"...We believe that our existing cash and cash equivalents and internally generated funds will be sufficient to cover working capital requirements and capital expenditures during the fiscal year. Other than the approximately $0.5 million remaining on the purchase price of employee housing, we currently have no significant capital expenditure commitments.
During the third quarter of fiscal 2012 we entered into three transactions which significantly reduced our cash on hand as of January 31, 2012. These transactions included:
• In December 2011, we lent Shandong Anda Biotech Co., Ltd., a third party which is a major supplier of stevia leaves to our company, approximately $3.1 million. The short-term loan is due on December 18, 2012 and bears no interest,
• In November 2011, we lent Pharmaceutical Corporation, a related party, approximately $3.1 million. The loan had a scheduled due date of November 20, 2012, and bears no interest. Pharmaceutical Corporationwas expected to use the money to acquire land use rights and Sunwin would have the beneficial ownership of the acquired land.This short-term loan was amended on March 16, 2012 to change repayment terms to a due date of April 20, 2012 since Sunwin has decided not to bid on the land use rights. The repayment of the $3.1 loan will improve the cash on hand position in the fourth quarter of fiscal 2012, and
• In January 2012, we paid $0.8 million for management fees to Pharmaceutical Corporation, a related party.
Accounts receivable, net of allowance for doubtful accounts, and including accounts receivable from related parties, decreased by $0.1 million during the third quarter of fiscal 2012. The days’ sales outstanding in accounts receivable decreased to 69days as of January 31, 2012, as compared to 79 days as of April 30, 2011.
At January 31, 2012, loan receivable amounted to $3.5 million, which represented an increase of $3.0 million from April 30, 2011. In December 2011, we entered into a loan agreement with Shandong Anda Biotech Co., Ltd. ( Shandong Anda), a third party. According to the terms of the agreement, we lent Shandong Anda approximately $3.1 million. The loan will be due on December 18, 2012 and bears no interest. During the third quarter of fiscal 2011 we also loaned $0.5 million to a subsidiary of China Direct Investments, Inc., our corporate management services provider. Payment of $0.2 million was received during the third quarter of 2012. The balance of $0.3 million plus accrued interest has been extended and now is due on demand.
At January 31, 2012 inventories, net of reserve for obsolescence, amounted to $4.0 million, as compared to $3.3 million as of April 30, 2011. The increase was due primarily to purchases of raw materials for stevia products in anticipation of future demand.
Our accounts payable and accrued expenses were $3.1 million at January 31, 2012, an increase of $0.6 million from April 30, 2011. This balance, as well as that of V.A.T. taxes payable, is subject to the timing of payments for balances related to raw material purchases made in the ordinary course of business.
Net cash used in operating activities was $8.9 million during the first nine months of fiscal 2012, as compared to net cash used in operating activities of $0.3 million during the first nine months of fiscal 2011.
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