Cautionary Note Regarding Forward-Looking Statements

    We make certain forward-looking statements in this report. Statements concerning our future operations, prospects, strategies, financial condition, future economic performance (including growth and earnings), demand for our services, and other statements of our plans, beliefs, or expectations, including the statements contained under the captions "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Business," as well as captions elsewhere in this document, are forward-looking statements. In some cases these statements are identifiable through the use of words such as "anticipate," "believe," "estimate," "expect," "intend," "plan," "project," "target," "can", "could," "may," "should," "will," "would," and similar expressions. The forward-looking statements we make are not guarantees of future performance and are subject to various assumptions, risks, and other factors that could cause actual results to differ materially from those suggested by these forward-looking statements. Because such statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by the forward-looking statements. Indeed, it is likely that some of our assumptions will prove to be incorrect. Our actual results and financial position will vary from those projected or implied in the forward-looking statements and the variances may be material. You are cautioned not to place undue reliance on such forward-looking statements. These risks and uncertainties, together with the other risks described from time to time in reports and documents that we file with the SEC should be considered in evaluating forward-looking statements.    The nature of our business makes predicting the future trends of our revenue, expenses, and net income difficult. Thus, our ability to predict results or the actual effect of our future plans or strategies is inherently uncertain. The risks and uncertainties involved in our business could affect the matters referred to in any forward-looking statements and it is possible that our actual results may differ materially from the anticipated results indicated in these forward-looking statements. Important factors that could cause actual results to differ from those in the forward-looking statements include, without limitation, the following:    

· the effect of political, economic, and market conditions and geopolitical

     events;   · legislative and regulatory changes that affect our business;   · the availability of funds and working capital;   · the actions and initiatives of current and potential competitors;   · investor sentiment; and   · our reputation.     

We do not undertake any responsibility to publicly release any revisions to these forward-looking statements to take into account events or circumstances that occur after the date of this report, except as required by law.

    The following discussion and analysis should be read in conjunction with our condensed consolidated financial statements and the related notes thereto as filed with the SEC and other financial information contained elsewhere in this report.    
 Except as otherwise indicated by the context, references in this Form 10-Q to "we," "us," "our," "the Registrant", "Green Dragon", "our Company," or "the Company" are to Green Dragon Wood Products, Inc., a Florida corporation and its consolidated subsidiaries. Unless the context otherwise requires, all references to (i) "BVI" are to British Virgin Islands; (ii) "PRC" and "China" are to the People's Republic of China; (iii) "U.S. dollar," "$  " and "US$  " are to United States dollars; (iv) "RMB" are to Yuan Renminbi of China; (v) "Securities Act" are to the Securities Act of 1933, as amended; and (vi) "Exchange Act" are to the Securities Exchange Act of 1934, as amended.    OVERVIEW    

The Company was incorporated under the laws of the State of Florida on September 26, 2007.

     3       
 On September 26, 2007, GDWP entered into a share exchange transaction with the equity owners of Green Dragon Industrial Inc. ("GDI") (formerly Fit Sum Group Limited). Pursuant to the share exchange transaction, GDI's equity owners transferred 100% of the equity interest in GDI in exchange for 200,000 shares of common stock of the Company. Upon completion of the share exchange, GDI became a wholly-owned subsidiary of the Company, and GDWPCL, through GDI, became an indirect wholly-owned operating subsidiary of the Company.    GDWPCL was incorporated as a limited liability company in Hong Kong Special Administrative Region of the People's Republic of China ("the PRC" or "China") on March 14, 2000. The principal activity of GDWPCL is trading of wood logs, wood lumber, wood veneers and other wood products in Hong Kong.    GDI was incorporated as a limited liability company in the British Virgin Islands ("BVI") on May 30, 2007, for the purpose of holding 100% equity interest in GDWPCL. On May 30, 2007, GDI entered into an exchange agreement with the equity owners of GDWPCL, whereby GDI transferred 37,500 shares of its common stock to the shareholders of GDWPCL in exchange for 5,000,000 ordinary shares of GDWPCL. Upon the completion of the share exchange, GDWPCL became a wholly-owned subsidiary of GDI.    

The following diagram sets forth the current corporate structure of Green Dragon:

    [[Image Removed]]     

The Company, through its subsidiaries, mainly engages in the re-sale and trading of wood logs, wood lumber, wood veneer and other wood products in Hong Kong.

 Neither GDWP nor GDI has any operations or plans to have any operations in the future other than acting as a holding company and management company for GDWPCL and raising capital for its operations. However, we reserve the right to change our operating plans regarding GDWP and GDI.     

Our executive offices are located at Unit 312, 3rd Floor, New East Ocean Centre, 9 Science Museum Road, Kowloon, Hong Kong. Our telephone number is (011) 852-2482-5168.

Critical Accounting Policies and Estimates

    Our condensed consolidated financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States ("US GAAP"). US GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenues and expenses amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of condensed consolidated our financial statements.      4       We believe the following is among the most critical accounting policies that impact our condensed consolidated financial statements. We suggest that our significant accounting policies, as described in our condensed consolidated financial statements in the Summary of Significant Accounting Policies, be read in conjunction with this Management's Discussion and Analysis of Financial Condition and Results of Operations.     

Accounts receivable and allowance for doubtful accounts

    Accounts receivable are recorded at the invoiced amount and do not bear interest, which are due within contractual payment terms, generally 60 to 180 days from shipment. The Company extends unsecured credit to its customers in the ordinary course of business, based on evaluation of a customer's financial condition, the customer credit-worthiness and their payment history. Accounts receivable outstanding longer than the contractual payment terms are considered past due. Past due balances over 180 days and those over a specified amount are reviewed individually for collectability. Management reviews the adequacy of the allowance for doubtful accounts on an ongoing basis, using historical collection trends and aging of receivables. Management also periodically evaluates individual customer's financial condition, credit history, and the current economic conditions to make adjustments in the allowance when it is considered necessary. 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 credit terms of our two major customers are summarized as below:

   Major Customers        Contractual        Repayment Term #                        Credit Term  Customer A             60 to 90 days      Accounts receivable are repaid on a                                           regular basis to the Company and the                                           cash receipt is made to Customer B upon                                           the instruction of the Company.  Customer B (also a     90 to 180 days     Customer B receives the cash settlement major supplier)                           from Customer A and the aggregate                                           receivable will offset against its trade                                           payable.     In March 2010, the Company entered into a tri-parties settlement arrangement among Customer A and Customer B. Under such arrangement, Customer A agreed to transfer its accounts receivable balance to Customer B and Customer B agreed to receive such accounts receivable balance from Customer A, on behalf of the Company, to offset against its trade payable due to the Company.     

Accounting Standard Codification (“ASC”) Topic 605

    We recognize revenue in accordance with ASC Topic 605, "Revenue Recognition" when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable, and collectability is reasonably assured.    The majority of the Company's revenue results from sales contracts with direct customers and revenues are generated upon the shipment of goods. The Company's pricing structure is fixed and there are no rebate or discount programs. Management conducts credit background checks for new customers as a means to reduce the subjectivity of assuring collectability. Based on these factors, the Company believes that it can apply the provisions of ASC Topic 605 with minimal subjectivity.      5       

Recent Accounting Pronouncements

    The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and do not believe the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations.    Results of Operations    

Comparison of the Three Months Ended December 31, 2016 and 2015

    The following table summarizes the results of our operations during the three months ended December 31, 2016 and 2015, and provides information regarding the dollar and percentage increase or (decrease) from the three months ended December 31, 2016 to the three months ended December 31, 2015.                                             Three Months Ended                                             December 31,             Increase/       Increase/                                          2016           2015        (Decrease)       (Decrease)  Revenue, net                          $    180,204        697,887     $    (517,683 )            (74 %) Cost of Revenue                          (42,047 )     (756,580 )      (714,533 )            (94 %) Gross Profit (Loss)                      138,157        (58,693 )       196,850              335 %  General and Administrative Expenses      270,252        217,646          52,606               24 % Total Operating Expenses                 270,252        217,646          52,606               24 % Loss from Operations                    (132,095 )     (276,339 )      (144,244 )            (52 %) Other Income / (Expense)                  17,954        (70,967 )        88,921              125 % Loss before Income Tax                  (114,141 )     (347,306 )      (223,165 )            (64 %) Income Tax Expense Net Loss                              $   (114,141 )     (347,306 )   $    (223,165 )            (64 %)     Revenue    Revenue for the three months ended December 31, 2016 was $  180,204, a decrease of $  517,683 or 74% from $  697,887 for the comparable period in 2015. The decrease in revenue is primarily attributed to the cooling measures implemented in the People's Republic of China to fix China's overheated real estate market. This slowing of the real estate market has resulted in less demand for our products as most of our clients are in the interior decorating and furniture business.    Additionally, our traditional markets in the Middle East have also suffered a dramatic drop as their economies continue to flounder as a result of political instability, a refugee crisis and a weak market for oil.     

Cost of revenue and gross profit

Cost of revenue for the three months ended December 31, 2016 was $ 42,047, a decrease of $ 714,533 or 94% from $ 756,580 for the comparable period in 2015. The decrease was primarily attributable to and in tandem with a decrease in sales.

Gross profit for the three months ended December 31, 2016 was $ 138,157, an increase in profit of $ 196,850 or 335% from gross loss $ 58,693 for the comparable period in 2015. The increase was primarily attributable to increase in sales of higher profit margin products.

     6       General and Administrative    

General and administrative expenses mainly consist of payroll, rental expenses, professional fee, bank charges and exchange gain or loss on foreign currency.

 General and administrative expenses for the three months ended December 31, 2016 was $  270,252, an increase of $  52,606 or 24% from $  217,646 for the comparable period in 2015. The increase was primarily attributable to a loss on the exchange difference in the EURO.    Other Income/(Expense)    
 Other income (after netting off other expenses) for the three months ended December 31, 2016 were $  17,954, a decrease of other expenses $  88,291or 125% from other expense of $  70,967 for the comparable period in 2015. The decrease in other expenses was due to a decrease in other income which is handling charges for inspection of goods for a customer .    Loss before income tax    Loss before income tax for the three months ended December 31, 2016 was $  114,141, a decrease of $  223,165 or 64% compared to a loss of $  347,306 for the comparable period in 2015. The decrease was due to the decrease in sales and increase in administrative expenses.    Net loss    Net loss for the three months ended December 31, 2016 was $  114,141, a decrease of $  223,165 or 64% compared to a loss of $  347,306 for the comparable period in 2015. The decrease was due to the decrease in sales and increase in administrative expenses.     

Comparison of the Nine months Ended December 31, 2016 and 2015

    The following table summarizes the results of our operations during the nine months ended December 31, 2016 and 2015, and provides information regarding the dollar and percentage increase or (decrease) from the nine months ended December 31, 2016 compared the nine months ended December 31, 2015.                                               Nine months Ended                                               December 31,              Increase/        Increase/                                          2016             2015          (Decrease)       (Decrease)  Revenue, net                          $   1,132,903$    3,551,460$   (2,418,557 )            (68 %) Cost of Revenue                          (861,087 )     (3,447,000 )     (2,585,913 )            (75 %) Gross Profit                              271,816          104,460          167,356              160 %  General and Administrative Expenses       512,382          648,052         (135,670 )            (21 %) Total Operating Expenses                  512,382          648,052         (135,670 )            (21 %) Loss from Operations                     (240,566 )       (543,592 )       (303,026 )            (56 %) Other Expense                             (48,223 )       (192,831 )       (144,608 )            (75 %) Loss before Income Tax                   (288,789 )       (736,423 )       (447,634 )            (61 %) Income Tax Expense Net Loss                              $    (288,789 )$     (736,423 )$     (447,634 )            (61 %)     Revenue    Revenue for the nine months ended December 31, 2016 was $  1,132,903, a decrease of $  2,418,557 or 68% from $  3,551,460 for the comparable period in 2015. The decrease in revenue is primarily attributed to the cooling measures implemented in the People's Republic of China to fix China's overheated real estate market. This slowing of the real estate market has resulted in less demand for our products as most of our clients are in the interior decorating and furniture business.      7       Additionally, our traditional markets in Europe and the Middle East have also suffered a dramatic drop as their economies continue to flounder as a result of political instability, a refugee crisis and a weak market for oil.     

Cost of revenue and gross profit

Cost of revenue for the nine months ended December 31, 2016 was $ 861,087, a decrease of $ 2,585,913 or 75% from $ 3,447,000 for the comparable period in 2015. The decrease was primarily attributable to and in tandem with a decrease in sales.

    Gross profit for the nine months ended December 31, 2016 was $  271,816, an increase of $  167,356 or 160% from $  104,460 for the comparable period in 2015. The increase was primarily attributable to increase in sales of higher profit margin products.    General and Administrative    

General and administrative expenses mainly consist of payroll, rental expenses, professional fee, bank charges and exchange gain or loss on foreign currency.

 General and administrative expenses for the nine months ended December 31, 2016 were $  512,382, a decrease of $  135,670 or 21% from $  648,052 for the comparable period in 2015. The decrease was primarily attributable to cost savings.    Other Income/(Expense)    Other expenses (after netting off the other income) for the nine months ended December 31, 2016 were $  48,223, a decrease in other expenses of $  144,608 or 75% from other expense of $  192,831 for the comparable period in 2015. The decrease in other expenses (after netting off the other income) was due to an increase in one item in other income, which is handling charges for inspection of goods 
 for a customer.    Loss before income tax    Loss before income tax for the nine months ended December 31, 2016 was $  288,789, a decrease in loss of $  447,634 or 61% compared to loss of $  736,423 for the comparable period in 2015. The decrease was due to increase in sales of higher profit margin products and decrease in administrative expenses.    Net loss    Net loss for the nine months ended December 31, 2016 was $  288,789, a decrease in loss of $  447,634 or 61% compared to loss of $  736,423 for the comparable period in 2015. The decrease was due to increase in sales of higher profit margin products and decrease in administrative expenses as discussed above.     

Liquidity and Capital Resources

   Cash and Cash Equivalents    

Our cash and cash equivalents as at the beginning of the nine months ended December 31, 2016 were $ 41,438 and increased to $ 57,776 at the end of the period, an increase of $ 16,338. The increase was primarily attributable to the decrease of repayment of our revolving lines of credit.

Net cash provided by operating activities

    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.      8       

Net cash used in investing activities

 Net cash used in investing activities was $  0 and $  1,374 for the nine months ended December 31, 2016 and 2015, respectively. The decrease of $  1,374 in net cash used in investing activities was mainly attributable to the no purchase of office equipment    

Net cash used in financing activities

    Net cash used in financing activities for the nine months ended December 31, 2016 was $  186,495 a decrease of $  823,788 or 82%, from net cash used by financing activities of $  1,010,283 for the comparable period in 2015. The decrease in cash used in financing activities was primarily attributable to a decrease in repayments of our revolving lines of credit    Non-cash transaction    In March 2010, the Company entered into a tri-parties settlement arrangement among two major customers, Customer A and Party B. Under such arrangement, Customer A agreed to transfer its accounts receivable balance to Party B and Party B agreed to receive such accounts receivable balance from Customer A, on behalf of the Company, to offset against its trade payable due to the Company.     

Pursuant to the terms of the Tri-parties Settlement Arrangement among Customer A, Party B and us;

1. Customer A agrees to make cash payments directly to the designated bank

accounts of Party B, per our monthly instruction; 2. We and Party B agree to offset the cash proceeds against the accounts payable

which we owe to Party B, and; 3. In any event if Party B is not reimbursed by Customer A, we are responsible to

chase Customer A for the settlement under obligation among the sales

contracts. Meanwhile, we are legally liable to repay the accounts payable to

    Party B under the purchase contract.     Under this arrangement, we can assure the collection from Customer A to meet with the purchase payable due to Party B on a timely basis. We also can reduce the time and costs to handle the fund remittance among Customer A, Party B and ourselves. As we continue to make the purchase orders to Party B, the accounts receivable originally due from Customer A will be gradually eliminated and offset by our future accounts payable due to Party B.    We have developed a prolonged business relationship with Party "B" in the sale and related products over10 years. In the normal course of business, Party B is acting as a "customer" or a "vendor", who generally sells and buys different types of wood products to and from us on an arm-length basis. These sale and purchases transactions are independent.     

We expect to sustain and continue this prolonged business relationship with Party B, because;

1. Party B has a long-term commercial history and experience in sale and

procurement of wood products in China; 2. Party B has developed an extensive marketing and sourcing network in China,

and;

3. We have built up a prolonged trust and confidence in doing business with each

    other.     We believe that there is no collectability concern with regard to the accounts receivable balance due from Party B, which will be recoverable by our future purchase orders.      9       
 As of December 31, 2016 and March 31, 2016, no accounts receivable balance transferred from Customer A to Party B . The accounts receivable balances of Customer A and Party B under the tri-parties settlement arrangement is presented as follows:                                                             As of                                          December 31, 2016       March 31, 2016 0-90 days                               $                   -     $          798,842 91-180 days                                               -              125,570 181-270 days                                        978,289                    - 271-360 days                                              -                    - Over 360 days                                     2,475,186            2,956,685                                                   3,453,475            3,881,097 Less: allowance for doubtful accounts            (2,000,000 )         (2,000,000 ) Total                                   $           1,453,475     $        1,881,097     Trends    

We are not aware of any trends, events or uncertainties that have or are reasonably likely to have a material impact on our short-term or long-term liquidity.

    Inflation     

We believe that inflation has not had a material or significant impact on our revenue or our results of operations.

   Working Capital    

Our working capital was $ -35,305 and $ 254,493 on December 31, 2016 and March 31, 2016, respectively.

 We currently generate our cash flow through our operations. We believe that our cash flow generated from operations will be sufficient to sustain operations for at least the next 12 months. There is no identifiable expansion plan as of December 31, 2016, but from time to time , we may identify new business opportunities to improve the profitability and working capital from operations.    Capital Resources    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.    The DBS Bank (Hong Kong) Limited ("DBS") provides a credit facility for borrowings up to HK$  14,000,000 (approximately $  1,806,000) for up to 120 days generally with interest at (i) 1% per annum below Prime Rate for Hong Kong Dollar bills and (ii) Standard Bills Rate quoted by DBS from time to time for foreign currency bills on the outstanding amount from drawdown until repayment in full as conclusively calculated by DBS.     

The credit facility with the Industrial and Commercial Bank of China (Asia) Limited (“ICBC”) provides for borrowings up to HK$ 6,400,000 (approximately $ 825,000), which bears interest at a rate of 2% per annum below the ICBC’s Hong Kong Dollar Best Lending Rate and are guaranteed by the Hong Kong Mortgage Corporation Limited (“HKMC”), and Ms. Mei Ling Law and Mr. Kwok Leung Lee, directors of the Company.

    The credit facility with Shanghai Commercial Bank Limited provides for borrowings up to HK$   6,500,000 (approximately $  837,000), which bears interest at a rate of 0.25% per annum over Hong Kong prime for HK dollars facilities and at a rate of 0.25% per annum over US prime for US dollars facilities and is personally guaranteed by Mr. Lee, director of the Company. Since June 2016, the Company terminated the credit facility with Shanghai Commercial Bank Limited and released the restricted cash deposit accordingly. The loan was fully repaid during the nine months ended December 31, 2016.      10       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 December 31, 2016, the Company had aggregate secured banking facilities of $ 3,028,239 in which $ 1,683,307 was unused.

   Financing Arrangement    

The financing arrangement with Tai Wah Timber Factory Limited provides for borrowings with interest rate at 12% per annum, and the interest is required to pay monthly.

As of December 31, 2016 and March 31, 2016, the outstanding balance was $ 672,154 and $ 671,803, respectively.

    While the capital resources of the Company are stable from a cash perspective, the credit of the Company for debt financing if necessary is extremely strong due to our strong banking relations and the credit facilities provided for our veneer products. From time to time we do have a need to exercise our credit options on a short term basis due to the nature of our business as importers/exporters. The Company has established lines of credit with banks and management maintains very strong relations with these banks. Management believes that its current lines of credit are more than sufficient to cover any short and long term liquidity needs. Our historical financial liquidity needs have been shown to be more than adequately covered by our credit facilities.  We believe that the strength of our management team to maintain strict internal control of its cash flow and liquidity that the current credit facilities are adequate 
 for our needs.    
 Our accounts receivable balance as of December 31, 2016 is $  1,865,837. Our accounts receivable are not considered by management to be high due to the nature of payment for our products.  Our clients are required to provide credit facilities for their product by a Letter of Credit or other negotiable method of payment for the amount owed.  We draw from the Letter of Credit prior to delivery only in the event that it is needed to maintain sufficient cash flow to cover our operations.  We pay the cost of drawing on any Letter of Credit. 

Because our cash flow is typically sufficient to cover our operations we do not carry accounts receivable unless prior arrangements have been made. It is company policy to recognize revenue when the product is shipped to our customers.

    In the event we are unable to generate sufficient funds to continue our business efforts or if the Company is pursued by a larger company for a business combination, we will analyze all strategies to continue the company and increase shareholder value.  Only under these circumstances would we consider a merger, acquisition, joint venture, strategic alliance, a roll-up, or other business combination to increase business and potentially increase the shareholder value of the Company.  Management believes its responsibility to increase shareholder value is of paramount importance, which means the Company should consider the aforementioned alternatives in the event funding is not available on favorable terms to the Company when and if needed.  

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