www.sec.gov/Archives/edgar/data/806592/...000016/suwn10-q.htm
Cost of Revenues and Gross Margin
Cost of revenues in the three and six months ended October 31, 2020 decreased by 20.2% and 0.4%, compared to the same period in 2019, respectively. Cost of revenues as a percentage of revenues increased from 79.4% to 102.3% during the three months ended 2020 compared to the same period in 2019. Cost of revenues as a percentage of revenues increased from 81.5% to 99.5% during the six months ended 2020 compared to the same period in 2019. Our consolidated gross margin for the three and six months ended by October 31, 2020 was negative 2.3% and 0.5%, as compared to 20.6% and 18.5% 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.