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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Willcox International Holdings Inc (PK) | USOTC:WINH | OTCMarkets | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 0.30 | 0.10 | 0.396 | 0.00 | 21:02:14 |
|
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
For the quarterly period ended December 31, 2015
|
|
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
WINHA INTERNATIONAL GROUP LIMITED
(Name of Registrant in its Charter)
|
|
Nevada
|
47-2450462
|
(State of Other Jurisdiction of incorporation or organization)
|
(I.R.S. Employer I.D. No.)
|
|
|
3rd Floor, No. 19 Changyi Road, Changmingshui Village
Wuguishan Town, Zhongshan City, P.R. China 528458
|
|
(Address of Principal Executive Offices)
|
Yile Center, 5 Xinzhong Avenue, Suite 918
Shiqi District, Zhongshan, P.R. China 528400
|
(Former Address, if Changed Since Last Report)
|
|
Page No
|
|
Part I
|
Financial Information
|
|
Item 1.
|
Financial Statements (unaudited):
|
|
Consolidated Balance Sheets (Unaudited) – December 31, 2015 and March 31, 2015
|
1
|
|
Consolidated Statements of Income and Other Comprehensive Income (Unaudited) - for the Three and Nine Months Ended December 31, 2015 and 2014
|
3
|
|
Consolidated Statement of Changes in Stockholders Equity (Unaudited) for the Nine Months Ended December 31, 2015
|
5
|
|
Consolidated Statements of Cash Flows (Unaudited) – for the Nine Months Ended December 31, 2015 and 2014
|
6
|
|
Notes to Consolidated Financial Statements (Unaudited)
|
8
|
|
Item 2.
|
Management's Discussion and Analysis of Financial Condition and Results of Operations
|
29
|
Item 3
|
Quantitative and Qualitative Disclosures about Market Risk
|
35
|
Item 4.
|
Controls and Procedures
|
35
|
Part II
|
Other Information
|
|
Item 1.
|
Legal Proceedings
|
36
|
Items 1A.
|
Risk Factors
|
36
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
36
|
Item 3.
|
Defaults upon Senior Securities
|
36
|
Item 4.
|
Mine Safety Disclosures
|
36
|
Item 5.
|
Other Information
|
36
|
Item 6.
|
Exhibits
|
37
|
Signatures
|
38
|
December 31,
|
March 31,
|
|||||||
2015
|
2015
|
|||||||
ASSETS |
(Unaudited)
|
|||||||
Current assets:
|
|
$ | ||||||
Cash and cash equivalents |
$
|
18,206,668
|
1,103,726
|
|||||
Accounts receivable
|
1,869,645
|
1,246,200
|
||||||
Inventory
|
1,490,382
|
2,621,655
|
||||||
Advances to suppliers
|
150,433
|
224,029
|
||||||
Prepaid expenses
|
29,972
|
145,524
|
||||||
Total current assets
|
21,747,100
|
5,341,134
|
||||||
Property, plant and equipment, net
|
630,502
|
391,313
|
||||||
Website - net
|
45,636
|
39,014
|
||||||
TOTAL ASSETS
|
$
|
22,423,238
|
$
|
5,771,461
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
December 31,
2015
|
March 31,
2015
|
||||||
(Unaudited)
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$
|
389,429
|
$
|
305,545
|
||||
Convertible debt
|
5,399,702
|
-
|
||||||
Advances from customers
|
722,997
|
732,212
|
||||||
Taxes payable
|
1,781,307
|
480,539
|
||||||
Accrued expenses
|
120,344
|
66,026
|
||||||
Loan from stockholder
|
115,215
|
72,228
|
||||||
Total current liabilities
|
8,528,994
|
1,656,550
|
||||||
Stockholders' equity:
|
||||||||
Common stock, $0.001 par value per share, 200,000,000 shares authorized; 49,989,500 shares issued and outstanding as of December 31, 2015 and March 31, 2015
|
49,990
|
49,990
|
||||||
Additional paid-in capital
|
3,482,583
|
2,666,582
|
||||||
Statutory reserve
|
1,219,794
|
252,053
|
||||||
Retained earnings
|
9,636,515
|
1,114,566
|
||||||
Other comprehensive (loss) income
|
(494,638
|
)
|
31,720
|
|||||
Total stockholders' equity
|
13,894,244
|
4,114,911
|
||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
|
$
|
22,423,238
|
$
|
5,771,461
|
Three Months Ended
December 31,
|
Nine Months Ended
December 31,
|
|||||||||||||||
|
2015
|
2014
|
2015
|
2014
|
||||||||||||
Revenues
|
$
|
11,458,651
|
$
|
3,191,550
|
$
|
26,855,768
|
$
|
5,441,739
|
||||||||
Cost of revenues
|
5,233,444
|
1,433,748
|
12,371,251
|
2,392,794
|
||||||||||||
Gross profit
|
6,225,207
|
1,757,802
|
14,484,517
|
3,048,945
|
||||||||||||
Operating expenses:
|
||||||||||||||||
Selling and marketing
|
236,400
|
114,400
|
650,135
|
354,697
|
||||||||||||
General and administrative
|
504,860
|
311,693
|
1,133,385
|
974,553
|
||||||||||||
Total operating expenses
|
741,260
|
426,093
|
1,783,520
|
1,329,250
|
||||||||||||
Income from operations
|
5,483,947
|
1,331,709
|
12,700,997
|
1,719,695
|
||||||||||||
Other income (expense)
|
6,109
|
(5,966
|
)
|
7,194
|
(13,891
|
)
|
||||||||||
Income before provision for income taxes
|
5,490,056
|
1,325,743
|
12,708,191
|
1,705,804
|
||||||||||||
Provision for income taxes
|
1,401,247
|
323,301
|
3,218,501
|
323,301
|
||||||||||||
Net income
|
4,088,809
|
1,002,442
|
9,489,690
|
1,382,503
|
Three Months Ended
December 31,
|
Nine Months Ended
December 31,
|
|||||||||||||||
|
2015
|
2014
|
2015
|
2014
|
||||||||||||
Other Comprehensive (loss) income:
|
||||||||||||||||
Foreign currency translation adjustment
|
(279,514
|
)
|
273
|
(526,358
|
)
|
(97
|
)
|
|||||||||
Total Comprehensive income
|
$
|
3,809,295
|
$
|
1,002,715
|
$
|
8,963,332
|
$
|
1,382,406
|
||||||||
Earnings per common share, basic and diluted
|
$
|
0.08
|
$
|
0.02
|
$
|
0.19
|
$
|
0.03
|
||||||||
Weighted average shares outstanding, basic and diluted
|
49,989,500
|
49,989,500
|
49,989,500
|
49,989,500
|
Additional
|
Statutory
|
Other
|
||||||||||||||||||||||
Common
|
Paid-in |
Reserve
|
Retained
|
Comprehensive | ||||||||||||||||||||
Stock
|
Capital |
Fund
|
Earnings |
Income
|
Total
|
|||||||||||||||||||
Balance, March 31, 2015
|
$
|
49,990
|
$
|
2,666,582
|
$
|
252,053
|
$
|
1,114,566
|
$
|
31,720
|
$
|
4,114,911
|
||||||||||||
Additional capital contribution from principal stockholders
|
-
|
816,001
|
-
|
-
|
-
|
816,001
|
||||||||||||||||||
Net income
|
-
|
-
|
-
|
9,489,690
|
-
|
9,489,690
|
||||||||||||||||||
Allocation to statutory reserve
|
-
|
-
|
967,741
|
(967,741
|
)
|
-
|
-
|
|||||||||||||||||
Foreign currency translation adjustment
|
-
|
-
|
-
|
-
|
(526,358
|
)
|
(526,358
|
|||||||||||||||||
Balance, December 31, 2015 (Unaudited)
|
$
|
49,990
|
$
|
3,482,583
|
$
|
1,219,794
|
$
|
9,636,515
|
$
|
(494,638
|
) |
$
|
13,894,244
|
Nine Months Ended
December 31,
|
||||||||
2015
|
2014
|
|||||||
Cash flows from operating activities:
|
||||||||
Net income
|
$
|
9,489,690
|
$
|
1,382,503
|
||||
Adjustments to reconcile net income (loss) to net
|
||||||||
cash provided by (used in) operating activities:
|
||||||||
Depreciation and amortization
|
108,474
|
39,315
|
||||||
Changes in operating assets and liabilities:
|
||||||||
(Increase) in accounts receivable
|
(623,445
|
)
|
(927,001
|
)
|
||||
Decrease (increase) in inventory
|
1,131,273
|
(1,863,268
|
)
|
|||||
Decrease in advances to suppliers
|
73,596
|
-
|
||||||
Decrease (increase) in prepaid expenses
|
115,552
|
(72,919
|
)
|
|||||
Increase in accounts payable
|
83,884
|
476,412
|
||||||
(Decrease) in deferred revenue
|
-
|
(6,264
|
)
|
|||||
(Decrease) increase in advances from customers
|
(9,215
|
)
|
5,864
|
|||||
Increase in taxes payable
|
1,300,201
|
352,877
|
||||||
Increase (decrease) in accrued expenses
|
78,973
|
(128,345
|
)
|
|||||
Net cash provided by (used in) operating activities
|
11,748,983
|
(740,826
|
)
|
|||||
Cash flows from investing activities:
|
||||||||
Payments for website expansion
|
(7,569
|
)
|
(16,633
|
)
|
||||
Purchase of fixed assets
|
(378,154
|
)
|
(417,147
|
)
|
||||
Net cash (used in) investing activities
|
(385,723
|
)
|
(433,780
|
)
|
Nine Months Ended
December 31,
|
||||||||
2015
|
2014
|
|||||||
Cash flows from financing activities:
|
||||||||
Proceeds from issuance of common stock
|
-
|
1,287,383
|
||||||
Proceeds from convertible debt
|
5,596,055
|
-
|
||||||
Additional capital contribution
|
816,001
|
-
|
||||||
Proceeds from stockholder loan
|
42,987
|
3,129
|
||||||
Net cash provided by financing activities
|
6,455,043
|
1,290,512
|
||||||
Effect of exchange rate changes on cash
|
(715,361
|
)
|
(97
|
)
|
||||
Net change in cash
|
17,102,942
|
115,809
|
||||||
Cash, beginning of year
|
1,103,726
|
155,160
|
||||||
Cash, end of year
|
$
|
18,206,668
|
$
|
270,969
|
||||
Supplemental disclosure of cash flow information:
|
||||||||
Cash paid for:
|
||||||||
Interest
|
$
|
-
|
$ | - | ||||
Income taxes
|
$
|
2,156,687
|
$
|
193,793
|
||||
Noncash financing activities:
|
||||||||
Payment of accrued expenses and other payables by shareholder in the form of a loan
|
$
|
26,345
|
$ | - |
December 31,
2015
|
March 31,
2015
|
|||||||
Balance sheet items, except for stockholders' equity, as of period end
|
0.1540
|
0.1632
|
For the three months
ended December 31,
|
For the nine months
ended December 31,
|
|||||||||||||||
2015
|
2014
|
2015
|
2014
|
|||||||||||||
Amounts included in the statements of income, statement of changes in stockholders' equity and statements of cash flows for the period
|
0.1563
|
0.1628
|
0.1596
|
0.1624
|
1.
|
Initial stage (planning), whereby the related costs are expensed.
|
2.
|
Development stage (web application, infrastructure, graphics), whereby the related costs are capitalized and amortized once the website is ready for use. Costs for development content of the website may be expensed or capitalized depending on the circumstances of the expenditures.
|
3.
|
Operating stage, whereby the related costs are expensed as incurred. Upgrades are usually expensed, unless they add additional functionality.
|
1.
|
Retail stores - The Company recognizes sales revenue from its seven retail stores, net of sales taxes and estimated sales returns at the time it sells merchandise to the customer. Customer purchases of shopping cards are not recognized as revenue until the card is redeemed and the customer purchases merchandise by using the shopping card.
|
2.
|
Custom-made sales - The Company started "Custom-made" sales in August 2014. The target customers are commercial customers who can order online or in the Company's local stores and make full payment on site. All orders are forwarded to Zhongshan Winha immediately, which arranges the delivery. Revenue from the sale of products is recognized upon delivery to customers provided that there are no uncertainties regarding customer acceptance, there is persuasive evidence of an arrangement, and the sales price is fixed and determinable. Revenue generated from custom-made sales was $6,839,914 and $1,875,615, respectively, for three months ended December 31, 2015 and 2014. Revenue generated from custom-made sales was $17,038,823 and $4,940,031, respectively, for nine months ended December 31, 2015 and 2014.
|
3.
|
Franchise and management fees
|
Furniture, fixtures and equipment
|
3 to 5 years
|
|
Leasehold improvements
|
Over the shorter of the remaining lease term or estimated useful life of the improvements.
|
|
Motor vehicles
|
5 years
|
December 31,
|
March 31,
|
|||||||
2015 | 2015 | |||||||
Furniture, fixtures and equipment | $ |
437,020
|
$ |
380,979
|
||||
Leasehold improvements
|
17,864
|
18,908
|
||||||
Motor vehicles
|
355,510
|
71,658
|
||||||
810,394
|
471,545
|
|||||||
Less: Accumulated depreciation
|
(179,892
|
)
|
(80,232
|
)
|
||||
$ |
630,502
|
$
|
391,313
|
Year Ending March 31,
|
Amount
|
|||
2016
|
62,849
|
|||
2017
|
250,411
|
|||
2018
|
196,336
|
|||
2019
|
165,770
|
|||
2020
|
91,401
|
|||
Thereafter
|
325,019
|
|||
Total
|
$
|
1,091,786
|
Three Months Ended
December 31,
|
Nine Months Ended
December 31,
|
|||||||||||||||
2015
|
2014
|
2015
|
2014
|
|||||||||||||
Current
|
$
|
1,401,274
|
$
|
323,301
|
$
|
3,218,501
|
$
|
323,301
|
||||||||
Deferred
|
-
|
-
|
-
|
-
|
||||||||||||
$
|
1,401,274
|
$
|
323,301
|
$
|
3,218,501
|
$
|
323,301
|
For the three months
ended December 31,
|
For the nine months
ended December 31,
|
|||||||||||||||
2015
|
2014
|
2015
|
2014
|
|||||||||||||
Statutory rate - PRC
|
25.0
|
%
|
(25.0
|
%)
|
25.0
|
%
|
25.0
|
%
|
||||||||
Change in valuation allowance
|
-
|
1.0
|
%
|
-
|
(6.0
|
%)
|
||||||||||
Effective income tax rate
|
25.0
|
%
|
24.0
|
%
|
25.0
|
%
|
19.0
|
%
|
December 31,
|
March 31,
|
|||||||
2015 | 2015 | |||||||
Net operating loss carryforwards
|
$ |
187,915
|
$ |
40,168
|
||||
Inventory intercompany profit
|
7,695
|
20,760
|
||||||
Less: valuation allowance
|
(195,610
|
) |
(60,928
|
) | ||||
Net deferred tax asset
|
$ |
-
|
|
$ |
-
|
|
ASSETS
|
March 31,
2015
|
|||
Investment in subsidiaries
|
$
|
4,156,530
|
||
TOTAL ASSETS
|
$
|
4,156,530
|
LIABILITIES AND
STOCKHOLDERS
'
EQUITY
|
March 31,
2015
|
|||
Stockholder loans
|
$
|
41,619
|
||
Stockholders' equity
|
||||
Common stock, $0.0001 par value; 200,000,000 shares authorized; 49,989,500 shares issued and outstanding as of March 31, 2015
|
49,990
|
|||
Additional paid-in capital
|
2,666,582
|
|||
Statutory reserve
|
252,053
|
|||
Retained earnings
|
1,114,566
|
|||
Other comprehensive income
|
31,720
|
|||
Total stockholders' equity
|
4,114,911
|
|||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
|
$
|
4,156,530
|
Year Ended
|
||||
March 31, 2015
|
||||
Revenues
|
||||
Share of earnings from
investment in subsidiaries and VIE
|
$
|
2,438,198
|
||
Operating expenses
|
||||
General and administrative
|
(71,646
|
)
|
||
Net income
|
$
|
2,366,552
|
Year Ended
March 31
|
||||
2015 | ||||
Cash flows from operating activities
|
||||
Net income
|
$
|
2,366,552
|
||
Adjustments to reconcile net income to net cash provided by (used in) operating activities
|
||||
Share of earnings from investment in subsidiaries and VIE
|
(2,438,198
|
)
|
||
Increase in accrued expenses and other payables
|
71,646
|
|||
Net cash provided by (used in) operating activities
|
-
|
|||
Net change in cash
|
-
|
|||
Cash, beginning of period
|
-
|
|||
Cash, end of period
|
$
|
-
|
||
Noncash financing activities:
|
||||
Payment of accrued expenses and other payables by shareholder
|
$
|
41,619
|
·
|
Opening up new retail stores.
We established one retail storefront in December 2013. Subsequently, we established six retail storefronts in the second quarter of 2014. Our retail stores are engaged in the sale of local specialty products.
|
·
|
Opening up more franchise stores.
We commenced franchising in the beginning of July 2015. As of the quarter ended on December 31, 2015, we have thirteen franchise stores operating. We plan to sell more franchises.
|
·
|
Opening up new theme restaurants.
We registered a catering management company in January, 2015 and opened one restaurant. We plan to open four more restaurants.
|
·
|
Developing direct suppliers.
To ensure healthy and stable supply networks, we have established supply relationships with approximately 100 direct suppliers across 15 provinces. We hope to add more direct suppliers in the coming months.
|
·
|
Developing an intelligent logistics system.
We have started developing a logistics system that integrates delivery and inventory control systems, and expect to complete this system within the next nine months. Under this system, a sales order will automatically be filled and delivered from the most cost-effective location, whether it is our retail stores or the Company's warehouse.
|
|
December 31
|
December 31
|
%
|
|||||||||
|
2015
|
2014
|
Change
|
|||||||||
Revenue
|
$
|
11,458,651
|
$
|
3,191,550
|
259
|
%
|
||||||
Cost of Goods Sold
|
(5,233,444
|
)
|
(1,433,748
|
)
|
265
|
%
|
||||||
Gross profit
|
6,225,207
|
1,757,802
|
254
|
%
|
||||||||
Total operating expenses
|
741,260
|
426,093
|
74
|
%
|
||||||||
Income (loss) from operations
|
5,483,947
|
1,331,709
|
312
|
%
|
||||||||
Other income (expense)
|
6,109
|
(5,966
|
)
|
202
|
%
|
|||||||
Income (loss) before provision for income taxes
|
5,490,056
|
1,325,743
|
314
|
%
|
||||||||
Provision for income taxes
|
1,401,247
|
323,301
|
333
|
%
|
||||||||
Net income (loss)
|
$
|
4,088,809
|
$
|
1,002,442
|
308
|
%
|
|
December 31
|
December 31
|
%
|
|||||||||
|
2015
|
2014
|
Change
|
|||||||||
Revenue
|
$
|
26,855,768
|
$
|
5,441,739
|
394
|
%
|
||||||
Cost of Goods Sold
|
(12,371,251
|
)
|
(2,392,794
|
)
|
417
|
%
|
||||||
Gross profit
|
14,484,517
|
3,048,945
|
375
|
%
|
||||||||
Total operating expenses
|
1,783,520
|
1,329,250
|
34
|
%
|
||||||||
Income (loss) from operations
|
12,700,997
|
1,719,695
|
639
|
%
|
||||||||
Other income (expense)
|
7,194
|
(13,891
|
)
|
152
|
%
|
|||||||
Income (loss) before provision for income taxes
|
12,708,191
|
1,705,804
|
645
|
%
|
||||||||
Provision for income taxes
|
3,218,501
|
323,301
|
896
|
%
|
||||||||
Net income (loss)
|
9,489,690
|
1,382,503
|
586
|
%
|
Three Months Ended
Dec. 31,
|
Nine Months Ended
Dec. 31,
|
|||||||||||||||
2015
|
2014
|
2015
|
2015
|
|||||||||||||
Retail Stores
|
$
|
3,677,445
|
$
|
1,315,935
|
$
|
8,358,201
|
$
|
501,708
|
||||||||
Custom-made
|
6,839,914
|
1,875,615
|
17,038,823
|
4,940,031
|
||||||||||||
Franchises
|
941,292
|
--
|
1,458,744
|
--
|
||||||||||||
Total
|
$
|
11,458,651
|
$
|
3,191,550
|
$
|
26,855,768
|
$
|
5,441,739
|
|
Nine months
ended
December 31,
2015
|
Nine
months
ended
December 31,
2014
|
||||||
Net cash provided (used) by operating activities
|
$
|
11,748,983
|
$
|
(740,826
|
)
|
|||
Net cash (used in) investing activities
|
$
|
(385,723
|
)
|
$
|
(433,780
|
)
|
||
Net cash provided by financing activities
|
$
|
6,455,043
|
$
|
1,290,512
|
·
|
We have not achieved the desired level of corporate governance with regard to identifying and measuring the risk of material misstatement. Because of our limited internal resources, we lack key monitoring mechanisms such as independent directors and audit committee to oversee and monitor the Company's risk management, business strategies and financial reporting procedures.
|
·
|
We have not designed and implemented controls to maintain appropriate segregation of duties in our manual and computer-based business processes which could affect the Company's purchasing controls, the limits on the delegation of authority for expenditures, and the proper review of manual journal entries.
|
·
|
Our accounting department personnel have limited knowledge and experience in US GAAP and reports with the Securities and Exchange Commission (the "SEC"). To remediate the material weakness, the management has hired an external consultant with extensive experience in US GAAP and reports to the SEC, who is responsible for assisting the Company with (i) the preparation of its financial statements in accordance with US GAAP and (ii) its periodic reports with the SEC.
|
Item 6.
|
Exhibits
|
31
|
Rule 13a-14(a) Certification - CEO and CFO
|
32
|
Rule 13a-14(b) Certification
|
101.INS
|
XBRL Instance
|
101.SCH
|
XBRL Schema XBRL Schema
|
101.CAL
|
XBRL Calculation
|
101.DEF
|
XBRL Definition
|
101.LAB
|
XBRL Label
|
101.PRE
|
XBRL Presentation
|
|
WINHA INTERNATIONAL GROUP LIMITED.
|
|
||||
|
|
|
|
|||
Date: March 25, 2016
|
By:
|
/s/ Chung Yan Winnie Lan
|
|
|||
|
|
Chung Yan Winnie Lan, Chief Executive Officer, Chief Financial and Accounting Officer
|
|
1 Year Willcox (PK) Chart |
1 Month Willcox (PK) Chart |
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