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Intangible Assets

12 Months Ended

Dec. 31, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

NOTE 4 - INTANGIBLE ASSETS

Intangible assets represent the cost of medical formulas approved for production by the China Food and Drug Administration (“CFDA”). The Company did not obtain CFDA production approval for any medical formulas during the years ended December 31, 2018 and 2017, and no costs were reclassified from advances to intangible assets during the years ended December 31, 2018 and 2017, respectively.

Approved medical formulas are amortized from the date CFDA approval is obtained over their individually identifiable estimated useful lives, which range from ten to thirteen years. It is at least reasonably possible that a change in the estimated useful lives of the medical formulas could occur in the near term due to changes in the demand for the drugs and medicines produced from these medical formulas. Amortization expense relating to intangible assets was $115,143 and $165,394, respectively for the years ended December 31, 2018 and 2017, and was included in the general and administrative expenses. Medical formulas typically do not have a residual value at the end of their amortization period.

The Company evaluates each approved medical formula for impairment at the date of CFDA approval, when indications of impairment are present and also at the date of each financial statement. The Company’s evaluation is based on an estimated undiscounted net cash flow model, which considers currently available market data for the related drug and the Company’s estimated market share. If the carrying value of the medical formula exceeds the estimated future net cash flows, an impairment loss is recognized for the excess of the carrying value over the fair value of the medical formula, which is determined by the estimated discounted future net cash flows. No impairment loss was recognized during the years ended December 31, 2018 and 2017.

Intangible assets consisted solely of CFDA approved medical formulas as follows:

	December 31,			December 31,
	2018			2017
Gross carrying amount	$	4,909,318		$	5,188,547
Accumulated amortization		(4,642,875	)		(4,789,691	)
Net carrying amount	$	266,443		$	398,856

The estimated aggregate annual amortization expense for each of the next five years and thereafter is as follows:

Year	Amount
2019		60,038
2020		37,112
2021		37,112
2022		37,112
2023		37,112
Thereafter		57,957
Total	$	266,443