SUNWIN STEVIA INTERNATIONAL, INC. - Quarter Report: 2020 July (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July 31, 2020

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to ___________

Commission file number: 000-53595

SUNWIN STEVIA INTERNATIONAL, INC.

(Exact name of registrant as specified in charter)

NEVADA	56-2416925
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

6 SHENGWANG AVE., QUFU, SHANDONG, CHINA	273100
(Address of principal executive offices)	(Zip Code)

(86) 537-4424999

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol (s)	Name of each exchange on which registered
None	SUWN	Not applicable

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the registrant has been submitted electronically and posted on its corporate Web site, if any, every Interactive Date File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer [ ]	Accelerated filer [ ]
Non-accelerated filer [ ]	Smaller reporting company [X]
Emerging growth company [ ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X].

Indicate the number of shares outstanding of each of the issuer's classes of common equity as of the latest practicable date: As of September 14, 2020, there were 199,632,803 shares of the registrant's common stock issued and outstanding.

SUNWIN STEVIA INTERNATIONAL, INC. AND SUBSIDIARIES

FORM 10-Q

QUARTERLY PERIOD ENDED JULY 31, 2020

INDEX

	Page
PART I-FINANCIAL INFORMATION
Item 1. Financial Statements	1

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	18

Item 3. Quantitative and Qualitative Disclosures About Market Risk	26

Item 4. Controls and Procedures	26

PART II-OTHER INFORMATION
Item 1. Legal Proceedings	27

Item 1A. Risk Factors	27

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	27

Item 3. Defaults Upon Senior Securities	27

Item 4. Mine Safety Disclosures	27

Item 5. Other Information	27

Item 6. Exhibits	28

FORWARD LOOKING STATEMENTS

This report contains forward-looking statements regarding our business, financial condition, results of operations and prospects. Words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates" and similar expressions or variations of such words are intended to identify forward-looking statements, but are not deemed to represent an all-inclusive means of identifying forward-looking statements as denoted in this report. Additionally, statements concerning future matters are forward-looking statements.

Although forward-looking statements in this report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by us. Consequently, forward-looking statements are inherently subject to risks and uncertainties and actual results and outcomes may differ materially from the results and outcomes discussed in or anticipated by the forward-looking statements. Factors that could cause or contribute to such differences in results and outcomes include, without limitation, those specifically addressed under the headings "Risks Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our annual report on Form 10-K, in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in this Form 10-Q and information contained in other reports that we file with the SEC. You are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this report.

We file reports with the SEC. The SEC maintains a website (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including us. You can also read and copy any materials we file with the SEC at the SEC's Public Reference Room at 100 F Street, NE, Washington, DC 20549. You can obtain additional information about the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.

We undertake no obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this report, except as required by law. Readers are urged to carefully review and consider the various disclosures made throughout the entirety of this quarterly report, which are designed to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations and prospects.

INDEX OF CERTAIN DEFINED TERMS USED IN THIS REPORT

We are on a fiscal year ending April 30, as such the year ending April 30, 2021 is referred to as "fiscal 2021" and the year ended April 30, 2020 is referred to as "fiscal 2020". Also, the three month period ended July 31, 2020 is our first quarter and is referred to as the "first quarter of fiscal 2021". Likewise, the three month period ended July 31, 2019 is referred to as the "first quarter of fiscal 2020".

When used in this report, the terms:
		-		"Sunwin", "we", "us" and the "Company" refers to Sunwin Stevia International, Inc., a Nevada corporation formerly known as Sunwin Neutraceuticals International, Inc., and our subsidiaries;
		-		"Sunwin Tech" refers to our wholly owned subsidiary Sunwin Tech Group, Inc., a Florida corporation, which was closed on April 30, 2018 and all of its assets and liabilities were transferred to the Company;
		-		"Qufu Natural Green" refers to our wholly owned subsidiary Qufu Natural Green Engineering Co., Ltd., a Chinese limited liability company;
		-		"Sunwin USA" refers to Sunwin USA, LLC, a Delaware limited liability company, a 100% owned subsidiary of Sunwin. Sunwin USA was previously Sunwin Stevia International Corp., a Florida corporation, it changed its name to Sunwin USA in May 2009;
		-		"Qufu Shengwang" refers to Qufu Shengwang Stevia Biology and Science Co., Ltd., a Chinese limited liability company. Qufu Natural Green owns a 100% interest in Qufu Shengwang. On July 30, 2019, Qufu Natural Green sold its 100% interest of Qufu Shengwang to a third party;
		-		"Qufu Shengren" refers to Qufu Shengren Pharmaceutical Co., Ltd., a Chinese limited liability company, and a 100% owned subsidiary of Qufu Natural Green. On April 30, 2020, the Company increased the total amount of capital of Qufu Sheng through a series of debt transfer and conversion agreements with investors, ownership of Qufu Natural Green became 61%; and
		-		“Qufu Shengren Import and Export" refers to Qufu Shengren Import and Export Co., Ltd., a Chinese limited liability company, a 100% owned subsidiary of Qufu Shengren.

We also use the following terms when referring to certain related parties:
	-		Mr. Laiwang Zhang, Chairman and a principal shareholder of our company;
	-		"Pharmaceutical Corporation" refers to Shandong Shengwang Pharmaceutical Co., Ltd., a Chinese limited liability company which is controlled by Mr. Laiwang Zhang;
	-		"Qufu Shengwang Import and Export" refers to Qufu Shengwang Import and Export Co., Ltd., a Chinese limited liability company, controlled by Mr. Zhang; and
	-		Mr. Weidong Chai, a management member of Qufu Shengren Pharmaceutical Co., Ltd.

The information which appears on our website at www.sunwininternational.com is not part of this report.

iii

ITEM I - FINANCIAL STATEMENTS

SUNWIN STEVIA INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

	July 31, 2020			April 30, 2020
	(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	875,632		$	1,137,920
Accounts receivable, net		2,109,377			2,713,567
Accounts receivable - related party		1,833,476			3,034,365
Inventories, net		13,203,055			12,874,497
Prepaid expenses and other current assets		1,024,203			693,552
Total Current Assets		19,045,743			20,453,901
Property and equipment, net		8,834,544			8,901,548
Total Assets	$	27,880,287		$	29,355,449

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses	$	10,816,147		$	8,533,131
Short-term loans		2,739,032			3,378,380
Due to related parties		2,878,273			5,072,451
Total Current Liabilities		16,433,451			16,983,962
Total Liabilities		16,433,451			16,983,962

Commitments and Contingencies

STOCKHOLDERS' EQUITY:
Preferred stock, $0.001 par value; 1,000,000 shares authorized; no shares issued and outstanding		-			-
Common stock, $0.001 par value, 200,000,000 shares authorized; 199,632,803 and 199,632,803 shares issued and outstanding as of July 31, 2020 and April 30, 2020, respectively		199,633			199,633
Additional paid-in capital		47,732,350			47,732,350
Accumulated deficit		(40,780,993	)		(40,118,394	)
Accumulated other comprehensive income		4,640,545			4,557,898
Total Sunwin Stevia International, Inc. Stockholders' Equity		11,791,535			12,371,487
Noncontrolling interest		(344,699	)		-
Total Stockholders' Equity		11,446,836			12,371,487

Total Liabilities and Stockholders' Equity	$	27,880,287		$	29,355,449


The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

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SUNWIN STEVIA INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(UNAUDITED)

	For the Three Months Ended July 31,
	2020			2019
Revenues	$	5,287,855		$	5,106,182
Revenues - related parties		1,751,823			1,783,893
Total revenues		7,039,678			6,890,075
Cost of revenues		5,262,992			4,120,629
Cost of revenues - related parties		1,609,508			1,648,239
Total cost of revenues		6,872,500			5,768,868
Gross profit		167,178			1,121,207

Operating expenses:
Selling expenses		310,915			374,432
General and administrative expenses		473,176			402,362
Research and development expenses		361,438			306,551
Total operating expenses, net		1,145,529			1,083,345
Income (loss) from operations		(978,351	)		37,862

Other (expenses) income:
Other (expenses) expenses		1,065			(1,759	)
Grant income		566			14,537
Interest income		231			84
Interest expense - related party		(16,807	)		(35,741	)
Interest expense		(62,531	)		(144,787	)
Total other expense		(77,476	)		(167,666	)
Loss from continuing operations before income taxes		(1,055,827	)		(129,804	)
Provision for income taxes		-			-
Net loss from continuing operations	$	(1,055,827	)	$	(129,804	)

Discontinued operations:
Loss from discontinued operations, net of income tax		-			(20,016	)
Loss from disposal of discontinued operations		-			(233,415	)
Loss from discontinued operations, net of income tax		-			(253,431	)
Net loss		(1,055,827	)		(383,235	)
Less: net loss attributable to noncontrolling interest		(393,228	)		-
Net loss attributable to Sunwin Stevia International, Inc.	$	(662,599	)	$	(383,235	)

Comprehensive loss:
Net loss	$	(662,599	)	$	(383,235	)
Foreign currency translation adjustment		131,176			268,559
Total comprehensive loss		(531,423	)	$	(114,676	)
Less: comprehensive loss attributable to noncontrolling interest		48,529			-
Comprehensive loss attributable to Sunwin Stevia International, Inc.	$	(579,952	)		(114,676	)
Earnings per common share attributable to Sunwin Stevia International, Inc.:
Continuing operations - basic and diluted	$	(0.00	)	$	(0.00	)
Discontinued operations - basic and diluted		-			(0.00	)
Net loss per common share attributable to Sunwin Stevia International, Inc. - basic and diluted	$	(0.00	)	$	(0.00	)
Weighted average common shares outstanding - basic and diluted		199,632,803			199,632,803

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

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SUNWIN STEVIA INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

	For the Three Months Ended July 31,
	2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(1,055,827	)	$	(383,235	)
Loss from discontinued operations		-			(253,431	)
Net loss from continuing operations		(1,055,827	)		(129,804	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation expense		304,440			270,988
Loss on disposition of property and equipment		-			20,076
Changes in operating assets and liabilities:
Accounts receivable and notes receivable		595,967			(233,798
Accounts receivable - related party		1,217,425			(89,839	)
Inventories		(189,149	)		(935,078	)
Prepaid expenses and other current assets		(290,138	)		(820,060	)
Accounts payable and accrued expenses		2,229,074			2,651,845
Taxes payable		(64,602	)		(23,053	)
NET CASH PROVIDED BY OPERATING ACTIVITIES FROM CONTINUING OPERATIONS		2,747,190			711,277
NET CASH PROVIDED BY DISCONTINUED OPERATING ACTIVITIES FROM DISCONTINUED OPERATIONS		-			1,453
NET CASH PROVIDED BY OPERATING ACTIVITIES		2,747,190			712,731

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceed from disposal of discontinued operations					726,839
Purchases of property and equipment		(137,776	)		(665,210	)
Proceed from disposal of equipment		-			5,815
NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES FROM CONTINUING OPERATIONS		(137,776	)		67,444
NET CASH USED IN INVESTING ACTIVITIES FROM DISCONTINUED OPERATIONS		-			-
NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES		(137,776	)		67,444

CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of short term loans		(666,667	)		-
Advance from related parties		3,055,118			663,686
Repayment of related party advances		(5,268,237	)		(947,046	)
NET CASH USED IN FINANCING ACTIVITIES FROM CONTINUING OPERATIONS		(2,879,786	)		(283,360	)
NET CASH USED IN FINANCING ACTIVITIES FROM DISCONTINUED OPERATIONS		-			(1,453	)
NET CASH USED IN FINANCING ACTIVITIES		(2,879,786	)		(284,813	)

EFFECT OF EXCHANGE RATE ON CASH		8,084			(4,177	)
NET (DECREASE) INCREASE IN CASH		(262,288	)		491,184

Cash at the beginning of period		1,137,920			294,199
Cash at the end of period		875,632			785,383

SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
Cash paid for income taxes	$	-		$	-
Cash paid for interest	$	16,782		$	31,329

NON-CASH INVESTING AND FINANCING ACTIVITIES:
Property and equipments acquired on credit as payable	$	1,362		$	74,989
Accrued interest payable to related party	$	4,356		$	27,978
Liability assumed in connection with discontinued operations	$	-		$	3,619,660

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

- 3 -

SUNWIN STEVIA INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(UNAUDITED)

For the Three Months Ended July 31, 2020 and 2019
	Number of Shares		Amount of Common Shares			Additional Paid-in Capital			Accumulated Deficit				Accumulated Other Comprehensive Income			Noncontrolling Interest				Total Stockholders' Equity

Balance, April 30, 2020		199,632,803		$	199,633		$	47,732,350		$	(40,118,394	)		$	4,557,898		$	-			$	12,371,487
Net loss for the three months ended July 31, 2020		-			-			-			(662,599	)			-			(393,228	)			(1,055,827	)
Foreign currency translation adjustment		-			-			-			-				82,647			48,529				131,176

Balance, July 31, 2020		199,632,803		$	199,633		$	47,732,350		$	(40,780,993	)		$	4,640,545		$	(344,699	)		$	11,446,836

	Number of Shares		Amount of Common Shares			Additional Paid-in Capital			Retained Earnings				Accumulated Other Comprehensive Income			Noncontrolling Interest				Total Stockholders' Equity

Balance, April 30, 2019		199,632,803		$	199,633		$	37,681,279		$	(38,735,711	)		$	4,391,836		$	-			$	3,537,037
Net loss for the three months ended July 31, 2019		-			-			-			(383,235	)			-			-				(383,235	)
Foreign currency translation adjustment		-			-			-			-				268,559			-				268,559

Balance, July 31, 2019		199,632,803		$	199,633		$	37,681,279		$	(39,118,946	)		$	4,660,395		$	-			$	3,422,361

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

- 4 -

SUNWIN STEVIA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JULY 31, 2020

NOTE 1 - ORGANIZATION AND OPERATIONS

DESCRIPTION OF BUSINESS

Sunwin Stevia International, Inc. ("Sunwin Stevia International"), a Nevada corporation, and its subsidiaries are referred to in this report as "we", "us", "our", "Sunwin" or the "Company".

We sell stevioside, a natural sweetener, and other pharmaceutical productions, such as Metformin. Substantially all of our operations are located in the People's Republic of China (the "PRC"). We have built an integrated company with the sourcing and production capabilities designed to meet the needs of our customers. Our operations are organized into two operating segments related to our product lines:

	-		Stevioside; and
	-		Corporate and other.

For the three months ended July 31, 2020 and fiscal year 2020, our subsidiaries included in continuing operations and discontinued operations consisted of the following:

- Sunwin Stevia International;

- Sunwin USA, LLC ("Sunwin USA"), wholly owned by Sunwin Stevia International;

- Qufu Natural Green Engineering Co., Ltd. ("Qufu Natural Green"), wholly owned by Sunwin Stevia International;

- Qufu Shengren Pharmaceutical Co., Ltd. ("Qufu Shengren"), 100% owned by Qufu Natural Green. On April 30, 2020, the Company increased the total amount of capital of Qufu Shengren through a series of debt transfer and conversion agreements with investors, ownership of Qufu Natural Green became 61%; (see Note 12)

- Qufu Shengwang Stevia Biology and Science Co., Ltd. ("Qufu Shengwang"), 100% owned by Qufu Natural Green. On July 30, 2019, Qufu Natural Green sold its 100% interest of Qufu Shengwang to a third party; and

- Qufu Shengren Import and Export Co., Ltd. (“Qufu Shengren Import and Export”), wholly owned subsidiary of Qufu Shengren.

Qufu Shengren

In fiscal 2009, Qufu Natural Green acquired Qufu Shengren for $3,097,242. The purchase price was equal to the value of the assets of Qufu Shengren as determined by an independent asset appraisal in accordance with asset appraisal principles in the PRC. Prior to being acquired by us, Qufu Shengren was engaged in the production and distribution of bulk drugs and pharmaceuticals. Subsequent to the acquisition, Qufu Shengren produces and distributes steviosides with a full range of grades from rebaudioside-A 10 to 99.

Since fiscal 2018 we invested in a new production line for Metformin as one of the new product markets we intend to branch into. Metformin is the raw material of Metformin hydrochloride tablets. Metformin is the first-line medication for the treatment of type 2 diabetes, particularly in people who are not satisfied with simple diet control, especially those with obesity and hyperinsulinemia. On July 10, 2019, our wholly owned subsidiary Qufu Shengren entered into a management agreement with Ru Yuan, an unaffiliated individual (the "Contractor"), to contract out the operation of the Metformin production line.

Qufu Shengren Import and Export

On October 9, 2019, Qufu Shengren invested RMB2,000,000 (approximately $288,000) in a new entity, Qufu Shengren Import and Export Co., Ltd., (“Qufu Shengren Import and Export”), a Chinese limited liability company, a 100% owned subsidiary of Qufu Shengren. Qufu Shengren Import and Export focuses on the export of our Stevia products, and the import and export of technology and other relevant products; we expect to increase operations in this subsidiary in the near future.

- 5 -

Sunwin USA

In fiscal year 2009, we entered into a distribution agreement with WILD Flavors to assist our 55% owned subsidiary, Sunwin USA, in the marketing and worldwide distribution of our stevioside-based sweetener products and issued WILD Flavors a 45% interest in Sunwin USA. In August 2012, the Company entered into an Exchange Agreement with WILD Flavors pursuant to which it purchased its 45% membership interest in Sunwin USA for an aggregate consideration of $1,625,874, which includes the issuance of 7,666,666 shares of our common stock valued at $1,533,333 and a cash payment of $92,541. The purchase included the product development and supply chain for OnlySweet.

Qufu Shengwang

In fiscal 2009, Qufu Natural Green acquired a 60% interest in Qufu Shengwang from its shareholder, Shandong Group, for $4,026,851. The purchase price represented 60% of the value of the net tangible assets of Qufu Shengwang as of April 30, 2008. Shandong Group is owned by Laiwang Zhang, our President and Chairman of the Board of Directors. Qufu Shengwang manufactures and sells stevia - based fertilizers and feed additives.

On September 30, 2011, Qufu Shengwang purchased the 40% equity interest in Qufu Shengwang owned by our Korean partner, Korea Stevia Company, Limited, for $626,125 in cash, and as a result of this repurchase transaction we now own 100% equity interest in all of the net assets of our subsidiary Qufu Shengwang. Therefore, the non-controlling interest of $2,109,028 in our balance sheet as of April 30, 2012 has been eliminated to reflect our 100% interest in Qufu Shengwang.

On July 1, 2012, Qufu Shengwang entered into a Cooperation Agreement with Hegeng (Beijing) Organic Farm Technology Co, Ltd. ("Hegeng"), a Chinese manufacturer and distributor of bio-fertilizers and pesticides, to jointly develop bio-bacterial fertilizers based on the residues from our stevia extraction. Under the Cooperation Agreement, Hegeng provides a strain and formula that we apply to the stevia residues to produce bio-bacterial fertilizers in the current facility of Qufu Shengwang. The bio-bacterial fertilizers will be distributed under Qufu Shengwang's name. No additional investment in the facility would be required. During the third quarter of fiscal year 2014, we decided to suspend the agreement with Hegeng due to a lack of sales since the reaction to the products was lower than anticipated in the fertilizer market.

On July 30, 2019, Qufu Shengwang was sold to an unaffiliated individual (see Note 4).

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements include the accounts of Sunwin and all our wholly-owned subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") and pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC") for interim financial reporting. The accompanying unaudited condensed consolidated financial statements for the interim periods presented are unaudited and reflect all adjustments (consisting only of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of the financial position and operating results for the periods presented. Certain financial statement amounts relating to prior periods have been reclassified to conform to the current period presentation. All intercompany accounts and transactions have been eliminated in consolidation.

These unaudited condensed consolidated interim financial statements should be read in conjunction with the financial statements and footnotes for the year ended April 30, 2020 included in our Form 10-K as filed with the SEC. The results of operations and cash flows for the three months ended July 31, 2020 are not necessarily indicative of the results of operations or cash flows which may be reported for future periods or the full fiscal year.

The condensed consolidated balance sheet as of April 30, 2020 contained herein has been derived from the audited consolidated financial statements as of April 30, 2020, but do not include all disclosures required by the U.S. GAAP.

Our unaudited condensed consolidated financial statements include the accounts of Sunwin and all our wholly-owned subsidiaries included in continuing operations and discontinued operations. All intercompany accounts and transactions have been eliminated in consolidation. Qufu Shengwang is the subsidiary with discontinued operations and our subsidiaries for continuing operations include the following:

- Qufu Natural Green;

- Qufu Shengren;

- Sunwin USA; and

- Qufu Shengren Import and Export

- 6 -

USE OF ESTIMATES

The preparation of unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include the allowance for doubtful accounts, the allowance for obsolete inventory, the useful life of property and equipment and intangible assets, assumptions used in assessing impairment of long-term assets and valuation of deferred tax assets, and the value of stock-based compensation. Actual results could differ from those estimates.

CASH AND CASH EQUIVALENTS

We consider all highly liquid investments with maturities of three months or less at the time of purchase to be cash and equivalents. As of July 31, 2020, we held $820,149 of our cash and cash equivalents with commercial banking institutions in the PRC, and $55,483 with banks in the United States. As of April 30, 2020, we held $1,054,090 of our cash and cash equivalents with commercial banking institution in PRC, and $83,830 in the United States. PRC banks protect consumers against loss if their bank or thrift institution fails, and each of our PRC bank account is insured up to RMB500,000 (approximately $71,000), As a result, cash held in PRC financial institutions of $721,996 and $946,274 is not insured as of July 31, 2020 and April 30, 2020, respectively. We have not experienced any losses in such bank accounts through July 31, 2020.

ACCOUNTS RECEIVABLE

Accounts receivable and other receivable are reported at net realizable value. We have established an allowance for doubtful accounts based upon factors pertaining to the credit risk of specific customers, historical trends, and other information. Delinquent accounts are written off when it is determined that the amounts are uncollectible after exhaustive efforts on collection. As of July 31, 2020 and April 30, 2020, the allowance for doubtful accounts was $75,460 and $74,665, respectively.

INVENTORIES

Inventories, consisting of raw materials, work in process, and finished goods related to our products, are stated at the lower of cost or estimated net realizable value that can be estimated utilizing the weighted moving average method. A reserve is established when management determines that certain slow-moving inventories may be sold at below book value. These reserves are recorded based on estimates. As of July 31, 2020, the Company did not record a reserve for slow-moving inventories. If inventory costs exceed expected market value due to obsolescence or quantities in excess of expected demand, the Company will record a write down of inventories for the difference between the lower of cost or estimated net realizable value. As of July 31, 2020 and April 30, 2020, the Company wrote down inventories of $202,903 and $113,155, respectively.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost. Depreciation and amortization are provided using the straight line method over the estimated economic lives of the assets, which range from two to thirty years. Expenditures for major renewals and betterments that extend the useful lives of property and equipment are capitalized. Expenditures for maintenance and repairs are charged to expense as incurred. In accordance with paragraph 360-10-35-17 of the Financial Accounting Standards Board (FASB) Accounting Standards Codification ("ASC"), we examine the possibility of decreases in the value of fixed assets when events or changes in circumstances reflect the fact that their recorded value may not be recoverable.

Included in property and equipment is construction-in-progress which consisted of factory improvements and machinery pending installation and included the costs of construction, machinery and equipment, and or any interest charges arising from borrowings used to finance these assets during the period of construction or installation of the assets if applicable. No provision for depreciation is made on construction-in-progress until such time as the relevant assets are completed and ready for their intended use.

LONG-LIVED ASSETS

In accordance with ASC 360, we review and evaluate our long-lived assets, including property and equipment, intangible assets, and land use rights, for impairment or when events or changes in circumstances indicate that the related carrying amounts may not be recoverable. An impairment is considered to exist if the total estimated future cash flows on an undiscounted basis are less than the carrying amount of the assets, including goodwill, if any. An impairment loss is measured and recorded based on discounted estimated future cash flows. In estimating future cash flows, assets are grouped at the lowest level for which there is identifiable cash flows that are largely independent of future cash flows from other asset groups. Our estimates of future cash flows are based on numerous assumptions and it is possible that actual future cash flows will be significantly different than the estimates. Based on our evaluation, we have determined certain long-lived assets that are no longer useful for our operations, and we recorded a loss on disposition of property and equipment of $0 and $19,842 at July 31, 2020 and April 30, 2020, respectively.

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FAIR VALUE OF FINANCIAL INSTRUMENTS

We adopted ASC Section 820-10-35-37 to measure the fair value of our financial instruments. ASC Section 820-10-35-37 establishes a common definition for fair value to be applied to existing generally accepted accounting principles that require the use of fair value measurements, establishes a framework for measuring fair value, and expands disclosure about such fair value measurements. The adoption of ASC Section 820-10-35-37 did not have an impact on our financial position or operating results, but did expand certain disclosures.

ASC Section 820-10-35-37 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, ASC Section 820-10-35-37 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below:

Level 1:	Observable inputs such as quoted market prices in active markets for identical assets or liabilities
Level 2:	Observable market-based inputs or unobservable inputs that are corroborated by market data
Level 3:	Unobservable inputs for which there is little or no market data, which require the use of the reporting entity's own assumptions.

The carrying amounts of our financial assets and liabilities, such as cash, accounts receivable, notes receivable, prepayments and other current assets, accounts payable, taxes payable and accrued expenses, approximate their fair values because of the short maturity of these instruments.

TAXES PAYABLE

We are required to charge for and to collect value added taxes (VAT) on our sales on behalf of the PRC tax authority. We record VAT that we billed our customers as VAT payable. In addition, we are required to pay value added taxes on our primary purchases. We record VAT that is charged by our vendors as VAT receivable. We are required to file VAT return on a monthly basis with the PRC tax authority, in which we are entitled to claim the VAT that we are charged by vendors as VAT credit and these credits can be applied to our VAT payable that we billed our customers. Accordingly, these VAT payable and receivable are presented as net amounts for financial statement purposes. Taxes payable as of July 31, 2020 and April 30, 2020 amounted to $204,109 and $266,708, respectively, consisted primarily of VAT taxes.

REVENUE RECOGNITION

Pursuant to the guidance of ASC 606, we record revenue when persuasive evidence of an arrangement exists, product delivery has occurred, the sales price to the customer is fixed or determinable, and collectability is reasonably assured. The adoption of this guidance did not have a material impact on our unaudited condensed consolidated financial statements.

In accordance with ASC 606, we recognize revenues from the sale of stevia and other productions upon shipment and transfer of title based on the trade terms. All product sales with customer specific acceptance provisions are recognized upon customer acceptance and the delivery of the products. We report revenues net of applicable sales taxes and related surcharges. The Company determines revenue recognition through the following steps:

	•	Identify the contract with a customer;
	•	Identify the performance obligations in the contract;
	•	Determine the transaction price;
	•	Allocate the transaction price to the performance obligations in the contract; and
	•	Recognize revenue when (or as) the entity satisfies a performance obligation.

The Company is also a lessor, which is an entity that is lease underlying asset to the third party, The Company’s lease revenue is recognized under ASC Topic 842, Leases, (“ASC 842”), which was adopted on May 1, 2019. In general, the Company commences rental revenue recognition when the tenant takes possession of the leased space and the leased space is substantially ready for its intended use. The Company’s lease has been accounted for as operating lease. Rental revenue is recognized on a straight-line basis over the terms of the lease of five years. Actual amounts billed in accordance with the lease during any given period may have been higher or lower than the amount of rental revenue recognized for the period. The difference by which straight-line rental revenue exceeded rents billed in accordance with lease agreements is recorded as “accounts receivable”. The difference by which rents billed in accordance with lease agreements exceeded straight-line rental revenue is recorded as “advances from customer”. The Company does not offset lease income and lease expense.

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GRANT INCOME

Grants received from PRC government agencies are recognized as deferred grant income and recognized in the unaudited condensed consolidated statements of operations and comprehensive loss as and when they are earned for the specific research and development projects for which these grants are designated for.

INCOME TAXES

The Company has adopted Accounting Standards Codification subtopic 740-10, Income Taxes ("ASC 740-10") which requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statement or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are recorded to reduce the deferred tax assets to an amount that it is more likely than not be realized.

We file federal and state income tax returns in the United States for our corporate operations pursuant to the U.S. Internal Revenue Code of 1986, as amended, and file separate foreign tax returns for our Chinese subsidiaries pursuant to the China's Unified Corporate Income Tax Law.

We apply the provisions of ASC 740-10-50, "Accounting for Uncertainty in Income Taxes", which provides clarification related to the process associated with accounting for uncertain tax positions recognized in our consolidated financial statements. Audit periods remain open for review until the statute of limitations has passed. The completion of review or the expiration of the statute of limitations for a given audit period could result in an adjustment to the Company's liability for income taxes. Any such adjustment could be material to the Company's results of operations for any given quarterly or annual period based, in part, upon the results of operations for the given period. As of July 31, 2020, the Company had no uncertain tax positions, and will continue to evaluate for uncertain positions in the future.

BASIC AND DILUTED EARNINGS PER SHARE

Pursuant to ASC Section 260-10-45, basic loss per common share is computed by dividing loss available to common shareholders by the weighted average number of shares of common stock outstanding for the periods presented. Diluted loss per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that would then share in the income of ours, subject to anti-dilution limitations. The following table presents a reconciliation of basic and diluted net income per common share:

	For Three Months Ended July 31,
	2020			2019
Numerator:
Net Loss attributable to Sunwin Stevia International, Inc.	$	(662,599	)	$	(383,235	)
Net loss from continuing operations	$	(662,599	)	$	(129,804	)
Net loss from discontinued operation		-			(253,431	)
Denominator:
Denominator for basic earnings per share - weighted average number of common shares outstanding		199,632,803			199,632,803
Stock awards, options, and warrants		-			-
Denominator for diluted earnings per share - weighted average number of common shares outstanding		199,632,803			199,632,803
Basic and diluted loss per common share attributable to Sunwin Stevia International, Inc.:
Net loss from continuing operations - basic and diluted	$	(0.00	)	$	(0.00	)
Net loss from discontinued operations - basic and diluted		-			(0.00	)
Net loss per common share - basic and diluted	$	(0.00	)		(0.00	)

FOREIGN CURRENCY TRANSLATION

Transactions and balances originally denominated in U.S. dollars are presented at their original amounts. Transactions and balances in other currencies are converted into U.S. dollars in accordance with ASC Section 830-20-35 and are included in determining net income or loss.

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The reporting currency of the Company is the U.S. dollar. The functional currency of the parent company is the U.S. dollar and the functional currency of the Company's operating subsidiaries is the Chinese Renminbi ("RMB"). In accordance with ASC 830-20-35, the consolidated financial statements were translated into United States dollars using balance sheet date rates of exchange for assets and liabilities, and average rates of exchange for the period for the income statements and cash flows. Equity accounts were stated at their historical rate. Net gains and losses resulting from foreign exchange transactions are included in the consolidated statements of operations. Translation adjustments resulting from the process of translating the local currency financial statements into U.S. dollars are included in other comprehensive income or loss.

RMB is not a fully convertible currency. All foreign exchange transactions involving RMB must take place either through the People's Bank of China (the "PBOC") or other institutions authorized to buy and sell foreign exchange. The exchange rate adopted for the foreign exchange transactions are the rates of exchange quoted by the PBOC, which are determined largely by supply and demand. Translation of amounts from RMB into United States dollars ("$") was made at the following exchange rates for the respective periods:

As of July 31, 2020	RMB 6.97 to $1.00
As of April 30, 2020	RMB 7.05 to $1.00

Three months ended July 31, 2020	RMB 7.07 to $1.00
Three months ended July 31, 2019	RMB 6.88 to $1.00

COMPREHENSIVE LOSS

Comprehensive loss is comprised of net loss and all changes to the statements of stockholders' equity, except those due to investments by stockholders, changes in paid-in capital and distributions to stockholders. For the Company, comprehensive loss for the three months ended July 31, 2020 and 2019 included net loss and unrealized gains from foreign currency translation adjustments.

STOCK BASED COMPENSATION

Stock-based compensation is accounted for based on the requirements of the Share-Based Payment topic of ASC 718 which requires recognition in the financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). ASC 718 also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award.

RESEARCH AND DEVELOPMENT

Research and development costs are expensed as incurred and are included in general and administrative expenses in the accompanying statements of operations. Research and development costs are incurred on a project specific basis. Research and development costs were $361,438 and $306,551 for the three months ended July 31, 2020 and 2019, respectively.

SHIPPING COSTS

Shipping costs are included in selling expenses and totaled $16,516 and $22,895 for the three months ended July 31, 2020 and 2019, respectively.

ADVERTISING

Advertising is expensed as incurred and is included in selling expenses and totaled $14,433 and $39,354 for the three months ended July 31, 2020 and 2019, respectively.

RECLASSIFICATIONS

Certain prior year amounts have been reclassified to conform to the current period presentation for amounts related to the discontinue operations (see Note 4). These reclassifications had no impact on net earnings and financial position.

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SEGMENT REPORTING

The Company uses the "management approach" in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company's chief operating decision maker for making operating decisions and assessing performance as the source for determining the Company's reportable segments. The Company's chief operating decision maker has been identified as the chief executive officer of the Company who reviews financial information of separate operating segments based on U.S. GAAP. The chief operating decision maker now reviews results analyzed by customer. This analysis is only presented at the revenue level with no allocation of direct or indirect costs. Consequently, the Company has determined that it has only one operating segment.

RECENT ACCOUNTING PRONOUNCEMENTS

In December 2019, the FASB issued ASU 2019-12 - Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This ASU provides an exception to the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year. This update also (1) requires an entity to recognize a franchise tax (or similar tax) that is partially based on income as an income-based tax and account for any incremental amount incurred as a non-income-based tax, (2) requires an entity to evaluate when a step-up in the tax basis of goodwill should be considered part of the business combination in which goodwill was originally recognized for accounting purposes and when it should be considered a separate transaction, and (3) requires that an entity reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date. The standard is effective for the Company for fiscal years beginning after December 15, 2020, with early adoption permitted. The Company is currently in the process of evaluating the impact of the adoption on its consolidated financial statements.

A variety of proposed or otherwise potential accounting standards are currently under study by standard setting organizations and various regulatory agencies. Due to the tentative and preliminary nature of those proposed standards, we have not determined whether implementation of such proposed standards would be material to our consolidated financial statements.

GOING CONCERN

Our unaudited condensed consolidated financial statements have been prepared assuming we will continue as a going concern. The Company has incurred recurring losses with a net loss of approximately $1,056,000 for the three months ended July 31, 2020 and has a significant accumulated deficit of $40.8 million as of July 31, 2020. The Company's cash balance and revenues generated are not currently sufficient and cannot be projected to cover operating expenses for the next twelve months from the date of this report. These factors raise doubt as to the ability of the Company to continue as a going concern. Management's plans include attempting to improve its business profitability, its ability to generate sufficient cash flow from its operations to meet its operating needs on a timely basis, obtain additional working capital funds through debt and equity financings, and restructure on-going operations to eliminate inefficiencies to raise cash balance in order to meet its anticipated cash requirements for the next twelve months from the date of this report. Management intends to make every effort to identify and develop sources of funds. The outcome of these matters cannot be predicted at this time. There can be no assurance that any additional financings will be available to the Company on satisfactory terms and conditions, if at all.

The ability of the Company to continue as a going concern is dependent upon its ability to achieve profitable operations and raise additional capital. The accompanying unaudited condensed consolidated financial statements do not include any adjustments related to the recoverability or classification of asset-carrying amount or the amounts and classification of liabilities that may result should the Company be unable to continue as a going concern.

NOTE 3 - NONCONTROLLING INTEREST

Noncontrolling interest on the consolidated balance sheets resulted from the consolidation of Shengren, a 61.3% owned subsidiary starting from April 30, 2020. An individual investor and Shandong Yulong Mining Group Co., Ltd. (“Yulong”) hold 38.4% and 0.3% of the equity interest in Shengren effective at the end of date, April 30, 2020, respectively, pursuant to a series of debt transfer and conversion agreements entered into on April 30, 2020 between seven individual creditors and three suppliers, an individual investor with Yulong and Qufu Shengren. Noncontrolling interest amounted to a deficit of $344,699 as of July 31, 2020.

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NOTE 4 - DISCONTINUED OPERATIONS

On July 30, 2019, Qufu Natural Green entered into an Asset Transfer Agreement with Na Li, an unaffiliated individual (the "Buyer") for the sale of 100% equity ownership of Qufu Shengwang. Pursuant to the Asset Transfer Agreement, the Buyer shall pay to Qufu Natural Green a total cash consideration of RMB8,000,000 (approximately $1,163,000) based on the estimated net book value as of July 30, 2019. The Buyer assumed all assets and liabilities of Qufu Shengwang including the amount of Qufu Shengwang owes to Qufu Natural Green of approximately RMB26,000,000 (approximately $3,779,000), and Qufu Natural Green shall assist in completing all documents required for the equity transfer after confirming the receipt of the first payment. The Company received the first installment of RMB5,000,000 on July 30, 2019, and received the second installment of RMB3,000,000 on August 20, 2019. The Buyer settled all liabilities of Qufu Shengwang due to Natural Green by assuming the liabilities on behalf of Qufu Shengren in the amount of approximately RMB 26,000,000 (approximately $3,779,000) due to another third party.

The Company did not have assets and liabilities on discontinued operations in the Company's condensed consolidated financial statements as of July 31, 2020 and April 30, 2020. The following table presents the results of discontinued operations in the three months ended July 31, 2020 and 2019:

	For the Three Months Ended July 31,
	2020		2019

Revenues	$	-	$	733,441
Cost of revenues		-		572,357
Gross profit		-		161,084
Operating expenses		-		172,142
Other income, net		-		8,958
Loss before income taxes		-		20,016
Income tax expense				-

Loss from discontinued operations		-		20,016
Loss from disposal, net of taxes		-		233,415
Total loss from discontinued operations	$	-	$	253,431

For the three months ended July 31, 2020 and 2019, loss from discontinued operations amounted to $0 and $20,016. The Company realized a loss of $233,415 from the disposal of 100% equity of Qufu Shengwang, which was reflected as loss from sale of discontinued operations on the condensed consolidated statement of operations for the three months ended July 31, 2019.

NOTE 5 - INVENTORIES

As of July 31, 2020 and April 30, 2020, inventories consisted of the following:

	July 31, 2020		April 30, 2020
	(unaudited)
Raw materials	$	3,541,783	$	4,676,361
Work in process		4,358,351		3,235,156
Finished goods		5,302,921		4,962,980
		13,203,055		12,874,497
Less: reserve for obsolete inventory		-		-
	$	13,203,055	$	12,874,497

NOTE 6 - PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets as of July 31, 2020 and April 30, 2020 totaled $1,024,203 and $693,552, respectively. As of July 31, 2020, prepaid expenses and other current assets includes $841,201 prepayments to suppliers for merchandise that had not been shipped to us and services that had not been provided to us, and $183,002 for business related employees' advances. As of April 30, 2020, prepaid expenses and other current assets includes $510,723 prepayments to suppliers for merchandise that had not been shipped to us and services that had not been provided to us and $182,829 for business related employees' advances.

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NOTE 7 - PROPERTY AND EQUIPMENT

As of July 31, 2020 and April 30, 2020, property and equipment consisted of the following:

		July 31, 2020			April 30, 2020
Estimated Life		(unaudited)
Office equipment	3-15 Years	$	398,210		$	394,019
Auto and trucks	2-10 Years		592,602			586,364
Manufacturing equipment	2-15 Years		6,772,918			6,559,726
Buildings	5-30 Years		9,349,881			9,248,227
Construction in process			7,917			7,834
			17,121,528			16,796,170
Less: accumulated depreciation			(8,286,984	)		(7,894,622	)
		$	8,834,544		$	8,901,548

For the three months ended July 31, 2020 and 2019, depreciation expense totaled $304,440 and $270,988, of which $282,725 and $232,587 were included in cost of revenues, respectively, and of which $21,716 and $38,401 were included in general and administrative expenses, respectively. Depreciation is not taken during the period of construction or equipment installation. Upon completion of the installation of manufacturing equipment or any construction in progress, construction in progress balances will be classified to their respective property and equipment category.

NOTE 8 - RELATED PARTY TRANSACTIONS

Accounts receivable - related party and revenue - related party

As of July 31, 2020 and April 30, 2020, $1,833,476 and $3,034,365 in accounts receivable - related party, respectively, were related to sales of products to Qufu Shengwang Import and Export Co., Ltd. ("Qufu Shengwang Import and Export"), a Chinese entity owned by our Chairman, Mr. Laiwang Zhang. For the three months ended July 31, 2020 and 2019, we recorded revenue - related party and cost of revenue – related party of $1,751,823 and $1,783,893, and $1,609,508 and $1,648,239, respectively, from Qufu Shengwang Import and Export.

Due to (from) related parties

From time to time, we receive advances from related parties and advance funds to related parties for working capital purposes. In the three months ended July 31, 2020 and 2019, we received advances from related parties for working capital that totaled $3,055,118 and $663,686, respectively, and we repaid to related parties a total of $5,268,237 and $947,046, respectively.

In the three months ended July 31, 2020 and 2019, interest expense related to due to related parties amounted to $16,807 and $35,741, respectively, which were included in interest expense in the accompanying condensed consolidated statements of operations and comprehensive loss, and in connection with the advances of RMB5,000,000 (approximately $717,000) and RMB8,000,000 (approximately $1,147,000) from Shangdong Shengwang Pharmaceutical Co., Ltd. ("Pharmaceutical Corporation"), a Chinese entity owned by our Chairman, Mr. Laiwang Zhang. These advances bear interest at the rate of 7.0% and 6.3% per annum, respectively. On December 12, 2019 and August 9, 2020, we repaid in full amount of the above advance of RMB8,000,000 and RMB5,000,000 with accrued interests, respectively.

On September 23, 2018, the Company borrowed a one-year loan of RMB1,110,000 (approximately $159,000) from Weidong Cai, a management member of Qufu Shengren, bearing an annual interest rate of 10%. On September 23, 2019, the parties extended the loan for another year, under the same terms and conditions, reclassified unpaid interest payable to the principal of this loan, resulting in an increase of principal from RMB1,110,000 (approximately $159,000) to RMB1,221,000 (approximately $175,000).

As of July 31, 2020, the balance we owed Pharmaceutical Corporation, and Mr. Weidong Chai amounted to $3,275,854, and $190,023, respectively. Qufu Shengwang Import and Export owed the Company $587,604 as of July 31, 2020. On April 30, 2020, the balance we owed to Pharmaceutical Corporation, Qufu Shengwang Import and Export and Mr. Weidong Chai amounted to $3,981,915, $906,879, and $183,657, respectively.

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As of July 31, 2020 and April 30, 2020, balance due to (from) related party activities consisted of the following:

	Shandong Shengwang Pharmaceutical Co., Ltd.			Qufu Shengwang Import and Export Co., Ltd.			Mr. Wedong Chai		Total
Balance due to related parties, April 30, 2020	$	3,981,915		$	906,879		$	183,657	$	5,072,451
Working capital advances from related parties		-			3,050,762			4,355		3,055,117
Repayments		(738,867	)		(4,529,370	)		-		(5,268,237	)
Effect of foreign currency exchange		32,806			(15,875	)		2,011		18,942
Balance due to related parties, July 31, 2020	$	3,275,854		$	(587,604	)	$	190,023	$	2,878,273

NOTE 9 - OPERATING LEASE

On July 10, 2019, we entered into the Metformin Production Line Operation Management Agreement (the “Agreement”) with Ru Yuan, an unaffiliated individual, to contract out the Metformin production line which was built by the Company. Under the terms of this agreement, Ru Yuan's (“lessee”) lease includes the fixed assets of Metformin production line including buildings, manufacturing equipment and construction in process. The lessee will pay to Qufu Shengren an annual contract fee of RMB3,000,000 (approximately $436,000) in July every year. On August 1, 2019, the Company (“lessor”) signed an addendum for Agreement with lessee to clarify the term of lease for five years, with conditional renewal options and the Company has the right to monitor operating and provide maintenance service for the underlying assets of the Metformin production line. The Company also has the right to terminate the Agreement if lessee fails to make payment timely. Under our analysis with the new lease standard, this lease agreement is classified as a cancellable operating lease. The Company received a total amount of RMB3,000,000 lease payment and the lease deposit of RMB1,000,000 as guarantee in 2019. The Company recorded a revenue of $308,770 from this operating lease in fiscal 2020, and the Company recorded a revenue of $97,392 from this operating lease for the first quarter of fiscal 2021. The Company received the second year's lease payment in August 2020.

NOTE 10 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses included the following as of July 31, 2020 and April 30, 2020:

Account	July 31, 2020		April 30, 2020
	(unaudited)
Accounts payable	$	8,064,960	$	6,443,200
Advanced from customers		67,268		172,512
Accrued salary payable		256,991		142,199
Tax payable		204,109		266,708
Other payable*		2,222,819		1,508,512
Total accounts payable and accrued expenses	$	10,816,147	$	8,533,131

* As of on July 31, 2020, other payables consists of general liability, worker's compensation, and medical insurance payable of $404,780, consulting fee payable of $212,238, union and education fees payable of $127,139, interest payables for short-term loans of $325,831, safety production fund payable of $171,083, advances from the employees of $284,453, security deposit for sub-contractor of $143,373 and other miscellaneous payables of $553,922. As of April 30, 2020, other payables consists of general liability, worker's compensation, and medical insurance payable of $409,811, consulting and service fee payable of $256,304, union and education fees payable of $125,800, interest payables for short-term loans of $129,976, safety production fund payable of $140,274, advances from the employees of $98,775, deposit for operating lease of $141,864 and other miscellaneous payables of $205,708.

NOTE 11 -LOAN PAYABLE

Short-term loan payable

Short-term loans are obtained from various individual lenders that are due within one year for working capital purpose. These loans are unsecured and can be renewed with 10 days advance notice prior to maturity date. As of July 31, 2020 and April 30, 2020, short-term loans consisted of the following:

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	July 31, 2020		April 30, 2020
	(unaudited)
Loan from Min Wu, an employee of Qufu Shengren, due on October 5, 2020, with an annual interest rate of 10%, renewed at October 6, 2019.	$	31,542	$	31,210
Loans from Jianjun Yan, non-related individual, due on October 6, 2020, with an annual interest rate of 10% at October 7, 2017, renewed at on October 7, 2019.		1,269,928		1,256,562
Loan from Jianjun Yan, non-related individual, due on March 31, 2021, with annual interest rate of 4%, renewed at April 1, 2020.		713,956		1,202,965
Loan from Junzhen Zhang, non-related individual, due on October 5, 2020, with an annual interest rate of 10%, renewed at October 6, 2019.		22,940		22,698
Loan from Jian Chen, non-related individual, due on January 27, 2021 and April 11, 2021, bearing an annual interest rate of 10%, with the principal amount of RMB770,000 ($109,236) and RMB440,000 ($62,420), renewed on January 27, 2020 and April 11, 2020, respectively. The Company repaid off these loans and accrued interest to him as of July 31, 2020.		-		171,656
Loan from Qing Kong, non-related individual, due on March 6, 2021, with an annual interest rate of 10%, renewed on March 7, 2020.		83,157		82,281
Loan from Qing Kong, non-related individual, due on January 8, 2021, with an annual interest rate of 10%, renewed on January 9, 2020.		34,696		34,331
Loan from Guihai Chen, non-related individual, due on March 9, 2021, with an annual interest rate of 10%, renewed on March 10, 2020.		20,789		20,570
Loan from Guihai Chen, non-related individual, due on September 20, 2020, with an annual interest rate of 10%, renewed at September 21, 2019.		31,542		31,210
Loan Weifeng Kong, non-related individual, due on November 28, 2020, with an annual interest rate of 10%, renewed on November 29, 2019.		28,675		28,373
Loan from Huagui Yong, non-related individual, due on April 8, 2021, with an annual interest rate of 6.3% at April 9, 2020.		71,687		70,932
Loan from Guohui Zhang, non-related individual, due on January 16, 2021, with an annual interest rate of 4% at January 17, 2020.		430,120		425,592
Total	$	2,739,032	$	3,378,380

For the three months ended July 31, 2020 and 2019, interest expense related to short-term loans amounted to $62,531 and $144,787, respectively, which were included in interest expense in the accompanying unaudited condensed consolidated statements of operations and comprehensive loss.

NOTE 12 - STOCKHOLDERS' EQUITY

As of July 31, 2020, we are authorized to issue 200,000,000 shares of common stock. We had 199,632,803 shares issued and outstanding as of July 31, 2020 and April 30, 2020.

In April 2020, management made the decision to increase the operating capital of Qufu Shengren from the original RMB 19,680,000 (approximately $2,800,000) to RMB 183,000,000 (approximately $26,000,000), this will allow the Company to better focus on our Stevia operation and increase investment in our research and production. The increase of capital will come from additional funding of RMB 92,470,000 (approximately $13,100,000) from Qufu Natural Green, and RMB 70,850,000 (approximately $10,000,000) debt to equity conversion of multiple creditors. On April 30, 2020, seven individual creditors and three suppliers, an individual investor and Qufu Shengren entered into a series of debt transfer and conversion agreements, the individual creditors and suppliers agreed to transfer the full amount of their receivable, including principal and interest due from Qufu Shengren, at full value, to the individual investor. The individual investor then converted the full amount of the debts into equity and transferred a part of that equity to Shangdong Yulong Mining Group Co., Ltd. ("Yulong"). The individual investor and Yulong became minority shareholders of Qufu Shengren as of April 30, 2020, accounting for 38.4% and 0.3%, respectively.

NOTE 13 - SEGMENT INFORMATION

The following information is presented in accordance with ASC Topic 280, "Segment Reporting", for the three months ended July 31, 2020 and 2019; we accounted for two reportable business segments - (1) natural sweetener (stevioside), and (2) corporate and other pharmaceutical. Our reportable segments are strategic business units that offer different products and are managed separately based on the fundamental differences in their operations. Condensed financial information with respect to these reportable business segments for the three months ended July 31, 2020 and 2019 is as follows:

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	Three Months Ended July 31,
	2020			2019
Revenues:
Stevioside - third party	$	5,190,463		$	4,527,666
Stevioside - related party		1,751,823			1,783,893
Total Stevioside		6,942,286			6,311,559
Corporate and other – third party		97,392			578,516
Corporate and other – related party		-			-
Total Corporate and other		97,392			578,516
Total segment and consolidated revenues	$	7,039,678		$	6,890,075

Interest expense:
Stevioside	$	79,107		$	180,444
Corporate and other		-			-
Total segment and consolidated interest expense	$	79,107		$	180,444

Depreciation and amortization:
Stevioside	$	253,776		$	199,222
Corporate and other		50,664			71,766
Total segment and consolidated depreciation and amortization	$	304,440		$	270,988

Income (loss) from continuing operations before income taxes:
Stevioside	$	(1,064,253	)	$	(165,071	)
Corporate and other		8,426			35,267
Total loss from continuing operations before income taxes	$	(1,055,827	)	$	(129,804	)

	July 31, 2020			April 30, 2020
Segment property and equipment:
Stevioside		$	6,994,948		$	6,976,153
Corporate and other			1,839,596			1,925,395
Total property and equipment		$	8,834,544		$	8,901,548

NOTE 14 - CONCENTRATIONS AND CREDIT RISK

(i) Customer Concentrations

For the three months ended July 31, 2020 and 2019, customers accounting for 10% or more of the Company's revenue were as follows:

	Three Months Ended July 31,
Customer	2020			2019
A (1)		24.9	%		25.9	%
B		-			21.6	%
C		37.1	%		*

(1)	Qufu Shengwang Import and Export Co., Ltd is a related party.

* Less than 10%.

(ii) Vendor Concentrations

For the three months ended July 31, 2020 and 2019, suppliers accounting for 10% or more of the Company's purchase were as follows:

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	Three Months Ended July 31,
Supplier	2020			2019
A		27.2	%		*
B		18.0	%		10.8	%
C		10.1	%		18.6	%
D		*			18.0	%
E		10.8	%		*
*Less than 10%.

(iii) Credit Risk

Financial instruments which potentially subject us to concentrations of credit risk consist principally of cash and trade accounts receivable. We place our cash with high credit quality financial institutions in the United States and the PRC. As of July 31, 2020 and April 30, 2020, we had $820,149 and $1,054,090 of cash balance held in PRC banks, respectively. PRC banks protect consumers against loss if their bank or thrift institution fails, and each of our PRC bank account is insured up to RMB500,000 (approximately $71,000). As a result, cash held in PRC financial institutions of $721,996 and $946,274 are not insured as of July 31, 2020 and April 30, 2020. We have not experienced any losses in such accounts through July 31, 2020. Our cash position by geographic area was as follows:

Country:	July 31, 2020				April 30, 2020
United States	$	55,483	6.3	%	$	83,830	7.4	%
China		820,149	93.7	%		1,054,090	92.6	%
Total cash and cash equivalents	$	875,632	100.00	%	$	1,137,920	100.00	%

Almost all of our sales are credit sales which are primarily to customers whose ability to pay is dependent upon the industry economics prevailing in these areas; however, we believe that the concentration of credit risk with respect to trade accounts receivable is limited due to generally short payment terms. We also perform ongoing credit evaluations of our customers to help further reduce potential credit risk.

NOTE 15 - SUBSEQUENT EVENTS

Our management has evaluated all activities subsequent to our balance sheet date through the issuance date of this report and concluded that no subsequent events have occurred that would require adjustments or disclosures to the accompanying unaudited condensed consolidated financial statements.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the information contained in the preceding unaudited condensed consolidated financial statements and footnotes and our 2020 Annual Report on Form 10-K for fiscal year ended April 30, 2020.

OVERVIEW

We sell stevioside, a natural sweetener. Stevioside is a natural zero calorie sweetener extracted from the leaf of the stevia plants.. Substantially all of our operations are located in the PRC. We have built an integrated company with the production and distribution capabilities designed to meet the needs of our customers.

Our operations were organized in two operating segments related to our product lines:

	-		Stevioside, and
	-		Corporate and other.

Going Concern

The accompanying unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has a significant accumulated deficit and incurred recurring losses. The Company's cash balance and revenues generated are not currently sufficient and cannot be projected to cover operating expenses for the next twelve months from the date of this report. These factors raise doubt as to the ability of the Company to continue as a going concern. Management's plans include attempting to improve its business profitability, its ability to generate sufficient cash flow from its operations to meet its operating needs on a timely basis, obtain additional working capital funds through debt and equity financings, and restructure on-going operations to eliminate inefficiencies to raise cash balance in order to meet its anticipated cash requirements for the next twelve months from the date of this report. Management intends to make every effort to improve its current sales forecast to further develop and expand the international markets for its new products as well as continuing with the current sources of funds to meet working capitals needs on as needed basis. There can be no assurance that these plans and arrangements will be successful.

Recent Developments

Sunwin Stevia has approximately 1,300 metric tons of manufacturing capacity per year to produce various specification of stevia extracts. With these manufacturing facilities, Sunwin Stevia is able to deliver stevia products containing Rebaudioside A in a range of 50% to 99% with a format of powder, granular, or tablet; as well as Rebaudioside B, Rebaudioside D, Rebaudioside M and enzyme treated stevia products. In 2020, we have made technical upgrades on our enzyme treated stevia production line, improving the production process of our enzyme treated stevia products.

In April 2020, management made the decision to increase the operating capital of Qufu Shengren from the original RMB 19,680,000 (approximately $2,800,000) to RMB 183,000,000 (approximately $26,000,000), this will allow for the Company to better focus on our Stevia operation and increase investment to our research and production. The increase of capital will come from additional funding of RMB 92,470,000 (approximately $13,100,000) from Qufu Natural Green, and RMB 70,850,000 (approximately $10,000,000) debt to equity conversion of multiple creditors. On April 30, 2020, seven individual creditors and three suppliers, an individual investor and Qufu Shengren entered into a series of debt transfer and conversion agreements, the individual creditors and suppliers agreed to transfer the full amount of their receivable, including principal and interest due from Qufu Shengren, at full value, to the individual investor. The individual investor then converted the full amount of the debts into equity and transferred a part of that equity to Shangdong Yulong Mining Group Co., Ltd. ("Yulong"). The individual investor and Yulong became minority shareholders of Qufu Shengren as of April 30, 2020, accounting for 38.4% and 0.3%, respectively.

We believe this addition in capital will greatly benefit our stevia product development, manufacturing, and marketing effort. With the increased capital, we will be able to focus more on our technology advancements, improvement in manufacturing process and increase our production capacity.

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Impact of COVID-19 Pandemic on the Company’s Operations

Since early 2020, the epidemic of the novel strain of coronavirus (COVID-19) (the “COVID-19 pandemic”) has spread across China and other countries, and has adversely affected businesses and economic activities in the first quarter of 2020 and beyond. The Company followed the restrictive measures implemented in China, by suspending onsite operation in January, 2020 and having employees work remotely until late March 2020, when the Company assessed the situation and started to gradually resume normal operation at areas deemed safe while implementing effective health measures. Consequently, the COVID-19 pandemic may adversely affect the Company’s business operations, financial condition and operating results for 2020, including but not limited to material negative impact to the Company’s total revenues, production capability, ability to conduct marketing and sales, and slower collection of accounts receivables. We are able to maintain certain income from previous existing orders and finished products, however, we anticipate significant economic impact related to COVID-19. Due to the high uncertainty of the evolving situation, the Company has limited foresight on the full impact brought upon by the COVID-19 pandemic and the related financial impact cannot be estimated at this time.

We are monitoring the global outbreak and spread of COVID-19 and taking steps in an effort to identify and mitigate the adverse impacts on, and risks to, our business (including but not limited to our employees, customers, and other business partners) posed by its spread and the governmental and community reactions thereto. We continue to assess and update our business continuity plans in the context of this pandemic, including taking steps in an effort to help keep our workforces healthy and safe. The spread of COVID-19 has caused us to modify our business practices (including warehouse and production procedures, employee travel, employee work locations in certain cases, and cancellation of physical participation in certain meetings, events and conferences), and we expect to take further actions as may be required or recommended by government authorities or as we determine are in the best interests of our employees, customers and other business partners. We are also working with our suppliers to understand the existing and future negative impacts, and to take actions in an effort to mitigate such impacts.

OUR PERFORMANCE

Our revenues totaled approximately $7,040,000 during the three months ended July 31, 2020, an increase of 2.2%, as compared with the same period in 2019, and our gross margin decreased to 2.4% from 16.3%. Our total operating expenses in the three months ended July 31, 2020 increased by approximately $62,000, or 5.7% compared to the same period in 2019 primarily due to an increase of approximately $71,000, or 17.6% in general and administrative expense and an increase of approximately $55,000, or 17.9% in research and development expenses, offset by a decrease of approximately $64,000, or 17.0% in selling expense. Our net loss from continuing operations for the three months ended July 31, 2020 was approximately $1,056,000, compared to a net loss from continuing operations of $130,000 in the same period in fiscal 2020.

Our operating performance for the three months ended July 31, 2020 showed an increase of 2.2% in sales revenue of from stevia products, including a 3.6% increase in sales to third parties, and offset by a decrease in sales to related party customers of approximately 1.8%.

While we have broadened our stevia product offerings to include a number of higher quality stevia grades needed in new product formulations we are developing to introduce to the U.S. and European food and beverage industry, the demand for higher grade stevia products has yet to materialize to the degree we had anticipated, and we hope that our sales volume in higher grade stevia products will increase in fiscal 2022 as demand resumes and increases after the effects of the global pandemic. Stevia has become more widely accepted by the food industry and many new stevia manufacturers have entered this industry in the past few years; recently we have introduced a new product line. We are now focusing on new types of stevia products, including tablets, liquid, High A products, and others. We expect to consistently increase our sales of our new products; however, we cannot quantify this increase and its effects on future periods.

Our Outlook

We believe that there are significant opportunities for worldwide growth in our Stevioside segment, not only in the U.S. and EU markets but also in our domestic market. For the fiscal year ended April 30, 2020 and beyond, we will continue to focus on our core business of producing and selling stevioside series products.

Currently there is a world-wide movement of lowering sugar intake, and more and more consumers are becoming aware of the health benefits associated with reduction of sugar intake. According to research data, 40% of Chinese consumers stated that they "will not mind paying more for food and beverages with more natural ingredients" and 80% of the interview consumers express a goal of "having a healthier diet". We believe that, in this search of a more natural and healthy diet and lifestyle, natural sweeteners such as stevia will become the mainstream sweetener in the food and beverage markets.

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Some of the recent favorable observations related to the stevia markets in fiscal 2020 include:

	-		Chinese domestic food and beverages, particularly herbal tea manufacturers and the pharmaceutical industry, have increased the use of steviosides, and new health awareness trends have also resulted in some new governing laws supporting the growth of this industry;
	-		Southeast and South Asia have renewed and increased their interest in stevia, particularly high grade stevia;
	-		New global product launches mentioning stevia have increased 13% per year on average from 2014 to 2018; and
	-		Stevia has been growing in popularity in the last 10 years throughout all the global markets.

Meanwhile, we are also facing challenges in competitive pricing and raw materials for the fiscal years ended April 30, 2020 and 2019, as well as negative impact from the global COVID-19 pandemic. During the fiscal years ended April 30, 2020, the market prices of stevioside products continue to be impacted by strong price competition among Chinese manufacturers. With this being a product gaining large market shares in China, in the recent years we have seen many competitors entering the market. These new competitors use lower pricing as their effort to gain market share as they initially entering the market, thus driving down the average prices for stevia products. We expect the pressure from pricing competition to continue in fiscal 2021. We anticipate the price of stevia leaves, the raw material used to produce our stevioside series products, will also continue to increase in fiscal 2021 since the demand for raw material may increase as the market grows, while the production of the raw material experiences negative impact due to the global pandemic.

We intend to make adjustments internally in order to better operate in this market; our goal is to increase sales and develop new client bases through our marketing effort, decrease our production expenses while maintaining the stability and quality of our products, and decrease our overall expenditures. We believe while there are challenges and risks in this market, our high quality high grade product and the formulations developed by our internal research and development team differentiates us from other competitors and our efforts will lead to sustainable growth in the future.

RESULTS OF OPERATIONS

The following table summarizes our results from operations for the three month periods ended July 31, 2020 and 2019. The percentages represent each line item as a percent of revenues:

For the Three Months ended July 31, 2020
	Stevioside					Corporate and Other				Consolidated
Revenues	$	6,942,286		100.0	%	$	97,392	100.0	%	$	7,039,678		100.0	%
Cost of goods sold		6,820,399		98.2	%		52,101	53.5	%		6,872,500		97.6	%
Gross profit		121,887		1.8	%		45,291	46.5	%		167,178		2.4	%
Selling expenses		310,915		4.5	%		-	-			310,915		4.4	%
General and administrative expenses		436,311		6.3	%		36,865	37.9	%		473,176		6.7	%
Research and development expenses		361,438		5.2	%		-	-			361,438		5.1	%
(Loss) income from operations		(986,777	)	(14.2	)%		8,426	8.7	%		(978,351	)	(13.9	)%
Other expenses		(77,476	)	(1.1	)%		-	-			(77,476	)	(1.1	)%
(Loss) income from continuing operations before income taxes	$	(1,064,253	)	(15.3	)%	$	8,426	8.7	%	$	(1,055,827	)	(15.0	)%

For the Three Months ended July 31, 2019
	Stevioside					Corporate and Other				Consolidated
Revenues	$	6,311,559		100.0	%	$	578,516	100.0	%	$	6,890,075		100.0	%
Cost of goods sold		5,390,466		85.5	%		378,402	65.4	%		5,768,868		83.7	%
Gross profit		921,093		14.5	%		200,114	34.6	%		1,121,207		16.3	%
Selling expenses		352,384		5.6	%		22,048	3.8	%		374,432		5.4	%
General and administrative expenses		261,211		4.1	%		141,151	24.4	%		402,362		5.8	%
Research and development expenses		304,903		4.8	%		1,648	0.3	%		306,551		4.4	%
Income from operations		2,595		0.1	%		35,267	6.1	%		37,862		0.5	%
Other expenses		(167,666	)	(2.7	)%		-	-			(167,666	)	(2.4	)%
(Loss) income from continuing operations before income taxes	$	(165,071	)	(2.6	)%	$	35,267	6.1	%	$	(129,804	)	(1.9	)%

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Revenues

Total revenues in the three months ended July 31, 2020 increased by approximately 2.2%, as compared to the same period in 2019. Stevioside revenues, which accounts for 98.6% and 91.6% of our total revenues in the three months ended July 31, 2020 and 2019, respectively, increased by approximately 10.0%, while Metformin revenues decreased by approximately $481,000 or 83.2%. The decrease in our Metformin revenues was the result of our operating lease for the Metformin production line to a third party. Since July 2019, we no longer operate in the direct production and sales of Metformin products.

Within our Stevioside segment, revenues from sales to third parties increased by 14.6% and sales to the related party decreased by 1.8% in the three months ended July 31, 2020, as compared to the same period in 2019, primarily due to an increasing demand from the domestic market and the results of our effort to develop sales in the domestic market. We have been trying to develop our domestic and international market in the past fiscal year. Since we do not have the authorization to export products from China, we outsourced all of our exporting business to a related party, Qufu Shengwang Import and Export, which has authorizations to export. While the adoption rate for stevia in the food and beverage sector has been slower than expected, we sold 233 metric tons and 180 metric tons of stevioside for the three months ended July 31, 2020 and 2019, respectively. We generated approximately $1,340,000,000 and $1,306,000 in revenue from producing over 40 metric tons and 35 metric tons of the customized orders for restructuring by enzyme based on our Stevioside products. Restructuring by enzyme based on our Stevioside products accounted for approximately 18.8% and 20.7% in the three months ended July 31, 2020 and 2019, respectively, of our total Stevioside segment revenues.

Our unit sale price fluctuated from month to month in the three months ended July 31, 2020, which was mainly affected by the market environment; the average unit sale price decreased by approximately 7.5% compared to the same period in 2019. We face challenges due to competitive pricing and difficulties sourcing raw materials for in the three months ended July 31, 2020, the market prices of stevioside products were impacted by strong price competition among Chinese manufacturers. We also anticipate the price of stevia leaves, the raw material used to produce our stevioside series products, to continue to increase in the near future. With the restructuring of our product line, we also continue to increase the sales of our low grade stevia products. Our low grade stevia and A3-97 products generated more than 35.7% and 35.6% of total revenue of our Stevioside segment, respectively.

Cost of Revenues and Gross Margin

Cost of revenues in the three months ended July 31, 2020 increased by 19.1%, compared to the same period in 2019. Cost of revenues as a percentage of revenues increased from 83.7% to 97.6% during the three months ended 2020 compared to the same period in 2019. Gross margin in Stevioside segment decreased from 14.6% to 1.8% for the three months ended by July 31, 2020, compared the same period in 2019. Our consolidated gross margin for the three months ended by July 31, 2020 was 2.4%, as compared to 13.3% in the same period in 2019, which was primarily due to the epidemic of the novel strain of coronavirus COVID-19 pandemic adversely affected businesses and economic activities in 2020.

We believe the effect of the COVID-19 pandemic is the most significant in our raw material purchasing and our sales. Due to the effect of the global COVID-19 pandemic, we expect the sourcing and availability of stevia raw material will have increased difficulties and costs for fiscal 2021 and 2022. February to March is normally the nursing period for stevia plants; as a result of COVID-19 related gathering laws, farmers are not able to have the same amount of nursery workers as previous years, resulting in a decrease of stevia plants, and relevant safety measures also resulted in an increase of general planting costs. We expect this to cause a shortage of stevia leaves harvest this year and along with the effect of the rain seasons, we expect to see an increase in our cost of raw material. After we resumed production, the effect of the COVID-19 pandemic on transportation has also made it difficult for us to efficiently procure our raw materials.

Selling Expenses

For the three months ended July 31, 2020, we had a decrease of approximately $64,000, or 17.0% in selling expenses, as compared to the same period in 2019. The decrease was primarily due to the approximately $82,000 decrease in marketing expense, $25,000 decrease in advertising expenses, $20,000 decrease in travel expense, $14,000 decrease in salary, $22,000 decrease in selling expense on Metformin product, $6,000 decrease in shipping and freight, and $12,000 decrease in miscellaneous expense, offset by approximately $117,000 increase in promotion expense in the three months ended July 31, 2020.

General and Administrative Expenses

Our general and administrative expenses for the three months ended July 31, 2020 increased by approximately $71,000, or 17.6% from the same period in 2019. The increase was primarily due to an increase of approximately $104,000 in repairs and maintenance fees, a $35,000 increase in safety production fund, and $16,000 increase in miscellaneous expense, offset by a decrease of approximately $27,000 in depreciation expense due to disposition of property and equipment in last fiscal year, $28,000 decrease in salary and wage expenses, $19,000 decrease in service and consulting fee, and $10,000 decrease in insurance expense.

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Research and Development Expense

For the three months ended July 31, 2020, our research and development expenses amounted to approximately $361,000, as compared to $307,000 for the same period in 2019. The increase of $55,000 was primarily due to the increase in spending for third party technical consulting fees in the three months ended July 31, 2020.

Other Income (Expenses)

For the three months ended July 31, 2020, other expense, net of other income, amounted to approximately $77,000, a decrease of $90,000 as compared to the other expense, net of other income, amounted to approximately $167,000 for the three months ended July 31, 2019. The decrease of other expenses was primarily attributable to a decrease of interest expense to third parties and related parties of $101,000, an increase in other expenses of $3,000, and offset by a decrease of grant income of $14,000.

Net Loss from Continuing Operations

As a result of the foregoing, our loss from continuing operations was $1,056,000 for the three months ended July 31, 2020, as compared with loss from continuing operations of $130,000 for the three months ended July 31, 2019, a change of $926,000, or 713.4%. The increase in net loss was primarily due to decreased gross profit and increased operating expenses, offset by decreased other expenses in the three months ended July 31, 2020, compared to the three months ended July 31, 2019.

Loss from Discontinued Operations

We did not have discontinued operations incurred in the three months ended July 31, 2020. Our loss from discontinued operations amounted to $20,000 for the three months ended July 31, 2019, and the Company also recorded a loss from disposal discontinued operations of approximately $233,000 at July 31, 2019. Our total loss from discontinued operations amounted to $253,000 or $0.00 per share (basic and diluted) for the three months ended July 2019.

The summarized operating result of discontinued operations included in our unaudited condensed consolidated statements of operations is as follows:

	For the Three Months Ended July 31,
	2020		2019

Revenues	$	-	$	733,441
Cost of revenues		-		572,357
Gross profit		-		161,084
Operating expenses		-		172,142
Other income, net		-		8,958
Loss before income taxes		-		20,016
Income tax expense		-		-

Loss from discontinued operations		-		20,016
Loss from disposal, net of taxes		-		233,415
Total loss from discontinued operations	$	-	$	253,431

Net Loss Attributable to Sunwin Sunwin Stevia International, Inc.

Our net loss attributable to Sunwin Sunwin Stevia International, Inc. in the three months ended July 31, 2020 was approximately $663,000, or $(0.00) per share (basic and diluted), compared to $383,000, or $(0.00) per share (basic and diluted), in the three months ended July 31, 2019.

Net Loss Attributable to Noncontrolling Interest

Noncontrolling interest represents the ownership interests an individual investor and Yulong hold in Qufu Shengren. The amount recorded as noncontrolling interest in our unaudited condensed consolidated statements of loss and comprehensive loss is computed by multiplying the after-tax loss for three months ended July 31, 2020 by the percentage ownership in Qufu Shengren not directly attributable to us. For the three months ended July 31, 2020, the noncontrolling interest attributable to ownership interests in Qufu Shengren not directly attributable to us was 38.7%. Net loss attributable to noncontrolling interest amounted to $393,000 for the three months ended July 31, 2020.

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Foreign Currency Translation Gain

The functional currency of our subsidiaries and variable interest entities operating in the PRC is the Chinese Yuan or Renminbi ("RMB"). The financial statements of our subsidiaries are translated to U.S. dollars using period end rates of exchange for assets and liabilities, and average rates of exchange (for the period) for revenues, costs, and expenses. Net gains and losses resulting from foreign exchange translations are included in the Comprehensive loss on the unaudited condensed consolidated statements of operations and comprehensive loss. As a result of foreign currency translations, which are a non-cash adjustment, we reported a foreign currency translation gain of $131,000 and $269,000 for the three months ended July 31, 2020 and 2019, respectively. This non-cash gain had the effect of reducing our reported comprehensive loss.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity is the ability of a company to generate sufficient cash to meet its operational cash requirements.

At July 31, 2020, we had working capital deficit of approximately $2,612,000, including cash of approximately $876,000, as compared to working capital of approximately $3,470,000, including cash of approximately $1,138,000 at April 30, 2020. The approximate $262,000 decrease in our cash at July 31, 2020 from April 30, 2020 is primarily attributable to net cash used in investing activities of approximately $138,000 and cash used in financing activities for repayment loans of approximately $2,880,000, offset by net cash provided by operating activities of approximately $2,747,000 during the three months ended July 31, 2020. The Company's cash balance and revenues generated are not currently sufficient and cannot be projected to cover operating expenses for the next twelve months from the date of this report. These factors raise doubt as to the ability of the Company to continue as a going concern. Management's plans include attempting to improve its business profitability, its ability to generate sufficient cash flow from its operations to meet its operating needs on a timely basis, obtain additional working capital funds through debt and equity financings, and restructure on-going operations to eliminate inefficiencies to raise cash balance in order to meet its anticipated cash requirements for the next twelve months from the date of this report. Management intends to make every effort to improve its current sales force as to further develop and expand the international markets for its new products as well as continuing with the current sources of funds to meet working capital needs on as needed basis. There can be no assurance that these plans and arrangements will be successful.

The COVID-19 Pandemic. On January 30, 2020, the World Health Organization declared the coronavirus outbreak a "Public Health Emergency of International Concern" and on March 10, 2020, declared it to be a pandemic. Actions taken around the world to help mitigate the spread of the coronavirus include restrictions on travel, quarantines in certain areas, and forced closures for certain types of public places and businesses. The coronavirus and actions taken to mitigate it have had and are expected to continue to have an adverse impact on the economies and financial markets of many countries, including the geographical areas in China in which the Company operates. Consequently, the COVID-19 pandemic may adversely affect the Company’s business operations, financial condition and operating results for 2020, including but not limited to material negative impact to the Company’s total revenues, slower collection of accounts receivables and significant impairment to the Company’s equity investments. Due to the high uncertainty of the evolving situation, the Company has limited visibility on the full impact brought upon by the COVID-19 pandemic and the related financial impact cannot be estimated at this time.

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Capital Resources

The following table provides certain selected balance sheets comparisons as of July 31, 2020 and April 30, 2020:

	July 31,		April 30,		Increase
	2020		2020		(Decrease)			%

Cash and cash equivalents	$	875,632	$	1,137,920	$	(262,288	)		(23.0	)%
Accounts receivable, net		2,109,377		2,713,567		(604,190	)		(22.3	)%
Accounts receivable - related party		1,833,476		3,034,365		(1,200,889	)		(39.6	)%
Inventories, net		13,203,055		12,874,497		328,558			2.6	%
Prepaid expenses and other current assets		1,024,203		693,552		330,651			47.7	%
Total current assets		19,045,743		20,453,901		(1,408,158	)		(6.9	)%
Property and equipment, net		8,834,544		8,901,548		(67,004	)		(0.8	)%
Total assets	$	27,880,287	$	29,355,449	$	(1,475,162	)		(5.0	)%

Accounts payable and accrued expenses	$	10,816,147	$	8,533,131	$	2,283,016			26.8	%
Short-term loans		2,739,032		3,378,380		(639,348	)		(18.9	)%
Due to related parties		2,878,273		5,072,451		(2,194,178	)		(43.3	)%
Total current liabilities		16,433,451		16,983,962		(550,511	)		(3.2	)%
Total liabilities	$	16,433,451	$	16,983,962	$	(550,511	)		(3.2	)%

We maintain cash and cash equivalents in China and United States. At July 31, 2020 and April 30, 2020, bank deposits were as follows:

	July 31,			April 30,
Country	2020			2020
United States		$	55,483		$	83,830
China			820,149			1,054,090
Total		$	875,632		$	1,137,920

The majority of our cash balances at July 31, 2020 are in the form of RMB stored in bank account of China. Cash held in banks in the PRC is not insured. The value of cash on deposit in mainland China of $820,149 as of July 31, 2020 has been converted based on the exchange rate as of July 31, 2020. In 1996, the Chinese government introduced regulations, which relaxed restrictions on the conversion of the RMB; however, restrictions still remain, including but not limited to restrictions on foreign invested entities. Foreign invested entities may only buy, sell or remit foreign currencies after providing valid commercial documents at only those banks authorized to conduct foreign exchanges. Furthermore, the conversion of RMB for capital account items, including direct investments and loans, is subject to PRC government approval. Chinese entities are required to establish and maintain separate foreign exchange accounts for capital account items. We cannot be certain Chinese regulatory authorities will not impose more stringent restrictions on the convertibility of the RMB, especially with respect to foreign exchange transactions. Accordingly, cash on deposit in banks in the PRC is not readily deployable by us for use outside of China.

Accounts receivable, net of allowance for doubtful accounts, including accounts receivable from related parties, decreased by approximately $1,805,000 during the three months ended July 31, 2020, as a result of the decrease in both accounts receivable from the third parties and accounts receivable from related party as of July 31, 2020. The days for sales outstanding in accounts receivable increased to 63 days as of July 31, 2020, as compared to 20 days as of April 30, 2020. Accounts receivable, net of allowance for doubtful accounts, excluding accounts receivable from the related parties, decreased by approximately $604,000 during the three months ended July 31, 2020. The days for sales outstanding in accounts receivable for third party sales increased to 42 days as of July 31, 2020, as compared to 15 days as of April 30, 2020. We will reevaluate and categorize accounts receivable for sales and will target to improve our collection effort in accounts receivable for related party sales and accounts receivable for third party sales in fiscal 2021.

Inventories at July 31, 2020, net of reserve for obsolescence, totaled approximately $13,203,000, as compared to $12,874,000 as of April 30, 2020. The increase is primarily due to our increase in procurements of raw materials in order to meet our anticipated higher sales volume during the fiscal year ended April 30, 2020. These inventories have not yet been sold due to the market demands not raising as much as we predicted; however, the current inventory level will prepare us for our anticipated upcoming increase in price.

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Our accounts payable and accrued expenses were approximately $10,816,000 at July 31, 2020, an increase of approximately $2,283,000 from April 30, 2020. The increase is primarily due to our increase in procurements of raw material as a result of the raising sales of such materials during the three months ended July 31, 2020.

Loans payable at July 31, 2020 and April 30, 2020 totaled approximately $2,739,000 and $3,378,000, respectively. These loans payable consisted of short-term loans from multiple non-related individuals, which bear annual interest rates of 4% - 10%. Range of maturity dates of the loans payable was from September 20, 2020 to April 8, 2021. During the three months ended July 31, 2020, loan amount of approximately $667,000 was repaid in cash.

Due to related parties at July 31, 2020 and April 30, 2020 totaled approximately $2,878,000 and $5,072,000, respectively. The decrease was a result of our repayment to related parties more than our borrowing from them during the three months ended July 31, 2020. As of July 31, 2020, the balance we owed Qufu Shengren Pharmaceutical Co., Ltd. (“Pharmaceutical Corporation”) and Mr. Weidong Chai, a management member of Pharmaceutical Corporation amounted to approximately $3,276,0000 and $190,000, respectively. Qufu Shengwang Import and Export Co., Ltd. owed the Company an amount of approximately $588,000 as of July 31, 2020. On April 30, 2020, the balance we owed to Pharmaceutical Corporation, Qufu Shengwang Import and Export and Mr. Weidong Chai amounted to approximately $3,982,000, $907,000, and $184,000, respectively.

Cash Flows Analysis

NET CASH FLOW PROVIDED BY OPERATING ACTIVITIES:

Net cash provided by operating activities was approximately $2,747,000 for the three months ended July 31, 2020, primarily due to a decrease of approximately $596,000 in accounts receivable and note receivable from a third party, a decrease of approximately $1,217,000 in accounts receivable - related party and an increase in accounts payable and accrued expenses of approximately $2,229,000, offset by an increase of approximately $189,000 in inventories, an increase of approximately $290,000 in prepaid expenses and other current assets, a decrease of approximately $65,000 in taxes payable, and a net loss of approximately $1,056,000 adjusted by non-cash working capital, depreciation expense of $304,000.

Net cash provided by operating activities from continuing operations was approximately $711,000 (total of $713,000 including net cash provided by discontinued operations of $1,000) for the three months ended July 31, 2019, primarily due to a net loss of approximately $130,000 adjusted by loss from discontinued operations of $253,000 and offset by non-cash working capital that primarily included depreciation expense of $271,000 and a loss on disposition of property and equipment of $20,000. The increase in net cash from operating activities was also primarily due to an increase in accounts payable and accrued expenses of approximately $2,652,000 and offset by an increase of approximately $234,000 in accounts receivable and note receivable from a third party, an increase of approximately $90,000 in accounts receivable - related party, an increase of approximately $935,000 in inventories, an increase of approximately $820,000 in prepaid expenses and other current assets and a decrease of approximately $23,000 in taxes payable.

NET CASH FLOW (USED IN) PROVIDED BY INVESTING ACTIVITIES:

Net cash used in investing activities from operations amounted to approximately $138,000 during the three months ended July 31, 2020 due to capital expenditures for property and equipment.

Net cash provided by investing activities from continuing operations amounted to $67,000 in investment activities, including the proceeds received from disposal of discontinued subsidiary of approximately $727,000 and proceeds received from disposal of equipment of $6,000, offset by approximately $665,000 in purchases of property and equipment in the three months ended July 31, 2019. Net cash used in investing activities from discontinued operations amounted to $0 in three months ended July 31, 2019.

NET CASH FLOW USED IN FINANCING ACTIVITIES:

Net cash used in financing activities from operations amounted to approximately $2,880,000 in the three months ended July 31, 2020, primarily due to repayment of short term loans in a total amount of approximately $667,000 and repayment of related party advances of approximately $5,268,000 and offset by advances received from related parties of approximately $3,055,000.

Net cash used in financing activities from continuing operations amounted to approximately $283,000 in the three months ended July 31, 2019, primarily due to repayment of related party advances of approximately $947,000 and offset by advances received from related parties of approximately $664,000. Net cash used in financing activities from discontinued operations amounted to $1,000 in in the three months ended July 31, 2019.

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Off Balance Sheet Arrangements

Under SEC regulations, we are required to disclose our off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, such as changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. An off-balance sheet arrangement means a transaction, agreement or contractual arrangement to which any entity that is not consolidated with us as a party, under which we have:

	-		Any obligation under certain guarantee contracts,
	-		Any retained or contingent interest in assets transferred to an unconsolidated entity or similar arrangement that serves as credit, liquidity or market risk support to that entity for such assets,
	-		Any obligation under a contract that would be accounted for as a derivative instrument, except that it is both indexed to our stock and classified in stockholder's equity in our statement of financial position, and
	-		Any obligation arising out of a material variable interest held by us in an unconsolidated entity that provides financing, liquidity, market risk or credit risk support to us, or engages in leasing, hedging or research and development services with us.

We do not have any off-balance sheet arrangements that we are required to disclose pursuant to these regulations. In the ordinary course of business, we enter into operating lease commitments, purchase commitments and other contractual obligations. These transactions are recognized in our financial statements in accordance with accepted accounting principles generally accepted in the U.S. ("U.S. GAAP").

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements in conformity with U.S. GAAP requires estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities in the consolidated financial statements and accompanying notes. The SEC has defined a company's critical accounting policies as the ones that are most important to the portrayal of the company's financial condition and results of operations, and which require the company to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Based on this definition, we have identified the critical accounting policies and judgments addressed below. We also have other key accounting policies, which involve the use of estimates, judgments and assumptions that are significant to understanding our results, which are described in Note 2 to our unaudited condensed consolidated financial statements. Although we believe that our estimates, assumptions and judgments are reasonable, they are based upon information presently available. Actual results may differ significantly from these estimates under different assumptions, judgments or conditions.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable to smaller reporting company.

ITEM 4. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act") that are designed to ensure that information required to be disclosed by us in reports that we file under the Exchange Act is recorded, processed, summarized and reported as specified in the SEC's rules and forms and that such information required to be disclosed by us in reports that we file under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer ("CEO"), and our Chief Financial Officer ("CFO"), to allow timely decisions regarding required disclosure.

Our management, with the participation of our CEO and CFO, performed an evaluation of the effectiveness of our disclosure controls and procedures as of July 31, 2020.

Based on this evaluation our management concluded that our disclosure controls and procedures were not effective as of July 31, 2020 such that the information relating to our company, required to be disclosed in our Securities and Exchange Commission reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and (ii) is accumulated and communicated to our management, including our CEO, to allow timely decisions regarding required disclosure.

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Management's Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act. Our management is also required to assess and report on the effectiveness of our internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 ("Section 404"). As reported in our Form 10-K for the year ended April 30, 2020, management assessed the effectiveness of our internal control over financial reporting as of April 30, 2020 and, during our assessment, management identified significant deficiencies related to (i) the U.S. GAAP expertise of our internal accounting staff, (ii) our internal audit functions and (iii) a lack of segregation of duties within accounting functions. Although management believes that these deficiencies do not amount to a material weakness, our internal controls over financial reporting were not effective at April 30, 2020.

Due to our size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible. As a result, we have not been able to take steps to improve our internal controls over financial reporting during the three months ended July 31, 2020. However, to the extent possible, we will implement procedures to assure that the initiation of transactions, the custody of assets and the recording of transactions will be performed by separate individuals.

A material weakness (within the meaning of PCAOB Auditing Standard No. 5) is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet important enough to merit attention by those responsible for oversight of the company's financial reporting.

In light of this significant deficiency, we performed additional analyses and procedures in order to conclude that our consolidated financial statements for the three months ended July 31, 2020 included in this quarterly report on Form 10-Q were fairly stated in accordance with the U.S. GAAP. Accordingly, management believes that despite our significant deficiency, our consolidated financial statements for the three months ended July 31, 2020 are fairly stated, in all material respects, in accordance with the U.S. GAAP.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting identified in connection with the evaluation of our controls performed during the three months ended July 31, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

None.

ITEM 1 A. RISK FACTORS.

Risk factors describing the major risks to our business can be found under Item 1A, "Risk Factors", in our fiscal 2020 Annual Report on Form 10-K. There has been no material change in our risk factors from those previously discussed in the fiscal 2020 Annual Report on Form 10-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURE.

None.

ITEM 5. OTHER INFORMATION.

None.

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ITEM 6. EXHIBITS

Exhibit No.		Description of Exhibit
31.1		Section 302 Certificate of Chief Executive Officer.*
31.2		Section 302 Certificate of Chief Financial Officer.*
32.1		Section 906 Certificate of Chief Executive Officer and Chief Financial Officer.*
101.INS		XBRL INSTANCE DOCUMENT**
101.SCH		XBRL TAXONOMY EXTENSION SCHEMA**
101.CAL		XBRL TAXONOMY EXTENSION CALCULATION LINKBASE**
101.DEF		XBRL TAXONOMY EXTENSION DEFINITION LINKBASE**
101.LAB		XBRL TAXONOMY EXTENSION LABEL LINKBASE**
101.PRE		XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE**

* - Filed herewith.

** - In accordance with Regulation S-T, the XBRL-formatted interactive data files that comprise Exhibit 101 to this Quarterly Report on Form 10-Q shall be deemed "furnished" and not "filed".

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	SUNWIN STEVIA INTERNATIONAL, INC.


Dated: September 11, 2020	By: /s/ Dongdong Lin
	Dongdong Lin,
	Chief Executive Officer


Dated: September 11, 2020	By: /s/ Fanjun Wu
	Fanjun Wu,
	Chief Financial Officer

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