| 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. 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 political, economic, and legal environments in the PRC, as well as by the general state of the PRC economy. The
Company’s operations in the PRC are subject to special considerations and significant risks not typically associated with companies
in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environment
and foreign currency exchange. The Company’s results may be adversely affected by changes in the political, regulatory and social
conditions in the PRC. Although the Company has not experienced losses from these situations and believes that it is in compliance with
existing laws and regulations including its organization and structure disclosed in Note 1, this may not be indicative of future results. The
Company has significant cash deposits with suppliers in order to obtain and maintain inventory. The Company’s ability to obtain
products and maintain inventory at existing and new locations is dependent upon its ability to post and maintain significant cash deposits
with its suppliers. In the PRC, many vendors are unwilling to extend credit terms for product sales that require cash deposits to be
made. The Company does not generally receive interest on any of its supplier deposits, and such deposits are subject to loss as a result
of the creditworthiness or bankruptcy of the party who holds such funds, as well as the risk from illegal acts such as conversion, fraud,
theft or dishonesty associated with the third party. If these circumstances were to arise, the Company would find it difficult or impossible,
due to the unpredictability of legal proceedings in China, to recover all or a portion of the amount on deposit with its 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 could cancel these agreements or permit them to expire at
the end of the agreement terms, as a result of which the Company would not retain control of the VIEs. Use
of estimates The
preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date
of the financial statements, and the reported amounts of revenues and expenses during the reporting period. The significant
estimates made in the preparation of the accompanying consolidated financial statements relate to the assessment of the carrying
values of accounts receivable, related allowance for doubtful accounts, losses. 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 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, cash
equivalents and restricted cash, financial assets available for sales, trade accounts receivable, notes receivables, other receivable,
accounts payable, other payable, notes payable, long-term loan payable, employee deposits and warrants liability. The carrying amounts
of cash and cash equivalents, restricted cash, 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 16). The carrying amount of Long-term
loan payable approximates fair value based on borrowing rates of similar bank loan currently available to the Company (Level 2) (See
Note 17). 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) (See Note 21). The carrying amount of the financial assets available for sale is
recorded at fair value and is determined based on unobservable inputs (Level 3) (See Note 4). The carrying amount of the employee deposits
is recorded at fair value and is determined based on unobservable inputs (Level 3) (See Note 22).
(amount in
absolute value) Active
Market Observable Unobservable Total
Cash,
cash equivalents and restricted cash $ 34,672,644 - - $ 34,672,644
Financial
assets available for sale - - 91,472 91,472
Trade
accounts receivable 13,423,728 - - 13,423,728
Notes
receivable 39,392 - - 39,392
Other
receivable 5,051,960 - - 5,051,960
Accounts
payable 29,895,830 - - 29,895,830
Notes
payable - 25,663,633 - 25,663,633
Other
payable 2,940,000 - - 2,940,000
Long-term
loan payable - 4,449,903 - 4,449,903
Total $ 86,023,554 30,113,536 91,472 $ 116,228,562 Revenue
recognition Effective
March 31, 2018, the Company began recognizing revenue under Accounting Standards Codification (“ASC”) Topic 606, Revenue
from Contracts with Customers (“ASC 606”), using the modified retrospective transition method. The impact of adopting the
new revenue standard was not material to the Company’s consolidated financial statements. The core principle of this new revenue
standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that
reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The following five steps
are applied to achieve that core principle:
● Step 1: Identify the contract
with the customer
● Step 2: Identify the performance
obligations in the contract
● Step 3: Determine the transaction
price
● Step 4: Allocate the transaction
price to the performance obligations in the contract
● Step 5: Recognize revenue
when the company satisfies a performance obligation In
order to identify the performance obligations in a contract with a customer, a company must assess the promised goods or services in
the contract and identify each promised good or service that is distinct. A performance obligation meets ASC 606’s definition of
a “distinct” good or service (or bundle of goods or services) if both of the following criteria are met:
● The customer can benefit
from the good or service either on its own or together with other resources that are readily available to the customer (i.e., the
good or service is capable of being distinct).
● The entity’s promise
to transfer the good or service to the customer is separately identifiable from other promises in the contract (i.e., the promise
to transfer the good or service is distinct within the context of the contract). If
a good or service is not distinct, the good or service is combined with other promised goods or services until a bundle of goods or services
is identified that is distinct. The
transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods
or services to a customer, excluding amounts collected on behalf of third parties (for example, some sales taxes). The consideration
promised in a contract with a customer may include fixed amounts, variable amounts, or both. Variable consideration is included in the
transaction price only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will
not occur when the uncertainty associated with the variable consideration is subsequently resolved. The
transaction price is allocated to each performance obligation on a relative standalone selling price basis. The transaction price allocated
to each performance obligation is recognized when that performance obligation is satisfied, at a point in time or over time as appropriate. The
Company’s revenue is net of value added tax (“VAT”) collected on behalf of the PRC tax authorities with 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. Certain
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 estimated amount based on accrued membership points was deducted from
sales revenue. 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, over-the-counter (“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 merchandise, such as prescription
and OTC drugs, are not refundable after the customers leave the counter. Returns 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. The Company based on historical experience, a reserve for potential losses from denial of reimbursement
on certain unqualified drugs is made to the receivables from the government agency. Additionally, several onsite clinics adjacent to
pharmacies provide limited medical services. Revenue from medical services is recognized after the service has been rendered to a customer.
As revenue from medical services is minimal compared to pharmacy retail sales, it is included as part of the pharmacy retail sales. The
Company deduct the membership rewards directly from the retail revenue, and present such amounts in net sales as opposed to the current
reduction of operation expense classification. Membership rewards, usually membership points, are accumulated by customers based on their
historical spending levels. The Company has determined that there is an additional performance obligation to those customers at the time
of the initial transaction. The customers can then redeem these points against the prices of merchandises they purchase in the future.
At the end of each period, unredeemed membership rewards are reflected as a contract liability. 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. The Company’s sales policy allows for
the return of certain merchandises without reason within seven days after a customer’s receipt of the applicable merchandise. 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 merchandise is transferred to customers. Historically, sales
returns have been minimal. The
Company’s revenue is net of 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 years ended March 31, 2021 and 2020:
2021 2020
For
the year ended March 31
Retail
drugstores
Prescription
drugs $ 27,162,968 $ 26,045,423
OTC
drugs 30,524,057 31,532,248
Nutritional
supplements 6,863,559 6,013,622
TCM 4,560,968 5,325,008
Sundry
products 1,379,917 1,312,293
Medical
devices 5,607,506 3,852,643
Total
retail revenue $ 76,098,975 $ 74,081,237
Online
pharmacy
Prescription
drugs $ 8,243,099 $ 1,447,469
OTC
drugs 7,559,585 5,721,638
Nutritional
supplements 956,013 742,809
TCM 295,410 266,638
Sundry
products 1,967,174 2,082,601
Medical
devices 3,464,638 3,280,060
Total
online revenue $ 22,485,919 $ 13,541,215
Drug
wholesale
Prescription
drugs $ 27,477,087 $ 24,857,708
OTC
drugs 6,242,630 4,196,841
Nutritional
supplements 151,657 205,881
TCM 218,758 314,769
Sundry
products 28,377 43,854
Medical
devices 431,230 86,184
Total
wholesale revenue $ 34,549,739 $ 29,705,237
Total
revenue $ 133,134,633 $ 117,327,689 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 and membership rewards. 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:
March
31, March
31,
Trade
receivable(included in accounts receivable, net) $ 13,423,728 $ 9,770,656
Contract
liabilities (included in accrued expenses) 1,470,217 1,106,982 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. The
following represents a reconciliation of cash and cash equivalents in the Consolidated Condensed Balance Sheets to total cash, cash equivalents
and restricted cash in the Consolidated Condensed Statements of Cash Flows as of March 31, 2021 and March 31, 2020:
March
31, March
31,
Cash
and cash equivalents $ 22,045,628 $ 16,176,318
Restricted
cash 12,627,016 14,806,288
Cash,
cash equivalents and restricted cash $ 34,672,644 $ 30,982,606 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 expected credit loss. 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 expected credit loss method to estimate the allowance for anticipated uncollectible receivable
balances. At each reporting period, the allowance balance is adjusted to reflect the amount computed as a result of the expected credit
loss 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. Credit
loss roll forward With
the adoption of the current expected credit loss standard in 2020, the company estimates future expected losses on accounts receivable
and other receivables over the remaining collection period of the instrument. The roll forward for the allowance for credit losses for
the year end March 31, 2021, is as follows:
For
the year ended
Account Other Total
Allowance
for credit losses as of March 31, 2020 $ 2,264,070 507,671 $ 2,771,741
Current
expected credit losses opening balance impact on retained earning 189,295 232,380 421,675
Credit
loss expense* 427,148 (246,587 ) 180,561
Ending
allowance for credit losses $ 2,880,513 493,464 $ 3,373,977
* The amount represents the reserve made in the current year on estimated
potential loss, but not includes the direct write-off of certain collectible from local government insurance agency. Advances
to suppliers Advances
to suppliers consist of prepayments to its vendors, such as pharmaceutical manufacturers and other distributors. Since the acquisition
of Jiuxin Medicine, the Company have transferred almost all logistics services of its 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 its drug wholesale business consist of prepayments to its vendors, such as pharmaceutical manufacturers and other distributors. The
Company typically receive products from vendors within three to nine months after making prepayments. The Company continuously monitor
delivery from, and payments to, its 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. Inventories Inventories
are stated at the lower of cost or net realizable value. Cost is determined using the first in first out (FIFO) method. 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
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
license Infinite 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. In the year ended March 31, 2020, the Company evaluated the licenses of insurance applicable drugstores acquired in the past based
on their discounted positive cash value. Due to the stricter government insurance policy in fiscal year 2021, the value of these licenses
has declined. As a result, The Company recorded an impairment of $628,192 as of March 31, 2020. In the year ended March 31, 2021, we
evaluated the use rights of the forest land, which 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. Based on the evaluation of the forest land use rights, the Company recorded
an impairment of $228,506. 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
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 March 31, 2021 and 2020. 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. The VAT rates range up to 17%, depending on the type of products sold. The VAT may be offset by
VAT paid by the Company on raw materials and other materials included in the cost of producing or acquiring its finished products. The
Company recorded a VAT payable net of payments in the accompanying financial statements. Stock
based compensation The
Company follows the provisions of 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 $309,446 and $262,553 for the year ended March 31, 2021 and 2020, respectively.
Such costs consist primarily of print and promotional materials such as flyers to local communities. 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 March 31, 2021 and 2020 were translated at 1 RMB to 0.1525 USD and at 1 RMB to
0.1410 USD, respectively. The average translation rates applied to income and cash flow statement amounts for years ended March 31, 2021
and 2020 were at 1 RMB to 0.1477 USD and at 1 RMB to 0.1436 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 covered by insurance up to RMB 500,000 (USD 79,600) per bank. As of March 31, 2021 and March 31,
2020, the Company had deposits totaling $34,602,819 and $30,974,714 that were covered by such limited insurance, respectively. Any
balance over RMB 500,000 (USD 79,600) per bank in PRC will not be covered. To date, the Company has not experienced any losses in such
accounts. For
the fiscal year ended March 31, 2021, two vendors collectively accounted for 42.9% of the Company’s total purchases and two suppliers
accounted |
