SUNWIN STEVIA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 2020
NOTE 1 - ORGANIZATION AND OPERATIONS
DESCRIPTION OF BUSINESS
Sunwin Stevia International, Inc. ("Sunwin Stevia International"), a Nevada corporation, and its subsidiaries are referred to in this report as "we", "us", "our", "Sunwin" or the "Company".
We sell stevioside, a natural sweetener, and other pharmaceutical productions, such as Metformin. Substantially all of our operations are located in the People's Republic of China (the "PRC"). We
have built an integrated company with the sourcing and production capabilities designed to meet the needs of our customers. Our operations are organized into two operating segments related to our product lines:
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Stevioside; and
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Corporate and other.
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For the six months ended October 31, 2020 and fiscal year 2020, our subsidiaries included in continuing operations and discontinued operations consisted of the following:
- Sunwin Stevia International;
- Sunwin USA, LLC ("Sunwin USA"), wholly owned by Sunwin Stevia International;
- Qufu Natural Green Engineering Co., Ltd. ("Qufu Natural Green"), wholly owned by Sunwin Stevia International;
- Qufu Shengren Pharmaceutical Co., Ltd. ("Qufu Shengren"), 100% owned by Qufu Natural Green. On April 30, 2020, the Company increased the total amount of capital of Qufu Shengren through a series
of debt transfer and conversion agreements with investors, ownership of Qufu Natural Green became 61%; (see Note 12)
- Qufu Shengwang Stevia Biology and Science Co., Ltd. ("Qufu Shengwang"), 100% owned by Qufu Natural Green. On July 30, 2019, Qufu Natural Green sold its 100% interest of Qufu Shengwang to a third
party; and
- Qufu Shengren Import and Export Co., Ltd. (“Qufu Shengren Import and Export”), wholly owned subsidiary of Qufu Shengren.
Qufu Shengren
In fiscal 2009, Qufu Natural Green acquired Qufu Shengren for $3,097,242. The purchase price was equal to the value of the assets of Qufu Shengren as determined by an independent asset appraisal in
accordance with asset appraisal principles in the PRC. Prior to being acquired by us, Qufu Shengren was engaged in the production and distribution of bulk drugs and pharmaceuticals. Subsequent to the acquisition, Qufu Shengren produces and
distributes steviosides with a full range of grades from rebaudioside-A 10 to 99.
Since fiscal 2018 we invested in a new production line for Metformin as one of the new product markets we intend to branch into. Metformin is the raw material of Metformin hydrochloride tablets.
Metformin is the first-line medication for the treatment of type 2 diabetes, particularly in people who are not satisfied with simple diet control, especially those with obesity and hyperinsulinemia. On July 10, 2019, our wholly owned subsidiary
Qufu Shengren entered into a management agreement with Ru Yuan, an unaffiliated individual (the "Contractor"), to contract out the operation of the Metformin production line.
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 the Company to better focus on our Stevia operation and increase investment in our research and production.
Qufu Shengren Import and Export
On October 9, 2019, Qufu Shengren invested RMB2,000,000 (approximately $288,000) in a new entity, Qufu Shengren Import and Export Co., Ltd., (“Qufu Shengren Import and Export”), a Chinese limited
liability company, a 100% owned subsidiary of Qufu Shengren. Qufu Shengren Import and Export focuses on the export of our Stevia products, and the import and export of technology and other relevant products; we expect to increase operations in this
subsidiary in the near future.
Sunwin USA
In fiscal year 2009, we entered into a distribution agreement with WILD Flavors to assist our 55% owned subsidiary, Sunwin USA, in the marketing and worldwide distribution of our
stevioside-based sweetener products and issued WILD Flavors a 45% interest in Sunwin USA. In August 2012, the Company entered into an Exchange Agreement with WILD Flavors pursuant to which it purchased its 45% membership interest in Sunwin USA for
an aggregate consideration of $1,625,874, which includes the issuance of 7,666,666 shares of our common stock valued at $1,533,333 and a cash payment of $92,541. The purchase included the product development and supply chain for OnlySweet.
Qufu Shengwang
In fiscal 2009, Qufu Natural Green acquired a 60% interest in Qufu Shengwang from its shareholder, Shandong Group, for $4,026,851. The purchase price represented 60% of the value of the net tangible
assets of Qufu Shengwang as of April 30, 2008. Shandong Group is owned by Laiwang Zhang, our President and Chairman of the Board of Directors. Qufu Shengwang manufactures and sells stevia - based fertilizers and feed additives.
On September 30, 2011, Qufu Shengwang purchased the 40% equity interest in Qufu Shengwang owned by our Korean partner, Korea Stevia Company, Limited, for $626,125 in cash, and as a result of this
repurchase transaction we now own 100% equity interest in all of the net assets of our subsidiary Qufu Shengwang. Therefore, the non-controlling interest of $2,109,028 in our balance sheet as of April 30, 2012 has been eliminated to reflect our 100%
interest in Qufu Shengwang.
On July 1, 2012, Qufu Shengwang entered into a Cooperation Agreement with Hegeng (Beijing) Organic Farm Technology Co, Ltd. ("Hegeng"), a Chinese manufacturer and distributor of bio-fertilizers and
pesticides, to jointly develop bio-bacterial fertilizers based on the residues from our stevia extraction. Under the Cooperation Agreement, Hegeng provides a strain and formula that we apply to the stevia residues to produce bio-bacterial fertilizers
in the current facility of Qufu Shengwang. The bio-bacterial fertilizers will be distributed under Qufu Shengwang's name. No additional investment in the facility would be required. During the third quarter of fiscal year 2014, we decided to suspend
the agreement with Hegeng due to a lack of sales since the reaction to the products was lower than anticipated in the fertilizer market.
On July 30, 2019, Qufu Shengwang was sold to an unaffiliated individual (see Note 4).
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements include the accounts of Sunwin and all our wholly-owned subsidiaries and have been prepared in accordance with accounting
principles generally accepted in the United States of America ("U.S. GAAP") and pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC") for interim financial reporting. The accompanying unaudited condensed
consolidated financial statements for the interim periods presented are unaudited and reflect all adjustments (consisting only of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of the
financial position and operating results for the periods presented. Certain financial statement amounts relating to prior periods have been reclassified to conform to the current period presentation. All intercompany accounts and transactions have
been eliminated in consolidation.
These unaudited condensed consolidated interim financial statements should be read in conjunction with the financial statements and footnotes for the year ended April 30, 2020 included in our Form
10-K as filed with the SEC. The results of operations and cash flows for the six months ended October 31, 2020 are not necessarily indicative of the results of operations or cash flows which may be reported for future periods or the full fiscal year.
The condensed consolidated balance sheet as of April 30, 2020 contained herein has been derived from the audited consolidated financial statements as of April 30, 2020, but do not include all
disclosures required by the U.S. GAAP.
Our unaudited condensed consolidated financial statements include the accounts of Sunwin and all our wholly-owned subsidiaries included in continuing operations and discontinued operations. All
intercompany accounts and transactions have been eliminated in consolidation. Qufu Shengwang is the subsidiary with discontinued operations and our subsidiaries for continuing operations include the following:
- Qufu Natural Green;
- Qufu Shengren;
- Sunwin USA; and
- Qufu Shengren Import and Export
USE OF ESTIMATES
The preparation of unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets
and liabilities and the disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates
include the allowance for doubtful accounts, the allowance for obsolete inventory, the useful life of property and equipment and intangible assets, assumptions used in assessing impairment of long-term assets and valuation of deferred tax assets, and
the value of stock-based compensation. Actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS
We consider all highly liquid investments with maturities of three months or less at the time of purchase to be cash and equivalents. As of October 31, 2020, we held $340,817 of our cash and cash
equivalents with commercial banking institutions in the PRC, and $55,762 with banks in the United States. As of April 30, 2020, we held $1,054,090 of our cash and cash equivalents with commercial banking institution in PRC, and $83,830 in the United
States. PRC banks protect consumers against loss if their bank or thrift institution fails, and each of our PRC bank account is insured up to RMB500,000 (approximately $75,000), As a result, cash held in PRC financial institutions of $166,327 and
$946,274 is not insured as of October 31, 2020 and April 30, 2020, respectively. We have not experienced any losses in such bank accounts through October 31, 2020.
ACCOUNTS RECEIVABLE
Accounts receivable and other receivable are reported at net realizable value. We have established an allowance for doubtful accounts based upon factors pertaining to the credit risk of specific
customers, historical trends, and other information. Delinquent accounts are written off when it is determined that the amounts are uncollectible after exhaustive efforts on collection. As of October 31, 2020 and April 30, 2020, the allowance for
doubtful accounts was $78,774 and $74,665, respectively.
INVENTORIES
Inventories, consisting of raw materials, work in process, and finished goods related to our products, are stated at the lower of cost or estimated net realizable value that can be
estimated utilizing the weighted moving average method. A reserve is established when management determines that certain slow-moving inventories may be sold at below book value. These reserves are recorded based on estimates. As of October 31, 2020,
the Company did not record a reserve for slow-moving inventories. If inventory costs exceed expected market value due to obsolescence or quantities in excess of expected demand, the Company will record a write down of inventories for the difference
between the lower of cost or estimated net realizable value. As of October 31, 2020 and April 30, 2020, the Company wrote down inventories of $367,337 and $113,155, respectively.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation and amortization are provided using the straight line method over the estimated economic lives of the assets, which range from two to thirty
years. Expenditures for major renewals and betterments that extend the useful lives of property and equipment are capitalized. Expenditures for maintenance and repairs are charged to expense as incurred. In accordance with paragraph 360-10-35-17 of
the Financial Accounting Standards Board (FASB) Accounting Standards Codification ("ASC"), we examine the possibility of decreases in the value of fixed assets when events or changes in circumstances reflect the fact that their recorded value may not
be recoverable.
Included in property and equipment is construction-in-progress which consisted of factory improvements and machinery pending installation and included the costs of construction, machinery and
equipment, and or any interest charges arising from borrowings used to finance these assets during the period of construction or installation of the assets if applicable. No provision for depreciation is made on construction-in-progress until such
time as the relevant assets are completed and ready for their intended use.
LONG-LIVED ASSETS
In accordance with ASC 360, we review and evaluate our long-lived assets, including property and equipment, intangible assets, and land use rights, for
impairment or when events or changes in circumstances indicate that the related carrying amounts may not be recoverable. An impairment is considered to exist if the total estimated future cash flows on an undiscounted basis are less than the carrying
amount of the assets, including goodwill, if any. An impairment loss is measured and recorded based on discounted estimated future cash flows. In estimating future cash flows, assets are grouped at the lowest level for which there is identifiable
cash flows that are largely independent of future cash flows from other asset groups. Our estimates of future cash flows are based on numerous assumptions and it is possible that actual future cash flows will be significantly different than the
estimates. Based on our evaluation, we have determined certain long-lived assets that are no longer useful for our operations, and we recorded a loss on disposition of property and equipment of $0 and $19,842 at October 31, 2020 and April 30, 2020,
respectively.
FAIR VALUE OF FINANCIAL INSTRUMENTS
We adopted ASC Section 820-10-35-37 to measure the fair value of our financial instruments. ASC Section 820-10-35-37 establishes a common definition for fair value to be applied to existing generally
accepted accounting principles that require the use of fair value measurements, establishes a framework for measuring fair value, and expands disclosure about such fair value measurements. The adoption of ASC Section 820-10-35-37 did not have an
impact on our financial position or operating results, but did expand certain disclosures.
ASC Section 820-10-35-37 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the
measurement date. Additionally, ASC Section 820-10-35-37 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below:
Level 1:
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Observable inputs such as quoted market prices in active markets for identical assets or liabilities
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Level 2:
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Observable market-based inputs or unobservable inputs that are corroborated by market data
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Level 3:
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Unobservable inputs for which there is little or no market data, which require the use of the reporting entity's own assumptions.
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The carrying amounts of our financial assets and liabilities, such as cash, accounts receivable, notes receivable, prepayments and other current assets, accounts payable, taxes payable and accrued
expenses, approximate their fair values because of the short maturity of these instruments.
TAXES PAYABLE
We are required to charge for and to collect value added taxes (VAT) on our sales on behalf of the PRC tax authority. We record VAT that we billed our customers as VAT payable. In addition, we are
required to pay value added taxes on our primary purchases. We record VAT that is charged by our vendors as VAT receivable. We are required to file VAT return on a monthly basis with the PRC tax authority, in which we are entitled to claim the VAT
that we are charged by vendors as VAT credit and these credits can be applied to our VAT payable that we billed our customers. Accordingly, these VAT payable and receivable are presented as net amounts for financial statement purposes. Taxes payable
as of October 31, 2020 and April 30, 2020 amounted to $189,390 and $266,708, respectively, consisted primarily of VAT taxes.
REVENUE RECOGNITION
Pursuant to the guidance of ASC 606, we record revenue when persuasive evidence of an arrangement exists, product delivery has occurred, the sales price to the customer is fixed or determinable, and
collectability is reasonably assured. The adoption of this guidance did not have a material impact on our unaudited condensed consolidated financial statements.
In accordance with ASC 606, we recognize revenues from the sale of stevia and other productions upon shipment and transfer of title based on the trade terms. All product sales with customer specific
acceptance provisions are recognized upon customer acceptance and the delivery of the products. We report revenues net of applicable sales taxes and related surcharges. The Company
determines revenue recognition through the following steps:
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Identify the contract with a customer;
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Identify the performance obligations in the contract;
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Determine the transaction price;
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Allocate the transaction price to the performance obligations in the contract; and
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Recognize revenue when (or as) the entity satisfies a performance obligation.
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The Company is also a lessor, which is an entity that is lease underlying asset to the third party, The Company’s lease revenue is recognized under ASC Topic 842, Leases, (“ASC 842”), which was
adopted on May 1, 2019. In general, the Company commences rental revenue recognition when the tenant takes possession of the leased space and the leased space is substantially ready for its intended use. The Company’s lease has been accounted for as
operating lease. Rental revenue is recognized on a straight-line basis over the terms of the lease of five years. Actual amounts billed in accordance with the lease during any given period may have been higher or lower than the amount of rental
revenue recognized for the period. The difference by which straight-line rental revenue exceeded rents billed in accordance with lease agreements is recorded as “accounts receivable”. The difference by which rents billed in accordance with lease
agreements exceeded straight-line rental revenue is recorded as “advances from customer”. The Company does not offset lease income and lease expense.
GRANT INCOME
Grants received from PRC government agencies are recognized as deferred grant income and recognized in the unaudited condensed consolidated statements of operations and comprehensive loss as and when
they are earned for the specific research and development projects for which these grants are designated for.
INCOME TAXES
The Company has adopted Accounting Standards Codification subtopic 740-10, Income Taxes ("ASC 740-10") which requires the recognition of deferred tax
liabilities and assets for the expected future tax consequences of events that have been included in the financial statement or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between
financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are recorded to reduce the deferred tax assets to an amount that it
is more likely than not be realized.
We file federal and state income tax returns in the United States for our corporate operations pursuant to the U.S. Internal Revenue Code of 1986, as amended, and file separate foreign tax returns
for our Chinese subsidiaries pursuant to the China's Unified Corporate Income Tax Law.
We apply the provisions of ASC 740-10-50, "Accounting for Uncertainty in Income Taxes", which provides clarification related to the process associated with accounting for uncertain tax positions
recognized in our consolidated financial statements. Audit periods remain open for review until the statute of limitations has passed. The completion of review or the expiration of the statute of limitations for a given audit period could result in
an adjustment to the Company's liability for income taxes. Any such adjustment could be material to the Company's results of operations for any given quarterly or annual period based, in part, upon the results of operations for the given period. As
of October 31, 2020, the Company had no uncertain tax positions, and will continue to evaluate for uncertain positions in the future.
BASIC AND DILUTED EARNINGS PER SHARE
Pursuant to ASC Section 260-10-45, basic loss per common share is computed by dividing loss available to common shareholders by the weighted average number of shares of common stock outstanding for
the periods presented. Diluted loss per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that would
then share in the income of ours, subject to anti-dilution limitations. The following table presents a reconciliation of basic and diluted net income per common share:
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Three Months Ended
October 31,
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Six Months Ended
October 31,
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Numerator:
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2020
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2019
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2020
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2019
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Net income (loss) attributable to Sunwin Stevia International, Inc.
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$
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(403,380
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)
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$
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191,891
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$
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(1,065,979
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)
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$
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(191,344
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)
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Net income (loss) from continuing operations
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$
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(403,380
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)
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$
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191,891
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$
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(1,065,979
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)
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$
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62,087
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Net loss from discontinued operation
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-
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-
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-
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(253,431
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)
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Denominator:
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Denominator for basic earnings per share - weighted average number of common shares outstanding
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199,632,803
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199,632,803
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199,632,803
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199,632,803
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Stock awards, options, and warrants
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-
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-
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-
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-
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Denominator for diluted earnings per share - adjusted weighted average outstanding average number of common shares outstanding
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199,632,803
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182,066,546
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199,632,803
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199,632,803
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Basic and diluted loss per common share:
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Net income (loss) from continuing operations - basic and diluted
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$
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(0.00
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)
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$
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0.00
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$
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(0.01
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)
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$
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0.00
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Net loss from discontinued operations - basic and diluted
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-
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-
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-
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(0.00
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)
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Net income (loss) per common share - basic and diluted
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$
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(0.00
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)
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$
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0.00
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$
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(0.01
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)
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$
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(0.00
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)
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FOREIGN CURRENCY TRANSLATION
Transactions and balances originally denominated in U.S. dollars are presented at their original amounts. Transactions and balances in other currencies are converted into U.S. dollars in accordance
with ASC Section 830-20-35 and are included in determining net income or loss.
The reporting currency of the Company is the U.S. dollar. The functional currency of the parent company is the U.S. dollar and the functional currency of the Company's operating subsidiaries is the
Chinese Renminbi ("RMB"). In accordance with ASC 830-20-35, the consolidated financial statements were translated into United States dollars using balance sheet date rates of exchange for assets and liabilities, and average rates of exchange for the
period for the income statements and cash flows. Equity accounts were stated at their historical rate. Net gains and losses resulting from foreign exchange transactions are included in the consolidated statements of operations. Translation
adjustments resulting from the process of translating the local currency financial statements into U.S. dollars are included in other comprehensive income or loss.
RMB is not a fully convertible currency. All foreign exchange transactions involving RMB must take place either through the People's Bank of China (the "PBOC") or other institutions authorized to buy
and sell foreign exchange. The exchange rate adopted for the foreign exchange transactions are the rates of exchange quoted by the PBOC, which are determined largely by supply and demand. Translation of amounts from RMB into United States dollars
("$") was made at the following exchange rates for the respective periods:
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Six months ended October 31, 2020
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Six months ended October 31, 2019
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COMPREHENSIVE LOSS
Comprehensive loss is comprised of net loss and all changes to the statements of stockholders' equity, except those due
to investments by stockholders, changes in paid-in capital and distributions to stockholders. For the Company, comprehensive loss for the three and six months ended October 31, 2020 and 2019 included net loss and unrealized gains from foreign
currency translation adjustments.
RESEARCH AND DEVELOPMENT
Research and development costs are expensed as incurred and are included in general and administrative expenses in the accompanying statements of operations. Research and development costs are
incurred on a project specific basis. Research and development costs were $71,129 and $339,401 for the three months ended October 31, 2020 and 2019, and $432,567 and $645,952 for the six months ended October 31, 2020 and 2019, respectively.
SHIPPING COSTS
Shipping costs are included in selling expenses and totaled $19,462 and $25,200 for the three months ended October 31, 2020 and 2019, and $35,978 and $48,095 for the six months ended October 31, 2020
and 2019, respectively.
ADVERTISING
Advertising is expensed as incurred and is included in selling expenses and totaled $40,443 and $208,896 for the three months ended October 31, 2020 and 2019, and $54,876 and $248,250 for the six months ended October 31, 2020 and
2019, respectively.
RECLASSIFICATIONS
Certain prior year amounts have been reclassified to conform to the current period presentation for amounts related to the discontinue operations (see Note 4). These reclassifications had no impact
on net earnings and financial position.
RECENT ACCOUNTING PRONOUNCEMENTS
In December 2019, the FASB issued ASU 2019-12 - Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This ASU provides an exception to the general methodology for calculating income
taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year. This update also (1) requires an entity to recognize a franchise tax (or similar tax) that is partially based on income as an income-based tax and account
for any incremental amount incurred as a non-income-based tax, (2) requires an entity to evaluate when a step-up in the tax basis of goodwill should be considered part of the business combination in which goodwill was originally recognized for
accounting purposes and when it should be considered a separate transaction, and (3) requires that an entity reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes
the enactment date. The standard is effective for the Company for fiscal years beginning after December 15, 2020, with early adoption permitted. The Company is currently in the process of evaluating the impact of the adoption on its consolidated
financial statements.
A variety of proposed or otherwise potential accounting standards are currently under study by standard setting organizations and various regulatory agencies. Due to the tentative and preliminary
nature of those proposed standards, we have not determined whether implementation of such proposed standards would be material to our consolidated financial statements.
GOING CONCERN
Our unaudited condensed consolidated financial statements have been prepared assuming we will continue as a going concern. The Company has incurred recurring losses with a net loss of approximately
$1,714,000 for the six months ended October 31, 2020 and has a significant accumulated deficit of $41.2 million as of October 31, 2020. 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 identify and develop sources of funds. The outcome of these matters cannot be
predicted at this time. There can be no assurance that any additional financings will be available to the Company on satisfactory terms and conditions, if at all.
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.
NOTE 3 - NONCONTROLLING INTEREST
Noncontrolling interest on the consolidated balance sheets resulted from the consolidation of Shengren, a 61.3% owned subsidiary starting from April 30, 2020. An individual investor and Shandong
Yulong Mining Group Co., Ltd. (“Yulong”) hold 38.4% and 0.3% of the equity interest in Shengren effective at the end of date, April 30, 2020, respectively, pursuant to a series of debt transfer and conversion agreements entered into on April 30, 2020
between seven individual creditors and three suppliers, an individual investor with Yulong and Qufu Shengren. Noncontrolling interest amounted to a deficit of $396,353 as of October 31, 2020.
NOTE 4 - DISCONTINUED OPERATIONS
On July 30, 2019, Qufu Natural Green entered into an Asset Transfer Agreement with Na Li, an unaffiliated individual (the "Buyer") for the sale of 100% equity ownership of Qufu Shengwang. Pursuant
to the Asset Transfer Agreement, the Buyer shall pay to Qufu Natural Green a total cash consideration of RMB8,000,000 (approximately $1,163,000) based on the estimated net book value as of July 30, 2019. The Buyer assumed all assets and liabilities
of Qufu Shengwang including the amount Qufu Shengwang owes to Qufu Natural Green of approximately RMB26,000,000 (approximately $3,779,000), and Qufu Natural Green shall assist in completing all documents required for the equity transfer after
confirming the receipt of the first payment. The Company received the first installment of RMB5,000,000 on July 30, 2019, and received the second installment of RMB3,000,000 on August 20, 2019. The Buyer settled all liabilities of Qufu Shengwang
due to Natural Green by assuming the liabilities on behalf of Qufu Shengren in the amount of approximately RMB 26,000,000 (approximately $3,779,000) due to another third party.
The Company did not have assets and liabilities on discontinued operations in the Company's condensed consolidated financial statements as of October 31, 2020 and April 30, 2020. The following table
presents the results of discontinued operations in the three and six months ended October 31, 2020 and 2019:
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Three Months Ended October 31,
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Six Months Ended October 31,
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2020
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2019
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2020
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2019
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Revenues
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$
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-
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$
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-
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$
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-
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$
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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
|
|
For the six months ended October 31, 2020 and 2019, loss from discontinued operations amounted to $0 and $20,016. The Company realized a loss of $233,415 from the disposal of 100% equity of Qufu
Shengwang, which was reflected as loss from sale of discontinued operations on the condensed consolidated statement of operations for the three months ended October 31, 2019.
NOTE 5 - INVENTORIES
As of October 31, 2020 and April 30, 2020, inventories consisted of the following:
|
|
October 31, 2020
|
|
|
April 30, 2020
|
|
|
|
(unaudited)
|
|
|
|
|
Raw materials
|
|
$
|
3,722,426
|
|
|
$
|
4,676,361
|
|
Work in process
|
|
|
5,303,804
|
|
|
|
3,235,156
|
|
Finished goods
|
|
|
6,302,651
|
|
|
|
4,962,980
|
|
|
|
|
15,328,881
|
|
|
|
12,874,497
|
|
Less: reserve for obsolete inventory
|
|
|
-
|
|
|
|
-
|
|
Total inventories, net
|
|
$
|
15,328,881
|
|
|
$
|
12,874,497
|
|
NOTE 6 - PREPAID EXPENSES AND OTHER CURRENT ASSETS
Prepaid expenses and other current assets as of October 31, 2020 and April 30, 2020 totaled $960,832 and $693,552, respectively. As of October 31, 2020, prepaid expenses and other current assets
includes $758,087 prepayments to suppliers for merchandise that had not been shipped to us and services that had not been provided to us, and $202,745 for business related employees' advances. As of April 30, 2020, prepaid expenses and other current
assets includes $510,723 prepayments to suppliers for merchandise that had not been shipped to us and services that had not been provided to us and $182,829 for business related employees' advances.
NOTE 7 - PROPERTY AND EQUIPMENT
As of October 31, 2020 and April 30, 2020, property and equipment consisted of the following:
|
|
October 31, 2020
|
|
|
April 30, 2020
|
|
Estimated Life
|
|
(unaudited)
|
|
|
|
|
Office equipment
|
3-15 Years
|
|
$
|
478,408
|
|
|
$
|
394,019
|
|
Auto and trucks
|
2-10 Years
|
|
|
618,634
|
|
|
|
586,364
|
|
Manufacturing equipment
|
2-15 Years
|
|
|
7,203,540
|
|
|
|
6,559,726
|
|
Buildings
|
5-30 Years
|
|
|
9,788,820
|
|
|
|
9,248,227
|
|
Construction in process
|
|
|
|
16,411
|
|
|
|
7,834
|
|
|
|
|
|
18,105,813
|
|
|
|
16,796,170
|
|
Less: accumulated depreciation
|
|
|
|
(8,980,217
|
)
|
|
|
(7,894,622
|
)
|
Total property and equipment, net
|
|
|
$
|
9,125,596
|
|
|
$
|
8,901,548
|
|
For the three months ended October 31, 2020 and 2019, depreciation expense totaled $322,121 and $297,357, of which $298,290 and $264,745 were included in cost of revenues, respectively, and of which
$23,831 and $32,612 were included in general and administrative expenses, respectively. For the six months ended October 31, 2020 and 2019, depreciation expense totaled $626,560 and $568,345, of which $581,013 and $497,332 was included in cost of
revenues, respectively, and of which $45,547 and $71,013 were included in general and administrative expenses, respectively. Depreciation is not taken during the period of construction or equipment installation. Upon completion of the installation of
manufacturing equipment or any construction in progress, construction in progress balances will be classified to their respective property and equipment category.
NOTE 8 - RELATED PARTY TRANSACTIONS
Accounts receivable - related party and revenue - related party
As of October 31, 2020 and April 30, 2020, $1,458,545 and $3,034,365 in accounts receivable - related party, respectively, were related to sales of products to Qufu Shengwang Import and Export Co.,
Ltd. ("Qufu Shengwang Import and Export"), a Chinese entity owned by our Chairman, Mr. Laiwang Zhang. For the three months ended October 31, 2020 and 2019, we recorded revenue - related party and cost of revenue – related party of $502,695 and
$2,314,666, and $546,254 and $2,068,261, respectively, from Qufu Shengwang Import and Export. For the six months ended October 31, 2020 and 2019, we recorded revenue - related party and cost of revenue – related party of $2,254,518 and $4,098,559,
$2,155,762 and $3,716,500, respectively, from Qufu Shengwang Import and Export.
Due to related parties
From time to time, we receive advances from related parties and advance funds to related parties for working capital purposes. In the six months ended October 31, 2020 and 2019, we received advances
from related parties for working capital that totaled $7,538,516 and $3,813,512, respectively, and we repaid to related parties a total of $7,755,243 and $3,795,447, respectively.
In the three months ended October 31, 2020 and 2019, interest expense related to due to related parties amounted to $4,867 and $28,359, and six months ended October 31, 2020 and 2019, interest
expense related to due to related parties amounted to $21,674 and $64,100, respectively, which were included in interest expense in the accompanying condensed consolidated statements of operations and comprehensive loss, and in connection with the
advances of RMB5,000,000 (approximately $717,000) and RMB8,000,000 (approximately $1,147,000) from Shangdong Shengwang Pharmaceutical Co., Ltd. ("Pharmaceutical Corporation"), a Chinese entity owned by our Chairman, Mr. Laiwang Zhang. These advances
bear interest at the rate of 7.0% and 6.3% per annum, respectively. On December 12, 2019 and August 9, 2020, we repaid in full amount of the above advance of RMB8,000,000 and RMB5,000,000 with accrued interests, respectively.
On September 23, 2019, the Company borrowed a one-year loan of RMB1,221,000 (approximately $175,000) from Weidong Cai, a management member of Qufu Shengren, bearing an annual interest rate of 10%. On
September 23, 2020, the parties extended the loan for another year, under the same terms and conditions, reclassified unpaid interest payable to the principal of this loan, resulting in an increase of principal from RMB1,221,000 (approximately
$175,000) to RMB1,343,100 (approximately $201,000).
As of October 31, 2020, the balance we owed Pharmaceutical Corporation, Qufu Shengwang Import and Export and Mr. Weidong Chai amounted to $3,418,493, $1,471,087, and $204,681, respectively. On April
30, 2020, the balance we owed to Pharmaceutical Corporation, Qufu Shengwang Import and Export and Mr. Weidong Chai amounted to $3,981,915, $906,879, and $183,657, respectively.
As of October 31, 2020 and April 30, 2020, balance due to related party activities consisted of the following:
|
|
Shandong Shengwang Pharmaceutical
Co., Ltd.
|
|
|
Qufu
Shengwang
Import and Export Co., Ltd.
|
|
|
Mr. Wedong Chai
|
|
|
Total
|
|
Balance due to related parties, April 30, 2020
|
|
$
|
3,981,915
|
|
|
$
|
906,879
|
|
|
$
|
183,657
|
|
|
$
|
5,072,451
|
|
Working capital advances from related parties
|
|
|
289,875
|
|
|
|
7,237,415
|
|
|
|
11,226
|
|
|
|
7,538,516
|
|
Repayments
|
|
|
(1,042,920
|
)
|
|
|
(6,711,603
|
)
|
|
|
(720
|
)
|
|
|
(7,755,243
|
)
|
Effect of foreign currency exchange
|
|
|
189,623
|
|
|
|
38,396
|
|
|
|
10,518
|
|
|
|
238,537
|
|
Balance due to related parties, October 31, 2020
|
|
$
|
3,418,493
|
|
|
$
|
1,471,087
|
|
|
$
|
204,681
|
|
|
$
|
5,094,261
|
|
NOTE 9 - OPERATING LEASE
On July 10, 2019, we entered into the Metformin Production Line Operation Management Agreement (the “Agreement”) with Ru Yuan, an unaffiliated individual, to contract out the Metformin production
line which was built by the Company. Under the terms of this agreement, Ru Yuan's (“lessee”) lease includes the fixed assets of Metformin production line including buildings, manufacturing equipment and construction in process. The lessee will pay to
Qufu Shengren an annual contract fee of RMB3,000,000 (approximately $436,000) in July every year. On August 1, 2019, the Company (“lessor”) signed an addendum for Agreement with lessee to clarify the term of lease for five years, with conditional
renewal options and the Company has the right to monitor operating and provide maintenance service for the underlying assets of the Metformin production line. The Company also has the right to terminate the Agreement if lessee fails to make payment
timely. Under our analysis with the new lease standard, this lease agreement is classified as a cancellable operating lease. The Company received a total amount of RMB3,000,000 lease payment and the lease deposit of RMB1,000,000 as guarantee in 2019.
The Company received the second year's lease payment of RMB3,000,000 in August 2020. The Company recorded revenues of $100,809 and $107,114 from this operating lease in the three months ended October
31, 2020 and 2019, and the Company recorded revenues of $198,201 and $112,251 from this operating lease in the six months ended October 31, 2020 and 2019.
NOTE 10 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses included the following as of October 31, 2020 and April 30, 2020:
Account
|
|
October 31,
2020
|
|
|
April 30,
2020
|
|
|
|
(unaudited)
|
|
|
|
|
Accounts payable
|
|
$
|
7,206,899
|
|
|
$
|
6,443,200
|
|
Advanced from customers
|
|
|
388,835
|
|
|
|
172,512
|
|
Accrued salary payable
|
|
|
105,755
|
|
|
|
142,199
|
|
Tax payable
|
|
|
189,390
|
|
|
|
266,708
|
|
Other payable*
|
|
|
2,149,696
|
|
|
|
1,508,512
|
|
Total accounts payable and accrued expenses
|
|
$
|
10,040,575
|
|
|
$
|
8,533,131
|
|
* As of on October 31, 2020, other payables consists of general liability, worker's compensation, and medical insurance payable of $413,789, consulting fee payable of $220,065, union and education
fees payable of $132,724, interest payables for short-term loans of $106,235, safety production fund payable of $199,540, advances from the employees of $118,187, security deposit for sub-contractor of $149,671 and other miscellaneous payables of
$809,484. As of April 30, 2020, other payables consists of general liability, worker's compensation, and medical insurance payable of $409,811, consulting and service fee payable of $256,304, union and education fees payable of $125,800, interest
payables for short-term loans of $129,976, safety production fund payable of $140,274, advances from the employees of $98,775, deposit for operating lease of $141,864 and other miscellaneous payables of $205,708.
NOTE 11 -LOAN PAYABLE
Short-term loan payable
Short-term loans are obtained from various individual lenders that are due within one year for working capital purpose. These loans are unsecured and can be renewed with 10 days advance notice prior
to maturity date. As of October 31, 2020 and April 30, 2020, short-term loans consisted of the following:
|
|
October 31,
2020
|
|
|
April 30,
2020
|
|
|
|
(unaudited)
|
|
|
|
|
Loan from Min Wu, an employee of Qufu Shengren, due on October 5, 2021, with an annual interest rate of 10%, renewed at October 6, 2020.
|
|
$
|
32,928
|
|
|
$
|
31,210
|
|
Loans from Jianjun Yan, non-related individual, due on October 6, 2021, with an annual interest rate of 10%, renewed at on October 7, 2020.
|
|
|
1,458,289
|
|
|
|
1,256,562
|
|
Loan from Jianjun Yan, non-related individual, due on March 31, 2021, with annual interest rate of 4%, renewed at April 1, 2020, and partially repaid approximately $504,000 in July 2020.
|
|
|
745,319
|
|
|
|
1,202,965
|
|
Loan from Junzhen Zhang, non-related individual, due on October 5, 2021, with an annual interest rate of 10%, renewed at October 6, 2020, and accrued interest converted into debt principal.
|
|
|
26,342
|
|
|
|
22,698
|
|
Loan from Jian Chen, non-related individual, due on January 27, 2021 and April 11, 2021, bearing an annual interest rate of 10%, with the principal amount of RMB770,000 ($109,236) and RMB440,000 ($62,420), renewed on January 27, 2020 and
April 11, 2020, respectively. The Company repaid off these loans and accrued interest to him in July 2020.
|
|
|
-
|
|
|
|
171,656
|
|
Loan from Qing Kong, non-related individual, due on March 6, 2021, with an annual interest rate of 10%, renewed on March 7, 2020.
|
|
|
86,809
|
|
|
|
82,281
|
|
Loan from Qing Kong, non-related individual, due on January 8, 2021, with an annual interest rate of 10%, renewed on January 9, 2020.
|
|
|
36,220
|
|
|
|
34,331
|
|
Loan from Guihai Chen, non-related individual, due on March 9, 2021, with an annual interest rate of 10%, renewed on March 10, 2020.
|
|
|
21,702
|
|
|
|
20,570
|
|
Loan from Guihai Chen, non-related individual, due on September 20, 2021, with an annual interest rate of 10%, renewed at September 21, 2020, and accrued interest converted into debt principal.
|
|
|
36,220
|
|
|
|
31,210
|
|
Loan Weifeng Kong, non-related individual, due on November 28, 2020, with an annual interest rate of 10%, renewed on November 29, 2019. (see more on Note 15)
|
|
|
29,934
|
|
|
|
28,373
|
|
Loan from Huagui Yong, non-related individual, due on April 8, 2021, with an annual interest rate of 6.3% at April 9, 2020.
|
|
|
74,836
|
|
|
|
70,932
|
|
Loan from Guohui Zhang, non-related individual, due on January 16, 2021, with an annual interest rate of 4% at January 17, 2020.
|
|
|
449,014
|
|
|
|
425,592
|
|
Total short-term loan payable
|
|
$
|
2,997,613
|
|
|
$
|
3,378,380
|
|
For the three and six months ended October 31, 2020 and 2019, interest expense related to short-term loans amounted to $47,413 and $92,559, and $109,944 and $237,346, respectively, which were
included in interest expense in the accompanying unaudited condensed consolidated statements of operations and comprehensive loss.
NOTE 12 - STOCKHOLDERS' EQUITY.
As of October 31, 2020, we are authorized to issue 200,000,000 shares of common stock. We had 199,632,803 shares issued and outstanding as of October 31, 2020 and April 30, 2020.
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 the Company to better focus on our Stevia operation and increase investment in 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.
NOTE 13 - SEGMENT INFORMATION
The following information is presented in accordance with ASC Topic 280, "Segment Reporting", for the three and six months ended October 31, 2020 and 2019; we accounted for two reportable business
segments - (1) natural sweetener (stevioside), and (2) corporate and other pharmaceutical. Our reportable segments are strategic business units that offer different products and are managed separately based on the fundamental differences in their
operations. Condensed financial information with respect to these reportable business segments for the three and six months ended October 31, 2020 and 2019 is as follows:
|
|
Three Months Ended October 31,
|
|
|
Six Months Ended October 31,
|
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Stevioside - third parties
|
|
$
|
3,830,340
|
|
|
|
4,768,613
|
|
|
|
9,020,803
|
|
|
|
9,296,279
|
|
Stevioside - related parties
|
|
|
502,695
|
|
|
|
2,314,666
|
|
|
|
2,254,518
|
|
|
|
4,098,559
|
|
Total Stevioside
|
|
|
4,333,035
|
|
|
|
7,083,279
|
|
|
|
11,275,321
|
|
|
|
13,394,838
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate and other – third party
|
|
|
100,809
|
|
|
|
78,302
|
|
|
|
198,201
|
|
|
|
656,818
|
|
Corporate and other – related party
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Total Corporate and other
|
|
|
100,809
|
|
|
|
78,302
|
|
|
|
198,201
|
|
|
|
656,818
|
|
Total segment and consolidated revenues
|
|
$
|
4,433,844
|
|
|
|
7,161,581
|
|
|
|
11,473,522
|
|
|
|
14,051,656
|
|
|
|
Three Months Ended October 31,
|
|
|
Six Months Ended October 31,
|
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
Interest (expense) income:
|
|
|
|
|
|
|
|
|
|
|
|
|
Stevioside
|
|
$
|
(52,018
|
)
|
|
$
|
(120,734
|
)
|
|
$
|
(131,125
|
)
|
|
$
|
(301,178
|
)
|
Corporate and other
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Total segment and consolidated interest expense
|
|
$
|
(52,018
|
)
|
|
$
|
(120,734
|
)
|
|
$
|
(131,125
|
)
|
|
$
|
(301,178
|
)
|
Depreciation and amortization:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stevioside
|
|
$
|
266,078
|
|
|
$
|
253,500
|
|
|
$
|
519,854
|
|
|
$
|
487,523
|
|
Corporate and other
|
|
|
56,042
|
|
|
|
43,857
|
|
|
|
106,706
|
|
|
|
80,822
|
|
Total segment and consolidated depreciation and amortization
|
|
$
|
322,120
|
|
|
$
|
297,357
|
|
|
$
|
626,560
|
|
|
$
|
568,345
|
|
Income (loss) from continuing operations before income taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stevioside
|
|
$
|
(705,674
|
)
|
|
$
|
203,668
|
|
|
$
|
(1,769,927
|
)
|
|
$
|
38,596
|
|
Corporate and other
|
|
|
47,223
|
|
|
|
(11,777
|
)
|
|
|
55,649
|
|
|
|
23,491
|
|
Total consolidated income (loss) from continuing operations before income taxes
|
|
$
|
(658,451
|
)
|
|
$
|
191,891
|
|
|
$
|
(1,714,278
|
)
|
|
$
|
62,087
|
|
|
|
|
|
|
|
October 31,
2020
|
|
April 30,
2020
|
|
Segment property and equipment:
|
|
|
|
|
Stevioside
|
|
$
|
7,211,452
|
|
|
$
|
6,976,153
|
|
Corporate and other
|
|
|
1,914,144
|
|
|
|
1,925,395
|
|
Total property and equipment
|
|
$
|
9,125,596
|
|
|
$
|
8,901,548
|
|
NOTE 14 - CONCENTRATIONS AND CREDIT RISK
(i) Customer Concentrations
For the three and six months ended October 31, 2020 and 2019, customers accounting for 10% or more of the Company's revenue were as follows:
|
|
For the three months ended October 31,
|
|
|
For the six months ended October 31,
|
|
Customer
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
A (1)
|
|
|
11.3
|
%
|
|
|
32.3
|
%
|
|
|
19.6
|
%
|
|
|
29.2
|
%
|
B
|
|
|
*
|
|
|
|
*
|
|
|
|
*
|
|
|
|
10.9
|
%
|
C
|
|
|
*
|
|
|
|
*
|
|
|
|
25.7
|
%
|
|
|
*
|
|
D
|
|
|
10.9
|
%
|
|
|
-
|
|
|
|
10.4
|
%
|
|
|
-
|
|
(1) Qufu Shengwang Import and Export Co., Ltd is a related party.
* Less than 10%.
(ii) Vendor Concentrations
For the three and six months ended October 31, 2020 and 2019, suppliers accounting for 10% or more of the Company's purchase were as follows:
|
|
For the three months ended October 31,
|
|
|
For the six months ended October 31,
|
|
Supplier
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
A
|
|
|
-
|
|
|
|
29.1
|
%
|
|
|
*
|
|
|
|
23.9
|
%
|
B
|
|
|
-
|
|
|
|
16.3
|
%
|
|
|
*
|
|
|
|
17.4
|
%
|
C
|
|
|
-
|
|
|
|
25.9
|
%
|
|
|
-
|
|
|
|
13.7
|
%
|
D
|
|
|
33.5
|
%
|
|
|
11.7
|
%
|
|
|
24.6
|
%
|
|
|
11.3
|
%
|
E
|
|
|
20.3
|
%
|
|
|
*
|
|
|
|
24.3
|
%
|
|
|
*
|
|
F
|
|
|
18.2
|
%
|
|
|
-
|
|
|
|
10.6
|
%
|
|
|
-
|
|
(iii) Credit Risk
Financial instruments which potentially subject us to concentrations of credit risk consist principally of cash and trade accounts receivable. We place our cash with high credit quality financial
institutions in the United States and the PRC. As of October 31, 2020 and April 30, 2020, we had $340,817 and $1,054,090 of cash balance held in PRC banks, respectively. PRC banks protect consumers against loss if their bank or thrift institution
fails, and each of our PRC bank accounts is insured up to RMB500,000 (approximately $75,000). As a result, cash held in PRC financial institutions of $166,327 and $946,274 are not insured as of October 31, 2020 and April 30, 2020. We have not
experienced any losses in such accounts through October 31, 2020. Our cash position by geographic area was as follows:
Country:
|
|
October 31, 2020
|
|
|
April 30, 2020
|
|
United States
|
|
$
|
55,762
|
|
|
|
14.1
|
%
|
|
$
|
83,830
|
|
|
|
7.4
|
%
|
China
|
|
|
340,817
|
|
|
|
85.9
|
%
|
|
|
1,054,090
|
|
|
|
92.6
|
%
|
Total cash and cash equivalents
|
|
$
|
396,579
|
|
|
|
100.00
|
%
|
|
$
|
1,137,920
|
|
|
|
100.00
|
%
|
Almost all of our sales are credit sales which are primarily to customers whose ability to pay is dependent upon the industry economics prevailing in these areas; however, we believe that the
concentration of credit risk with respect to trade accounts receivable is limited due to generally short payment terms. We also perform ongoing credit evaluations of our customers to help further reduce potential credit risk.
NOTE 15 - SUBSEQUENT EVENTS
On November 29, 2020, we renewed the RMB200,000 ($29,934) loan from Weifeng Kong, a non-related individual, with an annual interest rate of 10% and the new
due date will be November 28, 2021.