Financial Performance - For the fiscal year ended March 31, 2023, net revenues decreased by 24% to $1,971,679 from $2,602,281 in the previous fiscal year[175]. - The net loss for the fiscal year ended March 31, 2023, increased by 3% to $5,934,772 compared to a net loss of $5,736,095 in the prior year[175]. - Total revenues for the year ended March 31, 2023, were $1,971,679, a decrease of $630,602 or 24% compared to $2,602,281 for the year ended March 31, 2022[298]. - Gross profit for the year ended March 31, 2023, was $426,271, down from $1,251,643 in the previous year, representing a decline of 66%[298]. - Loss from operations increased to $5,607,509 for the year ended March 31, 2023, compared to $5,189,673 for the year ended March 31, 2022, an increase of 8%[298]. - Interest expense net rose significantly to $476,776 in 2023 from $36,695 in 2022, marking a 1,199% increase[298]. - The accumulated deficit as of March 31, 2023, was $21,613,133, up from $15,688,278 as of March 31, 2022[344]. - The company has raised substantial doubt about its ability to continue as a going concern due to ongoing losses and declining revenues[359]. Revenue Breakdown - Advanced TCMP products accounted for 33.3% of total revenue for the fiscal year ended March 31, 2023, down from 44.7% in the previous year[174]. - Revenue from Advanced TCMP decreased by $506,180, or 44%, accounting for 33% of total revenue for the year ended March 31, 2023[302]. - Revenue from Fine TCMP decreased by $284,976, or 71%, representing 6% of total revenue for the year ended March 31, 2023[303]. - Revenue from Regular TCMP decreased by $95,912, or 12%, accounting for 35% of total revenue for the year ended March 31, 2023[304]. - Revenue from raw medicinal materials was $502,425, representing 25% of total revenue for the year ended March 31, 2023[306]. Operational Developments - The company has developed and introduced a total of 17 Advanced TCMP products, 5 Fine TCMP products, and 87 Regular TCMP products as of the date of the annual report[174]. - The company plans to enhance cooperation with universities and research institutes for joint R&D projects related to TCMP processing methods and quality standards[176]. - The company has established a production facility for lyophilization processing, enhancing the quality and shelf life of its products[219]. - The company has a well-functioning production and sales network with 5 major suppliers in key TCM provinces[210]. - The company has been expanding its production base since October 2017, covering a total land area of 33,300 square meters to meet growing demand for TCMPs[288]. Research and Development - The R&D team has submitted 8 patent applications and 4 invention patent applications, all under substantive examination, focusing on preparation process patents[213]. - The company has achieved a 15% increase in bioactive compound extraction efficiency through e-beam processing compared to regular extraction methods[216]. - The research and development team consists of 15 dedicated researchers, focusing on innovative TCMP products that simplify administration for customers[244]. - The company intends to introduce new Advanced TCMP products steadily to strengthen its market leadership position in Directly-Oral and After-Soaking-Oral TCMPs[248]. Regulatory Compliance - The company’s operations are subject to PRC laws and regulations, which may pose risks related to foreign ownership and regulatory compliance[172]. - The company has obtained all necessary business licenses from the State Administration for Market Regulation for its operations[178]. - The VIE entity has obtained the required licenses and permits for pharmaceutical manufacturing, but compliance with GMP standards is critical for ongoing operations[179]. - The company complies with China's Environmental Protection Law and has not faced any penalties for non-compliance in the past[225]. - The production of Traditional Chinese Medicine Products (TCMP) must comply with the "Pharmaceutical Administration Law of PRC (2019 Revision)" and GMP standards[257]. Employee and Management Information - As of March 31, 2023, the company had a total of 78 full-time employees, with a focus on maintaining a qualified workforce for manufacturing and quality control[250]. - The company has signed confidentiality agreements with all employees to protect its production design and intellectual property[222]. - Information regarding directors, executive officers, and key employees is provided, indicating a structured management team[367]. Future Outlook - The company intends to retain future earnings to finance business expansion and does not anticipate paying cash dividends in the foreseeable future[191]. - The company is seeking to raise capital through additional debt and equity financings to fund operations for the next 12 months[344]. - The company plans to expand its distribution network, currently contracting with over 102 distributors in the PRC, to increase market penetration[249].
SXT Pharmaceuticals(SXTC) - 2023 Q4 - Annual Report