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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 | 21:14:04 |
☒ |
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐ |
TRANSITION REPORT PURSUANT TO 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
Weguishan Town, Zhongshan City, P.R. China 528458
|
|
(Address of Principal Executive Offices)
|
|
Page
|
|
|
PART I
|
|
ITEM 1.
|
BUSINESS
|
1
|
ITEM 1A.
|
RISK FACTORS
|
5
|
ITEM 1B.
|
UNRESOLVED STAFF COMMENTS
|
11
|
ITEM 2.
|
PROPERTIES
|
11
|
ITEM 3.
|
LEGAL PROCEEDINGS
|
12
|
ITEM 4.
|
MINE SAFETY DISCLOSURES
|
12
|
|
PART II
|
|
ITEM 5.
|
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
12
|
ITEM 6.
|
SELECTED FINANCIAL DATA
|
13
|
ITEM 7.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
13
|
ITEM 7A.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
16
|
ITEM 8.
|
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
16
|
ITEM 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
47
|
ITEM 9A.
|
CONTROLS AND PROCEDURES
|
47
|
ITEM 9B.
|
OTHER INFORMATION
|
48
|
|
PART III
|
|
ITEM 10.
|
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
48
|
ITEM 11.
|
EXECUTIVE COMPENSATION
|
49
|
ITEM 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
50
|
ITEM 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|
51
|
ITEM 14.
|
PRINCIPAL ACCOUNTANT FEES AND SERVICES
|
51
|
|
PART IV
|
|
ITEM 15.
|
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
|
52
|
Product
|
Sales Revenue
|
|||
Yushu Wild Cordyceps Sinensis (mushroom)
|
$
|
2,424,275
|
||
30-year JiShao DiaoHuang Rice Wine Gift Box
|
1,658,014
|
|||
30-year JiShao DiaoHuang Rice Wine (5L)
|
1,616,784
|
|||
30-year JiShao DiaoHuang Rice Wine (2.5L)
|
1,067,633
|
|||
Snow Mountain Farm Wild Morcella
|
1,044,189
|
|||
Tianlu Ripasso (wine)
|
1,037,737
|
|||
Wild Ginseng Gift Box
|
1,010,491
|
|||
Ken Gen Di Ke Lan Mountain Villa (wine)
|
936,150
|
|||
Chateau Kiwi Merlot
|
916,140
|
|||
Organic Sunflower Oil Gift Box
|
871,751
|
Product
|
Sales Revenue
|
|||
Mangosteen
|
$
|
2,223,351
|
||
30-year Chenjishaodiaohuang Wine
|
863,461
|
|||
Kiwi fruit
|
795,154
|
|||
30-year Chenjishaodiaohuang Wine - gift box
|
783,569
|
|||
American red pear
|
755,966
|
|||
Pitaya fruit
|
745,968
|
|||
Cucumis metuliferus
|
728,156
|
|||
Taiwan sweet nectarine
|
659,681
|
|||
Moon cake of Zunlong Yayue
|
642,134
|
|||
Superfine gold pear
|
624,147
|
Class
|
City
|
Franchisees
|
First-Tier City
|
Shenzhen
|
1
|
Guangzhou
|
9
|
|
Second-Tier City
|
Foshan
|
2
|
Dongguan
|
6
|
|
Shantou
|
5
|
|
Zhuhai
|
8
|
|
Third-Tier City
|
Zhongshan
|
2
|
Zhanjiang
|
5
|
|
Jiangmen
|
5
|
|
Huizhou
|
1
|
Class
|
Franchise Fee (1x)
|
Floor Space
|
Management Fee (monthly)
|
First-Tier City
|
600,000 RMB (89,153 US$)
|
Up to 100 m
2
|
70,000 RMB (10,401 US$)
|
Up to 200 m
2
|
80,000 RMB (11,887 US$)
|
||
Up to 300 m
2
|
100,000 RMB (14,859 US$)
|
||
Second-Tier City
|
550,000 RMB (81,724 US$)
|
Up to 100 m
2
|
50,000 RMB (7,429 US$)
|
Up to 200 m
2
|
60,000 RMB (8,915 US$)
|
||
Up to 300 m
2
|
70,000 RMB (10,401 US$)
|
||
Third-Tier City
|
450,000 RMB (66,865 US$)
|
Up to 200 m
2
|
40,000 RMB (5,943 US$)
|
Up to 300 m
2
|
50,000 RMB (7,429 US$)
|
Subsidiary
|
Location
|
Sq. Meters
|
Zhongshan Winha
|
P89, First Floor, No. 17, Chancheng District, Foshan City
|
197
|
Zhongshan Winha Catering Management Co., Ltd.
|
Floors 1 and 2, Tianbo Bldg., B Factory, No. 19 Changyi Rd., Changmingshui Industrial Park, Wuguishan
|
1,045
|
Zhongshan Winha
|
First Berth, No. 43 Tongle Road, Dongshen Town
|
250
|
Province/City
|
Parcels (#)
|
Acres
|
Crops
|
Anhui
|
2
|
52.72
|
quince, grape
|
Beijing
|
2
|
67.82
|
pear, peach
|
Fujian
|
3
|
73.64
|
pomelo, loquat, kumquat
|
Gansu
|
1
|
28.50
|
apricot
|
Guangdong
|
7
|
231.80
|
plum, orange, waxberry, olive, acrumenn, peach, litchi
|
Guanxi
|
1
|
25.70
|
orange
|
Guizhou
|
1
|
31.80
|
banboo shoot
|
Hainan
|
2
|
48.60
|
mango, orange
|
Hebei
|
3
|
100.49
|
peach, jujube, pear
|
Heilongjiang
|
1
|
26.69
|
blueberry
|
Hubei
|
1
|
26.69
|
kiwi
|
Jiangsu
|
1
|
40.03
|
waxberry
|
Jiangxi
|
4
|
97.37
|
tangerine, orange, kumquat
|
Ningxia
|
1
|
49.75
|
goji berry
|
Qinghai
|
2
|
59.14
|
cherry, pear
|
Shaanxi
|
1
|
26.03
|
date
|
Shandong
|
2
|
54.86
|
apple, pear
|
Sichuan
|
3
|
75.13
|
peach, kiwi, loquat
|
Yunnan
|
3
|
69.53
|
loquat, apple, peach
|
Bid
|
||||||||
Quarter Ending
|
High
|
Low
|
||||||
June 30, 2015
|
$
|
2.75
|
$
|
2.75
|
||||
September 30, 2015
|
$
|
2.75
|
$
|
2.75
|
||||
December 31, 2015
|
$
|
2.75
|
$
|
2.75
|
||||
March 31, 2016
|
$
|
3.75
|
$
|
2.75
|
||||
June 30, 2016
|
$
|
3.77
|
$
|
3.00
|
||||
September 30, 2016
|
$
|
3.89
|
$
|
3.76
|
||||
December 31, 2016
|
$
|
3.95
|
$
|
3.49
|
||||
March 31, 2017
|
$
|
3.95
|
$
|
3.25
|
·
|
the consolidated operations of Winha International and its subsidiaries, including Zhongshan Winha, from April 1, 2016 through December 31, 2016;
|
·
|
the consolidated operations of Winha International and its immediate subsidiaries, but not including Australian Winha and its subsidiaries, for the period from January 1, 2017 through March 31, 2017; and
|
·
|
44.87% of the net loss recorded by Australian Winha and its subsidiaries during the period from January 1, 2017 through March 31, 2017.
|
·
|
the initiation of franchising operations towards the end of fiscal year 2016 resulted in franchise-related revenue of $4,322,366 during the nine months ended December 31, 2016,compared to $3,055,692 during the year ended March 31, 2016; and
|
·
|
the initiation of wholesale operations during the summer of 2016 yielded $4,965,320 in revenue during the nine months ended December 31, 2016, compared to no such revenue during the year ended March 31, 2016.
|
F-17
|
Report of Independent Registered Public Accounting Firm
|
F-18
|
Consolidated Balance Sheets as of March 31, 2017 and 2016.
|
F-20
|
Consolidated Statements of Operations and Comprehensive Income (Loss) for the Years Ended March 31, 2017 and 2016.
|
F-22
|
Consolidated Statement of Changes in Stockholders’ Equity for the Years Ended March 31, 2017 and 2016.
|
F-24
|
Consolidated Statements of Cash Flows for the Years Ended March 31, 2017 and 2016.
|
F-26 to F-46
|
Notes to Consolidated Financial Statements.
|
ASSETS
|
2017
|
2016
|
||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
-
|
$
|
21,548,630
|
||||
Accounts receivable
|
-
|
1,417,860
|
||||||
Inventory
|
-
|
1,523,959
|
||||||
Advances to suppliers
|
-
|
151,230
|
||||||
Prepaid expenses
|
-
|
174,010
|
||||||
Deferred tax assets
|
-
|
32,810
|
||||||
Total current assets
|
-
|
24,848,499
|
||||||
Equity investment
|
13,042,386
|
-
|
||||||
Property, plant and equipment, net
|
-
|
1,847,977
|
||||||
Website - net
|
-
|
45,676
|
||||||
Deferred registration cost
|
-
|
212,312
|
||||||
TOTAL ASSETS
|
$
|
13,042,386
|
$
|
26,954,464
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
2017
|
2016
|
||||||
Current liabilities:
|
||||||||
Accounts payable
|
$
|
57,045
|
$
|
208,866
|
||||
Convertible debt
|
-
|
5,435,466
|
||||||
Advances from customers
|
-
|
769,814
|
||||||
Taxes payable
|
-
|
1,683,909
|
||||||
Accrued expenses
|
30,000
|
246
,
387
|
||||||
Loan from stockholder
|
118,680
|
477,199
|
||||||
Total current liabilities
|
205,725
|
8,821,641
|
||||||
Commitments and contingent liabilities
|
-
|
-
|
||||||
Stockholders’ equity:
|
||||||||
Common stock, $0.001 par value per share, 200,000,000 shares authorized; 49,989,500 shares issued and outstanding as of March 31, 2017 and 2016
|
49,990
|
49,990
|
||||||
Additional paid-in
capital
|
16,021,164
|
21,626,775
|
||||||
Statutory reserve
|
-
|
497,443
|
||||||
Retained earnings (deficit)
|
(3,235,951
|
)
|
(11,096
,
421
|
)
|
||||
Other comprehensive income (loss)
|
1,458
|
(230,584
|
)
|
|||||
Sub total
|
12,836
,
661
|
10,847,203
|
||||||
Noncontrolling interests
|
-
|
7,285,620
|
||||||
Total stockholders’ equity
|
12,836
,
661
|
18,132,823
|
||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$
|
13,042,386
|
$
|
26,954,464
|
Year Ended
March 31,
|
||||||||
2017
|
2016
|
|||||||
Revenues
|
$
|
45,470,149
|
$
|
42,442,485
|
||||
Cost of goods sold
|
24,529,336
|
19,992,753
|
||||||
Gross profit
|
20,940,813
|
22,449,732
|
||||||
Operating expenses:
|
||||||||
Selling and marketing
|
1,440,856
|
2,492,594
|
||||||
General and administrative
|
2,117,895
|
23,605,484
|
||||||
Total operating expenses
|
3,558,751
|
26,098,078
|
||||||
Income (loss) from operations
|
17,382,062
|
(3,648,346
|
)
|
|||||
Other income (expense):
|
||||||||
Other income
|
5,212
|
25,256
|
||||||
Other (expenses)
|
(458,280
|
)
|
(99,755
|
)
|
||||
Deconsolidation (loss)
|
(4,431,367
|
)
|
-
|
|||||
Investment (loss)
|
(103,635
|
)
|
-
|
|||||
Total other (expense)
|
(4
,
988,070
|
)
|
(74,499
|
)
|
||||
Income (loss) before provision for income taxes
|
12
,
393
,
992
|
(3,722,845
|
)
|
|||||
Provision for income taxes
|
4,477,314
|
4,542,327
|
||||||
Net income (loss) before noncontrolling interests
|
7,916,678
|
(8,265,172
|
)
|
|||||
Noncontrolling interests
|
5,030,472
|
3,039,948
|
||||||
Net income (loss) attributable to common stockholders
|
$
|
2,886,206
|
$
|
(11,305,120
|
)
|
Year Ended
March 31,
|
||||||||
|
2017
|
2016
|
||||||
Net income (loss) per common share, basic and diluted
|
$
|
0.0
6
|
$
|
(0.23
|
)
|
|||
Weighted average shares outstanding, basic and diluted
|
49,989,500
|
49,989,500
|
||||||
Comprehensive income (loss):
|
||||||||
Net income (loss)
|
7,916,678
|
(8,265,172
|
)
|
|||||
Foreign currency translation adjustment
|
(1,497,395
|
)
|
(414,183
|
)
|
||||
Comprehensive income (loss)
|
6
,
419
,
283
|
(8,679,355
|
)
|
|||||
Comprehensive income attributable to noncontrolling interests
|
4,429,826
|
2,873,992
|
||||||
Comprehensive income (loss) attributable to common stockholders
|
$
|
1
,
989,457
|
$
|
(11,553,347
|
)
|
Common
Stock
|
Additional
Paid-in
Capital
|
Retained
Earnings (Deficit)
|
Other
Comprehensive
(loss)
|
Statutory
Reserve
Fund
|
Non-
controlling
Interests
|
Total
|
||||||||||||||||||||||
Balance, March 31, 2015
|
$
|
49,990
|
$
|
2,666,582
|
$
|
1,114,566
|
$
|
31,720
|
$
|
252,053
|
$
|
-
|
$
|
4,114,911
|
||||||||||||||
Additional capital contribution from principal stockholder
|
-
|
816,001
|
-
|
-
|
-
|
-
|
816,001
|
|||||||||||||||||||||
Acquisition of VIE noncontrolling
interest
|
-
|
(1,550
|
)
|
-
|
-
|
-
|
-
|
(1,550
|
)
|
|||||||||||||||||||
Subsidiary stock issued
for compensation
|
-
|
21,882,816
|
-
|
-
|
-
|
-
|
21,882,816
|
|||||||||||||||||||||
Reclassification for issuance of subsidiary stock for compensation
|
-
|
(3,737,074
|
)
|
(559,656
|
)
|
(14,077
|
)
|
(100,821
|
)
|
4,411,628
|
-
|
|||||||||||||||||
Net (loss) income
|
-
|
-
|
(11,305,120
|
)
|
-
|
-
|
3,039,948
|
(8,265,172
|
)
|
|||||||||||||||||||
Appropriation of statutory reserve
|
-
|
-
|
(346,211
|
)
|
-
|
346,211
|
-
|
-
|
||||||||||||||||||||
Other comprehensive (loss)
|
-
|
-
|
-
|
(248,227
|
)
|
-
|
(165,956
|
)
|
(414,183
|
)
|
||||||||||||||||||
Balance, March 31, 2016
|
$
|
49,990
|
$
|
21,626,775
|
$
|
(11,096,421
|
)
|
$
|
(230,584
|
)
|
$
|
497,443
|
$
|
7,285,620
|
$
|
18,132,823
|
Common
Stock
|
Additional
Paid-in
Capital
|
Retained
Earnings
(Deficit)
|
Other
Comprehensive Income
|
Statutory
Reserve
Fund
|
Non-
controlling
Interests
|
Total
|
||||||||||||||||||||||
Balance, March 31, 2016
|
$
|
49,990
|
$
|
21,626,775
|
$
|
(11,096,421
|
)
|
$
|
(230,584
|
)
|
$
|
497,443
|
$
|
7,285,620
|
$
|
18,132,823
|
||||||||||||
Net income
|
-
|
-
|
2,886,206
|
-
|
-
|
5,030,472
|
7,916,678
|
|||||||||||||||||||||
Appropriation of statutory reserve
|
-
|
-
|
(
329,937
|
)
|
-
|
329,937
|
-
|
-
|
||||||||||||||||||||
Elimination due to deconsolidation
|
-
|
(5,605,611
|
)
|
5,304,201
|
1,128,79
0
|
(827,380
|
)
|
(11,715,445
|
)
|
(11,715,445
|
)
|
|||||||||||||||||
Other comprehensive (loss)
|
-
|
-
|
-
|
(
896
,
748
|
)
|
-
|
(600,647
|
)
|
(1,497,395
|
)
|
||||||||||||||||||
Balance, March 31, 2017
|
$
|
49,990
|
$
|
16,021,164
|
$
|
(3,235,951
|
)
|
$
|
1,458
|
$
|
-
|
$
|
-
|
$
|
12,836
,
661
|
Years Ended
March 31,
|
||||||||
2017
|
2016
|
|||||||
Cash flows from operating activities:
|
||||||||
Net income (loss)
|
$
|
7,916,678
|
$
|
(8,265,172
|
)
|
|||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
|
||||||||
Deconsolidation loss
|
4,431,367
|
-
|
||||||
Investment loss
|
103,635
|
-
|
||||||
Write off deferred registration costs
|
153,844
|
-
|
||||||
Write off website
|
34,140
|
-
|
||||||
Deferred taxes
|
30,835
|
(32,810
|
)
|
|||||
Depreciation and amortization
|
304,324
|
203,564
|
||||||
Stock
compensation
|
-
|
21,882,816
|
||||||
Changes in operating assets and liabilities:
|
||||||||
(Increase) in accounts receivable
|
(6,958,589
|
)
|
(171,660
|
)
|
||||
Decrease in inventories
|
872,509
|
1,097,696
|
||||||
Decrease in advances to suppliers
|
55,523
|
72,799
|
||||||
(Increase) in prepaid expenses
|
(5,799,085
|
)
|
(28,486
|
)
|
||||
(Decrease) in accounts payable
|
(3,374
|
)
|
(96,679
|
)
|
||||
(Decrease) increase in advances from customers
|
(668,436
|
)
|
37,602
|
|||||
Increase in taxes payable
|
502,960
|
1,203,370
|
||||||
Increase in accrued expenses
|
88,226
|
180,360
|
||||||
Net cash provided by operating activities
|
1
,0
64
,
557
|
16,083,400
|
||||||
Cash flows from investing activities:
|
||||||||
Acquisition of subsidiary
|
-
|
(1,550
|
)
|
|||||
Payments for website expansion
|
-
|
(10,234
|
)
|
|||||
Purchase of investment
|
(720,800
|
)
|
-
|
|||||
Purchase of
fixed assets
|
(9,623,726
|
)
|
(1,705,551
|
)
|
||||
Deconsolidation of cash
|
(13,258,063
|
)
|
-
|
|||||
Net cash (used in) investing activities
|
(23,602,589
|
)
|
(1,717,335
|
)
|
Years Ended
March 31,
|
||||||||
2017
|
2016
|
|||||||
Cash flows from financing activities:
|
||||||||
Proceeds from convertible debt
|
-
|
5,537,359
|
||||||
Repayment of redeemable convertible notes
|
(5,107,995
|
)
|
-
|
|||||
Advance proceeds for sale of subsidiary's stock
|
6,123,137
|
-
|
||||||
Additional capital contribution
|
-
|
816,001
|
||||||
Proceeds from stockholder loan-net
|
1,260,804
|
404,971
|
||||||
Deferred registration costs
|
-
|
(212,312
|
)
|
|||||
Net cash provided by financing activities
|
2,275,946
|
6,546,019
|
||||||
Effect of exchange rate changes on cash
|
(1,286,544
|
)
|
(467,180
|
)
|
||||
Net change in cash
|
(21,548,630
|
)
|
20,444,904
|
|||||
Cash, beginning of year
|
21,548,630
|
1,103,726
|
||||||
Cash, end of year
|
$
|
-
|
$
|
21,548,630
|
||||
Supplemental disclosure of cash flow information:
|
||||||||
Cash paid for interest
|
$
|
191,844
|
$
|
-
|
||||
Cash paid for income taxes
|
$
|
3,911,672
|
$
|
3,568,799
|
Noncash financing activities:
|
||||||||
Payment of accrued expenses and other payables by shareholder
in the form of a loan
|
$
|
363,115
|
$
|
41,328
|
||||
Property, equipment, construction in process transferred from prepayment
|
$
|
1,051,888
|
$
|
-
|
Percentage
of Shares
|
||||
Zhuowei Zhong
|
7
|
%
|
||
Beijing Ruihua Future Investment Management Co. Ltd.
|
5
|
%
|
||
Donghe Group Limited
|
5
|
%
|
||
Xinxi Zhong.
|
5
|
%
|
||
Zhifei Huang
|
4
|
%
|
||
Chun Yan Winne Lam
|
3
|
%
|
||
Total
|
29
|
%
|
March 31,
2017
|
March 31,
2016
|
|||||||
Balance sheet items, except for stockholders’ equity, as of period end
|
N/A
|
$
|
0.1550
|
|||||
Year Ended
March 31,
2017
|
Year Ended
March 31,
2016
|
|||||||
Amounts included in the statements of operations, statements of changes in stockholders’ equity and statements of cash flows
|
$
|
0.1486
|
$
|
0.1579
|
March 31,
2017
|
March 31,
2016
|
|||||||
Balance sheet items, except for stockholders’ equity, as of period end
|
$
|
0.7644
|
$
|
0.7668
|
||||
Year Ended
March 31,
2017
|
Year Ended
March 31,
2016
|
|||||||
Amounts included in the statements of operations, statements of changes in stockholders’ equity and statements of cash flows
|
$
|
0.7532
|
$
|
0.7361
|
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.
|
a)
|
Retail stores - The Company recognizes sales revenue from its 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 when the customer purchases merchandise by using the shopping card.
|
When the current fiscal year began, the Company had operated seven retail stores. During the three months ended September 30, 2016, the Company assigned the operation of six of its retail stores in Sanshui, Shunde, Chancheng, Xiaolan, Dongguan and Guangzhou to six independent individuals. Revenues are derived from the sale of food products to these six stores and one store that the Company operates. The Company recognizes revenue for product sales upon transfer of title to the six stores. Purchase orders and/or contracts are generally used to determine the existence of an arrangement. Shipping documents and the completion of any store acceptance requirements, when applicable, are used to verify product delivery. The Company assesses whether a price is fixed or determinable based upon the payment terms associated with the transaction and whether the sales price is subject to refund or adjustment
|
|
During the year ended March 31, 2017, wholesale revenue of $4,965,320 was generated from these six stores.
|
|
b)
|
Custom-made sales - 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 $29,713,348 and $29,943,950, respectively, for years ended March 31, 2017 and 2016, respectively.
|
c)
|
Franchise and management fees
|
During the three months ended September 30, 2015, the Company commenced franchising the use of the Company’s trademark, name identification and other business resources. The franchisee is required to pay franchise fees and management fees to Zhongshan Winha. Franchise fee revenue from franchise sales is recognized only when all material services or conditions relating to the sale have been substantially performed or satisfied by the Company. The franchise and management fees recognized by the Company were $4,322,366 and $3,055,692 for the years ended
March 31, 2017 and 2016, respectively,
and are included in revenue.
|
Level 1 Inputs
|
– Unadjusted quoted market prices for identical assets and liabilities in an active market that the Company has the ability to access.
|
Level 2 Inputs
|
– Inputs other than the quoted prices in active markets that are observable either directly or indirectly.
|
Level 3 Inputs
|
– Inputs based on prices or valuation techniques that are both unobservable and significant to the overall fair value measurements.
|
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
|
Greenhouses
|
3 years
|
Fruit orchards
|
Not yet producing
|
March 31,
2017
|
March 31,
2016
|
|||||||
Furniture, fixtures and equipment
|
$
|
-
|
$
|
1,131,124
|
||||
Leasehold improvements
|
-
|
629,536
|
||||||
Motor vehicles
|
-
|
361,967
|
||||||
-
|
2,122,627
|
|||||||
Less: accumulated depreciation
|
-
|
(274,650
|
)
|
|||||
$
|
-
|
$
|
1,847,977
|
2017
|
2016
|
|||||||
Current
|
$
|
4,444
,
504
|
$
|
4,575,137
|
||||
Deferred
|
32,810
|
(32,810
|
)
|
|||||
$
|
4,477,314
|
$
|
4,542,327
|
2017
|
2016
|
|||||||
Statutory rate - PRC
|
25.0
|
%
|
(25.0
|
)%
|
||||
Non-deductible deconsolidation loss
|
8.9
|
%
|
-
|
|||||
Non-deductible equity investment loss
|
0.2
|
%
|
-
|
|||||
Non-deductible stock compensation
|
-
|
146.9
|
%
|
|||||
Benefit of carryforward losses
|
0.3
|
%
|
(0.9
|
)%
|
||||
Other
|
1.9
|
%
|
1.0
|
%
|
||||
Effective income tax rate
|
36.1
|
%
|
122.0
|
%
|
March 31,
2017
|
March 31,
2016
|
|||||||
Net operating loss carryforwards
|
$
|
7,203,344
|
$
|
6,333,864
|
||||
Inventory intercompany profit
|
-
|
2,596
|
||||||
Less: valuation allowance
|
(7,203,344
|
)
|
(6,303,650
|
)
|
||||
Net deferred tax asset
|
$
|
-
|
$
|
32,810
|
Year Ended
|
||||
March 31,
2016
|
||||
Revenues
|
||||
Share of earnings from investment in subsidiaries
|
$
|
7,761,602
|
||
Operating expenses
|
||||
Stock compensation
|
(15,865,042
|
)
|
||
General and administrative
|
(161,732
|
)
|
||
Net (loss)
|
$
|
(8,265,172
|
)
|
Year Ended
March 31,
2016
|
||||
Cash flows from operating activities
|
||||
Net income
|
$
|
(8,265,172
|
)
|
|
Adjustments to reconcile net income to net cash provided by (used in) operating activities
|
||||
Share of earnings from investment in subsidiaries
|
(7,761,602
|
)
|
||
Stock compensation
|
15,865,042
|
|||
Increase in accrued expenses and other payables
|
161,732
|
|||
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
|
$
|
116,732
|
·
|
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.
|
Name
|
|
Age
|
|
Position
|
Chung Yan Winnie Lam
|
|
40
|
|
President, Secretary, Treasurer & Director
|
Name
|
|
Age
|
|
Position
|
Zhuowei Zhong
|
|
45
|
|
Chairman of the Board
|
Zhifei Huang
|
40
|
Chief Executive Officer
|
||
Huiwen Huang
|
52
|
Director of Legal Affairs
|
Fiscal
Year
|
Salary
|
Bonus
|
Stock
Awards
|
Option
Awards
|
Other
Compensation
|
||||||||||||||||
Chung Yan Winnie Lam
|
2017 |
--
|
--
|
--
|
--
|
--
|
|||||||||||||||
2016 |
--
|
--
|
--
|
--
|
--
|
||||||||||||||||
2015 |
--
|
--
|
--
|
--
|
--
|
Beneficial Owner
|
Amount
and Nature
of Beneficial
Ownership
(1)
|
Percentage
of Class
|
||||||
Chung Yan Winnie Lam
|
0
|
--
|
||||||
All officers and directors As a group (1 person)
|
0
|
--
|
||||||
Zening Lai
|
35,181,893
|
(2)
|
70.4
|
%
|
(1) Except as otherwise noted, all shares are owned of record and beneficially.
|
(2) Includes 35,181,844 shares owned of record by Pilot International Investment Co., Inc., of which Zening Lai is the sole shareholder.
|
3.1
|
Articles of Incorporation (incorporated by reference to Exhibit 3.1 to the Registration Statement on Form S-1 of the Company filed September 9, 2013 by the Company with the SEC)
|
3.2
|
By-laws (incorporated by reference to Exhibit 3.2 to the Registration Statement on Form S-1 of the Company filed September 9, 2013 by the Company with the SEC)
|
10.1
|
Form of Joint Cooperation Agreement executed by Zhongshan Winha and its franchisees - filed as an exhibit to the Company’s Annual Report on Form 10-K for the year ended March 31, 2016 and incorporated herein by reference.
|
10.2
|
Labor Contract dated April 29, 2016 between Zhongshan Winha Electronic Commerce Company Limited and Zhuowei Zhong
|
10.3
|
Labor Contract dated May 4, 2016 between Zhongshan Winha Electronic Commerce Company Limited and Zhifei Huang
|
31.1
|
Certification of the President of the Company, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
32.1
|
Certification of the President of the Company, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
101 INS
|
XBRL Instance Document*
|
101 SCH
|
XBRL Schema Document*
|
101 CAL
|
XBRL Calculation Linkbase Document*
|
101 DEF
|
XBRL Definition Linkbase Document*
|
101 LAB
|
XBRL Labels Linkbase Document*
|
101 PRE
|
XBRL Presentation Linkbase Document*
|
Dated: July 14, 2017
|
Winha International Group Limited
|
|
|
|
|
|
By:
|
/s/ Chung Yan Winnie Lam
|
|
|
Chung Yan Winnie Lam
|
|
|
(Principal Executive Officer, Principal Financial Officer, and Principal Accounting Officer)
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ Chung Yan Winnie Lam
|
|
President and Sole Director
|
|
July 14, 2017
|
Chung Yan Winnie Lam
|
|
(Principal Executive Officer, Principal Financial Officer, and Principal Accounting Officer)
|
|
|
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