Sales Performance - For the three months ended September 30, 2022, the company sold approximately 33,556 tons of fertilizer products, a decrease of 37.9% compared to 53,995 tons for the same period in 2021[158]. - Jinong's fertilizer sales were approximately 9,385 metric tons, down 38.4% from 15,224 metric tons in the same period last year, while Gufeng sold 24,171 metric tons, down 37.7% from 38,771 metric tons[162]. - The fertilizer business generated approximately 89.6% of total revenues for the three months ended September 30, 2022[158]. - The company's fertilizer revenue from five provinces in China accounted for approximately 60.7% of total fertilizer revenue, with Hebei contributing 27.3%[163]. - Total net sales for the three months ended September 30, 2022, were $27,597,325, a decrease of $5,241,563 or 16.0% from $32,838,888 for the same period in 2021[184]. Distributor and Market Presence - As of September 30, 2022, the company had a total of 1,318 distributors across 22 provinces, with Jinong having 974 distributors and Gufeng having 344 distributors[163]. - The company’s top five distributors accounted for 12.6% of Jinong's fertilizer revenues, while Gufeng's top five distributors accounted for 78.4% of its revenues for the three months ended September 30, 2022[163]. Financial Performance - Jinong's net sales decreased by $3,013,740 or 19.9% to $12,148,002, with a sales volume of approximately 9,385 metric tons, down 5,839 tons or 38.4% compared to 15,224 metric tons in 2021[184][185]. - Gufeng's net sales were $12,578,822, a decrease of $2,209,430 or 14.9%, with a sales volume of approximately 24,171 metric tons, down 14,600 tons or 37.7% from 38,771 metric tons in 2021[185]. - Total cost of goods sold for the three months ended September 30, 2022, was $22,412,516, a decrease of $3,926,524 or 14.9% from $26,339,040 in 2021[186]. - Total gross profit for the three months ended September 30, 2022, decreased by $1,315,039 or 20.2% to $5,184,809, with a gross profit margin of 18.8% compared to 19.8% in 2021[187]. - Selling expenses were $2,437,354, or 8.8% of net sales, a decrease of $992,089 or 28.9% from $3,429,443, or 10.4% of net sales in 2021[189]. - General and administrative expenses decreased by $13,030,735 or 79.9% to $3,285,115 from $16,315,850 in 2021[182]. Net Loss and Improvements - Net loss from continuing operations was $528,114, a significant improvement of $12,817,331 or 96.0% compared to a loss of $13,345,446 in 2021[182]. - Comprehensive loss for the three months ended September 30, 2022, was $11,448,272, a decrease of $3,172,361 or 21.7% from $14,620,634 in 2021[182]. - Net loss for the three months ended September 30, 2022, was $(528,114), a decrease in loss of $14,549,093, or 96.5%, compared to $(15,077,208) for the same period in 2021[194]. - Jinong's net income increased by $4,803,267, or 125.8%, to $984,350 for the three months ended September 30, 2022, from a net loss of $(3,818,917) for the same period in 2021[198]. - Gufeng's net loss decreased by $8,417,071, or 91.9%, to $(746,500) for the three months ended September 30, 2022, from $(9,163,571) for the same period in 2021[199]. Cash Flow and Assets - Cash and cash equivalents increased by $12,062,232, or 20.9%, to $69,832,535 as of September 30, 2022, compared to $57,770,303 as of June 30, 2022[200]. - Net cash used in operating activities was $(2,995,510) for the three months ended September 30, 2022, an increase of $4,510,466, or 297.7%, from $1,514,956 for the same period in 2021[204]. - Net cash provided by financing activities was $18,025,034 for the three months ended September 30, 2022, an increase of 100.0% compared to $0 for the same period in 2021[206]. - Accounts receivable decreased by $1,421,554, or 4.9%, to $27,371,337 as of September 30, 2022, compared to $28,792,891 as of June 30, 2022[208]. - Inventories increased by $3,147,114, or 7.5%, to $45,345,300 as of September 30, 2022, compared to $42,198,186 as of June 30, 2022[210]. - Advances to suppliers decreased by $13,548,396, or 65.4%, to $7,163,495 as of September 30, 2022, compared to $20,711,891 as of June 30, 2022[211]. Strategic Developments - The company is developing an online platform to connect its physical distribution network, indicating a strategic move towards e-commerce in the agricultural sector[176]. - The company is organized into three main business segments: Jinong (fertilizer production), Gufeng (fertilizer production), and Yuxing (agricultural products production) as of September 30, 2022[221]. Foreign Exchange and Economic Factors - The company reported an accumulated other comprehensive loss of $24 million as of September 30, 2022, due to foreign exchange risk from RMB depreciation[225]. - Between July 1, 2022, and September 30, 2022, the RMB decreased by a cumulative 6.0% against the U.S. dollar, affecting trade dynamics[225]. - The short-term debt outstanding was $3.8 million as of September 30, 2022, compared to $4.0 million as of June 30, 2022[226]. - The company has not entered any hedging transactions to mitigate exposure to foreign exchange or interest rate risks[227]. - Inflationary pressures have increased operating costs, adversely affecting gross margins and administrative expenses[230]. - The COVID-19 pandemic has created significant economic uncertainty, potentially impacting demand for the company's products and services[231]. - The company continues to monitor the COVID-19 situation and its potential effects on operations and financial performance[232].
CGA(CGA) - 2023 Q1 - Quarterly Report