0001144204-12-038407.txt : 20120706 0001144204-12-038407.hdr.sgml : 20120706 20120706143044 ACCESSION NUMBER: 0001144204-12-038407 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 20110630 FILED AS OF DATE: 20120706 DATE AS OF CHANGE: 20120706 FILER: COMPANY DATA: COMPANY CONFORMED NAME: China YCT International Group, Inc. CENTRAL INDEX KEY: 0000847464 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 652954561 STATE OF INCORPORATION: FL FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-53600 FILM NUMBER: 12950355 BUSINESS ADDRESS: STREET 1: GUCHENG ROAD SICHUI COUNTY STREET 2: SHANDONG PROVINCE CITY: SICHUI STATE: F4 ZIP: 273200 BUSINESS PHONE: 86-537-4268278 MAIL ADDRESS: STREET 1: GUCHENG ROAD SICHUI COUNTY STREET 2: SHANDONG PROVINCE CITY: SICHUI STATE: F4 ZIP: 273200 FORMER COMPANY: FORMER CONFORMED NAME: itLinkz Group, Inc. DATE OF NAME CHANGE: 20070406 FORMER COMPANY: FORMER CONFORMED NAME: MEDICAL TECHNOLOGY & INNOVATIONS INC /FL/ DATE OF NAME CHANGE: 19960118 FORMER COMPANY: FORMER CONFORMED NAME: SOUTHSTAR PRODUCTIONS INC DATE OF NAME CHANGE: 19960118 10-Q/A 1 v316820_10qa.htm FORM 10-Q/A

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q/A

Amendment No. 3

 

x             QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

                             For the quarterly period ended June 30, 2011

 

¨             TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

                 For the transition period from ______________ to _____________

 

Commission file number: 0-53600

 

CHINA YCT INTERNATIONAL GROUP, INC.

(Exact name of registrant as specified in its charter)

 

Delaware 65-2954561
(State or other jurisdiction of incorporation or (IRS Employer Identification No.)
organization)  

 

 

c/o Shandong Spring Pharmaceutical Co., Ltd Economic Development    
Zone.  
Gucheng Road Sishui County Shandong Province PR China   273200 
(Address of principal executive offices)   (Zip Code)

 

Issuer's telephone number: 406-282-3188

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ¨ No x

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x   No ¨

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  £                         Accelerated filer £

Non-accelerated filer    £ (Do not check if a smaller reporting company)  Smaller reporting company x

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  ¨  No x

 

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes x No ¨

 

The number of shares outstanding of the issuer’s common stock on September 5, 2011 was 73,780,610.

 

 
 

 

EXPLANATORY NOTE – AMENDMENT

 

The Form 10Q/A is being amended to restate our previously issued financial statements for the quarter ended June 30, 2011. On February 28, 2011, we acquired a United States patent which was accounted for as an acquisition of an asset. However, we recognized the contingent considerations that would be accounted for under the acquisition of a business. Therefore, we overstated the fair value of the patent. We restated our financial statements to correct this error. The changes in the financial statements at June 30, 2011 include, but are not limited to, a decrease in the amount recorded for net intangible assets by $22,761,679 a decrease in the amount recorded as a contingent liability by $23,391,902, and a reduction of $471,770 in retained earnings. We have also provided additional explanation as to (i) the intended purposes of the patent, (ii) the lack of accounts receivable as of June 30, 2011 and (iii) the lack of effectiveness of our internal controls and procedures at June 30, 2011.

 

 
 

 

CHINA YCT INTERNATIONAL GROUP, INC.

FORM 10-Q/A

 QUARTERLY PERIOD ENDED JUNE 30, 2011

 

INDEX

TABLE OF CONTENTS

 

    Page
     
  PART I - FINANCIAL INFORMATION  
     
Item 1: Financial Statements 3
     
Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations 20
     
Item 3: Quantitative and Qualitative Disclosures About Market Risk 24
     
Item 4: Controls and Procedures 25
     
  PART II - OTHER INFORMATION  
     
Item 1: Legal Proceedings 26
     
Item 1A: Risk Factors 26
     
Item 2: Unregistered Sales of Equity Securities and Use of Proceeds 26
     
Item 3: Defaults Upon Senior Securities 26
     
Item 4: Removed and Reserved 26
     
Item 5: Other Information 26
     
Item 6: Exhibits 26

 

2
 

 

Item 1. Financial Statement

 

CHINA YCT INTERNATIONAL GROUP, INC.
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED JUNE 30, 2011 AND 2010 (UNAUDITED)
 
Table of Contents

 

  Page
   
Consolidated Balance Sheets as of June 30, 2011 (Unaudited) and March 31, 2011 4
   
Consolidated Statements of Income for the three months ended June 30, 2011 and 2010 (Unaudited) 5
   
Consolidated Statements of Cash Flows for the three months ended June 30, 2011 and 2010 (Unaudited) 7
   
Notes to Consolidated Financial Statement (Unaudited) 8-19

 

3
 

 

CHINA YCT INTERNATIONAL GROUP, INC.

CONDENSED CONSOLIDATED BALANCE SHEET
RESTATED, June 30, 2011 & March 31, 2011

 

   UNIT: USD$ 
   June 30, 2011   March 31, 2011 
   (Unaudited)   (Audited) 
   (Restated)   (Restated) 
Assets          
Current assets:          
Cash and cash equivalent  $16,316,460   $6,046,804 
Prepaid accounts   5,551,348    15,602,258 
Inventory   1,635,250    59,183 
Total current assets   23,503,058    21,708,245 
Plant, property and equipment, net   9,677,789    9,629,558 
Construction in progress   213,956    211,189 
Intangible assets, net   39,375,325    40,560,015 
Total assets   72,770,128    72,109,007 
           
Liabilities and Stockholders’ Equity (Deficit)          
Liabilities:          
Current liabilities:          
Accounts payable   209,871    0 
Tax payable   597,391    1,683,944 
Other payable   113,937    229,561 
Total current liabilities   921,199    1,913,505 
Contingency   0    0 
Total liabilities   921,199    1,913,505 
           
Stockholders’ Equity          
Preferred stock, par value $500.00 per share; 45 shares authorized and issued at September 30, 2010 and March 31, 2010   22,500    22,500 
Common stock, par value $0.001 per share; 100,000,000 shares authorized; 73,780,610 and 73,758,388 shares issued and outstanding at June 30, 2011 and March 31, 2011, respectively   73,780    73,758 
Additional paid-in capital   36,879,643    36,868,554 
Statutory reserve   956,633    956,633 
Retained earnings   31,457,805    30,232,764 
Accumulated other comprehensive income   2,458,568    2,041,293 
Total stockholders’ equity   71,848,929    70,195,502 
Total liabilities and stockholders’ equity  $72,770,128   $72,109,007 

 

Notes to Financial Statements is attached.

 

 

4
 

 

CHINA YCT INTERNATIONAL GROUP, INC.

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
RESTATED, For The Three Months Ended June 30, 2011

(Unaudited)

 

   UNIT: USD$ 
   FOR THE THREE MONTHS
ENDED
 
   June 30, 2011   June 30, 2010 
    (Restated)     
Sales Revenue  $7,944,264   $5,661,519 
Cost of Goods Sold   3,582,345    3,061,321 
Gross Profit   4,361,919    2,600,198 
           
Selling Expenses   1,179,552    502,713 
G&A Expense   1,408,820    294,536 
R&D Expenses   193,518    60,338 
Total expense   2,781,890    857,587 
Income from operation   1,580,029    1,742,611 
Interest income (Expense)   -41    - 
Other income (Expense)   68,215    - 
Profit before tax   1,648,203    1,742,611 
Income tax   412,051    459,298 
           
Net income   1,236,152    1,283,313 
Other comprehensive income          
Foreign currency translation adjustment   417,275    144,853 
Comprehensive income  $1,653,427   $ 1 ,428,166 
           
Basic and diluted income per common share        
Basic and Diluted    0.02    0.04 
           
Weighted average number of common shares outstanding        
Basic and Diluted    73,780,610    29,471,503 

 

 

Notes to Financial Statements is attached.

 

5
 

 

CHINA YCT INTERNATIONAL GROUP, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDER EQUITY

 

                                   UNIT: USD$ 
CHINA YCT INTERNATIONAL
GROUP, INC.
  Preferred Stock
Series A
   Common shares   Additional
paid
    Statutory   Accumulated   Retained     
   Shares   Amount   Shares   Amount   in capital   Reserve   OCI   Earnings   Total 
                                     
Balance - March 31, 2011 (Restated)   45   $22,500    73,758,388   $73,758   $36,868,554   $956,633   $2,041,293   30,232,764   $70,195,502 
Net income for the quarter (Restated)                                      1,236,152    1,236,152 
Issuance of common shares to independent directors             22,222    22    11,089              (11,111)   0 
Foreign currency translation adjustment (Restated)                                 417,275         417,275 
Balance - June 30, 2011 (Restated)   45   $22,500    73,780,610   $73,780   $36,879,643   $956,633   $2,458,568   $31,457,805   $71,848,929 

 

 

Notes to Financial Statements is attached.

 

6
 

 

CHINA YCT INTERNATIONAL GROUP, INC.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW

RESTATED, Three Month Ended June 30, 2011

(Unaudited)

 

   UNIT: USD$ 
   THREE MONTHS ENDED 
   June 30, 2011   June 30, 2010 
   (Restated)      
Cash Flows From Operating Activities:          
Net income  1,236,152   $1,283,313 
Adjustments to reconcile net income to net cash provided by operating activities:          
Depreciation and amortization   2,050,602    147,414 
Issue of common shares as compensation        19,760 
Changes in operating assets and liabilities:          
Inventory   (1,576,067)   71,837 
Accounts payable   209,871    (2,299,928)
Taxes payable   (646,397)   (478,039)
Accrued expenses and other payables   (115,624)   42,292 
           
Net cash provided by (used in) operating activities   1,158,537    (1,213,351)
           
Cash flows from investing activities:          
Addition to plant and equipment   (77,596)   (52,618)
Prepayment to a third party vendor for acquisition of patent   10,030,688    (7,355,192)
           
Net cash provided by (used in) investing activities   9,953,092    (7,407,810)
           
Effect of exchange rate changes on cash and cash equivalents   (841,973)   101,975 
           
Net increase (decrease) in cash and cash equivalents   10,269,655    (8,519,186)
           
Cash and cash equivalents at beginning of period   6,046,804    11,911,933 
           
Cash and cash equivalents at ending of period  $16,316,460   $3,392,747 
           
Supplemental disclosures of cash flow information:          
Cash paid during the periods for:          
Interest   81    0 
Income taxes  $1,936,972   $1,231,593 
Non-cash financing activities:          
Stock issued for services   22,222    14,970 

 

 

Notes to Financial Statements is attached.

 

7
 

 

NOTE 1 - ORGANIZATION AND PRINCIPAL ACTIVITIES

 

China YCT International Group, Inc. (“China YCT”) was incorporated in the State of Florida, in the United States (the “US”) in January 1989, and reincorporated in the State of Delaware on April 4, 2007.  China YCT principally operates through the following directly owned subsidiaries: Landway Nano Bio-Tech, Inc. (100% owned), incorporated in Delaware, in the United States, and Shandong Spring Pharmaceutical Co., Ltd. (“Shandong Spring”), (100% owned), incorporated in the People’s Republic of China (“PRC”). China YCT International Group, Inc. and its subsidiaries are collectively referred to as the “Company.”

 

China YCT, through its wholly owned subsidiary, Shandong Spring, is engaged in the business of developing, manufacturing and marketing its own medicine from gingko extract, and other dietary supplement products in the P.R. China.

 

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of presentation

 

The consolidated financial statements of the Company are prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”).

 

Principles of consolidation

 

The consolidated financial statements include the financial statements of China YCT, Landway Nano and its wholly owned subsidiary, Shandong Spring.  All inter-company transactions and balances are eliminated in consolidation.

 

Use of estimates

 

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant accounting estimates reflected in the Company’s consolidated financial statements include: the valuation of inventory, and estimated useful lives and impairment of property and equipment and intangible assets.

 

Cash and cash equivalents

 

For the purposes of the statement of cash flow, the Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.

 

8
 

 

Inventory

 

Inventory is primarily composed of raw materials and packing materials for manufacturing, work in process, and finished goods. Inventories are valued at the lower of cost or market with cost determined on a weighted average basis. Management compares the cost of inventory with the market value and an allowance is made for writing down the inventory to its market value, if lower than cost.

 

Property and equipment

 

Property and equipment are stated at cost. The cost of an asset comprises its purchase price and any directly attributable costs of bringing the asset to its present working condition and locations for its intended use. Depreciation is calculated using the straight-like method over the following useful lives:

 

Buildings 30-35 years
   
Machinery, equipment and automobiles 7-15 years

 

Expenditures for maintenance and repairs are charged to expense as incurred. Additions, renewals and betterments are capitalized.

 

Intangible Assets

 

  (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 evenly over the grant period of 50 years.

 

  (ii) Patents:

 

In March 2010, the Company purchased one patent from Shandong YCT Corp.  The patent is the Company’s 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.  The patent was recorded at cost when purchased, and is being amortized over the shorter of its remaining legal life, 16.5 years, or its useful life, on a straight-line basis.

 

On February 28, 2011, the Company acquired U.S. patent No. 6,475,531 B1 titled “Safe Botanical Drug for Treatment and Prevention of Influenza and Increasing Immune Function”) through a purchase agreement with L.Y. Research Corp., a New Jersey Corporation.

 

9
 

 

According to the purchase agreement between the Company and L.Y. Hong Kong Biotech Limited (LYHK), CYIG acquires the patent for a consideration of issuing total 44,254,952 shares of CYIG common stock. The total value of the consideration on the acquisition date is $32,748,665 which is calculated by the total issuing shares, multiplying CYIG’s quoted stock price $0.74 per share on February 28, 2011. The patent is amortized straightly over the patent’s remaining legal life of 9.9 years starting from March 1, 2011.

 

Revenue recognition

 

The Company’s revenue recognition policies are in compliance with Staff Accounting Bulletin (“SAB”) 104, included in the Codification as ASC 605, Revenue Recognition. Sales revenue is recognized at the date of shipment to customers when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, no other significant obligations of the Company exist and collectability is reasonably assured. Payments received before all of the relevant criteria for revenue recognition are recorded as customer deposits.

 

Unearned revenue

 

Revenue from the sale of goods or services is recognized at the time that goods are delivered or services are rendered. Receipts in advance for goods to be delivered or services to be rendered in a subsequent period are carried forward as unearned revenue.

 

Impairment of long-lived assets

 

The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may no longer be recoverable. An impairment loss, measured based on the fair value of the asset, is recognized if expected future undiscounted cash flows are less than the carrying amount of the assets.

 

Value-added tax

 

Sales revenue represents the invoiced value of goods, net of a Value-Added Tax (“VAT”). All of the Company’s products that are sold in the PRC are subject to a Chinese value-added tax at a rate of 17% of the gross sales price. This VAT may be offset by VAT paid by the Company on raw materials and other materials included in the cost of producing their finished product.

 

The Company recorded net VAT Payable in amount of $85,160 and $465,811 as of June 30, 2011 and March 30, 2011, respectively.

 

Research and development

 

Research and development costs are related primarily to the Company’s developing its intellectual property. Research and development costs are expensed as incurred. The costs of material and equipment that are acquired or constructed for research and development activities and have alternative future uses are classified as plant and equipment and depreciated over their estimated useful lives.

 

10
 

 

The research and development expense for the three months ended June 30, 2011 and 2010 was $193,518 and $60,338, respectively.

 

Advertising costs

 

Advertising costs for newspaper and television are expensed as incurred.  The Company incurred advertising costs of $76,910 and nil for the three months ended June, 2011 and 2010, respectively.

 

Mailing and handling costs

 

The Company accounts for mailing and handling fees in accordance with the FASB ASC 605-45 (Emerging Issues Task Force (EITF) Issue No. 00-10, Accounting for Shipping and Handling Fees and Costs). The Company includes shipping and handling fees billed to customers in net revenues. Amounts incurred by the Company for freight are included in cost of goods sold. For the three months ended June 30, 2011 and 2010, the Company incurred $390,010 and $247,031 mailing and handling costs, respectively.

 

Net income (loss) per share (“EPS”)

 

Basic EPS excludes dilution and is computed by dividing net income (loss) attributable to common stockholders by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock (convertible preferred stock, forward contracts, warrants to purchase common stock, contingently issuable shares, common stock options and warrants and their equivalents using the treasury stock method) were exercised or converted into common stock. There are 31,610,679 and nil common stock equivalents available for dilution purposes as of June 30, 2011 and 2010, respectively.

 

Risks and uncertainties

 

The Company’s operations are carried out in the PRC. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environments in the PRC, and by the general state of the PRC’s economy. The Company’s operations in the PRC are subject to specific considerations and significant risks not typically associated with companies in the North America and Western Europe. These include risks associated with, among others, the political, economic and legal environments and foreign currency exchange. The Company’s results may be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things.

 

11
 

 

Fair Value of Financial Instruments

 

For certain of the Company’s financial instruments, including cash and cash equivalents, restricted cash, accounts receivable, accounts payable, accrued liabilities and short-term debt, the carrying amounts approximate their fair values due to their short maturities.

 

As of June 30, 2011, the Company did not identify any financial instruments that are required to be presented on the balance sheet at fair value other than those whose carrying amounts approximate fair value due to their short maturities.

 

Foreign currency translation

 

The accounts of the Company’s Chinese subsidiary are maintained in the RMB and the accounts of the U.S. parent company are maintained in the USD. The accounts of the Chinese subsidiary were translated into USD in accordance with Accounting Standards Codification (“ASC”) Topic 830 “Foreign Currency Matters,” with the RMB as the functional currency for the Chinese subsidiary. According to Topic 830, all assets and liabilities were translated at the exchange rate on the balance sheet date; stockholders’ equity is translated at historical rates and statement of income items are translated at the weighted average exchange rate for the period. The resulting translation adjustments are reported under other comprehensive income in accordance with ASC Topic 220, “Comprehensive Income.” Gains and losses resulting from the translations of foreign currency transactions and balances are reflected in the statements of income.

 

Translation adjustments resulting from this process amounted to $417,275 and $144,853 for the three months ended June 30, 2011 and 2010, respectively.

 

The following exchange rates were adopted to translate the amounts from RMB into United States dollars (“USD$”) for the respective periods:

 

   June 30,
2011
   March 31,
2011
   June 30,
2010
 
Three Months End RMB Exchange Rate (RMB/USD$)    6.4716    6.5564    6.7909 
Average Period RMB Exchange Rate (RMB/USD$)    6.5011    6.7111    6.8235 

 

12
 

 

Recent accounting pronouncements

 

In April 2010, the FASB issued FSP FAS 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial Instruments. This FSP amends SFAS No. 107, Disclosures about Fair Value of Financial Instruments, to require an entity to provide disclosures about the fair value of financial instruments in interim financial information. This FSP also amends Accounting Principles Board Opinion No. 28, Interim Financial Reporting, to require those disclosures in summarized financial information at interim reporting periods. FSP FAS 107-1 and APB 28-1 are effective for interim periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009.  Effective April 1, 2009, the Company adopted this pronouncement.  The adoption of this pronouncement did not have any significant impact on the Company’s financial condition or results of operations.

 

In January 2010, the FASB issued authoritative guidance to improve disclosures about fair value measurements. This guidance amends previous guidance on fair value measurements to add new requirements for disclosures about transfers into and out of Levels 1 and 2 and separate disclosures about purchases, sales, issuances, and settlements relating to Level 3 measurement on a gross basis rather than on a net basis as currently required. This guidance also clarifies existing fair value disclosures about the level of disaggregation and about inputs and valuation techniques used to measure fair value. This guidance is effective for annual and interim periods beginning after December 15, 2009, except for the requirement to provide the Level 3 activities of purchases, sales, issuances, and settlements on a gross basis, which will be effective for annual and interim periods beginning after December 15, 2010. Early application is permitted and, in the period of initial adoption, entities are not required to provide the amended disclosures for any previous periods presented for comparative purposes. The Company does not expect the adoption of this pronouncement to have a significant impact on its financial condition or results of operations.

 

NOTE 3 - RESTATEMENT OF FINANCIAL STATEMENTS

 

On April 4, 2012, the Audit Committee of the Board of Directors, based on discussions with management, concluded that the Company would restate its consolidated financial statements for the quarter ended June 30, 2011 in conjuction with the restatement of the financial statements for the year ended March 31, 2011 to correct the following errors:

 

·On February 28, 2011, we acquired a US patent which was accounted for as an acquisition of an asset. However, we recognized as part of the patent’s value the contingent consideration in the form of additional common stock that could be issued to the seller of the patent. Therefore, we overstated the fair value of the patent as recorded as the value for our intangible assets on the balance sheets since the year ended March 31, 2011. As a result, we adjusted the value of the intangible assets to reduce the value of the intangible asset by $22,761,679 at June 30, 2011; we made adjustment to reduce the contingent liability associated with the unissued shares by $23,391,902 at June 30, 2011;

 

·We did not accrue the amortization expense for the acquired US patent for the three month ended June 30, 2011 due to the uncertainty about continuing the contract. Therefore, we made an adjustment to increase by $825,597 the amortization expense and accumulated amortization for the US patent based on its restated value. We also made an adjustment to decrease by $157,256 the income tax based on the restated net income.

 

The effect of the adjustments on the consolidated statement of operations for the three months ended June 30, 2011 is to decrease net income attributable to common shares by $619,198. The effect of the adjustments on net income per common share from operations for the three months ended June 30, 2011 is a $0.01 decrease in net income per common share.

 

13
 

 

China YCT International Group, Inc.

Consolidated Balance Sheet

 

   June 30, 2011 
   As Previously
Reported
   Adjustments   As Restated 
Assets               
Current assets:               
Cash and cash equivalent  $16,316,460   $-   $16,316,460 
Prepaid accounts   5,551,348    -    5,551,348 
Inventory   1,635,250    -    1,635,250 
Total current assets   23,503,058    -    23,503,058 
Plant, property and equipment, net   9,677,789    -    9,677,789 
Construction in progress   213,956    -    213,956 
Intangible assets, net   62,137,004    (22,761,679)   39,375,325 
Total assets   95,531,808    (22,761,679)   72,770,128 
                
Liabilities and Stockholders’ Equity (Deficit)               
Liabilities:               
Current liabilities:               
Accounts payable   209,871    -    209,871 
Tax payable   754,647    (157,256)   597,391 
Other payable   113,937    -    113,937 
Total current liabilities   1,078,454    (157,255)   921,199 
Contingency   23,391,902    (23,391,902)   - 
Total liabilities   24,470,356    (23,549,157)   921,199 
                
Stockholders’ equity               
Preferred stock, par value $500.00 per share; 45 shares authorized and issued at September 30, 2010 and March 31, 2010   22,500    -    22,500 
Common stock, par value $0.001 per share; 100,000,000 shares authorized, 29,461,304 shares issued and outstanding at March 31, 2010; and 73,731,361 shares issued and outstanding at March 31, 2011.   73,780    -    73,780 
Additional paid-in capital   36,879,643    -    36,879,643 
Statutory reserve   956,633    -    956,633 
Retained earnings   31,929,575    (471,770)   31,457,805 
Accumulated other comprehensive income   1,199,321    1,259,247    2,458,568 
Total stockholders’ equity   71,061,452    787,477    71,848,929 
Total liabilities and stockholders’ equity  $95,531,808   $(22,761,680)  $72,770,128 

 

14
 

 

China YCT International Group, Inc.

Consolidated Income Statement

 

   Three Months Ended June 30, 2011 
   As Previously Reported   Adjustments   As Restated 
Sales Revenue  $7,944,264   $-   $7,944,264 
Cost of Goods Sold   3,582,345    -    3,582,345 
Gross Profit   4,361,919    -    4,361,919 
                
Selling Expenses   1,179,552    -    1,179,552 
G&A Expense   583,223    825,597    1,408,820 
R&D Expenses   193,518    -    193,518 
Total expense   1,956,293    825,597    2,781,890 
Income from operation   2,405,626    (825,597)   1,580,029 
Interest Income (Expense)   (41)   -    (41)
Other income (Expense)   68,215    -    68,215 
Profit before tax   2,473,800    (825,597)   1,648,203 
Income tax   618,450    (206,399)   412,051 
                
Net income   1,855,350    (619,198)   1,236,152 
 Other comprehensive income               
Foreign currency translation adjustment   (841,973)   1,259,248    417,275 
 Comprehensive income   1 ,013,377    640,050    1,653,427 
                
Basic and diluted income per common share               
Basic and Diluted  $0.03   $(0.01)  $0.02 
                
Weighted average number of common shares outstanding               
Basic and Diluted   73,780,610    73,780,610    73,780,610 

15
 

 

China YCT International Group, Inc.

Consolidated Statement of Cash Flows

 

   Three Months Ended June 30, 2011 
   As Previously Reported   Adjustments   As Restated 
Cash Flows From Operating Activities:               
Net income  $1,855,350   $(619,198)  $1,236,152 
Adjustments to reconcile net income to net cash provided by operating activities:               
Depreciation and amortization   1,225,006    825,596    2,050,602 
Issue of common shares as compensation   -    -    - 
Changes in operating assets and liabilities:               
Inventory   (1,576,067)   -    (1,576,067)
Advance to suppliers               
Other receivable from related parties   -    -    - 
Accounts payable   209,871    -    209,871 
Taxes payable   (439,998)   (206,399)   (646,397)
Accrued expenses and other payables   (115,624)   -    (115,624)
                
Net cash provided by (used in) operating activities   1,158,538    (1)   1,158,537 
                
Cash flows from investing activities:               
Addition to plant and equipment   (77,596)   -    (77,596)
Reduction of construction in progress   -    -    - 
Investment in Intagible Assets   -    -    - 
Prepayment for acquisition of patent   10,030,688    -    10,030,688 
                
Net cash provided by (used in) investing activities   9,953,092    -    9,953,092 
                
Effect of exchange rate changes on cash and cash equivalents   (841,973)   -    (841,973)
                
Net increase (decrease) in cash and cash equivalents   10,269,657    (1)   10,269,656 
                
Cash and cash equivalents at beginning of period   6,046,804    -    6,046,804 
                
Cash and cash equivalents at ending of period  $16,316,460   $-   $16,316,460 

 

 

16
 

 

NOTE 4 – PREPAID ACCOUNTS

 

The prepaid account in amount of $5,551,348 is a cash payment to a Chinese research company for the acquisition of a patent.  During the quarter ended June 30, 2011, $10,050,910 prepayment was refunded by the owner of the patent due to the incompletion of the required transferring paper work.  When the Company obtains the title of the patent, the rest of the payment will be made to the owner of the patent and the prepayment will be reclassified to a patent.

 

NOTE 5 - INVENTORY

 

Inventory consists of finished goods, work-in-process, and raw materials. No allowance for inventory was made for the three months ended June 30, 2011 and 2010.

 

The components of inventories as of June 30, 2011 and March 31, 2011 were as follows:

 

   Period Ended 
   June 30, 2011   March 31, 2011 
Raw materials  $854,854   $8,699 
Work-in-progress   212,846    27,225 
Finished goods   567,550    23,259 
Total Inventories  $1,635,250   $59,183 

 

NOTE 6 – PLANT, PROPERTY AND EQUIPMENT, NET

 

The components of property and equipment as of June 30, 2011 and March 31, 2011 were as follows:

 

   Period Ended 
   June 30, 2011   March 31, 2011 
Machinery & Equipment  $512,191   $516,935 
Furniture & Fixture   129,405    96,156 
Building   9,632,593    9,685,212 
Subtotal   10,474,188    10,298,303 
Less: Accumulated Depreciation   (796, 399)    (668,745)
Total plant, property and equipment, net  $9,677,789   $9,629,558 

 

The depreciation expense for the three months ended June 30, 2011 and 2010 was $127,654 and $54,456, respectively.

 

NOTE 7 – CONSTRUCTION IN PROGRESS

 

Construction in progress represents direct costs of construction or acquisition and design fees incurred for the Company’s new plant and equipment. Capitalization of these costs ceases and the construction in progress is transferred to plant and equipment when substantially all the activities necessary to prepare the assets for their intended use are completed. No depreciation is made until construction is completed and put into use.

 

NOTE 8 - MAJOR CUSTOMER AND VENDOR

 

In the three months ended June 30, 2011, the Company mainly sells products to individual retail customers through eight major distributors.

 

17
 

 

For the three months ended June 30, 2011, the purchase from the two major vendors was $4,774,381, representing 83% of the Company’s total purchase for the quarter.

 

Shandong Kangyuan    3,329,167 
Shandong YCT    1,445,213 
Total    $4,774,381 

 

NOTE 9 - 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   June 30, 2011   March 31,
2011
 
         (Restated)   (Restated) 
Land use right   50 years    1,547,801    1,547,801 
Less: Accumulated amortization        (149,626)   (139,821)
Land use right, net        1,398,175    1,407,980 
Patent 1   16.5 years    7,016,042    7,016,045 
Patent (U.S. No. 6,475,531 B1)   119 months    32,748,665    32,748,665 
Less: Accumulated amortization        (1,787,557)   (612,674)
Patents, net       $37,977,150   $39,152,036 

 

The amortization expense of land use right for the three months ended June 30, 2011 and 2010 was $9,805 and $8,141, respectively.

 

The amortization expense of the patents for the three months ended June 30, 2011 and 2010 was $1,174,887 and $84,819, respectively.

 

18
 

 

NOTE 10 - TAX PAYABLE

 

Tax payable at June 30, 2011 and March 31, 2011 were as follows:

 

   As of 
   June 31,
2011
   March 31,
2011
 
    (Restated)    (Restated) 
Corporate Income Tax  $514,240   $1,190,436 
Value-Added Tax   85,160    489,962 
Other Tax & Fees   (2,009)   3,546 
           
Total Tax Payable  $597,391   $1,683,944 

 

NOTE 11 - INCOME TAXES

 

Shandong Spring Pharmaceutical Co., Ltd is subject to the Enterprise income tax (“EIT”) at a statutory rate of 25%.

 

For the quarters ended June 30, 2011 and 2010, Shandong Spring Pharmaceutical Co., Ltd. recorded income tax provisions of $412,051 and $459,533, respectively.

 

19
 

 

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operation

 

You should read the following discussion together with our consolidated financial statements and the related notes included elsewhere in this Form 10-Q and our audited financial statements included in our Annual Report on Form 10-K. This discussion contains forward-looking statements. These forward-looking statements are based on information available at the time the statements are made and/or management’s belief as of that time with respect to future events and involve risks and uncertainties that could cause actual results and outcomes to be materially different. Important factors that could cause such differences include but are not limited to: competitive factors, general economic conditions, customer relations, relationships with vendors, the interest rate environment, governmental regulation and supervision, seasonality, distribution networks, product introductions and acceptance, technological change, changes in industry practices, onetime events and other factors described herein and in other filings made by the company with the Securities and Exchange Commission. While we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, and therefore, you should not rely on these forward-looking statements as representing our views as of any date subsequent to the date this Form 10-Q is filed with the Securities and Exchange Commission.

 

Overview

 

China YCT International Group, Inc. (“China YCT”) was incorporated in the State of Florida in January 1989, and reincorporated in the State of Delaware on April 4, 2007. China YCT principally operates through two of its wholly-owned subsidiaries: Landway Nano Bio-Tech, Inc., incorporated in Delaware, and Shandong Spring Pharmaceutical Co., Ltd. (“Shandong Spring”), incorporated in the People’s Republic of China (the “PRC”). China YCT International Group, Inc. and its subsidiaries are collectively referred to as the “Company”. China YCT, through its wholly-owned subsidiary, Shandong Spring, is engaged in the business of developing, manufacturing and marketing gingko and distributing other dietary supplement products in the PRC.

 

Results of Operations – Three Months ended June 30, 2011 compared to the Three Months Ended June 30, 2010

 

Net Sales

 

During the three months ended June 30, 2011, we realized $7,944,264 of sales revenue, an increase of 40% or $2,282,745 as compared to $5,661,519 for the same period of 2010. Starting from April 2010, we restructured our product distribution line due to profitability considerations. We discontinued the distribution of 24 cosmetic and daily necessities products due to increases of advertisement, transportation costs that resulted from new government regulations issued by SFDA of China. Meanwhile, we continued the distribution of our 10 types of health care supplement products, which are not affected by the government regulations. Since September 2009, we started to engage in the production and distribution of our own patented drug,, Huoliyuan Capsule,, and develop distribution channels for the drug. Our sales have increased since September 2009 as a result of the establishment of our manufacturing and distribution of Huoliyuan Capsule.

 

20
 

 

During the three months ended June 30, 2011, 58% of our revenues were from the sale of the 10 types of health care supplement products and 42% of our revenues were from sales of Huoliyuan Capsule. The following table sets forth a sales breakdown comparison by product for the periods under review:

 

Sales from:  June 30, 2011   June 30, 2010   Change in $   Variance 
Health care supplements   2,769,518    3,632,333    (862,815)   -24%
Drugs   4,627,751    2,029,186    2,598,565    128%
Others   546,995    0    546,995      
Total   7,944,264    5,661,519    2,282,745    40%

 

Cost of Goods Sold

 

Our costs of revenue were comprised primarily of the cost of finished goods we purchased from Shandong YCT, the raw materials we purchased from third party vendors and the manufacturing cost of Huoliyuan Capsule. During the three months ended June 30, 2011, our cost of goods sold totaled $3,582,345, representing an increase of $521,024 or 17% as compared to $3,061,321 during the same period of 2010. The percentages of the costs of goods sold to total revenues decreased to 45% from 54%, as compared to the same quarter of the previous year. The decrease of the ratio of cost of goods sold to total revenue is mainly due to the increased production and sales of Huoliyuan Capsule, which costs less than other products.

 

Gross Profit

 

Gross profit during the three months ended June 30, 2011 was $4,361,919, an increase of 68% or $1,761,721 as compared to the same period in the previous year. The increase in gross profit is a result of increased sales revenue and decreased cost of goods sold. Gross profit as a percentage of net revenues was 55% during the three months ended June 30, 2011, an increase of 9% as compared to the same period of the prior year. The increase in gross profit and gross profit percentage are primarily due to the increased sales revenue and the decreased cost of goods sold during the quarter ended June 30, 2011.

 

21
 

 

The following table sets forth a breakdown of our gross profits and gross margin of different products during the quarters ended June 30, 2011 and 2010:

 

   Gross Profit   Gross Profit 
   For the quarter ended June 30, 2011,   For the quarter ended June 30, 2010 
Products                    
Health care supplements   3,316,513    55%   1,591,014    45%
Drugs   4,627,751    54%   1,047,648    47%
Overall   7,944,264    55%   2,638,662    46%

 

Research and Development Expenses.

 

Our R&D expenses during the three months ended June 30, 2011 and 2010 were $193,518 or approximate 2% of total corresponding revenue and $60,338 or approximate 1% of total corresponding revenue, respectively. We have not incurred any significant R&D expenses since June 30, 2011. However, our long term goal is to utilize advanced biological technology to refine and extract the beneficial compounds in plants that have traditionally been known to have medicinal benefits, primarily gingko. Toward that end, we have a staff of eight employees engaged in research and development of new technologies and products. In addition we maintain close ties to the research staffs at Tsinghua University, China Agriculture University, Shandong Herbal Medicine University, and the Shandong Herbal Medicine Research Institute.

 

The influenza patent acquired in February 2011 is for an herbal medication called Pure Ban Lan Gen (“PBLG”). No expenses were incurred for research and development during the period ended June 30, 2011. The influenza patent has not been used for the production of health care products and is not related to our current line of health care products (mainly the gingko products). We acquired this patent in order to achieve the following two purposes:

 

(1)Drug - This patent will be used for research and development activities for a drug with a clinical study. The clinical study will be conducted in China. We will use the Influenza patent to apply for the IND (Investigational New Drug) of PBLG. After the clinical research and trials (Step 1, 2, 3) and qualified by the Chinese FDA, we intend to make application of new medicine to the Chinese FDA. We intend to start the research and development activities of the drug after we obtain additional financing. Assuming successful completion of the clinical study, we will then use the patent to get approval for production of the herbal drug from China’s SFDA. Once we get approval from China’s SFDA, we will use the patent to obtain the approval for production of the herbal drug from the United States’ FDA as well. We estimate that the commercialization of the patent to offer drugs that require FDA approval will not occur for three to four years and will require additional capital.

 

(2)Health Product - We also plan to sell the PBLG as a health product directly in China and the United States market. As a health product, sales of PBLG do not need any additional research and development or approval from China’s FDA and the United States’ FDA. The commercialization of the patent to offer health care products that do not require FDA approval will take one to two years. In each case, we anticipate that we will need to construct manufacturing facilities

 

Selling, General and Administrative Expenses (SG&A Expenses).

 

During the quarter ended June 30, 2011, our SG&A expenses consisted primarily of sales commissions, amortization expense, promotion expenses, freight charges and related compensation. Our overall SG&A expenses for three months ended June 30, 2011 were $2,588,372 or 33% of our net sales for the period, representing an increase of 225% or $1,791,123 as compared with the SG&A expenses for the same period of the previous year. The increase in our overall SG&A expenses was primarily due to the increase of selling expenses and amortization expense of an acquired patent.

 

Net Income

 

During the quarter ended June 30, 2011, we realized $1,236,152 in net income, representing a 4% or $47,161 decrease as compared to $1,283,313 during the quarter ended June 30, 2010. The decrease of our net income was a result of the increase in the selling expense and the amortization expense for the US patent.

 

Liquidity and Capital Resources

 

Our principal sources of liquidity were primarily generated from our operations. As of June 30, 2011, Shandong Spring Pharmaceutical had $22,581,860 in working capital, an increase of $2,580,721 or 13% as compared to $19,794,740 in working capital at March 31, 2011. The increase in the working capital at June 30, 2011 was primarily due to the increase in inventory to $1,635,250 from $59,183.

 

22
 

 

On October 26, 2010,, Shandong Spring Pharmaceutical signed an agreement to purchase three patents relating to Chinese herbal formulas from Jining Tianruitong Technology Development Limited Company for $15,557,318, which agreement was subsequently amended and restated on March 14, 2011.   As of June 30, 2011, cash and cash equivalents were $16,316,460, an increase by $10,269,656 or 170% from $6,046,804 as of March 31, 2011. The increase in the amount of cash was caused by a return of $10,050,910 from the owner of three patents because certain governmental approvals for the transfer of one patent was not completed and the patents are being purchased as a group.. We are obtaining the governmental approval for the transfer and expect to complete the transfer in the fourth quarter of the fiscal year ending March 31, 2012.  Approval from the State Intellectual Property Office of the PRC. is required to transfer the remaining patent. ..The total purchase price for the patents is $15,557,318 (based on the exchange rate on March 31, 2011) and , as of June 30, 2011, $5,414,557 had been paid. After the Company obtains title to the patents, the balance of the payment will be made in three equal annual installments of RMB 25,500,000 and the prepayment will be reclassified to the patents.

 

We did not have accounts receivable outstanding as of June 30, 2011. The Company currently sells two types of products: non-medical and medical products. Neither product’s sales are associated with any accounts receivable balance. Under the current sales model, the Company markets and sells non-medical products through distribution agents. All customers are recruited by the Company's distribution agents. When a customer places an order, the order is entered into the Company's ordering system and confirmed by designated distributors. The distributor collects payment from the customer before the order is confirmed. The confirmed order is reviewed by the Company’s sales department and the products are shipped directly to the customer from the Company. According to the sales agreements between the Company and its distributors, the Company is guaranteed to receive the full payment from distributors for all the products shipped to customers within one month from delivery. The Company reconciles its sales to the distributors' records and recognizes revenue once, at the end of each month. In the meantime, the same amount of cash associated with the Company’s sales of non-medical products is transferred to the Company's bank account from the distributors. Therefore, there is no accounts receivable balance associated with the Company’s non-medical product sales at the end of each quarter.

 

For the sales of medical products, the Company makes sales through a certified medicine sales agent. According to the contract with the agent, the Company collects cash before shipping the medical products to the agent. Since there is no credit sales, there is no accounts receivable balance associated with the Company’s medical product sales at quarter end.

 

Based on our current operating plan, we believe that existing cash and cash equivalents balances, and the funds to be generated by operations will be sufficient to meet our working capital and capital requirements for our current operations for at least the next 12 months. Our operations produced positive cash flow of $11,189,224 during the three months ended June 30, 2011 We expect our marketing activities to continue to help generate positive cash flow. The following table sets forth a summary of our cash flows for the periods as indicated:

 

   Three months ended 
   June 30, 2011   June 30, 2010 
   (Restated)     
Net cash provided by operating activities  $1,158,537   $(1,213,351)
Net cash provided by(used in) investing activities  $9,953,092   $(7,407,810)
Net cash provided by financing activities  $0   $0 
Effect of exchange rate change on cash and cash equivalents  $(841,973)  $101,975 
Net increase in cash and cash equivalents  $10,269,655   $(8,519,186)
Cash and cash equivalents, beginning balance  $6,046,804   $11,911,933 
Cash and cash equivalents, ending balance  $16,316,460   $3,392,747 

 

23
 

 

Operating Activities

 

Net cash provided by operating activities was $1,158,537 for the three month period ended June 30, 2011, an increase of 195% or $2,371,887 from the $(1,213,351) net cash provided by operating activities during the three month ended June 30, 2010. The increase was mainly attributable to the increase in the amortization expense.

 

Investing Activities

 

During the quarter ended June 30, 2011, our net cash provided by investing activities was $9,953,092, as compared to $(7,407,810) during the quarter ended June 30, 2010. This positive cash flow from the investing activities during the quarter ended June 30, 2011 was primarily caused by a refund of prepayment of $10,050,910 from the owner of a patent due to the patent not being transferred.

 

Financing Activities

 

Net cash generated or used by financing activities during the three month period ended June 30, 2011 and 2010 were both 0. None of our officers or shareholders has made commitments to the Company for financing in the form of advances, loans or credit lines.

 

In order to fully implement our business plan, however, we will require capital contributions in excess of our current level of working capital and the surplus capital which we believe will be generated from operations. Bringing our manufacturing facility to an operating level that should make the manufacturing operation profitable to produce our current products is estimated to require an additional $10 million. In order to develop the Influenza patent and offer a drug that would require Chinese FDA approval and a health care product that would not require such approval, we estimate that we will require an additional $20 million. Therefore to fully implement our business plan, including development of a facility to utilize our proprietary method of extracting flavones from ginkgo by using enzyme technology, we estimate that we will need a total of $40 million. We expect to seek equity and debt financing to obtain the funds we expect to require. At present, we have no commitment or understanding from any source for additional debt or equity capital and there can be no assurance that the funds will be available on acceptable terms.

 

Off-Balance Sheet Arrangements

 

We do not have any off-balance sheet arrangements.

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk

 

A smaller reporting company is not required to provide the information required by this Item.

 

24
 

 

Item 4. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures .

 

The term “disclosure controls and procedures” (defined in SEC Rule 13a-15(e)) refers to the controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported within required time periods. The Company’s management, with the participation of the Chief Executive Officer and Chief Financial Officer, has reassessed their previous conclusions that their disclosure controls and procedures were effective at June 30, 2011. Management considered the restatements of financial statements are indicative of a material weakness in internal control over financial reporting, therefore, concluded that, as of June 30, 2011, such controls and procedures were not effective.

 

Changes in internal controls.

 

The term “internal control over financial reporting” (defined in SEC Rule 13a-15(f)) refers to the process of a company that is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The Company’s management, with the participation of the Chief Executive Officer and Chief Financial Officer, has evaluated any changes in the Company’s internal control over financial reporting that occurred during the quarter of June 30, 2011, and they have concluded that there was no change to the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

25
 

 

PART II. OTHER INFORMATION

 

Item 1. Legal Proceedings

 

There are no material pending legal proceedings to which the Company is a party.

 

Item 1A. Risk Factors

 

A smaller reporting company is not required to provide the information required by this Item.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

On June 8, 2011, the Company issued 22,222 shares of our common stock to Robert J. Fanella, our independent director, as part of his compensation to serve as the independent director during the year of 2011. The offer and sale of the common stock therein were exempt from the registration requirements of the Securities Act of 1933 by virtue of Section 4(2) thereof and Regulation D promulgated thereunder, as transactions by an issuer not involving a public offering.

 

Item 3. Defaults Upon Senior Securities.

 

None

 

Item 4. Removed and Reserved

 

Item 5. Other Information

 

None

 

Item 6. Exhibits

 

31.1 Rule 13a-14(a)/ 15d-14(a) Certification of Chief Executive Officer
31.2 Rule 13a-14(a)/ 15d-14(a) Certification of Chief Financial Officer
32.1 Section 1350 Certification of Chief Executive Officer
32.2 Section 1350 Certification of Chief Financial Officer

 

XBRL Exhibit

101.INS XBRL Instance Document.

101.SCH XBRL Taxonomy Extension Schema Document.

101.CALXBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB XBRL Taxonomy Extension Label Linkbase Document.

101.PRE XBRL Taxonomy Extension Presentation Linkbase Document.

 

26
 

 

SIGNATURES

 

In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

CHINA YCT INTERNATIONAL GROUP, LTD.

 

By:

 

Date: July 6, 2012  
/s/ Yan Tinghe  
Yan Tinghe Chief Executive Officer  
    (Principal Executive Officer)  

 

/s/ Li Chuanmin  
Li Chuanmin Chief Financial Officer  
    (Principal Financial Officer)  

 

27

 

EX-31.1 2 v316820_ex31-1.htm EXHIBIT 31.1

EXHIBIT 31.1: Rule 13a-14(a) Certification

 

I, Yan Tinghe, certify that:

 

1.  I have reviewed this Amendment No.3 to the quarterly report on Form 10-Q of China YCT International Group, Inc.;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b. designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c. evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d. disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

 

 

 

 
 

 

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: July 6, 2012      
       
  By:  /s/ Yan Tinghe  
    Yan Tinghe, Chief Executive Officer  

 

 

EX-31.2 3 v316820_ex31-2.htm EXHIBIT 31.2

EXHIBIT 31.2: Rule 13a-14(a) Certification

 

I, Li Chuanmin, certify that:

 

1. I have reviewed this Amendment No. 3 to the quarterly report on Form 10-Q of China YCT International Group, Inc.;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b. designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c. evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d. disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

 

 

 
 

 

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: July 6, 2012 By: /s/ Li Chuanmin  
    Li Chuanmin, Chief Financial Officer  

 

 

 

 

EX-32 4 v316820_ex32.htm EXHIBIT 32

EXHIBIT 32: Rule 13a-14(b) Certification

 

In connection with the Amendment No. 3 to the Quarterly Report of China YCT International Group, Inc. (the “Company”) on Form 10-Q for the period ending June 30, 2011 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned, in the capacities and on the dates indicated below, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

 

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

July 6, 2012  /s/ Yan Tinghe  
  Yan Tinghe, Chief Executive Officer  
     
July 6, 2012  /s/ Li Chuanmin  
  Li Chuanmin, Chief Financial Officer  

 

A signed original of this written statement required by Section 906 has been provided to China YCT International Group, Inc. and will be retained by China YCT International Group, Inc. and furnished to the Securities and Exchange Commission or its staff upon request

 

 

EX-101.INS 5 cyig-20110630.xml XBRL INSTANCE DOCUMENT 73780610 3392747 213956 2458568 921199 0 72770128 73780 1635250 113937 73780610 45 23503058 956633 597391 5551348 16316460 0.001 36879643 72770128 45 22500 71848929 73780610 500.00 9677789 31457805 100000000 921199 209871 39375325 956633 2458568 31457805 73780610 73780 45 22500 36879643 11911933 211189 2041293 1913505 0 72109007 73758 59183 229561 73758388 45 21708245 956633 1683944 15602258 6046804 0.001 36868554 72109007 45 22500 70195502 73758388 500.00 9629558 30232764 100000000 1913505 0 40560015 956633 2041293 30232764 73758388 73758 45 22500 36868554 2600198 14970 42292 -7407810 3061321 1231593 7355192 -1213351 1428166 1742611 19760 1283313 60338 502713 -478039 52618 147414 5661519 1742611 -2299928 459298 -8519186 101975 0 -71837 857587 294536 0.04 29471503 -1283313 144853 Q1 CYIG CHINA YCT INTERNATIONAL GROUP, INC. true Smaller Reporting Company 2011 10-Q The Form 10Q/A is being amended to restate our previously issued financial statements for the quarter ended June 30, 2011. On February 28, 2011, we acquired a United States patent which was accounted for as an acquisition of an asset. However, we recognized the contingent considerations that would be accounted for under the acquisition of a business. Therefore, we overstated the fair value of the patent. We restated our financial statements to correct this error. The changes in the financial statements at June 30, 2011 include, but are not limited to, a decrease in the amount recorded for net intangible assets by $22,761,681 a decrease in the amount recorded as a contingent liability by $23,391,902, and a reduction of $471,770 in retained earnings. We have also provided additional explanation as to (i) the intended purposes of the patent, (ii) the lack of accounts receivable as of June 30, 2011 and (iii) the lack of effectiveness of our internal controls and procedures at June 30, 2011. 2011-06-30 0000847464 --03-31 4361919 22222 -115624 <div style="FONT: 10pt Times New Roman, Times, Serif"> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"><b>NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</b></p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> &#xA0;</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> <i><u>Basis of presentation</u></i></p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> &#xA0;</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> The consolidated financial statements of the Company are prepared in accordance with accounting principles generally accepted in the United States of America (&#x201C;US GAAP&#x201D;).</p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> &#xA0;</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> <i><u>Principles of consolidation</u></i></p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> &#xA0;</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> The consolidated financial statements include the financial statements of China YCT, Landway Nano and its wholly owned subsidiary, Shandong Spring.&#xA0;&#xA0;All inter-company transactions and balances are eliminated in consolidation.</p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> &#xA0;</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> <i><u>Use of estimates</u></i></p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> &#xA0;</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> The preparation of financial statements in conformity with US&#xA0;GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant accounting estimates reflected in the Company&#x2019;s consolidated financial statements include: the valuation of inventory, and estimated useful lives and impairment of property and equipment and intangible assets.</p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> &#xA0;</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> <i><u>Cash and cash equivalents</u></i></p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> &#xA0;</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> For the purposes of the statement of cash flow, the Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> &#xA0;</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> <i><u>Inventory</u></i></p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> &#xA0;</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> Inventory is primarily composed of raw materials and packing materials for manufacturing, work in process, and finished goods. Inventories are valued at the lower of cost or market with cost determined on a weighted average basis. Management compares the cost of inventory with the market value and an allowance is made for writing down the inventory to its market value, if lower than cost.</p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> &#xA0;</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> <i><u>Property and equipment</u></i></p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> &#xA0;</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> Property and equipment are stated at cost. The cost of an asset comprises its purchase price and any directly attributable costs of bringing the asset to its present working condition and locations for its intended use. Depreciation is calculated using the straight-like method over the following useful lives:</p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> &#xA0;</p> <table style="WIDTH: 100%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: top"> <td style="WIDTH: 35%">Buildings</td> <td style="WIDTH: 65%">30-35 years</td> </tr> <tr style="VERTICAL-ALIGN: top"> <td>&#xA0;</td> <td>&#xA0;</td> </tr> <tr style="VERTICAL-ALIGN: top"> <td>Machinery, equipment and automobiles</td> <td>7-15 years</td> </tr> </table> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> &#xA0;</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> Expenditures for maintenance and repairs are charged to expense as incurred. Additions, renewals and betterments are capitalized.</p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> &#xA0;</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> <i><u>Intangible Assets</u></i></p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> &#xA0;</p> <table style="WIDTH: 100%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: top"> <td style="WIDTH: 3%">&#xA0;</td> <td style="FONT-STYLE: italic; WIDTH: 4%; FONT-WEIGHT: bold"> <b><i>(i)</i></b></td> <td style="FONT-STYLE: italic; WIDTH: 93%; FONT-WEIGHT: bold"> <b><i>Land Use Rights:</i></b></td> </tr> </table> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> &#xA0;</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> All land in the PRC is owned by the government and cannot be sold to any individual or company.&#xA0;&#xA0;However, the government may grant a &#x201C;land use right&#x201D; for occupying, developing and using land. The Company records land use rights obtained as intangible assets at cost, which is amortized evenly over the grant period of 50 years.</p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> &#xA0;</p> <table style="WIDTH: 100%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: top"> <td style="WIDTH: 3%">&#xA0;</td> <td style="FONT-STYLE: italic; WIDTH: 4%; FONT-WEIGHT: bold"> <b><i>(ii)</i></b></td> <td style="FONT-STYLE: italic; WIDTH: 93%; FONT-WEIGHT: bold"> <b><i>Patents:</i></b></td> </tr> </table> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> &#xA0;</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> In March 2010, the Company purchased one patent from Shandong YCT Corp.&#xA0;&#xA0;The patent is the Company&#x2019;s 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.&#xA0;&#xA0;The patent was recorded at cost when purchased, and is being amortized over the shorter of its remaining legal life, 16.5 years, or its useful life, on a straight-line basis.</p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> &#xA0;</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> On February 28, 2011, the Company acquired U.S. patent No. 6,475,531 B1 titled &#x201C;Safe Botanical Drug for Treatment and Prevention of Influenza and Increasing Immune Function&#x201D;) through a purchase agreement with L.Y. Research Corp., a New Jersey Corporation.</p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> &#xA0;</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> According to the purchase agreement between the Company and L.Y. Hong Kong Biotech Limited (LYHK), CYIG acquires the patent for a consideration of issuing total 44,254,952 shares of CYIG common stock. The total value of the consideration on the acquisition date is $32,748,665 which is calculated by the total issuing shares, multiplying CYIG&#x2019;s quoted stock price $0.74 per share on February 28, 2011. The patent is amortized straightly over the patent&#x2019;s remaining legal life of 9.9 years starting from March 1, 2011.</p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> &#xA0;</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> <i><u>Revenue recognition</u></i></p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> &#xA0;</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> The Company&#x2019;s revenue recognition policies are in compliance with Staff Accounting Bulletin (&#x201C;SAB&#x201D;) 104, included in the Codification as ASC 605, Revenue Recognition. Sales revenue is recognized at the date of shipment to customers when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, no other significant obligations of the Company exist and collectability is reasonably assured. Payments received before all of the relevant criteria for revenue recognition are recorded as customer deposits.</p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> &#xA0;</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> <i><u>Unearned revenue</u></i></p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> &#xA0;</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> Revenue from the sale of goods or services is recognized at the time that goods are delivered or services are rendered. Receipts in advance for goods to be delivered or services to be rendered in a subsequent period are carried forward as unearned revenue.</p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> &#xA0;</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> <i><u>Impairment of long-lived assets</u></i></p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> &#xA0;</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may no longer be recoverable. An impairment loss, measured based on the fair value of the asset, is recognized if expected future undiscounted cash flows are less than the carrying amount of the assets.</p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> &#xA0;</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> <i><u>Value-added tax</u></i></p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> &#xA0;</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> Sales revenue represents the invoiced value of goods, net of a Value-Added Tax (&#x201C;VAT&#x201D;). All of the Company&#x2019;s products that are sold in the PRC are subject to a Chinese value-added tax at a rate of 17% of the gross sales price. This VAT may be offset by VAT paid by the Company on raw materials and other materials included in the cost of producing their finished product.</p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> &#xA0;</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> The Company recorded net VAT Payable in amount of $85,160 and $465,811 as of June 30, 2011 and March 30, 2011, respectively.</p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> &#xA0;</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> <i><u>Research and development</u></i></p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> &#xA0;</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> Research and development costs are related primarily to the Company&#x2019;s developing its intellectual property. Research and development costs are expensed as incurred. The costs of material and equipment that are acquired or constructed for research and development activities and have alternative future uses are classified as plant and equipment and depreciated over their estimated useful lives.</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> &#xA0;</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> The research and development expense for the three months ended June 30, 2011 and 2010 was $193,518 and $60,338, respectively.</p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> &#xA0;</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> <i><u>Advertising costs</u></i></p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> &#xA0;</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> Advertising costs for newspaper and television are expensed as incurred.&#xA0;&#xA0;The Company incurred advertising costs of $76,910 and nil for the three months ended June, 2011 and 2010, respectively.</p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> &#xA0;</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> <i><u>Mailing and handling costs</u></i></p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> &#xA0;</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> The Company accounts for mailing and handling fees in accordance with the FASB ASC 605-45 (Emerging Issues Task Force (EITF) Issue No. 00-10, Accounting for Shipping and Handling Fees and Costs). The Company includes shipping and handling fees billed to customers in net revenues. Amounts incurred by the Company for freight are included in cost of goods sold. For the three months ended June 30, 2011 and 2010, the Company incurred $390,010 and $247,031 mailing and handling costs, respectively.</p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> &#xA0;</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> <i><u>Net income (loss) per share (&#x201C;EPS&#x201D;)</u></i></p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> &#xA0;</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> Basic EPS excludes dilution and is computed by dividing net income (loss) attributable to common stockholders by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock (convertible preferred stock, forward contracts, warrants to purchase common stock, contingently issuable shares, common stock options and warrants and their equivalents using the treasury stock method) were exercised or converted into common stock. There are 31,610,679 and nil common stock equivalents available for dilution purposes as of June 30, 2011 and 2010, respectively.</p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> &#xA0;</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> <i><u>Risks and uncertainties</u></i></p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> &#xA0;</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> The Company&#x2019;s operations are carried out in the PRC. Accordingly, the Company&#x2019;s business, financial condition and results of operations may be influenced by the political, economic and legal environments in the PRC, and by the general state of the PRC&#x2019;s economy. The Company&#x2019;s operations in the PRC are subject to specific considerations and significant risks not typically associated with companies in the North America and Western Europe. These include risks associated with, among others, the political, economic and legal environments and foreign currency exchange. The Company&#x2019;s results may be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things.</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> &#xA0;</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> <i><u>Fair Value of Financial Instruments</u></i></p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> &#xA0;</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> For certain of the Company&#x2019;s financial instruments, including cash and cash equivalents, restricted cash, accounts receivable, accounts payable, accrued liabilities and short-term debt, the carrying amounts approximate their fair values due to their short maturities.</p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> &#xA0;</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> As of June 30, 2011, the Company did not identify any financial instruments that are required to be presented on the balance sheet at fair value other than those whose carrying amounts approximate fair value due to their short maturities.</p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> &#xA0;</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> <i><u>Foreign currency translation</u></i></p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> &#xA0;</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> The accounts of the Company&#x2019;s Chinese subsidiary are maintained in the RMB and the accounts of the U.S. parent company are maintained in the USD. The accounts of the Chinese subsidiary were translated into USD in accordance with Accounting Standards Codification (&#x201C;ASC&#x201D;) Topic 830 &#x201C;Foreign Currency Matters,&#x201D; with the RMB as the functional currency for the Chinese subsidiary. According to Topic 830, all assets and liabilities were translated at the exchange rate on the balance sheet date; stockholders&#x2019; equity is translated at historical rates and statement of income items are translated at the weighted average exchange rate for the period. The resulting translation adjustments are reported under other comprehensive income in accordance with ASC Topic 220, &#x201C;Comprehensive Income.&#x201D; Gains and losses resulting from the translations of foreign currency transactions and balances are reflected in the statements of income.</p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> &#xA0;</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> Translation adjustments resulting from this process amounted to $417,275&#xA0;and $144,853 for the three months ended June 30, 2011 and 2010, respectively.</p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> &#xA0;</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> The following exchange rates were adopted to translate the amounts from RMB into United States dollars (&#x201C;USD$&#x201D;) for the respective periods:</p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> &#xA0;</p> <table style="WIDTH: 80%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: bottom"> <td nowrap="nowrap">&#xA0;</td> <td style="PADDING-BOTTOM: 1pt" nowrap="nowrap">&#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="2" nowrap="nowrap">June&#xA0;30,<br /> 2011</td> <td style="PADDING-BOTTOM: 1pt" nowrap="nowrap">&#xA0;</td> <td style="PADDING-BOTTOM: 1pt" nowrap="nowrap">&#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="2" nowrap="nowrap">March&#xA0;31,<br /> 2011</td> <td style="PADDING-BOTTOM: 1pt" nowrap="nowrap">&#xA0;</td> <td style="PADDING-BOTTOM: 1pt" nowrap="nowrap">&#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="2" nowrap="nowrap">June&#xA0;30,<br /> 2010</td> <td style="PADDING-BOTTOM: 1pt" nowrap="nowrap">&#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; WIDTH: 61%">Three Months End RMB Exchange Rate (RMB/USD$)</td> <td style="WIDTH: 1%">&#xA0;</td> <td style="TEXT-ALIGN: left; WIDTH: 1%">&#xA0;</td> <td style="TEXT-ALIGN: right; WIDTH: 10%">6.4716</td> <td style="TEXT-ALIGN: left; WIDTH: 1%">&#xA0;</td> <td style="WIDTH: 1%">&#xA0;</td> <td style="TEXT-ALIGN: left; WIDTH: 1%">&#xA0;</td> <td style="TEXT-ALIGN: right; WIDTH: 10%">6.5564</td> <td style="TEXT-ALIGN: left; WIDTH: 1%">&#xA0;</td> <td style="WIDTH: 1%">&#xA0;</td> <td style="TEXT-ALIGN: left; WIDTH: 1%">&#xA0;</td> <td style="TEXT-ALIGN: right; WIDTH: 10%">6.7909</td> <td style="TEXT-ALIGN: left; WIDTH: 1%">&#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td>Average Period RMB Exchange Rate (RMB/USD$)</td> <td>&#xA0;</td> <td style="TEXT-ALIGN: left">&#xA0;</td> <td style="TEXT-ALIGN: right">6.5011</td> <td style="TEXT-ALIGN: left">&#xA0;</td> <td>&#xA0;</td> <td style="TEXT-ALIGN: left">&#xA0;</td> <td style="TEXT-ALIGN: right">6.7111</td> <td style="TEXT-ALIGN: left">&#xA0;</td> <td>&#xA0;</td> <td style="TEXT-ALIGN: left">&#xA0;</td> <td style="TEXT-ALIGN: right">6.8235</td> <td style="TEXT-ALIGN: left">&#xA0;</td> </tr> </table> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> &#xA0;</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> <i><u>Recent accounting pronouncements</u></i></p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> &#xA0;</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> In April 2010, the FASB issued FSP FAS 107-1 and APB 28-1, <i>Interim Disclosures about Fair Value of Financial Instruments.</i> This FSP amends SFAS No. 107, <i>Disclosures about Fair Value of Financial Instruments,</i> to require an entity to provide disclosures about the fair value of financial instruments in interim financial information. This FSP also amends Accounting Principles Board Opinion No. 28, <i>Interim Financial Reporting,</i> to require those disclosures in summarized financial information at interim reporting periods. FSP FAS 107-1 and APB 28-1 are effective for interim periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009.&#xA0;&#xA0;Effective April&#xA0;1, 2009, the Company adopted this pronouncement.&#xA0;&#xA0;The adoption of this pronouncement did not have any significant impact on the Company&#x2019;s financial condition or results of operations.</p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> &#xA0;</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> In January&#xA0;2010, the FASB issued authoritative guidance to improve disclosures about fair value measurements. This guidance amends previous guidance on fair value measurements to add new requirements for disclosures about transfers into and out of Levels 1 and 2 and separate disclosures about purchases, sales, issuances, and settlements relating to Level 3 measurement on a gross basis rather than on a net basis as currently required. This guidance also clarifies existing fair value disclosures about the level of disaggregation and about inputs and valuation techniques used to measure fair value. This guidance is effective for annual and interim periods beginning after December&#xA0;15, 2009, except for the requirement to provide the Level 3 activities of purchases, sales, issuances, and settlements on a gross basis, which will be effective for annual and interim periods beginning after December&#xA0;15, 2010. Early application is permitted and, in the period of initial adoption, entities are not required to provide the amended disclosures for any previous periods presented for comparative purposes. The Company does not expect the adoption of this pronouncement to have a significant impact on its financial condition or results of operations.</p> </div> 9953092 68215 3582345 1936972 417275 -10030688 1158537 1653427 1648203 1236152 193518 1179552 -646397 -41 0 77596 <div style="font: 10pt Times New Roman, Times, Serif"> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> <b>NOTE 1 - ORGANIZATION AND&#xA0;PRINCIPAL ACTIVITIES</b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> &#xA0;</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> China YCT International Group, Inc. (&#x201C;China YCT&#x201D;) was incorporated in the State of Florida, in the United States (the &#x201C;US&#x201D;) in January 1989, and reincorporated in the State of Delaware on April 4, 2007.&#xA0;&#xA0;China YCT principally operates through the following directly owned subsidiaries: Landway Nano Bio-Tech, Inc. (100% owned), incorporated in Delaware, in the United States, and Shandong Spring Pharmaceutical Co., Ltd. (&#x201C;Shandong Spring&#x201D;), (100% owned), incorporated in the People&#x2019;s Republic of China (&#x201C;PRC&#x201D;). China YCT International Group, Inc. and its subsidiaries are collectively referred to as the &#x201C;Company.&#x201D;</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> &#xA0;</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> China YCT, through its wholly owned subsidiary, Shandong Spring, is engaged in the business of developing, manufacturing and marketing its own medicine from gingko extract, and other dietary supplement products in the P.R. China.</p> </div> 2050602 7944264 1580029 209871 <div style="font: 10pt Times New Roman, Times, Serif"> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> <b>NOTE 5 -&#xA0;INVENTORY</b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> &#xA0;</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> Inventory consists of finished goods, work-in-process, and raw materials. No allowance for inventory was made for the three months ended June 30, 2011 and 2010.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> &#xA0;</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> The components of inventories as of June 30, 2011 and March 31, 2011 were as follows:</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> &#xA0;</p> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td>&#xA0;</td> <td style="font-weight: bold; padding-bottom: 1pt">&#xA0;</td> <td colspan="6" nowrap="nowrap" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> Period&#xA0;Ended</td> <td nowrap="nowrap" style="padding-bottom: 1pt; font-weight: bold"> &#xA0;</td> </tr> <tr style="vertical-align: bottom"> <td nowrap="nowrap">&#xA0;</td> <td nowrap="nowrap" style="font-weight: bold; padding-bottom: 1pt"> &#xA0;</td> <td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> June&#xA0;30,&#xA0;2011</td> <td nowrap="nowrap" style="padding-bottom: 1pt; font-weight: bold"> &#xA0;</td> <td nowrap="nowrap" style="font-weight: bold; padding-bottom: 1pt"> &#xA0;</td> <td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> March&#xA0;31,&#xA0;2011</td> <td style="padding-bottom: 1pt; font-weight: bold">&#xA0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,255,204)"> <td style="width: 74%; text-align: left">Raw materials</td> <td style="width: 1%">&#xA0;</td> <td style="width: 1%; text-align: left">$</td> <td style="width: 10%; text-align: right"><b>854,854</b></td> <td style="width: 1%; text-align: left">&#xA0;</td> <td style="width: 1%; font-weight: bold">&#xA0;</td> <td style="width: 1%; font-weight: bold; text-align: left">$</td> <td style="width: 10%; font-weight: bold; text-align: right"> 8,699</td> <td style="width: 1%; font-weight: bold; text-align: left"> &#xA0;</td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td>Work-in-progress</td> <td style="font-weight: bold">&#xA0;</td> <td style="font-weight: bold; text-align: left">&#xA0;</td> <td style="font-weight: bold; text-align: right">212,846</td> <td style="font-weight: bold; text-align: left">&#xA0;</td> <td style="font-weight: bold">&#xA0;</td> <td style="font-weight: bold; text-align: left">&#xA0;</td> <td style="font-weight: bold; text-align: right">27,225</td> <td style="font-weight: bold; text-align: left">&#xA0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,255,204)"> <td style="text-align: left">Finished goods</td> <td style="font-weight: bold">&#xA0;</td> <td style="font-weight: bold; text-align: left">&#xA0;</td> <td style="font-weight: bold; text-align: right">567,550</td> <td style="font-weight: bold; text-align: left">&#xA0;</td> <td style="font-weight: bold">&#xA0;</td> <td style="font-weight: bold; text-align: left">&#xA0;</td> <td style="font-weight: bold; text-align: right">23,259</td> <td style="font-weight: bold; text-align: left">&#xA0;</td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-weight: bold; text-align: left">Total Inventories</td> <td>&#xA0;</td> <td style="text-align: left">$</td> <td style="text-align: right">1,635,250</td> <td style="text-align: left">&#xA0;</td> <td>&#xA0;</td> <td style="text-align: left">$</td> <td style="text-align: right">59,183</td> <td style="text-align: left">&#xA0;</td> </tr> </table> </div> <div style="font: 10pt Times New Roman, Times, Serif"> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> <b>NOTE 6 &#x2013; PLANT, PROPERTY AND EQUIPMENT, NET</b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> &#xA0;</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> The components of property and equipment as of June 30, 2011 and March 31, 2011 were as follows:</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> &#xA0;</p> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 80%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td>&#xA0;</td> <td style="font-weight: bold">&#xA0;</td> <td colspan="6" nowrap="nowrap" style="font-weight: bold; text-align: center">Period&#xA0;Ended</td> <td nowrap="nowrap" style="font-weight: bold">&#xA0;</td> </tr> <tr style="vertical-align: bottom"> <td nowrap="nowrap">&#xA0;</td> <td nowrap="nowrap" style="font-weight: bold">&#xA0;</td> <td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center"> June&#xA0;30,&#xA0;2011</td> <td nowrap="nowrap" style="font-weight: bold">&#xA0;</td> <td nowrap="nowrap" style="font-weight: bold">&#xA0;</td> <td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center">March&#xA0;31, 2011</td> <td style="font-weight: bold">&#xA0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,255,204)"> <td style="width: 64%; font-weight: bold; text-align: left"> Machinery &amp; Equipment</td> <td style="width: 1%; font-weight: bold">&#xA0;</td> <td style="width: 1%; font-weight: bold; text-align: left">$</td> <td style="width: 15%; font-weight: bold; text-align: right"> 512,191</td> <td style="width: 1%; font-weight: bold; text-align: left"> &#xA0;</td> <td style="width: 1%; font-weight: bold">&#xA0;</td> <td style="width: 1%; font-weight: bold; text-align: left">$</td> <td style="width: 15%; font-weight: bold; text-align: right"> 516,935</td> <td style="width: 1%; font-weight: bold; text-align: left"> &#xA0;</td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-weight: bold; text-align: left">Furniture &amp; Fixture</td> <td style="font-weight: bold">&#xA0;</td> <td style="font-weight: bold; text-align: left">&#xA0;</td> <td style="font-weight: bold; text-align: right">129,405</td> <td style="font-weight: bold; text-align: left">&#xA0;</td> <td style="font-weight: bold">&#xA0;</td> <td style="font-weight: bold; text-align: left">&#xA0;</td> <td style="font-weight: bold; text-align: right">96,156</td> <td style="font-weight: bold; text-align: left">&#xA0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,255,204)"> <td style="font-weight: bold; padding-bottom: 1pt">Building</td> <td style="font-weight: bold; padding-bottom: 1pt">&#xA0;</td> <td style="border-bottom: Black 1pt solid; font-weight: bold; text-align: left"> &#xA0;</td> <td style="border-bottom: Black 1pt solid; font-weight: bold; text-align: right"> 9,632,593</td> <td style="padding-bottom: 1pt; font-weight: bold; text-align: left"> &#xA0;</td> <td style="font-weight: bold; padding-bottom: 1pt">&#xA0;</td> <td style="border-bottom: Black 1pt solid; font-weight: bold; text-align: left"> &#xA0;</td> <td style="border-bottom: Black 1pt solid; font-weight: bold; text-align: right"> 9,685,212</td> <td style="padding-bottom: 1pt; font-weight: bold; text-align: left"> &#xA0;</td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-weight: bold">Subtotal</td> <td style="font-weight: bold">&#xA0;</td> <td style="font-weight: bold; text-align: left">&#xA0;</td> <td style="font-weight: bold; text-align: right">10,474,188</td> <td style="font-weight: bold; text-align: left">&#xA0;</td> <td style="font-weight: bold">&#xA0;</td> <td style="font-weight: bold; text-align: left">&#xA0;</td> <td style="font-weight: bold; text-align: right">10,298,303</td> <td style="font-weight: bold; text-align: left">&#xA0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,255,204)"> <td style="font-weight: bold; text-align: left; padding-bottom: 1pt">Less: Accumulated Depreciation</td> <td style="font-weight: bold; padding-bottom: 1pt">&#xA0;</td> <td style="border-bottom: Black 1pt solid; font-weight: bold; text-align: left"> &#xA0;</td> <td style="border-bottom: Black 1pt solid; font-weight: bold; text-align: right"> (796, 399</td> <td style="padding-bottom: 1pt; font-weight: bold; text-align: left"> )<b>&#xA0;</b></td> <td style="font-weight: bold; padding-bottom: 1pt">&#xA0;</td> <td style="border-bottom: Black 1pt solid; font-weight: bold; text-align: left"> &#xA0;</td> <td style="border-bottom: Black 1pt solid; font-weight: bold; text-align: right"> (668,745</td> <td style="padding-bottom: 1pt; font-weight: bold; text-align: left">)</td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-weight: bold; text-align: left; padding-bottom: 2.5pt; padding-left: 9pt"> Total plant, property and equipment, net</td> <td style="font-weight: bold; padding-bottom: 2.5pt">&#xA0;</td> <td style="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left"> $</td> <td style="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right"> 9,677,789</td> <td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left"> &#xA0;</td> <td style="font-weight: bold; padding-bottom: 2.5pt">&#xA0;</td> <td style="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left"> $</td> <td style="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right"> 9,629,558</td> <td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left"> &#xA0;</td> </tr> </table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> &#xA0;</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> The depreciation expense for the three months ended June 30, 2011 and 2010 was $127,654 and $54,456, respectively.</p> </div> 412051 10269655 -841973 <div style="font: 10pt Times New Roman, Times, Serif"> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> <b>NOTE 11 - INCOME TAXES</b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> &#xA0;</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> Shandong Spring Pharmaceutical Co., Ltd is subject to the Enterprise income tax (&#x201C;EIT&#x201D;) at a statutory rate of 25%.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> &#xA0;</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> For the quarters ended June 30, 2011 and 2010, Shandong Spring Pharmaceutical Co., Ltd. recorded income tax provisions of $412,051 and $459,533, respectively.</p> </div> 81 1576067 2781890 <div style="font: 10pt Times New Roman, Times, Serif"> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> <b>NOTE 8 - MAJOR CUSTOMER AND VENDOR</b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> &#xA0;</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> In the three months ended June 30, 2011, the Company mainly sells products to individual retail customers through eight major distributors.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> &#xA0;</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> For the three months ended June 30, 2011, the purchase from the two major vendors was $4,774,381, representing 83% of the Company&#x2019;s total purchase for the quarter.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> &#xA0;</p> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 80%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom; background-color: rgb(204,255,204)"> <td style="width: 87%; font-weight: bold; text-align: left"> Shandong Kangyuan</td> <td style="width: 1%; font-weight: bold">&#xA0;</td> <td style="width: 1%; font-weight: bold; text-align: left"> &#xA0;</td> <td style="width: 10%; font-weight: bold; text-align: right"> 3,329,167</td> <td style="width: 1%; font-weight: bold; text-align: left"> &#xA0;</td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-weight: bold; text-align: left">Shandong YCT</td> <td style="font-weight: bold">&#xA0;</td> <td style="font-weight: bold; text-align: left">&#xA0;</td> <td style="font-weight: bold; text-align: right">1,445,213</td> <td style="font-weight: bold; text-align: left">&#xA0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,255,204)"> <td><b>Total</b> &#xA0;</td> <td>&#xA0;</td> <td style="text-align: left">$</td> <td style="text-align: right">4,774,381</td> <td style="text-align: left">&#xA0;</td> </tr> </table> </div> <div style="font: 10pt Times New Roman, Times, Serif"> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> <b>NOTE 9 - INTANGIBLE ASSETS, NET</b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> &#xA0;</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> The intangible assets of the Company consist of land use right and purchased patents.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> &#xA0;</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> Net land use right and purchased patents were as follows:</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> &#xA0;</p> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 80%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td>&#xA0;</td> <td>&#xA0;</td> <td>&#xA0;</td> <td>Amortization</td> <td>&#xA0;</td> <td>&#xA0;</td> <td colspan="6" style="text-align: center">As&#xA0;of</td> <td>&#xA0;</td> </tr> <tr style="vertical-align: bottom"> <td>&#xA0;</td> <td>&#xA0;</td> <td>&#xA0;</td> <td>Period</td> <td>&#xA0;</td> <td>&#xA0;</td> <td colspan="2" style="text-align: center"> June&#xA0;30,&#xA0;2011</td> <td>&#xA0;</td> <td>&#xA0;</td> <td colspan="2" style="text-align: center">March&#xA0;31,<br /> 2011</td> <td>&#xA0;</td> </tr> <tr style="vertical-align: bottom"> <td>&#xA0;</td> <td>&#xA0;</td> <td>&#xA0;</td> <td>&#xA0;</td> <td>&#xA0;</td> <td>&#xA0;</td> <td colspan="2" style="text-align: center">(Restated)</td> <td>&#xA0;</td> <td>&#xA0;</td> <td colspan="2" style="text-align: center">(Restated)</td> <td>&#xA0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,255,204)"> <td style="width: 45%; font-weight: bold; text-align: left">Land use right</td> <td style="width: 1%; font-weight: bold">&#xA0;</td> <td style="width: 1%; font-weight: bold; text-align: left"> &#xA0;</td> <td style="width: 26%; font-weight: bold; text-align: left"><b>50 years</b></td> <td style="width: 1%; font-weight: bold; text-align: left"> &#xA0;</td> <td style="width: 1%; font-weight: bold">&#xA0;</td> <td style="width: 1%; font-weight: bold; text-align: left"> &#xA0;</td> <td style="width: 10%; font-weight: bold; text-align: right"> 1,547,801</td> <td style="width: 1%; font-weight: bold; text-align: left"> &#xA0;</td> <td style="width: 1%; font-weight: bold">&#xA0;</td> <td style="width: 1%; font-weight: bold; text-align: left"> &#xA0;</td> <td style="width: 10%; font-weight: bold; text-align: right"> 1,547,801</td> <td style="width: 1%; font-weight: bold; text-align: left"> &#xA0;</td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-weight: bold; text-align: left; padding-bottom: 1pt">Less: Accumulated amortization</td> <td style="padding-bottom: 1pt">&#xA0;</td> <td style="padding-bottom: 1pt; text-align: left">&#xA0;</td> <td style="padding-bottom: 1pt; text-align: right">&#xA0;</td> <td style="padding-bottom: 1pt; text-align: left">&#xA0;</td> <td style="font-weight: bold; padding-bottom: 1pt">&#xA0;</td> <td style="border-bottom: Black 1pt solid; font-weight: bold; text-align: left"> &#xA0;</td> <td style="border-bottom: Black 1pt solid; font-weight: bold; text-align: right"> (149,626</td> <td style="padding-bottom: 1pt; font-weight: bold; text-align: left">)</td> <td style="font-weight: bold; padding-bottom: 1pt">&#xA0;</td> <td style="border-bottom: Black 1pt solid; font-weight: bold; text-align: left"> &#xA0;</td> <td style="border-bottom: Black 1pt solid; font-weight: bold; text-align: right"> (139,821</td> <td style="padding-bottom: 1pt; font-weight: bold; text-align: left">)</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,255,204)"> <td style="font-weight: bold; text-align: left; padding-bottom: 2.5pt">Land use right, net</td> <td style="padding-bottom: 2.5pt">&#xA0;</td> <td style="padding-bottom: 2.5pt; text-align: left">&#xA0;</td> <td style="padding-bottom: 2.5pt; text-align: right">&#xA0;</td> <td style="padding-bottom: 2.5pt; text-align: left">&#xA0;</td> <td style="font-weight: bold; padding-bottom: 2.5pt">&#xA0;</td> <td style="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left"> &#xA0;</td> <td style="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right"> 1,398,175</td> <td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left"> &#xA0;</td> <td style="font-weight: bold; padding-bottom: 2.5pt">&#xA0;</td> <td style="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left"> &#xA0;</td> <td style="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right"> 1,407,980</td> <td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left"> &#xA0;</td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-weight: bold">Patent 1</td> <td style="font-weight: bold">&#xA0;</td> <td style="font-weight: bold; text-align: left">&#xA0;</td> <td style="font-weight: bold; text-align: left"><b>16.5 years</b></td> <td style="font-weight: bold; text-align: left">&#xA0;</td> <td style="font-weight: bold">&#xA0;</td> <td style="font-weight: bold; text-align: left">&#xA0;</td> <td style="font-weight: bold; text-align: right">7,016,042</td> <td style="font-weight: bold; text-align: left">&#xA0;</td> <td style="font-weight: bold">&#xA0;</td> <td style="font-weight: bold; text-align: left">&#xA0;</td> <td style="font-weight: bold; text-align: right">7,016,045</td> <td style="font-weight: bold; text-align: left">&#xA0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,255,204)"> <td style="font-weight: bold; text-align: left">Patent (U.S. No. 6,475,531 B1)</td> <td style="font-weight: bold">&#xA0;</td> <td style="font-weight: bold; text-align: left">&#xA0;</td> <td style="font-weight: bold; text-align: left"><b>119 months</b></td> <td style="font-weight: bold; text-align: left">&#xA0;</td> <td style="font-weight: bold">&#xA0;</td> <td style="font-weight: bold; text-align: left">&#xA0;</td> <td style="font-weight: bold; text-align: right">32,748,665</td> <td style="font-weight: bold; text-align: left">&#xA0;</td> <td style="font-weight: bold">&#xA0;</td> <td style="font-weight: bold; text-align: left">&#xA0;</td> <td style="font-weight: bold; text-align: right">32,748,665</td> <td style="font-weight: bold; text-align: left">&#xA0;</td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-weight: bold; text-align: left; padding-bottom: 1pt">Less: Accumulated amortization</td> <td style="padding-bottom: 1pt">&#xA0;</td> <td style="padding-bottom: 1pt; text-align: left">&#xA0;</td> <td style="padding-bottom: 1pt; text-align: right">&#xA0;</td> <td style="padding-bottom: 1pt; text-align: left">&#xA0;</td> <td style="font-weight: bold; padding-bottom: 1pt">&#xA0;</td> <td style="border-bottom: Black 1pt solid; font-weight: bold; text-align: left"> &#xA0;</td> <td style="border-bottom: Black 1pt solid; font-weight: bold; text-align: right"> (1,787,557</td> <td style="padding-bottom: 1pt; font-weight: bold; text-align: left">)</td> <td style="font-weight: bold; padding-bottom: 1pt">&#xA0;</td> <td style="border-bottom: Black 1pt solid; font-weight: bold; text-align: left"> &#xA0;</td> <td style="border-bottom: Black 1pt solid; font-weight: bold; text-align: right"> (612,674</td> <td style="padding-bottom: 1pt; font-weight: bold; text-align: left">)</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,255,204)"> <td style="font-weight: bold; text-align: left; padding-bottom: 2.5pt"> Patents, net</td> <td style="padding-bottom: 2.5pt">&#xA0;</td> <td style="padding-bottom: 2.5pt; text-align: left">&#xA0;</td> <td style="padding-bottom: 2.5pt; text-align: right">&#xA0;</td> <td style="padding-bottom: 2.5pt; text-align: left">&#xA0;</td> <td style="font-weight: bold; padding-bottom: 2.5pt">&#xA0;</td> <td style="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left"> $</td> <td style="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right"> 37,977,150</td> <td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left"> &#xA0;</td> <td style="font-weight: bold; padding-bottom: 2.5pt">&#xA0;</td> <td style="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left"> $</td> <td style="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right"> 39,152,036</td> <td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left"> &#xA0;</td> </tr> </table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> &#xA0;</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> The amortization expense of land use right for the three months ended June 30, 2011 and 2010 was $9,805 and $8,141, respectively.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> &#xA0;</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> The amortization expense of the patents for the three months ended June 30, 2011 and 2010 was $1,174,887 and $84,819, respectively.</p> </div> 1408820 0.02 73780610 <div style="font: 10pt Times New Roman, Times, Serif"> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> <b>NOTE 10 - TAX PAYABLE</b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> &#xA0;</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> Tax payable at June 30, 2011 and March 31, 2011 were as follows:</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> &#xA0;</p> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 80%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td>&#xA0;</td> <td style="font-weight: bold">&#xA0;</td> <td colspan="6" nowrap="nowrap" style="font-weight: bold; text-align: center">As&#xA0;of</td> <td nowrap="nowrap" style="font-weight: bold">&#xA0;</td> </tr> <tr style="vertical-align: bottom"> <td nowrap="nowrap">&#xA0;</td> <td nowrap="nowrap" style="font-weight: bold; padding-bottom: 1pt"> &#xA0;</td> <td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> June&#xA0;31,<br /> 2011</td> <td nowrap="nowrap" style="padding-bottom: 1pt; font-weight: bold"> &#xA0;</td> <td nowrap="nowrap" style="font-weight: bold; padding-bottom: 1pt"> &#xA0;</td> <td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"> March&#xA0;31,<br /> 2011</td> <td style="padding-bottom: 1pt; font-weight: bold">&#xA0;</td> </tr> <tr style="vertical-align: bottom"> <td>&#xA0;</td> <td>&#xA0;</td> <td colspan="2" style="text-align: center">&#xA0;(Restated)</td> <td>&#xA0;</td> <td>&#xA0;</td> <td colspan="2" style="text-align: center">&#xA0;(Restated)</td> <td>&#xA0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,255,204)"> <td style="width: 74%; font-weight: bold; text-align: left"> Corporate Income Tax</td> <td style="width: 1%; font-weight: bold">&#xA0;</td> <td style="width: 1%; font-weight: bold; text-align: left">$</td> <td style="width: 10%; font-weight: bold; text-align: right"> 514,240</td> <td style="width: 1%; font-weight: bold; text-align: left"> &#xA0;</td> <td style="width: 1%; font-weight: bold">&#xA0;</td> <td style="width: 1%; font-weight: bold; text-align: left">$</td> <td style="width: 10%; font-weight: bold; text-align: right"> 1,190,436</td> <td style="width: 1%; font-weight: bold; text-align: left"> &#xA0;</td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-weight: bold">Value-Added Tax</td> <td style="font-weight: bold">&#xA0;</td> <td style="font-weight: bold; text-align: left">&#xA0;</td> <td style="font-weight: bold; text-align: right">85,160</td> <td style="font-weight: bold; text-align: left">&#xA0;</td> <td style="font-weight: bold">&#xA0;</td> <td style="font-weight: bold; text-align: left">&#xA0;</td> <td style="font-weight: bold; text-align: right">489,962</td> <td style="font-weight: bold; text-align: left">&#xA0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,255,204)"> <td style="font-weight: bold; text-align: left; padding-bottom: 1pt">Other Tax &amp; Fees</td> <td style="font-weight: bold; padding-bottom: 1pt">&#xA0;</td> <td style="border-bottom: Black 1pt solid; font-weight: bold; text-align: left"> &#xA0;</td> <td style="border-bottom: Black 1pt solid; font-weight: bold; text-align: right"> (2,009</td> <td style="padding-bottom: 1pt; font-weight: bold; text-align: left">)</td> <td style="font-weight: bold; padding-bottom: 1pt">&#xA0;</td> <td style="border-bottom: Black 1pt solid; font-weight: bold; text-align: left"> &#xA0;</td> <td style="border-bottom: Black 1pt solid; font-weight: bold; text-align: right"> 3,546</td> <td style="padding-bottom: 1pt; font-weight: bold; text-align: left"> &#xA0;</td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td>&#xA0;</td> <td>&#xA0;</td> <td style="text-align: left">&#xA0;</td> <td style="text-align: right">&#xA0;</td> <td style="text-align: left">&#xA0;</td> <td>&#xA0;</td> <td style="text-align: left">&#xA0;</td> <td style="text-align: right">&#xA0;</td> <td style="text-align: left">&#xA0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,255,204)"> <td style="font-weight: bold; text-align: left; padding-bottom: 2.5pt">Total Tax Payable</td> <td style="font-weight: bold; padding-bottom: 2.5pt">&#xA0;</td> <td style="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left"> $</td> <td style="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right"> 597,391</td> <td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left"> &#xA0;</td> <td style="font-weight: bold; padding-bottom: 2.5pt">&#xA0;</td> <td style="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left"> $</td> <td style="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right"> 1,683,944</td> <td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left"> &#xA0;</td> </tr> </table> </div> <div style="font: 10pt Times New Roman, Times, Serif"> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> <b>NOTE 4 &#x2013; PREPAID ACCOUNTS</b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> &#xA0;</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> The prepaid account in amount of $5,551,348 is a cash payment to a Chinese research company for the acquisition of a patent.&#xA0;&#xA0;During the quarter ended June 30, 2011, $10,050,910 prepayment was refunded by the owner of the patent due to the incompletion of the required transferring paper work.&#xA0;&#xA0;When the Company obtains the title of the patent, the rest of the payment will be made to the owner of the patent and the prepayment will be reclassified to a patent.</p> </div> <div style="font: 10pt Times New Roman, Times, Serif"> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> <b>NOTE 7 &#x2013; CONSTRUCTION IN PROGRESS</b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> &#xA0;</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> Construction in progress represents direct costs of construction or acquisition and design fees incurred for the Company&#x2019;s new plant and equipment. Capitalization of these costs ceases and the construction in progress is transferred to plant and equipment when substantially all the activities necessary to prepare the assets for their intended use are completed. No depreciation is made until construction is completed and put into use.</p> </div> -1236152 <div style="FONT: 10pt Times New Roman, Times, Serif"> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"><b>NOTE 3 - RESTATEMENT OF FINANCIAL STATEMENTS</b></p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> <b>&#xA0;</b></p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">On <font style="COLOR: black">April 4, 2012</font>, the Audit Committee of the Board of Directors, based on discussions with management, concluded that the Company would restate its consolidated financial statements for the quarter ended June 30, 2011 in conjuction with the restatement of the financial statements for the year ended March 31, 2011 to correct the following errors:</p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> &#xA0;</p> <table style="MARGIN-TOP: 0pt; WIDTH: 100%; FONT: 10pt Times New Roman, Times, Serif; MARGIN-BOTTOM: 0pt" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: top"> <td style="WIDTH: 0.25in"></td> <td style="WIDTH: 0.25in"><font style="FONT-FAMILY: Symbol">&#xB7;</font></td> <td>On February 28, 2011, we acquired a US patent which was accounted for as an acquisition of an asset. However, we recognized as part of the patent&#x2019;s value the contingent consideration in the form of additional common stock that could be issued to the seller of the patent. Therefore, we overstated the fair value of the patent as recorded as the value for our intangible assets on the balance sheets since the year ended March 31, 2011. As a result, we adjusted the value of the intangible assets to reduce the value of the intangible asset by $22,761,679 at June 30, 2011; we made adjustment to reduce the contingent liability associated with the unissued shares by $23,391,902 at June 30, 2011;</td> </tr> </table> <p style="MARGIN-TOP: 0pt; MARGIN-BOTTOM: 0pt">&#xA0;</p> <p style="MARGIN: 0pt 0px 0pt 0.5in"></p> <table style="MARGIN-TOP: 0pt; WIDTH: 100%; FONT: 10pt Times New Roman, Times, Serif; MARGIN-BOTTOM: 0pt" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: top"> <td style="WIDTH: 0.25in"></td> <td style="WIDTH: 0.25in"><font style="FONT-FAMILY: Symbol">&#xB7;</font></td> <td>We did not accrue the amortization expense for the acquired US patent for the three month ended June 30, 2011 due to the uncertainty about continuing the contract. Therefore, we made an adjustment to increase by $825,597 the amortization expense and accumulated amortization for the US patent based on its restated value. We also made an adjustment to decrease by $157,256 the income tax based on the restated net income.</td> </tr> </table> <p style="MARGIN-TOP: 0pt; MARGIN-BOTTOM: 0pt">&#xA0;</p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"></p> <p style="MARGIN: 0pt 0px">The effect of the adjustments on the consolidated statement of operations for the three months ended June 30, 2011 is to decrease net income attributable to common shares by $619,198. The effect of the adjustments on net income per common share from operations for the three months ended June 30, 2011 is a $0.01 decrease in net income per common share.</p> <p style="MARGIN: 0pt 0px">&#xA0;</p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"></p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"></p> <p style="TEXT-ALIGN: center; MARGIN-TOP: 0pt; FONT: 10pt Times New Roman, Times, Serif; MARGIN-BOTTOM: 0pt"> <b>China YCT International Group, Inc.</b></p> <p style="TEXT-ALIGN: center; MARGIN-TOP: 0pt; FONT: 10pt Times New Roman, Times, Serif; MARGIN-BOTTOM: 0pt"> <b>Consolidated Balance Sheet</b></p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"></p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> &#xA0;</p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"></p> <table style="WIDTH: 100%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: bottom"> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-SIZE: 10pt; FONT-WEIGHT: bold" colspan="10">June&#xA0;30, 2011</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt">&#xA0;</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-SIZE: 10pt; FONT-WEIGHT: bold" colspan="2">As&#xA0;Previously<br /> Reported</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-SIZE: 10pt; FONT-WEIGHT: bold" colspan="2">Adjustments</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-SIZE: 10pt; FONT-WEIGHT: bold" colspan="2">As&#xA0;Restated</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="FONT-SIZE: 10pt; FONT-WEIGHT: bold">Assets</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> Current assets:</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; TEXT-INDENT: 20pt; WIDTH: 58%; FONT-SIZE: 10pt"> Cash and cash equivalent</td> <td style="WIDTH: 2%; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; WIDTH: 1%; FONT-SIZE: 10pt">$</td> <td style="TEXT-ALIGN: right; WIDTH: 10%; FONT-SIZE: 10pt"> 16,316,460</td> <td style="TEXT-ALIGN: left; WIDTH: 1%; FONT-SIZE: 10pt"> &#xA0;</td> <td style="WIDTH: 2%; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; WIDTH: 1%; FONT-SIZE: 10pt">$</td> <td style="TEXT-ALIGN: right; WIDTH: 10%; FONT-SIZE: 10pt">-</td> <td style="TEXT-ALIGN: left; WIDTH: 1%; FONT-SIZE: 10pt"> &#xA0;</td> <td style="WIDTH: 2%; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; WIDTH: 1%; FONT-SIZE: 10pt">$</td> <td style="TEXT-ALIGN: right; WIDTH: 10%; FONT-SIZE: 10pt"> 16,316,460</td> <td style="TEXT-ALIGN: left; WIDTH: 1%; FONT-SIZE: 10pt"> &#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; TEXT-INDENT: 20pt; FONT-SIZE: 10pt"> Prepaid accounts</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">5,551,348</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">-</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">5,551,348</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="PADDING-BOTTOM: 1pt; TEXT-INDENT: 20pt; FONT-SIZE: 10pt"> Inventory</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt">&#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; FONT-SIZE: 10pt"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; FONT-SIZE: 10pt"> 1,635,250</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt"> &#xA0;</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt">&#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; FONT-SIZE: 10pt"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; FONT-SIZE: 10pt"> -</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt"> &#xA0;</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt">&#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; FONT-SIZE: 10pt"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; FONT-SIZE: 10pt"> 1,635,250</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt"> &#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; TEXT-INDENT: 20pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> Total current assets</td> <td style="FONT-SIZE: 10pt; FONT-WEIGHT: bold">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> 23,503,058</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="FONT-SIZE: 10pt; FONT-WEIGHT: bold">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> -</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="FONT-SIZE: 10pt; FONT-WEIGHT: bold">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> 23,503,058</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">Plant, property and equipment, net</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">9,677,789</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">-</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">9,677,789</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">Construction in progress</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">213,956</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">-</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">213,956</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt"> Intangible assets, net</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt">&#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; FONT-SIZE: 10pt"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; FONT-SIZE: 10pt"> 62,137,004</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt"> &#xA0;</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt">&#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; FONT-SIZE: 10pt"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; FONT-SIZE: 10pt"> (22,761,679</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt"> )</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt">&#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; FONT-SIZE: 10pt"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; FONT-SIZE: 10pt"> 39,375,325</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt"> &#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; TEXT-INDENT: 20pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> Total assets</td> <td style="FONT-SIZE: 10pt; FONT-WEIGHT: bold">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> 95,531,808</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="FONT-SIZE: 10pt; FONT-WEIGHT: bold">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> (22,761,679</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> )</td> <td style="FONT-SIZE: 10pt; FONT-WEIGHT: bold">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> 72,770,128</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> Liabilities and Stockholders&#x2019; Equity (Deficit)</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="FONT-SIZE: 10pt; FONT-WEIGHT: bold">Liabilities:</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> Current liabilities:</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; TEXT-INDENT: 20pt; FONT-SIZE: 10pt"> Accounts payable</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">209,871</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">-</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">209,871</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; TEXT-INDENT: 20pt; FONT-SIZE: 10pt"> Tax payable</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">754,647</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">(157,256</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">)</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">597,391</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; TEXT-INDENT: 20pt; FONT-SIZE: 10pt"> Other payable</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">113,937</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">-</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">113,937</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; TEXT-INDENT: 20pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> Total current liabilities</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> 1,078,454</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> (157,255</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> )</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> 921,199</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-INDENT: 20pt; FONT-SIZE: 10pt">Contingency</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">23,391,902</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">(23,391,902</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">)</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">-</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; TEXT-INDENT: 20pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> Total liabilities</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> 24,470,356</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> (23,549,157</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> )</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> 921,199</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> Stockholders&#x2019; equity</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="FONT-SIZE: 10pt">Preferred stock, par value $500.00 per share; 45 shares authorized and issued at September 30, 2010 and March 31, 2010</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">22,500</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">-</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">22,500</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">Common stock, par value $0.001 per share; 100,000,000 shares authorized, 29,461,304 shares issued and outstanding at March 31, 2010; and 73,731,361 shares issued and outstanding at March 31, 2011.</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">73,780</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">-</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">73,780</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">Additional paid-in capital</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">36,879,643</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">-</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">36,879,643</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">Statutory reserve</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">956,633</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">-</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">956,633</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">Retained earnings</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">31,929,575</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">(471,770</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">)</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">31,457,805</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">Accumulated other comprehensive income</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">1,199,321</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">1,259,247</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">2,458,568</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; TEXT-INDENT: 40pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> Total stockholders&#x2019; equity</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> 71,061,452</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> 787,477</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> 71,848,929</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt; TEXT-INDENT: 40pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> Total liabilities and stockholders&#x2019; equity</td> <td style="PADDING-BOTTOM: 2.5pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> $</td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> 95,531,808</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="PADDING-BOTTOM: 2.5pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> $</td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> (22,761,680</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> )</td> <td style="PADDING-BOTTOM: 2.5pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> $</td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> 72,770,128</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> </tr> </table> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"></p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> &#xA0;</p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"></p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> &#xA0;</p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"></p> <p style="TEXT-ALIGN: center; MARGIN-TOP: 0pt; FONT: 10pt Times New Roman, Times, Serif; MARGIN-BOTTOM: 0pt"> <b>China YCT International Group, Inc.</b></p> <p style="TEXT-ALIGN: center; MARGIN-TOP: 0pt; FONT: 10pt Times New Roman, Times, Serif; MARGIN-BOTTOM: 0pt"> <b>Consolidated Income Statement</b></p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"></p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> &#xA0;</p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"></p> <table style="WIDTH: 100%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: bottom"> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-SIZE: 10pt; FONT-WEIGHT: bold" colspan="10">Three Months Ended June 30, 2011</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-SIZE: 10pt; FONT-WEIGHT: bold" colspan="2">As&#xA0;Previously Reported</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-SIZE: 10pt; FONT-WEIGHT: bold" colspan="2">Adjustments</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-SIZE: 10pt; FONT-WEIGHT: bold" colspan="2">As&#xA0;Restated</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; WIDTH: 58%; FONT-SIZE: 10pt">Sales Revenue</td> <td style="WIDTH: 2%; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; WIDTH: 1%; FONT-SIZE: 10pt">$</td> <td style="TEXT-ALIGN: right; WIDTH: 10%; FONT-SIZE: 10pt"> 7,944,264</td> <td style="TEXT-ALIGN: left; WIDTH: 1%; FONT-SIZE: 10pt"> &#xA0;</td> <td style="WIDTH: 2%; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; WIDTH: 1%; FONT-SIZE: 10pt">$</td> <td style="TEXT-ALIGN: right; WIDTH: 10%; FONT-SIZE: 10pt">-</td> <td style="TEXT-ALIGN: left; WIDTH: 1%; FONT-SIZE: 10pt"> &#xA0;</td> <td style="WIDTH: 2%; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; WIDTH: 1%; FONT-SIZE: 10pt">$</td> <td style="TEXT-ALIGN: right; WIDTH: 10%; FONT-SIZE: 10pt"> 7,944,264</td> <td style="TEXT-ALIGN: left; WIDTH: 1%; FONT-SIZE: 10pt"> &#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt"> Cost of Goods Sold</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt">&#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; FONT-SIZE: 10pt"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; FONT-SIZE: 10pt"> 3,582,345</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt"> &#xA0;</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt">&#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; FONT-SIZE: 10pt"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; FONT-SIZE: 10pt"> -</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt"> &#xA0;</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt">&#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; FONT-SIZE: 10pt"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; FONT-SIZE: 10pt"> 3,582,345</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt"> &#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> Gross Profit</td> <td style="FONT-SIZE: 10pt; FONT-WEIGHT: bold">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> 4,361,919</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="FONT-SIZE: 10pt; FONT-WEIGHT: bold">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> -</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="FONT-SIZE: 10pt; FONT-WEIGHT: bold">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> 4,361,919</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">Selling Expenses</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">1,179,552</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">-</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">1,179,552</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="FONT-SIZE: 10pt">G&amp;A Expense</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">583,223</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">825,597</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">1,408,820</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt">R&amp;D Expenses</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt">&#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; FONT-SIZE: 10pt"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; FONT-SIZE: 10pt"> 193,518</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt"> &#xA0;</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt">&#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; FONT-SIZE: 10pt"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; FONT-SIZE: 10pt"> -</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt"> &#xA0;</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt">&#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; FONT-SIZE: 10pt"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; FONT-SIZE: 10pt"> 193,518</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt"> &#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> Total expense</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> 1,956,293</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> 825,597</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> 2,781,890</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> Income from operation</td> <td style="FONT-SIZE: 10pt; FONT-WEIGHT: bold">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> 2,405,626</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="FONT-SIZE: 10pt; FONT-WEIGHT: bold">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> (825,597</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> )</td> <td style="FONT-SIZE: 10pt; FONT-WEIGHT: bold">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> 1,580,029</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">Interest Income (Expense)</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">(41</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">)</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">-</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">(41</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">)</td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt"> Other income (Expense)</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt">&#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; FONT-SIZE: 10pt"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; FONT-SIZE: 10pt"> 68,215</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt"> &#xA0;</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt">&#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; FONT-SIZE: 10pt"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; FONT-SIZE: 10pt"> -</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt"> &#xA0;</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt">&#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; FONT-SIZE: 10pt"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; FONT-SIZE: 10pt"> 68,215</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt"> &#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> Profit before tax</td> <td style="FONT-SIZE: 10pt; FONT-WEIGHT: bold">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> 2,473,800</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="FONT-SIZE: 10pt; FONT-WEIGHT: bold">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> (825,597</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> )</td> <td style="FONT-SIZE: 10pt; FONT-WEIGHT: bold">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> 1,648,203</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt"> Income tax</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt">&#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; FONT-SIZE: 10pt"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; FONT-SIZE: 10pt"> 618,450</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt"> &#xA0;</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt">&#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; FONT-SIZE: 10pt"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; FONT-SIZE: 10pt"> (206,399</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt"> )</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt">&#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; FONT-SIZE: 10pt"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; FONT-SIZE: 10pt"> 412,051</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt"> &#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> Net income</td> <td style="PADDING-BOTTOM: 2.5pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> 1,855,350</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="PADDING-BOTTOM: 2.5pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> (619,198</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> )</td> <td style="PADDING-BOTTOM: 2.5pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> 1,236,152</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;Other comprehensive income</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; TEXT-INDENT: 10pt; FONT-SIZE: 10pt"> Foreign currency translation adjustment</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt">&#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; FONT-SIZE: 10pt"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; FONT-SIZE: 10pt"> (841,973</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt"> )</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt">&#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; FONT-SIZE: 10pt"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; FONT-SIZE: 10pt"> 1,259,248</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt"> &#xA0;</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt">&#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; FONT-SIZE: 10pt"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; FONT-SIZE: 10pt"> 417,275</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt"> &#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;Comprehensive income</td> <td style="PADDING-BOTTOM: 2.5pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> 1 ,013,377</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="PADDING-BOTTOM: 2.5pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> 640,050</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="PADDING-BOTTOM: 2.5pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> 1,653,427</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> Basic and diluted income per common share</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt; TEXT-INDENT: 10pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> Basic and Diluted</td> <td style="PADDING-BOTTOM: 2.5pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> $</td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> 0.03</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="PADDING-BOTTOM: 2.5pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> $</td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> (0.01</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> )</td> <td style="PADDING-BOTTOM: 2.5pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> $</td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> 0.02</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="FONT-SIZE: 10pt; FONT-WEIGHT: bold">Weighted average number of common shares outstanding</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt; TEXT-INDENT: 10pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> Basic and Diluted</td> <td style="PADDING-BOTTOM: 2.5pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> 73,780,610</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="PADDING-BOTTOM: 2.5pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> 73,780,610</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="PADDING-BOTTOM: 2.5pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> 73,780,610</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> </tr> </table> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"></p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"></p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> &#xA0;</p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"></p> <p style="TEXT-ALIGN: center; MARGIN-TOP: 0pt; FONT: 10pt Times New Roman, Times, Serif; MARGIN-BOTTOM: 0pt"> <b>China YCT International Group, Inc.</b></p> <p style="TEXT-ALIGN: center; MARGIN-TOP: 0pt; FONT: 10pt Times New Roman, Times, Serif; MARGIN-BOTTOM: 0pt"> <b>Consolidated Statement of Cash Flows</b></p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"></p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> &#xA0;</p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"></p> <table style="WIDTH: 100%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: bottom"> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-SIZE: 10pt; FONT-WEIGHT: bold" colspan="10">Three Months Ended June 30, 2011</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-SIZE: 10pt; FONT-WEIGHT: bold" colspan="2">As&#xA0;Previously Reported</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-SIZE: 10pt; FONT-WEIGHT: bold" colspan="2">Adjustments</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-SIZE: 10pt; FONT-WEIGHT: bold" colspan="2">As&#xA0;Restated</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> Cash Flows From Operating Activities:</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; TEXT-INDENT: 40pt; WIDTH: 58%; FONT-SIZE: 10pt"> Net income</td> <td style="WIDTH: 2%; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; WIDTH: 1%; FONT-SIZE: 10pt">$</td> <td style="TEXT-ALIGN: right; WIDTH: 10%; FONT-SIZE: 10pt"> 1,855,350</td> <td style="TEXT-ALIGN: left; WIDTH: 1%; FONT-SIZE: 10pt"> &#xA0;</td> <td style="WIDTH: 2%; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; WIDTH: 1%; FONT-SIZE: 10pt">$</td> <td style="TEXT-ALIGN: right; WIDTH: 10%; FONT-SIZE: 10pt"> (619,198</td> <td style="TEXT-ALIGN: left; WIDTH: 1%; FONT-SIZE: 10pt">)</td> <td style="WIDTH: 2%; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; WIDTH: 1%; FONT-SIZE: 10pt">$</td> <td style="TEXT-ALIGN: right; WIDTH: 10%; FONT-SIZE: 10pt"> 1,236,152</td> <td style="TEXT-ALIGN: left; WIDTH: 1%; FONT-SIZE: 10pt"> &#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">Adjustments to reconcile net income to net cash provided by operating activities:</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; TEXT-INDENT: 40pt; FONT-SIZE: 10pt"> Depreciation and amortization</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">1,225,006</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">825,596</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">2,050,602</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-INDENT: 40pt; FONT-SIZE: 10pt">Issue of common shares as compensation</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">-</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">-</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">-</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">Changes in operating assets and liabilities:</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-INDENT: 40pt; FONT-SIZE: 10pt">Inventory</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">(1,576,067</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">)</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">-</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">(1,576,067</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">)</td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; TEXT-INDENT: 40pt; FONT-SIZE: 10pt"> Advance to suppliers</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; TEXT-INDENT: 40pt; FONT-SIZE: 10pt"> Other receivable from related parties</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">-</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">-</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">-</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; TEXT-INDENT: 40pt; FONT-SIZE: 10pt"> Accounts payable</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">209,871</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">-</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">209,871</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; TEXT-INDENT: 40pt; FONT-SIZE: 10pt"> Taxes payable</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">(439,998</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">)</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">(206,399</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">)</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">(646,397</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">)</td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; TEXT-INDENT: 40pt; FONT-SIZE: 10pt"> Accrued expenses and other payables</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt">&#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; FONT-SIZE: 10pt"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; FONT-SIZE: 10pt"> (115,624</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt"> )</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt">&#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; FONT-SIZE: 10pt"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; FONT-SIZE: 10pt"> -</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt"> &#xA0;</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt">&#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; FONT-SIZE: 10pt"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; FONT-SIZE: 10pt"> (115,624</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt"> )</td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> Net cash provided by (used in) operating activities</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> 1,158,538</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> (1</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> )</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> 1,158,537</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> Cash flows from investing activities:</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; TEXT-INDENT: 40pt; FONT-SIZE: 10pt"> Addition to plant and equipment</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">(77,596</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">)</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">-</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">(77,596</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">)</td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; TEXT-INDENT: 40pt; FONT-SIZE: 10pt"> Reduction of construction in progress</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">-</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">-</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">-</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; TEXT-INDENT: 40pt; FONT-SIZE: 10pt"> Investment in Intagible Assets</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">-</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">-</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">-</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; TEXT-INDENT: 40pt; FONT-SIZE: 10pt"> Prepayment for acquisition of patent</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt">&#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; FONT-SIZE: 10pt"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; FONT-SIZE: 10pt"> 10,030,688</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt"> &#xA0;</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt">&#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; FONT-SIZE: 10pt"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; FONT-SIZE: 10pt"> -</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt"> &#xA0;</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt">&#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; FONT-SIZE: 10pt"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; FONT-SIZE: 10pt"> 10,030,688</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt"> &#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> Net cash provided by (used in) investing activities</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> 9,953,092</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt">&#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; FONT-SIZE: 10pt"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; FONT-SIZE: 10pt"> -</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt"> &#xA0;</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> 9,953,092</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> Effect of exchange rate changes on cash and cash equivalents</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> (841,973</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> )</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt">&#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; FONT-SIZE: 10pt"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; FONT-SIZE: 10pt"> -</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt"> &#xA0;</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> (841,973</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> )</td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">Net increase (decrease) in cash and cash equivalents</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">10,269,657</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">(1</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">)</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">10,269,656</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> Cash and cash equivalents at beginning of period</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> 6,046,804</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> -</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> 6,046,804</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: right; FONT-SIZE: 10pt">&#xA0;</td> <td style="TEXT-ALIGN: left; FONT-SIZE: 10pt">&#xA0;</td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> Cash and cash equivalents at ending of period</td> <td style="PADDING-BOTTOM: 2.5pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> $</td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> 16,316,460</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"> &#xA0;</td> <td style="PADDING-BOTTOM: 2.5pt; 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RESTATEMENT OF FINANCIAL STATEMENTS
3 Months Ended
Jun. 30, 2011
RESTATEMENT OF FINANCIAL STATEMENTS

NOTE 3 - RESTATEMENT OF FINANCIAL STATEMENTS

 

On April 4, 2012, the Audit Committee of the Board of Directors, based on discussions with management, concluded that the Company would restate its consolidated financial statements for the quarter ended June 30, 2011 in conjuction with the restatement of the financial statements for the year ended March 31, 2011 to correct the following errors:

 

· On February 28, 2011, we acquired a US patent which was accounted for as an acquisition of an asset. However, we recognized as part of the patent’s value the contingent consideration in the form of additional common stock that could be issued to the seller of the patent. Therefore, we overstated the fair value of the patent as recorded as the value for our intangible assets on the balance sheets since the year ended March 31, 2011. As a result, we adjusted the value of the intangible assets to reduce the value of the intangible asset by $22,761,679 at June 30, 2011; we made adjustment to reduce the contingent liability associated with the unissued shares by $23,391,902 at June 30, 2011;

 

· We did not accrue the amortization expense for the acquired US patent for the three month ended June 30, 2011 due to the uncertainty about continuing the contract. Therefore, we made an adjustment to increase by $825,597 the amortization expense and accumulated amortization for the US patent based on its restated value. We also made an adjustment to decrease by $157,256 the income tax based on the restated net income.

 

The effect of the adjustments on the consolidated statement of operations for the three months ended June 30, 2011 is to decrease net income attributable to common shares by $619,198. The effect of the adjustments on net income per common share from operations for the three months ended June 30, 2011 is a $0.01 decrease in net income per common share.

 

China YCT International Group, Inc.

Consolidated Balance Sheet

 

    June 30, 2011  
    As Previously
Reported
    Adjustments     As Restated  
Assets                        
Current assets:                        
Cash and cash equivalent   $ 16,316,460     $ -     $ 16,316,460  
Prepaid accounts     5,551,348       -       5,551,348  
Inventory     1,635,250       -       1,635,250  
Total current assets     23,503,058       -       23,503,058  
Plant, property and equipment, net     9,677,789       -       9,677,789  
Construction in progress     213,956       -       213,956  
Intangible assets, net     62,137,004       (22,761,679 )     39,375,325  
Total assets     95,531,808       (22,761,679 )     72,770,128  
                         
Liabilities and Stockholders’ Equity (Deficit)                        
Liabilities:                        
Current liabilities:                        
Accounts payable     209,871       -       209,871  
Tax payable     754,647       (157,256 )     597,391  
Other payable     113,937       -       113,937  
Total current liabilities     1,078,454       (157,255 )     921,199  
Contingency     23,391,902       (23,391,902 )     -  
Total liabilities     24,470,356       (23,549,157 )     921,199  
                         
Stockholders’ equity                        
Preferred stock, par value $500.00 per share; 45 shares authorized and issued at September 30, 2010 and March 31, 2010     22,500       -       22,500  
Common stock, par value $0.001 per share; 100,000,000 shares authorized, 29,461,304 shares issued and outstanding at March 31, 2010; and 73,731,361 shares issued and outstanding at March 31, 2011.     73,780       -       73,780  
Additional paid-in capital     36,879,643       -       36,879,643  
Statutory reserve     956,633       -       956,633  
Retained earnings     31,929,575       (471,770 )     31,457,805  
Accumulated other comprehensive income     1,199,321       1,259,247       2,458,568  
Total stockholders’ equity     71,061,452       787,477       71,848,929  
Total liabilities and stockholders’ equity   $ 95,531,808     $ (22,761,680 )   $ 72,770,128  

 

 

China YCT International Group, Inc.

Consolidated Income Statement

 

    Three Months Ended June 30, 2011  
    As Previously Reported     Adjustments     As Restated  
Sales Revenue   $ 7,944,264     $ -     $ 7,944,264  
Cost of Goods Sold     3,582,345       -       3,582,345  
Gross Profit     4,361,919       -       4,361,919  
                         
Selling Expenses     1,179,552       -       1,179,552  
G&A Expense     583,223       825,597       1,408,820  
R&D Expenses     193,518       -       193,518  
Total expense     1,956,293       825,597       2,781,890  
Income from operation     2,405,626       (825,597 )     1,580,029  
Interest Income (Expense)     (41 )     -       (41 )
Other income (Expense)     68,215       -       68,215  
Profit before tax     2,473,800       (825,597 )     1,648,203  
Income tax     618,450       (206,399 )     412,051  
                         
Net income     1,855,350       (619,198 )     1,236,152  
 Other comprehensive income                        
Foreign currency translation adjustment     (841,973 )     1,259,248       417,275  
 Comprehensive income     1 ,013,377       640,050       1,653,427  
                         
Basic and diluted income per common share                        
Basic and Diluted   $ 0.03     $ (0.01 )   $ 0.02  
                         
Weighted average number of common shares outstanding                        
Basic and Diluted     73,780,610       73,780,610       73,780,610  

 

China YCT International Group, Inc.

Consolidated Statement of Cash Flows

 

    Three Months Ended June 30, 2011  
    As Previously Reported     Adjustments     As Restated  
Cash Flows From Operating Activities:                        
Net income   $ 1,855,350     $ (619,198 )   $ 1,236,152  
Adjustments to reconcile net income to net cash provided by operating activities:                        
Depreciation and amortization     1,225,006       825,596       2,050,602  
Issue of common shares as compensation     -       -       -  
Changes in operating assets and liabilities:                        
Inventory     (1,576,067 )     -       (1,576,067 )
Advance to suppliers                        
Other receivable from related parties     -       -       -  
Accounts payable     209,871       -       209,871  
Taxes payable     (439,998 )     (206,399 )     (646,397 )
Accrued expenses and other payables     (115,624 )     -       (115,624 )
                         
Net cash provided by (used in) operating activities     1,158,538       (1 )     1,158,537  
                         
Cash flows from investing activities:                        
Addition to plant and equipment     (77,596 )     -       (77,596 )
Reduction of construction in progress     -       -       -  
Investment in Intagible Assets     -       -       -  
Prepayment for acquisition of patent     10,030,688       -       10,030,688  
                         
Net cash provided by (used in) investing activities     9,953,092       -       9,953,092  
                         
Effect of exchange rate changes on cash and cash equivalents     (841,973 )     -       (841,973 )
                         
Net increase (decrease) in cash and cash equivalents     10,269,657       (1 )     10,269,656  
                         
Cash and cash equivalents at beginning of period     6,046,804       -       6,046,804  
                         
Cash and cash equivalents at ending of period   $ 16,316,460     $ -     $ 16,316,460  
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
3 Months Ended
Jun. 30, 2011
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of presentation

 

The consolidated financial statements of the Company are prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”).

 

Principles of consolidation

 

The consolidated financial statements include the financial statements of China YCT, Landway Nano and its wholly owned subsidiary, Shandong Spring.  All inter-company transactions and balances are eliminated in consolidation.

 

Use of estimates

 

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant accounting estimates reflected in the Company’s consolidated financial statements include: the valuation of inventory, and estimated useful lives and impairment of property and equipment and intangible assets.

 

Cash and cash equivalents

 

For the purposes of the statement of cash flow, the Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.

 

Inventory

 

Inventory is primarily composed of raw materials and packing materials for manufacturing, work in process, and finished goods. Inventories are valued at the lower of cost or market with cost determined on a weighted average basis. Management compares the cost of inventory with the market value and an allowance is made for writing down the inventory to its market value, if lower than cost.

 

Property and equipment

 

Property and equipment are stated at cost. The cost of an asset comprises its purchase price and any directly attributable costs of bringing the asset to its present working condition and locations for its intended use. Depreciation is calculated using the straight-like method over the following useful lives:

 

Buildings 30-35 years
   
Machinery, equipment and automobiles 7-15 years

 

Expenditures for maintenance and repairs are charged to expense as incurred. Additions, renewals and betterments are capitalized.

 

Intangible Assets

 

  (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 evenly over the grant period of 50 years.

 

  (ii) Patents:

 

In March 2010, the Company purchased one patent from Shandong YCT Corp.  The patent is the Company’s 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.  The patent was recorded at cost when purchased, and is being amortized over the shorter of its remaining legal life, 16.5 years, or its useful life, on a straight-line basis.

 

On February 28, 2011, the Company acquired U.S. patent No. 6,475,531 B1 titled “Safe Botanical Drug for Treatment and Prevention of Influenza and Increasing Immune Function”) through a purchase agreement with L.Y. Research Corp., a New Jersey Corporation.

 

According to the purchase agreement between the Company and L.Y. Hong Kong Biotech Limited (LYHK), CYIG acquires the patent for a consideration of issuing total 44,254,952 shares of CYIG common stock. The total value of the consideration on the acquisition date is $32,748,665 which is calculated by the total issuing shares, multiplying CYIG’s quoted stock price $0.74 per share on February 28, 2011. The patent is amortized straightly over the patent’s remaining legal life of 9.9 years starting from March 1, 2011.

 

Revenue recognition

 

The Company’s revenue recognition policies are in compliance with Staff Accounting Bulletin (“SAB”) 104, included in the Codification as ASC 605, Revenue Recognition. Sales revenue is recognized at the date of shipment to customers when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, no other significant obligations of the Company exist and collectability is reasonably assured. Payments received before all of the relevant criteria for revenue recognition are recorded as customer deposits.

 

Unearned revenue

 

Revenue from the sale of goods or services is recognized at the time that goods are delivered or services are rendered. Receipts in advance for goods to be delivered or services to be rendered in a subsequent period are carried forward as unearned revenue.

 

Impairment of long-lived assets

 

The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may no longer be recoverable. An impairment loss, measured based on the fair value of the asset, is recognized if expected future undiscounted cash flows are less than the carrying amount of the assets.

 

Value-added tax

 

Sales revenue represents the invoiced value of goods, net of a Value-Added Tax (“VAT”). All of the Company’s products that are sold in the PRC are subject to a Chinese value-added tax at a rate of 17% of the gross sales price. This VAT may be offset by VAT paid by the Company on raw materials and other materials included in the cost of producing their finished product.

 

The Company recorded net VAT Payable in amount of $85,160 and $465,811 as of June 30, 2011 and March 30, 2011, respectively.

 

Research and development

 

Research and development costs are related primarily to the Company’s developing its intellectual property. Research and development costs are expensed as incurred. The costs of material and equipment that are acquired or constructed for research and development activities and have alternative future uses are classified as plant and equipment and depreciated over their estimated useful lives.

 

The research and development expense for the three months ended June 30, 2011 and 2010 was $193,518 and $60,338, respectively.

 

Advertising costs

 

Advertising costs for newspaper and television are expensed as incurred.  The Company incurred advertising costs of $76,910 and nil for the three months ended June, 2011 and 2010, respectively.

 

Mailing and handling costs

 

The Company accounts for mailing and handling fees in accordance with the FASB ASC 605-45 (Emerging Issues Task Force (EITF) Issue No. 00-10, Accounting for Shipping and Handling Fees and Costs). The Company includes shipping and handling fees billed to customers in net revenues. Amounts incurred by the Company for freight are included in cost of goods sold. For the three months ended June 30, 2011 and 2010, the Company incurred $390,010 and $247,031 mailing and handling costs, respectively.

 

Net income (loss) per share (“EPS”)

 

Basic EPS excludes dilution and is computed by dividing net income (loss) attributable to common stockholders by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock (convertible preferred stock, forward contracts, warrants to purchase common stock, contingently issuable shares, common stock options and warrants and their equivalents using the treasury stock method) were exercised or converted into common stock. There are 31,610,679 and nil common stock equivalents available for dilution purposes as of June 30, 2011 and 2010, respectively.

 

Risks and uncertainties

 

The Company’s operations are carried out in the PRC. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environments in the PRC, and by the general state of the PRC’s economy. The Company’s operations in the PRC are subject to specific considerations and significant risks not typically associated with companies in the North America and Western Europe. These include risks associated with, among others, the political, economic and legal environments and foreign currency exchange. The Company’s results may be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things.

 

Fair Value of Financial Instruments

 

For certain of the Company’s financial instruments, including cash and cash equivalents, restricted cash, accounts receivable, accounts payable, accrued liabilities and short-term debt, the carrying amounts approximate their fair values due to their short maturities.

 

As of June 30, 2011, the Company did not identify any financial instruments that are required to be presented on the balance sheet at fair value other than those whose carrying amounts approximate fair value due to their short maturities.

 

Foreign currency translation

 

The accounts of the Company’s Chinese subsidiary are maintained in the RMB and the accounts of the U.S. parent company are maintained in the USD. The accounts of the Chinese subsidiary were translated into USD in accordance with Accounting Standards Codification (“ASC”) Topic 830 “Foreign Currency Matters,” with the RMB as the functional currency for the Chinese subsidiary. According to Topic 830, all assets and liabilities were translated at the exchange rate on the balance sheet date; stockholders’ equity is translated at historical rates and statement of income items are translated at the weighted average exchange rate for the period. The resulting translation adjustments are reported under other comprehensive income in accordance with ASC Topic 220, “Comprehensive Income.” Gains and losses resulting from the translations of foreign currency transactions and balances are reflected in the statements of income.

 

Translation adjustments resulting from this process amounted to $417,275 and $144,853 for the three months ended June 30, 2011 and 2010, respectively.

 

The following exchange rates were adopted to translate the amounts from RMB into United States dollars (“USD$”) for the respective periods:

 

    June 30,
2011
    March 31,
2011
    June 30,
2010
 
Three Months End RMB Exchange Rate (RMB/USD$)     6.4716       6.5564       6.7909  
Average Period RMB Exchange Rate (RMB/USD$)     6.5011       6.7111       6.8235  

 

Recent accounting pronouncements

 

In April 2010, the FASB issued FSP FAS 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial Instruments. This FSP amends SFAS No. 107, Disclosures about Fair Value of Financial Instruments, to require an entity to provide disclosures about the fair value of financial instruments in interim financial information. This FSP also amends Accounting Principles Board Opinion No. 28, Interim Financial Reporting, to require those disclosures in summarized financial information at interim reporting periods. FSP FAS 107-1 and APB 28-1 are effective for interim periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009.  Effective April 1, 2009, the Company adopted this pronouncement.  The adoption of this pronouncement did not have any significant impact on the Company’s financial condition or results of operations.

 

In January 2010, the FASB issued authoritative guidance to improve disclosures about fair value measurements. This guidance amends previous guidance on fair value measurements to add new requirements for disclosures about transfers into and out of Levels 1 and 2 and separate disclosures about purchases, sales, issuances, and settlements relating to Level 3 measurement on a gross basis rather than on a net basis as currently required. This guidance also clarifies existing fair value disclosures about the level of disaggregation and about inputs and valuation techniques used to measure fair value. This guidance is effective for annual and interim periods beginning after December 15, 2009, except for the requirement to provide the Level 3 activities of purchases, sales, issuances, and settlements on a gross basis, which will be effective for annual and interim periods beginning after December 15, 2010. Early application is permitted and, in the period of initial adoption, entities are not required to provide the amended disclosures for any previous periods presented for comparative purposes. The Company does not expect the adoption of this pronouncement to have a significant impact on its financial condition or results of operations.

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CONDENSED CONSOLIDATED BALANCE SHEET RESTATED, June 30, 2011 & March 31, 2011 (USD $)
Jun. 30, 2011
Mar. 31, 2011
Current assets:    
Cash and cash equivalent $ 16,316,460 $ 6,046,804
Prepaid accounts 5,551,348 15,602,258
Inventory 1,635,250 59,183
Total current assets 23,503,058 21,708,245
Plant, property and equipment, net 9,677,789 9,629,558
Construction in progress 213,956 211,189
Intangible assets, net 39,375,325 40,560,015
Total assets 72,770,128 72,109,007
Current liabilities:    
Accounts payable 209,871 0
Tax payable 597,391 1,683,944
Other payable 113,937 229,561
Total current liabilities 921,199 1,913,505
Contingency 0 0
Total liabilities 921,199 1,913,505
Stockholders' Equity    
Preferred stock, par value $500.00 per share; 45 shares authorized and issued at September 30, 2010 and March 31, 2010 22,500 22,500
Common stock, par value $0.001 per share; 100,000,000 shares authorized; 73,780,610 and 73,758,388 shares issued and outstanding at June 30, 2011 and March 31, 2011, respectively 73,780 73,758
Additional paid-in capital 36,879,643 36,868,554
Statutory reserve 956,633 956,633
Retained earnings 31,457,805 30,232,764
Accumulated other comprehensive income 2,458,568 2,041,293
Total stockholders' equity 71,848,929 70,195,502
Total liabilities and stockholders' equity $ 72,770,128 $ 72,109,007
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CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW RESTATED, Three Month Ended June 30, 2011 (USD $)
3 Months Ended
Jun. 30, 2011
Jun. 30, 2010
Cash Flows From Operating Activities:    
Net income $ 1,236,152 $ 1,283,313
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization 2,050,602 147,414
Issue of common shares as compensation   19,760
Changes in operating assets and liabilities:    
Inventory (1,576,067) 71,837
Accounts payable 209,871 (2,299,928)
Taxes payable (646,397) (478,039)
Accrued expenses and other payables (115,624) 42,292
Net cash provided by (used in) operating activities 1,158,537 (1,213,351)
Cash flows from investing activities:    
Addition to plant and equipment (77,596) (52,618)
Prepayment to a third party vendor for acquisition of patent 10,030,688 (7,355,192)
Net cash provided by (used in) investing activities 9,953,092 (7,407,810)
Effect of exchange rate changes on cash and cash equivalents (841,973) 101,975
Net increase (decrease) in cash and cash equivalents 10,269,655 (8,519,186)
Cash and cash equivalents at beginning of period 6,046,804 11,911,933
Cash and cash equivalents at ending of period 16,316,460 3,392,747
Cash paid during the periods for:    
Interest 81 0
Income taxes 1,936,972 1,231,593
Non-cash financing activities:    
Stock issued for services $ 22,222 $ 14,970
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XML 18 R7.htm IDEA: XBRL DOCUMENT v2.4.0.6
ORGANIZATION AND PRINCIPAL ACTIVITIES
3 Months Ended
Jun. 30, 2011
ORGANIZATION AND PRINCIPAL ACTIVITIES

NOTE 1 - ORGANIZATION AND PRINCIPAL ACTIVITIES

 

China YCT International Group, Inc. (“China YCT”) was incorporated in the State of Florida, in the United States (the “US”) in January 1989, and reincorporated in the State of Delaware on April 4, 2007.  China YCT principally operates through the following directly owned subsidiaries: Landway Nano Bio-Tech, Inc. (100% owned), incorporated in Delaware, in the United States, and Shandong Spring Pharmaceutical Co., Ltd. (“Shandong Spring”), (100% owned), incorporated in the People’s Republic of China (“PRC”). China YCT International Group, Inc. and its subsidiaries are collectively referred to as the “Company.”

 

China YCT, through its wholly owned subsidiary, Shandong Spring, is engaged in the business of developing, manufacturing and marketing its own medicine from gingko extract, and other dietary supplement products in the P.R. China.

XML 19 R3.htm IDEA: XBRL DOCUMENT v2.4.0.6
CONDENSED CONSOLIDATED BALANCE SHEET RESTATED, June 30, 2011 & March 31, 2011 (Parenthetical) (USD $)
Jun. 30, 2011
Mar. 31, 2011
Preferred stock, par value $ 500.00 $ 500.00
Preferred stock, shares authorized 45 45
Preferred stock, shares issued 45 45
Common stock, par value $ 0.001 $ 0.001
Common stock, shares authorized 100,000,000 100,000,000
Common stock, shares issued 73,780,610 73,758,388
Common stock, shares outstanding 73,780,610 73,758,388
XML 20 R17.htm IDEA: XBRL DOCUMENT v2.4.0.6
INCOME TAXES
3 Months Ended
Jun. 30, 2011
INCOME TAXES

NOTE 11 - INCOME TAXES

 

Shandong Spring Pharmaceutical Co., Ltd is subject to the Enterprise income tax (“EIT”) at a statutory rate of 25%.

 

For the quarters ended June 30, 2011 and 2010, Shandong Spring Pharmaceutical Co., Ltd. recorded income tax provisions of $412,051 and $459,533, respectively.

XML 21 R1.htm IDEA: XBRL DOCUMENT v2.4.0.6
Document and Entity Information
3 Months Ended
Jun. 30, 2011
Sep. 05, 2011
Document Information [Line Items]    
Document Type 10-Q  
Amendment Flag true  
AmendmentDescription The Form 10Q/A is being amended to restate our previously issued financial statements for the quarter ended June 30, 2011. On February 28, 2011, we acquired a United States patent which was accounted for as an acquisition of an asset. However, we recognized the contingent considerations that would be accounted for under the acquisition of a business. Therefore, we overstated the fair value of the patent. We restated our financial statements to correct this error. The changes in the financial statements at June 30, 2011 include, but are not limited to, a decrease in the amount recorded for net intangible assets by $22,761,681 a decrease in the amount recorded as a contingent liability by $23,391,902, and a reduction of $471,770 in retained earnings. We have also provided additional explanation as to (i) the intended purposes of the patent, (ii) the lack of accounts receivable as of June 30, 2011 and (iii) the lack of effectiveness of our internal controls and procedures at June 30, 2011.  
Document Period End Date Jun. 30, 2011  
Document Fiscal Year Focus 2011  
Document Fiscal Period Focus Q1  
Trading Symbol CYIG  
Entity Registrant Name CHINA YCT INTERNATIONAL GROUP, INC.  
Entity Central Index Key 0000847464  
Current Fiscal Year End Date --03-31  
Entity Filer Category Smaller Reporting Company  
Entity Common Stock, Shares Outstanding   73,780,610
XML 22 R4.htm IDEA: XBRL DOCUMENT v2.4.0.6
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS RESTATED, For The Three Months Ended June 30, 2011 (USD $)
3 Months Ended
Jun. 30, 2011
Jun. 30, 2010
Sales Revenue $ 7,944,264 $ 5,661,519
Cost of Goods Sold 3,582,345 3,061,321
Gross Profit 4,361,919 2,600,198
Selling Expenses 1,179,552 502,713
G&A Expense 1,408,820 294,536
R&D Expenses 193,518 60,338
Total expense 2,781,890 857,587
Income from operation 1,580,029 1,742,611
Interest income (Expense) (41)  
Other income (Expense) 68,215  
Profit before tax 1,648,203 1,742,611
Income tax 412,051 459,298
Net income 1,236,152 1,283,313
Other comprehensive income    
Foreign currency translation adjustment 417,275 144,853
Comprehensive income $ 1,653,427 $ 1,428,166
Basic and diluted income per common share    
Basic and Diluted $ 0.02 $ 0.04
Weighted average number of common shares outstanding    
Basic and Diluted 73,780,610 29,471,503
XML 23 R12.htm IDEA: XBRL DOCUMENT v2.4.0.6
PLANT, PROPERTY AND EQUIPMENT, NET
3 Months Ended
Jun. 30, 2011
PLANT, PROPERTY AND EQUIPMENT, NET

NOTE 6 – PLANT, PROPERTY AND EQUIPMENT, NET

 

The components of property and equipment as of June 30, 2011 and March 31, 2011 were as follows:

 

    Period Ended  
    June 30, 2011     March 31, 2011  
Machinery & Equipment   $ 512,191     $ 516,935  
Furniture & Fixture     129,405       96,156  
Building     9,632,593       9,685,212  
Subtotal     10,474,188       10,298,303  
Less: Accumulated Depreciation     (796, 399 )      (668,745 )
Total plant, property and equipment, net   $ 9,677,789     $ 9,629,558  

 

The depreciation expense for the three months ended June 30, 2011 and 2010 was $127,654 and $54,456, respectively.

XML 24 R11.htm IDEA: XBRL DOCUMENT v2.4.0.6
INVENTORY
3 Months Ended
Jun. 30, 2011
INVENTORY

NOTE 5 - INVENTORY

 

Inventory consists of finished goods, work-in-process, and raw materials. No allowance for inventory was made for the three months ended June 30, 2011 and 2010.

 

The components of inventories as of June 30, 2011 and March 31, 2011 were as follows:

 

    Period Ended  
    June 30, 2011     March 31, 2011  
Raw materials   $ 854,854     $ 8,699  
Work-in-progress     212,846       27,225  
Finished goods     567,550       23,259  
Total Inventories   $ 1,635,250     $ 59,183  
XML 25 R15.htm IDEA: XBRL DOCUMENT v2.4.0.6
INTANGIBLE ASSETS, NET
3 Months Ended
Jun. 30, 2011
INTANGIBLE ASSETS, NET

NOTE 9 - 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     June 30, 2011     March 31,
2011
 
            (Restated)     (Restated)  
Land use right     50 years       1,547,801       1,547,801  
Less: Accumulated amortization             (149,626 )     (139,821 )
Land use right, net             1,398,175       1,407,980  
Patent 1     16.5 years       7,016,042       7,016,045  
Patent (U.S. No. 6,475,531 B1)     119 months       32,748,665       32,748,665  
Less: Accumulated amortization             (1,787,557 )     (612,674 )
Patents, net           $ 37,977,150     $ 39,152,036  

 

The amortization expense of land use right for the three months ended June 30, 2011 and 2010 was $9,805 and $8,141, respectively.

 

The amortization expense of the patents for the three months ended June 30, 2011 and 2010 was $1,174,887 and $84,819, respectively.

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CONSTRUCTION IN PROGRESS
3 Months Ended
Jun. 30, 2011
CONSTRUCTION IN PROGRESS

NOTE 7 – CONSTRUCTION IN PROGRESS

 

Construction in progress represents direct costs of construction or acquisition and design fees incurred for the Company’s new plant and equipment. Capitalization of these costs ceases and the construction in progress is transferred to plant and equipment when substantially all the activities necessary to prepare the assets for their intended use are completed. No depreciation is made until construction is completed and put into use.

XML 27 R14.htm IDEA: XBRL DOCUMENT v2.4.0.6
MAJOR CUSTOMER AND VENDOR
3 Months Ended
Jun. 30, 2011
MAJOR CUSTOMER AND VENDOR

NOTE 8 - MAJOR CUSTOMER AND VENDOR

 

In the three months ended June 30, 2011, the Company mainly sells products to individual retail customers through eight major distributors.

 

For the three months ended June 30, 2011, the purchase from the two major vendors was $4,774,381, representing 83% of the Company’s total purchase for the quarter.

 

Shandong Kangyuan     3,329,167  
Shandong YCT     1,445,213  
Total     $ 4,774,381  
XML 28 R16.htm IDEA: XBRL DOCUMENT v2.4.0.6
TAX PAYABLE
3 Months Ended
Jun. 30, 2011
TAX PAYABLE

NOTE 10 - TAX PAYABLE

 

Tax payable at June 30, 2011 and March 31, 2011 were as follows:

 

    As of  
    June 31,
2011
    March 31,
2011
 
     (Restated)      (Restated)  
Corporate Income Tax   $ 514,240     $ 1,190,436  
Value-Added Tax     85,160       489,962  
Other Tax & Fees     (2,009 )     3,546  
                 
Total Tax Payable   $ 597,391     $ 1,683,944  
XML 29 R5.htm IDEA: XBRL DOCUMENT v2.4.0.6
Statement Of Shareholders Equity And Other Comprehensive Income (USD $)
Total
Preferred Stock Series A
Common shares
Additional paid in capital
Statutory Reserve
Accumulated OCI
Retained Earnings
Beginning Balance at Mar. 31, 2011 $ 70,195,502 $ 22,500 $ 73,758 $ 36,868,554 $ 956,633 $ 2,041,293 $ 30,232,764
Beginning Balance (in shares) at Mar. 31, 2011   45 73,758,388        
Net income for the quarter (Restated) 1,236,152           1,236,152
Issuance of common shares to independent directors (in shares)     22,222        
Issuance of common shares to independent directors 0   22 11,089     (11,111)
Foreign currency translation adjustment (Restated) 417,275         417,275  
Ending Balance at Jun. 30, 2011 $ 71,848,929 $ 22,500 $ 73,780 $ 36,879,643 $ 956,633 $ 2,458,568 $ 31,457,805
Ending Balance (in shares) at Jun. 30, 2011   45 73,780,610        
XML 30 R10.htm IDEA: XBRL DOCUMENT v2.4.0.6
PREPAID ACCOUNTS
3 Months Ended
Jun. 30, 2011
PREPAID ACCOUNTS

NOTE 4 – PREPAID ACCOUNTS

 

The prepaid account in amount of $5,551,348 is a cash payment to a Chinese research company for the acquisition of a patent.  During the quarter ended June 30, 2011, $10,050,910 prepayment was refunded by the owner of the patent due to the incompletion of the required transferring paper work.  When the Company obtains the title of the patent, the rest of the payment will be made to the owner of the patent and the prepayment will be reclassified to a patent.

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