Financial Performance - For the fiscal year ended March 31, 2024, total revenue decreased by 2% to $1,928,497 compared to $1,971,679 in the previous fiscal year[180]. - The net loss for the fiscal year ended March 31, 2024, decreased by 48% to $3,098,532 from $5,934,772 in the previous fiscal year[180]. - Total revenues for the year ended March 31, 2024, were $1,928,497, a decrease of $43,182 or 2% compared to $1,971,679 for the year ended March 31, 2023[303]. - Gross profit increased by $127,700 or 30% to $553,971 for the year ended March 31, 2024, with a gross margin of 28.7% compared to 21.6% for the previous year[313]. - Total operating expenses decreased by $2,964,592 or 49% to $3,069,188 for the year ended March 31, 2024, primarily due to a significant reduction in general and administrative expenses[303]. - General and administrative expenses decreased by $3,010,706 or 53% to $2,635,622, mainly due to reduced payroll expenses and a 90% decrease in credit loss provisions[316]. - Loss from operations improved by $3,092,292 or 55% to $2,515,217 for the year ended March 31, 2024[303]. - The company generated $13,150 in revenue from a new health beverage product, contributing 1% to total revenue for the year ended March 31, 2024[311]. - The company’s total comprehensive loss for the year ended March 31, 2024, was $3,926,756, compared to $7,088,485 for the year ended March 31, 2023[344]. - The company experienced a continuous decline in revenue for the years ended March 31, 2024, 2023, and 2022, raising substantial doubt about its ability to continue as a going concern[364]. Product Development and R&D - Advanced TCMP products accounted for 49.1% of total revenue for the fiscal year ended March 31, 2024, up from 33.3% in the fiscal year ended March 31, 2023[179]. - The company has developed and marketed 11 Advanced TCMP products, 5 Fine TCMP products, and 200 Regular TCMP products[179]. - The company has decided to discontinue cooperation with major clients in the sales of Fine TCMP and will not develop or sell Fine TCMP products in the future[206]. - The company has a product portfolio of 11 Advanced TCMP products, 5 Fine TCMP products, 200 Regular TCMP products, and 200 raw medicinal materials[207]. - The R&D team has submitted 8 patent applications and 4 invention patent applications, all under substantive examination, focusing on preparation process patents[216]. - The company’s R&D strategy aims to revolutionize TCMP production using advanced technology, including e-beam processing which improved bioavailability by 15%[218][219]. - The company has established a strong R&D team of 13 researchers, focusing on innovative TCMP products that simplify administration for customers[249]. - The company has successfully commercialized multiple modernized TCMPs without the need for additional regulatory approvals[249]. Market and Customer Base - The customer base includes 57 pharmaceutical companies, 14 chain pharmacies, and 16 hospitals across five provinces in China[182]. - As of March 31, 2024, the company’s end-customer base includes 57 pharmaceutical companies, 14 chain pharmacies, and 16 hospitals across 5 provinces[214]. - The company currently contracts with over 102 distributors in the PRC and plans to expand its distribution network to increase market penetration[254]. - The company operates 4 sales offices covering 12 major provinces in China, with over 68 sales representatives managing distributor relationships[215]. Financial Structure and Compliance - The company operates under a VIE structure, consolidating the financial results of Taizhou Suxuantang in accordance with U.S. GAAP[176]. - The company has not distributed any earnings or settled amounts owed under the VIE Agreements as of the date of the annual report[191]. - The company is subject to a 10% withholding tax on dividends paid by WFOE to SXT HK, which may be reduced to 5% under certain conditions[199]. - The company has conducted foreign exchange registration under existing PRC regulations, allowing its PRC subsidiary to legally distribute earnings[201]. - The company has established contractual arrangements with Taizhou Suxuantang to consolidate financial results under U.S. GAAP due to PRC legal restrictions on foreign ownership[282]. Production and Manufacturing - The company reconstructed an 850-square-meter facility in December 2018 for TCMHS production and received a Food Manufacturing Certificate[222]. - The company has extended its production facility for lyophilization processing, enhancing its capability to produce temperature-sensitive TCMP products[222]. - The company operates GMP-certified facilities totaling approximately 1,200 square meters for Regular TCMP production and 450 square meters for Fine TCMP production[294]. - The company holds a Pharmaceutical Manufacturing Permit from the NMPA, valid until December 17, 2025[239]. - The company is GMP certified, ensuring compliance with strict quality control and assurance standards in pharmaceutical manufacturing[236]. Intellectual Property - The company holds 28 utility model and invention patents, with a validity period of 20 years from the application date[225]. - The company has submitted five additional invention patent applications recently, enhancing its intellectual property portfolio[227]. - There are currently four invention patent applications under substantive examination at the State Intellectual Property Office of PRC[181]. Strategic Goals and Future Plans - The company plans to enhance collaboration with universities and research institutes for joint R&D projects related to TCMP processing methods and quality standards[181]. - The company intends to retain future earnings to finance business expansion and does not anticipate paying cash dividends in the foreseeable future[196]. - The company aims to promote its existing brand to increase national recognition and maintain a branded pricing strategy through marketing efforts[252]. - The company is focused on developing and introducing additional Advanced TCMP products to strengthen its existing product portfolio[253]. Challenges and Risks - The company competes with established pharmaceutical companies in the TCMP market, which have greater resources and market presence[242]. - The management team has extensive experience in the pharmaceutical industry, with most members having over 10 years of relevant experience[250]. - The company experienced a significant increase in cash outflow from operating activities, with net cash used amounting to $1,928,053 for the year ended March 31, 2024, compared to $80,757 for the year ended March 31, 2023[352].
SXT Pharmaceuticals(SXTC) - 2024 Q4 - Annual Report