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

~~QUARTERLY~~For the ~~REPORT~~quarterly ~~UNDER~~period ~~SECTION~~ended 13February OR28, ~~15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~2017

~~For~~☐ TRANSITION REPORT ~~the~~UNDER ~~quarterly~~SECTION ~~period~~13 ~~ended~~OR ~~August~~15(d) ~~31,~~OF ~~2016~~THE SECURITIES EXCHANGE ACT OF 1934

[ ]

TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____

Commission File No. 0-54451

CHINA GEWANG BIOTECHNOLOGY, INC. (Exact Name of Registrant in its Charter) ~~Xita 23C, Star International, No. 8 Jinsui Road, Pearl River New Town, Guangzhou Province, P.R. China 510623 (Address of Principal Executive Offices) Issuer’s Telephone Number: 86-024-2397-4663~~

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 [X] No [ ]

Nevada		42-1769584
(State or Other Jurisdiction of incorporation or organization)		(I.R.S. Employer I.D. No.)

~~Indicate~~Floor by29, ~~check~~No. ~~mark~~334, ~~whether~~Huanshi ~~the~~East ~~registrant has submitted electronically and posted on its corporate Web site~~Road, ifYuexiu ~~any~~District, ~~every~~Guangzhou ~~Interactive~~City ~~Data~~Guangdong ~~File~~Province, ~~required~~P.R. toChina be510623 ~~submitted and posted pursuant to Rule 405 of Regulation S-T~~ (~~§232.405~~Address of ~~this~~Principal ~~chapter)~~Executive ~~during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files.~~Offices) ~~Yes [X] No [ ]~~

~~Indicate~~Issuer’s byTelephone ~~check~~Number: ~~mark whether the registrant is a shell company (as defined in Rule 12b~~86-~~2 of the Exchange Act) Yes [ ] No [X]~~ 024-2397-4663

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 ~~[X]~~ ☐

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:

~~October 14~~April 11, ~~2016~~2017

Common Voting Stock: 75,000,000

CHINA GEWANG BIOTECHNOLOGY, INC.

QUARTERLY report ~~REPORT~~on ONForm ~~FORM~~ 10-Q

~~FOR~~for the ~~THE~~fiscal ~~FISCAL~~ QUARTER ~~ENDED~~ended ~~AUGUST~~FEBRUARY 3128, ~~2016~~2017

~~TABLE~~Table of ~~OF CONTENTS~~Contents

Page No

		Page No
Part I	Financial Information

Item 1.	Financial Statements (unaudited):
	Consolidated Balance Sheets – February 28, 2017 and November 30, 2016	1
	Consolidated Statements of Income and Comprehensive Income - for the Three Month Periods Ended February 28, 2017 and February 29, 2016	3
	Consolidated Statements of Changes in Stockholders’ Equity - for the Three Months Ended February 28, 2017	5
	Consolidated Statements of Cash Flows - for the Three Months Ended February 28, 2017 and February 29, 2016	6
	Notes to Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	33
Item 3	Quantitative and Qualitative Disclosures about Market Risk	37
Item 4.	Controls and Procedures	38

Part II	Other Information

Item 1.	Legal Proceedings	39
Items 1A.	Risk Factors	39
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	39
Item 3.	Defaults upon Senior Securities	39
Item 4.	Mine Safety Disclosures	39
Item 5.	Other Information	39
Item 6.	Exhibits	39

Part I

Financial Information

Item 1.

Financial Statements (unaudited):

Consolidated Balance Sheets – August 31, 2016 and November 30, 2015

Consolidated Statements of Income and Comprehensive Income - for the

Three and Nine Month Periods Ended August 31, 2016 and 2015

Consolidated Statements of Changes in Stockholders’ Equity – for the

Nine Months Ended August 31, 2016

Consolidated Statements of Cash Flows - for the Nine Months Ended

August 31, 2016 and 2015

Notes to Consolidated Financial Statements

Item 2.

Management’s Discussion and Analysis of Financial Condition and

Results of Operations

Item 3

Quantitative and Qualitative Disclosures about Market Risk

Item 4.

Controls and Procedures

Part II

Other Information

Item 1.

Legal Proceedings

Items 1A.

Risk Factors

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

Item 3.

Defaults upon Senior Securities

Item 4.

Mine Safety Disclosures

Item 5.

Other Information

Item 6.

Exhibits

CHINA GEWANG BIOTECHNOLOGY, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (IN U.S. $)

	August 31,		November 30,
		February 28,		November 30,
ASSETS	~~2016~~	2017	~~2015~~	2016
	~~(Unaudited)~~	(Unaudited)
Current assets:
Cash	~~$ 9,785,095~~	$	~~$ 8~~16,~~669~~982,~~034~~700	$	13,108,340
Accounts receivable	~~12,471,292~~		~~267~~14,~~868~~374,154		11,205,011
Inventory	~~122,062~~		~~156~~105,~~778~~623		107,830
Prepaid expenses	~~5,800,239~~		~~201~~3,~~369~~564,223		5,540,051
Total current assets	~~28,178,688~~		935,~~295~~026,~~049~~700		29,961,232
Property, plant and equipment, net	~~117,459~~		65116,~~860~~051		128,767
Other assets:
Equity investment	3,610,293		-
Deferred registration costs			165,495		110,086
TOTAL ASSETS	$ 31,906,440		$ 9,360,909
Equity investment			8,156,428		6,003,412
LIABILITIES AND STOCKHOLDERS' EQUITY
Total Assets		$	43,464,674	$	36,203,497
Current liabilities:
Accounts payable	$ 4,258,281		$ -
Deferred revenue	85,323		-
Taxes payable	1,154,629		64,153
Accrued expenses and other payables	149,984		175,086
Loans from stockholder	256,044		166,106
Total current liabilities	5,904,261		405,345
Stockholders' equity:
Common stock -$0.001 par value, 100,000,000 and
75,000,000 shares authorized, 75,000,000 and 45,500,000
shares issued and outstanding as of August 31, 2016 and
November 30, 2015, respectively	75,000		45,500
Additional paid-in capital	16,980,102		6,525,743
Retained earnings	8,906,176		2,270,416
Statutory reserve fund	762,555		281,766
Other comprehensive (loss)	(906,382)		(252,022)
Stockholders' equity before noncontrolling interests	25,817,451		8,871,403
Noncontrolling interests	184,728		84,161
Total stockholders' equity	26,002,179		8,955,564
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 31,906,440		$ 9,360,909

See accompanying notes to the consolidated financial statements.

CHINA GEWANG BIOTECHNOLOGY, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (CONTINUED) (IN U.S. $)

	February 28,			November 30,
LIABILITIES AND STOCKHOLDERS’ EQUITY	2017			2016
	(Unaudited)

Current liabilities:
Accounts payable	$	4,348,821		$	3,367,174
Taxes payable		1,134,510			789,370
Accrued expenses and other payables		190,489			193,090
Loans from third party		228,259			228,238
Loans from stockholder		366,852			237,639

Total current liabilities		6,268,931			4,815,511

Commitments and contingencies

Stockholders’ equity:
Common stock - $0.001 par value, 100,000,000 and 100,000,000 shares authorized, 75,000,000 and 75,000,000 shares issued and outstanding as of February 28, 2017 and November 30, 2016, respectively		75,000			75,000
Additional paid-in capital		16,980,102			16,980,102
Retained earnings		20,707,870			15,026,053
Statutory reserve fund		759,094			759,094
Other comprehensive (loss)		(1,655,328	)		(1,707,064	)

Stockholders’ equity before noncontrolling interests		36,866,738			31,133,185

Noncontrolling interests		329,005			254,801

Total stockholders’ equity		37,195,743			31,387,986

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	43,464,674		$	36,203,497

See accompanying notes to the consolidated financial statements.

CHINA GEWANG BIOTECHNOLOGY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

FOR THE THREE MONTHS ENDED FEBRUARY 28, 2017 AND FEBRUARY 29, 2016

(UNAUDITED) (IN U.S. $)

	2017			2016

Net revenues	$	21,142,132		$	1,218,098
Cost of goods sold		(13,914,305	)		(342,608	)

Gross profit		7,227,827			875,490

Operating expenses:
Research and development		579,412			-
Selling and marketing		1,444,913			270,671
General and administrative		381,355			136,961

Total operating expenses		2,405,680			407,632

Operating income		4,822,147			467,858

Other income:
Interest income (expenses)		(2,464	)		4,768
Other non-operating income		1,406			1,488

Total other income (expenses)		(1,058	)		6,256

Income before provision for income taxes		4,821,089			474,114
Provision for income taxes		1,219,136			123,416
Income before equity in income of investee		3,601,953			350,698

Equity in income of investee		2,153,012			-

Net income before noncontrolling interests		5,754,965			350,698
Noncontrolling interests		(73,148	)		(18,512	)

Net income attributable to common stockholders	$	5,681,817		$	332,186

Earnings per common share	$	0.08		$	0.01

Weighted average shares outstanding		75,000,000			51,170,330

See accompanying notes to the consolidated financial statements.

CHINA GEWANG BIOTECHNOLOGY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

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

	Three Months ended		Nine Months ended
	August 31,		August 31,
	2016	2015	2016	2015
Revenue	$ 18,588,296	$ 1,066,381	$ 25,243,577	$ 3,072,993
Cost of goods sold	(11,150,902)	(350,488)	(14,518,511)	(897,546)
Gross profit	7,437,394	715,893	10,725,066	2,175,447
Operating expenses
Selling and marketing	2,315,620	212,242	3,235,593	540,887
General and administrative	235,273	120,383	495,212	308,637
Total operating expenses	2,550,893	332,625	3,730,805	849,524
Operating income	4,886,501	383,268	6,994,261	1,325,923
Other income (expense):
Interest income	5,246	4,316	16,341	8,187
Other non-operating income	-	-	1,481	-
Other non-operating expense	(4,835)	-	(4,835)	-
Total other income	411	4,316	12,987	8,187
Income before provision for income taxes	4,886,912	387,584	7,007,248	1,334,110
Provision for income taxes	$ 1,230,889	$ 100,544	$ 1,770,858	$ 338,154

FOR THE THREE MONTHS ENDED FEBRUARY 28, 2017 AND FEBRUARY 29, 2016

(UNAUDITED) (IN U.S. $)

	2017		2016

Comprehensive income:
Net income before noncontrolling interests	$	5,754,965	$	350,698
Foreign currency translation adjustment		52,792		(186,413	)

Comprehensive income		5,807,757		164,285
Comprehensive (loss) income attributable to noncontrolling interests		74,204		(9,193	)

Net comprehensive income attributable to common stockholders	$	5,881,961	$	155,092

See accompanying notes to the consolidated financial statements.

CHINA GEWANG BIOTECHNOLOGY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT ~~STATEMENTS~~ OF ~~INCOME~~CHANGES ~~AND~~IN ~~COMPREHENSIVE~~STOCKHOLDERS’ ~~INCOME (CONTINUED)~~EQUITY

FOR THE THREE ~~AND NINE~~ MONTHS ENDED ~~AUGUST 31~~FEBRUARY 28, ~~2016~~2017 ~~AND 2015~~ (UNAUDITED) (IN U.S. $)

	Three Months Ended			Nine Months Ended
		Common Stock			Additional Paid-in Capital		Retained Earnings		Noncon- trolling Interests		Statutory Reserve Fund		Other Comprehensive Income (Loss)			Total
	August 31,			August 31,
Balance, November 30, 2016		$	75,000		$	16,980,102	$	15,026,053	$	254,801	$	759,094	$	(1,707,064	)	$	31,387,986
	2016		2015	2016	2015
Net income			-			-		5,681,817		73,148		-		-			5,754,965
Equity in income of investee	$ 1,735,366		$ -	$ 2,143,641	$ -
Statutory reserve			-			-		-		-		-		-			-
Net income before noncontrolling interests	5,391,389		287,040	7,380,031	995,956
Other comprehensive income (loss)			-			-		-		1,056		-		51,736			52,792
Noncontrolling interests	(166,925)		(13,574)	(247,920)	(45,651)
Balance, February 28, 2017 (Unaudited)		$	75,000		$	16,980,102	$	20,707,870	$	329,005	$	759,094	$	(1,655,328	)	$	37,195,743
Net income attributable to common stockholders	5,224,464		273,466	7,132,111	950,305
Earnings per common share	$ 0.07		$ 0.01	$ 0.11	$ 0.02
Weighted average shares outstanding	75,000,000		45,500,000	62,278,182	39,514,598
Comprehensive income
Net income before noncontrolling interests	$ 5,391,389		$ 287,040	$ 7,380,031	$ 995,956
Foreign currency translation adjustment	(338,017)		(314,805)	(646,801)	(317,904)
Total comprehensive income	5,053,372		(27,765)	6,733,230	678,052
Comprehensive income attributable to noncontrolling interests	(18,396)		4,916	(100,567)	(37,272)
Net comprehensive income attribuatable to common stockholders	$ 5,034,976		$ (22,849)	$ 6,632,663	$ 640,780

See accompanying notes to the consolidated financial statements.

CHINA GEWANG BIOTECHNOLOGY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS ~~STATEMENT~~ OF ~~CHANGES~~CASH INFLOWS ~~STOCKHOLDERS’ EQUITY~~

FOR THE ~~NINE~~THREE MONTHS ENDED ~~AUGUST~~FEBRUARY 3128, ~~2016~~2017 ~~(UNAUDITED)~~AND ~~(IN~~FEBRUARY ~~U.S.~~29, $)2016

	Common Stock	Additional Paid-in Capital	Retained Earnings	Noncon- trolling Interests	Statutory Reserve Fund	Other Compre- hensive Income (Loss)	Total
Balance, November 30, 2015	$ 45,500	$ 6,525,743	$ 2,270,416	$ 84,161	$ 281,766	$ (252,022)	$ 8,955,564
Issuance of common stock	29,500	9,818,700	-	-	-	-	9,848,200
Equity in excess of purchase price of investee under common control	-	466,652	-	-	-	-	466,652
Acquisition of VIE non-controlling interest	-	169,007	17,709	(159,088)	(15,562)	(13,533)	(1,467)
Net income	-	-	7,114,402	265,629	-	-	7,380,031
Statutory reserve	-	-	(496,351)	-	496,351	-	-
Other comprehensive income (loss)	-	-	-	(5,974)	-	(640,827)	(646,801)
Balance, August 31, 2016 (Unaudited)	$ 75,000	$ 16,980,102	$ 8,906,176	$ 184,728	$ 762,555	$ (906,382)	$ 26,002,179

(UNAUDITED) (IN U.S. $)

	2017			2016

Cash flows from operating activities:
Net income	$	5,754,965		$	350,698
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		13,000			10,108
(Income) from equity investment		(2,153,012	)		-
Changes in operating assets and liabilities:
(Increase) in accounts receivable		(3,169,143	)		(26,726	)
Decrease in inventory		2,207			116,621
Decrease (increase) in prepaid expenses		1,975,828			(67,970	)
Increase in accounts payable		981,647			-
Increase in taxes payable		345,140			9,448
Decrease (increase) in accrued expenses and other liabilities		71,224			(90,631	)

Net cash provided by operating activities		3,821,856			301,548

Cash flows from investing activities:
Purchase of equipment		-			(78,567	)

Net cash (used in) investing activities		-			(78,567	)

Cash flows from financing activities:
Proceeds from sale of common stock		-			5,473,200

Net cash provided by financing activities		-			5,473,200

Effect of exchange rate changes on cash		52,504			(184,624	)

Net change in cash		3,874,360			5,511,557
Cash, beginning		13,108,340			8,669,034

Cash, end	$	16,982,700		$	14,180,591

See accompanying notes to the consolidated financial statements.

CHINA GEWANG BIOTECHNOLOGY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE ~~NINE~~THREE MONTHS ENDED ~~AUGUST~~FEBRUARY 3128, ~~2016~~2017 AND ~~2015~~FEBRUARY ~~(UNAUDITED)~~29, ~~(IN U.S. $)~~2016

	Nine Months Ended
	August 31,
	2016	2015
Cash flows from operating activities:
Net income	$ 7,380,031	$ 995,956
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation	39,616	22,656
(Income) from equity investment	(2,143,641)	-
Changes in operating assets and liabilities:
(Increase) in accounts receivable	(12,203,424)	(292,594)
Decrease (increase) in inventory	34,716	(103,253)
(Increase) in prepaid expenses	(5,598,870)	(137,847)
Increase (decrease) in accounts payable	4,258,281	(7,225)
Increase in deferred revenue	85,323	-
(Decrease) in advances from customers	-	(56,930)
Increase in taxes payable	1,090,476	3,804
(Decrease) increase in accrued expenses and other payables	64,836	115,668
Net cash (used in) provided by operating activities	(6,992,656)	540,235
Cash flows from investing activities:
Purchase of equipment	(94,953)	(34,991)
Payment for investment	(1,002,944)	-
Net cash (used in) investing activities	(1,097,897)	(34,991)
Cash flows from financing activities:
Proceeds from stockholder loans	-	56,415
Proceeds from sale of common stock	9,848,200	5,000,000
Net cash provided by financing activities	9,848,200	5,056,415
Effect of exchange rate changes on cash	(641,586)	(317,979)
Net change in cash	1,116,061	5,243,680
Cash, beginning	8,669,034	3,012,812
Cash, end	$ 9,785,095	$ 8,256,492

(UNAUDITED) (IN U.S. $)

	2017		2016

Supplemental disclosure of cash flow information:

Cash paid for interest	$	-	$	-
Cash paid for income taxes	$	913,177	$	113,712

Noncash financing activities:
Payment of accrued expenses and other payables by shareholder	$	129,209	$	20,000

See accompanying notes to the consolidated financial statements.

CHINA GEWANG BIOTECHNOLOGY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

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

	Nine Months Ended
	August 31,
	2016	2015
Supplemental disclosure of cash flow information:
Cash paid for interest	$ -	$ -
Cash paid for income taxes	$ 912,072	$ 338,735
Additional paid-in capital - equity in excess of purchase price
of investee under common control	$ 466,652	$ -
Noncash financing activities:
Payment of accrued expenses and other payables by shareholder	$ 88,817	$ 56,415

See accompanying notes to the consolidated financial statements.

CHINA GEWANG BIOTECHNOLOGY, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE ~~AND NINE~~ MONTHS ENDED ~~AUGUST~~FEBRUARY 3128, ~~2016~~2017 AND ~~2015~~FEBRUARY 29, 2016

(UNAUDITED) (IN U.S. $)

1. ORGANIZATION

~~ORGANIZATION~~China Gewang Biotechnology, Inc. (the “Company”), formerly known as Rich Star Development, was incorporated under the laws of the State of Nevada on May 29, 2009. From its inception until the closing of the reverse merger described below, the Company was a development-stage company in the business of sourcing and distributing food products, paper products, janitorial products, restaurant utensils and equipment to the food service industry in the PRC.

China Gewang Biotechnology, Inc. (the “Company”), formerly known as Rich Star Development, was incorporated under the laws of the State of Nevada on May 29, 2009. From its inception until the closing of the reverse merger described below, the Company was a development-stage company in the business of distributing designer clothing and footwear from established brands to customers around the world.

On April 20, 2015, the Company completed a reverse merger transaction through a share exchange with the stockholders of Biotechnology International Holding Ltd. (“Biotechnology International”), whereby the Company acquired 100% of the outstanding shares of Biotechnology International in exchange for 32,000,000 shares of its common stock, representing 90.14% of the issued and outstanding shares of common stock. As a result of the reverse merger, Biotechnology International became the Company’s wholly-owned subsidiary and the former Biotechnology International stockholders became our controlling stockholders. The share exchange transaction was treated as a reverse acquisition, with Biotechnology International as the acquirer and the Company as the acquired party for accounting purposes.

On January 8, 2015, the Company filed a certificate of amendment to its articles of incorporation to change its name from “Rich Star Development” to “China Gewang Biotechnology, Inc.”

On July 20, 2016 the Company filed with the Nevada Secretary of State a Certificate of Amendment to Articles of Incorporation. The Certificate of Amendment increased the number of authorized shares of common stock from 75 million to 100 million.

Majority-owned subsidiary: Guangdong Gewang ~~Selenium~~

As a result of the transaction with Biotechnology International, the Company owns all of the issued and outstanding common stock of Hong Kong Gewang Holdings Group Limited (“Hong Kong Gewang”), a wholly-owned subsidiary of Biotechnology International, which in turn owns all of the issued and outstanding common stock of Gewang Selenium Enrichment Information Consulting (Shenzhen) Co., Ltd. (“Gewang Selenium”). Before August 8, 2016, the Company effectively and substantially controlled Guangdong Gewang Biotechnology Co., Ltd. (“Guangdong Gewang”) through a series of captive agreements between Guangdong Gewang and Gewang Selenium. Guangdong Gewang, incorporated under the laws of the People’s Republic of China (“PRC”) on June 2010, is primarily engaged in the sale of selenium supplements within the PRC. It is a member of the Chinese Selenium Supplements Association.

On July 13, 2016, Gewang Selenium exercised its option to purchase all of the registered equity of Guangdong Gewang. The purchase price paid for the equity was RMB10,000 (approximately $1,519). The equity was purchased from Shili Zhang, Yun Zeng and Wei Xu. Shili Zhang was the Company’s CEO until April 8, 2016 and is the father of Mengdi Zhang, who owned 12.7% of the Company's outstanding common stock at the time of the sale on July 13, 2016. The other two sellers are not affiliated with the Company.

CHINA GEWANG BIOTECHNOLOGY, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED FEBRUARY 28, 2017 AND FEBRUARY 29, 2016

(UNAUDITED) (IN U.S. $)

1.	ORGANIZATION (continued)

On July 13, 2016, Gewang Selenium exercised its option to purchase all of the registered equity of Guangdong Gewang. The purchase price paid for the equity was RMB10,000 (approximately US$1,500). The equity was purchased from Shili Zhang, Yun Zeng and Wei Xu. Shili Zhang was the Company’s CEO until April 8, 2016 and is the father of Mengdi Zhang, who was the beneficial owner of 22.7% of the Company's outstanding common stock at the time of the sale on July 13, 2016. The other two sellers are not affiliated with the Company.

Upon application to the provincial government for registration of the transfer of equity, the Company was informed that Gewang Selenium would not be permitted to own 100% of Guangdong Gewang. Therefore the parties modified the exercise of the option to provide that Gewang Selenium would purchase only 98% of the registered equity of Guangdong Gewang. The purchase price paid for the equity was RMB 9,800 (approximately US$1,500). The remaining 2% of the registered equity was then sold by Yun Zeng to Haiping Wu for a price of RMB 200,000 (approximately US$30,400), which equaled 2% of the registered equity of Guangdong Gewang. Haiping Wu is a Director of Guangdong Gewang. The acquisition, as modified, was then approved by the provincial government on August 8, 2016.

Prior to the acquisition, Gewang Selenium controlled Guangdong Gewang through a series of contractual agreements, which made Guangdong Gewang a variable interest entity, the effect of which was to cause the balance sheet and operating results of Guangdong Gewang to be consolidated with those of Gewang Selenium in the Company's financial statements. As a result of the acquisition by Gewang Selenium of the registered ownership of Guangdong Gewang, the balance sheet and operating results of Guangdong Gewang will hereafter continue to be consolidated with those of Gewang Selenium as its majority-owned subsidiary. The previous non-controlling interest was reclassified to additional paid-in-capital.

The business of Guangdong Gewang consists of:

Sale of selenium supplements

Through a partnership with the Academy of Agricultural Sciences of Shangdong Province (the “Academy”), a highly regarded research institute in China, the Company has licensed the exclusive right to contract for the manufacture and marketing of products, two selenium capsules and one selenium powder, using formulas developed and owned by the Academy.

~~Upon~~CHINA GEWANG ~~application to the provincial government for registration of the transfer of equity~~BIOTECHNOLOGY, ~~the Company was informed that Gewang Selenium would not be permitted to own 100% of Guangdong Gewang~~INC. ~~Therefore~~ ~~the~~AND parties modified the exercise of the option to provide that Gewang Selenium would purchase only 98% of the registered equity of Guangdong Gewang. The purchase price paid for the equity was RMB 9,800 (approximately $1,500). The remaining 2% of the registered equity was then sold by Yun Zeng to Haiping Wu for a price of RMB 200,000 (approximately $30,400), which equaled 2% of the registered equity of Guangdong Gewang. Haiping Wu is a Director of Guangdong Gewang. The acquisition, as modified, was then approved by the provincial government on August 8, 2016.SUBSIDIARIES

~~Prior~~NOTES TO toTHE ~~the~~CONSOLIDATED ~~acquisition,~~FINANCIAL Gewang Selenium controlled Guangdong Gewang through a series of contractual agreements, which made Guangdong Gewang a variable interest entity, the effect of which was to cause the balance sheet and operating results of Guangdong Gewang to be consolidated with those of Gewang Selenium in the Company's financial statements. As a result of the acquisition by Gewang Selenium of registered ownership of Guangdong Gewang, the balance sheet and operating results of Guangdong Gewang will hereafter continue to be consolidated with those of Gewang Selenium as its majority-owned subsidiary. The previous non-controlling interest was reclassified to additional paid-in-capital.STATEMENTS

FOR THE THREE MONTHS ENDED FEBRUARY 28, 2017 AND FEBRUARY 29, 2016

(UNAUDITED) (IN U.S. $)

1.	ORGANIZATION (continued)

Sale of selenium products

In March 2016, the Company signed cooperation agreements with six selenium enriched food product manufacturers, providing for Guangdong Gewang to distribute 89 distinct selenium products to chain stores. The products include processed foods such as selenium enriched porridge, ready to eat foods such as seleniumenriched peanuts and ingredients such as selenium enriched flower. The Company is actively engaged in marketing healthy selenium rich foods including SeleniumRich Maize Residue, SeleniumRich Brown Rice. Selenium Enriched Black Beans, SeleniumEnriched Buckwheat Kernel and SeleniumEnriched Ormosia. The Company's distribution of these foods compliments the Company’s sale of selenium supplements by raising awareness of the need for selenium in the diets of our target consumer market.

Equity investment: Guangdong Tianmei

On April 28, 2016, the Company's wholly-owned subsidiary, Biotechnology International, entered into an investment agreement with Guangdong Tianmei Selenium-Rich Beverage Chain Co., Ltd. (“Guangdong Tianmei”). Guangdong Tianmei was organized in May 2015, and is engaged in the business of distributing selenium-rich bottled water. ~~Guangdong~~and ~~Tianmei~~ also functions as a placement agent for a variety of products from various manufacturers, all within the PRC. The investment agreement provided that Biotechnology International would pay US$1,000,000 to acquire a 30% interest in an Australian corporation to be formed, which would indirectly own all of the equity in Guangdong Tianmei.

The foregoing acquisition by Biotechnology International of 30% of Tianmei Beverage Group Corporation Limited, an Australian corporation ("Tianmei Australia"), was completed in May 2016, at which time Tianmei Australia acquired ownership, through subsidiaries, of Guangdong Tianmei. The ~~investment agreement provided that payment of the~~ $1,000,000 purchase price was ~~due~~paid ~~on June 20, 2016. Payment~~ in full ~~was made~~ on June 17, 2016.

AsOn February a23, ~~result~~2017, ofGuangdong ~~the~~Tianmei ~~entry~~entered into ~~the~~an ~~foregoing~~acquisition ~~agreements~~agreement with Chenzhou Qianlifeng Beverage Co., Ltd. (“Chenzhou Qianlifeng”). Chenzhou Qianlifeng specializes in the ~~Company~~production ~~has~~of selenium-rich water, and was contracted by Guangdong Tianmei to bottle selenium-rich water under Guangdong Tianmei’s label. The acquisition agreement provided that Guangdong Tianmei would pay RMB 5,000,000 (approximately US$724,600) to acquire a ~~corporate~~100% ~~structure~~interest ~~which~~in isChenzhou ~~set~~Qianlifeng. ~~forth~~The astotal ~~follows:~~price was fully paid on February 23, 2017.

2CHINA GEWANG BIOTECHNOLOGY, INC. AND SUBSIDIARIES

~~SUMMARY~~NOTES TO OFTHE ~~SIGNIFICANT~~CONSOLIDATED ~~ACCOUNTING~~FINANCIAL ~~POLICIES~~ STATEMENTS

FOR THE THREE MONTHS ENDED FEBRUARY 28, 2017 AND FEBRUARY 29, 2016

(UNAUDITED) (IN U.S. $)

1.	ORGANIZATION (continued)

As a result of the entry into the foregoing agreements, the Company has a corporate structure which is as follows:

CHINA GEWANG BIOTECHNOLOGY, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED FEBRUARY 28, 2017 AND FEBRUARY 29, 2016

(UNAUDITED) (IN U.S. $)

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of accounting and presentation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. The consolidated financial statements include those of the Company and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.

The unaudited interim consolidated financial statements of the Company as of ~~August~~February 3128, ~~2016~~2017, and for the three ~~and nine~~ months ended ~~August 31~~February 28, ~~2016~~2017 and ~~2015~~February 29, 2016 have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the rules and regulations of the Securities and Exchange Commission (the “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. ~~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.~~ 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 results of operations for the three ~~and nine~~ months ended ~~August~~February 3128, ~~2016~~2017 ~~and 2015~~ are not necessarily indicative of the results to be expected for future quarters or for the year ending November 30, ~~2016~~2017. 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 Company uses the equity method of accounting for its equity ~~investments. The~~investment ~~investments~~in ~~are~~Tianmei ~~under common control and can be significantly influenced~~Australia. Under the equity method, investments are carried at cost and increased or decreased by the Company’s pro-rata share of earnings or losses. The carrying costs of these investments ~~are~~is also increased or decreased to reflect additional contributions or withdrawals of capital. Any difference in the book equity and the Company’s pro-rata share of the net assets of the investment will be reported as gain or loss at the liquidation of the investment. Losses in excess of the ~~investments~~investment are recorded when the Company is committed to provide additional financial support. The Company uses the equity method for ~~investment~~its of 30% investment because the Company has the ability to exercise significant influence over ~~these~~Tianmei ~~entities~~Australia and its subsidiaries.

11The consolidated financial statements and notes to the consolidated financial statements are presented in United States dollars (“US Dollar” or “US$” or “$”).

~~All consolidated financial statements and notes to the consolidated financial statements are presented in United States dollars (“US Dollar” or “US$” or “$”).~~12

CHINA GEWANG BIOTECHNOLOGY, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED FEBRUARY 28, 2017 AND FEBRUARY 29, 2016

(UNAUDITED) (IN U.S. $)

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Use of estimates

The preparation of consolidated 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.

Foreign currency translations

Almost all of the Company assets are located in the PRC. The functional currency for the Company’s operations is the Renminbi (“RMB”). The Company uses the United States Dollar (“US Dollar” or “US$” or “$”) for financial reporting purposes. The financial statements of the Company have been translated into US Dollars in accordance with Financial Accounting Standards Board ("FASB”) Accounting Standards Codification ("ASC") Section 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 income ~~(loss)~~ and comprehensive income ~~(loss)~~, changes in stockholders’ equity and cash flows 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).

CHINA GEWANG BIOTECHNOLOGY, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED FEBRUARY 28, 2017 AND FEBRUARY 29, 2016

(UNAUDITED) (IN U.S. $)

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Foreign currency translations (continued)

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

	August 31, 2016	November 30, 2015
			February 28, 2017		November 30, 2016
	~~(Unaudited)~~		(Unaudited)
~~Balance sheet items, except for stockholders’ equity, as of periods end~~	~~0.1497~~Balance sheet items, except for stockholders’ equity, as of periods end	~~0.1561~~		0.1456		0.1452
	Three Months Ended
	August 31, 2016	August 31, 2015
	(Unaudited)	(Unaudited)
Amounts included in the statements of income and comprehensive income, changes in stockholders’ equity and cash flows for the periods presented	0.1506	0.1618

	Three Months Ended
	February 28, 2017		February 29, 2016
	(Unaudited)		(Unaudited)

Amounts included in the statements of income and comprehensive income, changes in stockholders’ equity and cash flows for the periods presented		0.1449		0.1533

	Nine Months Ended
	August 31, 2016	August 31, 2015
	(Unaudited)	(Unaudited)
Amounts included in the statements of income and comprehensive income, changes in stockholders’ equity and cash flows for the periods presented	0.1525	0.1624

For the three months ended February 28, 2017 and February 29, 2016, foreign currency translation adjustments of $52,792 and $(186,413), respectively, have been reported as other comprehensive income (loss). Other comprehensive income (loss) of the Company consists entirely of foreign currency translation adjustments.

~~Foreign~~Although the ~~currency~~PRC ~~translation~~government ~~adjustments~~regulations ofnow ~~$(338,017)~~allow ~~and~~convertibility ~~$(314,805)~~of ~~for~~ the ~~three~~RMB ~~months~~for ~~ended~~current ~~August~~account 31transactions, ~~2016~~significant ~~and~~restrictions still ~~2015,~~remain. ~~respectively~~Hence, ~~and~~such ~~$(646,801)~~translations ~~and~~should ~~$(317,904)~~not ~~for~~be ~~the~~construed ~~nine months ended August 31, 2016 and 2015, respectively, have been reported~~ as ~~other~~representations ~~comprehensive~~that ~~income~~the ~~(loss). Other~~RMB ~~comprehensive~~could ~~income~~be ~~(loss)~~converted ofinto ~~the~~US ~~Company~~Dollars at ~~consists~~that ~~entirely~~rate ofor ~~foreign~~any ~~currency~~other ~~translation adjustments~~rate.

~~Although~~The value of the RMB against the US Dollar and other currencies may fluctuate and is affected by, among other things, changes in the PRC’s ~~government~~political ~~regulations~~and ~~now~~economic ~~allow~~conditions. ~~convertibility~~Any significant revaluation of the RMB ~~for~~may ~~current~~materially ~~account~~affect ~~transactions,~~the ~~significant~~Company’s financial ~~restrictions~~condition ~~still~~in ~~remain.~~terms ~~Hence,~~of ~~such~~US ~~translations~~Dollar ~~should~~reporting. ~~not~~During bethe ~~construed~~year asended ~~representations~~December ~~that~~31, 2016, the ~~RMB~~PRC ~~could~~devalued beits ~~converted~~currency ~~into~~by approximately US8%. ~~Dollars~~Further atdevaluations ~~that~~of ~~rate~~its orcurrency ~~any~~could ~~other~~occur ~~rate~~in the future.

The value of 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. In August 2015, the PRC devalued its currency by approximately 3.5%; in January 2016 the PRC devalued its currency by an additional 0.5%. Further devaluations of its currency could occur.14

CHINA GEWANG BIOTECHNOLOGY, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED FEBRUARY 28, 2017 AND FEBRUARY 29, 2016

(UNAUDITED) (IN U.S. $)

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Revenue recognition

Revenues are primarily derived from selling selenium ~~related~~supplements and selenium products to wholesale customers, contract distributors, and from our retail stores. 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 ~~account~~ receivable is reasonably assured. The Company recognizes revenue for ~~product~~ sales upon transfer of title to the ~~customer~~customers. Customer purchase orders and/or contracts are generally used to determine the existence of an arrangement. Shipping documents and the completion of any customer 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. For manufacturing defects identified by customers at acceptance, the Company will return the goods to the manufacturer and receive replacements. The Company has had no product returns or sales discounts and allowances because goods delivered and accepted by customers are ~~normally~~ not returnable.

During the three months ended August 31, 2016, the Company commenced franchising the use of the Company's trademark, name identification and other business resources. The franchisee is required to pay franchise fees and management fees to the Company. Franchise fees are recognized only when all material services or conditions relating to the sale have been substantially performed or satisfied by the Company. Wholesale Revenue

13Wholesale revenue is recognized when title to the product is transferred to the distributors. Title is transferred upon receipt at the distributors’ locations, as determined by the specific sales terms.

The Company’s ~~revenues~~pays distributors certain incentives for promoting and placing its products, which allows the ~~three~~Company to quickly expand its distribution network and ~~nine~~sales ~~months~~volume. ~~ended~~The ~~August~~costs ~~31,~~associated ~~2016~~with ~~and~~these ~~2015~~incentives ~~were~~is ~~comprised~~deducted asfrom ~~follows:~~gross revenue in the consolidated statements of income and comprehensive income.

	Three Months Ended August 31,				Nine Months Ended August 31,
	2016		2015			2016		2015
	(Unaudited)		(Unaudited)			(Unaudited)		(Unaudited)
Wholesale		$ 17,244,934		$ 875,340			$ 23,026,125		$ 2,173,717
Retail	1,312,332		191,041			2,186,352		899,276
Franchise	31,030		-			31,100		-
		$ 18,588,296		$ 1,066,381			$ 25,243,577		$ 3,072,993

CHINA GEWANG BIOTECHNOLOGY, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED FEBRUARY 28, 2017 AND FEBRUARY 29, 2016

(UNAUDITED) (IN U.S. $)

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Revenue recognition (continued)

Retail Revenue

Company-operated retail store revenues are recognized when payment is tendered at the point of sale.

The Company’s net revenues for the three months ended February 28, 2017 and February 29, 2016 were comprised as follows:

	2017			2016

Wholesale gross revenue-selenium supplements	$	3,075,103		$	829,085
Wholesale gross revenue-selenium products		18,013,025			-
Less: promotion fees-selenium products,		(2,074,411	)		-

Wholesale revenues, net		19,013,717			829,085
Retail revenue-selenium supplements		1,207,534			389,013
Retail revenue-selenium products		920,881			-

	$	21,142,132		$	1,218,098

Shipping costs

Shipping costs incurred by the Company are recorded as selling expenses. Shipping costs for the three ~~and nine~~ months ended ~~Aug~~February 3128, ~~2016~~2017 and February ~~2015~~29, 2016 were $3125,~~573~~593 and $1115,~~357, respectively, and $71,~~026 ~~and $30~~,~~837,~~ respectively.

Advertising costs

Advertising costs are charged to operations when incurred. For the three ~~and nine~~ months ended ~~August~~February 3128, ~~2016~~2017 and ~~2015~~February 29, ~~advertising~~2016, advertising expenses were $~~251~~449,~~411~~044 and $21,~~804~~462, respectively~~, and $295,926 and $60,900, respectively~~.

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.

CHINA GEWANG BIOTECHNOLOGY, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED FEBRUARY 28, 2017 AND FEBRUARY 29, 2016

(UNAUDITED) (IN U.S. $)

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Accounts receivable

Accounts receivable are recorded at the contract amount after deduction of trade discounts and, allowances, if any, and do not bear interest. The allowance for doubtful accounts, when necessary, is the Company’s best estimate of the amount of probable credit losses from accounts receivable. The Company determines the allowance based on historical write-off experience, ~~customer~~the ~~specific~~level ~~facts~~of past-due accounts based on the contractual terms of the receivable, the relationship with the customer and current economic conditions.

Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any off-balance-sheet credit exposure related to its customers.

As of ~~August~~February 3128, ~~2016~~2017 and November 30, ~~2015~~2016, accounts receivable were $1214,~~471~~374,~~292~~154 and $~~267~~11,~~868~~205,011, respectively. The ~~Company~~increase ~~believes~~is primarily ~~that~~due ~~its~~to ~~accounts~~the ~~receivable~~recent ~~are~~sales with new wholesale distributors, which has been subsequently fully ~~collectable~~collected. ~~and~~Therefore, the Company determined that an allowance for doubtful accounts was not necessary. Historically, the Company did not have any uncollectable accounts receivable.

Inventory

Inventory, comprised principally of boxed selenium capsules, selenium-glossy ganoderma capsules and selenium powder, is valued at the lower of cost or market. The value of inventory is determined using the first-in, first-out method.

14The Company periodically estimates an inventory allowance for estimated unmarketable inventories when necessary. Inventory amounts are reported net of such allowances, if any. There were no allowances for inventory as of February 28, 2017 and November 30, 2016.

The Company periodically estimates an inventory allowance for estimated unmarketable inventories when necessary. Inventory amounts are reported net of such allowances, if any. There were no allowances for inventory as of August 31, 2016 Property and ~~November 30, 2015.~~Equipment

Fixed assets are recorded at cost, less accumulated depreciation. Cost includes the prices paid to acquire the assets, and any expenditures that substantially increase an 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. The estimated useful lives for fixed asset categories are as follows:

	Furniture and equipment	3-5years
	Motor vehicles	4 years

CHINA GEWANG BIOTECHNOLOGY, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED FEBRUARY 28, 2017 AND FEBRUARY 29, 2016

(UNAUDITED) (IN U.S. $)

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

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 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 2 Inputs –	Inputs other than the quoted prices in active markets that are observable either directly or indirectly.
Level 3 Inputs -	Inputs based on valuation techniques that are both unobservable and significant to the overall fair value measurements.
	Level 3 Inputs –	Inputs based on 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.

The Company did not identify any assets or liabilities that are required to be presented at fair value on a recurring basis. Carrying values of non-derivative financial instruments, including cash and cash equivalents, accounts receivable, inventory, prepaid expenses, ~~equity investment,~~ accounts payable, ~~payable for equity investment,~~ taxes payable, accrued liabilities and other payables, and loan from stockholder, approximated their fair values due to the short nature of these financial instruments. There were no changes in methods or assumptions during the periods presented.

CHINA GEWANG BIOTECHNOLOGY, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED FEBRUARY 28, 2017 AND FEBRUARY 29, 2016

(UNAUDITED) (IN U.S. $)

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Prepaid expenses

Prepaid expenses primarily consist of promotion expenses, rent, advertising expenses and licensing fees.

Prepaid promotion expenses represent ~~payments~~prepayments made to resellers for distributing our products to retail stores. In ~~March 2016, the Company entered into agreements with four resellers. In June and July 2016, the Company entered into agreements with another two resellers.~~ Prepaid promotion expenses as of ~~August~~February 3128, ~~2016~~2017, and November 30, ~~2015~~2016 were $52,~~409~~653,~~200~~684 and $04,275,602, respectively.

On January 5, 2011, the Company entered into a license agreement for the technology utilized for the manufacture of its selenium capsules and powder products from an unrelated third party for five years from January 2011 to December 2015. On December 30, 2015, the Company renewed the license agreement for another five years to December 2020 for $9086,~~360~~912 (RMB 600,000) each year. ~~The~~ The related prepaid licensing fees as of ~~$29~~February 28,~~940~~ ~~and $7~~2017,~~805~~ ~~were~~and ~~included~~November in30, ~~prepaid~~2016 ~~expenses~~were ~~on the balance sheets as of August 31~~$72,785 ~~2016~~ and ~~November 30~~$7, ~~2015~~259, respectively. The license provides for renewal options. Since this agreement requires the advance payment of the annual licensing fee, there were no minimum payments remaining under this agreement as of ~~August~~February 3128, ~~2016~~2017 and November 30, ~~2015~~2016.

15On September 30, 2016, the Company entered into a six-month agreement with an advertising company for $908,725 (RMB 6,000,000). As of February 28, 2017, and November 30, 2016, the unamortized balance of $145,570 and $605,816, respectively, was included in prepaid expenses on the balance sheet.

Impairment of long-~~live~~lived assets

The Company applies FASB ASC 360, “Property, Plant and Equipment,” 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 will 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. No impairment of long-lived assets was recognized for the three ~~and nine~~ months ended ~~August~~February 3128, ~~2016~~2017 and ~~2015~~February 29, 2016.

CHINA GEWANG BIOTECHNOLOGY, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED FEBRUARY 28, 2017 AND FEBRUARY 29, 2016

(UNAUDITED) (IN U.S. $)

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Statutory reserve fund

Pursuant to corporate law of the PRC, the Company is required to transfer 10% of its net income, as determined under PRC accounting rules and regulations, to a statutory reserve fund until such reserve balance reaches 50% of the Company’s registered capital. The statutory reserve fund is non-distributable other than during liquidation and can be used to fund previous years’ losses, if any, and may be utilized for business expansion or used to increase registered capital, provided that the remaining reserve balance after use is not less than 25% of registered capital. The statutory reserve fund was $~~762~~759,~~555~~094 ~~and $281,766~~ as of ~~August~~February 3128, ~~2016~~ 2017 and November 30, ~~2015~~2016, respectively. As of ~~August~~November 3130, 2016, the required statutory reserve ~~funds~~fund ~~have~~has been fully funded.

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 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 tax positions. As of ~~August~~February 3128, ~~2016~~2017 and November 30, ~~2015~~2016, the Company does not have a liability for any unrecognized tax benefits. The Company’s tax filings are subject to examination by the tax authorities. The tax years of 2013, 2014 and ~~2014~~2015 remain open to examination by tax authorities in the PRC.

CHINA GEWANG BIOTECHNOLOGY, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED FEBRUARY 28, 2017 AND FEBRUARY 29, 2016

(UNAUDITED) (IN U.S. $)

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Income taxes (continued)

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

United States

The Company is subject to United States tax at graduated rates from 15% to 35%. No provisions for income tax in the United States have been made as the Company had no U.S. taxable income for the three ~~and nine~~ months ended ~~August~~February 3128, ~~2016~~2017 and ~~2015.~~February 29, 2016.

British Virgin Islands (“BVI”)

Biotechnology International is incorporated in the BVI and is governed by the income tax laws of the BVI. According to current BVI income tax law, the applicable income tax rate for the Company is 0%.

Hong Kong

Hong Kong Gewang 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.

The People's Republic of China (“PRC”)

Gewang Selenium and Guangdong Gewang are subject to an Enterprise Income Tax at 25% and file their own tax returns.

3. RECENTLY ISSUED ACCOUNTING STANDARDS

~~RECENTLY~~In May ~~ISSUED~~2014, ~~ACCOUNTING~~the ~~STANDARDS~~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. In March 2016, the FASB issued Accounting Standards Update No. 2016-12, Revenue from Contracts with Customers, with respect to Principal versus Agent Considerations. In April 2016, the FASB issued Accounting Standards Update No. 2016-12, Revenue from Contracts with Customers, with respect to Identifying Performance Obligations and Licensing. In April 2016, the FASB additionally issued Accounting Standards Update No. 2016-12, Revenue from Contracts with Customers, with respect to Narrow-Scope Improvements and Practical Expedients. In December 2016, the FASB issued Accounting Standards Update No. 2016-20, Revenue from Contracts with Customers, with respect to Technical Corrections and Improvements. We do not believe this will have a material impact on our consolidated financial statements as currently they are not effective.

In February 2016, the Financial 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 a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. 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.21

InCHINA GEWANG ~~July 2015~~BIOTECHNOLOGY, the FASB issued ASU 2015-11 (Subtopic 330) - Simplifying the Measurement of Inventory, which provides guidance to companies who account for inventory using either the first-in, first-out (“FIFO”) or average cost methodsINC. ~~The~~AND guidance states that companies should measure inventory at the lower of cost or net realizable value. Net realizable value is defined as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. ASU 2015-11 is effective for fiscal years beginning after December 15, 2016. Early adoption is permitted. This accounting standard update is not expected to have a material impact on the Company’s consolidated financial statements.SUBSIDIARIES

InNOTES TO ~~March~~THE ~~2015,~~CONSOLIDATED ~~the~~FINANCIAL FASB issued ASU 2015-03 – Interest – Imputation of Interest (Subtopic 835-30). This ASU addressed the simplification and presentation of debt issuance costs by presenting them in the balance sheet as a direct deduction from the carrying amount of the related debt liability, consistent with debt discounts or premiums. This accounting standard update is not expected to have a material impact on the Company’s consolidated financial statements.STATEMENTS

InFOR THE ~~January~~THREE ~~2015,~~MONTHS ~~the~~ENDED ~~FASB~~FEBRUARY issued ASU 2015-01 – Income Statement – Extraordinary and Unusual Items (Subtopic 225-20). This ASU addressed the simplification of income statement presentation by eliminating the concept of extraordinary items. The amendments in this update are effective for fiscal years28, ~~and~~2017 ~~interim~~AND ~~periods~~FEBRUARY ~~within those fiscal years~~29, beginning after December 15, 2015. A reporting entity may apply the amendments prospectively. A reporting entity also may apply the amendments retrospectively to all prior periods presented in the financial statements. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. This accounting standard update is not expected to have a material impact on the Company’s consolidated financial statements.2016

17(UNAUDITED) (IN U.S. $)

In August 2014, the FASB issued authoritative guidance that requires an entity’s management to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern and requires additional disclosures if certain criteria are met3. ~~This~~ ~~guidance~~RECENTLY isISSUED ~~effective~~ACCOUNTING ~~for~~STANDARDS fiscal periods ending after December 15, 2016, with early adoption permitted. This accounting standard update is not expected to have a material impact on the Company’s consolidated financial statements.(continued)

4In February 2016, the FASB issued ASU 2016-02, “Leases.” The new standard establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. 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 do not believe this will have a material impact on our consolidated financial statements as currently all leases are prepaid.

~~RELATED~~In July ~~PARTY~~2015, ~~TRANSACTIONS~~the FASB issued ASU 2015-11 (Subtopic 330), “Simplifying the Measurement of Inventory,” which provides guidance to companies who account for inventory using either the first-in, first-out (“FIFO”) or average cost methods. The guidance states that companies should measure inventory at the lower of cost or net realizable value. Net realizable value is defined as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. ASU 2015-11 is effective for fiscal years beginning after December 15, 2016. Early adoption is permitted. This accounting standard update is not expected to have a material impact on the Company’s consolidated financial statements.

~~The Company obtained demand loans from one of its stockholders which are non-interest bearing~~4. ~~The~~ ~~loans~~RELATED ofPARTY ~~$256,044 as of August 31, 2016 and $166,106 as of November 30, 2015 are reflected as loans from stockholder.~~ TRANSACTIONS

~~The~~In March 2016 the Company entered into a one year promotion agreement with Guangdong Tianmei, ain ~~related~~which ~~party~~it now holds an indirect 30% ownership interest. ~~Prepaid~~ ~~promotion~~The ~~expenses~~agreement asexpired ofon ~~August~~March 31, 2017. Under the agreement, Guangdong Tianmei introduced the Company to Guangzhou Huayuda Commerce and Trade Co., Ltd. (“Guangzhou Huayuda”). Guangzhou Huayuda operated 14 stores in March 2016, and ~~November~~in 30August 2016 it expanded to 200 stores. The Company sells selenium enriched products to these stores, ~~2015~~and pays a monthly promotion fee to Guangdong Tianmei for each product sold in each store of RMB 108 (US$16.60). Sales to Guangzhou Huayuda were approximately RMB 9,381,000 (US$~~122~~1,~~874~~359,000) for the three months ended February 28, 2017. Promotion expenses incurred during the three months ended February 28, 2017 and February 29, 2016 were $0356,686 and $0, respectively.

The Company entered into an agreement with Guangdong Tianmei on June 10, 2015 to license the ~~usage~~use of the Company’s trademark for 10 years. Trademark revenue recorded for the three ~~and nine~~ months ended ~~August~~February 3128, ~~2016~~2017 and ~~2015~~February 29, 2016 were $~~0, $~~1,~~481,~~470 ~~$0,~~ and $0, respectively. The future commitment is approximately $1,500 each year.

CHINA GEWANG BIOTECHNOLOGY, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED FEBRUARY 28, 2017 AND FEBRUARY 29, 2016

(UNAUDITED) (IN U.S. $)

4.	RELATED PARTY TRANSACTIONS (continued)

Equity investment

On April 28, 2016, the Company's wholly-owned subsidiary, Biotechnology International, entered into an investment agreement with Guangdong Tianmei. At that time, 88% of the equity in Guangdong Tianmei was owned by two individuals who together directly or indirectly owned 22approximately 57% of the Company's outstanding shares. The investment agreement ~~provided~~required that Biotechnology International ~~would~~ pay US$1,000,000 to acquire a 30% interest in an Australian corporation ~~to be formed~~, which would indirectly own all of the equity in Guangdong Tianmei.

The acquisition by Biotechnology International of 30% of Tianmei Australia was completed in May 2016, at which time Tianmei Australia acquired ownership, through subsidiaries, of Guangdong Tianmei. ~~The investment agreement provided that payment of the $1,000,000 purchase price was due on June 20, 2016. Payment in full was made on June 17, 2016.~~

The net worth of Guangdong Tianmei at the time of the acquisition was $4,888,840, 30% of which was $1,466,652. ~~Because~~ As the Company and Guangdong Tianmei were under common control at the time of the acquisition, the $466,652 by which the Company's share of the net book value of Guangdong Tianmei exceeded the purchase price has been recorded as an increase to additional paid-in capital.

The changes in the equity investment are summarized as follows:

		August 31, 2016		November 30, 2015
			February 28, 2017		November 30, 2016
		(Unaudited)
	Initial investment		$	1,466,652	$	1,466,652
Initial investment		$ 1,466,652		$ -
	Pro rata share of net income for the year ended November 30, 2016			4,536,760		4,536,760
Pro rata share of net income		2,143,641		-
	Pro rata share of net income for the three months ended February 28, 2017			2,153,016		-
Investment, end of period/year		$ 3,610,293		$ -
	Investment, end of year/period		$	8,156,428	$	6,003,412

1823

~~The~~CHINA GEWANG ~~following~~BIOTECHNOLOGY, isINC. aAND ~~summary of results of operations of the investee for the period from the acquisition date to August 31, 2016:~~SUBSIDIARIES

Revenue	$	19,041,844
Cost of revenue	$	7,414,162
Expenses	$	4,482,212
Net income	$	7,145,470

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

5.FOR THE THREE MONTHS ENDED FEBRUARY 28, 2017 AND FEBRUARY 29, 2016

~~LEASES~~(UNAUDITED) (IN U.S. $)

~~The Company leases its warehouse and office space from an unrelated third party under a one-year operating lease, which expired on July 1, 2016~~4. ~~The~~RELATED ~~lease~~PARTY ~~required~~TRANSACTIONS ~~the Company to prepay the total rent of $89,813~~ (~~RMB 600,000~~continued) ~~in advance for one year. On June 29, 2016, the Company renewed the lease, which commenced on July 2, 2016 and expires on July 1, 2017.~~

~~The~~Equity investment ~~following leases terminated during the reporting period:~~(continued)

·The following is a summarized balance sheet of the investee as of February 28, 2017:

The Company leased its Chancheng store from an unrelated third party. The lease, which expired on August 31, 2015, required the Company to prepay the rent of $41,314 (RMB 276,000) in advance for one year. The Company renewed this lease to August 31, 2016 and prepaid the rent of $53,888 (RMB 360,000) in advance for one year. On May 31, 2016, the Company terminated the lease with a $4,576 settlement fee.

Current assets	$	34,168,608

Noncurrent assets	$	3,417,741

Current liabilities	$	9,544,371

Noncurrent liabilities	$	-

Equity	$	28,041,978

·The following is a summary of results of operations of the investee for the three months ended February 28, 2017:

The Company leased its Xiamen store from an unrelated third party. The lease expired on June 1, 2016 and had a renewal option but the Company decided not to renew the lease.

Revenue	$	20,059,817
Cost of revenue		(7,246,434	)
Expenses		(5,636,675	)

Net income	$	7,176,708

·24

~~The~~CHINA GEWANG ~~Company leased its Changsha store form an unrelated third party. The lease~~BIOTECHNOLOGY, ~~which expires on October 7, 2018, required the Company to prepay the rent of $62,869 (RMB 420,000) in advance for one year~~INC. On ~~May~~AND ~~31, 2016, the Company terminated the lease with a $0 settlement fee.~~ SUBSIDIARIES

~~The~~NOTES TO ~~following~~THE ~~leases~~CONSOLIDATED ~~remained~~FINANCIAL ~~in effect at August 31, 2016:~~STATEMENTS

·FOR THE THREE MONTHS ENDED FEBRUARY 28, 2017 AND FEBRUARY 29, 2016

The Company leases its flagship store in Guangzhou from an unrelated third party. The lease commenced on June 1, 2016 and expires on May 31, 2017. The lease required the Company to prepay the rent of $143,701 (~~RMB 960,000~~UNAUDITED) in(IN ~~advance for one year~~U. ~~The Company fully paid the rent in June 2016~~S. $)

·5. LEASES

The Company ~~leases~~leased its ~~Foshan~~warehouse ~~store, Longyan store~~ and ~~Zhuzhou~~office ~~store~~space from ~~three~~an unrelated third ~~parties.~~party ~~All~~under ~~these~~a ~~three~~one-year ~~leases~~operating ~~commenced on June 1~~lease, ~~2016~~which ~~and~~expired ~~expires~~ on July ~~May 31~~1, ~~2017~~2016. ~~These~~The ~~three~~lease ~~leases~~required ~~each require~~ the Company to prepay the total rent of US$6286,~~869~~912 (RMB ~~420~~600,000) in advance for one year. ~~The~~On ~~Company~~June 29, ~~fully~~2016, ~~paid~~ the ~~rent~~Company inrenewed ~~June~~the ~~2016. Since~~lease ~~these~~with ~~leases~~total ~~require~~rent ~~the~~of ~~advance~~approximately ~~payment~~US$86,900 of(RMB ~~the~~600,000), ~~annual~~which ~~rent,~~commenced ~~there~~on ~~are~~July no2, ~~minimum~~2016 and ~~payments~~expires ~~remaining~~on ~~under~~July ~~these~~1, ~~leases~~2017.

~~Prepaid~~The following ~~lease~~additional ~~payments~~leases ~~totaled~~are ~~$324,077~~in ~~and~~effect ~~$179,515~~ at ~~August~~February 3128, ~~2016 and November 30, 2015, respectively. Rent expense for the three and nine months ended August 31, 2016 and 2015 was $106,692 and $55,186, respectively, and $240,249 and $117,740, respectively.~~ 2017:

19● The Company leases its flagship store in Guangzhou from an unrelated third party. The lease commenced on June 1, 2016 and expires on May 31, 2017. The lease required the Company to prepay the rent of $145,396 (RMB 960,000) in advance for one year. The Company paid the rent in June 2016.

6● The Company leases its Foshan store, Longyan store and Zhuzhou store from three unrelated third parties. All three leases commenced on June 1, 2016 and expire on May 31, 2017. These leases each required the Company to prepay the rent of $63,611 (RMB 420,000) in advance for one year. The Company fully paid the rent in June 2016. Since these leases require the advance payment of the annual rent, there are no minimum payments remaining under these leases.

~~FIXED~~Prepaid lease ~~ASSETS~~payments were $109,905 and $ 221,123 at February 28, 2017 and November 30, 2016, respectively. Rent expense for the three months ended February 28, 2017 and February 29, 2016 was $102,121 and $66,686, respectively.

~~Fixed~~6. ~~assets~~FIXED ~~as of August 31, 2016 and November 30, 2015 are summarized as follows:~~ASSETS

	2016	2015
	(Unaudited)
Electronic equipment	$ 101,024	$ 68,733
Motor vehicles	124,916	69,714
Office equipment	12,405	12,936
	238,345	151,383
Less: accumulated depreciation	(120,886)	(85,523)
Fixed assets - net	$ 117,459	$ 65,860

Fixed assets as of February 28, 2017 and November 30, 2016 are summarized as follows:

For the three and nine months ended August 31, 2016 and 2015, depreciation expense was $14,855 and $8,741, respectively, and $39,616 and $22,656, respectively.

	February 28, 2017			November 30, 2016

Electronic equipment	$	126,190		$	125,850
Motor vehicles		121,479			121,151
Office equipment		12,063			12,031

		259,732			259,032
Less: accumulated depreciation		(143,681	)		(130,265	)

Fixed assets - net	$	116,051		$	128,767

7For the three months ended February 28, 2017 and February 29, 2016, depreciation expense was $13,000 and $10,108, respectively.

~~INCOME TAXES~~25

~~The~~CHINA GEWANG ~~provision for income taxes for the three and nine months ended August 31~~BIOTECHNOLOGY, ~~2016~~INC. ~~and~~AND ~~2015 consisted of the following:~~SUBSIDIARIES

		Three Months Ended August 31,						Nine Months Ended August 31,
		2016			2015			2016			2015
		(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Current	$		1,230,889	$		100,544	$		1,770,858	$		338,154
Deferred		-			-			-			-
	$		1,230,889	$		100,544	$		1,770,858	$		338,154

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NoFOR THE ~~provisions~~THREE ~~for~~MONTHS ~~income~~ENDED ~~taxes~~FEBRUARY in the United States have been made. The Company did not generate any income in the United States or otherwise have any U.S. taxable income. The Company does not believe that it has any U.S. Federal income tax liabilities with respect to any transactions that the Company or any of its subsidiaries may have engaged in through August 3128, ~~2016. However,~~2017 ~~there~~AND ~~can~~FEBRUARY ~~be no assurance that the IRS will agree with this position~~29, and therefore the Company ultimately could be liable for U.S. Federal income taxes, interest and penalties. The tax years ended November 30, 2015, December 31, 2014, and 2013 remain open to examination by the IRS. 2016

~~The Company did not file on time its U.S. federal income tax returns, including, without limitation, information returns on Internal Revenue Service~~ (~~“IRS”~~UNAUDITED) ~~Form~~(IN ~~5471, “Information Return of~~ U.S. Persons with Respect to Certain Foreign Corporations” for the short year tax return ended November 30, 2015 required to be filed as a result of the change in fiscal year. Failure to furnish any income tax returns and information returns with respect to any foreign business entity required, within the time prescribed by the IRS, subjects the Company to certain civil penalties. Management is of the opinion that penalties, if any, that may be assessed would not be material to the consolidated financial statements.$)

207. LOANS

The Company obtained non-interest bearing demand loans from a former officer and stockholder, who resigned from office on April 8, 2016. The loans of $228,259 and $228,238 at February 28, 2017 and November 30, 2016, respectively, are reflected as loans from third party.

~~CONCENTRATION~~The Company OFobtained ~~CREDIT~~non-interest ~~AND~~bearing ~~BUSINESS~~demand ~~RISKS~~loans from one of its stockholders. The loans of $366,852 and $237,639 at February 28, 2017 and November 30, 2016, respectively, are reflected as loans from stockholder.

8.	INCOME TAXES

The provision for income taxes for the three months ended February 28, 2017 and February 29, 2016 consisted of the following:

	2017		2016
	(Unaudited)		(Unaudited)
Current	$	1,219,136	$	123,416
Deferred		-		-

	$	1,219,136	$	123,416

No provisions for income taxes in the United States have been made. The Company did not generate any income in the United States or otherwise have any U.S. taxable income. The Company does not believe that it has any U.S. Federal income tax liabilities with respect to any transactions that the Company or any of its subsidiaries may have engaged in through February 28, 2017. However, there can be no assurance that the Internal Revenue Service (“IRS”) will agree with this position, and therefore the Company ultimately could be liable for U.S. Federal income taxes, interest and penalties. The tax years ended November 30, 2015 and December 31, 2014 and 2013 remain open to examination by the IRS.

The Company did not file on time its U.S. federal income tax returns, including, without limitation, information returns on IRS Form 5471, “Information Return of U.S. Persons with Respect to Certain Foreign Corporations” for the short year tax return ended November 30, 2015 filed as a result of the change in fiscal year. Failure to furnish any income tax returns and information returns with respect to any foreign business entity required, within the time prescribed by the IRS, subjects the Company to certain civil penalties. Management is of the opinion that penalties, if any, that may be assessed would not be material to the consolidated financial statements.

CHINA GEWANG BIOTECHNOLOGY, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED FEBRUARY 28, 2017 AND FEBRUARY 29, 2016

(UNAUDITED) (IN U.S. $)

9.	CONCENTRATION OF CREDIT AND BUSINESS RISKS

Cash and cash equivalents

Substantially all of the Company’s assets and bank accounts are in banks located in the PRC and are not covered by protection similar to that provided by the FDIC on funds held in United States banks.

Major customers

For the three ~~and nine~~ months ended ~~August~~February 3128, ~~2016~~2017, three customers ~~counted~~accounted for 5662% ~~and~~of ~~five~~total sales, the largest of which accounted for 25%. For the three months ended February 29, 2016, no customers ~~counted~~accounted for 67over 10% of total sales~~, respectively~~. As of ~~August~~February 3128, ~~2016~~2017, three customers accounted for 6567% of trade accounts receivable, the largest ~~being~~of 39which accounted for 27%. As of November 30, ~~2015~~2016, three ~~seven~~ customers accounted for 9064% of trade accounts receivable., the largest of which accounted for 24%

Vulnerability Due to Operations in the PRC

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 or effective. The economy in the PRC has recently started to narrow.

9.27

~~ISSUANCE~~CHINA GEWANG OFBIOTECHNOLOGY, ~~COMMON~~INC. ~~STOCK~~AND SUBSIDIARIES

OnNOTES TO ~~January~~THE ~~18,~~CONSOLIDATED ~~2016~~FINANCIAL the Company sold an aggregate of 12,000,000 shares of common stock to four individuals in a private offering. None of the purchasers were affiliated with the Company. The purchase price for the shares was three RMB (approximately US$0.4561) per share, or a total of 36 million RMB (approximately US$5,473,200). The purchase price was paid by the investors to Guangdong Gewang, which is managed by the Company’s wholly-owned subsidiary and accounted for as a variable interest entity at that time. STATEMENTS

OnFOR THE ~~May~~THREE ~~16,~~MONTHS ~~2016~~ENDED ~~the~~FEBRUARY ~~Company sold an aggregate of 17~~28,~~500,000~~ ~~shares~~2017 ofAND ~~common~~FEBRUARY ~~stock to two entities in a private offering. Neither of the purchasers was affiliated with the Company. The purchase price for the shares was US$0.25 per share~~29, or a total of US$4,375,000. The purchase price was paid by the investors to Guangdong Gewang, which was managed by a wholly-owned subsidiary of the Company and accounted for as a variable interest entity at that time. 2016

10(UNAUDITED) (IN U.S. $)

~~PARENT~~10. ~~COMPANY~~COMMITMENTS ~~ONLY~~AND ~~CONDENSED FINANCIAL INFORMATION~~CONTINGENCIES

~~The~~On December ~~following~~30, is2015, the ~~condensed~~Company ~~financial~~entered ~~information~~into ofa ~~China~~technology ~~Gewang~~usage ~~Biotechnology,~~agreement ~~Inc.,~~with the USAcademy ~~parent,~~for ~~consisting~~the ofright ~~balance~~to ~~sheets~~use asa ofnon-patented selenium-enrichment ~~August~~technology ~~31,~~for ~~2016~~its ~~and~~supplements ~~November~~manufacturing. The agreement commenced on December 30, 2015, and ~~statements~~expires ofon December ~~income~~29, ~~and~~2020. ~~cash~~The ~~flows~~annual ~~for~~fee ~~the~~of ~~three~~RMB ~~and~~600,000 ~~nine~~(approximately ~~months~~US$87,000) ~~ended~~is ~~August~~required ~~31,~~to ~~2016~~be ~~and~~paid ~~2015~~in advance before December 30 each year.

21On April 8, 2016, Guangdong Gewang entered into a Performance Salary Assessment Agreement with the Company’s Chief Executive Officer (“CEO”). The agreement states that the CEO would receive additional monthly compensation of RMB 50,000 (approximately US$7,000), only when the monthly net income of Guangdong Gewang exceeds RMB 2,500,000 (approximately US$363,000). The agreement commenced on April 8, 2016 and expired on April 7, 2017. For three months ended February 28, 2017, the CEO received additional monthly compensation in each month.

On July 1, 2016, the Company entered into three year agreements with four of its directors for total compensation of approximately $15,000 (RMB 110,000) per month.

As of September 1, 2016, the Company has a long-term agreement with the Academy. This agreement entitles the Company to the exclusive right of first refusal to use the research related to advanced selenium-enrichment techniques and technology that the Academy develops. The agreement calls for quarterly payments of approximately $579,700 (RMB 4,000,000). For the use of the techniques and/or technology developed, additional charges will be negotiated.

CHINA GEWANG BIOTECHNOLOGY, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED FEBRUARY 28, 2017 AND FEBRUARY 29, 2016

(UNAUDITED) (IN U.S. $)

11.

PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION

The following is the condensed financial information of China Gewang Biotechnology, Inc., the US parent, consisting of balance sheets as of February 28, 2017 and November 30, 2016, and statements of income and cash flows for the years ended February 28, 2017 and February 29, 2016.

Condensed Balance Sheets

	August 31,	November 30,
	ASSETS	February 28, 2017			November 30, 2016
ASSETS	2016	2015
	Other receivable from Guangdong Gewang	$	14,848,200		$	14,848,200
	(Unaudited)
	Investments in subsidiaries		22,619,312			16,774,972
Other receivable from Guangdong Gewang	$ 14,848,200	$ 5,000,000
	TOTAL ASSETS	$	37,467,512		$	31,623,172
Investment in subsidiaries and VIE	10,995,110	3,977,483
	LIABILITIES AND STOCKHOLDERS’ EQUITY
TOTAL ASSETS	$ 25,843,310	$ 8,977,483
	Current liabilities:
LIABILITIES AND STOCKHOLDERS' EQUITY
	Accrued expenses	$	14,953		$	33,375
Current liabilities:
	Loans from third party		220,396			220,396
Accrued expenses	$ 32,913	$ 33,375
	Loans from stockholder		365,425			236,216
Stockholder loans	177,674	156,866
	Total current liabilities		600,774			489,987
Total current liabilities	210,587	190,241
	Stockholders’ equity:
Stockholders' equity:
	Common stock, $0.001 par value, 100,000,000 and 100,000,000 shares authorized, 75,000,000 and 75,000,000 shares issued and outstanding as of February 28, 2017 and November 30, 2016, respectively		75,000			75,000
Common stock, $0.001 par value, 100,000,000 shares
	Additional paid-in capital		16,980,102			16,980,102
authorized, 75,000,000 and 45,500,000 shares
	Retained earnings		20,707,870			15,026,053
issued and outstanding as of August 31, 2016 and
	Statutory reserve fund		759,094			759,094
November 30, 2015, respectively	75,000	45,500
	Other comprehensive (loss) income		(1,655,328	)		(1,707,064	)
Additional paid-in capital	16,980,102	6,525,743
	Total stockholder’s equity		36,866,738			31,133,185
Retained earnings	8,721,448	2,186,255
	TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	37,467,512		$	31,623,172
Statutory reserve fund	762,555	281,766
Other comprehensive (loss) income	(906,382)	(252,022)
Total stockholders' equity	25,632,723	8,787,242
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 25,843,310	$ 8,977,483

2229

CHINA GEWANG BIOTECHNOLOGY, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED FEBRUARY 28, 2017 AND FEBRUARY 29, 2016

(UNAUDITED) (IN U.S. $)

11.

PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION (continued)

Condensed Statements of Income

	~~Three Months Ended~~		~~Nine~~Three Months Ended
	August 31,		August 31,
			February 28, 2017			February 29, 2016
	2016	2015	2016		2015
			(Unaudited)			(Unaudited)
	(Unaudited)	(Unaudited)	(Unaudited)		(Unaudited)
	Revenues:
Revenues:
	Share of earnings from investments in subsidiaries and VIE		$	5,681,817		$	353,575
Share of earnings from investments in subsidiaries and VIE	$ 5,261,122	$ 287,814	$ 7,208,038		$ 1,017,958
	Operating expenses:
Operating expenses:
	General and administrative			(55,378	)		(19,538	)
General and administrative	(36,657)	(14,348)	(75,927)		(67,652)
	Net income		$	5,626,439		$	334,037
Net income	$ 5,224,465	$ 273,466	$ 7,132,111		$ 950,306

Condensed Statements of Cash Flows

	Nine Months Ended
		Three Months Ended
	August 31,
		February 28, 2017			February 29, 2016
	2016	2015
		(Unaudited)			(Unaudited)
	(Unaudited)	(Unaudited)
	Cash flows from operating activities:
Cash flows from operating activities:
	Net income	$	5,626,439		$	334,037
Net income	$ 7,132,111	$ 950,306
	Adjustments to reconcile net income to net cash provided by (used in) operating activities
Adjustments to reconcile net income to net cash
	Share of earnings from investment in subsidiaries and VIE		(5,681,817	)		(353,575	)
provided by (used in) operating activities:
	Increase in accrued expenses and other liabilities		55,378			19,538
Share of earnings from investment in subsidiaries
	Net cash provided by (used in) operating activities		-			-
and VIE	(7,208,038)	(1,017,958)
	Net change in cash		-			-
Increase in accrued expenses and other liabilities	75,927	67,652
	Cash, beginning of period		-			-
Net cash provided by (used in) operating activities	-	-
	Cash, end of period	$	-		$	-
Net change in cash	-	-
	Noncash financing activities:
Cash, beginning of period	-	-
	Payment of accrued expenses and other payables by shareholder	$	129,209		$	20,000
Cash, end of period	$ -	$ -
Noncash financing activities:
Payments of accrued expenses and other payables
by shareholder	$ 88,817	$ 56,415

CHINA GEWANG BIOTECHNOLOGY, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED FEBRUARY 28, 2017 AND FEBRUARY 29, 2016

(UNAUDITED) (IN U.S. $)

11.

PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION (continued)

Basis of Presentation

The Company records its investment in its subsidiaries ~~and VIE~~ under the equity method of accounting. Such investments are presented as “Investments in subsidiaries ~~and VIE~~” on the condensed balance sheets and the subsidiaries and the prior VIE profits are presented as “Share of earnings from investments in subsidiaries and VIE” on the condensed statements of income.

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 ~~nine~~three months ended ~~August~~February 3128, ~~2016~~2017.

Restricted Net Assets

Under the PRC laws and regulations, the Company’s PRC subsidiaries ~~and VIE~~ 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 ~~and the VIE~~ were approximately $2536,~~843~~867,000 and $814,~~977~~621,000 as of ~~August~~February 3128, ~~2016~~2017 and November 30, ~~2015~~2016, respectively.

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 the PRC foreign exchange control regulations that restrict the Company’s ability to convert RMB into US Dollars.

CHINA GEWANG BIOTECHNOLOGY, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED FEBRUARY 28, 2017 AND FEBRUARY 29, 2016

(UNAUDITED) (IN U.S. $)

11.

PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION (continued)

Restricted Net Assets (continued)

Schedule I of Article 5-04 of Regulation S-X requires the condensed financial information of the parent company to be filed when the restricted net assets of consolidated subsidiaries exceed 25 percent of consolidated net assets as of the end of the most recently completed fiscal year. For purposes of the above test, restricted net assets of consolidated subsidiaries shall mean that amount of the Company’s proportionate share of net assets of consolidated subsidiaries (after intercompany eliminations) which as of the end of the most recent fiscal year may not be transferred to the parent company by its subsidiaries in the form of loans, advances or cash dividends without the consent of a third party. The condensed parent company only financial statements have been prepared in accordance with Rule 12-04, Schedule I of Regulation S-X as the restricted net assets of the Company’s PRC subsidiaries exceed 25% of the consolidated net assets of the Company.

1112. SUBSEQUENT EVENTS

~~SUBSEQUENT~~The Company’s ~~EVENTS~~management has performed subsequent events procedures through April 11, 2017, which is the date the consolidated financial statements were available to be issued. There were no subsequent events requiring adjustment to or disclosure in the consolidated financial statements

The Company’s management has performed subsequent events procedures through October 14, 2016, which is the date the consolidated financial statements were available to be issued. There were no subsequent events requiring adjustment to or disclosure in the consolidated financial statements.32

24ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

~~ITEM~~Results of 2.Operations

~~MANAGEMENT’S~~The following ~~DISCUSSION~~table ~~AND~~sets ~~ANALYSIS~~forth OFkey ~~FINANCIAL~~components ~~CONDITION~~of ~~AND~~our ~~RESULTS~~results OFof ~~OPERATIONS~~operations during the quarters ended February 28, 2017 and February 29, 2016, and the percentage changes between those two periods.

Principles of Consolidation

	Three Months Ended
	February 28,			February 29,
	2017			2016			Change
	(US $)			(US $)			%
Gross revenue	$	21,142,132		$	1,218,098			1,636	%
Cost of Sales		(13,914,305	)		(342,608	)		3,961	%
Gross profit		7,227,827			875,490			726	%
Selling and marketing expenses		1,444,913			270,671			434	%
General and administrative expenses		381,355			136,961			178	%
Research and development		579,412			--			100	%
Total operating expenses		2,405,680			407,632			490	%
Operating income		4,822,147			467,858			931	%
Other income (expense)		(1,058	)		6,256			117	%
Income before provision for income taxes		4,821,089			474,114			917	%
Provision for income taxes		1,219,136			123,416			888	%
Equity in income of investee		2,153,012			--			100	%
Net income before noncontrolling interests		5,754,965			350,698			1,544	%
Noncontrolling interests		(73,148	)		(18,512	)		295	%
Net income attributable to common stockholders	$	5,681,817		$	332,186			1,610	%

China Gewang Biotechnology, Inc. is a holding company whose assets consist of (a) an indirect 98% ownership interest in Guangdong Gewang Biotechnology Co., Ltd. ("Guangdong Gewang"), a wholly foreign owned entity organized under the laws of the People’s Republic of China ("PRC") in June 2010, and (b) an indirect 30% ownership interest in Guangdong Tianmei Selenium-Rich Beverage Chain Co., Ltd. ("Guangdong Tianmei"), a corporation organized under the laws of the PRC in May 2015. Guangdong Gewang is primarily engaged in the sale of selenium supplements within the PRC, and is a member of the Chinese Selenium Supplements Association. Guangdong Tianmei is engaged in the business of distributing selenium-rich bottled water, as well as functioning as a placement agent for products from other manufacturers. Sales

~~Before~~Our sales ~~August~~increased 8,to ~~2016~~$21,142,132 for the ~~Company~~fiscal ~~effectively~~quarter ~~and~~ended ~~substantially~~February ~~controlled~~28, ~~Guangdong~~2017 ~~Gewang~~from ~~through a series of captive agreements made on April 6~~$1,218,098 ~~2015~~for ~~between~~the ~~Guangdong~~quarter ~~Gewang~~ended ~~and~~February ~~its equity owners and Gewang Selenium Enrichment Information Consulting (Shenzhen) Co.~~29, ~~Ltd~~ 2016. ~~("Gewang~~Since ~~Selenium"),~~the ~~our~~end ~~wholly-owned~~of ~~subsidiary.~~the Onprior ~~July~~year's 13quarter, ~~2016,~~we ~~Gewang~~have ~~Selenium~~begun ~~exercised its option~~ to ~~purchase~~wholesale ~~all~~products ofmanufactured ~~the~~by ~~registered~~other ~~equity~~companies ofthrough ~~Guangdong~~our distribution ~~Gewang. The~~network ~~purchase~~and ~~price~~have ~~paid~~also ~~for~~increased the ~~equity~~volume ~~was~~of ~~RMB10,000~~sales ~~(approximately~~of ~~$1,519). The~~our ~~equity~~Jindanli ~~was~~branded ~~purchased~~products. ~~from~~Since ~~Shili~~March ~~Zhang~~2016, ~~Yun~~we ~~Zeng~~have ~~and~~signed agreements ~~Wei~~with ~~Xu.~~seven ~~Shili~~distributors ~~Zhang~~to ~~was~~distribute ~~the~~selenium ~~Company’s~~products ~~CEO~~to ~~until~~chain ~~April~~stores 8,encompassing ~~2016~~hundreds ~~and is the father~~ of ~~Mengdi~~retail ~~Zhang~~stores, ~~who~~and we ~~owned~~made ~~12.7%~~net sales of ~~the~~selenium-related ~~Company's~~products ~~outstanding~~totaling ~~common~~$15,938,614 ~~stock~~to atthese ~~the~~distributors ~~time~~during of the ~~sale~~first onquarter ~~July~~of ~~13,~~fiscal ~~2016~~year 2017. The ~~other~~following ~~two~~factors ~~sellers~~had ~~are~~the ~~not~~greatest ~~affiliated~~impact ~~with~~on ~~the~~our ~~Company.~~increase in sales:

~~Upon~~● ~~application~~Total towholesale ~~the provincial government for registration of the transfer of equity~~sales, ~~the~~including ~~Company was informed that Gewang Selenium would not be permitted to own 100%~~ of ~~Guangdong~~our ~~Gewang.~~Jindanli ~~Therefore~~branded ~~the~~products ~~parties~~and ~~modified~~products ~~the~~manufactured ~~exercise~~by ofother ~~the~~companies, ~~option~~ to ~~provide~~our ~~that~~distribution ~~Gewang~~network ~~Selenium would purchase only 98%~~ of ~~the~~15 ~~registered~~wholesale ~~equity~~customers ofby ~~Guangdong~~our ~~Gewang.~~headquarters ~~The~~marketing ~~purchase~~personnel ~~price~~increased ~~paid~~by ~~for the equity was RMB 9,800 (approximately~~ $118,~~500).~~184,632, ~~The~~primarily ~~remaining~~due ~~2% of the registered equity was then sold by Yun Zeng~~ to ~~Haiping~~an Wuincrease ~~for~~in ~~a price of RMB 200,000 (approximately $30,400), which equaled 2% of~~ the ~~registered~~number ~~equity~~ of ~~Guangdong~~sales ~~Gewang.~~personnel ~~Haiping~~during Wufiscal isyear ~~a Director of Guangdong Gewang. The acquisition, as modified, was then approved by the provincial government on August 8,~~ 2016.

In● ~~May~~Of ~~2016,~~the ~~our~~total ~~wholly-owned~~increase ~~subsidiary,~~in ~~Biotechnology~~wholesale ~~International~~sales ~~Holding~~for ~~Ltd. ("Biotechnology International"), purchased 30% of~~ the ~~outstanding~~quarter ~~shares~~ended ofFebruary ~~Tianmei~~28, ~~Beverage~~2017, ~~Group Corporation Limited~~$15,938,614 anwas ~~entity~~attributable ~~organized~~to ~~under~~ the ~~laws~~wholesale of ~~Australia~~89 ~~("Tianmei~~selenium ~~Australia"). The~~product ~~purchase~~types ~~price~~manufactured ~~was~~by ~~$1,000,000~~other ~~payable~~companies. toIn ~~Guangdong~~the ~~Tianmei.~~first Onquarter ~~May~~of ~~16,~~fiscal year 2016, ~~Tianmei~~we ~~Australia~~did ~~acquired~~not ~~all~~wholesale ofany ~~the~~products ~~outstanding~~other ~~shares~~than ofour ~~Tianmei~~Jindanli ~~International~~branded ~~Beverage Co~~products., ~~Ltd.,~~Since ~~which~~March is2016, ~~organized~~we inhave ~~the~~signed ~~British~~agreements ~~Virgin~~with ~~Islands~~six ~~("Tianmei~~manufacturers ~~BVI"). Tianmei~~and ~~BVI,~~with ~~through~~seven ~~its~~distributors ~~wholly~~to ~~owned~~create ~~subsidiary,~~ a ~~Hong~~network ~~Kong~~for ~~holding~~our ~~company,~~distribution ~~owns~~of ~~all~~selenium ofproducts ~~the~~to ~~equity~~chain ofstores, aand ~~wholly~~this ~~foreign-owned~~expansion ~~subsidiary~~of ~~organized~~our incustomer ~~PRC,~~base ~~which~~has ~~wholly~~greatly ~~owns~~increased ~~Guangdong~~our ~~Tianmei~~volume of sales.

25● Of the total increase in wholesale sales for the quarter ended February 28, 2017, $2,246,018 was attributable to an increase in the volume of our three Jindanli branded selenium supplements, from $829,085 during the quarter ended February 29, 2016, an increase of 271%. The increase is related to an expansion of our sales staff, which has increased the volume of sales of our existing products.

~~Results~~● Retail sales increased by $1,739,402, or 447% during the quarter ended February 28, 2017. Due to increased rent and unsatisfactory pedestrian flow, we closed our Changcheng, Xiamen and Changsha stores on May 31, 2016 and opened stores in Foshan, Longyan and Zhuzhou and a flagship store in Guangzhou on June 1, 2016. The new stores are located in areas with better pedestrian flow, resulting in a sharp increase in retail sales. In addition, the new stores stock an inventory of ~~Operations~~over 90 selenium products, whereas the previous stores stocked only our three selenium supplements.

~~The following table sets forth key components of our results of operations during the three and nine months ended August 31, 2016 and 2015, and the percentage changes between 2016 and 2015.~~Gross Profit

~~Three~~For the past three years we have sold our three selenium supplements, and only in March 2016 began to resell a wide variety of selenium-related products that we purchase at wholesale. After increasing during the 2014 and 2015 fiscal years, the unit prices that we pay to our manufacturers for the selenium supplements stabilized in the second quarter of fiscal 2016. As a result, our gross margin for selenium supplements was not significantly changed: 72.0% in the first quarter of fiscal year 2017 compared to 72.2% in the first quarter of fiscal year 2016. However, the selenium-related products that we resold during first quarter of fiscal year 2017 yielded a gross margin of only 21%. As a result, our overall gross margin during the three months ended ~~August~~February 3128, 2017 declined to 34.2% from 71.8% recorded on the sale of selenium supplements alone during the three months ended February 29, 2016.

	Aug. 31,		Aug. 31,
	2016		2015		Change
	(US $)		(US $)		%
Revenue		$ 18,588,296	$	1,066,381		1,643%
Cost of Goods Sold		(11,150,902)		(350,488)		3,082%
Gross profit		7,437,394		715,893		939%
Selling and marketing expenses		2,315,620		212,242		991%
General and administrative expenses		235,273		120,383		95%
Total operating expenses		2,550,893		332,625		667%
Income from operations		4,886,501		383,268		1,175%
Other income (net)		411		4,316		(90%)
Income before provision for income taxes and equity investment		4,886,912		387,584		1,161%
Provision for income taxes		1,230,889		100,544		1,124%
Equity in income of investee		1,735,366		-		100%
Net income before noncontrolling interests		5,391,389		287,040		1,778%
Noncontrolling interests		(166,925)		(13,574)		1,130%
Net income attributable to common stockholders		$ 5,224,464		$ 273,466		1,810%

Selling expenses

~~Nine~~Our selling ~~months~~and marketing expenses increased by 431% to $1,444,913 for the quarter ended ~~August~~February 3128, 2017 from $270,671 for the quarter ended February 29, 2016. Our selling expenses include rent, transportation expenses, advertising expenses and salaries incurred for the sales function, all of which will tend to increase as our sales increase. In the quarter ended February 28, 2017, we incurred $449,044 in advertising expense, which is significantly higher than we incurred in the past. We are committed to paying our current rate of advertising costs until March 31, 2017.

	Aug. 31,		Aug. 31,
	2016		2015		Change
	(US $)		(US $)		%
Revenue		$ 25,243,577	$	3,072,993		721%
Cost of Sales		(14,518,511)		(897,546)		1,518%
Gross profit		10,725,066		2,175,447		393%
Selling and marketing expenses		3,235,593		540,887		498%
General and administrative expenses		495,212		308,637		60%
Total operating expenses		3,730,805		849,524		339%
Income from operations		6,994,261		1,325,923		428%
Other income		12,987		8,187		59%
Income before provision for income taxes		7,007,248		1,334,110		425%
Provision for income taxes		1,770,858		338,154		424%
Equity in income of investee		2,143,641		-		100%
Net income before noncontrolling interests		7,380,031		995,956		641%
Noncontrolling interests		(247,920)		(45,651)		443%
Net income attributable to common stockholders		$ 7,132,111		$ 950,305		651%

General and administrative expenses

26Our general and administrative (“G&A”) expenses increased by 178% to $381,355 for the quarter ended February 28, 2017 from $136,961 for the quarter ended February 29, 2016. The largest components of our G&A expenses are the salaries of administrative personnel and fringe benefits provided to all of our staff. The change in G&A expenses occurred primarily as a result of the expansion of our business over the prior year, as reflected in the growth of our sales, which led to increases in travel and entertainment expenses. In addition, to enable us to manage our expanding operations, we added administrative personnel.

~~Sales. Our sales sharply increased to $18,588,296 and $25,243,577, respectively, for the three and nine months ended August 31, 2016~~ Income from $1,066,381 and $3,072,993, respectively, for the three and nine months ended August 31, 2015, an increase of $17,521,915 and $22,170,584, respectively, or 1,643% and 721%, respectively. Since March 2016, we have signed agreements with six distributors to distribute selenium products to hundreds of retail stores, and we have made sales of selenium products totaling $13,971,737 and $17,631,996 to these six distributors for the three and nine months ended August 31, 2016, respectively. In addition, the following factors also caused the increase in our sales:operations

·Because the sharp increase in our sales generated a material increase in our gross profit, our operating income increased by 931% to $4,822,147 for the quarter ended February 28, 2017, from $467,858 for the quarter ended February 29, 2016.

Wholesale sales of selenium supplements/products to established customers by our headquarters marketing personnel increased by $16,369,594 and $20,862,408, respectively, or 1870% and 960%, respectively, primarily due to an increase in the number of sales personnel during the three and nine months ended August 31, 2016.34

·As we have very little debt, our interest expense for the quarters ended February 28, 2017 and February 29, 2016 was substantially offset by interest income earned on our bank balances, resulting in other expense of ($1,058) for the quarter ended February 28, 2017 and other income of 6,256 for the quarter ended February 29, 2016. Our pre-tax income, therefore, was $4,821,089 for the quarter ended February 28, 2017 and $474,114 for the quarter ended February 29, 2016.

Retail sales increased by $1,121,291 and $1,287,075, respectively, or 587% and 143%, respectively, for the three and nine months ended August 31, 2016 and 2015. Due to increased rent and small pedestrian flow, we closed our Changcheng, Xiamen and Changsha stores on May 31, 2016 and opened stores in Foshan, Longyan and Zhuzhou and a flagship store in Guangzhou on June 1, 2016. The new stores are located in areas with large pedestrian flow, resulting in a sharp increase in retail sales. In addition, the new stores stock an inventory of nearly 100 selenium products, whereas the previous stores stocked only three selenium supplements.Net income

·Due to the increase in our pre-tax income, our provision for income taxes increased by 888% to $1,219,136 for the quarter ended February 28, 2017 from $123,416 for the quarter ended February 29, 2016. In this period, our effective tax rate was the same as the statutory rate of 25%. We also recorded equity investment income of $2,153,012, representing our 30% interest in the net income reported by Tianmei Australia for the quarter ended February 28, 2017. After deducting the provision for income taxes and adding equity in income of investee, China Gewang reported net income before noncontrolling interests of $5,754,965 for the quarter ended February 28, 2017 and $350,698 for the quarter ended February 29, 2016.

~~During~~Before August 8, 2016, the ~~three~~VIE ~~months~~Agreements ~~ended~~assigned to Gewang Selenium 95% of the net income of Guangdong Gewang. On August 318, 2016, weGewang Selenium ~~commenced~~purchased ~~franchising~~98% of the ~~use~~registered equity of ~~our~~Guangdong ~~trademark~~Gewang. Our non-controlling interest, ~~name~~therefore, ~~identification~~was ~~and~~reduced ~~other~~from 5% ~~business~~to ~~resources~~2%. ~~The~~We ~~franchisee~~recorded isa ~~required~~deduction tofor ~~pay~~noncontrolling usinterests aof ~~franchise~~$73,148 ~~fee~~ and ~~management~~$18,512 ~~fees.~~for ~~During~~ the ~~three~~quarters ~~months~~ ended ~~August~~February 3128, 2017 and February 29, 2016, ~~two~~respectively, ~~franchisees~~after ~~signed~~which ~~with~~our ~~us,~~net ~~and~~income weattributable ~~recorded~~to ~~total~~common ~~revenue~~stockholders ofwas $315,~~030~~681,817 ~~from~~($0.08 ~~their~~per share) ~~franchise~~and ~~fees~~$332,196 ($0.01 per share) for the quarters ended February 28, 2017 and ~~management~~February ~~fees~~29, 2016, respectively.

~~The~~Foreign Currency ~~following~~Translation ~~table shows the source of our revenue in the comparable periods:~~Adjustment

	Quarter ended August 31, 2016		Quarter ended August 31, 2015
	Sales	% of total	Sales	% of total
Headquarters wholesale-Selenium supplements	$ 2,822,405	15.2%	$ 875,340	82.0%
Headquarters wholesale-Selenium products	14,422,529	77.6%	--	--
Headquarters retail store	368,770	2.0%	78,899	7.4%
Changcheng retail store	--	--	92,124	8.7%
Xiamen retail store	--	--	20,018	1.9%
Foshan retail store	191,088	1.0%	--	--
Longyan retail store	162,476	0.9%	--	--
Zhuzhou retail store	141,835	0.7%	--	--
Flagship retail store	448,163	2.4%	--	--
Franchise fee and management fee	31,030	0.2%	--	--
	$ 18,588,296	100%	$ 1,066,381	100%

Our reporting currency is the U.S. dollar. Our local currency, the Renminbi (RMB), is our functional currency. Results of operations and cash flow are translated at average exchange rates during the period being reported upon, and assets and liabilities are translated at the unified exchange rate as quoted by the People’s Bank of China on the balance sheet date. Translation adjustments resulting from this process are included in other comprehensive income. For the quarters ended February 28, 2017 and February 29, 2016, foreign currency translation adjustments of $52,792 and $(186,413), respectively, have been reported as other comprehensive income (loss) in the consolidated statement of income and comprehensive income (loss). The loss during quarter ended February 29, 2016 was primarily due to devaluation of the PRC currency of approximately 3.5% in three months ended February 28, 2016. Additional devaluations could occur in the future and affect our results.

27RMB is not freely convertible into the currency of other nations. All such exchange transactions must take place through authorized institutions. There is, therefore, no guarantee the RMB amounts could have been, or could be, converted into US dollars at the rates used in translation. Substantially all of our assets are located in the PRC which makes it difficult for any funds to be utilized outside the PRC.

	Nine Months ended August 31, 2016		Nine Months ended August 31, 2015
	Sales	% of total	Sales	% of total
Headquarters wholesale-Selenium supplements	$ 4,945,966	19.6%	$ 2,173,716	70.7%
Headquarters wholesale-Selenium products	18,080,159	71.6%	--	--
Headquarters retail store	614,957	2.4%	389,912	12.7%
Changcheng retail store	267,524	1.1%	489,347	15.9%
Xiamen retail store	197,833	0.8%	20,018	0.7%
Changsha retail store	162,476	0.6%	--	--
Foshan retail store	191,088	0.8%	--	--
Longyan retail store	162,476	0.6%	--	--
Zhuzhou retail store	141,835	0.6%	--	--
Flagship retail store	448,163	1.8%	--	--
Franchise fee and management fee	31,100	0.1%	--	--
	$ 25,243,577	100%	$ 3,072,933	100%

Liquidity and Capital Resources

~~Gross~~We ~~Profit. For~~have ~~the~~financed ~~past~~our ~~two~~operations primarily ~~years~~through wecash ~~have~~flows ~~sold~~from ~~three~~operations ~~selenium supplements,~~ and ~~only~~sale ~~recently began to resell a wide variety~~ of ~~selenium-related products that we purchase at wholesale. After increasing over the past two fiscal years, the unit prices that we pay to~~ our ~~manufacturers~~common ~~for the selenium supplements stabilized in the second quarter of fiscal 2016~~stock. As a result, at ~~our~~February ~~gross~~28, ~~margin~~2017, ~~for~~our ~~selenium~~only ~~supplements~~debt was ~~not significantly changed: 71.3% in the three months ended August 31~~$595,111 ~~2016 compared to 67.1%~~ in ~~the three months ended August 31~~loans, ~~2015~~which ~~and~~consisted ~~71.5%~~of inUS ~~the~~Dollars ~~nine~~loaned ~~months~~to ~~ended~~pay ~~August~~our ~~31,~~administrative ~~2016 compared to 70.8%~~ expenses in the ~~nine months ended August 31, 2015~~ U. ~~However, the selenium-related products that we resell yielded a gross margin of only 32~~S.~~6% and 32~~.4% ~~for~~The ~~the~~debt ~~three~~at ~~and~~February ~~nine months ended August 31~~28, ~~2016,~~2017 ~~respectively.~~represented Asan aincrease ~~result,~~of ~~our overall gross margin declined to 40.0% and 42.5%~~$129,234 ~~respectively,~~during ~~for~~ the ~~three and nine months ended August 31, 2016 from 67~~quarter.~~1% and 70.8%, respectively, for the three and nine months ended August 31, 2015.~~

Selling expenses. Our selling expenses increased by 991% and 498%, respectively, or $2,103,378 and $2,694,706, respectively, to $2,315,620 and $3,235,593, respectively, for the three and nine months ended August 31, 2016 and 2015 from $212,242 and $540,887, respectively, for the three and nine months ended August 31, 2015. To obtain a strong distribution channel in a short time, we spent $1,473,694 and $1,858,907, respectively, in promotion fees, which were classified as selling expenses for the three and nine months ended August 31, 2016. In addition, our selling expenses also include rent, transportation expenses, advertising expenses and salaries incurred for the sales function, all of which will tend to increase as our sales increase. 35

~~General~~During the ~~and~~quarter ~~administrative~~ended ~~expenses. Our~~February ~~general~~28, ~~and~~2017, ~~administrative~~our ~~(“G&A”)~~working ~~expenses~~capital ~~increased~~of by$2,757,769 ~~95%~~represented ~~and~~an ~~60%,~~increase ~~respectively~~of $3,612,048, approximately equal to ~~$235,273~~our ~~and~~net income of $~~495~~3,~~212~~601,9536 ~~respectively,~~before ~~for~~adding ~~the~~our ~~three~~portion ~~and~~of ~~nine~~Guangdong ~~months~~Tianmei's ~~ended~~income. ~~August~~The ~~31,~~approximation ~~2016~~of our net income from ~~$120,383~~the ~~and~~operations ~~$308,637,~~of ~~respectively,~~Guangdong ~~for~~Gewang to the ~~three~~increase ~~and~~in ~~nine~~our ~~months~~working ~~ended~~capital ~~August~~occurs ~~31,~~because ~~2015.~~our ~~The~~operations, ~~largest~~which ~~components~~involve ofno manufacturing ~~our~~and ~~G&A~~limited ~~expenses~~real ~~are~~estate, ~~the~~require ~~salaries~~very ofmodest ~~administrative~~capital ~~personnel~~investments and, ~~government-mandated~~as ~~benefits~~a ~~provided~~result, toalmost all of our ~~staff.~~assets ~~The~~(other than ~~change~~our investment in ~~G&A~~Guangdong ~~expenses~~Tianmei) ~~from~~and ~~year~~all toof ~~year~~our ~~occurred~~liabilities ~~primarily~~are ascurrent. Until we further implement our plan to open a ~~result~~series of ~~the~~dedicated ~~expansion~~retail ofstores, ~~our~~which ~~business~~will inadd ~~the~~depreciable ~~past~~capital ~~year,~~assets asto ~~reflected~~our inbalance ~~the~~sheet, ~~growth~~net ofincome should continue to increase our ~~sales~~working capital.

~~Income from operations. Because~~ During the ~~sharp~~quarter ~~increase~~ended inFebruary ~~our~~28, ~~sales~~2017, ~~generated~~we aused ~~material~~cash ~~increase~~for inneither ~~our~~investing ~~gross~~nor ~~profit,~~financing. ~~our~~During ~~operating~~the ~~income~~quarter ~~increased~~ended byFebruary 129,~~175%~~ ~~and~~2016 we ~~428%,~~used ~~respectively~~$78,567 to $4purchase equipment,~~886,501~~ and we obtained $65,~~994~~473,~~261,~~200 ~~respectively,~~from ~~for~~ the ~~three~~sale ~~and~~of ~~nine~~shares ~~months~~of ~~ended~~our ~~August~~common ~~31,~~stock. ~~2016,~~As ~~from~~we ~~$383,268~~develop ~~and~~our physical ~~$1,325,923,~~presence ~~respectively~~by investing in retail stores, ~~for~~cash ~~the~~used ~~three~~in investing activities will increase, and ~~nine~~may ~~months~~require ~~ended~~expansion ~~August~~of our ~~31,~~cash ~~2015~~flows from financing activities.

During the quarter ended February 28, 2017, although we recorded net income of $5,754,965, our operations provided only $3,821,856 in net cash. The primary reasons for the difference were:

As● weOur ~~have~~net ~~very little debt, our other~~ income ~~for~~included ~~the three and nine months ended August 31, 2016 and 2015 consisted of interest income earned on our bank balances of~~ $52,~~246 and $4~~153,~~316,~~012 ~~respectively,~~attributable ~~and $16,341 and $8,187, respectively. We also recorded a trade-mark license fee of $1,481 charged~~ to our ~~investee,~~investment in Guangdong Tianmei, ~~for~~which ~~the~~represents ~~nine~~our ~~months~~30% ~~ended~~equity ~~August~~interest ~~31, 2016. Finally, we recorded as a non-operating expense the fee of $4,835 paid~~ in the ~~recent~~net ~~quarter to terminate the lease for our Chancheng store. Our pre-tax~~ income, ~~therefore,~~of ~~was~~Guangdong ~~$4,886,912and~~Tianmei ~~$387,584, respectively, and $7,007,248 and $1,334,110, respectively,~~ for the ~~three and nine months ended August 31, 2016 and 2015, respectively~~quarter.

~~Net~~● ~~income. Due~~The tomarked ~~the~~ increase in our ~~pre-tax~~sales ~~income,~~volume ~~our~~during ~~provision~~the ~~for~~quarter ~~income~~caused ~~taxes~~our ~~increased~~accounts byreceivable ~~1,124%~~balance ~~and~~at ~~424%,~~February ~~respectively~~28, 2017 to ~~$1,230,889~~exceed ~~and $1,770,858, respectively, for~~ the ~~three~~balance ~~and~~at ~~nine~~November ~~months ended August 31~~30, 2016 ~~from~~by $~~100~~3,~~544 and $338~~169,154, respectively, for the three and nine months ended August 31, 2015. In each period, our effective tax rate was the same as the statutory rate of 25%. We also recorded investment income of $1,735,366 and $2,143~~,641, respectively, representing our 30% interest in the net income reported by Guangdong Tianmei for the three and nine months ended August 31, 2016~~. ~~After~~All ~~deducting the provision for income taxes and adding equity in income~~ of ~~investee,~~these ~~China~~receivables ~~Gewang~~have ~~reported~~been ~~net~~collected ~~income~~since ~~before noncontrolling interests of $5,391,389 and $287,040, respectively, and $7,380,031 and $995,956, respectively, for~~ the ~~three~~fiscal ~~and nine months ended August 31, 2016 and 2015, respectively~~year-end.

~~Before~~● ~~August~~We 8,decreased ~~2016,~~ the ~~VIE~~balance ~~Agreements assigned to Gewang Selenium 95%~~ of ~~the~~our ~~net~~prepaid ~~income~~expenses ofby ~~Guangdong Gewang. On August 8~~$1, ~~2016~~975,828 ~~China~~to ~~Gewang~~a ~~purchased~~balance ~~98%~~ of ~~the registered equity of Guangdong Gewang. Our non-controlling interest~~$3, ~~therefore~~564, ~~was reduced from 5% to 2%~~223. WeIncluded ~~recorded~~in athat ~~deduction~~balance ~~for~~was ~~noncontrolling interests of~~ $~~166~~2,~~925 and $13~~653,~~574,~~684 ~~respectively,~~in ~~and~~promotion ~~$247,920~~fees ~~and~~prepaid ~~$45,651,~~to ~~respectively,~~certain ~~for~~of ~~the~~our ~~three~~distributors. ~~and~~Those ~~nine~~prepaid ~~months~~fees ~~ended~~will ~~August~~be ~~31,~~amortized ~~2016~~over ~~and~~the ~~2015,~~terms ~~after~~of ~~which~~ our ~~net~~distribution ~~income~~agreements ~~attributable~~with tothose ~~common stockholders was $5,224,464 ($0~~distributors.07 ~~per~~During ~~share)~~the ~~and~~quarter ~~$273,466~~ended ~~($0.01~~February ~~per share)~~28, ~~respectively~~2017, ~~and~~ $72,~~132~~074,~~111~~411 ~~($0.11~~in ~~per~~promotion ~~share)~~fees ~~and~~was ~~$950,305 ($0~~expensed.~~02 per share) for the three and nine months ended August 31, 2016 and 2015, respectively.~~

~~Foreign~~These uses ~~Currency Translation Adjustment. Our reporting currency is the U.S. dollar. Our local currency, the Renminbi (RMB), is our functional currency. Results~~ of ~~operations and~~ cash ~~flow~~were ~~are~~partially ~~translated~~offset atby ~~average~~a ~~exchange rates during the period being reported upon~~$1,975,828 ~~and~~reduction ~~assets~~in ~~and~~our ~~liabilities~~prepaid ~~are~~expenses ~~translated at the unified exchange rate as quoted by the People’s Bank of China on the~~ balance ~~sheet date~~. ~~Translation~~This ~~adjustments~~primarily ~~resulting~~represents ~~from this process are included in accumulated other comprehensive income in~~ the ~~statements~~ amortization of ~~stockholders’~~promotion ~~equity.~~fees ~~Transaction~~prepaid ~~gains~~during ~~and~~fiscal ~~losses~~year ~~that~~2016 ~~arise~~to ~~from~~certain ~~exchange~~or ~~rate~~our ~~fluctuations~~distributors, onwhich ~~transactions~~are ~~denominated~~being inamortized aover ~~currency other than~~ the ~~functional~~terms ~~currency are included in the results~~ of our ~~operations~~distribution ~~as incurred~~agreements. ~~For~~ ~~the three~~In ~~and nine months ended August 31~~addition, ~~2016~~we ~~and~~recorded ~~2015,~~a ~~foreign currency translation adjustments of~~ $~~(338~~981,~~017)~~647 ~~and~~increase ~~$(314,805),~~in ~~respectively,~~our ~~and~~accounts ~~$(646,801)~~payable and a $~~(317~~345,~~904),~~140 ~~respectively,~~increase ~~have been reported as other comprehensive loss~~ in ~~the~~our tax ~~consolidated~~payable, ~~statement~~both of ~~changes~~which inreflect ~~stockholders’ equity. The material negative adjustment during three and nine months ended August 31, 2016 was primarily due to devaluation of~~ the ~~PRC~~growth ~~currency of approximately 3.5%~~ in ~~August~~our ~~2015 and a further devaluation of 0~~operations.~~5% in January 2016. Further devaluations could occur.~~

~~RMB~~We have isno ~~not~~long-term ~~freely~~debt ~~convertible~~or ~~into~~any ~~the~~debt ~~currency of~~ other ~~nations.~~than ~~All~~the ~~such~~loans ~~exchange~~of ~~transactions must take place through authorized institutions~~U.S. ~~There is, therefore, no guarantee the RMB amounts could have been, or could be, converted into US~~ dollars atdiscussed ~~the rates used in translation~~above. ~~Substantially~~ ~~all~~Our ofmost ~~our~~significant ~~assets~~capital commitments ~~are~~for ~~located in~~ the ~~PRC~~next ~~which~~year ~~makes it difficult for any funds to be utilized outside the PRC.~~are:

~~Liquidity~~● Our greatest capital commitments in the long term are our quarterly payments to the Academy for a selenium enrichment technology and ~~Capital~~research ~~Resources~~research related to advanced selenium-enrichment techniques. Currently, we have committed to paying the Academy RMB 600,000 (US$86,724) per year for the next four years for selenium-enrichment technology and RMB 4,000,000 (US$578,160) quarterly for research related to advanced selenium-enrichment techniques for the next ten years. We expect to fund these fees from operations.

To● ~~date,~~In wethe ~~have~~short ~~financed~~term, ~~our~~over ~~operations~~the ~~primarily~~next ~~through~~year ~~cash~~we ~~flows~~expect ~~from~~to ~~operations~~renew ~~and~~all ~~sale~~ of our ~~common~~current ~~stock. As~~leases, awhich ~~result,~~will atrequire ~~August~~prepayment 31of RMB 2,820,000 ~~2016~~(US$407,603), ~~our~~which ~~only~~we ~~debt~~expect ~~consisted~~to ofpay ~~$256,044~~from inoperations. ~~loans~~We ~~from~~also ahope ~~stockholder,~~to ~~which~~open ~~consisted~~up ofto US26 ~~Dollars~~new ~~loaned~~retail tostores, ~~pay~~which ~~our~~will ~~expenses~~require ina ~~the~~capital ~~U.S.~~commitment of US$2,309,000.

2936

● During ~~the~~fiscal ~~nine~~year ~~months ended August 31,~~ 2016, ~~the~~we ~~increase~~expended ~~in our working capital was approximately equal to the sum of our net income for the period (~~$53,~~391~~745,~~389)~~884 ~~and~~on ~~the~~promotion ~~proceeds~~fees ofto ~~two private placements of common stock (together, $ 9,848,200)~~distributors. ~~Our~~These ~~working~~fees ~~capital~~are asgenerally ofpaid ~~August~~up ~~31,~~front ~~2016~~on ~~was $22,274,427, which represented~~ an ~~increase~~annual ~~of $13,384,723 during the nine months then ended~~basis. ~~The~~Because ~~approximation~~ of ~~our net income (plus capital paid-in during~~ the ~~period) to the~~ increase in our ~~working capital occurs because our operations~~sales, which ~~involve~~we nobelieve ~~manufacturing~~has ~~and~~resulted ~~limited~~in ~~real~~part ~~estate,~~from ~~require~~our ~~very~~sales ~~modest~~team ~~capital~~seeking ~~investments~~out ~~and,~~new aswholesale acustomers ~~result, almost all of our assets~~ and ~~all~~paying ofthese ~~our~~promotion ~~liabilities~~fees, ~~are~~we ~~current.~~plan ~~Until~~to wespend ~~further~~more ~~implement~~on ~~our~~promotion ~~plan~~fees toin ~~open~~the aupcoming ~~series~~fiscal ofyear. ~~dedicated~~We ~~retail~~have ~~stores,~~projected ~~which~~that ~~will~~we ~~add~~could ~~depreciable~~spend ~~capital~~up ~~assets~~ to ~~our~~RMB ~~balance~~57,283,200 ~~sheet~~(US$8,279,367) ~~net~~in ~~income~~promotion ~~should~~fees ~~continue~~in tothe ~~increase~~2017 ~~our~~fiscal ~~working capital~~year.

~~For~~We have ~~the~~ample ~~nine~~cash ~~months~~and ~~ended~~our ~~August~~operations ~~31,~~are ~~2016~~profitable. In addition, ~~our~~we ~~principal~~expect ~~investing~~our ~~activity~~recent ~~was~~success ~~the~~in ~~purchase~~collecting ofour aentire ~~30%~~accounts receivable ~~interest~~balance inwithin ~~Guangdong~~60 ~~Tianmei~~days ~~for~~to $1be replicated,~~002,944~~ due to our close relationship with our customers. InFor ~~addition~~these reasons, we ~~purchased~~do not ~~equipment~~anticipate ~~for~~incurring ~~$94,953~~significant additional debt. Therefore, ~~Our~~our ~~investing~~liquidity ~~cash~~should ~~flows~~be adequate to sustain the full implementation of our business plan for at least the ~~nine~~next twelve months ~~ended~~and ~~August~~the ~~31,~~foreseeable ~~2015~~future. ~~consisted~~We intend to apply a portion of our cash resources to an increase in the ~~purchase~~number of ~~fixed~~distributors ~~assets~~with ~~for~~which ~~$34,991~~we have relationships. ~~Again,~~Since asthe wesettlement ~~develop~~period for ~~our~~payment ~~physical~~of ~~presence~~invoices by ~~investing~~the distributors is, in ~~retail~~some ~~stores~~cases, ~~cash~~as ~~used~~long inas ~~investing~~90 ~~activities~~days, our cash resources will ~~increase,~~be ~~and~~needed ~~may~~to ~~require~~offset the ~~expansion~~gap ofbetween ~~our~~the cash ~~flows~~collections ~~from~~and ~~financing~~cash ~~activities~~payments.

~~For the nine months ended August 31, 2016 and 2015, our financing activities provided $9,848,200 and $5,056,415, respectively, which represented the proceeds~~ Impact of ~~two~~Recent ~~private~~Accounting placements of our common stock during fiscal year 2016 and one during fiscal year 2015. The $5,000,000 proceeds of that private offering were supplemented by a stockholder loan of $56,415 during the nine months ended August 31, 2015.Pronouncements

~~During~~New accounting ~~the~~rules nine months ended August 31, 2016, although we recorded net income of $7,380,031, our operations used $6,992,656 in net cash. This difference occurred in part because our net income included $2,143,641 attributable to our investment in Guangdong Tianmei. The primary reason for the disparity between net income and ~~use~~disclosure ofrequirements ~~cash,~~can ~~however,~~significantly ~~was~~impact the ~~marked~~comparability ~~increase in our sales volume during the third quarter~~ of ~~fiscal 2016, which caused~~ our ~~accounts~~financial ~~receivable balance at August 31, 2016 to exceed the balance at November 30, 2015 by $12,203,424~~statements. Please refer ~~In addition, in anticipation of further growth, we increased the balance of our prepaid expenses by $5,598,870,~~ to ~~assure~~Note ~~delivery~~2 of ~~inventories as needed. These uses of cash were partially offset by a $4,258,281 increase in~~ our ~~accounts~~consolidated ~~payable~~financial ~~and~~statements aincluded ~~$1,090,476 increase~~ in ~~our~~this ~~tax~~Form ~~payable, both of which reflect the growth in our operations~~10-Q. In contrast, during the nine months ended August 31, 2015, when the level of our operations was modest, the cash used in our operations was only $387,375 less than our net income, as the increase in our accounts receivable was modest.

~~Because~~In February 2016, the Financial Accounting Standards Board ("FASB”) issued Accounting Standards Update ("ASU") ASU 2016-02 – Leases. The new standard establishes a right-of-use ~~our~~(“ROU”) ~~ample~~model ~~cash~~that ~~position~~requires a lessee to record a ROU asset and a lease liability on the ~~profitability~~balance ofsheet ~~our~~for ~~operations~~all leases with terms longer than 12 months. Leases will be classified as either finance or operating, wewith doclassification ~~not~~affecting ~~anticipate~~the ~~incurring~~pattern ~~significant~~of ~~additional~~expense ~~debt~~recognition in the income statement. ~~Therefore~~ The new standard is effective for fiscal years beginning after December 15, ~~our~~2018, ~~liquidity~~including ~~should~~interim beperiods ~~adequate~~within those tofiscal ~~sustain~~years. A ~~the~~modified ~~full~~retrospective ~~implementation~~transition ofapproach ~~our~~is ~~business~~required ~~plan~~for lessees for capital and operating leases existing at, ~~least~~or entered into after, the ~~next~~beginning ~~twelve~~of ~~months~~the ~~and~~earliest comparative period presented in the ~~foreseeable~~financial ~~future~~statements, with certain practical expedients available. We are currently evaluating the impact of our pending adoption of the new standard on our financial statements.

~~Off-Balance~~Except for ~~Sheet~~the ~~Arrangements~~foregoing ASU, there were no recent accounting pronouncements that we expect to have a material effect on the Registrant’s financial position or results of operations.

~~We do not have any off~~Off-~~balance~~Balance Sheet ~~sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition or results of operations.~~Arrangements

~~Recent~~We do ~~accounting~~not ~~pronouncements~~have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition or results of operations.

InITEM ~~February~~3 ~~2016,~~QUANTITATIVE ~~the~~AND ~~Financial~~QUALITATIVE ~~Accounting~~DISCLOSURES ~~Standards~~ABOUT ~~Board~~MARKET ("FASB”) issued Accounting Standards Update ("ASU") ASU 2016-02 – Leases. The new standard establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. 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.RISK

~~Except~~Foreign Exchange ~~for the foregoing ASU, there were no recent accounting pronouncements that have or will have a material effect on the Company’s financial position or results of operations.~~Risk

30Substantially all of our revenues and our expenses are denominated in RMB. We believe the impact of foreign currency risk is not material and we have not used any forward contracts, currency borrowings or derivative instruments to hedge our exposure to foreign currency exchange risk. Although in general our exposure to foreign exchange risks should be limited, the value of your investment in our shares will be affected by the foreign exchange rate between U.S. dollars and RMB because the value of our business is effectively denominated in RMB, while we use the U.S. dollar as our reporting currency and our common stock is traded in U.S. dollars. The value of the RMB against the U.S. dollar and other currencies is affected by, among other things, changes in China’s political and economic conditions and China’s foreign exchange policies.

~~ITEM 3~~37

~~QUANTITATIVE~~To the ~~AND~~extent ~~QUALITATIVE~~that ~~DISCLOSURES~~we ~~ABOUT~~need ~~MARKET~~to ~~RISK~~convert U.S. dollars into RMB for our operations, acquisitions or other uses within China, appreciation of the RMB against the U.S. dollar would have an adverse effect on the RMB amount we receive from the conversion. To the extent that we seek to convert RMB into U.S. dollars, depreciation of the RMB against the U.S. dollar would have an adverse effect on the U.S. dollar amount we receive from the conversion. As of February 28, 2017, we had RMB-denominated cash, cash equivalents, and short-term investments of RMB116.6 million, which we recorded as US$16,982,700 on our balance sheet. A 10% change in the exchange rate between the RMB and the U.S. dollar would result in an increase or decrease of $1,698,270 in the U.S. dollar-denominated value of this cash, cash equivalents and short-term investments.

~~Not~~Interest Rate ~~applicable.~~Risk

~~ITEM~~Our 4exposure to interest rate risk primarily relates to the interest income generated by our cash resources, which is mostly held in interest-bearing bank deposits. We have not used any derivative financial instruments to manage our interest risk exposure. Interest-earning instruments carry a degree of interest rate risk. We have not been exposed, nor do we anticipate being exposed, to material risks due to changes in interest rates. However, our future interest income may be lower than expected due to changes in market interest rates.

ITEM 4 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 ~~August~~February 3128, ~~2016~~2017. The evaluation revealed that there are material weaknesses in our disclosure controls, specifically:

·● The relatively small number of employees who are responsible for accounting functions prevents us from segregating duties within our internal control system. ● Our internal financial staff lack expertise in identifying and addressing complex accounting issued under U.S. Generally Accepted Accounting Principles. ● Our executive officers are not familiar with the accounting and reporting requirements of a U.S. public company. ● We have not developed sufficient documentation concerning our existing financial processes, risk assessment and internal controls.

~~The~~Based on ~~relatively~~their ~~small~~evaluation, ~~number~~our ofChief ~~employees~~Executive ~~who~~Officer ~~are~~and ~~responsible~~Chief ~~for~~Financial ~~accounting~~Officer ~~functions~~concluded ~~prevents~~that usthe ~~from~~Company’s ~~segregating~~system ~~duties~~of ~~within~~disclosure controls ~~our~~and ~~internal~~procedures ~~control~~was ~~system~~not effective as of February 28, 2017.

·Changes in Internal Controls. There was no change in internal controls over financial reporting (as defined in Rule 13a-15(f) promulgated under the Securities Exchange Act of 1934) identified in connection with the evaluation described in the preceding paragraph that occurred during the Company’s first fiscal quarter that has materially affected or is reasonably likely to materially affect the Company’s internal control over financial reporting.

~~Our internal financial staff lack expertise in identifying and addressing complex accounting issued under U.S. Generally Accepted Accounting Principles.~~38

·PART II - OTHER INFORMATION

~~Our~~Item ~~executive officers are not familiar with the accounting and reporting requirements of a U~~1.S. ~~public~~Legal ~~company.~~Proceedings

·None.

WeItem ~~have~~1A ~~not~~Risk ~~developed sufficient documentation concerning our existing financial processes, risk assessment and internal controls.~~Factors

~~Based~~There have onbeen ~~their~~no ~~evaluation,~~material ~~our~~changes ~~Chief~~from ~~Executive~~the ~~Officer~~risk ~~and~~factors ~~Chief~~included ~~Financial~~in ~~Officer~~our ~~concluded~~Annual ~~that~~Report ~~the~~on ~~Company’s~~Form ~~system~~10-K offor ~~disclosure~~the ~~controls~~year ~~and~~ended ~~procedures~~November ~~was not effective as of August 31~~30, 2016.

~~Changes~~Item ~~in Internal Controls~~2. ~~There~~ ~~was~~Unregistered noSale ~~change~~of ~~in internal controls over financial reporting (as defined in Rule 13a-15(f) promulgated under the~~ Securities ~~Exchange~~and ~~Act~~Use of 1934) identified in connection with the evaluation described in the preceding paragraph that occurred during the Company’s third fiscal quarter that has materially affected or is reasonably likely to materially affect the Company’s internal control over financial reporting.Proceeds

~~PART~~(a) Unregistered ~~II - OTHER~~sales ~~INFORMATION~~of equity securities

~~Item~~None during 1the 1st quarter of fiscal 2017.

~~Legal~~(c) Purchases ~~Proceedings~~of equity securities

~~None~~The Company did not repurchase any of its equity securities that were registered under Section 12 of the Securities Exchange Act during the 1st quarter of fiscal 2017.

Item 1A3. Defaults Upon Senior Securities.

~~Risk Factors~~None.

~~There~~Item ~~have~~4. ~~been~~Mine noSafety ~~material changes from the risk factors included in our Annual Report on Form 10-K for the year ended November 30, 2015.~~Disclosures

~~Item 2~~None.

~~Unregistered~~Item ~~Sale~~5. ofOther ~~Securities and Use of Proceeds~~Information.

~~(a) Unregistered sales of equity securities~~None.

~~None~~Item ~~during the 3rd quarter of fiscal 2016~~6. Exhibits

	31.1	Rule 13a-14(a) Certification - CEO
	31.2	Rule 13a-14(a) Certification - CFO
	32	Rule 13a-14(b) Certification

	101.INS	XBRL Instance
	101.SCH	XBRL Schema
	101.CAL	XBRL Calculation
	101.DEF	XBRL Definition
	101.LAB	XBRL Label
	101.PRE	XBRL Presentation

~~The Company did not repurchase any of its equity securities that were registered under Section 12 of the Securities Exchange Act during the 3rd quarter of fiscal 2016.~~39

31SIGNATURES

~~Item~~Pursuant to 3the 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.

Defaults Upon Senior Securities.

	CHINA GEWANG BIOTECHNOLOGY, INC.

Date: April 11, 2017	By:	/s/ Li Wang
		Li Wang, Chief Executive Officer

	By:	/s/ Ming Cheng
		Ming Cheng, Chief Financial and Accounting Officer

~~None.~~* * * * *

~~Item 4.~~40

Mine Safety Disclosures

None.

Item 5.

Other Information.

None.

Item 6.

Exhibits

31.1

Rule 13a-14(a) Certification - CEO

31.2

Rule 13a-14(a) Certification - CFO

Rule 13a-14(b) Certification

101.INS

XBRL Instance

101.SCH

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.

CHINA GEWANG BIOTECHNOLOGY, INC.

Date: October 14, 2016

By: /s/ Li Wang

Li Wang, Chief Executive Officer

By: /s/ Ming Cheng

Ming Cheng, Chief Financial and Accounting Officer

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