Segments

9 Months Ended

Dec. 31, 2019

Segment Reporting [Abstract]

SEGMENTS

Note 23 – SEGMENTS

The Company operates within four main reportable segments: retail drugstores, online pharmacy, drug wholesale and herb farming. The retail drugstores segment sells prescription and OTC medicines, TCM, dietary supplements, medical devices, and sundry items to retail customers. The online pharmacy sells OTC drugs, dietary supplements, medical devices and sundry items to customers through several third-party platforms such as Alibaba’s Tmall, JD.com and Amazon.com, and the Company’s own platform all over China. The drug wholesale segment includes supplying the Company’s own retail drugstores with prescription and OTC medicines, TCM, dietary supplement, medical devices and sundry items (which sales have been eliminated as intercompany transactions), and also selling them to other drug vendors and hospitals. The Company’s herb farming segment cultivates selected herbs for sales to other drug vendors. The Company is also involved in online sales and clinic services that do not meet the quantitative thresholds for reportable segments and are included in the retail drugstores segment. The segments’ accounting policies are the same as those described in the summary of significant accounting policies. The Company evaluates performance based on profit or loss from operations before interest and income taxes not including nonrecurring gains and losses.

The Company’s reportable business segments are strategic business units that offer different products and services. Each segment is managed separately because the business segments require different operations and markets to distinct classes of customers.

The following table presents summarized information by segment of the continuing operations for the three months ended December 31, 2019.

	Retail drugstores			Online Pharmacy			Drug wholesale			Herb farming		Total
Revenue	$	21,575,965		$	3,965,023			7,822,294			-		33,363,282
Cost of goods		15,388,580			3,639,995			7,051,335			-		26,079,910
Gross profit	$	6,187,385		$	325,028			770,959			-		7,283,372
Selling expenses		4,836,140			507,393			332,867			-		5,676,400
General and administrative expenses		1,403,350			61,193			(410,483	)		-		1,054,060	*
Income (Loss) from operations	$	(52,105	)	$	(243,558	)		848,575			-		552,912
Depreciation and amortization	$	459,184		$	-			36,402			-		495,586
Total capital expenditures	$	277,480		$	-						-		277,480

* The Company negotiated with certain customers and collected certain aged accounts receivable after making its collection efforts and reversed the allowance made on these accounts.

The following table presents summarized information by segment of the continuing operations for the three months ended December 31, 2018.

	Retail drugstores			Online Pharmacy			Drug wholesale			Herb farming		Total
Revenue	$	20,867,250		$	2,493,205			7,556,094			-		30,916,549
Cost of goods		14,903,761			2,232,994			6,644,008			-		23,780,763
Gross profit	$	5,963,489		$	260,211			912,086			-		7,135,786
Selling expenses		4,819,081			438,235			1,431,261			-		6,688,577
General and administrative expenses		1,443,634			47,703			1,081,525			-		2,572,862
Income(Loss) from operations	$	(299,226	)	$	(225,727	)		(1,600,700	)		-		(2,125,653	)
Depreciation and amortization	$	449,893		$	-			433			-		450,326
Total capital expenditures	$	6,415,414		$	-			314			-		6,415,728

The following table presents summarized information of the continuing operation by segment for the nine months ended December 31, 2019:

	Retail drugstores			Online pharmacy			Drug wholesale			Herb farming		Total
Revenue	$	56,312,226		$	8,759,892			21,925,727			-		86,997,845
Cost of goods		39,542,348			7,769,309			19,648,014			-		66,959,671
Gross profit	$	16,769,878		$	990,583			2,277,713			-		20,038,174
Selling expenses		15,067,432			1,442,927			1,620,440			-		18,130,799
General and administrative expenses		4,396,589			176,792			1,156,226			-		5,729,607	*
Income (Loss) from operations	$	(2,694,143	)	$	(629,136	)		(498,953	)		-		(3,822,232	)
Depreciation and amortization	$	1,495,216		$	-			67,740			-		1,562,956
Total capital expenditures	$	1,267,614		$	-			-			-		1,267,614

The following table presents summarized information of the continuing operation by segment for the nine months ended December 31, 2018:

	Retail drugstores			Online pharmacy			Drug wholesale			Herb farming		Total
Revenue	$	54,971,889		$	6,637,922			19,488,350			-		81,098,161
Cost of goods		39,344,927			5,883,301			17,320,243			-		62,548,471
Gross profit	$	15,626,962		$	754,621			2,168,107			-		18,549,690
Selling expenses		12,453,077			1,316,945			2,769,056			-		16539,078
General and administrative expenses		4,644,077			292,544			1,406,081			-		6,342,874	*
Income (Loss) from operations	$	(1,470,364	)	$	(854,868	)		(2,007,030	)		-		(4,332,262	)
Depreciation and amortization	$	980,845		$	-			7,446			-		988,291
Total capital expenditures	$	6,789,129		$	-			1,437			-		6,790,566

The Company does not have long-lived assets located outside the PRC. In accordance with the enterprise-wide disclosure requirements of FASB’s accounting standard, the Company’s net revenue from external customers through its retail drugstores by main product category for the three and nine months ended December 31, 2019 and 2018 were as follows:

	Three months ended December 31,				Nine months ended December 31,
	2019		2018		2019		2018
Prescription drugs	$	7,496,469	$	6,756,073	$	19,214,689	$	17,835,700
OTC drugs		10,260,883		9,393,148		24,964,312		24,018,263
Nutritional supplements		1,602,407		1,869,351		4,510,514		4,750,013
TCM		1,416,126		1,342,768		4,474,676		4,615,033
Sundry products		188,484		248,729		777,432		799,554
Medical devices		611,597		1,257,180		2,370,604		2,953,326
Total	$	21,575,966	$	20,867,249	$	56,312,227	$	54,971,889

The Company’s net revenue from external customers through online pharmacy by main product category is as follows:

	Three months ended December 31,				Nine months ended December 31,
	2019		2018		2019		2018
Prescription drugs	$	-	$	-	$	-	$	-
OTC drugs		1,981,871		837,126		4,133,128		2,412,057
Nutritional supplements		245,249		220,776		488,956		575,862
TCM		42,331		28,785		77,981		54,417
Sundry products		729,179		573,993		1,542,372		2,128,282
Medical devices		966,393		832,526		2,517,455		1,467,304
Total	$	3,965,023	$	2,493,206	$	8,759,892	$	6,637,922

The Company’s net revenue from external customers through wholesale by main product category is as follows:

	Three months ended December 31,				Nine months ended December 31,
	2019		2018		2019		2018
Prescription drugs	$	6,358,031	$	3,933,441	$	18,054,557	$	11,708,683
OTC drugs		1,310,927		3,341,676		3,433,730		7,246,356
Nutritional supplements		47,736		167,069		104,475		240,666
TCM		67,507		77,216		247,465		156,525
Sundry products		19,789		5,949		30,809		21,479
Medical devices		18,303		30,743		54,690		114,641
Total	$	7,822,293	$	7,556,094	$	21,925,726	$	19,488,350