SUNWIN STEVIA INTERNATIONAL, INC. The following discussion and analysis of our consolidated financial condition
and results of operations for the fiscal years ended
OVERVIEW
We sell stevioside and other stevia derived products. Stevioside is a natural zero calorie sweetener extracted from the leaf of the stevia plants. Substantially all of our operations are located in the PRC. We have built an integrated company with the sourcing and production capabilities designed to meet the needs of our customers.
During the fiscal years ended
- Stevioside; and - Corporate and other. Recent Developments
Consequently, the COVID-19 pandemic still adversely affect the Company's business operations, financial condition and operating results for 2022 and 2023, including but not limited to material negative impact to the Company's total revenues, production capability, ability to conduct marketing and sales, and slower collection of accounts receivables. We are able to maintain certain income from previous existing orders and finished products, however, we believe the effect of the COVID-19 pandemic will be most significant in our raw material purchasing and our sales. Due to the effect of the global COVID-19 pandemic, we expect the sourcing and availability of stevia raw material will have increased difficulties and costs for fiscal 2022 and 2023.
We are monitoring the global outbreak and spread of COVID-19 and taking steps in an effort to identify and mitigate the adverse impacts on, and risks to, our business posed by its spread and the governmental and community reactions thereto. We continue to assess and update our business continuity plans in the context of this pandemic, including taking steps in an effort to help keep our workforces healthy and safe. We are also working with our suppliers to understand the existing and future negative impacts, and to take actions in an effort to mitigate such impacts. Due to the speed with which the COVID-19 pandemic is developing, the global breadth of its spread and the range of governmental and community reactions thereto, there is uncertainty around its duration and ultimate impact; therefore, any negative impact on our overall financial and operating results (including without limitation our liquidity) cannot be reasonably estimated at this time, but the pandemic could lead to extended disruption of economic activity and the impact on our financial and operating results.
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Our Performance
Our revenues totaled
While we have broadened our stevia product offerings to include a number of
higher quality stevia grades needed in new product formulations we are
developing to introduce to the
Our Outlook
We believe that there are significant opportunities for worldwide growth in our
Stevioside segment, not only in the
Currently there is a world-wide movement of lowering sugar intake, and more and more consumers are becoming aware of the health benefits associated with reduction of sugar intake. According to research data, 40% of Chinese consumers stated that they "will not mind paying more for food and beverages with more natural ingredients" and 80% of the interview consumers express a goal of "having a healthier diet". We believe in this search of a more natural and healthy diet and lifestyle, natural sweeteners such as stevia will become the mainstream sweetener in the food and beverage markets.
Some of the recent favorable observations related to the stevia markets includes:
- Chinese domestic food and beverages, particularly herbal tea
manufacturers and the pharmaceutical industry, have increased the use
of steviosides, and new health awareness trends have also resulted in
some new governing laws supporting the growth of this industry;
- Southeast and South Asia have renewed and increased their interest in
stevia, particularly high grade stevia;
- New global product launches mentioning stevia have increased 13% per
year on average from 2014 to 2018; and
- Stevia has been growing in popularity in the last 10 years throughout
all the global markets.
Meanwhile, we are also facing challenges in competitive pricing and raw
materials for the fiscal years ended
We intend to make adjustments internally in order to better operate in this market; our goal is to increase sales and develop new client bases through our marketing effort, decrease our production expenses while maintaining the stability and quality of our products, and decrease our overall expenditures. We believe while there are challenges and risks in this market, our high quality high grade product and the formulations developed by our internal research and development team differentiates us from other competitors and our efforts will lead to sustainable growth in the future.
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RESULTS OF OPERATIONS
The following table summarizes our results of operations for the fiscal year
ended
For the Fiscal Year Ended April 30, 2022
Stevioside Corporate and Other Consolidated
Revenues $34,832,117 100.0% $429,362 100.0% $35,261,479 100.0%
Cost of goods sold 31,956,506 91.7% 200,078 46.6% 32,156,584 91.2%
Gross profit 2,875,611 8.3% 229,284 53.4% 3,104,895 8.8%
Selling expenses 1,909,651 5.5% - - 1,909,651 5.4%
General and
administrative
expenses 1,895,345 5.4% 95 0.0% 1,895,440 5.4%
Research and
development expenses 2,763,854 7.9% - - 2,763,854 7.8%
Loss on disposition of
property and equipment 590,503 1.7% - - 590,503 1.7%
(Loss) gain from
operations (4,283,742) (12.3)% 229,189 53.4% (4,054,553) (11.5)%
Other expenses (539,055) (1.5)% 20 0.0% (539,035) (1.5)%
(Loss) gain from
continuing operation
before income taxes $(4,822,797) (13.8)% $229,209 53.4% $(4,593,588) (13.0)%
For the Fiscal Year Ended April 30, 2021
Stevioside Corporate and Other Consolidated
Revenues $24,970,088 100.0% $408,747 100.0% $25,378,835 100.0%
Cost of goods sold 26,293,331 105.3% 221,228 54.1% 26,514,559 104.5%
Gross profit (1,323,243) (5.3)% 187,519 45.9% (1,135,724) (4.5)%
Selling expenses 1,390,993 5.6% 594 0.1% 1,391,587 5.5%
General and
administrative
expenses 1,398,881 5.6% 35,046 8.6% 1,433,927 5.7%
Research and
development expenses 1,119,574 4.5% - - 1,119,574 4.4%
(Loss) gain from
operations (5,232,691) (21.0)% 151,879 37.2% (5,080,812) (20.0)%
Other expenses (168,463) (0.7)% - - (168,463) (0.7)%
(Loss) gain from
continuing operation
before income taxes $(5,401,154) (21.6)% $151,879 37.2% $(5,249,275) (20.7)%
Revenues
Total revenues in the fiscal year ended
With the restructuring of our product line, we also continue to increase the
sales of our low grade stevia products. Our low grade stevia and A3-97 products
generated more than 29.9% and 18.6% of total revenue of our Stevioside segment
for the fiscal year ended
Our unit sale price fluctuated from month to month in the fiscal year ended
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Cost of Revenues and Gross Margin
Cost of revenues includes the cost of raw materials, labor, depreciation, and
other fixed and variable overhead costs. Cost of revenues of Stevioside segment
in the fiscal year ended
We believe the effect of the COVID-19 pandemic is the most significant in our raw material purchasing and our sales. Due to the effect of the global COVID-19 pandemic, we expect the sourcing and availability of stevia raw material will have increased difficulties and costs for fiscal 2022. As a result of COVID-19 related gathering laws, farmers are not able to have the same amount of nursery workers as previous years, resulting in a decrease of stevia plants, and relevant safety measures also resulted in an increase of general planting costs. We expect this to cause a shortage of stevia leaves harvest this year and along with the effect of the rain seasons, we expect to see an increase in our cost of raw material. After we resumed production, the effect of the COVID-19 pandemic on transportation has also made it difficult for us to efficiently procure our raw materials.
Total Selling Expenses
Our selling expenses for the fiscal year ended
Total General and Administrative Expenses
Our general and administrative expenses for the fiscal year ended
Research and Development Expenses
For the fiscal year ended
Loss on Disposition of Property and Equipment
We periodically evaluate our property, plant and equipment to determine whether
any negative change in regulatory and environmental policies, technical
specifications or customer acceptance of our products impair the usefulness and
fair market value of these assets. In connection with this evaluation in fiscal
years ended
Other Expense
For the fiscal year ended
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Loss from Operations
As a result of the foregoing, our loss from operations was
Net Loss Attributable to Noncontrolling Interest
Noncontrolling interest represents the ownership interests an individual
investor and
Net Loss Attributable to
Net loss attributable to
Foreign Currency Translation Gain
The functional currency of our subsidiaries and variable interest entities
operating in the PRC is the Chinese Yuan or Renminbi ("RMB"). The financial
statements of our subsidiaries are translated to
LIQUIDITY AND CAPITAL RESOURCES
Liquidity is the ability of a company to generate sufficient cash to meet its operational cash requirements.
The following table provides certain selected balance sheets comparisons as of
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April 30, 2022 April 30, 2021 Increase (Decrease) %
Cash and cash
equivalents $321,193 $1,565,829 $(1,244,636) (79.5)%
Accounts receivable,
net 7,404,669 1,693,801 5,710,868 337.2%
Accounts receivable -
related party - 5,999,791 (5,999,791) (100.0)%
Inventories, net 5,564,044 12,930,461 (7,366,417) (57.0)%
Prepaid expenses and
other current assets 2,765,819 661,882 2,103,937 317.9%
Total current assets 16,055,725 22,851,764 (6,796,039) (29.7)%
Property and
equipment, net 7,485,733 9,217,115 (1,731,382) (18.8)%
Land use rights, net 1,950,204 - 1,950,204 100%
Total assets $25,491,662 $32,068,879 $(6,577,217) (20.5)%
Accounts payable and
accrued expenses 12,215,238 $11,141,408 $1,073,830 9.6%
Short-term loans 4,907,506 2,955,304 1,952,202 66.1%
Due to related
parties 4,882,162 9,843,636 (4,961,474) (50.4)%
Total current
liabilities 22,004,906 23,940,348 (1,935,442) (8.1)%
Total liabilities 22,004,906 $23,940,348 $(1,935,442) (8.1)%
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As of
The COVID-19 Pandemic. On
Accounts receivable, net of allowance for doubtful accounts, including accounts
receivable from related party, decreased by approximately
At
Our accounts payable and accrued expenses were approximately
Loans payable as of
Due to related parties at
Cash Flows Analysis
Net cash used in operating activities from operations was approximately
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Net cash used in operating activities from operations was approximately
Net cash used in investing activities from operations amounted to approximately
Net cash used in investing activities from continuing operations amounted to
NET CASH FLOW PROVIDED BYFINANCING ACTIVITIES:
Net cash provided by financing activities from operations amounted to
approximately
Net cash provided by financing activities from operations amounted to
approximately
CASH ALLOCATION BY COUNTRIES
The functional currency of our Chinese subsidiaries is the Chinese RMB.
Substantially all of our cash is held in the form of RMB at financial
institutions located in the PRC, where there is no equivalent of federal deposit
insurance as in
In 1996, the Chinese government introduced regulations which relaxed restrictions on the conversion of the RMB; however, restrictions still remain, including but not limited to restrictions on foreign invested entities. Foreign invested entities may only buy, sell or remit foreign currencies after providing valid commercial documents at only those banks authorized to conduct foreign exchanges. Furthermore, the conversion of RMB for capital account items, including direct investments and loans, is subject to PRC government approval. Chinese entities are required to establish and maintain separate foreign exchange accounts for capital account items. We cannot be certain Chinese regulatory authorities will not impose more stringent restrictions on the convertibility of the RMB, especially with respect to foreign exchange transactions. Accordingly, cash on deposit in banks in the PRC is not readily deployable by us for purposes outside of the PRC. Our cash position by geographic area was as follows:
Country: April 30, 2022 April 30, 2021 United States$18,033 5.6%$161,860 10.3% China 303,160 94.4% 1,403,969 89.7%
Total cash and cash equivalents
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Contractual Obligations and Off-Balance-Sheet Arrangements
Contractual Obligations
We have certain fixed contractual obligations and commitments that include
future estimated payments. Changes in our business needs, cancellation
provisions, changing interest rates, and other factors may result in actual
payments differing from the estimates. We cannot provide certainty regarding the
timing and amounts of payments. We have presented below a summary of the most
significant assumptions used in our determination of amounts presented in the
tables, in order to assist in the review of this information within the context
of our consolidated financial position, results of operations, and cash flows.
The following tables summarize our contractual obligations as of
Payments Due by Period
Less than
Contractual obligations: Total 1 year 1-3 years 3-5 years 5 + years
Individual loans 4,907,506 4,907,506 - - -
Total $4,907,506 4,907,506 - $- $-
Off-Balance-Sheet Arrangements
Under
- Any obligation under certain guarantee contracts,
- Any retained or contingent interest in assets transferred to an
unconsolidated entity or similar arrangement that serves as credit,
liquidity or market risk support to that entity for such assets,
- Any obligation under a contract that would be accounted for as a derivative
instrument, except that it is both indexed to our stock and classified in
stockholder's equity in our statement of financial position, and
- Any obligation arising out of a material variable interest held by us in an
unconsolidated entity that provides financing, liquidity, market risk or
credit risk support to us, or engages in leasing, hedging or research and
development services with us.
We do not have any off-balance-sheet arrangements that we are required to
disclose pursuant to these regulations. In the ordinary course of business, we
enter into operating lease commitments, purchase commitments and other
contractual obligations. These transactions are recognized in our financial
statements in accordance with accepted accounting principles generally accepted
in the
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The preparation of financial statements in conformity with
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