Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Dec. 31, 2018 | Feb. 14, 2019 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | CHINA JO-JO DRUGSTORES, INC. | |
Entity Central Index Key | 1,413,263 | |
Trading Symbol | CJJD | |
Amendment Flag | false | |
Current Fiscal Year End Date | --03-31 | |
Document Type | 10-Q | |
Document Period End Date | Dec. 31, 2018 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,019 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Ex Transition Period | false | |
Entity Common Stock, Shares Outstanding | 28,936,778 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) | Dec. 31, 2018 | Mar. 31, 2018 |
CURRENT ASSETS | ||
Cash | $ 5,619,051 | $ 15,132,640 |
Restricted cash | 14,988,478 | 16,319,551 |
Financial assets available for sale | 176,560 | 175,140 |
Notes receivable | 296,687 | 279,082 |
Trade accounts receivable | 10,637,316 | 8,322,393 |
Inventories | 10,483,059 | 13,429,568 |
Other receivables, net | 3,718,546 | 3,098,079 |
Advances to suppliers | 3,489,010 | 3,447,452 |
Other current assets | 1,468,188 | 2,116,237 |
Total current assets | 50,876,895 | 62,320,142 |
PROPERTY AND EQUIPMENT, net | 8,427,870 | 2,843,640 |
OTHER ASSETS | ||
Long-term investment | 34,208 | 40,890 |
Farmland assets | 727,064 | 796,286 |
Long term deposits | 2,266,420 | 2,501,968 |
Other noncurrent assets | 1,121,814 | 1,253,352 |
Intangible assets, net | 3,570,986 | 4,056,414 |
Total other assets | 7,720,492 | 8,648,910 |
Total assets | 67,025,257 | 73,812,692 |
CURRENT LIABILITIES | ||
Accounts payable, trade | 19,223,835 | 25,259,526 |
Notes payable | 25,271,064 | 19,180,200 |
Other payables | 3,851,366 | 4,272,523 |
Other payables - related parties | 726,219 | 850,342 |
Customer deposits | 1,492,122 | 4,040,867 |
Taxes payable | 745,518 | 366,040 |
Accrued liabilities | 1,618,006 | 841,993 |
Total current liabilities | 52,928,130 | 54,811,491 |
Financial liability | 79,957 | |
Purchase option and warrants liability | 312,751 | 138,796 |
Total liabilities | 53,320,838 | 54,950,287 |
COMMITMENTS AND CONTINGENCIES | ||
STOCKHOLDERS' EQUITY | ||
Common stock; $0.001 par value; 250,000,000 shares authorized; 28,936,778 and 28,936,778 shares issued and outstanding as of December 31, 2018 and March 31, 2018 | 28,937 | 28,937 |
Preferred stock; $0.001 par value; 10,000,000 shares authorized; nil issued and outstanding as of December 31, 2018 and March 31, 2018 | ||
Additional paid-in capital | 43,747,589 | 43,599,089 |
Statutory reserves | 1,309,109 | 1,309,109 |
Accumulated deficit | (33,572,688) | (29,661,190) |
Accumulated other comprehensive income | 2,628,814 | 3,586,460 |
Total stockholders' equity | 14,141,761 | 18,862,405 |
Noncontrolling interests | (437,342) | |
Total equity | 13,704,419 | 18,862,405 |
Total liabilities and stockholders' equity | $ 67,025,257 | $ 73,812,692 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2018 | Mar. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 250,000,000 | 250,000,000 |
Common stock, shares issued | 28,936,778 | 28,936,778 |
Common stock, shares outstanding | 28,936,778 | 28,936,778 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income Statement [Abstract] | ||||
REVENUES, NET | $ 30,916,549 | $ 26,812,242 | $ 81,098,161 | $ 71,973,653 |
COST OF GOODS SOLD | 23,780,763 | 21,240,629 | 62,548,471 | 56,666,782 |
GROSS PROFIT | 7,135,786 | 5,571,613 | 18,549,690 | 15,306,871 |
SELLING EXPENSES | 6,688,577 | 5,020,971 | 16,539,078 | 13,288,602 |
GENERAL AND ADMINISTRATIVE EXPENSES | 2,572,862 | 2,737,782 | 6,342,874 | 7,318,780 |
TOTAL OPERATING EXPENSES | 9,261,439 | 7,758,753 | 22,881,952 | 20,607,382 |
LOSS FROM OPERATIONS | (2,125,653) | (2,187,140) | (4,332,262) | (5,300,511) |
INTEREST INCOME | 18,964 | 76,266 | 92,196 | 479,509 |
OTHER INCOME, NET | 32,795 | 301,292 | 12,436 | 263,241 |
CHANGE IN FAIR VALUE OF DERIVATIVE LIABILITIES | (85,115) | 221,859 | (173,955) | 420,610 |
LOSS BEFORE INCOME TAXES | (2,159,009) | (1,587,723) | (4,401,585) | (4,137,151) |
PROVISION FOR INCOME TAXES | 47,958 | 38,106 | 104,712 | 76,691 |
NET LOSS | (2,206,967) | (1,625,829) | (4,506,297) | (4,213,842) |
OTHER COMPREHENSIVE (LOSS) INCOME | ||||
Foreign currency translation adjustments | (130,619) | 588,543 | (957,646) | 1,680,796 |
COMPREHENSIVE LOSS | $ (2,337,586) | $ (1,037,286) | $ (5,463,943) | $ (2,533,046) |
WEIGHTED AVERAGE NUMBER OF SHARES: | ||||
Basic | 28,936,778 | 25,214,678 | 28,936,778 | 25,214,678 |
Diluted | 28,936,778 | 25,214,678 | 28,936,778 | 25,214,678 |
EARNINGS PER SHARES: | ||||
Basic | $ (0.06) | $ (0.08) | $ (0.14) | $ (0.17) |
Diluted | $ (0.06) | $ (0.08) | $ (0.14) | $ (0.17) |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (4,506,297) | $ (4,213,842) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Bad debt direct write-off and provision | 1,266,994 | 1,948,887 |
Depreciation and amortization | 937,268 | 1,063,170 |
Impairment of leasehold improvement | (362,737) | |
Stock based compensation | 121,547 | 976,816 |
Change in fair value of purchase option derivative liability | 173,955 | (420,610) |
Accounts receivable, trade | (4,061,698) | (4,830,933) |
Notes receivable | (43,024) | 79,250 |
Inventories and biological assets | 1,828,232 | (2,945,926) |
Other receivables | (681,667) | (149,447) |
Advances to suppliers | (911,061) | (990,309) |
Other current assets | 476,909 | 562,148 |
Long term deposit | 18,548 | (1,345,486) |
Other noncurrent assets | 23,206 | (63,263) |
Accounts payable, trade | (3,945,980) | 853,598 |
Other payables and accrued liabilities | 815,725 | (127,969) |
Customer deposits | (2,258,202) | 387,458 |
Taxes payable | 422,665 | (222,207) |
Net cash used in operating activities | (10,322,880) | (9,801,402) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Disposal of financial assets available for sale | 87,471 | |
Purchase of financial assets available for sale | (104,577) | (136,074) |
Acquisition of equipment | (5,368,240) | (237,108) |
Increase in construction-in-progress | (1,125,110) | |
Increase intangible assets | (29,879) | |
Investment in a joint venture | (9,601) | |
Additions to leasehold improvements | (1,432,060) | (249,097) |
Net cash used in investing activities | (6,847,285) | (1,756,990) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from notes payable | 32,903,549 | 28,352,683 |
Repayment of notes payable | (24,930,903) | (22,501,743) |
Increase in financial liability | 82,167 | |
Proceeds from equity and debt financing | 7,544 | |
Repayment of other payables-related parties | (82,866) | (278,691) |
Net cash used in financing activities | 7,979,491 | 5,572,249 |
EFFECT OF EXCHANGE RATE ON CASH | (1,653,988) | 2,408,839 |
INCREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH | (10,844,662) | (3,577,304) |
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, beginning of year | 31,452,191 | 27,795,810 |
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, end of period | 20,607,529 | 24,218,506 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||
Cash paid for income taxes | $ 56,539 | $ 27,856 |
Description of Business and Org
Description of Business and Organization | 9 Months Ended |
Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [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”), Hangzhou Jiutong Medical Technology Co., Ltd (“Jiutong Medical”), and Hangzhou Jiuyi Medical Technology Co. Ltd. (“Jiuyi Technology”), its wholly-owned subsidiaries. The Company is an online and offline retailer 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, which are operated by Hangzhou Jiuzhou Grand Pharmacy Chain Co., Ltd. (“Jiuzhou Pharmacy”), a company that the Company controls through contractual arrangements. On March 31, 2017, Jiuxin Management established a subsidiary, Lin’An Jiuzhou Pharmacy Co., Ltd (“Lin’An Jiuzhou”) to operates drugstores in Lin’an City. As of December 31, 2018, Jiuzhou Pharmacy has established the following companies, each of which operates a drugstore in Hangzhou City: Entity Name Date Established Hangzhou Jiuben Pharmacy Co., Ltd (“Jiuben Pharmacy”) April 27, 2017 Hangzhou Jiuli Pharmacy Co., Ltd (“Jiuli Pharmacy”) May 22, 2017 Hangzhou Jiuxiang Pharmacy Co., Ltd (“Jiuxiang Pharmacy”) May 26, 2017 Hangzhou Jiuheng Pharmacy Co., Ltd (“Jiuheng Pharmacy”) June 6, 2017 Hangzhou Jiujiu Pharmacy Co., Ltd (“Jiujiu Pharmacy”) June 8, 2017 Hangzhou Jiuyi Pharmacy Co., Ltd (“Jiuyi Pharmacy”) June 8, 2017 Hangzhou Jiuyuan Pharmacy Co., Ltd (“Jiuyuan Pharmacy”) July 13, 2017 Hangzhou Jiumu Pharmacy Co., Ltd (“Jiumu Pharmacy”) July 21, 2017 Hangzhou Jiurui Pharmacy Co., Ltd (“Jiurui Pharmacy”) August 4, 2017 Zhejiang Jiuzhou Linjia Medical Investment and Management Co. Ltd (“Linjia Medical”) September 27, 2017 During the nine month period ending December 31, 2018, the Company opened two new stores. All of the new stores were without government insurance reimbursement certificates at their openings. The Company’s offline retail business also includes three 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. In May 2016, Hangzhou Shouantang Bio-technology Co., Ltd. (“Shouantang Bio”) set up and held 49% of Hangzhou Kahamadi Bio-technology Co., Ltd.(“Kahamadi Bio”), a joint venture specialized in brand name development for nutritional supplements. In 2018, Jiuzhou Pharmacy invested a total of $741,540 (5,100,000RMB) in and held 51% of Zhejiang Jiuzhou Linjia Medical Investment and Management Co. Ltd (“Linjia Medical”), which opened nine new clinics in Hangzhou as of December 31, 2018. The Company currently conducts its online retail pharmacy business through Jiuzhou Pharmacy, which holds the Company’s online pharmacy license. Prior to November 2015, the Company primarily conducted its online retail pharmacy business through Zhejiang Quannuo Internet Technology Co., Ltd.. In May 2015, the Company established Zhejiang Jianshun Network Technology Co. Ltd, a joint venture with Shanghai Jianbao Technology Co., Ltd. (“Jianshun Network”), in order to develop its online pharmaceutical sales from large commercial medical insurance companies. On September 10, 2015, Renovation set up a new entity Jiuyi Technology to provide additional technical support such as webpage development to our online pharmacy business. In November 2015, the Company sold all of the equity interests of Quannou Technology to six individuals for approximately $17,121 (RMB107,074). After the sale, its technical support function has been transferred back to Jiuzhou Pharmacy, which hosts our online pharmacy. 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. On April 20, 2018, 10% of Jiuxin Medcine shares were sold to Hangzhou Kangzhou Biotech Co. Ltd. for a total proceeds of $79,625 (RMB 507,760), 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 ● Incorporated in Hong Kong SAR on September 2, 2008 100% Jiuxin Management ● Established in the PRC on October 14, 2008 100% ● Deemed a wholly foreign owned enterprise (“WFOE”) under PRC law ● Registered capital of $14.5 million fully paid Shouantang Technology ● Established in the PRC on July 16, 2010 by Renovation with registered capital of $20 million 100% ● Registered capital requirement reduced by the SAIC to $11 million in July 2012 and is fully paid ● Deemed a WFOE under PRC law ● Invests and finances the working capital of Quannuo Technology Qianhong Agriculture ● Established in the PRC on August 10, 2010 by Jiuxin Management 100% ● Registered capital of RMB 10 million fully paid ● Carries out herb farming business Jiuzhou Pharmacy (1) ● Established in the PRC on September 9, 2003 VIE by contractual arrangements (2) ● Registered capital of RMB 5 million fully paid ● Operates the “Jiuzhou Grand Pharmacy” stores in Hangzhou Jiuzhou Clinic (1) ● Established in the PRC as a general partnership on October 10, 2003 VIE by contractual arrangements (2) ● Operates a medical clinic adjacent to one of Jiuzhou Pharmacy’s stores Jiuzhou Service (1) ● Established in the PRC on November 2, 2005 VIE by contractual arrangements (2) ● Registered capital of RMB 500,000 fully paid ● Operates a medical clinic adjacent to one of Jiuzhou Pharmacy’s stores Jiuxin Medicine ● ● Established in PRC on December 31, 2003 Acquired by Jiuzhou Pharmacy in August 2011 VIE by contractual arrangements as a controlled subsidiary of Jiuzhou Pharmacy (2) ● Registered capital of RMB 10 million fully paid ● Carries out pharmaceutical distribution services Entity Name Background Ownership 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% Jiuben Pharmacy ● Established in the PRC on April 27, 2017 by Jiuzhou Pharmacy ● Registered capital of $15,920 fully paid ● Operates a pharmacy in Hangzhou VIE by contractual arrangements as a wholly-owned subsidiary of Jiuzhou Pharmacy (2) Jiuli Pharmacy ● Established in the PRC on May 22, 2017 by Jiuzhou Pharmacy ● Registered capital of $15,920 fully paid ● Operates a pharmacy in Hangzhou VIE by contractual arrangements as a wholly-owned subsidiary of Jiuzhou Pharmacy (2) Jiuxiang Pharmacy ● Established in the PRC on May 26, 2017 by Jiuzhou Pharmacy ● Registered capital of $15,920 fully paid ● Operates a pharmacy in Hangzhou VIE by contractual arrangements as a wholly-owned subsidiary of Jiuzhou Pharmacy (2) Jiuheng Pharmacy ● Established in the PRC on June 6, 2017 by Jiuzhou Pharmacy ● Registered capital of $15,920 fully paid ● Operates a pharmacy in Hangzhou VIE by contractual arrangements as a wholly-owned subsidiary of Jiuzhou Pharmacy (2) Jiujiu Pharmacy ● Established in the PRC on June 8, 2017 by Jiuzhou Pharmacy ● Registered capital of $15,920 fully paid ● Operates a pharmacy in Hangzhou VIE by contractual arrangements as a wholly-owned subsidiary of Jiuzhou Pharmacy (2) Jiuyi Pharmacy ● Established in the PRC on June 8, 2017 by Jiuzhou Pharmacy ● Registered capital of $15,920 fully paid ● Operates a pharmacy in Hangzhou VIE by contractual arrangements as a wholly-owned subsidiary of Jiuzhou Pharmacy (2) Jiuyuan Pharmacy ● Established in the PRC on July 13, 2017 by Jiuzhou Pharmacy ● Registered capital of $15,920 fully paid ● Operates a pharmacy in Hangzhou VIE by contractual arrangements as a wholly-owned subsidiary of Jiuzhou Pharmacy (2) Jiumu Pharmacy ● Established in the PRC on July 21, 2017 by Jiuzhou Pharmacy ● Registered capital of $15,920 fully paid ● Operates a pharmacy in Hangzhou VIE by contractual arrangements as a wholly-owned subsidiary of Jiuzhou Pharmacy (2) Entity Name Background Ownership Jiurui Pharmacy ● Established in the PRC on August, 2017 by Jiuzhou Pharmacy ● Registered capital of $15,920 fully paid ● Operates a pharmacy in Hangzhou VIE by contractual arrangements as a wholly-owned subsidiary of Jiuzhou Pharmacy (2) Shouantang Bio ● Established in the PRC in October, 2014 by Shouantang Technology ● 100% held by Shouantang Technology ● Registered capital of RMB 1,000,000 fully paid ● Sells nutritional supplements under its own brand name 100% Jiuyi Technology ● Established in the PRC on September 10, 2015 ● 100% held by Renovation ● Technical support to online pharmacy 100% Kahamadi Bio ● Established in the PRC in May 2016 ● 49% held by Shouantang Bio ● Registered capital of RMB 10 million ● Develop brand name for nutritional supplements 49% Lin’An Jiuzhou ● Established in the PRC on March 31, 2017 ● 100% held by Jiuxin Management ● Registered capital of RMB 5 million ● Explore retail pharmacy market in Lin’An City 100% Linjia Medical ● Established in the PRC on September 27, 2017 ● 51% held by Jiuzhou Pharmacy ● Registered capital of RMB 20 million ● Operates local clinics VIE by contractual arrangements as a controlled subsidiary of Jiuzhou Pharmacy (2) (1) Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service had been under the common control of Mr. Lei Liu, Mr. Chong’an Jin and Ms. Li Qi, the three shareholders of Renovation (the “Owners”) since their respective establishment dates, pursuant to agreements among the Owners to vote their interests in concert as memorialized in a voting rights agreement. Based on such voting agreement, the Company has determined that common control exists among these three companies. 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. (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: a consulting services agreement, operating agreement, equity pledge agreement, voting rights agreement and option agreement. Because such agreements 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 each of the three companies (as well as subsidiaries of Jiuzhou Pharmacy) as a variable interest entity (“VIE”) under the accounting standards of the Financial Accounting Standards Board (“FASB”). Accordingly, the financial statements of Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service, as well as the subsidiary under the control of Jiuzhou Pharmacy, Jiuxin Medicine and Shouantang Bio are consolidated into the financial statements of the Company. |
Liquidity
Liquidity | 9 Months Ended |
Dec. 31, 2018 | |
Liquidity [Abstract] | |
LIQUIDITY | Note 2 – LIQUIDITY Our accounts have been prepared in accordance with U.S. GAAP on a going concern basis. The going concern basis assumes that assets are realized and liabilities are extinguished in the ordinary course of business at amounts disclosed in the financial statements. Our ability to continue as a going concern depends upon aligning our sources of funding (debt and equity) with our expenditure requirements and repayment of the short-term debts as and when they become due. The drug retail business is a highly competitive industry in PRC. Several large drugstore chains and a variety of single stores operate in Hangzhou City and Zhejiang Province. In order to increase our competitive advantages and gain more local retail pharmacy market share, during fiscal year 2018, we opened 57 new stores in Hangzhou. As a result, we incurred significant expenses related to rent, hiring and training employees, and marketing activities. As the retail pharmaceutical market has become more competitive in recent years, a new store is generally not profitable in its first year of operation. In fact, we incurred significant expense with limited incremental revenue in the period we opened new stores. As of December 31, 2018, all but 43 of the new stores have not obtained government insurance reimbursement certificates. It usually takes more than one year for a new store to apply for and obtain the local government insurance reimbursement certificate. Historically, sales reimbursed from the government insurance agency accounts for more than half of total revenue in a mature store. We are actively in the process of applying for certificates for all of our new stores. As more and more new stores obtain certificates, we expect our new store revenue will increase and eventually contribute positive operating cash flow. The Company's principal sources of liquidity consist of existing cash, equity financing, bank facilities from local banks as well as personal loans from its principal shareholders if necessary. On January 23, 2017, we completed a private placement with a single healthcare-focused institutional investor for the purchase of an aggregate of 4,840,000 shares of our common stock at a price of $2.20 per share and received gross proceeds of approximately $10,648,000. The Company has two credit line agreements from a local bank as displayed in detail in Note 14. Approximately $2.39 million bank credit line was still available for further borrowing as of December 31, 2018. Any borrowing therefrom is guaranteed by a third-party guarantor company, and secured by the Company's assets pursuant to a collateral agreement, as well as the personal guarantees of some of its principal shareholders. However, in the event the banks withdraw their credit lines with us, or our existing store performance suddenly deteriorates due to unexpected government policy changes, or our operating license is canceled as a result of violation of industry regulations, the Company may or may not be able to obtain alternative financing resources to support its continuing operation. At that time, the Company may not be able to continue to present itself on a going concern basis. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Note 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of presentation and consolidation The accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP"). The consolidated financial statements include the financial statements of the Company, its wholly-owned subsidiaries and VIEs. All significant inter-company transactions and balances between the Company, its subsidiaries and VIEs are eliminated upon consolidation. Consolidation of variable interest entities In accordance with accounting standards regarding consolidation of variable interest entities, VIEs are generally entities that lack sufficient equity to finance their activities without additional financial support from other parties or whose equity holders lack adequate decision making ability. All VIEs with which the Company is involved must be evaluated to determine the primary beneficiary of the risks and rewards of the VIE. The primary beneficiary is required to consolidate the VIE for financial reporting purposes. The Company has concluded, based on the contractual arrangements, that Jiuzhou Pharmacy (including its subsidiaries and controlled entities), Jiuzhou Clinic and Jiuzhou Service are each a VIE and that the Company's wholly-owned subsidiary, Jiuxin Management, absorbs a majority of the risk of loss from the activities of these companies, thereby enabling the Company, through Jiuxin Management, to receive a majority of their respective expected residual returns. Additionally, as Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service are under common control, the consolidated financial statements have been prepared as if the transactions had occurred retroactively as to the beginning of the reporting period of these consolidated financial statements. Control and common control are defined under the accounting standards as "an individual, enterprise, or immediate family members who hold more than 50 percent of the voting ownership interest of each entity." Because the Owners collectively own 100% of Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service, and have agreed to vote their interests in concert since the establishment of each of these three companies as memorialized in the voting rights agreement, the Company believes that the Owners collectively have control and common control of the three companies. Accordingly, the Company believes that Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service were constructively held under common control by Jiuxin Management as of the time the Contractual Agreements were entered into, establishing Jiuxin Management as their primary beneficiary. Jiuxin Management, in turn, is owned by Renovation, which is owned by the Company. Risks and Uncertainties The operations of the Company are located in the PRC. Accordingly, the Company's business, financial condition, and results of operations may be influenced by 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 others, the political, economic and legal environment and foreign currency exchange. The Company's results may be adversely affected by changes in the political, regulatory and social conditions in the PRC. Although the Company has not experienced losses from these situations and believes that it is in compliance with existing laws and regulations including its organization and structure disclosed in Note 1, this may not be indicative of future results. The Company has significant cash deposits with suppliers in order to obtain and maintain inventory. The Company's ability to obtain products and maintain inventory at existing and new locations is dependent upon its ability to post and maintain significant cash deposits with its suppliers. In the PRC, many vendors are unwilling to extend credit terms for product sales and instead 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 suppliers. 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 may cancel these agreements or permit them to expire at the end of the agreement terms, as a result of which the Company would not retain control of the VIEs. Use of estimates The preparation of unaudited condensed consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. The significant estimates made in the preparation of the accompanying unaudited condensed consolidated financial statements relate to the assessment of the carrying values of accounts receivable, advances to suppliers and related allowance for doubtful accounts, useful lives of property and equipment, inventory reserve and fair value of its purchase option derivative liability. Because of the use of estimates inherent in the financial reporting process, actual results could materially differ from those estimates. Fair value measurements The Company has adopted FASB ASC Topic 820, "Fair Value Measurement and Disclosure," which defines fair value, establishes a framework for measuring fair value in GAAP, and expands disclosures about fair value measurements. It does not require any new fair value measurements, but provides guidance on how to measure fair value by providing a fair value hierarchy used to classify the source of the information. It establishes a three-level valuation hierarchy of valuation techniques based on observable and unobservable inputs, which may be used to measure fair value and include the following: Level 1 – Quoted prices in active markets for identical assets or liabilities. Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Classification within the hierarchy is determined based on the lowest level of input that is significant to the fair value measurement. The Company's financial assets and liabilities, which include financial instruments as defined by FASB 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, and accounts payable are a reasonable approximation of fair value due to the short maturities of these instruments (Level 1). The carrying amount of notes payable approximates fair value based on borrowing rates of similar bank loan currently available to the Company (Level 2) (See Note 14). 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 December 31, 2018, the fair values of our derivative instruments that were carried at fair value (See Note 18 and 19). Active Market Observable Unobservable Total Cash and cash equivalents 5,619,051 - $ - 5,619,051 Restricted Cash 14,988,478 14,988,478 Notes payable - 25,271,064 - 25,271,064 Financial liability 79,957 79,957 Warrants liability - 312,751 $ - 312,751 Total 20,607,529 25,583,815 $ 79,957 46,271,301 Revenue recognition Revenue from sales of prescription medicine at 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 drugstores is recognized at the point of sale, which occurs when a customer pays for and receives the merchandise. Usually the majority of our merchandise, such as prescription and OTC drugs, are not allowed to be returned after the customers leave the counter. Return of other products, such as sundry products, are minimal. Sales of drugs reimbursed by the local government medical insurance agency and receivables from the agency are recognized when a customer pays for the drugs at a store. Based on historical experience, a reserve for potential loss from denial of reimbursement on certain unqualified drugs is made to the receivables from the government agency. Revenue from medical services is recognized after the service has been rendered to a customer. Revenue from online pharmacy sales is recognized when merchandise is shipped to customers. While most deliveries take one day, certain deliveries may take longer depending on a customer's location. Any loss caused in a shipment will be reimbursed by the Company's courier company. Our sales policy allows for the return of certain merchandises without reason within seven days after customer's receipt of the applicable merchandise. A proper sales reserve is made to account for the potential loss from returns from customers. Historically, sales returns seven days after merchandise receipts 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 and long-term deposits in a bank as security for its notes payable. The Company has notes payable outstanding with the bank and is required to keep certain amounts on deposit that are subject to withdrawal restrictions. The notes payable are generally short term in nature due to their short maturity period of six to nine months; thus, restricted cash is classified as a current asset. Accounts receivable Accounts receivable represents the following: (1) amounts due from banks relating to retail sales that are paid or settled by the customers' debit or credit cards, (2) amounts due from government social security bureaus and commercial health insurance programs relating to retail sales of drugs, prescription medicine, and medical services that are paid or settled by the customers' medical insurance cards, (3) amounts due from non-bank third party payment instruments such as Alipay and certain e-commerce platforms and (4) 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 the Company's retail business, accounts receivable mainly consist of reimbursements due from the government insurance bureaus and commercial health insurance programs and are usually collected within two or three months. The Company directly writes off delinquent account balances, which it determines to be uncollectible after confirming with the appropriate bureau or program each month. Additionally, the Company also makes estimated reserves on related outstanding accounts receivable based on historical trends. In the Company's online pharmacy business, accounts receivable primarily consist of amounts due from non-bank third party payment instruments such as Alipay and certain e-commerce platforms. To purchase pharmaceutical products from an e-commerce platforms such as Tmall, customers are required to submit payment to certain non-bank third party payment instruments, such as Alipay, which, in turn, reimburse the Company within seven days to a month. Except for customer returns of sold products, the receivables from these payments instruments are rarely uncollectible. 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. Advances to suppliers Advances to suppliers consist of prepayments to our vendors, such as pharmaceutical manufacturers and other distributors. Since the acquisition of Jiuxin Medicine, we have transferred almost all logistics services of our retail drugstores to Jiuxin Medicine. Jiuzhou Pharmacy only directly purchases certain non-medical products, such as certain nutritional supplements. As a result, almost all advances to suppliers are made by Jiuxin Medicine. Advances to suppliers for our drug wholesale business consist of prepayments to our vendors, such as pharmaceutical manufacturers and other distributors. We typically receive products from vendors within three to nine months after making prepayments. We continuously monitor delivery from, and payments to, our vendors while maintaining a provision for estimated credit losses based upon historical experience and any specific supplier issues, such as discontinuing of inventory supply, that have been identified. If we have difficulty receiving products from a vendor, we take the following steps: cease purchasing products from such vendor, ask for return of our prepayment promptly, and if necessary, take legal action. If all of these steps are unsuccessful, management then determines whether the prepayments should be reserved or written off. Inventories Inventories are stated at the lower of cost or market value. Cost is determined using the first in first out (FIFO) method. Market value is the lower of replacement cost or net realizable value. The Company carries out physical inventory counts on a monthly basis at each store and warehouse location. Herbs that the Company farms are recorded at their cost, which includes direct costs such as seed selection, fertilizer, labor costs that are spent in growing herbs on the leased farmland, and indirect costs such as amortization of farmland development cost. All costs are accumulated until the time of harvest and then allocated to harvested herbs costs when the herbs 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, if any, between the cost of the inventory and its estimated realizable value. Farmland assets 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 costs. Since April 2014, amortization of farmland development costs has been expensed instead of allocated into inventory due to unpredictable future market value of planted gingko trees. All related costs described in the above are accumulated until the time of harvest and then allocated to harvested herbs when they are sold. Property and equipment Property and equipment are stated at cost, net of accumulated depreciation or amortization. Depreciation is calculated on the straight-line method over the estimated useful lives of the assets, taking into consideration the assets' estimated residual value. Leasehold improvements are amortized over the shorter of lease term or remaining lease period of the underlying assets. Following are the estimated useful lives of the Company's property and equipment: Estimated Useful Life Leasehold improvements 3-10 years Motor vehicles 3-5 years Office equipment & furniture 3-5 years Buildings 35 years Maintenance, repairs and minor renewals are charged to expenses as incurred. Major additions and betterment to property and equipment are capitalized. Intangible assets 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 Land use rights 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 no fixed assets and farmland assets impaired for the three and nine months ended December 31, 2018. 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 follows FASB ASC Topic 740, "Income Taxes," which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates, applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The Company has adopted FASB ASC Topic 740-10-25, which provides criteria for the recognition, measurement, presentation and disclosure of uncertain tax position. The Company must recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution. The Company performed a self-assessment and the Company's liability for income taxes includes liability for unrecognized tax benefits, interest and penalties which relate to tax years still subject to review by taxing authorities. Audit periods remain open for review until the statute of limitations has passed, which in the PRC is usually 5 years. The completion of review or the expiration of the statute of limitations for a given audit period could result in an adjustment to the Company's liability for income taxes. Any such adjustment could be material to the Company's results of operations for any given quarterly or annual period based, in part, upon the results of operations for the given period. As of September 30, 2018 and March 31, 2018, the management of the Company considered that the Company had no additional liabilities for uncertain tax positions affecting its consolidated financial position and results of operations or cash flows, and will continue to evaluate for any uncertain position in the future. There are no estimated interest costs and penalties provided in the Company's consolidated financial statements for the three months ended September 30, 2018 and 2017, respectively. The Company's tax positions related to open tax years are subject to examination by the relevant tax authorities, the most significant of which is the China Tax Authority. Value added tax Sales revenue represents the invoiced value of goods, net of VAT. All of the Company's products are sold in the PRC and are subject to a VAT on the gross sales price. Since April 2018, The VAT rates have been adjusted to range up to 16%, 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. The accounting standards clarify the accounting and disclosure requirements for uncertain tax positions and prescribe a recognition threshold and measurement attribute for recognition and measurement of a tax position taken or expected to be taken in a tax return. The accounting standards also provide guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosures, and transition. No significant penalties, uncertain tax provisions or interest relating to income taxes were incurred during the periods ended December 31, 2018 and 2017. Stock based compensation The Company follows the provisions of FASB ASC 718, "Compensation — Stock Compensation," which establishes accounting standards for non-employee and employee stock-based awards. Under the provisions of FASB 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 $259,064 and $197,326 for the three months ended December 31, 2018 and 2017, respectively, and $657,968 and $518 060 for the nine months ended December 31, 2018 and 2017, 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-cancellable 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 10 year term with a renewal option upon the expiration of the lease; the wholesale warehouse lease has a 10-year term with a renewal option upon the expiration of the lease. The Company has historically been able to renew a majority of its drugstores leases. Under the terms of the lease agreements, the Company has no legal or contractual asset retirement obligations at the end of the lease. In addition, land leased from the government is amortized on a straight-line basis over a 30-year term. Foreign currency translation The Company uses the United States dollar ("U.S. dollars" or "USD") for financial reporting purposes. The Company's subsidiaries and VIEs maintain their books and records in their functional currency the Renminbi ("RMB"), the currency of the PRC. In general, for consolidation purposes, the Company translates the assets and liabilities of its subsidiaries and VIEs into U.S. dollars using the applicable exchange rates prevailing at the balance sheet date, and the statements of income and cash flows are translated at average exchange rates during the reporting period. As a result, amounts related to assets and liabilities reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheet. Equity accounts are translated at historical rates. Adjustments resulting from the translation of the financial statements of the subsidiaries and VIEs are recorded as accumulated other comprehensive income. The balance sheet amounts, with the exception of equity, at December 31, 2018 and at March 31, 2018 were translated at 1 RMB to 0.1454 USD and at 1 RMB to 0.1592 USD, respectively. The average translation rates applied to income and cash flow statement amounts for the nine months ended December 31, 2018 and 2017 were at 1 RMB to 0.1494 USD and at 1 RMB to 0.1512 USD, respectively. Concentrations and credit risk Certain financial instruments, which subject the Company to concentration of credit risk, consist of cash and restricted cash. The Company has cash balances at financial institutions located in Hong Kong and PRC. Balances at financial institutions in Hong Kong may, from time to time, exceed Hong Kong Deposit Protection Board's insured limits. Since March 31, 2015, balances at financial institutions and state-owned banks within the PRC are insured up to RMB 500,000 (USD 75,916) per bank. As of December 31, 2018 and March 31, 2018, the Company had deposits totaling $20,593,311 and $31,433,969 that were covered by such limited insurance, respectively. Any balance over RMB 500,000 (USD 75,916) per bank in PRC will not be covered. To date, the Company has not experienced any losses in such accounts. For the three months ended December 31, 2018, three largest vendors accounted for 70.3% of the Company's total purchases and one vendor accounted for 32.6% of the Company's total advances to suppliers. For the three months ended December 31, 2017, three largest vendors accounted for 31.0% of the Company's total purchases and one vendor accounted for 13.6% of the Company's total advances to suppliers. For the nine months ended December 31, 2018, two vendors accounted for 46.9% of the Company's total purchases and two vendors accounted for more than 10% of total advances to suppliers. For the nine months ended December 31, 2017, the Company's two largest vendors accounted for 26.1% of the Company's total purchases and one vendor accounted for 18.1% of the Company's total advances to suppliers. For the three months and nine months ended December 31, 2018, no customer accounted for more than 10% of the Company's total sales and more than 10% of total accounts receivable. For the three months and six months ended December 31, 2017, no customer accounted for more than 10% of the Company's total sales or more than 10% of total accounts receivable. Recent Accounting Pronouncements In February 2016, the FASB issued No. 2016-02 "Leases (Topic 842): Increasing transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements." The amendments in this update are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, for any of the following: 1. A public business entity; 2. A not-for-profit entity that has issued, or is a conduit bond obligor for, securities that are traded, listed, or quoted on an exchange or an over-the-counter market; 3. An employee benefit plan that files financial statements with the U.S. Securities and Exchange Commission (SEC). For all other entities, the amendments in this update are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early application of the amendments in this update is permitted for all entities. We are currently evaluating the impact of the adoption of ASU 2016-02 on our consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, "Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments," providing financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. For public business entities that are U.S. Securities and Exchange Commission (SEC) filers, the amendments in this update are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. All entities may adopt the amendments in this update earlier as of the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We are currently evaluating the impact of the adoption of ASU 2016-13 on our consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, "Statement of Cash Flows (Topic 230):Classification of Certain Cash Receipts and Cash Payments," addressing eight specific cash flow issues with the objective of reducing the existing diversity in practice. The amendments in this update are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity that elects early adoption must adopt all of the amendments in the same period. The amendments in this update should be applied using a retrospective transition method to each period presented. If it is impracticable to apply the amendments retrospectively for some of the issues, the amendments for those issues would be applied prospectively as of the earliest date practicable. The impact of adoption on its Condensed Consolidated Financial Statements for any period presented is not material. In July 2017, the FASB issued Accounting Standards update ("ASU") No. 2017-11, "Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815): I. Accounting for Certain Financial Instruments with Down Round Features; II. Replacement of the Indefinite Deferral for M |
Financial Assets Available for
Financial Assets Available for Sale | 9 Months Ended |
Dec. 31, 2018 | |
Financial Assets Available for Sale [Abstract] | |
FINANCIAL ASSETS AVAILABLE FOR SALE | Note 4 – FINANCIAL ASSETS AVAILABLE FOR SALE As of December 31, 2018 and March 31, 2018, financial assets available for sale amounted to $176,560 (RMB1,214,500) and $175,140 (RMB 1,100,000), respectively. In the year ended March 31, 2018, the Company invested a total of $159,915 as a limited partner (LP) in a private equity fund (PE fund), which is intended to invest in retail pharmaceutical business. However, as the PE fund has not been able to use its proceeds, it agreed to refund $85,118 (RMB585,000) as of December 31, 2018. Additionally, the Company has signed an investment agreement with Inter Mongolia Songlu Pharmaceutical Co.("Songlu Pharmaceutical") and invested a total of $87,225 (RMB600,000), which accounts for 0.5% shares of Songlu Pharmaceutical. The Company has also invested in a mutual fund a total of $14,538 (RMB100,000), which can be liquidated by giving notice. |
Trade Accounts Receivable
Trade Accounts Receivable | 9 Months Ended |
Dec. 31, 2018 | |
Receivables [Abstract] | |
TRADE ACCOUNTS RECEIVABLE | Note 5 – TRADE ACCOUNTS RECEIVABLE Trade accounts receivable consisted of the following: December 31, March 31, Accounts receivable $ 15,489,718 $ 12,883,707 Less: allowance for doubtful accounts (4,852,402 ) (4,561,314 ) Trade accounts receivable, net $ 10,637,316 $ 8,322,393 For the three months ended December 31, 2018 and 2017, $36,077 and $33,738 in accounts receivable were directly written off respectively. For the nine months ended December 31, 2018 and 2017, $64,412 and $158,721 in accounts receivable were directly written off, respectively. As of December 31, 2018 and March 31, 2018, no trade accounts receivables were pledged as collateral for borrowings from financial institutions. |
Other Current Assets
Other Current Assets | 9 Months Ended |
Dec. 31, 2018 | |
Prepaid Expense and Other Assets, Current [Abstract] | |
OTHER CURRENT ASSETS | Note 6 – OTHER CURRENT ASSETS Other current assets consisted of the following: December 31, March 31, Prepaid rental expenses (1) $ 1,285,752 $ 1,984,856 Prepaid and other current assets 182,436 131,381 Total $ 1,468,188 $ 2,116,237 (1) Represents store and office rental expenses that were usually prepaid and amortized over the prepayment period. |
Property and Equipment
Property and Equipment | 9 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | Note 7 – PROPERTY AND EQUIPMENT Property and equipment consisted of the following: December 31, March 31, Building* $ 6,280,935 $ 1,707,145 Leasehold improvements 8,338,779 7,606,496 Farmland development cost 1,738,621 1,904,151 Office equipment and furniture 5,252,629 5,581,554 Motor vehicles 579,891 456,442 Total 22,190,875 17,255,788 Less: Accumulated depreciation (11,474,422 ) (11,905,893 ) Impairment** (2,288,583 ) (2,506,255 ) Property and equipment, net $ 8,427,870 $ 2,843,640 * The increase of property and equipment from March 31, 2018 to December 31, 2018 is due to the purchase of Yueming shop, a new store which cost $4,722,193 (RMB32,482,394). The new store is located downtown south Hangzhou and adjacent to a super shopping mall. The Company plans to create a new flagship store. ** The variance of impairment from March 31, 2018 to December 31, 2018 is solely caused by exchange rate variance. Depreciation expenses for property and equipment totaled $338,946 and $406,048 for the three months ended December 31, 2018 and 2017, respectively. Depreciation expenses for property and equipment totaled $770,919 and $982,202 for the nine months ended December 31, 2018 and 2017, respectively. There were no fixed assets impaired in the three and nine months ended December 31, 2018. |
Advances to Suppliers
Advances to Suppliers | 9 Months Ended |
Dec. 31, 2018 | |
Advances to Suppliers [Abstract] | |
ADVANCES TO SUPPLIERS | Note 8 – ADVANCES TO SUPPLIERS Advances to suppliers consist of deposits, with or advances to, outside vendors for future inventory purchases. Most of the Company's suppliers require a certain amount of money to be deposited with them as a guarantee that the Company will receive its purchase on a timely basis. This amount is refundable and bears no interest. As of December 31, 2018 and March 31, 2018, advance to suppliers consist of the following: December 31, March 31, Advance to suppliers* $ 6,826,569 $ 6,505,545 Less: allowance for unrefundable advances (3,337,559 ) (3,058,092 ) Advance to suppliers, net $ 3,489,010 $ 3,447,452 * In order to achieve a larger rebate for certain merchandise, such as colla coril asini (donkey-hide gelatin), from certain suppliers, the Company made a significant cash advance to such suppliers. For the three and nine months ended December 31, 2018 and 2017, none of the advances to suppliers were written off against previous allowance for unrefundable advances, respectively. |
Inventory
Inventory | 9 Months Ended |
Dec. 31, 2018 | |
Inventory Disclosure [Abstract] | |
INVENTORY | Note 9 – INVENTORY Inventory consisted of finished goods, valued at $10,483,059 and $13,429,568 as of December 31, 2018 and March 31, 2018, respectively. The Company constantly monitors its potential obsolete products and is allowed to return products close to their expiration dates to its suppliers. Any loss on damaged items is immaterial and will be recognized immediately. As a result, no reserves were made for inventory as of December 31, 2018 and March 31, 2018. |
Farmland Assets
Farmland Assets | 9 Months Ended |
Dec. 31, 2018 | |
Farmland Assets [Abstract] | |
FARMLAND ASSETS | Note 10 – FARMLAND ASSETS Farmland assets consist of ginkgo trees planted in 2012 and expected to be harvested and sold in several years. As of December 31, 2018 and March 31, 2018, farmland assets are valued as follows: December 31, March 31, 2018 2018 Farmland assets $ 2,206,741 $ 2,416,839 Less: Impairment* (1,479,677 ) (1,620,553 ) Farmland assets, net $ 727,064 $ 796,286 * The estimated fair value is estimated to be lower than its investment value as of December 31, 2018 and March 31, 2018. |
Long Term Deposits, Landlords
Long Term Deposits, Landlords | 9 Months Ended |
Dec. 31, 2018 | |
Long Term Deposits, Landlords [Abstract] | |
LONG TERM DEPOSITS, LANDLORDS | Note 11 – LONG TERM DEPOSITS, LANDLORDS As of December 31, 2018 and March 31, 2018, long term deposits amounted to $2,266,420 and $2,501,968, respectively. Long term deposits are money deposited with, or advanced to, landlords for the purpose of securing retail store leases that the Company does not anticipate being returned within the next twelve months. Most of the Company's landlords require a minimum payment of nine months' rent, paid upfront, plus additional deposits. |
Other Noncurrent Assets
Other Noncurrent Assets | 9 Months Ended |
Dec. 31, 2018 | |
Other Assets, Noncurrent Disclosure [Abstract] | |
OTHER NONCURRENT ASSETS | Note 12 – OTHER NONCURRENT ASSETS Other noncurrent assets consisted of the following: December 31, March 31, Forest land use rights* $ 1,089,421 $ 1,235,253 Others 32,393 18,099 Total $ 1,121,814 $ 1,253,352 * The prepayment for lease of forest land use rights is a payment made to a local government in connection with entering into an operating land lease agreement. The land is currently used to cultivate Ginkgo trees. The forest rights certificate from the local village extends the life of the lease to January 31, 2060. The amortization of the prepayment for the lease of forest land use right was approximately $6,812 and $7,765 for the three months ended December 31, 2018 and 2017, respectively. The amortization of the prepayment for the lease of forest land use right was approximately $20,487 and $21,653 for the nine months ended December 31, 2018 and 2017, respectively. The Company's amortizations of the prepayment for lease of land use right for the next five years and thereafter are as follows: For the year ending December 31, Amount 2019 $ 28,071 2020 28,071 2021 28,071 2022 28,071 2023 28,071 Thereafter 949,066 |
Intangible Assets
Intangible Assets | 9 Months Ended |
Dec. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS | Note 13 – INTANGIBLE ASSETS Net intangible assets consisted of the following at: December 31, March 31, License (1) $ 1,863,603 $ 1,967,934 SAP software (2) 660,010 764,104 Land use rights (3) 1,417,651 1,552,622 Total intangible assets 3,941,264 4,284,660 Less: accumulated amortization (370,279 ) (228,246 ) Intangible assets, net $ 3,570,986 $ 4,056,414 Amortization expense of intangibles amounted to $50,342 and $38,412 for the three months ended December 31, 2018 and 2017, respectively, and $166,349 and $52,876 for the nine months ended December 31, 2018 and 2017, respectively. (1) This represents the fair value of the licenses of insurance applicable drugstores acquired from Sanhao Pharmacy, a drugstore chain Jiuzhou Pharmacy acquired in 2014. The licenses allow patients to pay by using insurance cards at stores. The stores are reimbursed from the Human Resource and Social Security Department of Hangzhou City. In September 2017, the Company acquired several new stores for the purpose of the Municipal Social Medical Reimbursement Qualification Certificates. The owners of these acquired drugstores agreed to cease their stores' business and liquidate all of the stores' accounts before Jiuzhou Pharmacy acquired them. As a result, Jiuzhou Pharmacy has not obtained any assets or liabilities from the stores, but was able to transfer the certificates to our new stores opened at the same time. (2) In 2017, we have installed a leading ERP system, SAP from Germany. SAP is a well-known management system used by many Fortune 500 companies. As of December 31, 2018, the system has been completely installed and has been running for eleven months in the Company. By automatically connecting commodity flow data with accounting recording, the system minimizes the manual errors made by accounting staff. Additionally, the system provides a view of overall and instant cash information by electronically linking local banking systems with SAP. Additional benefits include automatically-generated customized monthly company performance reports, instant inventory monitoring and reporting, and punctual maintenance of customer and supplier accounts. (3) In July 2013, the Company purchased the land use rights of a plot of farmland in Lin'an, Hangzhou, intended for the establishment of an herb processing plant in the future. However, as our farming business in Lin'an has not grown, the Company does not expect completion of the plant in the near future. |
Notes Payable
Notes Payable | 9 Months Ended |
Dec. 31, 2018 | |
Notes Payable [Abstract] | |
NOTES PAYABLE | Note 14 – NOTES PAYABLE The Company has credit facilities with Hangzhou United Bank ("HUB"), Bank of Hangzhou ("BOH"), and China Merchant Bank ("CMB") that provided working capital in the form of the following bank acceptance notes at December 31, 2018 and March 31, 2018: Origination Maturity December 31, March 31, Beneficiary Endorser date date 2018 2018 Jiuzhou Pharmacy (1) HUB 10/10/17 04/10/18 2,552,769 Jiuzhou Pharmacy (1) HUB 11/24/17 05/24/18 21,972 Jiuzhou Pharmacy (1) HUB 12/05/17 06/05/18 377,347 Jiuzhou Pharmacy (1) HUB 12/29/17 06/29/18 1,194,135 Jiuzhou Pharmacy (1) HUB 12/29/17 06/29/18 1,443,554 Jiuzhou Pharmacy (1) HUB 02/05/18 08/05/18 2,618,500 Jiuzhou Pharmacy (1) HUB 03/05/18 09/05/18 3,072,638 Jiuzhou Pharmacy (1) HUB 11/06/17 05/06/18 3,553,014 Jiuzhou Pharmacy (1) HUB 12/05/17 06/05/18 1,937,683 Jiuzhou Pharmacy (1) HUB 12/29/17 06/29/18 1,687,711 Jiuzhou Pharmacy (1) HUB 11/06/18 05/06/19 488,767 - Jiuzhou Pharmacy (1) HUB 12/12/18 06/12/19 2,182,572 - Jiuzhou Pharmacy (1) HUB 12/20/18 03/20/19 110,767 - Jiuzhou Pharmacy (1) HUB 12/20/18 06/20/19 1,046,714 Jiuzhou Pharmacy (1) HUB 12/29/18 06/29/19 5,372,061 Jiuzhou Pharmacy (1) HUB 07/05/18 01/05/19 2,989,780 Jiuzhou Pharmacy (1) HUB 08/06/18 02/06/19 1,357,129 Jiuzhou Pharmacy (1) HUB 08/17/18 02/17/19 277,657 Jiuzhou Pharmacy (1) HUB 08/31/18 02/28/19 2,300,155 Jiuzhou Pharmacy (1) HUB 09/05/18 03/05/19 1,876,612 Jiuxin Medicine (2) HUB 10/11/18 04/11/19 4,353,836 Jiuxin Medicine (2) HUB 11/07/18 05/07/19 2,915,014 Jiuxin Medicine (2) CMB 02/02/18 08/02/18 71,648 Jiuxin Medicine (2) CMB 02/07/18 08/07/18 95,530 Jiuxin Medicine (2) CMB 03/07/18 09/07/18 538,857 Jiuxin Medicine (2) CMB 03/15/18 09/15/18 44,842 Total $ 25,271,064 $ 19,180,200 (1) As of December 31, 2018, the Company had $25,271,064 (RMB 173,831,238) of notes payable from HUB. The Company is required to hold restricted cash in the amount of $14,723,476 (RMB 101,277,889) with HUB as collateral against these bank notes. Included in the restricted cash is a total of $10,194,220three-year deposit (RMB 70,122,647) deposited into HUB as a collateral for current and future notes payable from HUB. As of March 31, 2018, the Company had $18,429,322 (RMB 115,748,985) of notes payable from HUB. The Company is required to hold restricted cash in the amount of $13,565,300 (RMB 85,199,540) with HUB as collateral against these bank notes. Included in the restricted cash is a total of $7,269,509 three-year deposit (RMB 45,657,584) deposited into HUB as a collateral for current and future notes payable from HUB. (2) As of December 31, 2018, the Company had $0 (RMB0) of notes payable from CMB, with restricted cash in the amount of $0 (RMB0) held at the bank. As of March 31, 2018, the Company had $750,878 (RMB 4,716,037) of notes payable from CMB, with restricted cash in the amount of $750,878 (RMB 4,716,037) held at the bank. As of December 31, 2018, the Company had a credit line of approximately $12.94 million in the aggregate from HUB. By putting up a three-year deposit of $10.19 million and the restricted cash of $4.53 million deposited in the banks, the total credit line was $27.66 million. As of December 31, 2018, the Company had approximately $25.27 million of bank notes payable and approximately $2.39 million bank credit line was still available for further borrowing. The bank notes are secured by three shops of Jiuzhou Pharmacy and guaranteed by the Company's major shareholders. |
Taxes
Taxes | 9 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
TAXES | Note 15 – TAXES Income tax The Company accounts for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis, operating losses and tax credit carryforwards. Deferred tax assets and liabilities are calculated using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date. Valuation allowances are provided against deferred income tax assets for amounts which are not considered "more likely than not" to be realized. 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 For the three and six months ended December 31, 2018 and 2017, the components of income tax expense consist of the following: For the three months ended For the nine months ended December 31, December 31, 2018 2017 2018 2017 Current: Federal - - - - State - - - - Foreign 47,958 38,106 104,712 76,691 47,958 38,106 104,712 76,691 Deferred: Federal - - - - State - - - - Foreign - - - - - - - - Provision for income taxes 47,958 38,106 104,712 76,691 The following table reconciles the U.S. statutory tax rates with the Company's effective tax rate for the three and nine months ended December 31, 2018 and 2017: For the three months ended For the nine months ended December 31, December 31, 2018 2017 2018 2017 U.S. Statutory rates 21.0 % 34.0 % 21.0 % 34.0 % Foreign income not recognized in the U.S. (21.0 ) (34.0 ) (21.0 ) (34.0 ) China income taxes 25.0 25.0 25.0 25.0 Change in valuation allowance (1) (25.0 ) (25.0 ) (25.0 ) (25.0 ) Non-deductible expenses-permanent difference (2) (2.2 ) (2.4 ) (2.4 ) (1.9 ) Effective tax rate (2.2 )% (2.4 )% (2.4 )% (1.9 )% (1) Represents a non-taxable expense due to overall increase in allowance for accounts receivable and advances to suppliers. (2) The (2.2)% and (2.4)% rate adjustments for the three months ended December 31, 2018 and 2017 and the (2.4)% and (1.9)% rate adjustments for the nine months ended December 31, 2018 and 2017 represent expenses that primarily include stock option expenses and legal, accounting and other expenses incurred by the Company that are not deductible for PRC income tax. Jo-Jo Drugstores is incorporated in the U.S. and incurred a net operating loss for income tax purposes for the three and nine months ended December 31, 2018 and 2017. As of December 31, 2018, the estimated net operating loss carry forwards for U.S. income tax purposes amounted to $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 continuing losses for U.S. income tax purposes. Accordingly, the Company has provided a 100% valuation allowance at December 31, 2018. There was no net change in the valuation allowance for the three and nine months ended December 31, 2018 and 2017. Management reviews this valuation allowance periodically and makes adjustments as necessary. The components of the Company's net deferred tax assets are as follows: As of As of Allowance 771,675 584,427 Long-lived assets impairment - - Depreciation and Amortization 139,483 147,655 Accrued expense 420,143 140,124 Net operating loss carryforward 2,859,896 1,765,468 Foreign Tax Credit Carryover 195,000 195,000 Total deferred tax assets (liabilities): 4,386,197 2,832,673 Valuation allowance (4,386,197 ) (2,832,673 ) Net deferred tax assets (liabilities) - - The Company regularly assesses the realizability of its deferred tax assets and establishes a valuation allowance if it is more likely than not that some portion of the deferred tax assets will not be realized. We weigh all available positive and negative evidence, including earnings history and results of recent operations, scheduled reversals of deferred tax liabilities, projected future taxable income, and tax planning strategies. Assumptions used to forecast future taxable income often require significant judgment. More weight is given to objectively verifiable evidence. In the event we determine that we would not be able to realize all or part of our net deferred tax assets in the future, a valuation allowance will be established against deferred tax assets in the period in which we make such determination. The need to establish a valuation allowance against deferred tax assets may cause greater volatility in our effective tax rate. As of December 31, 2018 and December 31, 2017, the estimated net operating loss carry forwards for U.S. income tax purposes amounted to $816,908, which may be available to reduce future years' taxable income. These carry forwards will expire if not utilized by 2032. In addition, the Company carries a foreign tax credit of $195,000. As of December 31, 2018 and December 31, 2017, the estimated net operating loss carry forwards for Hong Kong income tax purposes amounted to $1,905,689 and $1,772,884, which may be available to reduce future years' taxable income. As of December 31, 2018 and December 31, 2017, the estimated net operating loss carry forwards for China income tax purposes amounted to $14,820,829 and $8,236,919, which may be available to reduce future years' taxable income. These carry forwards will expire if not utilized in next five years. On December 22, 2017, the U.S. federal government enacted the 2017 Tax Act. The 2017 Tax Act includes a number of changes in existing tax law impacting businesses, including the transition tax, a one-time deemed repatriation of cumulative undistributed foreign earnings and a permanent reduction in the U.S. federal statutory rate from 35% to 21%, effective on January 1, 2018. ASC 740 requires companies to recognize the effect of tax law changes in the period of enactment, accordingly, the effects must be recognized on companies' calendar year-end financial statements, even though the effective date for most provisions is January 1, 2018. As a result, we re-measured our net U.S. deferred tax assets at the 21% future tax rate. At December 31, 2017, according to the 2017 Tax Act for estimating our foreign undistributed earnings, we estimated an aggregate deficit in "accumulated earnings and profits," which is how foreign undistributed earnings are determined for the one-time transition tax and for U.S. income tax purposes. As a result, the one-time transition tax did not have a significant impact on the Company's FY18 tax provision and there was no undistributed accumulated earnings and profits as of September 30, 2018. In December 2017, the SEC issued Staff Accounting Bulletin No. 118 ("SAB 118"), which provided a measurement period of up to one year from the enactment date of the 2017 Tax Act for us to complete the accounting for the 2017 Tax Act and its related impacts. The income tax effects of the 2017 Tax Act for which the accounting is incomplete include: the impact of the transition tax, the revaluation of deferred tax assets and liabilities to reflect the 21% corporate tax rate, and the impact to the aforementioned items on state income taxes. We have made reasonable provisional estimates for each of these items, however, these estimates may be affected by other analyses related to the 2017 Tax Act, including but not limited to, any deferred adjustments related to the filing of our fiscal 2018 federal and state income tax returns and further guidance yet to be issued. The Company recorded net unrecognized tax benefits of $0.0 million as of January 31, 2018. It is our policy to classify accrued interest and penalties related to unrecognized tax benefits in the provision for income taxes. Audit periods remain open for review until the statute of limitations has passed, which in the PRC, the Company's most significant tax jurisdiction, is usually 5 years. The completion of review or the expiration of the statute of limitations for a given audit period could result in an adjustment to the Company's liability for income taxes. Any such adjustment could be material to the Company's results of operations for any given quarterly or annual period based, in part, upon the results of operations for the given period. |
Postretirement Benefits
Postretirement Benefits | 9 Months Ended |
Dec. 31, 2018 | |
Retirement Benefits [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 $338,083 and $312,701 in employment benefits and pension for the three months ended December 31, 2018 and 2017, respectively. The Company contributed $1,039,163 and $872,435 in employment benefits and pension for the nine months ended December 31, 2018 and 2017, respectively. |
Related Party Transactions and
Related Party Transactions and Arrangements | 9 Months Ended |
Dec. 31, 2018 | |
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: December 31, March 31, Due to a director and CEO (1) 726,219 850,342 Total $ 726,219 $ 850,342 (1) 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. As of December 31, 2018 and March 31, 2018, notes payable totaling $0 and $3,253,630 were secured by the personal properties of certain of the Company's shareholders, respectively. The lien on such shareholders' properties has been released since July 2018. The Company leases a retail space from Mr. Lei Liu. The lease expires in September 2020. Rent expenses totaled $16,136 and $4,536 for the three months ended December 31, 2018 and 2017, respectively. Rent expenses totaled $25,100 and $12,959 for the nine months ended December 31, 2018 and 2017, respectively. All amounts due and payable have been paid to Mr. Liu as of December 31, 2018. |
Financial Liability
Financial Liability | 9 Months Ended |
Dec. 31, 2018 | |
Financial Liability [Abstract] | |
Financial Liability | Note 18 – Financial Liability To encourage operating teams, which consists of doctors and nurses, to devote their efforts to run clinics, Linjia Medical allows them to put deposits in the clinic where doctors and nurses work, and take shares in any profit of the clinic. The principal amounts of the deposits are refundable if the doctors and nurses leave the clinic. In order to properly reflect Linjia Medical's liabilities, the Company reclassifies the deposits of $79,957 (RMB550,000) as financial liability as of December 31, 2018. |
Warrants
Warrants | 9 Months Ended |
Dec. 31, 2018 | |
Warrants [Abstract] | |
WARRANTS | Note 19 – WARRANTS In connection with the registered direct offering closed on July 19, 2015, the Company issued a warrant to an investor to purchase up to 600,000 shares of common stock at an exercise price of $3.10 per share. The warrant became exercisable on January 19, 2016 and will expire on January 18, 2021. In connection with the offering, the Company also issued a warrant to its placement agent of this offering, pursuant to which the agent may purchase up to 6% of the aggregate number of shares of common stock sold in the offering, i.e. 72,000 shares. Such warrant has the same terms as the warrant issued to investor in the offering. The fair value of the warrants issued to purchase 672,000 shares as described above was estimated by using the binominal pricing model with the following assumptions: Common Stock Common Stock December 31, (1) March 31, Stock price $ 2.00 $ 1.35 Exercise price $ 3.10 $ 3.10 Annual dividend yield 0 % 0 % Expected term (years) 2.30 2.80 Risk-free interest rate 2.48 % 1.98 % Expected volatility 67.70 % 68.73 % (1) As of December 31, 2018, the warrants had not been exercised. Upon evaluation, as the warrants meet the definition of a derivative under FASB ASC 815, as the Company cannot avoid a net cash settlement under certain circumstances. Accordingly, the fair value of the warrants was classified as a liability of $138,796 as of March 31, 2018. For the three and nine months ended December 31, 2018, the Company recognized a loss of $85,116 and $116,522 for the investor warrant and placement agent warrant, from the change in fair value of the warrant liability. As a result, the warrant liability is carried on the consolidated balance sheets at the fair value of $312,751 for the investor warrant and placement agent warrant, collectively, as of December 31, 2018. |
Stockholder's Equity
Stockholder's Equity | 9 Months Ended |
Dec. 31, 2018 | |
Stockholders' Equity Note [Abstract] | |
STOCKHOLDER'S EQUITY | Note 20 – STOCKHOLDER'S EQUITY Common stock On January 23, 2017, the Company closed a private offering with one institutional investor (the "Investor") pursuant to which the Company sold to the Investor, and the Investor purchased from the Company, an aggregate of 4,840,000 shares of the common stock, par value $0.001 per share, of the Company, at a purchase price of $2.20 per share, for aggregate gross proceeds to the Company of $10,648,000 (the "Private Placement"). 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 an expense over the requisite service periods in the Company's consolidated statements of operations. Share-based awards are attributed to expenses 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 FASB 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 March 30, 2018, the Company granted a total of 3,947,100 shares of restricted common stock to its key employees in its retail drugstores and online pharmacy under the Company's 2010 Equity Incentive Plan, as amended (the "Plan"). The stock awards vested on the grant date. On June 28, 2018, the compensation committee of the Company canceled 225,000 shares granted to the CEO in order to conform aggregate issuances to the 675,000 share limitation set forth in the Plan. The Tax Cuts and Jobs Act of 2017 removed the 162(m) qualified performance based compensation exemption to the $1 million cap on deductions for compensation to covered executives. Section 1.3.2 was in the Plan to permit grants under the Plan to fit within that exemption. As that exemption no longer applies for grants made in 2018 or thereafter, the Plan has been amended to remove the provisions intended to comply with that exemption, including the one in Section 1.3.2. of the Plan. All $5,328,585 expense has been recorded as a service compensation expense in the year ended March 31, 2018. Stock options 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 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 three months ended December 31, 2018 and 2017, $0 and $65,585 was recorded as compensation expense. For the nine months ended December 31, 2018 and 2017, $0 and $313,651 was recorded as service compensation expense, respectively. As of December 31, 2018, all compensation costs related to stock option compensation arrangements granted have been recognized. Statutory reserves Statutory reserves represent restricted retained earnings. Under Chinese law, the Company is required to set aside 10% of its net income as reported in its statutory accounts into the Statutory Surplus Reserve Fund (the "Reserve Fund") annually. Once the total amount set aside in the Reserve Fund reaches 50% of the entity's registered capital, further appropriations become discretionary. The Reserve Fund can be used to increase the entity's registered capital upon approval by relevant government authorities or eliminate its future losses under PRC GAAP upon a resolution by its board of directors. The Reserve Fund is not distributable to shareholders, as cash dividends or otherwise, except in the event of liquidation. Appropriations to the Reserve Fund are accounted for as a transfer from unrestricted earnings to statutory reserves. During the three and nine months ended December 31, 2018 and 2017, the Company did not make appropriations to statutory reserves. There are no legal requirements in the PRC to fund the Reserve Fund by transfer of cash to any restricted accounts, and the Company does not do so. |
(Loss) Income Per Share
(Loss) Income Per Share | 9 Months Ended |
Dec. 31, 2018 | |
EARNINGS PER SHARES: | |
(LOSS) INCOME PER SHARE | Note 21 – (LOSS) INCOME 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) earnings per share computation: Three months ended Nine months ended 2018 2017 2018 2017 Net income attributable to controlling interest $ (1,678,231 ) $ (1,625,829 ) $ (3,911,501 ) $ (4,213,842 ) Weighted average shares used in basic computation 28,936,778 25,214,678 28,936,778 25,214,678 Diluted effect of purchase options and warrants - - - - Weighted average shares used in diluted computation 28,936,778 25,214,678 28,936,778 25,214,678 Income per share – Basic: Net (loss) attributable to controlling interest $ (0.06 ) $ (0.08 ) $ (0.14 ) $ (0.17 ) Loss per share – Diluted: Net (loss) attributable to controlling interest $ (0.06 ) $ (0.08 ) $ (0.14 ) $ (0.17 ) For the three and nine months ended December 31, 2018, 967,000 shares underlying employee stock options and 600,000 shares underlying outstanding purchase options to an investor, and 72,000 shares underlying outstanding purchase option to an investment placement agent were excluded from the calculation of diluted loss per share as the options were anti-dilutive. |
Segments
Segments | 9 Months Ended |
Dec. 31, 2018 | |
Segment Reporting [Abstract] | |
SEGMENTS | Note 22 – 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 three months ended December 31, 2018. Retail drugstores Online Pharmacy Drug wholesale Herb Total Revenue $ 20,867,250 $ 2,493,205 7,556,094 - 30,916,549 Cost of goods 14,903,761 2,232,994 6,644,008 - 23,780,763 Gross profit $ 5,963,489 $ 260,211 912,086 - 7,135,786 Selling expenses 4,819,081 438,235 1,431,261 - 6,688,577 General and administrative expenses 1,443,634 47,703 1,081,525 - 2,572,862 Loss income from operations $ (299,226 ) $ (225,727 ) (1,600,700 - (2,125,653 ) Depreciation and amortization $ 449,893 $ - 433 - 450,326 Total capital expenditures $ 6,415,414 $ - 314 - 6,415,728 The following table presents summarized information by segment of the continuing operations for the three months ended December 31, 2017. Retail drugstores Online Pharmacy Drug wholesale Herb Total Revenue $ 18,288,222 $ 3,395,047 5,128,973 - 26,812,242 Cost of goods 13,686,969 3,134,767 4,418,893 - 21,240,629 Gross profit $ 4,601,253 $ 260,280 710,080 - 5,571,613 Selling expenses 3,509,018 572,397 939,556 - 5,020,971 General and administrative expenses 930,689 174,865 1,615,560 16,668 2,737,782 Income (Loss) from operations $ 161,546 $ (486,982 ) (1,845,036 ) (16,668 ) (2,187,140 ) Depreciation and amortization $ (525,203 ) $ - 4,649 - (520,554 ) Total capital expenditures $ 8,9495 $ - 4,711 - 94,206 The following table presents summarized information of the continuing operation by segment for the nine months ended December 31, 2018: Retail Online Drug Herb Total Revenue $ 54,971,889 $ 6,637,922 19,488,350 81,098,161 Cost of goods 39,344,927 5,883,301 17,320,243 62,548,471 Gross profit $ 15,626,962 $ 754,621 2,168,107 18,549,690 Selling expenses 12,453,077 1,316,945 2,769,056 16539,078 General and administrative expenses 4,644,077 292,544 1,406,081 6,342,874 Loss from operations $ (1,470,364 ) $ (854,868 ) (2,007,030 ) (4,332,262 ) Depreciation and amortization $ 980,845 $ - 7,446 988,291 Total capital expenditures $ 6,789,129 $ - 1,437 6,790,566 The following table presents summarized information of the continuing operation by segment for the nine months ended December 31, 2017: Retail Online Drug Herb Total Revenue $ 46,356,207 $ 9,595,752 16,021,694 - 71,973,653 Cost of goods 34,227,630 8,644,564 13,794,588 - 56,666,782 Gross profit $ 12,128,577 $ 951,188 2,227,106 - 15,306,871 Selling expenses 8,510,663 1,547,569 3,230,370 - 13,288,602 General and administrative expenses 4,942,902 352,770 1,996,393 26,715 7,318,780 Loss income from operations $ (1,324,988 ) $ (949,151 ) (2,999,657 ) (26,715 ) (5,300,511 ) Depreciation and amortization $ (854,445 ) $ - 209,023 - (645,422 ) Total capital expenditures $ 295,637 $ - 10,927 - 306,564 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 category is as follows: Three months ended Nine months ended 2018 2017 2018 2017 Prescription drugs $ 6,756,073 $ 5,373,870 $ 17,835,700 $ 14,860,659 OTC drugs 9,393,148 9,168,708 24,018,263 21,593,385 Nutritional supplements 1,869,351 1,883,020 4,750,013 4,558,383 TCM 1,342,768 1,185,004 4,615,033 3,136,203 Sundry products 248,729 180,338 799,554 804,817 Medical devices 1,257,180 497,282 2,953,326 1,402,760 Total $ 20,867,249 $ 18,288,222 $ 54,971,889 $ 46,356,207 The Company's net revenue from external customers through online pharmacy by main product category is as follows: Three months ended Nine months ended 2018 2017 2018 2017 Prescription drugs $ - $ - $ - $ - OTC drugs 837,126 1,535,383 2,412,057 4,038,674 Nutritional supplements 220,776 514,952 575,862 1,365,834 TCM 28,785 8,802 54,417 18,984 Sundry products 573,993 224,514 2,128,282 1,065,935 Medical devices 832,526 1,111,396 1,467,304 3,106,325 Total $ 2,493,206 $ 3,395,047 $ 6,637,922 $ 9,595,752 The Company's net revenue from external customers through wholesale by main product category is as follows: Three months ended Nine months ended 2018 2017 2018 2017 Prescription drugs $ 3,933,441 $ 2,777,566 $ 11,708,683 $ 9,252,199 OTC drugs 3,341,676 2,303,726 7,246,356 6,652,879 Nutritional supplements 167,069 19,123 240,666 47,660 TCM 77,216 20,876 156,525 21,480 Sundry products 5,949 - 21,479 - Medical devices 30,743 7,682 114,641 47,476 Total $ 7,556,094 $ 5,128,973 $ 19,488,350 $ 16,021,694 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | Note 23 – COMMITMENTS AND CONTINGENCIES Operating lease commitments The Company recognizes lease expenses 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 September 30, Retail Online Drug Herb Total 2019 $ 4,590,468 $ - $ - $ - $ 4,590,468 2020 3,699,758 - - - 3,699,758 2021 2,799,515 - - - 2,799,515 2022 2,013,152 - - - 2,013,152 2023 1,342,827 - - - 1,342,827 Thereafter 1,762,033 - - - 1,762,033 Total rent expense amounted to $1,194,247 and $1,184,452 for the three months ended December 31, 2018 and 2017, respectively. Total rent expense amounted to $3,586,552 and $3,114,851 for the nine months ended December 31, 2018 and 2017, respectively. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Dec. 31, 2018 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | Note 24 – Subsequent Events The Company's management has evaluated subsequent events through the date these financial statements were issued, and there were no material subsequent events requiring adjustments to the financial statements or disclosure. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Dec. 31, 2018 | |
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 are generally entities that lack sufficient equity to finance their activities without additional financial support from other parties or whose equity holders lack adequate decision making ability. All VIEs with which the Company is involved must be evaluated to determine the primary beneficiary of the risks and rewards of the VIE. The primary beneficiary is required to consolidate the VIE for financial reporting purposes. The Company has concluded, based on the contractual arrangements, that Jiuzhou Pharmacy (including its subsidiaries and controlled entities), Jiuzhou Clinic and Jiuzhou Service are each a VIE and that the Company's wholly-owned subsidiary, Jiuxin Management, absorbs a majority of the risk of loss from the activities of these companies, thereby enabling the Company, through Jiuxin Management, to receive a majority of their respective expected residual returns. Additionally, as Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service are under common control, the consolidated financial statements have been prepared as if the transactions had occurred retroactively as to the beginning of the reporting period of these consolidated financial statements. Control and common control are defined under the accounting standards as "an individual, enterprise, or immediate family members who hold more than 50 percent of the voting ownership interest of each entity." Because the Owners collectively own 100% of Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service, and have agreed to vote their interests in concert since the establishment of each of these three companies as memorialized in the voting rights agreement, the Company believes that the Owners collectively have control and common control of the three companies. Accordingly, the Company believes that Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service were constructively held under common control by Jiuxin Management as of the time the Contractual Agreements were entered into, establishing Jiuxin Management as their primary beneficiary. Jiuxin Management, in turn, is owned by Renovation, which is owned by the Company. |
Risks and Uncertainties | Risks and Uncertainties The operations of the Company are located in the PRC. Accordingly, the Company's business, financial condition, and results of operations may be influenced by 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 others, the political, economic and legal environment and foreign currency exchange. The Company's results may be adversely affected by changes in the political, regulatory and social conditions in the PRC. Although the Company has not experienced losses from these situations and believes that it is in compliance with existing laws and regulations including its organization and structure disclosed in Note 1, this may not be indicative of future results. The Company has significant cash deposits with suppliers in order to obtain and maintain inventory. The Company's ability to obtain products and maintain inventory at existing and new locations is dependent upon its ability to post and maintain significant cash deposits with its suppliers. In the PRC, many vendors are unwilling to extend credit terms for product sales and instead 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 suppliers. 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 may cancel these agreements or permit them to expire at the end of the agreement terms, as a result of which the Company would not retain control of the VIEs. |
Use of estimates | Use of estimates The preparation of unaudited condensed consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. The significant estimates made in the preparation of the accompanying unaudited condensed consolidated financial statements relate to the assessment of the carrying values of accounts receivable, advances to suppliers and related allowance for doubtful accounts, useful lives of property and equipment, inventory reserve and fair value of its purchase option derivative liability. Because of the use of estimates inherent in the financial reporting process, actual results could materially differ from those estimates. |
Fair value measurements | Fair value measurements The Company has adopted FASB ASC Topic 820, "Fair Value Measurement and Disclosure," which defines fair value, establishes a framework for measuring fair value in GAAP, and expands disclosures about fair value measurements. It does not require any new fair value measurements, but provides guidance on how to measure fair value by providing a fair value hierarchy used to classify the source of the information. It establishes a three-level valuation hierarchy of valuation techniques based on observable and unobservable inputs, which may be used to measure fair value and include the following: Level 1 – Quoted prices in active markets for identical assets or liabilities. Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Classification within the hierarchy is determined based on the lowest level of input that is significant to the fair value measurement. The Company's financial assets and liabilities, which include financial instruments as defined by FASB 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, and accounts payable are a reasonable approximation of fair value due to the short maturities of these instruments (Level 1). The carrying amount of notes payable approximates fair value based on borrowing rates of similar bank loan currently available to the Company (Level 2) (See Note 14). 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 December 31, 2018, the fair values of our derivative instruments that were carried at fair value (See Note 18 and 19). Active Market Observable Unobservable Total Cash and cash equivalents 5,619,051 - $ - 5,619,051 Restricted Cash 14,988,478 14,988,478 Notes payable - 25,271,064 - 25,271,064 Financial liability 79,957 79,957 Warrants liability - 312,751 $ - 312,751 Total 20,607,529 25,583,815 $ 79,957 46,271,301 |
Revenue recognition | Revenue recognition Revenue from sales of prescription medicine at 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 drugstores is recognized at the point of sale, which occurs when a customer pays for and receives the merchandise. Usually the majority of our merchandise, such as prescription and OTC drugs, are not allowed to be returned after the customers leave the counter. Return of other products, such as sundry products, are minimal. Sales of drugs reimbursed by the local government medical insurance agency and receivables from the agency are recognized when a customer pays for the drugs at a store. Based on historical experience, a reserve for potential loss from denial of reimbursement on certain unqualified drugs is made to the receivables from the government agency. Revenue from medical services is recognized after the service has been rendered to a customer. Revenue from online pharmacy sales is recognized when merchandise is shipped to customers. While most deliveries take one day, certain deliveries may take longer depending on a customer's location. Any loss caused in a shipment will be reimbursed by the Company's courier company. Our sales policy allows for the return of certain merchandises without reason within seven days after customer's receipt of the applicable merchandise. A proper sales reserve is made to account for the potential loss from returns from customers. Historically, sales returns seven days after merchandise receipts 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 and long-term deposits in a bank as security for its notes payable. The Company has notes payable outstanding with the bank and is required to keep certain amounts on deposit that are subject to withdrawal restrictions. The notes payable are generally short term in nature due to their short maturity period of six to nine months; thus, restricted cash is classified as a current asset. |
Accounts receivable | Accounts receivable Accounts receivable represents the following: (1) amounts due from banks relating to retail sales that are paid or settled by the customers' debit or credit cards, (2) amounts due from government social security bureaus and commercial health insurance programs relating to retail sales of drugs, prescription medicine, and medical services that are paid or settled by the customers' medical insurance cards, (3) amounts due from non-bank third party payment instruments such as Alipay and certain e-commerce platforms and (4) 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 the Company's retail business, accounts receivable mainly consist of reimbursements due from the government insurance bureaus and commercial health insurance programs and are usually collected within two or three months. The Company directly writes off delinquent account balances, which it determines to be uncollectible after confirming with the appropriate bureau or program each month. Additionally, the Company also makes estimated reserves on related outstanding accounts receivable based on historical trends. In the Company's online pharmacy business, accounts receivable primarily consist of amounts due from non-bank third party payment instruments such as Alipay and certain e-commerce platforms. To purchase pharmaceutical products from an e-commerce platforms such as Tmall, customers are required to submit payment to certain non-bank third party payment instruments, such as Alipay, which, in turn, reimburse the Company within seven days to a month. Except for customer returns of sold products, the receivables from these payments instruments are rarely uncollectible. 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. |
Advances to suppliers | Advances to suppliers Advances to suppliers consist of prepayments to our vendors, such as pharmaceutical manufacturers and other distributors. Since the acquisition of Jiuxin Medicine, we have transferred almost all logistics services of our retail drugstores to Jiuxin Medicine. Jiuzhou Pharmacy only directly purchases certain non-medical products, such as certain nutritional supplements. As a result, almost all advances to suppliers are made by Jiuxin Medicine. Advances to suppliers for our drug wholesale business consist of prepayments to our vendors, such as pharmaceutical manufacturers and other distributors. We typically receive products from vendors within three to nine months after making prepayments. We continuously monitor delivery from, and payments to, our vendors while maintaining a provision for estimated credit losses based upon historical experience and any specific supplier issues, such as discontinuing of inventory supply, that have been identified. If we have difficulty receiving products from a vendor, we take the following steps: cease purchasing products from such vendor, ask for return of our prepayment promptly, and if necessary, take legal action. If all of these steps are unsuccessful, management then determines whether the prepayments should be reserved or written off. |
Inventories | Inventories Inventories are stated at the lower of cost or market value. Cost is determined using the first in first out (FIFO) method. Market value is the lower of replacement cost or net realizable value. The Company carries out physical inventory counts on a monthly basis at each store and warehouse location. Herbs that the Company farms are recorded at their cost, which includes direct costs such as seed selection, fertilizer, labor costs that are spent in growing herbs on the leased farmland, and indirect costs such as amortization of farmland development cost. All costs are accumulated until the time of harvest and then allocated to harvested herbs costs when the herbs 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, if any, between the cost of the inventory and its estimated realizable value. |
Farmland assets | Farmland assets 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 costs. Since April 2014, amortization of farmland development costs has been expensed instead of allocated into inventory due to unpredictable future market value of planted gingko trees. All related costs described in the above are accumulated until the time of harvest and then allocated to harvested herbs when they are sold. |
Property and equipment | Property and equipment Property and equipment are stated at cost, net of accumulated depreciation or amortization. Depreciation is calculated on the straight-line method over the estimated useful lives of the assets, taking into consideration the assets' estimated residual value. Leasehold improvements are amortized over the shorter of lease term or remaining lease period of the underlying assets. Following are the estimated useful lives of the Company's property and equipment: Estimated Useful Life Leasehold improvements 3-10 years Motor vehicles 3-5 years Office equipment & furniture 3-5 years Buildings 35 years Maintenance, repairs and minor renewals are charged to expenses as incurred. Major additions and betterment to property and equipment are capitalized. |
Intangible assets | Intangible assets 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 Land use rights 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 no fixed assets and farmland assets impaired for the three and nine months ended December 31, 2018. |
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 follows FASB ASC Topic 740, "Income Taxes," which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates, applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The Company has adopted FASB ASC Topic 740-10-25, which provides criteria for the recognition, measurement, presentation and disclosure of uncertain tax position. The Company must recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution. The Company performed a self-assessment and the Company's liability for income taxes includes liability for unrecognized tax benefits, interest and penalties which relate to tax years still subject to review by taxing authorities. Audit periods remain open for review until the statute of limitations has passed, which in the PRC is usually 5 years. The completion of review or the expiration of the statute of limitations for a given audit period could result in an adjustment to the Company's liability for income taxes. Any such adjustment could be material to the Company's results of operations for any given quarterly or annual period based, in part, upon the results of operations for the given period. As of September 30, 2018 and March 31, 2018, the management of the Company considered that the Company had no additional liabilities for uncertain tax positions affecting its consolidated financial position and results of operations or cash flows, and will continue to evaluate for any uncertain position in the future. There are no estimated interest costs and penalties provided in the Company's consolidated financial statements for the three months ended September 30, 2018 and 2017, respectively. The Company's tax positions related to open tax years are subject to examination by the relevant tax authorities, the most significant of which is the China Tax Authority. |
Value added tax | Value added tax Sales revenue represents the invoiced value of goods, net of VAT. All of the Company's products are sold in the PRC and are subject to a VAT on the gross sales price. Since April 2018, The VAT rates have been adjusted to range up to 16%, 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. The accounting standards clarify the accounting and disclosure requirements for uncertain tax positions and prescribe a recognition threshold and measurement attribute for recognition and measurement of a tax position taken or expected to be taken in a tax return. The accounting standards also provide guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosures, and transition. No significant penalties, uncertain tax provisions or interest relating to income taxes were incurred during the periods ended December 31, 2018 and 2017. |
Stock based compensation | Stock based compensation The Company follows the provisions of FASB ASC 718, "Compensation — Stock Compensation," which establishes accounting standards for non-employee and employee stock-based awards. Under the provisions of FASB 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 $259,064 and $197,326 for the three months ended December 31, 2018 and 2017, respectively, and $657,968 and $518 060 for the nine months ended December 31, 2018 and 2017, 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-cancellable 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 10 year term with a renewal option upon the expiration of the lease; the wholesale warehouse lease has a 10-year term with a renewal option upon the expiration of the lease. The Company has historically been able to renew a majority of its drugstores leases. Under the terms of the lease agreements, the Company has no legal or contractual asset retirement obligations at the end of the lease. In addition, land leased from the government is amortized on a straight-line basis over a 30-year term. |
Foreign currency translation | Foreign currency translation The Company uses the United States dollar ("U.S. dollars" or "USD") for financial reporting purposes. The Company's subsidiaries and VIEs maintain their books and records in their functional currency the Renminbi ("RMB"), the currency of the PRC. In general, for consolidation purposes, the Company translates the assets and liabilities of its subsidiaries and VIEs into U.S. dollars using the applicable exchange rates prevailing at the balance sheet date, and the statements of income and cash flows are translated at average exchange rates during the reporting period. As a result, amounts related to assets and liabilities reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheet. Equity accounts are translated at historical rates. Adjustments resulting from the translation of the financial statements of the subsidiaries and VIEs are recorded as accumulated other comprehensive income. The balance sheet amounts, with the exception of equity, at December 31, 2018 and at March 31, 2018 were translated at 1 RMB to 0.1454 USD and at 1 RMB to 0.1592 USD, respectively. The average translation rates applied to income and cash flow statement amounts for the nine months ended December 31, 2018 and 2017 were at 1 RMB to 0.1494 USD and at 1 RMB to 0.1512 USD, respectively. |
Concentrations and credit risk | Concentrations and credit risk Certain financial instruments, which subject the Company to concentration of credit risk, consist of cash and restricted cash. The Company has cash balances at financial institutions located in Hong Kong and PRC. Balances at financial institutions in Hong Kong may, from time to time, exceed Hong Kong Deposit Protection Board's insured limits. Since March 31, 2015, balances at financial institutions and state-owned banks within the PRC are insured up to RMB 500,000 (USD 75,916) per bank. As of December 31, 2018 and March 31, 2018, the Company had deposits totaling $20,593,311 and $31,433,969 that were covered by such limited insurance, respectively. Any balance over RMB 500,000 (USD 75,916) per bank in PRC will not be covered. To date, the Company has not experienced any losses in such accounts. For the three months ended December 31, 2018, three largest vendors accounted for 70.3% of the Company's total purchases and one vendor accounted for 32.6% of the Company's total advances to suppliers. For the three months ended December 31, 2017, three largest vendors accounted for 31.0% of the Company's total purchases and one vendor accounted for 13.6% of the Company's total advances to suppliers. For the nine months ended December 31, 2018, two vendors accounted for 46.9% of the Company's total purchases and two vendors accounted for more than 10% of total advances to suppliers. For the nine months ended December 31, 2017, the Company's two largest vendors accounted for 26.1% of the Company's total purchases and one vendor accounted for 18.1% of the Company's total advances to suppliers. For the three months and nine months ended December 31, 2018, no customer accounted for more than 10% of the Company's total sales and more than 10% of total accounts receivable. For the three months and six months ended December 31, 2017, no customer accounted for more than 10% of the Company's total sales or more than 10% of total accounts receivable. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In February 2016, the FASB issued No. 2016-02 "Leases (Topic 842): Increasing transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements." The amendments in this update are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, for any of the following: 1. A public business entity; 2. A not-for-profit entity that has issued, or is a conduit bond obligor for, securities that are traded, listed, or quoted on an exchange or an over-the-counter market; 3. An employee benefit plan that files financial statements with the U.S. Securities and Exchange Commission (SEC). For all other entities, the amendments in this update are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early application of the amendments in this update is permitted for all entities. We are currently evaluating the impact of the adoption of ASU 2016-02 on our consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, "Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments," providing financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. For public business entities that are U.S. Securities and Exchange Commission (SEC) filers, the amendments in this update are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. All entities may adopt the amendments in this update earlier as of the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We are currently evaluating the impact of the adoption of ASU 2016-13 on our consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, "Statement of Cash Flows (Topic 230):Classification of Certain Cash Receipts and Cash Payments," addressing eight specific cash flow issues with the objective of reducing the existing diversity in practice. The amendments in this update are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity that elects early adoption must adopt all of the amendments in the same period. The amendments in this update should be applied using a retrospective transition method to each period presented. If it is impracticable to apply the amendments retrospectively for some of the issues, the amendments for those issues would be applied prospectively as of the earliest date practicable. The impact of adoption on its Condensed Consolidated Financial Statements for any period presented is not material. In July 2017, the FASB issued Accounting Standards update ("ASU") No. 2017-11, "Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815): I. Accounting for Certain Financial Instruments with Down Round Features; II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception". Part I of this update addresses the complexity of accounting for certain financial instruments with down round features. Part II of this update addresses the difficulty of navigating Topic 480, Distinguishing Liabilities from Equity, because of the existence of extensive pending content in the FASB Accounting Standards Codification®. We are currently evaluating the impact of the adoption of ASU 2017-11 on our consolidated financial statements. In January 2017, the FASB issued Accounting Standards update ("ASU") No. 2017-04, "Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment" ("ASU 2017-04"), which removes Step 2 from the goodwill impairment test. An entity will apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit's carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. The new guidance does not amend the optional qualitative assessment of goodwill impairment. Public business entity that is a U.S. Securities and Exchange Commission filer should adopt the amendments in this ASU for its annual or any interim goodwill impairment test in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We are currently evaluating the impact of the adoption of ASU 2017-04 on our consolidated financial statements. In February 2018, the FASB released ASU 2018-2, "Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income." This standard update addresses a specific consequence of the Tax Cuts and Jobs Act ("U.S. tax reform") and allows a reclassification from accumulated other comprehensive income to retained earnings for the stranded tax effects resulting from U.S. tax reform. Consequently, the update eliminates the stranded tax effects that were created as a result of the historical U.S. federal corporate income tax rate to the newly enacted U.S. federal corporate income tax rate. The Company is required to adopt this standard in the first quarter of fiscal year 2021, with early adoption permitted. The amendments in this update should be applied either in the period of adoption or retrospectively to each period in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act is recognized.We are currently evaluating the impact of adoption on its Condensed Consolidated Financial Statements. |
Adoption of New Revenue Recognition Standard | Adoption of New Revenue Recognition Standard In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU")2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09 outlines a single comprehensive model for companies to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. In March 2016, the FASB issued ASU 2016-08,"Principal Versus Agent Considerations (Reporting Revenue Gross Versus Net)," which amends the principal versus-agent implementation guidance and in April 2016 the FASB issued ASU 2016-10, "Identifying Performance Obligations and Licensing," which amends the guidance in those areas in the new revenue recognition standard. On April 1, 2018, we adopted the guidance in ASC 606 and all the related amendments and applied the new revenue standard to all contracts using the modified retrospective method. Based on the new standard our revenue recognition policies related to membership rewards programs will change. But the impact of the new revenue standard was not material and there was no adjustment required to the opening balance of retained earnings. We expect the impact of the adoption of the new revenue standard to be immaterial to our net income on an ongoing basis. The following is a discussion of the Company's revenue recognition policies by segment under the new revenue recognition accounting standard: Pharmacy retail sales The physical pharmacies sell prescription drugs, OTC drugs, traditional Chinese medicine, nutritional supplements, medical devices and sundry products. Revenue from sales of prescription medicine at 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 drugstores is recognized at the point of sale, which is when a customer pays for and receives the merchandise. Usually the majority of our merchandise, such as prescription and OTC drugs, are not allowed to be returned after the customers leave the counter. Return of other products, such as sundry products, are minimal. Sales of drugs reimbursed by the local government medical insurance agency and receivables from the agency are recognized when a customer pays for the drugs at a store. Based on historical experience, a reserve for potential loss from denial of reimbursement on certain unqualified drugs is made to the receivables from the government agency. Revenue from medical services is recognized after the service has been rendered to a customer. As revenue from medical services are minimal compared to pharmacy retail sales, it is included as part of the pharmacy retail sales. Online pharmacy sales The online pharmacy sells various health products except for prescription drugs. Revenue from online pharmacy sales is recognized when merchandise is shipped to customers. While most deliveries take one day, certain deliveries may take longer depending on a customer's location. Any loss caused in a shipment will be reimbursed by the Company's courier company. Our sales policy allows for the return of certain merchandises without reason within seven days after customer's receipt of the applicable merchandise. A proper sales reserve is made to account for the potential loss from returns from customers. Historically, sales returns seven days after merchandise receipts have been minimal. Wholesale Jiuxin Medicine purchases medicine in quantity and distributes products primarily to local pharmacies and medical products dealers. 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. Disaggregation of Revenue The following table disaggregates the Company's revenue by major source in each segment for the three and nine months ended December 31, 2018: Three months ended December 31 2018 2017 Retail drugstores Prescription drugs $ 6,756,073 $ 5,373,870 OTC drugs 9,393,148 9,168,708 Nutritional supplements 1,869,351 1,883,020 TCM 1,342,768 1,185,004 Sundry products 248,729 180,338 Medical devices 1,257,180 497,282 Total retail revenue $ 20,867,249 $ 18,288,222 Online pharmacy Prescription drugs $ - $ - OTC drugs 837,126 1,535,383 Nutritional supplements 220,776 514,952 TCM 28,785 8,802 Sundry products 573,993 224,514 Medical devices 832,526 1,111,396 Total online revenue $ 2,493,206 $ 3,395,047 Drug wholesale Prescription drugs $ 3,933,441 $ 2,777,566 OTC drugs 3,341,676 2,303,726 Nutritional supplements 167,069 19,123 TCM 77,216 20,876 Sundry products 5,949 - Medical devices 30,743 7,682 Total wholesale revenue $ 7,556,094 $ 5,128,973 Total revenue $ 30,916,549 $ 26,812,242 Nine months ended December 31 2018 2017 Retail drugstores Prescription drugs $ 17,835,700 $ 14,860,659 OTC drugs 24,018,263 21,593,385 Nutritional supplements 4,750,013 4,558,383 TCM 4,615,033 3,136,203 Sundry products 799,554 804,817 Medical devices 2,953,326 1,402,760 Total retail revenue $ 54,971,889 $ 46,356,207 Online pharmacy Prescription drugs $ - $ - OTC drugs 2,412,057 4,038,674 Nutritional supplements 575,862 1,365,834 TCM 54,417 18,984 Sundry products 2,128,282 1,065,935 Medical devices 1,467,304 3,106,325 Total online revenue $ 6,637,922 $ 9,595,752 Drug wholesale Prescription drugs $ 11,708,683 $ 9,252,199 OTC drugs 7,246,356 6,652,879 Nutritional supplements 240,666 47,660 TCM 156,525 21,480 Sundry products 21,479 - Medical devices 114,641 47,476 Total wholesale revenue $ 19,488,350 $ 16,021,694 Total revenue $ 81,098,161 $ 71,973,653 Contract Balances Contract liabilities primarily represent the Company's obligation to transfer additional goods or services to a customer for which the Company has received consideration, for example membership points. The consideration received remains a contract liability until goods or services have been provided to the retail customer. The following table provides information about receivables and contract liabilities from contracts with customers: December 31, March 31, Trade receivable(included in accounts receivable, net) $ 10,637,316 $ 8,322,393 Contract liabilities (included in accrued expenses) 2,196,478 4,461,136 Impact of New Revenue Recognition Standard on Financial Statement Line Items The Company adopted ASU 2014-09 using the modified retrospective method. The cumulative effect of applying the new guidance to all contracts was recorded as an adjustment to retained earnings as of the adoption date. As a result of applying the modified retrospective method to adopt the new revenue guidance, the following adjustments were made to accounts on the condensed statement of operation for the three and nine months ended December 31, 2018: Impact of Change in Accounting Policy As Reported Balances For the Three Months Balance Ended without In thousands December 31, Adjustments Adoption of Condensed Consolidated Statement of Operations: Net revenues 30,916 (36 ) 30,880 Cost of revenues 23,780 - 23,776 Gross profit 7,135 (36 ) 7,099 SELLING EXPENSES 6,688 36 6,724 GENERAL AND ADMINISTRATIVE EXPENSES 2,572 - 2,572 Operating profit (2,125 ) - (2,125 ) Income (loss) before income tax provision (2,159 ) - (2,159 ) Income tax provision 47 - 47 Income (loss) from continuing operations (2,206 ) - (2,206 ) Net income (loss) (2,206 ) - (2,206 ) Impact of Change in Accounting Policy As Reported Balances For the Nine Months Balance Ended without In thousands December 31, Adjustments Adoption of Condensed Consolidated Statement of Operations: Net revenues 81,098 106 81,024 Cost of revenues 62,548 - 62,548 Gross profit 18,550 106 18,656 SELLING EXPENSES 16,539 (106 ) 16,433 GENERAL AND ADMINISTRATIVE EXPENSES 6,342 - 6,342 Operating profit (4,332 ) - (4,332 ) Income (loss) before income tax provision (4,401 ) - (4,401 ) Income tax provision 104 - 104 Income (loss) from continuing operations (4,506 ) - (4,506 ) Net income (loss) (4,506 ) - (4,506 ) The adoption of ASU 2014-09 has no effect on consolidated balance sheet and statement of cash flow. |
Adoption of Statement of Cash Flows | Adoption of Statement of Cash Flows In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows, which amends Accounting Standard Codification ("ASC") Topic 230. This ASU requires entities to show the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. When cash, cash equivalents, restricted cash and restricted cash equivalents are presented in more than one line item on the balance sheet, the new guidance requires a reconciliation of the totals in the statement of cash flows to the related captions in the balance sheet. Entities will also have to disclose the nature of their restricted cash and restricted cash equivalent balances. The guidance is required to be applied retrospectively. The Company adopted this new accounting guidance. The following represents a reconciliation of cash and cash equivalents in the condensed consolidated balance sheet to total cash, cash equivalents and restricted cash in the condensed consolidated statement of cash flows: December 31, March 31, 2018 2018 Cash and cash equivalents 5,619,051 15,132,640 Restricted cash 14,988,478 16,319,551 Total cash, cash equivalents and restricted cash in the statement of cash flows 20,607,529 31,452,191 Restricted cash in the condensed consolidated balance sheets primarily represents deposits required by a bank as security for its notes payable. The Company has notes payable outstanding with the bank and is required to keep certain amounts on deposit that are subject to withdrawal restrictions. All restricted cash is invested in time deposits and money markets, which are classified within Level 1 of the fair value hierarchy. Restricted cash activity was previously reported in "Change in restricted cash" within financing activities cash flows on the Company's condensed consolidated statement of cash flows. The following is a reconciliation of the effect on the relevant line items on the statement of cash flows for the nine months ended December 31, 2017 as a result of adopting this new accounting guidance: As Previously As Reported Adjustments Revised Nine Months Ended December 31, 2017 Change in restricted cash -5,743,155 5,743,155 - Net cash provided by financing activities -170,906 5,743,155 5,572,249 Effects of exchange rate on cash 1,760,935 647,905 2,408,840 Net decrease in cash, cash equivalents and restricted cash -9,968,364 6,391,060 -3,577,304 Cash, cash equivalents, and restricted cash at the beginning of the period 18,364,424 9,431,386 27,795,810 Cash, cash equivalents, and restricted cash at the end of the period 8,396,060 15,822,446 24,218,506 |
Description of Business and O_2
Description of Business and Organization (Tables) | 9 Months Ended |
Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of subsidiaries | Entity Name Date Established Hangzhou Jiuben Pharmacy Co., Ltd ("Jiuben Pharmacy") April 27, 2017 Hangzhou Jiuli Pharmacy Co., Ltd ("Jiuli Pharmacy") May 22, 2017 Hangzhou Jiuxiang Pharmacy Co., Ltd ("Jiuxiang Pharmacy") May 26, 2017 Hangzhou Jiuheng Pharmacy Co., Ltd ("Jiuheng Pharmacy") June 6, 2017 Hangzhou Jiujiu Pharmacy Co., Ltd ("Jiujiu Pharmacy") June 8, 2017 Hangzhou Jiuyi Pharmacy Co., Ltd ("Jiuyi Pharmacy") June 8, 2017 Hangzhou Jiuyuan Pharmacy Co., Ltd ("Jiuyuan Pharmacy") July 13, 2017 Hangzhou Jiumu Pharmacy Co., Ltd ("Jiumu Pharmacy") July 21, 2017 Hangzhou Jiurui Pharmacy Co., Ltd ("Jiurui Pharmacy") August 4, 2017 Zhejiang Jiuzhou Linjia Medical Investment and Management Co. Ltd ("Linjia Medical") September 27, 2017 |
Schedule of consolidated financial statements activities | Entity Name Background Ownership Renovation ● Incorporated in Hong Kong SAR on September 2, 2008 100% Jiuxin Management ● Established in the PRC on October 14, 2008 100% ● Deemed a wholly foreign owned enterprise (“WFOE”) under PRC law ● Registered capital of $14.5 million fully paid Shouantang Technology ● Established in the PRC on July 16, 2010 by Renovation with registered capital of $20 million 100% ● Registered capital requirement reduced by the SAIC to $11 million in July 2012 and is fully paid ● Deemed a WFOE under PRC law ● Invests and finances the working capital of Quannuo Technology Qianhong Agriculture ● Established in the PRC on August 10, 2010 by Jiuxin Management 100% ● Registered capital of RMB 10 million fully paid ● Carries out herb farming business Jiuzhou Pharmacy (1) ● Established in the PRC on September 9, 2003 VIE by contractual arrangements (2) ● Registered capital of RMB 5 million fully paid ● Operates the “Jiuzhou Grand Pharmacy” stores in Hangzhou Jiuzhou Clinic (1) ● Established in the PRC as a general partnership on October 10, 2003 VIE by contractual arrangements (2) ● Operates a medical clinic adjacent to one of Jiuzhou Pharmacy’s stores Jiuzhou Service (1) ● Established in the PRC on November 2, 2005 VIE by contractual arrangements (2) ● Registered capital of RMB 500,000 fully paid ● Operates a medical clinic adjacent to one of Jiuzhou Pharmacy’s stores Jiuxin Medicine ● ● Established in PRC on December 31, 2003 Acquired by Jiuzhou Pharmacy in August 2011 VIE by contractual arrangements as a controlled subsidiary of Jiuzhou Pharmacy (2) ● Registered capital of RMB 10 million fully paid ● Carries out pharmaceutical distribution services Entity Name Background Ownership 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% Jiuben Pharmacy ● Established in the PRC on April 27, 2017 by Jiuzhou Pharmacy ● Registered capital of $15,920 fully paid ● Operates a pharmacy in Hangzhou VIE by contractual arrangements as a wholly-owned subsidiary of Jiuzhou Pharmacy (2) Jiuli Pharmacy ● Established in the PRC on May 22, 2017 by Jiuzhou Pharmacy ● Registered capital of $15,920 fully paid ● Operates a pharmacy in Hangzhou VIE by contractual arrangements as a wholly-owned subsidiary of Jiuzhou Pharmacy (2) Jiuxiang Pharmacy ● Established in the PRC on May 26, 2017 by Jiuzhou Pharmacy ● Registered capital of $15,920 fully paid ● Operates a pharmacy in Hangzhou VIE by contractual arrangements as a wholly-owned subsidiary of Jiuzhou Pharmacy (2) Jiuheng Pharmacy ● Established in the PRC on June 6, 2017 by Jiuzhou Pharmacy ● Registered capital of $15,920 fully paid ● Operates a pharmacy in Hangzhou VIE by contractual arrangements as a wholly-owned subsidiary of Jiuzhou Pharmacy (2) Jiujiu Pharmacy ● Established in the PRC on June 8, 2017 by Jiuzhou Pharmacy ● Registered capital of $15,920 fully paid ● Operates a pharmacy in Hangzhou VIE by contractual arrangements as a wholly-owned subsidiary of Jiuzhou Pharmacy (2) Jiuyi Pharmacy ● Established in the PRC on June 8, 2017 by Jiuzhou Pharmacy ● Registered capital of $15,920 fully paid ● Operates a pharmacy in Hangzhou VIE by contractual arrangements as a wholly-owned subsidiary of Jiuzhou Pharmacy (2) Jiuyuan Pharmacy ● Established in the PRC on July 13, 2017 by Jiuzhou Pharmacy ● Registered capital of $15,920 fully paid ● Operates a pharmacy in Hangzhou VIE by contractual arrangements as a wholly-owned subsidiary of Jiuzhou Pharmacy (2) Jiumu Pharmacy ● Established in the PRC on July 21, 2017 by Jiuzhou Pharmacy ● Registered capital of $15,920 fully paid ● Operates a pharmacy in Hangzhou VIE by contractual arrangements as a wholly-owned subsidiary of Jiuzhou Pharmacy (2) Entity Name Background Ownership Jiurui Pharmacy ● Established in the PRC on August, 2017 by Jiuzhou Pharmacy ● Registered capital of $15,920 fully paid ● Operates a pharmacy in Hangzhou VIE by contractual arrangements as a wholly-owned subsidiary of Jiuzhou Pharmacy (2) Shouantang Bio ● Established in the PRC in October, 2014 by Shouantang Technology ● 100% held by Shouantang Technology ● Registered capital of RMB 1,000,000 fully paid ● Sells nutritional supplements under its own brand name 100% Jiuyi Technology ● Established in the PRC on September 10, 2015 ● 100% held by Renovation ● Technical support to online pharmacy 100% Kahamadi Bio ● Established in the PRC in May 2016 ● 49% held by Shouantang Bio ● Registered capital of RMB 10 million ● Develop brand name for nutritional supplements 49% Lin’An Jiuzhou ● Established in the PRC on March 31, 2017 ● 100% held by Jiuxin Management ● Registered capital of RMB 5 million ● Explore retail pharmacy market in Lin’An City 100% Linjia Medical ● Established in the PRC on September 27, 2017 ● 51% held by Jiuzhou Pharmacy ● Registered capital of RMB 20 million ● Operates local clinics VIE by contractual arrangements as a controlled subsidiary of Jiuzhou Pharmacy (2) (1) Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service had been under the common control of Mr. Lei Liu, Mr. Chong’an Jin and Ms. Li Qi, the three shareholders of Renovation (the “Owners”) since their respective establishment dates, pursuant to agreements among the Owners to vote their interests in concert as memorialized in a voting rights agreement. Based on such voting agreement, the Company has determined that common control exists among these three companies. 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. (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: a consulting services agreement, operating agreement, equity pledge agreement, voting rights agreement and option agreement. Because such agreements 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 each of the three companies (as well as subsidiaries of Jiuzhou Pharmacy) as a variable interest entity (“VIE”) under the accounting standards of the Financial Accounting Standards Board (“FASB”). Accordingly, the financial statements of Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service, as well as the subsidiary under the control of Jiuzhou Pharmacy, Jiuxin Medicine and Shouantang Bio are consolidated into the financial statements of the Company. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Schedule of fair values of derivative instruments | Active Market Observable Unobservable Total Cash and cash equivalents 5,619,051 - $ - 5,619,051 Restricted Cash 14,988,478 14,988,478 Notes payable - 25,271,064 - 25,271,064 Financial liability 79,957 79,957 Warrants liability - 312,751 $ - 312,751 Total 20,607,529 25,583,815 $ 79,957 46,271,301 |
Schedule of estimated useful lives of property and equipment | Estimated Useful Life Leasehold improvements 3-10 years Motor vehicles 3-5 years Office equipment & furniture 3-5 years Buildings 35 years |
Schedule of estimated useful lives of intangible assets | Estimated Land use rights 50 years Software 3 years |
Schedule of revenue by major source in each segment | Three months ended December 31 2018 2017 Retail drugstores Prescription drugs $ 6,756,073 $ 5,373,870 OTC drugs 9,393,148 9,168,708 Nutritional supplements 1,869,351 1,883,020 TCM 1,342,768 1,185,004 Sundry products 248,729 180,338 Medical devices 1,257,180 497,282 Total retail revenue $ 20,867,249 $ 18,288,222 Online pharmacy Prescription drugs $ - $ - OTC drugs 837,126 1,535,383 Nutritional supplements 220,776 514,952 TCM 28,785 8,802 Sundry products 573,993 224,514 Medical devices 832,526 1,111,396 Total online revenue $ 2,493,206 $ 3,395,047 Drug wholesale Prescription drugs $ 3,933,441 $ 2,777,566 OTC drugs 3,341,676 2,303,726 Nutritional supplements 167,069 19,123 TCM 77,216 20,876 Sundry products 5,949 - Medical devices 30,743 7,682 Total wholesale revenue $ 7,556,094 $ 5,128,973 Total revenue $ 30,916,549 $ 26,812,242 Nine months ended December 31 2018 2017 Retail drugstores Prescription drugs $ 17,835,700 $ 14,860,659 OTC drugs 24,018,263 21,593,385 Nutritional supplements 4,750,013 4,558,383 TCM 4,615,033 3,136,203 Sundry products 799,554 804,817 Medical devices 2,953,326 1,402,760 Total retail revenue $ 54,971,889 $ 46,356,207 Online pharmacy Prescription drugs $ - $ - OTC drugs 2,412,057 4,038,674 Nutritional supplements 575,862 1,365,834 TCM 54,417 18,984 Sundry products 2,128,282 1,065,935 Medical devices 1,467,304 3,106,325 Total online revenue $ 6,637,922 $ 9,595,752 Drug wholesale Prescription drugs $ 11,708,683 $ 9,252,199 OTC drugs 7,246,356 6,652,879 Nutritional supplements 240,666 47,660 TCM 156,525 21,480 Sundry products 21,479 - Medical devices 114,641 47,476 Total wholesale revenue $ 19,488,350 $ 16,021,694 Total revenue $ 81,098,161 $ 71,973,653 |
Schedule of receivables and contract liabilities from contracts with customers | December 31, March 31, Trade receivable(included in accounts receivable, net) $ 10,637,316 $ 8,322,393 Contract liabilities (included in accrued expenses) 2,196,478 s 4,461,136 |
Schedule of condensed statement of operation | Impact of Change in Accounting Policy As Reported Balances For the Three Months Balance Ended without In thousands December 31, Adjustments Adoption of Condensed Consolidated Statement of Operations: Net revenues 30,916 (36 ) 30,880 Cost of revenues 23,780 - 23,776 Gross profit 7,135 (36 ) 7,099 SELLING EXPENSES 6,688 36 6,724 GENERAL AND ADMINISTRATIVE EXPENSES 2,572 - 2,572 Operating profit (2,125 ) - (2,125 ) Income (loss) before income tax provision (2,159 ) - (2,159 ) Income tax provision 47 - 47 Income (loss) from continuing operations (2,206 ) - (2,206 ) Net income (loss) (2,206 ) - (2,206 ) Impact of Change in Accounting Policy As Reported Balances For the Nine Months Balance Ended without In thousands December 31, Adjustments Adoption of Condensed Consolidated Statement of Operations: Net revenues 81,098 106 81,024 Cost of revenues 62,548 - 62,548 Gross profit 18,550 106 18,656 SELLING EXPENSES 16,539 (106 ) 16,433 GENERAL AND ADMINISTRATIVE EXPENSES 6,342 - 6,342 Operating profit (4,332 ) - (4,332 ) Income (loss) before income tax provision (4,401 ) - (4,401 ) Income tax provision 104 - 104 Income (loss) from continuing operations (4,506 ) - (4,506 ) Net income (loss) (4,506 ) - (4,506 ) |
Schedule of cash equivalents and restricted cash. | December 31, March 31, 2018 2018 Cash and cash equivalents 5,619,051 15,132,640 Restricted cash 14,988,478 16,319,551 Total cash, cash equivalents and restricted cash in the statement of cash flows 20,607,529 31,452,191 |
Schedule of reconciliation of line items on the statement of cash flows | As Previously As Reported Adjustments Revised Nine Months Ended December 31, 2017 Change in restricted cash -5,743,155 5,743,155 - Net cash provided by financing activities -170,906 5,743,155 5,572,249 Effects of exchange rate on cash 1,760,935 647,905 2,408,840 Net decrease in cash, cash equivalents and restricted cash -9,968,364 6,391,060 -3,577,304 Cash, cash equivalents, and restricted cash at the beginning of the period 18,364,424 9,431,386 27,795,810 Cash, cash equivalents, and restricted cash at the end of the period 8,396,060 15,822,446 24,218,506 |
Trade Accounts Receivable (Tabl
Trade Accounts Receivable (Tables) | 9 Months Ended |
Dec. 31, 2018 | |
Receivables [Abstract] | |
Schedule of trade accounts receivable | December 31, March 31, Accounts receivable $ 15,489,718 $ 12,883,707 Less: allowance for doubtful accounts (4,852,402 ) (4,561,314 ) Trade accounts receivable, net $ 10,637,316 $ 8,322,393 |
Other Current Assets (Tables)
Other Current Assets (Tables) | 9 Months Ended |
Dec. 31, 2018 | |
Prepaid Expense and Other Assets, Current [Abstract] | |
Schedule of other current assets | December 31, March 31, Prepaid rental expenses (1) $ 1,285,752 $ 1,984,856 Prepaid and other current assets 182,436 131,381 Total $ 1,468,188 $ 2,116,237 (1) Represents store and office rental expenses that were usually prepaid and amortized over the prepayment period. |
Property and Equipment (Tables)
Property and Equipment (Tables) | 9 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | December 31, March 31, Building* $ 6,280,935 $ 1,707,145 Leasehold improvements 8,338,779 7,606,496 Farmland development cost 1,738,621 1,904,151 Office equipment and furniture 5,252,629 5,581,554 Motor vehicles 579,891 456,442 Total 22,190,875 17,255,788 Less: Accumulated depreciation (11,474,422 ) (11,905,893 ) Impairment** (2,288,583 ) (2,506,255 ) Property and equipment, net $ 8,427,870 $ 2,843,640 * The increase of property and equipment from March 31, 2018 to December 31, 2018 is due to the purchase of Yueming shop, a new store which cost $4,722,193 (RMB32,482,394). The new store is located downtown south Hangzhou and adjacent to a super shopping mall. The Company plans to create a new flagship store. ** The variance of impairment from March 31, 2018 to December 31, 2018 is solely caused by exchange rate variance. |
Advances to Suppliers (Tables)
Advances to Suppliers (Tables) | 9 Months Ended |
Dec. 31, 2018 | |
Advances to Suppliers [Abstract] | |
Schedule of advance to suppliers | December 31, March 31, Advance to suppliers* $ 6,826,569 $ 6,505,545 Less: allowance for unrefundable advances (3,337,559 ) (3,058,092 ) Advance to suppliers, net $ 3,489,010 $ 3,447,452 * In order to achieve a larger rebate for certain merchandise, such as colla coril asini (donkey-hide gelatin), from certain suppliers, the Company made a significant cash advance to such suppliers. |
Farmland Assets (Tables)
Farmland Assets (Tables) | 9 Months Ended |
Dec. 31, 2018 | |
Farmland Assets [Abstract] | |
Schedule of farmland assets | December 31, March 31, 2018 2018 Farmland assets $ 2,206,741 $ 2,416,839 Less: Impairment* (1,479,677 ) (1,620,553 ) Farmland assets, net $ 727,064 $ 796,286 * The estimated fair value is estimated to be lower than its investment value as of December 31, 2018 and March 31, 2018. |
Other Noncurrent Assets (Tables
Other Noncurrent Assets (Tables) | 9 Months Ended |
Dec. 31, 2018 | |
Other Assets, Noncurrent Disclosure [Abstract] | |
Schedule of other noncurrent assets | December 31, March 31, Forest land use rights* $ 1,089,421 $ 1,235,253 Others 32,393 18,099 Total $ 1,121,814 $ 1,253,352 * The prepayment for lease of forest land use rights is a payment made to a local government in connection with entering into an operating land lease agreement. The land is currently used to cultivate Ginkgo trees. The forest rights certificate from the local village extends the life of the lease to January 31, 2060. |
Schedule of amortizations of the prepayment for lease of land use right | For the year ending December 31, Amount 2019 $ 28,071 2020 28,071 2021 28,071 2022 28,071 2023 28,071 Thereafter 949,066 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 9 Months Ended |
Dec. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of net intangible assets | December 31, March 31, License (1) $ 1,863,603 $ 1,967,934 SAP software (2) 660,010 764,104 Land use rights (3) 1,417,651 1,552,622 Total intangible assets 3,941,264 4,284,660 Less: accumulated amortization (370,279 ) (228,246 ) Intangible assets, net $ 3,570,986 $ 4,056,414 (1) This represents the fair value of the licenses of insurance applicable drugstores acquired from Sanhao Pharmacy, a drugstore chain Jiuzhou Pharmacy acquired in 2014. The licenses allow patients to pay by using insurance cards at stores. The stores are reimbursed from the Human Resource and Social Security Department of Hangzhou City. In September 2017, the Company acquired several new stores for the purpose of the Municipal Social Medical Reimbursement Qualification Certificates. The owners of these acquired drugstores agreed to cease their stores' business and liquidate all of the stores' accounts before Jiuzhou Pharmacy acquired them. As a result, Jiuzhou Pharmacy has not obtained any assets or liabilities from the stores, but was able to transfer the certificates to our new stores opened at the same time. (2) In 2017, we have installed a leading ERP system, SAP from Germany. SAP is a well-known management system used by many Fortune 500 companies. As of December 31, 2018, the system has been completely installed and has been running for eleven months in the Company. By automatically connecting commodity flow data with accounting recording, the system minimizes the manual errors made by accounting staff. Additionally, the system provides a view of overall and instant cash information by electronically linking local banking systems with SAP. Additional benefits include automatically-generated customized monthly company performance reports, instant inventory monitoring and reporting, and punctual maintenance of customer and supplier accounts. (3) In July 2013, the Company purchased the land use rights of a plot of farmland in Lin'an, Hangzhou, intended for the establishment of an herb processing plant in the future. However, as our farming business in Lin'an has not grown, the Company does not expect completion of the plant in the near future. |
Notes Payable (Tables)
Notes Payable (Tables) | 9 Months Ended |
Dec. 31, 2018 | |
Notes Payable [Abstract] | |
Schedule of credit facilities with banks | Origination Maturity December 31, March 31, Beneficiary Endorser date date 2018 2018 Jiuzhou Pharmacy (1) HUB 10/10/17 04/10/18 2,552,769 Jiuzhou Pharmacy (1) HUB 11/24/17 05/24/18 21,972 Jiuzhou Pharmacy (1) HUB 12/05/17 06/05/18 377,347 Jiuzhou Pharmacy (1) HUB 12/29/17 06/29/18 1,194,135 Jiuzhou Pharmacy (1) HUB 12/29/17 06/29/18 1,443,554 Jiuzhou Pharmacy (1) HUB 02/05/18 08/05/18 2,618,500 Jiuzhou Pharmacy (1) HUB 03/05/18 09/05/18 3,072,638 Jiuzhou Pharmacy (1) HUB 11/06/17 05/06/18 3,553,014 Jiuzhou Pharmacy (1) HUB 12/05/17 06/05/18 1,937,683 Jiuzhou Pharmacy (1) HUB 12/29/17 06/29/18 1,687,711 Jiuzhou Pharmacy (1) HUB 11/06/18 05/06/19 488,767 - Jiuzhou Pharmacy (1) HUB 12/12/18 06/12/19 2,182,572 - Jiuzhou Pharmacy (1) HUB 12/20/18 03/20/19 110,767 - Jiuzhou Pharmacy (1) HUB 12/20/18 06/20/19 1,046,714 Jiuzhou Pharmacy (1) HUB 12/29/18 06/29/19 5,372,061 Jiuzhou Pharmacy (1) HUB 07/05/18 01/05/19 2,989,780 Jiuzhou Pharmacy (1) HUB 08/06/18 02/06/19 1,357,129 Jiuzhou Pharmacy (1) HUB 08/17/18 02/17/19 277,657 Jiuzhou Pharmacy (1) HUB 08/31/18 02/28/19 2,300,155 Jiuzhou Pharmacy (1) HUB 09/05/18 03/05/19 1,876,612 Jiuxin Medicine (2) HUB 10/11/18 04/11/19 4,353,836 Jiuxin Medicine (2) HUB 11/07/18 05/07/19 2,915,014 Jiuxin Medicine (2) CMB 02/02/18 08/02/18 71,648 Jiuxin Medicine (2) CMB 02/07/18 08/07/18 95,530 Jiuxin Medicine (2) CMB 03/07/18 09/07/18 538,857 Jiuxin Medicine (2) CMB 03/15/18 09/15/18 44,842 Total $ 25,271,064 $ 19,180,200 (1) As of December 31, 2018, the Company had $25,271,064 (RMB 173,831,238) of notes payable from HUB. The Company is required to hold restricted cash in the amount of $14,723,476 (RMB 101,277,889) with HUB as collateral against these bank notes. Included in the restricted cash is a total of $10,194,220three-year deposit (RMB 70,122,647) deposited into HUB as a collateral for current and future notes payable from HUB. As of March 31, 2018, the Company had $18,429,322 (RMB 115,748,985) of notes payable from HUB. The Company is required to hold restricted cash in the amount of $13,565,300 (RMB 85,199,540) with HUB as collateral against these bank notes. Included in the restricted cash is a total of $7,269,509 three-year deposit (RMB 45,657,584) deposited into HUB as a collateral for current and future notes payable from HUB. (2) As of December 31, 2018, the Company had $0 (RMB0) of notes payable from CMB, with restricted cash in the amount of $0 (RMB0) held at the bank. As of March 31, 2018, the Company had $750,878 (RMB 4,716,037) of notes payable from CMB, with restricted cash in the amount of $750,878 (RMB 4,716,037) held at the bank. |
Taxes (Tables)
Taxes (Tables) | 9 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Schedule of income arising in or derived from tax jurisdiction which each entity domiciled | Entity Income Tax Jurisdiction Jo-Jo Drugstores United States Renovation Hong Kong, PRC All other entities Mainland, PRC |
Schedule of components of income tax expense | For the three months ended For the nine months ended December 31, December 31, 2018 2017 2018 2017 Current: Federal - - - - State - - - - Foreign 47,958 38,106 104,712 76,691 47,958 38,106 104,712 76,691 Deferred: Federal - - - - State - - - - Foreign - - - - - - - - Provision for income taxes 47,958 38,106 104,712 76,691 |
Schedule of reconciles the U.S. statutory tax rates with the Company's effective tax rate | For the three months ended For the nine months ended December 31, December 31, 2018 2017 2018 2017 U.S. Statutory rates 21.0 % 34.0 % 21.0 % 34.0 % Foreign income not recognized in the U.S. (21.0 ) (34.0 ) (21.0 ) (34.0 ) China income taxes 25.0 25.0 25.0 25.0 Change in valuation allowance (1) (25.0 ) (25.0 ) (25.0 ) (25.0 ) Non-deductible expenses-permanent difference (2) (2.2 ) (2.4 ) (2.4 ) (1.9 ) Effective tax rate (2.2 )% (2.4 )% (2.4 )% (1.9 )% (1) Represents a non-taxable expense due to overall increase in allowance for accounts receivable and advances to suppliers. (2) The (2.2)% and (2.4)% rate adjustments for the three months ended December 31, 2018 and 2017 and the (2.4)% and (1.9)% rate adjustments for the nine months ended December 31, 2018 and 2017 represent expenses that primarily include stock option expenses and legal, accounting and other expenses incurred by the Company that are not deductible for PRC income tax. |
Schedule of net deferred tax assets | As of As of Allowance 771,675 584,427 Long-lived assets impairment - - Depreciation and Amortization 139,483 147,655 Accrued expense 420,143 140,124 Net operating loss carryforward 2,859,896 1,765,468 Foreign Tax Credit Carryover 195,000 195,000 Total deferred tax assets (liabilities): 4,386,197 2,832,673 Valuation allowance (4,386,197 ) (2,832,673 ) Net deferred tax assets (liabilities) - - |
Related Party Transactions an_2
Related Party Transactions and Arrangements (Tables) | 9 Months Ended |
Dec. 31, 2018 | |
Related Party Transactions [Abstract] | |
Schedule of amounts payable to related parties | December 31, March 31, Due to a director and CEO (1) 726,219 850,342 Total $ 726,219 $ 850,342 (1) 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. |
Warrants (Tables)
Warrants (Tables) | 9 Months Ended |
Dec. 31, 2018 | |
Warrants [Abstract] | |
Schedule of estimated fair value of warrants using the binominal pricing model | Common Stock Common Stock December 31, (1) March 31, Stock price $ 2.00 $ 1.35 Exercise price $ 3.10 $ 3.10 Annual dividend yield 0 % 0 % Expected term (years) 2.30 2.80 Risk-free interest rate 2.48 % 1.98 % Expected volatility 67.70 % 68.73 % (1) As of December 31, 2018, the warrants had not been exercised. |
(Loss) Income Per Share (Tables
(Loss) Income Per Share (Tables) | 9 Months Ended |
Dec. 31, 2018 | |
EARNINGS PER SHARES: | |
Schedule of reconciliation of the basic and diluted (loss) earnings per share | Three months ended Nine months ended 2018 2017 2018 2017 Net income attributable to controlling interest $ (1,678,231 ) $ (1,625,829 ) $ (3,911,501 ) $ (4,213,842 ) Weighted average shares used in basic computation 28,936,778 25,214,678 28,936,778 25,214,678 Diluted effect of purchase options and warrants - - - - Weighted average shares used in diluted computation 28,936,778 25,214,678 28,936,778 25,214,678 Income per share – Basic: Net (loss) attributable to controlling interest $ (0.06 ) $ (0.08 ) $ (0.14 ) $ (0.17 ) Loss per share – Diluted: Net (loss) attributable to controlling interest $ (0.06 ) $ (0.08 ) $ (0.14 ) $ (0.17 ) |
Segments (Tables)
Segments (Tables) | 9 Months Ended |
Dec. 31, 2018 | |
Segment Reporting [Abstract] | |
Summary of segment of the continuing operations | The following table presents summarized information by segment of the continuing operations for the three months ended December 31, 2018. Retail drugstores Online Pharmacy Drug wholesale Herb Total Revenue $ 20,867,250 $ 2,493,205 7,556,094 - 30,916,549 Cost of goods 14,903,761 2,232,994 6,644,008 - 23,780,763 Gross profit $ 5,963,489 $ 260,211 912,086 - 7,135,786 Selling expenses 4,819,081 438,235 1,431,261 - 6,688,577 General and administrative expenses 1,443,634 47,703 1,081,525 - 2,572,862 Loss income from operations $ (299,226 ) $ (225,727 ) (1,600,700 - (2,125,653 ) Depreciation and amortization $ 449,893 $ - 433 - 450,326 Total capital expenditures $ 6,415,414 $ - 314 - 6,415,728 The following table presents summarized information by segment of the continuing operations for the three months ended December 31, 2017. Retail drugstores Online Pharmacy Drug wholesale Herb Total Revenue $ 18,288,222 $ 3,395,047 5,128,973 - 26,812,242 Cost of goods 13,686,969 3,134,767 4,418,893 - 21,240,629 Gross profit $ 4,601,253 $ 260,280 710,080 - 5,571,613 Selling expenses 3,509,018 572,397 939,556 - 5,020,971 General and administrative expenses 930,689 174,865 1,615,560 16,668 2,737,782 Income (Loss) from operations $ 161,546 $ (486,982 ) (1,845,036 ) (16,668 ) (2,187,140 ) Depreciation and amortization $ (525,203 ) $ - 4,649 - (520,554 ) Total capital expenditures $ 8,9495 $ - 4,711 - 94,206 The following table presents summarized information of the continuing operation by segment for the nine months ended December 31, 2018: Retail Online Drug Herb Total Revenue $ 54,971,889 $ 6,637,922 19,488,350 81,098,161 Cost of goods 39,344,927 5,883,301 17,320,243 62,548,471 Gross profit $ 15,626,962 $ 754,621 2,168,107 18,549,690 Selling expenses 12,453,077 1,316,945 2,769,056 16539,078 General and administrative expenses 4,644,077 292,544 1,406,081 6,342,874 Loss from operations $ (1,470,364 ) $ (854,868 ) (2,007,030 ) (4,332,262 ) Depreciation and amortization $ 980,845 $ - 7,446 988,291 Total capital expenditures $ 6,789,129 $ - 1,437 6,790,566 The following table presents summarized information of the continuing operation by segment for the nine months ended December 31, 2017: Retail Online Drug Herb Total Revenue $ 46,356,207 $ 9,595,752 16,021,694 - 71,973,653 Cost of goods 34,227,630 8,644,564 13,794,588 - 56,666,782 Gross profit $ 12,128,577 $ 951,188 2,227,106 - 15,306,871 Selling expenses 8,510,663 1,547,569 3,230,370 - 13,288,602 General and administrative expenses 4,942,902 352,770 1,996,393 26,715 7,318,780 Loss income from operations $ (1,324,988 ) $ (949,151 ) (2,999,657 ) (26,715 ) (5,300,511 ) Depreciation and amortization $ (854,445 ) $ - 209,023 - (645,422 ) Total capital expenditures $ 295,637 $ - 10,927 - 306,564 |
Summary of net revenue from external customers through its retail drugstores by main products | Three months ended Nine months ended 2018 2017 2018 2017 Prescription drugs $ 6,756,073 $ 5,373,870 $ 17,835,700 $ 14,860,659 OTC drugs 9,393,148 9,168,708 24,018,263 21,593,385 Nutritional supplements 1,869,351 1,883,020 4,750,013 4,558,383 TCM 1,342,768 1,185,004 4,615,033 3,136,203 Sundry products 248,729 180,338 799,554 804,817 Medical devices 1,257,180 497,282 2,953,326 1,402,760 Total $ 20,867,249 $ 18,288,222 $ 54,971,889 $ 46,356,207 Three months ended Nine months ended 2018 2017 2018 2017 Prescription drugs $ - $ - $ - $ - OTC drugs 837,126 1,535,383 2,412,057 4,038,674 Nutritional supplements 220,776 514,952 575,862 1,365,834 TCM 28,785 8,802 54,417 18,984 Sundry products 573,993 224,514 2,128,282 1,065,935 Medical devices 832,526 1,111,396 1,467,304 3,106,325 Total $ 2,493,206 $ 3,395,047 $ 6,637,922 $ 9,595,752 Three months ended Nine months ended 2018 2017 2018 2017 Prescription drugs $ 3,933,441 $ 2,777,566 $ 11,708,683 $ 9,252,199 OTC drugs 3,341,676 2,303,726 7,246,356 6,652,879 Nutritional supplements 167,069 19,123 240,666 47,660 TCM 77,216 20,876 156,525 21,480 Sundry products 5,949 - 21,479 - Medical devices 30,743 7,682 114,641 47,476 Total $ 7,556,094 $ 5,128,973 $ 19,488,350 $ 16,021,694 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of company's commitments for minimum rental payments | Periods ending September 30, Retail Online Drug Herb Total 2019 $ 4,590,468 $ - $ - $ - $ 4,590,468 2020 3,699,758 - - - 3,699,758 2021 2,799,515 - - - 2,799,515 2022 2,013,152 - - - 2,013,152 2023 1,342,827 - - - 1,342,827 Thereafter 1,762,033 - - - 1,762,033 |
Description of Business and O_3
Description of Business and Organization (Details) | 9 Months Ended |
Dec. 31, 2018 | |
Hangzhou Jiuben Pharmacy Co., Ltd ("Jiuben Pharmacy") [Member] | |
Variable Interest Entity [Line Items] | |
Date of established | Apr. 27, 2017 |
Hangzhou Jiuli Pharmacy Co., Ltd ("Jiuli Pharmacy") [Member] | |
Variable Interest Entity [Line Items] | |
Date of established | May 22, 2017 |
Hangzhou Jiuxiang Pharmacy Co., Ltd (“Jiuxiang Pharmacy”) [Member] | |
Variable Interest Entity [Line Items] | |
Date of established | May 26, 2017 |
Hangzhou Jiuheng Pharmacy Co., Ltd (“Jiuheng Pharmacy”) [Member] | |
Variable Interest Entity [Line Items] | |
Date of established | Jun. 6, 2017 |
Hangzhou Jiujiu Pharmacy Co., Ltd ("Jiujiu Pharmacy") [Member] | |
Variable Interest Entity [Line Items] | |
Date of established | Jun. 8, 2017 |
Hangzhou Jiuyi Pharmacy Co., Ltd (“Jiuyi Pharmacy”) [Member] | |
Variable Interest Entity [Line Items] | |
Date of established | Jun. 8, 2017 |
Hangzhou Jiuyuan Pharmacy Co., Ltd (“Jiuyuan Pharmacy”) [Member] | |
Variable Interest Entity [Line Items] | |
Date of established | Jul. 13, 2017 |
Hangzhou Jiumu Pharmacy Co., Ltd (“Jiumu Pharmacy”) [Member] | |
Variable Interest Entity [Line Items] | |
Date of established | Jul. 21, 2017 |
Hangzhou Jiurui Pharmacy Co., Ltd (“Jiurui Pharmacy”) [Member] | |
Variable Interest Entity [Line Items] | |
Date of established | Aug. 4, 2017 |
Zhejiang Jiuzhou Linjia Medical Investment and Management Co. Ltd (“Linjia Medical”) [Member] | |
Variable Interest Entity [Line Items] | |
Date of established | Sep. 27, 2017 |
Description of Business and O_4
Description of Business and Organization (Details 1) | 9 Months Ended | |
Dec. 31, 2018 | ||
Variable Interest Entity [Line Items] | ||
Entity ownership percentage | 100.00% | |
Renovation [Member] | ||
Variable Interest Entity [Line Items] | ||
Ownership background, description | Incorporated in Hong Kong SAR on September 2, 2008 | |
Entity ownership percentage | 100.00% | |
Jiuben Pharmacy [Member] | ||
Variable Interest Entity [Line Items] | ||
Ownership background, description | Established in the PRC on October 14, 2008 Deemed a wholly foreign owned enterprise ("WFOE") under PRC law Registered capital of $14.5 million fully paid | |
Entity ownership percentage | 100.00% | |
Shouantang Technology [Member] | ||
Variable Interest Entity [Line Items] | ||
Ownership background, description | 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 | |
Entity ownership percentage | 100.00% | |
Qianhong Agriculture [Member] | ||
Variable Interest Entity [Line Items] | ||
Ownership background, description | Established in the PRC on August 10, 2010 by Jiuxin Management Registered capital of RMB 10 million fully paid Carries out herb farming business | |
Entity ownership percentage | 100.00% | |
Jiuzhou Pharmacy [Member] | ||
Variable Interest Entity [Line Items] | ||
Ownership background, description | Established in the PRC on September 9, 2003 Registered capital of RMB 5 million fully paid Operates the "Jiuzhou Grand Pharmacy" stores in Hangzhou | [1] |
Entity ownership description | VIE by contractual arrangements | [2] |
Jiuzhou Clinic [Member] | ||
Variable Interest Entity [Line Items] | ||
Ownership background, description | Established in the PRC as a general partnership on October 10, 2003 Operates a medical clinic adjacent to one of Jiuzhou Pharmacy's stores | [1] |
Entity ownership description | VIE by contractual arrangements | [2] |
Jiuzhou Service [Member] | ||
Variable Interest Entity [Line Items] | ||
Ownership background, description | 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 | [1] |
Entity ownership description | VIE by contractual arrangements | [2] |
Jiuxin Medicine [Member] | ||
Variable Interest Entity [Line Items] | ||
Ownership background, description | 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 | |
Entity ownership description | VIE by contractual arrangements as a controlled subsidiary of Jiuzhou Pharmacy | [2] |
Jiutong Medical [Member] | ||
Variable Interest Entity [Line Items] | ||
Ownership background, description | Established in the PRC on December 20, 2011 by Renovation Registered capital of $2.6 million fully paid Currently has no operation | |
Entity ownership percentage | 100.00% | |
Jiuben Pharmacy [Member] | ||
Variable Interest Entity [Line Items] | ||
Ownership background, description | Established in the PRC on April 27, 2017 by Jiuzhou Pharmacy Registered capital of $15,920 fully paid Operates a pharmacy in Hangzhou | |
Entity ownership description | VIE by contractual arrangements as a wholly-owned subsidiary of Jiuzhou Pharmacy | [2] |
Jiuli Pharmacy [Member] | ||
Variable Interest Entity [Line Items] | ||
Ownership background, description | Established in the PRC on May 22, 2017 by Jiuzhou Pharmacy Registered capital of $15,920 fully paid Operates a pharmacy in Hangzhou | |
Entity ownership description | VIE by contractual arrangements as a wholly-owned subsidiary of Jiuzhou Pharmacy | [2] |
Jiuxiang Pharmacy [Member] | ||
Variable Interest Entity [Line Items] | ||
Ownership background, description | Established in the PRC on May 26, 2017 by Jiuzhou Pharmacy Registered capital of $15,920 fully paid Operates a pharmacy in Hangzhou | |
Entity ownership description | VIE by contractual arrangements as a wholly-owned subsidiary of Jiuzhou Pharmacy | [2] |
Jiuheng Pharmacy [Member] | ||
Variable Interest Entity [Line Items] | ||
Ownership background, description | Established in the PRC on June 6, 2017 by Jiuzhou Pharmacy Registered capital of $15,920 fully paid Operates a pharmacy in Hangzhou | |
Entity ownership description | VIE by contractual arrangements as a wholly-owned subsidiary of Jiuzhou Pharmacy | [2] |
Jiujiu Pharmacy [Member] | ||
Variable Interest Entity [Line Items] | ||
Ownership background, description | Established in the PRC on June 8, 2017 by Jiuzhou Pharmacy Registered capital of $15,920 fully paid Operates a pharmacy in Hangzhou | |
Entity ownership description | VIE by contractual arrangements as a wholly-owned subsidiary of Jiuzhou Pharmacy | [2] |
Jiuyi Pharmacy [Member] | ||
Variable Interest Entity [Line Items] | ||
Ownership background, description | Established in the PRC on June 8, 2017 by Jiuzhou Pharmacy Registered capital of $15,920 fully paid Operates a pharmacy in Hangzhou | |
Entity ownership description | VIE by contractual arrangements as a wholly-owned subsidiary of Jiuzhou Pharmacy | [2] |
Jiuyuan Pharmacy [Member] | ||
Variable Interest Entity [Line Items] | ||
Ownership background, description | Established in the PRC on July 13, 2017 by Jiuzhou Pharmacy Registered capital of $15,920 fully paid Operates a pharmacy in Hangzhou | |
Entity ownership description | VIE by contractual arrangements as a wholly-owned subsidiary of Jiuzhou Pharmacy | [2] |
Jiumu Pharmacy [Member] | ||
Variable Interest Entity [Line Items] | ||
Ownership background, description | Established in the PRC on July 21, 2017 by Jiuzhou Pharmacy Registered capital of $15,920 fully paid Operates a pharmacy in Hangzhou | |
Entity ownership description | VIE by contractual arrangements as a wholly-owned subsidiary of Jiuzhou Pharmacy | [2] |
Jiurui Pharmacy [Member] | ||
Variable Interest Entity [Line Items] | ||
Ownership background, description | Established in the PRC on August, 2017 by Jiuzhou Pharmacy Registered capital of $15,920 fully paid Operates a pharmacy in Hangzhou | |
Entity ownership description | VIE by contractual arrangements as a wholly-owned subsidiary of Jiuzhou Pharmacy | [2] |
Shouantang Bio [Member] | ||
Variable Interest Entity [Line Items] | ||
Ownership background, description | Established in the PRC in October, 2014 by Shouantang Technology 100% held by Shouantang Technology Registered capital of RMB 1,000,000 fully paid Sells nutritional supplements under its own brand name | |
Entity ownership percentage | 100.00% | |
Jiuyi Technology [Member] | ||
Variable Interest Entity [Line Items] | ||
Ownership background, description | Established in the PRC on September 10, 2015 100% held by Renovation Technical support to online pharmacy | |
Entity ownership percentage | 100.00% | |
Kahamadi Bio [Member] | ||
Variable Interest Entity [Line Items] | ||
Ownership background, description | Established in the PRC in May 2016 49% held by Shouantang Bio Registered capital of RMB 10 million Develop brand name for nutritional supplements | |
Entity ownership percentage | 49.00% | |
Lin'An Jiuzhou [Member] | ||
Variable Interest Entity [Line Items] | ||
Ownership background, description | Established in the PRC on March 31, 2017 100% held by Jiuxin Management Registered capital of RMB 5 million Explore retail pharmacy market in Lin'An City | |
Entity ownership percentage | 100.00% | |
Linjia Medical [Member] | ||
Variable Interest Entity [Line Items] | ||
Ownership background, description | Established in the PRC on September 27, 2017 51% held by Jiuzhou Pharmacy Registered capital of RMB 20 million Operates local clinics | |
Entity ownership description | VIE by contractual arrangements as a controlled subsidiary of Jiuzhou Pharmacy | [2] |
[1] | Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service had been under the common control of Mr. Lei Liu, Mr. Chong'an Jin and Ms. Li Qi, the three shareholders of Renovation (the "Owners") since their respective establishment dates, pursuant to agreements among the Owners to vote their interests in concert as memorialized in a voting rights agreement. Based on such voting agreement, the Company has determined that common control exists among these three companies. 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. | |
[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: a consulting services agreement, operating agreement, equity pledge agreement, voting rights agreement and option agreement. Because such agreements 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 each of the three companies (as well as subsidiaries of Jiuzhou Pharmacy) as a variable interest entity ("VIE") under the accounting standards of the Financial Accounting Standards Board ("FASB"). Accordingly, the financial statements of Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service, as well as the subsidiary under the control of Jiuzhou Pharmacy, Jiuxin Medicine and Shouantang Bio are consolidated into the financial statements of the Company. |
Description of Business and O_5
Description of Business and Organization (Details Textual) | 1 Months Ended | 9 Months Ended | |||||||
Sep. 17, 2009shares | Dec. 31, 2018USD ($) | Dec. 31, 2018CNY (¥) | Apr. 20, 2018USD ($) | Apr. 20, 2018CNY (¥) | May 31, 2016 | Nov. 30, 2015USD ($) | Nov. 30, 2015CNY (¥) | Dec. 18, 2013CNY (¥) | |
Description of Business and Organization (Textual) | |||||||||
Entity Incorporation, Date of Incorporation | Dec. 19, 2006 | ||||||||
Renovation [Member] | |||||||||
Description of Business and Organization (Textual) | |||||||||
Percentage of capital stock in exchange transaction | 100.00% | ||||||||
Issuance of equity consideration, shares | shares | 7,900,000 | ||||||||
Jiuyuan Pharmacy [Member] | |||||||||
Description of Business and Organization (Textual) | |||||||||
Registered capital paid | $ 15,920 | ||||||||
Jiuyi Pharmacy [Member] | |||||||||
Description of Business and Organization (Textual) | |||||||||
Registered capital paid | 15,920 | ||||||||
Jiuxiang Pharmacy [Member] | |||||||||
Description of Business and Organization (Textual) | |||||||||
Registered capital paid | $ 15,920 | ||||||||
Shouantang Bio [Member] | |||||||||
Description of Business and Organization (Textual) | |||||||||
Percentage of capital stock in exchange transaction | 100.00% | 100.00% | |||||||
Shouantang Bio [Member] | CNY [Member] | |||||||||
Description of Business and Organization (Textual) | |||||||||
Registered capital paid | ¥ | ¥ 1,000,000 | ||||||||
Jiuyi Technology [Member] | |||||||||
Description of Business and Organization (Textual) | |||||||||
Percentage of capital stock in exchange transaction | 100.00% | 100.00% | |||||||
Jiuzhou Service [Member] | |||||||||
Description of Business and Organization (Textual) | |||||||||
Registered capital paid | $ 500,000 | ||||||||
Percentage of ownership | 51.00% | ||||||||
Jiuxin Medicine [Member] | |||||||||
Description of Business and Organization (Textual) | |||||||||
Issuance of equity consideration | $ 79,625 | ||||||||
Percentage of ownership | 10.00% | 10.00% | 49.00% | ||||||
Jiuxin Medicine [Member] | CNY [Member] | |||||||||
Description of Business and Organization (Textual) | |||||||||
Issuance of equity consideration | ¥ | ¥ 507,760 | ||||||||
Registered capital paid | ¥ | ¥ 10,000,000 | ||||||||
Kahamadi Bio [Member] | |||||||||
Description of Business and Organization (Textual) | |||||||||
Registered capital paid | ¥ | ¥ 10,000,000 | ||||||||
Percentage of ownership | 49.00% | 49.00% | |||||||
Jiutong Medical [Member] | |||||||||
Description of Business and Organization (Textual) | |||||||||
Registered capital paid | $ 2,600,000 | ||||||||
Percentage of ownership | 100.00% | 100.00% | |||||||
Jiuxin Management [Member] | |||||||||
Description of Business and Organization (Textual) | |||||||||
Registered capital paid | $ 14,500,000 | ||||||||
Percentage of ownership | 100.00% | 100.00% | |||||||
Qianhong Agriculture [Member] | |||||||||
Description of Business and Organization (Textual) | |||||||||
Percentage of ownership | 100.00% | 100.00% | |||||||
Qianhong Agriculture [Member] | CNY [Member] | |||||||||
Description of Business and Organization (Textual) | |||||||||
Registered capital paid | ¥ | ¥ 10,000,000 | ||||||||
Jiuzhou Pharmacy [Member] | |||||||||
Description of Business and Organization (Textual) | |||||||||
Percentage of ownership | 51.00% | 51.00% | |||||||
Total amount of investment | $ 741,540 | ||||||||
Jiuzhou Pharmacy [Member] | CNY [Member] | |||||||||
Description of Business and Organization (Textual) | |||||||||
Registered capital paid | ¥ | ¥ 5,000,000 | ||||||||
Total amount of investment | ¥ | ¥ 5,100,000 | ||||||||
Shouantang Technology [Member] | |||||||||
Description of Business and Organization (Textual) | |||||||||
Registered capital paid | $ 20,000,000 | ||||||||
Percentage of ownership | 100.00% | 100.00% | |||||||
Registered capital requirement reduced | $ 11,000,000 | ||||||||
Lin' An Jiuzhou [Member] | |||||||||
Description of Business and Organization (Textual) | |||||||||
Percentage of ownership | 100.00% | 100.00% | |||||||
Lin' An Jiuzhou [Member] | CNY [Member] | |||||||||
Description of Business and Organization (Textual) | |||||||||
Registered capital paid | ¥ | ¥ 5,000,000 | ||||||||
Jiuben Pharmacy [Member] | |||||||||
Description of Business and Organization (Textual) | |||||||||
Registered capital paid | $ 15,920 | ||||||||
Jiumu Pharmacy [Member] | |||||||||
Description of Business and Organization (Textual) | |||||||||
Registered capital paid | 15,920 | ||||||||
Jiuheng Pharmacy [Member] | |||||||||
Description of Business and Organization (Textual) | |||||||||
Registered capital paid | 15,920 | ||||||||
Jiujiu Pharmacy [Member] | |||||||||
Description of Business and Organization (Textual) | |||||||||
Registered capital paid | 15,920 | ||||||||
Jiuli Pharmacy [Member] | |||||||||
Description of Business and Organization (Textual) | |||||||||
Registered capital paid | 15,920 | ||||||||
Jiurui Pharmacy [Member] | |||||||||
Description of Business and Organization (Textual) | |||||||||
Registered capital paid | $ 15,920 | ||||||||
Songlu Pharmaceutical [Member] | |||||||||
Description of Business and Organization (Textual) | |||||||||
Percentage of ownership | 0.50% | 0.50% | |||||||
Quannuo Technology [Member] | |||||||||
Description of Business and Organization (Textual) | |||||||||
Issuance of equity consideration | $ 17,121 | ||||||||
Quannuo Technology [Member] | CNY [Member] | |||||||||
Description of Business and Organization (Textual) | |||||||||
Issuance of equity consideration | ¥ | ¥ 107,074 | ||||||||
Linjia Medical [Member] | |||||||||
Description of Business and Organization (Textual) | |||||||||
Percentage of ownership | 51.00% | ||||||||
Linjia Medical [Member] | CNY [Member] | |||||||||
Description of Business and Organization (Textual) | |||||||||
Registered capital paid | ¥ | ¥ 20,000,000 |
Liquidity (Details)
Liquidity (Details) - USD ($) | 1 Months Ended | |
Jan. 23, 2017 | Dec. 31, 2018 | |
Liquidity (Textual) | ||
Bank credit line from two local banks | $ 27,660,000 | |
Two credit line agreements [Member] | ||
Liquidity (Textual) | ||
Bank credit line from two local banks | $ 2,390,000 | |
Private Placement [Member] | ||
Liquidity (Textual) | ||
Purchase of aggregate of common stock | 4,840,000 | |
Common stock price, per share | $ 2.20 | |
Gross proceeds from private placement | $ 10,648,000 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) | Dec. 31, 2018USD ($) |
Summary of fair values of derivative instruments | |
Cash and cash equivalents | $ 5,619,051 |
Restricted Cash | 14,988,478 |
Notes payable | 25,271,064 |
Financial liability | 79,957 |
Warrants liability | 312,751 |
Total | 46,271,301 |
Active Market for Identical Assets (Level 1) | |
Summary of fair values of derivative instruments | |
Cash and cash equivalents | 5,619,051 |
Restricted Cash | 14,988,478 |
Notes payable | |
Financial liability | |
Warrants liability | |
Total | 20,607,529 |
Observable Inputs (Level 2) | |
Summary of fair values of derivative instruments | |
Cash and cash equivalents | |
Notes payable | 25,271,064 |
Financial liability | |
Warrants liability | 312,751 |
Total | 25,583,815 |
Unobservable Inputs (Level 3) | |
Summary of fair values of derivative instruments | |
Cash and cash equivalents | |
Notes payable | |
Financial liability | 79,957 |
Warrants liability | |
Total | $ (79,957) |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details 1) | 9 Months Ended |
Dec. 31, 2018 | |
Building [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives of property and equipment | 35 years |
Maximum [Member] | Office Equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives of property and equipment | 5 years |
Maximum [Member] | Leasehold Improvements [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives of property and equipment | 10 years |
Maximum [Member] | Vehicles [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives of property and equipment | 5 years |
Minimum [Member] | Office Equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives of property and equipment | 3 years |
Minimum [Member] | Leasehold Improvements [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives of property and equipment | 3 years |
Minimum [Member] | Vehicles [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives of property and equipment | 3 years |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies (Details 2) | 9 Months Ended |
Dec. 31, 2018 | |
Land Use Rights [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated useful life of intangible assets | 50 years |
Computer Software, Intangible Asset [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated useful life of intangible assets | 3 years |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies (Details 3) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 30,916,549 | $ 26,812,242 | $ 81,098,161 | $ 71,973,653 |
Retail Store [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 18,136,298 | 18,288,222 | 54,971,889 | 46,356,207 |
Retail Store [Member] | Prescription Drugs [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 6,756,073 | 5,373,870 | 17,835,700 | 14,860,659 |
Retail Store [Member] | Over Counter Drugs [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 9,393,148 | 9,168,708 | 24,018,263 | 21,593,385 |
Retail Store [Member] | Nutritional Supplements [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 1,869,351 | 1,883,020 | 4,750,013 | 4,558,383 |
Retail Store [Member] | Traditional Chinese Medicine [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 1,342,768 | 1,185,004 | 4,615,033 | 3,136,203 |
Retail Store [Member] | Sundry Products [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 248,729 | 180,338 | 799,554 | 804,817 |
Retail Store [Member] | Medical Devices [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 1,257,180 | 497,282 | 2,953,326 | 1,402,760 |
Drug Wholesale [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 7,556,094 | 5,128,973 | 19,488,350 | 16,021,694 |
Drug Wholesale [Member] | Prescription Drugs [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 3,933,441 | 2,777,566 | 11,708,683 | 9,252,199 |
Drug Wholesale [Member] | Over Counter Drugs [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 3,341,676 | 2,303,726 | 7,246,356 | 6,652,879 |
Drug Wholesale [Member] | Nutritional Supplements [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 167,069 | 19,123 | 240,666 | 47,660 |
Drug Wholesale [Member] | Traditional Chinese Medicine [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 77,216 | 20,876 | 156,525 | 21,480 |
Drug Wholesale [Member] | Sundry Products [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 5,949 | 21,479 | ||
Drug Wholesale [Member] | Medical Devices [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 30,743 | 7,682 | 114,641 | 47,476 |
Online Pharmacy [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 2,493,206 | 3,395,047 | 6,637,922 | 9,595,752 |
Online Pharmacy [Member] | Prescription Drugs [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | ||||
Online Pharmacy [Member] | Over Counter Drugs [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 837,126 | 1,535,383 | 2,412,057 | 4,038,674 |
Online Pharmacy [Member] | Nutritional Supplements [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 220,776 | 514,952 | 575,862 | 1,365,834 |
Online Pharmacy [Member] | Traditional Chinese Medicine [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 28,785 | 8,802 | 54,417 | 18,984 |
Online Pharmacy [Member] | Sundry Products [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 573,993 | 224,514 | 2,128,282 | 1,065,935 |
Online Pharmacy [Member] | Medical Devices [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 832,526 | $ 1,111,396 | $ 1,467,304 | $ 3,106,325 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies (Details 4) - USD ($) | Dec. 31, 2018 | Mar. 31, 2018 |
Accounting Policies [Abstract] | ||
Trade receivable(included in accounts receivable, net) | $ 10,637,316 | $ 8,322,393 |
Contract liabilities (included in accrued expenses) | $ 2,196,478 | $ 4,461,136 |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies (Details 5) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Condensed Consolidated Statement of Operations: | ||||
Net revenues | $ 30,916,549 | $ 26,812,242 | $ 81,098,161 | $ 71,973,653 |
Cost of revenues | 23,780,763 | 21,240,629 | 62,548,471 | 56,666,782 |
Gross profit | 7,135,786 | 5,571,613 | 18,549,690 | 15,306,871 |
SELLING EXPENSES | 6,688,577 | 5,020,971 | 16,539,078 | 13,288,602 |
GENERAL AND ADMINISTRATIVE EXPENSES | 2,572,862 | 2,737,782 | 6,342,874 | 7,318,780 |
Operating profit | (2,125,653) | (2,187,140) | (4,332,262) | (5,300,511) |
Income (loss) before income tax provision | (2,159,009) | (1,587,723) | (4,401,585) | (4,137,151) |
Income tax provision | 47,958 | 38,106 | 104,712 | 76,691 |
Net income (loss) | (2,206,967) | $ (1,625,829) | (4,506,297) | $ (4,213,842) |
Restatement Adjustment [Member] | ||||
Condensed Consolidated Statement of Operations: | ||||
Net revenues | (36) | 106 | ||
Cost of revenues | ||||
Gross profit | (36) | 106 | ||
SELLING EXPENSES | (36) | (106) | ||
GENERAL AND ADMINISTRATIVE EXPENSES | ||||
Operating profit | ||||
Income (loss) before income tax provision | ||||
Income tax provision | ||||
Income (loss) from continuing operations | ||||
Net income (loss) | ||||
Previously Reported [Member] | ||||
Condensed Consolidated Statement of Operations: | ||||
Net revenues | 30,916 | 81,098 | ||
Cost of revenues | 23,780 | 62,548 | ||
Gross profit | 7,135 | 18,550 | ||
SELLING EXPENSES | 6,688 | 16,539 | ||
GENERAL AND ADMINISTRATIVE EXPENSES | 2,572 | 6,342 | ||
Operating profit | (2,125) | (4,332) | ||
Income (loss) before income tax provision | (2,159) | (4,401) | ||
Income tax provision | 47 | 104 | ||
Income (loss) from continuing operations | (2,206) | (4,506) | ||
Net income (loss) | (2,206) | (4,506) | ||
Accounting Standards Update 2014 09 Without Adoption [Member] | ||||
Condensed Consolidated Statement of Operations: | ||||
Net revenues | 30,880 | 81,024 | ||
Cost of revenues | 23,776 | 62,548 | ||
Gross profit | 7,099 | 18,656 | ||
SELLING EXPENSES | 6,724 | 16,433 | ||
GENERAL AND ADMINISTRATIVE EXPENSES | 2,572 | 6,342 | ||
Operating profit | (2,125) | (4,332) | ||
Income (loss) before income tax provision | (2,159) | (4,401) | ||
Income tax provision | 47 | 104 | ||
Income (loss) from continuing operations | (2,206) | (4,506) | ||
Net income (loss) | $ (2,206) | $ (4,506) |
Summary of Significant Accou_10
Summary of Significant Accounting Policies (Details 6) - USD ($) | Dec. 31, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Mar. 31, 2017 |
Accounting Policies [Abstract] | ||||
Cash and cash equivalents | $ 5,619,051 | $ 15,132,640 | ||
Restricted cash | 14,988,478 | 16,319,551 | ||
Total cash, cash equivalents and restricted cash in the statement of cash flows | $ 20,607,529 | $ 31,452,191 | $ 24,218,506 | $ 27,795,810 |
Summary of Significant Accou_11
Summary of Significant Accounting Policies (Details 7) - USD ($) | 9 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Net cash provided by financing activities | $ 7,979,491 | $ 5,572,249 |
Effects of exchange rate on cash | (1,653,988) | 2,408,839 |
Net decrease in cash, cash equivalents and restricted cash | (10,844,662) | (3,577,304) |
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, beginning of year | 31,452,191 | 27,795,810 |
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, end of period | $ 20,607,529 | 24,218,506 |
Previously Reported [Member] | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Change in restricted cash | (5,743,155) | |
Net cash provided by financing activities | (170,906) | |
Effects of exchange rate on cash | 1,760,935 | |
Net decrease in cash, cash equivalents and restricted cash | (9,968,364) | |
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, beginning of year | 18,364,424 | |
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, end of period | 8,396,060 | |
Adjustments [Member] | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Change in restricted cash | 5,743,155 | |
Net cash provided by financing activities | 5,743,155 | |
Effects of exchange rate on cash | 647,905 | |
Net decrease in cash, cash equivalents and restricted cash | 6,391,060 | |
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, beginning of year | 9,431,386 | |
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, end of period | $ 15,822,446 |
Summary of Significant Accou_12
Summary of Significant Accounting Policies (Details Textual) | 3 Months Ended | 9 Months Ended | |||
Dec. 31, 2018USD ($)Vendors | Dec. 31, 2017USD ($)Vendors | Dec. 31, 2018USD ($)Vendors | Dec. 31, 2017USD ($)VendorsSupplier | Mar. 31, 2018USD ($) | |
Summary of Significant Accounting Policies (Textual) | |||||
Voting ownership interest | 50.00% | ||||
Ownership percentage | 100.00% | ||||
Value added tax, percentage | 16.00% | ||||
Income tax, description | The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution. The Company performed a self-assessment and the Company's liability for income taxes includes liability for unrecognized tax benefits, interest and penalties which relate to tax years still subject to review by taxing authorities. Audit periods remain open for review until the statute of limitations has passed, which in the PRC is usually 5 years. | ||||
Advertising and promotion costs | $ | $ 25,906,400 | $ 19,732,600 | $ 65,796,800 | $ 51,806,000 | |
Term of agreement for operating leases | 30 years | 30 years | |||
Foreign currency translation, description | The balance sheet amounts, with the exception of equity, at December 31, 2018 and at March 31, 2018 were translated at 1 RMB to 0.1454 USD and at 1 RMB to 0.1592 USD, respectively. The average translation rates applied to income and cash flow statement amounts for the nine months ended December 31, 2018 and 2017 were at 1 RMB to 0.1494 USD and at 1 RMB to 0.1512 USD, respectively. | ||||
Deposits | $ | $ 2,059,331,100 | $ 2,059,331,100 | $ 31,433,969 | ||
Wholesale Warehouse [Member] | |||||
Summary of Significant Accounting Policies (Textual) | |||||
Term of agreement for operating leases | 10 years | 10 years | |||
Advances To Suppliers [Member] | |||||
Summary of Significant Accounting Policies (Textual) | |||||
Concentration risk, percentage | 32.60% | 13.60% | 10.00% | 18.10% | |
Number of vendors | Vendors | 1 | 1 | 2 | ||
Number of supplier | Supplier | 1 | ||||
Cost Of Goods, Total [Member] | |||||
Summary of Significant Accounting Policies (Textual) | |||||
Concentration risk, percentage | 70.30% | 31.00% | 46.90% | 26.10% | |
Number of vendors | Vendors | 3 | 3 | 2 | 2 | |
Sales Revenue, Net [Member] | |||||
Summary of Significant Accounting Policies (Textual) | |||||
Concentration risk, percentage | 10.00% | 10.00% | 10.00% | 10.00% | |
Accounts Receivable [Member] | |||||
Summary of Significant Accounting Policies (Textual) | |||||
Concentration risk, percentage | 10.00% | 10.00% | 10.00% | 10.00% | |
Minimum [Member] | Retail Site [Member] | |||||
Summary of Significant Accounting Policies (Textual) | |||||
Term of agreement for operating leases | 3 years | 3 years | |||
Maximum [Member] | Retail Site [Member] | |||||
Summary of Significant Accounting Policies (Textual) | |||||
Term of agreement for operating leases | 10 years | 10 years |
Financial Assets Available fo_2
Financial Assets Available for Sale (Details) | Dec. 31, 2018USD ($) | Apr. 20, 2018 | Mar. 31, 2018USD ($) | Mar. 31, 2018CNY (¥) | May 31, 2016 | Dec. 18, 2013 |
Financial Assets Available for Sale (Textual) | ||||||
Financial assets available for sale | $ 176,560 | ¥ 175,140 | ||||
Investment agreement fund | 85,118 | |||||
Invested total amount | 14,538 | $ 159,915 | ||||
RMB [Member] | ||||||
Financial Assets Available for Sale (Textual) | ||||||
Financial assets available for sale | 1,214,500 | $ 1,100,000 | ||||
Investment agreement fund | 585,000 | |||||
Invested total amount | $ 100,000 | |||||
Kahamadi Bio [Member] | ||||||
Financial Assets Available for Sale (Textual) | ||||||
Percentage of shares | 49.00% | |||||
Zhejiang Shouantang Medical Technology [Member] | ||||||
Financial Assets Available for Sale (Textual) | ||||||
Percentage of shares | 100.00% | |||||
Hangzhou Qianhong Agriculture Development [Member] | ||||||
Financial Assets Available for Sale (Textual) | ||||||
Percentage of shares | 100.00% | |||||
Zhejiang Jiuxin Investment Management [Member] | ||||||
Financial Assets Available for Sale (Textual) | ||||||
Percentage of shares | 100.00% | |||||
Hangzhou Jiutong Medical Technology [Member] | ||||||
Financial Assets Available for Sale (Textual) | ||||||
Percentage of shares | 100.00% | |||||
Lin Jiuzhou [Member] | ||||||
Financial Assets Available for Sale (Textual) | ||||||
Percentage of shares | 100.00% | |||||
Zhejiang Jiuxin Medicine [Member] | ||||||
Financial Assets Available for Sale (Textual) | ||||||
Percentage of shares | 10.00% | 49.00% | ||||
Hangzhou Jiuzhou Medical and Public Health Service [Member] | ||||||
Financial Assets Available for Sale (Textual) | ||||||
Percentage of shares | 51.00% | |||||
Songlu Pharmaceutical [Member] | ||||||
Financial Assets Available for Sale (Textual) | ||||||
Invested total amount | $ 87,225 | |||||
Percentage of shares | 0.50% | |||||
Songlu Pharmaceutical [Member] | RMB [Member] | ||||||
Financial Assets Available for Sale (Textual) | ||||||
Invested total amount | $ 600,000 |
Trade Accounts Receivable (Deta
Trade Accounts Receivable (Details) - USD ($) | Dec. 31, 2018 | Mar. 31, 2018 |
Receivables [Abstract] | ||
Accounts receivable | $ 15,489,718 | $ 12,883,707 |
Less: allowance for doubtful accounts | (4,852,402) | (4,561,314) |
Trade accounts receivable, net | $ 10,637,316 | $ 8,322,393 |
Trade Accounts Receivable (De_2
Trade Accounts Receivable (Details Textual) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Trade Accounts Receivable (Textual) | ||||
Accounts receivable written off | $ 36,077 | $ 33,738 | $ 64,412 | $ 158,721 |
Other Current Assets (Details)
Other Current Assets (Details) - USD ($) | Dec. 31, 2018 | Mar. 31, 2018 | |
Other Current Assets [Abstract] | |||
Prepaid rental expenses | [1] | $ 1,285,752 | $ 1,984,856 |
Prepaid and other current assets | 182,436 | 131,381 | |
Total | $ 1,468,188 | $ 2,116,237 | |
[1] | Represents store and office rental expenses that were usually prepaid and amortized over the prepayment period. |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | Dec. 31, 2018 | Mar. 31, 2018 | ||
Property, Plant and Equipment [Line Items] | ||||
Total | $ 22,190,875 | $ 17,255,788 | ||
Less: Accumulated depreciation | (11,474,422) | (11,905,893) | ||
Impairment | [1] | (2,288,583) | (2,506,255) | |
Property and equipment, net | 8,427,870 | 2,843,640 | ||
Farmland Development Cost [Member] | ||||
Property, Plant and Equipment [Line Items] | ||||
Total | 1,738,621 | 1,904,151 | ||
Vehicles [Member] | ||||
Property, Plant and Equipment [Line Items] | ||||
Total | 579,891 | 456,442 | ||
Leasehold Improvements [Member] | ||||
Property, Plant and Equipment [Line Items] | ||||
Total | 8,338,779 | 7,606,496 | ||
Building [Member] | ||||
Property, Plant and Equipment [Line Items] | ||||
Total | 6,280,935 | [2] | 1,707,145 | |
Office Equipment [Member] | ||||
Property, Plant and Equipment [Line Items] | ||||
Total | $ 5,252,629 | $ 5,581,554 | ||
[1] | The variance of impairment from March 31, 2018 to December 31, 2018 is solely caused by exchange rate variance. | |||
[2] | The increase of property and equipment from March 31, 2018 to December 31, 2018 is due to the purchase of Yueming shop, a new store which cost $4,722,193 (RMB32,482,394). The new store is located downtown south Hangzhou and adjacent to a super shopping mall. The Company plans to create a new flagship store. |
Property and Equipment (Detai_2
Property and Equipment (Details Textual) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Property and Equipment (Textual) | ||||
Depreciation expenses for property and equipment | $ 338,946 | $ 406,048 | $ 770,919 | $ 982,202 |
Purchase of new store | 4,722,193 | |||
CNY [Member] | ||||
Property and Equipment (Textual) | ||||
Purchase of new store | $ 32,482,394 |
Advances to Suppliers (Details)
Advances to Suppliers (Details) - USD ($) | Dec. 31, 2018 | Mar. 31, 2018 | |
Advances to Suppliers [Abstract] | |||
Advance to suppliers | [1] | $ 6,826,569 | $ 6,505,545 |
Less: allowance for unrefundable advances | (3,337,559) | (3,058,092) | |
Advance to suppliers, net | $ 3,489,010 | $ 3,447,452 | |
[1] | In order to achieve a larger rebate for certain merchandise, such as colla coril asini (donkey-hide gelatin), from certain suppliers, the Company made a significant cash advance to such suppliers. |
Inventory (Details)
Inventory (Details) - USD ($) | Dec. 31, 2018 | Mar. 31, 2018 |
Inventory (Textual) | ||
Finished goods | $ 10,483,059 | $ 13,429,568 |
Farmland Assets (Details)
Farmland Assets (Details) - USD ($) | Dec. 31, 2018 | Mar. 31, 2018 | |
Farmland Assets [Abstract] | |||
Farmland assets | $ 2,206,741 | $ 2,416,839 | |
Less: Impairment | [1] | (1,479,677) | (1,620,553) |
Farmland assets, net | $ 727,064 | $ 796,286 | |
[1] | The estimated fair value is estimated to be lower than its investment value as of December 31, 2018 and March 31, 2018. |
Long Term Deposits, Landlords (
Long Term Deposits, Landlords (Details) - USD ($) | Dec. 31, 2018 | Mar. 31, 2018 |
Long Term Deposits, Landlords (Textual) | ||
Long term deposits | $ 2,266,420 | $ 2,501,968 |
Other Noncurrent Assets (Detail
Other Noncurrent Assets (Details) - USD ($) | Dec. 31, 2018 | Mar. 31, 2018 | |
Other Assets, Noncurrent Disclosure [Abstract] | |||
Forest land use rights | [1] | $ 1,089,421 | $ 1,235,253 |
Others | 32,393 | 18,099 | |
Total | $ 1,121,814 | $ 1,253,352 | |
[1] | The prepayment for lease of forest land use rights is a payment made to a local government in connection with entering into an operating land lease agreement. The land is currently used to cultivate Ginkgo trees. The forest rights certificate from the local village extends the life of the lease to January 31, 2060. |
Other Noncurrent Assets (Deta_2
Other Noncurrent Assets (Details 1) | Dec. 31, 2018USD ($) |
Other Assets, Noncurrent Disclosure [Abstract] | |
2,019 | $ 28,071 |
2,020 | 28,071 |
2,021 | 28,071 |
2,022 | 28,071 |
2,023 | 28,071 |
Thereafter | $ 949,066 |
Other Noncurrent Assets (Deta_3
Other Noncurrent Assets (Details Textual) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Other Noncurrent Assets (Textual) | ||||
Amortization of prepayment for lease of land use right | $ 6,579 | $ 7,042 | $ 13,675 | $ 13,888 |
Description of lease prepayment life | Extends the life of the lease to January 31, 2060. |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) | Dec. 31, 2018 | Mar. 31, 2018 | |
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Total intangible assets | $ 3,941,264 | $ 4,284,660 | |
Less: accumulated amortization | (370,279) | (228,246) | |
Intangible assets, net | 3,570,986 | 4,056,414 | |
Licenses [Member] | |||
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Total intangible assets | [1] | 1,863,603 | 1,967,934 |
Use Rights [Member] | |||
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Total intangible assets | [2] | 1,417,651 | 1,552,622 |
Sap Software [Member] | |||
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Total intangible assets | [3] | $ 660,010 | $ 764,104 |
[1] | This represents the fair value of the licenses of insurance applicable drugstores acquired from Sanhao Pharmacy, a drugstore chain Jiuzhou Pharmacy acquired in 2014. The licenses allow patients to pay by using insurance cards at stores. The stores are reimbursed from the Human Resource and Social Security Department of Hangzhou City. In September 2017, the Company acquired several new stores for the purpose of the Municipal Social Medical Reimbursement Qualification Certificates. The owners of these acquired drugstores agreed to cease their stores' business and liquidate all of the stores' accounts before Jiuzhou Pharmacy acquired them. As a result, Jiuzhou Pharmacy has not obtained any assets or liabilities from the stores, but was able to transfer the certificates to our new stores opened at the same time. | ||
[2] | In July 2013, the Company purchased the land use rights of a plot of farmland in Lin'an, Hangzhou, intended for the establishment of an herb processing plant in the future. However, as our farming business in Lin'an has not grown, the Company does not expect completion of the plant in the near future. | ||
[3] | In 2017, we have installed a leading ERP system, SAP from Germany. SAP is a well-known management system used by many fortune 500 companies. As of December 31, 2018, the system has been completely installed and has been running for eleven months in the Company. By automatically connecting commodity flow data with accounting recording, the system minimizes the manual errors made by accounting staff. Additionally, the system provides a view of overall and instant cash information by electronically linking local banking systems with SAP. Additional benefits include automatically-generated customized monthly company performance reports, instant inventory monitoring and reporting, and punctual maintenance of customer and supplier accounts. |
Intangible Assets (Details Text
Intangible Assets (Details Textual) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Intangible Assets (Textual) | ||||
Amortization expense of intangibles | $ 50,342 | $ 38,412 | $ 166,349 | $ 52,876 |
Notes Payable (Details)
Notes Payable (Details) - USD ($) | 9 Months Ended | ||
Dec. 31, 2018 | Mar. 31, 2018 | ||
Short-term Debt [Line Items] | |||
Notes payable | $ 25,271,064 | $ 19,180,200 | |
Jiuzhou Pharmacy [Member] | HUB [Member] | 10/10/17 [Member] | |||
Short-term Debt [Line Items] | |||
Maturity date | [1] | Apr. 10, 2018 | |
Notes payable | [1] | 2,552,769 | |
Jiuzhou Pharmacy [Member] | HUB [Member] | 11/24/17 [Member] | |||
Short-term Debt [Line Items] | |||
Maturity date | [1] | May 24, 2018 | |
Notes payable | [1] | 21,972 | |
Jiuzhou Pharmacy [Member] | HUB [Member] | 12/05/17 [Member] | |||
Short-term Debt [Line Items] | |||
Maturity date | [1] | Jun. 5, 2018 | |
Notes payable | [1] | 377,347 | |
Jiuzhou Pharmacy [Member] | HUB [Member] | 12/29/17 [Member] | |||
Short-term Debt [Line Items] | |||
Maturity date | [1] | Jun. 29, 2018 | |
Notes payable | [1] | 1,194,135 | |
Jiuzhou Pharmacy [Member] | HUB [Member] | 12/29/17 One [Member] | |||
Short-term Debt [Line Items] | |||
Maturity date | [1] | Jun. 29, 2018 | |
Notes payable | [1] | 1,443,554 | |
Jiuzhou Pharmacy [Member] | HUB [Member] | 02/05/18 [Member] | |||
Short-term Debt [Line Items] | |||
Maturity date | [1] | Aug. 5, 2018 | |
Notes payable | [1] | 2,618,500 | |
Jiuzhou Pharmacy [Member] | HUB [Member] | 03/05/18 [Member] | |||
Short-term Debt [Line Items] | |||
Maturity date | [1] | Sep. 5, 2018 | |
Notes payable | [1] | 3,072,638 | |
Jiuzhou Pharmacy [Member] | HUB [Member] | 11/06/17 [Member] | |||
Short-term Debt [Line Items] | |||
Maturity date | [1] | May 6, 2018 | |
Notes payable | [1] | 3,553,014 | |
Jiuzhou Pharmacy [Member] | HUB [Member] | 12/05/17 [Member] | |||
Short-term Debt [Line Items] | |||
Maturity date | [1] | Jun. 5, 2018 | |
Notes payable | [1] | 1,937,683 | |
Jiuzhou Pharmacy [Member] | HUB [Member] | 12/29/17 [Member] | |||
Short-term Debt [Line Items] | |||
Maturity date | [1] | Jun. 29, 2018 | |
Notes payable | [1] | 1,687,711 | |
Jiuzhou Pharmacy [Member] | HUB [Member] | 11/06/18 [Member] | |||
Short-term Debt [Line Items] | |||
Maturity date | [1] | May 6, 2019 | |
Notes payable | [1] | $ 488,767 | |
Jiuzhou Pharmacy [Member] | HUB [Member] | 12/12/18 [Member] | |||
Short-term Debt [Line Items] | |||
Maturity date | [1] | Jun. 12, 2019 | |
Notes payable | [1] | $ 2,167,359 | |
Jiuzhou Pharmacy [Member] | HUB [Member] | 12/20/18 [Member] | |||
Short-term Debt [Line Items] | |||
Maturity date | [1] | Mar. 20, 2019 | |
Notes payable | [1] | $ 1,860,231 | |
Jiuzhou Pharmacy [Member] | HUB [Member] | 12/20/18 One [Member] | |||
Short-term Debt [Line Items] | |||
Maturity date | [2] | Jun. 20, 2019 | |
Notes payable | [1] | $ 1,046,714 | |
Jiuzhou Pharmacy [Member] | HUB [Member] | 12/29/18 [Member] | |||
Short-term Debt [Line Items] | |||
Maturity date | [2] | Jun. 29, 2019 | |
Notes payable | [1] | $ 5,372,061 | |
Jiuzhou Pharmacy [Member] | HUB [Member] | 07/05/18 [Member] | |||
Short-term Debt [Line Items] | |||
Maturity date | [2] | Jan. 5, 2019 | |
Notes payable | [1] | $ 2,989,780 | |
Jiuzhou Pharmacy [Member] | HUB [Member] | 08/06/18 [Member] | |||
Short-term Debt [Line Items] | |||
Maturity date | [2] | Feb. 6, 2019 | |
Notes payable | [1] | $ 1,357,129 | |
Jiuzhou Pharmacy [Member] | HUB [Member] | 08/17/18 [Member] | |||
Short-term Debt [Line Items] | |||
Maturity date | [2] | Feb. 17, 2019 | |
Notes payable | [1] | $ 277,657 | |
Jiuzhou Pharmacy [Member] | HUB [Member] | 08/31/18 [Member] | |||
Short-term Debt [Line Items] | |||
Maturity date | [2] | Feb. 28, 2019 | |
Notes payable | [1] | $ 2,300,155 | |
Jiuzhou Pharmacy [Member] | HUB [Member] | 09/05/18 [Member] | |||
Short-term Debt [Line Items] | |||
Maturity date | Mar. 5, 2019 | ||
Notes payable | [1] | $ 1,876,612 | |
Jiuxin Medicine [Member] | HUB [Member] | 10/11/18 [Member] | |||
Short-term Debt [Line Items] | |||
Maturity date | [2] | Apr. 11, 2019 | |
Notes payable | [2] | $ 4,353,836 | |
Jiuxin Medicine [Member] | HUB [Member] | 11/07/18 [Member] | |||
Short-term Debt [Line Items] | |||
Maturity date | [2] | May 7, 2019 | |
Notes payable | [2] | $ 2,915,014 | |
Jiuxin Medicine [Member] | CMB [Member] | 02/02/18 [Member] | |||
Short-term Debt [Line Items] | |||
Maturity date | [2] | Aug. 2, 2018 | |
Notes payable | [2] | 71,648 | |
Jiuxin Medicine [Member] | CMB [Member] | 02/07/18 [Member] | |||
Short-term Debt [Line Items] | |||
Maturity date | [2] | Jul. 2, 2018 | |
Notes payable | [2] | 95,530 | |
Jiuxin Medicine [Member] | CMB [Member] | 03/07/18 [Member] | |||
Short-term Debt [Line Items] | |||
Maturity date | [2] | Sep. 7, 2018 | |
Notes payable | [2] | 538,857 | |
Jiuxin Medicine [Member] | CMB [Member] | 03/15/18 [Member] | |||
Short-term Debt [Line Items] | |||
Maturity date | [2] | Sep. 15, 2018 | |
Notes payable | [2] | $ 44,842 | |
[1] | As of December 31, 2018, the Company had $25,271,064 (RMB 173,831,238) of notes payable from HUB. The Company is required to hold restricted cash in the amount of $14,723,476 (RMB 101,277,889) with HUB as collateral against these bank notes. Included in the restricted cash is a total of $10,194,220three-year deposit (RMB 70,122,647) deposited into HUB as a collateral for current and future notes payable from HUB. As of March 31, 2018, the Company had $18,429,322 (RMB 115,748,985) of notes payable from HUB. The Company is required to hold restricted cash in the amount of $13,565,300 (RMB 85,199,540) with HUB as collateral against these bank notes. Included in the restricted cash is a total of $7,269,509 three-year deposit (RMB 45,657,584) deposited into HUB as a collateral for current and future notes payable from HUB. | ||
[2] | As of December 31, 2018, the Company had $0 (RMB0) of notes payable from CMB, with restricted cash in the amount of $0 (RMB0) held at the bank. As of March 31, 2018, the Company had $750,878 (RMB 4,716,037) of notes payable from CMB, with restricted cash in the amount of $750,878 (RMB 4,716,037) held at the bank. |
Notes Payable (Details Textual)
Notes Payable (Details Textual) | 9 Months Ended | 12 Months Ended | ||
Dec. 31, 2018USD ($) | Mar. 31, 2018USD ($) | Dec. 31, 2018CNY (¥) | Mar. 31, 2018CNY (¥) | |
Notes Payable (Textual) | ||||
Notes payable | $ 25,270,000 | |||
Line of credit total | 27,660,000 | |||
Bank credit line facilities available for borrowing | 2,390,000 | |||
HUB [Member] | ||||
Notes Payable (Textual) | ||||
Notes payable | 10,190,000 | |||
Restricted cash | 4,530,000 | |||
Line of credit total | 12,940,000 | |||
HUB [Member] | Notes Payable to Banks [Member] | ||||
Notes Payable (Textual) | ||||
Notes payable | 25,271,064 | $ 18,429,322 | ||
Restricted cash | 14,723,476 | 13,565,300 | ||
HUB [Member] | Notes Payable to Banks [Member] | RMB [Member] | ||||
Notes Payable (Textual) | ||||
Notes payable | 115,748,985 | ¥ 173,831,238 | ||
Restricted cash | 85,199,540 | 101,277,889 | ||
CMB [Member] | Notes Payable to Banks [Member] | ||||
Notes Payable (Textual) | ||||
Notes payable | 0 | 750,878 | ||
Restricted cash | 0 | 750,878 | ||
CMB [Member] | Notes Payable to Banks [Member] | RMB [Member] | ||||
Notes Payable (Textual) | ||||
Notes payable | 4,716,037 | 0 | ||
Restricted cash | 4,716,037 | 0 | ||
HUB One [Member] | Notes Payable to Banks [Member] | ||||
Notes Payable (Textual) | ||||
Restricted cash | $ 10,194,220 | $ 7,269,509 | ||
Term of deposit | 3 years | 3 years | ||
HUB One [Member] | Notes Payable to Banks [Member] | RMB [Member] | ||||
Notes Payable (Textual) | ||||
Restricted cash | ¥ | ¥ 173,831,238 | ¥ 45,657,584 |
Taxes (Details)
Taxes (Details) | 9 Months Ended |
Dec. 31, 2018 | |
Renovation [Member] | |
Income Taxes [Line Items] | |
Income Tax Jurisdiction | Hong Kong, PRC |
Other Entities [Member] | |
Income Taxes [Line Items] | |
Income Tax Jurisdiction | Mainland, PRC |
Jo Jo Drugstores [Member] | |
Income Taxes [Line Items] | |
Income Tax Jurisdiction | United States |
Taxes (Details 1)
Taxes (Details 1) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Current: | ||||
Federal | ||||
State | ||||
Foreign | 47,958 | 38,106 | 104,712 | 76,691 |
Total | 47,958 | 38,106 | 104,712 | 76,691 |
Deferred: | ||||
Federal | 0 | |||
State | 0 | |||
Foreign | 0 | |||
Total | 0 | |||
Provision for income taxes | $ 47,958 | $ 38,106 | $ 104,712 | $ 76,691 |
Taxes (Details 2)
Taxes (Details 2) | 3 Months Ended | 9 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | ||
Income Tax Disclosure [Abstract] | |||||
U.S. Statutory rates | 21.00% | 34.00% | 21.00% | 34.00% | |
Foreign income not recognized in the U.S. | (21.00%) | (34.00%) | (21.00%) | (34.00%) | |
China income taxes | 25.00% | 25.00% | 25.00% | 25.00% | |
Change in valuation allowance | [1] | (25.00%) | (25.00%) | (25.00%) | (25.00%) |
Non-deductible expenses-permanent difference | [2] | (2.20%) | (2.40%) | (2.40%) | (1.90%) |
Effective tax rate | (2.20%) | (2.24%) | (2.24%) | (1.90%) | |
[1] | Represents a non-taxable expense due to overall increase in allowance for accounts receivable and advances to suppliers. | ||||
[2] | The (2.2)% and (2.4)% rate adjustments for the three months ended December 31, 2018 and 2017 and the (2.4)% and (1.9)% rate adjustments for the nine months ended December 31, 2018 and 2017 represent expenses that primarily include stock option expenses and legal, accounting and other expenses incurred by the Company that are not deductible for PRC income tax. |
Taxes (Details 3)
Taxes (Details 3) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Income Tax Disclosure [Abstract] | ||
Allowance | $ 771,675 | $ 584,427 |
Long-lived assets impairment | ||
Depreciation and Amortization | 139,483 | 147,655 |
Accrued expense | 420,143 | 140,124 |
Net operating loss carryforward | 2,859,896 | 1,765,468 |
Foreign Tax Credit Carryover | 195,000 | 195,000 |
Total deferred tax assets (liabilities): | 4,386,197 | 2,832,673 |
Valuation allowance | (4,386,197) | (2,832,673) |
Net deferred tax assets (liabilities) |
Taxes (Details Textual)
Taxes (Details Textual) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||
Dec. 22, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Jan. 31, 2018 | Sep. 30, 2017 | |
Taxes (Textual) | |||||||
Estimated net operating loss carry forwards for U.S. income tax purposes | $ 2,859,896 | $ 1,765,468 | $ 2,859,896 | $ 1,765,468 | |||
Expiration date | Mar. 31, 2032 | ||||||
Valuation allowance, percentage | 100.00% | ||||||
Effective tax rate | (2.20%) | (2.24%) | (2.24%) | (1.90%) | |||
Foreign tax credit | $ 195,000 | ||||||
Income tax, description | The U.S. federal statutory rate from 35% to 21%, effective on January 1, 2018. ASC 740 requires companies to recognize the effect of tax law changes in the period of enactment, accordingly, the effects must be recognized on companies' calendar year-end financial statements, even though the effective date for most provisions is January 1, 2018. As a result, we re-measured our net U.S. deferred tax assets at the 21% future tax rate. | Audit periods remain open for review until the statute of limitations has passed, which in the PRC, the Company's most significant tax jurisdiction, is usually 5 years. | |||||
Net unrecognized tax benefits | $ 0 | ||||||
Percentage of corporate tax rate | 21.00% | ||||||
Jo Jo Drugstores [Member] | |||||||
Taxes (Textual) | |||||||
Estimated net operating loss carry forwards for U.S. income tax purposes | $ 1,503,000 | $ 1,503,000 | |||||
Us Income Tax [Member] | |||||||
Taxes (Textual) | |||||||
Estimated net operating loss carry forwards for U.S. income tax purposes | 816,908 | $ 816,908 | $ 816,908 | ||||
Expiration date | Mar. 31, 2032 | ||||||
Hong Kong Income Tax [Member] | |||||||
Taxes (Textual) | |||||||
Estimated net operating loss carry forwards for U.S. income tax purposes | 1,905,689 | $ 1,905,689 | 1,772,884 | ||||
China Income Tax [Member] | |||||||
Taxes (Textual) | |||||||
Estimated net operating loss carry forwards for U.S. income tax purposes | $ 14,820,829 | $ 14,820,829 | $ 8,236,919 |
Postretirement Benefits (Detail
Postretirement Benefits (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Postretirement Benefits (Textual) | ||||
Employment benefits and pension contribution | $ 338,083 | $ 312,701 | $ 1,039,163 | $ 872,435 |
Related Party Transactions an_3
Related Party Transactions and Arrangements (Details) - USD ($) | Dec. 31, 2018 | Mar. 31, 2018 | |
Related Party Transaction [Line Items] | |||
Total | $ 726,219 | $ 850,342 | |
Due to a director and CEO [Member] | |||
Related Party Transaction [Line Items] | |||
Total | [1] | $ 726,219 | $ 850,342 |
[1] | 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. |
Related Party Transactions an_4
Related Party Transactions and Arrangements (Details Textual) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Mar. 31, 2018 | |
Related Party Transactions and Arrangements (Textual) | |||||
Notes payable, related parties | $ 0 | $ 0 | $ 3,253,630 | ||
Chief Executive Officer [Member] | |||||
Related Party Transactions and Arrangements (Textual) | |||||
Lease expiration date | Sep. 30, 2020 | ||||
Rent expenses | $ 16,136 | $ 4,536 | $ 25,100 | $ 12,959 |
Financial Liability (Details)
Financial Liability (Details) | Dec. 31, 2018USD ($) |
Financial Liability (Textual) | |
Reclassifies deposits financial liability | $ 79,957 |
CNY [Member] | |
Financial Liability (Textual) | |
Reclassifies deposits financial liability | $ 550,000 |
Warrants (Details)
Warrants (Details) - Warrant [Member] - $ / shares | 9 Months Ended | 12 Months Ended | |
Dec. 31, 2018 | [1] | Mar. 31, 2018 | |
Class of Warrant or Right [Line Items] | |||
Stock price | $ 2 | $ 1.35 | |
Exercise price | $ 3.10 | $ 3.10 | |
Annual dividend yield | 0.00% | 0.00% | |
Expected term (years) | 2 years 3 months 19 days | 2 years 9 months 18 days | |
Risk-free interest rate | 2.48% | 1.98% | |
Expected volatility | 67.70% | 68.73% | |
[1] | As of December 31, 2018, the warrants had not been exercised. |
Warrants (Details Textual)
Warrants (Details Textual) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended |
Jul. 19, 2015 | Dec. 31, 2018 | Dec. 31, 2018 | Mar. 31, 2018 | |
Warrants (Textual) | ||||
Fair value estimation method | Binominal pricing model | |||
Fair value of warrant liability | $ 138,796 | |||
Purchase of warrants investors | 672,000 | |||
Recognized gain on fair value of warrant liability investor placement agent | $ 8,511,600 | $ 11,652,200 | ||
Fair value of warrant liability investor placement agent | $ 31,275,100 | |||
Warrant [Member] | ||||
Warrants (Textual) | ||||
Stock purchase price per share (in dollars per share) | $ 3.10 | |||
Warrants exercisable date | Jan. 19, 2016 | |||
Maturity date | Jan. 18, 2021 | |||
Purchase of warrants investors | 600,000 | |||
Issuance of warrants to placement agent | 72,000 | |||
Percentage of stock sold in offering | 6.00% |
Stockholder's Equity (Details)
Stockholder's Equity (Details) | Nov. 18, 2014Segment$ / sharesshares | Jun. 28, 2018shares | Mar. 30, 2018shares | Jan. 23, 2017USD ($)$ / sharesshares | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Mar. 31, 2018USD ($) |
Stockholder's Equity (Textual) | |||||||||
Reserve fund percentage | 50.00% | ||||||||
Statutory accounts percentage | 10.00% | ||||||||
Compensation committee cancelled shares | 225,000 | ||||||||
Chief Executive Officer [Member] | |||||||||
Stockholder's Equity (Textual) | |||||||||
Aggregate issuances shares | 675,000 | ||||||||
Performance based compensation exemption, description | The Tax Cuts and Jobs Act of 2017 removed the 162(m) qualified performance based compensation exemption to the $1 million cap on deductions for compensation to covered executives. | ||||||||
Employee Stock Option [Member] | |||||||||
Stockholder's Equity (Textual) | |||||||||
Number of granted shares | 967,000 | ||||||||
Share based compensation expense | $ | $ 0 | $ 65,585,000 | $ 0 | $ 313,651,000 | |||||
Number of directors, officers and employees in a group | Segment | 46 | ||||||||
Exercise price of stock option | $ / shares | $ 2.50 | ||||||||
Period for options exercisable from the vesting date | 5 years | ||||||||
Maturity date | Nov. 17, 2022 | ||||||||
Common Stock [Member] | |||||||||
Stockholder's Equity (Textual) | |||||||||
Company sold common stock to investor | 4,840,000 | ||||||||
Common stock, par value | $ / shares | $ 0.001 | ||||||||
Purchase price | $ / shares | $ 2.20 | ||||||||
Proceeds from private placement | $ | $ 10,648,000 | ||||||||
Stock Compensation Plan Three [Member] | |||||||||
Stockholder's Equity (Textual) | |||||||||
Number of granted shares | 3,947,100 | ||||||||
Share based compensation expense | $ | $ 5,328,585 |
(Loss) Income Per Share (Detail
(Loss) Income Per Share (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
EARNINGS PER SHARES: | ||||
Net income attributable to controlling interest | $ (2,206,967) | $ (1,625,829) | $ (4,506,297) | $ (4,213,842) |
Weighted average shares used in basic computation | 28,936,778 | 25,214,678 | 28,936,778 | 25,214,678 |
Diluted effect of purchase options and warrants | ||||
Weighted average shares used in diluted computation | 28,936,778 | 25,214,678 | 28,936,778 | 25,214,678 |
Income per share - Basic: | ||||
Net (loss) attributable to controlling interest | $ (0.06) | $ (0.08) | $ (0.14) | $ (0.17) |
Loss per share - Diluted: | ||||
Net (loss) attributable to controlling interest | $ (0.06) | $ (0.08) | $ (0.14) | $ (0.17) |
(Loss) Income Per Share (Deta_2
(Loss) Income Per Share (Details Textual) - Employee Stock Option [Member] - shares | 3 Months Ended | 9 Months Ended |
Dec. 31, 2018 | Dec. 31, 2018 | |
(Loss) Income Per Share (Textual) | ||
Antidilutive securities excluded from calculation of diluted earnings per share | 967,000 | 967,000 |
Private Placement [Member] | ||
(Loss) Income Per Share (Textual) | ||
Antidilutive securities excluded from calculation of diluted earnings per share | 72,000 | 72,000 |
Investor [Member] | ||
(Loss) Income Per Share (Textual) | ||
Antidilutive securities excluded from calculation of diluted earnings per share | 600,000 | 600,000 |
Segments (Details)
Segments (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Segment Reporting Information [Line Items] | ||||
Revenue | $ 30,916,549 | $ 26,812,242 | $ 81,098,161 | $ 71,973,653 |
Cost of goods | 23,780,763 | 21,240,629 | 62,548,471 | 56,666,782 |
Gross profit | 7,135,786 | 5,571,613 | 18,549,690 | 15,306,871 |
Selling expenses | 6,688,577 | 5,020,971 | 16,539,078 | 13,288,602 |
General and administrative expenses | 2,572,862 | 2,737,782 | 6,342,874 | 7,318,780 |
Income (Loss) from operations | (2,125,653) | (2,187,140) | (4,332,262) | (5,300,511) |
Depreciation and amortization | 450,326 | (520,554) | 988,291 | (645,422) |
Total capital expenditures | 6,415,728 | 94,206 | 6,790,566 | 306,564 |
Retail Store [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 20,867,250 | 18,288,222 | 54,971,889 | 46,356,207 |
Cost of goods | 14,903,761 | 13,686,969 | 39,344,927 | 34,227,630 |
Gross profit | 5,963,489 | 4,601,253 | 15,626,962 | 12,128,577 |
Selling expenses | 4,819,081 | 3,509,018 | 12,453,077 | 8,510,663 |
General and administrative expenses | 1,443,634 | 930,689 | 4,644,077 | 4,942,902 |
Income (Loss) from operations | (299,226) | 161,546 | (1,470,364) | (1,324,988) |
Depreciation and amortization | 449,893 | (525,203) | 980,845 | (854,445) |
Total capital expenditures | 6,415,414 | 89,495 | 6,789,129 | 295,637 |
Online Pharmacy [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 2,493,205 | 3,395,047 | 6,637,922 | 9,595,752 |
Cost of goods | 2,232,994 | 3,134,767 | 5,883,301 | 8,644,564 |
Gross profit | 260,211 | 260,280 | 754,621 | 951,188 |
Selling expenses | 438,235 | 572,397 | 1,316,945 | 1,547,569 |
General and administrative expenses | 47,703 | 174,865 | 292,544 | 352,770 |
Income (Loss) from operations | (225,727) | (486,982) | (854,868) | (949,151) |
Depreciation and amortization | ||||
Total capital expenditures | ||||
Drug Wholesale [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 7,556,094 | 5,128,973 | 19,488,350 | 16,021,694 |
Cost of goods | 6,644,008 | 4,418,893 | 17,320,243 | 13,794,588 |
Gross profit | 912,086 | 710,080 | 2,168,107 | 2,227,106 |
Selling expenses | 1,431,261 | 939,556 | 2,769,056 | 3,230,370 |
General and administrative expenses | 1,081,525 | 1,615,560 | 1,406,081 | 1,996,393 |
Income (Loss) from operations | (1,600,700) | (1,845,036) | (2,007,030) | (2,999,657) |
Depreciation and amortization | 433 | 4,649 | 7,446 | 209,023 |
Total capital expenditures | 314 | 4,711 | 1,437 | 10,927 |
Herbs Farming [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | ||||
Cost of goods | ||||
Gross profit | ||||
Selling expenses | ||||
General and administrative expenses | 16,668 | 26,715 | ||
Income (Loss) from operations | (16,668) | (26,715) | ||
Depreciation and amortization | ||||
Total capital expenditures |
Segments (Details 1)
Segments (Details 1) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Revenue from External Customer [Line Items] | ||||
Net revenue from external customers | $ 30,916,549 | $ 26,812,242 | $ 81,098,161 | $ 71,973,653 |
Retail Store [Member] | ||||
Revenue from External Customer [Line Items] | ||||
Net revenue from external customers | 20,867,250 | 18,288,222 | 54,971,889 | 46,356,207 |
Drug Wholesale [Member] | ||||
Revenue from External Customer [Line Items] | ||||
Net revenue from external customers | 7,556,094 | 5,128,973 | 19,488,350 | 16,021,694 |
Online Pharmacy [Member] | ||||
Revenue from External Customer [Line Items] | ||||
Net revenue from external customers | 2,493,205 | 3,395,047 | 6,637,922 | 9,595,752 |
Herbs Farming [Member] | ||||
Revenue from External Customer [Line Items] | ||||
Net revenue from external customers | ||||
Prescription Drugs [Member] | Retail Store [Member] | ||||
Revenue from External Customer [Line Items] | ||||
Net revenue from external customers | 6,756,073 | 5,373,870 | 17,835,700 | 14,860,659 |
Prescription Drugs [Member] | Drug Wholesale [Member] | ||||
Revenue from External Customer [Line Items] | ||||
Net revenue from external customers | 3,933,441 | 2,777,566 | 1,708,683 | 9,252,199 |
Prescription Drugs [Member] | Online Pharmacy [Member] | ||||
Revenue from External Customer [Line Items] | ||||
Net revenue from external customers | ||||
Over Counter Drugs [Member] | Retail Store [Member] | ||||
Revenue from External Customer [Line Items] | ||||
Net revenue from external customers | 9,393,148 | 9,168,708 | 24,018,263 | 21,593,385 |
Over Counter Drugs [Member] | Drug Wholesale [Member] | ||||
Revenue from External Customer [Line Items] | ||||
Net revenue from external customers | 3,341,676 | 2,303,726 | 7,246,356 | 6,652,879 |
Over Counter Drugs [Member] | Online Pharmacy [Member] | ||||
Revenue from External Customer [Line Items] | ||||
Net revenue from external customers | 837,126 | 1,535,383 | 2,412,057 | 4,038,674 |
Nutritional Supplements [Member] | Retail Store [Member] | ||||
Revenue from External Customer [Line Items] | ||||
Net revenue from external customers | 1,869,351 | 1,883,020 | 4,750,013 | 4,558,383 |
Nutritional Supplements [Member] | Drug Wholesale [Member] | ||||
Revenue from External Customer [Line Items] | ||||
Net revenue from external customers | 167,069 | 19,123 | 240,666 | 47,660 |
Nutritional Supplements [Member] | Online Pharmacy [Member] | ||||
Revenue from External Customer [Line Items] | ||||
Net revenue from external customers | 220,776 | 514,952 | 575,862 | 1,365,834 |
Traditional Chinese Medicine [Member] | Retail Store [Member] | ||||
Revenue from External Customer [Line Items] | ||||
Net revenue from external customers | 1,342,768 | 1,185,004 | 4,615,033 | 3,136,203 |
Traditional Chinese Medicine [Member] | Drug Wholesale [Member] | ||||
Revenue from External Customer [Line Items] | ||||
Net revenue from external customers | 77,216 | 20,876 | 156,525 | 21,480 |
Traditional Chinese Medicine [Member] | Online Pharmacy [Member] | ||||
Revenue from External Customer [Line Items] | ||||
Net revenue from external customers | 28,785 | 8,802 | 54,417 | 18,984 |
Sundry Products [Member] | Retail Store [Member] | ||||
Revenue from External Customer [Line Items] | ||||
Net revenue from external customers | 248,729 | 180,338 | 799,554 | 804,817 |
Sundry Products [Member] | Drug Wholesale [Member] | ||||
Revenue from External Customer [Line Items] | ||||
Net revenue from external customers | 5,949 | 21,479 | ||
Sundry Products [Member] | Online Pharmacy [Member] | ||||
Revenue from External Customer [Line Items] | ||||
Net revenue from external customers | 573,993 | 224,514 | 2,128,282 | 1,065,935 |
Medical Devices [Member] | Retail Store [Member] | ||||
Revenue from External Customer [Line Items] | ||||
Net revenue from external customers | 1,257,180 | 497,282 | 2,953,326 | 1,402,760 |
Medical Devices [Member] | Drug Wholesale [Member] | ||||
Revenue from External Customer [Line Items] | ||||
Net revenue from external customers | 30,743 | 7,682 | 114,641 | 47,476 |
Medical Devices [Member] | Online Pharmacy [Member] | ||||
Revenue from External Customer [Line Items] | ||||
Net revenue from external customers | $ 832,526 | $ 1,111,396 | $ 1,467,304 | $ 3,106,325 |
Segments (Details Textual)
Segments (Details Textual) | 9 Months Ended |
Dec. 31, 2018Segment | |
Segments (Textual) | |
Number of operating segments | 4 |
Commitments and Contingencies_2
Commitments and Contingencies (Details) | Dec. 31, 2018USD ($) |
Commitments and Contingencies [Line Items] | |
2,019 | $ 4,590,468 |
2,020 | 3,699,758 |
2,021 | 2,799,515 |
2,022 | 2,013,152 |
2,023 | 1,342,827 |
Thereafter | 1,762,033 |
Retail Store [Member] | |
Commitments and Contingencies [Line Items] | |
2,019 | 4,590,468 |
2,020 | 3,699,758 |
2,021 | 2,799,515 |
2,022 | 2,013,152 |
2,023 | 1,342,827 |
Thereafter | 1,762,033 |
Drug Wholesale [Member] | |
Commitments and Contingencies [Line Items] | |
2,019 | |
2,020 | |
2,021 | |
2,022 | |
2,023 | |
Thereafter | |
Online Pharmacy [Member] | |
Commitments and Contingencies [Line Items] | |
2,019 | |
2,020 | |
2,021 | |
2,022 | |
2,023 | |
Thereafter | |
Herbs Farming [Member] | |
Commitments and Contingencies [Line Items] | |
2,019 | |
2,020 | |
2,021 | |
2,022 | |
2,023 | |
Thereafter |
Commitments and Contingencies_3
Commitments and Contingencies (Details Textual) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Commitments and Contingencies (Textual) | ||||
Total rent expenses | $ 1,194,247 | $ 1,184,452 | $ 3,586,552 | $ 3,114,851 |