Note 7 - Intangible Assets, Net

12 Months Ended

Mar. 31, 2018

Notes

Note 7 - Intangible Assets, Net

NOTE 7 - INTANGIBLE ASSETS, NET

The intangible assets consist of the following:

	Amortization	As of
	Period	March 31, 2018		March 31, 2017
Land use right	50 years	$	1,613,842	$	1,470,875
Patent (non-US No. ZL200610068850.0)	16.5 years		7,315,405		6,667,343
Patent (non-US No. ZL200510045001.9)	14 years		9,859,894		8,986,419
Intangible assets for production and marketing of Yuanbaofen product	10 years		1,755,443		1,599,930
Less: Accumulated amortization			(8,682,567)		(6,681,809)
Intangible assets, net		$	11,862,017	$	12,042,758

(i)                  Land Use Rights:

All land in the PRC is owned by the government and cannot be sold to any individual or company.  However, the government may grant a "land use right" for occupying, developing and using land. The Company records land use rights obtained as intangible assets at cost, which is amortized on the straight line method over the grant period of 50 years.

(ii)                Patents

In March 2010, the Company purchased one patent use right (ZL200610068850.0) from Shandong Yongchuntang.  The Company has exclusive right to use an aglycone type and purification method of biotransformation in the gingko product manufacturing process for a period of 20 years from the patent application date. 

In October 2011, based on a purchase agreement signed with Jining Tianruitong Technology development Company, Limited on October 26, 2010, the Company acquired a patent "Treatment to ischemic encephalopathy and its preparation method" (ZL200510045001.9). The patent was recorded at cost when purchased, and is being amortized over its legal life on a straight-line basis. The patent's legal life is considered shorter than its remaining useful life.

(iii)              Intangible assets for production and marketing of Yuanbaofen product:

On March 18, 2017, the Company entered into an acquisition agreement (the "Agreement") with Shandong Yongchuntang Group Co., Ltd. (“Shandong Yongchuntang”) to acquire a group of tangible and intangible assets for producing and marketing acer truncatum products. Pursuant to the Agreement, the Company agreed to transfer 3% equity of Shandong Spring Pharmaceutical to Shandong Yongchuntang in exchange for a group of research equipment and a group of intangible assets related to Acer Truncatum Industrial Project (the "Project). The group of the intangible assets includes a patent on the refinery process of the acer truncatum seed oils, a trademark with the name of "Bao Feng San Yi", and certain related certifications.  The fair value of assets acquired is approximately $2,338,000 (RMB14,701,200). Approximately $583,000 (RMB3,662,800) was allocated to research equipment acquired and approximately $1,755,000 (RMB11,038,400) was allocated to intangible assets acquired. This acquisition is considered as an asset acquisition as per ASU 2017-01, "Business Combinations (Topic 805). The excess amount of consideration paid over the fair market value of assets acquired was $448,690, which was recorded as a reduction to the Company's equity. The tangible and intangible assets acquired related to the Project are being depreciated or amortized over the useful life of 3 to 10 years on a straight-line basis.

Pursuant to FASB ASC 350-30-50-3, the Company conducted its annual test for impairment on intangible assets, related to the project as of March 31, 2018 and 2017. No impairment of intangible assets was recorded in the years ended March 31, 2018 and 2017.

The amortization expense of land use right for the years ended March 31, 2018 and 2017 was $30,634 and $30,163, respectively.

The amortization expense of patents for the years ended March 31, 2018 and 2017 was $1,085,255 and $1,068,594, respectively.

The amortization expense of intangible assets for production and marketing of the Yuanbaofen product for the years ended March 31, 2018 and 2017 was $166,606 and $0, respectively.