10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

FORM 10-Q

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

For the quarterly period ended September 30, 2018

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

For the transition period fromto 

Commission file number: 0-53600

SPRING PHARMACEUTICAL GROUP, INC.

(Exact name of registrant as specified in its charter)

Delaware	30-0781441
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

11 Quanxing Road

Sishui County, Shandong Province 373200

People's Republic of China

(Address of principal executive offices)

Issuer's telephone number:   +86 0537-4268271

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

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

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

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☐ (Do not check if a smaller reporting company)	Smaller reporting company ☒
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided to Section 7(a)(2)(B) of the Securities Act.  ☐

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

The number of shares outstanding of the issuer's common stock on November 13, 2018 was 29,839,168.

SPRING PHARMACEUTICAL GROUP, INC.

(FORMERLY KNOWN AS CHINA YCT INTERNATIONAL GROUP, INC.)

Table of Contents

	Page
Consolidated Balance Sheets as of September 30, 2018 and March 31, 2018 (Unaudited)	F1
Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Months Ended September 30, 2018 and 2017 (Unaudited)	F2
Consolidated Statements of Cash Flows for the Six Months Ended September 30, 2018 and 2017 (Unaudited)	F3
Notes to Consolidated Financial Statements (Unaudited)	F4-F8

SPRING PHARMACEUTICAL GROUP, INC.

(FORMERLY KNOWN AS CHINA YCT INTERNATIONAL GROUP, INC.)

CONSOLIDATED BALANCE SHEETS

(Unaudited)

	SEPTEMBER 30,			MARCH 31,
	2018			2018
Assets
Current assets:
Cash and cash equivalents	$	31,948,886		$	25,353,360
Accounts receivable		122,093			174,558
Inventories		1,947,262			2,383,382
Purchase deposit to related party		1,286,166			1,412,864
Prepaid leases – current portion		856,662			741,583
Total current assets		36,161,069			30,065,747
Prepaid leases		1,319,382			641,349
Development cost of acer truncatum bunge planting		45,459,621			48,984,881
Plant, property, and equipment, net		14,761,960			16,793,413
Intangible assets, net		10,225,176			11,862,017
Deferred tax assets		182,405			200,387
Security deposit to related party		1,453,657			1,590,305
Total assets	$	109,563,270		$	110,138,099
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and other accrued expenses	$	107,582		$	372,782
Advance from customers		-			445,829
Taxes payable		2,089,423			1,164,198
Total current liabilities		2,197,005			1,982,809
Stockholders' Equity
Preferred stock, par value $0.001 per share; 5,000,000 shares authorized, zero shares issued and outstanding		-			-
12% Preferred stock, par value $500 per share; 45 shares authorized, issued and outstanding		22,500			22,500
Common stock, par value $0.001 per share; 100,000,000 shares authorized;  29,839,168 and 29,789,168 shares issued and outstanding at September 30, 2018 and March 31, 2018, respectively		29,839			29,789
Additional paid-in capital		4,363,788			4,322,838
Statutory reserve		1,828,504			1,828,504
Retained earnings		103,015,416			94,447,937
Accumulated other comprehensive income (loss)		(4,917,587	)		4,455,017
Total stockholders' equity attributable to the Company		104,342,460			105,106,585
Noncontrolling interest		3,023,805			3,048,705
Total stockholders' equity		107,366,265			108,155,290
Total liabilities and stockholders' equity	$	109,563,270		$	110,138,099

The accompanying notes are an integral part of these consolidated financial statements.

F - 1

SPRING PHARMACEUTICAL GROUP, INC.

(FORMERLY KNOWN AS CHINA YCT INTERNATIONAL GROUP, INC.)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

	THREE MONTHS ENDED					SIX MONTHS ENDED
	SEPTEMBER 30,					SEPTEMBER 30,
	2018			2017		2018			2017
Sales	$	18,684,939		$	13,866,784	$	39,573,786		$	31,001,649
Cost of Goods Sold (including $3,785,996 and $3,020,708 from a related party for the three months ended September 30, 2018 and 2017, respectively; including $8,176,320 and $7,309,643 from a related party for the six months ended September 30, 2018 and 2017, respectively)		10,619,845			8,811,390		22,584,545			19,098,538
Gross profit		8,065,094			5,055,394		16,989,241			11,903,111
Operating expenses
Selling expenses		1,312,878			1,082,147		2,704,481			2,318,439
General and administrative expenses		1,110,995			868,258		2,192,044			1,776,663
Research and development expenses		68,424			62,033		391,157			126,411
Total operating expenses		2,492,297			2,012,438		5,287,682			4,221,513
Income from operations		5,572,797			3,042,956		11,701,559			7,681,598
Gain on disposal of acer truncatum bunge plants		-			-		-			573,092
Interest income		34,972			31,199		75,045			56,302
Income before income tax provision		5,607,769			3,074,155		11,776,604			8,310,992
Income tax provision		1,401,942			768,539		2,944,151			2,077,748
Net income		4,205,827			2,305,616		8,832,453			6,233,244
Less: Net income attributable to noncontrolling interest		126,175			69,168		264,974			186,997
Net income attributable to the Company		4,079,652			2,236,448		8,567,479			6,046,247
Other comprehensive income (loss):
Foreign currency translation adjustment		(4,125,116	)		1,908,799		(9,662,478	)		3,564,300
Comprehensive income (loss)		80,711			4,214,415		(830,025	)		9,797,544
Less: Comprehensive income (loss) attributable to noncontrolling interest		2,422			126,432		(24,900	)		292,747
Comprehensive income (loss) attributable to the Company	$	78,289		$	4,087,983	$	(805,125	)	$	9,504,797
Earnings per common share
Basic and Diluted	$	0.14		$	0.08	$	0.29		$	0.20
Weighted average number of common shares outstanding
Basic and Diluted		29,839,168			29,789,168		29,821,682			29,789,168

The accompanying notes are an integral part of these consolidated financial statements.

F - 2

SPRING PHARMACEUTICAL GROUP, INC.

(FORMERLY KNOWN AS CHINA YCT INTERNATIONAL GROUP, INC.)

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	SIX MONTHS ENDED
	SEPTEMBER 30,
	2018			2017
Cash Flows From Operating Activities:
Net income	$	8,832,453		$	6,233,244
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of plant, property and equipment		682,403			615,112
Amortization of intangible assets		644,301			628,768
Amortization of prepaid leases		446,857			431,644
Stock-based compensation expenses		41,000			-
Deferred taxes		797			278,054
Gain on disposal of acer truncatum bunge plants		-			(573,092	)
Changes in operating assets and liabilities:
Purchase deposit to vendors		-			664,506
Inventory		241,332			3,230,636
Accounts receivable		39,087			1,158,886
Cash received from cancellation of lease		-			56,732
Prepaid expenses		-			(279,239	)
Prepaid leases		(1,398,241	)		-
Taxes payable		1,069,603			(1,155,471	)
Purchase deposit and accounts payable to related party, net		5,526			(686,806	)
Accounts payable and other accrued expenses		(243,253	)		24,034
Advance from customers		(425,147	)		113,615
Net cash provided by operating activities		9,936,718			10,740,623
Cash Flows From Investing Activities:
Acquisition of property, plant and equipment		(68,483	)		(2,110,189	)
Proceeds from disposal of acer truncatum bunge plants		-			2,114,541
Development cost of acer truncatum bunge planting		(713,375	)		(2,420,741	)
Net cash used in investing activities		(781,858	)		(2,416,389	)
Effect of exchange rate changes on cash and cash equivalents		(2,559,334	)		558,074
Net increase in cash and cash equivalents		6,595,526			8,882,308
Cash and cash equivalents at beginning of period		25,353,360			10,308,622
Cash and cash equivalents at end of period	$	31,948,886		$	19,190,930
Supplemental disclosures of cash flow information:
Cash paid during the periods for:
Interest	$	-		$	-
Income taxes	$	1,966,462		$	2,790,002

The accompanying notes are an integral part of these consolidated financial statements.

F - 3

SPRING PHARMACEUTICAL GROUP, INC.

(FORMERLY KNOWN AS CHINA YCT INTERNATIONAL GROUP, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 - ORGANIZATION AND PRINCIPAL ACTIVITIES

On August 28, 2018, China YCT International Group, Inc. filed a Certificate of Amendment to its Articles of Incorporation with the State of Delaware to change its corporate name from China YCT International Group, Inc. to Spring Pharmaceutical Group, Inc. ("Spring Pharmaceutical"). The name change was effective as of the filing of the Certificate of Amendment with the State of Delaware.
 

Spring Pharmaceutical, through its 100% owned subsidiary Landway Nano Bio-Tech, Inc. ("Landway Nano"), incorporated in Delaware, owns 97% of Shandong Spring Pharmaceutical Co., Ltd. ("Shandong Spring"), incorporated in the People's Republic of China ("PRC"). Spring Pharmaceutical and its subsidiaries are collectively referred to as "the Company".  The Company, through its 97% owned subsidiary, Shandong Spring, is engaged in the business of (i) distributing health care supplement products, (ii) developing, manufacturing, and selling Huoliyuan capsules, a prescription medicine, and (iii) developing the acer truncatum bunge planting bases and selling acer truncatum seed oil in the PRC. Acer truncatum bunge plants are a species of maple tree.

NOTE 2 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and the rules and regulations of the Securities and Exchange Commission. In the opinion of management, the unaudited financial statements have been prepared on the same basis as the annual financial statements and reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the financial position as of September 30, 2018 and the results of operations and cash flows for the periods ended September 30, 2018 and 2017. The financial data and other information disclosed in these notes to the interim financial statements related to these periods are unaudited. The results for the three and six months ended September 30, 2018 are not necessarily indicative of the results to be expected for any subsequent periods or for the entire year ending March 31, 2019. The balance sheet on March 31, 2018 has been derived from the audited financial statements at that date.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to the Securities and Exchange Commission's rules and regulations.

These unaudited financial statements should be read in conjunction with our audited financial statements and notes thereto for the year ended March 31, 2018 as included in our Annual Report on Form 10-K. 

Principles of consolidation

The consolidated financial statements include the financial statements of Spring Pharmaceutical, Landway Nano and its 97% owned subsidiary, Shandong Spring.  All inter-company transactions and balances are eliminated in consolidation.

Use of estimates

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

Foreign currency translation

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

F - 4

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

	September 30		September 30
	2018		2017
Period End Exchange Rate (RMB/USD)		6.8792		6.6369
Average Period Exchange Rate (RMB/USD)		6.5940		6.7569

Recent accounting pronouncements

The Company's management has evaluated all the recently issued accounting pronouncements during the quarter ended September 30, 2018 and does not believe that they will have a material effect on the Company's consolidated financial position and results of operations. 

NOTE 3 - INVENTORIES

The components of inventories were as follows: 

	September 30,		March 31,
	2018		2018
Raw materials	$	786,007	$	233,138
Packaging materials		190,477		652,179
Work-in-process		152,051		686,234
Finished goods		818,727		811,831
Total Inventories	$	1,947,262	$	2,383,382

NOTE 4 – PLANT, PROPERTY, AND EQUIPMENT, NET

The components of plant, property and equipment were as follows:

	September 30,			March 31,
	2018			2018
Machinery and equipment	$	3,285,970		$	3,594,861
Office equipment and automobiles		769,106			769,589
Building		12,437,555			13,606,722
Leasehold improvements		3,876,194			4,240,568
Subtotal		20,368,825			22,211,740
Less: Accumulated depreciation and amortization		(5,606,865	)		(5,418,327	)
Total plant, property and equipment, net	$	14,761,960		$	16,793,413

The depreciation and amortization expense for the three months ended September 30, 2018 and 2017 was $329,637 and $327,864, respectively.

The depreciation and amortization expense for the six months ended September 30, 2018 and 2017 was $682,403 and $615,112, respectively.

F - 5

NOTE 5 - TAXES PAYABLE

Taxes payable at September 30, 2018 and March 31, 2018 were as follows:

	September 30,		March 31,
	2018		2018
Corporate income tax - foreign	$	1,411,597	$	519,875
Value-added tax - foreign		610,034		580,429
Other tax and fees - foreign		67,792		63,894
Total tax payable	$	2,089,423	$	1,164,198

NOTE 6 - INCOME TAXES
      

Spring Pharmaceutical and Landway Nano were incorporated in the United States of America and are subject to United States federal taxation. No provisions for income taxes have been made, as there was no taxable income from U.S. operations for the three and six months ended September 30, 2018 and 2017. The Company has net loss carryforward of approximately $22,000, which will expire in 2037. The Company has set up 100% valuation allowance on deferred tax assets resulting from net operating loss incurred in the U.S. 

The U.S. Tax Cuts and Jobs Act (the "Act") was enacted on December 22, 2017 and introduces significant changes to U.S. income tax law. Effective in 2018, the Tax Act reduces the U.S. statutory tax rate from 35% to 21% and creates new taxes on certain foreign-sourced earnings and certain related-party payments.

The Company's Chinese subsidiary is governed by the Income Tax Law of the PRC concerning the privately run and foreign invested enterprises, which are generally subject to tax at a statutory rate of 25% on income reported in the statutory financial statements after appropriate tax adjustments.

Dividend payments by PRC subsidiaries are limited by certain statutory regulations in the PRC. No dividends may be paid by PRC subsidiaries without first receiving prior approval from SAFE. Dividend payments are restricted to 90% of after-tax profits.

The Company had not provided deferred taxes on undistributed earnings attributable to its PRC subsidiaries as they were to be permanently reinvested. On February 22, 2008, the Ministry of Finance and State Administration of Taxation jointly issued Cai Shui 2008 Circular 1, "Circular 1." According to Article 4 of Circular 1, distributions of accumulated profits earned by foreign investment enterprises ("FIE") prior to January 1, 2008 to their foreign investors would be exempt from withholding tax ("WHT"), while distribution of the profits earned by a FIE after January 1, 2008 to its foreign investors should be subject to WHT.

Prior to the enactment of the Act, since Shandong Spring intends to reinvest its earnings to further expand its businesses in mainland China, it does not intend to declare dividends to their immediate foreign holding companies in the foreseeable future. Accordingly, the Company has not recorded any deferred taxes in relation to US tax on the cumulative amount of undistributed retained earnings since January 1, 2008. Under the "#1703. Treatment of deferred foreign income upon transition to new participation exemption system-deemed repatriation" of the Act, U.S. shareholders owning at least 10% of a foreign subsidiary generally must include income, for the subsidiary's last tax year beginning before 2018, the shareholder's pro rata share of the accumulated post-'86 historical E&P of the foreign subsidiary as of the "measurement date" to the extent such E&P has not been previously subject to U.S. tax.  The Company assessed its income tax effects of the Act and concluded that it had no one-time transition tax liability on its cumulative amount of undistributed retained earnings since January 1, 2008 as the Company had enough foreign tax credits available to offset the resulting incremental tax.

F - 6

The reconciliation of income tax expense at the U.S. statutory rate of 21% and 35% in 2018 and 2017, to the Company's effective tax rate is as follows:

	Six Months Ended
	September 30,
	2018			2017
	21%			35%
Tax at U.S. statutory rate		$	2,473,087		$	2,908,847
Tax rate difference between China and U.S.			471,064			(831,099	)
Effective tax		$	2,944,151		$	2,077,748

The provisions for income taxes are summarized as follows: 

	Six Months Ended
	September 30,
	2018			2017
Current		$	2,943,354		$	1,799,694
Deferred			797			278,054
Total		$	2,944,151		$	2,077,748

NOTE 7 - STOCKHOLDERS' EQUITY

On June 4, 2018, the Company issued 50,000 shares of common stock to a consultant for marketing consulting services, which were valued at $41,000 based on the quoted market price at issuance.

NOTE 8 - RELATED PARTY TRANSACTIONS AND BALANCES

Balances:

(i) Security deposit to related party:

The security deposit to related party of $1,453,657 represents the deposit paid to Shandong Yongchuntang Group Co., Ltd ("Shandong Yongchuntang") on January 4, 2017 for using the direct-sales license issued to Shandong Yongchuntang. The amount is non-interest bearing and not secured. Shandong Yongchuntang owns 3% of the equity of Shandong Spring.

(ii) Trade related balance with related party:

On September 30, 2018 and March 31, 2018, purchase deposit to related party of $1,286,166 and $1,412,864, respectively, pertains to a purchase deposit paid in respect of the purchase of healthcare products from Shandong Yongchuntang.

Transactions:

(i) Purchase from related party (See Note 9)

Contingency:

The Company is authorized by Shandong Yongchuntang to sell Shandong Yongchuntang's products using the direct-sales license issued to Shandong Yongchuntang.  As a condition for using the direct-sales license, the Company needs to make 20% sales increase each year based on 95% of sales in the year 2014.  If the Company cannot meet this sales target in any year from April 1, 2017 to June 30, 2020, a security deposit of approximately $1.5 million will be used as an annual fee for using the direct-sales license.  There is a risk that the Company may fail to meet the sales target and may need to pay approximately $1.5 million in the subsequent years.

F - 7

NOTE 9 - MAJOR CUSTOMERS AND VENDORS

The Company sold products through ten distributors during the three and six months ended September 30, 2018 and 2017. Sales to five distributors represented 17%, 14%, 12%, 11%, and 11% of total sales for the three months ended September 30, 2018. Sales to four distributors represented 19%, 16%, 15% and 13% of total sales for the three months ended September 30, 2017.

The Company's sales throughsix distributors represented 16%, 14%, 12%, 12%, 11% and 10% of total sales for the six months ended September 30, 2018. Sales to four distributors represented 17%, 17%, 13% and 13% of total sales for the six months ended September 30, 2017.

The Company sold 11 products during the three months ended September 30, 2018 and 2017, respectively. Sales of three products represented38%, 25%, and 14% of total sales for the three months ended September 30, 2018.  Sales of three products represented50%, 10%, and 10% of total sales for the three months ended September 30, 2017. 

The Company sold 11 products during the six months ended September 30, 2018 and 2017, respectively. Sales of three products represented 37%, 25%, and 12% of total sales for the six months ended September 30, 2018.  Sales of four products represented 43%, 14%, 10% and 10% of total sales for the six months ended September 30, 2017.

The Company purchases certain of its products from Shandong Yongchuntang, a related party, according to the purchase contract signed between the Company and Shandong Yongchuntang. Pursuant to the contract dated February 20, 2017, the Company agreed to purchase nine products from Shandong Yongchuntang at fixed prices. On February 21, 2018, the Company further renewed the purchase contract with Shandong Yongchuntang for a term of one year ending on February 25, 2019.  Pursuant to this most recently renewed one-year contract, the Company continues to purchase the nine products from Shandong Yongchuntang at fixed prices without changes in any terms of the previous contract. Total purchases from Shandong Yongchuntang represented 43% and 43% of our total purchases during the three months ended September 30, 2018 and 2017, respectively. The purchases from three other vendors represented 20%, 13% and 12% of the Company's total purchases for the three months ended September 30, 2018. The purchases from three other vendors represented 20%, 17% and 10% of the Company's total purchases for the three months ended September 30, 2017.

                                  

Total purchases from Shandong Yongchuntang represented 40% and 49% of our total purchases during the six months ended September 30, 2018 and 2017, respectively.  The purchases from three other vendors represented 26%, 11%, and 11% of the Company's total purchases for the six months ended September 30, 2018. The purchases from two other vendors represented 20% and 16% of the Company's total purchases for the six months ended September 30, 2017.

NOTE 10 – SUBSEQUENT EVENTS

The Company has evaluated subsequent events that have occurred after the date of the balance sheet through the date of issuance of these consolidated financial statements and determined that no subsequent event requires recognition or disclosure to the consolidated financial statements.

F - 8

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

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

Overview
 

We were incorporated in the State of Florida in January 1989 and reincorporated in the State of Delaware on April 4, 2007. We operate principally through our wholly-owned subsidiary, Landway Nano Bio-Tech, Inc. ("Landway Nano"), incorporated in Delaware, which, in turn, owns 97% of Shandong Spring Pharmaceutical Co., Ltd. ("Shandong Spring"), incorporated in the People's Republic of China (the "PRC"). We, through Shandong Spring, are engaged in the business of (i) distributing health care supplement products, (ii) developing, manufacturing, and selling Huoliyuan capsules, a prescription medicine, and (iii) developing the acer truncatum bunge planting bases and selling acer truncatum seed oil in the PRC. Acer truncatum bunge plants are a species of maple tree.

The Company's proprietary product, Huoliyuan capsule, is a China Food and Drug Administration ("CFDA") approved prescription TCM that has a wide range of therapeutic benefits. It is the only TCM of its kind made in slow-release capsule form for improved absorption rate and therapeutic effects.

Since July 2015, the Company has also produced acer truncatum bunge seed oil and sold the product to customers through an Internet direct sales system operated by the Company pursuant to an agreement with Shandong Yongchuntang.  Currently, the acer truncatum bunge seed oil is extracted from acer truncatum pods that are purchased from third party vendors. We expect that approximately 10% of our self-grown acer truncatum pods will be ready for use in production during the last quarter of 2018, and the rest of the self-grown acer truncatum pods will be gradually ready for use in production during the next two to three years depending upon the timing of their harvest. The Company currently has a 5,880 mu (approximately 2,324.77 acres) acer truncatum bunge plantation base coupled with modern production facilities. We believe it is the only company in China able to achieve industrial-scale production and vertically integrated capability for acer truncatum bunge seed oil products.

On March 18, 2017, the Company entered into an Acquisition Agreement on Acer Truncatum Industrial Project (the "Agreement") with Shandong Yongchuntang.  Pursuant to the Agreement, the Company agreed to transfer a 3% equity interest in Shandong Spring in exchange for tangible and intangible assets related to the Acer Truncatum Industrial Project (the "Project"), which were owned by Shandong Yongchuntang. As a result of this transaction, Shandong Yongchuntang has become a 3% shareholder of Shandong Spring.

On August 28, 2018, we filed a Certificate of Amendment to our Articles of Incorporation with the State of Delaware to change our Company's name from China YCT International Group, Inc. to Spring Pharmaceutical Group, Inc. The name change was effective as of the filing of the Certificate of Amendment with the State of Delaware.

1

Results of Operations

The following table sets forth information from our statements of comprehensive income (loss) for the three months ended September 30, 2018 and 2017, in dollars:
                

	Three Months Ended
	September 30,				$			%
	2018		2017		Change			Change
Sales		18,684,939		13,866,784		4,818,155			34.7	%
Cost of Goods sold		10,619,845		8,811,390		1,808,455			20.5	%
Gross Profit		8,065,094		5,055,394		3,009,700			59.5	%
Operating Expenses		2,492,297		2,012,438		479,859			23.8	%
Operating Income		5,572,797		3,042,956		2,529,841			83.1	%
Interest Income		34,972		31,199		3,773			12.1	%
Income Tax Provision		1,401,942		768,539		633,403			82.4	%
Net Income		4,205,827		2,305,616		1,900,211			82.4	%
Comprehensive Income		80,711		4,214,415		(4,133,704	)		(98.1	)%

The following table sets forth information from our statements of comprehensive income (loss) for the six months ended September 30, 2018 and 2017, in dollars:

	Six Months Ended
	September 30,					$			%
	2018			2017		Change			Change
Sales		39,573,786			31,001,649		8,572,137			27.7	%
Cost of Goods sold		22,584,545			19,098,538		3,486,007			18.3	%
Gross Profit		16,989,241			11,903,111		5,086,130			42.7	%
Operating Expenses		5,287,682			4,221,513		1,066,169			25.3	%
Operating Income		11,701,559			7,681,598		4,019,961			52.3	%
Interest Income		75,045			56,302		18,743			33.3	%
Gain on Disposal of Acer Truncatum Bunge Plants		-			573,092		(573,092	)		(100.0	)%
Income Tax Provision		2,944,151			2,077,748		866,403			41.7	%
Net Income		8,832,453			6,233,244		2,599,209			41.7	%
Comprehensive Income (Loss)		(830,025	)		9,797,544		(10,627,569	)		(108.5	)%

2

Revenue

During the three months ended September 30, 2018, we realized $18,684,939 in revenue, representing an increase of 34.7% or $4,818,155 as compared to $13,866,784 for the same period in 2017.  The increase in revenue in RMB was 38.7% as compared to the three months ended September 30, 2017, but 4.0% of the increase was offset by fewer USD converted from RMB due to RMB depreciation that occurred in the three months ended September 30, 2018, compared with the same period in 2017.  The total 38.7% revenue increase in RMB was due to the increased sales of health care products, acer truncatum bunge seed oil, and Huoliyuan Capsule.

      

During the six months ended September 30, 2018, we realized $39,573,786 in revenue, representing an increase of 27.7%or $8,572,137 as compared to $31,001,649 for the same period in 2017.  The increase in revenue in RMB was 24.6%as compared to the six months ended September 30, 2017. The other 3.1% of the increase in dollar denominated revenue was attributable to the RMB appreciation during the six months ended September 30, 2018 compared with the same period in 2017. The total 24.6% revenue increase in RMB was due to the increased sales of health care products, acer truncatum bunge seed oil, and Huoliyuan Capsule.

Part of our revenues was generated by us as the distributor for the health care products manufactured by Shandong Yongchuntang. We purchase the products from Shandong Yongchuntang, a related party, according to the purchase contract signed between the Company and Shandong Yongchuntang. Pursuant to the renewed one-year contract dated February 20, 2017, the Company agreed to purchase nine products from Shandong Yongchuntang at fixed prices. On February 21, 2018, the Company further renewed the purchase contract with Shandong Yongchuntang for a term of one year ending on February 25, 2019.  Pursuant to this most recently renewed one-year contract, the Company continues to purchase the nine products from Shandong Yongchuntang at fixed prices without changes in any terms of the previous contract. During the three months ended September 30, 2018, 37.0% of our total revenue was generated as the distributor of Shandong Yongchuntang, compared to 39.8% during the three months ended September 30, 2017.  During the six months ended September 30, 2018, 37.7% of our total revenue was generated as the distributor of Shandong Yongchuntang, compared to 43.1% during the six months ended September 30, 2017. 

For the three months ended September 30, 2018, our revenue from sales of the health care products was $6,918,146, representing an increase of 25.3% or $1,398,948 as compared to $5,519,198 for the same period in 2017.  For the six months ended September 30, 2018, our revenue from sales of the health care products was $14,928,744, representing an increase of 11.7% or $1,564,545 as compared to $13,364,199 for the same period in 2017.  The increase in sales of the health care products was primarily due to the growth of our customer basis and the internet direct-sales.

The sales of Huoliyuan Capsule accounted for 37.8% of our revenue during the three months ended September 30, 2018, compared to 49.4% during the three months ended September 30, 2017. The sales of Huoliyuan Capsule accounted for 37.1% of our revenue during the six months ended September 30, 2018, compared to 42.7% during the six months ended September 30, 2017. The sales of the Huoliyuan Capsule during the three months ended September 30, 2018 were $7,067,046, an increase of 3.1% or $210,677 as compared to the three months ended September 30, 2017. The sales of the Huoliyuan Capsule during the six months ended September 30, 2018 were $14,697,336, an increase of 10.9% or $1,445,925 as compared to the six months ended September 30, 2017. The increase in sales of Huoliyuan Capsule was primarily due to the stabilization of the market competition.

3

Since July 2015, we have produced acer truncatum bunge seed oil and sold the product to customers through our distributors.  The acer truncatum bunge seed oil was extracted from the acer truncatum pods that were purchased from third party vendors.  We expect that approximately 10%of our self-grown acer truncatum pods will be ready for use in production during the last quarter of 2018, and the rest of the self-grown acer truncatum pods will be gradually ready for use in production during the next two to three  years depending upon the timing of their harvest. During the three months ended September 30, 2018, 25.2% of our total revenue was generated from the sales of acer truncatum oil products, compared to 10.8% during the same period in 2017. During the three months ended September 30, 2018, the sales of acer truncatum bunge seed oil was $4,699,747, representing an increase of 215.2% or $3,208,530 compared to $1,491,217 for the same period in 2017. During the six months ended September 30, 2018, 25.2% of our total revenue was generated from the sales of acer truncatum oil products, compared to 14.2% during the same period in 2017. During the six months ended September 30, 2018, the sales of acer truncatum bunge seed oil was $9,947,706, representing an increase of 126.8% or $5,561,667 compared to $4,386,039 for the same period in 2017. The significant increase in sales of acer truncatum seed oil products was primarily due to the continuing promotion of our acer truncatum bunge seed oil by organizing conferences to introduce the features and benefits of the product to our distributors and customers.

       

The following is the sales breakdown by products during the three months ended September 30, 2018 and 2017:

	For the Three Months Ended September 30,
	2018				2017
Health care supplements		6,918,146	37.0	%		5,519,198	39.8	%
Drugs (Huoliyuan capsule)		7,067,046	37.8	%		6,856,369	49.4	%
Acer truncatum oil		4,699,747	25.2	%		1,491,217	10.8	%
Total		18,684,939	100.0	%		13,866,784	100.0	%

The following is the sales breakdown by products during the six months ended September 30, 2018 and 2017:

	For the Six Months Ended September 30,
	2018				2017
Health care supplements		14,928,744	37.7	%		13,364,199	43.1	%
Drugs (Huoliyuan capsule)		14,697,336	37.1	%		13,251,411	42.7	%
Acer truncatum oil		9,947,706	25.2	%		4,386,039	14.2	%
Total		39,573,786	100.1	%		31,001,649	100.1	%

Cost of Goods Sold

Our cost of goods sold were comprised primarily of the cost of finished goods we purchased from Shandong Yongchuntang, the raw materials we purchased from third party vendors, and the manufacturing costs of acer truncatum bunge seed oil, and Huoliyuan Capsule. The cost of manufacturing Huoliyuan Capsule was approximately 46.5% and 55.5% of the total cost of goods sold during the three months ended September 30, 2018 and 2017, respectively. The cost of manufacturing Huoliyuan Capsule was approximately 45.9% and 48.3% of the total cost of goods sold during the six months ended September 30, 2018 and 2017, respectively. The cost of manufacturing acer truncatum bunge seed oil was approximately 17.3% and 9.8% of the total cost of goods sold during the three months ended September 30, 2018 and 2017, respectively. The cost of manufacturing acer truncatum bunge seed oil was approximately 17.3% and 12.9% of the total cost of goods sold during the six months ended September 30, 2018 and 2017, respectively.

During the three months ended September 30, 2018, our cost of goods sold totaled $10,619,845, representing an increase of $1,808,455 or 20.5% as compared to $8,811,390 during the three months ended September 30, 2017. The percentages of the cost of goods sold to total revenues decreased from 63.5% for the three months ended September 30, 2017 to 56.8% for the three months ended September 30, 2018.   During the six months ended September 30, 2018, our cost of goods sold totaled $ 22,584,545, representing an increase of $3,486,007 or 18.3% as compared to $19,098,538 during the six months ended September 30, 2017. The percentages of the cost of goods sold to total revenues decreased from 61.6% for the six months ended September 30, 2017 to 57.1% for the six months ended September 30, 2018.  The decrease in the percentages of the costs of goods sold to total revenues was primarily due to the decreased raw material, packaging and manufacturing cost for acer truncatum bunge seed oil products.

4

Gross Profit

Gross profit for the three months ended September 30, 2018 was $8,065,094, an increase of 59.5% or $3,009,700 as compared to the same period for the prior year. The overall gross profit as a percentage of net revenues was approximately 43.2% for the three months ended September 30, 2018, an increase of 6.7% from 36.5% for the same period of 2017. The gross profit as percentage of net revenues for the health care products was approximately 44.3% for the three months ended September 30, 2018, a slight decrease from 44.5% for the same period of 2017.  The gross profit as percentage of net revenues for Huoliyuan was approximately 30.2% for the three months ended September 30, 2018, a slight increase from 28.7% for the same period of 2017. The gross profit as percentage of net revenues for acer truncatum bunge seed oil was approximately 61.0% for the three months ended September 30, 2018, increased from 42.1% for the same period of 2017. The higher gross profit as percentage of net revenue for the acer truncatum bunge seed oil during the three months ended September 30, 2018 was primarily due to the decreased raw material, packaging and manufacturing cost.

The comparison of the gross profits for the three months ended September 30, 2018 and 2017 is as follows:

	September 30, 2018		GrossProfit Margin			September 30, 2017		GrossProfit Margin			Change in $		Variance
Health care supplements		3,066,425		44.3	%		2,456,533		44.5	%		609,892		24.8	%
Drugs (Huoliyuan capsule)		2,131,152		30.2	%		1,970,445		28.7	%		160,707		8.2	%
Acer truncatum oil		2,867,517		61.0	%		628,416		42.1	%		2,239,101		356.3	%
Total		8,065,094		43.2	%		5,055,394		36.5	%		3,009,700		59.5	%

Gross profit for the six months ended September 30, 2018 was $16,989,241, an increase of 42.7% or $5,086,130 as compared to the same period for the prior year. The overall gross profit as a percentage of net revenues was approximately 42.9% for the six months ended September 30, 2018, increased from 38.4% for the same period of 2017. The gross profit as percentage of net revenues for the health care products was approximately 44.4% for the six months ended September 30, 2018, a slight decrease from 44.6% for the same period of 2017.  The gross profit as percentage of net revenues for Huoliyuan was approximately 29.4% for the six months ended September 30, 2018, a slight decrease from 30.4% for the same period of 2017. The gross profit as percentage of net revenues for acer truncatum bunge seed oil was approximately 60.7% for the six months ended September 30, 2018, increased from 43.7% for the same period of 2017. The higher gross profit as percentage of net revenue for the acer truncatum bunge seed oil during the six months ended September 30, 2018 was primarily due to the decreased raw material, packaging and manufacturing cost.

The comparison of the gross profits for the six months ended September 30, 2018 and 2017 is as follows:

	September 30, 2018		GrossProfit Margin			September 30, 2017		GrossProfit Margin			Change in $		Variance
Health care supplements		6,623,716		44.4	%		5,964,647		44.6	%		659,069		11.0	%
Drugs (Huoliyuan capsule)		4,324,819		29.4	%		4,022,212		30.4	%		302,607		7.5	%
Acer truncatum oil		6,040,706		60.7	%		1,916,252		43.7	%		4,124,454		215.2	%
Total		16,989,241		42.9	%		11,903,111		38.4	%		5,086,130		42.7	%

Research and Development Expenses

Our R&D expenses for the three months ended September 30, 2018 were $68,424 or approximate 0.4% of total corresponding revenue, an increase of $6,391 or 10.3%, as compared to $62,033 or approximately 0.4% of total corresponding revenue for the three months ended September 30, 2017.  Our R&D expenses for the six months ended September 30, 2018 were $391,157 or approximate 1.0% of total corresponding revenue, an increase of $264,746 or 209.4%, as compared to $126,411 or approximately 0.4% of total corresponding revenue for the six months ended September 30, 2017.  The increase in R&D expenses was primarily due to the increased cost of the materials used by the R&D department.

Our long-term goal is to utilize advanced biological technology to refine and extract the beneficial compounds in plants that have traditionally been known to have medicinal benefits, primarily gingko and acer truncatum bunge plants. As of September 30, 2018, we had 27 staff in R&D department.

5

Operating expenses

Our selling expenses consist primarily of sales commissions, advertising and promotion expenses, freight charges and related compensation. Our selling expenses for the three months ended September 30, 2018 were $1,312,878 or 7.0% of our total revenue for the period, representing a decrease on the percentage of total revenue from 7.8% for the prior year's quarter ended September 30, 2017. Our selling expenses for the three months ended September 30, 2018 increased by 21.3% or $230,731 as compared to the same period in the prior year. The increase in selling expenses was primarily due to the increase in shipping cost and sales commission as a result of increased sales.

Our selling expenses for the six months ended September 30, 2018 were $2,704,481 or 6.8% of our total revenue for the period, representing a decrease on the percentage of total revenue from 7.5% for the prior year's six months ended September 30, 2017. Our selling expenses for the six months ended September 30, 2018 increased by 16.7% or $386,042 as compared to the same period in the prior year. The increase in selling expenses was primarily due to the increase in shipping cost and sales commission as a result of increased sales.

Our G&A expenses for the three months ended September 30, 2018 were $1,110,995 or 5.9% of our total revenue for the period, representing a decrease on the percentage of total revenue from 6.3% for the prior year's quarter ended September 30, 2017.  Our G&A expenses for the three months ended September 30, 2018 increased by 28.0% or $242,737 as compared to the same period in the prior year.  The increase in G&A expenses was primarily due to the increase in legal and consulting fees.

Our G&A expenses for the six months ended September 30, 2018 were $2,192,044 or 5.5% of our total revenue for the period, representing a slight decrease on the percentage of total revenue from 5.7% for the prior year's six months ended September 30, 2017.  Our G&A expenses for the six months ended September 30, 2018 increased by 23.4% or $415,381 as compared to the same period in the prior year. The increase in G&A expenses was primarily due to the increase in legal and consulting fees.
 

Net Income

As a result of above, during the three months ended September 30, 2018, we realized net income of $4,205,827, representing an 82.4% or $1,900,211 increase, compared to $2,305,616 during the three months ended September 30, 2017. The increase was mainly due to the higher revenue from sales of acer truncatum bunge seed oil and health care supplement and the lower production cost for acer truncatum bunge seed oil. 

During the six months ended September 30, 2018, we realized net income of $8,832,453, representing a 41.7% or $2,599,209 increase, compared to $6,233,244 during the six months ended September 30, 2017. The increase was mainly due to the higher revenue from sales of all products and the lower production cost for acer truncatum bunge seed oil.

Income Taxes
 

Income tax expense increased by $633,403 during the three months ended September 30, 2018, as compared to the prior quarter ended September 30, 2017, as a result of the increase in income from operation.

Income tax expense increased by $866,403 during the six months ended September 30, 2018, as compared to the six months ended September 30, 2017, as a result of the increase in income from operation.

Comprehensive Income (Loss)

Our business operates entirely in Chinese RMB, but we report our results in our SEC filings in U.S. Dollars. The conversion of our accounts from RMB to Dollars results in translation adjustments, which are reported as a middle step between net income and comprehensive income. The net income is added to the retained earnings on our balance sheet while the translation adjustment is added to a line item on our balance sheet labeled "Accumulated other comprehensive income (loss)," since it is more reflective of changes in the relative values of U.S. and Chinese currencies than of the success of our business. During the three months ended September 30, 2018, the effect of converting our financial results to Dollars was a loss of $4,125,116 to our other comprehensive income, as compared to income of $1,908,799 during the three months ended September 30, 2017 as a result of the currency exchange rate fluctuation.

During the six months ended September 30, 2018, the effect of converting our financial results to Dollars was a loss of $9,662,478 to our other comprehensive income, as compared to income of $3,564,300 during the six months ended September 30, 2017 as a result of the currency exchange rate fluctuation.  

6

Noncontrolling interest

On March 18, 2017, Shandong Yongchuntang became a 3% shareholder of Shandong Spring.  During the three months ended September 30, 2018, $2,422 of comprehensive income was attributable to Shandong Yongchuntang.

During the six months ended September 30, 2018, $24,900 of comprehensive loss was attributable to Shandong Yongchuntang.

          
Liquidity and Capital Resources

Our principal sources of liquidity were generated from our operations. As of September 30, 2018, we had $33,964,064 in working capital, an increase of $5,881,126 or 20.9% as compared to $28,082,938 in working capital as of March 31, 2018. Based on our current operating plan, we believe that existing cash and cash equivalents balances, and the funds to be generated by operations will be sufficient to meet our working capital and capital requirements for our current operations for at least the next 12 months. Our operations produced positive cash flow of $9,936,718 during the six months ended September 30, 2018. We expect our marketing activities to continue to help generate positive cash flow.  The operations of our own manufacturing since fiscal year 2010 and the development of our own acer truncatum bunge planting bases have put some pressure on our cash flow. We may be required to seek additional capital and reduce certain spending as needed on an on-going basis. There can be no assurance that any additional financing will be available on acceptable terms.  

In order to fully implement our business plan, however, we will require capital contributions in excess of our current asset value. While our self-generated funds are sufficient for bringing our manufacturing facility to an operating level that assures profitability, we still need additional funding for market development and further promotion of our products. Our expectation, therefore, is that we will seek to access the capital markets in both the U.S. and China to obtain the funds we need. At present, we have no commitment from any source for additional funds and there can be no assurance that the funds will be available on terms acceptable to us.
 

The following table sets forth a summary of our cash flows for the periods indicated:

	For the Six Months Ended September 30,
	2018			2017			Change in $			Change in %
Net cash provided by operating activities	$	9,936,718		$	10,740,623			(803,905	)		(7.5	)%
Net cash used in investing activities	$	(781,858	)	$	(2,416,389	)		1,634,531			(67.6	)%
Effect of exchange rate change on cash and cash equivalents	$	(2,559,334	)	$	558,074			(3,117,408	)		(558.6	)%
Net increase in cash and cash equivalents	$	6,595,526		$	8,882,308			(2,286,782	)		(25.7	)%
Cash and cash equivalents, beginning balance	$	25,353,360		$	10,308,622			15,044,738			145.9	%
Cash and cash equivalents, ending balance	$	31,948,886		$	19,190,930			12,757,956			66.5	%

7

Operating Activities

Net cash provided by operating activities was $9,936,718 for the six months ended September 30, 2018, which was a decrease of 7.5% or $803,905 from the $10,740,623 net cash provided by operating activities for the same period of the prior year. The decrease primarily resulted from increased cash outflow from the increased balance in prepaid leases; and decreased balance in accounts payable and advance from customers offset by increased cash inflow, resulting from higher net income and increased balance in tax payable.

Investing Activities

During the six months ended September 30, 2018, our net cash used in investing activities was $781,858, as compared to $2,416,389 of net cash used for the six months ended September 30, 2017. The cash used in investing activities for the six months ended September 30, 2018 of $781,858 was primarily attributable to the acquisition of property, plant and equipment of $68,483 and capital expenditures of $713,375 in acer truncatum bunge planting.

During the six months ended September 30, 2017, our net cash used in investing activities was $2,416,389. The cash used in investing activities for the six months ended September 30, 2017 of $2,416,389 was primarily attributable to the acquisition of property, plant and equipment of $2,110,189, and capital expenditures of $2,420,741 in acer truncatum bunge planting, and offsetting by cash receipt of $2,114,541 from disposal of acer truncatum bunge plants.

Financing Activities

No net cash was generated or used by financing activities over the six months ended September 30, 2018 and 2017.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

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

        
Item 4. Controls and Procedures
     

Evaluation of Disclosure Controls and Procedures

The term "disclosure controls and procedures" (defined in SEC Rule 13a-15(e)) refers to the controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files under the Securities Exchange Act of 1934 (the "Exchange Act") is recorded, processed, summarized and reported within required time periods. The Company's management, with the participation of the Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company's disclosure controls and procedures as of the end of the period covered by this quarterly report on Form 10-Q (the "Evaluation Date"). Based on that evaluation, the Company's Chief Executive Officer and Chief Financial Officer have concluded that, as of the Evaluation Date, such controls and procedures were not effective. Our material weaknesses in internal control over financial reporting and efforts to correct such weaknesses are discussed in Item 9A of our Annual Report on Form 10-K for the year ended March 31, 2018 filed on June 29, 2018.

Changes in Internal Controls

The term "internal control over financial reporting" (defined in SEC Rule 13a-15(f)) refers to the process of a company that is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The Company's management, with the participation of the Chief Executive Officer and Chief Financial Officer, has evaluated any changes in the Company's internal control over financial reporting that occurred during the quarter ended September 30, 2018, and they have concluded that there was no change to the Company's internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

8

PART II.

OTHER INFORMATION

Item 1. Legal Proceedings

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

Item 1A. Risk Factors

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

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

Not Applicable

Item 3. Defaults Upon Senior Securities.

None

Item 4. Removed and Reserved

Item 5. Other Information

None

Item 6. Exhibits

31.1	Rule 13a-14(a)/ 15d-14(a) Certification of Chief Executive Officer
31.2	Rule 13a-14(a)/ 15d-14(a) Certification of Chief Financial Officer
32	Section 1350 Certification of Chief Executive Officer and Chief Financial Officer
101.INS	XBRL Instance Document.
101.SCH	XBRL Taxonomy Extension Schema Document.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.

9

SIGNATURES

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

SPRING PHARMACEUTICAL GROUP, INC.

Date: November 13, 2018

/s/ Tinghe Yan

 Tinghe Yan, Chief Executive Officer (Principal Executive Officer)

/s/ Chuanmin Li

 Chuanmin Li, Chief Financial Officer (Principal Financial Officer)

10

EX-31.1

Exhibit 31.1

Rule13a-14(a) Certification

I, Tinghe Yan, certify that:

1.      I have reviewed this quarterly report on Form10-Q of Spring Pharmaceutical Group, Inc.;

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

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

4.      The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules13a-15(f) and15d-15(f)) for the registrant and have:

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

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

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

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

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

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

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

Date:   November 13, 2018

By:     /s/ Tinghe Yan

  Tinghe Yan, Chief Executive Officer (Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

Rule13a-14(a) Certification

I, Chuanmin Li, certify that:

1.      I have reviewed this quarterly report on Form10-Q of Spring Pharmaceutical Group, Inc.;

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

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

4.      The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules13a-15(f) and15d-15(f)) for the registrant and have:

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

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

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

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

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

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

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

Date:    November 13, 2018

By:       /s/ Chuanmin Li

              Chuanmin Li,  Chief Financial Officer (Principal Financial Officer)

EX-32

EXHIBIT 32

Rule13a-14(b) Certification

In connection with the Quarterly Report of Spring Pharmaceutical Group, Inc. (the "Company") on Form 10-Q for the period ending September 30, 2018 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), each of the undersigned, in the capacities and on the dates indicated below, hereby certifies, pursuant to 18U.S.C. Section1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

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

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

November 13, 2018	By: /s/Yan Tinghe
	Tinghe Yan, Chief Executive Officer (Principal Executive Officer)
November 13, 2018	By: /s/Chuanmin Li
	Chuanmin Li, Chief Financial Officer (Principal Financial Officer)

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

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Document and Entity Information - shares	6 Months Ended
	Sep. 30, 2018	Nov. 13, 2018
Details
Registrant Name	SPRING PHARMACEUTICAL GROUP, INC.
Registrant CIK	0000847464
SEC Form	10-Q
Period End date	Sep. 30, 2018
Fiscal Year End	--03-31
Trading Symbol	cyig
Tax Identification Number (TIN)	300781441
Number of common stock shares outstanding		29,839,168
Filer Category	Non-accelerated Filer
Current with reporting	Yes
Small Business	true
Emerging Growth Company	false
Amendment Flag	false
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q2
Entity Incorporation, State Country Name	Delaware

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Consolidated Balance Sheets - USD ($)	Sep. 30, 2018	Mar. 31, 2018
Current Assets
Cash and cash equivalents	$ 31,948,886	$ 25,353,360
Accounts receivable	122,093	174,558
Inventories	1,947,262	2,383,382
Purchase deposit to related party	1,286,166	1,412,864
Prepaid leases - current portion	856,662	741,583
Total current assets	36,161,069	30,065,747
Prepaid expenses	1,319,382	641,349
Development cost of acer truncatum bunge planting	45,459,621	48,984,881
Plant, property, and equipment, net	14,761,960	16,793,413
Intangible assets, net	10,225,176	11,862,017
Deferred tax assets	182,405	200,387
Security deposit to related party	1,453,657	1,590,305
Total assets	109,563,270	110,138,099
Current liabilities:
Accounts payable and other accrued expenses	107,582	372,782
Advance from customers	0	445,829
Taxes payable	2,089,423	1,164,198
Total current liabilities	2,197,005	1,982,809
Stockholders' Equity
Preferred shares	22,500	22,500
Common shares	29,839	29,789
Additional paid-in capital	4,363,788	4,322,838
Statutory reserve	1,828,504	1,828,504
Retained earnings	103,015,416	94,447,937
Accumulated other comprehensive income (loss)	(4,917,587)	4,455,017
Total stockholders' equity attributable to the Company	104,342,460	105,106,585
Noncontrolling interest	3,023,805	3,048,705
Total stockholders' deficit	107,366,265	108,155,290
Total liabilities and stockholders' deficit	$ 109,563,270	$ 110,138,099

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Consolidated Balance Sheets - Parenthetical - $ / shares	Sep. 30, 2018	Mar. 31, 2018
Details
Preferred Stock, Par or Stated Value Per Share	$ 500	$ 500
Preferred Stock, Shares Authorized	45	45
Preferred Stock, Shares Issued	45	45
Preferred Stock, Shares Outstanding	45	45
Common Stock, Par or Stated Value Per Share	$ 0.001	$ 0.001
Common Stock, Shares Authorized	100,000,000	100,000,000
Common Stock, Shares, Issued	29,839,168	29,789,168
Common Stock, Shares, Outstanding	29,839,168	29,789,168

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Consolidated Statement of Operations - USD ($)	3 Months Ended		6 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Details
Sales	$ 18,684,939	$ 13,866,784	$ 39,573,786	$ 31,001,649
Cost of Goods Sold	10,619,845	8,811,390	22,584,545	19,098,538
Gross profit	8,065,094	5,055,394	16,989,241	11,903,111
Operating expenses:
Selling expenses	1,312,878	1,082,147	2,704,481	2,318,439
General and administrative expenses	1,110,995	868,258	2,192,044	1,776,663
Research and development expenses	68,424	62,033	391,157	126,411
Total operating expenses	2,492,297	2,012,438	5,287,682	4,221,513
Income from operations	5,572,797	3,042,956	11,701,559	7,681,598
Gain on disposal of acer truncatum bunge plants	0	0	0	573,092
Interest income	34,972	31,199	75,045	56,302
Income before income tax provision	5,607,769	3,074,155	11,776,604	8,310,992
Income tax provision	1,401,942	768,539	2,944,151	2,077,748
Net Income (Loss)	4,205,827	2,305,616	8,832,453	6,233,244
Net income attributable to noncontrolling interest	126,175	69,168	264,974	186,997
Net income attributable to the Company	4,079,652	2,236,448	8,567,479	6,046,247
Other comprehensive income (loss):
Foreign currency translation adjustment	(4,125,116)	1,908,799	(9,662,478)	3,564,300
Comprehensive income (loss)	80,711	4,214,415	(830,025)	9,797,544
Comprehensive income (loss) attributable to noncontrolling interest	2,422	126,432	(24,900)	292,747
Comprehensive income (loss) attributable to the Company	$ 78,289	$ 4,087,983	$ (805,125)	$ 9,504,797
Basic and diluted net loss per common share	$ 0.14	$ 0.08	$ 0.29	$ 0.20
Basic and diluted weighted-average common shares outstanding	29,839,168	29,789,168	29,821,682	29,789,168

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Consolidated Statement of Operations - Parenthetical - USD ($)	3 Months Ended		6 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Details
Related parties amount in cost of sales	$ 3,785,996	$ 3,020,708	$ 8,176,320	$ 7,309,643

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Consolidated Statements of Cash Flows - USD ($)	6 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Net Cash Provided by (Used in) Operating Activities
Net Income (Loss)	$ 8,832,453	$ 6,233,244
Adjustments to Reconcile Net Income (Loss) to Cash Provided by (Used in) Operating Activities
Depreciation and amortization of plant, property and equipment	682,403	615,112
Amortization of intangible assets	644,301	628,768
Amortization of prepaid lease	446,857	431,644
Stock-based compensation expenses	41,000	0
Deferred taxes	797	278,054
Gain on disposal of acer truncatum bunge plants	0	(573,092)
Changes in operating assets and liabilities:
Change in purchase deposit to vendors	0	664,506
Change in inventory	241,332	3,230,636
Change in accounts receivable	39,087	1,158,886
Cash received from cancellation of lease	0	56,732
Change in prepaid expenses	0	(279,239)
Change in prepaid expenses	(1,398,241)	0
Change in taxes payable	1,069,603	(1,155,471)
Change in purchase deposit and accounts payable to related party, net	5,526	(686,806)
Increase (Decrease) in Accounts Payable and Accrued Liabilities	(243,253)	24,034
Change in advance from customers	(425,147)	113,615
Net Cash Provided by (Used in) Operating Activities, Continuing Operations	9,936,718	10,740,623
Net Cash Provided by (Used in) Investing Activities
Acquisition of property, plant and equipment	(68,483)	(2,110,189)
Proceeds from disposal of acer truncatum bunge plants	0	2,114,541
Development cost of acer truncatum bunge planting	(713,375)	(2,420,741)
Net Cash Provided by (Used in) Investing Activities	(781,858)	(2,416,389)
Effect of exchange rate changes on cash and cash equivalents	(2,559,334)	558,074
Cash and Cash Equivalents, Period Increase (Decrease)	6,595,526	8,882,308
Cash and Cash Equivalents, at Carrying Value, Beginning Balance	25,353,360	10,308,622
Cash and Cash Equivalents, at Carrying Value, Ending Balance	31,948,886	19,190,930
Supplemental Cash Flow Information
Interest Paid, Including Capitalized Interest, Operating and Investing Activities	0	0
Income Taxes Paid, Net	$ 1,966,462	$ 2,790,002

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Note 1 - Organization and Principal Activities

6 Months Ended

Sep. 30, 2018

Notes

Note 1 - Organization and Principal Activities

NOTE 1 - ORGANIZATION AND PRINCIPAL ACTIVITIES

On August 28, 2018, China YCT International Group, Inc. filed a Certificate of Amendment to its Articles of Incorporation with the State of Delaware to change its corporate name from China YCT International Group, Inc. to Spring Pharmaceutical Group, Inc. (“Spring Pharmaceutical”). The name change was effective as of the filing of the Certificate of Amendment with the State of Delaware.

Spring Pharmaceutical, through its 100% owned subsidiary Landway Nano Bio-Tech, Inc. ("Landway Nano"), incorporated in Delaware, owns 97% of Shandong Spring Pharmaceutical Co., Ltd. ("Shandong Spring"), incorporated in the People's Republic of China ("PRC"). Spring Pharmaceutical and its subsidiaries are collectively referred to as “the Company".  The Company, through its 97% owned subsidiary, Shandong Spring, is engaged in the business of (i) distributing health care supplement products, (ii) developing, manufacturing, and selling Huoliyuan capsules, a prescription medicine, and (iii) developing the acer truncatum bunge planting bases and selling acer truncatum seed oil in the PRC. Acer truncatum bunge plants are a species of maple tree.

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Note 2 - Basis of Presentation and Summary of Significant Accounting Policies

6 Months Ended

Sep. 30, 2018

Notes

Note 2 - Basis of Presentation and Summary of Significant Accounting Policies

NOTE 2 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and the rules and regulations of the Securities and Exchange Commission. In the opinion of management, the unaudited financial statements have been prepared on the same basis as the annual financial statements and reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the financial position as of September 30, 2018 and the results of operations and cash flows for the periods ended September 30, 2018 and 2017. The financial data and other information disclosed in these notes to the interim financial statements related to these periods are unaudited. The results for the three and six months ended September 30, 2018 are not necessarily indicative of the results to be expected for any subsequent periods or for the entire year ending March 31, 2019. The balance sheet on March 31, 2018 has been derived from the audited financial statements at that date.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to the Securities and Exchange Commission's rules and regulations. These unaudited financial statements should be read in conjunction with our audited financial statements and notes thereto for the year ended March 31, 2018 as included in our Annual Report on Form 10-K. 

Principles of consolidation

The consolidated financial statements include the financial statements of Spring Pharmaceutical, Landway Nano and its 97% owned subsidiary, Shandong Spring.  All inter-company transactions and balances are eliminated in consolidation.

Use of estimates

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

Foreign currency translation

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

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

	September 30		September 30
	2018		2017
Period End Exchange Rate (RMB/USD)		6.8792		6.6369
Average Period Exchange Rate (RMB/USD)		6.5940		6.7569

Recent accounting pronouncements

The Company's management has evaluated all the recently issued accounting pronouncements during the quarter ended September 30, 2018 and does not believe that they will have a material effect on the Company's consolidated financial position and results of operations.

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Note 3 - Inventories

6 Months Ended

Sep. 30, 2018

Notes

Note 3 - Inventories

NOTE 3 - INVENTORIES

The components of inventories were as follows: 

	September 30,		March 31,
	2018		2018
Raw materials	$	786,007	$	233,138
Packaging materials		190,477		652,179
Work-in-process		152,051		686,234
Finished goods		818,727		811,831
Total Inventories	$	1,947,262	$	2,383,382

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Note 4 - Plant, Property, and Equipment, Net

6 Months Ended

Sep. 30, 2018

Notes

Note 4 - Plant, Property, and Equipment, Net

NOTE 4 – PLANT, PROPERTY, AND EQUIPMENT, NET

The components of plant, property and equipment were as follows:

	September 30,		March 31,
	2018		2018
Machinery and equipment	$	3,285,970	$	3,594,861
Office equipment and automobiles		769,106		769,589
Building		12,437,555		13,606,722
Leasehold improvements		3,876,194		4,240,568
Subtotal		20,368,825		22,211,740
Less: Accumulated depreciation and amortization		(5,606,865)		(5,418,327)
Total plant, property and equipment, net	$	14,761,960	$	16,793,413

The depreciation and amortization expense for the three months ended September 30, 2018 and 2017 was $329,637 and $327,864, respectively.

The depreciation and amortization expense for the six months ended September 30, 2018 and 2017 was $682,403 and $615,112, respectively.

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Note 5 - Taxes Payable

6 Months Ended

Sep. 30, 2018

Notes

Note 5 - Taxes Payable

NOTE 5 - TAXES PAYABLE

Taxes payable at September 30, 2018 and March 31, 2018 were as follows:

	September 30,		March 31,
	2018		2018
Corporate income tax - foreign	$	1,411,597	$	519,875
Value-added tax - foreign		610,034		580,429
Other tax and fees - foreign		67,792		63,894
Total tax payable	$	2,089,423	$	1,164,198

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Note 6 - Income Taxes

6 Months Ended

Sep. 30, 2018

Notes

Note 6 - Income Taxes

NOTE 6 - INCOME TAXES

Spring Pharmaceutical and Landway Nano were incorporated in the United States of America and are subject to United States federal taxation. No provisions for income taxes have been made, as there was no taxable income from U.S. operations for the three and six months ended September 30, 2018 and 2017. The Company has net loss carryforward of approximately $22,000, which will expire in 2037. The Company has set up 100% valuation allowance on deferred tax assets resulting from net operating loss incurred in the U.S.

The U.S. Tax Cuts and Jobs Act (the "Act") was enacted on December 22, 2017 and introduces significant changes to U.S. income tax law. Effective in 2018, the Tax Act reduces the U.S. statutory tax rate from 35% to 21% and creates new taxes on certain foreign-sourced earnings and certain related-party payments.

The Company's Chinese subsidiary is governed by the Income Tax Law of the PRC concerning the privately run and foreign invested enterprises, which are generally subject to tax at a statutory rate of 25% on income reported in the statutory financial statements after appropriate tax adjustments.

Dividend payments by PRC subsidiaries are limited by certain statutory regulations in the PRC. No dividends may be paid by PRC subsidiaries without first receiving prior approval from SAFE. Dividend payments are restricted to 90% of after-tax profits.

The Company had not provided deferred taxes on undistributed earnings attributable to its PRC subsidiaries as they were to be permanently reinvested. On February 22, 2008, the Ministry of Finance and State Administration of Taxation jointly issued Cai Shui 2008 Circular 1, "Circular 1." According to Article 4 of Circular 1, distributions of accumulated profits earned by foreign investment enterprises ("FIE") prior to January 1, 2008 to their foreign investors would be exempt from withholding tax ("WHT"), while distribution of the profits earned by a FIE after January 1, 2008 to its foreign investors should be subject to WHT.

Prior to the enactment of the Act, since Shandong Spring intends to reinvest its earnings to further expand its businesses in mainland China, it does not intend to declare dividends to their immediate foreign holding companies in the foreseeable future. Accordingly, the Company has not recorded any deferred taxes in relation to US tax on the cumulative amount of undistributed retained earnings since January 1, 2008. Under the "#1703. Treatment of deferred foreign income upon transition to new participation exemption system-deemed repatriation" of the Act, U.S. shareholders owning at least 10% of a foreign subsidiary generally must include income, for the subsidiary's last tax year beginning before 2018, the shareholder's pro rata share of the accumulated post-'86 historical E&P of the foreign subsidiary as of the "measurement date" to the extent such E&P has not been previously subject to U.S. tax.  The Company assessed its income tax effects of the Act and concluded that it had no one-time transition tax liability on its cumulative amount of undistributed retained earnings since January 1, 2008 as the Company had enough foreign tax credits available to offset the resulting incremental tax.

The reconciliation of income tax expense at the U.S. statutory rate of 21% and 35% in 2018 and 2017, to the Company's effective tax rate is as follows:

	Six Months Ended
	September 30,
	2018			2017
	21%			35%
Tax at U.S. statutory rate		$	2,473,087		$	2,908,847
Tax rate difference between China and U.S.			471,064			(831,099)
Effective tax		$	2,944,151		$	2,077,748

The provisions for income taxes are summarized as follows: 

	Six Months Ended
	September 30,
	2018		2017
Current	$	2,943,354	$	1,799,694
Deferred		797		278,054
Total	$	2,944,151	$	2,077,748

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Note 7 - Stockholders' Equity

6 Months Ended

Sep. 30, 2018

Notes

Note 7 - Stockholders' Equity

NOTE 7 - STOCKHOLDERS' EQUITY

On June 4, 2018, the Company issued 50,000 shares of common stock to a consultant for marketing consulting services, which were valued at $41,000 based on the quoted market price at issuance.

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Note 8 - Related Party Transactions and Balances

6 Months Ended

Sep. 30, 2018

Notes

Note 8 - Related Party Transactions and Balances

NOTE 8 - RELATED PARTY TRANSACTIONS AND BALANCES

Balances:

(i) Security deposit to related party:

The security deposit to related party of $1,453,657 represents the deposit paid to Shandong Yongchuntang Group Co., Ltd ("Shandong Yongchuntang") on January 4, 2017 for using the direct-sales license issued to Shandong Yongchuntang. The amount is non-interest bearing and not secured. Shandong Yongchuntang owns 3% of the equity of Shandong Spring.

(ii) Trade related balance with related party:

On September 30, 2018 and March 31, 2018, purchase deposit to related party of $1,286,166 and $1,412,864, respectively, pertains to a purchase deposit paid in respect of the purchase of healthcare products from Shandong Yongchuntang.

Transactions:

(i) Purchase from related party (See Note 9)

Contingency:

The Company is authorized by Shandong Yongchuntang to sell Shandong Yongchuntang's products using the direct-sales license issued to Shandong Yongchuntang.  As a condition for using the direct-sales license, the Company needs to make 20% sales increase each year based on 95% of sales in the year 2014.  If the Company cannot meet this sales target in any year from April 1, 2017 to June 30, 2020, a security deposit of approximately $1.5 million will be used as an annual fee for using the direct-sales license.  There is a risk that the Company may fail to meet the sales target and may need to pay approximately $1.5 million in the subsequent years.

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Note 9 - Major Customer and Vendor

6 Months Ended

Sep. 30, 2018

Notes

Note 9 - Major Customer and Vendor

NOTE 9 - MAJOR CUSTOMERS AND VENDORS

The Company sold products through ten distributors during the three and six months ended September 30, 2018 and 2017. Sales to five distributors represented 17%, 14%, 12%, 11%, and 11% of total sales for the three months ended September 30, 2018. Sales to four distributors represented 19%, 16%, 15% and 13% of total sales for the three months ended September 30, 2017.

The Company's sales through six distributors represented 16%, 14%, 12%, 12%, 11% and 10% of total sales for the six months ended September 30, 2018. Sales to four distributors represented 17%, 17%, 13% and 13% of total sales for the six months ended September 30, 2017.

The Company sold 11 products during the three months ended September 30, 2018 and 2017, respectively. Sales of three products represented 38%, 25%, and 14% of total sales for the three months ended September 30, 2018.  Sales of three products represented 50%, 10%, and 10% of total sales for the three months ended September 30, 2017.   

The Company sold 11 products during the six months ended September 30, 2018 and 2017, respectively. Sales of three products represented 37%, 25%, and 12% of total sales for the six months ended September 30, 2018.  Sales of four products represented 43%, 14%, 10% and 10% of total sales for the six months ended September 30, 2017.

The Company purchases certain of its products from Shandong Yongchuntang, a related party, according to the purchase contract signed between the Company and Shandong Yongchuntang. Pursuant to the contract dated February 20, 2017, the Company agreed to purchase nine products from Shandong Yongchuntang at fixed prices. On February 21, 2018, the Company further renewed the purchase contract with Shandong Yongchuntang for a term of one year ending on February 25, 2019.  Pursuant to this most recently renewed one-year contract, the Company continues to purchase  the nine products from Shandong Yongchuntang at fixed prices without changes in any terms of the previous contract. Total purchases from Shandong Yongchuntang represented 43% and 43% of our total purchases during the three months ended September 30, 2018 and 2017, respectively. The purchases from three other vendors represented 20%, 13% and 12% of the Company's total purchases for the three months ended September 30, 2018. The purchases from three other vendors represented 20%, 17% and 10% of the Company's total purchases for the three months ended September 30, 2017.

Total purchases from Shandong Yongchuntang represented 40% and 49% of our total purchases during the six months ended September 30, 2018 and 2017, respectively.  The purchases from three other vendors represented 26%, 11%, and 11% of the Company's total purchases for the six months ended September 30, 2018. The purchases from two other vendors represented 20% and 16% of the Company's total purchases for the six months ended September 30, 2017.

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Note 10 - Subsequent Events

6 Months Ended

Sep. 30, 2018

Notes

Note 10 - Subsequent Events

NOTE 10 – SUBSEQUENT EVENTS

The Company has evaluated subsequent events that have occurred after the date of the balance sheet through the date of issuance of these consolidated financial statements and determined that no subsequent event requires recognition or disclosure to the consolidated financial statements.

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Note 2 - Basis of Presentation and Summary of Significant Accounting Policies: Basis of Presentation (Policies)

6 Months Ended

Sep. 30, 2018

Policies

Basis of Presentation

Basis of presentation

The unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and the rules and regulations of the Securities and Exchange Commission. In the opinion of management, the unaudited financial statements have been prepared on the same basis as the annual financial statements and reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the financial position as of September 30, 2018 and the results of operations and cash flows for the periods ended September 30, 2018 and 2017. The financial data and other information disclosed in these notes to the interim financial statements related to these periods are unaudited. The results for the three and six months ended September 30, 2018 are not necessarily indicative of the results to be expected for any subsequent periods or for the entire year ending March 31, 2019. The balance sheet on March 31, 2018 has been derived from the audited financial statements at that date.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to the Securities and Exchange Commission's rules and regulations. These unaudited financial statements should be read in conjunction with our audited financial statements and notes thereto for the year ended March 31, 2018 as included in our Annual Report on Form 10-K. 

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Note 2 - Basis of Presentation and Summary of Significant Accounting Policies: Principles of Consolidation (Policies)

6 Months Ended

Sep. 30, 2018

Policies

Principles of Consolidation

Principles of consolidation

The consolidated financial statements include the financial statements of Spring Pharmaceutical, Landway Nano and its 97% owned subsidiary, Shandong Spring.  All inter-company transactions and balances are eliminated in consolidation.

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Note 2 - Basis of Presentation and Summary of Significant Accounting Policies: Use of estimates (Policies)

6 Months Ended

Sep. 30, 2018

Policies

Use of estimates

Use of estimates

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

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Note 2 - Basis of Presentation and Summary of Significant Accounting Policies: Foreign Currency Translation (Policies)

6 Months Ended

Sep. 30, 2018

Policies

Foreign Currency Translation

Foreign currency translation

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

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

	September 30		September 30
	2018		2017
Period End Exchange Rate (RMB/USD)		6.8792		6.6369
Average Period Exchange Rate (RMB/USD)		6.5940		6.7569

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Note 2 - Basis of Presentation and Summary of Significant Accounting Policies: Recent Accounting Pronouncements (Policies)

6 Months Ended

Sep. 30, 2018

Policies

Recent Accounting Pronouncements

Recent accounting pronouncements

The Company's management has evaluated all the recently issued accounting pronouncements during the quarter ended September 30, 2018 and does not believe that they will have a material effect on the Company's consolidated financial position and results of operations.

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Note 2 - Basis of Presentation and Summary of Significant Accounting Policies: Foreign Currency Translation: Schedule of Intercompany Foreign Currency Balances (Tables)

6 Months Ended

Sep. 30, 2018

Tables/Schedules

Schedule of Intercompany Foreign Currency Balances

	September 30		September 30
	2018		2017
Period End Exchange Rate (RMB/USD)		6.8792		6.6369
Average Period Exchange Rate (RMB/USD)		6.5940		6.7569

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Note 3 - Inventories: Schedule of Inventory (Tables)

6 Months Ended

Sep. 30, 2018

Tables/Schedules

Schedule of Inventory

	September 30,		March 31,
	2018		2018
Raw materials	$	786,007	$	233,138
Packaging materials		190,477		652,179
Work-in-process		152,051		686,234
Finished goods		818,727		811,831
Total Inventories	$	1,947,262	$	2,383,382

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Note 4 - Plant, Property, and Equipment, Net: Property, Plant and Equipment (Tables)

6 Months Ended

Sep. 30, 2018

Tables/Schedules

Property, Plant and Equipment

	September 30,		March 31,
	2018		2018
Machinery and equipment	$	3,285,970	$	3,594,861
Office equipment and automobiles		769,106		769,589
Building		12,437,555		13,606,722
Leasehold improvements		3,876,194		4,240,568
Subtotal		20,368,825		22,211,740
Less: Accumulated depreciation and amortization		(5,606,865)		(5,418,327)
Total plant, property and equipment, net	$	14,761,960	$	16,793,413

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Note 5 - Taxes Payable: Schedule of Taxes Payable (Tables)

6 Months Ended

Sep. 30, 2018

Tables/Schedules

Schedule of Taxes Payable

	September 30,		March 31,
	2018		2018
Corporate income tax - foreign	$	1,411,597	$	519,875
Value-added tax - foreign		610,034		580,429
Other tax and fees - foreign		67,792		63,894
Total tax payable	$	2,089,423	$	1,164,198

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Note 6 - Income Taxes: Schedule of Effective Income Tax Rate Reconciliation (Tables)

6 Months Ended

Sep. 30, 2018

Tables/Schedules

Schedule of Effective Income Tax Rate Reconciliation

	Six Months Ended
	September 30,
	2018			2017
	21%			35%
Tax at U.S. statutory rate		$	2,473,087		$	2,908,847
Tax rate difference between China and U.S.			471,064			(831,099)
Effective tax		$	2,944,151		$	2,077,748

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Note 6 - Income Taxes: Schedule of Provision for Income Tax Expense (Benefit) (Tables)

6 Months Ended

Sep. 30, 2018

Tables/Schedules

Schedule of Provision for Income Tax Expense (Benefit)

	Six Months Ended
	September 30,
	2018		2017
Current	$	2,943,354	$	1,799,694
Deferred		797		278,054
Total	$	2,944,151	$	2,077,748

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Note 1 - Organization and Principal Activities (Details)	6 Months Ended
	Sep. 30, 2018
Landway Nano
Subsidiary or Equity Method Investee, Cumulative Percentage Ownership after All Transactions	100.00%
Shandong Spring Pharmaceutical
Subsidiary or Equity Method Investee, Cumulative Percentage Ownership after All Transactions	97.00%

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Note 2 - Basis of Presentation and Summary of Significant Accounting Policies: Foreign Currency Translation: Schedule of Intercompany Foreign Currency Balances (Details)	Sep. 30, 2018	Mar. 31, 2018
Details
Foreign Currency Exchange Rate, Translation	6.8792	6.6369
Foreign Currency Exchange Rate Translation Average Rate	6.5940	6.7569

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Note 3 - Inventories: Schedule of Inventory (Details) - USD ($)	Sep. 30, 2018	Mar. 31, 2018
Details
Raw Materials	$ 786,007	$ 233,138
Packaging materials	190,477	652,179
Work-in-process	152,051	686,234
Finished goods	818,727	811,831
Inventories	$ 1,947,262	$ 2,383,382

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Note 4 - Plant, Property, and Equipment, Net: Property, Plant and Equipment (Details) - USD ($)	Sep. 30, 2018	Mar. 31, 2018
Details
Machinery and Equipment, Gross	$ 3,285,970	$ 3,594,861
Office Equipment	769,106	769,589
Buildings and Improvements, Gross	12,437,555	13,606,722
Leasehold Improvements, Gross	3,876,194	4,240,568
Property, Plant and Equipment, Gross	20,368,825	22,211,740
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment	(5,606,865)	(5,418,327)
Plant, property, and equipment, net	$ 14,761,960	$ 16,793,413

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Note 4 - Plant, Property, and Equipment, Net (Details) - USD ($)	3 Months Ended		6 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Details
Depreciation	$ 329,637	$ 327,864	$ 682,403	$ 615,112

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Note 5 - Taxes Payable: Schedule of Taxes Payable (Details) - USD ($)	Sep. 30, 2018	Mar. 31, 2018
Details
Corporate Income Tax - foreign	$ 1,411,597	$ 519,875
Value-Added Tax - foreign	610,034	580,429
Other Tax and Fees - foreign	67,792	63,894
Taxes payable	$ 2,089,423	$ 1,164,198

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Note 6 - Income Taxes (Details)	6 Months Ended
	Sep. 30, 2018 USD ($)
Details
Operating Loss Carryforwards	$ 22,000
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent	25.00%

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Note 6 - Income Taxes: Schedule of Effective Income Tax Rate Reconciliation (Details) - USD ($)	3 Months Ended		6 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Details
Effective Income Tax Rate Reconciliation at Federal Statutory Income Tax Rate, Amount			$ 2,473,087	$ 2,908,847
Effective Income Tax Rate Reconciliation, Foreign Income Tax Rate Differential, Amount			471,064	(831,099)
Income tax provision	$ 1,401,942	$ 768,539	$ 2,944,151	$ 2,077,748

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Note 6 - Income Taxes: Schedule of Provision for Income Tax Expense (Benefit) (Details) - USD ($)	3 Months Ended		6 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Details
Current Federal Tax Expense (Benefit)			$ 2,943,354	$ 1,799,694
Deferred taxes			797	278,054
Income tax provision	$ 1,401,942	$ 768,539	$ 2,944,151	$ 2,077,748

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Note 7 - Stockholders' Equity (Details)	6 Months Ended
	Sep. 30, 2018 USD ($) shares
Details
Stock Issued During Period, Shares, Issued for Services | shares	50,000
Stock Issued During Period, Value, Issued for Services | $	$ 41,000

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Note 8 - Related Party Transactions and Balances (Details) - USD ($)	Sep. 30, 2018	Mar. 31, 2018
Details
Security deposit to related party	$ 1,453,657	$ 1,590,305
Purchase deposit to related party	$ 1,286,166	$ 1,412,864

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Note 9 - Major Customer and Vendor (Details)	3 Months Ended		6 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Number Of Major Distributors	The Company sold products through ten distributors	The Company sold products through ten distributors
Concentration Risk, Other Risk	Sales to five distributors represented 17%, 14%, 12%, 11%, and 11% of total sales	Sales to four distributors represented 19%, 16%, 15% and 13% of total sales	sales through six distributors represented 16%, 14%, 12%, 12%, 11% and 10% of total sales	Sales to four distributors represented 17%, 17%, 13% and 13% of total sales
Concentration Risk, Product	Sales of three products represented 38%, 25%, and 14% of total sales	Sales of three products represented 50%, 10%, and 10% of total sales	Sales of three products represented 37%, 25%, and 12% of total sales	Sales of four products represented 43%, 14%, 10% and 10% of total sales
Shandong Yongchuntang
Concentration Risk, Supplier	43%	43%	40%	49%
Other Vendor 1
Concentration Risk, Supplier	20%	20%	26%	20%
Other Vendor 2
Concentration Risk, Supplier	13%	17%	11%	16%
Other Vendor 3
Concentration Risk, Supplier	12%	10%	11%