 31, March 31, 2015 2014 Farmland assets $ 2,530,558 $ 2,192,372 Less: impairments (826,199 ) (820,637 ) Farmland assets, net $ 1,704,359 $ 1,371,735 |
LONG TERM DEPOSITS
LONG TERM DEPOSITS | 12 Months Ended |
Mar. 31, 2015 | |
Long Term Deposits [Abstract] | |
LONG TERM DEPOSITS | Note 10 – LONG TERM DEPOSITS As of March 31, 2015 and 2014, long term deposits amounted to $2,584,025 and $2,786,437, respectively. Long term deposits are money deposited with or advanced to landlords for securing retail store leases for which the Company does not anticipate applying or being returned within the next twelve months. Most of the Company’s landlords require a minimum of nine months’ rent being paid upfront plus additional deposits. |
OTHER NONCURRENT ASSETS
OTHER NONCURRENT ASSETS | 12 Months Ended |
Mar. 31, 2015 | |
Other Assets, Noncurrent Disclosure [Abstract] | |
OTHER NONCURRENT ASSETS | Note 11 – OTHER NONCURRENT ASSETS Other noncurrent assets consisted of the following: March 31, 2015 March 31, 2014 Prepayment for lease of land use right – noncurrent, net (1) $ 2,734,798 $ 2,878,687 Long term prepaid expense - 158,243 Total $ 2,734,798 $ 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 the carrying cost. As a result, the Company recorded an impairment of $2,477,212 on the lease prepayment in fiscal 2014. The amortization of prepayment for lease of land use right was $67,104 and $162,600 for the year ended March 31, 2015 and 2014, respectively. Such amounts were capitalized and recorded as work-in-process inventory. The Company’s amortizations of prepayment for lease of land use right for the next five years and thereafter are as follows: Years ending March 31, Amount 2016 $ 67,104 2017 67,104 2018 67,104 2019 67,104 2020 67,104 Thereafter 1,261,778 |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 12 Months Ended |
Mar. 31, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS | Note 12 – INTANGIBLE ASSETS Intangible assets consisted of the following: March 31, 2015 March 31, 2014 License (1) $ 1,570,274 $ - Goodwill (1) 23,623 - Land use rights (2) $ 1,593,403 $ 1,582,677 Software 477,302 474,088 Total intangible assets 3,664,602 2,056,765 Less: accumulated amortization (522,599 ) (487,322 ) Other intangible assets, net $ 3,142,003 $ 1,569,443 (1) As of March 31, 2015, the intangible assets with indefinite life consisted of the following, which were generated through the acquisition of Sanhao Pharmacy (see Note 22- Business Combination). There is no intangible asset with indefinite life as of March 31, 2014. Preliminary Fair value Currency translation adjustment Net carrying value Licenses* $ 1,566,046 $ 4,228 $ 1,570,274 Goodwill on acquisition of Sanhao Pharmacy 23,560 63 23,623 $ 1,589,606 $ 4,291 $ 1,593,897 * This represents the preliminary fair value of the licenses of insurance applicable drugstores acquired from Sanhao Pharmacy. The licenses allow 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. (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 the completion of the plant in the near future. Amortization expense of intangible assets for the years ended March 31, 2015 and 2014 amounted to $31,975 and $112,209, respectively. |
SHORT-TERM BANK LOAN
SHORT-TERM BANK LOAN | 12 Months Ended |
Mar. 31, 2015 | |
Debt Disclosure [Abstract] | |
SHORT-TERM BANK LOAN | Note 13 – SHORT-TERM BANK LOAN As of March 31, 2015, our short-term loan consisted of a loan of $32,680 (RMB200,000) from Industrial and Commercial Bank of China, due on September 30, 2015 with annual interest of 5.885%. This loan is guaranteed by Hangzhou SME Guaranty Co., Ltd., which is not related to or affiliated with the Company. |
NOTES PAYABLE
NOTES PAYABLE | 12 Months Ended |
Mar. 31, 2015 | |
Notes Payable [Abstract] | |
NOTES PAYABLE | Note 14 – 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 as of March 31, 2015 and 2014: Origination Maturity March 31, March 31, Beneficiary Endorser date date 2015 2014 Jiuzhou Pharmacy(1) ICBC 12/27/13 06/26/14 $ - $ 1,351,959 Jiuzhou Pharmacy(1) ICBC 10/11/13 04/11/14 - 730,350 Jiuzhou Pharmacy(2) HUB 10/08/13 04/08/14 - 486,900 Jiuzhou Pharmacy(2) HUB 11/05/13 05/05/14 - 1,720,380 Jiuzhou Pharmacy(2) HUB 12/26/13 06/26/14 - 117,960 Jiuzhou Pharmacy(2) HUB 02/07/14 05/07/14 - 649,200 Jiuzhou Pharmacy(2) HUB 02/07/14 08/07/14 - 985,161 Jiuzhou Pharmacy(2) HUB 03/06/14 09/06/14 - 1,778,808 Jiuzhou Pharmacy(3) HUB 08/05/14 08/04/15 1,634,000 - Jiuzhou Pharmacy(3) HUB 10/09/14 04/09/15 784,320 Jiuzhou Pharmacy(3) HUB 10/09/14 04/09/15 1,187,918 Jiuzhou Pharmacy(3) HUB 12/05/14 06/05/15 1,329,651 Jiuzhou Pharmacy(3) HUB 12/26/14 06/26/15 1,601,320 Jiuzhou Pharmacy(3) HUB 03/04/15 09/04/15 1,470,600 - Jiuzhou Pharmacy(3) HUB 03/13/14 09/13/15 604,580 Jiuzhou Pharmacy(4) BOH 11/06/14 05/06/15 2,908,520 Jiuzhou Pharmacy(4) BOH 02/09/15 08/09/15 1,993,480 Jiuzhou Pharmacy(1) ICBC 12/26/14 06/25/15 2,238,580 - Total $ 15,752,969 $ 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 the amounts borrowed as restricted cash with ICBC as additional collateral against these bank notes. All the outstanding notes payable had been repaid upon maturity. As of March 31, 2015, the Company had $2,238,580 (RMB 13,700,000) notes payable from ICBC, with restricted cash of $671,574 (RMB 4,110,000) held at the 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 March 31, 2015, the Company had $8,612,389 (RMB52,707,400) notes payable from HUB. The Company is required to hold restricted cash of $36,921,220 (RMB52,707,400) with HUB as collateral against these bank notes. (4) As of March 31, 2015, the Company had $4,902,000 (RMB30,000,000) 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 $2,287,600 (RMB 14,000,000) with BOH as collateral against these bank notes. As of March 31, 2015, the Company had a credit line of approximately $11.59 million in the aggregate from HUB, BOH and ICBC. By putting up the restricted cash of $9.00 million deposited in the banks, the total credit line was increased to $20.59 million. As of March 31, 2015, the Company had approximately $15.75 million bank notes payable, and approximately $3.56 million bank credit line was still available for further borrowing. The bank notes are also secured by buildings owned by the Company’s major shareholders with a value of approximately $3,836,632 (RMB23,480,000) personally guaranteed by the major shareholders and guaranteed by Zhejiang JinQiao Guarantee Company and Hangzhou Small and Medium sized Guarantee CO., Ltd. At March 31, 2015, the fair value of the Company’s notes payable was estimated, using Level 2 inputs, at $15,743,000 compared to a carrying amount of $15,752,969. At March 31, 2014, the fair value of the Company’s notes payable was estimated, using Level 2 inputs, at $7,810,000 compared to a carrying amount of $7,820,718. The fair values were estimated using an income approach by applying market interest rates for comparable instruments. |
TAXES
TAXES | 12 Months Ended |
Mar. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
TAXES | Note 15 – TAXES Income tax The Company is subject to income taxes on an entity basis on income arising in or derived from the tax jurisdiction in which each entity is domiciled. Entity Income Tax Jurisdiction Jo-Jo Drugstores United States Renovation Hong Kong, PRC All other entities Mainland, PRC Jo-Jo Drugstores is incorporated in the U.S. and has incurred a net operating loss for income tax purposes for 2015 and 2014. As of March 31, 2015, the estimated net operating loss carry forwards for U.S. income tax purposes amounted to approximately $1,503,000 which may be available to reduce future years’ taxable income. These carry forwards will expire, if not utilized by 2032. Management believes that the realization of the benefits arising from this loss appears to be uncertain due to the Company’s limited operating history and continuing losses for U.S. income tax purposes. Accordingly, the Company has provided a 100% deferred tax asset valuation allowance as of March 31, 2015 and no deferred tax asset benefit has been recorded. The valuation allowance as of March 31, 2015 was $511,000. The net change in the valuation allowance was an increase of $25,000. The Company’s management reviews this valuation allowance periodically and makes adjustments as necessary. Significant components of the income tax provision were as follows for the years ended March 31, 2015 and 2014: Years ended March 31, 2015 2014 Current tax provision Federal $ - $ - State - - Foreign 57,398 44,870 57,398 44,870 Deferred tax provision Federal $ - $ - State - - Foreign - - - - Income tax provision (a) $ 57,398 $ 44,870 (a) The current income tax provision for the year ended March 31, 2015 excludes those incomes related to accounts receivables and advance to suppliers allowance reversals, and inventory reserve reversal, which are non-taxable. Income from continuing operations before income taxes was allocated between the United States and foreign components for the years ended March 31, 2015 and 2014 as follows: Years ended March 31, 2015 2014 United States $ (1,056,717 ) $ (1,034,223 ) Foreign 1,969,743 (24,277,077 ) $ 913,026 $ (25,311,300 ) The Company files U.S. federal and state income tax returns. With few exceptions, the Company was subject to the U.S. federal and state income tax examinations by tax authorities for years on or after 2007. The Company’s subsidiaries and VIEs in China file income tax returns with both the state and local tax bureaus in the PRC. Such income tax returns are subject to examinations by these foreign tax authorities and have passed all examinations since each subsidiary’s and VIE’s inception date. The following table reconciles the U.S. statutory tax rates with the Company's effective tax rate for the years ended March 31, 2015 and 2014: 2015 2014 U.S. Statutory rates 34.0 % 34.0 % Foreign income not recognized in the U.S. (34.0 ) (34.0 ) China income taxes 25.0 25.0 Change in valuation allowance (a) (25.8 ) (24.9 ) Others (b) 7.1 (0.4 ) Effective tax rate 6.3 % (0.3 )% (a) The (25.8)% for the year ended March 31, 2015 primarily represents the effect of those profit from accounts receivable and advance to suppliers allowance reversal, and inventory reserve reversal, which, according to China annual tax filing, is non-taxable for PRC income tax. (b) The 7.1% for the year ended March 31, 2015 and the (0.4)% for the year ended March 31, 2014 represent the combined effect of expenses incurred by the Company that were not deductible for PRC income tax and PRC income tax exemptions. The temporary differences and carry forwards gave rise to the following deferred tax assets as of March 31, 2015 and 2014: Years ended March 31, 2015 2014 Current deferred tax assets: Allowance for doubtful accounts $ 1,031,566 $ 2,759,144 Inventory reserve - 193,676 Payroll accrual 163,594 63,214 Valuation allowance (1,195,160 ) (3,016,034 ) Total current deferred tax assets $ - $ - Long-term deferred tax assets: Long-lived assets impairment $ 1,062,703 $ 792,432 Long-term lease reserve 623,500 619,303 Depreciation and amortization - 323,547 Net operating loss carry forward 708,033 410,592 Valuation allowance (2,394,236 ) (2,145,874 ) Total current deferred tax assets $ - $ - Total $ - $ - Management believes that the realization of the benefits arising from these temporary differences and carry forwards appear to be uncertain since it is subject to local tax authority’s approval. As a result, the Company made a full valuation allowance against its net deferred tax assets as of March 31, 2015. Management reviews this valuation allowance periodically and makes adjustments as necessary. Future reversal of the valuation allowance will be recognized either when the benefit is realized or when it has been determined that it is more likely than not that the benefit will be realized through future earnings. Value added tax VAT on sales and on purchases amounted to $19,737,410 and $18,613,431 for the year ended March 31, 2015, and $16,045,706 and $15,069,655 for the year ended March 31, 2014, respectively. Sales and purchases are recorded net of VAT collected and paid as the Company acts as an agent for the government. VAT taxes are not impacted by the income tax holiday. Taxes payable at March 31, 2015 and 2014 consisted of the following: March 31, March 31, 2015 2014 VAT $ 301,149 $ 344,329 Income tax 8,007 7,851 Others 18,955 21,321 Total taxes payable $ 328,111 $ 373,501 |
POSTRETIREMENT BENEFITS
POSTRETIREMENT BENEFITS | 12 Months Ended |
Mar. 31, 2015 | |
Compensation and Retirement Disclosure [Abstract] | |
POSTRETIREMENT BENEFITS | Note 16 – POSTRETIREMENT BENEFITS Regulations in the PRC require the Company to contribute to a defined contribution retirement plan for all permanent employees. The contribution for each employee is based on a percentage of the employee’s current compensation as required by the local government. The Company contributed $849,689 and $663,837 in employment benefits and pension for the years ended March 31, 2015 and 2014, respectively. |
RELATED PARTY TRANSACTIONS AND
RELATED PARTY TRANSACTIONS AND ARRANGEMENTS | 12 Months Ended |
Mar. 31, 2015 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS AND ARRANGEMENTS | Note 17 – RELATED PARTY TRANSACTIONS AND ARRANGEMENTS Amounts payable to related parties are summarized as follows: March 31, March 31, 2015 2014 Due to cofounders (1): $ 576,818 $ 576,818 Due to director (2): 2,152,922 1,807,476 Total $ 2,729,740 $ 2,384,294 (1) As of March 31, 2015 and 2014, the amount due to cofounders represents loans from the ultimate 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. In addition, Mr. Lei Liu also advanced cash to the Company for working capital purpose. 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 March 31, 2015 and 2014, notes payable totaling $5,790,471 and $5,738,409, respectively, were secured by the personal properties of certain of the Company’s shareholders. The Company leases from Mr. Lei Liu a retail space which expires in September 2015 and had a lease for corporate office which 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 $97,500 and $170,730 for the years ended March 31, 2015 and 2014, respectively. The amounts were paid to Mr. Liu as of March 31, 2015. |
PURCHASE OPTION DERIVATIVE LIAB
PURCHASE OPTION DERIVATIVE LIABILITY | 12 Months Ended |
Mar. 31, 2015 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
PURCHASE OPTION DERIVATIVE LIABILITY | Note 18 – PURCHASE OPTION DERIVATIVE LIABILITY In connection with the public offering of the Company’s common stock that closed on April 28, 2010, the Company issued to its underwriters, Madison Williams and Company and Rodman & Renshaw, LLC, an option for $100 to purchase up to a total of 105,000 shares of common stock (3% of the shares sold in the public offering) at $6.25 per share (125% of the price of the shares sold in the public offering). The option was exercisable from October 23, 2010 to April 22, 2015., The option has not been exercised eventually and has expired as the date of the report. The Company is treating the common shares underlying the option as a derivative liability because the strike price of the option is denominated in U.S. dollars, a currency other than the Company’s functional currency, the Chinese RMB. As a result, the option is not considered indexed to the Company’s own stock, and as such, all future changes in the fair value of the option are recognized currently in earnings until such time as the option is exercised or expired. On April 22, 2010, the issue date of the option, the Company classified the fair value of this option as a liability resulting in a decrease of additional paid-in capital of $402,451 and the establishment of a $402,451 in liability to recognize the option’s fair value. The Company recognized a loss of $33,520 from the change in fair value of the option liability for year ended March 31, 2015. This option does not trade in an active securities market, and as such, the Company estimates its fair value using the Black-Scholes Option Pricing Model (the “Black-Scholes Model”) on the date that the option was originally issued and as of March 31, 2015 using the following assumptions: March 31, 2015 (1) March 31, 2014 Stock price $ 2.82 $ 2.07 Exercise price $ 6.25 $ 6.25 Annual dividend yield 0 % 0 % Expected term (years) 0.05 1.05 Risk-free interest rate 0.05 % 0.13 % Expected volatility 96.40 % 132.55 % (1) As of March 31, 2015, the option to purchase 105,000 shares of common stock had not been exercised. Expected volatility is based on historical volatility. Historical volatility is computed using daily pricing observations for recent periods that correspond to the term of the option. The Company believes this method produces an estimate that is representative of future volatility over the expected term of this option. The expected life is based on the remaining term of the option. The risk-free interest rate is based on U.S. Treasury securities according to the remaining term of the option. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Depending on the product and the terms of the transaction, the fair value of option liability are modeled using a series of techniques, including closed-form analytic formula such as the Black-Scholes Model, which does not entail material subjectivity because the methodology employed does not necessitate significant judgment, and the pricing inputs are observed from actively quoted markets. The fair value of the 105,000 shares underlying the option outstanding as of March 31, 2015 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 of $2and $52,603 as of March 31, 2015 and 2014, respectively. |
WARRANTS
WARRANTS | 12 Months Ended |
Mar. 31, 2015 | |
Warrants and Rights Note Disclosure [Abstract] | |
WARRANTS | Note 19 – WARRANTS On September 26, 2013, as annual compensation for its financial advisory service, the Company issued a warrant to a financial consulting firm to purchase up to 150,000 shares of common stock at $1.20 per share. The warrant is exercisable from September 26, 2013 to September 25, 2016. Because the warrant is denominated in U.S. dollars and the Company’s functional currency is the RMB, it does not meet the requirements of the accounting standard to be indexed only to the Company’s stock. Accordingly, it is accounted for at fair value as derivative liabilities and marked to market price each period. The warrant does not trade in an active securities market, and as such, the Company estimates its fair value using the Black-Scholes Model on the date that the warrant was originally issued and as of March 31, 2014 using the following assumptions: Common Stock Warrants Common Stock Warrants March 31, 2015 (1) March 31, 2014 Stock price $ 2.82 $ 2.07 Exercise price $ 1.20 $ 1.20 Annual dividend yield 0 % 0 % Expected term (years) 1.49 2.49 Risk-free interest rate 0.67 % 0.67 % Expected volatility 116.88 % 114.15 % (1) As of March 31, 2015, 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 $69,931 from the change in fair value of the warrant liability for the year ended March 31, 2015. As a result, the warrant liability is carried on the consolidated balance sheets at the fair value of $315,325 and $ $226,313 as of March 31, 2015 and 2014, respectively. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 12 Months Ended |
Mar. 31, 2015 | |
Stockholders Equity Note [Abstract] | |
STOCKHOLDERS' EQUITY | Note 20 – STOCKHOLDERS’ EQUITY Stock-based compensation The Company accounts for share-based payment awards granted to employees and directors by recording compensation expense based on estimated fair values. The Company estimates the fair value of share-based payment awards on the date of grant. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in the Company’s consolidated statements of operations. Share-based awards are attributed to expense using the straight-line method over the vesting period. The Company determines the value of each option award that contains a market condition using a Monte Carlo Simulation valuation model, while all other option awards are valued using the Black-Scholes valuation model as permitted under ASC 718, Compensation - Stock Compensation. The assumptions used in calculating the fair value of share-based payment awards represent the Company’s best estimates. The Company’s estimates of the fair values of stock options granted and the resulting amounts of share-based compensation recognized may be impacted by certain variables including stock price volatility, employee stock option exercise behaviors, additional stock option modifications, estimates of forfeitures, and the related income tax impact. 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 November 18, 2014 was $1.89. All such shares vested on February 18, 2015, and for the year ended March 31, 2015, $661,500 was recorded as service compensation expense. On January 16, 2015, a total of 265,000 shares have vested, which were issued to 39 employees under the Plan in January 2012. $62,034 and $11,422 was charged to general and administrative expense and selling expense for the year ended March 31, 2015, respectively. $78,022 and $30,736 was charged to general and administrative expense and selling expense for the year ended March 31, 2014, respectively. 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 grantees including 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 grantees are still employed by the Company on such a date. The options will be exercisable for five years from the vesting date, or November 18, 2017 until November 17, 2022. For the year ended March 31, 2015, $182,482 was recorded as compensation expense. A summary of the Company's stock option activities is as follows: Options Weighted- average exercise price Weighted- average remaining contractual term (years) Aggregate intrinsic value Outstanding at March 31, 2014 - $ - - - Granted 967,000 2.50 8.00 309,440 Exercised - - - - Forfeited or expired - - - - Outstanding at March 31, 2015 967,000 $ 2.50 7.63 $ 309,440 Exercisable at March 31, 2015 - $ - - $ - Vested or expected to vest 967,000 $ 2.50 7.63 $ 309,440 The weighted-average grant date fair values were determined using the Black- Scholes option-pricing model with the following weighted average assumptions: Year ended March 31, 2015 Fair value of stock options granted $ 1.54 Expected volatility 123.19 % Expected term (years) 5.00 Risk-free interest rate 1.65 % Annual dividend yield 0 % For purposes of determining the expected term and in the absence of historical data relating to stock option exercises, the Company applies a simplified approach: the expected term of awards granted is presumed to be the mid-point between the vesting date and the end of the contractual term. For fiscal year ended March 31, 2015, the Company uses the annual volatility of its daily closing price for expected volatility. The risk-free interest rate for periods within the expected or contractual life of the option, as applicable, is based on the United States Treasury yield curve in effect during the period the options were granted. The Company's expected dividend yield is zero. As of March 31, 2015, there was $1.3 million of total unrecognized compensation costs related to stock option compensation arrangements granted which is expected to be recognized over the remaining weighted-average period of 2.63 years. Statutory reserve Statutory reserves represent restricted retained earnings. Based on their legal formation, the Company is required to set aside 10% of the net income of each VIE and subsidiary in the PRC as reported in its statutory account on an annual basis to the Statutory Surplus Reserve Fund (the “Reserve Fund”). Once the total amount set aside in the Reserve Fund reaches 50% of the entity’s registered capital, further appropriations become discretionary. The Reserve Fund can be used to increase the entity’s registered capital upon approval by relevant government authorities or to eliminate its future losses under PRC GAAP upon a resolution by its board of directors. The Reserve Fund is not distributable to shareholders, as cash dividend or otherwise, except in the event of liquidation. Appropriations to the Reserve Fund are accounted for as a transfer from unrestricted earnings to statutory reserves. During the years ended March 31, 2015 and 2014, 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 | 12 Months Ended |
Mar. 31, 2015 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | Note 21 – 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 loss per share computation: Years ended March 31, 2015 2014 Net earnings (loss) attributable to controlling interest $ 856,557 $ (25,356,136 ) Weighted average shares used in basic computation 14,960,522 13,880,190 Diluted effect of stock options and warrants 195,901 - Weighted average shares used in diluted computation 15,156,423 13,880,190 Earnings (loss) per share – Basic: Net earnings (loss) before noncontrolling interest $ 0.06 $ (1.83 ) Add: Net loss attributable to noncontrolling interest $ - $ - Net loss attributable to controlling interest $ 0.06 $ (1.83 ) Earnings (loss) per share – Diluted: Net earnings (loss) before noncontrolling interest $ 0.06 $ (1.83 ) Add: Net loss attributable to noncontrolling interest $ - $ - Net loss attributable to controlling interest $ 0.06 $ (1.83 ) For the year ended March 31, 2015 and 2014, 105,000 underlying outstanding purchase options of Madison Williams and Company and Rodman & Renshaw, LLC, were excluded from the calculation of diluted earnings (loss) per share as the options were anti-dilutive. |
BUSINESS COMBINATION
BUSINESS COMBINATION | 12 Months Ended |
Mar. 31, 2015 | |
Business Combinations [Abstract] | |
BUSINESS COMBINATION | Note 22 – BUSINESS COMBINATION Sanhao Pharmacy On October 9, 2014, Jiuzhou Pharmacy completed its acquisition of Sanhao Pharmacy. Sanhao Pharmacy is a local drugstore chain of 11 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 $1,568,640 (RMB 9,600,000), with the excess amount of cash payment over the fair value capitalized by the Company as goodwill of $23,623. 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 March 31, 2015, the Company had paid a total of 60%, or $941,184 (RMB 5,760,000). The remaining amount is expected to be paid within next few months. In January 2015, eight stores of Sanhao Pharmacy with the qualification of Social Health Insurance ("SHI"), have been relocated close to the major resident areas in Hangzhou with significant store improvements. These eight stores are now operating under the brand name “Jiuzhou Pharmacy”. The following table summarizes the preliminary fair value of the assets acquired and liabilities assumed at the date of acquisition: Total purchase price $ 1,568,640 Allocation of the purchase price to assets and liabilities at fair value: Cash and cash equivalents $ 32,016 Accounts receivable, net 5,612 Inventories 53,731 Advances on inventory purchases 474 Property, plant and equipment, net 543 Licenses 1,570,274 Total assets 1,662,650 Accounts payable 37,315 Tax receivable (1,023 ) Accrued liabilities and other liabilities, current 81,341 Total liabilities 117,633 Net assets acquired at fair value $ 1,545,017 Goodwill $ 23,623 Pro forma results are not materially different from historical results. |
SEGMENTS
SEGMENTS | 12 Months Ended |
Mar. 31, 2015 | |
Segment Reporting [Abstract] | |
SEGMENTS | Note 23 – SEGMENTS The Company operates within four main reportable segments: retail drugstores, online pharmacy, drug wholesale and herb farming. The retail drugstores segment sells prescription and over-the-counter (“OTC”) medicines, TCM, dietary supplements, medical devices, and sundry items to retail customers. The 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 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 operations for the year ended March 31, 2015: Retail drugstores Online pharmacy Drug wholesale Herb farming Total Revenue $ 48,799,736 $ 14,879,397 $ 13,216,599 $ - $ 76,895,732 Cost of goods 39,278,615 12,781,734 12,397,358 - 64,457,707 Gross profit $ 9,521,121 $ 2,097,663 $ 819,241 $ - $ 12,438,025 Selling expenses 9,364,232 589,920 462,299 - 10,416,451 General and administrative expenses 5,460,827 674,470 (5,881,032 )* 59,125 313,390 Profit (loss) from operations $ (5,303,938 ) $ 833,273 $ 6,237,974 $ (59,125 ) $ 1,708,184 Depreciation and amortization $ 1,847,415 $ 4,812 $ 645,669 $ 322,593 $ 2,820,489 Total capital expenditures $ 1,378,362 $ 17,219 $ 77,550 $ - $ 1,473,131 * include the accounts receivable and advance to suppliers allowance reversal of $7,535,180. The following table presents summarized information by segment of the continuing operations for the year ended March 31, 2014: Retail drugstores Online pharmacy Drug wholesale Herb farming Total Revenue $ 40,096,781 $ 7,560,135 $ 18,497,671 $ - $ 66,154,587 Cost of goods 33,706,866 6,240,848 20,479,387 - 60,427,101 Gross profit $ 6,389,915 $ 1,319,287 $ (1,981,716 ) $ - $ 5,727,486 Selling expenses 12,778,642 386,135 523,994 - 13,688,771 General and administrative expenses 6,222,194 471,996 4,127,733 446,934 11,268,857 Profit (loss) from operations $ (12,610,921 ) $ 461,156 $ (6,633,443 ) $ (446,934 ) $ (19,230,142 ) Depreciation and amortization $ 2,618,740 $ 19,812 $ 594,500 $ 1,117 $ 3,234,169 Total capital expenditures $ 391,369 $ 309 $ 135,761 $ 1,585,602 $ 2,113,041 *The negative wholesale gross margin for the year ended March 31, 2014 was primarily due to the discounted sales of certain products that the Company’s new wholesale team has decided not to continue expending significant efforts to sell in the future. While the total discounted sales amount was approximately $0.7 million, the cost of the products sold was approximately $2.1 million, which resulted in a net loss of $1.4 million from such sales and negative gross margin in fiscal 2014. 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 drugstores by main product categories for the years ended March 31, 2015 and 2014 were as follows: Years ended March 31, 2015 2014 Prescription drugs $ 17,932,423 $ 19,781,547 OTC drugs 20,087,425 13,922,633 Nutritional supplements 5,033,819 2,736,808 TCM 3,316,067 2,718,305 Sundry products 1,032,800 134,218 Medical devices 1,397,202 803,270 Total $ 48,799,736 $ 40,096,781 The Company’s net revenues from external customers through its online pharmacy by main product categories for the years ended March 31, 2015 and 2014 were as follows: Years ended March 31, 2015 2014 Prescription drugs $ - $ - OTC drugs 4,551,354 3,347,470 Nutritional supplements 1,610,375 512,339 TCM - - Sundry products 1,827,669 1,761,945 Medical devices 6,889,999 1,938,381 Total $ 14,879,397 $ 7,560,135 The Company’s net revenues from external customers through its wholesale business by main product categories for the years ended March 31, 2015 and 2014 were as follows: Years ended March 31, 2015 2014 Prescription drugs $ 7,777,525 $ 13,746,053 OTC drugs 5,094,150 1,012,630 Nutritional supplements 98,444 262,470 TCM 155,151 931 Sundry products 72,357 3,468,832 Medical devices 18,972 6,755 Total $ 13,216,599 $ 18,497,671 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Mar. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | Note 24 – 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 March 31, Retail Online Drug Herb farming Total 2016 $ 3,265,512 $ 113,449 $ 189,140 $ - $ 3,568,101 2017 2,154,469 133,501 154,623 - 2,442,593 2018 1,790,078 139,305 150,914 - 2,080,297 2019 1,364,959 139,305 150,914 - 1,655,178 2020 562,102 139,305 150,914 - 852,321 Thereafter 202,702 174,131 37,728 - 414,561 Total $ 9,339,822 $ 838,996 $ 834,233 $ - $ 11,013,051 Total rent expense amounted to $4,480,869 and $4,563,376 for years ended March 31, 2015 and 2014, respectively. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Mar. 31, 2015 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | Note 25 – SUBSEQUENT EVENTS On April 8, 2015, Hangzhou Quannuo cancelled its registration with local State Administration of Industrial and Commerce or known as SAIC. The store had ceased operations in fiscal 2015. |
SUMMARY OF SIGNIFICANT ACCOUN32
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Mar. 31, 2015 | |
Accounting Policies [Abstract] | |
Basis of presentation and consolidation | Basis of presentation and consolidation The accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). The consolidated financial statements include the financial statements of the Company, its wholly-owned subsidiaries and VIEs. All significant inter-company transactions and balances between the Company, its subsidiaries and VIEs are eliminated upon consolidation. |
Consolidation of variable interest entities | Consolidation of variable interest entities In accordance with accounting standards regarding consolidation of variable interest entities (“VIEs”), VIEs are generally entities that lack sufficient equity to finance their activities without additional financial support from other parties or whose equity holders lack adequate decision making ability. All VIEs with which the Company is involved must be evaluated to determine the primary beneficiary of the risks and rewards of the VIE. The primary beneficiary is required to consolidate the VIE for financial reporting purposes. The Company has concluded, based on the contractual arrangements, that Jiuzhou Pharmacy (including its subsidiaries and controlled entities), Jiuzhou Clinic and Jiuzhou Service are each a VIE and that the Company’s wholly-owned subsidiary, Jiuxin Management, absorbs a majority of the risk of loss from the activities of these companies, thereby enabling the Company, through Jiuxin Management, to receive a majority of their respective expected residual returns. Based on our evaluation of the VIEs, we are the primary beneficiary of their risks and rewards; therefore, we consolidate the VIEs for financial reporting purposes. Additionally, as Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service are under common control, the consolidated financial statements have been prepared as if the transactions had occurred retroactively as to the beginning of the reporting period of these consolidated financial statements. Control and common control is defined under the accounting standards as “an individual, enterprise, or immediate family members who hold more than 50 percent of the voting ownership interest of each entity.” Because the Owners collectively own 100% of Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service, and have agreed to vote their interests in concert since the establishment of each of these three companies as memorialized the Voting Rights Proxy Agreement, the Company believes that the Owners collectively have control and common control of the three companies. Accordingly, the Company believes that Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service were constructively held under common control by Jiuxin Management as of the time the Contractual Agreements were entered into, establishing Jiuxin Management as their primary beneficiary. Jiuxin Management, in turn, is owned by Renovation, which is owned by the Company. Although the Company has determined that the accounting standards regarding consolidation of VIEs do not provide for retroactive accounting treatment, each of Jiuzhou Pharmacy, Jiuzhou Clinic, and Jiuzhou Service was in substance controlled on its establishment date of September 9, 2003, October 10, 2003, and November 2, 2005, respectively, by the Owners. Such common control conditions resulted in the share exchange transaction to be a capital transaction in substance, reflected as a recapitalization, and the Company has accordingly recorded the consolidation at its historical cost. |
Risks and Uncertainties | Risks and Uncertainties The operations of the Company are located in the PRC. Accordingly, the Company’s business, financial condition, and results of operations may be influenced by the political, economic, and legal environments in the PRC, as well as by the general state of the PRC economy. The Company’s operations in the PRC are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among other factors, the political, economic and legal environment and foreign currency exchange. The Company’s results may be adversely affected by changes in the political, regulatory and social conditions in the PRC, and by changes in governmental policies or interpretations with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation, among other things. Although the Company has not experienced losses from these situations and believes that it is in compliance with existing laws and regulations including its organization and structure disclosed in Note 1, this may not be indicative of future results. The Company has significant cash deposits with suppliers in order to obtain and maintain inventory. The Company’s ability to obtain products and maintain inventory at existing and new locations is dependent upon its ability to post and maintain significant cash deposits with its suppliers. In the PRC, many vendors are unwilling to extend credit terms for product sales that require cash deposits to be made. The Company does not generally receive interest on any of its supplier deposits, and such deposits are subject to loss as a result of the creditworthiness or bankruptcy of the party who holds such funds, as well as the risk from illegal acts such as conversion, fraud, theft or dishonesty associated with the third party. If these circumstances were to arise, the Company would find it difficult or impossible, due to the unpredictability of legal proceedings in China, to recover all or a portion of the amount on deposit with its vendors or landlords. Members of the current management team own controlling interests in the Company and are also the Owners of the VIEs in the PRC. The Company only controls the VIEs through contractual arrangements which obligate it to absorb the risk of loss and to receive the residual expected returns. As such, the controlling shareholders of the Company and the VIEs could cancel these agreements or permit them to expire at the end of the agreement terms, as a result of which the Company would not retain control of the VIEs. |
Use of estimates | Use of estimates The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. The significant estimates made in the preparation of the accompanying consolidated financial statements relate primarily to the assessment of the carrying values of accounts receivable and advances to suppliers, and related allowance for doubtful accounts, useful lives of property and equipment as well as intangible assets, fair value of purchase option derivative liability and warranty liability and impairment of goodwill. Because of the use of estimates inherent in the financial reporting process, actual results could materially differ from those estimates. |
Fair value measurements | Fair value measurements Accounting Standards Codification Topic (ASC) 820-10, Fair Value Accounting (ASC 820), provides a common definition of fair value and establishes a framework to make the measurement of fair value in U.S. GAAP more consistent and comparable. This guidance also requires expanded disclosures to provide information about the extent to which fair value is used to measure assets and liabilities, the methods and assumptions used to measure fair value, and the effect of fair value measures on earnings. Fair value is defined as the amount that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants and requires that assets and liabilities carried at fair value be classified and disclosed in the following three categories: • Level 1-Quoted prices for identical instruments in active markets. • Level 2-Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. • Level 3-Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. The Company's financial assets and liabilities, which include financial instruments as defined by ASC 820, include cash and cash equivalents, accounts receivable, accounts payable, long-term debt and derivatives. The carrying amounts of cash and cash equivalents, Financial assets available for sales, accounts receivable, notes receivables, notes payable and accounts payable are a reasonable approximation of fair value due to the short maturities of these instruments. The carrying amount of long term debt approximates fair value based on borrowing rates currently available to the Company. The carrying amount of the Company's derivative instruments is recorded at fair value and is determined based on observable inputs that are corroborated by market data (Level 2). As of March 31, 2015 and March 31, 2014, the fair values of our derivative instruments that were carried at fair value. |
Revenue recognition | Revenue recognition Revenue from sales of prescription medicine at the drugstores is recognized when the prescription is filled and the customer picks up and pays for the prescription. Revenue from sales of other merchandise at the drugstores is recognized at the point of sale, which is when the customer pays for and receives the merchandise. Sales of drugs reimbursed by the local government medical insurance agency and receivables from the agency are recognized when a customer pays for the drugs at a store. Based on historical experience, a reserve for potential loss from denial of reimbursement on certain unqualified drugs was made to the receivables from the government agency. Revenue from medical services is recognized after the service has been rendered to the customer. Revenue from online pharmacy sales is recognized when merchandise is delivered to customers. While most deliveries take one day, certain deliveries may take longer depending on the customer’s location. Any loss caused in the shipment will be reimbursed by the courier company. A proper sales discount is made to account for the potential loss from returns. Historically, sales returns have been minimal. Revenue from sales of merchandise to non-retail customers is recognized when the following conditions are met: (1) persuasive evidence of an arrangement exists (sales agreements and customer purchase orders are used to determine the existence of an arrangement); (2) delivery of goods has occurred and risks and benefits of ownership have been transferred, which is when the goods are received by the customer at its designated location in accordance with the sales terms; (3) the sales price is fixed or determinable; and (4) collectability is probable. Historically, sales returns have been minimal. The Company’s revenue is net of value added tax (“VAT”) collected on behalf of PRC tax authorities in respect to the sales of merchandise. VAT collected from customers, net of VAT paid for purchases, is recorded as a liability in the accompanying consolidated balance sheets until it is paid to the relevant PRC tax authorities. |
Restricted cash | Restricted cash The Company’s restricted cash consists of cash in a bank as security for its notes payable. The Company has notes payable outstanding with the banks and is required to keep certain amounts on deposit that are subject to withdrawal restrictions. The notes payable are generally short term in nature due to their short maturity period of six to nine months; thus, restricted cash is classified as a current asset. |
Accounts receivable | Accounts receivable Accounts receivable represents the following: (1) amounts due from banks relating to retail sales that are paid or settled by the customers’ debit or credit cards, (2) amounts due from government social security bureaus and commercial health insurance programs relating to retail sales of drugs, prescription medicine, and medical services that are paid or settled by the customers’ medical insurance cards, and (3) amounts due from non-retail customers for sales of merchandise. Accounts receivable are recorded at net realizable value consisting of the carrying amount less an allowance for uncollectible accounts, as necessary. In its wholesale business, the Company uses the aging method to estimate the allowance for anticipated uncollectible receivable balances. Under the aging method, bad debt percentages are determined by management, based on historical experience and the current economic climate, are applied to customers’ balances categorized by the number of months the underlying invoices have remained outstanding. At each reporting period, the allowance balance is adjusted to reflect the amount computed as a result of the aging method. When facts subsequently become available to indicate that the allowance provided requires an adjustment, a corresponding adjustment is made to the allowance account as a change in estimate. In its retail business, accounts receivable mainly consist of reimbursements due from the government insurance bureaus and commercial health insurance programs, and are usually collected within two or three months. The Company directly writes off delinquent account balances that are determined to be uncollectable after confirming with the appropriate bureau or program each month. Additionally, the Company also makes an estimated reserve on related outstanding accounts receivable based on historical trends. |
Inventories | Inventories Inventories are stated at the lower of cost or market. Cost is determined using the first in first out (FIFO) method. Market is the lower of replacement cost or net realizable value. The Company carries out physical inventory counts on a monthly basis at each store and warehouse location. Herbs that the Company farms are recorded at their cost, which includes direct costs such as seed selection, fertilizer, and labor costs that are spent in growing herbs on the leased farmland, and indirect costs such as amortization of farmland development cost. All the costs are accumulated until the time of harvest and then allocated to harvested herbs costs when they are sold. The Company periodically reviews its inventory and records write-downs to inventories for shrinkage losses and damaged merchandise that are identified. The Company provides a reserve for estimated inventory obsolescence or excess quantities on hand equal to the difference between the cost of the inventory and its estimated realizable value. |
Property and equipment | Property and equipment Property and equipment are stated at cost, net of accumulated depreciation or amortization. Depreciation is calculated on the straight-line method over the estimated useful lives of the assets, taking into consideration the assets’ estimated residual value. Leasehold improvements are amortized over the shorter of lease term or remaining lease period of the underlying assets. Following are the estimated useful lives of the Company’s property and equipment: Estimated Useful Life Leasehold improvements 3-10 years Motor vehicles 3-5 years Office equipment and furniture 3-5 years Buildings 35 years Maintenance, repairs and minor renewals are charged to expense as incurred. Major additions and betterment to property and equipment are capitalized. |
Intangibles | Intangibles Intangible assets are acquired individually or as part of a group of assets, and are initially recorded at their fair value. The cost of a group of assets acquired in a transaction is allocated to the individual assets based on their relative fair values. The estimated useful lives of the Company’s intangible assets are as follows: Estimated Useful Life Land use right 50 years Software 3 years The Company evaluates intangible assets for impairment whenever events or changes in circumstances indicate that the assets might be impaired. |
Impairment of long-lived assets | Impairment of long-lived assets The Company evaluates long-lived tangible and intangible assets for impairment, whenever events or changes in circumstances indicate that the carrying value may not be recoverable from its estimated future cash flows. Recoverability is measured by comparing the assets’ net book value to the related projected undiscounted cash flows from these assets, considering a number of factors, including past operating results, budgets, economic projections, market trends and product development cycles. If the net book value of the asset exceeds the related undiscounted cash flows, the asset is considered impaired, and a second test is performed to measure the amount of impairment loss. There were $1,053,765 fixed assets impaired in the year ended March 31, 2015 (See Note 6). |
Notes payable | Notes payable During the normal course of business, the Company regularly issues bank acceptance bills as a payment method to settle outstanding accounts payables with various material suppliers. The Company records such bank acceptance bills as notes payable. Such notes payable are generally short term in nature due to their short maturity period of six to nine months. |
Income taxes | Income taxes The Company records income taxes pursuant to the accounting standards for income taxes. These standards require the recognition of deferred income tax liabilities and assets for the expected future tax consequences of temporary differences between income tax basis and financial reporting basis of assets and liabilities. The provision for income taxes consists of taxes currently due and the net change in deferred taxes. A valuation allowance is recognized if it is more likely than not that some portion, or all of, a deferred tax asset will not be realized. The accounting standards clarify the accounting and disclosure requirements for uncertain tax positions and prescribe a recognition threshold and measurement attribute for recognition and measurement of a tax position taken or expected to be taken in a tax return. The accounting standards also provide guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosures, and transition. No significant penalties, uncertain tax provisions or interest relating to income taxes were incurred during the years ended March 31, 2015 and 2014. Since its inception, all of the tax returns of the Company have been and remain subject to examination by the tax authorities. |
Value added tax | Value added tax Sales revenue represents the invoiced value of goods, net of value added tax (“VAT”). All of the Company’s products are sold in the PRC and are subject to a VAT on the gross sales price. The VAT rates range up to 17%, depending on the type of products sold. The VAT may be offset by VAT paid by the Company on raw materials and other materials included in the cost of producing or acquiring its finished products. The Company recorded a VAT payable net of payments in the accompanying financial statements. |
Stock based compensation | Stock based compensation The Company follows the provisions of ASC 718, “Compensation — Stock Compensation,” which establishes accounting for non-employee and employee stock-based awards. Under the provisions of ASC 718, the fair value of stock issued is used to measure the fair value of services received as the Company believes such approach is a more reliable method of measuring the fair value of the services. For non-employee stock-based awards, fair value is measured based on the value of the Company’s common stock on the date that the commitment for performance by the counterparty has been reached or the counterparty’s performance is complete. The fair value of the equity instrument is calculated and then recognized as compensation expense over the requisite performance period. For employee stock-based awards, share-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense with graded vesting on a straight–line basis over the requisite service period for the entire award. |
Advertising and promotion costs | Advertising and promotion costs Advertising and promotion costs are expensed as incurred, and amounted to $412,535 and $4,637,276 for years ended March 31, 2015 and 2014, 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 8-year term with a renewal option upon the expiration of the lease; the wholesale warehouse lease has a 10-year term with a renewal option upon the expiration of the lease. The Company has historically been able to renew a majority of its drugstores leases. Under the terms of the lease agreements, the Company has no legal or contractual asset retirement obligations at the end of the lease. Land leased from the government is amortized on a straight-line basis over a 30-year term. |
Foreign currency translation | Foreign currency translation The Company uses the United States dollar (“U.S. dollars” or “USD”) for financial reporting purposes. The Company’s subsidiaries and VIEs maintain their books and records in their functional currency the Renminbi (“RMB”), the currency of the PRC. In general, for consolidation purposes, the Company translates the assets and liabilities of its subsidiaries and VIEs into U.S. dollars using the applicable exchange rates prevailing at the balance sheet date, and the statements of operations and cash flows are translated at average exchange rates during the reporting period. As a result, amounts related to assets and liabilities reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheet. Equity accounts are translated at historical rates. Adjustments resulting from the translation of the financial statements of the subsidiaries and VIEs are recorded as accumulated other comprehensive income. The balance sheet amounts, with the exception of equity, at March 31, 2015 and 2014 were translated at 1 RMB to $0.1634 USD and at 1 RMB to $0.1623 USD, respectively. The average translation rates applied to income and cash flow statement amounts for the years ended March 31, 2014 and 2013 were at 1 RMB to $0.1625 USD and at 1 RMB to $0.1626 USD, respectively. |
Concentrations and credit risk | Concentrations and credit risk Certain financial instruments, which subject the Company to concentration of credit risk, consist of cash and restricted cash, accounts receivable, advance to suppliers, accounts payable and other liabilities. The Company has cash balances at financial institutions located in Hong Kong and PRC. Balances at financial institutions in Hong Kong may, from time to time, exceed Hong Kong Deposit Protection Board’s insured limits. Balances at financial institutions and state-owned banks within the PRC are not covered by insurance. As of March 31, 2015 and 2014, the Company had deposits totaling $12,563,579 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 fiscal year ended March 31, 2015, two vendors collectively accounted for 28% of the Company’s total purchases and no supplier accounted for more than 10% of total advances to suppliers. For the fiscal year ended March 31, 2014, one vendor accounted for 11% of the Company’s total purchases and another vendor accounted for more than 10% of total advances to suppliers. For the fiscal year ended March 31, 2015, no customer accounted for more than 10% of the Company’s total sales and more than 10% of total accounts receivable. For the fiscal year ended March 31, 2014, no customer accounted for more than 10% of the Company’s total sales and one customer accounted for 28% of total accounts receivable. |
Non-controlling interest | Non-controlling interest As of March 31, 2015, Wang Yi, an individual, owned 49% of the equity interests of Shouantang Health, which was not under the Company’s control. In April 2015, Shouantang Health was closed. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In April 2014, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("ASU") No. 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity ("ASU No. 2014-08"). Under ASU No. 2014-08, only disposals representing a strategic shift in operations should be presented as discontinued operations. ASU No. 2014-08 also requires disclosure of the pre-tax income attributable to a disposal of a significant part of an organization that does not qualify for discontinued operations reporting. The amendments in ASU No. 2014-08 are effective in the first quarter of 2015 for public business entities with annual periods beginning on or after December 15, 2014. Early adoption is permitted. The Company does not expect that the adoption of ASU No. 2014-08 will have a significant impact on the Company’s consolidated financial statements. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers: Topic 606. This Update affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets, unless those contracts are within the scope of other standards. The guidance in this Update supersedes the revenue recognition requirements in Topic 605, Revenue Recognition and most industry-specific guidance. The core principle of the guidance is that an entity should recognize revenue to illustrate the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new guidance also includes a cohesive set of disclosure requirements that will provide users of financial statements with comprehensive information about the nature, amount, timing, and uncertainty of revenue and cash flows arising from a reporting organization’s contracts with customers. This ASU is effective for fiscal years, and interim periods within those years beginning after December 15, 2016 for public companies and 2017 for non-public entities. Management is evaluating the effect, if any, on the Company’s financial position and results of operations. 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 ASU 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. |
Reclassification | Reclassification Certain prior period amounts have been reclassified to conform to the current period presentation. Such reclassifications had no effect on net income or cash flows as previously reported. |
DESCRIPTION OF BUSINESS AND O33
DESCRIPTION OF BUSINESS AND ORGANIZATION (Tables) | 12 Months Ended |
Mar. 31, 2015 | |
Description Of Business and Organization [Abstract] | |
Schedule of activities of company and affiliates | Entity Name Background Ownership Renovation HK • Incorporated in Hong Kong SAR on September 2, 2008 100% Jiuxin Management • Established in the PRC on October 14, 2008 • Deemed a wholly foreign owned enterprise (“WFOE”) under PRC law • Registered capital of $4.5 million fully paid 100% Shouantang Technology • Established in the PRC on July 16, 2010 by Renovation with 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 100% Qianhong Agriculture • Established in the PRC on August 10, 2010 by Jiuxin Management • Registered capital of RMB 10 million fully paid • Carries out cultivation of TCM herbal plants 100% Quannuo Technology • Established in the PRC on July 7, 2009 • 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 100% Hangzhou Quannuo • Established in the PRC on July 8, 2010 by Quannuo Technology • Registered capital of RMB 800,000 fully paid • Cancelled its business registration in April 2015 100% Jiuzhou Pharmacy (1) • Established in the PRC on September 9, 2003 • Registered capital of RMB 5 million fully paid • Operates the “Jiuzhou Grand Pharmacy” stores in Hangzhou including the eight stores of Sanhao Grand Pharmacy Chain Co., Ltd. Jiuzhou Pharmacy acquired in October 2014 which operate under “Jiuzhou Grand Pharmacy” after the acquisition VIE by contractual arrangements (2) Jiuzhou Clinic (1) • Established in the PRC as a general partnership on October 10, 2003 • Operates a medical clinic adjacent to one of Jiuzhou Pharmacy’s stores VIE by contractual arrangements (2) Jiuzhou Service (1) • Established in the PRC on November 2, 2005 • Registered capital of RMB 500,000 fully paid • Operates a medical clinic adjacent to one of Jiuzhou Pharmacy’s stores VIE by contractual arrangements (2) Jiuxin Medicine • Established in PRC on December 31, 2003 • Acquired by Jiuzhou Pharmacy in August 2011 • Registered capital of RMB 10 million fully paid • Carries out pharmaceutical distribution services VIE by contractual arrangements as a wholly-owned subsidiary of Jiuzhou Pharmacy (2) Jiutong Medical • Established in the PRC on December 20, 2011 by Renovation Registered capital of $2.6 million fully paid • Currently has no operation 100% Shouantang Health • Established in the PRC on December 18, 2013 by Jiuzhou Service • Registered capital of RMB 500,000 fully paid • 51% held by Jiuzhou Service • Closed in April 2015 VIE by contractual arrangements as a controlled entity of Jiuzhou Service (2) Shouantang Bio • Established in the PRC in October, 2014 by Shouantang Technology • 100% held by Shouantang Technology • Sells nutritional supplements under its own brand name 100% (1) Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service have been under the common control of the three shareholders ofRenovation (the “Owners”) since their respective establishment dates, pursuant to agreements among the Owners to vote their interests in concert as memorialized in a voting agreement. Based on such voting agreement, the Company has determined that common control exists among these three companies. Operationally, the Owners have operated these three companies in conjunction with one another since each company’s respective establishment date. Jiuxin Medicine is also deemed under the common control of the Owners 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 one subsidiary of Jiuzhou Pharmacy) as a variable interest entity (“VIE”) under the accounting standards of the Financial Accounting Standards Board (“FASB”). Accordingly, the financial statements of Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service, as well as the subsidiary under the control of Jiuzhou Pharmacy (Shouantang Health), are consolidated into the financial statements of the Company. |
SUMMARY OF SIGNIFICANT ACCOUN34
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Mar. 31, 2015 | |
Accounting Policies [Abstract] | |
Schedule of estimated useful lives of property and equipment | Estimated Useful Life Leasehold improvements 3-10 years Motor vehicles 3-5 years Office equipment and furniture 3-5 years Buildings 35 years |
Schedule of estimated useful lives of intangible assets | Estimated Useful Life Land use right 50 years Software 3 years |
TRADE ACCOUNTS RECEIVABLE (Tabl
TRADE ACCOUNTS RECEIVABLE (Tables) | 12 Months Ended |
Mar. 31, 2015 | |
Accounts Receivable, Net [Abstract] | |
Schedule of trade accounts receivable | March 31, March 31, 2015 2014 Accounts receivable $ 12,108,561 $ 11,869,866 Less: allowance for doubtful accounts (2,870,818 ) (5,135,330 ) Trade accounts receivable, net $ 9,237,743 $ 6,734,536 |
OTHER CURRENT ASSETS (Tables)
OTHER CURRENT ASSETS (Tables) | 12 Months Ended |
Mar. 31, 2015 | |
Assets, Current [Abstract] | |
Schedule of other current assets | March 31, March 31, 2015 2014 Prepaid rental expenses (1) $ 1,712,018 $ 1,165,633 Lease rights transfer fees, current portion (2) - 11,939 Prepaids and other current assets $ 488,820 485,530 Total $ 2,200,838 $ 1,663,102 (1) As the Company opened new stores in Fiscal 2015, prepaid rental expenses increased. (2) Lease rights transfer fees are paid by the Company to secure store rentals in coveted areas. The additional costs of acquiring the right to lease new store locations are capitalized and amortized over the period of the initial lease term. The rising of B2C e-commerce, which is decentralized in terms its regulations in China, cuts the overall demand on store rental. As the store rental market has become favorable to tenants, the Company was no longer required to pay lease rights transfer fees when renting new store spaces in fiscal 2015. |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Mar. 31, 2015 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | March 31, March 31, 2015 2014 Building $ 1,751,986 $ 1,139,412 Leasehold improvements 12,792,714 12,329,637 Farmland development cost 1,954,165 1,941,010 Office equipment and furniture 5,949,193 5,535,667 Motor vehicles 667,428 579,834 Total 23,115,486 21,525,560 Less: Accumulated depreciation (13,606,043 ) (10,729,190 ) Impairment (2,452,662 ) (1,383,682 ) Property and equipment, net $ 7,056,781 $ 9,412,688 |
ADVANCES TO SUPPLIERS (Tables)
ADVANCES TO SUPPLIERS (Tables) | 12 Months Ended |
Mar. 31, 2015 | |
Advances To Suppliers [Abstract] | |
Schedule of advance to suppliers | March 31, March 31, 2015 2014 Advance to suppliers $ 5,942,866 $ 11,162,767 Less: allowance for doubtful accounts (1,225,514 ) (6,585,573 ) Advance to suppliers, net $ 4,717,352 $ 4,577,194 |
INVENTORY (Tables)
INVENTORY (Tables) | 12 Months Ended |
Mar. 31, 2015 | |
Inventory Disclosure [Abstract] | |
Schedule of inventory | March 31, March 31, 2015 2014 Finished goods $ 10,538,591 $ 7,822,102 Less: reserve for inventory (1) - (774,705 ) Inventory, net $ 10,538,591 $ 7,047,397 (1) As of March 31,2014, the Company recorded a reserve of $774,705 for those products that were estimated to be obsolete. As of March 31,2015, all those goods had been sold. As a result, no such reserve was made as of March 31,2015. |
FARMLAND ASSETS (Tables)
FARMLAND ASSETS (Tables) | 12 Months Ended |
Mar. 31, 2015 | |
Farmland Assets [Abstract] | |
Schedule of farmland assets | March 31, March 31, 2015 2014 Farmland assets $ 2,530,558 $ 2,192,372 Less: impairments (826,199 ) (820,637 ) Farmland assets, net $ 1,704,359 $ 1,371,735 |
OTHER NONCURRENT ASSETS (Tables
OTHER NONCURRENT ASSETS (Tables) | 12 Months Ended |
Mar. 31, 2015 | |
Other Assets, Noncurrent Disclosure [Abstract] | |
Schedule of other noncurrent assets | March 31, 2015 March 31, 2014 Prepayment for lease of land use right – noncurrent, net (1) $ 2,734,798 $ 2,878,687 Long term prepaid expense - 158,243 Total $ 2,734,798 $ 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 the carrying cost. As a result, the Company recorded an impairment of $2,477,212 on the lease prepayment in fiscal 2014. |
Schedule of prepayment for lease of land use right | Years ending March 31, Amount 2016 $ 67,104 2017 67,104 2018 67,104 2019 67,104 2020 67,104 Thereafter 1,261,778 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Mar. 31, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of net intangible assets | March 31, 2015 March 31, 2014 License (1) $ 1,570,274 $ - Goodwill (1) 23,623 - Land use rights (2) $ 1,593,403 $ 1,582,677 Software 477,302 474,088 Total intangible assets 3,664,602 2,056,765 Less: accumulated amortization (522,599 ) (487,322 ) Other intangible assets, net $ 3,142,003 $ 1,569,443 (1) As of March 31, 2015, the intangible assets with indefinite life consisted of the following, which were generated through the acquisition of Sanhao Pharmacy (see Note 22- Business Combination). There is no intangible asset with indefinite life as of March 31, 2014. |
Schedule of intangible assets with indefinite life generated through acquisition of Sanhao Pharmacy | Preliminary Fair value Currency translation adjustment Net carrying value Licenses* $ 1,566,046 $ 4,228 $ 1,570,274 Goodwill on acquisition of Sanhao Pharmacy 23,560 63 23,623 $ 1,589,606 $ 4,291 $ 1,593,897 * This represents the preliminary fair value of the licenses of insurance applicable drugstores acquired from Sanhao Pharmacy. The licenses allow 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. (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 the completion of the plant in the near future. |
NOTES PAYABLE (Tables)
NOTES PAYABLE (Tables) | 12 Months Ended |
Mar. 31, 2015 | |
Notes Payable [Abstract] | |
Schedule of credit facilities with bank | Origination Maturity March 31, March 31, Beneficiary Endorser date date 2015 2014 Jiuzhou Pharmacy(1) ICBC 12/27/13 06/26/14 $ - $ 1,351,959 Jiuzhou Pharmacy(1) ICBC 10/11/13 04/11/14 - 730,350 Jiuzhou Pharmacy(2) HUB 10/08/13 04/08/14 - 486,900 Jiuzhou Pharmacy(2) HUB 11/05/13 05/05/14 - 1,720,380 Jiuzhou Pharmacy(2) HUB 12/26/13 06/26/14 - 117,960 Jiuzhou Pharmacy(2) HUB 02/07/14 05/07/14 - 649,200 Jiuzhou Pharmacy(2) HUB 02/07/14 08/07/14 - 985,161 Jiuzhou Pharmacy(2) HUB 03/06/14 09/06/14 - 1,778,808 Jiuzhou Pharmacy(3) HUB 08/05/14 08/04/15 1,634,000 - Jiuzhou Pharmacy(3) HUB 10/09/14 04/09/15 784,320 Jiuzhou Pharmacy(3) HUB 10/09/14 04/09/15 1,187,918 Jiuzhou Pharmacy(3) HUB 12/05/14 06/05/15 1,329,651 Jiuzhou Pharmacy(3) HUB 12/26/14 06/26/15 1,601,320 Jiuzhou Pharmacy(3) HUB 03/04/15 09/04/15 1,470,600 - Jiuzhou Pharmacy(3) HUB 03/13/14 09/13/15 604,580 Jiuzhou Pharmacy(4) BOH 11/06/14 05/06/15 2,908,520 Jiuzhou Pharmacy(4) BOH 02/09/15 08/09/15 1,993,480 Jiuzhou Pharmacy(1) ICBC 12/26/14 06/25/15 2,238,580 - Total $ 15,752,969 $ 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 the amounts borrowed as restricted cash with ICBC as additional collateral against these bank notes. All the outstanding notes payable had been repaid upon maturity. As of March 31, 2015, the Company had $2,238,580 (RMB 13,700,000) notes payable from ICBC, with restricted cash of $671,574 (RMB 4,110,000) held at the 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 March 31, 2015, the Company had $8,612,389 (RMB52,707,400) notes payable from HUB. The Company is required to hold restricted cash of $36,921,220 (RMB52,707,400) with HUB as collateral against these bank notes. (4) As of March 31, 2015, the Company had $4,902,000 (RMB30,000,000) 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 $2,287,600 (RMB 14,000,000) with BOH as collateral against these bank notes. |
TAXES (Tables)
TAXES (Tables) | 12 Months Ended |
Mar. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
Schedule of income arising in or derived from tax jurisdiction in which each entity is domiciled | Entity Income Tax Jurisdiction Jo-Jo Drugstores United States Renovation Hong Kong, PRC All other entities Mainland, PRC |
Schedule of significant components of income tax provision | Years ended March 31, 2015 2014 Current tax provision Federal $ - $ - State - - Foreign 57,398 44,870 57,398 44,870 Deferred tax provision Federal $ - $ - State - - Foreign - - - - Income tax provision (a) $ 57,398 $ 44,870 (a) The current income tax provision for the year ended March 31, 2015 excludes those incomes related to accounts receivables and advance to suppliers allowance reversals, and inventory reserve reversal, which are non-taxable. |
Schedule of income from continuing operations before income taxes | Years ended March 31, 2015 2014 United States $ (1,056,717 ) $ (1,034,223 ) Foreign 1,969,743 (24,277,077 ) $ 913,026 $ (25,311,300 ) |
Schedule of reconciles the U.S. statutory tax rates with company's effective tax rate | 2015 2014 U.S. Statutory rates 34.0 % 34.0 % Foreign income not recognized in the U.S. (34.0 ) (34.0 ) China income taxes 25.0 25.0 Change in valuation allowance (a) (25.8 ) (24.9 ) Others (b) 7.1 (0.4 ) Effective tax rate 6.3 % (0.3 )% (a) The (25.8)% for the year ended March 31, 2015 primarily represents the effect of those profit from accounts receivable and advance to suppliers allowance reversal, and inventory reserve reversal, which, according to China annual tax filing, is non-taxable for PRC income tax. (b) The 7.1% for the year ended March 31, 2015 and the (0.4)% for the year ended March 31, 2014 represent the combined effect of expenses incurred by the Company that were not deductible for PRC income tax and PRC income tax exemptions. |
Schedule of deferred tax assets | Years ended March 31, 2015 2014 Current deferred tax assets: Allowance for doubtful accounts $ 1,031,566 $ 2,759,144 Inventory reserve - 193,676 Payroll accrual 163,594 63,214 Valuation allowance (1,195,160 ) (3,016,034 ) Total current deferred tax assets $ - $ - Long-term deferred tax assets: Long-lived assets impairment $ 1,062,703 $ 792,432 Long-term lease reserve 623,500 619,303 Depreciation and amortization - 323,547 Net operating loss carry forward 708,033 410,592 Valuation allowance (2,394,236 ) (2,145,874 ) Total current deferred tax assets $ - $ - Total $ - $ - |
Schedule of taxes payable | March 31, March 31, 2015 2014 VAT $ 301,149 $ 344,329 Income tax 8,007 7,851 Others 18,955 21,321 Total taxes payable $ 328,111 $ 373,501 |
RELATED PARTY TRANSACTIONS AN45
RELATED PARTY TRANSACTIONS AND ARRANGEMENTS (Tables) | 12 Months Ended |
Mar. 31, 2015 | |
Related Party Transactions [Abstract] | |
Schedule of amounts payable to related parties | March 31, March 31, 2015 2014 Due to cofounders (1): $ 576,818 $ 576,818 Due to director (2): 2,152,922 1,807,476 Total $ 2,729,740 $ 2,384,294 (1) As of March 31, 2015 and 2014, the amount due to cofounders represents loans from the ultimate 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. In addition, Mr. Lei Liu also advanced cash to the Company for working capital purpose. 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 LI46
PURCHASE OPTION DERIVATIVE LIABILITY (Tables) | 12 Months Ended |
Mar. 31, 2015 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of fair value assumption using Black-Scholes Option Pricing Model | March 31, 2015 (1) March 31, 2014 Stock price $ 2.82 $ 2.07 Exercise price $ 6.25 $ 6.25 Annual dividend yield 0 % 0 % Expected term (years) 0.05 1.05 Risk-free interest rate 0.05 % 0.13 % Expected volatility 96.40 % 132.55 % (1) As of March 31, 2015, the option to purchase 105,000 shares of common stock had not been exercised. |
WARRANTS (Tables)
WARRANTS (Tables) | 12 Months Ended |
Mar. 31, 2015 | |
Warrants and Rights Note Disclosure [Abstract] | |
Schedule of estimated fair value of warrants | Common Stock Warrants Common Stock Warrants March 31, 2015 (1) March 31, 2014 Stock price $ 2.82 $ 2.07 Exercise price $ 1.20 $ 1.20 Annual dividend yield 0 % 0 % Expected term (years) 1.49 2.49 Risk-free interest rate 0.67 % 0.67 % Expected volatility 116.88 % 114.15 % (1) As of March 31, 2015, the warrant had not been exercised. |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 12 Months Ended |
Mar. 31, 2015 | |
Stockholders Equity Note [Abstract] | |
Schedule of stock option activities | Options Weighted- average exercise price Weighted- average remaining contractual term (years) Aggregate intrinsic value Outstanding at March 31, 2014 - $ - - - Granted 967,000 2.50 8.00 309,440 Exercised - - - - Forfeited or expired - - - - Outstanding at March 31, 2015 967,000 $ 2.50 7.63 $ 309,440 Exercisable at March 31, 2015 - $ - - $ - Vested or expected to vest 967,000 $ 2.50 7.63 $ 309,440 |
Schedule of weighted average assumptions | Year ended March 31, 2015 Fair value of stock options granted $ 1.54 Expected volatility 123.19 % Expected term (years) 5.00 Risk-free interest rate 1.65 % Annual dividend yield 0 % |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 12 Months Ended |
Mar. 31, 2015 | |
Earnings Per Share [Abstract] | |
Schedule of reconciliation of the basic and diluted earnings per share computation | Years ended March 31, 2015 2014 Net earnings (loss) attributable to controlling interest $ 856,557 $ (25,356,136 ) Weighted average shares used in basic computation 14,960,522 13,880,190 Diluted effect of stock options and warrants 195,901 - Weighted average shares used in diluted computation 15,156,423 13,880,190 Earnings (loss) per share – Basic: Net earnings (loss) before noncontrolling interest $ 0.06 $ (1.83 ) Add: Net loss attributable to noncontrolling interest $ - $ - Net loss attributable to controlling interest $ 0.06 $ (1.83 ) Earnings (loss) per share – Diluted: Net earnings (loss) before noncontrolling interest $ 0.06 $ (1.83 ) Add: Net loss attributable to noncontrolling interest $ - $ - Net loss attributable to controlling interest $ 0.06 $ (1.83 ) |
BUSINESS COMBINATION (Tables)
BUSINESS COMBINATION (Tables) | 12 Months Ended |
Mar. 31, 2015 | |
Business Combinations [Abstract] | |
Schedule of preliminary fair value of the assets acquired and liabilities assumed at the date of acquisition | Total purchase price $ 1,568,640 Allocation of the purchase price to assets and liabilities at fair value: Cash and cash equivalents $ 32,016 Accounts receivable, net 5,612 Inventories 53,731 Advances on inventory purchases 474 Property, plant and equipment, net 543 Licenses 1,570,274 Total assets 1,662,650 Accounts payable 37,315 Tax receivable (1,023 ) Accrued liabilities and other liabilities, current 81,341 Total liabilities 117,633 Net assets acquired at fair value $ 1,545,017 Goodwill $ 23,623 |
SEGMENTS (Tables)
SEGMENTS (Tables) | 12 Months Ended |
Mar. 31, 2015 | |
Segment Reporting Information [Line Items] | |
Schedule of information by segment | The following table presents summarized information by segment of the continuing operations for the year ended March 31, 2015: Retail drugstores Online pharmacy Drug wholesale Herb farming Total Revenue $ 48,799,736 $ 14,879,397 $ 13,216,599 $ - $ 76,895,732 Cost of goods 39,278,615 12,781,734 12,397,358 - 64,457,707 Gross profit $ 9,521,121 $ 2,097,663 $ 819,241 $ - $ 12,438,025 Selling expenses 9,364,232 589,920 462,299 - 10,416,451 General and administrative expenses 5,460,827 674,470 (5,881,032 )* 59,125 313,390 Profit (loss) from operations $ (5,303,938 ) $ 833,273 $ 6,237,974 $ (59,125 ) $ 1,708,184 Depreciation and amortization $ 1,847,415 $ 4,812 $ 645,669 $ 322,593 $ 2,820,489 Total capital expenditures $ 1,378,362 $ 17,219 $ 77,550 $ - $ 1,473,131 * include the accounts receivable and advance to suppliers allowance reversal of $7,535,180. The following table presents summarized information by segment of the continuing operations for the year ended March 31, 2014: Retail drugstores Online pharmacy Drug wholesale Herb farming Total Revenue $ 40,096,781 $ 7,560,135 $ 18,497,671 $ - $ 66,154,587 Cost of goods 33,706,866 6,240,848 20,479,387 - 60,427,101 Gross profit $ 6,389,915 $ 1,319,287 $ (1,981,716 ) $ - $ 5,727,486 Selling expenses 12,778,642 386,135 523,994 - 13,688,771 General and administrative expenses 6,222,194 471,996 4,127,733 446,934 11,268,857 Profit (loss) from operations $ (12,610,921 ) $ 461,156 $ (6,633,443 ) $ (446,934 ) $ (19,230,142 ) Depreciation and amortization $ 2,618,740 $ 19,812 $ 594,500 $ 1,117 $ 3,234,169 Total capital expenditures $ 391,369 $ 309 $ 135,761 $ 1,585,602 $ 2,113,041 *The negative wholesale gross margin for the year ended March 31, 2014 was primarily due to the discounted sales of certain products that the Company’s new wholesale team has decided not to continue expending significant efforts to sell in the future. While the total discounted sales amount was approximately $0.7 million, the cost of the products sold was approximately $2.1 million, which resulted in a net loss of $1.4 million from such sales and negative gross margin in fiscal 2014. |
Retail drugstores | |
Segment Reporting Information [Line Items] | |
Schedule of net revenue from external customers by main products | Years ended March 31, 2015 2014 Prescription drugs $ 17,932,423 $ 19,781,547 OTC drugs 20,087,425 13,922,633 Nutritional supplements 5,033,819 2,736,808 TCM 3,316,067 2,718,305 Sundry products 1,032,800 134,218 Medical devices 1,397,202 803,270 Total $ 48,799,736 $ 40,096,781 |
Drug wholesale | |
Segment Reporting Information [Line Items] | |
Schedule of net revenue from external customers by main products | Years ended March 31, 2015 2014 Prescription drugs $ 7,777,525 $ 13,746,053 OTC drugs 5,094,150 1,012,630 Nutritional supplements 98,444 262,470 TCM 155,151 931 Sundry products 72,357 3,468,832 Medical devices 18,972 6,755 Total $ 13,216,599 $ 18,497,671 |
Online Pharmacy | |
Segment Reporting Information [Line Items] | |
Schedule of net revenue from external customers by main products | Years ended March 31, 2015 2014 Prescription drugs $ - $ - OTC drugs 4,551,354 3,347,470 Nutritional supplements 1,610,375 512,339 TCM - - Sundry products 1,827,669 1,761,945 Medical devices 6,889,999 1,938,381 Total $ 14,879,397 $ 7,560,135 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Mar. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of company's commitments for minimum rental payments | Periods ending March 31, Retail Online Drug Herb farming Total 2016 $ 3,265,512 $ 113,449 $ 189,140 $ - $ 3,568,101 2017 2,154,469 133,501 154,623 - 2,442,593 2018 1,790,078 139,305 150,914 - 2,080,297 2019 1,364,959 139,305 150,914 - 1,655,178 2020 562,102 139,305 150,914 - 852,321 Thereafter 202,702 174,131 37,728 - 414,561 Total $ 9,339,822 $ 838,996 $ 834,233 $ - $ 11,013,051 |
DESCRIPTION OF BUSINESS AND O53
DESCRIPTION OF BUSINESS AND ORGANIZATION - Summary of consolidated financial statements of various entities (Details) | 12 Months Ended | |||
Mar. 31, 2015USD ($) | Mar. 31, 2015CNY (¥) | Jul. 16, 2010USD ($) | ||
Schedule Of Activities Of Company and Affiliates [Line Items] | ||||
Percentage of ownership held in subsidiary by other entity | 100.00% | |||
Renovation Investment (Hong Kong) Co., Ltd. ("Renovation") | ||||
Schedule Of Activities Of Company and Affiliates [Line Items] | ||||
Description of background of entities | Incorporated in Hong Kong SAR on September 2, 2008 | |||
Percentage of ownership held in subsidiary | 100.00% | 100.00% | ||
Fully paid up registered capital | $ | $ 4,500,000 | |||
Jiuxin Management | ||||
Schedule Of Activities Of Company and Affiliates [Line Items] | ||||
Description of background of entities | • Established in the PRC on October 14, 2008 • Deemed a wholly foreign owned enterprise ("WFOE") under PRC law • Registered capital of $4.5 million fully paid | |||
Percentage of ownership held in subsidiary | 100.00% | 100.00% | ||
Fully paid up registered capital | $ | $ 11,000,000 | |||
Shouantang Technology | ||||
Schedule Of Activities Of Company and Affiliates [Line Items] | ||||
Description of background of entities | • Established in the PRC on July 16, 2010 by Renovation with 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 | |||
Percentage of ownership held in subsidiary | 100.00% | 100.00% | ||
Fully paid up registered capital | $ | $ 20,000,000 | |||
Qianhong Agriculture | ||||
Schedule Of Activities Of Company and Affiliates [Line Items] | ||||
Description of background of entities | • Established in the PRC on August 10, 2010 by Jiuxin Management • Registered capital of RMB 10 million fully paid • Carries out cultivation of TCM herbal plants | |||
Percentage of ownership held in subsidiary | 100.00% | 100.00% | ||
Fully paid up registered capital | ¥ 10,000,000 | |||
Quannuo Technology | ||||
Schedule Of Activities Of Company and Affiliates [Line Items] | ||||
Description of background of entities | • Established in the PRC on July 7, 2009 • 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 | |||
Percentage of ownership held in subsidiary | 100.00% | 100.00% | ||
Fully paid up registered capital | ¥ 10,000,000 | |||
Hangzhou Quannuo | ||||
Schedule Of Activities Of Company and Affiliates [Line Items] | ||||
Description of background of entities | • Established in the PRC on July 8, 2010 by Quannuo Technology • Registered capital of RMB 800,000 fully paid • Cancelled its business registration in April 2015 | |||
Fully paid up registered capital | 800,000 | |||
Jiuzhou Pharmacy | ||||
Schedule Of Activities Of Company and Affiliates [Line Items] | ||||
Description of background of entities | [1] | • Established in the PRC on September 9, 2003 • Registered capital of RMB 5 million fully paid • Operates the "Jiuzhou Grand Pharmacy" stores in Hangzhou including the eight stores of Sanhao Grand Pharmacy Chain Co., Ltd. Jiuzhou Pharmacy acquired in October 2014 which operate under "Jiuzhou Grand Pharmacy" after the acquisition | ||
Description of ownership percentage of entities | [1],[2] | VIE by contractual arrangements | ||
Fully paid up registered capital | [1] | 5,000,000 | ||
Jiuzhou Clinic | ||||
Schedule Of Activities Of Company and Affiliates [Line Items] | ||||
Description of background of entities | [1] | • Established in the PRC as a general partnership on October 10, 2003 • Operates a medical clinic adjacent to one of Jiuzhou Pharmacy's stores | ||
Description of ownership percentage of entities | [1],[2] | VIE by contractual arrangements | ||
Jiuzhou Service | ||||
Schedule Of Activities Of Company and Affiliates [Line Items] | ||||
Description of background of entities | [1] | • Established in the PRC on November 2, 2005 • Registered capital of RMB 500,000 fully paid • Operates a medical clinic adjacent to one of Jiuzhou Pharmacy's stores | ||
Description of ownership percentage of entities | [2] | VIE by contractual arrangements | ||
Fully paid up registered capital | [1] | 500,000 | ||
Jiuxin Medicine | ||||
Schedule Of Activities Of Company and Affiliates [Line Items] | ||||
Description of background of entities | • Established in PRC on December 31, 2003 • Acquired by Jiuzhou Pharmacy in August 2011 • Registered capital of RMB 10 million fully paid • Carries out pharmaceutical distribution services | |||
Description of ownership percentage of entities | [2] | VIE by contractual arrangements as a wholly-owned subsidiary of Jiuzhou Pharmacy | ||
Fully paid up registered capital | ¥ 10,000,000 | |||
Jiutong Medical | ||||
Schedule Of Activities Of Company and Affiliates [Line Items] | ||||
Description of background of entities | • Established in the PRC on December 20, 2011 by Renovation Registered capital of $2.6 million fully paid • Currently has no operation | |||
Percentage of ownership held in subsidiary | 100.00% | 100.00% | ||
Fully paid up registered capital | ¥ 2,600,000 | |||
Shouantang Health | ||||
Schedule Of Activities Of Company and Affiliates [Line Items] | ||||
Description of background of entities | • Established in the PRC on December 18, 2013 by Jiuzhou Service • Registered capital of RMB 500,000 fully paid • 51% held by Jiuzhou Service • Closed in April 2015 | |||
Description of ownership percentage of entities | [1],[2] | VIE by contractual arrangements as a controlled entity of Jiuzhou Service | ||
Fully paid up registered capital | ¥ 500,000 | |||
Percentage of ownership held in subsidiary by other entity | 51.00% | |||
Shouantang Bio | ||||
Schedule Of Activities Of Company and Affiliates [Line Items] | ||||
Description of background of entities | • Established in the PRC in October, 2014 by Shouantang Technology • 100% held by Shouantang Technology • Sells nutritional supplements under its own brand name | |||
Percentage of ownership held in subsidiary | 100.00% | 100.00% | ||
Percentage of ownership held in subsidiary by other entity | 100.00% | |||
[1] | Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service have been under the common control of the three shareholders ofRenovation (the "Owners") since their respective establishment dates, pursuant to agreements among the Owners to vote their interests in concert as memorialized in a voting agreement. Based on such voting agreement, the Company has determined that common control exists among these three companies. Operationally, the Owners have operated these three companies in conjunction with one another since each company's respective establishment date. Jiuxin Medicine is also deemed under the common control of the Owners 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 one subsidiary of Jiuzhou Pharmacy) as a variable interest entity ("VIE") under the accounting standards of the Financial Accounting Standards Board ("FASB"). Accordingly, the financial statements of Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service, as well as the subsidiary under the control of Jiuzhou Pharmacy (Shouantang Health), are consolidated into the financial statements of the Company. |
DESCRIPTION OF BUSINESS AND O54
DESCRIPTION OF BUSINESS AND ORGANIZATION (Detail Textuals) | 1 Months Ended | ||||
Sep. 17, 2009shares | Mar. 31, 2015CNY (¥) | Mar. 31, 2014Clinic | Dec. 18, 2013 | ||
Business Acquisition [Line Items] | |||||
Number of medical clinics owned | Clinic | 5 | ||||
Jiuzhou Service | |||||
Business Acquisition [Line Items] | |||||
Percentage of ownership held | 51.00% | ||||
Registered capital | ¥ | [1] | ¥ 500,000 | |||
Renovation Investment (Hong Kong) Co., Ltd. ("Renovation") | Common Stock | |||||
Business Acquisition [Line Items] | |||||
Issuance of equity consideration (in shares) | 7,900,000 | ||||
Percentage of capital stock in exchange transaction | 100.00% | ||||
[1] | Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service have been under the common control of the three shareholders ofRenovation (the "Owners") since their respective establishment dates, pursuant to agreements among the Owners to vote their interests in concert as memorialized in a voting agreement. Based on such voting agreement, the Company has determined that common control exists among these three companies. Operationally, the Owners have operated these three companies in conjunction with one another since each company's respective establishment date. Jiuxin Medicine is also deemed under the common control of the Owners as a subsidiary of Jiuzhou Pharmacy, as is Shouantang Health as a subsidiary of Jiuzhou Service. |
SUMMARY OF SIGNIFICANT ACCOUN55
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Summary of estimated useful lives of property and equipment (Details) | 12 Months Ended |
Mar. 31, 2015 | |
Leasehold improvements | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 3-10 years |
Motor vehicles | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 3-5 years |
Office equipment and furniture | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 3-5 years |
Buildings | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 35 years |
SUMMARY OF SIGNIFICANT ACCOUN56
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Summary of estimated useful lives of intangible assets (Details 1) | 12 Months Ended |
Mar. 31, 2015 | |
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 ACCOUN57
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Detail Textuals) | 12 Months Ended | ||||||
Mar. 31, 2015USD ($)$ / shares | Mar. 31, 2014USD ($)$ / shares | Mar. 31, 2014$ / shares¥ / shares | Mar. 31, 2013$ / shares | Mar. 31, 2013¥ / shares | Mar. 31, 2015¥ / shares | Mar. 31, 2014¥ / shares | |
Accounting Policies [Abstract] | |||||||
Benchmark percentage of the voting ownership interest for control and common control | 50.00% | ||||||
Percentage of ownership held in subsidiary by other entity | 100.00% | ||||||
Fixed assets impaired charges | $ 1,053,765 | ||||||
Value added tax, percentage | 17.00% | ||||||
Advertising and promotion costs | $ 412,535 | $ 4,637,276 | |||||
Foreign currency exchange rate for translated amounts with exception of equity for balance sheet | (per share) | $ 0.1634 | $ 0.1623 | $ 0.1623 | ¥ 1 | ¥ 1 | ||
Average translation rates applied to income and cash flow statement amounts | (per share) | $ 0.1625 | $ 1 | $ 0.1626 | ¥ 1 |
SUMMARY OF SIGNIFICANT ACCOUN58
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Detail Textuals 1) | 12 Months Ended | |
Mar. 31, 2015USD ($)Vendor | Mar. 31, 2014USD ($)VendorCustomer | |
Concentration Risk [Line Items] | ||
Deposits not covered by insurance | $ 12,563,579 | $ 7,204,626 |
Supplier Concentration Risk | Total purchases | ||
Concentration Risk [Line Items] | ||
Number of vendors | Vendor | 2 | 1 |
Concentration risk, percentage | 28.00% | 11.00% |
Supplier Concentration Risk | Total advances | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 10.00% | 10.00% |
Customer Concentration Risk | Total sales | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 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 |
Customer Concentration Risk | Total accounts receivable | ||
Concentration Risk [Line Items] | ||
Number of customers | Customer | 1 | |
Concentration risk, percentage | 10.00% | 28.00% |
Concentration risk, customer | more than 10% of total accounts receivable | one customer accounted for 28% of total accounts receivable |
SUMMARY OF SIGNIFICANT ACCOUN59
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Detail Textuals 2) | 12 Months Ended |
Mar. 31, 2015 | |
Retail drugstore leases | Minimum | |
Operating Leased Assets [Line Items] | |
Term of agreement for operating leases | 3 years |
Retail drugstore leases | Maximum | |
Operating Leased Assets [Line Items] | |
Term of agreement for operating leases | 8 years |
Wholesale warehouse lease | |
Operating Leased Assets [Line Items] | |
Term of agreement for operating leases | 10 years |
Land | |
Operating Leased Assets [Line Items] | |
Term of agreement for operating leases | 30 years |
SUMMARY OF SIGNIFICANT ACCOUN60
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Detail Textuals 3) | Mar. 31, 2015 |
Noncontrolling interest | Wang Yi | |
Noncontrolling Interest [Line Items] | |
Percentage of ownership held | 49.00% |
FINANCIAL ASSETS AVAILABLE FO61
FINANCIAL ASSETS AVAILABLE FOR SALE (Detail Textuals) | Feb. 04, 2015USD ($) | Mar. 31, 2015USD ($) | Feb. 04, 2015CNY (¥) | Mar. 31, 2014USD ($) |
Schedule of Available-for-sale Securities [Line Items] | ||||
Financial assets available for sale | $ 1,307,200 | |||
Fortune 99 | Bank of Hangzhou | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Interest rate | 5.45% | |||
Total principal amount of wealth management product | $ 1,307,200 | ¥ 8,000,000 |
TRADE ACCOUNTS RECEIVABLE - Sum
TRADE ACCOUNTS RECEIVABLE - Summary of components of trade accounts receivable (Details) - USD ($) | Mar. 31, 2015 | Mar. 31, 2014 |
Accounts Receivable, Net [Abstract] | ||
Accounts receivable | $ 12,108,561 | $ 11,869,866 |
Less: allowance for doubtful accounts | (2,870,818) | (5,135,330) |
Trade accounts receivable, net | $ 9,237,743 | $ 6,734,536 |
TRADE ACCOUNTS RECEIVABLE (Deta
TRADE ACCOUNTS RECEIVABLE (Detail Textuals) - USD ($) | 12 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Accounts Receivable, Net [Abstract] | ||
Accounts receivable written off | $ 253,193 | $ 644,049 |
Accounts receivable written off against previous allowance for doubtful accounts | $ 0 | $ 367,706 |
OTHER CURRENT ASSETS - Summary
OTHER CURRENT ASSETS - Summary of components of other current assets (Details) - USD ($) | Mar. 31, 2015 | Mar. 31, 2014 | |
Assets, Current [Abstract] | |||
Prepaid rental expenses | [1] | $ 1,712,018 | $ 1,165,633 |
Lease rights transfer fees, current portion | [2] | 11,939 | |
Prepaids and other current assets | $ 488,820 | 485,530 | |
Total | $ 2,200,838 | $ 1,663,102 | |
[1] | As the Company opened new stores in Fiscal 2015, prepaid rental expenses increased. | ||
[2] | Lease rights transfer fees are paid by the Company to secure store rentals in coveted areas. The additional costs of acquiring the right to lease new store locations are capitalized and amortized over the period of the initial lease term. The rising of B2C e-commerce, which is decentralized in terms its regulations in China, cuts the overall demand on store rental. As the store rental market has become favorable to tenants, the Company was no longer required to pay lease rights transfer fees when renting new store spaces in fiscal 2015. |
PROPERTY AND EQUIPMENT - Summar
PROPERTY AND EQUIPMENT - Summary of components of property and equipment (Details) - USD ($) | Mar. 31, 2015 | Mar. 31, 2014 |
Property, Plant and Equipment [Line Items] | ||
Total | $ 23,115,486 | $ 21,525,560 |
Less: Accumulated depreciation | (13,606,043) | (10,729,190) |
Impairment | (2,452,662) | (1,383,682) |
Property and equipment, net | 7,056,781 | 9,412,688 |
Building | ||
Property, Plant and Equipment [Line Items] | ||
Total | 1,751,986 | 1,139,412 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Total | 12,792,714 | 12,329,637 |
Farmland development cost | ||
Property, Plant and Equipment [Line Items] | ||
Total | 1,954,165 | 1,941,010 |
Office equipment and furniture | ||
Property, Plant and Equipment [Line Items] | ||
Total | 5,949,193 | 5,535,667 |
Motor vehicles | ||
Property, Plant and Equipment [Line Items] | ||
Total | $ 667,428 | $ 579,834 |
PROPERTY AND EQUIPMENT (Detail
PROPERTY AND EQUIPMENT (Detail Textuals) | 12 Months Ended | |
Mar. 31, 2015USD ($)Store | Mar. 31, 2014USD ($) | |
Property, Plant and Equipment [Abstract] | ||
Total depreciation expense for property and equipment | $ 2,788,691 | $ 3,121,960 |
Impairment of fixed assets | $ 1,053,765 | 4,995,012 |
Impairment of leasehold improvement and office equipment | 480,771 | |
Impairment of land and road improvement | 905,468 | |
Leasehold improvement write-off | $ 145,040 | |
Number of Shanghai drugstores closed | Store | 5 |
ADVANCES TO SUPPLIERS - Summary
ADVANCES TO SUPPLIERS - Summary of components of advance to suppliers (Details) - USD ($) | Mar. 31, 2015 | Mar. 31, 2014 |
Advances To Suppliers [Abstract] | ||
Advance to suppliers | $ 5,942,866 | $ 11,162,767 |
Less: allowance for doubtful accounts | (1,225,514) | (6,585,573) |
Advance to suppliers, net | $ 4,717,352 | $ 4,577,194 |
ADVANCES TO SUPPLIERS (Detail T
ADVANCES TO SUPPLIERS (Detail Textuals) - USD ($) | 12 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Advances To Suppliers [Abstract] | ||
Advances to suppliers written off against previous allowance for doubtful accounts | $ 0 | $ 456,089 |
Collected goods against advance to vendor | 3,300,000 | |
Cash advances to vendors | $ 2,100,000 |
INVENTORY - Summary of Inventor
INVENTORY - Summary of Inventory (Details) - USD ($) | Mar. 31, 2015 | Mar. 31, 2014 | |
Inventory Disclosure [Abstract] | |||
Finished goods | $ 10,538,591 | $ 7,822,102 | |
Less: reserve for inventory | [1] | (774,705) | |
Inventory, net | $ 10,538,591 | $ 7,047,397 | |
[1] | As of March 31,2014, the Company recorded a reserve of $774,705 for those products that were estimated to be obsolete. As of March 31,2015, all those goods had been sold. As a result, no such reserve was made as of March 31,2015. |
INVENTORY - Summary of Invent70
INVENTORY - Summary of Inventory (Parentheticals) (Details) | 12 Months Ended |
Mar. 31, 2014USD ($) | |
Inventory Disclosure [Abstract] | |
Inventory reserve for obsolete goods | $ 774,705 |
FARMLAND ASSETS -Summary of far
FARMLAND ASSETS -Summary of farmland assets (Details) - USD ($) | Mar. 31, 2015 | Mar. 31, 2014 |
Farmland Assets [Abstract] | ||
Farmland assets | $ 2,530,558 | $ 2,192,372 |
Less: impairments | (826,199) | (820,637) |
Farmland assets, net | $ 1,704,359 | $ 1,371,735 |
LONG TERM DEPOSITS (Detail Text
LONG TERM DEPOSITS (Detail Textuals) - USD ($) | Mar. 31, 2015 | Mar. 31, 2014 |
Long Term Deposits [Abstract] | ||
Long term deposits | $ 2,584,025 | $ 2,786,437 |
OTHER NONCURRENT ASSETS - Summa
OTHER NONCURRENT ASSETS - Summary of components of other noncurrent assets (Details) - USD ($) | Mar. 31, 2015 | Mar. 31, 2014 | |
Other Assets, Noncurrent Disclosure [Abstract] | |||
Prepayment for lease of land use right - noncurrent, net | [1] | $ 2,734,798 | $ 2,878,687 |
Long term prepaid expense | 158,243 | ||
Total | $ 2,734,798 | $ 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 the carrying cost. As a result, the Company recorded an impairment of $2,477,212 on the lease prepayment in fiscal 2014. |
OTHER NONCURRENT ASSETS - Sum74
OTHER NONCURRENT ASSETS - Summary of amortizations of prepayment for lease of land use right for next five years (Details 1) - Land use right | Mar. 31, 2015USD ($) |
Years ending March 31, | |
2,016 | $ 67,104 |
2,017 | 67,104 |
2,018 | 67,104 |
2,019 | 67,104 |
2,020 | 67,104 |
Thereafter | $ 1,261,778 |
OTHER NONCURRENT ASSETS (Detail
OTHER NONCURRENT ASSETS (Detail Textuals) - USD ($) | 12 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Schedule Of Other Assets Noncurrent [Line Items] | ||
Deposit included in prepayment | $ 1,137,500 | |
Impairment of lease prepayment | $ 145,040 | |
Land | ||
Schedule Of Other Assets Noncurrent [Line Items] | ||
Term of agreement for operating land lease | 30 years | |
Impairment of lease prepayment | 2,477,212 | |
Amortization of prepayment for lease of land use right | $ 67,104 | $ 162,600 |
INTANGIBLE ASSETS - Summary of
INTANGIBLE ASSETS - Summary of components of intangible assets (Details) - USD ($) | Mar. 31, 2015 | Mar. 31, 2014 | |
Schedule Of Finite And Indefinite Lived Intangible Assets [Line Items] | |||
Total intangible assets | $ 3,664,602 | $ 2,056,765 | |
Less: accumulated amortization | (522,599) | (487,322) | |
Other intangible assets, net | 3,142,003 | $ 1,569,443 | |
Licenses | |||
Schedule Of Finite And Indefinite Lived Intangible Assets [Line Items] | |||
Total intangible assets | [1] | 1,570,274 | |
Goodwill | |||
Schedule Of Finite And Indefinite Lived Intangible Assets [Line Items] | |||
Total intangible assets | [1] | 23,623 | |
Land use rights | |||
Schedule Of Finite And Indefinite Lived Intangible Assets [Line Items] | |||
Total intangible assets | [2] | 1,593,403 | $ 1,582,677 |
Software | |||
Schedule Of Finite And Indefinite Lived Intangible Assets [Line Items] | |||
Total intangible assets | $ 477,302 | $ 474,088 | |
[1] | As of March 31, 2015, the intangible assets with indefinite life consisted of the following, which were generated through the acquisition of Sanhao Pharmacy (see Note 22- Business Combination). There is no intangible asset with indefinite life as of March 31, 2014. | ||
[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 the completion of the plant in the near future. |
INTANGIBLE ASSETS - Intangible
INTANGIBLE ASSETS - Intangible assets with indefinite life (Details 1) - Mar. 31, 2015 - Sanhao Pharmacy - USD ($) | Total | |
Indefinite-lived Intangible Assets [Line Items] | ||
Goodwill | $ 23,560 | |
Goodwill, currency translation adjustment | 63 | |
Goodwill, net carrying value | 23,623 | |
Preliminary fair value, including goodwill | 1,589,606 | |
Currency translation adjustment including goodwill | 4,291 | |
Net carrying value including goodwill | 1,593,897 | |
Licenses | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Preliminary fair value, excluding goodwill | [1] | 1,566,046 |
Currency translation adjustment excluding goodwill | [1] | 4,228 |
Net carrying value excluding goodwill | [1] | $ 1,570,274 |
[1] | This represents the preliminary fair value of the licenses of insurance applicable drugstores acquired from Sanhao Pharmacy. The licenses allow 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 (Detail Textu
INTANGIBLE ASSETS (Detail Textuals) - USD ($) | 12 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization expense of intangibles | $ 31,975 | $ 112,209 |
SHORT-TERM BANK LOAN (Detail Te
SHORT-TERM BANK LOAN (Detail Textuals) - Mar. 31, 2015 - Short term loan - Industrial And Commercial Bank Of China | USD ($) | CNY (¥) |
Short-term Debt [Line Items] | ||
Short term loan | $ 32,680 | ¥ 200,000 |
Percentage of interest rate on short term loan | 5.885% | 5.885% |
NOTES PAYABLE - Summary of note
NOTES PAYABLE - Summary of notes payable (Details) - USD ($) | Mar. 31, 2015 | Mar. 31, 2014 | |
Short-term Debt [Line Items] | |||
Notes Payable, Current, Total | $ 15,752,969 | $ 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 | |
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 | |
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 | [1] | $ 2,238,580 | |
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 | |
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 | |
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 | |
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 | |
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 | |
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 | |
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 | [3] | $ 1,634,000 | |
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 | [3] | 784,320 | |
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 | [3] | 1,187,918 | |
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 | [3] | 1,329,651 | |
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 | [3] | 1,601,320 | |
Jiuzhou Pharmacy | Line of bank credit | Hangzhou United Bank ("HUB") | 03/04/15 | 09/04/15 | |||
Short-term Debt [Line Items] | |||
Notes Payable, Current, Total | [3] | 1,470,600 | |
Jiuzhou Pharmacy | Line of bank credit | Hangzhou United Bank ("HUB") | 03/13/14 | 09/13/15 | |||
Short-term Debt [Line Items] | |||
Notes Payable, Current, Total | [3] | 604,580 | |
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 | [4] | 2,908,520 | |
Jiuzhou Pharmacy | Line of bank credit | Bank of Hangzhou ("BOH") | 02/09/15 | 08/09/15 | |||
Short-term Debt [Line Items] | |||
Notes Payable, Current, Total | [4] | $ 1,993,480 | |
[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 the amounts borrowed as restricted cash with ICBC as additional collateral against these bank notes. All the outstanding notes payable had been repaid upon maturity. As of March 31, 2015, the Company had $2,238,580 (RMB 13,700,000) notes payable from ICBC, with restricted cash of $671,574 (RMB 4,110,000) held at the 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 March 31, 2015, the Company had $8,612,389 (RMB52,707,400) notes payable from HUB. The Company is required to hold restricted cash of $36,921,220 (RMB52,707,400) with HUB as collateral against these bank notes. | ||
[4] | As of March 31, 2015, the Company had $4,902,000 (RMB30,000,000) 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 $2,287,600 (RMB 14,000,000) with BOH as collateral against these bank notes. |
NOTES PAYABLE (Detail Textuals)
NOTES PAYABLE (Detail Textuals) | 12 Months Ended | ||||
Mar. 31, 2015USD ($) | Mar. 31, 2015CNY (¥) | Mar. 31, 2014USD ($) | Mar. 31, 2015CNY (¥) | Mar. 31, 2014CNY (¥) | |
Debt Instrument [Line Items] | |||||
Aggregate restricted cash deposited at banks as collateral | $ 8,992,101 | $ 3,114,543 | |||
Bank notes payable | 15,752,969 | 7,820,718 | |||
Line of Credit | |||||
Debt Instrument [Line Items] | |||||
Aggregate restricted cash deposited at banks as collateral | 9,000,000 | ||||
Aggregate maximum line of credit amount | 20,590,000 | ||||
Bank facilities available for future borrowing | 3,560,000 | ||||
Line of Credit | Industrial And Commercial Bank Of China | |||||
Debt Instrument [Line Items] | |||||
Aggregate maximum line of credit amount | 11,590,000 | ||||
Line of Credit | Hangzhou United Bank | |||||
Debt Instrument [Line Items] | |||||
Aggregate maximum line of credit amount | 11,590,000 | ||||
Line of Credit | Bank of Hangzhou | |||||
Debt Instrument [Line Items] | |||||
Aggregate maximum line of credit amount | 11,590,000 | ||||
Notes Payable | Industrial And Commercial Bank Of China | |||||
Debt Instrument [Line Items] | |||||
Notes payable | 2,238,580 | $ 2,082,309 | ¥ 13,700,000 | ¥ 12,830,000 | |
Guaranteed amount for credit line | 3,836,632 | ¥ 23,480,000 | |||
Percentage of restricted cash as collateral for notes payable | 30.00% | ||||
Aggregate restricted cash deposited at banks as collateral | 671,574 | 4,110,000 | |||
Notes Payable | Hangzhou United Bank | |||||
Debt Instrument [Line Items] | |||||
Notes payable | 8,612,389 | $ 5,738,409 | 52,707,400 | 35,356,800 | |
Aggregate restricted cash deposited at banks as collateral | 36,921,220 | $ 2,489,851 | 52,707,400 | ¥ 15,341,040 | |
Notes Payable | Bank of Hangzhou | |||||
Debt Instrument [Line Items] | |||||
Notes payable | 4,902,000 | 30,000,000 | |||
Aggregate restricted cash deposited at banks as collateral | $ 2,287,600 | ¥ 14,000,000 |
NOTES PAYABLE (Detail Textuals
NOTES PAYABLE (Detail Textuals 1) - USD ($) | Mar. 31, 2015 | Mar. 31, 2014 |
Short-term Debt [Line Items] | ||
Notes payable | $ 15,752,969 | $ 7,820,718 |
Carrying Amount | Level 2 | ||
Short-term Debt [Line Items] | ||
Notes payable | 15,752,969 | 7,820,718 |
Fair value | Level 2 | ||
Short-term Debt [Line Items] | ||
Notes payable | $ 15,743,000 | $ 7,810,000 |
TAXES - Summary of significant
TAXES - Summary of significant components of the income tax provision (Details) - USD ($) | 12 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | ||
Current tax provision | |||
Federal | |||
State | |||
Foreign | $ 57,398 | $ 44,870 | |
Current tax provision, total | $ 57,398 | $ 44,870 | |
Deferred tax provision | |||
Federal | |||
State | |||
Foreign | |||
Deferred tax provision, total | |||
Income tax provision | [1] | $ 57,398 | $ 44,870 |
[1] | The current income tax provision for the year ended March 31, 2015 excludes those incomes related to accounts receivables and advance to suppliers allowance reversals, and inventory reserve reversal, which are non-taxable. |
TAXES - Summary of income from
TAXES - Summary of income from continuing operations before income taxes was allocated between the United States and foreign components (Details 1) - USD ($) | 12 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Income Tax Disclosure [Abstract] | ||
United States | $ (1,056,717) | $ (1,034,223) |
Foreign | 1,969,743 | (24,277,077) |
Income from continuing operations before income taxes | $ 913,026 | $ (25,311,300) |
TAXES - Summary of reconciliati
TAXES - Summary of reconciliation of U.S. statutory tax rates with effective tax rate (Details 2) | 12 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | ||
Income Tax Disclosure [Abstract] | |||
U.S. Statutory rates | 34.00% | 34.00% | |
Foreign income not recognized in the U.S. | (34.00%) | (34.00%) | |
China income taxes | 25.00% | 25.00% | |
Change in valuation allowance | [1] | (25.80%) | (24.90%) |
Others | [2] | 7.10% | (0.40%) |
Effective tax rate | 6.30% | (0.30%) | |
[1] | The (25.8)% for the year ended March 31, 2015 primarily represents the effect of those profit from accounts receivable and advance to suppliers allowance reversal, and inventory reserve reversal, which, according to China annual tax filing, is non-taxable for PRC income tax. | ||
[2] | The 7.1% for the year ended March 31, 2015 and the (0.4)% for the year ended March 31, 2014 represent the combined effect of expenses incurred by the Company that were not deductible for PRC income tax and PRC income tax exemptions. |
TAXES - Summary of temporary di
TAXES - Summary of temporary differences and carry forwards gave rise to the following deferred tax assets (Details 3) - USD ($) | Mar. 31, 2015 | Mar. 31, 2014 |
Current deferred tax assets: | ||
Allowance for doubtful accounts | $ 1,031,566 | $ 2,759,144 |
Inventory reserve | 193,676 | |
Payroll accrual | 163,594 | 63,214 |
Valuation allowance | $ (1,195,160) | $ (3,016,034) |
Total current deferred tax assets | ||
Long-term deferred tax assets: | ||
Long-lived assets impairment | $ 1,062,703 | $ 792,432 |
Long-term lease reserve | 623,500 | 619,303 |
Depreciation and amortization | 323,547 | |
Net operating loss carry forward | 708,033 | 410,592 |
Valuation allowance | $ (2,394,236) | $ (2,145,874) |
Total current deferred tax assets | ||
Total |
TAXES - Summary of taxes payabl
TAXES - Summary of taxes payable (Details 4) - USD ($) | Mar. 31, 2015 | Mar. 31, 2014 |
Income Tax Disclosure [Abstract] | ||
VAT | $ 301,149 | $ 344,329 |
Income tax | 8,007 | 7,851 |
Others | 18,955 | 21,321 |
Total taxes payable | $ 328,111 | $ 373,501 |
TAXES (Detail Textuals)
TAXES (Detail Textuals) - USD ($) | 12 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | ||
Income Tax Disclosure [Abstract] | |||
Estimated net operating loss carryforwards for U.S. income tax purposes | $ 1,503,000 | ||
Valuation allowance, amount | 511,000 | ||
Net increase in the valuation allowance | $ 25,000 | ||
Effect of those profit from accounts receivable and advance to suppliers allowance reversal, and inventory reserve reversal | [1] | (25.80%) | (24.90%) |
Non-deductible expenses-permanent difference | 7.10% | (0.40%) | |
VAT on sales | $ 19,737,410 | $ 16,045,706 | |
VAT on purchases | $ 18,613,431 | $ 15,069,655 | |
[1] | The (25.8)% for the year ended March 31, 2015 primarily represents the effect of those profit from accounts receivable and advance to suppliers allowance reversal, and inventory reserve reversal, which, according to China annual tax filing, is non-taxable for PRC income tax. |
POSTRETIREMENT BENEFITS (Detail
POSTRETIREMENT BENEFITS (Detail Textuals) - USD ($) | 12 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Compensation and Retirement Disclosure [Abstract] | ||
Contribution to employment benefits and pension | $ 849,689 | $ 663,837 |
RELATED PARTY TRANSACTIONS AN90
RELATED PARTY TRANSACTIONS AND ARRANGEMENTS - Amounts payable to related parties (Details) - USD ($) | Mar. 31, 2015 | Mar. 31, 2014 | |
Related Party Transaction [Line Items] | |||
Total | $ 2,729,740 | $ 2,384,294 | |
Due to cofounders | |||
Related Party Transaction [Line Items] | |||
Total | [1] | 576,818 | 576,818 |
Due to director | |||
Related Party Transaction [Line Items] | |||
Total | [2] | $ 2,152,922 | $ 1,807,476 |
[1] | As of March 31, 2015 and 2014, the amount due to cofounders represents loans from the ultimate 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. In addition, Mr. Lei Liu also advanced cash to the Company for working capital purpose. 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 $941,613 owed to Mr. Liu. |
RELATED PARTY TRANSACTIONS AN91
RELATED PARTY TRANSACTIONS AND ARRANGEMENTS (Detail Textuals) - USD ($) | Jul. 02, 2014 | Mar. 31, 2015 | Mar. 31, 2014 |
Related Party Transaction [Line Items] | |||
Due to officer | $ 2,729,740 | $ 2,384,294 | |
Notes payable secured by the personal properties of certain shareholder's | 5,790,471 | 5,738,409 | |
Mr. Lei Liu | |||
Related Party Transaction [Line Items] | |||
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 | ||
Rent expense | $ 97,500 | $ 170,730 |
PURCHASE OPTION DERIVATIVE LI92
PURCHASE OPTION DERIVATIVE LIABILITY - Summary of assumptions to estimate fair value (Details) - Underwriter Purchase Option - $ / shares | 12 Months Ended | ||
Mar. 31, 2015 | [1] | Mar. 31, 2014 | |
Derivative [Line Items] | |||
Stock price | $ 2.82 | $ 2.07 | |
Exercise price | $ 6.25 | $ 6.25 | |
Annual dividend yield | 0.00% | 0.00% | |
Expected term (years) | 18 days | 1 year 18 days | |
Risk-free interest rate | 0.05% | 0.13% | |
Expected volatility | 96.40% | 132.55% | |
[1] | As of March 31, 2015, the option to purchase 105,000 shares of common stock had not been exercised. |
PURCHASE OPTION DERIVATIVE LI93
PURCHASE OPTION DERIVATIVE LIABILITY (Detail Textuals) - Underwriter Purchase Option - USD ($) | 1 Months Ended | 12 Months Ended | ||
Apr. 28, 2010 | Apr. 22, 2010 | Mar. 31, 2015 | Mar. 31, 2014 | |
Derivative [Line Items] | ||||
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 | $ 2 | $ 52,603 | |
Gain (loss) on change in fair value option | $ 33,520 |
WARRANTS - Summary of warrants
WARRANTS - Summary of warrants (Details) - Common Stock Warrants - $ / shares | 12 Months Ended | ||
Mar. 31, 2015 | [1] | Mar. 31, 2014 | |
Class of Warrant or Right [Line Items] | |||
Stock price | $ 2.82 | $ 2.07 | |
Exercise price | $ 1.20 | $ 1.20 | |
Annual dividend yield | 0.00% | 0.00% | |
Expected term (years) | 1 year 5 months 26 days | 2 years 5 months 26 days | |
Risk-free interest rate | 0.67% | 0.67% | |
Expected volatility | 116.88% | 114.15% | |
[1] | As of March 31, 2015, the warrant had not been exercised. |
WARRANTS (Detail Textuals)
WARRANTS (Detail Textuals) - Common Stock Warrants - USD ($) | 12 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | Sep. 26, 2013 | |
Class of Warrant or Right [Line Items] | |||
Fair value estimation method | Black-Scholes Model | ||
Fair value of warrants | $ 33,606 | ||
Gain (loss) from changes in fair value of warrant liability | $ 69,931 | ||
Fair value of warrant liability | $ 315,325 | $ 226,313 | |
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- Summary o
STOCKHOLDERS' EQUITY- Summary of stock option activities (Details) - Mar. 31, 2015 - Stock option - USD ($) | Total |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |
Options Outstanding | 967,000 |
Options Granted | |
Options Exercised | |
Options Forfeited or expired | |
Outstanding | 967,000 |
Options Exercisable | |
Options Vested or expected to vest | 967,000 |
Share Based Compensation Arrangement By Share Based Payment Award Options Weighted Average Exercise Price [Roll Forward] | |
Weighted average exercise price Outstanding | |
Weighted average exercise price Granted | $ 2.50 |
Weighted average exercise price Exercised | |
Weighted average exercise price Forfeited or expired | |
Weighted average exercise price Outstanding | $ 2.50 |
Weighted average exercise price Exercisable | |
Weighted average exercise price Vested or expected to vest | $ 2.50 |
Share Based Compensation Arrangement By Share Based Payment Award Options Weighted Average Remaining Contractual Term [Abstract] | |
Weighted-average remaining contractual term Granted | 8 years |
Weighted-average remaining contractual term Outstanding | 7 years 7 months 17 days |
Weighted-average remaining contractual term Vested or expected to vest | 7 years 7 months 17 days |
Share Based Compensation Arrangement By Share Based Payment Award Options Aggregate Intrinsic Value Roll Forward | |
Aggregate intrinsic value Outstanding | |
Aggregate intrinsic value Granted | $ 309,440 |
Aggregate intrinsic value Exercised | |
Aggregate intrinsic value Forfeited or expired | |
Aggregate intrinsic value Outstanding | $ 309,440 |
Aggregate intrinsic value Exercisable | |
Aggregate intrinsic value Vested or expected to vest | $ 309,440 |
STOCKHOLDERS' EQUITY - Summary
STOCKHOLDERS' EQUITY - Summary of weighted average grant date fair values (Details 1) - Mar. 31, 2015 - Stock option - $ / shares | Total |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Fair value of stock options granted | $ 1.54 |
Expected volatility | 123.19% |
Expected term (years) | 5 years |
Risk-free interest rate | 1.65% |
Annual dividend yield | 0.00% |
STOCKHOLDER'S EQUITY (Detail Te
STOCKHOLDER'S EQUITY (Detail Textuals) | 1 Months Ended | 12 Months Ended | ||
Jan. 16, 2015Employeeshares | Nov. 18, 2014Officer$ / sharesshares | Mar. 31, 2015USD ($)$ / sharesshares | Mar. 31, 2014USD ($) | |
Stock option | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of options granted | shares | ||||
Exercise price of stock option | $ / shares | $ 2.50 | |||
Unrecognized compensation costs | $ 1,300,000 | |||
Weighted-average remaining contractual term Vested or expected to vest | 2 years 7 months 17 days | |||
Group of 39 employees | Restricted Stock | Stock incentive plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of shares vested | shares | 265,000 | |||
Number of employees in a group | Employee | 39 | |||
Group of 39 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 | $ 62,034 | $ 78,022 | ||
Group of 39 employees | Restricted Stock | Stock incentive plan | Selling Expense | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share based compensation expense | 11,422 | $ 30,736 | ||
Directors and officers | Restricted Stock | Stock incentive plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of restricted awards granted | shares | 350,000 | |||
Trading value of common stock, per share (in dollars per share) | $ / shares | $ 1.89 | |||
Share based compensation expense | 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 | $ 182,482 | |||
Number of options granted | shares | 967,000 | |||
Number of directors, officers and employees in a group | Officer | 46 | |||
Exercise price of stock option | $ / shares | $ 2.50 | |||
Vesting period of options | 3 years | |||
Period for options exercisable from the vesting date | 5 years |
STOCKHOLDER'S EQUITY (Detail 99
STOCKHOLDER'S EQUITY (Detail Textuals 1) | 12 Months Ended |
Mar. 31, 2015 | |
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) -
EARNINGS PER SHARE (Details) - Summary of reconciliation of basic and diluted earnings per share computation (Details) - USD ($) | 12 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Earnings Per Share [Abstract] | ||
Net earnings (loss) attributable to controlling interest | $ 856,557 | $ (25,356,136) |
Weighted average shares used in basic computation (in shares) | 14,960,522 | 13,880,190 |
Diluted effect of stock options and warrants (in shares) | 195,901 | |
Weighted average shares used in diluted computation (in shares) | 15,156,423 | 13,880,190 |
Earnings (loss) per share - Basic: | ||
Net earnings (loss) before noncontrolling interest (in dollars per share) | $ 0.06 | $ (1.83) |
Add: Net loss attributable to noncontrolling interest (in dollars per share) | ||
Net loss attributable to controlling interest (in dollars per share) | $ 0.06 | $ (1.83) |
Earnings (loss) per share - Diluted: | ||
Net earnings (loss) before noncontrolling interest (in dollars per share) | $ 0.06 | $ (1.83) |
Add: Net loss attributable to noncontrolling interest (in dollars per share) | ||
Net loss attributable to controlling interest (in dollars per share) | $ 0.06 | $ (1.83) |
EARNINGS PER SHARE (Detail Text
EARNINGS PER SHARE (Detail Textuals) - shares | 12 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Outstanding Purchase Options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from calculation of diluted earnings per share | 105,000 | 105,000 |
BUSINESS COMBINATION - Summary
BUSINESS COMBINATION - Summary of preliminary fair value of the assets acquired and liabilities assumed at the date of acquisition (Details) - Sanhao Pharmacy | Mar. 31, 2015USD ($) | Oct. 09, 2014USD ($) | Oct. 09, 2014CNY (¥) |
Allocation of the purchase price to assets and liabilities at fair value: | |||
Goodwill | $ 23,560 | ||
Jiuzhou Pharmacy | |||
Business Acquisition [Line Items] | |||
Total purchase price | $ 1,568,640 | ¥ 9,600,000 | |
Allocation of the purchase price to assets and liabilities at fair value: | |||
Cash and cash equivalents | 32,016 | ||
Accounts receivable, net | 5,612 | ||
Inventories | 53,731 | ||
Advances on inventory purchases | 474 | ||
Property, plant and equipment, net | 543 | ||
Licenses | 1,570,274 | ||
Total assets | 1,662,650 | ||
Accounts payable | 37,315 | ||
Tax receivable | (1,023) | ||
Accrued liabilities and other liabilities, current | 81,341 | ||
Total liabilities | 117,633 | ||
Net assets acquired at fair value | 1,545,017 | ||
Goodwill | $ 23,623 |
BUSINESS COMBINATION (Detail Te
BUSINESS COMBINATION (Detail Textuals) - Sanhao Pharmacy | Oct. 09, 2014USD ($)Store | Oct. 09, 2014CNY (¥) | Jan. 31, 2015Store | Mar. 31, 2015USD ($) | Oct. 09, 2014CNY (¥)Store |
Business Combinations [Abstract] | |||||
Goodwill, net carrying value | $ 23,623 | ||||
Business Acquisition [Line Items] | |||||
Goodwill | $ 23,560 | ||||
Jiuzhou Pharmacy | |||||
Business Acquisition [Line Items] | |||||
Number of local drugstore chain | Store | 11 | 11 | |||
Total purchase price | $ 1,568,640 | ¥ 9,600,000 | |||
Goodwill | $ 23,623 | ||||
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 | $ 941,184 | ¥ 5,760,000 | |||
Number of stores operating under brand name of Jiuzhou Pharmacy | Store | 8 |
SEGMENTS - Summarized informati
SEGMENTS - Summarized information by segment of continuing operation (Details) - USD ($) | 12 Months Ended | |||
Mar. 31, 2015 | Mar. 31, 2014 | |||
Segment Reporting Information [Line Items] | ||||
Revenue | $ 76,895,732 | $ 66,154,587 | ||
Cost of goods | 64,457,707 | 60,427,101 | ||
Gross profit | 12,438,025 | 5,727,486 | ||
Selling expenses | 10,416,451 | 13,688,771 | ||
General and administrative expenses | 313,390 | 11,268,857 | ||
Profit (loss) from operations | 1,708,184 | (19,230,142) | ||
Depreciation and amortization | 2,820,489 | 3,234,169 | ||
Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 76,895,732 | 66,154,587 | ||
Cost of goods | 64,457,707 | 60,427,101 | ||
Gross profit | 12,438,025 | 5,727,486 | ||
Selling expenses | 10,416,451 | 13,688,771 | ||
General and administrative expenses | 313,390 | 11,268,857 | ||
Profit (loss) from operations | 1,708,184 | (19,230,142) | ||
Depreciation and amortization | 2,820,489 | 3,234,169 | ||
Total capital expenditures | 1,473,131 | 2,113,041 | ||
Operating Segments | Retail drugstores | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 48,799,736 | 40,096,781 | ||
Cost of goods | 39,278,615 | 33,706,866 | ||
Gross profit | 9,521,121 | 6,389,915 | ||
Selling expenses | 9,364,232 | 12,778,642 | ||
General and administrative expenses | 5,460,827 | 6,222,194 | ||
Profit (loss) from operations | (5,303,938) | (12,610,921) | ||
Depreciation and amortization | 1,847,415 | 2,618,740 | ||
Total capital expenditures | 1,378,362 | 391,369 | ||
Operating Segments | Online Pharmacy | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 14,879,397 | 7,560,135 | ||
Cost of goods | 12,781,734 | 6,240,848 | ||
Gross profit | 2,097,663 | 1,319,287 | ||
Selling expenses | 589,920 | 386,135 | ||
General and administrative expenses | 674,470 | 471,996 | ||
Profit (loss) from operations | 833,273 | 461,156 | ||
Depreciation and amortization | 4,812 | 19,812 | ||
Total capital expenditures | 17,219 | 309 | ||
Operating Segments | Drug wholesale | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 13,216,599 | 18,497,671 | ||
Cost of goods | 12,397,358 | 20,479,387 | ||
Gross profit | 819,241 | (1,981,716) | [1] | |
Selling expenses | 462,299 | 523,994 | ||
General and administrative expenses | (5,881,032) | [2] | 4,127,733 | |
Profit (loss) from operations | 6,237,974 | (6,633,443) | ||
Depreciation and amortization | 645,669 | 594,500 | ||
Total capital expenditures | $ 77,550 | $ 135,761 | ||
Operating Segments | Herb farming | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | ||||
Cost of goods | ||||
Gross profit | ||||
Selling expenses | ||||
General and administrative expenses | $ 59,125 | $ 446,934 | ||
Profit (loss) from operations | (59,125) | (446,934) | ||
Depreciation and amortization | $ 322,593 | 1,117 | ||
Total capital expenditures | $ 1,585,602 | |||
[1] | The negative wholesale gross margin for the year ended March 31, 2014 was primarily due to the discounted sales of certain products that the Company's new wholesale team has decided not to continue expending significant efforts to sell in the future. While the total discounted sales amount was approximately $0.7 million, the cost of the products sold was approximately $2.1 million, which resulted in a net loss of $1.4 million from such sales and negative gross margin in fiscal 2014. | |||
[2] | include the accounts receivable and advance to suppliers allowance reversal of $7,535,180. |
SEGMENTS - Summary of net reven
SEGMENTS - Summary of net revenue from external customers (Details 1) - Operating Segments - USD ($) | 12 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Retail drugstores | ||
Revenue from External Customer [Line Items] | ||
Net revenue from external customers | $ 48,799,736 | $ 40,096,781 |
Retail drugstores | Prescription drugs | ||
Revenue from External Customer [Line Items] | ||
Net revenue from external customers | 17,932,423 | 19,781,547 |
Retail drugstores | OTC drugs | ||
Revenue from External Customer [Line Items] | ||
Net revenue from external customers | 20,087,425 | 13,922,633 |
Retail drugstores | Nutritional supplements | ||
Revenue from External Customer [Line Items] | ||
Net revenue from external customers | 5,033,819 | 2,736,808 |
Retail drugstores | TCM | ||
Revenue from External Customer [Line Items] | ||
Net revenue from external customers | 3,316,067 | 2,718,305 |
Retail drugstores | Sundry products | ||
Revenue from External Customer [Line Items] | ||
Net revenue from external customers | 1,032,800 | 134,218 |
Retail drugstores | Medical devices | ||
Revenue from External Customer [Line Items] | ||
Net revenue from external customers | 1,397,202 | 803,270 |
Online Pharmacy | ||
Revenue from External Customer [Line Items] | ||
Net revenue from external customers | $ 14,879,397 | $ 7,560,135 |
Online Pharmacy | Prescription drugs | ||
Revenue from External Customer [Line Items] | ||
Net revenue from external customers | ||
Online Pharmacy | OTC drugs | ||
Revenue from External Customer [Line Items] | ||
Net revenue from external customers | $ 4,551,354 | $ 3,347,470 |
Online Pharmacy | Nutritional supplements | ||
Revenue from External Customer [Line Items] | ||
Net revenue from external customers | $ 1,610,375 | $ 512,339 |
Online Pharmacy | TCM | ||
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 | $ 1,827,669 | $ 1,761,945 |
Online Pharmacy | Medical devices | ||
Revenue from External Customer [Line Items] | ||
Net revenue from external customers | 6,889,999 | 1,938,381 |
Drug wholesale | ||
Revenue from External Customer [Line Items] | ||
Net revenue from external customers | 13,216,599 | 18,497,671 |
Drug wholesale | Prescription drugs | ||
Revenue from External Customer [Line Items] | ||
Net revenue from external customers | 7,777,525 | 13,746,053 |
Drug wholesale | OTC drugs | ||
Revenue from External Customer [Line Items] | ||
Net revenue from external customers | 5,094,150 | 1,012,630 |
Drug wholesale | Nutritional supplements | ||
Revenue from External Customer [Line Items] | ||
Net revenue from external customers | 98,444 | 262,470 |
Drug wholesale | TCM | ||
Revenue from External Customer [Line Items] | ||
Net revenue from external customers | 155,151 | 931 |
Drug wholesale | Sundry products | ||
Revenue from External Customer [Line Items] | ||
Net revenue from external customers | 72,357 | 3,468,832 |
Drug wholesale | Medical devices | ||
Revenue from External Customer [Line Items] | ||
Net revenue from external customers | $ 18,972 | $ 6,755 |
SEGMENTS (Detail Textuals)
SEGMENTS (Detail Textuals) | 12 Months Ended | |
Mar. 31, 2015USD ($)Segment | Mar. 31, 2014USD ($) | |
Revenue From External Customer [Line Items] | ||
Number of operating segments | Segment | 4 | |
Operating Segments | Drug wholesale | ||
Revenue From External Customer [Line Items] | ||
Accounts receivable and advance to Suppliers allowance reversal | $ 7,535,180 | |
Total discounted sales | $ 700,000 | |
Cost of products sold | 2,100,000 | |
Net loss | $ 1,400,000 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Summary of minimum rental payments under leases (Details) | Mar. 31, 2015USD ($) |
Commitments and Contingencies [Line Items] | |
2,016 | $ 3,568,101 |
2,017 | 2,442,593 |
2,018 | 2,080,297 |
2,019 | 1,655,178 |
2,020 | 852,321 |
Thereafter | 414,561 |
Total | 11,013,051 |
Retail drugstores | |
Commitments and Contingencies [Line Items] | |
2,016 | 3,265,512 |
2,017 | 2,154,469 |
2,018 | 1,790,078 |
2,019 | 1,364,959 |
2,020 | 562,102 |
Thereafter | 202,702 |
Total | 9,339,822 |
Online Pharmacy | |
Commitments and Contingencies [Line Items] | |
2,016 | 113,449 |
2,017 | 133,501 |
2,018 | 139,305 |
2,019 | 139,305 |
2,020 | 139,305 |
Thereafter | 174,131 |
Total | 838,996 |
Drug wholesale | |
Commitments and Contingencies [Line Items] | |
2,016 | 189,140 |
2,017 | 154,623 |
2,018 | 150,914 |
2,019 | 150,914 |
2,020 | 150,914 |
Thereafter | 37,728 |
Total | $ 834,233 |
Herb farming | |
Commitments and Contingencies [Line Items] | |
2,016 | |
2,017 | |
2,018 | |
2,019 | |
2,020 | |
Thereafter | |
Total |
COMMITMENTS AND CONTINGENCIE108
COMMITMENTS AND CONTINGENCIES (Detail Textuals) - USD ($) | 12 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Total rent expense | $ 4,480,869 | $ 4,563,376 |