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Note 9 - Related Party Transactions and Balances
9 Months Ended
Dec. 31, 2018
Notes  
Note 9 - Related Party Transactions and Balances

NOTE 9 - RELATED PARTY TRANSACTIONS AND BALANCES

 

Balances:

 

 (i)      Security deposit to related party:

 

The security deposit to related party of $1,457,046 represents the deposit paid to Shandong Yongchuntang Group 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% of the equity of Shandong Spring.

 

(ii) Trade related balance with related party:

 

On December 31, 2018 and March 31, 2018, purchase deposit to related party of $1,195,399 and $1,412,864, respectively, pertains to a purchase deposit paid in respect of the purchase of healthcare products from Shandong Yongchuntang.

 

Transactions:

 

(i) Purchase from related party (See Note 10)

 

(ii) Sales to related party:

 

During the three and nine months ended December 31, 2018, the Company sold acer truncatum oil product to Shandong Yongchuntang for $271,415.

 

During the three and nine months ended December 31, 2017, the Company sold acer truncatum oil product to Shandong Yongchuntang for $131,906.

 

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 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 $1.5 million (RMB 10 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 $1.5 million (RMB 10 million) in the subsequent years.