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Note 12 - Related Party Transactions and Balances
12 Months Ended
Mar. 31, 2018
Notes  
Note 12 - Related Party Transactions and Balances

NOTE 12 - RELATED PARTY TRANSACTIONS AND BALANCES

 

Balances:

 

(i) Security deposit to related party:

 

The security deposit to related party of $1,590,305 represents the deposit paid to 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% of the equity of Shandong Spring Pharmaceutical.

 

(ii) Trade related balance with related party:

 

On March 31, 2018, purchase deposit to related party of $1,412,864 pertains to a purchase deposit paid in respect of the purchase of healthcare products from Shandong Yongchuntang.

 

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

 

Transactions:

 

(i) Acquisition of assets

 

On March 18, 2017, 3% equity of Shandong Spring Pharmaceutical was transferred to Shandong Yongchuntang in exchange for tangible and intangible assets related to Acer Truncatum Industrial Project. (See Note 7 and Note 11.)

 

(ii) Sales to related party

 

During the years ended March 31, 2018 and 2017, the Company sold acer truncatum seed oil products to Shandong Yongchuntang for $337,535 and $134,413, respectively.

 

(iii) Purchase from related party (See Note 13)

 

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 a 20% sales increase each year based on 95% of sales in the year 2014.  If the Company cannot meet this sales target in any year from April 1, 2017 to June 30, 2020, a security deposit of approximately $1.6 million will be used as an annual fee for using the direct-sales license.  There is a risk that the Company may fail to meet the sales target and may need to pay approximately $1.6 million in the subsequent years.