STOCKHOLDERS' EQUITY

3 Months Ended

Jun. 30, 2012

STOCKHOLDERS' EQUITY

NOTE 13 - STOCKHOLDERS’ EQUITY

Stock Issued to Independent Directors

During the three months ended June 30, 2012, the Company issued an aggregate of 50,000 shares of its common stock to the Company’s three independent directors as compensation for their services. The shares were valued at $0.10 per share, which was the average market price of the common stock for the five days before the grant date. Therefore, the total amount of compensation in the form of issuing shares of common stock to the independent directors was $5,000 for the three months ended June 30, 2012.

Stock Issued for Acquisition of Patent

On February 28, 2011, the Company issued 44,254,952 shares of common stocks, as a partial of total considerations to acquire a U.S. patent No. 6,475,531 B1 titled “Safe Botanical Drug for Treatment and Prevention of Influenza and Increasing Immune Function”) from L.Y. Research Corp., a New Jersey Corporation.   The shares of the common stocks were valued at the average closing market price on February 28, 2011 in the amount of $32,748,665.

Statutory Reserve

Subsidiaries incorporated in China are required to make appropriations to reserve funds, based on after-tax net income determined in accordance with generally accepted accounting principles of the People’s Republic of China (“PRC GAAP”).  Effective January 1, 2006, the Company is only required to contribute to one statutory reserve fund at 10% of net income after tax per annum, and any contributions are not to exceed 50% of the respective companies’ registered capital.

As of June 30, 2012, the Company appropriated $956,633 to the statutory reserve.