GREEN DRAGON WOOD PRODUCTS, INC.

As of December 31, 2016, the balance represented temporary advances made by Mr. Lee, the director to the Company, which was unsecured, interest-free with no fixed terms of repayment. Imputed interest is not significant.

The credit facility with the Bank of China (Hong Kong) Limited (“BOC”) provides for borrowings up to HK$2,000,000 (approximately $258,000), which bears interest at a rate of 0.5% per annum below the HKD Prime Rate and are guaranteed by Mr. Kwok Leung Lee, a director of the Company.

On January 26, 2011, the High Court of the Hong Kong Special Administrative Region granted leave to Mr. Yip and CCGL to set the case down for a 7-day trial. The hearing occurred in October 2012 and the parties are waiting for the judgment of the court. At March 31, 2014, in the opinion of Company management, the resolution of this matter will not have a material effect on the Company’s financial statements in the foreseeable future.

Net cash provided by operating activities for the nine months ended December 31, 2016 was $202,611, a decrease of $711,501 or 78% from net cash provided by operating activities of $914,112 for the comparable period in 2015. This decrease was primarily attributable to cash outflows of $454,310 for accounts payable for this period when compared to a net cash inflows of $699,746 of accounts payable in 2015.

As of December 31, 2016, the Company has a revolving line of credit with DBS Bank (Hong Kong) Limited with an outstanding balance of $399,363, a revolving line of credit with Industrial and Commercial Bank of China (Asia) Limited with an outstanding balance of $553,048, a revolving line of credit with ICICI Bank Limited with an outstanding balance of $138,065, a revolving line of credit with Bank of China (Hong Kong) Limited with an outstanding balance of $254,456 and a trade financing payable to Tai Wah Timber Factory Limited in an aggregate of $672,154. We will require additional fund if we were to expand our business.