Sales Performance - For the three months ended September 30, 2019, the company sold approximately 71,704 metric tons of fertilizer products, a 4.7% increase from 67,851 metric tons in the same period of 2018[130]. - Jinong and Gufeng generated approximately 69.6% and 69.0% of total revenues for the three months ended September 30, 2019 and 2018, respectively[128]. - Revenue per ton for Jinong was $1,035 in Q3 2019, down from $1,294 in Q3 2018, while Gufeng's revenue per ton decreased from $348 to $311[129]. - The sales VIEs contributed 25.4% and 26.9% of total revenues for the three months ended September 30, 2019 and 2018, respectively[128]. - Agricultural products revenue was primarily generated from Shaanxi (71.3%), Sichuan (4.9%), and Gansu (4.6%), which together accounted for 80.8% of total agricultural products revenue[132]. - Fertilizer sales in five provinces accounted for approximately 56.7% of total fertilizer revenue, with Hebei contributing the largest share at 25.9%[131]. - During Q3 2019, Jinong launched one new fertilizer product and added 19 new distributors, while Gufeng added one new distributor[133]. Financial Performance - Total net sales for the three months ended September 30, 2019 were $50,821,571, a decrease of $7,133,235 or 12.3% from $57,954,806 for the same period in 2018[146]. - Jinong's net sales decreased by $3,441,717, or 15.3%, to $19,054,816 from $22,496,533 for the three months ended September 30, 2018, primarily due to a decrease in sales price[147]. - Gufeng's net sales were $16,323,217, a decrease of $1,150,034, or 6.6%, from $17,473,251 for the same period in 2018, attributed to a decrease in sales price[148]. - Yuxing's net sales increased by $152,165 or 6.4%, to $2,539,711 from $2,387,546 for the same period in 2018, driven by higher market demand and prices[149]. - Total gross profit for the three months ended September 30, 2019 decreased by $3,310,393, or 20.1%, to $13,159,247 compared to $16,469,640 for the same period in 2018[153]. - Gross profit margin was 25.9% for the three months ended September 30, 2019, down from 28.4% for the same period in 2018[153]. - Jinong's gross profit decreased by $2,731,075, or 24.2%, to $8,562,286 for the three months ended September 30, 2019, with a gross profit margin of approximately 44.9%[154]. - Gufeng's gross profit was $1,869,209, a decrease of $299,179, or 13.8%, with a gross profit margin of approximately 11.5%[155]. - Comprehensive loss for the three months ended September 30, 2019 was $24,683,284, compared to a loss of $6,975,987 for the same period in 2018, representing an increase of 253.8%[146]. - Net income for the three months ended September 30, 2019, was $(7,315,799), a decrease of $16,327,604, or 181.2%, compared to $9,011,805 for the same period in 2018[166]. Expenses - Selling expenses for the three months ended September 30, 2019, were $3,630,355, or 7.1% of net sales, compared to $3,420,427, or 5.9% of net sales for the same period in 2018, reflecting an increase of $209,928, or 6.1%[159]. - General and administrative expenses increased to $16,341,792, or 32.2% of net sales for the three months ended September 30, 2019, from $2,309,359, or 4.0% of net sales in 2018, an increase of $14,032,432, or 607.6%[162]. Cash Flow and Assets - Cash and cash equivalents increased to $82,953,941 as of September 30, 2019, up by $10,694,137, or 14.8%, from $72,259,804 as of June 30, 2019[174]. - Net cash provided by operating activities was $3,079,634 for the three months ended September 30, 2019, a decrease of $5,439,205, or 63.8%, from $8,518,839 for the same period in 2018[176]. - Accounts receivable decreased to $138,984,949 as of September 30, 2019, down by $6,205,211, or 4.3%, from $145,190,160 as of June 30, 2019[181]. - Inventories decreased to $146,848,526 as of September 30, 2019, a decline of $15,165,363, or 9.4%, from $162,013,889 as of June 30, 2019[184]. - Advances to suppliers decreased to $29,136,516 as of September 30, 2019, representing a decrease of $3,577,301, or 10.9%, from $32,713,817 as of June 30, 2019[185]. - Customer deposits decreased to $6,164,137 as of September 30, 2019, down by $350,482, or 5.4%, from $6,514,619 as of June 30, 2019[187]. Debt and Liabilities - Gufeng's net income for the three months ended September 30, 2019, was $(11,511,954), a decrease of $12,632,298, or 1,127.5%, from $1,120,344 for the same period in 2018[171]. - As of September 30, 2019, the company had short-term debt outstanding of $3.8 million, an increase from $3.6 million as of June 30, 2019[201]. Other Financial Information - The accumulated other comprehensive loss was $37 million as of September 30, 2019, primarily due to currency fluctuations[200]. - Between July 1, 2019, and September 30, 2019, the Chinese currency depreciated by 4.2% against the U.S. dollar, impacting trade dynamics[200]. - The company maintains reserves for potential credit losses on accounts receivable, with specific policies for accounts outstanding over 180 days for Jinong and Gufeng, and over 90 days for Yuxing[194]. - Deferred assets, which represent amounts advanced to distributors for marketing and store development, had been fully amortized as of September 30, 2019[195]. - The company does not use financial instruments subject to changes in financial market conditions in the normal course of business[198]. - Management reviews customer credit worthiness and historical bad debts to evaluate the adequacy of reserves for accounts receivable[194]. - The company has not entered into any hedging transactions to mitigate exposure to foreign exchange risk[200]. - Inflationary factors may adversely affect operating results, although no material impact has been observed to date[206]. - The company’s revenue recognition policy states that sales revenue is recognized upon shipment when all criteria are met, with no product returns typically allowed[191].
CGA(CGA) - 2020 Q1 - Quarterly Report