Document_And_Entity_Informatio
Document And Entity Information | 3 Months Ended | |
Sep. 30, 2013 | Nov. 14, 2013 | |
Document Information [Line Items] | ' | ' |
Entity Registrant Name | 'Bohai Pharmaceuticals Group, Inc. | ' |
Entity Central Index Key | '0001443242 | ' |
Current Fiscal Year End Date | '--06-30 | ' |
Entity Filer Category | 'Smaller Reporting Company | ' |
Trading Symbol | 'BOPH | ' |
Entity Common Stock, Shares Outstanding | ' | 17,861,085 |
Document Type | '10-Q | ' |
Amendment Flag | 'false | ' |
Document Period End Date | 30-Sep-13 | ' |
Document Fiscal Period Focus | 'Q1 | ' |
Document Fiscal Year Focus | '2014 | ' |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS(USD ($)) | Sep. 30, 2013 | Jun. 30, 2013 |
ASSETS | ' | ' |
Cash | $14,441,774 | $6,947,972 |
Restricted cash | 12,649,350 | 12,574,051 |
Accounts receivable | 40,999,217 | 38,716,023 |
Inventories | 4,713,299 | 2,781,734 |
Prepaid expenses and other current assets | 691,879 | 499,231 |
Total current assets | 73,495,519 | 61,519,011 |
Non-current assets: | ' | ' |
Property, plant and equipment, net | 17,546,375 | 17,678,453 |
Prepayment for property, plant and equipment | 1,173,348 | 1,112,873 |
Intangible assets - pharmaceutical formulas | 14,193,679 | 14,109,169 |
Intangible assets - land use right, net | 37,882,616 | 37,863,464 |
Other intangible assets, net | 27,181,651 | 28,139,219 |
Goodwill | 5,233,369 | 5,202,209 |
Total non-current assets | 103,211,038 | 104,105,387 |
TOTAL ASSETS | 176,706,557 | 165,624,398 |
LIABILITIES AND STOCKHOLDERS' EQUITY | ' | ' |
Notes payable | 9,765,784 | 9,707,638 |
Short-term loan | 4,882,892 | 0 |
Convertible notes, net | 8,464,500 | 8,464,500 |
Accounts payable | 5,942,027 | 5,081,913 |
Accrued expenses | 12,656,688 | 12,185,615 |
Land use right payable | 6,510,523 | 6,471,759 |
Income taxes payable | 3,237,719 | 2,222,476 |
Due to related party | 52,314 | 52,830 |
Total current liabilities | 51,512,447 | 44,186,731 |
Non-current liabilities: | ' | ' |
Acquisition purchase price payable - non-current portion | 0 | 5,000,000 |
Deferred tax liability | 8,092,187 | 8,048,113 |
Total non-current liabilities | 8,092,187 | 13,048,113 |
TOTAL LIABILITIES | 59,604,634 | 57,234,844 |
COMMITMENTS, CONTINGENCIES, AND OTHER MATTERS | ' | ' |
STOCKHOLDERS' EQUITY | ' | ' |
Common stock, $0.001 par value, 150,000,000 shares authorized, 17,861,085 shares issued and outstanding as of September 30, 2013 and June 30, 2013, respectively | 17,861 | 17,861 |
Additional paid-in capital | 24,615,353 | 24,615,353 |
Accumulated other comprehensive income | 9,624,219 | 8,999,581 |
Retained earnings | 82,844,490 | 74,756,759 |
Total stockholders' equity | 117,101,923 | 108,389,554 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $176,706,557 | $165,624,398 |
CONDENSED_CONSOLIDATED_BALANCE1
CONDENSED CONSOLIDATED BALANCE SHEETS [Parenthetical] (USD $) | Sep. 30, 2013 | Jun. 30, 2013 |
Common stock, par value (in dollars per share) | $0.00 | $0.00 |
Common stock, shares authorized | 150,000,000 | 150,000,000 |
Common stock, shares issued | 17,861,085 | 17,861,085 |
Common stock, shares outstanding | 17,861,085 | 17,861,085 |
CONDENSED_CONSOLIDATED_STATEME
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (USD $) | 3 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Net revenues | $50,889,060 | $35,348,820 |
Cost of revenues | 11,707,654 | 8,894,889 |
Gross profit | 39,181,406 | 26,453,931 |
Operating expenses: | ' | ' |
Selling, general and administrative | 27,240,489 | 17,207,116 |
Depreciation and amortization | 713,560 | 656,105 |
Total operating expenses | 27,954,049 | 17,863,221 |
Income from operations | 11,227,357 | 8,590,710 |
Other expenses: | ' | ' |
Interest income | 2,790 | 17,785 |
Interest expenses | -362,286 | -513,033 |
Other expenses, net | -26,117 | -16,706 |
Change in fair value of derivative liabilities | 0 | 498,002 |
Total other expenses | -385,613 | -13,952 |
Income before provision for income taxes | 10,841,744 | 8,576,758 |
Provision for income taxes | -2,754,013 | -2,181,246 |
Net income | 8,087,731 | 6,395,512 |
Comprehensive income: | ' | ' |
Net income | 8,087,731 | 6,395,512 |
Other comprehensive income | ' | ' |
Unrealized foreign currency translation gain (loss) | 624,638 | -248,947 |
Comprehensive income | $8,712,369 | $6,146,565 |
Net income per common share | ' | ' |
Basic (in dollar per share) | $0.45 | $0.36 |
Diluted (in dollar per share) | $0.38 | $0.30 |
Weighted average common shares outstanding | ' | ' |
Basic (in shares) | 17,861,085 | 17,861,085 |
Diluted (in shares) | 22,093,335 | 22,563,585 |
CONDENSED_CONSOLIDATED_STATEME1
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 3 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Cash flows from operating activities: | ' | ' |
Net income | $8,087,731 | $6,395,512 |
Adjustments to reconcile net income to net cash provided by operating activities: | ' | ' |
Depreciation and amortization | 1,605,848 | 1,083,978 |
Loss on disposal of property, plant and equipment | 9,897 | 0 |
Change in fair value of warrants | 0 | -498,002 |
Deferred income taxes | -4,118 | 106,410 |
Changes in operating assets and liabilities: | ' | ' |
Accounts receivable | -2,044,145 | -4,104,067 |
Prepaid expenses and other current assets | -188,996 | -551,346 |
Inventories | -1,908,226 | -505,562 |
Accounts payable | 826,784 | 193,721 |
Accrued expenses | 401,371 | -729,970 |
Income taxes payable | 998,437 | 191,018 |
Net cash provided by operating activities | 7,784,583 | 1,581,692 |
Cash flows used in investing activities: | ' | ' |
Purchases of property, plant and equipment | -27,127 | -11,344 |
Property, plant and equipment deposits | -53,622 | -3,490 |
Cash paid for acquisition of business | -5,000,000 | 0 |
Net cash used in by investing activities | -5,080,749 | -14,834 |
Cash flows from financing activities: | ' | ' |
Proceeds from short-term loan | 4,865,864 | 0 |
Borrowing from related party | 0 | 2,545 |
Repayment to related party | -757 | 0 |
Deposit of restricted cash-convertible note escrow deposit | 0 | 945,195 |
Release of restricted cash-convertible note escrow deposit | 0 | -845,495 |
Repayment of convertible notes | 0 | -631,000 |
Net cash flows provided by (used in) financing activities | 4,865,107 | -528,755 |
Effect of foreign currency translation on cash and cash equivalents | -75,139 | -45,231 |
Net increase in cash and cash equivalents | 7,493,802 | 992,872 |
Cash and cash equivalents at beginning of period | 6,947,972 | 18,386,288 |
Cash and cash equivalents at end of period | 14,441,774 | 19,379,160 |
Cash paid during the period for: | ' | ' |
Interest | 45,009 | 313,895 |
Income taxes | 1,759,694 | 1,878,185 |
Non-cash investing and financing activities: | ' | ' |
Land use right liability | 6,510,523 | 0 |
Acquisition liability | 0 | 25,300,000 |
Acquisition of property, plant and equipment through assumption of debt | $1,798,262 | $0 |
ORGANIZATION_AND_PRINCIPAL_ACT
ORGANIZATION AND PRINCIPAL ACTIVITIES | 3 Months Ended | |
Sep. 30, 2013 | ||
Organization, Consolidation and Presentation Of Financial Statements [Abstract] | ' | |
Nature of Operations [Text Block] | ' | |
1 | ORGANIZATION AND PRINCIPAL ACTIVITIES | |
The Company’s Operations | ||
Bohai Pharmaceuticals Group, Inc. (“BPGI”) was incorporated under the laws of the State of Nevada on January 9, 2008 under the name of Link Resources, Inc. Prior to January 5, 2010, BPGI was a public “shell” company. BPGI became a public operating company on January 5, 2010 pursuant to a Share Exchange Transaction completed on January 5, 2010. | ||
BPGI is engaged in the production, manufacturing and distribution of herbal pharmaceuticals based on traditional Chinese medicine (“TCM”) in the People’s Republic of China (“China” or the “PRC”) through the following two operating subsidiaries: | ||
(i) Yantai Bohai Pharmaceuticals Group Co., Ltd., (“Bohai”) a PRC company and the Company’s original operating subsidiary BPGI controls Bohai through a variable interest entity arrangement (“VIE”) described below; and | ||
(ii) Yantai Tianzheng Pharmaceuticals Company, Ltd., a PRC company (“Yantai Tianzheng”) which BPGI acquired effective July 1, 2011 through a newly formed PRC wholly-foreign owned enterprise subsidiary, Yantai Nirui Pharmaceuticals, Ltd. (“WOFE II”). | ||
BPGI owns 100% of Chance High International Limited, a British Virgin Islands company (“Chance High”). Chance High owns 100% of the issued and outstanding shares of capital stock of a Chinese wholly-foreign owned enterprise known as Yantai Shencaojishi Pharmaceuticals Co., Ltd. (the “WOFE”). On December 7, 2009 (prior to the date of the Share Exchange Transaction), the WOFE entered into a series of variable interest entity contractual agreements (the “VIE Agreements”) with Bohai and its three shareholders, including Mr. Hongwei Qu, the Company’s current Chairman and Chief Executive Officer (“Mr. Qu”). Mr. Qu currently owns 96.7% of the outstanding equity interests of Bohai and two other shareholders who collectively own the remaining 3.3% of Bohai. | ||
The VIE Agreements include (i) a Consulting Services Agreement, (ii) an Operating Agreement, and (iii) a Proxy Agreement, through which the WOFE has the right to advise, consult, manage and operate Bohai for an annual fee equal to all of Bohai’s yearly net profits after tax. Pursuant to these agreements, the WOFE indirectly owns but has 100% managerial and economic control of the business activities of Bohai including the right to appoint all executives and senior management and members of the board of directors of Bohai. Additionally, Bohai’s shareholders pledged their rights, titles and equity interest in Bohai as security for the WOFE to collect consulting and services fees provided to Bohai pursuant to an equity pledge agreement. In order to further reinforce the WOFE’s rights to control and operate Bohai, Bohai’s shareholders granted the WOFE an exclusive right and option to acquire all of their equity interests in Bohai through an option agreement. The VIE Agreements have perpetual terms unless otherwise determined by PRC law, and can (particularly in the case of the Consulting Services Agreement (which is the principal VIE Agreement) be terminated by the parties under certain circumstances, including material breach, the termination of Bohai’s business or a liquidation of Bohai. The WOFE (which is controlled indirectly by BPGI through Chance High) can also terminate the Consulting Services Agreement at will. | ||
BPGI, its wholly owned subsidiary Chance High, WOFE, WOFE II, Bohai and Yantai Tianzheng are referred to herein collectively and as a consolidated basis as the “Company” or “we”, “us” or “our” or similar terminology. Mr. Qu currently serves the Company’s Chairman, Chief Executive Officer and President. As used herein, the term “Common Stock” means the common stock of BPGI, $0.001 par value per share. | ||
BPGI is headquartered and maintains its principal operations in the city of Yantai, Shandong Province, China, and conducts business operations exclusively in the PRC. | ||
LIQUIDITY_AND_FINANCIAL_CONDIT
LIQUIDITY AND FINANCIAL CONDITION | 3 Months Ended | |
Sep. 30, 2013 | ||
Liquidity and Financial Conditions [Abstract] | ' | |
Liquidity and Financial Condition [Text Block] | ' | |
2 | LIQUIDITY AND FINANCIAL CONDITION | |
The Company’s net income amounted to $8,087,731 for the three months ended September 30, 2013. The Company’s cash flows from operations amounted to $7,784,583 for the three months ended September 30, 2013. The Company had working capital of $21,983,071 as of September 30, 2013. The Company has historically financed its operations principally from cash flows generated from operating activities and external financing raised in the bank loan. | ||
On August 8, 2011, the Company, through WOFE II, signed a share transfer agreement with the shareholders of Yantai Tianzheng to acquire 100% of Yantai Tianzheng for total purchase consideration of US$35,000,000 has been paid (of which $5,000,000 was paid during the quarter ended September 30, 2013). | ||
The Company is gaining the benefits of the economies of scale that is realized by having combined and streamlined the cost structures of the historical Bohai and the acquired Yantai Tianzheng businesses. As described above, the Company has committed to a plan of streamlining the combined business around a more focused portfolio of products that include non-prescription drug products acquired as part of the Yantai Tianzheng’s product portfolio. | ||
On June 8, 2010, Yantai Tianzheng signed an agreement with Yantai Huanghai Construction Co. to construct certain portions of a factory. The total contract price amounted to approximately $3.15 million (RMB 19.5 million). Management estimates that construction is 95% completed as of September 30, 2013 and that the project will be completed by November 2013. The remaining commitment of the contract amounted to approximately $0.9 million (RMB 5.6 million) as of September 30, 2013. | ||
On November 5, 2012, the Company acquired a new land use right of 266,668 square meters located in the high-tech development district of Laishan, Yantai, Shandong Province. The Company was granted the right to use the land for a period of 50 years at a total cost of approximately $19.53 million (RMB 120,000,000). As of September 30, 2013, the Company paid $13.02 million (RMB 80,000,000). The Company is obligated to make one remaining installment payment of $6.51 million (RMB 40,000,000) by December 31, 2013 (see Note 7). | ||
The Company is also required to repay the remaining $8,464,500 convertible notes balance, which pursuant to four amendments to the original notes, is currently due on an extended maturity date of April 5, 2013. In October 2013, the Company made a payment amounting to $400,000. The Company is currently working with Euro Pacific as representative of the Investors on a fifth amendment to the Notes which would further extend the maturity date of the Notes from April 5, 2013 to April 5, 2014. In connection with such extension, the Company and Euro Pacific proposed to make a payment in the amount equal to 10% of the outstanding principal plus any accrued interest (at the current rate of 12% per annum). As of the date the financial statements were issued, no written agreement has been entered into in this regard. The Company is unable to predict whether an agreement will be reached. | ||
As described elsewhere herein, the Company has at times, been in temporary default of its obligation to repay the convertible notes at previously extended maturity dates. The Company is currently in default under the terms of the latest extended note agreement. The Company cannot predict what the implications of the non-payment of the notes would be other than it would continue to experience difficulty converting sufficient currency and will maintain an escrow account of restricted funds intended to secure the Note’s repayment. The non-payment of the notes could have a material adverse effect on the Company should the note holders pursue further action. | ||
Management believes, based on the Company’s historical ability to fund operations using internally generated cash flow and the progress made towards integrating the business of Yantai Tianzheng, and subsequent commitment to focus on a more streamlined higher margin product portfolio, that the Company’s currently available cash and funds it expects to generate from operations and through potential short term loans financing from banks will enable it to operate the business and satisfy short term obligations through at least September 30, 2014. Notwithstanding, the Company still has substantial obligations as described herein and there is no assurance that unforeseen circumstances would not have a material adverse effect on the Company’s financial condition. | ||
The Company will require significant additional capital in order to fund these obligations and execute its longer term business plan. If the Company is unable to generate sufficient operating cash flows or raise additional capital, or encounters unforeseen circumstances that place constraints on its capital resources, management will be required to take various measures to conserve liquidity. Such measures could include, but not necessarily be limited to, curtailing the Company’s business development activities (as was done recently when the Company determined to streamline its operations to focus on the continued distribution of a smaller number of key products), suspending the pursuit of one or more elements of its business plan, and controlling overhead expenses. There is a material risk, and management cannot provide any assurances, that the Company will be able to raise additional capital if needed. On August 15, 2013, the Company has a financing as short term loan amounted to $4,882,892 (RMB 30,000,000), guaranteed by a third party and the principal shareholder of the Company, Hongwei Qu. which is due on August 14, 2014. Except that, the Company has not received any commitments for new financing, and cannot provide any assurance that new financing will be available to the Company on acceptable terms, if at all. The failure of the Company to fund its obligations when needed would have a material adverse effect on its business and results of operations. | ||
SUMMARY_OF_SIGNIFICANT_ACCOUNT
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended | |||||||
Sep. 30, 2013 | ||||||||
Accounting Policies [Abstract] | ' | |||||||
Basis of Presentation and Significant Accounting Policies [Text Block] | ' | |||||||
3 | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||||
Principles of Consolidation | ||||||||
The accompanying consolidated financial statements include the accounts of BPGI, its wholly-owned subsidiary Chance High, WOFE, WOFE II, Yantai Tianzheng and Bohai. All significant intercompany accounts and transactions have been eliminated in consolidation. | ||||||||
The Company, in determining whether it is required to consolidate investee businesses, considers both the voting and variable interest models of consolidation as required under applicable GAAP. The Company adopted FAS Accounting Standards Codification (“ASC”) 810-10-15-14 and also ASC 810-10-05-8, which requires that a VIE be consolidated if that company is entitled to receive a majority of the VIE’s residual returns and has direct ability to make decisions on all operating activities of the VIE. The Company controls Bohai through the VIE Agreements described in Note 1, under the following series of agreements entered into on December 7, 2009. | ||||||||
Under the Operating Agreement entered into between WOFE and Bohai, the WOFE has the direct ability to make decisions on all the operating activities and exercise all voting rights of Bohai. Under the Consulting Services Agreement entered into between WOFE and Bohai, Bohai agreed to pay all of its net income to WOFE quarterly as a consulting fee. Accordingly, WOFE has the right to receive the expected residual returns of Bohai. As such, the Company is the primary beneficiary of and maintains controlling managerial and financial interest in, Bohai in accordance with ASC 810-10-15-14. Accordingly, Bohai’s financial position and results of operations are consolidated with those of the Company for all periods presented. | ||||||||
We initially measured the assets, liabilities, and non-controlling interests of Bohai at their carrying amounts as of the date of the Share Exchange. We have subsequently accounted for the assets, liabilities, and non-controlling interest of Bohai as if it was consolidated based on voting interests. The usual accounting rules for which the VIE operates are applied as they would to a consolidated subsidiary as follows: | ||||||||
¨ | Carrying amounts of the VIE are consolidated into the financial statements of the Company as the primary beneficiary, or Primary Beneficiary (“PB”); and | |||||||
¨ | Inter-company transactions and balances, such as revenues and costs, receivables and payables between or among the PB and the VIE(s) are eliminated in their entirety. | |||||||
The carrying amount and classification of Bohai’s assets and liabilities included in the consolidated balance sheets are as follows: | ||||||||
September 30, | June 30, | |||||||
2013 | 2013 | |||||||
Total current assets* | $ | 77,739,308 | $ | 61,519,011 | ||||
Total assets* | 149,639,899 | 165,624,398 | ||||||
Total current liabilities** | 30,531,031 | 44,186,731 | ||||||
Total liabilities** | $ | 34,304,325 | $ | 57,234,844 | ||||
* Includes intercompany accounts in the amounts of $36,190,722 and $26,417,979 in current assets as of September 30, 2013 and June 30, 2013, respectively, which were eliminated in consolidation. | ||||||||
** Includes intercompany accounts in the amounts of $9,342,271 and $4,372,634 in current liabilities as of September 30, 2013 and June 30, 2013, respectively, which were eliminated in consolidation. | ||||||||
Business Combinations | ||||||||
The Company uses the acquisition method of accounting for business combinations which requires that the assets acquired and liabilities assumed be recorded at the date of the acquisition at their respective fair values. Assets acquired and liabilities assumed in a business combination that arise from contingencies are recognized at fair value if fair value can reasonably be estimated. If the acquisition date fair value of an asset acquired or liability assumed that arises from a contingency cannot be determined, the asset or liability is recognized if probable and reasonably estimable; if these criteria are not met, no asset or liability is recognized. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Any excess of the purchase price (consideration transferred) over the estimated fair values of net assets acquired is recorded as goodwill. Transaction costs and costs to restructure the acquired company are charged to expense as incurred. The operating results of acquired business are reflected in the acquirer’s consolidated financial statements and results of operations after the date of the acquisition. | ||||||||
Basis of Presentation | ||||||||
The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial statements and with the instructions to Form 10-Q and Article 8 of Regulation S-X of the United States Securities and Exchange Commission (“SEC”). Accordingly, they do not contain all information and footnotes required by GAAP for annual financial statements. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of September 30, 2013 and the results of operations and cash flows for the periods presented. The results of operations for the three months ended September 30, 2013 are not necessarily indicative of the operating results for the full fiscal year or any future period. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2013. The Company’s accounting policies are described in the Notes to Consolidated Financial Statements in its Annual Report on Form 10-K for the year ended June 30, 2013, filed on September 27, 2013, and updated, as necessary, in this Quarterly Report on Form 10-Q. | ||||||||
Reclassifications | ||||||||
Certain amounts in the September 30, 2012 condensed consolidated financial statement have been reclassified to conform to the September 30, 2013 presentation. | ||||||||
Business Segments | ||||||||
The Company’s operates its business through a single reporting segment. | ||||||||
Use of Estimates | ||||||||
The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Management makes these estimates using the best information available at the time the estimates are made; however, actual results could differ materially from those results. | ||||||||
Significant estimates and assumptions include allocating purchase consideration issued in business combinations, valuing equity securities and derivative financial instruments issued in financing transactions and in share-based payment arrangements, accounts receivable reserves, inventory reserves, and evaluating the carrying amounts and useful lives of intangible assets. Certain estimates, including accounts receivable and inventory reserves and the carrying amounts of intangible assets (including present value of future cash flow estimates for the Company’s pharmaceutical formulas) could be affected by external conditions including those unique to the Company’s industry and general economic conditions. It is reasonably possible that these external factors could have an effect on management’s estimates that could cause actual results to differ from management’s estimates. | ||||||||
Company management re-evaluates all of accounting estimates at least quarterly based on these conditions and records adjustments, when necessary. | ||||||||
Cash and Cash Equivalents | ||||||||
We consider all highly liquid investments purchased with original maturities of three months or less to be cash equivalents. We maintain bank accounts in the PRC and a checking account in the United States of America that principally consist of demand deposits. We also have restricted cash accounts in the United States that include funds designated for interest payments due to convertible note holders and for use in investor relations programs pursuant to a securities purchase agreement. | ||||||||
Restricted Cash | ||||||||
Escrow account balances amounted to $12,649,350 and $12,574,051 as of September 30, 2013 and June 30, 2013, respectively. | ||||||||
The Company is required by its Note holders to maintain deposits in escrow accounts to fund the principal and interest payments under the Convertible Notes obligation. As of September 30, 2013 and June 30, 2013, there was $7,766,458 and $7,720,232 of cash restricted for this purpose. | ||||||||
The Company has certain outstanding notes payable in the amount of $9,765,784 and $9,707,638 as of September 30, 2013 and June 30, 2013, respectively, and it is required to maintain a portion of these outstanding draft amounts in its bank as restricted cash. As of September 30, 2013 and June 30, 2013, there was $4,882,892 and $4,853,819 cash restricted for this purpose. | ||||||||
Accounts Receivable | ||||||||
Accounts receivable consists of amounts due from customers. The Company’s credit terms generally range from 90 to 180 days. The Company’s policy with respect accounts receivable reserves is to establish an allowance for doubtful accounts based on management’s assessment of known requirements, aging of receivables, payment history, specific customer’s current credit worthiness, and the economic environment. The Company has a significantly low history of credit losses and no historical pattern of making any price or collection concessions with respect to its accounts receivable balances. Accordingly, an allowance for doubtful accounts is not considered necessary based on management’s assessment. | ||||||||
Inventories | ||||||||
Inventories are valued at the lower of cost, determined using the weighted average method, or market. Finished goods inventories include the costs of raw materials, direct labor and overhead associated with the manufacturing process. In assessing the ultimate realization of inventories, management makes judgments as to future demand requirements compared to current or committed inventory levels. Our reserve requirements generally increase/decrease due to management’s projected demand requirements, market conditions and product life cycle changes. As of September 30, 2013 and June 30, 2013, management does not believe that any inventory reserves are necessary. | ||||||||
Property, Plant and Equipment | ||||||||
Property, plant and equipment are carried at cost and are depreciated on a straight-line basis over the estimated useful lives of the assets that range from 5 to 10 years for office equipment, machinery, and vehicles and 30 to 40 years for buildings. The cost of repairs and maintenance is charged to expense as incurred; major replacements and improvements are capitalized. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income in the year of disposition. We examine the possibility of impairment in the value of fixed assets when events or changes in circumstances reflect the fact that their recorded value may not be recoverable. | ||||||||
Intangible Asset – Pharmaceutical Formulas | ||||||||
The Company has purchased pharmaceutical formulas that were approved by the State Food and Drug Administration of China (“SFDA”). These formulas can be renewed every 5 years without limitation for a minimum fee and are subject to certain protections under PRC drug regulations for an indefinite period of time. These regulations mitigate competition and the ability of other suppliers to replicate the Company’s products or produce comparable substitutes. These intangible assets are measured initially at cost not subject to amortization and are tested for impairment annually or in interim reporting periods if events or changes in circumstances indicate that the carrying amounts of these intangible assets might not be recoverable. | ||||||||
During the year ended June 30, 2013, we determined that we will no longer manufacture or seek to develop a market for ten of our products due to a change in our business strategy as more fully described in Note 2. As a result of this decision, we recorded an impairment charge in the amount of $1,668,486 during the year ended June 30, 2013. In addition to the above, we reclassified certain other formulas with an aggregate carrying amount of $10,331,414 to other intangible assets. The Company has suspended plans to develop and manufacture products to be derived from these formulas but intends to retain them to mitigate competition and maintain the option of using these formulas should they be useful in the future. Accordingly, the Company has determined these formulas, which are approved by the State Food and Drug Administration, should be held as defensive assets. The Company determined that these formulas have an estimated useful life of 8 years as defensive assets. | ||||||||
Common Stock Purchase Warrants and Other Derivative Financial Instruments | ||||||||
The Company accounts for the issuance of common stock purchase warrants issued as free standing financial instruments in accordance with the applicable provisions ASC 810 “Derivatives and Hedging Activities.” Based on this guidance, the Company classifies as equity any contracts that (i) require physical settlement or net-share settlement or (ii) gives the Company a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement). The Company classifies as assets or liabilities any contracts that require net-cash settlement (including a requirement to net cash settle the contract if an event occurs and if that event is outside the control of the Company) or (ii) gives the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement). The Company assesses classification of its freestanding derivatives at each reporting date to determine whether a change in classification between assets and liabilities is required. The Company determined that its freestanding derivatives, which principally consist of warrants to purchase common stock required classification as liability instruments at September 30, 2013 and June 30, 2013 due to the existence of non-standard anti-dilution privileges that caused the warrants to not be indexed to the Company’s own stock. | ||||||||
Fair Value Measurements and Fair Value of Financial Instruments | ||||||||
We adopted the guidance of ASC 820 for fair value measurements, which clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows: | ||||||||
Level 1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date. | ||||||||
Level 2 - Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other then quoted prices that are observable, and inputs derived from or corroborated by observable market data. | ||||||||
Level 3 - Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information. | ||||||||
The carrying amounts reported in the balance sheets for cash, accounts receivable, other receivables, short-term borrowings, accounts payable and accrued expenses, customer advances, and amounts due from related parties approximate their fair market value based on the short-term maturity of these instruments. | ||||||||
ASC 825-10 “ Financial Instruments, ” allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (fair value option). The fair value option may be elected on an instrument-by-instrument basis and is irrevocable, unless a new election date occurs. If the fair value option is elected for an instrument, unrealized gains and losses for that instrument should be reported in earnings at each subsequent reporting date. We use Level 3 inputs to value the Company’s derivative liabilities. | ||||||||
The following table reflects gains and losses for the three months ended September 30, 2013 and year ended June 30, 2013 for all financial assets and liabilities categorized as Level 3. | ||||||||
Liabilities: | ||||||||
Balance of warrant liabilities as of June 30, 2012 | $ | 1,211,236 | ||||||
Change in the fair value of warrant liabilities | -1,211,236 | |||||||
Balance of warrant liabilities as of June 30, 2013 | - | |||||||
Change in the fair value of warrant liabilities | - | |||||||
Balance of warrant liabilities as of September 30, 2013 | $ | - | ||||||
Estimating the fair value of derivative financial instruments require the development of significant and subjective estimates that may, and are likely to, change over the duration of the instrument with related changes in internal and external market factors. The assumptions used to value the Company’s derivatives, which had a direct effect on the fair values. In addition, valuation techniques are sensitive to changes in the trading market price of the our Common Stock and its estimated volatility interest rate changes and other variables or market conditions not within the Company’s control that can significantly affect management’s estimates of fair value and changes in fair value. Because derivative financial instruments are initially and subsequently carried at fair value, the Company’s net income may include significant charges or credits as these estimates and assumptions change. | ||||||||
The warrants expired on January 5, 2013. At the expiration time, the portion of this warrant not exercised prior thereto shall be and become void and of no value and this warrant shall be terminated and shall no longer be outstanding. | ||||||||
Foreign Currency Translation | ||||||||
The Company’s reporting currency is the U.S. dollar. The functional currency of the Company’s operating business based in the PRC is the RMB. For the Company’s subsidiaries and affiliates whose functional currencies are the RMB, results of operations and cash flows are translated at average exchange rates during the period, assets and liabilities are translated at the exchange rate in effect as of the end of the period, and equity is translated at historical exchange rates. Translation adjustments resulting from the process of translating the functional currency financial statements into U.S. dollars are included in comprehensive income. | ||||||||
Exchange gains or losses arising from foreign currency transactions are included in the determination of net income for the respective periods. All of the Company’s revenue transactions are transacted in the functional currency. The Company has not entered into any material transactions that are either originated, or to be settled, in currencies other than the RMB. Accordingly, transaction gains or losses have not had, and are not expected to have a material effect on the Company’s results of operations. | ||||||||
Period end exchange rates used to translate assets and liabilities and average exchange rates used to translate results of operations in each of the reporting periods are as follows: | ||||||||
Three | Three | |||||||
months | months | |||||||
ended | ended | |||||||
September | September | |||||||
30, 2013 | 30, 2012 | |||||||
Period end US$: RMB exchange rate | 6.1439 | 6.3265 | ||||||
Average periodic US$: RMB exchange rate | 6.1654 | 6.3257 | ||||||
The RMB is not freely convertible into any other currencies. In addition, all foreign exchange transactions in the PRC must be conducted through authorized institutions. Accordingly, management cannot provide any assurance that the RMB underlying the consolidated financial statement amounts could have been, or could be, converted into US dollars at the exchange rates used to translate the functional currency into the reporting currency. | ||||||||
Revenue Recognition | ||||||||
Revenue represents the invoiced value of goods sold recognized upon the delivery of goods to distributors. Pursuant to the guidance of ASC Topic 605 and ASC Topic 36, revenue is recognized when all of the following criteria are met: | ||||||||
¨ | Persuasive evidence of an arrangement exists; | |||||||
¨ | Delivery has occurred or services have been rendered; | |||||||
¨ | The seller’s price to the buyer is fixed or determinable; and | |||||||
¨ | Collectability is reasonably assured. | |||||||
Cost of Revenue | ||||||||
Cost of revenue consists primarily of raw material costs, labor cost, overhead costs associated with the manufacturing process and related expenses which are directly attributable to our revenues. | ||||||||
Stock-based Compensation | ||||||||
Stock based compensation is accounted for based on the requirements of the Share-Based Payment topic of ASC 718 which requires recognition in the consolidated financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the employee or director’s requisite service period (presumptively, the vesting period). The FASB Accounting Standards Codification also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award. | ||||||||
Pursuant to ASC Topic 505-50, for share-based payments to consultants and other third-parties, compensation expense is determined at the “measurement date.” The expense is recognized over the vesting period of the award. Until the measurement date is reached, the total amount of compensation expense remains uncertain. We record compensation expense based on the fair value of the award at the reporting date. The awards to consultants and other third-parties are then revalued, or the total compensation is recalculated based on the then current fair value, at each subsequent reporting date. | ||||||||
Research and Development Costs | ||||||||
Research and development costs are charged to expense as incurred and included in operating expenses. We have only one full-time employee who is engaged in research and development, so the Company is mainly dependent on third-parties to perform the limited amount of research and development that the Company undertakes (see Note16). On March 1, 2013, the Company entered into a series of contracts with Binzhou Medical College to establish an institute named Bohai Pharmaceutical Institute in the following 5 years. On May 31, 2013, these two parties entered into two contracts agreeing on performing researches on two pharmaceutical products, namely Lung Nourishing Cream and Tongbi Capsules, in the following 17 months, respectively. These three contracts are amounting to $244,154 (RMB 1,500,000), which have been fully paid by September 30, 2013. Research and development costs amounted to $39,047 and $1,995 for the three months ended September 30, 2013 and 2012, respectively. | ||||||||
Shipping costs | ||||||||
Shipping costs are included in selling, general and administrative expense. Shipping costs amounted to $272,203 and $292,643 for the three months ended September 30, 2013 and 2012, respectively. | ||||||||
Advertising | ||||||||
Advertising and promotion costs are charged to expense as incurred. Advertising expenses included in selling, general and administrative expenses amounted to $101,280 and $102,305 for the three months ended September 30, 2013 and 2012, respectively. | ||||||||
Income Taxes | ||||||||
We are governed by the PRC’s Income Tax Laws and the Internal Revenue Code of the United States. Income taxes are accounted for 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 and income tax base of assets and liabilities and operating loss and tax credit carry-forwards. Deferred tax assets are reduced by a valuation allowance to the extent that management concludes it is more likely than not that the benefit of such tax assets will not be realized in future periods. Deferred tax assets and liabilities are measured 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 periods that include the enactment date. | ||||||||
We account for certain tax positions based upon authoritative guidance that prescribes a recognition threshold and measurement processes for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The guidance also provides direction on recognition, classification, interest and penalties, accounting in interim periods and related disclosure. | ||||||||
Our policy is to classify assessments, if any, for tax related to interest as interest expense and penalties as general and administrative expense. | ||||||||
Earnings per Share | ||||||||
We report earnings per share in accordance with ASC Topic 260, “Earnings Per Share”. Basic earnings (loss) per share are computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share is computed by dividing net income by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period. Common equivalent shares are excluded from the computation of diluted shares in periods for which they have an anti-dilutive effect. Diluted shares underlying stock options and common stock purchase warrants are included in the determination of diluted earnings per share using the treasury stock method. Diluted shares underlying convertible debt obligations are included in the determination of diluted loss per share using the “if converted” method (Note 17). | ||||||||
Recent Accounting Pronouncements | ||||||||
In February 2013, the FASB issued Accounting Standards Update (“ASU”) 2013-02, “Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income”. The ASU does not change the current requirements for reporting net income or other comprehensive income in financial statements. However, this ASU requires an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, an entity is required to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures required under U.S. GAAP that provide additional detail about those amounts. The guidance is effective prospectively for reporting periods beginning after December 15, 2012 for public entities. The adoption of this standard did not have a material impact on the Company’s consolidated financial position or results of operations. | ||||||||
Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the Company’s consolidated financial position or results of operations upon adoption. | ||||||||
INVENTORIES
INVENTORIES | 3 Months Ended | |||||||
Sep. 30, 2013 | ||||||||
Inventory Disclosure [Abstract] | ' | |||||||
Inventory Disclosure [Text Block] | ' | |||||||
4 | INVENTORIES | |||||||
Inventories consist of the following: | ||||||||
September 30, | June 30, | |||||||
2013 | 2013 | |||||||
(unaudited) | ||||||||
Raw materials | $ | 2,534,264 | $ | 1,415,071 | ||||
Work in progress | 899,279 | 840,954 | ||||||
Finished goods | 1,279,756 | 525,709 | ||||||
Total inventories | $ | 4,713,299 | $ | 2,781,734 | ||||
PROPERTY_PLANT_AND_EQUIPMENT_N
PROPERTY, PLANT AND EQUIPMENT, NET | 3 Months Ended | |||||||
Sep. 30, 2013 | ||||||||
Property, Plant and Equipment [Abstract] | ' | |||||||
Property, Plant and Equipment Disclosure [Text Block] | ' | |||||||
5 | PROPERTY, PLANT AND EQUIPMENT, NET | |||||||
Property, plant and equipment consist of the following: | ||||||||
September 30, | June 30, | |||||||
2013 | 2013 | |||||||
(unaudited) | ||||||||
Buildings | $ | 9,176,176 | $ | 9,121,541 | ||||
Plant equipment | 8,619,156 | 8,548,658 | ||||||
Office equipment | 268,872 | 250,339 | ||||||
Motor vehicles | 279,543 | 291,784 | ||||||
Total | 18,343,747 | 18,212,322 | ||||||
Less: accumulated depreciation | -3,109,566 | -2,827,442 | ||||||
Construction in progress | 2,312,194 | 2,293,573 | ||||||
Property, plant and equipment, net | $ | 17,546,375 | $ | 17,678,453 | ||||
Depreciation expense for property, plant and equipment for the three months ended September 30, 2013 and 2012 amounted to $276,748 and $143,123, respectively. | ||||||||
On June 8, 2010, Yantai Tianzheng signed an agreement with Yantai Huanghai Construction Co. to construct certain portions of a factory. The total contract price amounted to approximately $3.15 million (RMB 19.5 million). Management estimates that construction is 95% completed as of September 30, 2013 and that the project will be completed by November 30, 2013. The remaining commitment of the contract amounted to approximately $0.9 million (RMB 5.6 million) as of September 30, 2013. | ||||||||
INDEFINITE_LIVED_INTANGIBLE_AS
INDEFINITE LIVED INTANGIBLE ASSETS - PHARMACEUTICAL FORMULAS | 3 Months Ended | |||||||
Sep. 30, 2013 | ||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | |||||||
Intangible Assets Disclosure [Text Block] | ' | |||||||
6 | INDEFINITE LIVED INTANGIBLE ASSETS – PHARMACEUTICAL FORMULAS | |||||||
The Company purchased, and currently owns exclusive rights to, a series of pharmaceutical formulas that were approved by the SFDA. This asset includes 12 formulas that are included in the Chinese government’s Essential Drug List (“EDL”) and 25 medicines included in the National Drug Reimbursement List (“NDRL”). The intellectual property underlying these formulas can be renewed every 5 years without limitation for a minimum fee and are subject to certain protections under PRC drug regulations for an indefinite period of time. These regulations mitigate competition and the ability of other suppliers to replicate the Company’s products or produce comparable substitutes. These intangible assets are measured initially at cost not subject to amortization and are tested for impairment annually or in interim reporting periods if events or changes in circumstances indicate that the carrying amounts of these intangible assets might not be recoverable. | ||||||||
Pharmaceutical formulas with indefinite lives consist of the following: | ||||||||
September | June 30, | |||||||
30, 2013 | 2013 | |||||||
(unaudited) | ||||||||
Pharmaceutical formulas, without amortization, at cost | $ | 14,193,679 | $ | 14,109,169 | ||||
INTANGIBLE_ASSETS_LAND_USE_RIG
INTANGIBLE ASSETS - LAND USE RIGHTS, NET | 3 Months Ended | |||||||
Sep. 30, 2013 | ||||||||
Long Term Prepayment Land Use Rights Net [Abstract] | ' | |||||||
Long Term Prepayments Land User Rights Net [Text Block] | ' | |||||||
7 | INTANGIBLE ASSETS - LAND USE RIGHTS, NET | |||||||
September 30, | June 30, | |||||||
2013 | 2013 | |||||||
(unaudited) | ||||||||
Land use rights, at cost | $ | 40,333,561 | $ | 40,093,414 | ||||
Less: Accumulated amortization | -2,450,945 | -2,229,950 | ||||||
Intangible assets – land use rights, net | $ | 37,882,616 | $ | 37,863,464 | ||||
The Company acquired a new land use right for 266,668 square meters on November 5, 2012. The Company was granted the right to use the land for a period of 50 years at a cost of approximately $19.53 million (RMB 120,000,000). As of September 30, 2013, the Company has made payment of $13.02 million (RMB 80,000,000). The Company is obligated to make one remaining installment payment of $6.51 million by December 31, 2013. | ||||||||
There is no private ownership of land in the PRC. All land is owned by the government, which grants land use rights for specified periods of time. Amortization expense for land use rights amounted to $206,914 and $162,563 for the three months ended September 30, 2013 and 2012, respectively. | ||||||||
Amortization is calculated over a period of 30-50 years. | ||||||||
Amortization of land use rights for fiscal years ending subsequent to September 30, 2013 is as follows: | ||||||||
Amortization | ||||||||
Remainder of FY 2014 | $ | 620,742 | ||||||
2015 | 827,656 | |||||||
2016 | 827,656 | |||||||
2017 | 827,656 | |||||||
2018 | 827,656 | |||||||
Thereafter | 33,951,250 | |||||||
Total | $ | 37,882,616 | ||||||
OTHER_INTANGIBLE_ASSETS_NET
OTHER INTANGIBLE ASSETS, NET | 3 Months Ended | |||||||||||||
Sep. 30, 2013 | ||||||||||||||
Other Intangible Assets [Abstract] | ' | |||||||||||||
Other Intangible Assets [Text Block] | ' | |||||||||||||
8 | OTHER INTANGIBLE ASSETS, NET | |||||||||||||
Other Intangible assets, net include customer relationships and certain prescription drug product formulas. The Company acquired these assets in its business combination with Yantai Tianzheng. Customer relationships are amortized on a straight line basis over periods of 5 and 8 years. Pharmaceutical formulas including those retained as defensive assets are amortized on a straigh t line basis over a period of 8 years. | ||||||||||||||
$10,393,296 for the carrying amount of certain other product formulas that the Company will hold as defensive assets have been reclassified from indefinite life drug formulas. According to the Company’s years of industrial experience and R&D knowledge, to get a new drug formula approved from scratch usually take at least 8 years, so the Company is amortizing the pharmaceutical formulas as defensive assets over 8 years. | ||||||||||||||
Other intangible assets at September 30, 2013 (unaudited) consist of the following: | ||||||||||||||
Customer | YTP Drug | Defensive | ||||||||||||
Relationships | Formulas | Drug formulas | Total | |||||||||||
Cost | $ | 14,887,287 | $ | 10,402,350 | $ | 10,393,296 | $ | 35,682,933 | ||||||
Accumulated Amortization | -4,264,230 | -2,937,890 | -1,299,162 | -8,501,282 | ||||||||||
Net carrying amount | $ | 10,623,057 | $ | 7,464,460 | $ | 9,094,134 | $ | 27,181,651 | ||||||
Other intangible assets at June 30, 2013 consist of the following: | ||||||||||||||
Customer | YTP Drug | Defensive | ||||||||||||
Relationships | Formulas | Drug formulas | Total | |||||||||||
Cost | $ | 14,798,647 | $ | 10,340,415 | $ | 10,331,414 | $ | 35,470,476 | ||||||
Accumulated Amortization | -3,767,858 | -2,594,829 | -968,570 | -7,331,257 | ||||||||||
Net carrying amount | $ | 11,030,789 | $ | 7,745,586 | $ | 9,362,844 | $ | 28,139,219 | ||||||
Amortization expense for customer relationships amounted to $472,151 and $460,186 for the three months ended September 30, 2013 and 2012, respectively. | ||||||||||||||
Amortization expense for YTP drug formulas amounted to $326,377 and $318,106 for the three months ended September 30, 2013 and 2012, respectively. | ||||||||||||||
Amortization expense for defensive drug formulas amounted to $323,658 and $0 for the three months ended September 30, 2013 and 2012, respectively. Amortization expenses are recorded in general and administrative expenses. | ||||||||||||||
Amortization expense for fiscal years ending subsequent to September 30, 2013 is as follows: | ||||||||||||||
Amortization | ||||||||||||||
Remainder of FY 2014 | $ | 3,366,558 | ||||||||||||
2015 | 4,448,744 | |||||||||||||
2016 | 4,448,744 | |||||||||||||
2017 | 4,448,744 | |||||||||||||
2018 | 4,448,744 | |||||||||||||
Thereafter | 6,020,117 | |||||||||||||
Total | $ | 27,181,651 | ||||||||||||
GOODWILL
GOODWILL | 3 Months Ended | ||
Sep. 30, 2013 | |||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | ||
Goodwill and Intangible Assets Disclosure [Text Block] | ' | ||
9 | GOODWILL | ||
On August 8, 2011, the Company acquired 100% of Yantai Tianzheng’s equity interests for total purchase consideration of US$35,000,000 (paid in its RMB equivalent). The Company accounted for its acquisitions of Yantai Tianzheng using the acquisition method of accounting. The fair value of the purchase consideration issued to the sellers of Yantai Tianzheng was allocated to fair value of the net tangible assets acquired, with the resulting excess allocated to separately identifiable intangibles including customer relationships that have a finite life, pharmaceutical formulas that have an indefinite life and the remainder recorded as goodwill. Goodwill recognized from the transactions mainly represented the expected operational synergies upon acquisition of the subsidiary and intangibles not qualifying for separate recognition. Goodwill is nondeductible for income tax purpose in the tax jurisdiction of the acquisition transactions incurred. Goodwill amounted $5,233,369 and $5,202,209 as of September 30, 2013 and December 30, 2012, respectively. | |||
ACCRUED_EXPENSES
ACCRUED EXPENSES | 3 Months Ended | |||||||
Sep. 30, 2013 | ||||||||
Payables and Accruals [Abstract] | ' | |||||||
Accounts Payable, Accrued Liabilities, and Other Liabilities Disclosure, Current [Text Block] | ' | |||||||
10 | ACCRUED EXPENSES | |||||||
Accrued expense consists of the following: | ||||||||
September 30, | June 30, | |||||||
2013 | 2013 | |||||||
(unaudited) | ||||||||
Sales representatives commission and expenses | $ | 5,253,303 | $ | 4,731,442 | ||||
Other payable for PPE | 1,798,262 | 2,279,869 | ||||||
Other accrued expense | 1,545,387 | 1,596,636 | ||||||
Other taxes payable | 2,353,150 | 2,185,328 | ||||||
Interest | 1,447,567 | 1,117,527 | ||||||
Compensation and related cost | 259,019 | 274,813 | ||||||
Total | $ | 12,656,688 | $ | 12,185,615 | ||||
DUE_TO_RELATED_PARTY
DUE TO RELATED PARTY | 3 Months Ended | ||
Sep. 30, 2013 | |||
Due to Related Parties [Abstract] | ' | ||
Related Party Transactions Disclosure [Text Block] | ' | ||
11 | DUE TO RELATED PARTY | ||
Due to related party amounted to $52,314 and $52,830 as of September 30, 2013 and December 30, 2012, respectively. It represents accrued out of pocket expenses of Mr. Qu Hongwei, Chief executive officer of the Company. | |||
NOTES_PAYABLE
NOTES PAYABLE | 3 Months Ended | |
Sep. 30, 2013 | ||
Debt Disclosure [Abstract] | ' | |
Mortgage Notes Payable Disclosure [Text Block] | ' | |
12 | NOTES PAYABLE | |
As of September 30, 2013, the Company borrowed $9,765,784 (RMB 60,000,000) from Weihai City Commercial Bank (“City Bank”). The current amount of credit owed to City Bank under the facility was obtained by Yantai Tianzheng in May 7, 2013 and has a 6-month maturity with a bank charge fee of 0.05% Yantai Tianzheng paid a facility fee of approximately $4,800 to City Bank at the inception of the arrangement. Yantai Tianzheng entered into this credit facility following its execution of third party guaranty arrangements between Yantai Tianzheng, City Bank and Laishan Public Assets Management LLP (“Laishan”) and between Yantai Tianzheng, City Bank, and Yantai Bohai Pharmaceuticals Group Co., Ltd., (“Bohai”) in April 2013. Under the terms of the Guaranty, Laishan and Bohai each has agreed to act as guarantor of up to $4,853,819 (RMB 30,000,000) of any credit extended by City Bank to Yantai Tianzheng at any time during the period from April 25, 2013 through April 25, 2014. Laishan is an unrelated third party and has no business relationship with the Company. | ||
SHORTTERM_LOAN
SHORT-TERM LOAN | 3 Months Ended | |
Sep. 30, 2013 | ||
Short-term Debt [Abstract] | ' | |
Short-term Debt [Text Block] | ' | |
13 | SHORT-TERM LOAN | |
On August 15, 2013, the Company entered into a short term bank loan agreement with Yantai Rural Commercial Bank Ltd (“RCB”). As of September 30, 2013, the loan amounted to $4,882,892 (RMB 30,000,000) with an interest rate of 9% per annum, which is due on August 14, 2014. The Company entered into this credit facility following its execution of third party guaranty arrangements among the Company, RCB, Shandong Guangyuan Group Ltd. (“Guangyuan”), and the principal shareholder of the Company, Hongwei Qu, on August 15, 2013. Guangyuan is an unrelated third party and has no business relationship with the Company. | ||
CONVERTIBLE_PROMISSORY_NOTES_I
CONVERTIBLE PROMISSORY NOTES IN DEFAULT AND DUE ON DEMAND | 3 Months Ended | |
Sep. 30, 2013 | ||
Convertible Promissory Notes and Warrants [Abstract] | ' | |
Convertible Promissory Notes and Warrants [Text Block] | ' | |
14 | CONVERTIBLE PROMISSORY NOTES IN DEFAULT AND DUE ON DEMAND | |
Convertible Notes | ||
On January 5, 2010, pursuant to a Securities Purchase Agreement (the “Securities Purchase Agreement”) with 128 accredited investors (the “Investors”), BPGI sold 6,000,000 units for aggregate gross proceeds of $12,000,000, each unit consisting of an 8% senior convertible promissory note in the principal amount of $2 and one Common Stock purchase warrant (collectively, the “Investor Warrants”). By agreement with the Investors, each investor received: (i) a single Note representing the aggregate number of Notes purchased by them as part of the units (each, a “Note” and collectively, the “Notes”) and (ii) a single Investor Warrant exercisable at $2.40 per share subject to certain anti-dilution provisions. The majority of this debt is guaranteed by third-parties and our CEO, Mr. Qu, and a portion is secured by our inventories and fixed assets. | ||
The Notes originally bore interest at 8% per annum, payable quarterly in arrears on the last day of each fiscal quarter of the Company. Principal was originally due on January 5, 2012. Each Note, plus all accrued but unpaid interest thereon, is convertible, in whole but not in part, at any time at the option of the holder, into shares of Common Stock at a conversion price of $2.00 per share, subject to adjustments for certain anti-dilution provisions. | ||
The Convertible Notes were initially recorded at a discounted carrying amount of zero as a result of having allocated a portion of the proceeds to (i) the fair value of the warrants, which were recorded as liabilities stated at fair value, and (ii) a beneficial conversion feature that was not bifurcated as a free standing derivative at the time of issuance or at subsequent reporting dates based on periodic classification assessments. Accretion of the note discount amounted to $0 and $0 for the three months ended September 30, 2013 and 2012, respectively. Accretion of the discount was recorded as a component of interest expense in the accompanying statements of income and comprehensive income. Contractual interest expense amounted to $253,935 and $282,150 for the three months ended September 30, 2013 and 2012, respectively. | ||
The Notes contain certain events of default, including non-payment of interest or principal when due, bankruptcy, failure to maintain a listing of the Common Stock or to make required filings on a timely basis. No premium is payable by us if an event of default occurs. However, upon an Event of Default, and provided no more than 50% of the aggregate face amount of the Notes have been converted, the Investors holding Notes have the right to receive a portion, based on their pro-rata participation in the transaction, of 1,000,000 shares of our Common Stock that have been placed in escrow by our principal shareholder. The shares in escrow will be returned to our principal shareholder when 50% of the aggregate face amount of the Notes has been converted or, if later, when the Notes are repaid. | ||
On December 31, 2011, the Company’s Chinese operating subsidiary determined it was unable to convert a sufficient number of RMB’s needed to repay the notes on their original maturity date of January 5, 2012. As a result, the Company entered into a series of amendments to the Notes with Euro Pacific as representative of the Investors to extend to the maturity date and increase the interest rate on the Notes. Pursuant to the most recent amendment, the maturity date of the notes was extended to April 5, 2013 and the interest rate was increased to 12% per annum. The Company is negotiating with Euro Pacific to extend the maturity date to April 5, 2014 and in connection with such extension, the Company and Euro Pacific proposed to make a payment in the amount equal to 10% of the outstanding principal plus any accrued interest (at the current rate of 12% per annum). The outstanding balance of the Notes amounted to $8,464,500 and $8,464,500 as of September 30, 2013 and June 30, 2013, respectively. | ||
On June 27, 2012, Euro Pacific also agreed to release us from certain restrictions on our ability to incur debt, to incur liens or to make capital expenditures as stipulated in the note agreement. The purpose of the Third Amendment is to provide us with enhanced flexibility to seek potential sources of financing. | ||
The Company has been and is currently in temporary default of this obligation at the previously extended maturity dates. Should the Company be unable to repay the notes in time and in the absence of a further extension of the maturity date, this circumstance would constitute an event of default under the terms of loan agreement. The Company cannot predict what the implications of the non-payment of the loan would be other than it would continue to experience difficulty converting sufficiency currency and will maintain an escrow account of restricted funds intended to secure their repayment. The non-payment of the notes could have a material adverse effect on the Company should the note holders pursue further action. As of the date the financial statements were issued, no written agreement has been entered into in this regard. The Company is unable to predict whether an agreement will be reached. | ||
As of September 30, 2013 and June 30, 2013, the Company’s principal shareholder, Mr. Qu, is obligated to deliver 1,000,000 shares of Common Stock to the Investors if a default occurs. | ||
ACQUISITION_PURCHASE_PRICE_PAY
ACQUISITION PURCHASE PRICE PAYABLE | 3 Months Ended | |
Sep. 30, 2013 | ||
Acquisition Purchase Price Payable [Abstract] | ' | |
Business Combination Disclosure [Text Block] | ' | |
15 | ACQUISITION PURCHASE PRICE PAYABLE | |
On August 8, 2011, the Company, through WOFE II, acquired 100% of Yantai Tianzheng’s equity interests for total purchase consideration of US$35,000,000 which was fully paid as of September 30, 2013. The Company paid $5,000,000 during the quarter ended September 30, 2013. | ||
Certain provisions in the acquisition agreement provided the Company with the ability to elect, at its own discretion, to automatically convert any portion or all of the installment payments due into a two-year term loan, with interest accruing at the rate of six percent (6%) per annum. | ||
COMMITMENTS_CONTINGENCIES_AND_
COMMITMENTS, CONTINGENCIES AND OTHER MATTERS | 3 Months Ended | ||||||||||||
Sep. 30, 2013 | |||||||||||||
Commitments and Contingencies Disclosure [Abstract] | ' | ||||||||||||
Commitments and Contingencies Disclosure [Text Block] | ' | ||||||||||||
16 | COMMITMENTS, CONTINGENCIES AND OTHER MATTERS | ||||||||||||
(a) | Contract Research and Development Arrangement | ||||||||||||
On May 2009, the Company entered into a contract with Yantai Tianzheng Medicine Research and Development Co. to perform research and development on two new pharmaceutical products, namely Fern Injection and Forsythia Capsule. The total contract price is approximately $2,426,910 (RMB 15,000,000). Yantai Tianzheng Medicine Research and Development Co. committed to complete all research work required for the clinical trial within 3 years. As of September 30, 2013, the Company has paid $2,131,390 (RMB 13,095,044) and the remaining contract amount will be paid as the research services are performed. All payments of $2,131,390 (RMB 13,095,044) have been charged to expense. The Company extended the term of the contract to May 10, 2017 due to certain changes in government regulations that affected this research project. Research and development costs associated with this contract amounted to $0 and $0 for the three months ended September 30, 2013 and 2012. | |||||||||||||
(b) | Supplier Concentrations | ||||||||||||
We have the following concentrations of business with each supplier constituting greater than 10% of the Company’s purchases of raw materials or other supplies: | |||||||||||||
Three months ended | Three months ended | ||||||||||||
September 30, 2013 | September 30, 2012 | ||||||||||||
(unaudited) | (unaudited) | ||||||||||||
Shandong Yantai Medicine Procurement and Supply Station | 24.4 | % | 26.9 | % | |||||||||
Shandong Shuntianyi Chinese Herbal Medicine Co., Ltd | 23.4 | % | * | % | |||||||||
Shanxi Guangsheng Capsule Co., Ltd | 11.7 | % | * | % | |||||||||
* Constitutes less than 10% of the Company’s purchases. | |||||||||||||
We had a commitment to purchase certain raw materials totaling $3,072,454 as of September 30, 2013 that was fulfilled upon the delivery of the goods in October 2013. | |||||||||||||
(c) | Sales Concentrations | ||||||||||||
Sales Product Concentrations | |||||||||||||
Five of the Company’s products, namely Tongbi Capsules, Tongbi Tablets, Lung Nourishing Syrup, Zhengxintai Capsules and Fangfengtongsheng Tablets represented approximately 29.7%, 15.6%, 14.4%, 14.9% and 22.7%, respectively, of total sales for the three months ended September 30, 2013. | |||||||||||||
Five of our products, namely Tongbi Capsules, Tongbi Tablets, Lung Nourishing Syrup, Zhengxintai Capsules and Fangfengtongsheng Tablets represented approximately 25.6 %, 9.6%, 15.0%, 11.7% and 18.5%, respectively, of total sales for the three months ended September 30, 2012. | |||||||||||||
Sales Customer Concentrations | |||||||||||||
We have the following concentrations of business with each customer constituting greater than 5% of the Company’s sales of products for the three months ended September 30, 2013 and 2012: | |||||||||||||
Three months ended | Three months ended | ||||||||||||
September 30, 2013 | September 30, 2012 | ||||||||||||
(unaudited) | (unaudited) | ||||||||||||
Sichuan Zhuxin Medicine Co., Ltd. | 6.5 | % | * | % | |||||||||
Chongqing Shenzong Medicine Co., Ltd | 6.4 | % | * | % | |||||||||
Yantai Shenzhou Medicine Co., Ltd | 6.3 | % | * | % | |||||||||
* Constitutes less than 5% of the Company’s sales. | |||||||||||||
No customer concentrations in the three months ended September 30, 2012. | |||||||||||||
(d) | Economic and Political Risks | ||||||||||||
The Company’s operations are conducted solely in the PRC. There are significant risks associated with doing business in the PRC, which include, among others, political, economic, legal and foreign currency exchange risks. The Company’s results may be adversely affected by changes in political and social conditions in the PRC, and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation, among other things. | |||||||||||||
(e) | Concentrations of Credit Risk | ||||||||||||
Financial instruments which potentially subject us to concentrations of credit risk consist principally of cash and trade accounts receivable. Substantially all of the Company’s cash is deposited in state-owned banks within the PRC, and no deposits are covered by insurance. We have not experienced any losses in such accounts and believe that the Company’s loss exposure is insignificant due to the fact that banks in the PRC are state owned and are generally high credit quality financial institutions. A significant portion of the Company’s sales are credit sales which are made primarily to customers whose ability to pay are dependent upon the industry economics prevailing in these areas. We continually monitor the credit worthiness of the Company’s customers in an effort to reduce credit risk. | |||||||||||||
At September 30, 2013 and June 30, 2013, the Company’s cash balances by geographic area were as follows: | |||||||||||||
September 30, | June 30, | ||||||||||||
2013 | 2013 | ||||||||||||
(unaudited) | |||||||||||||
Country: | |||||||||||||
United States | $ | 62,832 | 0.44 | % | $ | 28,331 | 0.41 | % | |||||
China | 14,378,942 | 99.56 | % | 6,919,641 | 99.59 | % | |||||||
Total cash and cash equivalents | $ | 14,441,774 | 100 | % | $ | 6,947,972 | 100 | % | |||||
(f) | Certificate of land use right | ||||||||||||
The Company’s corporate headquarters is located at No. 9 Daxin Road, Zhifu District, Yantai, Shandong Province in China. Under the current PRC laws, land is owned by the state, and parcels of land in rural areas which are known as collective land are owned by the rural collective economic organization. “Land use rights” are granted to an individual or entity after payment of a land use right fee is made to the applicable state or rural collective economic organization. Land use rights allow the holder of the right to use the land for a specified long-term period. | |||||||||||||
We have 5 land use rights, for a total of approximately 675,364 square meters of land on which the Company maintains its manufacturing facility. | |||||||||||||
The Company has not obtained a land use right certificate for two parcles of land located in the high-tech development district of Laishan district, including an area of 266,668 square meters purchased on November 5, 2012 and an area of 333,335 square meters purchased on February 22, 2010. Registration of the two land use right certification is still in process. | |||||||||||||
We currently have not obtained the land use right certificate for another parcel of land located in Xingfu Twelve Village of Zhifu District. The land is about 11,222 square meters. We maintain our manufacturing facility on this land. In the process of the planning of Yantai City, the usage of the aforesaid land use right has been changed from “industrial use” to “commercial use” and therefore, the approval process for the land use right certificates on five relevant parcels of land including the land occupied by the Company has been suspended until the completion of the planning process. | |||||||||||||
We cannot provide any assurance that the Company will eventually obtain the land use right certificate for these lands. If the Company is asked by the local government to relocate the Company’s facility, management believes that estimated relocation and other costs will be reimbursed by the local government. The Company does not believe that a requirement to relocate operations would have a material adverse effect on the Company’s financial position results of operations. | |||||||||||||
(g) | Business insurance | ||||||||||||
Business insurance is not readily available in the PRC. To the extent that the Company suffers a loss of a type that would normally be covered by insurance in the United States, such as product liability and general liability insurance, the Company would incur significant expenses in both defending any action and in paying any claims that could result from a settlement or judgment. | |||||||||||||
NET_INCOME_PER_SHARE
NET INCOME PER SHARE | 3 Months Ended | |||||||
Sep. 30, 2013 | ||||||||
Earnings Per Share [Abstract] | ' | |||||||
Earnings Per Share [Text Block] | ' | |||||||
17 | NET INCOME PER SHARE | |||||||
Basic earnings per share are computed on the basis of the weighted average number of shares of Common Stock outstanding during the period. Diluted earnings per share is computed on the basis of the weighted average number of shares of Common Stock plus the effect of potentially dilutive common shares outstanding during the period using the if-converted method for the convertible debt and equity securities and the treasury stock method for stock options and common stock purchase warrants. The following table sets forth the computation of basic and diluted net income per common share: | ||||||||
Three months | Three months | |||||||
ended | ended | |||||||
September 30, | ||||||||
September 30, 2013 | 2012 | |||||||
(unaudited) | (unaudited) | |||||||
Net income available to common stockholders-basic | $ | 8,087,731 | $ | 6,395,512 | ||||
Interest on convertible notes | 253,935 | 282,150 | ||||||
Net income available for common shareholders – diluted | $ | 8,341,666 | $ | 6,677,662 | ||||
Weighted average number of common shares outstanding - basic | 17,861,085 | 17,861,085 | ||||||
Common shares if converted from Convertible Debt | 4,232,250 | 4,702,500 | ||||||
Weighted average number of common shares outstanding - diluted | 22,093,335 | 22,563,585 | ||||||
Earnings (loss) per share: | ||||||||
Basic | $ | 0.45 | $ | 0.36 | ||||
Diluted | $ | 0.38 | $ | 0.3 | ||||
STOCK_OPTIONS
STOCK OPTIONS | 3 Months Ended | ||||||||||||||
Sep. 30, 2013 | |||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | ||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Text Block] | ' | ||||||||||||||
18 | STOCK OPTIONS | ||||||||||||||
On October 13, 2010, we granted stock options to two directors for the purchase of 26,000 shares of our Common Stock at an exercise price of $2.00 per share. The options vested immediately and expire five years from the date of issuance. These options have been valued at $23,844. We use a binomial option pricing model to calculate the grant date fair value of the options, with the following assumptions: no dividend yield, expected volatility of 70%, risk free interest rate of 0.3%, expected term of 2.5 years. | |||||||||||||||
On May 2, 2011, we granted stock options to a director for the purchase of 6,000 shares of our Common Stock at an exercise price of $2.00 per share. The options vested immediately and expire five years from the date of issuance. These options have been valued at $3,184. We use a binomial option pricing model to calculate the grant date fair value of the options, with the following assumptions: no dividend yield, expected volatility of 55%, risk free interest rate of 0.3%, expected term of 5 years. | |||||||||||||||
The following table summarizes the weighted average remaining contractual life and exercise price of our outstanding options as of September 30, 2013: | |||||||||||||||
Options Outstanding | |||||||||||||||
Number | |||||||||||||||
Outstanding | |||||||||||||||
Number | Currently | Weighted | Weighted Average | ||||||||||||
Outstanding | Exercisable | Average | Exercise Price of | ||||||||||||
at | at | Remaining | Options | ||||||||||||
Exercise | September 30, | September 30, | Contractual Life | currently | |||||||||||
Price | 2013 | 2013 | (Years) | exercisable | |||||||||||
$ | 2 | 32,000 | 32,000 | 2.39 | $ | 2 | |||||||||
The Company accounts for share-based payments in accordance with ASC 718. Accordingly, it expenses the fair value of awards granted to the directors. Total compensation expense related to the stock options for the three months ended September 30, 2013 and 2012 was $0 and $0, respectively. | |||||||||||||||
A summary of our stock option activity as of September 30, 2013, and changes during the three months ended September 30, 2013 and year ended June 30, 2013 is presented in the following table: | |||||||||||||||
Exercise Price | |||||||||||||||
Option | Vested | per Common | |||||||||||||
Shares | Shares | Stock Range | |||||||||||||
Balance, June 30, 2012 | - | - | $ | - | |||||||||||
Granted or vested during the year ended June 30, 2013 | 32,000 | 32,000 | 2 | ||||||||||||
Exercised during the year ended June 30, 2013 | - | - | - | ||||||||||||
Expired during the year ended June 30, 2013 | - | - | - | ||||||||||||
Balance, June 30, 2013 | 32,000 | 32,000 | 2 | ||||||||||||
Granted or vested during the three months ended September 30, 2013 | - | - | - | ||||||||||||
Exercised during the three months ended September 30, 2013 | - | - | - | ||||||||||||
Expired during the three months ended September 30, 2013 | - | - | - | ||||||||||||
Balance, September 30, 2013 | 32,000 | 32,000 | $ | 2 | |||||||||||
STOCKHOLDERS_EQUITY
STOCKHOLDERS' EQUITY | 3 Months Ended | |
Sep. 30, 2013 | ||
Stockholders Equity Note [Abstract] | ' | |
Stockholders Equity Note Disclosure [Text Block] | ' | |
19 | STOCKHOLDERS ’ EQUITY | |
Authorized Capital | ||
The Company is authorized to issue 150 million shares of Common Stock, par value $0.001 per share. Holders of its Common Stock are entitled to one vote for each share held of record on each matter submitted to a vote of shareholders. | ||
Statutory Reserves | ||
According to the laws and regulations in the PRC, we are required to provide for certain statutory funds, namely, reserve fund by an appropriation from net profit after taxes but before dividend distribution based on the local statutory financial statements of the PRC company prepared in accordance with the accounting principles and relevant financial regulations. | ||
In the PRC, we are required to allocate at least 10% of our net profit to the reserve fund until the balance of such fund has reached 50% of its registered capital. Appropriation of enterprise expansion fund are determined at the discretion of it directors. We had satisfied statutory reserve requirement by the first quarter of the fiscal year 2010, no further allocation to the statutory reserve is required. | ||
The reserve fund can only be used, upon approval by the relevant authority, to offset accumulated losses or increase capital. | ||
The Company allocated $3,207,325 to the reserve fund during the three months ended September 30, 2013 which recorded in retained earnings. | ||
OPERATING_EXPENSE
OPERATING EXPENSE | 3 Months Ended | |||||||
Sep. 30, 2013 | ||||||||
Operating Expenses [Abstract] | ' | |||||||
Operating Expenses [Text Block] | ' | |||||||
20 | OPERATING EXPENSE | |||||||
For the three months ended September 30, 2013 and 2012, operating expenses consisted of the following: | ||||||||
Three months ended | Three months ended | |||||||
September 30, 2013 | September 30, 2012 | |||||||
(unaudited) | (unaudited) | |||||||
Sales Commissions | $ | 25,036,380 | $ | 15,854,517 | ||||
Advertising expense | 101,280 | 102,305 | ||||||
Audit fees and other professional expenses | 27,628 | 69,593 | ||||||
Depreciation and amortization | 713,560 | 958,890 | ||||||
Staff costs (salary & welfare) | 517,980 | 496,370 | ||||||
Research and development cost | 39,047 | 1,995 | ||||||
Other operating expenses | 1,518,174 | 682,336 | ||||||
Total Operating expenses | $ | 27,954,049 | $ | 18,166,006 | ||||
INCOME_TAXES
INCOME TAXES | 3 Months Ended | |
Sep. 30, 2013 | ||
Income Tax Disclosure [Abstract] | ' | |
Income Tax Disclosure [Text Block] | ' | |
21 | INCOME TAXES | |
The Company is incorporated under the laws of State of Nevada in the United States of America and has legal subsidiaries in the British Virgin Islands (“BVI”) and the PRC. The Company does not have any employees or assets nor or is it engaged in any income producing activities in the Unites States and in the BVI. The Company is currently filing Federal income tax returns in the United States and applicable franchise tax returns in the state of Nevada. The Company has fully reserved for these and all other deferred tax assets generated in the Company’s US operations since it currently more likely than not that those assets will not be realized in future periods. | ||
The Company’s only income producing activities are in the PRC. The statutory corporation income tax rate in the PRC is 25%, which is approximately equal to the effective income tax rate that the Company expects to use when recording income tax expense for financial reporting purposes for the year ending June 30, 2014. Accordingly, the Company is recording a tax provision at interim reporting dates for taxable income earned in the PRC using the effective rate expected to be in effect for the year ending June 30, 2014. | ||
VIE
VIE | 3 Months Ended | ||
Sep. 30, 2013 | |||
Variable Interest Entity [Abstract] | ' | ||
Variable Interest Entities [Text Block] | ' | ||
22 | VIE | ||
To satisfy PRC laws and regulations, the Company conducts certain business in the PRC through the VIEs. | |||
As a result of the VIE Agreements signed between Yantai Shencaojishi Pharmaceuticals Co., Ltd (“WOFE”) and Yantai Bohai Pharmaceuticals Group Co. Ltd (“Bohai”), the Company includes the assets, liabilities, revenues and expenses of Bohai(the “VIE”) in its consolidated financial statements. | |||
Substantially all of the Company’s assets, including those of Bohai which is considered the VIE and Yantai Tianzheng, which is an acquired subsidiary of the Company are accessible to Bohai through WOFE II creditors irrespective of the VIE arrangement. | |||
The VIE Agreements include: | |||
Equity Interest Pledge Agreement. The WOFE and Bohai Shareholders have entered into Equity Interest Pledge Agreements, pursuant to which each Bohai Shareholder has pledged all of his shares of Bohai to the WOFE in order to guarantee cash-flow payments under the applicable Consulting Services Agreement. The Equity Pledge Agreement further entitles the WOFE to collect dividends from Bohai during the term of the pledge. | |||
Consulting Service Agreement. Bohai and the WOFE has entered into a Consulting Services Agreement, which provides that the WOFE will be the exclusive provider of technology services to Bohai and Bohai will pay all of its net income based on the quarterly financial statements to the WOFE for such services. Any such payment from the WOFE to the Company would need to comply with applicable Chinese laws affecting payments from Chinese companies to non-Chinese companies. See “Risk Factors – Risks Associated With Doing Business in China.” | |||
Operating Agreement. Pursuant to the operating agreement among the WOFE, Bohai and each of Bohai Shareholder, the WOFE provides guidance and instructions on Bohai’s daily operations and financial affairs. The Bohai Shareholders must designate the candidates recommended by the WOFE as their representatives on their respective boards of directors. The WOFE has the right to appoint senior executives of Bohai. In addition, the WOFE agrees to guarantee Bohai’s performance under any agreements or arrangements relating to Bohai’s business arrangements with any third party. Bohai, in return, agrees to pledge its accounts receivable and all of its assets to the WOFE. Moreover, Bohai agrees that without the prior consent of the WOFE, Bohai will not engage in any transactions that could materially affect its assets, liabilities, rights or operations, including, without limitation, incurrence or assumption of any indebtedness, sale or purchase of any assets or rights, incurrence of any encumbrance on any of its assets or intellectual property rights in favor of a third party or transfer of any agreements relating to its business operation to any third party. | |||
These contractual arrangements may not be as effective in providing the Company with control over the VIEs as direct ownership. Due to its VIEs structure, the Company has to rely on contract right to effect control and management of the VIEs, which exposes it to the risk of potential breach of contract by the shareholders of Yantai Bohai Pharmaceuticals Group Co. Ltd. The VIE Agreements are subject to significant risks as set forth in the following risk factors. | |||
¨ | The PRC government may determine that the VIE Agreements used to control the Company’s operating subsidiary Bohai are not in compliance with applicable PRC laws, rules and regulations and that they are therefore unenforceable. | ||
¨ | There are risks involved with the operation of Bohai under the VIE Agreements. The Company has been advised by PRC legal counsel that if the PRC government determines the VIE Agreement used to control the operating company to be unenforceable as they circumvent the PRC restrictions relating to foreign investment restrictions, the relevant regulatory authorities would have broad discretion in dealing with such breach and could have a material adverse impact on our business, financial condition and results of operations. | ||
¨ | The Company depend upon the VIE Agreements in conducting its production, manufacturing, and distribution of traditional Chinese herbal medicines in the PRC, which may not be as effective as direct ownership. | ||
¨ | The Company conduct its production, manufacturing and distribution of traditional Chinese herbal medicines in the PRC and generate the revenues from the Bohai business through the VIE Agreements. The VIE Agreements may not be as effective in providing us with control over Bohai as direct ownership. The VIE Agreements are governed by PRC laws and provide for the resolution of disputes through arbitration proceedings pursuant to PRC laws. Accordingly, the VIE Agreements will be interpreted in accordance with PRC laws. If Bohai or its Shareholders fail to perform the obligations under the VIE Agreements, the Company may have to rely on legal remedies under PRC laws, including seeking specific performance or injunctive relief, and claiming damages, and there is a risk that the Company may be unable to obtain these remedies. The legal environment in China is not as developed as in other jurisdictions. As a result, uncertainties in the PRC legal system could limit the Company’s ability to enforce the VIE Agreements. | ||
¨ | The pricing arrangement under the VIE Agreements may be challenged by the PRC tax authorities. | ||
¨ | The Company could face adverse tax consequences if the PRC tax authorities determine that the VIE Agreements were not entered into based on arm’s length negotiations. If the PRC tax authorities determine that the VIE Agreements were not entered into on an arm’s length basis, they may adjust the income and expenses of the Company for PRC tax purposes which could result in higher tax liability | ||
SUBSEQUENT_EVENTS
SUBSEQUENT EVENTS | 3 Months Ended | |
Sep. 30, 2013 | ||
Subsequent Events [Abstract] | ' | |
Subsequent Events [Text Block] | ' | |
23 | SUBSEQUENT EVENTS | |
Pursuant to the most recent amendment, the convertible notes were due on April 5, 2013. The Company is negotiating with Euro Pacific to extend the maturity date to April 5, 2014 and in connection with such extension, the Company proposed to make a payment in the amount equal to 10% of the outstanding princip al plus any accrued interest (at the current rate of 12% per annum). The company made a payment amounting to $400,000 in October 2013. As of the date the financial statements were issued, the Company the outstanding balance of the convertible notes is $8,064,500. | ||
SUMMARY_OF_SIGNIFICANT_ACCOUNT1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended | |||||||
Sep. 30, 2013 | ||||||||
Accounting Policies [Abstract] | ' | |||||||
Consolidation, Policy [Policy Text Block] | ' | |||||||
Principles of Consolidation | ||||||||
The accompanying consolidated financial statements include the accounts of BPGI, its wholly-owned subsidiary Chance High, WOFE, WOFE II, Yantai Tianzheng and Bohai. All significant intercompany accounts and transactions have been eliminated in consolidation. | ||||||||
The Company, in determining whether it is required to consolidate investee businesses, considers both the voting and variable interest models of consolidation as required under applicable GAAP. The Company adopted FAS Accounting Standards Codification (“ASC”) 810-10-15-14 and also ASC 810-10-05-8, which requires that a VIE be consolidated if that company is entitled to receive a majority of the VIE’s residual returns and has direct ability to make decisions on all operating activities of the VIE. The Company controls Bohai through the VIE Agreements described in Note 1, under the following series of agreements entered into on December 7, 2009. | ||||||||
Under the Operating Agreement entered into between WOFE and Bohai, the WOFE has the direct ability to make decisions on all the operating activities and exercise all voting rights of Bohai. Under the Consulting Services Agreement entered into between WOFE and Bohai, Bohai agreed to pay all of its net income to WOFE quarterly as a consulting fee. Accordingly, WOFE has the right to receive the expected residual returns of Bohai. As such, the Company is the primary beneficiary of and maintains controlling managerial and financial interest in, Bohai in accordance with ASC 810-10-15-14. Accordingly, Bohai’s financial position and results of operations are consolidated with those of the Company for all periods presented. | ||||||||
We initially measured the assets, liabilities, and non-controlling interests of Bohai at their carrying amounts as of the date of the Share Exchange. We have subsequently accounted for the assets, liabilities, and non-controlling interest of Bohai as if it was consolidated based on voting interests. The usual accounting rules for which the VIE operates are applied as they would to a consolidated subsidiary as follows: | ||||||||
¨ | Carrying amounts of the VIE are consolidated into the financial statements of the Company as the primary beneficiary, or Primary Beneficiary (“PB”); and | |||||||
¨ | Inter-company transactions and balances, such as revenues and costs, receivables and payables between or among the PB and the VIE(s) are eliminated in their entirety. | |||||||
The carrying amount and classification of Bohai’s assets and liabilities included in the consolidated balance sheets are as follows: | ||||||||
September 30, | June 30, | |||||||
2013 | 2013 | |||||||
Total current assets* | $ | 77,739,308 | $ | 61,519,011 | ||||
Total assets* | 149,639,899 | 165,624,398 | ||||||
Total current liabilities** | 30,531,031 | 44,186,731 | ||||||
Total liabilities** | $ | 34,304,325 | $ | 57,234,844 | ||||
* Includes intercompany accounts in the amounts of $36,190,722 and $26,417,979 in current assets as of September 30, 2013 and June 30, 2013, respectively, which were eliminated in consolidation. | ||||||||
** Includes intercompany accounts in the amounts of $9,342,271 and $4,372,634 in current liabilities as of September 30, 2013 and June 30, 2013, respectively, which were eliminated in consolidation. | ||||||||
Business Combinations Policy [Policy Text Block] | ' | |||||||
Business Combinations | ||||||||
The Company uses the acquisition method of accounting for business combinations which requires that the assets acquired and liabilities assumed be recorded at the date of the acquisition at their respective fair values. Assets acquired and liabilities assumed in a business combination that arise from contingencies are recognized at fair value if fair value can reasonably be estimated. If the acquisition date fair value of an asset acquired or liability assumed that arises from a contingency cannot be determined, the asset or liability is recognized if probable and reasonably estimable; if these criteria are not met, no asset or liability is recognized. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Any excess of the purchase price (consideration transferred) over the estimated fair values of net assets acquired is recorded as goodwill. Transaction costs and costs to restructure the acquired company are charged to expense as incurred. The operating results of acquired business are reflected in the acquirer’s consolidated financial statements and results of operations after the date of the acquisition. | ||||||||
Basis of Accounting, Policy [Policy Text Block] | ' | |||||||
Basis of Presentation | ||||||||
The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial statements and with the instructions to Form 10-Q and Article 8 of Regulation S-X of the United States Securities and Exchange Commission (“SEC”). Accordingly, they do not contain all information and footnotes required by GAAP for annual financial statements. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of September 30, 2013 and the results of operations and cash flows for the periods presented. The results of operations for the three months ended September 30, 2013 are not necessarily indicative of the operating results for the full fiscal year or any future period. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2013. The Company’s accounting policies are described in the Notes to Consolidated Financial Statements in its Annual Report on Form 10-K for the year ended June 30, 2013, filed on September 27, 2013, and updated, as necessary, in this Quarterly Report on Form 10-Q. | ||||||||
Reclassification, Policy [Policy Text Block] | ' | |||||||
Reclassifications | ||||||||
Certain amounts in the September 30, 2012 condensed consolidated financial statement have been reclassified to conform to the September 30, 2013 presentation. | ||||||||
Segment Reporting, Policy [Policy Text Block] | ' | |||||||
Business Segments | ||||||||
The Company’s operates its business through a single reporting segment. | ||||||||
Use of Estimates, Policy [Policy Text Block] | ' | |||||||
Use of Estimates | ||||||||
The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Management makes these estimates using the best information available at the time the estimates are made; however, actual results could differ materially from those results. | ||||||||
Significant estimates and assumptions include allocating purchase consideration issued in business combinations, valuing equity securities and derivative financial instruments issued in financing transactions and in share-based payment arrangements, accounts receivable reserves, inventory reserves, and evaluating the carrying amounts and useful lives of intangible assets. Certain estimates, including accounts receivable and inventory reserves and the carrying amounts of intangible assets (including present value of future cash flow estimates for the Company’s pharmaceutical formulas) could be affected by external conditions including those unique to the Company’s industry and general economic conditions. It is reasonably possible that these external factors could have an effect on management’s estimates that could cause actual results to differ from management’s estimates. | ||||||||
Company management re-evaluates all of accounting estimates at least quarterly based on these conditions and records adjustments, when necessary. | ||||||||
Cash and Cash Equivalents, Policy [Policy Text Block] | ' | |||||||
Cash and Cash Equivalents | ||||||||
We consider all highly liquid investments purchased with original maturities of three months or less to be cash equivalents. We maintain bank accounts in the PRC and a checking account in the United States of America that principally consist of demand deposits. We also have restricted cash accounts in the United States that include funds designated for interest payments due to convertible note holders and for use in investor relations programs pursuant to a securities purchase agreement. | ||||||||
Cash and Cash Equivalents, Restricted Cash and Cash Equivalents, Policy [Policy Text Block] | ' | |||||||
Restricted Cash | ||||||||
Escrow account balances amounted to $12,649,350 and $12,574,051 as of September 30, 2013 and June 30, 2013, respectively. | ||||||||
The Company is required by its Note holders to maintain deposits in escrow accounts to fund the principal and interest payments under the Convertible Notes obligation. As of September 30, 2013 and June 30, 2013, there was $7,766,458 and $7,720,232 of cash restricted for this purpose. | ||||||||
The Company has certain outstanding notes payable in the amount of $9,765,784 and $9,707,638 as of September 30, 2013 and June 30, 2013, respectively, and it is required to maintain a portion of these outstanding draft amounts in its bank as restricted cash. As of September 30, 2013 and June 30, 2013, there was $4,882,892 and $4,853,819 cash restricted for this purpose. | ||||||||
Trade and Other Accounts Receivable, Policy [Policy Text Block] | ' | |||||||
Accounts Receivable | ||||||||
Accounts receivable consists of amounts due from customers. The Company’s credit terms generally range from 90 to 180 days. The Company’s policy with respect accounts receivable reserves is to establish an allowance for doubtful accounts based on management’s assessment of known requirements, aging of receivables, payment history, specific customer’s current credit worthiness, and the economic environment. The Company has a significantly low history of credit losses and no historical pattern of making any price or collection concessions with respect to its accounts receivable balances. Accordingly, an allowance for doubtful accounts is not considered necessary based on management’s assessment. | ||||||||
Inventory, Policy [Policy Text Block] | ' | |||||||
Inventories | ||||||||
Inventories are valued at the lower of cost, determined using the weighted average method, or market. Finished goods inventories include the costs of raw materials, direct labor and overhead associated with the manufacturing process. In assessing the ultimate realization of inventories, management makes judgments as to future demand requirements compared to current or committed inventory levels. Our reserve requirements generally increase/decrease due to management’s projected demand requirements, market conditions and product life cycle changes. As of September 30, 2013 and June 30, 2013, management does not believe that any inventory reserves are necessary. | ||||||||
Property, Plant and Equipment, Policy [Policy Text Block] | ' | |||||||
Property, Plant and Equipment | ||||||||
Property, plant and equipment are carried at cost and are depreciated on a straight-line basis over the estimated useful lives of the assets that range from 5 to 10 years for office equipment, machinery, and vehicles and 30 to 40 years for buildings. The cost of repairs and maintenance is charged to expense as incurred; major replacements and improvements are capitalized. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income in the year of disposition. We examine the possibility of impairment in the value of fixed assets when events or changes in circumstances reflect the fact that their recorded value may not be recoverable. | ||||||||
Goodwill and Intangible Assets, Policy [Policy Text Block] | ' | |||||||
Intangible Asset – Pharmaceutical Formulas | ||||||||
The Company has purchased pharmaceutical formulas that were approved by the State Food and Drug Administration of China (“SFDA”). These formulas can be renewed every 5 years without limitation for a minimum fee and are subject to certain protections under PRC drug regulations for an indefinite period of time. These regulations mitigate competition and the ability of other suppliers to replicate the Company’s products or produce comparable substitutes. These intangible assets are measured initially at cost not subject to amortization and are tested for impairment annually or in interim reporting periods if events or changes in circumstances indicate that the carrying amounts of these intangible assets might not be recoverable. | ||||||||
During the year ended June 30, 2013, we determined that we will no longer manufacture or seek to develop a market for ten of our products due to a change in our business strategy as more fully described in Note 2. As a result of this decision, we recorded an impairment charge in the amount of $1,668,486 during the year ended June 30, 2013. In addition to the above, we reclassified certain other formulas with an aggregate carrying amount of $10,331,414 to other intangible assets. The Company has suspended plans to develop and manufacture products to be derived from these formulas but intends to retain them to mitigate competition and maintain the option of using these formulas should they be useful in the future. Accordingly, the Company has determined these formulas, which are approved by the State Food and Drug Administration, should be held as defensive assets. The Company determined that these formulas have an estimated useful life of 8 years as defensive assets. | ||||||||
Common Stock Purchase Warrants And Other Derivative Financial Instruments [Policy Text Block] | ' | |||||||
Common Stock Purchase Warrants and Other Derivative Financial Instruments | ||||||||
The Company accounts for the issuance of common stock purchase warrants issued as free standing financial instruments in accordance with the applicable provisions ASC 810 “Derivatives and Hedging Activities.” Based on this guidance, the Company classifies as equity any contracts that (i) require physical settlement or net-share settlement or (ii) gives the Company a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement). The Company classifies as assets or liabilities any contracts that require net-cash settlement (including a requirement to net cash settle the contract if an event occurs and if that event is outside the control of the Company) or (ii) gives the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement). The Company assesses classification of its freestanding derivatives at each reporting date to determine whether a change in classification between assets and liabilities is required. The Company determined that its freestanding derivatives, which principally consist of warrants to purchase common stock required classification as liability instruments at September 30, 2013 and June 30, 2013 due to the existence of non-standard anti-dilution privileges that caused the warrants to not be indexed to the Company’s own stock. | ||||||||
Fair Value of Financial Instruments, Policy [Policy Text Block] | ' | |||||||
Fair Value Measurements and Fair Value of Financial Instruments | ||||||||
We adopted the guidance of ASC 820 for fair value measurements, which clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows: | ||||||||
Level 1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date. | ||||||||
Level 2 - Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other then quoted prices that are observable, and inputs derived from or corroborated by observable market data. | ||||||||
Level 3 - Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information. | ||||||||
The carrying amounts reported in the balance sheets for cash, accounts receivable, other receivables, short-term borrowings, accounts payable and accrued expenses, customer advances, and amounts due from related parties approximate their fair market value based on the short-term maturity of these instruments. | ||||||||
ASC 825-10 “ Financial Instruments, ” allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (fair value option). The fair value option may be elected on an instrument-by-instrument basis and is irrevocable, unless a new election date occurs. If the fair value option is elected for an instrument, unrealized gains and losses for that instrument should be reported in earnings at each subsequent reporting date. We use Level 3 inputs to value the Company’s derivative liabilities. | ||||||||
The following table reflects gains and losses for the three months ended September 30, 2013 and year ended June 30, 2013 for all financial assets and liabilities categorized as Level 3. | ||||||||
Liabilities: | ||||||||
Balance of warrant liabilities as of June 30, 2012 | $ | 1,211,236 | ||||||
Change in the fair value of warrant liabilities | -1,211,236 | |||||||
Balance of warrant liabilities as of June 30, 2013 | - | |||||||
Change in the fair value of warrant liabilities | - | |||||||
Balance of warrant liabilities as of September 30, 2013 | $ | - | ||||||
Estimating the fair value of derivative financial instruments require the development of significant and subjective estimates that may, and are likely to, change over the duration of the instrument with related changes in internal and external market factors. The assumptions used to value the Company’s derivatives, which had a direct effect on the fair values. In addition, valuation techniques are sensitive to changes in the trading market price of the our Common Stock and its estimated volatility interest rate changes and other variables or market conditions not within the Company’s control that can significantly affect management’s estimates of fair value and changes in fair value. Because derivative financial instruments are initially and subsequently carried at fair value, the Company’s net income may include significant charges or credits as these estimates and assumptions change. | ||||||||
The warrants expired on January 5, 2013. At the expiration time, the portion of this warrant not exercised prior thereto shall be and become void and of no value and this warrant shall be terminated and shall no longer be outstanding. | ||||||||
Foreign Currency Transactions and Translations Policy [Policy Text Block] | ' | |||||||
Foreign Currency Translation | ||||||||
The Company’s reporting currency is the U.S. dollar. The functional currency of the Company’s operating business based in the PRC is the RMB. For the Company’s subsidiaries and affiliates whose functional currencies are the RMB, results of operations and cash flows are translated at average exchange rates during the period, assets and liabilities are translated at the exchange rate in effect as of the end of the period, and equity is translated at historical exchange rates. Translation adjustments resulting from the process of translating the functional currency financial statements into U.S. dollars are included in comprehensive income. | ||||||||
Exchange gains or losses arising from foreign currency transactions are included in the determination of net income for the respective periods. All of the Company’s revenue transactions are transacted in the functional currency. The Company has not entered into any material transactions that are either originated, or to be settled, in currencies other than the RMB. Accordingly, transaction gains or losses have not had, and are not expected to have a material effect on the Company’s results of operations. | ||||||||
Period end exchange rates used to translate assets and liabilities and average exchange rates used to translate results of operations in each of the reporting periods are as follows: | ||||||||
Three | Three | |||||||
months | months | |||||||
ended | ended | |||||||
September | September | |||||||
30, 2013 | 30, 2012 | |||||||
Period end US$: RMB exchange rate | 6.1439 | 6.3265 | ||||||
Average periodic US$: RMB exchange rate | 6.1654 | 6.3257 | ||||||
The RMB is not freely convertible into any other currencies. In addition, all foreign exchange transactions in the PRC must be conducted through authorized institutions. Accordingly, management cannot provide any assurance that the RMB underlying the consolidated financial statement amounts could have been, or could be, converted into US dollars at the exchange rates used to translate the functional currency into the reporting currency. | ||||||||
Revenue Recognition, Policy [Policy Text Block] | ' | |||||||
Revenue Recognition | ||||||||
Revenue represents the invoiced value of goods sold recognized upon the delivery of goods to distributors. Pursuant to the guidance of ASC Topic 605 and ASC Topic 36, revenue is recognized when all of the following criteria are met: | ||||||||
¨ | Persuasive evidence of an arrangement exists; | |||||||
¨ | Delivery has occurred or services have been rendered; | |||||||
¨ | The seller’s price to the buyer is fixed or determinable; and | |||||||
¨ | Collectability is reasonably assured. | |||||||
Cost of Sales, Policy [Policy Text Block] | ' | |||||||
Cost of Revenue | ||||||||
Cost of revenue consists primarily of raw material costs, labor cost, overhead costs associated with the manufacturing process and related expenses which are directly attributable to our revenues. | ||||||||
Share-based Compensation, Option and Incentive Plans, Director Policy [Policy Text Block] | ' | |||||||
Stock-based Compensation | ||||||||
Stock based compensation is accounted for based on the requirements of the Share-Based Payment topic of ASC 718 which requires recognition in the consolidated financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the employee or director’s requisite service period (presumptively, the vesting period). The FASB Accounting Standards Codification also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award. | ||||||||
Pursuant to ASC Topic 505-50, for share-based payments to consultants and other third-parties, compensation expense is determined at the “measurement date.” The expense is recognized over the vesting period of the award. Until the measurement date is reached, the total amount of compensation expense remains uncertain. We record compensation expense based on the fair value of the award at the reporting date. The awards to consultants and other third-parties are then revalued, or the total compensation is recalculated based on the then current fair value, at each subsequent reporting date. | ||||||||
Research and Development Expense, Policy [Policy Text Block] | ' | |||||||
Research and Development Costs | ||||||||
Research and development costs are charged to expense as incurred and included in operating expenses. We have only one full-time employee who is engaged in research and development, so the Company is mainly dependent on third-parties to perform the limited amount of research and development that the Company undertakes (see Note16). On March 1, 2013, the Company entered into a series of contracts with Binzhou Medical College to establish an institute named Bohai Pharmaceutical Institute in the following 5 years. On May 31, 2013, these two parties entered into two contracts agreeing on performing researches on two pharmaceutical products, namely Lung Nourishing Cream and Tongbi Capsules, in the following 17 months, respectively. These three contracts are amounting to $244,154 (RMB 1,500,000), which have been fully paid by September 30, 2013. Research and development costs amounted to $39,047 and $1,995 for the three months ended September 30, 2013 and 2012, respectively. | ||||||||
Shipping and Handling Cost, Policy [Policy Text Block] | ' | |||||||
Shipping costs | ||||||||
Shipping costs are included in selling, general and administrative expense. Shipping costs amounted to $272,203 and $292,643 for the three months ended September 30, 2013 and 2012, respectively. | ||||||||
Advertising and Promotion [Policy Text Block] | ' | |||||||
Advertising | ||||||||
Advertising and promotion costs are charged to expense as incurred. Advertising expenses included in selling, general and administrative expenses amounted to $101,280 and $102,305 for the three months ended September 30, 2013 and 2012, respectively. | ||||||||
Income Tax, Policy [Policy Text Block] | ' | |||||||
Income Taxes | ||||||||
We are governed by the PRC’s Income Tax Laws and the Internal Revenue Code of the United States. Income taxes are accounted for 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 and income tax base of assets and liabilities and operating loss and tax credit carry-forwards. Deferred tax assets are reduced by a valuation allowance to the extent that management concludes it is more likely than not that the benefit of such tax assets will not be realized in future periods. Deferred tax assets and liabilities are measured 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 periods that include the enactment date. | ||||||||
We account for certain tax positions based upon authoritative guidance that prescribes a recognition threshold and measurement processes for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The guidance also provides direction on recognition, classification, interest and penalties, accounting in interim periods and related disclosure. | ||||||||
Our policy is to classify assessments, if any, for tax related to interest as interest expense and penalties as general and administrative expense. | ||||||||
Earnings Per Share, Policy [Policy Text Block] | ' | |||||||
Earnings per Share | ||||||||
We report earnings per share in accordance with ASC Topic 260, “Earnings Per Share”. Basic earnings (loss) per share are computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share is computed by dividing net income by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period. Common equivalent shares are excluded from the computation of diluted shares in periods for which they have an anti-dilutive effect. Diluted shares underlying stock options and common stock purchase warrants are included in the determination of diluted earnings per share using the treasury stock method. Diluted shares underlying convertible debt obligations are included in the determination of diluted loss per share using the “if converted” method (Note 17). | ||||||||
New Accounting Pronouncements, Policy [Policy Text Block] | ' | |||||||
Recent Accounting Pronouncements | ||||||||
In February 2013, the FASB issued Accounting Standards Update (“ASU”) 2013-02, “Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income”. The ASU does not change the current requirements for reporting net income or other comprehensive income in financial statements. However, this ASU requires an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, an entity is required to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures required under U.S. GAAP that provide additional detail about those amounts. The guidance is effective prospectively for reporting periods beginning after December 15, 2012 for public entities. The adoption of this standard did not have a material impact on the Company’s consolidated financial position or results of operations. | ||||||||
Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the Company’s consolidated financial position or results of operations upon adoption. | ||||||||
SUMMARY_OF_SIGNIFICANT_ACCOUNT2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended | |||||||
Sep. 30, 2013 | ||||||||
Accounting Policies [Abstract] | ' | |||||||
Schedule of Condensed Balance Sheet [Table Text Block] | ' | |||||||
The carrying amount and classification of Bohai’s assets and liabilities included in the consolidated balance sheets are as follows: | ||||||||
September 30, | June 30, | |||||||
2013 | 2013 | |||||||
Total current assets* | $ | 77,739,308 | $ | 61,519,011 | ||||
Total assets* | 149,639,899 | 165,624,398 | ||||||
Total current liabilities** | 30,531,031 | 44,186,731 | ||||||
Total liabilities** | $ | 34,304,325 | $ | 57,234,844 | ||||
* Includes intercompany accounts in the amounts of $36,190,722 and $26,417,979 in current assets as of September 30, 2013 and June 30, 2013, respectively, which were eliminated in consolidation. | ||||||||
** Includes intercompany accounts in the amounts of $9,342,271 and $4,372,634 in current liabilities as of September 30, 2013 and June 30, 2013, respectively, which were eliminated in consolidation. | ||||||||
Schedule of Derivative Liabilities at Fair Value [Table Text Block] | ' | |||||||
The following table reflects gains and losses for the three months ended September 30, 2013 and year ended June 30, 2013 for all financial assets and liabilities categorized as Level 3. | ||||||||
Liabilities: | ||||||||
Balance of warrant liabilities as of June 30, 2012 | $ | 1,211,236 | ||||||
Change in the fair value of warrant liabilities | -1,211,236 | |||||||
Balance of warrant liabilities as of June 30, 2013 | - | |||||||
Change in the fair value of warrant liabilities | - | |||||||
Balance of warrant liabilities as of September 30, 2013 | $ | - | ||||||
Schedule Of Foreign Exchange Translation Exchange Rate [Table Text Block] | ' | |||||||
Period end exchange rates used to translate assets and liabilities and average exchange rates used to translate results of operations in each of the reporting periods are as follows: | ||||||||
Three | Three | |||||||
months | months | |||||||
ended | ended | |||||||
September | September | |||||||
30, 2013 | 30, 2012 | |||||||
Period end US$: RMB exchange rate | 6.1439 | 6.3265 | ||||||
Average periodic US$: RMB exchange rate | 6.1654 | 6.3257 | ||||||
INVENTORIES_Tables
INVENTORIES (Tables) | 3 Months Ended | |||||||
Sep. 30, 2013 | ||||||||
Inventory Disclosure [Abstract] | ' | |||||||
Schedule of Inventory, Current [Table Text Block] | ' | |||||||
Inventories consist of the following: | ||||||||
September 30, | June 30, | |||||||
2013 | 2013 | |||||||
(unaudited) | ||||||||
Raw materials | $ | 2,534,264 | $ | 1,415,071 | ||||
Work in progress | 899,279 | 840,954 | ||||||
Finished goods | 1,279,756 | 525,709 | ||||||
Total inventories | $ | 4,713,299 | $ | 2,781,734 | ||||
PROPERTY_PLANT_AND_EQUIPMENT_N1
PROPERTY, PLANT AND EQUIPMENT, NET (Tables) | 3 Months Ended | |||||||
Sep. 30, 2013 | ||||||||
Property, Plant and Equipment [Abstract] | ' | |||||||
Property, Plant and Equipment [Table Text Block] | ' | |||||||
Property, plant and equipment consist of the following: | ||||||||
September 30, | June 30, | |||||||
2013 | 2013 | |||||||
(unaudited) | ||||||||
Buildings | $ | 9,176,176 | $ | 9,121,541 | ||||
Plant equipment | 8,619,156 | 8,548,658 | ||||||
Office equipment | 268,872 | 250,339 | ||||||
Motor vehicles | 279,543 | 291,784 | ||||||
Total | 18,343,747 | 18,212,322 | ||||||
Less: accumulated depreciation | -3,109,566 | -2,827,442 | ||||||
Construction in progress | 2,312,194 | 2,293,573 | ||||||
Property, plant and equipment, net | $ | 17,546,375 | $ | 17,678,453 | ||||
INDEFINITE_LIVED_INTANGIBLE_AS1
INDEFINITE LIVED INTANGIBLE ASSETS - PHARMACEUTICAL FORMULAS (Tables) | 3 Months Ended | |||||||
Sep. 30, 2013 | ||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | |||||||
Schedule of Indefinite-Lived Intangible Assets [Table Text Block] | ' | |||||||
Pharmaceutical formulas with indefinite lives consist of the following: | ||||||||
September | June 30, | |||||||
30, 2013 | 2013 | |||||||
(unaudited) | ||||||||
Pharmaceutical formulas, without amortization, at cost | $ | 14,193,679 | $ | 14,109,169 | ||||
INTANGIBLE_ASSETS_LAND_USE_RIG1
INTANGIBLE ASSETS - LAND USE RIGHTS, NET (Tables) | 3 Months Ended | |||||||
Sep. 30, 2013 | ||||||||
Long Term Prepayment Land Use Rights Net [Abstract] | ' | |||||||
Schedule of Acquired Finite-Lived Intangible Assets by Major Class [Table Text Block] | ' | |||||||
September 30, | June 30, | |||||||
2013 | 2013 | |||||||
(unaudited) | ||||||||
Land use rights, at cost | $ | 40,333,561 | $ | 40,093,414 | ||||
Less: Accumulated amortization | -2,450,945 | -2,229,950 | ||||||
Intangible assets – land use rights, net | $ | 37,882,616 | $ | 37,863,464 | ||||
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block] | ' | |||||||
Amortization of land use rights for fiscal years ending subsequent to September 30, 2013 is as follows: | ||||||||
Amortization | ||||||||
Remainder of FY 2014 | $ | 620,742 | ||||||
2015 | 827,656 | |||||||
2016 | 827,656 | |||||||
2017 | 827,656 | |||||||
2018 | 827,656 | |||||||
Thereafter | 33,951,250 | |||||||
Total | $ | 37,882,616 | ||||||
OTHER_INTANGIBLE_ASSETS_NET_Ta
OTHER INTANGIBLE ASSETS, NET (Tables) | 3 Months Ended | |||||||||||||
Sep. 30, 2013 | ||||||||||||||
Other Intangible Assets [Abstract] | ' | |||||||||||||
Schedule Of Other Intangible Assets [Table Text Block] | ' | |||||||||||||
Other intangible assets at September 30, 2013 (unaudited) consist of the following: | ||||||||||||||
Customer | YTP Drug | Defensive | ||||||||||||
Relationships | Formulas | Drug formulas | Total | |||||||||||
Cost | $ | 14,887,287 | $ | 10,402,350 | $ | 10,393,296 | $ | 35,682,933 | ||||||
Accumulated Amortization | -4,264,230 | -2,937,890 | -1,299,162 | -8,501,282 | ||||||||||
Net carrying amount | $ | 10,623,057 | $ | 7,464,460 | $ | 9,094,134 | $ | 27,181,651 | ||||||
Other intangible assets at June 30, 2013 consist of the following: | ||||||||||||||
Customer | YTP Drug | Defensive | ||||||||||||
Relationships | Formulas | Drug formulas | Total | |||||||||||
Cost | $ | 14,798,647 | $ | 10,340,415 | $ | 10,331,414 | $ | 35,470,476 | ||||||
Accumulated Amortization | -3,767,858 | -2,594,829 | -968,570 | -7,331,257 | ||||||||||
Net carrying amount | $ | 11,030,789 | $ | 7,745,586 | $ | 9,362,844 | $ | 28,139,219 | ||||||
Schedule of Finite-Lived Intangible Assets Future Amortization Expense, Net [Table Text Block] | ' | |||||||||||||
Amortization expense for fiscal years ending subsequent to September 30, 2013 is as follows: | ||||||||||||||
Amortization | ||||||||||||||
Remainder of FY 2014 | $ | 3,366,558 | ||||||||||||
2015 | 4,448,744 | |||||||||||||
2016 | 4,448,744 | |||||||||||||
2017 | 4,448,744 | |||||||||||||
2018 | 4,448,744 | |||||||||||||
Thereafter | 6,020,117 | |||||||||||||
Total | $ | 27,181,651 | ||||||||||||
ACCRUED_EXPENSES_Tables
ACCRUED EXPENSES (Tables) | 3 Months Ended | |||||||
Sep. 30, 2013 | ||||||||
Payables and Accruals [Abstract] | ' | |||||||
Schedule of Accrued Liabilities [Table Text Block] | ' | |||||||
Accrued expense consists of the following: | ||||||||
September 30, | June 30, | |||||||
2013 | 2013 | |||||||
(unaudited) | ||||||||
Sales representatives commission and expenses | $ | 5,253,303 | $ | 4,731,442 | ||||
Other payable for PPE | 1,798,262 | 2,279,869 | ||||||
Other accrued expense | 1,545,387 | 1,596,636 | ||||||
Other taxes payable | 2,353,150 | 2,185,328 | ||||||
Interest | 1,447,567 | 1,117,527 | ||||||
Compensation and related cost | 259,019 | 274,813 | ||||||
Total | $ | 12,656,688 | $ | 12,185,615 | ||||
COMMITMENTS_CONTINGENCIES_AND_1
COMMITMENTS, CONTINGENCIES AND OTHER MATTERS (Tables) | 3 Months Ended | ||||||||||||
Sep. 30, 2013 | |||||||||||||
Loss Contingencies [Line Items] | ' | ||||||||||||
Schedule Of Cash Balances By Geographic Segment [Table Text Block] | ' | ||||||||||||
At September 30, 2013 and June 30, 2013, the Company’s cash balances by geographic area were as follows: | |||||||||||||
September 30, | June 30, | ||||||||||||
2013 | 2013 | ||||||||||||
(unaudited) | |||||||||||||
Country: | |||||||||||||
United States | $ | 62,832 | 0.44 | % | $ | 28,331 | 0.41 | % | |||||
China | 14,378,942 | 99.56 | % | 6,919,641 | 99.59 | % | |||||||
Total cash and cash equivalents | $ | 14,441,774 | 100 | % | $ | 6,947,972 | 100 | % | |||||
Supplier Concentration Risk [Member] | ' | ||||||||||||
Loss Contingencies [Line Items] | ' | ||||||||||||
Schedules Of Concentration Of Risk, By Risk Factor [Table Text Block] | ' | ||||||||||||
We have the following concentrations of business with each supplier constituting greater than 10% of the Company’s purchases of raw materials or other supplies: | |||||||||||||
Three months ended | Three months ended | ||||||||||||
September 30, 2013 | September 30, 2012 | ||||||||||||
(unaudited) | (unaudited) | ||||||||||||
Shandong Yantai Medicine Procurement and Supply Station | 24.4 | % | 26.9 | % | |||||||||
Shandong Shuntianyi Chinese Herbal Medicine Co., Ltd | 23.4 | % | * | % | |||||||||
Shanxi Guangsheng Capsule Co., Ltd | 11.7 | % | * | % | |||||||||
* Constitutes less than 10% of the Company’s purchases. | |||||||||||||
Customer Concentration Risk [Member] | ' | ||||||||||||
Loss Contingencies [Line Items] | ' | ||||||||||||
Schedules Of Concentration Of Risk, By Risk Factor [Table Text Block] | ' | ||||||||||||
We have the following concentrations of business with each customer constituting greater than 5% of the Company’s sales of products for the three months ended September 30, 2013 and 2012: | |||||||||||||
Three months ended | Three months ended | ||||||||||||
September 30, 2013 | September 30, 2012 | ||||||||||||
(unaudited) | (unaudited) | ||||||||||||
Sichuan Zhuxin Medicine Co., Ltd. | 6.5 | % | * | % | |||||||||
Chongqing Shenzong Medicine Co., Ltd | 6.4 | % | * | % | |||||||||
Yantai Shenzhou Medicine Co., Ltd | 6.3 | % | * | % | |||||||||
* Constitutes less than 5% of the Company’s sales. | |||||||||||||
NET_INCOME_PER_SHARE_Tables
NET INCOME PER SHARE (Tables) | 3 Months Ended | |||||||
Sep. 30, 2013 | ||||||||
Earnings Per Share [Abstract] | ' | |||||||
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] | ' | |||||||
The following table sets forth the computation of basic and diluted net income per common share: | ||||||||
Three months | Three months | |||||||
ended | ended | |||||||
September 30, | ||||||||
September 30, 2013 | 2012 | |||||||
(unaudited) | (unaudited) | |||||||
Net income available to common stockholders-basic | $ | 8,087,731 | $ | 6,395,512 | ||||
Interest on convertible notes | 253,935 | 282,150 | ||||||
Net income available for common shareholders – diluted | $ | 8,341,666 | $ | 6,677,662 | ||||
Weighted average number of common shares outstanding - basic | 17,861,085 | 17,861,085 | ||||||
Common shares if converted from Convertible Debt | 4,232,250 | 4,702,500 | ||||||
Weighted average number of common shares outstanding - diluted | 22,093,335 | 22,563,585 | ||||||
Earnings (loss) per share: | ||||||||
Basic | $ | 0.45 | $ | 0.36 | ||||
Diluted | $ | 0.38 | $ | 0.3 | ||||
STOCK_OPTIONS_Tables
STOCK OPTIONS (Tables) | 3 Months Ended | ||||||||||||||
Sep. 30, 2013 | |||||||||||||||
Disclosure Of Compensation Related Costs Share-based Payments [Line Items] | ' | ||||||||||||||
Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block] | ' | ||||||||||||||
A summary of our stock option activity as of September 30, 2013, and changes during the three months ended September 30, 2013 and year ended June 30, 2013 is presented in the following table: | |||||||||||||||
Exercise Price | |||||||||||||||
Option | Vested | per Common | |||||||||||||
Shares | Shares | Stock Range | |||||||||||||
Balance, June 30, 2012 | - | - | $ | - | |||||||||||
Granted or vested during the year ended June 30, 2013 | 32,000 | 32,000 | 2 | ||||||||||||
Exercised during the year ended June 30, 2013 | - | - | - | ||||||||||||
Expired during the year ended June 30, 2013 | - | - | - | ||||||||||||
Balance, June 30, 2013 | 32,000 | 32,000 | 2 | ||||||||||||
Granted or vested during the three months ended September 30, 2013 | - | - | - | ||||||||||||
Exercised during the three months ended September 30, 2013 | - | - | - | ||||||||||||
Expired during the three months ended September 30, 2013 | - | - | - | ||||||||||||
Balance, September 30, 2013 | 32,000 | 32,000 | $ | 2 | |||||||||||
Stock Option [Member] | ' | ||||||||||||||
Disclosure Of Compensation Related Costs Share-based Payments [Line Items] | ' | ||||||||||||||
Schedule of Share-based Compensation, Activity [Table Text Block] | ' | ||||||||||||||
The following table summarizes the weighted average remaining contractual life and exercise price of our outstanding options as of September 30, 2013: | |||||||||||||||
Options Outstanding | |||||||||||||||
Number | |||||||||||||||
Outstanding | |||||||||||||||
Number | Currently | Weighted | Weighted Average | ||||||||||||
Outstanding | Exercisable | Average | Exercise Price of | ||||||||||||
at | at | Remaining | Options | ||||||||||||
Exercise | September 30, | September 30, | Contractual Life | currently | |||||||||||
Price | 2013 | 2013 | (Years) | exercisable | |||||||||||
$ | 2 | 32,000 | 32,000 | 2.39 | $ | 2 | |||||||||
OPERATING_EXPENSE_Tables
OPERATING EXPENSE (Tables) | 3 Months Ended | |||||||
Sep. 30, 2013 | ||||||||
Operating Expenses [Abstract] | ' | |||||||
Schedule Of Operating Costs and Expenses [Table Text Block] | ' | |||||||
For the three months ended September 30, 2013 and 2012, operating expenses consisted of the following: | ||||||||
Three months ended | Three months ended | |||||||
September 30, 2013 | September 30, 2012 | |||||||
(unaudited) | (unaudited) | |||||||
Sales Commissions | $ | 25,036,380 | $ | 15,854,517 | ||||
Advertising expense | 101,280 | 102,305 | ||||||
Audit fees and other professional expenses | 27,628 | 69,593 | ||||||
Depreciation and amortization | 713,560 | 958,890 | ||||||
Staff costs (salary & welfare) | 517,980 | 496,370 | ||||||
Research and development cost | 39,047 | 1,995 | ||||||
Other operating expenses | 1,518,174 | 682,336 | ||||||
Total Operating expenses | $ | 27,954,049 | $ | 18,166,006 | ||||
ORGANIZATION_AND_PRINCIPAL_ACT1
ORGANIZATION AND PRINCIPAL ACTIVITIES (Details Textual) (USD $) | 3 Months Ended | |
Sep. 30, 2013 | Jun. 30, 2013 | |
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ' | ' |
Variable Interest Entity, Qualitative or Quantitative Information, Ownership Percentage | 100.00% | ' |
Common Stock Par Or Stated Value Per Share | $0.00 | $0.00 |
Chairman and Chief Executive Officer [Member] | ' | ' |
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ' | ' |
Equity Method Investment, Ownership Percentage | 96.70% | ' |
Two Other Shareholders [Member] | ' | ' |
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ' | ' |
Equity Method Investment, Ownership Percentage | 3.30% | ' |
Chance High International Limited [Member] | ' | ' |
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ' | ' |
Equity Method Investment, Ownership Percentage | 100.00% | ' |
Yantai Shencaojishi Pharmaceuticals [Member] | ' | ' |
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ' | ' |
Equity Method Investment, Ownership Percentage | 100.00% | ' |
LIQUIDITY_AND_FINANCIAL_CONDIT1
LIQUIDITY AND FINANCIAL CONDITION (Details Textual) | 0 Months Ended | 3 Months Ended | 1 Months Ended | 0 Months Ended | |||||||||
Nov. 05, 2012 | Jun. 08, 2010 | Jun. 08, 2010 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2012 | Jun. 30, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Oct. 31, 2013 | Nov. 05, 2012 | Nov. 05, 2012 | Aug. 08, 2011 | |
USD ($) | CNY | USD ($) | CNY | USD ($) | USD ($) | Subsequent Event [Member] | Subsequent Event [Member] | Subsequent Event [Member] | Land Use Rights [Member] | Land Use Rights [Member] | Yantai Tianzheng [Member] | ||
USD ($) | CNY | USD ($) | USD ($) | CNY | USD ($) | ||||||||
sqm | sqm | ||||||||||||
Liquidity and Financial Condition [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net income | ' | ' | ' | $8,087,731 | ' | $6,395,512 | ' | ' | ' | ' | ' | ' | ' |
Net cash provided by operating activities | ' | ' | ' | 7,784,583 | ' | 1,581,692 | ' | ' | ' | ' | ' | ' | ' |
Working Capital | ' | ' | ' | 21,983,071 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Convertible notes, net | ' | ' | ' | 8,464,500 | ' | ' | 8,464,500 | ' | ' | 8,064,500 | ' | ' | ' |
Percentage Of Construction Completed | ' | ' | ' | 95.00% | 95.00% | ' | ' | ' | ' | ' | ' | ' | ' |
Construction and Development Costs | ' | 3,150,000 | 19,500,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Equity Method Investment, Ownership Percentage | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 100.00% |
Business Acquisition Cash Paid During Period | ' | ' | ' | 5,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Land use rights payments | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 19,530,000 | 120,000,000 | ' |
Remaining Installment Payments To Acquire Land | ' | ' | ' | 13,020,000 | 80,000,000 | ' | ' | 6,510,000 | 40,000,000 | ' | ' | ' | ' |
Estimated Cost To Be Incurred | ' | ' | ' | 900,000 | 5,600,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Finite-Lived Intangible Asset, Useful Life | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '50 years | '50 years | ' |
Area of Land | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 266,668 | 266,668 | ' |
Amendment Description | 'The Company is currently working with Euro Pacific as representative of the Investors on a fifth amendment to the Notes which would further extend the maturity date of the Notes from April 5, 2013 to April 5, 2014. In connection with such extension, the Company and Euro Pacific proposed to make a payment in the amount equal to 10% of the outstanding principal plus any accrued interest (at the current rate of 12% per annum). As of the date the financial statements were issued, no written agreement has been entered into in this regard. The Company is unable to predict whether an agreement will be reached. | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Business Acquisition Cost Of Acquired Entity Purchase Prices | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 35,000,000 |
Short-term Debt | ' | ' | ' | 4,882,892 | 30,000,000 | ' | 0 | ' | ' | ' | ' | ' | ' |
Repayments of Short-term Debt, Total | ' | ' | ' | ' | ' | ' | ' | ' | ' | $400,000 | ' | ' | ' |
SUMMARY_OF_SIGNIFICANT_ACCOUNT3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) (USD $) | Sep. 30, 2013 | Jun. 30, 2013 | ||
Significant Accounting Policies [Line Items] | ' | ' | ||
Total current assets | $73,495,519 | $61,519,011 | ||
Total assets | 176,706,557 | 165,624,398 | ||
Total current liabilities | 51,512,447 | 44,186,731 | ||
Total liabilities | 59,604,634 | 57,234,844 | ||
Yantai Bohai [Member] | ' | ' | ||
Significant Accounting Policies [Line Items] | ' | ' | ||
Total current assets | 77,739,308 | [1] | 61,519,011 | [1] |
Total assets | 149,639,899 | [1] | 165,624,398 | [1] |
Total current liabilities | 30,531,031 | [2] | 44,186,731 | [2] |
Total liabilities | $34,304,325 | [2] | $57,234,844 | [2] |
[1] | Includes intercompany accounts in the amounts of $36,190,722 and $26,417,979 in current assets as of September 30, 2013 and June 30, 2013, respectively, which were eliminated in consolidation. | |||
[2] | Includes intercompany accounts in the amounts of $9,342,271 and $4,372,634 in current liabilities as of September 30, 2013 and June 30, 2013, respectively, which were eliminated in consolidation. |
SUMMARY_OF_SIGNIFICANT_ACCOUNT4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) (USD $) | 3 Months Ended | 12 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | Jun. 30, 2013 | |
Liabilities: | ' | ' | ' |
Balance of warrant liabilities, Begining | $0 | $1,211,236 | $1,211,236 |
Change in the fair value of warrant liabilities | 0 | 498,002 | -1,211,236 |
Balance of warrant liabilities, Ending | $0 | ' | $0 |
SUMMARY_OF_SIGNIFICANT_ACCOUNT5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) | Sep. 30, 2013 | Sep. 30, 2012 |
Significant Accounting Policies [Line Items] | ' | ' |
Period end US$: RMB exchange rate | 6.1439 | 6.3265 |
Average periodic US$: RMB exchange rate | 6.1654 | 6.3257 |
SUMMARY_OF_SIGNIFICANT_ACCOUNT6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Textual) | 3 Months Ended | 12 Months Ended | 3 Months Ended | 12 Months Ended | 3 Months Ended | |||||||||||||||||
Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2012 | Jun. 30, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | |
USD ($) | CNY | USD ($) | USD ($) | Bank Overdrafts [Member] | Bank Overdrafts [Member] | Other Intangible Assets [Member] | Other Intangible Assets [Member] | Defensive Drug Formulas [Member] | Defensive Drug Formulas [Member] | Defensive Drug Formulas [Member] | Defensive Drug Formulas [Member] | Office Equipment [Member] | Office Equipment [Member] | Machinery and Equipment [Member] | Machinery and Equipment [Member] | Vehicles [Member] | Vehicles [Member] | Building [Member] | Building [Member] | Intersegment Elimination [Member] | Intersegment Elimination [Member] | |
USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | Other Intangible Assets [Member] | Other Intangible Assets [Member] | Minimum [Member] | Maximum [Member] | Minimum [Member] | Maximum [Member] | Minimum [Member] | Maximum [Member] | Minimum [Member] | Maximum [Member] | USD ($) | USD ($) | ||||||
USD ($) | USD ($) | |||||||||||||||||||||
Significant Accounting Policies [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total current assets | $73,495,519 | ' | ' | $61,519,011 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $36,190,722 | $26,417,979 |
Total current liabilities | 51,512,447 | ' | ' | 44,186,731 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 9,342,271 | 4,372,634 |
Escrow Deposit | 12,649,350 | ' | ' | 12,574,051 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Shipping, Handling and Transportation Costs | 272,203 | ' | 292,643 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Goodwill, Impairment Loss | ' | ' | ' | 1,668,486 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Property, Plant and Equipment, Useful Life | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '5 years | '10 years | '5 years | '10 years | '5 years | '10 years | '30 years | '40 years | ' | ' |
Cost | ' | ' | ' | ' | ' | ' | 35,682,933 | 35,470,476 | 10,393,296 | ' | 10,393,296 | 10,331,414 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Finite-Lived Intangible Asset, Useful Life | ' | ' | ' | ' | ' | ' | ' | ' | '8 years | '8 years | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Advertising Expense | 101,280 | ' | 102,305 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Research and Development Expense | 39,047 | ' | 1,995 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Restricted Cash and Cash Equivalents | 7,766,458 | ' | ' | 7,720,232 | 4,882,892 | 4,853,819 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Notes Payable, Total | 9,765,784 | ' | ' | 9,707,638 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Repayment of contracts | $244,154 | 1,500,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
INVENTORIES_Details
INVENTORIES (Details) (USD $) | Sep. 30, 2013 | Jun. 30, 2013 |
Inventory [Line Items] | ' | ' |
Raw materials | $2,534,264 | $1,415,071 |
Work in progress | 899,279 | 840,954 |
Finished goods | 1,279,756 | 525,709 |
Total inventories | $4,713,299 | $2,781,734 |
PROPERTY_PLANT_AND_EQUIPMENT_N2
PROPERTY, PLANT AND EQUIPMENT, NET (Details) (USD $) | Sep. 30, 2013 | Jun. 30, 2013 |
Property, Plant and Equipment [Line Items] | ' | ' |
Property, Plant and Equipment, Gross | $18,343,747 | $18,212,322 |
Less: accumulated depreciation | -3,109,566 | -2,827,442 |
Construction in progress | 2,312,194 | 2,293,573 |
Property, plant and equipment, net | 17,546,375 | 17,678,453 |
Building [Member] | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' |
Property, Plant and Equipment, Gross | 9,176,176 | 9,121,541 |
Plant Equipment [Member] | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' |
Property, Plant and Equipment, Gross | 8,619,156 | 8,548,658 |
Office Equipment [Member] | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' |
Property, Plant and Equipment, Gross | 268,872 | 250,339 |
Vehicles [Member] | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' |
Property, Plant and Equipment, Gross | $279,543 | $291,784 |
PROPERTY_PLANT_AND_EQUIPMENT_N3
PROPERTY, PLANT AND EQUIPMENT, NET (Details Textual) | 0 Months Ended | 3 Months Ended | |||
Jun. 08, 2010 | Jun. 08, 2010 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | |
USD ($) | CNY | USD ($) | USD ($) | CNY | |
Property, Plant and Equipment [Line Items] | ' | ' | ' | ' | ' |
Depreciation | ' | ' | $276,748 | $143,123 | ' |
Construction and Development Costs | 3,150,000 | 19,500,000 | ' | ' | ' |
Estimated Cost To Be Incurred | ' | ' | $900,000 | ' | 5,600,000 |
Construction Completion Percentage | ' | ' | 95.00% | ' | ' |
INDEFINITE_LIVED_INTANGIBLE_AS2
INDEFINITE LIVED INTANGIBLE ASSETS - PHARMACEUTICAL FORMULAS (Details) (USD $) | Sep. 30, 2013 | Jun. 30, 2013 |
Indefinite-lived Intangible Assets [Line Items] | ' | ' |
Pharmaceutical formulas, without amortization, at cost | $14,193,679 | $14,109,169 |
INDEFINITE_LIVED_INTANGIBLE_AS3
INDEFINITE LIVED INTANGIBLE ASSETS - PHARMACEUTICAL FORMULAS (Details Textual) | 3 Months Ended |
Sep. 30, 2013 | |
Indefinite-lived Intangible Assets [Line Items] | ' |
Indefinite Lived Intangible Asset Intellectual Property Renewal | '5 years |
Indefinite Lived Intangible Assets Description | 'This asset includes 12 formulas that are included in the Chinese governments Essential Drug List (EDL) and 25 medicines included in the National Drug Reimbursement List (NDRL). |
INTANGIBLE_ASSETS_LAND_USE_RIG2
INTANGIBLE ASSETS - LAND USE RIGHTS, NET (Details) (USD $) | Sep. 30, 2013 | Jun. 30, 2013 |
Long Term Prepayment [Line Items] | ' | ' |
Land use rights, at cost | $40,333,561 | $40,093,414 |
Less: Accumulated amortization | -2,450,945 | -2,229,950 |
Intangible assets - land use rights, net | $37,882,616 | $37,863,464 |
INTANGIBLE_ASSETS_LAND_USE_RIG3
INTANGIBLE ASSETS - LAND USE RIGHTS, NET (Details 1) (USD $) | Sep. 30, 2013 | Jun. 30, 2013 |
Long Term Prepayment [Line Items] | ' | ' |
Remainder of FY 2014 | $620,742 | ' |
2015 | 827,656 | ' |
2016 | 827,656 | ' |
2017 | 827,656 | ' |
2018 | 827,656 | ' |
Thereafter | 33,951,250 | ' |
Intangible assets - land use rights, net | $37,882,616 | $37,863,464 |
INTANGIBLE_ASSETS_LAND_USE_RIG4
INTANGIBLE ASSETS - LAND USE RIGHTS, NET (Details Textual) | 3 Months Ended | 1 Months Ended | 0 Months Ended | 3 Months Ended | ||||||
Sep. 30, 2013 | Sep. 30, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Nov. 05, 2012 | Nov. 05, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2013 | |
USD ($) | CNY | Subsequent Event [Member] | Subsequent Event [Member] | Land Use Rights [Member] | Land Use Rights [Member] | Land Use Rights [Member] | Land Use Rights [Member] | Land Use Rights [Member] | Land Use Rights [Member] | |
USD ($) | CNY | USD ($) | CNY | USD ($) | USD ($) | Maximum [Member] | Minimum [Member] | |||
sqm | sqm | |||||||||
Long Term Prepayment [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Amortization of Intangible Assets | ' | ' | ' | ' | ' | ' | $206,914 | $162,563 | ' | ' |
Finite-Lived Intangible Asset, Useful Life | ' | ' | ' | ' | '50 years | '50 years | ' | ' | '50 years | '30 years |
Land use rights payments | ' | ' | ' | ' | 19,530,000 | 120,000,000 | ' | ' | ' | ' |
Remaining Installment Payments To Acquire Land | $13,020,000 | 80,000,000 | $6,510,000 | 40,000,000 | ' | ' | ' | ' | ' | ' |
Area of Land | ' | ' | ' | ' | 266,668 | 266,668 | ' | ' | ' | ' |
OTHER_INTANGIBLE_ASSETS_NET_De
OTHER INTANGIBLE ASSETS, NET (Details) (USD $) | Sep. 30, 2013 | Jun. 30, 2013 |
Finite-Lived Intangible Assets [Line Items] | ' | ' |
Accumulated amortization | ($2,450,945) | ($2,229,950) |
Defensive Drug Formulas [Member] | ' | ' |
Finite-Lived Intangible Assets [Line Items] | ' | ' |
Cost | 10,393,296 | ' |
Other Intangible Assets [Member] | ' | ' |
Finite-Lived Intangible Assets [Line Items] | ' | ' |
Cost | 35,682,933 | 35,470,476 |
Accumulated amortization | -8,501,282 | -7,331,257 |
Net carrying amount | 27,181,651 | 28,139,219 |
Other Intangible Assets [Member] | Customer Relationships [Member] | ' | ' |
Finite-Lived Intangible Assets [Line Items] | ' | ' |
Cost | 14,887,287 | 14,798,647 |
Accumulated amortization | -4,264,230 | -3,767,858 |
Net carrying amount | 10,623,057 | 11,030,789 |
Other Intangible Assets [Member] | YTP Drug Formulas [Member] | ' | ' |
Finite-Lived Intangible Assets [Line Items] | ' | ' |
Cost | 10,402,350 | 10,340,415 |
Accumulated amortization | -2,937,890 | -2,594,829 |
Net carrying amount | 7,464,460 | 7,745,586 |
Other Intangible Assets [Member] | Defensive Drug Formulas [Member] | ' | ' |
Finite-Lived Intangible Assets [Line Items] | ' | ' |
Cost | 10,393,296 | 10,331,414 |
Accumulated amortization | -1,299,162 | -968,570 |
Net carrying amount | $9,094,134 | $9,362,844 |
OTHER_INTANGIBLE_ASSETS_NET_De1
OTHER INTANGIBLE ASSETS, NET (Details 1) (USD $) | Sep. 30, 2013 | Jun. 30, 2013 |
Finite-Lived Intangible Assets [Line Items] | ' | ' |
Remainder of FY 2014 | $620,742 | ' |
2015 | 827,656 | ' |
2016 | 827,656 | ' |
2017 | 827,656 | ' |
2018 | 827,656 | ' |
Thereafter | 33,951,250 | ' |
Other Intangible Assets [Member] | ' | ' |
Finite-Lived Intangible Assets [Line Items] | ' | ' |
Remainder of FY 2014 | 3,366,558 | ' |
2015 | 4,448,744 | ' |
2016 | 4,448,744 | ' |
2017 | 4,448,744 | ' |
2018 | 4,448,744 | ' |
Thereafter | 6,020,117 | ' |
Total | $27,181,651 | $28,139,219 |
OTHER_INTANGIBLE_ASSETS_NET_De2
OTHER INTANGIBLE ASSETS, NET (Details Textual) (USD $) | 3 Months Ended | 12 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | Jun. 30, 2013 | |
Other Intangible Assets [Member] | ' | ' | ' |
Finite-Lived Intangible Assets [Line Items] | ' | ' | ' |
Cost | $35,682,933 | ' | 35,470,476 |
Customer Relationships [Member] | ' | ' | ' |
Finite-Lived Intangible Assets [Line Items] | ' | ' | ' |
Amortization of Other Deferred Charges | 472,151 | 460,186 | ' |
Customer Relationships [Member] | Other Intangible Assets [Member] | ' | ' | ' |
Finite-Lived Intangible Assets [Line Items] | ' | ' | ' |
Cost | 14,887,287 | ' | 14,798,647 |
Customer Relationships [Member] | Minimum [Member] | ' | ' | ' |
Finite-Lived Intangible Assets [Line Items] | ' | ' | ' |
Finite-Lived Intangible Asset, Useful Life | '5 years | ' | ' |
Customer Relationships [Member] | Maximum [Member] | ' | ' | ' |
Finite-Lived Intangible Assets [Line Items] | ' | ' | ' |
Finite-Lived Intangible Asset, Useful Life | '8 years | ' | ' |
Drug Formulas [Member] | ' | ' | ' |
Finite-Lived Intangible Assets [Line Items] | ' | ' | ' |
Amortization of Other Deferred Charges | 326,377 | 318,106 | ' |
Drug Formulas [Member] | Other Intangible Assets [Member] | ' | ' | ' |
Finite-Lived Intangible Assets [Line Items] | ' | ' | ' |
Cost | 10,402,350 | ' | 10,340,415 |
Drug Formulas [Member] | Maximum [Member] | ' | ' | ' |
Finite-Lived Intangible Assets [Line Items] | ' | ' | ' |
Finite-Lived Intangible Asset, Useful Life | '8 years | ' | ' |
Defensive Drug Formulas [Member] | ' | ' | ' |
Finite-Lived Intangible Assets [Line Items] | ' | ' | ' |
Amortization of Other Deferred Charges | 323,658 | 0 | ' |
Finite-Lived Intangible Asset, Useful Life | '8 years | ' | '8 years |
Cost | 10,393,296 | ' | ' |
Defensive Drug Formulas [Member] | Other Intangible Assets [Member] | ' | ' | ' |
Finite-Lived Intangible Assets [Line Items] | ' | ' | ' |
Cost | $10,393,296 | ' | 10,331,414 |
GOODWILL_Details_Textual
GOODWILL (Details Textual) (USD $) | Sep. 30, 2013 | Jun. 30, 2013 | Dec. 31, 2012 | Aug. 08, 2011 |
Yantai Tianzheng [Member] | ||||
Goodwill [Line Items] | ' | ' | ' | ' |
Business Acquisition, Percentage of Voting Interests Acquired | ' | ' | ' | 100.00% |
Goodwill | $5,233,369 | $5,202,209 | $5,202,209 | ' |
Business Acquisition Cost Of Acquired Entity Purchase Prices | ' | ' | ' | $35,000,000 |
ACCRUED_EXPENSES_Details
ACCRUED EXPENSES (Details) (USD $) | Sep. 30, 2013 | Jun. 30, 2013 |
Accrued Expenses [Line Items] | ' | ' |
Sales representatives commission and expenses | $5,253,303 | $4,731,442 |
Other payable for PPE | 1,798,262 | 2,279,869 |
Other accrued expense | 1,545,387 | 1,596,636 |
Other taxes payable | 2,353,150 | 2,185,328 |
Interest | 1,447,567 | 1,117,527 |
Compensation and related cost | 259,019 | 274,813 |
Total | $12,656,688 | $12,185,615 |
DUE_TO_RELATED_PARTY_Details_T
DUE TO RELATED PARTY (Details Textual) (USD $) | Sep. 30, 2013 | Jun. 30, 2013 | Dec. 31, 2012 |
Due To Related Party [Line Items] | ' | ' | ' |
Due To Related Parties | $52,314 | $52,830 | $52,830 |
NOTES_PAYABLE_Details_Textual
NOTES PAYABLE (Details Textual) | 0 Months Ended | 3 Months Ended | 3 Months Ended | ||||
7-May-13 | Sep. 30, 2013 | Jun. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | |
USD ($) | USD ($) | Guarantees [Member] | Guarantees [Member] | Weihai City Commercial Bank [Member] | Weihai City Commercial Bank [Member] | ||
USD ($) | CNY | USD ($) | CNY | ||||
Notes Payable [Line Items] | ' | ' | ' | ' | ' | ' | ' |
Notes Payable, Total | ' | $9,765,784 | $9,707,638 | ' | ' | $9,765,784 | 60,000,000 |
Line of Credit Facility, Commitment Fee Amount | ' | 4,800 | ' | ' | ' | ' | ' |
Restricted Cash and Cash Equivalents | ' | $7,766,458 | $7,720,232 | $4,853,819 | 30,000,000 | ' | ' |
Debt Instrument, Term | ' | ' | ' | ' | ' | '6 months | '6 months |
Debt Instrument, Maturity Date, Description | ' | ' | ' | 'credit extended by City Bank to Yantai Tianzheng at any time during the period from April 25, 2013 through April 25, 2014. Laishan is an unrelated third party and has no business relationship with the Company. | 'credit extended by City Bank to Yantai Tianzheng at any time during the period from April 25, 2013 through April 25, 2014. Laishan is an unrelated third party and has no business relationship with the Company. | ' | ' |
Bank Charge Fee, Percentage | 0.05% | ' | ' | ' | ' | ' | ' |
SHORTTERM_LOAN_Details_Textual
SHORT-TERM LOAN (Details Textual) | 3 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | |
USD ($) | CNY | USD ($) | |
Short-term Debt [Line Items] | ' | ' | ' |
Short-term Debt | $4,882,892 | 30,000,000 | $0 |
Debt Instrument, Interest Rate, Effective Percentage | 9.00% | 9.00% | ' |
Debt Instrument, Maturity Date | 14-Aug-14 | 14-Aug-14 | ' |
CONVERTIBLE_PROMISSORY_NOTES_I1
CONVERTIBLE PROMISSORY NOTES IN DEFAULT AND DUE ON DEMAND (Details Textual) (USD $) | 3 Months Ended | 12 Months Ended | 3 Months Ended | 0 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Jun. 30, 2013 | Dec. 31, 2011 | Sep. 30, 2013 | Jan. 05, 2010 | |
Eight Percent Senior Convertible Promissory Note [Member] | Securities Purchase Agreement [Member] | |||||
Convertible Promissory Notes [Line Items] | ' | ' | ' | ' | ' | ' |
Sale of Stock, Number of Shares Issued in Transaction | ' | ' | ' | ' | ' | 6,000,000 |
Proceeds from Issuance or Sale of Equity | ' | ' | ' | ' | ' | $12,000,000 |
Debt Instrument, Interest Rate, Effective Percentage | 9.00% | ' | ' | ' | 8.00% | 8.00% |
Debt Instrument, Maturity Date | 14-Aug-14 | ' | ' | ' | 5-Jan-12 | ' |
Common Stock Convertible Conversion Price | ' | ' | ' | ' | $2 | $2 |
Description On Event Of Default | 'upon an Event of Default, and provided no more than 50% of the aggregate face amount of the Notes have been converted, the Investors holding Notes have the right to receive a portion, based on their pro-rata participation in the transaction, of 1,000,000 shares of our Common Stock that have been placed in escrow by our principal shareholder. The shares in escrow will be returned to our principal shareholder when 50% of the aggregate face amount of the Notes has been converted or, if later, when the Notes are repaid. | ' | ' | ' | ' | ' |
Class of Warrant or Right, Exercise Price of Warrants or Rights | ' | ' | ' | ' | ' | 2.4 |
Contractual Interest Expense on Prepetition Liabilities Not Recognized in Statement of Operations | 253,935 | 282,150 | ' | ' | ' | ' |
Long-term Debt, Percentage Bearing Fixed Interest, Percentage Rate | ' | ' | ' | 12.00% | ' | ' |
Debt Instrument, Debt Default, Description of Violation or Event of Default | 'the Companys principal shareholder, Mr. Qu, is obligated to deliver 1,000,000 shares of Common Stock to the Investors if a default occurs. | ' | 'the Companys principal shareholder, Mr. Qu, is obligated to deliver 1,000,000 shares of Common Stock to the Investors if a default occurs. | ' | ' | ' |
Debt Instrument, Payment Terms | 'The Company is negotiating with Euro Pacific to extend the maturity date to April 5, 2014 and in connection with such extension, the Company and Euro Pacific proposed to make a payment in the amount equal to 10% of the outstanding principal plus any accrued interest (at the current rate of 12% per annum). | ' | ' | ' | ' | ' |
Accretion Of Note Discount | 0 | 0 | ' | ' | ' | ' |
Convertible Notes Payable, Current | $8,464,500 | ' | $8,464,500 | ' | ' | ' |
ACQUISITION_PURCHASE_PRICE_PAY1
ACQUISITION PURCHASE PRICE PAYABLE (Details Textual) (USD $) | 3 Months Ended | |||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Aug. 08, 2011 | |
Two Year Term Loan [Member] | Yantai Tianzheng [Member] | |||
Acquisition Purchase Price Payable [Line Items] | ' | ' | ' | ' |
Equity Method Investment, Ownership Percentage | ' | ' | ' | 100.00% |
Business Acquisitions Cost Of Acquired Entity Purchase Price | ' | ' | ' | $35,000,000 |
Payments To Acquire Businesses, Gross | $5,000,000 | $0 | ' | ' |
Debt Instrument, Interest Rate, Stated Percentage | ' | ' | 6.00% | ' |
COMMITMENTS_CONTINGENCIES_AND_2
COMMITMENTS, CONTINGENCIES AND OTHER MATTERS (Details) | 3 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | ||
Supplier Concentration Risk [Member] | Shandong Yantai Medicine Procurement and Supply Station [Member] | ' | ' | |
Loss Contingencies [Line Items] | ' | ' | |
Concentration Risk, Percentage | 24.40% | 26.90% | |
Supplier Concentration Risk [Member] | Shandong Shuntianyi Chinese Herbal Medicine Co., Ltd [Member] | ' | ' | |
Loss Contingencies [Line Items] | ' | ' | |
Concentration Risk, Percentage | 23.40% | ' | [1] |
Supplier Concentration Risk [Member] | Shanxi Guang Sheng Capsule Co Ltd [Member] | ' | ' | |
Loss Contingencies [Line Items] | ' | ' | |
Concentration Risk, Percentage | 11.70% | ' | [1] |
Customer Concentration Risk [Member] | Sichuan Zhuxin Medicine Co Ltd [Member] | ' | ' | |
Loss Contingencies [Line Items] | ' | ' | |
Concentration Risk, Percentage | 6.50% | ' | [2] |
Customer Concentration Risk [Member] | Chongqing Shenzong Medicine Co Ltd [Member] | ' | ' | |
Loss Contingencies [Line Items] | ' | ' | |
Concentration Risk, Percentage | 6.40% | ' | [2] |
Customer Concentration Risk [Member] | Yantai Shenzhou Medicine Co Ltd [Member] | ' | ' | |
Loss Contingencies [Line Items] | ' | ' | |
Concentration Risk, Percentage | 6.30% | ' | [2] |
[1] | Constitutes less than 10% of the Companybs purchases. | ||
[2] | Constitutes less than 5% of the Companybs sales. |
COMMITMENTS_CONTINGENCIES_AND_3
COMMITMENTS, CONTINGENCIES AND OTHER MATTERS (Details 1) (USD $) | 3 Months Ended | 12 Months Ended | ||
Sep. 30, 2013 | Jun. 30, 2013 | Sep. 30, 2012 | Jun. 30, 2012 | |
Loss Contingencies [Line Items] | ' | ' | ' | ' |
Cash and cash equivalents at end of year | $14,441,774 | $6,947,972 | $19,379,160 | $18,386,288 |
Percentage Of Cash and Cash Equivalents By Geographical Segment | 100.00% | 100.00% | ' | ' |
United States [Member] | ' | ' | ' | ' |
Loss Contingencies [Line Items] | ' | ' | ' | ' |
Cash and cash equivalents at end of year | 62,832 | 28,331 | ' | ' |
Percentage Of Cash and Cash Equivalents By Geographical Segment | 0.44% | 0.41% | ' | ' |
China [Member] | ' | ' | ' | ' |
Loss Contingencies [Line Items] | ' | ' | ' | ' |
Cash and cash equivalents at end of year | $14,378,942 | $6,919,641 | ' | ' |
Percentage Of Cash and Cash Equivalents By Geographical Segment | 99.56% | 99.59% | ' | ' |
COMMITMENTS_CONTINGENCIES_AND_4
COMMITMENTS, CONTINGENCIES AND OTHER MATTERS (Details Textual) | 3 Months Ended | 3 Months Ended | 3 Months Ended | 3 Months Ended | ||||||||||||||||||
Sep. 30, 2013 | Sep. 30, 2012 | Nov. 05, 2012 | Nov. 05, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | |
USD ($) | USD ($) | Laishan District Piece Of Land One [Member] | Laishan District Piece Of Land Two [Member] | Tongbi Capsules [Member] | Tongbi Capsules [Member] | Lung Nourishing Syrup [Member] | Lung Nourishing Syrup [Member] | Zhengxintai Capsules [Member] | Zhengxintai Capsules [Member] | Fang Fengtongsheng Tablets [Member] | Fang Fengtongsheng Tablets [Member] | Tongbi Tablet [Member] | Tongbi Tablet [Member] | Raw Materials [Member] | Manufacturing Facility [Member] | Corporate Headquarters [Member] | Contract Research and Development Arrangement [Member] | Contract Research and Development Arrangement [Member] | Contract Research and Development Arrangement [Member] | Contract Research and Development Arrangement [Member] | Contract Research and Development Arrangement [Member] | |
sqm | sqm | USD ($) | sqm | sqm | USD ($) | CNY | Yantai Tianzheng [Member] | Yantai Tianzheng [Member] | Yantai Tianzheng [Member] | |||||||||||||
USD ($) | USD ($) | CNY | ||||||||||||||||||||
Loss Contingencies [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total Contract Amount Paid | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $2,426,910 | 15,000,000 | $2,131,390 | ' | 13,095,044 |
Research and development cost | 39,047 | 1,995 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0 | 0 | ' |
Each Supplier Constituting Percentage | 10.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Purchase Obligation | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $3,072,454 | ' | ' | ' | ' | ' | ' | ' |
Percentage Of Total Sales | ' | ' | ' | ' | 29.70% | 25.60% | 14.40% | 15.00% | 14.90% | 11.70% | 22.70% | 18.50% | 15.60% | 9.60% | ' | ' | ' | ' | ' | ' | ' | ' |
Area of Land | ' | ' | 266,668 | 333,335 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 675,364 | 11,222 | ' | ' | ' | ' | ' |
Number Of Land Use Rights | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 5 | ' | ' | ' | ' | ' | ' |
Each Customer Constituting Percentage | 5.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
NET_INCOME_PER_SHARE_Details
NET INCOME PER SHARE (Details) (USD $) | 3 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Earnings Per Share Basic And Diluted [Line Items] | ' | ' |
Net income available to common stockholders-basic | $8,087,731 | $6,395,512 |
Interest on convertible notes | 253,935 | 282,150 |
Net income available for common shareholders - diluted | $8,341,666 | $6,677,662 |
Weighted average number of common shares outstanding - basic (in shares) | 17,861,085 | 17,861,085 |
Common shares if converted from Convertible Debt (in shares) | 4,232,250 | 4,702,500 |
Weighted average number of common shares outstanding - diluted (in shares) | 22,093,335 | 22,563,585 |
Earnings (loss) per share: | ' | ' |
Basic (in dollars per share) | $0.45 | $0.36 |
Diluted (in dollars per share) | $0.38 | $0.30 |
STOCK_OPTIONS_Details
STOCK OPTIONS (Details) (USD $) | 3 Months Ended | ||
Sep. 30, 2013 | Jun. 30, 2013 | Jun. 30, 2012 | |
Disclosure Of Compensation Related Costs Share-based Payments [Line Items] | ' | ' | ' |
Options Outstanding, Number, Exercise Price | $2 | $2 | $0 |
Options Outstanding, Number, Outstanding at September30, 2013 | 32,000 | 32,000 | 0 |
Options Outstanding, Number, Outstanding Currently Exercisable at September30, 2013 | 32,000 | ' | ' |
Options Outstanding, Number, Weighted Average Remaining Contractual Life (Years) | '2 years 4 months 20 days | ' | ' |
OptionsOutstanding, Number, Weighted Average Exercise Price of Options currently exercisable | $2 | ' | ' |
STOCK_OPTIONS_Details_1
STOCK OPTIONS (Details 1) (USD $) | 0 Months Ended | 3 Months Ended | 12 Months Ended | |
2-May-11 | Oct. 13, 2010 | Sep. 30, 2013 | Jun. 30, 2013 | |
Disclosure Of Compensation Related Costs Share-based Payments [Line Items] | ' | ' | ' | ' |
Option Shares Balance | ' | ' | 32,000 | 0 |
Option Shares, Granted or vested | 6,000 | 26,000 | 0 | 32,000 |
Option Shares, Exercised | ' | ' | 0 | 0 |
Option Shares, Expired during the year ended | ' | ' | 0 | 0 |
Option Shares, Balance | ' | ' | 32,000 | 32,000 |
Vested Shares, Balance | ' | ' | 32,000 | 0 |
Vested Shares, Granted or vested | ' | ' | 0 | 32,000 |
Vested Shares, Exercised | ' | ' | 0 | 0 |
Vested Shares, Expired | ' | ' | 0 | 0 |
Vested Shares, Balance | ' | ' | 32,000 | 32,000 |
Exercise Price per Common Stock Range, Balance | ' | ' | $2 | $0 |
Exercise Price per Common Stock Range, Granted or vested | $2 | $2 | $0 | $2 |
Exercise Price per Common Stock Range, Exercised | ' | ' | $0 | $0 |
Exercise Price per Common Stock Range, Expired | ' | ' | $0 | $0 |
Exercise Price per Common Stock Range, Balance | ' | ' | $2 | $2 |
STOCK_OPTIONS_Details_Textual
STOCK OPTIONS (Details Textual) (USD $) | 0 Months Ended | 3 Months Ended | 12 Months Ended | ||
2-May-11 | Oct. 13, 2010 | Sep. 30, 2013 | Sep. 30, 2012 | Jun. 30, 2013 | |
Disclosure Of Compensation Related Costs Share-based Payments [Line Items] | ' | ' | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 6,000 | 26,000 | 0 | ' | 32,000 |
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price | $2 | $2 | $0 | ' | $2 |
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | '5 years | '5 years | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested in Period, Fair Value | $3,184 | $23,844 | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Dividend Rate | 0.00% | 0.00% | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate | 55.00% | 70.00% | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate | 0.30% | 0.30% | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Term | '5 years | '2 years 6 months | ' | ' | ' |
Stock or Unit Option Plan Expense | ' | ' | $0 | $0 | ' |
STOCKHOLDERS_EQUITY_Details_Te
STOCKHOLDERS b EQUITY (Details Textual) (USD $) | 3 Months Ended | |
Sep. 30, 2013 | Jun. 30, 2013 | |
Stockholders Equity Disclosure [Line Items] | ' | ' |
Common Stock, Shares Authorized | 150,000,000 | 150,000,000 |
Common Stock, Par Or Stated Value Per Share | $0.00 | $0.00 |
Percentage Of Net Income To Be Allocated To Reserve Fund | 10.00% | ' |
Description On Allocation Of Net Profit To Reserve Fund | 'In the PRC, we are required to allocate at least 10% of our net profit to the reserve fund until the balance of such fund has reached 50% of its registered capital. | ' |
Restructuring Reserve | $3,207,325 | ' |
OPERATING_EXPENSE_Details
OPERATING EXPENSE (Details) (USD $) | 3 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Operating Loss Carryforwards [Line Items] | ' | ' |
Sales Commissions | $25,036,380 | $15,854,517 |
Advertising expense | 101,280 | 102,305 |
Audit fees and other professional expenses | 27,628 | 69,593 |
Depreciation and amortization | 713,560 | 656,105 |
Staff costs (salary & welfare) | 517,980 | 496,370 |
Research and development cost | 39,047 | 1,995 |
Other operating expenses | 1,518,174 | 682,336 |
Total operating expenses | $27,954,049 | $17,863,221 |
INCOME_TAXES_Details_Textual
INCOME TAXES (Details Textual) (People Republic Of China [Member]) | 3 Months Ended |
Sep. 30, 2013 | |
People Republic Of China [Member] | ' |
Income Tax Disclosure [Line Items] | ' |
Effective Income Tax Rate Reconciliation At Federal Statutory Corporation Income Tax Rate | 25.00% |
SUBSEQUENT_EVENTS_Details_Text
SUBSEQUENT EVENTS (Details Textual) (USD $) | 3 Months Ended | 3 Months Ended | ||
Sep. 30, 2013 | Jun. 30, 2013 | Sep. 30, 2013 | Oct. 31, 2013 | |
Subsequent Event [Member] | Subsequent Event [Member] | |||
Subsequent Event [Line Items] | ' | ' | ' | ' |
Debt Instrument, Payment Terms | 'The Company is negotiating with Euro Pacific to extend the maturity date to April 5, 2014 and in connection with such extension, the Company and Euro Pacific proposed to make a payment in the amount equal to 10% of the outstanding principal plus any accrued interest (at the current rate of 12% per annum). | ' | 'The Company is negotiating with Euro Pacific to extend the maturity date to April 5, 2014 and in connection with such extension, the Company and Euro Pacific proposed to make a payment in the amount equal to 10% of the outstanding principal plus any accrued interest (at the current rate of 12% per annum). | ' |
Payment Of Convertible Debt | ' | ' | ' | $400,000 |
Convertible Notes Payable, Current | $8,464,500 | $8,464,500 | ' | $8,064,500 |