COMMITMENTS AND CONTINGENCIES

6 Months Ended

Apr. 30, 2012

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies Disclosure [Text Block]

21.           COMMITMENTS AND CONTINGENCIES

The Company has various purchase commitments for materials, supplies and services incident to the ordinary conduct of business, generally for quantities required for the Company’s business and at prevailing market prices. No material annual loss is expected from these commitments and there are no minimum purchase commitments.

The Company and its subsidiaries are self-insured, and they do not carry any property insurance, general liability insurance, or any other insurance that covers the risks of their business operations. As a result any material loss or damage to its properties or other assets, or personal injuries arising from its business operations would have a material adverse effect on the Company’s financial condition and operations.

The Company is not involved in any legal matters arising in the normal course of business. While incapable of estimation, in the opinion of the management, the individual regulatory and legal matters in which it might involve in the future are not expected to have a material adverse effect on the Company’s financial position, results of operations, or cash flows.

(1)  Operating lease arrangements

We currently have no operating lease agreement with any company.

(2)  Capital commitments

On October 12, 2009, we entered into a purchase agreement with Harbin Renhuang Pharmaceutical Stock Co. Ltd (“Renhuang Stock”) to acquire the land use right, property and plant located at our Ah City Natural and Biopharmaceutical plant for a total consideration of $25,262,493. Pursuant to the purchase agreement, a payment of $15,789,058 was made to Renhuang Stock in October 2009 and a payment of $7,894,529 was made to Renhuang Stock in January 2011, with a final payment of $1,578,906 will be paid once we received all the related title transfer documents from local government, at which time title for the assets will be transferred. According to the agreement, we were exempted from lease payments for the underlying assets starting from May 1, 2010.

On April 10, 2010, CBP China entered into a Purchase Agreement with Hongxiangmingyuan of Heilongjiang Yongtai Company, to acquire two office floors for a total consideration of $6,057,409.  Pursuant to the Purchase Agreement, a payment of $4,240,186 was made in April 2010 and recorded as deposits on the condensed consolidated balance sheet.  Pursuant to the Purchase Agreement, final payment of $1,817,223 is due by December 20, 2012, at which time title for the assets will be transferred.

Name of Fixed Asset	Purchase Date		Prepaid Amount		Remaining Amount		Total Amount
Ah City Pharmaceutical Plant		October 2009	$	23,683,587	$	1,578,906	$	25,262,493
Two Office Floors		April 2010		4,240,186		1,817,223		6,057,409
Total			$	27,923,773	$	3,396,129	$	31,319,902

In January 2011, CBP China started its Ah City Phase Two project for Siberian Ginseng products development and industrialization and entered into a Construction and Engineering Design Contract (the “Contract”) with Heilongjiang Medical Architecture Design Institute (the “Institute”) for architectural design. A few payments have been made to Institute and relevant local government departments for design and start up fees and we recorded $1,949,949 as Construction-in-progress for Ah City Phase Two project. The estimated total investment for Ah City Phase Two is $18,946,870. In anticipation of the project proceeding, we expect to pay approximately $9,418,173 in our fiscal year 2012 and $7,578,748 in our fiscal year 2013. The project is anticipated to be finished in 2013.

Name of Construction-in-Progress	Start Date	Paid Amount		Remaining Amount		Projected Total Amount
Ah City Phase Two (Siberian Ginseng Product Industrialization)	January 2011	$	1,949,949	$	16,996,921	$	18,946,870

On January 11, 2011, CBP China entered into an Exclusive Licensing Agreement for Harbin Renhuang Pharmaceutical Co., Ltd. to Use Forest Resources under Yichun Red Star Forestry Bureau (the “Agreement”) with Yichun Red Star Forestry Bureau of Heilongjiang Province (the “Forestry Bureau”) which provides us with 30 years exclusive license right to use approximately 6,667 hectares of undergrowth resources including approximately 67 hectares of Siberian Ginseng GAP cultivation base in Heilongjiang Province. Pursuant to the Agreement, a payment of $7,894,529 was made to Forestry Bureau in January 2011, second payment of $6,315,623 was made in October 2011 and with a final payment of $1,578,906 remaining until receive all the required material from local government authorities for a total consideration of $15,789,058. Siberian Ginseng is a plant with medically-established anti-depressant and mood regulation qualities and is also an active ingredient in our market-leading line of all-natural anti-depressant medications. We will be responsible for continued maintenance and protection of wild resources to make this area a professional Siberian Ginseng base.

In the fiscal year 2011, we purchased the following intangible assets:

Name of Intangible Assets	Purchase Date		Paid Amount		Remaining Amount		Total Amount
Patent of Ingredients and preparation for Parkinson Drug		August 2011	$	1,357,859	$	1,357,859	$	2,715,718
Patent of Ingredients and preparation for XiangDousu		August 2011		1,342,070		1,342,070		2,684,140
Patent of Mudouye Extract		September 2011		1,894,687		1,894,687		3,789,374
Patent of Hongdoushan Extract		September 2011		2,384,148		2,384,148		4,768,296
Patent of Ingredients and preparation for Jizhi Pills		October 2011		2,131,523		2,131,523		4,263,046
Yichun Undergrowth Resource Exclusive Using right		January 2011		14,210,152		1,578,906		15,789,058
Total			$	23,320,439	$	10,689,193	$	34,009,632

On January 24, 2012, the Company entered into an advertising contract with Harbin Weishi Advertising Company to advertise its products from February 1, 2012 to January 31, 2013 as shown on the following table.

Advertising Contract	Contract Date		Paid Amount		Remaining Amount		Total Amount
			US$		US$		US$
Harbin TV Weishi Advertising Company		January 2012		1,799,953		5,399,858		7,199,811

As of April 30, 2012, the Company has capital commitments for purchase of Ah City Nature and Pharmaceutical Plant, two office floors, undergrowth resources right, product patents, advertising contract and Ah City Phase Two construction-in-progress of approximately $36,482,101. The amounts to be paid in the future years are as follows:

Year	Payment for properties
2012	$	25,286,177
2013		11,195,924
Total	$	36,482,101