Qufu, September 19, 2008 - Sunwin International Neutraceuticals, Inc., a leader in the production and distribution of Chinese herbs, veterinary medicines and one of the world's leading producers of all natural, zero calorie Stevia in China, today announced its first quarter results for fiscal 2009 for the quarter ended July 31, 2008.
Financial Highlights:
Revenues for the first three months of fiscal 2009 increased 48% to $6.23 million as compared to revenues of $4.22 million in the first three months of fiscal 2008. Net income the first three months of fiscal 2009 was approximately $297,000 as compared to approximately $309,000 in the first three months of fiscal 2008. The slight decline in net income was primarily attributable to two factors. First, China experienced substantial increases in the price of coal in the current quarter as compared to 2008 which resulted in higher operating costs at our production facilities as well as increased transportation costs for sourcing raw materials. Energy prices have begun to moderate and we believe that gross margins should improve in the coming quarters. Second, income taxes in the current quarter were approximately $74,000 as compared to no taxes paid in the same period in fiscal 2008.
Cash and cash equivalents as of July 31, 2008 increased 29% to $7.66 million as compared to cash and cash equivalents of $6.81 million as of April 30, 2008. Working capital (current assets less current liabilities) as of July 31, 2008 increased 18% to approximately $13.83 million, as compared to working capital of $11.73 million at April 30, 2008.
President and Chairman Laiwang Zhang commented, "Sunwin posted strong first quarter sales growth despite Chinese government restrictions related to the 2008 Beijing Summer Olympics. Total stevia deliveries continue to grow compared to a year ago attributable to increased marketing and our plant expansion. Pricing remains strong due to growing global demand and we anticipate improvements in margins in the coming quarters. We are confident the business is on track for continued growth in revenue and increased profitability generating cash reserves and funds for increased investment in vertically scaling in our markets."
Outlook:
Sunwin expects to continue its growth through ongoing expansion efforts in major markets including the United States while deepening its product lines in its veterinary feeds as well as stevia grades for wholesale distribution.
The company has continued to execute on its growth plans by broadening its product offerings and capabilities through its recently announced acquisition of a 60% interest in Qufu Shengwang Stevia Biology and Science Company. Under terms of the agreement to acquire Qufu Shengwang, the selling parties entered into a "make good" agreement in which the selling parties agreed to return to Sunwin a prorata number of the shares they acquired as part of this transaction in the event that Qufu Shengwang does not earn a minimum of $5,000,000 in net income over a period of 36 consecutive months after completion of the acquisition. Management believes this "make good" agreement demonstrates the confidence that the Qufu team has in their earnings expectations. The acquisition of Qufu Shengwang has a vertical component by monetizing waste components in Sunwin's stevia refinement process while expanding the company's presence in animal and veterinary markets.
Sunwin continues to grow its United States and North American presence using its proprietary Only Sweet™ brand of dietary supplements sold at approximately 4,000 retail stores in the US. Only Sweet unit sales increased 35% during the first quarter of 2009 as compared to the first quarter of 2008 while operating expenses decreased 63% as a result of a more streamlined organization and the completion of capital initiatives made in fiscal 2008. The company will continue to pursue additional opportunities for expansion including partnerships with major consumer packaged goods providers and beverage companies seeking alternatives to chemically based zero calorie sweeteners that are falling out of favor with consumers.
For Fiscal 2009, the company expects ongoing revenue growth compared to prior year periods and expects to improve its operating margins as energy costs moderate and we increase facility utilization. Additionally, the Qufu Shengwang acquisition will enable us to use our stevia byproducts for production of their feeds. The company expects its past investment in facilities expansion to produce increasing tonnage of Stevia, including a growing component of higher grade product to meet increasing demand in the food and beverage production channel. Sunwin will continue to focus on production of premium value highly refined Stevia grades. These highly refined grades will meet growing demand from potential food and beverage partners in the mass retail channels with whom Sunwin began early stage discussions regarding the use of its stevia.
SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
July 31, April 30,
2008 2008
------------ ------------
(unaudited) (restated)
CURRENT ASSETS:
Cash $ 7,660,694 $ 6,811,136
Accounts receivable, net 3,808,388 4,163,839
Inventories, net 5,013,694 4,707,043
Prepaid expenses and other current assets 349,802 264,576
------------ ------------
Total current assets 16,832,578 15,946,594
PROPERTY AND EQUIPMENT, net 14,188,808 14,151,293
------------ ------------
Total assets $ 31,021,386 $ 30,097,887
============ ============
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 2,757,071 $ 2,649,817
Advances from customers 5,108 12,726
Note payable 100,000 -
Taxes payable 85,604 401,808
Due to related parties 431,477 431,443
------------ ------------
Total current liabilities 3,379,260 3,495,794
OTHER PAYABLES 157,747 154,207
------------ ------------
Total liabilities 3,537,007 3,650,001
------------ ------------
STOCKHOLDERS’ EQUITY:
Preferred stock: $.001 par value; 1,000,000
shares authorized; no shares issued and
outstanding - -
Common stock: $.001 par value 200,000,000
shares authorized; 87,006,936 shares issued
and outstanding at July 31, 2008 and April
30, 2008, respectively 87,007 87,007
Additional paid-in capital 17,341,813 17,218,066
Retained earnings 6,623,553 6,325,919
Subscription receivable (372,900) (372,900)
Other comprehensive income - foreign
currency 3,804,906 3,189,794
------------ ------------
Total stockholders' equity 27,484,379 26,447,886
------------ ------------
Total liabilities and stockholders'
equity $ 31,021,386 $ 30,097,887
============ ============
SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the three months
ended
July 31,
------------------------
2008 2007
----------- -----------
NET REVENUES $ 6,227,872 $ 4,217,237
COST OF SALES 4,717,667 2,874,122
----------- -----------
GROSS PROFIT 1,510,205 1,343,115
----------- -----------
OPERATING EXPENSES:
Stock-based consulting expenses 123,748 123,748
Selling expenses 459,336 576,960
General and administrative expenses 568,168 359,232
----------- -----------
Total operating expenses 1,151,252 1,059,940
----------- -----------
INCOME FROM OPERATIONS 358,953 283,175
OTHER INCOME:
Other income (expense) 240 (203)
Interest income 12,611 25,666
----------- -----------
Total other income 12,851 25,463
NET INCOME BEFORE PROVISION FOR INCOME TAXES 371,804 308,638
INCOME TAXES (74,170) -
----------- -----------
NET INCOME 297,634 308,638
OTHER COMPREHENSIVE INCOME:
Unrealized foreign currency translation 1,185,202 410,856
----------- -----------
COMPREHENSIVE INCOME $ 1,482,836 $ 719,494
=========== ===========
NET INCOME PER COMMON SHARE - BASIC AND
DILUTED:
Net income per common share - basic $ 0.00 $ 0.00
=========== ===========
Net income per common share - diluted $ 0.00 $ 0.00
=========== ===========
Weighted Common Shares Outstanding - basic 87,006,936 86,824,629
=========== ===========
Weighted Common Shares Outstanding - diluted 87,006,936 88,517,684
=========== ===========