SUNWIN STEVIA INTERNATIONAL, INC. The following discussion and analysis of our consolidated financial condition and results of operations for the fiscal years endedApril 30, 2021 and 2020 should be read in conjunction with the consolidated financial statements and footnotes, and other information presented elsewhere in this Form 10-K. OVERVIEW We sell stevioside and other stevia derived products. Stevioside is a natural zero calorie sweetener extracted from the leaf of the stevia plants. Substantially all of our operations are located in the PRC. We have built an integrated company with the sourcing and production capabilities designed to meet the needs of our customers.
During the fiscal years ended
- Stevioside; and
- Corporate and other.
Recent Developments
Consequently, the COVID-19 pandemic may adversely affect the Company's business
operations, financial condition and operating results for 2021 and 2022,
including but not limited to material negative impact to the Company's total
revenues, production capability, ability to conduct marketing and sales, and
slower collection of accounts receivables. We are able to maintain certain
income from previous existing orders and finished products, however, we believe
the effect of the COVID-19 pandemic will be most significant in our raw material
purchasing and our sales. Due to the effect of the global COVID-19 pandemic, we
expect the sourcing and availability of stevia raw material will have increased
difficulties and costs for fiscal 2021 and 2021.
We are monitoring the global outbreak and spread of COVID-19 and taking steps in
an effort to identify and mitigate the adverse impacts on, and risks to, our
business posed by its spread and the governmental and community reactions
thereto. We continue to assess and update our business continuity plans in the
context of this pandemic, including taking steps in an effort to help keep our
workforces healthy and safe. We are also working with our suppliers to
understand the existing and future negative impacts, and to take actions in an
effort to mitigate such impacts. Due to the speed with which
the COVID-19 pandemic is developing, the global breadth of its spread and the
range of governmental and community reactions thereto, there is uncertainty
around its duration and ultimate impact; therefore, any negative impact on our
overall financial and operating results (including without limitation our
liquidity) cannot be reasonably estimated at this time, but the pandemic could
lead to extended disruption of economic activity and the impact on our financial
and operating results.
Our Performance
Our revenues totaled $25.4 million in the fiscal year ended April 30, 2021 , a
decrease of 2.7% as compared to the fiscal year ended April 30, 2020 , but our
gross margin decreased to (4.5)% from 16.9% primarily due to our cost of revenue
increased by 22.2%. Our total operating expenses in the fiscal year ended April
30, 2021 decreased by approximately $897,000 or 18.5% compared to the fiscal
year ended April 30, 2020 primarily due to a decrease of approximately $120,000
or 8.0% in selling expenses, a decrease of approximately $12,000 or 0.8% in
general and administrative expenses, and a decrease of approximately $765,000 or
40.6% in research and development expenses. Our net loss from continuing
operations for the fiscal year ended April 30, 2021 was approximately
$5,249,000 , compared to $1,129,000 in the fiscal year ended April 30, 2020 .
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While we have broadened our stevia product offerings to include a number of
higher quality stevia grades needed in new product formulations we are
developing to introduce to the U.S. and European food and beverage industry, the
demand for higher grade stevia products has yet to materialize to the degree we
had anticipated, and thus our sales volume in higher grade stevia products was
lower than expected for the fiscal year ended April 30, 2021 . The decrease of
revenue in Stevioside segment is primarily due to a decreasing demand from the
developing domestic and international market, and overall negative impact from
the global COVID-19 pandemic.
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, 2021 and beyond, we will continue to
focus on our core business of producing and selling stevioside series products.
Currently there is a world-wide movement of lowering sugar intake, and more and
more consumers are becoming aware of the health benefits associated with
reduction of sugar intake. According to research data, 40% of Chinese consumers
stated that they "will not mind paying more for food and beverages with more
natural ingredients" and 80% of the interview consumers express a goal of
"having a healthier diet". We believe in this search of a more natural and
healthy diet and lifestyle, natural sweeteners such as stevia will become the
mainstream sweetener in the food and beverage markets.
Some of the recent favorable observations related to the stevia markets
includes:
- Chinese domestic food and beverages, particularly herbal tea
manufacturers and the pharmaceutical industry, have increased the use
of steviosides, and new health awareness trends have alsoresulted in
some new governing laws supporting the growth of this industry;
- Southeast and
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, 2021 and 2020, as well as
negative impact from the global COVID-19 pandemic, which has longer lasting
effects then we previously estimated. During the fiscal years 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 2022. We anticipate the price of stevia
leaves, the raw material used to produce our stevioside series products, will
also continue to increase in fiscal 2022 since the demand for raw material may
increase as the market recover, 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.
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RESULTS OF OPERATIONS
The following table summarizes our results of operations for the fiscal year
ended April 30, 2021 and 2020. The percentages represent each line item as a
percent of revenues:
For the Fiscal Year Ended April 30, 2021
Stevioside Corporate and Other Consolidated
Revenues $ 24,970,088 100.0 % $ 408,747 100.0 % $ 25,378,835 100.0 %
Cost of goods sold 26,293,331 105.3 % 221,228 54.1 % 26,514,559 104.5 %
Gross profit (1,323,243 ) (5.3 )% 187,519 45.9 % (1,135,724 ) (4.5 )%
Selling expenses 1,390,993 5.6 % 594 0.1 % 1,391,587 5.5 %
General and
administrative
expenses 1,398,881 5.6 % 35,046 8.6 % 1,433,927 5.7 %
Research and
development expenses 1,119,574 4.5 % - - 1,119,574 4.4 %
(Loss) gain from
operations (5,232,691 ) (21.0 )% 151,879 37.2 % (5,080,812 ) (20.0 )%
Other expenses (168,463 ) (0.7 )% - - (168,463 ) (0.7 )%
(Loss) gain from
continuing operation
before income taxes $ (5,401,154 ) (21.6 )% $ 151,879 37.2 % $ (5,249,275 ) (20.7 )%
For the Fiscal Year Ended April 30, 2020
Stevioside Corporate and Other Consolidated
Revenues $ 25,238,941 100.0 % $ 852,543 100.0 % $ 26,091,484 100.0 %
Cost of goods sold 21,275,494 84.3 % 416,933 48.9 % 21,692,427 83.1 %
Gross profit 3,963,447 15.7 % 435,610 51.1 % 4,399,057 16.9 %
Selling expenses 1,489,928 5.9 % 21,863 2.6 % 1,511,791 5.8 %
General and
administrative
expenses 1,301,402 5.2 % 144,250 16.9 % 1,445,652 5.5 %
Research and
development expenses 1,884,718 7.5 % - - 1,884,718 7.2 %
(Loss) gain from
operations (712,601 ) (2.8 )% 269,497 31.6 % (443,104 ) (1.7 )%
Other income
(expenses) (686,148 ) (2.7 )% - - (686,148 ) (2.6 )%
(Loss) gain from
continuing operation
before income taxes $ (1,398,749 ) (5.5 )% $ 269,497 31.6 % $ (1,129,252 ) (4.3 )%
Revenues
Total revenues in the fiscal year ended April 30, 2021 decreased by
approximately $713,000 , or 2.7%, as compared to the fiscal year ended April 30,
2020 . Within our Stevioside segment, revenues from sales to third parties
decreased by 1.2% and the sales to the related party decreased by 0.7% in the
fiscal year ended April 30, 2021 , as compared to the fiscal year ended April 30,
2020 , primarily due to a decreasing demand from both domestic and overseas
markets after COVID-19 pandemic. Since we do not have the authorization to
export products from China , we outsourced our exporting business to a related
party, Qufu Shengwang Import and Export Corporation , which has authorizations to
export. In addition, our products including A3-99 and enzyme treated stevia have
been well accepted by the market, especially in the U.S. . We sold 846 metric
tons and 761 metric tons of stevioside for the fiscal year ended April 30, 2021
and 2020, respectively. We generated approximately $4,884,000 and $5,765,000 in
revenue from producing over 165 metric tons and 104 metric tons of the
customized orders for restructuring by enzyme based on our Stevioside products
which accounted for approximately 19% and 23% of our total revenues of
Sativoside segment in the fiscal years ended April 30, 2021 and 2020,
respectively.
Our unit sale price fluctuated from month to month in the fiscal year ended
April 30, 2021 , which was mainly affected by the market environment; the average
unit sales price of our stevia products has slightly decreased because of our
effort to stay ahead of competition and to gain market share for the fiscal year
ended April 30, 2021 , as compared to the fiscal year ended April 30, 2020 . We
are facing challenges in competitive pricing and sourcing of raw materials, and
the market prices of stevioside products were impacted by strong price
competition among Chinese manufacturers. 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 34% and 25% of total
revenue of our Stevioside segment, respectively, while our enzyme treated
products generated approximately $4.9 million in revenues with the gross profit
rate of 9.5% and average unit price of $29.7 in the fiscal year ended April 30,
2021 . Our low grade stevia and A3-97 products generated more than 32% and 26% of
total revenue of our Stevioside segment, respectively, while we generated
approximately $5.8 million from enzyme treated products in revenues with the
gross profit rate of 31.6% and the average unit price of $36 in the fiscal year
ended April 30, 2020 . In the fiscal year ended April 30, 2021 , some of our
stevia products, such as A3-98, A3-97, A3-95, A3-80, A3-60, and A3-50, were sold
for a loss in order to avoid further losses resulting from spoilage of
overstocked inventory.
- 16 -
--------------------------------------------------------------------------------Cost of Revenues and Gross Margin
Cost of revenues includes the cost of raw materials, labor, depreciation, and other fixed and variable overhead costs. Cost of revenues of Stevioside segment in the fiscal year endedApril 30, 2021 increased by approximately$5,018,000 , or 23.6%, while revenues from Stevioside segment decreased by approximately$267,000 , compared to the fiscal year endedApril 30, 2020 . Gross margin on Stevioside segment for the fiscal year endedApril 30, 2020 was (5.3)%, as compared to 15.7% for the fiscal year endedApril 30, 2020 . The decrease in gross margins for Stevioside was primarily due to the lower revenue and the higher raw material costs. Since we purchase our raw materials on the spot market, we are unable to predict, with any degree of certainty, our raw material costs and their impact on our gross margin in future periods.
Total Selling Expenses
Our selling expenses for the fiscal year endedApril 30, 2021 decreased by approximately$120,000 , or 8.0% compared to the fiscal year endedApril 30, 2020 . The decrease was primarily due to an approximately$247,000 decrease in advertising expense, a decrease of approximately$9,000 in office expense, a decrease of approximately$48,000 in travel expense, a decrease of approximately$22,000 in shipping and freight, a decrease of approximately$29,000 in salary and wage expenses, a decrease of approximately$21,000 in selling expense on Metformin products and a decrease of approximately$6,000 in miscellaneous expenses, offset by an increase of approximately$50,000 in commission expense, an increase of approximately$26,000 in local sales taxes and an increase of approximately$186,000 in promotion and marketing fees in the fiscal year endedApril 30, 2021 .
Total General and Administrative Expenses
Our general and administrative expenses for the fiscal year endedApril 30, 2021 decreased by$12,000 , or 0.8% compared to the fiscal year endedApril 30, 2020 . The decrease was primarily due to a decrease of approximately$77,000 in consulting and service expenses, a decrease of approximately$26,000 in travel expense, a decrease of approximately$63,000 in office expense, a decrease of approximately$20,000 in product testing expense, a decrease of$21,000 in consumables, and a decrease of approximately$13,000 in miscellaneous expenses, offset by an increase of approximately$120,000 in salaries and wages, an increase of approximately$33,000 in property tax and other taxes, an increase of approximately$24,000 in meals and entertainment, an increase of approximately$13,000 in bad debt expense and an increase of approximately$18,000 in repair and maintenance fees.
Research and Development Expenses
For the fiscal year endedApril 30, 2021 , our research and development expenses amounted to approximately$1,120,000 as compared to$1,885,000 for the fiscal year endedApril 30, 2020 . The decrease of approximately$765,000 was primarily attributable to the decrease in research and development activities related to the development of new product lines of Stevioside products.
Other Expense
For the fiscal year endedApril 30, 2021 , other expense, net of other income, amounted to approximately$168,000 , a decrease of$518,000 as compared to other expense, net of other income, amounted to approximately$686,000 for the fiscal year endedApril 30, 2020 . The decrease of other expense was primarily attributable to a decrease in interest expense - related party in the amount of approximately$76,000 , a decrease in interest expense - third party in the amount of approximately$417,000 due to the less amount of renewal loan principal, and a decrease in other expense of approximately$61,000 primarily due to an export tax rebate, offset by a decrease in grant income of approximately$36,000 .
Loss from Continuing Operations
As a result of the foregoing, our loss from continuing operations was$5,249,000 for the fiscal year endedApril 30, 2021 , as compared with loss from continuing operations of$1,129,000 for the fiscal year endedApril 30, 2020 , a change of$4,120,000 , or 364.8%. The increase of net loss was primarily due to a lower revenue with a higher cost revenue, offset by a lower operating expense. - 17 - --------------------------------------------------------------------------------
Loss from Discontinued Operation
No loss or gain from discontinued operations in the fiscal year endedApril 30, 2021 , as compared with loss from discontinued operations was$253,000 , or$0.00 per share (basic and diluted), for the fiscal year endedApril 30, 2020 . The summarized operating result of discontinued operations included in our consolidated statements of operations is as follows: Fiscal Years Ended April 30, 2021 2020 Revenues $ - $ 733,441 Cost of revenues - 572,357 Loss before income taxes - (20,016 ) Income tax expense - - Loss from discontinued operations - (20,016 ) Gain from disposal, net of taxes -
61,050
Loss from sales of subsidiary - (294,465 ) Total loss from discontinued operations $ - $
(253,431 )
Net Loss Attributable to Noncontrolling Interest
Noncontrolling interest represents the ownership interests an individual investor andShangdong Yulong Mining Group Co., Ltd. ("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 by 38.7%, the percentage ownership in Qufu Shengren not directly attributable to us. Net loss attributable to noncontrolling interest amounted to approximately$2,010,461 for the year endedApril 30, 2021 .
Net Loss Attributable to
Net loss attributable toSunwin Stevia International, Inc. in the fiscal year endedApril 30, 2021 was approximately$3,239,000 , or$(0.02) per share (basic and diluted), compared to$1,383,000 , or$(0.01) per share (basic and diluted), in the fiscal year endedApril 30, 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 income on
the consolidated statements of operations. As a result of foreign currency
translations, which are a non-cash adjustment, we reported a foreign currency
translation gain of $1,006,000 for the fiscal year ended April 30, 2021 , as
compared to a foreign currency translation gain of $166,000 for the fiscal year
ended April 30, 2020 . This non-cash loss had the effect of increasing our
reported comprehensive loss.
LIQUIDITY AND CAPITAL RESOURCESLiquidity is the ability of a company to generate sufficient cash to meet its operational cash requirements.
As ofApril 30, 2021 , we had working deficit of$1,089,000 , including cash of approximately$1,566,000 , as compared to working capital of approximately$3,470,000 and cash of$1,138,000 as ofApril 30, 2020 . The approximate$428,000 increase in our cash as ofApril 30, 2021 fromApril 30, 2020 is primarily attributable to net cash used in operating activities of approximately$2,204,000 , net cash used in investing activities of approximately$766,000 , and cash provided by financing activities of approximately$3,292,000 during the fiscal year endedApril 30, 2021 . We may seek to raise capital through additional debt and/or equity financings to fund our operations in the future. Although we have historically raised capital from sales of equity and from bank or individual loans, there is no assurance that we will be able to continue to do so. If we are unable to raise additional capital or secure additional lending in the next 12 months, management expects that we will need to curtail or cease operations. The accompanying consolidated financial statements do not include any adjustments related to the recoverability and or classification of recorded asset amounts and or classification of liabilities that might be necessary should we be unable to continue as a going concern. - 18 - -------------------------------------------------------------------------------- The COVID-19 Pandemic. OnJanuary 30, 2020 , theWorld Health Organization declared the coronavirus outbreak a "Public Health Emergency of International Concern" and onMarch 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 inChina 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. Accounts receivable, net of allowance for doubtful accounts, including accounts receivable from related parties, increased by approximately$1,946,000 during the fiscal year endedApril 30, 2021 as a result of the increase in accounts receivable from the related party in amount of approximately$2,965,000 as ofApril 30, 2021 . The days for sales outstanding in accounts receivable increased to 24 days as ofApril 30, 2021 , as compared to 20 days onApril 30, 2020 . Accounts receivable, net of allowance for doubtful accounts, excluding accounts receivable from the related parties, decreased by approximately$1,020,000 during the fiscal year endedApril 30, 2021 . The days for sales outstanding in accounts receivable for third party sales accounted to 12 days as ofApril 30, 2021 , as compared to 15 days as ofApril 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 the fiscal 2021. AtApril 30, 2021 our inventories, net of reserve for obsolescence, totaled approximately$12,930,000 , as compared to$12,874,000 onApril 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 endedApril 30, 2021 . 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 demands. Our accounts payable and accrued expenses were approximately$11,141,000 atApril 30, 2021 , an increase of approximately$2,608,000 fromApril 30, 2020 balance of$8,533,000 . The increase was primarily due to the timing of payments for balances related to raw material purchases made in the ordinary course of business. Loans payable as ofApril 30, 2021 and 2020 totaled approximately$2,955,000 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 fromSeptember 20, 2021 toApril 8, 2022 . During the year endedApril 30, 2021 , the Company borrowed a new loan of approximately$21,000 and repaid loans in amount of approximately$922,000 . Due to related parties atApril 30, 2021 and 2020 totaled approximately$9,844,000 and$5,073,000 , respectively. The increase was primarily due to our increase in the balance of$5,234,000 advance from Qufu Shengwang Import and Export during the fiscal year endedApril 30, 2021 . OnApril 30, 2021 , the balance we owed toPharmaceutical Corporation , Qufu Shengwang Import and Export and Mr.Weidong Chai , a management member ofQufu Shengren Pharmaceutical Co., Ltd. , approximately amounted to$3,484,000 ,$6,140,000 and$219,000 , respectively. OnApril 30, 2020 , the balance we owed toPharmaceutical Corporation , Qufu Shengwang Import and Export, and Mr.Weidong Chai approximately amounted to$3,982,000 ,$907,000 and$184,000 , respectively. Cash Flows Analysis
NET CASH FLOW PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Net cash used in continuing operating activities from operations was approximately$2,204,000 for the fiscal year endedApril 30, 2021 , primarily due to a net loss of approximately$5,249,000 , an increase of approximately$2,586,000 in accounts receivable - related party, an increase of approximately$218,000 in inventories, offset by a decrease of approximately$1,196,000 in accounts receivable and note receivable from a third party, a decrease of approximately$95,000 in prepaid expenses and other current assets, an increase in accounts payable and accrued expenses of approximately$1,890,000 , an increase of approximately$38,000 in taxes payable, and non-cash working capital primarily included non-cash depreciation expense of$1,340,000 , provision for obsolete inventories of$1,277,000 and a loss on allowance for doubtful accounts of$13,000 . No net cash used in operating activities was from discontinued operations in fiscal year endedApril 30, 2021 . - 19 - -------------------------------------------------------------------------------- Net cash provided by operating activities from continuing operations was approximately$1,944,000 (total of$2,158,000 including provided by discontinued operations of$214,000 ) for the fiscal year endedApril 30, 2020 , primarily due to a decrease of approximately$246,000 in accounts receivable and note receivable from a third party, a decrease of approximately$808,000 in prepaid expenses and other current assets, an increase in accounts payable and accrued expenses of approximately$2,735,000 and an increase of approximately$147,000 in taxes payable, and non-cash working capital primarily included non-cash depreciation expense of$1,219,000 , provision for obsolete inventories of$113,000 and a loss on disposition of property and equipment of$20,000 , offset by an increase of approximately$672,000 in accounts receivable - related party, an increase of approximately$1,542,000 in inventories, and a net loss of approximately$1,383,000 adjusted by loss from discontinued operations of$253,000 .
Net cash used in investing activities from continuing operations amounted to$766,000 on purchases of property and equipment in the fiscal year endedApril 30, 2021 . Net cash used in investing activities from continuing operations amounted to$627,000 in the fiscal year endedApril 30, 2020 . We spent$1,775,000 in purchases of property and equipment, offset by the proceeds received from disposal of discontinued operations of approximately$1,143,000 and proceeds received from disposal of equipment of approximately$5,000 in the fiscal year endedApril 30, 2020 , as compared to$2,360,000 in the fiscal year endedApril 30, 2019 .
No net cash used in investing activities from discontinued operations in fiscal
years ended
NET CASH FLOW PROVIDED BY (USED IN) FINANCING ACTIVITIES:
Net cash provided by financing activities from continuing operations amounted to approximately$3,292,000 in the fiscal year endedApril 30, 2021 , primarily due to the proceeds from a non-related individual short-term loan of$21,000 and advances received from related parties of approximately$13,211,000 , offset by repayment of short-term loans of$922,000 and repayment of related party advances of approximately$9,018,000 . Net cash used in financing activities from continuing operations amounted to approximately$638,000 in the fiscal year endedApril 30, 2020 , primarily due to repayment of short-term loans of$515,000 and repayment of related party advances of approximately$9,044,000 , offset by the proceeds from a non-related individual short-term loan of$944,000 and advances received from related parties of approximately$7,977,000 .
No net cash used in financing activities from discontinued operations in fiscal
years ended
CASH ALLOCATION BY COUNTRIES
The functional currency of our Chinese subsidiaries is the Chinese RMB. Substantially all of our cash is held in the form of RMB at financial institutions located in the PRC, where there is no equivalent of federal deposit insurance as inthe United States . As a result, cash accounts at financial institutions in the PRC are not insured. We have not experienced any losses in such accounts as ofApril 30, 2021 . In 1996, the Chinese government introduced regulations which relaxed restrictions on the conversion of the RMB; however, restrictions still remain, including but not limited to restrictions on foreign invested entities. Foreign invested entities may only buy, sell or remit foreign currencies after providing valid commercial documents at only those banks authorized to conduct foreign exchanges. Furthermore, the conversion of RMB for capital account items, including direct investments and loans, is subject to PRC government approval. Chinese entities are required to establish and maintain separate foreign exchange accounts for capital account items. We cannot be certain Chinese regulatory authorities will not impose more stringent restrictions on the convertibility of the RMB, especially with respect to foreign exchange transactions. Accordingly, cash on deposit in banks in the PRC is not readily deployable by us for purposes outside of the PRC. Our cash position by geographic area was as follows: Country: April 30, 2021 April 30, 2020 United States$ 161,860 10.3 %$ 83,830 7.4 % China 1,403,969 89.7 % 1,054,090 92.6 % Total cash and cash equivalents$ 1,565,829 100.00 %$ 1,137,920 100.00 % - 20 -
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Contractual Obligations and Off-Balance-Sheet Arrangements
Contractual Obligations
We have certain fixed contractual obligations and commitments that include future estimated payments. Changes in our business needs, cancellation provisions, changing interest rates, and other factors may result in actual payments differing from the estimates. We cannot provide certainty regarding the timing and amounts of payments. We have presented below a summary of the most significant assumptions used in our determination of amounts presented in the tables, in order to assist in the review of this information within the context of our consolidated financial position, results of operations, and cash flows. The following tables summarize our contractual obligations as ofApril 30, 2021 , and the effect these obligations are expected to have on our liquidity and cash flows in future periods. Payments Due by Period Less than Contractual obligations: Total 1 year 1-3 years 3-5 years 5 + years Individual loans 2,955,304 2,955,304 - - - Total$ 2,955,304 2,955,304 - $ - $ -
Off-Balance-Sheet Arrangements
UnderSEC 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 is 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.
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 AND ESTIMATES
The preparation of financial statements in conformity withU.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. TheSEC 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 1 to our 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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