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Note 8 - Related Party Transactions and Balances
3 Months Ended
Jun. 30, 2017
Notes  
Note 8 - Related Party Transactions and Balances

NOTE 8 - RELATED PARTY TRANSACTIONS AND BALANCES

 

Balances:

 

(i)                  Security deposit to related party:

The security deposit - related party of $1,476,145 represents the deposit paid to Shandong Yongchuntang Bioengineering Co. Ltd. ("Shandong Yongchuntang") on January 4, 2017 for using the direct-sales license issued to Shandong Yongchuntang. The amount is non-interest bearing and not secured. Shandong Yongchuntang owns 3% equity of Shandong Spring.

 

(ii)                Trade related balance with related party:

 

On June 30, 2017, purchase deposit to related party of $1,318,791 pertains to purchase deposit paid in respect of purchase of healthcare products from Shandong Yongchuntang.

 

On March 31, 2017, accounts payable balance of $706,048 pertains to payable in respect of purchase of healthcare products from Shandong Yongchuntang.

 

Contingency:

The Company is authorized by Shandong Yongchuntang to sell Shandong Yongchuntang's products using the direct-sales license issued to Shandong Yongchuntang.  As a condition for using the direct-sales license, the Company needs to make 20% sales increase each year based on the 95% of sales of the year 2014.  If the Company cannot meet this sales target in any year from April 1, 2017 to June 30, 2020, the Company needs to pay approximately $1.4 million as an annual fee for using the direct-sales license.  There is risk that the Company may fail to meet the sales target and may need to pay approximate $1.4 million in the subsequent years.