Note 7 - Intangible Assets, Net

12 Months Ended

Mar. 31, 2016

Notes

Note 7 - Intangible Assets, Net

NOTE 7 - INTANGIBLE ASSETS, NET

The intangible assets of the Company consist of land use right and purchased patents.

Net land use right and purchased patents were as follows:

	Amortization	As of
	Period	March 31, 2016		March 31, 2015
Land use right	50 years	$	1,570,605	$	1,652,177
Patent (non-US No. ZL200610068850.0)	16.5 years		7,119,421		7,489,173
Patent (non-US No. ZL200510045001.9)	14 years		9,595,741		10,094,103
Patent (non-US No. ZL200710013301.8)	15 years		-		1,628,082
Less: Accumulated amortization			(5,990,620)		(5,470,263)
Intangible assets, net		$	12,295,147	$	15,393,272

The amortization expense of land use right for the years ended March 31, 2016 and 2015 was $32,107 and $33,389, respectively.

The amortization expense of patent for the years ended March 31, 2016 and 2015 was $1,242,794 and $1,283,105, respectively.

Impairment

In October 2011, the Company acquired a patent which is a Chinese herbal medicine compound to treat renal insufficiency and its preparation” (ZL200710013301.8). The patent was recorded at cost when purchased, and was being amortized over its legal lives of 15 years on a straight-line basis. The purpose of the acquisition was to increase variety of the products which were made of pure Chinese herbals. The product was targeted to cure chronic renal insufficiency through strengthening the spleen, kidney and promoting blood circulation to dispel blood stasis. Lately, however, the same type of medicines with the similar therapeutic effect were also produced by other companies and appeared to be over supplied in the market.  In addition, due to the short supply of one core component – Sanqi, the cost of the production has been increasing.  The Company also found out certain deficiency in its product formulation which is needed to be improved.  However, the Company does not have plan to invest in such improvement because, since late 2014, it has shifted manufacturing focus from producing Chinese medicines for curing regular diseases to producing these for curing highly incidence of diseases such as cardiovascular disease.  Due to the reasons stated above, the Company decided to cease the further development of the product using this patent and the production of the medicine that uses this patent.

Pursuant to FASB ASC 350-30-50-3, the Company conducted its annual test for impairment on patent as of March 31, 2016. The Company estimated the future net undiscounted cash flows that are expected to be generated from the use of the patent and its eventual disposal. The Company determined that the fair value of the patent is nil with no disposal cash inflow. Accordingly, the Company recorded the full impairment of the patent of $1,114,942 in the year ended March 31, 2016.