U. S. Securities and Exchange Commission

Washington, D. C. 20549

FORM 10-Q

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended ~~December~~June 3130, ~~2016~~2017

	[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from _____ to _____

Commission File No. 333-191063


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)

Issuer's Telephone Number: 86-760-8896-3655

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files.) Yes ☒ No ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ☐ No ☒

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check One)

Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☒

Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the Registrant's classes of common stock, as of the latest practicable date:

~~February~~August 21, 2017

Common Voting Stock: 49,989,500

WINHA INTERNATIONAL GROUP LIMITED

QUARTERLY REPORT ON FORM 10-Q

FOR THE FISCAL QUARTER ENDED ~~DECEMBER~~JUNE 3130, ~~2016~~2017

TABLE OF CONTENTS

		Page No
Prelim.	Transient Investment Company	i
Part I	Financial Information
Item 1.	Financial Statements (unaudited):
	Consolidated Balance Sheets– December 31, 2016 (Unaudited) and March 31, 2016	1
	Consolidated Balance Sheets– June 30, 2017 (Unaudited) and March 31, 2017	1
	Consolidated Statements of Income and Other Comprehensive Income (Unaudited) - for the Three and Nine Months Ended December 31, 2016 and 2015	3
	Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) - for the Three Months Ended June 30, 2017 and 2016	2
	Consolidated Statement of Changes in Stockholders Equity (Unaudited) for the Nine Months Ended December 31, 2016	5
	Consolidated Statement of Changes in Stockholders Equity (Unaudited) for the Three Months Ended June 30, 2017	4
	Consolidated Statements of Cash Flows (Unaudited) – for the Nine Months Ended December 31, 2016 and 2015	6
	Consolidated Statements of Cash Flows (Unaudited) – for the Three Months Ended June 30, 2017 and 2016	5
	Notes to Consolidated Financial Statements (Unaudited)	8
	Notes to the Consolidated Financial Statements (Unaudited)	6
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	3522
Item 3	Quantitative and Qualitative Disclosures about Market Risk	4125
Item 4.	Controls and Procedures	4125
Part II	Other Information
Item 1.	Legal Proceedings	4226
Items 1A.	Risk Factors	4226
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4226
Item 3.	Defaults upon Senior Securities	4326
Item 4.	Mine Safety Disclosures	4326
Item 5.	Other Information	4326
Item 6.	Exhibits	4326
	Signatures	4427

Transient Investment Company

On January 4, 2017 our subsidiary, Australian Winha Commerce and Trade Limited ("Australian Winha"), completed a public offering of its common stock on the ASX Limited Exchange in Australia. As a result, the beneficial interest of Winha International Group Limited ("Winha International") in Australian Winha was reduced from 60% to 44.87%, thus making our interest in Australian Winha an investment security within the definitions set forth in the Investment Company Act of 1940. Australian Winha owns, indirectly, substantially all of the assets that have appeared on the balance sheets in reports with the Securities and Exchange Commission filed by Winha International for periods prior to January 4, 2017. The reclassification of its interest in Australian Winha to an investment security, therefore, caused Winha International to become an investment company within the definitions set forth in the Investment Company Act of 1940.

The Board of Directors of Winha International has adopted a resolution directing the officers of Winha International to take all appropriate action so that, as soon as reasonably possible, but in any event prior to January 4, 2018, Winha International will cease to be an investment company. Management is endeavoring to effect one or more transactions that will cause investment securities to represent less than 40% of the Company's shareholders equity. Winha International, therefore, qualifies as a "transient investment company" pursuant to SEC Rule 3a-2 promulgated under the Investment Company Act, and is currently exempt from regulation pursuant to that Act. If, however, Winha International ceases to qualify for that exemption (which will occur automatically on January 4, 2018 if management's efforts have not been successful before that date), then Winha International will be required to register as an investment company and restructure its management and operations to comply with the regulations applicable to registered investment companies.

WINHA INTERNATIONAL GROUP LIMITED AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (IN U.S. $)

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

JUNE 30, 2017 AND MARCH 31, 2017

ASSETS	June 30, 2017		March 31, 2017
	(Unaudited)

Dividend receivable	$	1,166,554	$	-

Equity investment		13,710,695		13,042,386

TOTAL ASSETS	$	14,877,249	$	13,042,386

Current liabilities:
Accounts payable		$	60,439			$	57,045

Accrued expenses		50,000			30,000
Loan from stockholder		118,680			118,680

Total current liabilities		229,119			205,725

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 June 30, 2017 and March 31, 2017		49,990			49,990
Additional paid-in capital		16,021,164			16,021,164
(Deficit)		(995,593	)		(3,235,951	)
Other comprehensive (loss) income		(427,431	)		1,458

Total stockholders' equity		14,648,130			12,836,661
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	14,877,249		$	$13,042,386

See accompanying notes to the consolidated financial statements.

WINHA INTERNATIONAL GROUP LIMITED AND SUBSIDIARIES

CONSOLIDATED ~~BALANCE~~STATEMENTS ~~SHEETS~~OF ~~(IN~~OPERATIONS ~~U.S.~~AND $)COMPREHENSIVE INCOME (~~CONTINUED~~LOSS)

LIABILITIES AND STOCKHOLDERS' EQUITY	December 31, 2016			March 31, 2016
	(Unaudited)
Current liabilities:
Accounts payable	$	214,639		$	208,866
Convertible debt		-			5,435,466
Advances from customers		54,353			769,814
Advanced proceeds		6,123,137			-
Taxes payable		2,071,850			1,683,909
Accrued expenses		208,553			246,387
Loan from stockholder		1,731,124			477,199
Total current liabilities		10,403,656			8,821,641
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, 2016 and March 31, 2016		49,990			49,990
Additional paid-in capital		21,626,775			21,626,775
Statutory reserve		827,380			497,443
Accumulated (deficit)		(3,880,650	)		(11,096,421	)
Other comprehensive (loss)		(1,131,553	)		(230,584	)
Sub-total		17,491,942			10,847,203
Noncontrolling interests		11,715,445			7,285,620
Total stockholders' equity		29,207,387			18,132,823
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	39,611,043		$	26,954,464

FOR THE THREE MONTHS ENDED JUNE 30, 2017 AND 2016 (IN U.S. $) (UNAUDITED)

	Three Months Ended June 30,
	2017			2016

Revenues	$	-		$	13,917,834
Cost of goods sold		-			6,422,736

Gross profit		-			7,495,098

Operating expenses:
Selling and marketing		-			560,612
General and administrative		23,394			531,886

Total operating expenses		23,394			1,092,498

Income (loss) from operations		(23,394	)		6,402,600

Other income (expense):
Other income		-			4,082
Investment income		2,263,752			-

Total other income		2,263,752			4,082

Income before provision for income taxes		2,240,358			6,406,682
Provision for income taxes		-			1,531,143

Net income before noncontrolling interests		2,240,358			4,875,539
Noncontrolling interests		-			1,950,216

Net income attributable to common stockholders	$	2,240,358		$	2,925,323

See accompanying notes to the consolidated financial statements.

WINHA INTERNATIONAL GROUP LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF ~~INCOME~~OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (CONTINUED)

FOR THE THREE ~~AND NINE~~ MONTHS ENDED ~~DECEMBER~~JUNE 3130, ~~2016~~2017 AND ~~2015~~2016 (IN U.S. $) (UNAUDITED)

	Three Months Ended December 31,						Nine Months Ended December 31,
	Three Months Ended June 30,
	2016			2015			2016			2015
	2017			2016
Revenues	$	16,686,167		$	11,458,651		$	45,470,149		$	26,855,768
Net income per common share, basic and diluted	$	0.04		$	0.06
Cost of revenues		9,535,901			5,233,444			24,529,336			12,371,251
Weighted average shares outstanding, basic and diluted		49,989,500			49,989,500
Gross profit		7,150,266			6,225,207			20,940,813			14,484,517
Comprehensive income:
Operating expenses:
Net income		2,240,358			4,875,539
Selling and marketing		449,185			236,400			1,440,856			650,135
Foreign currency translation adjustment		(428,889	)		(925,980	)
General and administrative		890,906			504,860			1,970,981			1,133,385
Comprehensive income		1,811,469			3,949,559
Finance expenses		6,182			-			22,414			-
Comprehensive income attributable to noncontrolling interests		-			1,579,823
Total operating expenses		1,346,273			741,260			3,434,251			1,783,520
Comprehensive income attributable to common stockholders	$	1,811,469		$	2,369,736
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

See accompanying notes to the consolidated financial statements.

WINHA INTERNATIONAL GROUP LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF ~~INCOME~~CHANGES ~~AND~~IN ~~COMPREHENSIVE~~STOCKHOLDERS' ~~INCOME~~EQUITY

FOR THE THREE ~~AND NINE~~ MONTHS ENDED ~~DECEMBER~~JUNE 3130, ~~2016~~2017 ~~AND 2015~~ (IN U.S. $) (UNAUDITED)

(CONTINUED)

	Common Stock		Additional Paid-in Capital		(Deficit)			Other Comprehensive Income (Loss)			Total

Balance, March 31, 2017	$	49,990	$	16,021,164	$	(3,235,951	)	$	1,458		$	12,836,661

Net income		-		-		2,240,358			(428,889	)		1,811,469

Balance, June 30, 2017	$	49,990	$	16,021,164	$	(995,593	)	$	(427,431	)	$	14,648,130

	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

See accompanying notes to the consolidated financial statements.

WINHA INTERNATIONAL GROUP LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS'

FOR THE NINE MONTHS ENDED DECEMBER 31, 2016 (IN U.S. $)

		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

See accompanying notes to the consolidated financial statements

WINHA INTERNATIONAL GROUP LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE ~~NINE~~THREE MONTHS ENDED ~~DECEMBER~~JUNE 3130, ~~2016~~2017 AND ~~2015~~2016 (IN U.S. $) (UNAUDITED)

	Nine Months Ended December 31,
	Three Months Ended June 30,
	2016			2015
	2017			2016
Cash flows from operating activities:
Net income	$	122,~~576~~240,~~180~~358		$	94,~~489~~875,~~690~~539
Adjustments to reconcile net income to net cash provided by operating activities:
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Write off deferred registration costs		153,844			-
Investment income		(2,263,752	)		-
Write off website		34,140			-
Depreciation and amortization		-			106,941
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~~97,~~445~~463	)
Decrease in inventories		~~872,509~~-			1328,~~131,273~~798
Decrease in advances to suppliers		~~55,523~~-			7362,~~596~~638
(Increase) decrease in prepaid expenses		(5,796,725	)		115,552
Decrease in prepaid expenses		-			64,322
Increase in accounts payable		16,364			83,884
Decrease in deferred tax assets					25,741
(Decrease) in advances from customers		(668,436	)		(9,215	)
Increase (decrease) in accounts payable		3,394			(5,798	)
Increase in taxes payable		502,960			1,300,201
Increase in advances from customers		-			484,676
Increase in accrued expenses		88,226			78,973
Increase in taxes payable		-			73,634
Net cash provided by operating activities		1,208,794			11,748,983
Increase in accrued expenses		20,000			10,171
Net cash provided by operating activities		-			5,929,199
Cash flows from investing activities:
Payments for website expansion		-			(7,569	)
Purchase of fixed assets		-			(2,265	)
Purchase of investment		(720,800	)		-
Net cash (used in) investing activities		-			(2,265	)
Purchase of fixed assets		(9,623,726	)		(378,154	)
Net cash (used in) investing activities		(10,344,526	)		(385,723	)

Cash flows from financing activities:
Proceeds from stockholder loan-net		-		103,382
Deferred registration costs		-		(23,393

Net cash provided by financing activities		-		79,989

Effect of exchange rate changes on cash		-		(1,031,431

Net change in cash		-		4,975,492
Cash, beginning of year		-		21,548,630

Cash, end of year	$	-		26,524,122

Supplemental disclosure of cash flow information:

Cash paid for income taxes	$	-		1,461,930

Noncash financing activities:

Payment of accrued expenses and other payables by shareholder in the form of a loan	$	-	$	54,388

See accompanying notes to the consolidated financial statements.

WINHA INTERNATIONAL GROUP LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED DECEMBER 31, 2016 AND 2015 (IN U.S. $) (UNAUDITED) (CONTINUED)

	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

Supplemental disclosure of cash flow information:
Cash paid for interest		191,844		-
Cash paid for income taxes	$	3,911,672	$	2,156,687
Noncash financing activities:
Payment of accrued expenses and other payables by shareholder in the form of a loan	$	333,115	$	26,345
Property, equipment, construction in process transferred from prepayment	$	1,051,888	$	-

See accompanying notes to the consolidated financial statements.

WINHA INTERNATIONAL GROUP LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE ~~AND NINE~~ MONTHS ENDED ~~DECEMBER~~JUNE 3130, ~~2016~~2017 AND ~~2015~~2016 (IN U.S. $) (UNAUDITED)

(IN U.S. $) (UNAUDITED)

1. ORGANIZATION AND BUSINESS

Winha International Group Limited ("Winha International") was incorporated in Nevada on April 15, 2013. The subsidiaries of the Company and their principal activities are described as follows:

Winha International and its subsidiaries are collectively referred to as the "Company". The Company ~~initially~~retails ~~retailed its~~ local specialty products, ~~through~~including ~~its seven self~~locally-~~operated~~produced ~~physical stores. During the three months ended September 30~~food, ~~2016~~beverages, ~~the~~and ~~Company~~arts ~~entered into agreements with six individuals to assume the operations of six of its seven retail stores located in Sanshui, Shunde, Chancheng, Xiaolan, Dongguan~~ and ~~Guangzhou~~crafts, ~~which~~from ~~the~~different ~~Company~~regions ~~had~~across ~~itself~~China ~~previously~~through ~~operated.~~its ~~The stores continue to operate under the Company's trade name~~subsidiaries. The Company ~~derives~~will ~~revenues~~provide ~~from~~customers ~~wholesaling~~with ~~its~~access ~~products~~ to ~~these~~a ~~six~~variety ~~stores.~~of ~~The~~local ~~stores~~products ~~are~~that ~~supplemented~~can bytypically ~~two~~only ~~restaurants,~~be ~~the~~found ~~first~~in oflocal ~~which~~stores ~~the~~or ~~Company~~markets ~~opened~~ in ~~April~~specific ~~2015.~~regions Inof ~~addition, the Company has granted 44 franchises to use the Company's tradename, store style and its other resources~~China. ~~The Company plans to open additional restaurants and add additional franchisees during fiscal 2018.~~

~~Until November 27~~Initially, ~~2015,~~ the Company operated its business through a variable interest entity, Zhongshan Winha Electronic Commerce Company Limited ("Zhongshan Winha"), which ~~had~~has two wholly owned limited liability subsidiaries, Zhongshan Supermarket Limited ("Zhongshan Supermarket") and Zhongshan Winha Catering Management Co., Ltd. ("Winha Catering"), as well as three incorporated branches. The Company had the controlling interest in Zhongshan Winha via its wholly owned subsidiary Shenzhen ~~Wanha~~Winha Information Technologies Company Ltd. ("Shenzhen ~~Wanha~~Winha") through a series of contractual arrangements. On November 27, 2015, the shareholders of Zhongshan Winha transferred their stock to Shenzhen ~~Wanha~~Winha, upon the exercise of its option to purchase all of the registered equity. ~~The purchase price was 1 Renminbi (RMB), approximately US $0.16.~~ Zhongshan Winha, ~~therefore,~~ is now a wholly owned subsidiary of Shenzhen ~~Wanha~~Winha. The purchase price was $0.16.

In May 2015, C&V International Company Limited ~~("C&V")~~, a wholly owned subsidiary of Winha International, set up a wholly owned subsidiary, Australia Winha Commerce and Trade ~~International~~ Limited ("Australian Winha"). InFrom February through May 2016, ~~Sanmei~~Winha International ~~Investment~~effected ~~Co., Ltd ("Sanmei Investment"),~~ a ~~company~~reorganization ~~incorporated~~of inits ~~Anguilla on April 23~~subsidiaries, ~~2013,~~with ~~transferred~~the ~~100%~~result ofthat ~~its~~Australian ~~shares to~~ Winha ~~International.~~became ~~Subsequently, Winha International transferred~~ the ~~shares~~indirect ofowner, ~~C&V~~through ~~to Sanmei Investment~~subsidiaries, ~~and C&V transferred the shares~~ of ~~Australian~~Zhongshan Winha, tothe ~~Sanmei~~Company's ~~Investment~~operating subsidiary.

8In March 2016, 29% of the outstanding shares of Australian Winha were transferred to the following individuals and entities, each of which has a direct or indirect relationship with the major shareholder and consultants of the Company.

WINHA INTERNATIONAL GROUP LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE ~~AND NINE~~ MONTHS ENDED ~~DECEMBER~~JUNE 3130, ~~2016~~2017 AND ~~2015~~2016 (IN U.S. $) (UNAUDITED)

(IN U.S. $) (UNAUDITED)

1. ORGANIZATION AND BUSINESS (CONTINUED)

In March 2016, 40% of the 72,000,000 shares of Australian Winha were transferred from Sanmei Investment to the following individuals and entities, which have direct or indirect relationships with the major shareholder or are consultants of the Company:

	Percentage of Shares			Bonus 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

Total		29	%		20,880,000

	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

In addition, 11 individuals, suppliers of Zhongshan Winha, were each sold 1% of Australian Winha shares for $0.0001 per share as follows:

The effect of ~~this~~these ~~transaction~~transactions was to reduce the interest of the Company in its Australian subsidiary by 40%. The Company used the Australian Winha offering price for its initial public offering in Australia to approximate the fair value of the 40% stock issued. The Company recognized stock compensation ~~expense~~ of ~~approximately~~ $21,~~883~~882,~~000~~816 during the year ended March 31, 2016 in general and administrative expenses.

9On January 4, 2017, the Company's 60% owned subsidiary, Australian Winha, was admitted to the ASX Limited Exchange in Australia and there were 24,271,191 ordinary shares issued at an issue price of AUD$0.35 per share to yield net proceeds of AUD$8,494,917 (approximately USD$6,123,000). As a result of the offering, the Company's 60% ownership of Australian Winha was diluted to 44.87%. Because the Company's ownership of Australia Winha is less than 50%, the Company is required to deconsolidate Australia Winha and recognize its share of the earnings (loss) reported by Australian Winha on the equity basis of accounting (See notes 2 and 5).

WINHA INTERNATIONAL GROUP LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE ~~AND NINE~~ MONTHS ENDED ~~DECEMBER~~JUNE 3130, ~~2016~~2017 AND ~~2015~~2016 (IN U.S. $) (UNAUDITED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(IN U.S. $) (UNAUDITED)

1. ORGANIZATION AND BUSINESS (CONTINUED)

The following chart illustrates the Company's current corporate structure.

WINHA INTERNATIONAL GROUP LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2016 AND 2015

(IN U.S. $) (UNAUDITED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting and Presentation

The ~~accompanying~~unaudited interim consolidated financial statements of the Company as of June 30, 2017 and for the three months ended June 30, 2017 and 2016, have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the ~~U.S. Securities and Exchange Commission ("~~SEC") which apply to interim financial statements. Accordingly, they do not include all of the information and footnotes normally required by accounting principles generally accepted in the United States of America for annual financial statements. In the opinion of management, such information contains all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results for the periods presented. The interim consolidated financial information should be read in conjunction with the consolidated financial statements and the notes thereto, included in the Company's Form 10-K filed with the SEC. The results of operations for the three ~~and nine~~ months ended ~~December~~June 3130, ~~2016~~2017 are not necessarily indicative of the results to be expected for future quarters or for the year ending March 31, ~~2017~~2018.

Until November 27, 2015, the consolidated financial statements include the accounts of the Company, its wholly owned subsidiaries and Zhongshan Winha, its VIE, for which it was deemed the primary beneficiary. On November 27, 2015, the VIE structure was terminated upon Shenzhen Wanha exercising its option to purchase all of the registered equity of Zhongshan Winha. Shenzhen Wanha became the sole owner of Zhongshan Winha. All significant inter-company accounts and transactions have been eliminated in consolidation.

All consolidated financial statements and notes to the consolidated financial statements are presented in United States dollars ("US Dollar" or "US$" or "$").

~~Foreign~~Deconsolidation ~~Currency~~of ~~Translation~~Australian Winha and Equity Method on Investment

~~Almost~~On ~~all~~January ~~Company~~4, ~~assets~~2017, ~~and operations are located in either~~ the ~~PRC or Australia. The functional currency for the majority of the~~ Company's ~~operations~~60% isowned ~~the~~subsidiary, ~~Renminbi~~Australian ~~("RMB"). For~~ Winha ~~International~~issued ~~Investment Holdings Company~~24,271,191 ~~the~~ordinary ~~functional~~shares ~~currency~~in isconnection ~~the~~with ~~Hong~~its ~~Kong~~public ~~Dollar~~offering ~~("HKD")~~in Australia. After ~~For~~the ~~Australian Winha~~offering, the ~~functional~~Company's ~~currency~~60% isownership ~~the~~of Australian ~~Dollar~~Winha ~~("AUD"). The~~was ~~Company~~diluted ~~uses~~to ~~the~~44.87%. In ~~United~~our ~~States~~financial ~~Dollar~~statements, ~~("US~~we ~~Dollar"~~consolidated orAustralian ~~"US$"~~Winha oruntil ~~"$")~~January ~~for~~3, ~~financial reporting purposes~~2017. ~~The~~ ~~financial~~Since ~~statements~~January of4, ~~the~~2017, ~~Company~~Winha ~~have~~International ~~been~~accounts ~~translated~~for ~~into~~its USinvestment ~~dollars~~ in ~~accordance~~Australian ~~with~~Winha ~~Financial~~as ~~Accounting~~an ~~Standards~~equity ~~Board~~method ~~("FASB")~~investment ~~Accounting~~subsequent ~~Standards~~to ~~Codification~~the ~~("ASC") 830, "Foreign Currency Matters"~~deconsolidation.

11With the public offering in Australia in January 2017 (see Note 1), the Company no longer consolidates the operations of Australian Winha and its subsidiaries as its ownership was reduced to 44.87% and now recognizes the income (loss) on the equity method of accounting. Accordingly, the information presented in the financial statements and the related footnotes relates to the prior period that was consolidated with the Company.

WINHA INTERNATIONAL GROUP LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE ~~AND NINE~~ MONTHS ENDED ~~DECEMBER~~JUNE 3130, ~~2016~~2017 AND ~~2015~~2016 (IN U.S. $) (UNAUDITED)

(IN U.S. $) (UNAUDITED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Foreign Currency Translation ~~(continued)~~

~~All~~Almost ~~asset~~all ~~and~~Company ~~liability~~assets ~~accounts~~and ~~have~~operations ~~been~~are ~~translated~~located ~~using~~in the ~~exchange~~PRC. The ~~rate~~functional incurrency ~~effect~~for atthe majority of the ~~balance~~Company's ~~sheet~~operations ~~date~~is the Renminbi ("RMB"). ~~Equity~~ ~~accounts~~For ~~have~~Winha ~~been~~International ~~translated~~Investment atHoldings ~~their~~Company, ~~historical~~the ~~exchange~~functional ~~rates~~currency ~~when~~for the ~~capital~~majority ~~transactions~~of ~~occurred. Statements~~its ofoperations ~~income~~is ~~and~~the ~~comprehensive~~Hong ~~income,~~Kong ~~changes~~Dollar in("HKD"). ~~stockholders'~~For ~~equity~~Australian ~~and~~Winha, ~~cash~~the ~~flow~~functional ~~amounts~~currency ~~have~~is ~~been~~the ~~translated~~Australian ~~using~~Dollar ("AUD"). The Company uses the ~~average~~United ~~exchange~~States ~~rate~~Dollar ("US Dollar" or "US$" or "$") for ~~the~~financial ~~periods~~reporting ~~presented~~purposes. ~~Adjustments~~The ~~resulting~~financial ~~from~~statements ~~the translation~~ of the Company's ~~financial~~have ~~statements~~been ~~are~~translated ~~recorded~~into asUS ~~other~~dollars ~~comprehensive~~in ~~income~~accordance ~~(loss)~~with FASB ASC 830, "Foreign Currency Matters."

All asset and liability accounts have been translated using the exchange rate in effect at the balance sheet date. Equity accounts have been translated at their historical exchange rates when the capital transactions occurred. Statements of operations, changes in stockholders' equity and cash flow amounts have been translated using the average exchange rate for the periods presented. Adjustments resulting from the translation of the Company's financial statements are recorded as other comprehensive income (loss).

The exchange rates used to translate amounts in RMB into US dollars for the purposes of preparing the financial statements are as follows:

	December 31, 2016		March 31, 2016
	June 30, 2017		March 31, 2017
	(Unaudited)
Balance sheet items, except for stockholders' equity	$	0.1440	$	0.1550
Balance sheet items, except for stockholders' equity, as of period end	$	0.1475	$	0.1451
	For the Three Months Ended December 31,
	Three Months Ended June 30, 2017		Three Months Ended June 30, 2016
	2016		2015
	(Unaudited)		(Unaudited)
Amounts included in the statements of operations	$	0.1457	$	0.1563
Amounts included in the statements of operations, statements of changes in stockholders' equity and statements of cash flows	$	0.1457	$	0.1531
	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

WINHA INTERNATIONAL GROUP LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2016 AND 2015

(IN U.S. $) (UNAUDITED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Foreign Currency Translation (continued)

The exchange rates used to translate amounts in AUD into US dollars for the purposes of preparing the consolidated financial statements are as follows:

	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

WINHA INTERNATIONAL GROUP LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE ~~AND NINE~~ MONTHS ENDED ~~DECEMBER~~JUNE 3130, ~~2016~~2017 AND ~~2015~~2016 (IN U.S. $) (UNAUDITED)

(IN U.S. $) (UNAUDITED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Foreign Currency Translation (continued)

For the three and nine months ended December 31, 2016 and 2015, foreign currency translation adjustments of $(798,871) and $(279,514), respectively, $(1,501,616) and $(526,358), respectively have been reported as other comprehensive income (loss). Other comprehensive income (loss) of the Company consists entirely of foreign currency translation adjustments. Pursuant to ASC 740-30-25-17, "Exceptions to Comprehensive Recognition of Deferred Income Taxes", the Company does not recognize deferred U.S. taxes related to the undistributed earnings of its foreign subsidiaries and, accordingly, recognizes no income tax expense or benefit from foreign currency translation adjustments.

	June 30, 2017			March 31, 2017
	(Unaudited)

Balance sheet items, except for stockholders' equity, as of period end		$	0.7678		$	0.7644

	Three Months Ended June 30, 2017			Three Months Ended June 30, 2016
	(Unaudited)			(Unaudited)

Amounts included in the statements of operations, statements of changes in stockholders' equity and statements of cash flows		$	0.7508		$	0.7455

~~Although~~For ~~government~~the ~~regulations~~three ~~now~~months ~~allow~~ended ~~convertibility~~June of30, ~~the~~2017 ~~RMB~~and ~~for~~2016, ~~current~~foreign ~~account~~currency ~~transactions~~translation adjustments of $(428,889) ~~significant~~and ~~restrictions~~$(925,980), ~~still~~respectively, ~~remain~~have been reported as other comprehensive (loss). ~~Hence~~Pursuant to ASC 740-30-25-17, ~~such~~"Exceptions ~~translations~~to ~~should~~Comprehensive Recognition of Deferred Income Taxes," the Company does not berecognize ~~construed~~deferred asU.S. ~~representations~~taxes ~~that~~related to the ~~RMB~~undistributed ~~could~~earnings beof ~~converted~~its ~~into~~foreign USsubsidiaries ~~dollars~~and, ataccordingly, ~~that~~recognizes ~~rate~~no income tax expense or ~~any~~benefit ~~other~~from ~~rate~~foreign currency translation adjustments.

~~The~~Although ~~value~~government ofregulations ~~the RMB against the US dollar and other currencies may fluctuate and is affected by, among other things, changes~~ in ~~the~~China ~~PRC's~~now ~~political~~allow ~~and~~convertibility ~~economic conditions. Any significant revaluation~~ of the RMB ~~may~~for ~~materially~~current ~~affect~~account ~~the~~transactions, ~~Company's~~significant ~~financial~~restrictions ~~condition~~still inremain. Hence, ~~terms~~such oftranslations USshould ~~dollar~~not ~~reporting. The~~be ~~PRC~~construed ~~has~~as ~~devalued~~representations that the RMB bycould ~~approximately~~be 6%converted ~~subsequent~~into toUS ~~March~~dollars ~~31,~~at ~~2016.~~that ~~Further~~rate ~~devaluations~~or ~~could~~any ~~occur~~other ~~in the future~~rate.

~~Vulnerability~~The ~~Due~~value Toof ~~Operations~~the RMB against the US dollar and other currencies may fluctuate and is affected by, among other things, changes in the PRC's political and economic conditions. Any significant revaluation of the RMB may materially affect the Company's financial condition in terms of US dollar reporting. The PRC has devalued the RMB by approximately 2% subsequent to March 31, 2017. Further devaluations could occur in the future.

The Company's operations may be adversely affected by significant political, economic and social uncertainties in the PRC. Although the PRC government has been pursuing economic reform policies for more than twenty years, no assurance can be given that the PRC government will continue to pursue such policies or that such policies may not be significantly altered, especially in the event of a change in leadership, social or political disruption or unforeseen circumstances affecting the PRC's political, economic and social conditions. There is also no guarantee that the PRC government's pursuit of economic reforms will be consistent, effective or will continue.10

WINHA INTERNATIONAL GROUP LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE ~~AND NINE~~ MONTHS ENDED ~~DECEMBER~~JUNE 3130, ~~2016~~2017 AND ~~2015~~2016 (IN U.S. $) (UNAUDITED)

(IN U.S. $) (UNAUDITED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Vulnerability Due to Operations in PRC

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

Prepaid Expenses

Prepaid expenses as of December 31, 2016 mainly represent the prepayments of approximately $2,231,000 for the land lease and crop planting expenses. Prepaid expenses as of March 31, 2016, mainly represent the prepayment of approximately $174,000 for prepaid decoration expenses of the Company's new stores. The non-current portion of prepaid expense of approximately $2,501,000 is for the land lease.

Advances from Customers

Advances from customers represents prepaid cards purchased by customers at our retail locations. Advances from customers was $54,353 and $769,814 as of December 31, 2016 and March 31, 2016, respectively. These cards are no longer being issued.

Website Development Costs

The Company accounts for website development costs in accordance with ASC 350-50, "Accounting for Website Development Costs", wherein website development costs are segregated into three activities:

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.

WINHA INTERNATIONAL GROUP LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2016 AND 2015

(IN U.S. $) (UNAUDITED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Website Development Costs (continued)

3. Operating stage, whereby the related costs are expensed as incurred. Upgrades are usually expensed, unless they add additional functionality.

The Company had website costs of $6,349 and $45,676 as of December 31, 2016 and March 31, 2016, respectively. The Company wrote off the net book value of website and development costs of $34,140 due to the discontinuance of the website during the three months ended September 30, 2016. The remaining $6,349 was the cost for the restaurant website. Amortization expense was $957 and $196, $2,360 and $599 for the three and nine months ended December 31, 2016 and December 31, 2015, respectively.

Revenue Recognition

The Company's revenue recognition policies comply with FASB ASC 605 "Revenue Recognition." The Company recognizes product revenue when the following fundamental criteria are met: (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred, (iii) the price paid by the customer is fixed or determinable and (iv) collection of the resulting accounts receivable is reasonably assured. The Company recognizes revenue from the following channels:

~~1. Wholesale~~ 11

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 now derived from the sale of food products to these six stores and one store that the Company operates. The Company recognizes wholesale 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.

WINHA INTERNATIONAL GROUP LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE ~~AND NINE~~ MONTHS ENDED ~~DECEMBER~~JUNE 3130, ~~2016~~2017 AND ~~2015~~2016 (IN U.S. $) (UNAUDITED)

(IN U.S. $) (UNAUDITED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Revenue Recognition (continued)

~~During~~a. ~~the~~Retail ~~three~~stores ~~and~~- ~~nine~~The ~~months~~Company ~~ended~~recognizes ~~December~~sales ~~31,~~revenue ~~2016,~~from ~~wholesale~~its ~~revenue~~retail stores, net of ~~$3,097,941~~sales taxes and ~~$4,965,320~~estimated ~~was~~sales ~~generated~~returns ~~from~~at ~~these~~the ~~six~~time ~~stores~~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.

2When the fiscal year 2017 began, the Company had operated seven retail stores. ~~Custom-made~~ 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.

~~The~~During ~~target customers are commercial customers who can order online or in~~ the ~~Company's~~three ~~local~~months ~~stores~~ended ~~and~~June ~~make full payment on site. All orders are forwarded to Zhongshan Winha immediately~~30, ~~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~~ 2016, ~~there~~wholesale isrevenue ~~persuasive evidence~~ of ~~an arrangement~~ $2,083,498 ~~and~~was ~~the sales price is fixed and determinable. Revenue~~ generated from ~~custom-made~~these ~~sales~~six ~~was $10,017,018 and $7,051,713, $29,713,348 and $17,851,673, respectively, for three and nine months ended December 31, 2016 and 2015, respectively~~stores.

3b. ~~Franchise~~ Custom-made sales - The target customers are commercial customers who can order online or in the Company's local stores and ~~management~~make ~~fees~~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 $9,816,177 for three months ended June 30, 2016.

~~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~~c. ~~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 $1,036,656 and $941,292, $4,322,366 and $1,458,744, respectively, for the three and nine months ended December 31, 2016 and 2015, and are included in revenue.~~

~~Zhongshan~~During ~~Winha~~the ~~grants~~three ~~certain~~months ~~commercial~~ended ~~customers~~September ~~limited~~30, ~~rights~~2015, tothe ~~return~~Company ~~products~~commenced franchising the use of the Company's trademark, name identification and ~~provides~~other ~~price~~business ~~protection~~resources. ~~for~~The ~~inventories~~franchisee ~~held~~is byrequired ~~resellers~~to atpay ~~the~~franchise ~~time~~fees ofand ~~published~~management ~~price~~fees ~~reductions.~~to Zhongshan Winha. ~~establishes~~Franchise anfee ~~estimated~~revenue ~~allowance~~from ~~for~~franchise ~~future~~sales ~~product~~is ~~returns~~recognized ~~based~~only ~~upon~~when ~~historical~~all ~~return~~material ~~experience~~services ~~when~~or conditions relating to the ~~related~~sale ~~revenue~~have isbeen ~~recorded~~substantially performed or satisfied by the Company. The franchise and ~~provides~~management fees recognized by the Company were $1,492,731 for ~~appropriate~~the ~~price~~three ~~protection~~months ~~reserves~~ended ~~when~~June ~~pricing~~30, 2016, ~~adjustments~~and are ~~approved~~included in revenue.

Zhongshan Winha's return policy allows customers to return their merchandise in the original box and/or packaging within 7 days of purchase. The Company has not experienced material returns or price adjustments.12

WINHA INTERNATIONAL GROUP LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE ~~AND NINE~~ MONTHS ENDED ~~DECEMBER~~JUNE 3130, ~~2016~~2017 AND ~~2015~~2016 (IN U.S. $) (UNAUDITED)

(IN U.S. $) (UNAUDITED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Revenue Recognition (continued)

Zhongshan Winha grants certain commercial customers limited rights to return products and provides price protection for inventories held by resellers at the time of published price reductions. Zhongshan Winha establishes an estimated allowance for future product returns based upon historical return experience when the related revenue is recorded and provides for appropriate price protection reserves when pricing adjustments are approved.

Fair Value of Financial Instruments

FASB ASC 820, "Fair Value Measurement," specifies a hierarchy of valuation techniques based upon whether the inputs to those valuation techniques reflect assumptions other market participants would use based upon market data obtained from independent sources (observable inputs). In accordance with ASC 820, the following summarizes the fair value hierarchy:

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.

ASC 820 requires the use of observable market data, when available, in making fair value measurements. When inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. As of December 31, 2016 and March 31, 2016, none of the Company's assets and liabilities were required to be reported at fair value on a recurring basis. Carrying values of non-derivative financial instruments, including cash, accounts receivable, inventory, prepaid expenses, advances to suppliers, accounts payable, accrued expenses, advanced proceeds, convertible debt, taxes payable, advances from customers, and loan from stockholder approximate their fair values due to the short term nature of these financial instruments. There were no changes in methods or assumptions during the periods presented.13

Cash and Cash Equivalents

The Company considers all demand and time deposits and all highly liquid investments with an original maturity of three months or less to be cash equivalents.

WINHA INTERNATIONAL GROUP LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE ~~AND NINE~~ MONTHS ENDED ~~DECEMBER~~JUNE 3130, ~~2016~~2017 AND ~~2015~~2016 (IN U.S. $) (UNAUDITED)

(IN U.S. $) (UNAUDITED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

~~Accounts~~ Fair ~~Receivable~~Value of Financial Instruments (continued)

~~Accounts~~ASC ~~receivable~~820 isrequires ~~stated~~the atuse ~~cost, net~~ of anobservable ~~allowance~~market ~~for~~data, ~~doubtful~~when ~~accounts~~available, ifin ~~required~~making fair value measurements. ~~Receivables~~When ~~outstanding~~inputs ~~longer~~used ~~than~~to measure fair value fall within different levels of the ~~payment~~hierarchy, ~~terms~~the ~~are~~level ~~considered~~within ~~past~~which ~~due. The~~the ~~Company~~fair ~~maintains~~value anmeasurement ~~allowance~~is ~~for~~categorized ~~doubtful~~is ~~accounts~~based ~~for~~on ~~estimated~~the ~~losses~~lowest ~~when~~level ~~necessary~~input ~~resulting~~that ~~from~~is significant to the ~~failure~~fair ofvalue ~~customers~~measurement. Valuation techniques used need to ~~make~~maximize ~~required~~the ~~payments~~use of observable inputs and minimize the use of unobservable inputs. ~~The~~As ~~Company~~of ~~reviews~~June 30, 2017 and March 31, 2017, none of the ~~accounts~~Company's ~~receivable~~assets and liabilities were required to be reported at fair value on a ~~periodic~~recurring basis. Carrying values of non-derivative financial instruments, including accounts payable, accrued expenses and ~~makes~~loan ~~allowances~~from ~~where~~stockholder ~~there~~approximate istheir ~~doubt~~fair asvalues due to the ~~collectability~~short term nature of ~~individual~~these ~~balances~~financial instruments. There were no changes in methods or assumptions during the periods presented.

In evaluating the collectability of individual receivable balances, the Company considers many factors, including the age of the balance, the customer's payment history, its current credit-worthiness and current economic trends. The Company considers all accounts receivable at December 31, 2016 and March 31, 2016 to be fully collectible and, therefore, did not provide an allowance for doubtful accounts. For the periods presented, the Company did not write off any accounts receivable as bad debts.

Inventories

Inventories, comprised of merchandise and food products, are stated at the lower of cost or market. The value of inventory is determined using the weighted average cost method. Inventories also include approximately $67,000 of the costs for growing crops on the leased farmland.

The Company estimates an allowance for excess or unusable inventories. Inventory is reported net of such allowances, if any. There was no allowance for excess or unusable inventories as of December 31, 2016 and March 31, 2016.

WINHA INTERNATIONAL GROUP LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2016 AND 2015

(IN U.S. $) (UNAUDITED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Property, Plant and Equipment

Property, plant and equipment are recorded at cost, less accumulated depreciation. Cost includes the price paid to acquire the asset, and any expenditure that substantially increases the asset's value or extends the useful life of an existing asset. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. Major repairs and betterments that significantly extend original useful lives or improve productivity are capitalized and depreciated over the periods benefited. Maintenance and repairs are generally expensed as incurred.

During the three months ended September 30, 2016, the Company acquired various fruit orchards for $9,425,559. The fruit orchards grow 41 different kinds of fruits in various areas in China. The book value of the orchards includes costs related to saplings, fertilizer, pesticide, water, electricity, labor and land leasing. The planting costs are capitalized. In addition, the Company also capitalized $453,134 for ten greenhouses utilized in the process of growing vegetables.

The estimated useful lives for property, plant and equipment categories are as follows:

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

Impairment of Long-Lived Assets

The Company follows FASB ASC 360, "Accounting for the Impairment and Disposal of Long-Lived Assets", which addresses the financial accounting and reporting for the recognition and measurement of impairment losses for long-lived assets. In accordance with ASC 360, long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company may recognize the impairment of long-lived assets in the event the net book value of such assets exceeds the future undiscounted cash flows attributable to those assets. The Company wrote off its website development costs of $34,140 during the three months ended September 30, 2016.

WINHA INTERNATIONAL GROUP LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2016 AND 2015

(IN U.S. $) (UNAUDITED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Income Taxes

The Company accounts for income taxes in accordance with FASB ASC 740, "Income Taxes", ("ASC 740"), which requires the recognition of deferred income taxes for differences between the basis of assets and liabilities for financial statement and income tax purposes. Deferred tax assets and liabilities represent the future tax consequences for those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Deferred taxes are also recognized for operating losses that are available to offset future taxable income. A valuation allowance is established, when necessary, to reduce deferred tax assets to the amount expected to be realized. ASC 740 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements.

Under ASC 740, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position would be measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. ASC 740 also provides guidance on the de-recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, and accounting for interest and penalties associated with these tax positions. As of ~~December~~June 3130, ~~2016~~2017 and March 31, ~~2016~~2017, the Company did not record any liabilities for unrecognized income tax benefits. The earnings of equity investment will be indefinitely reinvested and accordingly, no deferred taxes will be calculated.

The income tax laws of various jurisdictions in which the Company and its subsidiaries operate are summarized as follows:

~~United States~~14

The Company is subject to United States tax at graduated rates from 15% to 35%. No provision for income tax in the United States has been made as the Company had no U.S. taxable income for the three and nine months ended December 31, 2016 and 2015.

Anguilla

Sanmei International Investment Co, Ltd is incorporated in Anguilla and is governed by the income tax laws of Anguilla. According to current Anguilla income tax law, the applicable income tax rate for the Company is 0%.

WINHA INTERNATIONAL GROUP LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE ~~AND NINE~~ MONTHS ENDED ~~DECEMBER~~JUNE 3130, ~~2016~~2017 AND ~~2015~~2016 (IN U.S. $) (UNAUDITED)

(IN U.S. $) (UNAUDITED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Income Taxes (continued)

United States

Anguilla

Australia

Winha Commerce and Trade ~~International~~ Limited is incorporated in Australia. Pursuant to the income tax laws of Australia, the Company is not subject to tax on non-Australian source income.

Cayman Islands

C&V International ~~Holding~~Holdings Company Limited is incorporated in ~~the~~ Cayman Islands and is governed by the income tax laws of the Cayman Islands. According to current Cayman Islands income tax ~~laws~~law, the applicable income tax rate for the Company is 0%.

Hong Kong

Winha International Investment Holdings Company Limited is incorporated in Hong Kong. Pursuant to the income tax laws of Hong Kong, the Company is not subject to tax on non-Hong Kong source income.

PRC

Shenzhen ~~Wanha Information Technology Co.~~Winha, ~~Ltd. and~~ Zhongshan Winha Electronic Commerce Company Limited, together with Zhongshan Winha Catering Management Company Limited and Zhongshan ~~Winha~~ Supermarket Limited are subject to an Enterprise Income Tax at 25% and each files its own tax return.

2215

WINHA INTERNATIONAL GROUP LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE ~~AND NINE~~ MONTHS ENDED ~~DECEMBER~~JUNE 3130, ~~2016~~2017 AND ~~2015~~2016 (IN U.S. $) (UNAUDITED)

(IN U.S. $) (UNAUDITED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Net Income (Loss) Per Common Share

The Company computes net income (loss) per common share in accordance with FASB ASC 260, "Earnings Per Share." ("ASC 260"). Under the provisions of ASC 260, basic net income (loss) per common share is computed by dividing the net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted income per common share is computed by dividing the net income by the weighted average number of shares of common stock outstanding plus the effect of any potential dilutive shares outstanding during the period. There were no dilutive shares outstanding during the three ~~and nine~~ months ended ~~December~~June 3130, ~~2016~~2017 and ~~2015~~2016. Accordingly, the number of weighted average shares outstanding as well as the amount of net income per share are ~~presented~~the same for basic and diluted per share calculations for the periods reflected in the accompanying consolidated statements of income and other comprehensive income.

Statutory Reserve

The Company's China-based subsidiaries and related entities are required to make appropriations of retained earnings for certain non-distributable reserve funds.

Pursuant to the China Foreign Investment Enterprises laws, the Company's China-based subsidiaries, are required to make appropriations from their after-tax profit as determined under generally accepted accounting principles in the PRC (the "after-tax-profit under PRC GAAP") to a general non-distributable reserve fund. Each year, at least 10% of each entities after-tax-profit under PRC GAAP is required to be set aside as a general reserve fund until the fund equals 50% of the registered capital of the applicable entity.

The statutory reserve fund is restricted as to use and can only be used to ~~set-off~~offset against losses, expansion of production and operations and increasing registered capital of the respective company. The fund is not allowed to be ~~used~~transferred byto the Company ~~for~~in terms of cash dividends, loans or advances, nor is it allowed for distribution except under liquidation.

The required transfer to the statutory reserve fund was $~~329~~276,~~937~~438 ~~and $967,741, respectively,~~ for the ~~nine~~three months ended ~~December~~June 3130, 2016 ~~and 2015, respectively~~.

2316

WINHA INTERNATIONAL GROUP LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE ~~AND NINE~~ MONTHS ENDED ~~DECEMBER~~JUNE 3130, ~~2016~~2017 AND ~~2015~~2016 (IN U.S. $) (UNAUDITED)

(IN U.S. $) (UNAUDITED)

3. RECENTLY ISSUED ACCOUNTING STANDARDS

In ~~August~~February ~~2016~~2017, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") ~~2016~~2017-1505, ~~Statement~~Other Income-Gains and Losses from the Derecognition of ~~Cash~~Nonfinancial ~~Flows~~Assets (~~Topic~~Subtopic ~~230~~610-20): ~~Classification~~Clarifying the Scope of ~~Certain~~Asset ~~Cash~~Derecognition ~~Receipts~~Guidance and ~~Cash~~Accounting ~~Payments.~~for ~~This~~Partial ~~ASU~~Sales ~~addresses~~of ~~the~~Nonfinancial ~~classification~~Assets. ofThis ~~certain~~ASU ~~specific~~requires ~~cash~~all ~~flow~~entities ~~issues~~to ~~including~~derecognize ~~debt~~a ~~prepayment~~business or ~~extinguishment~~nonprofit ~~costs,~~activity ~~settlement~~in ofaccordance ~~certain~~with ~~debt~~Topic ~~instruments~~810, ~~contingent~~and ~~consideration~~also ~~payments~~requires ~~made~~all ~~after~~entities aderecognize ~~business~~an ~~combination,~~equity ~~proceeds~~method ~~from~~investment ~~the~~in ~~settlement~~accordance ofwith ~~certain~~Topic ~~insurance~~860. The ~~claims~~amendments ~~and~~in ~~distributions~~this ~~received~~ASU ~~from~~eliminate ~~equity~~the ~~method~~scope ~~investees~~exceptions, and simplifies GAAP. This ASU is effective for fiscal years beginning after December 15, 2017, ~~and~~including interim reporting periods within ~~those~~that ~~fiscal~~reporting ~~years,~~period. Public ~~with~~entities ~~early~~may ~~adoption~~apply ~~permitted.~~the Anguidance ~~entity~~earlier ~~that~~but ~~elects~~only ~~early~~as ~~adoption~~of ~~must~~annual ~~adopt~~reporting ~~all~~periods ofbeginning ~~the~~after ~~amendments~~December in15, ~~the~~2016, ~~same~~including interim reporting periods within that reporting period. The Company is ~~currently~~ evaluating the ~~effect~~impact of adopting this ~~ASU~~new ~~will~~accounting ~~have~~guidance on its consolidated ~~statement~~financial ~~of cash flows~~statements.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This ASU addresses the classification of certain specific cash flow issues including debt prepayment or extinguishment costs, settlement of certain debt instruments, contingent consideration payments made after a business combination, proceeds from the settlement of certain insurance claims and distributions received from equity method investees. This ASU is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted. An entity that elects early adoption must adopt all of the amendments in the same period. The Company is currently evaluating the effect this ASU will have on its consolidated statement of cash flows.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The new standard requires financial assets measured at amortized cost be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. The standard will be effective for the Company beginning January 1, 2020, with early application permitted. The Company is evaluating the impact of adopting this new accounting guidance on its consolidated financial statements.

In May, 2016, the FASB issued ASU No. 2016-10, Revenue with Contracts with Customers: Narrow-scope Improvements and Practical Expedients, which is an amendment to ASU No. 2014-09 that clarifies the objective of the collectability criterion, to allow entities to exclude amounts collected from customers from all sales taxes from the transaction price, to specify the measurement date for noncash consideration at contract inception. Variable consideration guidance applies only to variability resulting from reasons other than the form of the consideration, and clarification on contract modifications at transition. The implementation guidelines follow ASU No. 2014-09.17

WINHA INTERNATIONAL GROUP LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE ~~AND NINE~~ MONTHS ENDED ~~DECEMBER~~JUNE 3130, ~~2016~~2017 AND ~~2015~~2016 (IN U.S. $) (UNAUDITED)

(IN U.S. $) (UNAUDITED)

3. RECENTLY ISSUED ACCOUNTING STANDARDS (CONTINUED)

In April 2016, the FASB issued ~~Accounting~~ASU ~~Standards Update~~ No. 2016-12, Revenue from Contracts with Customers. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). This guidance supersedes current guidance on revenue recognition in Topic 605, Revenue Recognition. In addition, there are disclosure requirements related to the nature, amount, timing, and uncertainty of revenue recognition. In August 2015, the FASB issued ASU No.2015-14 to defer the effective date of ASU No. 2014-09 for all entities by one year. For public business entities that follow U.S. GAAP, the deferral results in the new revenue standard being effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted for interim and annual periods beginning after December 15, 2016. The Company is currently evaluating the impact of adopting this standard on its consolidated financial statements.

In ~~February~~May, 2016, the FASB issued ASU No. 2016-0210, ~~Leases~~Revenue ~~(Topic~~with ~~842),~~Contracts ~~which~~with ~~supersedes~~Customers: ~~the~~Narrow-scope ~~existing~~Improvements ~~guidance~~and ~~for~~Practical ~~lease accounting~~Expedients, ~~Leases~~which ~~(Topic~~is ~~840).~~an amendment to ASU ~~2016~~No. 2014-0209 ~~requires~~that ~~lessees~~clarifies tothe ~~recognize~~objective ~~leases~~of onthe ~~their~~collectability ~~balance sheets~~criterion, ~~and~~to ~~leaves~~allow ~~lessor~~entities ~~accounting~~to ~~largely~~exclude ~~unchanged.~~amounts ~~The~~collected ~~amendments~~from incustomers ~~this~~from ~~ASU~~all ~~are~~sales ~~effective~~taxes ~~for~~from the ~~Company~~transaction ~~beginning April 1~~price, ~~2020~~to ~~and~~specify ~~interim~~the ~~periods~~measurement ~~within~~date ~~that~~for ~~fiscal~~noncash ~~year.~~consideration ~~Early application~~ is ~~permitted~~contract ~~for all entities~~inception. ~~ASU~~Variable ~~2016-02~~consideration ~~requires~~guidance aapplies ~~modified~~only ~~retrospective~~to ~~approach~~variability ~~for~~resulting ~~all~~from ~~leases~~reasons ~~existing~~other ~~at,~~than ~~or entered into after,~~ the ~~date~~form of ~~initial~~the ~~application~~consideration, ~~with~~and anclarification ~~option~~on tocontract ~~elect~~modifications toat ~~use certain~~ transition ~~relief~~. The ~~Company~~implementation isguidelines ~~currently~~follow ~~assessing the impact that the adoption of~~ ASU ~~2016-02~~No. ~~will have on its financial statements~~2014-09.

25In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which supersedes the existing guidance for lease accounting, Leases (Topic 840). ASU 2016-02 requires lessees to recognize leases on their balance sheets, and leaves lessor accounting largely unchanged. The amendments in this ASU are effective for the Company beginning April 1, 2020 and interim periods within that fiscal year. Early application is permitted for all entities. ASU 2016-02 requires a modified retrospective approach for all leases existing at, or entered into after, the date of initial application, with an option to elect to use certain transition relief. The Company is currently assessing the impact that the adoption of ASU 2016-02 will have on its consolidated financial statements.

WINHA INTERNATIONAL GROUP LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE ~~AND NINE~~ MONTHS ENDED ~~DECEMBER~~JUNE 3130, ~~2016~~2017 AND ~~2015~~2016 (IN U.S. $) (UNAUDITED)

~~(IN U~~4.S. EQUITY ~~$) (UNAUDITED)~~ INVESTMENT

~~4. PROPERTY~~On November 7, ~~PLANT~~2016, ~~AND~~Australian ~~EQUIPMENT~~Winha, entered into a series of contractual agreements (the "Acquisition Agreements") with Flavours Fruit & Veg Pty Ltd ("Flavours"), an Australia company, World of Flavours Pty Ltd ("World") and Select Providor Pty Ltd ("Select") (collectively "Flavours Shareholders"), to acquire 49% shares of Flavours.

~~Property~~On January 4, ~~plant~~2017, ~~and~~the ~~equipment~~Company's ~~are~~60% ~~summarized~~owned assubsidiary, ~~follows:~~Australian Winha issued 24,271,191 ordinary shares. After the offering, the Company's 60% ownership of Australian Winha was reduced to 44.87%.

	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

Under the equity method, the Company's investment in Australian Winha was initially recognized at fair value of $13,141,799 and adjusted thereafter to recognize the Company's share of the profit or loss and other comprehensive income (loss) of Australian Winha.

~~For~~The ~~the~~following ~~three~~table ~~and~~reconciles ~~nine~~the ~~months~~investment ~~ended~~income ~~December~~with ~~31,~~equity ~~2016~~investment ~~and~~for ~~2015,~~the ~~depreciation~~three ~~expense~~months ~~was~~ended ~~$70~~June 30,~~661~~ 2017 and ~~$34,469,~~March ~~$301~~31,~~964~~ ~~and $107~~2017,~~875,~~ respectively.:

5. INVESTMENT

	June 30, 2017				March 31, 2017
	(Unaudited)

Equity investment - beginning		$	13,042,386			$	13,141,799
Investment income (loss)		$	2,263,752			$	(103,635	)
Other comprehensive (loss) gain		$	(428,889	)		$	4,222
Dividend declared (approximately USD $0.026 per share)		$	(1,166,554	)		$	-

Equity investment - ending		$	13,710,695			$	13,042,386

OnThe ~~November~~following 7,table ~~2016,~~summarized the ~~Company's~~operation ~~60%~~information ~~owned subsidiary, Australian Winha, entered into a series~~ of ~~contractual agreements (the "Acquisition Agreements") with Flavours Fruit & Veg Pty Ltd ("Flavours"), an~~ Australia company, World of Flavours Pty Ltd ("World") and Select Providor Pty Ltd ("Select") (collectively "Flavours Shareholders"), to acquire the shares of Flavours. The Acquisition Agreements include (i) a Share Sale Agreement, (ii) a Share Subscription Agreement, (iii) a Subscription Agreement for Convertible Notes, and (iv) a Call Option Agreement.Winha:

Share Sale Agreement: Pursuant to the Share Sale Agreement, Australian Winha acquired 49 shares from each of the Flavours Shareholders, for a total of 98 shares, representing 16.1% of the currently outstanding shares, in exchange for a total of AUD$600,000 (approximately US$458,000).

	June 30, 2017			March 31, 2017
	(Unaudited)

Revenues		$	18,665,611		$	22,107,355
Gross profit		$	7,353,321		$	8,825,839
Net income (loss)		$	5,045,134		$	(230,969	)
Total assets		$	41,260,271		$	43,293,241
Total liabilities		$	3,424,863		$	3,438,626

265. RELATED PARTY TRANSACTIONS

The Company obtained demand loans from the chairman of the board, which are non-interest bearing. The loans of $118,680 as of June 30, 2017 and March 31, 2017 are reflected as loan from stockholder in the consolidated balance sheets.

WINHA INTERNATIONAL GROUP LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE ~~AND NINE~~ MONTHS ENDED ~~DECEMBER~~JUNE 3130, ~~2016~~2017 AND ~~2015~~2016 (IN U.S. $) (UNAUDITED)

~~(IN U~~6.S. INCOME ~~$) (UNAUDITED)~~ TAXES

5The Company is required to file income tax returns in both the United States and the PRC. ~~INVESTMENT~~ Its ~~(CONTINUED)~~operations in the United States have been insignificant and income taxes have not been accrued.

~~Share~~The ~~Subscription~~provision ~~Agreement: Pursuant~~for toincome ~~the~~taxes ~~Share~~consisted ~~Subscription~~of ~~Agreement,~~the ~~which~~following ~~expires on June 30, 2017, Flavours agrees to sell an additional 229 shares to Australian Winha~~ for ~~AUD$1,400,000 (approximately US$1,069,000). The agreement is dependent upon Australian Winha gaining approval to list their shares on~~ the ~~Australian~~three ~~Securities~~months ~~Exchange~~ended ~~("ASX").~~June 30:

Subscription Agreement for Convertible Notes: Pursuant to the Convertible Note Agreement, Australian Winha will loan to Flavours, in the form of a secured convertible note and guaranteed by the current directors' of Flavours, AUD$1,000,000 (approximately US$763,000) convertible into 163 shares of Flavours stock. The note will bear interest at 10% per annum, payable monthly. The note expires twenty four months from the date of issuance. The note is convertible upon Australian Winha gaining approval to list their shares on the ASX. Should Australian Winha not give notice of conversion of the note within 30 days of meeting the ASX listing conditions, Flavours can elect to convert the note for up to 163 shares.

	2017		2016
	(Unaudited)		(Unaudited)

Current	$	-	$	1,556,884
Deferred		-		(25,741	)

	$	-	$	1,531,143

~~Call~~The ~~Option~~following ~~Agreement: Australian~~table ~~Winha~~reconciles ~~also has a Call Option Agreement to purchase~~ the ~~remaining~~effective ~~255~~income ~~shares~~tax ~~from~~rates ~~each~~with of the ~~Flavours~~statutory ~~Shareholders,~~rates afor total of 510 shares, at a price equal to eight times Flavours' March 31, 2019 year end net profit after tax, under Australian generally accepted accounting principles, which may be satisfied by a cash payment, the ~~issue~~three ofmonths ~~fully~~ended ~~paid~~June ~~ordinary shares in Australian Winha~~30, ~~or a combination of both.~~respectively:

As of December 31, 2016, the Company had made a payment of approximately $720,000 (AU$1,000,000).

	2017		2016
	(Unaudited)		(Unaudited)

Statutory rate - PRC		-		25.0	%
Benefit of carryforward losses		-		(1.1	)%
Other		-		-

Effective income tax rate		-		23.9	%

During the three months ended June 30, 2016, the Company did not recognize any tax benefit related to Parent's loss of approximately $(15,865,000) since it has no income. The stock compensation of approximately $15,865,000 would be deductible only to the U.S. Parent Company and accordingly there is no deferred tax benefit to be recognized. The stock compensation of approximately $6,017,000 can't be deducted by the Operating Company under PRC tax laws. ~~LEASES~~

The Company leases its offices, warehouse and stores under operating leases expiring in various years through 2023.

During the three months ended September 30, 2016, the Company leased ten parcels of farmland, totaling 132,000 square meters, to plant vegetables for a one year period. The annual lease was $21,774 and was fully paid during the three months ended September 30, 2016.

WINHA INTERNATIONAL GROUP LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2016 AND 2015

(IN U.S. $) (UNAUDITED)

6. LEASES (CONTINUED)

Through September 30, 2016, the Company entered into 41 operating lease agreements with 41 independent local farmers to lease a total of 4,760,024 square meters of farmland to plant fruit trees for a ten year period. The leases required the Company to prepay rent in advance, ranging from two to four years. The Company made initial prepayments of $4,773,571, which included land leasing amount and labor costs. On December 31, 2016 $3,984,092 is included in the prepaid expenses in the consolidated balance sheet.

The total future minimum lease payments are as follows:

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

Rent expense was $58,335, and $61,589, $218,967 and $188,546, for the three and nine months ended December 31, 2016 and 2015, respectively.

7. CONVERTIBLE NOTES

In May 2015, C&V International Company Limited set up a wholly owned subsidiary, Winha Commerce and Trade International Limited ("Australian Winha").

On September 1, 2015, Australia Winha borrowed $542,570 (AUD$750,000) in the form of a twelve month convertible promissory note with interest at 6% per annum. The note was convertible into 750,000 shares of Australia Winha at $0.70401 per share (AUD$1.00) and was convertible at the option of the Company.

On December 17, 2015, Australia Winha borrowed another $4,892,896 (AUD$6,750,000) in the form of a twelve month convertible promissory note with interest at 6% per annum. The note was convertible into 6,750,000 shares of Australia Winha at $0.71012 per share (AUD$1.00) and was convertible at the option of the Company.

WINHA INTERNATIONAL GROUP LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2016 AND 2015

(IN U.S. $) (UNAUDITED)

7. CONVERTIBLE NOTES (CONTINUED)

Australia Winha repaid the above notes on July 13, 2016. Interest expense was $37,548 and $16,685, for the three months ended September 30, 2016 and 2015, respectively, and $117,011 and $16,685 for the nine months ended December 31, 2016 and 2015, respectively, and recorded under non-operating expenses.

8. RELATED PARTY TRANSACTIONS

The Company obtained demand loans from its chairman of the board, which are non-interest bearing. The loans of $1,731,124 and $477,199 as of December 31, 2016 and March 31, 2016, respectively, are recorded as loan from stockholder in the consolidated balance sheets.

9. INCOME TAXES

The Company is required to file income tax returns in both the United States and the PRC. The Company has had no operations in the United States, and no income taxes have been accrued.

The provision for income taxes consisted of the following for three and nine months ended December 31:

	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

WINHA INTERNATIONAL GROUP LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2016 AND 2015

(IN U.S. $) (UNAUDITED)

9. INCOME TAXES (CONTINUED)

	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

The following table reconciles the effective income tax rates with the statutory rates:

	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	%

Deferred tax assets and liabilities are recognized for expected future tax consequences of differences between the carrying amounts of assets and liabilities and their respective tax bases using enacted tax rates in effect for the year in which the differences are expected to reverse. The laws of China permit the carry-forward of net operating losses for a period of five years. U.S. federal net operating losses can generally be carried forward twenty years.

~~Deferred tax assets are comprised of the following:~~20

	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

WINHA INTERNATIONAL GROUP LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE ~~AND NINE~~ MONTHS ENDED ~~DECEMBER~~JUNE 3130, ~~2016~~2017 AND ~~2015~~2016 (IN U.S. $) (UNAUDITED)

~~(IN U~~6.S. INCOME $)TAXES (~~UNAUDITED~~CONTINUED)

~~9. INCOME~~Deferred ~~TAXES~~tax ~~(CONTINUED)~~assets are comprised of the following:

At December 31, 2016 and March 31, 2016, the Company had unused operating loss carry-forwards of approximately $17,070,000 and $16,215,000 respectively, expiring in various years through 2021. The Company has established a valuation allowance of $6,547,804 and $6,303,650 against the deferred tax asset related to net operating loss carry-forwards at December 31, 2016 and March 31, 2016, respectively, due to the uncertainty of realizing the benefit. The carryforwards are principally in the United States.

	June 30, 2017			March 31, 2017
	(Unaudited)

Net operating loss carryforwards		$	7,239,616	$	7,239,616
Less: valuation allowance			(7,239,616		(7,239,616	)
Net deferred tax asset

~~The~~At June 30, 2017 and March 31, 2017, the Company's ~~tax~~had ~~filings~~unused ~~are~~operating ~~subject~~loss tocarry-forwards ~~examination~~of byapproximately ~~the~~$20,685,000 ~~tax~~and ~~authorities~~$20,685,000 respectively, expiring in various years through 2037. ~~The~~As ~~tax~~it ~~years~~is ~~2015~~more likely than not that the benefit from the NOL carryforwards will not be realized, ~~2014~~$7,239,616 ~~and~~valuation ~~2013~~allowance ~~remain~~has ~~open~~been torecognized ~~examination~~as byof ~~the~~June ~~tax~~30, ~~authorities~~2017 inand ~~the~~March ~~PRC~~31, 2017. The ~~Company's~~valuation ~~U.S.~~allowance ~~tax~~increased ~~returns~~by approximately $936,000 and $6,243,000 for the years ended March 31, 2017 and 2016, ~~2015,~~respectively. The ~~and~~carryforwards ~~2014~~ are ~~subject~~principally toin ~~examination by~~ the ~~tax~~United ~~authorities~~States.

10The Company's tax filings are subject to examination by the tax authorities. ~~CONCENTRATION~~ The OFtax ~~CREDIT~~years ~~RISK~~March 31, 2016, 2015 and 2014 remain open to examination by the tax authorities in the PRC. The Company's U.S. tax returns for the years ended March 31, 2016, 2015, and 2014 are subject to examination by the tax authorities.

Substantially all of the Company's bank accounts are located in The People's Republic of China and are not covered by protection similar to that provided by the FDIC on funds held in United States banks.21

WINHA INTERNATIONAL GROUP LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2016 AND 2015

(IN U.S. $) (UNAUDITED)

11. PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION

The following is the condensed financial information of Winha International Group Limited only, the US parent, balance sheet as of March 31, 2016 and the related statements of operations and cash flows for year ended March 31, 2016:

Condensed Balance Sheet

ASSETS	March 31, 2016
Investment in subsidiaries	$	11,050,554
TOTAL ASSETS	$	11,050,554
LIABILITIES AND STOCKHOLDERS' EQUITY
Accrued Expenses	$	45,000
Stockholder loans		158,351
Total Liabilities		203,351
Stockholders' equity
Common stock, $0.0001 par value; 200,000,000 shares authorized; 49,989,500 shares issued and outstanding as of March 31, 2016		49,990
Additional paid-in capital		21,626,775
Statutory reserve		497,443
Accumulated (deficit)		(11,096,421	)

Other comprehensive (loss)		(230,584	)
Total stockholders' equity		10,847,203
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	11,050,554

WINHA INTERNATIONAL GROUP LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2016 AND 2015

(IN U.S. $) (UNAUDITED)

11. PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION (CONTINUED)

Condensed Statement of Operations

	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	)

Condensed Statement of Cash Flows

	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

WINHA INTERNATIONAL GROUP LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2016 AND 2015

(IN U.S. $) (UNAUDITED)

11. PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION (CONTINUED)

Basis of Presentation

The Company records its investment in its subsidiaries under the equity method of accounting. Such investments are presented as "Investment in subsidiaries" on the condensed balance sheet and the subsidiaries' profits are presented as "Share of earnings from investment in subsidiaries" in the condensed statement of operations.

Certain information and footnote disclosures normally included in financial statements prepared in conformity with accounting principles generally accepted in the United States of America have been condensed or omitted. The parent only financial information has been derived from the Company's consolidated financial statements and should be read in conjunction with the Company's consolidated financial statements.

There were no cash transactions in the US parent company during the twelve months ended March 31, 2016.

Restricted Net Assets

Under PRC laws and regulations, the Company's PRC subsidiaries are restricted in their ability to transfer certain of their net assets to the Company in the form of dividend payments, loans or advances. The restricted net assets of the Company's PRC subsidiaries was approximately $11,051,000 as of March 31, 2016.

The Company's operations and revenues are conducted and generated in the PRC, and all of the Company's revenues being earned and currency received are denominated in RMB. RMB is subject to the foreign exchange control regulations in China, and, as a result, the Company may be unable to distribute any dividends outside of China due to PRC foreign exchange control regulations that restrict the Company's ability to convert RMB into US Dollars.

12. SUBSEQUENT EVENT

On January 4, 2017, the Company's 60% owned subsidiary, Australian Winha, was admitted to the ASX Limited Exchange in Australia and there were 24,271,191 ordinary shares issued at an issue price of AUD$0.35 per share and raised a total of AUD$8,494,917 (approximately USD$6,123,000). After the offering, the Company's 60% ownership of Australian Winha was diluted to 44.87%.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS

The following management's discussion and analysis of financial condition and results of operations provides information which management believes is relevant to an assessment and understanding of our results of operations and financial condition. The discussion should be read along with our financial statements and notes thereto. This section includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our predictions.

Events Affecting Consolidation

We operate our business in China through Zhongshan Winha. We ~~expect~~hold ~~that~~an ~~virtually~~equity ~~all~~interest ofin ~~our revenue will be derived from~~ Zhongshan Winha. On August 1, 2013, our subsidiary, Shenzhen Wanha, entered into a set of contractual agreements with Zhongshan Winha and its equity owners, including an exclusive business cooperation agreement, exclusive option agreement, loan agreement, share pledge agreement, power of attorney and spousal consents. Shenzhen Wanha, through ~~these~~several ~~arrangements,~~tiers ~~assumed operational control~~ of ~~Zhongshan Winha and became the primary beneficiary of those operations~~subsidiaries. AsUntil aMarch ~~result,~~2016 ~~Zhongshan~~we ~~Winha~~held ~~was considered~~ a ~~variable~~100% interest ~~entity~~in ~~with~~those ~~respect to Shenzhen Wanha and, as a result, from August 1, 2013 through November 27, 2015, the financial statements of Zhongshan Winha were consolidated with our Company's financial statements~~subsidiaries.

OnIn ~~November~~March 272016, ~~2015~~our subsidiary, ~~Shenzhen~~Sanmei ~~Wanha~~Investment, ~~exercised~~transferred ~~its~~29% ~~option~~of the outstanding shares of our subsidiary, Australian Winha, to ~~purchase~~persons ~~the~~and ~~registered~~entities ~~equity~~who were either affiliates of, or consultants to, Zhongshan Winha, ~~from~~and transferred 11% of the ~~shareholders~~shares of Australian Winha to persons who are suppliers to Zhongshan Winha. ~~Upon~~ The effect of above transaction reduced the ~~exercise~~interest of the ~~purchase~~Company ~~option~~in its Australian subsidiary, and indirectly in Zhongshan Winha, ~~became~~by a40%. ~~wholly~~Subsequently, ~~owned~~on ~~subsidiary~~January 4, 2017, Australian Winha completed a public offering of ~~Shenzhen~~its ~~Wanha~~shares on the ASX Limited Exchange in Australia, which reduced our equity interest in Australian Winha to 44.87%. ~~The~~As a result, the financial statements of Australian Winha and its subsidiaries, including Zhongshan Winha, ~~remain~~have ~~consolidated~~been ~~with~~deconsolidated ~~our~~as ~~Company's~~of December 31, 2016 from the financial statements of our U.S. entity, ~~but~~Winha International. Our interest in Australian Winha and its subsidiaries is now recorded on our balance sheets as aan ~~subsidiary.~~"equity investment"

In May 2015, C&V International Company Limited ("C&V"), a wholly owned subsidiary of Winha International, set up a wholly owned subsidiary, Winha Commerce and Trade International Limited ("Australian Winha"). In February 2016, 100% of the outstanding shares of Sanmei International Investment Co., Ltd ("Sanmei Investment"), a company incorporated in Anguilla on April 23, 2013, were transferred to Winha International Group Limited. Winha International Group Limited then transferred the shares of its wholly owned subsidiary, C&V, to Sanmei Investment.

In March 2016, C&V transferred the shares of Australian Winha to Sanmei Investment. Subsequently, Sanmei Investment transferred 29% of the outstanding shares of Australian Winha to persons and entities who were either affiliates of, or consultants to, the Company (5% to Beijing Ruihua Future, 5% to Donghe Group, 7% to Zhuowei Zhong, 5% to Xinxi Zhong, 4% to Zhifei Huang and 3% to Chun Yan Winne Lam), and transferred 11% of the shares of Australian Winha to persons who are suppliers to Zhongshan Winha. The effect of above transaction reduced the interest of the Company in its Australian subsidiary, and indirectly in Zhongshan Winha, by 40%.

Results of Operations

The ~~following tables set forth key components of our~~ results of operations ~~during~~reported ~~the~~by ~~three and nine months ended December 31, 2016 and 2015, and~~ the ~~percentage~~Company ~~changes~~in ~~between~~this ~~2016~~Quarterly ~~and~~Report ~~2015.~~reflect:

·	For the three months ended June 30, 2017:

	o	the consolidated operations of Winha International and its immediate subsidiaries, but not including Australian Winha and its subsidiaries; plus

	o	44.87% of the net income recorded by Australian Winha and its subsidiaries during the three months ended June 30, 2017.

·	For the three months ended June 30, 2016: the consolidated operations of Winha International and its subsidiaries, including Zhongshan Winha.

~~For~~In ~~the~~future ~~three~~reports, ~~months~~unless ~~ended~~Winha ~~December~~International's 31equity interest in Australian Winha increases to exceed 50%, ~~2016~~the results of operations of Australian Winha and ~~2015:~~ its subsidiaries will be reflected in the financial statements of Winha International by recording Winha International's portion of the net income or loss realized by Australian Winha as a gain or loss on investment, with a corresponding adjustment to the book value of the Company's investment in Australian Winha.

	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	%)

~~For~~Our share of the ~~nine~~net income of Australian Winha for the three months ended ~~December~~June 3130, ~~2016~~2017 was $2,263,752, which was recorded as investment income on our Consolidated Statements of Operations. During the same period, our U.S. parent incurred general and ~~2015:~~ administrative expenses of $23,394, primarily consisting of professional fees relating to its status as a public reporting company in the U.S. Our net income for the three months ended June 30, 2017, therefore, was $2,240,358, or $0.04 per share.

	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	%
Net income		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 three months ended June 30, 2016, we owned 60% of Australian Winha, and therefore consolidated the results of operations of Australian Winha and its subsidiaries, including Zhongshan Winha, with our own. During those three months, our consolidated operations yielded $13,917,834 in revenue, derived from the following revenue sources:

Revenue

Off-the-shelf products	$	2,083,498
Custom-made products		9,816,177
Franchises		1,492,731

~~Our~~Gross ~~revenue~~profit ~~grew~~for ~~during fiscal year 2016 and~~ the ~~first~~three ~~nine~~ months ofended ~~fiscal~~June ~~year 2017~~30, as2016 ~~recognition~~was of$7,495,098, ~~our~~representing ~~brand~~a ~~developed~~gross ~~and~~margin weof ~~introduced~~almost ~~additional revenue streams~~54%. ~~During~~However, ~~the~~Zhongshan ~~three~~Winha's ~~and~~gross ~~nine~~margin ~~months~~fell ~~ended~~later ~~December~~in ~~31,~~ 2016, ~~our~~and ~~total~~is ~~revenue~~not ~~increased~~likely to ~~$16,686,167~~return ~~and~~to ~~$45,470,149,~~the ~~respectively,~~54% anlevel ~~increase~~in offuture ~~46%~~periods. ~~and~~The ~~69%~~largest ~~over~~component ~~the revenue~~ of ~~$11,458,651~~its ~~and $26,855,768~~revenue ~~that we realized~~ during ~~the~~ three ~~and nine~~ months ended ~~December~~June 3130, ~~2015.~~2016 Inwas ~~addition to continuing expansion of our~~ custom-~~made~~ sales ~~operations~~, ~~two~~made ~~new channels for product distribution contributed~~ to ~~revenue~~order, ~~during~~which are the ~~three~~most ~~and~~profitable ~~nine~~class ~~months~~of ~~ended~~sales. ~~December 31, 2016:~~

36Operating expenses recorded for the three months ended June 30, 2016, consisting of $560,612 in selling and marketing expenses and $531,886 in general and administrative expenses, were at approximately the level realized throughout the year. As is made obvious by the modest operating expenses reported in 2017, after deconsolidation, most of the operating expenses during the three months ended June 30, 2016 were incurred by our operating subsidiary.

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.

Our net after-tax income for the three months ended June 30, 2016 was $4,875,539. The portion of that attributable to the operations of Australian Winha and subsidiaries was allocable 60% to the shareholders of Winha International and 40% to the persons who were minority shareholders of Australian Winha during that period, resulting in a deduction of $1,950,216 attributable to the non-controlling interest held by those minority shareholders. The net income for the three months ended June 30, 2016 attributable to the common stockholders of Winha International, therefore, was $2,925,323, or approximately $0.06 per share.

During the three and nine months ended December 31, 2016, we had total revenue of $16,686,167 and $45,470,149, respectively, representing an increase of 46% and 69%, respectively, when compared with the three and nine months ended December 31, 2015. The following table shows the components of revenue:

For the three months ended December 31, 2016:

	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

For the nine months ended December 31, 2016:

	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

Gross profit

Gross profit for the three and nine months ended December 31, 2016 increased to $7,150,266 and $20,940,813, respectively, due to the increase in revenue. Our gross margin decreased to 43% and 46%, respectively, as compared to the 54% gross margin, respectively, that we realized during both the three and nine months ended December 31, 2015. Gross margin, excluding franchise-related revenue, was only 39% and 40%, respectively, for the three and nine months ended December 31, 2016. The reduction in gross margin reflected the increased portion of our revenue attributable to the retail stores and wholesale, which have lower margins than our custom-made sales. We expect the gross margin to change as additional revenue streams are added, although the direction will depend on the relative volume of high-margin revenue sources (e.g. custom made sales, franchising) versus lower margin sources (e.g. retail stores and wholesale).

Operating Expenses

Selling Expenses. Selling expenses represent the labor cost for our marketing department and retail store, as well as expenses directly related to our marketing efforts. Selling expense for the three and nine months ended December 31, 2016 were $449,185 and 1,970,981, respectively, an increase of 90% and 122%, respectively, over the three and nine months ended December 31, 2015. Selling expenses increased primarily due to the addition of a second restaurant in fiscal year 2016. We expect our selling expenses to increase in proportion to the number of additional restaurants that we open.

General and Administrative Expenses. General and administrative expenses for the three and nine months ended December 31, 2016 totaled $890,906 and $1,970,981, respectively, representing an increase of 76.5% and 73.9% respectively, from three and nine months ended December 31, 2015. The increase was primarily due to the expansion of our overall operations, including the introduction of franchise operations and a second restaurant. In addition, our 60%-owned Australian subsidiary incurred $299,047 in expenses in connection with its preparation for listing on the Australian Stock Exchange ("ASX") that initially was rejected. As we expand our operations, particularly as we initiate our multi-faceted marketing program, we expect general and administrative expenses to increase, reflecting the staffing requirements of more complex and expanded operations.

Net Income

After taking into account insignificant amounts of other income (loss), we recorded pre-tax net income of $5,802,234 and $5,490,056, respectively, $17,053,494 and $12,708,191, respectively, for the three and nine months ended December 31, 2016 and 2015. Corporate income in China is subject to income tax at a rate of 25%. Our provision for income taxes was $1,529,319 and $1,401,247, respectively, and $4,477,314 and $3,218,501, respectively, for the three and nine months ended December 31, 2016 and 2015, primarily representing the enterprise income tax on the income of our Chinese operating entities. After deducting the income tax, we had a net income before non-controlling interests of $4,272,915 and $4,088,809, respectively, and $12,576,180 and $9,489,690, respectively, during the three and nine months ended December 31, 2016 and 2015. However, because of the 40% of Australian Winha that we do not own, we are required to allocate 40% of the net income (loss) realized by Australian Winha and its subsidiaries to the non-controlling interest. As a result, net income attributable to the common stockholders of the Company (i.e. after the allocation to the non-controlling interest) was $2,563,749 and $4,088,809, respectively, representing $0.05 per share and $0,08 per share, respectively, and $7,545,708 and $9,489,690, respectively, representing $0.15 per share and $0.19 per share, respectively, for the three and nine months ended December 31, 2016 and 2015.

Foreign Currency Translation Adjustment

Our reporting currency is the U.S. dollar. Our local currency, Renminbi, is our functional currency. All asset and liability accounts have been translated using the exchange rate in effect at the balance sheet date. Equity accounts have been translated at their historical exchange rates when the capital transactions occurred. Statements of income and other comprehensive income and cash flows have been translated using the average exchange rate for the periods presented. Adjustments resulting from the translation of our consolidated financial statements are recorded as other comprehensive income. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred. For the three and nine months ended December 31, 2016 and 2015, foreign currency translation adjustments of $(798,871) and $(279,514), respectively, and $(1,501,616) and $(526,358), respectively, have been reported as other comprehensive income (loss) in the consolidated statements of income and other comprehensive income (loss), respectively. The significant increase in the translation adjustments was due to the PRC's devaluation of its currency. Further devaluation could occur.

Liquidity and Capital Resources

AsThe ofCompany's ~~December~~44.87% ~~31,~~portion ~~2016,~~of the ~~Company~~net ~~had~~book ~~cash~~value of Australian Winha and ~~cash~~its ~~equivalent~~subsidiaries ofon January 4, 2017 was $13,~~258~~141,~~063,~~799. ~~compared~~As toa ~~$21~~result of the deconsolidation on that date,~~548,630~~ that book value was recorded as "equity investment" and all assets and liabilities of Australian Winha and its subsidiaries were eliminated from the balance sheet of Winha International. At the end of the fiscal year, on March 31, ~~2016.~~2017, ~~The~~the ~~following~~Company's ~~table~~equity ~~summarizes~~in ~~our~~the ~~cash~~net ~~flows~~loss ~~for~~incurred by Australian Winha and subsidiaries during the ~~nine~~fourth ~~months~~quarter ~~ended~~of ~~December~~that ~~31,~~year ~~2016~~was recorded as an expense and ~~2015:~~ deducted from our equity investment, resulting in a value of $13,042,386.

	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

During the ~~nine~~three months ended ~~December~~June 3130, ~~2016~~2017, ~~our~~the ~~operations~~Company's ~~yielded~~44.87% ~~$12,576,180~~share inof the net income ~~but~~recorded ~~only~~by ~~provided~~Australian ~~cash~~Winha ~~totaling~~in that period equaled $12,~~208~~263,~~794~~752. ~~The~~This ~~discrepancy~~was ~~between~~offset ~~net~~by ~~income~~a ~~and~~comprehensive ~~cash~~loss ~~was~~of ~~primarily~~$428,889 due to ~~our~~foreign ~~prepayment~~currency oftranslation $4adjustment,~~732,252~~ toas ~~lease~~well ~~farm~~as ~~land~~by ~~over~~ the ~~next~~amount ~~several~~of ~~years.~~the Individend ~~addition,~~declared ~~our~~by ~~accounts~~Australian ~~receivable~~Winha ~~increased~~payable byto ~~$6,958,589 during~~ the ~~nine~~Company. ~~months~~The ~~ended~~net ~~December~~amount 31of $668,309 ~~2016~~was ~~due~~added to the ~~period-to-period~~book ~~increase~~value inof ~~sales, and~~ the ~~balance~~Company's ofequity ~~advances~~investment ~~from~~in ~~customers~~Australian ~~decreased by $668~~Winha,~~436.~~ ~~All~~resulting ofin ~~this~~a ~~was~~value ~~partially~~of ~~offset by a~~ $~~872~~13,~~509~~710,695 ~~decrease~~at inJune ~~inventory~~30, ~~due~~2017. toThis ~~our~~was ~~outsourcing~~supplemented ofby ~~control~~the ~~over~~$1,166,554 ~~six~~dividend ofpayable ~~our~~to ~~retail~~the ~~stores.~~Company ~~During~~by ~~the~~Australian ~~nine~~Winha ~~months~~at ~~ended~~June ~~December 31~~30, ~~2015~~2017, ~~our~~and ~~operations~~offset ~~yielded~~by $9229,~~489,690~~119 in ~~net~~current ~~income~~liabilities ~~and~~of ~~provided~~Winha ~~cash~~International ~~totaling~~as ~~$11,748,983.~~of ~~The~~June ~~difference~~30, ~~between~~2017, ~~net~~consisting ~~income~~of ~~and~~accounts ~~cash~~payable, ~~provided~~accrued byexpenses ~~operations~~and ~~was~~a ~~primarily~~loan ~~caused~~from ~~by an increase in taxes payable of $1~~shareholder,~~300,201~~ ~~and~~to yield a ~~decrease~~stockholders' inequity ~~inventory~~ of $114,~~131~~648,~~273~~130 ~~during~~at that ~~period~~date.

~~During~~The ~~the~~Statements ~~nine~~of ~~months~~Cash ~~ended~~Flows ~~December 31, 2015 our Australian subsidiary sold convertible debentures~~ for ~~net proceeds of $5,596,055. The Australian subsidiary repaid those debentures in full during~~ the ~~nine~~three months ended ~~December~~June 3130, ~~2016~~2017, ~~funded~~similar byto ~~cash received from~~ the ~~pre-sale~~Statements of 24Operations,~~271,191~~ ~~ordinary~~presents ~~shares~~the oflimited ~~$6,123,137~~operations -of the ~~sale~~parent ~~was~~company ~~completed~~after ondeconsolidation: ~~January~~during 4,that ~~2017,~~period ~~reducing~~there ~~the~~was ~~equity~~no ~~interest~~cash offlow ~~our~~from ~~U.S~~operations, ~~parent~~investing inactivities ~~the~~or ~~Australian subsidiary (and~~financing, ~~indirectly,~~as ~~in our Chinese operating company) to 44.87%. During~~ the ~~nine~~expenses ~~months ended December 31, 2016, we also received loans~~ of ~~$1,260,804~~ ~~from~~the aparent ~~stockholder~~company ~~who~~were ~~paid~~simply ~~our~~added ~~professional~~to ~~fees~~accounts inpayable ~~the United States~~ and inaccrued ~~Australia during that period~~expenses. AsThe ~~a result of these transactions, net~~ cash ~~provided~~flows ~~by financing activities~~ for the ~~nine~~three months ended ~~December~~June 3130, 2016 ~~was~~were ~~$2,275,946.~~realized ~~For~~primarily ~~the~~by ~~nine~~Zhongshan ~~months~~Winha ~~ended~~in ~~December~~that ~~31,~~three ~~2015,~~month ~~the~~period. ~~proceeds~~In ~~from~~future ~~sale~~reports, ofunless ~~the~~Winha ~~convertible~~International's ~~debt~~equity ~~combined~~interest ~~with~~in aAustralian ~~capital~~Winha ~~contribution~~increases to ~~our~~exceed ~~Chinese~~50%, ~~operating~~cash ~~company~~flows ofexperienced ~~$816,001~~by ~~and~~Australian ~~proceeds~~Winha ~~from~~and ~~the~~its ~~stockholder~~subsidiaries ~~loans~~will ofnot ~~$42,987~~be ~~resulted~~reflected in ~~net~~the ~~cash~~Statements ~~provided~~of byCash ~~financing~~Flows ~~activities~~ of ~~$6,455,043~~Winha International.

With the cash from operations and financing activities, we used $9,623,726 to purchase fixed assets, including $9,425,559 expended to purchase fruit orchards. We also used $720,800 as the initial payment towards the acquisition by the Australian subsidiary of an Australian company named Flavours Fruit & Veg Pty Ltd. ("Flavours"). Completion of our purchase of that company will require an additional payment of approximately $1.57 million plus an additional payment in an amount determined by Flavours' net profit for the year ended March 31, 2019. During the nine months ended December 31, 2015, we purchased fixed assets for $378,154 and spent $7,569 to further develop our website, resulting in total cash used in investing activities of $385,723.

We had working capital of approximately $14,000,000 as of December 31, 2016, a decrease of approximately $2,000,000 compared to March 31, 2016. The decrease was principally the result of the investment in the fruit orchards and prepayment of the long-term leases related to the orchards.

Our debt obligations at December 31, 2016 consisted of $1,731,124 in stockholder loans payable on demand. Since our cash balance far exceeds our debt obligations, we believe that our capital resources will be adequate to fund the Company's operations for at least the next 12 months.

Transfer of Cash

According to PRC laws and regulations, in the event that we need to finance ~~the~~our PRC operations in the future, we are allowed to provide funding by means of capital contributions through Australian Winha to Shenzhen ~~Wanha~~Winha and/or loans to Zhongshan Winha. The loans would be subject to applicable government registration and approval requirements. We may not be able to complete the registration or obtain these government approvals on a timely basis. If we fail to complete such registration or receive such approvals, our ability to finance ~~the~~our PRC operations may be negatively affected, which could adversely affect ~~liquidity and~~ the ~~Company~~operating company's liquidity and its ability to fund and expand ~~its~~our business.

Current PRC regulations permit ~~the~~our PRC subsidiaries to pay dividends to Australian Winha. However, payment of dividends is subject to applicable regulatory requirements. Furthermore, cash transfers from ~~the~~our PRC subsidiaries to their parent companies outside of China are subject to PRC government control of currency conversion. ~~The~~We ~~Company~~receive ~~receives~~ substantially all of ~~its~~our revenues in RMB. Under ~~the~~our current corporate structure, our income is primarily derived by ~~the~~our PRC subsidiaries. Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and expenditures from trade-related transactions can be made in foreign currencies without prior approval from the State Administration of Foreign Exchange ("SAFE") by complying with certain procedural requirements. As profits and dividends are current account items, any revenue generated in the PRC may be paid to shareholders outside of the PRC as profit or dividends without prior approval from SAFE so long as we comply with certain procedural requirements. However, the PRC government may also, at its discretion, restrict access in the future to foreign currencies for current account transactions. If the foreign exchange control system prevents ~~us from~~ obtaining sufficient foreign currency to satisfy ~~our~~the currency demands, ~~the~~we ~~Company~~ may not be able to pay dividends in foreign currencies to ~~the~~Australian Winha which will make it difficult to pay dividends to our shareholders. ~~The~~Our inability to obtain the requisite approvals for converting RMB into foreign currencies, any delays in receiving such approvals or any future restrictions on currency exchanges may restrict the ability of ~~the~~our PRC subsidiary to remit sufficient foreign currency to pay dividends or other payments to Australian Winha, or otherwise satisfy its foreign currency denominated obligations.

~~The Company currently intends to reinvest only earnings in expanding the operations and currently has no plans to pay any dividends.~~24

~~Future~~The ~~Reporting~~Company currently intends to reinvest its earnings in expanding its operations and currently has no plans to pay any dividends.

It Critical ~~should~~Accounting bePolicies ~~noted that based upon the additional sale of shares by Australian Winha on January 4, 2017, the Company will no longer be consolidating Australian Winha~~ and its wholly owned subsidiaries that represent the operations of the Company through December 31, 2016. As the sale of shares reduced the Company's ownership to 44.87%, the Company will be reporting its share of the earnings (loss) of Australian Winha and subsidiaries utilizing the equity method of accounting in accordance with accounting principles generally accepted in the United States of America.Estimates

40In preparing our financial statements we are required to formulate working policies regarding valuation of our assets and liabilities and to develop estimates of those values. In our preparation of the financial statements for the quarter ended June 30, 2017, there were no estimates made which were (a) subject to a high degree of uncertainty and (b) material to our results.

Impact of Accounting Pronouncements

~~Leases.~~There Inwere ~~February~~no ~~2016,~~recent ~~the~~accounting ~~Financial~~pronouncements ~~Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") ASU 2016-02 – Leases. The new standard establishes a right-of-use ("ROU") model~~ that ~~requires~~have aor ~~lessee~~will tohave ~~record~~ a ~~ROU~~material ~~asset~~effect ~~and a lease liability~~ on the ~~balance~~Company's ~~sheet~~financial ~~for~~position ~~all leases with terms longer than 12 months. Leases will be classified as either finance~~ or ~~operating,~~results ~~with classification affecting the pattern~~ of ~~expense recognition in the income statement~~operations. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. We are currently evaluating the impact of our pending adoption of the new standard on our financial statements.

Revenue Recognition. In April 2016, the FASB issued Accounting Standards Update No. 2016-12, Revenue from Contracts with Customers. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). This guidance supersedes current guidance on revenue recognition in Topic 605, Revenue Recognition. In addition, there are disclosure requirements related to the nature, amount, timing, and uncertainty of revenue recognition. In August 2015, the FASB issued ASU No.2015-14 to defer the effective date of ASU No. 2014-09 for all entities by one year. For public business entities that follow U.S. GAAP, the deferral results in the new revenue standard being effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted for interim and annual periods beginning after December 15, 2016. The Company is currently evaluating the impact of adopting this standard on its consolidated financial statements.

Except as set forth above, there were no recent accounting pronouncements that we expect to have a material effect on the Company's financial position or results of operations.

Off Balance Sheet Transactions

We do not currently have any off-balance sheet arrangements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Evaluation of Disclosure Controls and Procedures. Our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the Company's disclosure controls and procedures (as defined in Rule13a-15(e) promulgated by the Securities and Exchange Commission) as of ~~December~~June 3130, ~~2016~~2017. The evaluation revealed that there are material weaknesses in our disclosure controls, specifically:

·	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.

Based on their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the Company's system of disclosure controls and procedures was not effective as of ~~December~~June 3130, ~~2016~~2017.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings
	None.
Item 1A	Risk Factors
	There have been no material changes from the risk factors included in the Annual Report on Form 10-K for the year ended March 31, 2016.
	There have been no material changes from the risk factors included in the Annual Report on Form 10-K for the year ended March 31, 2017.
Item 2	Unregistered Sale of Securities and Use of Proceeds
	(a) Unregistered sales of equity securities
	The Company did not effect any unregistered sale of securities during the third quarter of fiscal year 2017.
	The Company did not effect any unregistered sale of securities during the first quarter of fiscal year 2018.
	(c) Purchases of equity securities
	The Company did not repurchase any of its equity securities that were registered under Section 12 of the Securities Exchange Act during the third quarter of fiscal year 2017.
	The Company did not repurchase any of its equity securities that were registered under Section 12 of the Securities Exchange Act during the first quarter of fiscal year 2018.
Item 3.	Defaults Upon Senior Securities.
	None.
Item 4.	Mine Safety Disclosures.
	Not Applicable.
Item 5.	Other Information.
	None.
Item 6.	Exhibits

4226

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

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.

	WINHA INTERNATIONAL GROUP LIMITED.
Date: February 21, 2017	By:	/s/ Chung Yan Winnie Lan
Date: August 21, 2017	By:	/s/ Chung Yan Winnie Lan
		Chung Yan Winnie Lan, Chief Executive Officer, Chief Financial and Accounting Officer

44 27

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