Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended |
Mar. 31, 2014 | |
Document and Entity Information: | ' |
Entity Registrant Name | 'Bohai Pharmaceuticals Group, Inc. |
Document Type | 'POS AM |
Document Period End Date | 31-Mar-14 |
Amendment Flag | 'false |
Entity Central Index Key | '0001443242 |
Current Fiscal Year End Date | '--06-30 |
Entity Common Stock, Shares Outstanding | 17,861,085 |
Entity Filer Category | 'Smaller Reporting Company |
Entity Current Reporting Status | 'Yes |
Entity Voluntary Filers | 'No |
Entity Well-known Seasoned Issuer | 'No |
Document Fiscal Year Focus | '2014 |
Document Fiscal Period Focus | 'FY |
Bohai_Pharmaceuticals_Group_In
Bohai Pharmaceuticals Group, Inc. - Balance Sheets (USD $) | Mar. 31, 2014 | Jun. 30, 2013 | Jun. 30, 2012 | |||
Current Assets: | ' | ' | ' | |||
Cash | $11,265,031 | $6,947,972 | $18,386,288 | |||
Restricted cash | 12,609,747 | 12,574,051 | 9,449,905 | |||
Accounts receivable | 46,496,963 | 38,716,023 | 29,670,552 | |||
Inventories | 4,504,744 | 2,781,734 | 3,795,915 | |||
Prepaid expenses and other current assets | 939,555 | 1,007,365 | 879,696 | |||
Total Current Assets | 75,816,040 | 62,027,145 | 62,182,356 | |||
Non-current Assets | ' | ' | ' | |||
Property, plant and equipment, net | 17,327,863 | 17,678,453 | 11,681,272 | |||
Prepayment for property, plant and equipment | 996,286 | 604,739 | 594,508 | |||
Intangible assets- pharmaceutical formulas | 14,149,231 | 14,109,169 | 25,610,557 | |||
Intangible assets- land use right, net | 37,350,012 | 37,863,464 | 18,739,297 | |||
Other intangible assets, net | 24,851,359 | 28,139,219 | 21,497,890 | |||
Goodwill | 5,216,982 | 5,202,209 | 5,092,139 | |||
Total Non-Current Assets | 99,891,733 | 103,597,253 | 83,215,663 | |||
TOTAL ASSETS | 175,707,773 | 165,624,398 | 145,398,019 | |||
Current liabilities: | ' | ' | ' | |||
Notes payable | 9,735,203 | 9,707,638 | ' | |||
Short-term loan | 4,867,601 | 0 | ' | |||
Convertible notes, net | ' | 8,464,500 | 10,036,000 | |||
Accounts payable | 5,137,420 | 5,081,913 | 3,334,101 | |||
Accrued expenses | 11,805,864 | 12,185,615 | 8,478,054 | |||
Land use right payable | 0 | 6,471,759 | ' | |||
Income taxes payable | 2,073,289 | 2,222,476 | 2,338,825 | |||
Acquisition purchase price payable | ' | ' | 5,000,000 | |||
Derivative liabilities- investor and agent warrants | ' | ' | 1,211,236 | |||
Due to related party | 55,741 | 52,830 | 36,002 | |||
Total current liabilities | 33,675,118 | 44,186,731 | 30,434,218 | |||
Non-current liabilities | ' | ' | ' | |||
Acquisition purchase price payable - non-current portion | 0 | 5,000,000 | 20,300,000 | |||
Deferred tax liability | 7,922,428 | 8,048,113 | 8,161,269 | |||
Covertible notes, net non-current | 7,618,050 | 8,464,500 | ' | |||
Total non-current liabilities | 15,540,478 | 21,512,613 | 28,461,269 | |||
TOTAL LIABILITIES | 49,215,596 | 57,234,844 | 58,895,487 | |||
STOCKHOLDERS' EQUITY | ' | ' | ' | |||
Common Stock | 17,861 | [1] | 17,861 | [1] | 17,861 | [1] |
Additional paid-in capital | 24,615,353 | 24,615,353 | 24,615,353 | |||
Accumulated other comprehensive income | 9,077,431 | 8,999,581 | 6,236,076 | |||
Retained earnings | 92,781,532 | 74,756,759 | 55,633,242 | |||
Total stockholders' equity | 126,492,177 | 108,389,554 | 86,502,532 | |||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $175,707,773 | $165,624,398 | $145,398,019 | |||
[1] | $0.001 par value, 150,000,000 shares authorized, 17,861,085 shares issued and outstanding as of March 31, 2014, June 30, 2013 and June 30, 2012, respectively. |
Bohai_Pharmaceuticals_Group_In1
Bohai Pharmaceuticals Group, Inc.- Balance Sheets, Parenthetical (USD $) | Mar. 31, 2014 | Jun. 30, 2013 | Jun. 30, 2012 |
Statement of Financial Position | ' | ' | ' |
Common Stock, Par Value | $0.00 | $0.00 | $0.00 |
Common Stock, Shares Authorized | 150,000,000 | 150,000,000 | 150,000,000 |
Common Stock, Shares Issued | 17,861,085 | 17,861,085 | 17,861,085 |
Common Stock, Shares Outstanding | 17,861,085 | 17,861,085 | 17,861,085 |
Bohai_Pharmaceuticals_Group_In2
Bohai Pharmaceuticals Group, Inc. - Statements of Income and Comprehensive Income (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 | Jun. 30, 2013 | Jun. 30, 2012 | |
Income Statement | ' | ' | ' | ' | ' | ' |
Net Revenues | $39,722,126 | $34,786,624 | $129,284,445 | $111,067,950 | $151,792,917 | $137,372,492 |
Cost of revenues | 10,125,405 | 8,919,666 | 30,879,154 | 27,098,204 | 37,196,569 | 33,532,900 |
Gross profit | 29,596,721 | 25,866,958 | 98,405,291 | 83,969,746 | 114,596,348 | 103,839,592 |
Operating expenses: | ' | ' | ' | ' | ' | ' |
Selling, general and administrative expenses | 23,103,935 | 20,476,092 | 70,348,334 | 60,230,015 | 83,416,640 | 72,889,809 |
Impairment charge- drug formula | 0 | 0 | 0 | 1,688,486 | 1,688,486 | ' |
Depreciation and amortization | 722,006 | 740,503 | 2,154,368 | 2,088,424 | 2,613,040 | 2,578,316 |
TOTAL OPERATING EXPENSES | 23,825,941 | 21,216,595 | 72,502,702 | 64,006,925 | 87,718,166 | 75,468,125 |
Income from operations | 5,770,780 | 4,650,363 | 25,902,589 | 19,962,821 | 26,878,182 | 28,371,467 |
Other income (expenses): | ' | ' | ' | ' | ' | ' |
Interest income | 3,296 | 2,796 | 78,016 | 29,122 | 38,712 | 69,308 |
Interest expenses | -336,645 | -456,930 | -1,555,573 | -1,396,286 | -1,967,527 | -11,194,301 |
Other (expenses) income, net | -29 | -142 | -31,329 | -16,733 | -16,795 | -10,198 |
Change in fair value of derivative liabilities | 0 | 0 | 0 | 1,211,236 | 1,211,236 | -273,369 |
Total other (expenses) income | -333,378 | -454,276 | -1,508,886 | -172,661 | -734,374 | -11,408,560 |
Income before provision for income taxes | 5,437,402 | 4,196,087 | 24,393,703 | 19,790,160 | 26,143,808 | 16,962,907 |
Provision for income taxes | -1,509,391 | -1,036,881 | -6,368,930 | -4,976,705 | -7,020,291 | -7,314,882 |
Net income | 3,928,011 | 3,159,206 | 18,024,773 | 14,813,455 | 19,123,517 | 9,648,025 |
Comprehensive income: | ' | ' | ' | ' | ' | ' |
Net income | 3,928,011 | 3,159,206 | 18,024,773 | 14,813,455 | 19,123,517 | 9,648,025 |
Unrealized foreign currency translation (loss) gain | -1,187,686 | 658,168 | 77,850 | 862,251 | 2,763,505 | 2,676,721 |
Comprehensive income | $2,740,325 | $3,817,374 | $18,102,623 | $15,675,706 | $21,887,022 | $12,324,746 |
Net income per common share, basic | $0.22 | $0.18 | $1.10 | $0.83 | $1.07 | $0.54 |
Net income per common share, diluted | $0.19 | $0.15 | $0.85 | $0.71 | $0.91 | $0.54 |
Weighted average common shares outstanding, basic | 17,861,085 | 17,861,085 | 17,861,085 | 17,861,085 | 17,861,085 | 17,861,085 |
Weighted average common shares outstanding, diluted | 21,831,328 | 22,093,335 | 21,957,639 | 22,093,335 | 22,093,335 | 22,879,085 |
Bohai_Pharmaceuticals_Group_In3
Bohai Pharmaceuticals Group, Inc. - Statement of Stockholders' Equity (USD $) | Common Stock | Additional paid-in Capital | Accumulated Other Comprehensive Income | Retained Earnings | Total |
Balance, Value at Jun. 30, 2011 | $17,861 | $18,345,574 | $3,559,355 | $45,985,217 | $67,908,007 |
Balance, Shares at Jun. 30, 2011 | 17,861,085 | ' | ' | ' | ' |
Capital Contribution from Stockholder | ' | 6,225,779 | ' | ' | 6,225,779 |
Stock based compensation | ' | 44,000 | ' | ' | 44,000 |
Foreign currency translation adjustment | ' | ' | 2,676,721 | ' | 2,676,721 |
Net income | ' | ' | ' | 9,648,025 | 9,648,025 |
Balance, Value at Jun. 30, 2012 | 17,861 | 24,615,353 | 6,236,076 | 55,633,242 | 86,502,532 |
Balance, Shares at Jun. 30, 2012 | 17,861,085 | ' | ' | ' | ' |
Foreign currency translation adjustment | ' | ' | 2,763,505 | ' | 2,763,505 |
Net income | ' | ' | ' | 19,123,517 | 19,123,517 |
Balance, Value at Jun. 30, 2013 | $17,861 | $24,615,353 | $8,999,581 | $74,756,759 | $108,389,554 |
Balance, Shares at Jun. 30, 2013 | 17,861,085 | ' | ' | ' | ' |
Bohai_Pharmaceuticals_Group_In4
Bohai Pharmaceuticals Group, Inc. - Consolidated Statements of Cash Flows (USD $) | 9 Months Ended | 12 Months Ended | ||
Mar. 31, 2014 | Mar. 31, 2013 | Jun. 30, 2013 | Jun. 30, 2012 | |
Cash flows from operating activities: | ' | ' | ' | ' |
Net income | $18,024,773 | $14,813,455 | $19,123,517 | $9,648,025 |
Adjustments to reconcile net income to net cash provided by operating activities: | ' | ' | ' | ' |
Depreciation and amortization | 4,854,759 | 4,053,576 | 5,359,502 | 4,330,595 |
Impairment of intangible assets- drug formula | 0 | 1,688,486 | 1,688,486 | ' |
Loss on disposal of property, plant and equipment | 9,944 | 0 | ' | -1,414 |
Amortization of debt issue costs | ' | ' | ' | 485,039 |
Non-cash interest- convertible notes | ' | ' | ' | 9,317,897 |
Change in fair value of warrants | 0 | -1,211,236 | -1,211,236 | 273,369 |
Stock based compensation | ' | ' | ' | 44,000 |
Deferred income taxes | -149,182 | -331,999 | -285,138 | -170,059 |
Changes in operating assets and liabilities: | ' | ' | ' | ' |
Accounts receivable, increase decrease | -7,704,260 | -11,091,285 | -8,275,584 | -6,309,216 |
Prepaid expenses and other current assets, increase decrease | 37,775 | 426,946 | 393,371 | 416,173 |
Inventories, increase decrease | -1,722,546 | 714,984 | 1,079,465 | -900,652 |
Accounts payable, increase decrease | 41,256 | 941,963 | 1,650,110 | -428,745 |
Accrued expenses, increase decrease | -417,479 | -1,415,975 | 1,205,007 | 3,054,618 |
Income taxes payable, increase decrease | -156,172 | -715,086 | -164,351 | 847,910 |
Net cash provided by operating activities | 12,818,868 | 7,873,829 | 20,563,149 | 20,607,540 |
Cash flows used in investing activities: | ' | ' | ' | ' |
Purchases of property, plant and equipment | -195,192 | -781,176 | -3,959,698 | -914,448 |
Proceeds from disposal of property, plant and equipment | ' | ' | ' | 26,764 |
Land use rights payments | -6,518,267 | -6,349,206 | -12,745,551 | ' |
Prepayment for property, plant and equipment | -596,718 | -2,528,104 | -497,783 | -594,508 |
Cash received in acquisition of business | ' | ' | ' | 1,358,078 |
Cash paid for acquisition of business | -5,000,000 | -12,472,815 | -20,300,000 | -9,700,000 |
Deposit of restricted cash- convertible note escrow deposit | ' | -1,494,964 | -2,697,345 | -10,044,756 |
Release of restricted cash- convertible note escrow deposit | ' | 2,546,786 | 4,601,029 | 1,054,789 |
Net cash used in investing activities | -12,310,177 | -21,079,479 | -35,599,348 | -18,814,081 |
Cash flows from financing activities: | ' | ' | ' | ' |
Proceeds from short-term | 4,888,701 | 0 | ' | ' |
Proceeds from notes payable | 9,777,401 | 0 | 9,559,163 | -3,062,076 |
Borrowing from related party | 0 | 12,349 | 16,059 | 23,879 |
Repayment to related party | 2,466 | 0 | ' | ' |
Repayment of convertible notes | -846,450 | -1,571,500 | -1,571,500 | -414,000 |
Repayment of short-term loan | -9,777,401 | 0 | ' | ' |
Deposit of restricted cash- note payable | ' | ' | -4,779,582 | ' |
Capital Contribution from shareholder | ' | ' | ' | 6,297,328 |
Net cash provided by (used in) financing activities | 4,044,717 | -1,559,151 | 3,224,140 | 2,845,131 |
Effect of foreign currency translation on cash and cash equivalents | -236,349 | 134,113 | 373,743 | 403,272 |
Net increase decrease in cash and cash equivalents | 4,317,059 | -14,630,688 | -11,438,316 | 5,041,862 |
Cash and cash equivalents at beginning of period | 6,947,972 | 18,386,288 | 18,386,288 | 13,344,426 |
Cash and cash equivalents at end of period | 11,265,031 | 3,755,600 | 6,947,972 | 18,386,288 |
Cash paid during the period for: | ' | ' | ' | ' |
Cash paid for interest | 749,350 | 875,286 | 1,363,164 | 868,875 |
Cash paid for income taxes | 6,674,283 | 6,023,796 | 7,469,786 | 6,697,654 |
Non-cash investing and financing activities: | ' | ' | ' | ' |
Land use right liability | ' | ' | 6,471,759 | ' |
Acquisition liability | ' | ' | 5,000,000 | 25,300,000 |
PPE non-cash assuming liability | ' | ' | $2,279,869 | ' |
Organization_and_Principal_Act
Organization and Principal Activities | 9 Months Ended | 12 Months Ended |
Mar. 31, 2014 | Jun. 30, 2013 | |
Notes | ' | ' |
Organization and Principal Activities | ' | ' |
ORGANIZATION AND PRINCIPAL ACTIVITIES | ORGANIZATION AND PRINCIPAL ACTIVITIES | |
The Company’s Operations | ||
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. | ||
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: | ||
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 | ||
(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”). | ||
(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. | ||
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 has100 % 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. | ||
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, 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. | ||
BPGI is headquartered and maintains its principal operations in the city of Yantai, Shandong Province, China, and conducts business operations exclusively in the PRC. | ||
On January 17, 2014, the Company merged WOFE with and into WOFE II. In connection with the merger, and in accordance with relevant PRC laws and regulations, all of WOFE’s rights relating to Bohai transferred to WOFE II. | ||
Recent Developments | ||
During the year ended June 30, 2013, management performed an evaluation of the Company’s product portfolio based on a confluence of factors that have emerged within China’s pharmaceutical industry and consumer markets. These factors include, among others, (i) current economic conditions in China and management’s expectations of future economic trends, (ii) changes in China’s Essential Drug Laws, (iii) the PRC Central Government’s policy designating lists of specific drugs eligible for reimbursement, (iv) consumers’ preference for drug delivery systems in the forms of pills, tablets and ingestible liquids, and (v) competition from other drug manufacturing companies within China. Based on these factors, management determined that the Company will streamline its operations to focus on the continued distribution of Lung Nourishing Syrup, Tongbi Capsules, Tongbi Tablets, Fangfengtongsheng Granule, and Zhengxintai Capsules and certain other products. As a consequence, management determined that it would be in the best interests of the Company and its stockholders to commit to a plan of (i) fully abandoning plans to create new products from a limited number of formulas purchased in 2005, and (ii) indefinitely suspending plans to develop and produce a more diversified portfolio that would be derived from a series of other approved formulas that the Company purchased in 2010 and 2005. | ||
As a result, the Company (i) recorded an impairment charge of $1,688,486 for the aggregate carrying amount of certain product formulas that the Company has abandoned in their entirety, and (ii) reclassified $10,331,414 for the carrying amount of certain other product formulas that the Company will hold as defensive assets. Formulas to be held as defensive assets will be amortized over a period of 8 years (Note 6 and 8). |
Liquidity_and_Financial_Condit
Liquidity and Financial Condition | 9 Months Ended | 12 Months Ended |
Mar. 31, 2014 | Jun. 30, 2013 | |
Notes | ' | ' |
Liquidity and Financial Condition | ' | ' |
LIQUIDITY AND FINANCIAL CONDITION | LIQUIDITY AND FINANCIAL CONDITION | |
The Company’s net income amounted to $3,928,011 and $18,024,773 for the three and nine-month periods ended March 31, 2014. The Company’s cash flows provided by operating activities amounted to $12,818,868 for the nine months ended March 31, 2014. The Company had working capital of $42,140,922 as of March 31, 2014. The Company has historically financed its operations principally from cash flows generated from operating activities and external financing through short-term bank loans, convertible notes, and notes payable. | The Company’s net income amounted to $19,123,517 for the year ended June 30, 2013. The Company’s cash flows from operations amounted to $20,563,149 for the year ended June 30, 2013. The Company had working capital of $17,332,280 as of June 30, 2013. The Company has historically financed its operations principally from cash flows generated from operating activities and external financing raised in the private placement of convertible notes (Note 11). | |
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 and the balance was fully paid as of March31, 2014. | ||
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 (paid in its RMB equivalent, of which US$6,000,000 was paid as of the Execution Date of the acquisition and the remaining $29,000,000 was payable in a series of installments which the Company, at its discretion, could elect to defer (Note 12). The Company paid $30,000,000 to date (of which $20,300,000 was paid during the year ended June 30, 2013) and elected to defer $5,000,000. As of June 30, 2013, the balance of $5,000,000 is due on February 8, 2015. | ||
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. 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. | ||
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 $3,160,000 (RMB 19,500,000). The construction is 100% completed and transferred into buildings as of March 31, 2014. | ||
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 $19,470,000 (RMB 120,000,000). The Company paid in full $19,470,000 (RMB 120,000,000) as of March 31, 2014. (See Note 7). | 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 $3,150,000 (RMB 19,500,000). Management estimates that construction is 85% completed as of June 30, 2013 and that the project will be completed by December 31, 2013. The remaining commitment of the contract amounted to approximately $0.5 million (RMB 3.1 million) as of June 30, 2013. | |
The Company is also required to repay the remaining $7,618,050 convertible notes balance, which pursuant to four amendments to the original notes, as of March 31, 2014, was due on an extended maturity date of April 5, 2013. The Company and Euro Pacific, the representative of the investors of the Notes, signed a fifth amendment to the Notes. The fifth amendment further extends the maturity date of the Notes to April 5, 2016 (See Note 23). The Company made payments toward principal of $846,450 during the nine months ended March 31, 2014. | 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. The Company was granted the right to use the land for a period of 50 years at a total cost of approximately $19 million (RMB 120,000,000). As of June 30, 2013, the Company paid $12.95 million (RMB 80,000,000). The Company is obligated to make one remaining installment payment of $6.47 million (RMB 40,000,000) by December 31, 2013 (see Note 7). | |
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 cannot predict what the implications of the non-payment of the notes would be. The Company will 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. | 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. 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 of 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. | |
Management believes, based on the Company’s historical ability to fund operations using internally generated cash flow, 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 March 31, 2015. 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. | 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 on 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. | |
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. | ||
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 July1, 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. | ||
On August 15, 2013, the Company obtained a short term loan from Yantai Rural Commercial Bank Ltd. (“RCB”) due on August 14, 2014 in the amount of $4,867,601 (RMB 30,000,000), which was guaranteed by a third party, Shandong Guangyuan Group Ltd. (“Guangyuan”) and the principal shareholder of the Company, Hongwei Qu. Guangyuan is an unrelated third party and has no business relationship with the Company (See Note 13). Except for the loan from RCB, 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. | ||
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 as described in Note 1 above), 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. 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 | 9 Months Ended | 12 Months Ended | ||||||||||||||||
Mar. 31, 2014 | Jun. 30, 2013 | |||||||||||||||||
Notes | ' | ' | ||||||||||||||||
Summary of Significant Accounting Policies | ' | ' | ||||||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||||||||||||||
Principles of Consolidation | Principles of Consolidation | |||||||||||||||||
The accompanying condensed 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 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. | 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. | 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: | 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 | · 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. | · 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: | The carrying amount and classification of Bohai’s assets and liabilities included in the consolidated balance sheets are as follows: | |||||||||||||||||
31-Mar-14 | June 30, 2013 | |||||||||||||||||
June 30, 2013 | June 30, 2012 | |||||||||||||||||
Total current assets* | $ | 78,784,249 | $ | 58,857,580 | ||||||||||||||
Total assets* | 149,323,537 | 130,683,952 | Total current assets* | $ | 58,857,580 | $ | 51,470,381 | |||||||||||
Total current liabilities** | 25,992,090 | 24,065,824 | Total assets* | 130,683,952 | 99,899,826 | |||||||||||||
Total liabilities** | $ | 29,807,146 | $ | 27,729,581 | Total current liabilities** | 24,065,824 | 11,689,137 | |||||||||||
Total liabilities** | $ | 27,729,581 | $ | 15,277,230 | ||||||||||||||
* Includes intercompany accounts in the amounts of $26,417,979 and $20,338,295 in current assets as of June 30, 2013 and June 30, 2012, respectively, that were eliminated in consolidation. | ||||||||||||||||||
* Includes intercompany accounts in the amounts of $37,308,891 and $26,417,979 in current assets as of March 31, 2014 and June 30, 2013, respectively, which were eliminated in consolidation. | ||||||||||||||||||
** Includes intercompany accounts in the amounts of $4,372,634 and $2,490,528 in current liabilities as of June 30, 2013 and June 30, 2012, respectively, that were eliminated in consolidation. | ||||||||||||||||||
** Includes intercompany accounts in the amounts of $9,416,538 and $4,372,634 in current liabilities as of March 31, 2014 and June 30, 2013, respectively, which were eliminated in consolidation. | ||||||||||||||||||
Business Combinations | ||||||||||||||||||
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. | ||||||||||||||||||
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. | ||||||||||||||||||
Reclassifications | ||||||||||||||||||
Basis of Presentation | ||||||||||||||||||
Certain amounts in the June 30, 2012 consolidated financial statement have been reclassified to conform to the June 30, 2013 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 March 31, 2014 and the results of operations and cash flows for the periods presented. The results of operations for the nine months ended March 31, 2014 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. | ||||||||||||||||||
Business Segments | ||||||||||||||||||
Reclassifications | ||||||||||||||||||
The Company’s operates its business through a single reporting segment. | ||||||||||||||||||
Certain amounts in the March 31, 2013 condensed consolidated financial statement have been reclassified to conform to the March 31, 2014presentation. | ||||||||||||||||||
Use of Estimates | ||||||||||||||||||
Business Segments | ||||||||||||||||||
The preparation of the 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. | ||||||||||||||||||
The Company’s operates its business through a single reporting segment. | ||||||||||||||||||
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. | ||||||||||||||||||
Use of Estimates | ||||||||||||||||||
Company management re-evaluates all of accounting estimates at least quarterly based on these conditions and records adjustments, when necessary. | ||||||||||||||||||
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. | ||||||||||||||||||
Cash and Cash Equivalents | ||||||||||||||||||
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. | ||||||||||||||||||
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. | ||||||||||||||||||
Company management re-evaluates all of the accounting estimates at least quarterly based on these conditions and records adjustments, when necessary. | ||||||||||||||||||
Restricted Cash | ||||||||||||||||||
Cash and Cash Equivalents | ||||||||||||||||||
Escrow account balances amounted to $12,574,051 and $9,449,905 as of June 30, 2013 and June 30, 2012, respectively. | ||||||||||||||||||
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. | ||||||||||||||||||
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 June 30, 2013 and 2012, there was $7,720,232, and $9,449,905 of cash restricted for this purpose. The Company has certain outstanding notes payable. The Company is required to maintain a portion of these outstanding draft amounts in its bank as restricted cash. As of June 30, 2013 and 2012, there was $4,853,819 and $0 cash restricted for this purpose. | ||||||||||||||||||
Restricted Cash | ||||||||||||||||||
Accounts Receivable | ||||||||||||||||||
Escrow account balances amounted to $12,609,747 and $12,574,051 as of March 31, 2014 and June 30, 2013, respectively. | ||||||||||||||||||
Accounts receivable consists of amounts due from customers. We extend unsecured credit to our customers in the ordinary course of business but mitigate the associated risks by performing credit checks and actively pursuing past due accounts. 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 . | ||||||||||||||||||
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 March 31, 2014 and June 30, 2013, there was $7,742,146 and $7,720,232 of cash restricted for this purpose. | ||||||||||||||||||
Inventories | ||||||||||||||||||
The Company has certain outstanding notes payable in the amount of $9,735,203 and $9,707,638 as of March 31, 2014 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 March 31, 2014 and June 30, 2013, there was $4,867,601 and $4,853,819 cash restricted for this purpose. | ||||||||||||||||||
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 June 30, 2013 and June 30, 2012, management does not believe that any inventory reserves are necessary. | ||||||||||||||||||
Accounts Receivable | ||||||||||||||||||
Property, Plant and Equipment | ||||||||||||||||||
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 to 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. | ||||||||||||||||||
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, 5 to 10 years for machinery, 5 to 10 years for 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. | ||||||||||||||||||
Inventories | ||||||||||||||||||
Intangible Asset – Pharmaceutical Formulas | ||||||||||||||||||
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 March 31, 2014 and June 30, 2013, management does not believe that any inventory reserves are necessary. | ||||||||||||||||||
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 notes 1 and 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. | ||||||||||||||||||
Property, Plant and Equipment | ||||||||||||||||||
Common Stock Purchase Warrants and Other Derivative Financial Instruments | ||||||||||||||||||
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, 5 to 10 years for machinery, and 5 to 10 years for 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. | ||||||||||||||||||
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 June 30, 2013 and 2012 due to the existence of non-standard anti-dilution privileges that caused the warrants to not be indexed to the Company’s own stock. | ||||||||||||||||||
Intangible Asset – Pharmaceutical Formulas | ||||||||||||||||||
Fair Value Measurements and Fair Value of Financial Instruments | ||||||||||||||||||
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. | ||||||||||||||||||
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: | ||||||||||||||||||
During the year ended June 30, 2013, we determined that we would 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 approximately $10,000,000 (RMB 63,855,371) 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. | ||||||||||||||||||
Level 1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date. | ||||||||||||||||||
Common Stock Purchase Warrants and Other Derivative Financial Instruments | ||||||||||||||||||
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. | ||||||||||||||||||
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 common stock purchase warrants have expired as of June 30, 2013. | ||||||||||||||||||
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. | ||||||||||||||||||
Fair Value Measurements and Fair Value of Financial Instruments | 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. | |||||||||||||||||
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: | 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. | |||||||||||||||||
Level 1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date. | The following table reflects gains and losses for the years ended June 30, 2013 and 2012 for all financial assets and liabilities categorized as Level 3. | |||||||||||||||||
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. | Liabilities: | |||||||||||||||||
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. | Balance of warrant liabilities as of June 30, 2011 | $ | 937,867 | |||||||||||||||
Change in the fair value of warrant liabilities | 273,369 | |||||||||||||||||
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. | Balance of warrant liabilities as of June 30, 2012 | 1,211,236 | ||||||||||||||||
Change in the fair value of warrant liabilities | -1,211,236 | |||||||||||||||||
The following table reflects gains and losses for the nine months ended March 31, 2014 and year ended June 30, 2013 for all financial assets and liabilities categorized as Level 3. | Balance of warrant liabilities as of June 30, 2013 | $ | - | |||||||||||||||
Liabilities: | 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 described above are more fully described in Note 10. 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. | ||||||||||||||||||
Balance of warrant liabilities as of June 30, 2012 | $ | 1,211,236 | ||||||||||||||||
Change in the fair value of warrant liabilities | -1,211,236 | Foreign Currency Translation | ||||||||||||||||
Balance of warrant liabilities as of June 30, 2013 | - | |||||||||||||||||
Change in the fair value of warrant liabilities | - | 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. | ||||||||||||||||
Balance of warrant liabilities as of March 31, 2014 | $ | - | ||||||||||||||||
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: | ||||||||||||||||||
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 year ended June 30, 2013 | The year ended June 30, 2012 | ||||||||||||||||
Period end US$: RMB exchange rate | 6.1807 | 6.3143 | ||||||||||||||||
The warrants expired on January 5, 2013. At the expiration time, the portion of this warrant not exercised prior thereto shall be and become void and of no value and this warrant shall be terminated and shall no longer be outstanding. | Average periodic US$: RMB exchange rate | 6.2767 | 6.3519 | |||||||||||||||
Foreign Currency Translation | 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. | |||||||||||||||||
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. | Revenue Recognition | |||||||||||||||||
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. | 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: | |||||||||||||||||
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: | ¨ | 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 | |||||||||||||||||
Nine Months ended March 31, 2014 | Nine months ended March 31, 2013 | ¨ | Collectability is reasonably assured. | |||||||||||||||
Period end US$: RMB exchange rate | 6.1632 | 6.2741 | ||||||||||||||||
Average periodic US$: RMB exchange rate | 6.1366 | 6.3 | ||||||||||||||||
Cost of Revenue | ||||||||||||||||||
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 condensed 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. | 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. | |||||||||||||||||
Revenue Recognition | Stock-based Compensation | |||||||||||||||||
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: | 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. | |||||||||||||||||
¨ | Persuasive evidence of an arrangement exists; | 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. | ||||||||||||||||
¨ | Delivery has occurred or services have been rendered; | Research and Development Costs | ||||||||||||||||
¨ | The seller’s price to the buyer is fixed or determinable; and | 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, whose cost is $7,982 for the year ended June 30, 2013. So the Company is mainly dependent on a third-party, Yantai Tianzheng Medicine Research and Development Co., Ltd., to perform the limited amount of research and development that the Company undertakes. Research and development costs amounted to $7,982 and $7,800 for the years ended June 30, 2013 and 2012, respectively. | ||||||||||||||||
¨ | Collectability is reasonably assured. | Shipping costs | ||||||||||||||||
Shipping costs are included in selling, general and administrative expense. Shipping costs amounted to $1,011,367 and $1,303,710 for the years ended June 30, 2013 and 2012, respectively. | ||||||||||||||||||
Cost of Revenue | ||||||||||||||||||
Advertising | ||||||||||||||||||
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. | ||||||||||||||||||
Advertising and promotion costs are charged to expense as incurred. Advertising expenses included in selling, general and administrative expenses amounted to $95,477 and $3,497,560 for the years ended June 30, 2013 and 2012, respectively. | ||||||||||||||||||
Stock-based Compensation | ||||||||||||||||||
Income Taxes | ||||||||||||||||||
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. | ||||||||||||||||||
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. | ||||||||||||||||||
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. | ||||||||||||||||||
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. | ||||||||||||||||||
Research and Development Costs | ||||||||||||||||||
Our policy is to classify assessments, if any, for tax related to interest as interest expense and penalties as general and administrative expense. | ||||||||||||||||||
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 amount to $243,380 (RMB 1,500,000), which have been fully paid as of March 31, 2014. Research and development costs amounted to $25,699 and $1,995 for the three months ended March 31, 2014 and 2013, respectively. Research and development costs amounted to $88,450 and $5,985 for the nine months ended March 31, 2014 and 2013, respectively. | ||||||||||||||||||
Earnings per Share | ||||||||||||||||||
Shipping costs | ||||||||||||||||||
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. | ||||||||||||||||||
Shipping costs are included in selling, general and administrative expense. Shipping costs amounted to $267,295 and $216,032 for the three months ended March 31, 2014 and 2013, respectively. Shipping costs are included in selling, general and administrative expense. Shipping costs amounted to $746,679 and $770,013 for the nine months ended March 31, 2014 and 2013, respectively. | Diluted shares underlying convertible debt obligations are included in the determination of diluted loss per share using the “if converted” method (Note 14). | |||||||||||||||||
Advertising | Recent Accounting Pronouncements | |||||||||||||||||
Advertising and promotion costs are charged to expense as incurred. Advertising expenses included in selling, general and administrative expenses amounted to $11,692 and $127,463 for the three months ended March 31, 2014 and 2013, respectively. Advertising expenses included in selling, general and administrative expenses amounted to $676,660 and $231,168 for the nine months ended March 31, 2014 and 2013, respectively. | In July 2012, the FASB issued ASU 2012-02, “Intangibles-Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment." This ASU simplifies how entities test indefinite-lived intangible assets for impairment which improve consistency in impairment testing requirements among long-lived asset categories. These amended standards permit an assessment of qualitative factors to determine whether it is more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying value. For assets in which this assessment concludes it is more likely than not that the fair value is more than its carrying value, these amended standards eliminate the requirement to perform quantitative impairment testing as outlined in the previously issued standards. The guidance is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012, early adoption is permitted. The adoption of this standard did not have a material impact on the Company’s consolidated financial position or results of operations. | |||||||||||||||||
Income Taxes | 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. | |||||||||||||||||
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. | 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. | |||||||||||||||||
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 | 9 Months Ended | 12 Months Ended | ||||||||||||||
Mar. 31, 2014 | Jun. 30, 2013 | |||||||||||||||
Notes | ' | ' | ||||||||||||||
Inventories | ' | ' | ||||||||||||||
INVENTORIES | INVENTORIES | |||||||||||||||
Inventories consist of the following: | Inventories consist of the following: | |||||||||||||||
March 31, 2014 | June 30, 2013 | June 30, 2013 | June 30, 2012 | |||||||||||||
(unaudited) | ||||||||||||||||
Raw materials | $ | 2,620,565 | $ | 1,415,071 | Raw materials | $ | 1,415,071 | $ | 2,079,480 | |||||||
Work in progress | 750,510 | 840,954 | Work in progress | 840,954 | 882,005 | |||||||||||
Finished goods | 1,133,669 | 525,709 | Finished goods | 525,709 | 834,430 | |||||||||||
Total inventories | $ | 4,504,744 | $ | 2,781,734 | Total inventories | $ | 2,781,734 | $ | 3,795,915 | |||||||
Property_Plant_and_Equipment_N
Property, Plant and Equipment, Net | 9 Months Ended | 12 Months Ended | |||||||||||||||
Mar. 31, 2014 | Jun. 30, 2013 | ||||||||||||||||
Notes | ' | ' | |||||||||||||||
Property, Plant and Equipment, Net | ' | ' | |||||||||||||||
PROPERTY, PLANT AND EQUIPMENT, NET | PROPERTY, PLANT AND EQUIPMENT, NET | ||||||||||||||||
Property, plant and equipment consist of the following: | Property, plant and equipment consist of the following: | ||||||||||||||||
March 31, 2014 | June 30, 2013 | June 30, 2013 | June 30, 2012 | ||||||||||||||
(unaudited) | |||||||||||||||||
Buildings | $ | 11,520,404 | $ | 9,121,541 | Buildings | $ | 9,121,541 | $ | 8,928,545 | ||||||||
Plant equipment | 8,832,992 | 8,548,658 | Plant equipment | 8,548,658 | 2,490,764 | ||||||||||||
Office equipment | 285,152 | 250,339 | Office equipment | 250,339 | 208,539 | ||||||||||||
Motor vehicles | 278,667 | 291,784 | Motor vehicles | 291,784 | 285,610 | ||||||||||||
Total | 20,917,215 | 18,212,322 | Total | 18,212,322 | 11,913,458 | ||||||||||||
Less: accumulated depreciation | -3,668,064 | -2,827,442 | Less: accumulated depreciation | -2,827,442 | -2,188,340 | ||||||||||||
Construction in progress | 78,712 | 2,293,573 | Construction in progress | 2,293,573 | 1,956,154 | ||||||||||||
Property, plant and equipment, net | $ | 17,327,863 | $ | 17,678,453 | Property, plant and equipment, net | $ | 17,678,453 | $ | 11,681,272 | ||||||||
Depreciation expense for property, plant and equipment for the years ended June 30, 2013 and 2012 amounted to $582,748 and $563,214, respectively. | |||||||||||||||||
Depreciation expense for property, plant and equipment for the three months ended March 31, 2014 and 2013 amounted to $293,168 and $139,789, respectively. Depreciation expense for property, plant and equipment for the nine months ended March 31, 2014 and 2013 amounted to $848,747 and $427,279, 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 $3,150,000 (RMB 19.5 million). Management estimates that construction is 85% completed as of June 30, 2013 and that the project will be completed by December 31, 2013. The remaining commitment of the contract amounted to approximately $0.5 million (RMB 3.1 million) as of June 30, 2013. | |||||||||||||||||
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 $3,160,000 (RMB 19.5 million). The construction is 100% completed and transferred into buildings as of March 31, 2014. |
Indefinite_Lived_Intangible_As
Indefinite Lived Intangible Assets - Pharmaceutical Formulas | 9 Months Ended | 12 Months Ended | |||||||||||||||
Mar. 31, 2014 | Jun. 30, 2013 | ||||||||||||||||
Notes | ' | ' | |||||||||||||||
Indefinite Lived Intangible Assets - Pharmaceutical Formulas | ' | ' | |||||||||||||||
INDEFINITE LIVED INTANGIBLE ASSETS – PHARMACEUTICAL FORMULAS | 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. | 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 nominal 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: | Pharmaceutical formulas with indefinite lives consist of the following: | ||||||||||||||||
March 31, 2014 | June 30, 2013 | 30-Jun-13 | June 30, 2012 | ||||||||||||||
(unaudited) | |||||||||||||||||
Pharmaceutical formulas, without amortization, at cost | $ | 14,149,231 | $ | 14,109,169 | Pharmaceutical formulas, without amortization, at cost | $ | 14,109,169 | $ | 25,610,557 | ||||||||
During the year ended June 30, 2013, the Company recorded an impairment charge of $1,688,486, for a limited number of products formulas purchased in 2005 that will no longer be used to develop products. The Company also reclassified $10,331,414 for the cost of certain other SFDA approved drug formulas that the Company will retain as defensive assets, to other intangible assets (Notes 1 and 2). The Company has made a determination that that is in the Company’s best interests to retain these formulas to mitigate competition and provide the Company with the option of using them in future development efforts should it be advantageous to do so. | |||||||||||||||||
Intangible_Assets_Land_Use_Rig
Intangible Assets - Land Use Rights, Net | 9 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Notes | ' | |||||||
Intangible Assets - Land Use Rights, Net | ' | |||||||
INTANGIBLE ASSETS - LAND USE RIGHTS, NET | ||||||||
March 31, 2014 | June 30, 2013 | |||||||
(unaudited) | ||||||||
Land use rights, at cost | $ | 40,207,257 | $ | 40,093,414 | ||||
Less: Accumulated amortization | -2,857,245 | -2,229,950 | ||||||
Intangible assets – land use rights, net | $ | 37,350,012 | $ | 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 $19.47 million (RMB 120,000,000). | ||||||||
As of March 31, 2014, the Company had made full payments of $19,470,000 (RMB 120,000,000) through four installments: | ||||||||
Installment | Payment date | Amount in USD | ||||||
First | 11/30/12 | 3,245,067 | ||||||
Second | 12/31/12 | 3,245,067 | ||||||
Third | 6/30/13 | 6,490,135 | ||||||
Fourth | 12/31/13 | 6,490,135 | ||||||
Total | 19,470,404 | |||||||
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 $208,271 and $259,027 for the three months ended March 31, 2014 and 2013, respectively. Amortization expense for land use rights amounted to $623,655 and $648,409 for the nine months ended March 31, 2014 and 2013, respectively. | ||||||||
Amortization is calculated over a period of 30 years - 50 years. | ||||||||
Amortization of land use rights for fiscal years ending subsequent to March 31, 2014 is as follows: | ||||||||
Amortization | ||||||||
Remainder of FY 2014 | $ | 208,271 | ||||||
2015 | 833,084 | |||||||
2016 | 833,084 | |||||||
2017 | 833,084 | |||||||
2018 | 833,084 | |||||||
Thereafter | 33,809,405 | |||||||
Total | $ | 37,350,012 | ||||||
Other_Intangible_Assets_Net
Other Intangible Assets, Net | 9 Months Ended | 12 Months Ended | |||||||||||||||||||||||||||||
Mar. 31, 2014 | Jun. 30, 2013 | ||||||||||||||||||||||||||||||
Notes | ' | ' | |||||||||||||||||||||||||||||
Other Intangible Assets, Net | ' | ' | |||||||||||||||||||||||||||||
OTHER INTANGIBLE ASSETS, NET | 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 straight t line basis over a period of 8 years. | Other Intangible assets, net includes 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 straight line basis over a period of 8 years . | ||||||||||||||||||||||||||||||
Approximately, $10.45 million 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. | $10,331,414 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 March 31, 2014 (unaudited) consist of the following: | Other intangible assets at June 30, 2013 consist of the following: | ||||||||||||||||||||||||||||||
Customer | YTP Drug | Defensive | |||||||||||||||||||||||||||||
Customer Relationships | Yantai Tianzheng Drug Formulas | Defensive Drug formulas | Total | Relationships | Formulas | Drug formulas | Total | ||||||||||||||||||||||||
Cost | $ | 14,840,667 | $ | 10,369,775 | $ | 10,360,749 | $ | 35,571,191 | Cost | $ | 14,798,647 | $ | 10,340,415 | $ | 10,331,414 | $ | 35,470,476 | ||||||||||||||
Accumulated Amortization | -5,195,515 | -3,581,677 | -1,942,640 | -10,719,832 | Accumulated Amortization | -3,767,858 | -2,594,829 | -968,570 | -7,331,257 | ||||||||||||||||||||||
Net carrying amount | $ | 9,645,152 | $ | 6,788,098 | $ | 8,418,109 | $ | 24,851,359 | Net carrying amount | $ | 11,030,789 | $ | 7,745,586 | $ | 9,362,844 | $ | 28,139,219 | ||||||||||||||
Other intangible assets at June 30, 2013 consist of the following: | Other intangible assets at June 30, 2012 consist of the following: | ||||||||||||||||||||||||||||||
Customer | YTP Drug | Defensive | |||||||||||||||||||||||||||||
Customer Relationships | Yantai Tianzheng Drug Formulas | Defensive Drug formulas | Total | Relationships | Formulas | Drug formulas | Total | ||||||||||||||||||||||||
Cost | $ | 14,798,647 | $ | 10,340,415 | $ | 10,331,414 | $ | 35,470,476 | Cost | $ | 14,485,533 | $ | 10,121,629 | $ | - | $ | 24,607,162 | ||||||||||||||
Accumulated Amortization | -3,767,858 | -2,594,829 | -968,570 | -7,331,257 | Accumulated Amortization | -1,844,068 | -1,265,204 | - | -3,109,272 | ||||||||||||||||||||||
Net carrying amount | $ | 11,030,789 | $ | 7,745,586 | $ | 9,362,844 | $ | 28,139,219 | Net carrying amount | $ | 12,641,465 | $ | 8,856,425 | $ | - | $ | 21,497,890 | ||||||||||||||
Amortization expense for customer relationships amounted to $475,248 and $463,396 for the three months ended March 31, 2014 and 2013, respectively. Amortization expense for customer relationships amounted to $1,423,101 and $1,386,190 for the nine months ended March 31, 2014 and 2013, respectively. | Amortization expense for customer relationships amounted to $1,855,115 and $1,833,152 for the years ended June 30, 2013 and 2012, respectively. | ||||||||||||||||||||||||||||||
Amortization expense for Yantai Tianzheng drug formulas amounted to $328,518 and $320,325 for the three months ended March 31, 2014 and 2013, respectively. Amortization expense for YTP drug formulas amounted to $983,727 and $958,212 for the nine months ended March 31, 2014 and 2013, respectively. | Amortization expense for YTP drug formulas amounted to $1,282,359 and $1,257,714 for the years ended June 30, 2013 and 2012, respectively. | ||||||||||||||||||||||||||||||
Amortization expense for defensive drug formulas amounted to $325,780 and $317,200 for the three months ended March 31, 2014 and 2013, respectively. Amortization expense for defensive drug formulas amounted to $975,530 and $633,486 for the nine months ended March 31, 2014 and 2013, respectively. Amortization expenses are recorded in general and administrative expenses. | Amortization expense for defensive drug formulas amounted to $953,756 and $0 for the years ended June 30, 2013 and 2012, respectively. Amortization expenses are recorded in general and administrative expenses. | ||||||||||||||||||||||||||||||
Amortization expense for fiscal years ending subsequent to March 31, 2014 is as follows: | Amortization expense for fiscal years ending subsequent to June 30, 2013 is as follows: | ||||||||||||||||||||||||||||||
Amortization | |||||||||||||||||||||||||||||||
Remainder of FY 2014 | $ | 1,129,546 | |||||||||||||||||||||||||||||
2015 | 4,518,184 | Amortization | |||||||||||||||||||||||||||||
2016 | 4,518,184 | 2014 | $ | 4,409,149 | |||||||||||||||||||||||||||
2017 | 4,518,184 | 2015 | 4,409,149 | ||||||||||||||||||||||||||||
2018 | 4,518,184 | 2016 | 4,409,149 | ||||||||||||||||||||||||||||
Thereafter | 5,649,077 | 2017 | 4,409,149 | ||||||||||||||||||||||||||||
Total | $ | 24,851,359 | 2018 | 4,409,149 | |||||||||||||||||||||||||||
Thereafter | 6,093,474 | ||||||||||||||||||||||||||||||
Total | $ | 28,139,219 | |||||||||||||||||||||||||||||
Goodwill
Goodwill | 9 Months Ended |
Mar. 31, 2014 | |
Notes | ' |
Goodwill | ' |
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 acquisition 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 $5,216,982 (RMB 32,153,295) and $5,202,209 (RMB 32,153,295) as of March 31, 2014 and June 30, 2013, respectively. Goodwill is 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. The Company has decided there is no impairment for the nine months ended March 31, 2014 and 2013. |
Accrued_Expenses
Accrued Expenses | 9 Months Ended | 12 Months Ended | |||||||||||||||
Mar. 31, 2014 | Jun. 30, 2013 | ||||||||||||||||
Notes | ' | ' | |||||||||||||||
Accrued Expenses | ' | ' | |||||||||||||||
ACCRUED EXPENSES | ACCRUED EXPENSES | ||||||||||||||||
Accrued expense consists of the following: | |||||||||||||||||
Accrued expense consists of the following: | |||||||||||||||||
March 31, 2014 | June 30, 2013 | June 30, 2013 | June 30, 2012 | ||||||||||||||
(unaudited) | |||||||||||||||||
Sales representatives commission and expenses | $ | 4,028,220 | $ | 4,731,442 | Sales representatives commission and expenses | $ | 4,731,442 | $ | 3,778,996 | ||||||||
Other payable for PPE | 1,692,216 | 2,279,869 | Other payable for PPE | 2,279,869 | - | ||||||||||||
Other accrued expense | 1,596,820 | 1,596,636 | Other accrued expense | 1,596,636 | 1,557,472 | ||||||||||||
Other taxes payable | 2,359,678 | 2,185,328 | Other taxes payable | 2,185,328 | 1,879,334 | ||||||||||||
Accrued Interest expenses | 1,915,101 | 1,117,527 | Interest | 1,117,527 | 516,269 | ||||||||||||
Compensation and related cost | 213,829 | 274,813 | Compensation and related cost | 274,813 | 357,975 | ||||||||||||
Total | $ | 11,805,864 | $ | 12,185,615 | Advertising expense | - | 388,008 | ||||||||||
Total | $ | 12,185,615 | $ | 8,478,054 | |||||||||||||
Due_To_Related_Party
Due To Related Party | 9 Months Ended |
Mar. 31, 2014 | |
Notes | ' |
Due To Related Party | ' |
DUE TO RELATED PARTY | |
Due to related party amounted to $55,741 and $52,830 as of March 31, 2014 and June 30, 2013, respectively. It represents accrued out of pocket expenses of Mr. Hongwei Qu, Chief executive officer of the Company. |
Notes_Payable
Notes Payable | 9 Months Ended | 12 Months Ended |
Mar. 31, 2014 | Jun. 30, 2013 | |
Notes | ' | ' |
Notes Payable | ' | ' |
NOTES PAYABLE | NOTES PAYABLE | |
The Company borrowed from Weihai City Commercial Bank (“City Bank”) under the facility was obtained by Yantai Tianzheng. The latest outstanding amount of $9,735,203 (RMB 60,000,000) was borrowed on November 11, 2013 and has a term of a period of nine months and has a bank charge fee of 0.05%. As of March 31, 2014 and June 30, 2013, the outstanding aggregate amount was $9,735,203 (RMB 60,000,000) and $9,707,638 (RMB 60,000,000), respectively. The Company was required to maintain 50% of the notes amounts, or $4,867,601 (RMB 30,000,000) and $4,853,819 (RMB 30,000,000) as guaranteed funds, which was classified as restricted cash as of March 31, 2014 and June 30, 2013, respectively. | As of June 30, 2013, the Company has a note payable of $9,707,638 (RMB 60,000,000) from Weihai City Commercial Bank (the “Bank”). The current amount of credit owed to the Bank under the facility was obtained by Yantai Tianzheng in May 7, 2013 and has a 6-month maturity. The Company paid a facility fee of approximately $4,800 to the bank at the inception of the arrangement. Yantai Tianzheng entered into this credit facility following its execution of third party guaranty arrangements between the Company, the Bank and Laishan Public Assets Management LLP (“Laishan”) and between the Company, the Bank, and Bohai in April 2013 (the “Guaranties”). 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 the Bank to the Company at any time during the period from April 25, 2013 through April 25, 2014. Any amounts due to Laishan and Bohai pursuant to the terms of the Guaranty shall be subordinate to any amounts owed to the Bank. | |
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 Bohai in April 2013. Under the terms of the Guaranty, Laishan and Bohai each has agreed to act as guarantor of up to $4,876,601 (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. As a state-owned enterprise, Laishan provides the guarantee to support the development of Bohai, which is a prominent emerging company in the area. |
Shortterm_Loan
Short-term Loan | 9 Months Ended |
Mar. 31, 2014 | |
Notes | ' |
Short-term Loan | ' |
SHORT-TERM LOAN | |
On August 15, 2013, the Company entered into a short term bank loan agreement with RCB. As of March 31, 2014, the loan amounted to $4,867,601 (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, 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. Guangyuan is a construction company and expected to be a potential constructor for Bohai’s construction on the land purchased in November 2012. |
Convertible_Promissory_Notes_i
Convertible Promissory Notes in Default and Due On Demand | 9 Months Ended | 12 Months Ended | ||||
Mar. 31, 2014 | Jun. 30, 2013 | |||||
Notes | ' | ' | ||||
Convertible Promissory Notes in Default and Due On Demand | ' | ' | ||||
CONVERTIBLE PROMISSORY NOTES IN DEFAULT AND DUE ON DEMAND | CONVERTIBLE PROMISSORY NOTES IN DEFAULT AND DUE ON DEMAND | |||||
Convertible Notes | 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 $2.00 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. | 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 $2.00 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 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 March 31, 2014 and 2013, respectively. Accretion of the note discount amounted to $0 and $0 for the nine months ended March 31, 2014 and 2013, 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 $228,542 and $253,935 for the three months ended March 31, 2014 and 2013, respectively. Contractual interest expense amounted to $724,412 and $815,326 for the nine months ended March 31, 2014 and 2013, respectively. | 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 $8,997,898 for the years ended June 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 $1,069,261 and $10,875,038 for the years ended June 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. | 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 amount of RMB 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 fourth amendment, the maturity date of the notes was extended to April 5, 2013 and the interest rate was increased to 12% per annum. In October 2013, the Company paid $400,000 towards the principal. In March 2014, the Company paid $446,450 towards the principal. The outstanding balance of the Notes amounted to $7,618,050 and $8,464,500 as of March 31, 2014 and June 30, 2013, respectively. The Company and Euro Pacific, the representative of the investors of the Notes,signed a fifth amendment to the Notes. The fifth amendment further extends the maturity date of the Notes to April 5, 2016 (See Note 23). | 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 Company has been 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. | 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. | |||||
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. | |||||
The Company has paid $2,831,950 principle in total. The payment dates and amounts are as follows: | As of June 30, 2013 and June 30, 2012, the Company’s principal shareholder, Mr. Qu, is obligated to deliver 1,000,000 shares of Common Stock to the Investors if certain Events of Default occur. | |||||
Payment date | Amount | |||||
14-May-12 | $ | 314,000 | ||||
28-Jun-12 | 100,000 | |||||
3-Jul-12 | 631,000 | |||||
29-Nov-12 | 940,500 | |||||
9-Oct-13 | 100,000 | |||||
29-Oct-13 | 300,000 | |||||
6-Mar-14 | 446,450 | |||||
As of March 31, 2014 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 | 9 Months Ended | 12 Months Ended |
Mar. 31, 2014 | Jun. 30, 2013 | |
Notes | ' | ' |
Acquisition Purchase Price Payable | ' | ' |
ACQUISITION PURCHASE PRICE PAYABLE | 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 that was fully paid as of March 31, 2014. $5,000,000 was paid on September 24, 2013, and the balance was fully paid as of March 31, 2014. | 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 (paid in its RMB equivalent) of which US$6,000,000 was paid as of the Execution Date of the acquisition the remaining $29,000,000 was due in a series of contractual installments. | |
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. | ||
As of June 30, 2013, $30,000,000 was paid. As of June 30, 2013, the balance of $5,000,000 is due on February 8, 2015. |
Commitments_Contingencies_and_
Commitments, Contingencies and Other Matters | 9 Months Ended | 12 Months Ended | ||||||||||||||||||||||||||||
Mar. 31, 2014 | Jun. 30, 2013 | |||||||||||||||||||||||||||||
Notes | ' | ' | ||||||||||||||||||||||||||||
Commitments, Contingencies and Other Matters | ' | ' | ||||||||||||||||||||||||||||
COMMITMENTS, CONTINGENCIES AND OTHER MATTERS | COMMITMENTS, CONTINGENCIES AND OTHER MATTERS | |||||||||||||||||||||||||||||
(a) | Contract Research and Development Arrangement | (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 $2,444,350 (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 March 31, 2014, the Company has paid $2,133,925 (RMB 13,095,044 ) and the remaining contract amount will be paid as the research services are performed. All payments of $2,133,925 (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 nine months ended March 31, 2014 and 2013. | ||||||||||||||||||||||||||||||
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 June 30, 2013, the Company has paid $2,118,699 (RMB 13,095,044) and the remaining contract amount will be paid as the research services are performed. All payments of $2,118,699 (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 years ended June 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: | (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 | Three months | Nine months | Nine months | |||||||||||||||||||||||||||
ended | ended | ended | ended | The year ended June 30, 2013 | The year ended June 30, 2012 | |||||||||||||||||||||||||
March 31, | March 31, | March 31, | March 31, | |||||||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | Shandong Yantai Medicine Procurement and Supply Station | 29 | % | 13.2 | % | ||||||||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | Anhui DeChang Pharmaceutical Co. Ltd. | * % | 16.2 | % | |||||||||||||||||||||||
A Company | 24.60% | 43.20% | 24.80% | 31.80% | * Constitutes less than 10% of the Company’s purchases. | |||||||||||||||||||||||||
B Company | 21.60% | *% | 22.80% | *% | ||||||||||||||||||||||||||
C Company | 10.80% | 10.40% | 10.50% | *% | We had a commitment to purchase certain raw materials totaling $5,036,761 as of June 30, 2013 that was fulfilled upon the delivery of the goods in July 2013. | |||||||||||||||||||||||||
* Constitutes less than 10% of the Company’s purchases. | (c) | Sales Product Concentrations | ||||||||||||||||||||||||||||
Five of the Company’s products, namely Tongbi Capsules, Tongbi Tablets, Lung Nourishing Syrup, Zhengxintai Capsules and Fangfengtongsheng Tablets represented approximately 30.5%, 12.6%, 18.4%, 12.5% and 18.6%, respectively, of total sales for the year ended June 30, 2013. | ||||||||||||||||||||||||||||||
We had a commitment to purchase certain raw materials totaling $3,661,770 as of March 31, 2014 that was fulfilled upon the delivery of the goods in April 2014. | ||||||||||||||||||||||||||||||
Five of our products, namely Tongbi Capsules, Tongbi Tablets, Lung Nourishing Syrup, Zhengxintai Capsules and Fangfengtongsheng Tablets represented approximately 22.8%, 9.1%, 16.6%, 10.6% and 18.3%, respectively, of total sales for the year ended June 30, 2012. | ||||||||||||||||||||||||||||||
(c) | Sales Concentrations | (d) | Economic and Political Risks | |||||||||||||||||||||||||||
Sales Product Concentrations | ||||||||||||||||||||||||||||||
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. | ||||||||||||||||||||||||||||||
Five of the Company’s products, namely Tongbi Capsules, Tongbi Tablets, Lung Nourishing Syrup, Zhengxintai Capsules and Fangfengtongsheng Tablets represented approximately 31.9%, 17.7%, 14.6%, 12.5% and 20.9%, respectively, of total sales for the three months ended March 31, 2014. | ||||||||||||||||||||||||||||||
(e) | Concentrations of Credit Risk | |||||||||||||||||||||||||||||
Five of the Company’s products, namely Tongbi Capsules, Tongbi Tablets, Lung Nourishing Syrup, Zhengxintai Capsules and Fangfengtongsheng Tablets represented approximately 30.8%, 17.7%, 15.2%, 12.6% and 21.1%, respectively, of total sales for the nine months ended March 31, 2013. | ||||||||||||||||||||||||||||||
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. | ||||||||||||||||||||||||||||||
Five of the Company’s products, namely Tongbi Capsules, Tongbi Tablets, Lung Nourishing Syrup, Zhengxintai Capsules and Fangfengtongsheng Tablets represented approximately 29.2%, 12.3%, 22.9%, 12.8% and 19.6%, respectively, of total sales for the three months ended March 31, 2013. | At June 30, 2013 and June 30, 2012, the Company’s cash balances by geographic area were as follows: | |||||||||||||||||||||||||||||
Five of the Company’s products, namely Tongbi Capsules, Tongbi Tablets, Lung Nourishing Syrup, Zhengxintai Capsules and Fangfengtongsheng Tablets represented approximately 31.0%, 12.1%, 18.2%, 11.8% and 17.7%, respectively, of total sales for the nine months ended March 31, 2014. | June 30, 2013 | June 30, 2012 | ||||||||||||||||||||||||||||
Country: | ||||||||||||||||||||||||||||||
Sales Customer Concentrations | United States | $ | 28,331 | 0.41 | % | $ | 23,406 | 0.13 | % | |||||||||||||||||||||
China | 6,919,641 | 99.59 | % | 18,362,882 | 99.87 | % | ||||||||||||||||||||||||
The Company does not have concentrations of business with each customer constituting greater than 10 % of the Company’s gross sales for the nine months ended March 31, 2014 and 2013. | Total cash and cash equivalents | $ | 6,947,972 | 100 | % | $ | 18,386,288 | 100 | % | |||||||||||||||||||||
(d) | Economic and Political Risks | (f) | Certificate of land use right | |||||||||||||||||||||||||||
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. | ||||||||||||||||||||||||||||||
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. | ||||||||||||||||||||||||||||||
(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. | 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. | |||||||||||||||||||||||||||||
At March 31, 2014 and June 30, 2013, the Company’s cash balances by geographic area were as follows: | The Company has not obtained a land use right certificate for two piece 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 piece 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. | ||||||||||||||||||||||||||||||
31-Mar-14 | 30-Jun-13 | |||||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||||
Country: | 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. | |||||||||||||||||||||||||||||
United States | $ | 110,393 | 0.98% | $ | 28,331 | 0.41% | ||||||||||||||||||||||||
China | 11,154,638 | 99.02% | 6,919,641 | 99.59% | (g) | Business insurance | ||||||||||||||||||||||||
Total cash and cash equivalents | $ | 11,265,031 | 100% | $ | 6,947,972 | 100% | ||||||||||||||||||||||||
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. | ||||||||||||||||||||||||||||||
(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 one parcel of land of 333,335 square meters that is located in the high-tech development district of Laishan and that was purchased on February 22, 2010. Registration of this land use right certification is still in process. On November 12, 2013, the Company obtained the land use right certificate for one parcel land of 266,668 square meters that is located in the high-tech development district of Laishan and that was purchased on November 5, 2012. | ||||||||||||||||||||||||||||||
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 certificates 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 or 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 | 9 Months Ended | 12 Months Ended | |||||||||||||||||||||
Mar. 31, 2014 | Jun. 30, 2013 | ||||||||||||||||||||||
Notes | ' | ' | |||||||||||||||||||||
Net Income Per Share | ' | ' | |||||||||||||||||||||
NET INCOME PER SHARE | 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: | 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: | ||||||||||||||||||||||
The year ended June 30, 2013 | The year ended June 30, 2012 | ||||||||||||||||||||||
Net income available to common stockholders-basic | $ | 19,123,517 | $ | 9,648,025 | |||||||||||||||||||
Interest on convertible notes | 1,069,261 | 10,875,038 | |||||||||||||||||||||
Net income available for common shareholders – diluted | $ | 20,192,778 | $ | 20,523,063 | |||||||||||||||||||
Weighted average number of common shares outstanding - basic | 17,861,085 | 17,861,085 | |||||||||||||||||||||
Common shares if converted from Convertible Debt | 4,232,250 | 5,018,000 | |||||||||||||||||||||
Weighted average number of common shares outstanding - diluted | 22,093,335 | 22,879,085 | |||||||||||||||||||||
Earnings (loss) per share: | |||||||||||||||||||||||
Basic | $ | 1.07 | $ | 0.54 | |||||||||||||||||||
Diluted | $ | 0.91 | $ | 0.54 | |||||||||||||||||||
Three months | Three months | Nine months | Nine months | ||||||||||||||||||||
ended | ended | ended | ended | ||||||||||||||||||||
March 31, 2014 | March 31, 2013 | March 31, 2014 | March 31, 2013 | ||||||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||||||||||||||
Net income available to common stockholders - basic | $ | 3,928,011 | $ | 3,159,206 | $ | 18,024,773 | $ | 14,813,455 | |||||||||||||||
Interest on convertible notes | 228,542 | 253,935 | 724,412 | 815,326 | |||||||||||||||||||
Net income available for common shareholders - diluted | $ | 4,156,553 | $ | 3,413,141 | $ | 18,749,185 | $ | 15,628,781 | |||||||||||||||
Weighted average number of common shares outstanding - basic | 17,861,085 | 17,861,085 | 17,861,085 | 17,861,085 | |||||||||||||||||||
Common shares if converted from Convertible Debt | 3,970,243 | 4,232,250 | 4,096,554 | 4,232,250 | |||||||||||||||||||
Weighted average number of common shares outstanding - diluted | 21,831,328 | 22,093,335 | 21,957,639 | 22,093,335 | |||||||||||||||||||
Earnings per share: | |||||||||||||||||||||||
Basic | $ | 0.22 | $ | 0.18 | $ | 1.1 | $ | 0.83 | |||||||||||||||
Diluted | $ | 0.19 | $ | 0.15 | $ | 0.85 | $ | 0.71 | |||||||||||||||
Stock_Options
Stock Options | 9 Months Ended | 12 Months Ended | |||||||||||||||||||||||||||||
Mar. 31, 2014 | Jun. 30, 2013 | ||||||||||||||||||||||||||||||
Notes | ' | ' | |||||||||||||||||||||||||||||
Stock Options | ' | ' | |||||||||||||||||||||||||||||
STOCK OPTIONS | 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 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. | 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 March 31, 2014: | The following table summarizes the weighted average remaining contractual life and exercise price of our outstanding options as of June 30, 2013: | ||||||||||||||||||||||||||||||
Options Outstanding | Options Outstanding | ||||||||||||||||||||||||||||||
Number | Number | ||||||||||||||||||||||||||||||
Outstanding | Outstanding | Weighted | Weighted Average | ||||||||||||||||||||||||||||
Number | Currently | Weighted | Weighted Average | Number | Currently | Average | Exercise Price of | ||||||||||||||||||||||||
Outstanding | Exercisable | Average | Exercise Price of | Outstanding | Exercisable | Remaining | Options | ||||||||||||||||||||||||
at | at | Remaining | Options | Exercise | at | at | Contractual Life | currently | |||||||||||||||||||||||
Exercise | March 31, | March 31, | Contractual Life | currently | Price | June 30, 2013 | June 30, 2013 | (Years) | exercisable | ||||||||||||||||||||||
Price | 2014 | 2014 | (Years) | exercisable | |||||||||||||||||||||||||||
$ | 2 | 32,000 | 32,000 | 2.39 | $ | 2 | |||||||||||||||||||||||||
$ | 2 | 32,000 | 32,000 | 1.5 | $ | 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 years ended June 30, 2013 and 2012 was $0 and $0, respectively and was recorded as general and administrative expense. | |||||||||||||||||||||||||||||||
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 and nine months ended March 31, 2014 were $0 and $0, respectively. Total compensation expense related to the stock options for the three and nine months ended March 31, 2014 were $0 and $0, respectively. | |||||||||||||||||||||||||||||||
A summary of our stock option activity as of March 31, 2014, and changes during the nine months ended March 31, 2014 and year ended June 30, 2013 is presented in the following table: | A summary of our stock option activity as of June 30, 2013, and changes during years ended June 30, 2013 and 2012 is presented in the following table: | ||||||||||||||||||||||||||||||
Exercise Price | |||||||||||||||||||||||||||||||
Exercise Price | Option | Vested | per Common | ||||||||||||||||||||||||||||
Option | Vested | per Common | Shares | Shares | Stock Range | ||||||||||||||||||||||||||
Shares | Shares | Stock Range | Balance, June 30, 2011 | - | - | $ | - | ||||||||||||||||||||||||
Balance, June 30, 2012 | - | - | $ | - | |||||||||||||||||||||||||||
Granted or vested during the year ended June 30, 2012 | 32,000 | 32,000 | $ | 2 | |||||||||||||||||||||||||||
Granted or vested during the year ended June 30, 2013 | 32,000 | 32,000 | 2 | ||||||||||||||||||||||||||||
Exercised during the year ended June 30, 2012 | - | - | $ | - | |||||||||||||||||||||||||||
Exercised during the year ended June 30, 2013 | - | - | - | ||||||||||||||||||||||||||||
Expired during the year ended June 30, 2012 | - | - | $ | - | |||||||||||||||||||||||||||
Expired during the year ended June 30, 2013 | - | - | - | ||||||||||||||||||||||||||||
Balance, June 30, 2012 | 32,000 | 32,000 | $ | 2 | |||||||||||||||||||||||||||
Balance, June 30, 2013 | 32,000 | 32,000 | 2 | ||||||||||||||||||||||||||||
Granted or vested during the year ended June 30, 2013 | - | - | $ | - | |||||||||||||||||||||||||||
Granted or vested during the nine months ended March 31, 2014 | - | - | - | ||||||||||||||||||||||||||||
Exercised during the year ended June 30, 2013 | - | - | $ | - | |||||||||||||||||||||||||||
Exercised during the nine months ended March 31, 2014 | - | - | - | ||||||||||||||||||||||||||||
Expired during the year ended June 30, 2013 | - | - | $ | - | |||||||||||||||||||||||||||
Expired during the nine months ended March 31, 2014 | - | - | - | ||||||||||||||||||||||||||||
Balance, June 30, 2013 | 32,000 | 32,000 | $ | 2 | |||||||||||||||||||||||||||
Balance, March 31, 2014 | 32,000 | 32,000 | $ | 2 | |||||||||||||||||||||||||||
Stockholders_Equity
Stockholders' Equity | 9 Months Ended | 12 Months Ended |
Mar. 31, 2014 | Jun. 30, 2013 | |
Notes | ' | ' |
Stockholders' Equity | ' | ' |
STOCKHOLDERS’ EQUITY | STOCKHOLDERS’ EQUITY | |
Authorized Capital | Authorized Capital | |
The Company is authorized to issue 150,000,000 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. | The Company is authorized to issue 150,000,000 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. | |
Retained earnings | ||
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. | Restricted Stock Awards | |
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. The Company allocated $390,797 to the reserve fund during the nine months ended March 31, 2014 which recorded in retained earnings. | On June 4, 2010, we granted 120,000 shares of Restricted Common Stock to our Chief Financial Officer for three years of service. The Restricted Common Stock vests in three equal annual installments over the related service period. We issued 40,000 shares of Restricted Common Stock during the year ended June 30, 2011. Our Chief Financial Officer resigned on December 31, 2011. | |
The reserve fund can only be used, upon approval by the relevant authority, to offset accumulated losses or increase capital. | On November 10, 2010, we issued 25,000 shares of fully vested, non-forfeitable Common Stock to a non-employee service provider to create investor awareness programs. | |
On January 5, 2011, we issued 20,000 shares of fully vested, non-forfeitable Common Stock to a third party to create investor awareness programs. | ||
There were no shares issued for the year ended June 30, 2013 and 2012. | ||
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 $3,188,228 to the reserve fund during the year ended Jun 30, 2013. |
Operating_Expenses
Operating Expenses | 9 Months Ended | 12 Months Ended | |||||||||||||||||||||
Mar. 31, 2014 | Jun. 30, 2013 | ||||||||||||||||||||||
Notes | ' | ' | |||||||||||||||||||||
Operating Expenses | ' | ' | |||||||||||||||||||||
OPERATING EXPENSES | OPERATING EXPENSES | ||||||||||||||||||||||
For the three and nine months ended March 31, 2014 and 2013, operating expenses consisted of the following: | |||||||||||||||||||||||
For the years ended June 30, 2013 and 2012, operating expenses consisted of the following: | |||||||||||||||||||||||
Three months ended | Three months ended | Nine months ended | Nine months ended | ||||||||||||||||||||
March 31, 2014 (unaudited) | March 31, 2013 (unaudited) | March 31, 2014 (unaudited) | March 31, 2013 (unaudited) | The year ended June 30, 2013 | The year ended June 30, 2012 | ||||||||||||||||||
Sales Commissions | $ | 20,910,232 | $ | 17,740,073 | $ | 63,673,952 | $ | 53,897,326 | Sales Commissions | $ | 75,414,664 | $ | 61,008,134 | ||||||||||
Advertising expense | 11,692 | 127,643 | 676,660 | 231,168 | Advertising expense | 95,477 | 3,497,560 | ||||||||||||||||
Audit fees and other professional expenses | 13,238 | 18,432 | 502,648 | 200,708 | Audit fees and consulting expenses | 230,150 | 520,261 | ||||||||||||||||
Depreciation and amortization | 722,006 | 740,503 | 2,154,368 | 2,088,424 | Depreciation and amortization | 2,613,040 | 2,578,316 | ||||||||||||||||
Staff costs (salary & welfare) | 1,149,730 | 1,399,910 | 2,183,661 | 2,406,436 | Staff costs (salary & welfare) | 2,652,288 | 2,723,569 | ||||||||||||||||
Research and development cost | 25,699 | 1,995 | 88,450 | 5,985 | Other operating expenses | 5,024,061 | 5,140,285 | ||||||||||||||||
Other operating expenses | 993,344 | 1,188,039 | 3,222,963 | 3,488,392 | Impairment of drug formula | 1,688,486 | - | ||||||||||||||||
Impairment of drug formula | - | - | - | 1,688,486 | |||||||||||||||||||
Total Operating expenses | $ | 87,718,166 | $ | 75,468,125 | |||||||||||||||||||
Total Operating expenses | $ | 23,825,941 | $ | 21,216,595 | $ | 72,502,702 | $ | 64,006,925 | |||||||||||||||
Income_Taxes
Income Taxes | 9 Months Ended | 12 Months Ended | ||||||||
Mar. 31, 2014 | Jun. 30, 2013 | |||||||||
Notes | ' | ' | ||||||||
Income Taxes | ' | ' | ||||||||
INCOME TAXES | 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 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’s net operating losses that may be available to offset future taxable income in the United States, if any, amount to approximately $9,000,000 and expire through 2031. The Company has fully reserved for these and all other deferred tax assets generated in the Company’s US operations since it is 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. | The Company’s only income producing activities are in the PRC. The statutory corporation income tax rate in the PRC is 25%. | |||||||||
For the years ended June 30, 2013 and 2012, the provision for income taxes consisted of the following: | ||||||||||
Years Ended June 30, | ||||||||||
2013 | 2012 | |||||||||
Current taxes | ||||||||||
United States | $ | - | $ | - | ||||||
PRC | 7,305,429 | 7,484,941 | ||||||||
Deferred taxes (benefit) | ||||||||||
United States | -449,012 | -4,188,248 | ||||||||
PRC | -285,138 | -170,059 | ||||||||
Change in valuation allowance | 449,012 | 4,188,248 | ||||||||
Provision for Income Taxes | $ | 7,020,291 | $ | 7,314,882 | ||||||
As of June 30, 2013, we had $15,696,907 of net operating loss carry forwards available for federal income tax purposes that may be used to offset future taxable income and will begin to expire in 2030. We provided for a full valuation allowance against the net deferred tax assets of $5,336,949 on the expected future tax benefits from the net operating loss carry forwards for the year ended June 30, 2013 as management believes it is more likely than not that these assets will not be realized in the future. During the years ended June 30, 2013 and 2012, the valuation allowance increased by $449,012 and 4,188,248, respectively. | ||||||||||
We are subject to income tax in the United States and the PRC. There was a benefit for income tax in the United States because we had a taxable loss in the United States for the years ended June 30, 2013 and 2012. The statutory federal income tax rate is 34%. The company recorded an US tax valuation allowance of $449,012 and $4,188,248 in fiscal year 2013 and 2012, respectively. Absent this valuation allowance, the effective tax rate would have been 26.7 % and 25.1 % in 2013 and 2012, respectively. | ||||||||||
The table below summarizes the differences between the U.S. statutory federal rate and our effective tax rate as follows for the years ended June 30, 2013 and 2012: | ||||||||||
For the Years Ended June 30, | ||||||||||
2013 | 2012 | |||||||||
Experted US tax at statutory rate | $ | 8,888,894 | $ | 5,767,388 | ||||||
Foreign tax differential | -1,905,795 | -2,445,869 | ||||||||
Permanent differences | -411,820 | -194,885 | ||||||||
Change in valuation allowance | 449,012 | 4,188,248 | ||||||||
Provision for Income Taxes | $ | 7,020,291 | $ | 7,314,882 | ||||||
Our deferred tax assets as of June 30, 2013 and 2012 are as follows: | ||||||||||
June 30, | ||||||||||
2013 | 2012 | |||||||||
Deferred tax assets: | ||||||||||
NOL carryover | $ | 5,250,749 | $ | 4,801,737 | ||||||
Stock compensation | 86,200 | 86,200 | ||||||||
Sub-total | 5,336,949 | 4,887,937 | ||||||||
Deferred tax liabilities: | ||||||||||
Valuation allowance | -5,336,949 | -4,887,937 | ||||||||
Total | $ | - | $ | - | ||||||
The Company also has a deferred tax liability related to definite and indefinite lived intangibles in the PRC jurisdiction of $8,048,113 and $8,161,269 for the years ended June 30, 2013 and 2012, respectively. | ||||||||||
The Company has permanently reinvested earnings in its foreign subsidiaries. At June 30, 2013, approximately $686,258,508 of accumulated earnings was permanently reinvested. If such earnings were repatriated, there could be additional federal income taxes (net of available tax credits). It is not practicable to determine the amount of additional tax that might be payable on the undistributed foreign earnings. | ||||||||||
Management has evaluated and concluded that there was no material uncertain tax positions requiring recognition in the Company’s consolidated financial statements for the years ended June 30, 2013 and 2012. Further, it is not anticipated that the unrecognized benefits will significantly change over the next twelve months. | ||||||||||
We and our subsidiaries file income tax returns in the U.S. federal jurisdiction and in the PRC. For federal tax purposes, years beginning after June 30, 2009 are still open to examination. Currently, no income tax returns are under examination. |
Vie
Vie | 9 Months Ended | 12 Months Ended | ||
Mar. 31, 2014 | Jun. 30, 2013 | |||
Notes | ' | ' | ||
Vie | ' | ' | ||
VIE | VIE | |||
To satisfy PRC laws and regulations, the Company conducts certain business in the PRC through the 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 WOFE and Bohai, the Company includes the assets, liabilities, revenues and expenses of Bohai (the “VIE”) in its consolidated financial statements. | ||||
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 YantaiTianzheng, which is an acquired subsidiary of the Company, are accessible to Bohai through WOFE II creditors irrespective of the VIE arrangement. | ||||
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: | ||||
The VIE Agreements include: | ||||
Equity Interest Pledge Agreement. The WOFE and Bohai’s 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. | ||||
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.” | ||||
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 the Bohai shareholders, 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. | ||||
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 VIE as direct ownership. Due to its VIE structure, the Company has to rely on contract right to effect control and management of the VIE, which exposes it to the risk of potential breach of contract by the shareholders of Bohai. | ||||
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 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. | ||||
¨ | 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. | ||||
¨ | 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 depends 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 Company conducts 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 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 | ||||
¨ | 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. | |||
On January 17, 2014, all rights and obligations of WOFE relating to Bohai, including all of WOFE’s rights and obligations under each of the VIE Agreements, were assigned in full to WOFE II. |
Subsequent_Events
Subsequent Events | 9 Months Ended | 12 Months Ended |
Mar. 31, 2014 | Jun. 30, 2013 | |
Notes | ' | ' |
Subsequent Events | ' | ' |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS | |
On April 21, 2014, the Company and Euro Pacific, acting as representative of the holders of certain 8% convertible notes, entered into a Fifth Amendment to the convertible notes (the “Fifth Amendment”) to extend the maturity date of the convertible notes to April 5, 2016.The fifth amendment provides, among other things, that (i) the interest of the convertible notes will cease to accrue as of the date of the Fifth Amendment (the “Effective Date”), (ii) any accrued and unpaid interest as of the Effective Date in an aggregate amount of up to $1,000,000 (unless otherwise converted to the Company’s common stock pursuant to Section 5 of the Notes) will be paid by cash as soon as practicable after the date of consummation of a financing by the Company conducted in the U.S. with net proceeds to the Company of at least $5 million, and (iii) in the event that the volume weighted average public trading price (as reported by Bloomberg Financial Markets) of the Company’s common stock exceeds $2.50 for 20 consecutive trading days (the “Trading Period”) with a daily average volume of 30,000 shares over such Trading Period, the Company will have the right, upon notice to the Investor Representative, to require mandatory conversion of the entire outstanding principal amount (including any accrued but unpaid interest) due thereunder into shares of common stock at a conversion price of $2.00 per share. | Pursuant to the most recent amendment, the convertible notes was 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 principal plus any accrued interest (at the current rate of 12% per annum). As of the date the financial statements were issued, the Company did not make the payment. | |
On August 15, 2013, the Company entered into a short term bank loan agreement with Yantai Rural Commercial Bank Ltd (“RCB”). The loan amounted to approximately $4,854,000 (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. | ||
The Company has evaluated subsequent events from the balance sheet date through September 27, 2013, the date at which the financial statements were available to be issued, and determined there are no other items to disclose. |
Long_Term_Prepayments_Land_Use
Long Term Prepayments- Land Use Rights, Net | 12 Months Ended | ||||||||
Jun. 30, 2013 | |||||||||
Notes | ' | ||||||||
Long Term Prepayments- Land Use Rights, Net | ' | ||||||||
LONG TERM PREPAYMENTS- LAND USE RIGHTS, NET | |||||||||
June 30, 2013 | June 30, 2012 | ||||||||
Land use rights, at cost | $ | 40,093,414 | $ | 20,240,623 | |||||
Less: Accumulated amortization | -2,229,950 | -1,501,326 | |||||||
Intangible assets – land use rights, net | $ | 37,863,464 | $ | 18,739,297 | |||||
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 million (RMB 120,000,000). As of June 30, 2013, the Company has made payment of $12.95 million (RMB 80,000,000). The Company is obligated to make one remaining installment payment of $6.47 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 $685,524 and $676,515 for the years ended June 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 June 30, 2013 is as follows: | |||||||||
Amortization | |||||||||
2014 | $ | 812,979 | |||||||
2015 | 812,979 | ||||||||
2016 | 812,979 | ||||||||
2017 | 812,979 | ||||||||
2018 | 812,979 | ||||||||
Thereafter | 33,798,569 | ||||||||
Total | $ | 37,863,464 | |||||||
Summary_of_Significant_Account1
Summary of Significant Accounting Policies: Principles of Consolidation (Policies) | 9 Months Ended | 12 Months Ended | ||||||||||||||||
Mar. 31, 2014 | Jun. 30, 2013 | |||||||||||||||||
Policies | ' | ' | ||||||||||||||||
Principles of Consolidation | ' | ' | ||||||||||||||||
Principles of Consolidation | Principles of Consolidation | |||||||||||||||||
The accompanying condensed 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 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. | 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. | 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: | 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 | · 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. | · 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: | The carrying amount and classification of Bohai’s assets and liabilities included in the consolidated balance sheets are as follows: | |||||||||||||||||
31-Mar-14 | June 30, 2013 | |||||||||||||||||
June 30, 2013 | June 30, 2012 | |||||||||||||||||
Total current assets* | $ | 78,784,249 | $ | 58,857,580 | ||||||||||||||
Total assets* | 149,323,537 | 130,683,952 | Total current assets* | $ | 58,857,580 | $ | 51,470,381 | |||||||||||
Total current liabilities** | 25,992,090 | 24,065,824 | Total assets* | 130,683,952 | 99,899,826 | |||||||||||||
Total liabilities** | $ | 29,807,146 | $ | 27,729,581 | Total current liabilities** | 24,065,824 | 11,689,137 | |||||||||||
Total liabilities** | $ | 27,729,581 | $ | 15,277,230 | ||||||||||||||
* Includes intercompany accounts in the amounts of $26,417,979 and $20,338,295 in current assets as of June 30, 2013 and June 30, 2012, respectively, that were eliminated in consolidation. | ||||||||||||||||||
* Includes intercompany accounts in the amounts of $37,308,891 and $26,417,979 in current assets as of March 31, 2014 and June 30, 2013, respectively, which were eliminated in consolidation. | ||||||||||||||||||
** Includes intercompany accounts in the amounts of $4,372,634 and $2,490,528 in current liabilities as of June 30, 2013 and June 30, 2012, respectively, that were eliminated in consolidation. | ||||||||||||||||||
** Includes intercompany accounts in the amounts of $9,416,538 and $4,372,634 in current liabilities as of March 31, 2014 and June 30, 2013, respectively, which were eliminated in consolidation. |
Summary_of_Significant_Account2
Summary of Significant Accounting Policies: Business Combinations (Policies) | 9 Months Ended | 12 Months Ended |
Mar. 31, 2014 | Jun. 30, 2013 | |
Policies | ' | ' |
Business Combinations | ' | ' |
Business Combinations | 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. | 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. |
Summary_of_Significant_Account3
Summary of Significant Accounting Policies: Basis of Presentation (Policies) | 9 Months Ended |
Mar. 31, 2014 | |
Policies | ' |
Basis of Presentation | ' |
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 March 31, 2014 and the results of operations and cash flows for the periods presented. The results of operations for the nine months ended March 31, 2014 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. |
Summary_of_Significant_Account4
Summary of Significant Accounting Policies: Reclassifications (Policies) | 9 Months Ended | 12 Months Ended |
Mar. 31, 2014 | Jun. 30, 2013 | |
Policies | ' | ' |
Reclassifications | ' | ' |
Reclassifications | Reclassifications | |
Certain amounts in the March 31, 2013 condensed consolidated financial statement have been reclassified to conform to the March 31, 2014presentation. | Certain amounts in the June 30, 2012 consolidated financial statement have been reclassified to conform to the June 30, 2013 presentation. |
Summary_of_Significant_Account5
Summary of Significant Accounting Policies: Business Segments (Policies) | 9 Months Ended | 12 Months Ended |
Mar. 31, 2014 | Jun. 30, 2013 | |
Policies | ' | ' |
Business Segments | ' | ' |
Business Segments | Business Segments | |
The Company’s operates its business through a single reporting segment. | The Company’s operates its business through a single reporting segment. |
Summary_of_Significant_Account6
Summary of Significant Accounting Policies: Use of Estimates (Policies) | 9 Months Ended | 12 Months Ended |
Mar. 31, 2014 | Jun. 30, 2013 | |
Policies | ' | ' |
Use of Estimates | ' | ' |
Use of Estimates | 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. | The preparation of the 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. | 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 the accounting estimates at least quarterly based on these conditions and records adjustments, when necessary. | Company management re-evaluates all of accounting estimates at least quarterly based on these conditions and records adjustments, when necessary. |
Summary_of_Significant_Account7
Summary of Significant Accounting Policies: Cash and Cash Equivalents (Policies) | 9 Months Ended | 12 Months Ended |
Mar. 31, 2014 | Jun. 30, 2013 | |
Policies | ' | ' |
Cash and Cash Equivalents | ' | ' |
Cash and Cash Equivalents | 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. | 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. |
Summary_of_Significant_Account8
Summary of Significant Accounting Policies: Restricted Cash (Policies) | 9 Months Ended | 12 Months Ended |
Mar. 31, 2014 | Jun. 30, 2013 | |
Policies | ' | ' |
Restricted Cash | ' | ' |
Restricted Cash | Restricted Cash | |
Escrow account balances amounted to $12,609,747 and $12,574,051 as of March 31, 2014 and June 30, 2013, respectively. | Escrow account balances amounted to $12,574,051 and $9,449,905 as of June 30, 2013 and June 30, 2012, 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 March 31, 2014 and June 30, 2013, there was $7,742,146 and $7,720,232 of cash restricted for this purpose. | 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 June 30, 2013 and 2012, there was $7,720,232, and $9,449,905 of cash restricted for this purpose. The Company has certain outstanding notes payable. The Company is required to maintain a portion of these outstanding draft amounts in its bank as restricted cash. As of June 30, 2013 and 2012, there was $4,853,819 and $0 cash restricted for this purpose. | |
The Company has certain outstanding notes payable in the amount of $9,735,203 and $9,707,638 as of March 31, 2014 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 March 31, 2014 and June 30, 2013, there was $4,867,601 and $4,853,819 cash restricted for this purpose. |
Summary_of_Significant_Account9
Summary of Significant Accounting Policies: Accounts Receivable (Policies) | 9 Months Ended | 12 Months Ended |
Mar. 31, 2014 | Jun. 30, 2013 | |
Policies | ' | ' |
Accounts Receivable | ' | ' |
Accounts Receivable | 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 to 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. | Accounts receivable consists of amounts due from customers. We extend unsecured credit to our customers in the ordinary course of business but mitigate the associated risks by performing credit checks and actively pursuing past due accounts. 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 . |
Recovered_Sheet1
Summary of Significant Accounting Policies: Inventories (Policies) | 9 Months Ended | 12 Months Ended |
Mar. 31, 2014 | Jun. 30, 2013 | |
Policies | ' | ' |
Inventories | ' | ' |
Inventories | 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 March 31, 2014 and June 30, 2013, management does not believe that any inventory reserves are necessary. | 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 June 30, 2013 and June 30, 2012, management does not believe that any inventory reserves are necessary. | |
Recovered_Sheet2
Summary of Significant Accounting Policies: Property, Plant and Equipment (Policies) | 9 Months Ended | 12 Months Ended |
Mar. 31, 2014 | Jun. 30, 2013 | |
Policies | ' | ' |
Property, Plant and Equipment | ' | ' |
Property, Plant and Equipment | 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, 5 to 10 years for machinery, and 5 to 10 years for 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. | 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, 5 to 10 years for machinery, 5 to 10 years for 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. |
Recovered_Sheet3
Summary of Significant Accounting Policies: Intangible Asset - Pharmaceutical Formulas (Policies) | 9 Months Ended | 12 Months Ended |
Mar. 31, 2014 | Jun. 30, 2013 | |
Policies | ' | ' |
Intangible Asset - Pharmaceutical Formulas | ' | ' |
Intangible Asset – Pharmaceutical Formulas | 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. | 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 would 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 approximately $10,000,000 (RMB 63,855,371) 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. | 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 notes 1 and 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. |
Recovered_Sheet4
Summary of Significant Accounting Policies: Common Stock Purchase Warrants and Other Derivative Financial Instruments (Policies) | 9 Months Ended | 12 Months Ended |
Mar. 31, 2014 | Jun. 30, 2013 | |
Policies | ' | ' |
Common Stock Purchase Warrants and Other Derivative Financial Instruments | ' | ' |
Common Stock Purchase Warrants and Other Derivative Financial Instruments | 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 common stock purchase warrants have expired as of June 30, 2013. | 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 June 30, 2013 and 2012 due to the existence of non-standard anti-dilution privileges that caused the warrants to not be indexed to the Company’s own stock. |
Recovered_Sheet5
Summary of Significant Accounting Policies: Fair Value Measurements and Fair Value of Financial Instruments (Policies) | 9 Months Ended | 12 Months Ended | ||||||||
Mar. 31, 2014 | Jun. 30, 2013 | |||||||||
Policies | ' | ' | ||||||||
Fair Value Measurements and Fair Value of Financial Instruments | ' | ' | ||||||||
Fair Value Measurements and Fair Value of Financial Instruments | 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: | 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 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 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. | 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. | 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. | 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 nine months ended March 31, 2014 and year ended June 30, 2013 for all financial assets and liabilities categorized as Level 3. | The following table reflects gains and losses for the years ended June 30, 2013 and 2012 for all financial assets and liabilities categorized as Level 3. | |||||||||
Liabilities: | 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, 2011 | $ | 937,867 | ||||||
Balance of warrant liabilities as of June 30, 2013 | - | Change in the fair value of warrant liabilities | 273,369 | |||||||
Change in the fair value of warrant liabilities | - | Balance of warrant liabilities as of June 30, 2012 | 1,211,236 | |||||||
Balance of warrant liabilities as of March 31, 2014 | $ | - | Change in the fair value of warrant liabilities | -1,211,236 | ||||||
Balance of warrant liabilities as of June 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 described above are more fully described in Note 10. 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. | ||||||||||
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. | |||||||||
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. |
Recovered_Sheet6
Summary of Significant Accounting Policies: Foreign Currency Translation (Policies) | 9 Months Ended | 12 Months Ended | ||||||||||||||||
Mar. 31, 2014 | Jun. 30, 2013 | |||||||||||||||||
Policies | ' | ' | ||||||||||||||||
Foreign Currency Translation | ' | ' | ||||||||||||||||
Foreign Currency Translation | 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. | 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. | 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: | 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: | |||||||||||||||||
The year ended June 30, 2013 | The year ended June 30, 2012 | |||||||||||||||||
Nine Months ended March 31, 2014 | Nine months ended March 31, 2013 | Period end US$: RMB exchange rate | 6.1807 | 6.3143 | ||||||||||||||
Period end US$: RMB exchange rate | 6.1632 | 6.2741 | Average periodic US$: RMB exchange rate | 6.2767 | 6.3519 | |||||||||||||
Average periodic US$: RMB exchange rate | 6.1366 | 6.3 | ||||||||||||||||
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. | ||||||||||||||||||
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 condensed 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. |
Recovered_Sheet7
Summary of Significant Accounting Policies: Revenue Recognition (Policies) | 9 Months Ended | 12 Months Ended | |||
Mar. 31, 2014 | Jun. 30, 2013 | ||||
Policies | ' | ' | |||
Revenue Recognition | ' | ' | |||
Revenue Recognition | 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: | 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; | ¨ | Persuasive evidence of an arrangement exists; | ||
¨ | Delivery has occurred or services have been rendered; | ||||
¨ | Delivery has occurred or services have been rendered; | ¨ | The seller’s price to the buyer is fixed or determinable; and | ||
¨ | Collectability is reasonably assured. | ||||
¨ | The seller’s price to the buyer is fixed or determinable; and | ||||
¨ | Collectability is reasonably assured. | ||||
Recovered_Sheet8
Summary of Significant Accounting Policies: Cost of Revenue (Policies) | 9 Months Ended | 12 Months Ended |
Mar. 31, 2014 | Jun. 30, 2013 | |
Policies | ' | ' |
Cost of Revenue | ' | ' |
Cost of Revenue | 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. | 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. |
Recovered_Sheet9
Summary of Significant Accounting Policies: Stock-based Compensation (Policies) | 9 Months Ended | 12 Months Ended |
Mar. 31, 2014 | Jun. 30, 2013 | |
Policies | ' | ' |
Stock-based Compensation | ' | ' |
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. | ||
Stock-based Compensation | ' | ' |
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. |
Recovered_Sheet10
Summary of Significant Accounting Policies: Research and Development Costs (Policies) | 9 Months Ended | 12 Months Ended |
Mar. 31, 2014 | Jun. 30, 2013 | |
Policies | ' | ' |
Research and Development Costs | ' | ' |
Research and Development Costs | 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 amount to $243,380 (RMB 1,500,000), which have been fully paid as of March 31, 2014. Research and development costs amounted to $25,699 and $1,995 for the three months ended March 31, 2014 and 2013, respectively. Research and development costs amounted to $88,450 and $5,985 for the nine months ended March 31, 2014 and 2013, respectively. | 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, whose cost is $7,982 for the year ended June 30, 2013. So the Company is mainly dependent on a third-party, Yantai Tianzheng Medicine Research and Development Co., Ltd., to perform the limited amount of research and development that the Company undertakes. Research and development costs amounted to $7,982 and $7,800 for the years ended June 30, 2013 and 2012, respectively. |
Recovered_Sheet11
Summary of Significant Accounting Policies: Shipping Costs (Policies) | 9 Months Ended | 12 Months Ended |
Mar. 31, 2014 | Jun. 30, 2013 | |
Policies | ' | ' |
Shipping Costs | ' | ' |
Shipping costs | Shipping costs | |
Shipping costs are included in selling, general and administrative expense. Shipping costs amounted to $267,295 and $216,032 for the three months ended March 31, 2014 and 2013, respectively. Shipping costs are included in selling, general and administrative expense. Shipping costs amounted to $746,679 and $770,013 for the nine months ended March 31, 2014 and 2013, respectively. | Shipping costs are included in selling, general and administrative expense. Shipping costs amounted to $1,011,367 and $1,303,710 for the years ended June 30, 2013 and 2012, respectively. |
Recovered_Sheet12
Summary of Significant Accounting Policies: Advertising (Policies) | 9 Months Ended | 12 Months Ended |
Mar. 31, 2014 | Jun. 30, 2013 | |
Policies | ' | ' |
Advertising | ' | ' |
Advertising | Advertising | |
Advertising and promotion costs are charged to expense as incurred. Advertising expenses included in selling, general and administrative expenses amounted to $11,692 and $127,463 for the three months ended March 31, 2014 and 2013, respectively. Advertising expenses included in selling, general and administrative expenses amounted to $676,660 and $231,168 for the nine months ended March 31, 2014 and 2013, respectively. | Advertising and promotion costs are charged to expense as incurred. Advertising expenses included in selling, general and administrative expenses amounted to $95,477 and $3,497,560 for the years ended June 30, 2013 and 2012, respectively. |
Recovered_Sheet13
Summary of Significant Accounting Policies: Income Taxes (Policies) | 9 Months Ended | 12 Months Ended |
Mar. 31, 2014 | Jun. 30, 2013 | |
Policies | ' | ' |
Income Taxes | ' | ' |
Income Taxes | 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 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. | 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. | Our policy is to classify assessments, if any, for tax related to interest as interest expense and penalties as general and administrative expense. |
Recovered_Sheet14
Summary of Significant Accounting Policies: Earnings Per Share (Policies) | 9 Months Ended | 12 Months Ended |
Mar. 31, 2014 | Jun. 30, 2013 | |
Policies | ' | ' |
Earnings Per Share | ' | ' |
Earnings per Share | 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). | 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 14). |
Recovered_Sheet15
Summary of Significant Accounting Policies: Recent Accounting Pronouncements (Policies) | 9 Months Ended | 12 Months Ended |
Mar. 31, 2014 | Jun. 30, 2013 | |
Policies | ' | ' |
Recent Accounting Pronouncements | ' | ' |
Recent Accounting Pronouncements | 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. | In July 2012, the FASB issued ASU 2012-02, “Intangibles-Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment." This ASU simplifies how entities test indefinite-lived intangible assets for impairment which improve consistency in impairment testing requirements among long-lived asset categories. These amended standards permit an assessment of qualitative factors to determine whether it is more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying value. For assets in which this assessment concludes it is more likely than not that the fair value is more than its carrying value, these amended standards eliminate the requirement to perform quantitative impairment testing as outlined in the previously issued standards. The guidance is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012, early adoption is permitted. 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. | 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. |
Recovered_Sheet16
Summary of Significant Accounting Policies: Principles of Consolidation: Condensed Balance Sheet (Tables) | 9 Months Ended | 12 Months Ended | ||||||||||||||||
Mar. 31, 2014 | Jun. 30, 2013 | |||||||||||||||||
Tables/Schedules | ' | ' | ||||||||||||||||
Condensed Balance Sheet | ' | ' | ||||||||||||||||
31-Mar-14 | June 30, 2013 | |||||||||||||||||
June 30, 2013 | June 30, 2012 | |||||||||||||||||
Total current assets* | $ | 78,784,249 | $ | 58,857,580 | ||||||||||||||
Total assets* | 149,323,537 | 130,683,952 | Total current assets* | $ | 58,857,580 | $ | 51,470,381 | |||||||||||
Total current liabilities** | 25,992,090 | 24,065,824 | Total assets* | 130,683,952 | 99,899,826 | |||||||||||||
Total liabilities** | $ | 29,807,146 | $ | 27,729,581 | Total current liabilities** | 24,065,824 | 11,689,137 | |||||||||||
Total liabilities** | $ | 27,729,581 | $ | 15,277,230 | ||||||||||||||
Recovered_Sheet17
Summary of Significant Accounting Policies: Fair Value Measurements and Fair Value of Financial Instruments: Schedule of Derivative Liabilities at Fair Value (Tables) | 9 Months Ended | 12 Months Ended | ||||||||
Mar. 31, 2014 | Jun. 30, 2013 | |||||||||
Tables/Schedules | ' | ' | ||||||||
Schedule of Derivative Liabilities at Fair Value | ' | ' | ||||||||
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, 2011 | $ | 937,867 | ||||||
Balance of warrant liabilities as of June 30, 2013 | - | Change in the fair value of warrant liabilities | 273,369 | |||||||
Change in the fair value of warrant liabilities | - | Balance of warrant liabilities as of June 30, 2012 | 1,211,236 | |||||||
Balance of warrant liabilities as of March 31, 2014 | $ | - | Change in the fair value of warrant liabilities | -1,211,236 | ||||||
Balance of warrant liabilities as of June 30, 2013 | $ | - | ||||||||
Recovered_Sheet18
Summary of Significant Accounting Policies: Foreign Currency Translation: Schedule of Foreign Exchange Translation Exchange Rate Table Text Block (Tables) | 9 Months Ended | 12 Months Ended | ||||||||||||||||
Mar. 31, 2014 | Jun. 30, 2013 | |||||||||||||||||
Tables/Schedules | ' | ' | ||||||||||||||||
Schedule of Foreign Exchange Translation Exchange Rate Table Text Block | ' | ' | ||||||||||||||||
Nine Months ended March 31, 2014 | Nine months ended March 31, 2013 | The year ended June 30, 2013 | The year ended June 30, 2012 | |||||||||||||||
Period end US$: RMB exchange rate | 6.1632 | 6.2741 | Period end US$: RMB exchange rate | 6.1807 | 6.3143 | |||||||||||||
Average periodic US$: RMB exchange rate | 6.1366 | 6.3 | Average periodic US$: RMB exchange rate | 6.2767 | 6.3519 |
Inventories_Schedule_of_Invent
Inventories: Schedule of Inventory, Current (Tables) | 9 Months Ended | 12 Months Ended | ||||||||||||||
Mar. 31, 2014 | Jun. 30, 2013 | |||||||||||||||
Tables/Schedules | ' | ' | ||||||||||||||
Schedule of Inventory, Current | ' | ' | ||||||||||||||
March 31, 2014 | June 30, 2013 | June 30, 2013 | June 30, 2012 | |||||||||||||
(unaudited) | ||||||||||||||||
Raw materials | $ | 2,620,565 | $ | 1,415,071 | Raw materials | $ | 1,415,071 | $ | 2,079,480 | |||||||
Work in progress | 750,510 | 840,954 | Work in progress | 840,954 | 882,005 | |||||||||||
Finished goods | 1,133,669 | 525,709 | Finished goods | 525,709 | 834,430 | |||||||||||
Total inventories | $ | 4,504,744 | $ | 2,781,734 | Total inventories | $ | 2,781,734 | $ | 3,795,915 |
Property_Plant_and_Equipment_N1
Property, Plant and Equipment, Net: Property, Plant and Equipment, Net (Tables) | 9 Months Ended | 12 Months Ended | |||||||||||||||
Mar. 31, 2014 | Jun. 30, 2013 | ||||||||||||||||
Tables/Schedules | ' | ' | |||||||||||||||
Property, Plant and Equipment, Net | ' | ' | |||||||||||||||
March 31, 2014 | June 30, 2013 | June 30, 2013 | June 30, 2012 | ||||||||||||||
(unaudited) | |||||||||||||||||
Buildings | $ | 11,520,404 | $ | 9,121,541 | Buildings | $ | 9,121,541 | $ | 8,928,545 | ||||||||
Plant equipment | 8,832,992 | 8,548,658 | Plant equipment | 8,548,658 | 2,490,764 | ||||||||||||
Office equipment | 285,152 | 250,339 | Office equipment | 250,339 | 208,539 | ||||||||||||
Motor vehicles | 278,667 | 291,784 | Motor vehicles | 291,784 | 285,610 | ||||||||||||
Total | 20,917,215 | 18,212,322 | Total | 18,212,322 | 11,913,458 | ||||||||||||
Less: accumulated depreciation | -3,668,064 | -2,827,442 | Less: accumulated depreciation | -2,827,442 | -2,188,340 | ||||||||||||
Construction in progress | 78,712 | 2,293,573 | Construction in progress | 2,293,573 | 1,956,154 | ||||||||||||
Property, plant and equipment, net | $ | 17,327,863 | $ | 17,678,453 | Property, plant and equipment, net | $ | 17,678,453 | $ | 11,681,272 |
Indefinite_Lived_Intangible_As1
Indefinite Lived Intangible Assets - Pharmaceutical Formulas: Schedule of Indefinite-Lived Intangible Assets (Tables) | 9 Months Ended | 12 Months Ended | |||||||||||||||
Mar. 31, 2014 | Jun. 30, 2013 | ||||||||||||||||
Tables/Schedules | ' | ' | |||||||||||||||
Schedule of Indefinite-Lived Intangible Assets | ' | ' | |||||||||||||||
March 31, 2014 | June 30, 2013 | 30-Jun-13 | June 30, 2012 | ||||||||||||||
(unaudited) | |||||||||||||||||
Pharmaceutical formulas, without amortization, at cost | $ | 14,149,231 | $ | 14,109,169 | Pharmaceutical formulas, without amortization, at cost | $ | 14,109,169 | $ | 25,610,557 | ||||||||
Intangible_Assets_Land_Use_Rig1
Intangible Assets - Land Use Rights, Net: Schedule of Acquired Finite-Lived Intangible Assets by Major Class (Tables) | 9 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Tables/Schedules | ' | |||||||
Schedule of Acquired Finite-Lived Intangible Assets by Major Class | ' | |||||||
March 31, 2014 | June 30, 2013 | |||||||
(unaudited) | ||||||||
Land use rights, at cost | $ | 40,207,257 | $ | 40,093,414 | ||||
Less: Accumulated amortization | -2,857,245 | -2,229,950 | ||||||
Intangible assets – land use rights, net | $ | 37,350,012 | $ | 37,863,464 |
Intangible_Assets_Land_Use_Rig2
Intangible Assets - Land Use Rights, Net: Installments Table Text Block (Tables) | 9 Months Ended | ||
Mar. 31, 2014 | |||
Tables/Schedules | ' | ||
Installments Table Text Block | ' | ||
Installment | Payment date | Amount in USD | |
First | 11/30/12 | 3,245,067 | |
Second | 12/31/12 | 3,245,067 | |
Third | 6/30/13 | 6,490,135 | |
Fourth | 12/31/13 | 6,490,135 | |
Total | 19,470,404 |
Intangible_Assets_Land_Use_Rig3
Intangible Assets - Land Use Rights, Net: Schedule of Finite-Lived Intangible Assets, Future Amortization Expense (Tables) | 9 Months Ended | 12 Months Ended | ||||||||
Mar. 31, 2014 | Jun. 30, 2013 | |||||||||
Tables/Schedules | ' | ' | ||||||||
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | ' | ' | ||||||||
Amortization | Amortization | |||||||||
Remainder of FY 2014 | $ | 208,271 | 2014 | $ | 4,409,149 | |||||
2015 | 833,084 | 2015 | 4,409,149 | |||||||
2016 | 833,084 | 2016 | 4,409,149 | |||||||
2017 | 833,084 | 2017 | 4,409,149 | |||||||
2018 | 833,084 | 2018 | 4,409,149 | |||||||
Thereafter | 33,809,405 | Thereafter | 6,093,474 | |||||||
Total | $ | 37,350,012 | Total | $ | 28,139,219 |
Other_Intangible_Assets_Net_Sc
Other Intangible Assets, Net: Schedule of Other Intangible Assets Table Text Block (Tables) | 9 Months Ended | 12 Months Ended | |||||||||||||||||||||||||||||
Mar. 31, 2014 | Jun. 30, 2013 | ||||||||||||||||||||||||||||||
Tables/Schedules | ' | ' | |||||||||||||||||||||||||||||
Schedule of Other Intangible Assets Table Text Block | ' | ' | |||||||||||||||||||||||||||||
Customer Relationships | Yantai Tianzheng Drug Formulas | Defensive Drug formulas | Total | Other intangible assets at June 30, 2013 consist of the following: | |||||||||||||||||||||||||||
Cost | $ | 14,840,667 | $ | 10,369,775 | $ | 10,360,749 | $ | 35,571,191 | Customer | YTP Drug | Defensive | ||||||||||||||||||||
Relationships | Formulas | Drug formulas | Total | ||||||||||||||||||||||||||||
Accumulated Amortization | -5,195,515 | -3,581,677 | -1,942,640 | -10,719,832 | |||||||||||||||||||||||||||
Cost | $ | 14,798,647 | $ | 10,340,415 | $ | 10,331,414 | $ | 35,470,476 | |||||||||||||||||||||||
Net carrying amount | $ | 9,645,152 | $ | 6,788,098 | $ | 8,418,109 | $ | 24,851,359 | |||||||||||||||||||||||
Accumulated Amortization | -3,767,858 | -2,594,829 | -968,570 | -7,331,257 | |||||||||||||||||||||||||||
Other intangible assets at June 30, 2013 consist of the following: | |||||||||||||||||||||||||||||||
Net carrying amount | $ | 11,030,789 | $ | 7,745,586 | $ | 9,362,844 | $ | 28,139,219 | |||||||||||||||||||||||
Customer Relationships | Yantai Tianzheng Drug Formulas | Defensive Drug formulas | Total | Other intangible assets at June 30, 2012 consist of the following: | |||||||||||||||||||||||||||
Cost | $ | 14,798,647 | $ | 10,340,415 | $ | 10,331,414 | $ | 35,470,476 | Customer | YTP Drug | Defensive | ||||||||||||||||||||
Relationships | Formulas | Drug formulas | Total | ||||||||||||||||||||||||||||
Accumulated Amortization | -3,767,858 | -2,594,829 | -968,570 | -7,331,257 | |||||||||||||||||||||||||||
Cost | $ | 14,485,533 | $ | 10,121,629 | $ | - | $ | 24,607,162 | |||||||||||||||||||||||
Net carrying amount | $ | 11,030,789 | $ | 7,745,586 | $ | 9,362,844 | $ | 28,139,219 | |||||||||||||||||||||||
Accumulated Amortization | -1,844,068 | -1,265,204 | - | -3,109,272 | |||||||||||||||||||||||||||
Net carrying amount | $ | 12,641,465 | $ | 8,856,425 | $ | - | $ | 21,497,890 |
Other_Intangible_Assets_Net_Sc1
Other Intangible Assets, Net: Schedule Of Finite Lived Intangible Assets Future Amortization Expense Net Table Text Block (Tables) | 9 Months Ended | ||||
Mar. 31, 2014 | |||||
Tables/Schedules | ' | ||||
Schedule Of Finite Lived Intangible Assets Future Amortization Expense Net Table Text Block | ' | ||||
Amortization | |||||
Remainder of FY 2014 | $ | 1,129,546 | |||
2015 | 4,518,184 | ||||
2016 | 4,518,184 | ||||
2017 | 4,518,184 | ||||
2018 | 4,518,184 | ||||
Thereafter | 5,649,077 | ||||
Total | $ | 24,851,359 |
Accrued_Expenses_Schedule_of_A
Accrued Expenses: Schedule of Accrued Liabilities (Tables) | 9 Months Ended | 12 Months Ended | |||||||||||||||
Mar. 31, 2014 | Jun. 30, 2013 | ||||||||||||||||
Tables/Schedules | ' | ' | |||||||||||||||
Schedule of Accrued Liabilities | ' | ' | |||||||||||||||
March 31, 2014 | June 30, 2013 | June 30, 2013 | June 30, 2012 | ||||||||||||||
(unaudited) | |||||||||||||||||
Sales representatives commission and expenses | $ | 4,028,220 | $ | 4,731,442 | Sales representatives commission and expenses | $ | 4,731,442 | $ | 3,778,996 | ||||||||
Other payable for PPE | 1,692,216 | 2,279,869 | Other payable for PPE | 2,279,869 | - | ||||||||||||
Other accrued expense | 1,596,820 | 1,596,636 | Other accrued expense | 1,596,636 | 1,557,472 | ||||||||||||
Other taxes payable | 2,359,678 | 2,185,328 | Other taxes payable | 2,185,328 | 1,879,334 | ||||||||||||
Accrued Interest expenses | 1,915,101 | 1,117,527 | Interest | 1,117,527 | 516,269 | ||||||||||||
Compensation and related cost | 213,829 | 274,813 | Compensation and related cost | 274,813 | 357,975 | ||||||||||||
Total | $ | 11,805,864 | $ | 12,185,615 | Advertising expense | - | 388,008 | ||||||||||
Total | $ | 12,185,615 | $ | 8,478,054 |
Convertible_Promissory_Notes_i1
Convertible Promissory Notes in Default and Due On Demand: Schedule of Long-term Debt Instruments (Tables) | 9 Months Ended | ||||
Mar. 31, 2014 | |||||
Tables/Schedules | ' | ||||
Schedule of Long-term Debt Instruments | ' | ||||
Payment date | Amount | ||||
14-May-12 | $ | 314,000 | |||
28-Jun-12 | 100,000 | ||||
3-Jul-12 | 631,000 | ||||
29-Nov-12 | 940,500 | ||||
9-Oct-13 | 100,000 | ||||
29-Oct-13 | 300,000 | ||||
6-Mar-14 | 446,450 |
Commitments_Contingencies_and_1
Commitments, Contingencies and Other Matters: Schedules of Concentration of Risk, by Risk Factor (Tables) | 9 Months Ended | 12 Months Ended | ||||||||||||||||||||
Mar. 31, 2014 | Jun. 30, 2013 | |||||||||||||||||||||
Tables/Schedules | ' | ' | ||||||||||||||||||||
Schedules of Concentration of Risk, by Risk Factor | ' | ' | ||||||||||||||||||||
Three months | Three months | Nine months | Nine months | The year ended June 30, 2013 | The year ended June 30, 2012 | |||||||||||||||||
ended | ended | ended | ended | |||||||||||||||||||
March 31, | March 31, | March 31, | March 31, | Shandong Yantai Medicine Procurement and Supply Station | 29 | % | 13.2 | % | ||||||||||||||
2014 | 2013 | 2014 | 2013 | Anhui DeChang Pharmaceutical Co. Ltd. | * % | 16.2 | % | |||||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||||||||
A Company | 24.60% | 43.20% | 24.80% | 31.80% | ||||||||||||||||||
B Company | 21.60% | *% | 22.80% | *% | ||||||||||||||||||
C Company | 10.80% | 10.40% | 10.50% | *% | ||||||||||||||||||
* Constitutes less than 10% of the Company’s purchases. |
Commitments_Contingencies_and_2
Commitments, Contingencies and Other Matters: Schedule Of Cash Balances By Geographic Segment Table Text Block (Tables) | 9 Months Ended | 12 Months Ended | ||||||||||||||||||||||||||||
Mar. 31, 2014 | Jun. 30, 2013 | |||||||||||||||||||||||||||||
Tables/Schedules | ' | ' | ||||||||||||||||||||||||||||
Schedule Of Cash Balances By Geographic Segment Table Text Block | ' | ' | ||||||||||||||||||||||||||||
31-Mar-14 | 30-Jun-13 | June 30, 2013 | June 30, 2012 | |||||||||||||||||||||||||||
(unaudited) | Country: | |||||||||||||||||||||||||||||
Country: | United States | $ | 28,331 | 0.41 | % | $ | 23,406 | 0.13 | % | |||||||||||||||||||||
United States | $ | 110,393 | 0.98% | $ | 28,331 | 0.41% | China | 6,919,641 | 99.59 | % | 18,362,882 | 99.87 | % | |||||||||||||||||
China | 11,154,638 | 99.02% | 6,919,641 | 99.59% | Total cash and cash equivalents | $ | 6,947,972 | 100 | % | $ | 18,386,288 | 100 | % | |||||||||||||||||
Total cash and cash equivalents | $ | 11,265,031 | 100% | $ | 6,947,972 | 100% |
Net_Income_Per_Share_Schedule_
Net Income Per Share: Schedule of Earnings Per Share, Basic and Diluted (Tables) | 9 Months Ended | 12 Months Ended | |||||||||||||||||||||
Mar. 31, 2014 | Jun. 30, 2013 | ||||||||||||||||||||||
Tables/Schedules | ' | ' | |||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted | ' | ' | |||||||||||||||||||||
Three months | Three months | Nine months | Nine months | The year ended June 30, 2013 | The year ended June 30, 2012 | ||||||||||||||||||
ended | ended | ended | ended | ||||||||||||||||||||
March 31, 2014 | March 31, 2013 | March 31, 2014 | March 31, 2013 | Net income available to common stockholders-basic | $ | 19,123,517 | $ | 9,648,025 | |||||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | Interest on convertible notes | 1,069,261 | 10,875,038 | |||||||||||||||||
Net income available for common shareholders – diluted | $ | 20,192,778 | $ | 20,523,063 | |||||||||||||||||||
Net income available to common stockholders - basic | $ | 3,928,011 | $ | 3,159,206 | $ | 18,024,773 | $ | 14,813,455 | |||||||||||||||
Interest on convertible notes | 228,542 | 253,935 | 724,412 | 815,326 | Weighted average number of common shares outstanding - basic | 17,861,085 | 17,861,085 | ||||||||||||||||
Net income available for common shareholders - diluted | $ | 4,156,553 | $ | 3,413,141 | $ | 18,749,185 | $ | 15,628,781 | Common shares if converted from Convertible Debt | 4,232,250 | 5,018,000 | ||||||||||||
Weighted average number of common shares outstanding - diluted | 22,093,335 | 22,879,085 | |||||||||||||||||||||
Weighted average number of common shares outstanding - basic | 17,861,085 | 17,861,085 | 17,861,085 | 17,861,085 | |||||||||||||||||||
Common shares if converted from Convertible Debt | 3,970,243 | 4,232,250 | 4,096,554 | 4,232,250 | Earnings (loss) per share: | ||||||||||||||||||
Weighted average number of common shares outstanding - diluted | 21,831,328 | 22,093,335 | 21,957,639 | 22,093,335 | Basic | $ | 1.07 | $ | 0.54 | ||||||||||||||
Diluted | $ | 0.91 | $ | 0.54 | |||||||||||||||||||
Earnings per share: | |||||||||||||||||||||||
Basic | $ | 0.22 | $ | 0.18 | $ | 1.1 | $ | 0.83 | |||||||||||||||
Diluted | $ | 0.19 | $ | 0.15 | $ | 0.85 | $ | 0.71 |
Stock_Options_Schedule_of_Othe
Stock Options: Schedule of Other Share-based Compensation, Activity (Tables) | 9 Months Ended | 12 Months Ended | |||||||||||||||||||||||||||||
Mar. 31, 2014 | Jun. 30, 2013 | ||||||||||||||||||||||||||||||
Tables/Schedules | ' | ' | |||||||||||||||||||||||||||||
Schedule of Other Share-based Compensation, Activity | ' | ' | |||||||||||||||||||||||||||||
Options Outstanding | Options Outstanding | ||||||||||||||||||||||||||||||
Number | Number | ||||||||||||||||||||||||||||||
Outstanding | Outstanding | Weighted | Weighted Average | ||||||||||||||||||||||||||||
Number | Currently | Weighted | Weighted Average | Number | Currently | Average | Exercise Price of | ||||||||||||||||||||||||
Outstanding | Exercisable | Average | Exercise Price of | Outstanding | Exercisable | Remaining | Options | ||||||||||||||||||||||||
at | at | Remaining | Options | Exercise | at | at | Contractual Life | currently | |||||||||||||||||||||||
Exercise | March 31, | March 31, | Contractual Life | currently | Price | June 30, 2013 | June 30, 2013 | (Years) | exercisable | ||||||||||||||||||||||
Price | 2014 | 2014 | (Years) | exercisable | |||||||||||||||||||||||||||
$ | 2 | 32,000 | 32,000 | 2.39 | $ | 2 | |||||||||||||||||||||||||
$ | 2 | 32,000 | 32,000 | 1.5 | $ | 2 |
Stock_Options_Schedule_of_Shar
Stock Options: Schedule of Share-based Compensation, Activity (Tables) | 9 Months Ended | 12 Months Ended | ||||||||||||||||||||
Mar. 31, 2014 | Jun. 30, 2013 | |||||||||||||||||||||
Tables/Schedules | ' | ' | ||||||||||||||||||||
Schedule of Share-based Compensation, Activity | ' | ' | ||||||||||||||||||||
Exercise Price | Exercise Price | |||||||||||||||||||||
Option | Vested | per Common | Option | Vested | per Common | |||||||||||||||||
Shares | Shares | Stock Range | Shares | Shares | Stock Range | |||||||||||||||||
Balance, June 30, 2012 | - | - | $ | - | Balance, June 30, 2011 | - | - | $ | - | |||||||||||||
Granted or vested during the year ended June 30, 2013 | 32,000 | 32,000 | 2 | Granted or vested during the year ended June 30, 2012 | 32,000 | 32,000 | $ | 2 | ||||||||||||||
Exercised during the year ended June 30, 2013 | - | - | - | Exercised during the year ended June 30, 2012 | - | - | $ | - | ||||||||||||||
Expired during the year ended June 30, 2013 | - | - | - | Expired during the year ended June 30, 2012 | - | - | $ | - | ||||||||||||||
Balance, June 30, 2013 | 32,000 | 32,000 | 2 | Balance, June 30, 2012 | 32,000 | 32,000 | $ | 2 | ||||||||||||||
Granted or vested during the nine months ended March 31, 2014 | - | - | - | Granted or vested during the year ended June 30, 2013 | - | - | $ | - | ||||||||||||||
Exercised during the nine months ended March 31, 2014 | - | - | - | Exercised during the year ended June 30, 2013 | - | - | $ | - | ||||||||||||||
Expired during the nine months ended March 31, 2014 | - | - | - | Expired during the year ended June 30, 2013 | - | - | $ | - | ||||||||||||||
Balance, March 31, 2014 | 32,000 | 32,000 | $ | 2 | Balance, June 30, 2013 | 32,000 | 32,000 | $ | 2 |
Operating_Expenses_Schedule_of
Operating Expenses: Schedule of Operating Costs and Expenses Table Text Block (Tables) | 9 Months Ended | 12 Months Ended | |||||||||||||||||||||
Mar. 31, 2014 | Jun. 30, 2013 | ||||||||||||||||||||||
Tables/Schedules | ' | ' | |||||||||||||||||||||
Schedule of Operating Costs and Expenses Table Text Block | ' | ' | |||||||||||||||||||||
Three months ended | Three months ended | Nine months ended | Nine months ended | The year ended June 30, 2013 | The year ended June 30, 2012 | ||||||||||||||||||
March 31, 2014 (unaudited) | March 31, 2013 (unaudited) | March 31, 2014 (unaudited) | March 31, 2013 (unaudited) | ||||||||||||||||||||
Sales Commissions | $ | 75,414,664 | $ | 61,008,134 | |||||||||||||||||||
Sales Commissions | $ | 20,910,232 | $ | 17,740,073 | $ | 63,673,952 | $ | 53,897,326 | Advertising expense | 95,477 | 3,497,560 | ||||||||||||
Advertising expense | 11,692 | 127,643 | 676,660 | 231,168 | Audit fees and consulting expenses | 230,150 | 520,261 | ||||||||||||||||
Audit fees and other professional expenses | 13,238 | 18,432 | 502,648 | 200,708 | Depreciation and amortization | 2,613,040 | 2,578,316 | ||||||||||||||||
Depreciation and amortization | 722,006 | 740,503 | 2,154,368 | 2,088,424 | Staff costs (salary & welfare) | 2,652,288 | 2,723,569 | ||||||||||||||||
Staff costs (salary & welfare) | 1,149,730 | 1,399,910 | 2,183,661 | 2,406,436 | Other operating expenses | 5,024,061 | 5,140,285 | ||||||||||||||||
Research and development cost | 25,699 | 1,995 | 88,450 | 5,985 | Impairment of drug formula | 1,688,486 | - | ||||||||||||||||
Other operating expenses | 993,344 | 1,188,039 | 3,222,963 | 3,488,392 | |||||||||||||||||||
Impairment of drug formula | - | - | - | 1,688,486 | Total Operating expenses | $ | 87,718,166 | $ | 75,468,125 | ||||||||||||||
Total Operating expenses | $ | 23,825,941 | $ | 21,216,595 | $ | 72,502,702 | $ | 64,006,925 |
Long_Term_Prepayments_Land_Use1
Long Term Prepayments- Land Use Rights, Net: Schedule of Expected Amortization Expense (Tables) | 12 Months Ended | ||||
Jun. 30, 2013 | |||||
Tables/Schedules | ' | ||||
Schedule of Expected Amortization Expense | ' | ||||
Amortization | |||||
2014 | $ | 812,979 | |||
2015 | 812,979 | ||||
2016 | 812,979 | ||||
2017 | 812,979 | ||||
2018 | 812,979 | ||||
Thereafter | 33,798,569 | ||||
Total | $ | 37,863,464 |
Other_Intangible_Assets_Net_Sc2
Other Intangible Assets, Net: Schedule of Finite-Lived Intangible Assets, Future Amortization Expense (Tables) | 9 Months Ended | 12 Months Ended | ||||||||
Mar. 31, 2014 | Jun. 30, 2013 | |||||||||
Tables/Schedules | ' | ' | ||||||||
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | ' | ' | ||||||||
Amortization | Amortization | |||||||||
Remainder of FY 2014 | $ | 208,271 | 2014 | $ | 4,409,149 | |||||
2015 | 833,084 | 2015 | 4,409,149 | |||||||
2016 | 833,084 | 2016 | 4,409,149 | |||||||
2017 | 833,084 | 2017 | 4,409,149 | |||||||
2018 | 833,084 | 2018 | 4,409,149 | |||||||
Thereafter | 33,809,405 | Thereafter | 6,093,474 | |||||||
Total | $ | 37,350,012 | Total | $ | 28,139,219 |
Income_Taxes_Schedule_of_Effec
Income Taxes: Schedule of Effective Income Tax Rate Reconciliation (Tables) | 12 Months Ended | ||||||||
Jun. 30, 2013 | |||||||||
Tables/Schedules | ' | ||||||||
Schedule of Effective Income Tax Rate Reconciliation | ' | ||||||||
For the Years Ended June 30, | |||||||||
2013 | 2012 | ||||||||
Experted US tax at statutory rate | $ | 8,888,894 | $ | 5,767,388 | |||||
Foreign tax differential | -1,905,795 | -2,445,869 | |||||||
Permanent differences | -411,820 | -194,885 | |||||||
Change in valuation allowance | 449,012 | 4,188,248 | |||||||
Provision for Income Taxes | $ | 7,020,291 | $ | 7,314,882 |
Income_Taxes_Schedule_of_Defer
Income Taxes: Schedule of Deferred Tax Assets and Liabilities (Tables) | 12 Months Ended | ||||||||
Jun. 30, 2013 | |||||||||
Tables/Schedules | ' | ||||||||
Schedule of Deferred Tax Assets and Liabilities | ' | ||||||||
June 30, | |||||||||
2013 | 2012 | ||||||||
Deferred tax assets: | |||||||||
NOL carryover | $ | 5,250,749 | $ | 4,801,737 | |||||
Stock compensation | 86,200 | 86,200 | |||||||
Sub-total | 5,336,949 | 4,887,937 | |||||||
Deferred tax liabilities: | |||||||||
Valuation allowance | -5,336,949 | -4,887,937 | |||||||
Total | $ | - | $ | - |
Organization_and_Principal_Act1
Organization and Principal Activities (Details) (USD $) | 12 Months Ended | ||
Jun. 30, 2013 | Mar. 31, 2014 | Jun. 30, 2012 | |
Equity Method Investment, Ownership Percentage | 100.00% | 100.00% | ' |
Common Stock, Par Value | $0.00 | $0.00 | $0.00 |
Asset Impairment Charges | $1,688,486 | ' | ' |
Defensive Assets | $10,331,414 | ' | ' |
Chance High International Limited | ' | ' | ' |
Equity Method Investment, Ownership Percentage | 100.00% | 100.00% | ' |
Chairman and Chief Executive Officer | ' | ' | ' |
Equity Method Investment, Ownership Percentage | 96.70% | 96.70% | ' |
Two Other Shareholders | ' | ' | ' |
Equity Method Investment, Ownership Percentage | 3.30% | 3.30% | ' |
Liquidity_and_Financial_Condit1
Liquidity and Financial Condition (Details) (USD $) | 0 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | 37 Months Ended | 46 Months Ended | 3 Months Ended | 9 Months Ended | 37 Months Ended | 46 Months Ended | 3 Months Ended | 37 Months Ended | 46 Months Ended | 0 Months Ended | ||||||||
Jun. 08, 2010 | Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 | Jun. 30, 2013 | Jun. 30, 2012 | Jun. 30, 2013 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Jun. 30, 2013 | Mar. 31, 2014 | Mar. 31, 2014 | Jun. 30, 2013 | Mar. 31, 2014 | Jun. 30, 2013 | Aug. 08, 2011 | Mar. 31, 2014 | Mar. 31, 2014 | Aug. 15, 2013 | Aug. 15, 2013 | |
US ($) | US ($) | US ($) | US ($) | CNY | CNY | CNY | Yantai Tianzheng | Yantai Tianzheng | Land Use Rights | Land Use Rights | Yantai Rural Commercial Bank Ltd. | Yantai Rural Commercial Bank Ltd. | ||||||||||
US ($) | US ($) | US ($) acre | CNY acre | US ($) | CNY | |||||||||||||||||
Net income | ' | $3,928,011 | $3,159,206 | $18,024,773 | $14,813,455 | $19,123,517 | $9,648,025 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net cash provided by operating activities | ' | ' | ' | 12,818,868 | 7,873,829 | 20,563,149 | 20,607,540 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Working Capital | ' | 42,140,922 | ' | 42,140,922 | ' | 17,332,280 | ' | 17,332,280 | 42,140,922 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Equity Method Investment, Ownership Percentage | ' | 100.00% | ' | 100.00% | ' | 100.00% | ' | 100.00% | 100.00% | ' | ' | ' | ' | ' | ' | ' | ' | 100.00% | ' | ' | ' | ' |
Business Acquisition Cost of Acquired Entity Purchase Prices | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 5,000,000 | 35,000,000 | ' | ' | ' | ' |
Construction and Development Costs | 3,160,000 | ' | ' | ' | ' | ' | ' | 3,150,000 | ' | ' | ' | 3,150,000 | 3,160,000 | ' | 19,500,000 | 19,500,000 | ' | ' | ' | ' | ' | ' |
Percentage of Construction Completed | ' | ' | ' | ' | ' | ' | ' | ' | 100.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Finite-Lived Intangible Asset, Useful Life | ' | '50 years | ' | ' | ' | '50 years | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Installment Payments to Acquire Land | ' | ' | ' | ' | ' | ' | ' | ' | ' | 19,470,000 | ' | ' | ' | 120,000,000 | ' | ' | ' | ' | 19,470,000 | 120,000,000 | ' | ' |
Convertible Notes Payable, Current | ' | 7,618,050 | ' | 7,618,050 | ' | 8,464,500 | ' | 8,464,500 | 7,618,050 | 7,618,050 | 7,618,050 | ' | 7,618,050 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Repayment of short-term loan | ' | ' | ' | -9,777,401 | 0 | ' | ' | ' | ' | ' | 846,450 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Short-term loan | ' | $4,867,601 | ' | $4,867,601 | ' | $0 | ' | $0 | $4,867,601 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $4,867,601 | $30,000,000 |
Recovered_Sheet19
Summary of Significant Accounting Policies: Principles of Consolidation: Condensed Balance Sheet (Details) (USD $) | Mar. 31, 2014 | Jun. 30, 2013 | Jun. 30, 2012 |
Total Current Assets | $75,816,040 | $62,027,145 | $62,182,356 |
TOTAL ASSETS | 175,707,773 | 165,624,398 | 145,398,019 |
Total current liabilities | 33,675,118 | 44,186,731 | 30,434,218 |
TOTAL LIABILITIES | 49,215,596 | 57,234,844 | 58,895,487 |
Condensed balance sheet | ' | ' | ' |
Total Current Assets | 78,784,249 | 58,857,580 | 51,470,381 |
TOTAL ASSETS | 149,323,537 | 130,683,952 | 99,899,826 |
Total current liabilities | 25,992,090 | 24,065,824 | 11,689,137 |
TOTAL LIABILITIES | $29,807,146 | $27,729,581 | $15,277,230 |
Recovered_Sheet20
Summary of Significant Accounting Policies: Principles of Consolidation (Details) (USD $) | Mar. 31, 2014 | Jun. 30, 2013 | Jun. 30, 2012 |
Total Current Assets | $75,816,040 | $62,027,145 | $62,182,356 |
Total current liabilities | 33,675,118 | 44,186,731 | 30,434,218 |
Intersegment Elimination | US ($) | ' | ' | ' |
Total Current Assets | 37,308,891 | 26,417,979 | 20,338,295 |
Total current liabilities | $9,416,538 | $4,372,634 | $2,490,528 |
Recovered_Sheet21
Summary of Significant Accounting Policies: Restricted Cash (Details) (USD $) | Mar. 31, 2014 | Jun. 30, 2013 | Jun. 30, 2012 |
Escrow Deposit | $12,609,747 | $12,574,051 | $9,449,905 |
Restricted Cash and Cash Equivalents | 7,742,146 | 7,720,232 | 9,449,905 |
Notes payable | 9,735,203 | 9,707,638 | ' |
Bank Overdrafts | US ($) | ' | ' | ' |
Restricted Cash and Cash Equivalents | $4,867,601 | $4,853,819 | $0 |
Recovered_Sheet22
Summary of Significant Accounting Policies: Property, Plant and Equipment (Details) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2014 | Jun. 30, 2013 | |
Office Equipment | Minimum | ' | ' |
Property, Plant and Equipment, Useful Life | '5 years | '5 years |
Office Equipment | Maximum | ' | ' |
Property, Plant and Equipment, Useful Life | '10 years | '10 years |
Machinery and Equipment | Minimum | ' | ' |
Property, Plant and Equipment, Useful Life | '5 years | '5 years |
Machinery and Equipment | Maximum | ' | ' |
Property, Plant and Equipment, Useful Life | '10 years | '10 years |
Vehicles | Minimum | ' | ' |
Property, Plant and Equipment, Useful Life | '5 years | '5 years |
Vehicles | Maximum | ' | ' |
Property, Plant and Equipment, Useful Life | '10 years | '10 years |
Building | Minimum | ' | ' |
Property, Plant and Equipment, Useful Life | '30 years | '30 years |
Building | Maximum | ' | ' |
Property, Plant and Equipment, Useful Life | '40 years | '40 years |
Recovered_Sheet23
Summary of Significant Accounting Policies: Intangible Asset - Pharmaceutical Formulas (Details) (USD $) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2014 | Jun. 30, 2013 | |
Indefinite Lived Intangible Asset Intellectual Property Renewal | '5 years | '5 years |
Goodwill, Impairment Loss | ' | $1,668,486 |
Finite-Lived Intangible Asset, Useful Life | '50 years | '50 years |
Defensive Drug Formulas | US ($) | ' | ' |
Finite-Lived Intangible Asset, Useful Life | ' | '8 years |
Defensive Drug Formulas | Other Intangible Assets | US ($) | ' | ' |
Other Finite-Lived Intangible Assets, Gross | ' | 10,000,000 |
Other Indefinite-lived Intangible Assets | ' | 10,331,414 |
Defensive Drug Formulas | Other Intangible Assets | CNY | ' | ' |
Other Finite-Lived Intangible Assets, Gross | ' | $63,855,371 |
Recovered_Sheet24
Summary of Significant Accounting Policies: Fair Value Measurements and Fair Value of Financial Instruments: Schedule of Derivative Liabilities at Fair Value (Details) (USD $) | 9 Months Ended | 12 Months Ended | |||
Mar. 31, 2014 | Mar. 31, 2013 | Jun. 30, 2013 | Jun. 30, 2012 | Jun. 30, 2011 | |
Details | ' | ' | ' | ' | ' |
Derivative Liability | ' | ' | ' | $1,211,236 | $937,867 |
Change in fair value of warrants | $0 | ($1,211,236) | ($1,211,236) | $273,369 | ' |
Recovered_Sheet25
Summary of Significant Accounting Policies: Foreign Currency Translation: Schedule of Foreign Exchange Translation Exchange Rate Table Text Block (Details) | 9 Months Ended | 12 Months Ended | ||
Mar. 31, 2014 | Mar. 31, 2013 | Jun. 30, 2013 | Jun. 30, 2012 | |
Details | ' | ' | ' | ' |
ForeignCurrencyExchangeRateTranslation | 6.1632 | 6.2741 | 6.1807 | 6.3143 |
Foreign Currency Transactions Average Exchange Rates | 6.1366 | 6.3 | 6.2767 | 6.3519 |
Recovered_Sheet26
Summary of Significant Accounting Policies: Research and Development Costs (Details) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | 3 Months Ended | ||||
Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 | Jun. 30, 2012 | Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 | Jun. 30, 2013 | Mar. 31, 2014 | |
US ($) | US ($) | US ($) | US ($) | US ($) | CNY | ||||||
Repayment of Contracts | ' | ' | ' | ' | ' | $243,380 | ' | ' | ' | ' | $1,500,000 |
Research and Development Expense | $25,699 | $1,995 | $88,450 | $5,985 | $7,800 | $25,699 | $1,995 | $88,450 | $5,985 | $7,982 | ' |
Recovered_Sheet27
Summary of Significant Accounting Policies: Shipping Costs (Details) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 | Jun. 30, 2013 | Jun. 30, 2012 | |
Shipping, Handling and Transportation Costs | $11,692 | $127,463 | $676,660 | $231,168 | $95,477 | $3,497,560 |
US ($) | ' | ' | ' | ' | ' | ' |
Shipping, Handling and Transportation Costs | $267,295 | $216,032 | $746,679 | $770,013 | $1,011,367 | $1,303,710 |
Recovered_Sheet28
Summary of Significant Accounting Policies: Advertising (Details) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 | Jun. 30, 2013 | Jun. 30, 2012 | |
Details | ' | ' | ' | ' | ' | ' |
Shipping, Handling and Transportation Costs | $11,692 | $127,463 | $676,660 | $231,168 | $95,477 | $3,497,560 |
Inventories_Schedule_of_Invent1
Inventories: Schedule of Inventory, Current (Details) (USD $) | Mar. 31, 2014 | Jun. 30, 2013 | Jun. 30, 2012 |
Details | ' | ' | ' |
Inventory, Raw Materials, Gross | $2,620,565 | $1,415,071 | $2,079,480 |
Inventory, Work in Process, Gross | 750,510 | 840,954 | 882,005 |
Inventory, Finished Goods, Gross | 1,133,669 | 525,709 | 834,430 |
Inventory, Gas in Storage Underground, Noncurrent | $4,504,744 | $2,781,734 | $3,795,915 |
Property_Plant_and_Equipment_N2
Property, Plant and Equipment, Net: Property, Plant and Equipment, Net (Details) (USD $) | Mar. 31, 2014 | Jun. 30, 2013 | Jun. 30, 2012 |
Property, Plant and Equipment, Gross | $20,917,215 | $18,212,322 | $11,913,458 |
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment | -3,668,064 | -2,827,442 | -2,188,340 |
Construction in Progress, Gross | 78,712 | 2,293,573 | 1,956,154 |
Property, plant and equipment, net | 17,327,863 | 17,678,453 | 11,681,272 |
Buildings | ' | ' | ' |
Property, Plant and Equipment, Gross | 11,520,404 | 9,121,541 | 8,928,545 |
Plant Equipment | ' | ' | ' |
Property, Plant and Equipment, Gross | 8,832,992 | 8,548,658 | 2,490,764 |
Office Equipment | ' | ' | ' |
Property, Plant and Equipment, Gross | 285,152 | 250,339 | 208,539 |
Vehicles | ' | ' | ' |
Property, Plant and Equipment, Gross | $278,667 | $291,784 | $285,610 |
Property_Plant_and_Equipment_N3
Property, Plant and Equipment, Net (Details) (USD $) | 0 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | 37 Months Ended | |||
Jun. 08, 2010 | Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 | Jun. 30, 2013 | Jun. 30, 2012 | Jun. 30, 2013 | |
Details | ' | ' | ' | ' | ' | ' | ' | ' |
Depreciation | ' | $293,168 | $139,789 | $848,747 | $427,279 | $582,748 | $563,214 | ' |
Construction and Development Costs | $3,160,000 | ' | ' | ' | ' | ' | ' | $3,150,000 |
Construction Completion Percentage | ' | 100.00% | ' | 100.00% | ' | 85.00% | ' | 85.00% |
Indefinite_Lived_Intangible_As2
Indefinite Lived Intangible Assets - Pharmaceutical Formulas: Schedule of Indefinite-Lived Intangible Assets (Details) (USD $) | Mar. 31, 2014 | Jun. 30, 2013 | Jun. 30, 2012 |
Details | ' | ' | ' |
Intangible assets- pharmaceutical formulas | $14,149,231 | $14,109,169 | $25,610,557 |
Intangible_Assets_Land_Use_Rig4
Intangible Assets - Land Use Rights, Net: Schedule of Acquired Finite-Lived Intangible Assets by Major Class (Details) (USD $) | Mar. 31, 2014 | Jun. 30, 2013 | Jun. 30, 2012 |
Intangible assets- land use right, net | $37,350,012 | $37,863,464 | $18,739,297 |
Use Rights | ' | ' | ' |
Finite-Lived Intangible Assets, Gross | 40,207,257 | 40,093,414 | 20,240,623 |
Finite-Lived Intangible Assets, Accumulated Amortization | -2,857,245 | -2,229,950 | -1,501,326 |
Intangible assets- land use right, net | $37,350,012 | $37,863,464 | $18,739,297 |
Intangible_Assets_Land_Use_Rig5
Intangible Assets - Land Use Rights, Net: Installments Table Text Block (Details) (USD $) | Mar. 31, 2014 |
First Installment | November 30, 2012 | ' |
Installments | $3,245,067 |
Second Installment | December 31, 2012 | ' |
Installments | 3,245,067 |
Third Installment | June 30, 2013 | ' |
Installments | 6,490,135 |
Fourth Installment | December 31, 2013 | ' |
Installments | 6,490,135 |
Total Installments | ' |
Installments | $19,470,404 |
Intangible_Assets_Land_Use_Rig6
Intangible Assets - Land Use Rights, Net (Details) (USD $) | 3 Months Ended | 12 Months Ended | 3 Months Ended | 9 Months Ended | ||||
Mar. 31, 2014 | Jun. 30, 2013 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 | |
Minimum | Maximum | Land Use Rights | Land Use Rights | Land Use Rights | Land Use Rights | |||
US ($) | US ($) | US ($) | US ($) | |||||
Amortization of Intangible Assets | ' | ' | ' | ' | $208,271 | $259,027 | $623,655 | $648,409 |
Finite-Lived Intangible Asset, Useful Life | '50 years | '50 years | '30 years | '50 years | ' | ' | ' | ' |
Intangible_Assets_Land_Use_Rig7
Intangible Assets - Land Use Rights, Net: Schedule of Finite-Lived Intangible Assets, Future Amortization Expense (Details) (USD $) | Mar. 31, 2014 | Jun. 30, 2013 | Jun. 30, 2012 |
Intangible assets- land use right, net | $37,350,012 | $37,863,464 | $18,739,297 |
Use Rights | ' | ' | ' |
Finite-Lived Intangible Assets, Amortization Expense, Next Twelve Months | 208,271 | 4,409,149 | ' |
Finite-Lived Intangible Assets, Amortization Expense, Year Two | 833,084 | 4,409,149 | ' |
Finite-Lived Intangible Assets, Amortization Expense, Year Three | 833,084 | 4,409,149 | ' |
Finite-Lived Intangible Assets, Amortization Expense, Year Four | 833,084 | 4,409,149 | ' |
Finite-Lived Intangible Assets, Amortization Expense, Year Five | 833,084 | 4,409,149 | ' |
Finite-Lived Intangible Assets, Amortization Expense, after Year Five | 33,809,405 | 6,093,474 | ' |
Intangible assets- land use right, net | $37,350,012 | $37,863,464 | $18,739,297 |
Other_Intangible_Assets_Net_Sc3
Other Intangible Assets, Net: Schedule of Other Intangible Assets Table Text Block (Details) (USD $) | Mar. 31, 2014 | Jun. 30, 2013 | Jun. 30, 2012 |
Other intangible assets, net | $24,851,359 | $28,139,219 | $21,497,890 |
USD ($) | ' | ' | ' |
Other Finite-Lived Intangible Assets, Gross | 35,571,191 | 35,470,476 | 24,607,162 |
Finite-Lived Intangible Assets, Accumulated Amortization | -10,719,832 | -7,331,257 | -3,109,272 |
Other intangible assets, net | 24,851,359 | 28,139,219 | 21,497,890 |
Customer Relationships | USD ($) | ' | ' | ' |
Other Finite-Lived Intangible Assets, Gross | 14,840,667 | 14,798,647 | 14,485,533 |
Finite-Lived Intangible Assets, Accumulated Amortization | -5,195,515 | -3,767,858 | -1,844,068 |
Other intangible assets, net | 9,645,152 | 11,030,789 | 12,641,465 |
Yantai Tianzheng Drug Formulas | USD ($) | ' | ' | ' |
Other Finite-Lived Intangible Assets, Gross | 10,369,775 | 10,340,415 | 10,121,629 |
Finite-Lived Intangible Assets, Accumulated Amortization | -3,581,677 | -2,594,829 | -1,265,204 |
Other intangible assets, net | 6,788,098 | 7,745,586 | 8,856,425 |
Defensive Drug Formulas | USD ($) | ' | ' | ' |
Other Finite-Lived Intangible Assets, Gross | 10,360,749 | 10,331,414 | ' |
Finite-Lived Intangible Assets, Accumulated Amortization | -1,942,640 | -968,570 | ' |
Other intangible assets, net | $8,418,109 | $9,362,844 | ' |
Other_Intangible_Assets_Net_De
Other Intangible Assets, Net (Details) (USD ($), USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 | Jun. 30, 2013 | Jun. 30, 2012 | |
Customer Relationships | ' | ' | ' | ' | ' | ' |
Amortization of Other Deferred Charges | $475,248 | $463,396 | $1,423,101 | $1,386,190 | $1,855,115 | $1,833,152 |
Drug Formulas | ' | ' | ' | ' | ' | ' |
Amortization of Other Deferred Charges | 328,518 | 320,325 | 983,727 | 958,212 | 1,282,359 | 1,257,714 |
Defensive Drug Formulas | ' | ' | ' | ' | ' | ' |
Amortization of Other Deferred Charges | $325,780 | $317,200 | $975,530 | $633,486 | $953,756 | $0 |
Other_Intangible_Assets_Net_Sc4
Other Intangible Assets, Net: Schedule Of Finite Lived Intangible Assets Future Amortization Expense Net Table Text Block (Details) (USD $) | Mar. 31, 2014 | Jun. 30, 2013 | Jun. 30, 2012 |
Other intangible assets, net | $24,851,359 | $28,139,219 | $21,497,890 |
Other Intangible Assets | ' | ' | ' |
Finite-Lived Intangible Assets, Amortization Expense, Next Twelve Months | 1,129,546 | ' | ' |
Finite-Lived Intangible Assets, Amortization Expense, Year Two | 4,518,184 | ' | ' |
Finite-Lived Intangible Assets, Amortization Expense, Year Three | 4,518,184 | ' | ' |
Finite-Lived Intangible Assets, Amortization Expense, Year Four | 4,518,184 | ' | ' |
Finite-Lived Intangible Assets, Amortization Expense, Year Five | 4,518,184 | ' | ' |
Finite-Lived Intangible Assets, Amortization Expense, after Year Five | 5,649,077 | ' | ' |
Other intangible assets, net | $24,851,359 | ' | ' |
Goodwill_Details
Goodwill (Details) (USD $) | Mar. 31, 2014 | Jun. 30, 2013 | Jun. 30, 2012 | Mar. 31, 2014 | Jun. 30, 2013 | Mar. 31, 2014 | Jun. 30, 2013 | Aug. 08, 2011 |
US ($) | US ($) | CNY | CNY | Yantai Tianzheng | ||||
US ($) | ||||||||
Business Acquisition, Percentage of Voting Interests Acquired | ' | ' | ' | ' | ' | ' | ' | 100.00% |
Business Acquisition, Cost of Acquired Entity, Purchase Price | ' | ' | ' | ' | ' | ' | ' | $35,000,000 |
Goodwill | $5,216,982 | $5,202,209 | $5,092,139 | $5,216,982 | $5,202,209 | $32,153,295 | $32,153,295 | ' |
Accrued_Expenses_Schedule_of_A1
Accrued Expenses: Schedule of Accrued Liabilities (Details) (USD $) | Mar. 31, 2014 | Jun. 30, 2013 | Jun. 30, 2012 |
Details | ' | ' | ' |
Accrued Sales Commission, Current | $4,028,220 | $4,731,442 | $3,778,996 |
Other Payable For PPE | 1,692,216 | 2,279,869 | ' |
Other Accrued Liabilities, Current | 1,596,820 | 1,596,636 | 1,557,472 |
Accrual for Taxes Other than Income Taxes, Current | 2,359,678 | 2,185,328 | 1,879,334 |
Interest Payable, Current | 1,915,101 | 1,117,527 | 516,269 |
Accrued Employee Benefits, Current | 213,829 | 274,813 | 357,975 |
Accrued expenses | 11,805,864 | 12,185,615 | 8,478,054 |
Deferred Advertising Costs | ' | ' | $388,008 |
Due_To_Related_Party_Details
Due To Related Party (Details) (USD $) | Mar. 31, 2014 | Jun. 30, 2013 | Jun. 30, 2012 |
Details | ' | ' | ' |
Due to related party | $55,741 | $52,830 | $36,002 |
Notes_Payable_Details
Notes Payable (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||||||||||||||
Mar. 31, 2014 | Aug. 01, 2014 | Jun. 30, 2013 | Jun. 30, 2012 | Mar. 31, 2014 | Nov. 11, 2013 | Jun. 30, 2013 | Mar. 31, 2014 | Jun. 30, 2013 | Apr. 25, 2014 | Mar. 31, 2014 | Nov. 11, 2013 | Jun. 30, 2013 | Mar. 31, 2014 | Jun. 30, 2013 | Apr. 25, 2014 | |
Guarantees | Guarantees | Subsequent Event | CNY | CNY | CNY | CNY | CNY | CNY | ||||||||
Guarantees | Guarantees | Subsequent Event | ||||||||||||||
Notes Payable, Related Parties, Current | ' | ' | ' | ' | $9,735,203 | $9,735,203 | $9,707,638 | ' | ' | ' | $60,000,000 | $60,000,000 | $60,000,000 | ' | ' | ' |
Bank Charge Fee Percentage | ' | 0.05% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Restricted Cash Minimum Percentage on Notes Payable | 50.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Restricted Cash and Cash Equivalents | 7,742,146 | ' | 7,720,232 | 9,449,905 | ' | ' | ' | 4,867,601 | 4,853,819 | 4,876,601 | ' | ' | ' | 30,000,000 | 30,000,000 | 30,000,000 |
Notes payable | $9,735,203 | ' | $9,707,638 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Shortterm_Loan_Details
Short-term Loan (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Jun. 30, 2013 | |
Short-term loan | $4,867,601 | $0 |
Debt Instrument, Interest Rate, Effective Percentage | 9.00% | ' |
Debt Instrument, Maturity Date | 14-Aug-14 | ' |
USD ($) | ' | ' |
Short-term loan | 4,867,601 | ' |
CNY | ' | ' |
Short-term loan | $30,000,000 | ' |
Convertible_Promissory_Notes_i2
Convertible Promissory Notes in Default and Due On Demand (Details) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | 0 Months Ended | 3 Months Ended | 12 Months Ended | ||||||
Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 | Jun. 30, 2013 | Jun. 30, 2012 | Dec. 31, 2011 | Jan. 05, 2010 | Jan. 06, 2010 | Mar. 31, 2014 | Jun. 30, 2013 | Jan. 06, 2010 | |
Securities Purchase Agreement | Securities Purchase Agreement | Eight Percent Senior Convertible Promissory Note | Eight Percent Senior Convertible Promissory Note | Eight Percent Senior Convertible Promissory Note | ||||||||
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% | ' | 9.00% | ' | ' | ' | ' | ' | 8.00% | ' | ' | 8.00% |
Common Stock Convertible Conversion Price | ' | ' | ' | ' | ' | ' | ' | ' | $2 | ' | ' | $2 |
Class of Warrant or Right, Exercise Price of Warrants or Rights | ' | ' | ' | ' | ' | ' | ' | ' | $2.40 | ' | ' | ' |
Debt Instrument, Maturity Date | 14-Aug-14 | ' | ' | ' | ' | ' | ' | ' | ' | 5-Jan-12 | 5-Jan-12 | ' |
Accretion of Note Discount | 0 | 0 | 0 | 0 | 0 | 8,997,898 | ' | ' | ' | ' | ' | ' |
Interest Expense, Debt | 228,542 | 253,935 | 724,412 | 815,326 | 1,069,261 | 10,875,038 | ' | ' | ' | ' | ' | ' |
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 | ' | ' | ' | '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 | ' | ' | ' | ' | ' | ' | ' |
Debt Instrument, Interest Rate at Period End | ' | ' | ' | ' | ' | ' | 12.00% | ' | ' | ' | ' | ' |
Convertible Notes Payable, Current | $7,618,050 | ' | $7,618,050 | ' | $8,464,500 | ' | ' | ' | ' | ' | ' | ' |
Debt Instrument, Debt Default, Description of Violation or Event of Default | '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. | ' | ' | ' | 'the Company’s principal shareholder, Mr. Qu, is obligated to deliver 1,000,000 shares of Common Stock to the Investors if certain Events of Default occur. | ' | ' | ' | ' | ' | ' | ' |
Convertible_Promissory_Notes_i3
Convertible Promissory Notes in Default and Due On Demand: Schedule of Long-term Debt Instruments (Details) (USD $) | 9 Months Ended | 12 Months Ended | 3 Months Ended | ||||||||
Mar. 31, 2014 | Mar. 31, 2013 | Jun. 30, 2013 | Jun. 30, 2012 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | |
Repayment Date One | Repayment Date Two | Repayment Date Three | Repayment Date Four | Repayment Date Five | Repayment Date Six | Repayment Date Seven | |||||
Repayment Date of Convertible Debt | ' | ' | ' | ' | 14-May-12 | 28-Jun-12 | 3-Jul-12 | 29-Nov-12 | 9-Oct-13 | 29-Oct-13 | 6-Mar-14 |
Repayment of convertible notes | ($846,450) | ($1,571,500) | ($1,571,500) | ($414,000) | $314,000 | $100,000 | $631,000 | $940,500 | $100,000 | $300,000 | $446,450 |
Acquisition_Purchase_Price_Pay1
Acquisition Purchase Price Payable (Details) (USD $) | 9 Months Ended | 12 Months Ended | 1 Months Ended | 12 Months Ended | ||||
Mar. 31, 2014 | Mar. 31, 2013 | Jun. 30, 2013 | Jun. 30, 2012 | Sep. 24, 2013 | Jun. 30, 2013 | Mar. 31, 2014 | Aug. 08, 2011 | |
Yantai Tianzheng | Yantai Tianzheng | Yantai Tianzheng | Yantai Tianzheng | |||||
Equity Method Investment, Ownership Percentage | 100.00% | ' | 100.00% | ' | ' | ' | ' | 100.00% |
Business Acquisition, Cost of Acquired Entity, Purchase Price | ' | ' | ' | ' | ' | $35,000,000 | $35,000,000 | ' |
Cash paid for acquisition of business | ($5,000,000) | ($12,472,815) | ($20,300,000) | ($9,700,000) | $5,000,000 | $5,000,000 | ' | ' |
Commitments_Contingencies_and_3
Commitments, Contingencies and Other Matters (Details) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | 9 Months Ended | 12 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||||||||||||||||||||
Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 | Jun. 30, 2012 | Jun. 30, 2013 | 31-May-09 | 30-May-09 | 31-May-09 | Mar. 31, 2014 | Mar. 31, 2013 | Jun. 30, 2013 | Jun. 30, 2012 | Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 | Jun. 30, 2013 | Jun. 30, 2012 | Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 | Jun. 30, 2013 | Jun. 30, 2012 | Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 | Jun. 30, 2013 | Jun. 30, 2012 | Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 | Jun. 30, 2013 | Jun. 30, 2012 | Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 | Jun. 30, 2013 | Jun. 30, 2012 | |
Contract Research and Development Arrangement | Contract Research and Development Arrangement | Contract Research and Development Arrangement | Contract Research and Development Arrangement | Contract Research and Development Arrangement | Contract Research and Development Arrangement | Contract Research and Development Arrangement | Tongbi Capsules | Tongbi Capsules | Tongbi Capsules | Tongbi Capsules | Tongbi Capsules | Tongbi Capsules | Tongbi Tablet | Tongbi Tablet | Tongbi Tablet | Tongbi Tablet | Tongbi Tablet | Tongbi Tablet | Lung Nourishing Syrup | Lung Nourishing Syrup | Lung Nourishing Syrup | Lung Nourishing Syrup | Lung Nourishing Syrup | Lung Nourishing Syrup | Zhengxintai Capsules | Zhengxintai Capsules | Zhengxintai Capsules | Zhengxintai Capsules | Zhengxintai Capsules | Zhengxintai Capsules | Fang Fengtongsheng Tablets | Fang Fengtongsheng Tablets | Fang Fengtongsheng Tablets | Fang Fengtongsheng Tablets | Fang Fengtongsheng Tablets | Fang Fengtongsheng Tablets | |||||||
CNY | Yantai Tianzheng | Yantai Tianzheng | Yantai Tianzheng | Yantai Tianzheng | |||||||||||||||||||||||||||||||||||||||
Total Contract Amount Paid | ' | ' | ' | ' | ' | ' | $2,444,350 | $2,426,910 | $15,000,000 | $2,133,925 | ' | $2,118,699 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Research and Development Expense | 25,699 | 1,995 | 88,450 | 5,985 | 7,800 | ' | ' | ' | ' | 0 | 0 | 0 | 0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Purchase Obligation | $3,661,770 | ' | $3,661,770 | ' | ' | $5,036,761 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Percentage of Total Sales | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 31.90% | 29.20% | 31.00% | 30.80% | 30.50% | 22.80% | 17.70% | 12.30% | 12.10% | 17.70% | 12.60% | 9.10% | 14.60% | 22.90% | 18.20% | 15.20% | 18.40% | 16.60% | 12.50% | 12.80% | 11.80% | 12.60% | 12.50% | 10.60% | 20.90% | 19.60% | 17.70% | 21.10% | 18.60% | 18.30% |
Commitments_Contingencies_and_4
Commitments, Contingencies and Other Matters: Schedules of Concentration of Risk, by Risk Factor (Details) | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||||||
Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 | Jun. 30, 2013 | Jun. 30, 2012 | Jun. 30, 2013 | Jun. 30, 2012 | |
A Company | A Company | A Company | A Company | B Company | B Company | B Company | B Company | C Company | C Company | C Company | C Company | Shangdong Yantai Medicine | Shangdong Yantai Medicine | Anhui DeChange Pharmaceutical | Anhui DeChange Pharmaceutical | |
Concentration Risk, Percentage | 24.60% | 43.20% | 24.80% | 31.80% | 21.60% | 0.00% | 22.80% | 0.00% | 10.80% | 10.40% | 10.50% | 0.00% | 29.00% | 13.20% | 0.00% | 16.20% |
Commitments_Contingencies_and_5
Commitments, Contingencies and Other Matters: Schedule Of Cash Balances By Geographic Segment Table Text Block (Details) (USD $) | Mar. 31, 2014 | Jun. 30, 2013 | Mar. 31, 2013 | Jun. 30, 2012 | Jun. 30, 2011 |
Cash and cash equivalents at beginning of period | $11,265,031 | $6,947,972 | $3,755,600 | $18,386,288 | $13,344,426 |
Percentage of Cash and Cash Equivalents By Geographical Segment | 100.00% | 100.00% | ' | 100.00% | ' |
United States | ' | ' | ' | ' | ' |
Cash and cash equivalents at beginning of period | 110,393 | 28,331 | ' | 23,406 | ' |
Percentage of Cash and Cash Equivalents By Geographical Segment | 0.98% | 0.41% | ' | 0.13% | ' |
China | ' | ' | ' | ' | ' |
Cash and cash equivalents at beginning of period | $11,154,638 | $6,919,641 | ' | $18,362,882 | ' |
Percentage of Cash and Cash Equivalents By Geographical Segment | 99.02% | 99.59% | ' | 99.87% | ' |
Net_Income_Per_Share_Schedule_1
Net Income Per Share: Schedule of Earnings Per Share, Basic and Diluted (Details) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 | Jun. 30, 2013 | Jun. 30, 2012 | |
Details | ' | ' | ' | ' | ' | ' |
Net Income (Loss) Available to Common Stockholders, Basic | $3,928,011 | $3,159,206 | $18,024,773 | $14,813,455 | $19,123,517 | $9,648,025 |
Effective Interest on Convertible Notes and Amortization of Debt Issued Costs | 228,542 | 253,935 | 724,412 | 815,326 | 1,069,261 | 10,875,038 |
Net Income (Loss) Available to Common Stockholders, Diluted | $4,156,553 | $3,413,141 | $18,749,185 | $15,628,781 | $20,192,778 | $20,523,063 |
Weighted average common shares outstanding, basic | 17,861,085 | 17,861,085 | 17,861,085 | 17,861,085 | 17,861,085 | 17,861,085 |
Common Shares Issuable Upon Conversion of Convertible Debt | 3,970,243 | 4,232,250 | 4,096,554 | 4,232,250 | 4,232,250 | 5,018,000 |
Weighted average common shares outstanding, diluted | 21,831,328 | 22,093,335 | 21,957,639 | 22,093,335 | 22,093,335 | 22,879,085 |
Net income per common share, basic | $0.22 | $0.18 | $1.10 | $0.83 | $1.07 | $0.54 |
Net income per common share, diluted | $0.19 | $0.15 | $0.85 | $0.71 | $0.91 | $0.54 |
Stock_Options_Details
Stock Options (Details) (USD $) | 0 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
2-May-11 | Oct. 13, 2010 | Mar. 31, 2014 | Mar. 31, 2014 | Jun. 30, 2013 | Jun. 30, 2012 | |
Details | ' | ' | ' | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 6,000 | 26,000 | ' | ' | 32,000 | 32,000 |
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price | $2 | $2 | ' | ' | $2 | $2 |
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 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 | $0 | $0 |
Stock_Options_Schedule_of_Othe1
Stock Options: Schedule of Other Share-based Compensation, Activity (Details) (USD $) | Mar. 31, 2014 | Jun. 30, 2013 | Jun. 30, 2012 |
Details | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price | $2 | $2 | $2 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number | 32,000 | 32,000 | 32,000 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Number | 32,000 | 32,000 | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term | 1.5 | 2.39 | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Exercise Price | $2 | $2 | ' |
Stock_Options_Schedule_of_Shar1
Stock Options: Schedule of Share-based Compensation, Activity (Details) (USD $) | 0 Months Ended | 12 Months Ended | |||
2-May-11 | Oct. 13, 2010 | Jun. 30, 2013 | Jun. 30, 2012 | Mar. 31, 2014 | |
Details | ' | ' | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number | ' | ' | 32,000 | 32,000 | 32,000 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Number | ' | ' | 32,000 | 32,000 | 32,000 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price | ' | ' | $2 | $2 | $2 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 6,000 | 26,000 | 32,000 | 32,000 | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested, Number of Shares | ' | ' | 32,000 | 32,000 | ' |
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price | $2 | $2 | $2 | $2 | ' |
Stockholders_Equity_Details
Stockholders' Equity (Details) (USD $) | 9 Months Ended | 12 Months Ended | ||||
Mar. 31, 2014 | Jun. 30, 2013 | Jun. 30, 2012 | Jan. 25, 2011 | Nov. 10, 2010 | Jun. 04, 2010 | |
Details | ' | ' | ' | ' | ' | ' |
Common Stock, Shares Authorized | 150,000,000 | 150,000,000 | 150,000,000 | ' | ' | ' |
Common Stock, Par Value | $0.00 | $0.00 | $0.00 | ' | ' | ' |
Percentage of Net Income to be Allocated to Reserve Fund | 10.00% | 10.00% | ' | ' | ' | ' |
Restructuring Reserve | $390,797 | ' | ' | ' | ' | ' |
Excess Stock, Shares Issued | ' | ' | ' | ' | ' | 120,000 |
Common Stock, Shares Issued | 17,861,085 | 17,861,085 | 17,861,085 | 20,000 | 25,000 | ' |
Operating_Expenses_Schedule_of1
Operating Expenses: Schedule of Operating Costs and Expenses Table Text Block (Details) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 | Jun. 30, 2013 | Jun. 30, 2012 | |
Details | ' | ' | ' | ' | ' | ' |
Commission | $20,910,232 | $17,740,073 | $63,673,952 | $53,897,326 | $75,414,664 | $61,008,134 |
Marketing and Advertising Expense | 11,692 | 127,643 | 676,660 | 231,168 | 95,477 | 3,497,560 |
Professional Fees | 13,238 | 18,432 | 502,648 | 200,708 | 230,150 | 520,261 |
Depreciation and amortization | 722,006 | 740,503 | 2,154,368 | 2,088,424 | 2,613,040 | 2,578,316 |
Staff Costs | 1,149,730 | 1,399,910 | 2,183,661 | 2,406,436 | 2,652,288 | 2,723,569 |
Research and Development Expense | 25,699 | 1,995 | 88,450 | 5,985 | ' | 7,800 |
Other Cost and Expense, Operating | 993,344 | 1,188,039 | 3,222,963 | 3,488,392 | 5,024,061 | 5,140,285 |
Impairment of intangible assets- drug formula | 0 | 0 | 0 | 1,688,486 | 1,688,486 | ' |
TOTAL OPERATING EXPENSES | $23,825,941 | $21,216,595 | $72,502,702 | $64,006,925 | $87,718,166 | $75,468,125 |
Income_Taxes_Details
Income Taxes (Details) (USD $) | 12 Months Ended | ||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2012 | |
Details | ' | ' | ' |
Effective Income Tax Rate Reconciliation At Federal Statutory Corporation Income Tax Rate | 25.00% | 34.00% | ' |
Current Foreign Tax Expense (Benefit) | ' | $7,305,429 | $7,484,941 |
Deferred Other Tax Expense (Benefit) | ' | -449,012 | -4,188,248 |
Deferred Foreign Income Tax Expense (Benefit) | ' | -285,138 | -170,059 |
Effective Income Tax Rate Reconciliation, Change in Deferred Tax Assets Valuation Allowance, Amount | ' | 449,012 | 4,188,248 |
Provision for Income Taxes | ' | 7,020,291 | 7,314,882 |
Operating Loss Carryforwards | ' | 15,696,907 | ' |
Deferred Tax Assets, Net of Valuation Allowance | ' | 5,336,949 | ' |
Valuation Allowance, Deferred Tax Asset, Change in Amount | ' | 449,012 | 4,188,248 |
Deferred Tax Assets, Valuation Allowance | ' | 449,012 | 4,188,248 |
Indefinite-lived Intangible Assets, Acquired During Period | ' | 8,048,113 | 8,161,269 |
Accumulated Amortization, Deferred Finance Costs | ' | $686,258,508 | ' |
Subsequent_Events_Details
Subsequent Events (Details) (USD $) | 12 Months Ended | ||
Apr. 05, 2014 | Apr. 21, 2014 | Aug. 15, 2013 | |
Details | ' | ' | ' |
Convertible Note | ' | 8.00% | ' |
Deposit Liabilities, Accrued Interest | ' | $1,000,000 | ' |
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 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). | ' | ' |
Debt Instrument, Face Amount | ' | ' | $4,854,000 |
Debt Instrument, Interest Rate, Stated Percentage | ' | ' | 9.00% |
Indefinite_Lived_Intangible_As3
Indefinite Lived Intangible Assets - Pharmaceutical Formulas (Details) (USD $) | 12 Months Ended |
Jun. 30, 2013 | |
Details | ' |
Goodwill and Intangible Asset Impairment | $1,688,486 |
Long_Term_Prepayments_Land_Use2
Long Term Prepayments- Land Use Rights, Net (Details) (USD $) | Mar. 31, 2014 | Jun. 30, 2013 | Jun. 30, 2012 |
Intangible assets- land use right, net | $37,350,012 | $37,863,464 | $18,739,297 |
Use Rights | ' | ' | ' |
Finite-Lived Intangible Assets, Gross | 40,207,257 | 40,093,414 | 20,240,623 |
Finite-Lived Intangible Assets, Accumulated Amortization | -2,857,245 | -2,229,950 | -1,501,326 |
Intangible assets- land use right, net | $37,350,012 | $37,863,464 | $18,739,297 |
Long_Term_Prepayments_Land_Use3
Long Term Prepayments- Land Use Rights, Net: Schedule of Expected Amortization Expense (Details) (USD $) | Mar. 31, 2014 | Jun. 30, 2013 | Jun. 30, 2012 |
Intangible assets- land use right, net | $37,350,012 | $37,863,464 | $18,739,297 |
Land Use Rights | ' | ' | ' |
Finite-Lived Intangible Assets, Amortization Expense, Next Twelve Months | ' | 812,979 | ' |
Finite-Lived Intangible Assets, Amortization Expense, Year Two | ' | 812,979 | ' |
Finite-Lived Intangible Assets, Amortization Expense, Year Three | ' | 812,979 | ' |
Finite-Lived Intangible Assets, Amortization Expense, Year Four | ' | 812,979 | ' |
Finite-Lived Intangible Assets, Amortization Expense, Year Five | ' | 812,979 | ' |
Finite-Lived Intangible Assets, Amortization Expense, after Year Five | ' | 33,798,569 | ' |
Intangible assets- land use right, net | ' | $37,863,464 | ' |
Other_Intangible_Assets_Net_Sc5
Other Intangible Assets, Net: Schedule of Finite-Lived Intangible Assets, Future Amortization Expense (Details) (Use Rights, USD $) | Mar. 31, 2014 | Jun. 30, 2013 |
Use Rights | ' | ' |
Finite-Lived Intangible Assets, Amortization Expense, Next Twelve Months | $208,271 | $4,409,149 |
Finite-Lived Intangible Assets, Amortization Expense, Year Two | 833,084 | 4,409,149 |
Finite-Lived Intangible Assets, Amortization Expense, Year Three | 833,084 | 4,409,149 |
Finite-Lived Intangible Assets, Amortization Expense, Year Four | 833,084 | 4,409,149 |
Finite-Lived Intangible Assets, Amortization Expense, Year Five | 833,084 | 4,409,149 |
Finite-Lived Intangible Assets, Amortization Expense, after Year Five | 33,809,405 | 6,093,474 |
Indefinite-lived Intangible Assets | ' | $28,139,219 |
Income_Taxes_Schedule_of_Effec1
Income Taxes: Schedule of Effective Income Tax Rate Reconciliation (Details) (USD $) | 12 Months Ended | |
Jun. 30, 2013 | Jun. 30, 2012 | |
Details | ' | ' |
Effective Income Tax Rate Reconciliation at Federal Statutory Income Tax Rate, Amount | $8,888,894 | $5,767,388 |
Effective Income Tax Rate Reconciliation, Foreign Income Tax Rate Differential, Amount | -1,905,795 | -2,445,869 |
Permanent Differences | -411,820 | -194,885 |
Valuation Allowance, Deferred Tax Asset, Change in Amount | 449,012 | 4,188,248 |
Provision for Income Taxes | $7,020,291 | $7,314,882 |
Income_Taxes_Schedule_of_Defer1
Income Taxes: Schedule of Deferred Tax Assets and Liabilities (Details) (USD $) | Jun. 30, 2013 | Jun. 30, 2012 |
Details | ' | ' |
Deferred Tax Assets, Other Tax Carryforwards | $5,250,749 | $4,801,737 |
Deferred Tax Assets, Tax Deferred Expense, Compensation and Benefits | 86,200 | 86,200 |
Deferred Tax Assets, Tax Deferred Expense, Compensation and Benefits, Other | 5,336,949 | 4,887,937 |
Deferred Tax Assets, Valuation Allowance, Current | ($5,336,949) | ($4,887,937) |