NOTE 6- INVESTMENTS

A)	Investments in unconsolidated entities

On September 27, 2012, Ankang Longevity Group entered into two equity investment agreements with a third party, Shaanxi Pharmaceutical Group Pai’ang Medicine Co. Ltd., a Chinese state-owned pharmaceutical enterprise to invest a total of RMB 6.8 million (approximately $1.0 million) to form a joint venture pharmacy retail company called Shaanxi Pharmaceutical Sunsimiao Drugstores Ankang Retail Chain Co., Ltd. (“Sunsimiao Drugstores”), and a joint venture pharmaceutical wholesale distribution company named Shaanxi Pharmaceutical Holding Group Longevity Pharmacy Co., Ltd. (“Shaanxi Longevity Pharmacy”). Ankang Longevity Group obtained 49% interest in each of these two new joint venture companies. These two joint ventures are formed as new business entities to collaborate with Shaanxi Pharmaceutical Group to expand sales to regional hospitals and clinics and to establish the presence of retail pharmacies under the Brand name “Sunsimiao”. These two companies started business operations in May 2013. The investments were accounted for using the equity method because Ankang Longevity Group has significant influence, but no control of these two entities. Ankang Longevity Group recorded a net income of $532,320 and $599,118 for the years ended June 30, 2016 and 2015, respectively, from the investment, which was included in “Income from equity method investments” in the consolidated statements of operations and comprehensive income.

In September 2013, Ankang Longevity Group entered into a supplemental agreement with Shaanxi Pharmaceutical Group Pai’ang Medicine Co. Ltd. (“Shaanxi Pharmaceutical Group”). According to the supplemental agreement, the new joint-venture companies established by Shaanxi Pharmaceutical and Ankang Longevity Group are required to exclusively purchase certain raw materials and drug products from Shaanxi Pharmaceutical Group. In return, Shaanxi Pharmaceutical Group has agreed to compensate Ankang Longevity Group with a preferred distribution equal to 7% of the total purchases made from Shaanxi Pharmaceutical Group. For the years ended June 30, 2016 and 2015, a total of $1,124,258 and $1,124,010 were recognized by Ankang Longevity Group from this supplemental agreement in addition to its 49% share of the net income of the joint ventures, respectively.

On each of April 6, 2013 and June 2, 2013, Tenet-Jove entity invested RMB 1.5 million each (approximately $0.23 million) into two new companies: Nanjing Kang Tian Yi Dressing & Adornment Co., Ltd (“Nanjing Kangtianyi”) and Tianjin Ou Feng Biotechnology Co., Ltd (“Tianjin Ou’Feng”), to obtain non-controlling interests of 30% and 40%. Both companies have not been able to generate profits. Tianjin Ou’Feng has gone out of business as of June 30, 2015. As a result, the Company recorded impairment of $244,350 on these investments in unconsolidated entities for the year ended June 30, 2015. In November 2015, Tenet-Jove entity collected RMB 100,000 ($16,370) from Nanjing Kangtianyi as investment income. In June 2016, the Company withdrew its investments in both companies and received RMB 3.0 million (approximately $0.45 million) of its original investment amount. As a result of the withdrawal, the Company recognized a gain of approximately $233,000 for the year ended June 30, 2016.

On October 21, 2013, the Company, through its controlled subsidiaries, Zhisheng Freight and Zhisheng Agricultural, entered into an agreement with an unrelated third party, Zhejiang Zhen’Ai Network Warehousing Services Co., Ltd. (“Zhen’Ai Network”), and invested RMB 14.5 million (approximately $2.2 million) into Tiancang Systematic Warehousing project (“Tiancang Project”) operated by Zhen’Ai Network. Tiancang Project is an online platform established to provide comprehensive warehousing and logistic solutions to companies involved in E-commerce. The Company is entitled to a profit sharing of 29% of Tiancang Project’s after-tax net income annually, less 30% statutory reserve and 10% employee welfare fund. When the amount of the accumulated statutory reserve reaches 30% of the total investment for the Tiancang Project, no additional appropriation of the statutory reserve is required. The Tiancang Project is currently up and running. For the year ended June 30, 2016, Zhisheng Freight received investment income distribution of $139,949 from Zhen’Ai Network.

The Company’s investments in unconsolidated entities consist of the following:

	June 30, 2016		June 30, 2015

Shaanxi Pharmacy Holding Group Longevity Pharmacy Co., Ltd ( Ankang Longevity Pharmacy )	$	2,091,531	$	1,797,814
Shaanxi Pharmacy Sunsimiao Drugstores Ankang Chain Co., Ltd		493,008		452,939
Nanjing Kang Tian Yi Dressing & Adornment Co., Ltd		-		245,550
Zhejiang Zhen’Ai Network Warehousing Services Co., Ltd.		2,182,308		2,373,650
Total	$	4,766,847	$	4,869,953

Summarized financial information of unconsolidated entities is as follows:

	June 30, 2016		June 30, 2015

Current assets	$	28,450,106	$	26,768,724
Noncurrent assets		386,764		547,736
Current liabilities		23,577,799		22,739,953
Noncurrent liabilities		-		-

	For the years ended June 30,
	2016		2015
Net sales	$	25,456,718	$	35,891,304
Gross profit		3,382,468		3,233,879
Income from operations		1,071,742		1,857,819
Net income		1,086,377		1,856,794

B) Investments in real estate project

On January 28, 2014, the Company, through one of its VIEs, Ankang Longevity Group, entered into an agreement (“Agreement”) with an unrelated third party, Shaanxi Xunyang Hongye Real Estate Co., Ltd. (“Xunyang Hongye”), to jointly invest a total of RMB 60.0 million (approximately $9.0 million) to build a site for planned Chinese herbal medicine exchange market (the “Exchange”) in Ankang City, China. The Exchange intends to provide services to Chinese herbal medicine traders and wholesalers by incorporating physical trading spaces, an online trading platform and logistic services into one-stop shop. Ankang Longevity Group contributed RMB 40.0 million (approximately $6.0 million) for this project, which, in return, entitles Ankang Longevity Group to 60% ownership of the real estate properties that are being constructed. Xunyang Hongye is an experienced real estate developer which is contributing its expertise and license to develop this project. The building has been completed and put in use during the last quarter of the fiscal 2016 after being granted the Certificate of Occupancy. Pursuant to the allocation agreement signed between Ankang Longevity Group and Xunyang Hongye initially signed on October 30, 2015, the Chinese herbal medicine trading hall on the 1st and 2nd floor of the building (total area of 1,720 square meter), the apartments on 3rd floors (total area of 820 square meter) and 4 underground parking spots were allocated and transferred to the Company. Thus the Company reclassified RMB 40.0 million investment in real estate project (approximately $6.0 million) to property and equipment.

The Company’s investments in real estate project consist of the following:

	June 30, 2016		June 30, 2015
Shanxi XunyangHongye Real Estate Co., Ltd	$	-	$	6,548,000

Total investments (A+B)	$	4,766,847	$	11,417,953