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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, 2016
|
|
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to _____
|
|
|
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)
|
|
Page No
|
|
Part I
|
Financial Information
|
|
Item 1.
|
Financial Statements (unaudited):
|
|
Consolidated Balance Sheets– December 31, 2016 (Unaudited) and March 31, 2016
|
1
|
|
Consolidated Statements of Income and Other Comprehensive Income (Unaudited) - for the Three and Nine Months Ended December 31, 2016 and 2015
|
3
|
|
Consolidated Statement of Changes in Stockholders Equity (Unaudited) for the Nine Months Ended December 31, 2016
|
5
|
|
Consolidated Statements of Cash Flows (Unaudited) – for the Nine Months Ended December 31, 2016 and 2015
|
6
|
|
Notes to Consolidated Financial Statements (Unaudited)
|
8
|
|
Item 2.
|
Management's Discussion and Analysis of Financial Condition and Results of Operations
|
35
|
Item 3
|
Quantitative and Qualitative Disclosures about Market Risk
|
41
|
Item 4.
|
Controls and Procedures
|
41
|
Part II
|
Other Information
|
|
Item 1.
|
Legal Proceedings
|
42
|
Items 1A.
|
Risk Factors
|
42
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
42
|
Item 3.
|
Defaults upon Senior Securities
|
43
|
Item 4.
|
Mine Safety Disclosures
|
43
|
Item 5.
|
Other Information
|
43
|
Item 6.
|
Exhibits
|
43
|
Signatures
|
44
|
ASSETS
|
December 31,
2016
|
March 31,
2016
|
||||||
(Unaudited)
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
13,258,063
|
$
|
21,548,630
|
||||
Accounts receivable
|
8,202,351
|
1,417,860
|
||||||
Inventories
|
666,200
|
1,523,959
|
||||||
Advances to suppliers
|
78,768
|
151,230
|
||||||
Prepaid expenses
|
2,231,274
|
174,010
|
||||||
Deferred tax assets
|
-
|
32,810
|
||||||
Total current assets
|
24,436,656
|
24,848,499
|
||||||
Property, plant and equipment, net
|
11,894,362
|
1,847,977
|
||||||
Website - net
|
6,349
|
45,676
|
||||||
Investment
|
720,800
|
-
|
||||||
Prepaid expenses - noncurrent
|
2,500,978
|
-
|
||||||
Deferred registration costs
|
51,898
|
212,312
|
||||||
TOTAL ASSETS
|
$
|
39,611,043
|
$
|
26,954,464
|
Three Months Ended
December 31,
|
Nine Months Ended
December 31,
|
|||||||||||||||
|
2016
|
2015
|
2016
|
2015
|
||||||||||||
Revenues
|
$
|
16,686,167
|
$
|
11,458,651
|
$
|
45,470,149
|
$
|
26,855,768
|
||||||||
Cost of revenues
|
9,535,901
|
5,233,444
|
24,529,336
|
12,371,251
|
||||||||||||
Gross profit
|
7,150,266
|
6,225,207
|
20,940,813
|
14,484,517
|
||||||||||||
Operating expenses:
|
||||||||||||||||
Selling and marketing
|
449,185
|
236,400
|
1,440,856
|
650,135
|
||||||||||||
General and administrative
|
890,906
|
504,860
|
1,970,981
|
1,133,385
|
||||||||||||
Finance expenses
|
6,182
|
-
|
22,414
|
-
|
||||||||||||
Total operating expenses
|
1,346,273
|
741,260
|
3,434,251
|
1,783,520
|
||||||||||||
Income from operations
|
5,803,993
|
5,483,947
|
17,506,562
|
12,700,997
|
||||||||||||
Other non-operating income
|
155
|
6,109
|
5,212
|
7,194
|
||||||||||||
Other non-operating (expenses)
|
(1,914
|
)
|
-
|
(458,280
|
)
|
-
|
||||||||||
Total non-operating income(expense)
|
(1,759
|
)
|
6,109
|
(453,068
|
)
|
7,194
|
||||||||||
Income before provision for income taxes
|
5,802,234
|
5,490,056
|
17,053,494
|
12,708,191
|
||||||||||||
Provision for income taxes
|
1,529,319
|
1,401,247
|
4,477,314
|
3,218,501
|
Three Months Ended
December 31,
|
Nine Months Ended
December 31,
|
|||||||||||||||
|
2016
|
2015
|
2016
|
2015
|
||||||||||||
Net income before noncontrolling interest
|
4,272,915
|
4,088,809
|
12,576,180
|
9,489,690
|
||||||||||||
Noncontrolling interest
|
1,709,166
|
-
|
5,030,472
|
-
|
Net income attributable to common stockholders
|
$
|
2,563,749
|
$
|
4,088,809
|
$
|
7,545,708
|
$
|
9,489,690
|
||||||||
Earnings per common share, basic and diluted
|
$
|
0.05
|
$
|
0.08
|
$
|
0.15
|
$
|
0.19
|
Weighted average shares outstanding, basic and diluted
|
49,989,500
|
49,989,500
|
49,989,500
|
49,989,500
|
Other Comprehensive income:
|
||||||||||||||||
Net income
|
$
|
4,272,915
|
$
|
4,088,809
|
$
|
12,576,180
|
$
|
9,489,690
|
Foreign currency translation adjustment
|
(798,871
|
)
|
(279,514
|
)
|
(1,501,616
|
)
|
(526,358
|
)
|
||||||||
Comprehensive income
|
3,474,044
|
3,809,295
|
11,074,564
|
8,963,332
|
||||||||||||
Comprehensive income attributable to noncontrollinginterest
|
1,389,617
|
-
|
4,429,825
|
-
|
Comprehensive income attributable to common stockholders
|
$
|
2,084,427
|
$
|
3,809,295
|
$
|
6,644,739
|
$
|
8,963,332
|
Common
Stock
|
Additional
Paid-in
Capital
|
Accumulated
(Deficit)
|
Other
Comprehensive
(Loss)
|
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
|
-
|
-
|
7,545,708
|
-
|
-
|
5,030,472
|
12,576,180
|
|||||||||||||||||||||
Appropriation of statutory reserve
|
-
|
-
|
(329,937
|
)
|
-
|
329,937
|
-
|
-
|
||||||||||||||||||||
Other comprehensive (loss)
|
-
|
-
|
-
|
(900,969
|
)
|
-
|
(600,647
|
)
|
(1,501,616
|
)
|
Balance, December 31, 2016
|
$
|
49,990
|
$
|
21,626,775
|
$
|
(3,880,650
|
)
|
$
|
(1,131,553
|
)
|
$
|
827,380
|
$
|
11,715,445
|
$
|
29,207,387
|
Nine Months Ended
December 31,
|
||||||||
2016
|
2015
|
|||||||
Cash flows from operating activities:
|
||||||||
Net income
|
$
|
12,576,180
|
$
|
9,489,690
|
||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Write off deferred registration costs
|
153,844
|
-
|
||||||
Write off website
|
34,140
|
-
|
||||||
Deferred taxes
|
30,834
|
-
|
||||||
Depreciation of property
|
301,964
|
108,474
|
||||||
Changes in operating assets and liabilities:
|
||||||||
(Increase) in accounts receivable
|
(6,958,589
|
)
|
(623,445
|
)
|
||||
Decrease in inventories
|
872,509
|
1,131,273
|
||||||
Decrease in advances to suppliers
|
55,523
|
73,596
|
||||||
(Increase) decrease in prepaid expenses
|
(5,796,725
|
)
|
115,552
|
|||||
Increase in accounts payable
|
16,364
|
83,884
|
||||||
(Decrease) in advances from customers
|
(668,436
|
)
|
(9,215
|
)
|
||||
Increase in taxes payable
|
502,960
|
1,300,201
|
||||||
Increase in accrued expenses
|
88,226
|
78,973
|
||||||
Net cash provided by operating activities
|
1,208,794
|
11,748,983
|
||||||
Cash flows from investing activities:
|
||||||||
Payments for website expansion
|
-
|
(7,569
|
)
|
|||||
Purchase of investment
|
(720,800
|
)
|
-
|
|||||
Purchase of fixed assets
|
(9,623,726
|
)
|
(378,154
|
)
|
||||
Net cash (used in) investing activities
|
(10,344,526
|
)
|
(385,723
|
)
|
Nine Months Ended
December 31,
|
||||||||
2016
|
2015
|
|||||||
Cash flows from financing activities:
|
||||||||
Advance proceeds for sale of subsidiary's stock
|
6,123,137
|
-
|
||||||
Additional capital contribution
|
-
|
816,001
|
||||||
Proceeds from redeemable convertible notes
|
-
|
5,596,055
|
||||||
Repayment of redeemable convertible notes
|
(5,107,
995
|
)
|
-
|
|||||
Proceeds from stockholder loan-net
|
1,260,804
|
42,987
|
||||||
Net cash provided by financing activities
|
2,275,946
|
6,455,043
|
||||||
Effect of exchange rate changes on cash
|
(1,430,
781
|
)
|
(715,361
|
)
|
||||
Net change in cash
|
(8,290,
567
|
)
|
17,102,942
|
|||||
Cash, beginning of period
|
21,548,630
|
1,103,726
|
||||||
Cash, end of period
|
$
|
13,258,063
|
$
|
18,206,668
|
|||||||||||||||||||||||||||||||
Percentage
of
Shares
|
Shares
issued
|
|||||||
Zhuowei Zhong
|
7
|
%
|
5,040,000
|
|||||
Beijing Ruihua Future Investment Management Co. Ltd.
|
5
|
%
|
3,600,000
|
|||||
Donghe Group Limited
|
5
|
%
|
3,600,000
|
|||||
Xinxi Zhong.
|
5
|
%
|
3,600,000
|
|||||
Zhifei Huang
|
4
|
%
|
2,880,000
|
|||||
Chun Yan Winne Lam
|
3
|
%
|
2,160,000
|
|||||
Sub Total
|
29
|
%
|
20,880,000
|
|||||
Individual Suppliers
|
11
|
%
|
7,920,000
|
|||||
Total
|
40
|
%
|
28,800,000
|
1. |
ORGANIZATION AND BUSINESS (CONTINUED)
|
December 31,
2016
|
March 31,
2016
|
|||||||
(Unaudited)
|
||||||||
Balance sheet items, except for stockholders' equity
|
$
|
0.1440
|
$
|
0.1550
|
||||
For the
Three Months Ended
December 31,
|
||||||||
2016 | 2015 | |||||||
(Unaudited)
|
(Unaudited)
|
|||||||
Amounts included in the statements of operations
|
$
|
0.1457
|
$
|
0.1563
|
||||
For the
Nine Months Ended
December 31,
|
||||||||
2016 | 2015 | |||||||
(Unaudited)
|
(Unaudited)
|
|||||||
Amounts included in the statements of operations, changes in stockholders' equity and cash flows
|
$
|
0.1481
|
$
|
0.1596
|
December 31,
2016
|
March 31,
2016
|
|||||||
(Unaudited)
|
(Unaudited)
|
|||||||
Balance sheet items, except for stockholders' equity
|
$
|
0.7208
|
$
|
0.7668
|
||||
For the
Three Months Ended
December 31,
|
||||||||
2016 | 2015 | |||||||
(Unaudited)
|
(Unaudited)
|
|||||||
Amounts included in the statements of operations
|
$
|
0.7491
|
N/A
|
|||||
For the
Nine Months Ended
December 31,
|
||||||||
2016 | 2015 | |||||||
(Unaudited)
|
(Unaudited)
|
|||||||
Amounts included in the statements of operations, changes in stockholders' equity and cash flows
|
$
|
0.7509
|
N/A
|
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 of content for 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.
|
December 31,
2016
|
March 31,
2016
|
|||||||
(Unaudited)
|
||||||||
Furniture, fixtures and equipment
|
$
|
1,073,338
|
$
|
1,131,124
|
||||
Leasehold improvements
|
567,966
|
629,536
|
||||||
Motor vehicles
|
336,168
|
361,967
|
||||||
Greenhouses
|
435,211
|
-
|
||||||
Fruit orchards
|
10,092,294
|
-
|
||||||
12,504,977
|
2,122,627
|
|||||||
Less: accumulated depreciation
|
(610,615
|
)
|
(274,650
|
)
|
||||
$
|
11,894,362
|
$
|
1,847,977
|
Year Ending March 31,
|
Amount
|
|||
2017
|
$
|
60,171
|
||
2018
|
248,244
|
|||
2019
|
243,097
|
|||
2020
|
1,211,583
|
|||
Thereafter
|
9,938,004
|
|||
Total
|
$
|
11,701,099
|
Three Months Ended
December 31,
|
||||||||
2016
|
2015
|
|||||||
(Unaudited)
|
(Unaudited)
|
|||||||
Current
|
$
|
1,522,778
|
$
|
1,401,274
|
||||
Deferred
|
6,541
|
-
|
||||||
$
|
1,529,319
|
$
|
1,401,274
|
|
Nine Months Ended
December 31,
|
||||||||
2016 |
2015
|
|||||||
(Unaudited)
|
(Unaudited)
|
|||||||
Current
|
$
|
4,446,480
|
$
|
3,218,501
|
||||
Deferred
|
30,834
|
-
|
||||||
$
|
4,477,314
|
$
|
3,218,501
|
For the
Three Months Ended
December 31,
|
For the
Nine Months Ended
December 31,
|
|||||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||
Statutory rate - PRC
|
25.0
|
%
|
25.0
|
%
|
25.0
|
%
|
25.0
|
%
|
||||||||
Change in valuation allowance
|
1.4
|
%
|
-
|
1.3
|
%
|
-
|
||||||||||
Effective income tax rate
|
26.4
|
%
|
25.0
|
%
|
26.3
|
%
|
25.0
|
%
|
December 31,
2016
|
March 31,
2016
|
|||||||
(Unaudited)
|
||||||||
Net operating loss carryforwards
|
$
|
6,547,804
|
$
|
6,333,864
|
||||
Inventory intercompany profit
|
-
|
2,596
|
||||||
Less: valuation allowance
|
(6,547,804
|
)
|
(6,303,650
|
)
|
||||
Net deferred tax asset
|
$
|
-
|
$
|
32,810
|
Other comprehensive (loss)
|
(230,584
|
)
|
||
Total stockholders' equity
|
10,847,203
|
|||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
|
$
|
11,050,554
|
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 (loss)
|
$
|
(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
|
|
December 31,
|
December 31,
|
%
|
|||||||||
|
2016
|
2015
|
Change
|
|||||||||
Revenue
|
$
|
16,686,167
|
$
|
11,458,651
|
46
|
%
|
||||||
Cost of Goods Sold
|
9,535,901
|
5,233,444
|
82
|
%
|
||||||||
Gross profit
|
7,150,266
|
6,255,207
|
14
|
%
|
||||||||
Total operating expenses
|
1,346,273
|
741,260
|
122
|
%
|
||||||||
Income from operations
|
5,803,993
|
5,483,947
|
0
|
%
|
||||||||
Income before provision for income taxes
|
5,802,234
|
5,490,056
|
6
|
%
|
||||||||
Provision for income taxes
|
1,529,319
|
1,401,247
|
9
|
%
|
||||||||
Net income
|
4,272,915
|
4,088,809
|
5
|
%
|
||||||||
Net income attributable to common stockholders
|
$
|
2,563,749
|
$
|
4,088,809
|
37
|
%
|
||||||
Earnings per common share, basic and diluted
|
$
|
0.05
|
$
|
0.08
|
(38
|
%)
|
|
December 31,
|
December 31,
|
%
|
|||||||||
|
2016
|
2015
|
Change
|
|||||||||
Revenue
|
$
|
45,470,149
|
$
|
26,855,768
|
69
|
%
|
||||||
Cost of Goods Sold
|
24,529,336
|
12,371,251
|
98
|
%
|
||||||||
Gross profit
|
20,940,813
|
14,484,517
|
45
|
%
|
||||||||
Total operating expenses
|
3,434,251
|
1,783,520
|
109
|
%
|
||||||||
Income from operations
|
17,506,562
|
12,700,997
|
35
|
%
|
||||||||
Income before provision for income taxes
|
17,053,494
|
12,708,191
|
34
|
%
|
||||||||
Provision for income taxes
|
4,477,314
|
3,218,501
|
39
|
%
|
||||||||
12,576,180
|
9,489,690
|
33
|
%
|
|||||||||
Net income attributable to common stockholders
|
$
|
7,545,708
|
$
|
9,489,690
|
20
|
%
|
||||||
Earnings per common share, basic and diluted
|
$
|
0.15
|
$
|
0.19
|
(21
|
%)
|
·
|
During the year ended March 31, 2016 we initiated franchising operations, and sold 26 franchises, which were supplemented by an additional 18 franchises during the nine months ended December 31, 2016. During the three and nine months ended December 31, 2016,franchise operations contributed $ 1,036,656 and $4,322,366 to revenue, consisting of upfront franchise fees of and monthly administrative fees, respectively, an increase of 10% and 196% over the revenue of $941,292 and $1,458,744 that we realized during the three and nine months ended December 31, 2015.
|
·
|
At June 30, 2016 our retail operations consisted of seven stores and two restaurants. During the three months ended September 30, 2016, we transferred control of six of the retail stores (those in Sanshui, Shunde, Chancheng, Xiaolan, Dongguan and Guangzhou) to six unrelated individuals. We now market to those six stores as a wholesale provider. As a result, our retail sales for the nine months ended December 31, 2016 fell by $1,076,236 compared to the comparable period of fiscal year 2016 (with a reduction of $931,094 for the quarter ended December 31, 2016 from the quarter ended December 31, 2015); but we recorded wholesale sales of $4,965,320 in the recent nine month period, with no comparable sales in the nine months ended December 31, 2015.
|
|
December 31,
|
December 31,
|
||||||
|
2016
|
2015
|
||||||
Retail stores and other retail sales
|
$
|
2,534,552
|
$
|
3,465,646
|
||||
Custom-made
|
10,017,018
|
7,051,713
|
||||||
Franchises
|
1,036,656
|
941,292
|
||||||
Wholesale
|
3,097,941
|
|||||||
Total
|
$
|
16,686,167
|
$
|
11,458,651
|
|
December 31,
|
December 31,
|
||||||
|
2016
|
2015
|
||||||
Retail stores and other retail sales
|
$
|
6,469,115
|
$
|
7,545,351
|
||||
Custom-made
|
29,713,348
|
17,851,673
|
||||||
Franchises
|
4,322,366
|
1,458,744
|
||||||
Wholesale
|
4,965,320
|
|||||||
Total
|
$
|
45,470,149
|
$
|
26,855,768
|
|
Nine months ended
December 31,
2016
|
Nine months
ended
December 31,
2015
|
||||||
Net cash provided (used) by operating activities
|
$
|
1,208,794
|
$
|
11,748,983
|
||||
Net cash (used in) investing activities
|
$
|
(10,344,526
|
)
|
$
|
(385,723
|
)
|
||
Net cash provided by financing activities
|
$
|
2,275,946
|
$
|
6,455,043
|
ITEM 3. |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
·
|
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 3.
|
Defaults Upon Senior Securities
.
|
|
None.
|
|
|
Item 4.
|
Mine Safety Disclosures.
|
|
Not Applicable.
|
Item 5.
|
Other Information.
|
|
None.
|
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: February 21, 2017
|
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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