Sales Performance - For the six months ended December 31, 2020, the company sold approximately 148,788 metric tons of fertilizer products, a decrease of 6.2% compared to 158,643 metric tons for the same period in 2019[147]. - For the three months ended December 31, 2020, Jinong sold approximately 21,228 metric tons of fertilizer products, a decrease of 3.9% from 22,086 metric tons in the same period of 2019[143]. - Gufeng sold approximately 66,865 metric tons of fertilizer products for the three months ended December 31, 2020, an increase of 2.1% from 65,483 metric tons in the same period of 2019[143]. - For the six months ended December 31, 2020, total net sales decreased by $7,887,006, or 7.9%, to $92,499,574 from $100,386,580 for the same period in 2019[183]. Revenue Generation - Jinong and Gufeng generated approximately 73.2% and 71.9% of total revenues for the six months ended December 31, 2020 and 2019, respectively[140]. - The company's fertilizer revenue from five provinces in China accounted for approximately 67.0% of total fertilizer revenue for the three months ended December 31, 2020[148]. - Jinong's net sales increased by $380,390, or 2.6%, to $14,901,875 for the three months ended December 31, 2020, primarily due to higher sales prices[166]. - Gufeng's net sales were $22,436,394, an increase of $169,845 or 0.8%, attributed to higher sales volume[167]. - Yuxing's net sales increased by $220,685 or 9.0%, reaching $2,682,195, driven by increased market demand[167]. - VIEs' net sales decreased by $1,994,587 or 19.3%, totaling $8,320,878, mainly due to reduced market demand[168]. Profitability and Expenses - Gross profit for the three months ended December 31, 2020 decreased by $396,366 or 4.5%, to $8,424,119, with a gross profit margin of 17.4%[171]. - Jinong's gross profit decreased by $413,135 or 9.4%, to $3,980,458, with a gross profit margin of approximately 26.7%[171]. - Operating expenses increased by $10,268,179 or 28.0%, totaling $46,886,682 for the three months ended December 31, 2020[171]. - Net income loss for the three months ended December 31, 2020 was $(40,036,663), an increase in loss of $12,955,783 or 47.8% compared to the same period in 2019[171]. - Gross profit for the six months ended December 31, 2020 decreased by $5,243,944, or 23.9%, to $16,735,788 compared to $21,979,732 for the same period in 2019[187]. - Jinong's net sales decreased by $4,145,114, or 12.3%, to $29,431,187 for the six months ended December 31, 2020 from $33,576,301 for the same period in 2019[183]. - Gufeng's gross profit increased by $60,566, or 1.4%, to $4,440,357 for the six months ended December 31, 2020 from $4,379,791 for the same period in 2019[188]. Distribution Network - Jinong's top five distributors accounted for only 3.8% of its fertilizer revenues for the three months ended December 31, 2020, indicating a diversified distribution network[148]. - Gufeng's top five distributors accounted for 78.7% of its revenues for the three months ended December 31, 2020, highlighting a concentration in its distribution[148]. - The company has a total of 1,922 distributors covering 22 provinces, 4 autonomous regions, and 4 central municipalities in China as of December 31, 2020[148]. Cash Flow and Financial Position - Cash and cash equivalents decreased by $2,108,391, or 17.7%, to $9,826,386 as of December 31, 2020, from $11,934,778 as of June 30, 2020[199]. - Net cash used in operating activities was $6,237,210 for the six months ended December 31, 2020, an increase of $4,162,879, or 200.7%, from $2,074,331 in the same period of 2019[202]. - Accounts receivable decreased by $3,280,351, or 3.1%, to $102,412,975 as of December 31, 2020, compared to $105,693,326 as of June 30, 2020[207]. - Inventories decreased by $8,090,566, or 8.2%, to $90,830,515 as of December 31, 2020, from $98,921,081 as of June 30, 2020[209]. - Advances to suppliers decreased by $30,672,195, or 47.1%, to $34,409,623 as of December 31, 2020, compared to $65,081,818 as of June 30, 2020[210]. Losses and Financial Challenges - Net loss for the three months ended December 31, 2020 was $40,036,663, an increase in loss of $12,955,783, or 47.8%, compared to a net loss of $27,080,880 for the same period in 2019[180]. - VIEs' net sales decreased by $3,521,185, or 15.2%, to $19,698,107 for the six months ended December 31, 2020 from $23,219,292 for the same period in 2019[184]. - Jinong's gross profit margin decreased to approximately 26.6% for the six months ended December 31, 2020 from 38.6% for the same period in 2019[187]. - Gufeng's net loss increased by $27,814,747, or 83.8%, to $61,009,636 for the six months ended December 31, 2020, primarily due to higher general and administrative expenses[198]. - Net loss for the six months ended December 31, 2020, was $70,989,577, an increase of $36,592,897, or 106.4%, compared to a net loss of $34,396,679 in the same period of 2019[194]. Market Conditions and Risks - The COVID-19 pandemic has introduced significant economic uncertainty, potentially affecting demand for the company's products and services[231]. - Management has not entered any hedging transactions to mitigate exposure to foreign exchange or interest rate risks[224][228]. - The company has not experienced significant credit risk, as most customers are long-term clients with strong payment records[229]. - The accumulated other comprehensive loss was $9 million as of December 31, 2020, reflecting foreign exchange risks due to RMB fluctuations[224]. - Between July 1, 2020, and December 31, 2020, the RMB appreciated by a cumulative 8.2% against the U.S. dollar, impacting trade dynamics[224].
CGA(CGA) - 2021 Q2 - Quarterly Report