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OTHER LIABILITY
9 Months Ended
Dec. 31, 2012
Other Liabilities Disclosure [Abstract]  
OTHER LIABILITY

NOTE 11 – OTHER LIABILITY

 

On February 28, 2011, the Company entered into the Purchase Agreement. Pursuant to the terms of the Purchase Agreement, the Company acquired a patent (the “LY Patent”) from L.Y. (HK) Biotech Limited, a wholly owned company by L.Y. Research Corp., in exchange for 44,254,952 shares of the Company’s common stock at inception date. In addition, there were two contingent considerations of a total of 31,610,544 shares to be issued upon the occurrences of some pre-determined events. The first contingent consideration of 11,063,968 shares was required to be issued upon the Company’s stock being listed on OTCBB or OTCQB.

 

Because the obligation to issue additional shares to LY Research was contingent upon the occurrence of certain predetermined events, the liability was to be recognized when the contingencies were resolved. On September 9, 2011, LY Research became entitled to the issuance of 11,063,968 shares of common stock upon the occurrence of the quotation of the Company’s common stock on the OTCQB. Therefore, the liability to issue 11,063,968 shares of common stock should be recorded for the quarter ended September 30, 2011 and forward.

 

The amount of the liability is calculated by multiplying the 11,063,968 shares of stock by the quoted average stock price on September 9, 2011. The stock price per share on September 9, 2011 was $0.25. The calculation of the liability to issue 11,063,968 shares of the common stock is as followed:

 

Other Liability $2,765,992 = 11,063,968 shares x $0.25

 

We recognized $2,765,992 as an “Other Liability” and an addition to the US patent, for the quarter ended September 30, 2011 and forward. As of March 31, 2012, the Patent was written-off due to impairment.

 

As of October 21, 2012, because the conditions set in the Purchase Agreement were not fulfilled, the Company and LY Research entered into a termination agreement on October 29, 2012 to formally terminate the Purchase Agreement, and return the Patent and the shares to LY Research and the Company, respectively. As a result, the “Other Liability” of $2,765,992 was reversed as of December 31, 2012.