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China-Biotics, Inc – ‘10-K’ for 3/31/12 – ‘EX-101.INS’

On:  Friday, 9/14/12, at 4:39pm ET   ·   For:  3/31/12   ·   Accession #:  1144204-12-51520   ·   File #:  1-34123

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  As Of               Filer                 Filing    For·On·As Docs:Size             Issuer                      Filing Agent

 9/14/12  China-Biotics, Inc                10-K        3/31/12   44:3.1M                                   Toppan Merrill/FA

Annual Report   —   Form 10-K   —   Sect. 13 / 15(d) – SEA’34
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-K        Annual Report                                       HTML    747K 
 3: EX-21.1     Subsidiaries List                                   HTML     13K 
 2: EX-16.3     Letter re: Change in Certifying Accountant          HTML     15K 
 4: EX-31.1     Certification -- §302 - SOA'02                      HTML     18K 
 5: EX-31.2     Certification -- §302 - SOA'02                      HTML     18K 
 6: EX-32.1     Certification -- §906 - SOA'02                      HTML     14K 
 7: EX-32.2     Certification -- §906 - SOA'02                      HTML     15K 
27: R1          Document and Entity Information                     HTML     43K 
20: R2          Consolidated Balance Sheets                         HTML    126K 
25: R3          Consolidated Balance Sheets [Parenthetical]         HTML     37K 
29: R4          Consolidated Statements of Operations and Other     HTML    102K 
                Comprehensive Income                                             
40: R5          Consolidated Statements of Changes in               HTML     39K 
                Stockholders' Equity                                             
21: R6          Consolidated Statements of Cash Flows               HTML    128K 
24: R7          Organization and Description of Business            HTML     23K 
19: R8          Summary of Principal Accounting Policies            HTML     57K 
16: R9          Earnings Per Share                                  HTML     28K 
41: R10         Risks, Uncertainties, and Concentrations            HTML     24K 
31: R11         Accounts Receivable                                 HTML     19K 
30: R12         Inventories                                         HTML     19K 
35: R13         Loan Receivable                                     HTML     18K 
36: R14         Deposits                                            HTML     23K 
34: R15         Land Use Right                                      HTML     26K 
37: R16         Property, Plant and Equipment                       HTML     25K 
26: R17         Amount Due to Director                              HTML     17K 
28: R18         Loans Payable                                       HTML     18K 
33: R19         Convertible Notes Payable                           HTML     22K 
44: R20         Income Taxes Payable                                HTML     54K 
38: R21         Treasury Stock                                      HTML     18K 
22: R22         Capital and Statutory Reserves                      HTML     17K 
32: R23         Option Incentive Plan                               HTML     34K 
23: R24         Product Return Concessions                          HTML     18K 
15: R25         Retirement Costs                                    HTML     27K 
39: R26         Commitments and Contingencies                       HTML     38K 
42: R27         Business Segments                                   HTML     38K 
18: R28         Schedule I Condensed Parent Company Financial       HTML     52K 
                Statements                                                       
43: XML         IDEA XML File -- Filing Summary                      XML     55K 
17: EXCEL       IDEA Workbook of Financial Reports (.xls)            XLS    297K 
 8: EX-101.INS  XBRL Instance -- chbt-20120331                       XML    456K 
10: EX-101.CAL  XBRL Calculations -- chbt-20120331_cal               XML     97K 
11: EX-101.DEF  XBRL Definitions -- chbt-20120331_def                XML    177K 
12: EX-101.LAB  XBRL Labels -- chbt-20120331_lab                     XML    413K 
13: EX-101.PRE  XBRL Presentations -- chbt-20120331_pre              XML    251K 
 9: EX-101.SCH  XBRL Schema -- chbt-20120331                         XSD     69K 
14: ZIP         XBRL Zipped Folder -- 0001144204-12-051520-xbrl      Zip     63K

‘EX-101.INS’   —   XBRL Instance — chbt-20120331

This Exhibit is an XBRL XML File.

                                                                                                                                                                                
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<chbt:OrganizationAndDescriptionOfBusinessDisclosureTextBlock contextRef="Context_FYE_31-Mar-2012">
<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: 0.5in;"><b>1.</b></td> <td><b>ORGANIZATION AND DESCRIPTION OF BUSINESS</b></td> </tr> </table> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">China-Biotics, Inc. (sometimes referred to as “China-Biotics” or the “Company”) is engaged in the research, development, production, marketing, and distribution of probiotics products (which we sometimes refer to simply as “probiotics”), which are products that contain live microbial food supplements that beneficially affect the host by improving its intestinal microbial balance.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>Corporate Organization and History</b></p> <p style="text-align: justify; text-indent: 45pt; margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">The Company was incorporated under the name Otish Resources, Inc. in Delaware in February 2003. On March 22, 2006, the Company completed a securities exchange transaction (the “share exchange”) with Sinosmart Group Inc. (“SGI”) and the shareholders of SGI and issued to the SGI shareholders an aggregate of 15,980,000 shares of newly issued common stock in exchange for all of SGI’s ordinary shares issued and outstanding. The share exchange was treated as a recapitalization with SGI treated as the accounting acquirer, and as a result, the Company became engaged in SGI’s business operations of probiotics products.</p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">SGI was incorporated in the British Virgin Islands on February 13, 2004. SGI’s original shareholders were Mr. Song Jinan, Ms. Yan Li, Mr. Huang Weida, and Ms. Yan Yihong (the “Original SGI Shareholders”). Until August 2005, the Original SGI Shareholders owned 99.5% of the outstanding stock of Shanghai Shining Biotechnology Co. Ltd. (“Shining”), with Shanghai Shengyuan Property Co., Ltd. (“Shengyuan”) owning the remaining 0.5% of the Shining equity.</p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">On August 11, 2005, SGI entered into an agreement to acquire 100% of the outstanding Shining shares from the Original SGI Shareholders and Shengyuan in exchange for a total cash consideration of $2.3 million dollars (RMB 18,350,000). On August 19, 2005, the transaction was approved by the Economic and Trade Bureau of the Pudong New District, Shanghai, PRC, and in October 2005, SGI made full payment of $2.3 million dollars to the Original SGI Shareholders and Shengyuan. In December 2005, a revised business license was issued to Shining as a Wholly Owned Foreign Corporation, signifying the formal recognition of SGI as Shining’s sole shareholder by the Chinese government authorities.</p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">Also on August 11, 2005, SGI granted the Original SGI Shareholders the option to purchase an aggregate of 9,000 shares of SGI for $1.00 per share. On October 25, 2005, the Original SGI Shareholders exercised the option and purchased 9,000 shares of SGI (representing 90% of the ownership of SGI) for an aggregate of $9,000. In the share exchange, the Original SGI Shareholders exchanged 9,000 shares of SGI for 10,067,400 shares of the Company’s common stock, which represented 63% of the total of 15,980,000 shares received by all SGI shareholders in this transaction.</p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">On December 9, 2005, SGI incorporated a wholly owned subsidiary, Growing State Limited (“GSL”), in accordance with the laws of the British Virgin Islands. On September 22, 2006, GSL established a wholly foreign-owned enterprise, Growing Bioengineering (Shanghai) Company Limited (“Growing”) in the PRC.</p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">Both Shining and Growing are manufacturers and distributors of probiotics products in the PRC.</p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">On May 4, 2010, the Company incorporated a wholly owned subsidiary, King Treasure Group Limited (“KTG”), in accordance with the laws of the British Virgin Islands. On June 25, 2010, KTG incorporated a wholly owned subsidiary, Best Design Holdings Limited (“BDH”), in Hong Kong and BDH established a wholly foreign-owned enterprise, Growing Bio (Yangling) Company Limited (“Growing Yangling”) in the PRC. Growing Yangling commenced construction a manufacturing plant in Yangling Agricultural High-tech Industries Demonstration Zone in June 2012.</p>
</chbt:OrganizationAndDescriptionOfBusinessDisclosureTextBlock>
<us-gaap:SignificantAccountingPoliciesTextBlock contextRef="Context_FYE_31-Mar-2012">
<div> <table style="margin-top: 0px; font: 10pt times new roman, times, serif; margin-bottom: 0px;" cellspacing="0" cellpadding="0"> <tr style="text-align: justify; vertical-align: top;"> <td style="text-align: left; width: 0.5in;"><b>2.</b></td> <td style="text-align: justify;"><b>SUMMARY OF PRINCIPAL ACCOUNTING POLICIES</b></td> </tr> </table> </div> <div> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> </div> <div> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>Basis of presentation and consolidation</b></p> </div> <div> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b> </b></p> </div> <div> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">The consolidated financial statements for China-Biotics, Inc. and its subsidiaries for the years ended March 31, 2012 and 2011 are prepared in accordance with accounting principles generally accepted in the United States of America and include the accounts of SGI, Shining, Growing, GSL, KTG, BDH and Growing Yangling. Intercompany accounts and transactions have been eliminated in consolidation.</p> </div> <div> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> </div> <div> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>Use of Estimates</b></p> </div> <div> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> </div> <div> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Because of the use of estimates inherent in the financial reporting process, actual results could differ from those estimates. Those estimates and assumptions include estimates for allowance for doubtful accounts, inventory valuation, impairment consideration, and assumptions used in the valuation of derivative liabilities.</p> </div> <div> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> </div> <div> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>Revenue Recognition</b></p> </div> <div> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> </div> <div> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">Revenues of the Company are from the sale of our probiotics products. We recognize revenue from the sale of goods when all of the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the sales price is fixed or determinable; and (4) collectability is reasonably assured. Revenues are presented net of value added tax (VAT”). In our revenue arrangements, physical delivery is the point in time when customer acceptance occurs since title and risk of loss are transferred to the customer.</p> </div> <div> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> </div> <div> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>Cash and cash equivalents</b></p> </div> <div> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> </div> <div> <p style="text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">Cash and cash equivalents include all highly liquid investments with an original maturity of three months or less.</p> </div> <div> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> </div> <div> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>Accounts receivable</b></p> </div> <div> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> </div> <div> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">Accounts receivable are recognized and carried at the original invoiced amount less an allowance for any uncollectible accounts. The Company uses the aging method to estimate the valuation allowance for anticipated uncollectible receivable balances. Under the aging method, bad debts determined by management are based on historical experience as well as the current economic climate and are applied to customers’ balances categorized by the number of months the underlying invoices have remained outstanding. The valuation allowance balance is adjusted to the amount computed as a result of the aging method. When facts subsequently become available to indicate that an adjustment to the bad debt allowance should be made, this is recorded as a change in estimate in the current year. As of March 31, 2012, allowance for doubtful accounts was $1,665,188. As of March 31, 2011, no allowance for doubtful accounts was provided.</p> </div> <div> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> </div> <div> <p style="text-align: justify; margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>Inventories</b></p> </div> <div> <p style="text-align: justify; margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b> </b></p> </div> <div> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">Inventories are stated at the lower of cost or market. Cost, which is calculated using the weighted average method, comprises all costs of purchases, costs of conversion, and other costs incurred in bringing the inventories to their present location and condition. Market value is determined by reference to the sales proceeds of items sold in the ordinary course of business after the balance sheet date.  </p> </div> <div> <p style="text-align: justify; margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> </div> <div> <p style="text-align: justify; margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>Property, plant and equipment</b></p> </div> <div> <p style="text-align: justify; margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> </div> <div> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">Property, plant and equipment, and land use rights are recorded at cost and are stated net of accumulated depreciation. Gains or losses on disposals are reflected as gain or loss in the year of disposal. The cost of improvements that extend the life of plant and equipment are capitalized. These capitalized costs may include structural improvements, equipment, and fixtures. All ordinary repair and maintenance costs are expensed as incurred.</p> </div> <div> <p style="text-align: justify; margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> </div> <div> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">Plant and equipment are depreciated at rates sufficient to write off their cost over their estimated useful lives on a straight-line basis. Leasehold improvements are depreciated over the lease term of the related leased properties. Depreciation relating to property, plant, and equipment used in production is used in our determination of gross profit. The estimated useful lives of the assets are as follows:</p> </div> <div> <p style="text-align: justify; margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> </div> <div> <table style="width: 85%; border-collapse: collapse; font: 10pt times new roman, times, serif; margin-left: 0.5in;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: top;"> <td style="width: 29%;">Land use right</td> <td style="width: 2%;"> </td> <td style="width: 69%;">Terms defined in related legal documents</td> </tr> <tr style="vertical-align: top;"> <td>Building</td> <td> </td> <td>20 years</td> </tr> <tr style="vertical-align: top;"> <td>Plant and machinery</td> <td> </td> <td>10 years</td> </tr> <tr style="vertical-align: top;"> <td>Office equipment</td> <td> </td> <td>5 years</td> </tr> <tr style="vertical-align: top;"> <td>Motor vehicles</td> <td> </td> <td>5 years</td> </tr> <tr style="vertical-align: top;"> <td>Leasehold improvements</td> <td> </td> <td>The shorter of 5 years or lease term of related leased properties</td> </tr> </table> </div> <div> <p style="text-align: justify; margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> </div> <div> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">Construction in progress includes project costs paid to third parties that are clearly associated with the acquisition, development, and construction of an asset and are capitalized as a cost of that project prior to the use of the assets. Such costs include the costs of construction, equipment, interest and direct labor costs. These capitalized project costs are not subject to depreciation until the assets to which they are related are placed into service. </p> </div> <div> <p style="text-align: justify; margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> </div> <div> <p style="text-align: justify; margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>Land use rights</b></p> </div> <div> <p style="text-align: justify; margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b> </b></p> </div> <div> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">According to the law of China, the government owns all the land in China. Companies or individuals are authorized to possess and use the land only through land use rights granted by the Chinese government. Land use rights are amortized using the straight-line method over the related lease terms.</p> </div> <div> <p style="text-align: justify; margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b> </b></p> </div> <div> <p style="text-align: justify; margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>Impairment of Long-Lived Assets</b></p> </div> <div> <p style="text-align: justify; margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> </div> <div> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">The Company's policy is to record an impairment loss against the balance of a long-lived asset in the period when it is determined that the carrying amount of the asset may not be recoverable. This determination is based on an evaluation of such factors as the occurrence of a significant event, a significant change in the environment in which the business assets operate or if the expected future non-discounted cash flows of the business is determined to be less than the carrying value of the assets. If impairment is deemed to exist, the assets will be written down to fair value. Management also evaluates events and circumstances to determine whether revised estimates of useful lives are warranted. Based upon management’s assessment, there were no indicators of impairment of the Company’s long lived assets as of March 31, 2012 or 2011.</p> </div> <div> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b> </b></p> </div> <div> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>Foreign Currency Translations and Transactions</b></p> </div> <div> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> </div> <div> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">The accompanying consolidated financial statements are presented in United States dollars. The functional currency of the Company is the Renminbi (“RMB”). Capital accounts of the consolidated financial statements are translated into United States dollars from RMB at their historical exchange rates when the capital transactions occurred. Assets and liabilities are translated at the exchange rate as of the balance sheet date. Income and expenditures are translated at the average exchange rate for the period presented.</p> </div> <div> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> </div> <div> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">The RMB is the functional currency of Shining, Growing, and Yangling Growing (the “Operating Subsidiaries”) as it is the currency of the People’s Republic of China, which is the primary economic environment the Operating Subsidiaries operate in and the environment in which the Company primarily generates and expends cash. RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into US dollars at the rates used in translation.</p> </div> <div> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> </div> <div> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>Comprehensive Income</b></p> </div> <div> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> </div> <div> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">Under authoritative guidance of the FASB on reporting comprehensive income, disclosure of all components of comprehensive income and loss on an annual and interim basis is required. Comprehensive income is defined to include all changes in equity which for the Company principally compose foreign currency translations.</p> </div> <div> <p style="text-align: justify; text-indent: 45pt; margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> </div> <div> <p style="text-align: justify; margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>Fair value of financial instruments</b></p> </div> <div> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> </div> <div> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">Fair value measurements are determined using authoritative guidance issued by the FASB, with the exception of the application of the guidance to non-recurring, non-financial assets and liabilities as permitted. Fair value is defined in the authoritative guidance as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. A fair value hierarchy was established, which prioritizes the inputs used in measuring fair value into three broad levels as follows:</p> </div> <div> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> </div> <div> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">Level 1-Quoted prices in active markets for identical assets or liabilities.</p> </div> <div> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> </div> <div> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">Level 2-Inputs, other than the quoted prices in active markets, are observable either directly or indirectly.</p> </div> <div> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> </div> <div> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">Level 3-Unobservable inputs based on the Company’s assumptions</p> </div> <div> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> </div> <div> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">The Company is required to use observable market data if available without undue cost and effort. The following table presents certain investments and liabilities of the Company’s financial assets measured and recorded at fair value on the Company’s consolidated balance sheets on a recurring basis and their level within the fair value hierarchy as of March 31, 2012 and 2011:</p> </div> <div> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> </div> <div> <table style="width: 100%; border-collapse: collapse; font: 10pt times new roman, times, serif;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: bottom;"> <td nowrap="nowrap"> </td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="14" nowrap="nowrap">Fair Value Measurements as at March 31, 2012</td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> </tr> <tr style="vertical-align: bottom;"> <td nowrap="nowrap"> </td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap">Balance at<br />March 31,<br />2012</td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap">Quoted Prices in<br />Active Markets<br />(Level 1)</td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap">Significant Other<br />Observable Inputs<br />(Level 2)</td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap">Significant<br />Unobservable<br />Inputs<br />(Level 3)</td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; width: 52%;">Loan receivable</td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 9%;">20,753,343</td> <td style="text-align: left; width: 1%;"> </td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 9%;">-</td> <td style="text-align: left; width: 1%;"> </td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 9%;">20,753,343</td> <td style="text-align: left; width: 1%;"> </td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 9%;">-</td> <td style="text-align: left; width: 1%;"> </td> </tr> </table> </div> <div> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> </div> <div> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">The changes in level 3 liabilities measured at fair value on a recurring basis are summarized as follows:</p> </div> <div> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> </div> <div> <table style="width: 100%; border-collapse: collapse; font: 10pt times new roman, times, serif;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: bottom;"> <td style="text-align: center; padding-bottom: 1pt;" nowrap="nowrap"></td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap"> Embedded derivatives<br />– conversion right</td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="width: 82%;">Balance at April 1, 2010</td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 15%;">14,797,000</td> <td style="text-align: left; width: 1%;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 1pt;">Gain on extinguishment of derivative liability related to of convertible note payable</td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">(14,797,000</td> <td style="text-align: left; padding-bottom: 1pt;">)</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="padding-bottom: 1pt;">Balance at March 31, 2011 and 2012</td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;">$</td> <td style="border-bottom: black 1pt solid; text-align: right;">-</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> </tr> </table> </div> <div> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> </div> <div> <p style="text-align: justify; margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>Derivative financial instruments</b></p> </div> <div> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> </div> <div> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">On December 11, 2007, the Company issued a 4% Senior Convertible Promissory Note in an amount of $25,000,000 (the “Note”), which was due on December 11, 2010. Pursuant to ASC Topic 815, “Derivatives and Hedging” (Formerly, SFAS No. 133 “Accounting For Derivatives Instruments And Hedging Activities” and EITF Issue No. 00-19 “Accounting For Derivatives Financial Instruments Indexed To And Potentially Settled In A Company’s Own Stock”), the Company bifurcated the conversion options with a mandatory conversion feature (“embedded derivatives”) from the Note as the embedded derivatives were determined to be not clearly and closely related to the host contract. The embedded derivatives were recorded at fair value, mark-to-market at each reporting period, and were reflected on a separate line in the balance sheet. On December 9, 2010, the Note was repaid and the derivative liability was extinguished resulting in a gain of $14,797,000 during the year ended March 31, 2011.</p> </div> <div> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> </div> <div> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>Stock based compensation</b></p> </div> <div> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> </div> <div> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">The Company periodically issues stock options and warrants to employees and non-employees in non-capital raising transactions for services and for financing costs. The Company accounts for stock option and warrant grants issued and vesting to employees based on the authoritative guidance provided by the Financial Accounting Standards Board, whereas the value of the award is measured on the date of grant and recognized over the vesting period. The Company accounts for stock option and warrant grants issued and vesting to non-employees in accordance with the authoritative guidance of the Financial Accounting Standards Board, whereas the value of the stock compensation is based upon the measurement date as determined at either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete. Non-employee stock-based compensation charges generally are amortized over the vesting period on a straight-line basis. In certain circumstances where there are no future performance requirements by the non-employee, option grants are immediately vested and the total stock-based compensation charge is recorded in the period of the measurement date.</p> </div> <div> <p style="text-align: justify; margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> </div> <div> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">The fair value of the Company’s common stock option grant is estimated using the Black-Scholes-Merton option pricing model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the common stock options, and future dividends. Compensation expense is recorded based upon vesting schedule of these options using the value derived from the Black-Scholes-Merton option pricing model, and based on actual experience. The assumptions used in the Black-Scholes-Merton option pricing model could materially affect compensation expense recorded in future periods.</p> </div> <div> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> </div> <div> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>Treasury Stock</b></p> </div> <div> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> </div> <div> <p style="text-align: justify; margin: 0pt 0px; font: 10pt times new roman, times, serif;">The Company treats common stock repurchased, but not yet canceled, as treasury stock. Treasury stock is accounted for by the cost method, with par value charged to common stock, and any excess charged against additional paid-in capital or retained earnings.</p> </div> <div> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> </div> <div> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>Advertising costs</b></p> </div> <div> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> </div> <div> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">All advertising costs incurred in the promotion of the Company’s products are expensed as incurred. Advertising costs, which are included in selling expenses in the accompanying consolidated statements of operations and other comprehensive income, amounted to $582,028 and $2,973,683 for the years ended March 31, 2012 and 2011, respectively.</p> </div> <div> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> </div> <div> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>Income Taxes</b></p> </div> <div> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> </div> <div> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">The Company uses an asset and liability approach for financial accounting and reporting for income taxes that allows recognition and measurement of deferred tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future deductibility is uncertain. The Company’s policy is to recognize interest and/or penalties related to income tax matters in income tax expense.</p> </div> <div> <p style="text-align: justify; text-indent: 45pt; margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> </div> <div> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>Research</b> <b>and Development Costs</b></p> </div> <div> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> </div> <div> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">Research and development costs are expensed as incurred. For the years ended March 31, 2012 and 2011, there were $5,084,949 and $6,730,514 of research and development expenses recorded and are included in general and administrative expenses in the accompanying consolidated statements of income and other comprehensive income.</p> </div> <div> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> </div> <div> <p style="text-align: justify; margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>Earnings Per Share</b></p> </div> <div> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> </div> <div> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">Basic earnings per share is computed in accordance with ASC Topic 260 “Earnings Per Share” (Formerly, SFAS No.128, “Earnings Per Share”), by dividing the net income by the weighted average number of shares of outstanding common stock during the period. The diluted earnings per share calculation includes the impact of dilutive convertible securities, if applicable. The weighted average number of shares of outstanding common stock is determined by relating the portion of time within a reporting period that a particular number of shares of common stock has been outstanding to the total time in that period (see Note 3).</p> </div> <div> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> </div> <div> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>Segment Reporting</b></p> </div> <div> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> </div> <div> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">ASC Topic 280 “Segment Reporting” (Formerly, SFAS No. 131, “Disclosure about Segments of an Enterprise and Related Information”), requires use of the “management approach” model for segment reporting. The management approach model is based on the way a company’s management organizes segments within the Company for making operating decisions and assessing performance. Reportable segments are based on one of the followings: (a) products and services, (b) geographical areas, (c) legal structure, (d) management structure, or (e) any other manner in which management disaggregates a company. The Company’s management has adopted the “products and services” approach for segment reporting.</p> </div> <div> <p style="text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> </div> <div> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">The Company operates its business on the basis of two reportable segments — retail products and bulk additive products.</p> </div> <div> <p style="text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> </div> <div> <p style="text-align: justify; margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>Recent Accounting Pronouncements</b></p> </div> <div> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> </div> <div> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">In May 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2011-04, “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs”. ASU No. 2011-4 does not require additional fair value measurements and is not intended to establish valuation standards or affect valuation practices outside of financial reporting. The ASU is effective for interim and annual periods beginning after December 15, 2011. The Company adopted ASU No. 2011-04 effective January 1, 2012 and it did not affect the Company’s results of operations, financial condition or liquidity.</p> </div> <div> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> </div> <div> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">In June 2011, the FASB issued ASU No. 2011-05, “Presentation of Comprehensive Income”. The ASU eliminates the option to present the components of other comprehensive income as part of the statement of changes in shareholders’ equity, and instead requires consecutive presentation of the statement of net income and other comprehensive income either in a continuous statement of comprehensive income or in two separate but consecutive statements. ASU No. 2011-5 is effective for interim and annual periods beginning after December 15, 2011. The Company adopted ASU 2011-05 effective January 1, 2012 and it did not affect the Company’s results of operations, financial condition or liquidity.</p> </div> <div> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> </div> <div> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">In September 2011, the FASB issued ASU 2011-08, “Testing Goodwill for Impairment”, an update to existing guidance on the assessment of goodwill impairment. This update simplifies the assessment of goodwill for impairment by allowing companies to consider qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount before performing the two step impairment review process. It also amends the examples of events or circumstances that would be considered in a goodwill impairment evaluation. The amendments are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. The Company adopted ASU 2011-08 effective January 1, 2012. We do not believe that the adoption of this new accounting guidance will have a significant effect on our goodwill impairment assessments in the future.</p> </div> <div> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> </div> <div> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">In December 2011, the FASB issued ASU No. 2011-11, “Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities.” This ASU requires an entity to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position. ASU No. 2011-11 will be applied retrospectively and is effective for annual and interim reporting periods beginning on or after January 1, 2013. The Company does not expect adoption of this standard to have a material impact on its consolidated results of operations, financial condition, or liquidity.</p> </div> <div> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> </div> <div> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA, and the Securities and Exchange Commission (the “SEC”) did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statements.</p> </div>
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<us-gaap:EarningsPerShareTextBlock contextRef="Context_FYE_31-Mar-2012">
<table style="margin-top: 0px; font: 10pt times new roman, times, serif; margin-bottom: 0px;" cellspacing="0" cellpadding="0"> <tr style="text-align: justify; vertical-align: top;"> <td style="text-align: left; width: 0.5in;"><b>3.</b></td> <td style="text-align: justify;"><b>EARNINGS PER SHARE</b></td> </tr> </table> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">The following table sets forth the computation of basic and diluted earnings per share:</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> </td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="6">Years ended March 31,</td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> </tr> <tr style="vertical-align: bottom;"> <td> </td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2">2012</td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2">2011</td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="font-weight: bold;">Earnings per share – Basic</td> <td> </td> <td style="text-align: center;" colspan="2"> </td> <td> </td> <td> </td> <td style="text-align: center;" colspan="2"> </td> <td> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 2.5pt; width: 76%;">Income for the year</td> <td style="padding-bottom: 2.5pt; width: 1%;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left; width: 1%;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right; width: 9%;">2,775,810</td> <td style="text-align: left; padding-bottom: 2.5pt; width: 1%;"> </td> <td style="padding-bottom: 2.5pt; width: 1%;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left; width: 1%;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right; width: 9%;">36,935,477</td> <td style="text-align: left; padding-bottom: 2.5pt; width: 1%;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 2.5pt;">Basic average common stock outstanding</td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;"> </td> <td style="border-bottom: black 2.5pt double; text-align: right;">22,150,200</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;"> </td> <td style="border-bottom: black 2.5pt double; text-align: right;">22,241,076</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="padding-bottom: 2.5pt;">Net earnings per share</td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">0.13</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">1.66</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> </tr> </table> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <table style="width: 100%; border-collapse: collapse; font: 10pt times new roman, times, serif;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: bottom;"> <td> </td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="6">Years ended March 31,</td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> </tr> <tr style="vertical-align: bottom;"> <td> </td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2">2012</td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2">2011</td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="font-weight: bold;">Earnings per share – Diluted</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; width: 76%; font-weight: bold;">Income for the year</td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 9%;">2,775,810</td> <td style="text-align: left; width: 1%;"> </td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 9%;">36,935,477</td> <td style="text-align: left; width: 1%;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 1pt;">Gain on extinguishment of derivative liability</td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">-</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">(14,797,000</td> <td style="text-align: left; padding-bottom: 1pt;">)</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">2,775,810</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">22,138,477</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left;">Basic average common stock outstanding</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">22,150,200</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">22,241,076</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;">Diluted effect from derivative liability</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">-</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">1,444,064</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 1pt;">Diluted effect from vested stock options</td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">116,793</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">3,864</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 2.5pt;">Diluted average common stock outstanding</td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;"> </td> <td style="border-bottom: black 2.5pt double; text-align: right;">22,266,993</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;"> </td> <td style="border-bottom: black 2.5pt double; text-align: right;">23,689,004</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="padding-bottom: 2.5pt;">Net earnings per share</td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">0.12</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">0.93</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> </tr> </table> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">Basic earnings per share is computed by dividing the net income by the weighted average number of outstanding common stock during the period.  The diluted earnings per share calculation includes the impact of dilutive convertible securities, if applicable.  The weighted average number of outstanding common stock is determined by relating the portion of time within a reporting period that a particular number of shares of common stock has been outstanding to the total time in that period.</p>
</us-gaap:EarningsPerShareTextBlock>
<us-gaap:ConcentrationRiskDisclosureTextBlock contextRef="Context_FYE_31-Mar-2012">
<table style="margin-top: 0px; font: 10pt times new roman, times, serif; margin-bottom: 0px;" cellspacing="0" cellpadding="0"> <tr style="text-align: justify; vertical-align: top;"> <td style="text-align: left; width: 0.5in;"><b>4.</b></td> <td style="text-align: justify;"><b>RISKS, UNCERTAINTIES, AND CONCENTRATIONS</b></td> </tr> </table> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-align: justify; margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>Economic and political risks</b></p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">The Company’s operations are conducted in the PRC and are subject to various political, economic, and other risks and uncertainties inherent in this country. Among other risks, the Company’s operations are subject to the risks of restrictions on transfer of funds; export duties, quotas and embargoes; domestic and international customs and tariffs; changing taxation policies; foreign exchange restrictions; and political conditions and governmental regulations.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-align: justify; margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>Concentration of Credit Risk</b></p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and accounts receivable. As of March 31, 2012 and 2011, the Company had cash deposits of $70.09 million and $143.99 million placed with several banks in the PRC, which includes the Special Administrative Region of Hong Kong, where there is currently no rule or regulation in place for obligatory insurance of bank accounts. For the years ended March 31, 2012 and 2011, all of the Company’s sales arose in the PRC. In addition, all accounts receivable as at March 31, 2012 and 2011 are from customers in the PRC.</p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-align: justify; margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>Concentration of Customers</b></p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">The Company had no sales to a single customer that accounted for more than 10% of total gross sales.  For the year ended March 31, 2012, there is no customer that accounted over 5% of our sales revenue.   For the year ended March 31, 2011, there is one customer that accounted for 5.2% of our sales revenue.   As of March 31, 2012, there is one customer that accounted for 4.8% of our accounts receivable. As of March 31, 2011, there is one customer that accounted for 2.9% of our accounts receivable.</p>
</us-gaap:ConcentrationRiskDisclosureTextBlock>
<chbt:AccountsReceivableTextBlock contextRef="Context_FYE_31-Mar-2012">
<table style="margin-top: 0px; font: 10pt times new roman, times, serif; margin-bottom: 0px;" cellspacing="0" cellpadding="0"> <tr style="text-align: justify; vertical-align: top;"> <td style="text-align: left; width: 0.5in;"><b>5.</b></td> <td style="text-align: justify;"><b>ACCOUNTS RECEIVABLE</b></td> </tr> </table> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">Accounts receivable consisted of the following:</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 nowrap="nowrap"> </td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap">March 31, 2012</td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap">March 31, 2011</td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> </tr> <tr style="vertical-align: bottom;"> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td style="text-align: center;" colspan="2" nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td style="text-align: center;" colspan="2" nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; width: 76%;">Accounts receivable</td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 9%;">35,057,662</td> <td style="text-align: left; width: 1%;"> </td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 9%;">26,194,313</td> <td style="text-align: left; width: 1%;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 1pt;">Less: Allowance for doubtful accounts</td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">(1,665,188</td> <td style="text-align: left; padding-bottom: 1pt;">)</td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">-</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">33,392,474</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">26,194,313</td> </tr> </table>
</chbt:AccountsReceivableTextBlock>
<invest:InvestmentTextBlock contextRef="Context_FYE_31-Mar-2012">
<table style="margin-top: 0px; font: 10pt times new roman, times, serif; margin-bottom: 0px;" cellspacing="0" cellpadding="0"> <tr style="text-align: justify; vertical-align: top;"> <td style="text-align: left; width: 0.5in;"><b>6.</b></td> <td style="text-align: justify;"><b>INVENTORIES</b></td> </tr> </table> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">Inventories consisted of the following:</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <table style="width: 100%; border-collapse: collapse; font: 10pt times new roman, times, serif;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: bottom;"> <td nowrap="nowrap"> </td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap">March 31, 2012</td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap">March 31, 2011</td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> </tr> <tr style="vertical-align: bottom;"> <td> </td> <td> </td> <td style="text-align: center;" colspan="2"> </td> <td> </td> <td> </td> <td style="text-align: center;" colspan="2"> </td> <td> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; width: 76%;">Raw materials</td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 9%;">801,288</td> <td style="text-align: left; width: 1%;"> </td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 9%;">744,667</td> <td style="text-align: left; width: 1%;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td>Work-in-progress</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">99,763</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">94,756</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 1pt;">Finished goods</td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">1,041,498</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">932,898</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">1,942,549</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">1,772,321</td> </tr> </table>
</invest:InvestmentTextBlock>
<us-gaap:FinancingReceivablesTextBlock contextRef="Context_FYE_31-Mar-2012">
<table style="margin-top: 0px; font: 10pt times new roman, times, serif; margin-bottom: 0px;" cellspacing="0" cellpadding="0"> <tr style="text-align: justify; vertical-align: top;"> <td style="text-align: left; width: 0.5in;"><b>7.</b></td> <td style="text-align: justify;"><b>LOAN RECEIVABLE</b></td> </tr> </table> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">On December 19, 2011, the Company entered into an agreement with Jiangxi International Trust Co., Ltd. (“Jiangxi”) to loan $20,753,343 (RMB 131,100,000) to the Jiangxi International Trust of Yinhe #7 Property, an investment fund sponsored by Jiangxi. The loan principal is due on December 26, 2013, is unsecured, and according to the loan agreement, the Company is to earn 20% interest per annum, less a 5% investment management fee per annum.  Interest income for the year ended March 31, 2012 includes $1,078,320 of interest accrued on the outstanding balance. Jiangxi is a major trust and investment company that is executing different investment projects in the PRC, including real estate projects, listed company restructuring, and other financial services.</p>
</us-gaap:FinancingReceivablesTextBlock>
<chbt:DepositsTextBlock contextRef="Context_FYE_31-Mar-2012">
<table style="margin-top: 0px; font: 10pt times new roman, times, serif; margin-bottom: 0px;" cellspacing="0" cellpadding="0"> <tr style="text-align: justify; vertical-align: top;"> <td style="text-align: left; width: 0.5in;"><b>8.</b></td> <td style="text-align: justify;"><b>DEPOSITS</b></td> </tr> </table> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">Deposits for the acquisition of long-term assets and operating trading deposits consisted of the following:</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 nowrap="nowrap"> </td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap">March 31, 2012</td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap">March 31, 2011</td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left;">Long term</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; width: 76%;">Deposit for acquisition of a company</td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 9%;">23,739,812</td> <td style="text-align: left; width: 1%;"> </td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 9%;">-</td> <td style="text-align: left; width: 1%;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 1pt;">Deposit for acquisition of patent</td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">6,330,616</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">-</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">30,070,428</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">-</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left;">Short term</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">-</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 1pt;">Other operating deposits</td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">1,114,367</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">85,546</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">31,184,795</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">85,546</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> </tr> </table> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">On March 27, 2012, the Company made a deposit of $23,739,811(RMB 150,000,000) to the government of Yangling for a bid to acquire a probiotics company located in Yangling, Shaanxi Province that is in receivership. According to the relevant regulations, the deposit will be treated as part of the purchase price of the acquisition if the transaction is approved. As of September 13, 2012, the government of Yangling is reviewing bids received for the probiotics company and expects to complete this process by the end of calendar 2012. If the Company does not win the auction to acquire the probiotics company, its deposit will be returned.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b> </b></p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">On February 1, 2012, our subsidiary, Growing, entered into an agreement to acquire a patent regarding a production technology for $6,647,147 (RMB 42,000,000) from an unrelated PRC company. Growing made a deposit of $6,330,616 (RMB 40,000,000) to the seller for the transfer of the patent within 210 days, or by August 30, 2012. The original terms of the agreement were that if the patent cannot be transferred to Growing within 210 days, Growing will be refunded the deposit paid and also be compensated an additional $159,000 (RMB 1,000,000) for damages. The transfer was not completed by August 30, 2012, and on September 3, 2012, Growing and the seller mutually agreed to extend the completion date to December 30, 2012. As of September 13, 2012, the transfer had not yet been completed because the Company is waiting for approval of the transfer from the State Intellectual Property Office of the PRC. The Company has no information to allow it to estimate when such confirmation will be obtained, but expects the transaction to close in 2013, after which the patent is planned to be used in the Company’s operations.</p>
</chbt:DepositsTextBlock>
<us-gaap:IntangibleAssetsDisclosureTextBlock contextRef="Context_FYE_31-Mar-2012">
<table style="margin-top: 0px; font: 10pt times new roman, times, serif; margin-bottom: 0px;" cellspacing="0" cellpadding="0"> <tr style="text-align: justify; vertical-align: top;"> <td style="text-align: left; width: 0.5in;"><b>9.</b></td> <td style="text-align: justify;"><b>LAND USE RIGHTS</b></td> </tr> </table> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">The land use rights consisted of the following:</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 nowrap="nowrap"> </td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">March 31,<br />2012</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">March 31,<br />2011</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> </tr> <tr style="vertical-align: bottom;"> <td> </td> <td> </td> <td style="text-align: center;" colspan="2"> </td> <td> </td> <td> </td> <td style="text-align: center;" colspan="2"> </td> <td> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; text-indent: -0.25in; padding-left: 0.25in; width: 76%;">Land use rights</td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 9%;">5,231,955</td> <td style="text-align: left; width: 1%;"> </td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 9%;">1,900,734</td> <td style="text-align: left; width: 1%;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 1pt; text-indent: -0.25in; padding-left: 0.25in;">Less: Accumulated amortization</td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">(175,072</td> <td style="text-align: left; padding-bottom: 1pt;">)</td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">(120,380</td> <td style="text-align: left; padding-bottom: 1pt;">)</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">5,056,883</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">1,780,354</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> </tr> </table> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">On March 21, 2006, GSL, our subsidiary, entered into an agreement, as amended, with Shanghai Qingpu Industrial Park District Development (Group) Company Limited for the lease of 36,075 square meters of land in the Shanghai Qingpu Industrial Park District on which we constructed our 300-metric ton capacity production plant for a term of 50 years beginning January 15, 2008. The agreement provides for the payment of leasing fees of approximately $1.8 million. In February 2009, the formal land use right certificate was issued. There are no future lease payments under this land lease. The Qingpu land use right was pledged to a bank as a credit guarantee for a loan of $4,747,963 (RMB 30,000,000 million, see Note 12).  At March 31, 2012, and 2011, the net book value of such land use right was $1,806,203 and $1,780,354, respectively.</p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">In 2012, our Growing Yangling, subsidiary of the Company that operates in Yangling, the PRC, has acquired a land use right for a period of 50 years, beginning January 18, 2012. At March 31, 2012, the net book value of the land use right was $3,250,680.</p> <p style="text-align: justify; margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">Amortization expense amounted to $49,664 and $97,925 for the years ended March 31, 2012, and 2011, respectively.</p> <p style="text-align: justify; margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">The estimated amortization expense for the land use rights over each of the five years and thereafter is summarized as below:</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <table style="width: 100%; border-collapse: collapse; font: 10pt times new roman, times, serif;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: bottom;"> <td style="text-align: left;" nowrap="nowrap"> </td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">March 31, <br />2012</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left;">For the year ended March 31:</td> <td> </td> <td style="text-align: right;" colspan="2"> </td> <td> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; width: 88%;">2013</td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 9%;">104,639</td> <td style="text-align: left; width: 1%;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left;">2014</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">104,639</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;">2015</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">104,639</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left;">2016</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">104,639</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;">2017</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">104,639</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 1pt;">Thereafter</td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">4,533,688</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">5,056,883</td> </tr> </table>
</us-gaap:IntangibleAssetsDisclosureTextBlock>
<us-gaap:PropertyPlantAndEquipmentDisclosureTextBlock contextRef="Context_FYE_31-Mar-2012">
<table style="margin-top: 0px; font: 10pt times new roman, times, serif; margin-bottom: 0px;" cellspacing="0" cellpadding="0"> <tr style="text-align: justify; vertical-align: top;"> <td style="text-align: left; width: 0.5in;"><b>10.</b></td> <td style="text-align: justify;"><b>PROPERTY, PLANT AND EQUIPMENT</b></td> </tr> </table> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">Property, plant and equipment, net, consisted of the following:</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <table style="width: 100%; border-collapse: collapse; font: 10pt times new roman, times, serif;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: bottom;"> <td nowrap="nowrap"> </td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap">March 31,<br />2012</td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap">March 31,<br />2011</td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> </tr> <tr style="vertical-align: bottom;"> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="width: 76%;">Building</td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 9%;">44,754,344</td> <td style="text-align: left; width: 1%;"> </td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 9%;">12,047,068</td> <td style="text-align: left; width: 1%;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;">Plant and machinery</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">23,963,145</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">51,430,868</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left;">Leasehold improvements</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">1,814,783</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">1,750,615</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;">Office equipment</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">4,220,655</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">4,007,571</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left;">Motor vehicles</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">543,569</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">445,632</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 1pt;">Construction in progress</td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">13,217,574</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">1,762,970</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">88,514,070</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">71,444,724</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 1pt;">Less: Accumulated depreciation</td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">(16,433,738</td> <td style="text-align: left; padding-bottom: 1pt;">)</td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">(12,302,168</td> <td style="text-align: left; padding-bottom: 1pt;">)</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">72,080,332</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">59,142,556</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> </tr> </table> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">For the years ended March 31, 2012 and 2011, depreciation expense amounted to $3,672,224 and $4,591,402, respectively.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">At March 31, 2012, construction in progress consisted primarily of Phase 2 construction of a research and development center and other ancillary facilities in Qingpu.  At March 31, 2011, construction in progress consisted of Phase 1 construction of a research and development center and other ancillary facilities in Qingpu, and an office building, which is used as our corporate headquarters.</p> <p style="text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">At March 31, 2012, the corporate headquarters office building was pledged to banks as a guarantee for a total of loans of $3,165,308 (RMB 20,000,000, see Note 12).  The net book value of the building was $8,919,818.</p>
</us-gaap:PropertyPlantAndEquipmentDisclosureTextBlock>
<chbt:AmountDueFromOrToDirectorDisclosureTextBlock contextRef="Context_FYE_31-Mar-2012">
<table style="margin-top: 0px; font: 10pt times new roman, times, serif; margin-bottom: 0px;" cellspacing="0" cellpadding="0"> <tr style="text-align: justify; vertical-align: top;"> <td style="text-align: left; width: 0.5in;"><b>11.</b></td> <td style="text-align: justify;"><b>AMOUNT DUE TO DIRECTOR</b></td> </tr> </table> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">As of March 31, 2012 and 2011, the amount due to a director, Mr. Song Jinan, represented advances to the Company which are unsecured, interest-free and repayable on demand. The advances from such director were entered into because of the difficulty the Company faced in paying expenses incurred outside China in non-PRC currency due to the difficulties the Company had in converting currency because of foreign exchange controls.</p>
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<us-gaap:IncomeTaxDisclosureTextBlock contextRef="Context_FYE_31-Mar-2012">
<table style="margin-top: 0px; font: 10pt times new roman, times, serif; margin-bottom: 0px;" cellspacing="0" cellpadding="0"> <tr style="text-align: justify; vertical-align: top;"> <td style="text-align: left; width: 0.5in;"><b>14.</b></td> <td style="text-align: justify;"><b>INCOME TAXES PAYABLE</b></td> </tr> </table> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">For the years ended March 31, 2012 and 2011, the components of earnings before income taxes were:</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 nowrap="nowrap"> </td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="6" nowrap="nowrap">Years ended March 31,</td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> </tr> <tr style="vertical-align: bottom;"> <td nowrap="nowrap"> </td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap">2012</td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap">2011</td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; width: 76%;">Income before income taxes generated in the PRC</td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 9%;">10,573,208</td> <td style="text-align: left; width: 1%;"> </td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 9%;">43,374,799</td> <td style="text-align: left; width: 1%;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;">(Loss) income before income taxes generated in the United States of America</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">(4,564,027</td> <td style="text-align: left;">)</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">2,972,262</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left;">Loss before income taxes generated in the British Virgin Islands</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">(399,402</td> <td style="text-align: left;">)</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">(394,616</td> <td style="text-align: left;">)</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 1pt;">Loss before income taxes generated in Hong Kong</td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">(801</td> <td style="text-align: left; padding-bottom: 1pt;">)</td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">(34,629</td> <td style="text-align: left; padding-bottom: 1pt;">)</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">5,608,978</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">45,917,816</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> </tr> </table> <p style="text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">For the years ended March 31, 2012 and March 31, 2011, there was no tax provision related to income (loss) generated in the United States of America, the British Virgin Islands, and Hong Kong. For the years ended March 31, 2012 and March 31, 2011, the provision for income taxes relating to income generated in the PRC consists of the following:</p> <p style="text-indent: 0.5in; 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 nowrap="nowrap"> </td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="6" nowrap="nowrap">Years ended March 31,</td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> </tr> <tr style="vertical-align: bottom;"> <td nowrap="nowrap"> </td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap">2012</td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap">2011</td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> </tr> <tr style="vertical-align: bottom;"> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="width: 76%;">Current-PRC</td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 9%;">3,140,086</td> <td style="text-align: left; width: 1%;"> </td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 9%;">8,675,431</td> <td style="text-align: left; width: 1%;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="padding-bottom: 1pt;">Deferred-PRC</td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">(306,918</td> <td style="text-align: left; padding-bottom: 1pt;">)</td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">306,918</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">2,833,168</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">8,982,349</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> </tr> </table> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">For the years ended March 31, 2012 and 2011, the reconciliation between the PRC statutory tax rate and effective tax rate are as follows:</p> <p style="text-indent: 0.5in; 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 nowrap="nowrap"> </td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="6" nowrap="nowrap">Years  ended  March  31,</td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> </tr> <tr style="vertical-align: bottom;"> <td nowrap="nowrap"> </td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap">2012</td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap">2011</td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; width: 76%;">Statutory rate</td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;"> </td> <td style="text-align: right; width: 9%;">25.0</td> <td style="text-align: left; width: 1%;">%</td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;"> </td> <td style="text-align: right; width: 9%;">25.0</td> <td style="text-align: left; width: 1%;">%</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;">Preferential tax rate</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">-</td> <td style="text-align: left;">%</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">(5.0</td> <td style="text-align: left;">)%</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left;">Effect of different tax rates in other jurisdictions</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">5.5</td> <td style="text-align: left;">%</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">(1.0</td> <td style="text-align: left;">)%</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;">Expenses not deductible for tax purpose</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">6.5</td> <td style="text-align: left;">%</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">-</td> <td style="text-align: left;">%</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left;">Effect of taxable temporary difference</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">8.5</td> <td style="text-align: left;">%</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">(5.1</td> <td style="text-align: left;">)%</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;">Interest on accrued taxes</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">-</td> <td style="text-align: left;">%</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">5.0</td> <td style="text-align: left;">%</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left;">Tax losses not recognized</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">5.0</td> <td style="text-align: left;">%</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">(0.4</td> <td style="text-align: left;">)%</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 1pt;">Deferred tax</td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">-</td> <td style="text-align: left; padding-bottom: 1pt;">%</td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">1.1</td> <td style="text-align: left; padding-bottom: 1pt;">%</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 2.5pt;">Effective tax rate</td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;"> </td> <td style="border-bottom: black 2.5pt double; text-align: right;">50.5</td> <td style="text-align: left; padding-bottom: 2.5pt;">%</td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;"> </td> <td style="border-bottom: black 2.5pt double; text-align: right;">19.6</td> <td style="text-align: left; padding-bottom: 2.5pt;">%</td> </tr> </table> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">As of March 31, 2012 and 2011, the Company had incurred tax losses of approximately $4.2 million and $2.2 million, respectively which can be carried forward in various jurisdictions from five to 25 years.</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 nowrap="nowrap"> </td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="6" nowrap="nowrap">Year ended March 31,</td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> </tr> <tr style="vertical-align: bottom;"> <td nowrap="nowrap"> </td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap">2012</td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap">2011</td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left;">Deferred tax assets</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;">Net operating loss carryforwards</td> <td style="color: yellow;"> </td> <td style="text-align: left; color: yellow;"> </td> <td style="text-align: right; color: yellow;"> </td> <td style="text-align: left; color: yellow;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="width: 76%;"> - PRC</td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 9%;">320,292</td> <td style="text-align: left; width: 1%;"> </td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 9%;">63,970</td> <td style="text-align: left; width: 1%;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;"> - United States of America</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">334,633</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">-</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left;"> - Hong Kong</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">132</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">5,714</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 1pt;">Less: Valuation allowance</td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">(655,057</td> <td style="text-align: left; padding-bottom: 1pt;">)</td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">(69,684</td> <td style="text-align: left; padding-bottom: 1pt;">)</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 2.5pt;">Net deferred tax assets</td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">-</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">-</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> </tr> </table> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">The Company is incorporated in Delaware and is subject to U.S. tax law.  The daily operations of the Company in the United States principally relate to payment of legal and professional fees. The income generated from the United States in 2011 primarily related to the change in the fair value of derivative liability, which is a permanent difference between book and tax reporting. The Company has no taxable income in the United States and does not expect it will be able to realize the U.S. tax losses.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">There is no income tax for companies not carrying out business activities in the British Virgin Islands or Hong Kong. Accordingly, the Company's financial statements do not present any income tax provisions related to the British Virgin Islands or Hong Kong tax jurisdictions.</p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">The Company has its principal operations in the PRC and is subject to a PRC Enterprise Income Tax (“EIT”) rate of 25% in calendar years 2012 and 2011, subject to certain rate reductions. The Company’s subsidiary Shining is located in the Shanghai Jinqiao special economic zone and was awarded the status of “high technology” enterprise for the calendar year 2007 until 2011. Therefore, Shining enjoyed a preferential income tax rate of 15% in 2007 to 2011. Beginning January 1, 2012, Shining’s EIT rate is 25%.</p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">The Company’s subsidiary Growing is located in Qingpu and has similar business operations as Shining, but with a larger production scale.  Growing was exempted from PRC Enterprise Income Tax in calendar 2008 and 2009, followed by 50% tax exemption for calendar 2010 to 2012.</p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">The Company’s subsidiary, Growing Yangling, is located in Yangling and as of March 31, 2012, its manufacturing plant was under construction. According to the investment agreement with the local government, Growing Yangling is entitled to have a tax incentive that exempts the local portion of EIT for three calendar years from the commencement of production, followed by 50% tax exemption of local portion for the next year. There is no financial effect from the tax holiday as Growing Yangling did not generate any assessable profit in fiscal years 2012 or 2011.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"></p> <p style="text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">At March 31, 2012 and 2012, taxes payable consisted of the following:</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 nowrap="nowrap"> </td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap">March 31, <br /> 2012</td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap">March 31,<br />2011</td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left;">Taxes arising prior to 2005:</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; width: 76%;">Value added tax and other taxes</td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 9%;">5,707,746</td> <td style="text-align: left; width: 1%;"> </td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 9%;">5,505,930</td> <td style="text-align: left; width: 1%;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left;">Income taxes</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">3,112,441</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">3,002,391</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 1pt;">Dividends withholding tax</td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">3,914,453</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">4,095,745</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td>Total taxes prior to 2005</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">12,734,640</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">12,604,066</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td></td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left;">Value added tax and other taxes</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">1,366,106</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">515,637</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;">Income taxes</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">2,100,059</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">1,317,961</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 1pt;">Accrued interest on taxes</td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">17,163,806</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">16,505,088</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">33,364,611</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">30,942,752</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> </tr> </table> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">In addition to the EIT, companies in the PRC that are engaged in the sale of goods are generally required to pay value added taxes (“VAT”) at a rate of 17% of the gross sales proceeds received, less any deductible VAT already paid or borne by the taxpayer.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">Our management believes that our operations in China were exempted from EIT and VAT for all years prior to 2005 because we had been recognized by the local government as an advanced technology enterprise. However, the Company never received a written confirmation from the appropriate tax authorities for the tax exemption status of our operations in China prior to 2005. As a result, there is no way to ascertain the ultimate position which may be taken by the relevant PRC tax authorities in the future and accordingly, full provisions for tax liabilities in the amount of $12,734,640, for all years prior to 2005 have been recorded by the Company. Beginning in January 2006, we made tax payments to the PRC tax authorities for 2005 and we have made regular tax payments to the PRC tax authorities for all subsequent periods.</p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-align: left; margin-top: 0pt; font: 10pt times new roman, times, serif; margin-bottom: 0pt;"></p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">In addition, in connection with dividends paid to the Shining shareholders between April 2003 to June 2005, Shining did not deduct a withholding tax at the rate of 20% as required by applicable Chinese laws and regulations. The Company has accrued the dividend withholding tax and interest on the dividend withholding tax.</p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-align: justify; background-color: white; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">According to PRC tax regulations, the overdue tax liabilities in the PRC for the calendar years prior to 2005 may be subject to interest at the 0.05% per day, and potential penalties for the late payment of taxes which is calculated on the basis of 0.5 times to five times the amount of taxes payable. Through March 31, 2011, the Company accrued the interest that may be potentially payable upon these taxes incurred prior to 2005 and the unpaid dividend withholding tax. Interest related to the unpaid taxes was recognized in the Company’s consolidated statements of operations as a component of its income tax provision.</p> <p style="text-align: justify; background-color: white; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-align: justify; background-color: white; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">For the year ended March 31, 2012, management made an assessment of whether it was necessary to provide a further provision for interest and penalties on these unpaid amounts. Management determined that no further provision for interest and penalties was necessary given the unlikelihood of payment of the amount already accrued and provided in the financial statements. This assessment was based upon receipt by the company of a report by an independent tax expert that the amount of taxes prior to 2005 may not be payable, the length of time the amount has been outstanding, and that there have been no requests from PRC tax authorities for payment of the unpaid taxes outstanding amounts. As such, management believes that the previously recorded amounts are sufficient to cover any settlement of this liability.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">The Company’s PRC subsidiaries are deemed “high technology” enterprises subject to preferred tax rates (tax holiday). The table below shows the effect of using the higher rates and earnings per share.</p> <p style="text-indent: 0.5in; 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 nowrap="nowrap"> </td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="6" nowrap="nowrap">Year ended March 31,</td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> </tr> <tr style="vertical-align: bottom;"> <td nowrap="nowrap"> </td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap">2012</td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap">2011</td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> </tr> <tr style="vertical-align: bottom;"> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td colspan="2" nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td colspan="2" nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="width: 76%;">Income per common share-basic</td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 9%;">0.13</td> <td style="text-align: left; width: 1%;"> </td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 9%;">1.66</td> <td style="text-align: left; width: 1%;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 1pt;">Effect of tax holiday</td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">0.01</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">0.11</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 2.5pt;">Pro forma income per common share-basic</td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">0.14</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">1.77</td> </tr> </table>
</us-gaap:IncomeTaxDisclosureTextBlock>
<us-gaap:TreasuryStockTextBlock contextRef="Context_FYE_31-Mar-2012">
<table style="margin-top: 0px; font: 10pt times new roman, times, serif; margin-bottom: 0px;" cellspacing="0" cellpadding="0"> <tr style="text-align: justify; vertical-align: top;"> <td style="text-align: left; width: 0.5in;"><b>15.</b></td> <td style="text-align: justify;"><b>TREASURY STOCK</b></td> </tr> </table> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">On March 22, 2006, the Company repurchased 24,381,004 shares of common stock of the Company with a total cost of $2,438 under the approval of the Board of Directors. Before year ended March 31, 2010, 4,381,004 shares of common stock of the Company were cancelled and the balance of 20,000,000 shares of common stock of the Company with a total cost of $2,000 remained in treasury. The Company recorded the entire purchase price of the remaining treasury stock as a reduction of equity.</p> <p style="text-align: justify; text-indent: 45pt; margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">During the year ended March 31, 2011, the Company repurchased 219,800 shares of its common stock for an aggregate cost of $2,739,634. The Company recorded the entire purchase price of the treasury stock as a reduction of equity.</p>
</us-gaap:TreasuryStockTextBlock>
<chbt:CapitalAndStatutoryReservesDisclosureTextBlock contextRef="Context_FYE_31-Mar-2012">
<table style="margin-top: 0px; font: 10pt times new roman, times, serif; margin-bottom: 0px;" cellspacing="0" cellpadding="0"> <tr style="text-align: justify; vertical-align: top;"> <td style="text-align: left; width: 0.5in;"><b>16.</b></td> <td style="text-align: justify;"><b>CAPITAL AND STATUTORY RESERVES</b></td> </tr> </table> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">The Company’s PRC subsidiary, Shining, is required to make appropriations to reserve funds, comprising the statutory surplus reserve, statutory public welfare fund and discretionary surplus reserve, based on after-tax net income determined in accordance with generally accepted accounting principles of the PRC (the “PRC GAAP”). Appropriation to the statutory surplus reserve should be at least 10% of the after tax net income determined in accordance with the PRC GAAP until the reserve is equal to 50% of the subsidiary’s registered capital. Appropriations to the statutory public welfare fund are at 5% to 10% of the after tax net income determined in accordance with the PRC GAAP. Appropriations to the discretionary surplus reserve are made at the discretion of the Board of Directors. The statutory public welfare fund is established for the purpose of providing employee facilities and other collective benefits to the employees and is non-distributable other than in liquidation. The statutory surplus reserve and discretionary surplus reserve can be used to make good losses or to increase the capital of the relevant company.</p>
</chbt:CapitalAndStatutoryReservesDisclosureTextBlock>
<chbt:ProductReturnsTextBlock contextRef="Context_FYE_31-Mar-2012">
<table style="margin-top: 0px; font: 10pt times new roman, times, serif; margin-bottom: 0px;" cellspacing="0" cellpadding="0"> <tr style="text-align: justify; vertical-align: top;"> <td style="text-align: left; width: 0.5in;"><b>18.</b></td> <td style="text-align: justify;"><b>PRODUCT RETURN CONCESSIONS</b></td> </tr> </table> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">For the year ended March 31, 2012, product returns of $474,505 were deducted from sales due to a batch of probiotics products produced in June 2011 that were below the Company’s quality standards due to production problems. For the year ended March 31, 2011, product returns of $2,590,841 were deducted from sales due to the overestimation of market demand by the Company’s distributors for the first calendar quarter of 2011. We agreed to accept the return of probiotics products from certain distributors during May 2011, in part to avoid the Company suffering a negative image in the probiotics market. All such returned goods were held in the Company’s warehouse until they were fully destroyed by September 2011.</p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">As a result of a product returns after certain of our products did not meet our quality standards, and in order to improve the confidence of the Company’s distributors and end-user customers in our probiotics products, we provided special concession credits to our distributors during August 2011 to address the complaints and concerns of customers worried about food and healthcare products in the PRC. Such credits were made available for our distributors to reimburse end-user customers for products which were recalled. We treated these special credits as being comparable to a warranty on our probiotics products, and we incurred a cost of $7,162,229 for these credits for the year ended March 31, 2012 that has been reflected as an additional cost of product returns in the accompanying consolidated financial statements.</p>
</chbt:ProductReturnsTextBlock>
<us-gaap:PensionAndOtherPostretirementBenefitsDisclosureTextBlock contextRef="Context_FYE_31-Mar-2012">
<table style="margin-top: 0px; font: 10pt times new roman, times, serif; margin-bottom: 0px;" cellspacing="0" cellpadding="0"> <tr style="text-align: justify; vertical-align: top;"> <td style="text-align: left; width: 0.5in;"><b>19.</b></td> <td style="text-align: justify;"><b>RETIREMENT COSTS</b></td> </tr> </table> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">The Company’s employees are required to participate in a central pension scheme operated by the local municipal government and the Company is required to contribute a certain percentage of their payroll costs to the central pension. In accordance with the rules of the central pension, contributions are recorded when due and included in general and administrative expenses in the accompanying consolidated statements of operations and comprehensive income. Forfeited contributions are available to reduce contributions payable in future years. For the years ended March 31 2012 and 2011, the Company’s retirement costs are summarized as follows:</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 nowrap="nowrap"> </td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="6" nowrap="nowrap">Years ended March 31,</td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> </tr> <tr style="vertical-align: bottom;"> <td nowrap="nowrap"> </td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap">2012</td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap">2011</td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="width: 76%;"> </td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;"> </td> <td style="text-align: right; width: 9%;"> </td> <td style="text-align: left; width: 1%;"> </td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;"> </td> <td style="text-align: right; width: 9%;"> </td> <td style="text-align: left; width: 1%;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 2.5pt;">Contributions to central pension operated by local municipal government</td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">1,790,857</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">2,210,103</td> </tr> </table>
</us-gaap:PensionAndOtherPostretirementBenefitsDisclosureTextBlock>
<us-gaap:CommitmentsDisclosureTextBlock contextRef="Context_FYE_31-Mar-2012">
<table style="margin-top: 0px; font: 10pt times new roman, times, serif; margin-bottom: 0px;" cellspacing="0" cellpadding="0"> <tr style="text-align: justify; vertical-align: top;"> <td style="text-align: left; width: 0.5in;"><b>20.</b></td> <td style="text-align: justify;"><b>COMMITMENTS AND CONTINGENCIES</b></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;"><b>Operating Leases</b></p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">As of March 31, 2012, future minimum lease payments under non-cancellable operating leases for office, warehouse and factory were as follows:</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="text-align: left;" nowrap="nowrap"> </td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap">2012</td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left;">For the year ended March 31:</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; text-indent: 5pt; width: 88%;">2013</td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 9%;">622,396</td> <td style="text-align: left; width: 1%;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; text-indent: 5pt;">2014</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">94,832</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 1pt; text-indent: 5pt;">Thereafter</td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">-</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">717,228</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> </tr> </table> <p style="text-align: justify; margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">Rental expense, which was charged to expense, amounted to $275,424 and $1,689,680 for the years ended March 31, 2012 and 2011, respectively.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-align: justify; margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>Capital commitments</b></p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">On August 12, 2010, BDH, a subsidiary of the Company, entered into the agreements with a government agency to establish manufacturing facilities for animal probiotics products in the Yangling Agricultural High-tech Industries Demonstration Zone in Shaanxi Province of China. In furtherance of such agreements, BDH incorporated a foreign, wholly owned subsidiary, Growing Yangling, with a registered capital of $50 million. As of March 31, 2012, the Company had injected into Growing Yangling $7.5 million as registered capital. According to the approval from the government agency dated October 12, 2010, the remaining balance of Growing Yangling’s registered capital of $42.5 million must be injected before July 13, 2013.</p> <p style="text-align: justify; margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">The cost for constructing the Yangling facility is expected to be over $58 million invested over two years, which would be mainly facilitated by the capital injection from BDH. The facility will produce probiotics and probiotics-related biological additives for the animal feed industry. Currently, the facility is in its construction stage. During the year ended March 31, 2011, the Company made total payment of approximately $3.25 million (RMB 20,608,112) to acquire the land use right of approximately 122,600 square meters (183.94 mu). We received the land certificate on January 28, 2012 and commenced construction in June 2012. We expect to complete construction by June 2014. As of March 31, 2012, Growing Yangling entered into agreements with contractors related to the construction of the plant and manufacturing facilities for future payment of $2,548,749 and $2,458,630, respectively. Subsequent to March 31, 2012, Growing Yangling entered into agreements with contractors for approximately $15,750,000 (RMB 99,400,000) for the purchase of production equipment. Shining also entered into agreements with contractors for initial work on the project in the amount of $125,726, which had not been paid as of March 31, 2012.</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;">On February 1, 2012, our subsidiary, Growing, entered into an agreement to acquire a patent regarding a production technology for $6,647,147 (RMB 42,000,000) from an unrelated PRC company. Growing made a deposit of $6,330,616 (RMB 40,000,000) to the seller for the transfer of the patent within 210 days, or by August 30, 2012. The original terms of the agreement were that if the patent cannot be transferred to Growing within 210 days, Growing will be refunded the deposit paid and also be compensated an additional $159,000 (RMB 1,000,000) for damages. The transfer was not completed by August 30, 2012, and on September 3, 2012, Growing and the seller mutually agreed to extend the completion date to December 30, 2012. As of September 13, 2012, the transfer had not yet been completed because the Company is waiting for approval of the transfer from the State Intellectual Property Office of the PRC. The Company has no information to allow it to estimate when such confirmation will be obtained, but expects the transaction to close in 2013, after which the patent is planned to be used in the Company’s operations.</p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>Purchase obligations</b></p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">The Company entered into the agreements with the suppliers to purchase raw materials and packing materials. The amount of future payments is $8,019,273.</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;"><b>Other obligations</b></p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">The Company entered into an agreement with a university to perform research and development. The amount of future payments is $1,424,389 (RMB 9,000,000).</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;"><b>Pending litigation</b></p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">The Company and certain of its current and former officers and directors have been named as defendants in two putative shareholder class action lawsuits, one in the United States District Court for the Central District of California (<i>Mohapatra v. China-Biotics</i>, <i>Inc., et al.</i>, No. 10-cv-6954 (C.D. Cal.), the “California Action”) and the other in the United States District Court for the Southern District of New York (<i>Hill v. China-Biotics, Inc., et al.</i>, No. 10-cv-7838 (S.D.N.Y.), the “New York Action”). After certain shareholders filed motions for appointment as lead plaintiff in both lawsuits, the plaintiff in the California Action voluntarily dismissed its case and the plaintiff in the New York Action, together with another shareholder, were appointed as lead plaintiffs. The lead plaintiffs filed an amended complaint in which they allege that the defendants violated Sections 11, 12(a)(2), and 15 of the Securities Act of 1933, and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by making material misstatements or failing to disclose certain material information regarding, among other things, the Company’s financial condition, operations, and future business prospects, and the quality, nature, and quantity of the Company’s retail outlets. The lead plaintiffs seek to represent a class of shareholders who bought the Company’s securities between July 10, 2008 and August 27, 2010.</p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">On August 18, 2011, the Company filed a motion to dismiss the lead plaintiffs’ amended complaint. The court dismissed the lead plaintiffs’ Section 11 claim, but gave them leave to replead. The court did not rule on the motion to dismiss the Section 10(b) claim. On January 9, 2012, the lead plaintiffs filed a second amended complaint that included a new named plaintiff and new allegations for the Section 11 claim. On February 27, 2012, the Company filed a motion to dismiss the amended Section 11 claim. Both that motion and the original motion to dismiss the Section 10(b) and Section 20(a) claims are currently pending before the court. The Company intends to defend this action vigorously.</p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">The Company and certain of its current and former officers and directors have been named as defendants in a putative stockholder class action in the United States District Court for the Southern District of New York (<i>Casper v. Jinan, et al.</i>, No. 12-cv-4202 (S.D.N.Y.). The plaintiff alleges that the defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by making material misstatements about the Company’s projected revenue growth for 2011. The plaintiff seeks to represent a class of stockholders who bought the Company’s securities between February 9, 2011 and July 1, 2011. On September 5, 2012, the court appointed the Blanck Investor Group as lead plaintiff. The Company intends to defend this action vigorously.</p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">The Company and its directors have been named as defendants in a derivative lawsuit filed in the United States District Court for the District of Columbia (<i>Marteney v. Song Jinan, et al.</i>, No. 10-cv-1983 (D.D.C.)). The complaint alleges that the directors breached their fiduciary duties by disseminating false and misleading financial statements and seeks unspecified damages. On March 26, 2012, the plaintiff filed an amended complaint in which he added Roth Capital Partners LLC and Maxim Group LLC as defendants. On September 7, 2012, Roth Capital Partners LLC and Maxim Group LLC filed a motion to dismiss. The defendants intend to defend this action vigorously.</p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">With respect to the above-referenced litigation matters, the Company is unable at this time to estimate possible losses, if any, or any other impact of the outcome of the litigation matters on the consolidated financial statements.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b> </b></p> <div style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>Review of decision ordering that the registration of the Company’s securities be revoked </b></div> <p style="text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">On September 15, 2011, the staff of the SEC informed the Company that it intended to recommend that the SEC institute a public administrative proceeding against the Company for alleged violations of Section 13(a) of the Securities Exchange Act of 1934 and Rules 13a-1 and 13a-13 or 13a-16. On October 7, 2011, the SEC issued an Order Instituting Proceedings to determine whether it was necessary and appropriate to suspend or revoke the registration of the Company’s securities. On February 22, 2012, the administrative law judge overseeing the proceedings issued a decision ordering that the registration of the Company’s securities be revoked. On March 26, 2012, the SEC granted the Company’s petition for review of this decision. The results of the SEC review are pending as of September 13, 2012. If the registration of the Company’s securities is revoked, no U.S. registered broker-dealer may execute trades in the Company’s shares and the trading market for our common stock may cease to exist. In such event, investors may not be able to liquidate their investment.</p>
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<us-gaap:DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock contextRef="Context_FYE_31-Mar-2012">
<table style="margin-top: 0px; font: 10pt times new roman, times, serif; margin-bottom: 0px;" cellspacing="0" cellpadding="0"> <tr style="text-align: justify; vertical-align: top;"> <td style="text-align: left; width: 0.5in;"><b>17.</b></td> <td style="text-align: justify;"><b>OPTION INCENTIVE PLAN</b></td> </tr> </table> <p style="text-align: justify; margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">On January 16, 2011, the Board adopted the 2010 Equity Incentive Plan (the “2010 Plan”) and reserved 1,500,000 shares of common stock for issuance under the 2010 Plan. On March 9, 2011, the 2010 Plan was approved by the Company’s stockholders at the 2010 Annual Meeting of Stockholders.</p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">On January 16, 2011, the Company granted to the directors and officers an option to purchase 910,000 shares of common stock under the 2010 Plan. The options have exercise price of $14.81 per share, an expiration date of five to ten years from the date of grant, and vest over 48 consecutive months: 20% in the first 12-month period; 20% in the second 12-month period; 30% in the third 12-month period; and 30% in the forth 12-month period. The Company determined the fair value of the options on the date of grant was $9,477,024 using the Black-Scholes-Merton option pricing model with the following assumptions: expected volatility, 76%; risk-free interest rate, 1.95%; expected weighted average life, five to ten years; and expected dividend yield, 0%. As of March 31, 2012 and 2011, the total vested options were 165,000 shares and 45,500 shares, respectively.</p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">During June 2011, two candidates resigned from their position and terminated their services to the Company. They also did not exercise their vesting options within three months from the date of their termination. According to the option agreement, their options were forfeited and cancelled; the total number of forfeited and cancelled options was 250,000.</p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">During the years ended March 31, 2012 and 2011, no vested options were exercised.</p> <p style="text-align: justify; margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">At March 31, 2012 and 2011, outstanding options were as follows:</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 nowrap="nowrap"> </td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap">Number of<br />Shares under<br />Options</td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap">Weighted<br />Average<br />Exercise Price</td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> </tr> <tr style="vertical-align: bottom;"> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td>Options outstanding at April 1, 2010</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">-</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;">$</td> <td style="text-align: right;">-</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; width: 76%;">Options granted</td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;"> </td> <td style="text-align: right; width: 9%;">910,000</td> <td style="text-align: left; width: 1%;"> </td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;"> </td> <td style="text-align: right; width: 9%;">14.81</td> <td style="text-align: left; width: 1%;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left;">Options expired or forfeited</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">-</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">-</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 1pt;">Options exercised</td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">-</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> <td style="padding-bottom: 1pt;"> </td> <td style="text-align: left; padding-bottom: 1pt;"> </td> <td style="text-align: right; padding-bottom: 1pt;">-</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td>Options outstanding at March 31, 2011</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">910,000</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">14.81</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;">Options granted</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">-</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">-</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left;">Options expired or forfeited</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">(250,000</td> <td style="text-align: left;">)</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">14.81</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 1pt;">Options exercised</td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">-</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> <td style="padding-bottom: 1pt;"> </td> <td style="text-align: left; padding-bottom: 1pt;"> </td> <td style="text-align: right; padding-bottom: 1pt;">-</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="padding-bottom: 2.5pt;">Options outstanding at March 31, 2012</td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;"> </td> <td style="border-bottom: black 2.5pt double; text-align: right;">660,000</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="text-align: left; padding-bottom: 2.5pt;">$</td> <td style="text-align: right; padding-bottom: 2.5pt;">14.81</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr> </table> <p style="text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">The following table summarizes information about options outstanding at March 31, 2012:</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="text-align: center;" colspan="2" nowrap="nowrap"> </td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="10" nowrap="nowrap">Options Outstanding</td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="6" nowrap="nowrap">Options Exercisable</td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> </tr> <tr style="vertical-align: bottom;"> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap">Exercise<br />price</td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap">Number of<br />shares<br />under Option</td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap">Weighted average<br />remaining contractual life<br />(years)</td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap">Weighted<br />Average<br />Exercise Price</td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap">Number of<br />shares<br />under Option</td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap">Weighted<br />Average<br />Exercise Price</td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; width: 1%;"> </td> <td style="text-align: right; width: 14%;"> </td> <td style="text-align: left; width: 1%;"> </td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;"> </td> <td style="text-align: right; width: 14%;"> </td> <td style="text-align: left; width: 1%;"> </td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;"> </td> <td style="text-align: right; width: 14%;"> </td> <td style="text-align: left; width: 1%;"> </td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;"> </td> <td style="text-align: right; width: 14%;"> </td> <td style="text-align: left; width: 1%;"> </td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;"> </td> <td style="text-align: right; width: 14%;"> </td> <td style="text-align: left; width: 1%;"> </td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;"> </td> <td style="text-align: right; width: 13%;"> </td> <td style="text-align: left; width: 1%;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left;">$</td> <td style="text-align: right;">14.81</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">660,000</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">7.15</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;">$</td> <td style="text-align: right;">14.81</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">165,000</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;">$</td> <td style="text-align: right;">14.81</td> <td style="text-align: left;"> </td> </tr> </table> <p style="text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">At March 31, 2012 and 2011, the options outstanding and exercisable had no intrinsic value.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">For the years ended March 31, 2012 and 2011, the Company has recorded $1,484,690 and $473,852, respectively, as the fair value of the vested options.</p> <p style="text-align: justify; margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">As of March 31, 2012, total compensation cost related to non-vested stock options and restricted stock not yet recognized was approximately $5,054,193, which is expected to be recognized over the next 33 months</p>
</us-gaap:DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock>
<us-gaap:DebtDisclosureTextBlock contextRef="Context_FYE_31-Mar-2012">
<table style="margin-top: 0px; font: 10pt times new roman, times, serif; margin-bottom: 0px;" cellspacing="0" cellpadding="0"> <tr style="text-align: justify; vertical-align: top;"> <td style="text-align: left; width: 0.5in;"><b>13.</b></td> <td style="text-align: justify;"><b>CONVERTIBLE NOTES PAYABLE</b></td> </tr> </table> <p style="text-align: justify; margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b> </b></p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">On December 11, 2007, the Company issued a senior convertible promissory note for $25,000,000, due December 11, 2010 in a private placement. Mr. Song Jinan, the Company’s Chief Executive Officer and largest shareholder, agreed to guarantee the Company’s obligations under the Note with a pledge of 4,000,000 shares of China-Biotics common stock owned by Mr. Song. The note was convertible at an exercise price of $12 per share into shares of the Company’s common stock at any time until maturity. If the Note was not converted before maturity, the Company agreed to redeem the Note with a total yield of 10% per annum. The Note also included a mandatory conversion into the Company’s common stock if the Company achieved net income of $60 million in fiscal year 2010. For the year ended March 31, 2010, the Company had net income of $15.6 million. Since the Company did not attain net income of $60 million, the Note was not converted. On December 9, 2010, the Note was paid off in full and the guarantee by Mr. Song was released. The Company had been paying interest at 4% on a quarterly basis, and had accrued an additional 6% for a total of 10% since the Note was not converted at maturity. For the years ended March 31, 2012 and 2011, interest expense was $0 and $4,684,932, respectively.</p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">The Company accounted for the net proceeds from the issuance of the Note as two separate components: an embedded conversion feature and a debt component. The Company determined that the fair value of the conversion feature of the notes resulted in a derivative liability of $9,118,000 being recorded when the notes were issued. The $9,118,000 amount was allocated to debt discount and amortized over the term of the note using the effective interest method. The embedded derivatives were recorded at fair value, mark-to-market at each reporting period, and were reflected on a separate line in the balance sheet. On December 9, 2010, the Note was repaid and the derivative liability was extinguished resulting in a gain of $14,797,000 during the year ended March 31, 2011.</p>
</us-gaap:DebtDisclosureTextBlock>
<us-gaap:SegmentReportingDisclosureTextBlock contextRef="Context_FYE_31-Mar-2012">
<table style="margin-top: 0px; font: 10pt times new roman, times, serif; margin-bottom: 0px;" cellspacing="0" cellpadding="0"> <tr style="text-align: justify; vertical-align: top;"> <td style="text-align: left; width: 0.5in;"><b>21.</b></td> <td style="text-align: justify;"><b>BUSINESS SEGMENTS</b></td> </tr> </table> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">The Company operates two business segments for the years ended March 31, 2012 and 2011, which are retail probiotics products as a health supplement and bulk additives for institutional customers in the PRC. The following is the summary information by segment as of March 31, 2012 and 2011, and for the years ended March 31, 2012 and 2011:</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="border-bottom: black 1pt solid; text-align: justify;" nowrap="nowrap">Year Ended<br />March 31, 2012</td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap">Retail products</td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap">Bulk additives</td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap">Segment<br /> Total</td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap">Corporate</td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap">Total</td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> </tr> <tr style="vertical-align: bottom;"> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: justify; width: 40%;">Net revenue</td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 9%;">27,890,558</td> <td style="text-align: left; width: 1%;"> </td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 9%;">30,983,071</td> <td style="text-align: left; width: 1%;"> </td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 9%;">58,873,629</td> <td style="text-align: left; width: 1%;"> </td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 9%;">-</td> <td style="text-align: left; width: 1%;"> </td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 9%;">58,873,629</td> <td style="text-align: left; width: 1%;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;">Income (loss) from operations</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">(1,029,460</td> <td style="text-align: left;">)</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">9,976,901</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">8,947,441</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">(5,349,478</td> <td style="text-align: left;">)</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">3,597,963</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left;">Income taxes</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">1,278,070</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">1,555,098</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">2,833,168</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">-</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">2,833,168</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;">Total assets</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">115,981,279</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">102,438,295</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">218,419,574</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">38,542,990</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">256,962,564</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left;">Depreciation and amortization</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">1,091,171</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">2,599,604</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">3,690,775</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">31,113</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">3,721,888</td> <td style="text-align: left;"> </td> </tr> </table> <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="border-bottom: black 1pt solid; text-align: justify;" nowrap="nowrap">Year Ended<br />March 31, 2011</td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap">Retail products</td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap">Bulk additives</td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap">Segment<br /> Total</td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap">Corporate</td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap">Total</td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> </tr> <tr style="vertical-align: bottom;"> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: justify; width: 40%;">Net revenue</td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 9%;">62,564,210</td> <td style="text-align: left; width: 1%;"> </td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 9%;">46,230,722</td> <td style="text-align: left; width: 1%;"> </td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 9%;">108,794,932</td> <td style="text-align: left; width: 1%;"> </td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 9%;">-</td> <td style="text-align: left; width: 1%;"> </td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 9%;">108,794,932</td> <td style="text-align: left; width: 1%;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;">Income (loss) from operations</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">23,159,118</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">20,428,594</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">43,587,712</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">(7,853,577</td> <td style="text-align: left;">)</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">35,734,135</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left;">Income taxes</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">6,225,158</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">2,757,191</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">8,982,349</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">-</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">8,982,349</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;">Total assets</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">114,292,840</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">78,356,139</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">192,648,979</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">44,982,300</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">237,631,279</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left;">Depreciation and amortization</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">2,001,845</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">2,675,588</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">4,677,433</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">11,894</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">4,689,327</td> <td style="text-align: left;"> </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;">Reconciliation is provided for unallocated amounts relating to corporate operations, which is not included in the segment information.</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 nowrap="nowrap"> </td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="6" nowrap="nowrap">Years ended March 31,</td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> </tr> <tr style="vertical-align: bottom;"> <td style="border-bottom: black 1pt solid;" nowrap="nowrap">Reconciliation</td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap">2012</td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap">2011</td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> </tr> <tr style="vertical-align: bottom;"> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; width: 76%;">Total segment operating income</td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 9%;">8,947,441</td> <td style="text-align: left; width: 1%;"> </td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 9%;">43,587,712</td> <td style="text-align: left; width: 1%;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;">Corporate overhead expenses</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">(5,349,478</td> <td style="text-align: left;">)</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">(7,853,577</td> <td style="text-align: left;">)</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left;">Other income, net</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">2,011,015</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">10,183,691</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 1pt;">Income tax expense</td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">(2,833,168</td> <td style="text-align: left; padding-bottom: 1pt;">)</td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">(8,982,349</td> <td style="text-align: left; padding-bottom: 1pt;">)</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 2.5pt;">Total consolidated net income</td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">2,775,810</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">36,935,477</td> <td style="text-align: left; padding-bottom: 2.5pt;"></td> </tr> </table>
</us-gaap:SegmentReportingDisclosureTextBlock>
<us-gaap:CondensedFinancialInformationOfParentCompanyOnlyDisclosureTextBlock contextRef="Context_FYE_31-Mar-2012">
<p style="text-align: center; margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>CHINA-BIOTICS, INC.</b></p> <p style="text-align: center; margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>SCHEDULE I – CONDENSED PARENT COMPANY FINANCIAL STATEMENTS</b></p> <p style="text-align: center; margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>BALANCE SHEETS</b></p> <p style="text-align: center; margin: 0pt 0px; font: 10pt times new roman, times, serif;">(Amounts expressed in US Dollars)</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 nowrap="nowrap"> </td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap">March 31, <br />2012</td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap">March 31,<br />2011</td> <td style="padding-bottom: 1pt;" nowrap="nowrap"> </td> </tr> <tr style="vertical-align: bottom;"> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="font-weight: bold;">ASSETS</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; width: 76%;">Cash and cash equivalents</td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 9%;">5,974</td> <td style="text-align: left; width: 1%;"> </td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 9%;">63,513</td> <td style="text-align: left; width: 1%;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 1pt;">Investments in and advances to subsidiaries</td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">207,407,664</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">200,636,597</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 2.5pt; font-weight: bold;">Total assets</td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">207,413,638</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">200,700,110</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; font-weight: bold;">LIABILITIES AND SHAREHOLDERS’ EQUITY</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; font-weight: bold;">Current liabilities</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td>Accounts payable and accrued expenses</td> <td> </td> <td style="text-align: left;">$</td> <td style="text-align: right;">2,971,694</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;">$</td> <td style="text-align: right;">2,764,303</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 1pt;">Amount due to director</td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">2,011,332</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">1,591,332</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; font-weight: bold;">Total current liabilities</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">4,983,026</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">4,355,635</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; font-weight: bold;">Commitments and contingencies</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; font-weight: bold;">Stockholders’ equity:</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left;">Preferred stock</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">-</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">-</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;">Common stock</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">4,237</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">4,237</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left;">Additional paid-in capital</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">84,727,616</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">83,242,926</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;">Retained earnings</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">108,179,075</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">105,403,265</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left;">Treasury stock</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">(2,741,634</td> <td style="text-align: left;">)</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">(2,741,634</td> <td style="text-align: left;">)</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 1pt;">Accumulated other comprehensive income</td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">12,261,318</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">10,435,681</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 1pt; font-weight: bold;">Total stockholders’ equity</td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">202,430,612</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">196,344,475</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 2.5pt; font-weight: bold;">Total liabilities and stockholders’ equity</td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">207,413,638</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">200,700,110</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> </tr> </table> <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;">The accompanying note is an integral part of these condensed financial statements.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-align: center; margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>CHINA-BIOTICS, INC.</b></p> <p style="text-align: center; margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>SCHEDULE I - CONDENSED PARENT COMPANY FINANCIAL STATEMENTS</b></p> <p style="text-align: center; margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME</b></p> <p style="text-align: center; margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>(Amounts expressed in US Dollars)</b></p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b> </b></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> </td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="6">Year ended March 31,</td> <td style="padding-bottom: 1pt;"> </td> </tr> <tr style="vertical-align: bottom;"> <td> </td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2">2012</td> <td style="padding-bottom: 1pt;"> </td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2">2011</td> <td style="padding-bottom: 1pt;"> </td> </tr> <tr style="vertical-align: bottom;"> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; width: 74%;">General and administrative expenses</td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 10%;">(4,564,076</td> <td style="text-align: left; width: 1%;">)</td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 10%;">(7,159,455</td> <td style="text-align: left; width: 1%;">)</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;">Exchange loss, net</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">(23</td> <td style="text-align: left;">)</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">(32,185</td> <td style="text-align: left;">)</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left;">Interest income</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">73</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">483</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;">Interest expenses</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">-</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">(4,885,468</td> <td style="text-align: left;">)</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 1pt;">Gain on extinguishment of derivative liability</td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">-</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">14,797,000</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;">Income (loss) before equity in earnings of subsidiaries</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">(4,564,026</td> <td style="text-align: left;">)</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">2,720,375</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 1pt;">Equity in earnings of subsidiaries</td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">7,339,836</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">34,215,102</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;">Net income</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">2,775,810</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">36,935,477</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left;">Other comprehensive income</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 1pt;">Foreign currency translation adjustment</td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">1,825,637</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">5,495,851</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 2.5pt;">Comprehensive income</td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">4,601,447</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">42,431,328</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td>Weighted average shares outstanding</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="padding-bottom: 2.5pt;">Basic</td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;"> </td> <td style="border-bottom: black 2.5pt double; text-align: right;">22,150,200</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;"> </td> <td style="border-bottom: black 2.5pt double; text-align: right;">22,241,076</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="padding-bottom: 2.5pt;">Diluted</td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;"> </td> <td style="border-bottom: black 2.5pt double; text-align: right;">22,266,993</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;"> </td> <td style="border-bottom: black 2.5pt double; text-align: right;">23,689,004</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td>Earnings per share:</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="padding-bottom: 2.5pt;">Basic</td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">0.13</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">1.66</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="padding-bottom: 2.5pt;">Diluted</td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">0.12</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">0.93</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> </tr> </table> <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;">The accompanying note is an integral part of these condensed financial statements.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-align: center; margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>CHINA-BIOTICS, INC.</b></p> <p style="text-align: center; margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>SCHEDULE I - CONDENSED PARENT COMPANY FINANCIAL STATEMENTS</b></p> <p style="text-align: center; margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>STATEMENTS OF CASH FLOWS</b></p> <p style="text-align: center; margin: 0pt 0px; font: 10pt times new roman, times, serif;">(Amounts expressed in US Dollars)</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> </td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="6">Year ended March 31,</td> <td style="padding-bottom: 1pt;"> </td> </tr> <tr style="vertical-align: bottom;"> <td> </td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2">2012</td> <td style="padding-bottom: 1pt;"> </td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2">2011</td> <td style="padding-bottom: 1pt;"> </td> </tr> <tr style="vertical-align: bottom;"> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; font-weight: bold;">CASH FLOWS FROM OPERATING ACTIVITIES</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; width: 74%;">Net income</td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 10%;">2,775,810</td> <td style="text-align: left; width: 1%;"> </td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 10%;">36,935,477</td> <td style="text-align: left; width: 1%;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left;">Adjustments for:</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;">Investments in and advances to subsidiaries</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">(4,945,430</td> <td style="text-align: left;">)</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">4,777,278</td> <td style="text-align: left;"></td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left;">Gain on extinguishment of derivative liability</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">-</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">(14,797,000</td> <td style="text-align: left;">)</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;">Fair value of vested options</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">1,484,690</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">473,852</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 1pt; padding-left: 0.12in;">- Accounts payable and accrued expenses</td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">207,391</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">(1,177,792</td> <td style="text-align: left; padding-bottom: 1pt;">)</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; font-weight: bold;">NET CASH USED PROVIDED BY (USED IN) IN OPERATING ACTIVITIES</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">(477,539</td> <td style="text-align: left;">)</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">26,211,815</td> <td style="text-align: left;"></td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; font-weight: bold;">CASH FLOWS FROM FINANCING ACTIVITIES</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;">Repayment of convertible note</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">-</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">(25,000,000</td> <td style="text-align: left;">)</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left;">Purchase of treasury stocks</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">-</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">(2,739,634</td> <td style="text-align: left;">)</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 1pt;">Cash advance from a director</td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">420,000</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">1,591,332</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; font-weight: bold;">NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">420,000</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">(26,148,302</td> <td style="text-align: left;">)</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; font-weight: bold;">NET CHANGES IN CASH AND CASH EQUIVALENTS BALANCES</td> <td> </td> <td style="text-align: left;"></td> <td style="text-align: right;">(57,539</td> <td style="text-align: left;">)</td> <td> </td> <td style="text-align: left;"></td> <td style="text-align: right;">63,513</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 1pt; font-weight: bold;">CASH AND CASH EQUIVALENTS BALANCES, beginning of period</td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">63,513</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">-</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 2.5pt; font-weight: bold;">CASH AND CASH EQUIVALENTS BALANCES, end of period</td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">5,974</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">63,513</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; font-weight: bold;">Supplemental disclosure of non-cash information:</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left;">Taxes paid</td> <td> </td> <td style="text-align: left;">$</td> <td style="text-align: right;">-</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;">$</td> <td style="text-align: right;">- </td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: white;"> <td style="text-align: left;">Interest paid</td> <td> </td> <td style="text-align: left;">$</td> <td style="text-align: right;">-</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;">$</td> <td style="text-align: right;">5,434,983</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr> </table> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-align: center; margin: 0pt 0px; font: 10pt times new roman, times, serif;">The accompanying note is an integral part of these condensed financial statements.</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;">1      These condensed parent company only financial statements should be read in connection with the consolidated financial statements and notes thereto.</p>
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<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: 0.5in;"><b>12.</b></td> <td><b>LOANS PAYABLE</b></td> </tr> </table> <p style="text-align: justify; margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b> </b></p> <p style="text-align: justify; margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>Short term loan</b></p> <p style="text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">On March 19, 2012, the Company received a loan from the Bank of China for $3,165,308 (RMB 20,000,000), secured by the corporate headquarters office building of Growing (see Note10), due September 19, 2012. Interest is 7.2% per annum, based on 118% of the six months’ of RMB borrowing prime rate established by the People’s Bank of China at the time of funding. Total principal and interest are due September 19, 2012. The loan is renewable with the bank upon maturity.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-align: justify; margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>Long term loan</b></p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"> </p> <p style="text-align: justify; text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">On December 7, 2011, the Company received a loan from Shanghai Rural Commercial Bank for $4,747,963 (RMB 30,000,000), secured by the land use right in Qingpu of Growing (see Note 9), due May 27, 2014. Interest is 7.65% per annum, based on 115% of the 1-to-3 years’ borrowing of RMB prime rate set by the People’s Bank of China at the time of funding, and is due at the end of each calendar quarter. On May 25, 2012, the Company repaid $791,327 (RMB 5,000,000) of the loan.</p>
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Filing Submission 0001144204-12-051520   –   Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)
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