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Dynamic quotes 
OFFON

SUNWIN STEVIA INTERNATIONAL, INC.

(SUWN)
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SUNWIN STEVIA INTERNATIONAL : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-Q)

03/15/2021 | 03:08pm EST

The following discussion should be read in conjunction with the information contained in the preceding unaudited condensed consolidated financial statements and footnotes and our 2020 Annual Report on Form 10-K for fiscal year ended April 30, 2020.

OVERVIEW


We sell stevioside, a natural sweetener. 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
production and distribution capabilities designed to meet the needs of our
customers.

Our operations were organized in two operating segments related to our product lines:

  -   Stevioside, and
  -   Corporate and other.



Going Concern

The accompanying unaudited condensed consolidated financial statements have been
prepared assuming that the Company will continue as a going concern. The Company
has a significant accumulated deficit and incurred recurring losses. The
Company's cash balance and revenues generated are not currently sufficient and
cannot be projected to cover operating expenses for the next twelve months from
the date of this report. These factors raise doubt as to the ability of the
Company to continue as a going concern. Management's plans include attempting to
improve its business profitability, its ability to generate sufficient cash flow
from its operations to meet its operating needs on a timely basis, obtain
additional working capital funds through debt and equity financings, and
restructure on-going operations to eliminate inefficiencies to raise cash
balance in order to meet its anticipated cash requirements for the next twelve
months from the date of this report. Management intends to make every effort to
improve its current sales forecast to further develop and expand the
international markets for its new products as well as continuing with the
current sources of funds to meet working capitals needs on as needed
basis. There can be no assurance that these plans and arrangements will be
successful.

The ability of the Company to continue as a going concern is dependent upon its
ability to achieve profitable operations and raise additional capital. The
accompanying unaudited condensed consolidated financial statements do not
include any adjustments related to the recoverability or classification of
asset-carrying amount or the amounts and classification of liabilities that may
result should the Company be unable to continue as a going concern.

Recent Developments


Sunwin Stevia has approximately 1,300 metric tons of manufacturing capacity per
year to produce various specifications of stevia extracts. With these
manufacturing facilities, Sunwin Stevia is able to deliver stevia products
containing Rebaudioside A in a range of 50% to 99% with a format of powder,
granular, or tablet; as well as Rebaudioside B, Rebaudioside D, Rebaudioside M
and enzyme treated stevia products. In 2020, we have made technical upgrades on
our enzyme treated stevia production line, improving the production process of
our enzyme treated stevia products.

In April 2020, management made the decision to increase the operating capital of
Qufu Shengren from the original RMB 19,680,000 (approximately $2,800,000) to RMB
183,000,000 (approximately $26,000,000), this will allow for the Company to
better focus on our Stevia operation and increase investment to our research and
production. The increase of capital will come from additional funding of RMB
92,470,000 (approximately $13,100,000) from Qufu Natural Green, and RMB
70,850,000 (approximately $10,000,000) debt to equity conversion of multiple
creditors. On April 30, 2020, seven individual creditors and three suppliers, an
individual investor and Qufu Shengren entered into a series of debt transfer and
conversion agreements, the individual creditors and suppliers agreed to transfer
the full amount of their receivable, including principal and interest due from
Qufu Shengren, at full value, to the individual investor. The individual
investor then converted the full amount of the debts into equity and transferred
a part of that equity to Shangdong Yulong Mining Group Co., Ltd. ("Yulong"). The
individual investor and Yulong became minority shareholders of Qufu Shengren as
of April 30, 2020, accounting for 38.4% and 0.3%, respectively.
                                     - 20 -
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We believe this addition in capital will greatly benefit our stevia product development, manufacturing, and marketing effort. With the increased capital, we will be able to focus more on our technology advancements, improvement in manufacturing process and increase our production capacity.

Impact of COVID-19 Pandemic on the Company's Operations


Since early 2020, the epidemic of the novel strain of coronavirus (COVID-19)
(the "COVID-19 pandemic") has spread across China and other countries, and has
adversely affected businesses and economic activities in the first quarter of
2020 and beyond. The Company followed the restrictive measures implemented in
China, by suspending onsite operation in January, 2020 and having employees work
remotely until late March 2020, when the Company assessed the situation and
started to gradually resume normal operation at areas deemed safe while
implementing effective health measures. Consequently, the COVID-19 pandemic may
adversely affect the Company's business operations, financial condition and
operating results for 2020, 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. As
of January 2021, we have been able to resume some of our manufacturing
operations, however, our sales and promotional efforts as still severely
impacted by the global pandemic. We are able to maintain certain income from
previous existing orders and finished products, however, we anticipate
significant economic impact related to COVID-19. Due to the high uncertainty of
the evolving situation, the Company has limited foresight on the full impact
brought upon by the COVID-19 pandemic and the related financial impact cannot be
estimated at this time.

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 (including but not limited to our employees, customers, and other
business partners) 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. The spread of COVID-19 has caused us
to modify our business practices (including warehouse and production procedures,
employee travel, employee work locations in certain cases, and cancellation of
physical participation in certain meetings, events and conferences), and we
expect to take further actions as may be required or recommended by government
authorities or as we determine are in the best interests of our employees,
customers and other business partners. 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.

OUR PERFORMANCE


 Our revenues totaled approximately $6,987,000 during the three months ended
January 31, 2021, an increase of 34.3%, as compared with the same period in
2020, and our gross margin decreased to (4.5)% from 9.9% due to significant
increase in COVID related costs. Our total operating expenses in the three
months ended January 31, 2021 decreased by approximately $12,000, or 0.8%
compared to the same period in 2020 primarily due to a decrease of approximately
$40,000, or 8.4% in general and administrative expenses and a decrease of
approximately $92,000, or 14.5% in research and development expenses, offset by
an increase of approximately $120,000, or 33.2% in selling expense. Our net loss
from continuing operations for the three months ended January 31, 2021 was
approximately $1,779,000, compared to a net loss from continuing operations of
$960,000 in three months ended January 31, 2020.

Our revenues totaled approximately $18,460,000 during the nine months ended
January 31, 2021, a decrease of 4.1%, as compared with the same period in 2020,
and our gross margin decreased to (1.4)% from 16.2%. Our total operating
expenses in the nine months ended January 31, 2021 decreased by approximately
$574,000, or 15.6% compared to the same period in 2020 primarily due to a
decrease of approximately $190,000, or 15.3% in selling expense, a decrease of
approximately $79,000, or 6.8% in general and administrative expense, and a
decrease of approximately $305,000, or 23.9% in research and development
expenses. Our net loss from continuing operations for the nine months ended
January 31, 2021 was approximately $3,475,000, compared to a net loss from
continuing operations of $1,120,000 in nine months ended January 31, 2020.

Our Outlook


We believe that there are significant opportunities for worldwide growth in our
Stevioside segment, not only in the U.S. and EU markets but also in our domestic
market. For the fiscal year ended April 30, 2020 and beyond, we will continue to
focus on our core business of producing and selling stevioside series products.
                                     - 21 -
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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 that, 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 in fiscal 2020 include:

- 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 April 30, 2020 and 2021, as well as
negative impact from the global COVID-19 pandemic. During the fiscal year ended
April 30, 2021, the market prices of stevioside products continue to be impacted
by strong price competition among Chinese manufacturers. With this being a
product gaining large market shares in China, in the recent years we have seen
many competitors entering the market. These new competitors use lower pricing as
their effort to gain market share as they initially entering the market, thus
driving down the average prices for stevia products. We expect the pressure from
pricing competition to continue in fiscal 2021. We anticipate the price of
stevia leaves, the raw material used to produce our stevioside series products,
will also continue to increase in fiscal 2021 since the demand for raw material
may increase as the market grows, while the production of the raw material
experiences negative impact due to the global pandemic.

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.

RESULTS OF OPERATIONS


The following table summarizes our results from operations for the three month
periods ended January 31, 2021 and 2020. The percentages represent each line
item as a percent of revenues:

                                   For the Three Months ended January 31, 2021
                                Stevioside                 Corporate and Other                Consolidated
Revenues                $  6,881,811         100.0 %    $    104,866         100.0 %   $  6,986,677         100.0 %
Cost of goods sold         7,246,458         105.3 %          56,802          54.2 %      7,303,260         104.5 %
Gross profit                (364,647 )        (5.3 )%         48,064          45.8 %       (316,583 )        (4.5 )%
Selling expenses             480,210           7.0 %              11           0.0 %        480,221           6.9 %
General and
administrative
expenses                     440,634           6.4 %             110           0.1 %        440,744           6.3 %
Research and
development expenses         541,733           7.9 %               -             -          541,733           7.8 %
Income (loss) from
operations                (1,827,224 )       (26.6 )%         47,943          45.7 %     (1,779,281 )       (25.5 )%
Other income
(expenses)                    18,435           0.3 %               -             -           18,435           0.3 %
Income (loss) from
continuing operations
before income taxes     $ (1,808,789 )       (26.3 )%   $     47,943          45.7 %   $ (1,760,846 )       (25.2 )%



                                     - 22 -
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                                   For the Three Months ended January 31, 2020
                                Stevioside                 Corporate and Other                Consolidated
Revenues                $  5,104,858         100.0 %    $    98,571          100.0 %   $  5,203,429         100.0 %
Cost of goods sold         4,688,555          91.8 %             48            0.0 %      4,688,603          90.1 %
Gross profit                 416,303           8.2 %         98,523          100.0 %        514,826           9.9 %
Selling expenses             360,440           7.1 %              -              -          360,440           6.9 %
General and
administrative
expenses                     474,548           9.3 %          6,539            6.6 %        481,087           9.2 %
Research and
development expenses         633,668          12.4 %              -              -          633,668          12.2 %
Income (loss) from
operations                (1,052,351 )       (20.6 )%        91,982           93.4 %       (960,369 )       (18.5 )%
Other expenses              (221,503 )        (4.3 )%             -              -         (221,503 )        (4.3 )%
Income (loss) from
continuing operation
before income taxes     $ (1,273,854 )         (25 )%   $    91,982         

93.4 % $ (1,181,872 ) (22.7 )%

The following table summarizes our results from operations for the nine month periods ended January 31, 2021 and 2020.

                                   For the Nine Months ended January 31, 2021
                                Stevioside                 Corporate and Other                Consolidated
Revenues                $ 18,157,132         100.0 %    $    303,067         100.0 %   $ 18,460,199         100.0 %
Cost of goods sold        18,550,208         102.2 %         163,508          54.0 %     18,713,716         101.4 %
Gross profit                (393,076 )        (2.2 )%        139,559          46.0 %       (253,517 )        (1.4 )%
Selling expenses           1,047,115           5.8 %             587           0.2 %      1,047,702           5.7 %
General and
administrative
expenses                   1,050,924           5.8 %          35,380          11.7 %      1,086,304           5.9 %
Research and
development expenses         974,300           5.4 %               -             -          974,300           5.3 %
Income (loss) from
operations                (3,465,415 )       (19.1 )%        103,592          34.2 %     (3,361,823 )       (18.2 )%
Other expenses              (113,301 )        (0.6 )%              -             -         (113,301 )        (0.6 )%
Income (loss) from
continuing operations
before income taxes     $ (3,578,716 )       (19.7 )%   $    103,592          34.2 %   $ (3,475,124 )       (18.8 )%



                                    For the Nine Months ended January 31, 2020
                                Stevioside                 Corporate and Other                 Consolidated
Revenues                $ 18,499,696         100.0 %    $    755,389         100.0 %    $ 19,255,085         100.0 %
Cost of goods sold        15,727,024          85.0 %         417,589          55.3 %      16,144,613          83.8 %
Gross profit               2,772,672          15.0 %         337,800          44.7 %       3,110,472          16.2 %
Selling expenses           1,215,596           6.6 %          22,049           2.9 %       1,237,645           6.4 %
General and
administrative
expenses                   1,009,492           5.5 %         155,690          20.6 %       1,165,182           6.1 %
Research and
development expenses       1,277,972           6.9 %           1,648           0.2 %       1,279,620           6.6 %
Income (loss) from
operations                  (730,388 )        (3.9 )%        158,413          21.0 %        (571,975 )        (3.0 )%
Other expenses              (504,871 )        (2.7 )%        (42,939 )        (5.7 )%       (547,810 )        (2.8 )%
Income (loss) from
continuing operation
before income taxes     $ (1,235,259 )        (6.7 )%   $    115,474          15.3 %    $ (1,119,785 )        (5.8 )%



                                     - 23 -
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Revenues

Total revenues in the three months ended January 31, 2021 increased by approximately 34.3%, as compared to the same period in 2020. Stevioside revenues, which accounts for 98.5% and 98.1% of our total revenues in the three months ended January 31, 2021 and 2020, respectively, increased by 34.8%.


Within our Stevioside segment, revenues from sales to third parties increased by
24.2% and sales to the related party increased by 54.5% in the three months
ended January 31, 2021, as compared to the same period in 2020, primarily due
to the results of our sales efforts in both domestic and international markets
after removal of travel restrictions in China as the markets gradually recover
from the global pandemic. We sold 227 metric tons and 168 metric tons of
stevioside for the three months ended January 31, 2021 and 2020, respectively.
We generated approximately $1,166,000 and $605,000 in revenue from producing 42
metric tons and 29 metric tons of the customized orders for restructuring by
enzyme based on our Stevioside products. Restructuring by enzyme based on our
Stevioside products accounted for approximately 19.5% and 11.5% in the three
months ended January 31, 2021 and 2020, respectively, of our total Stevioside
segment revenues. Our low grade ordinary stevia products generated an amount of
approximately $2,242,000, 37.5% of total revenue of our Stevioside segment for
three months ended January 31, 2021.

Total revenues in the nine months ended January 31, 2021 decreased by 4.1% as
compared to the same period in 2020. Stevioside revenues, which accounts for
98.4% and 96.1% of our total revenues in the nine months ended January 31, 2021
and 2020, respectively. During the nine months ended January 31, 2021, within
our Stevioside segment, our sales volume increased by approximately 35 metric
tons, a 6.1% increase. Stevioside revenues from sales to third parties increased
by 4.2%, but sales to the related parties decreased by 14.8% in the nine months
ended January 31, 2021, as compared to the same period in 2020. Restructuring by
enzyme based on our Stevioside products accounted for approximately 16.6% and
20.4% in the nine months ended January 31, 2021 and 2020, respectively, of our
total Stevioside segment revenues. 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 46.8% and 56.5% of total
revenue of our Stevioside segment for three and nine months ended January 31,
2021, respectively.

Our unit sale price fluctuated from month to month in the three and nine months
ended January 31, 2021, which was mainly affected by the market environment; the
average unit sale price decreased by approximately 17.9% and 10.7%, compared to
the same period in 2020, respectively. We face challenges due to competitive
pricing and difficulties sourcing raw materials in 2021; the market prices of
stevioside products were impacted by strong price competition among Chinese
manufacturers.

Cost of Revenues and Gross Margin


Cost of revenues in the three and nine months ended January 31, 2021 increased
by 55.8% and 15.9%, compared to the same period in 2020, respectively. Cost of
revenues as a percentage of revenues increased from 90.1% to 104.5% during the
three months ended 2020 compared to the same period in 2020. Cost of revenues as
a percentage of revenues increased from 83.8% to 101.4% during the nine months
ended 2020 compared to the same period in 2020. Our consolidated gross margin
for the three and nine months ended by January 31, 2021 was (4.5)% and (1.4)%,
as compared to 9.9% and 16.2% in the same period in 2020, which was primarily
due to the epidemic of the novel strain of coronavirus COVID-19 pandemic
adversely affected businesses and economic activities in 2020, and our efforts
to insure safety in production and transportation.

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 2021 and 2022. February to
March is normally the nursing period for stevia plants; 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.

Selling Expenses

For the three months ended January 31, 2021, we had an increase of approximately
$120,000, or 33.2% in selling expenses, as compared to the same period in 2020.
The increase was primarily due to the approximately $210,000 increase in
promotion expense, a $35,000 increase in commission expense, and a $11,000
increase in miscellaneous expense, offset by a $54,000 decrease in advertising
expenses, a $25,000 decrease in travel expense, a $28,000 decrease in salary,
and a $29,000 decrease in office expense in the three months ended January 31,
2021.
                                     - 24 -
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For the nine months ended January 31, 2021, we had a decrease of approximately
$190,000, or 15.3% in selling expenses, as compared to the same period in 2020.
The decrease was primarily due to the approximately $206,000 decrease in
marketing expense, a $248,000 decrease in advertising expenses, a $59,000
decrease in travel expense, a $47,000 decrease in salary, a $21,000 decrease in
selling expense on Metformin product, a $12,000 decrease in shipping and
freight, and a $29,000 decrease in miscellaneous expense, offset by
approximately $409,000 increase in promotion expense and a $23,000 increase in
commission expense in the nine months ended January 31, 2021.

General and Administrative Expenses


Our general and administrative expenses for the three months ended January 31,
2021 decreased by approximately $40,000, or 8.4% from the same period in 2020.
The decrease was primarily due to a decrease of approximately $116,000 in
insurance expense, a decrease of approximately $42,000 in service and consulting
expense, a decrease of approximately $13,000 in repairs and maintenance fees, a
decrease of approximately $44,000 in office expense, and a decrease of
approximately $20,000 in travel expense, offset by a $32,000 increase in safety
production fund, a $51,000 increase in marketing expense and a $29,000 increase
in salary and welfare benefit expenses and a $83,000 decrease in miscellaneous
expense in the three months ended January 31, 2021.

Our general and administrative expenses for the nine months ended January 31,
2021 decreased by approximately $79,000, or 6.8% from the same period in 2020.
The decrease was primarily due to a decrease of approximately $37,000 in repairs
and maintenance fees, a decrease of approximately $52,000 in depreciation
expense, a decrease of approximately $126,000 in insurance expense, a decrease
of approximately $50,000 in office expense, and a decrease of approximately
$26,000 in travel expense, offset by a $90,000 increase in safety production
fund, a $66,000 increase in salary and welfare benefit expenses, a $54,000
increase in marketing expense, and a $2,000 increase in miscellaneous expense in
the nine months ended January 31, 2021.

Research and Development Expense


For the three and nine months ended January 31, 2021, our research and
development expenses amounted to approximately $542,000 and $974,000, as
compared to $634,000 and $1,280,000 for the same period in 2020, respectively.
The decreases were primarily due to the decrease in spending for third party
technical consulting fees in the three and nine months ended January 31, 2021.

Other Income (Expenses)


For the three months ended January 31, 2021, other income, net of other expense,
amounted to approximately $18,000, an increase of $240,000 as compared to the
other expense, net of other income, amounted to approximately $222,000 for the
three months ended January 31, 2020. The decrease of other expenses was
primarily attributable to a decrease of interest expense to third parties and
related parties of $179,000, and a decrease in other expenses of $79,000 for
sales tax rebate, offset by a decrease in grant income of approximately $18,000.

For the nine months ended January 31, 2021, other expense, net of other income,
amounted to approximately $113,000, a decrease of $435,000 as compared to the
other expense, net of other income, amounted to approximately $548,000 for the
nine months ended January 31, 2020. The decrease of other expenses was primarily
attributable to a decrease of interest expense to third parties and related
parties of $349,000, and a decrease in other expenses of $117,000, offset by an
increase in grant income of $31,000.

Net Loss from Continuing Operations


As a result of the foregoing, our loss from continuing operations was $1,761,000
for the three months ended January 31, 2021, as compared with loss from
continuing operations of $1,182,000 for the three months ended January 31, 2020,
a change of $579,000, or 49.0%. The increase in net loss was primarily due to
increased negative gross profit and increased operating expenses, offset by
decreased other expenses in the three months ended January 31, 2021, compared to
the three months ended January 31, 2020.

As a result of the foregoing, our loss from continuing operations was $3,475,000
for the nine months ended January 31, 2021, as compared with loss from
continuing operations of $1,120,000 for the nine months ended January 31, 2020,
a change of $2,355,000, or 210.3%. The increase in net loss was primarily due to
increased negative gross profit, offset by decreased operating expenses and
decreased other expenses in the nine months ended January 31, 2021, compared to
the nine months ended January 31, 2020, as we discussed above.
                                     - 25 -
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Loss from Discontinued Operations


We did not have discontinued operations incurred in the nine months ended
January 31, 2021. Our loss from discontinued operations amounted to $20,000 for
the nine months ended January 31, 2020, and the Company also recorded a loss
from disposal discontinued operations of approximately $233,000 at January 31,
2020. Our total loss from discontinued operations amounted to $253,000 or $0.00
per share (basic and diluted) for the nine months ended January 2020.

The summarized operating result of discontinued operations included in our unaudited condensed consolidated statements of operations is as follows:


                                         Three Months Ended January 31,               Nine Months Ended January 31,
                                        2021                        2020               2021                  2020

Revenues                           $             -             $             -     $           -         $     733,441
Cost of revenues                                 -                           -                 -               572,357
Gross profit                                     -                           -                 -               161,084
Operating expenses                               -                           -                 -               172,142
Other income, net                                -                           -                 -                 8,958
Loss before income taxes                         -                           -                 -                20,016
Income tax expense                               -                           -                 -                     -
Loss from discontinued
operations                                       -                           -                 -                20,016
Loss from disposal, net of taxes                 -                           -                 -                   960
Loss from sales of subsidiary                    -                           -                 -               232,455
Total loss from discontinued
operations                         $             -             $             -     $           -         $     253,431


Net Loss Attributable to Noncontrolling Interest


Noncontrolling interest represents the ownership interests an individual
investor and Yulong hold in Qufu Shengren. The amount recorded as noncontrolling
interest in our unaudited condensed consolidated statements of loss and
comprehensive loss is computed by multiplying the after-tax loss for three
months ended January 31, 2021 by the percentage ownership in Qufu Shengren not
directly attributable to us. For the three and nine months ended January 31,
2021, the noncontrolling interest attributable to ownership interests in Qufu
Shengren not directly attributable to us was 38.7%. Net loss attributable to
noncontrolling interest amounted to approximately $681,000 and $1,330,000 for
the three and nine months ended January 31, 2021, respectively.

Net Loss Attributable to Sunwin Stevia International, Inc.


Our net loss attributable to Sunwin Stevia International, Inc. in the three
months ended January 31, 2021 was approximately $1,080,000, or $(0.01) per share
(basic and diluted), compared to net loss of $1,182,000, or $(0.01) per share
(basic and diluted), in the three months ended January 31, 2020.

Our net loss attributable to Sunwin Stevia International, Inc. in the nine
months ended January 31, 2021 was approximately $2,146,000, or $(0.01) per share
(basic and diluted), compared to net loss of $1,373,000, or $$(0.01) per share
(basic and diluted), in the nine months ended January 31, 2020.

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 U.S. dollars using period end
rates of exchange for assets and liabilities, and average rates of exchange (for
the period) for revenues, costs, and expenses. Net gains and losses resulting
from foreign exchange translations are included in the Comprehensive loss on the
unaudited condensed consolidated statements of operations and comprehensive
loss. As a result of foreign currency translations, which are a non-cash
adjustment, we reported a foreign currency translation gain of $420,000 and
$62,000 for the three months ended January 31, 2021 and 2020, respectively. We
also reported a foreign currency translation gain of $1,101,000 and $225,000 for
the nine months ended January 31, 2021 and 2020, respectively.  This non-cash
gain had the effect of reducing our reported comprehensive loss.
                                     - 26 -
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                        LIQUIDITY AND CAPITAL RESOURCES

Liquidity is the ability of a company to generate sufficient cash to meet its operational cash requirements.


At January 31, 2021, we had working capital of approximately $416,000, including
cash of approximately $225,000, as compared to working capital of approximately
$3,470,000, including cash of approximately $1,138,000 at April 30, 2020. The
approximate $912,000 decrease in our cash at January 31, 2021 from April 30,
2020 is primarily attributable to net cash used in operating activities of
approximately $1,537,000 and net cash used in investing activities of
approximately $529,000, offset by cash provided by financing activities of
approximately $1,108,000 during the nine months ended January 31, 2021. The
Company's cash balance and revenues generated are not currently sufficient and
cannot be projected to cover operating expenses for the next twelve months from
the date of this report. These factors raise doubt as to the ability of the
Company to continue as a going concern. Management's plans include attempting to
improve its business profitability, its ability to generate sufficient cash flow
from its operations to meet its operating needs on a timely basis, obtain
additional working capital funds through debt and equity financings, and
restructure on-going operations to eliminate inefficiencies to raise cash
balance in order to meet its anticipated cash requirements for the next twelve
months from the date of this report. Management intends to make every effort to
improve its current sales force as to further develop and expand the
international markets for its new products as well as continuing with the
current sources of funds to meet working capital needs on as needed basis. There
can be no assurance that these plans and arrangements will be successful.

The COVID-19 Pandemic. On January 30, 2020, the World Health Organization
declared the coronavirus outbreak a "Public Health Emergency of International
Concern" and on March 10, 2020, declared it to be a pandemic. Actions taken
around the world to help mitigate the spread of the coronavirus include
restrictions on travel, quarantines in certain areas, and forced closures for
certain types of public places and businesses. The coronavirus and actions taken
to mitigate it have had and are expected to continue to have an adverse impact
on the economies and financial markets of many countries, including the
geographical areas in China in which the Company operates. Consequently, the
COVID-19 pandemic may adversely affect the Company's business operations,
financial condition and operating results for 2020 and 2021, including but not
limited to material negative impact to the Company's total revenues, slower
collection of accounts receivables and significant impairment to the Company's
equity investments. Due to the high uncertainty of the evolving situation, the
Company has limited visibility on the full impact brought upon by the COVID-19
pandemic and the related financial impact cannot be estimated at this time.

Capital Resources

The following table provides certain selected balance sheets comparisons as of January 31, 2021 and April 30, 2020:

                                   January 31,       April 30,        Increase
                                       2021             2020         (Decrease)           %

Cash and cash equivalents          $    225,471     $  1,137,920     $  (912,449 )         (80.2 )%
Accounts receivable, net              2,193,000        2,713,567        (520,567 )         (19.2 )%
Accounts receivable - related
party                                 3,142,845        3,034,365         108,480             3.6 %
Inventories, net                     14,261,652       12,874,497       1,387,155            10.8 %
Prepaid expenses and other
current assets                          785,830          693,552          92,278            13.3 %
Total current assets                 20,608,798       20,453,901         154,897             0.8 %
Property and equipment, net           9,580,776        8,901,548         679,228             7.6 %
Total assets                       $ 30,189,574     $ 29,355,449     $   834,125             2.8 %

Accounts payable and accrued
expenses                           $  9,647,602     $  8,533,131     $ 1,114,471            13.1 %
Short-term loans                      2,923,674        3,378,380        (454,706 )         (13.5 )%
Due to related parties                7,621,248        5,072,451       2,548,797            50.2 %
Total current liabilities            20,192,524       16,983,962       3,208,562            18.9 %
Total liabilities                  $ 20,192,524     $ 16,983,962     $ 3,208,562            18.9 %



                                     - 27 -
--------------------------------------------------------------------------------

We maintain cash and cash equivalents in China and United States. At January 31, 2021 and April 30, 2020, bank deposits were as follows:

               January 31,      April 30,
Country           2021            2020
United States    $   63,628     $    83,830
China               161,843       1,054,090
Total            $  225,471     $ 1,137,920



The majority of our cash balances at January 31, 2021 are in the form of RMB
stored in bank account of China. Cash held in banks in the PRC is not insured.
The value of cash on deposit in mainland China of $161,843 as of January 31,
2021 has been converted based on the exchange rate as of January 31, 2021. 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 use outside of China.

Accounts receivable, net of allowance for doubtful accounts, including accounts
receivable from related parties, decreased by approximately $412,000 during the
nine months ended January 31, 2021, as a result of the decrease in accounts
receivable from the third parties in amount of approximately $521,000, and
offset by an increase of $108,000 in accounts receivable from related party as
of January 31, 2021. The days for sales outstanding in accounts receivable
increased to 27 days as of January 31, 2021, as compared to 20 days as of April
30, 2020. The days for sales outstanding in accounts receivable for third party
sales increased to 17 days as of January 31, 2021, as compared to 15 days as of
April 30, 2020. We will reevaluate and categorize accounts receivable for sales
and will target to improve our collection effort in accounts receivable for
related party sales and accounts receivable for third party sales in fiscal
2021.

Inventories at January 31, 2021, net of reserve for obsolescence, totaled
approximately $14,262,000, as compared to $12,874,000 as of April 30, 2020. The
increase is primarily due to our increase in procurements of raw materials in
order to meet our anticipated higher sales volume during the fiscal year ended
April 30, 2020. These inventories have not yet been sold due to the market
demands not raising as much as we predicted; however, the current inventory
level will prepare us for our anticipated upcoming increase in price.

Our accounts payable and accrued expenses were approximately $9,648,000 at
January 31, 2021, an increase of approximately $1,114,000 from April 30, 2020.
The increase is primarily due to our increase in procurements of raw material as
a result of the raising sales of such materials during the nine months ended
January 31, 2021.

Loans payable at January 31, 2021 and April 30, 2020 totaled approximately $2,924,000 and $3,378,000, respectively. These loans payable consisted of short-term loans from multiple non-related individuals, which bear annual interest rates of 4% - 10%. Range of maturity dates of the loan payable was from March 6, 2021 to January 16, 2022. During the nine months ended January 31, 2021, loan amount of approximately $912,000 was repaid in cash.


Due to related parties at January 31, 2021 and April 30, 2020 totaled
approximately $7,621,000 and $5,072,000, respectively. As of January 31, 2021,
the balance we owed Qufu Shengren Pharmaceutical Co., Ltd. ("Pharmaceutical
Corporation"), Qufu Shengwang Import and Export Co., Ltd.  and Mr. Weidong Chai,
a management member of Pharmaceutical Corporation, amounted to approximately
$3,542,000, $3,863,000, and $217,000, respectively. On April 30, 2020, the
balance we owed to Pharmaceutical Corporation, Qufu Shengwang Import and Export
and Mr. Weidong Chai amounted to approximately $3,982,000, $907,000, and
$184,000, respectively.

                                     - 28 -
--------------------------------------------------------------------------------

Cash Flows Analysis

NET CASH FLOW PROVIDED BY (USED IN) OPERATING ACTIVITIES:


Net cash used in operating activities was approximately $1,537,000 for the nine
months ended January 31, 2021, primarily due to a net loss of approximately
$3,475,000, adjusted by non-cash working capital, depreciation expense of
$976,000 and provision for obsolete inventory of approximately $665,000, an
increase of approximately $806,000 in inventories, an increase of approximately
$14,000 in prepaid expenses and other current assets, offset by a decrease of
approximately $727,000 in accounts receivable and note receivable from a third
party, a decrease of approximately $173,000 in accounts receivable - related
party  an  increase in accounts payable and accrued expenses of approximately
$80,000, and an increase of approximately $137,000 in taxes payable.

Net cash provided by operating activities from continuing operations was
approximately $1,246,000 (total net cash provided by operating activities of
$906,000 including net cash used in discontinued operations of $341,000) for the
nine months ended January 31, 2020, primarily due to a net loss of approximately
$1,120,000 adjusted by loss from discontinued operations of $253,000 and offset
by non-cash working capital that primarily included depreciation expense of
$902,000 and a loss on disposition of property and equipment of $49,000. The
increase in net cash from operating activities was also primarily due to a
decrease of approximately $1,558,000 in accounts receivable and note receivable
from a third party, a decrease of approximately $99,000 in prepaid expenses and
other current assets, an  increase in accounts payable and accrued expenses of
approximately $1,113,000, an increase of approximately $48,000 in taxes payable,
and offset by an increase of approximately $238,000 in accounts receivable -
related party and an increase of approximately $1,165,000 in inventories.

NET CASH FLOW USED IN INVESTING ACTIVITIES:

Net cash used in investing activities from operations amounted to approximately $529,000 during the nine months ended January 31, 2021 due to capital expenditures for property and equipment.


Net cash used in investing activities from continuing operations amounted to
$214,000 in investment activities, including the proceeds received from disposal
of discontinued subsidiary of approximately $1,145,000 and a proceed received
from disposal of equipment of $30,000, offset by approximately $1,389,000 in
purchases of property and equipment in the nine months ended January 31, 2020.

NET CASH FLOW PROVIDED BY (USED IN) FINANCING ACTIVITIES:


Net cash provided by financing activities from operations amounted to
approximately $1,108,000 in the nine months ended January 31, 2021, primarily
due to proceeds from loan of approximately $21,000 and advances received from
related parties of approximately $10,413,000, offset by repayment of short term
loans in a total amount of approximately $912,000 and repayment of related party
advances of approximately $8,414,000.

Net cash used in financing activities from continuing operations amounted to
approximately $806,000 in the nine months ended January 31, 2020, primarily due
to the repayment of related party advances of approximately $6,215,000 and
offset by proceeds from short-term loan of $429,000 and advances received from
related parties of approximately $4,980,000. Net cash used in financing
activities from discontinued operations amounted to $0 in the nine months ended
January 31, 2020.

Off Balance Sheet Arrangements


Under SEC regulations, we are required to disclose our off-balance sheet
arrangements that have or are reasonably likely to have a current or future
effect on our financial condition, such as changes in financial condition,
revenues or expenses, results of operations, liquidity, capital expenditures or
capital resources that are material to investors. An off-balance sheet
arrangement means a transaction, agreement or contractual arrangement to which
any entity that is not consolidated with us as a party, under which we have:

  -    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.



                                     - 29 -
--------------------------------------------------------------------------------


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 U.S. ("U.S. GAAP").

CRITICAL ACCOUNTING POLICIES


The preparation of financial statements in conformity with U.S. GAAP requires
estimates and assumptions that affect the reported amounts of assets and
liabilities, revenues and expenses, and related disclosures of contingent assets
and liabilities in the consolidated financial statements and accompanying notes.
The SEC has defined a company's critical accounting policies as the ones that
are most important to the portrayal of the company's financial condition and
results of operations, and which require the company to make its most difficult
and subjective judgments, often as a result of the need to make estimates of
matters that are inherently uncertain. Based on this definition, we have
identified the critical accounting policies and judgments addressed below. We
also have other key accounting policies, which involve the use of estimates,
judgments and assumptions that are significant to understanding our results,
which are described in Note 2 to our unaudited condensed consolidated financial
statements. Although we believe that our estimates, assumptions and judgments
are reasonable, they are based upon information presently available. Actual
results may differ significantly from these estimates under different
assumptions, judgments or conditions.

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