Stevia Corp (STEV)

[Trained Monkey]

Fins and Notes - re: Q2 2014 10Q


With the 10q imminent, here’s a retrospective on $STEV’s fins for DD and projection purposes.


These are the financial numbers and info we have to date (2014 Calendar year) (See below for fiscal year):

Revenue:
Q1 2014 - $4,479,334
-Revenue source - Stevia harvest (Feb/March 2014)


Q2 2014 - $2,217,026
-Revenue source - Stevia harvest (Feb/March 2014)


Q3 2014 - ????
-Revenue source - $200,000+ order to Darden from Aquaculture


Q4 2014 - ?????
-Revenue source - Hemp harvest (Oct- Dec) w/commercial orders lined up. Would love updates on yield, sales, etc.


2014 calendar year Q1+Q2 revenues = $6,696,360

2013 calendar year total revenues (Q1+Q2+Q3+Q4) = $2,168,093

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Keep in mind STEV's fiscal year ends 3/31, and Q2 is the first quarter of the new fiscal year. So this will be the second quarter of STEV’s fiscal year:

Q1 2013 - $957,261
Q2 2014 - $2,217,026 (up $1.35M) (130% increase)

Q2 2013 – $547,858
Q2 2014 – (Should be out Friday)

Q3 2013 – $388,746
Q3 2014 –

Q4 2013 - $4,479,334
Q4 2014 -

2013 Fiscal (Ended 3/31/14) – $6,373,199
2014 Fiscal (Ends 3/31/15) - $2,217,026 (was $957,261 at this point in 2013)

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Quick financial notes from the last quarter (Q1 2014):
Link: http://archive.fast-edgar.com//20140819/APK2H22CZ222TJZ2222N2ZZZQMOA4Y823262/

1. Total assets up over 20% to $5.48M, including over $3M in prepaid seeds and fertilizer.

2. Total current liabilities down over from $1.3M to $913K

3. Total liabilities down from $6.74M to $2.4M

4. Total equity up from -$2.35M to $3.09M

5. Revenue up from $957K to $2.2M

6. Gross margin up from -$144K to $480K

7. EPS up from -$.02 to .01


Takeaway: Assets up, current and total liabilities significantly down, equity significantly higher, revenues more than doubled. Gross margin shows the business model is making money. Revenue growth is VERY strong...AGAIN. Great quarter over quarter and year over year growth.
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Quick Company Notes:

Already purchased all the seeds/fertilizer for Spring 2015 harvest

PG. 29 of 10q:

*The company acquired certain seeds and fertilizer in the amount of $3,136,630 in aggregate which was used for preparation of the fall planting for the spring harvest which will start from the second half of February, 2015 and last through April, 2015. In Q1 and Q2 2015 operating (farm) expenses will be significantly lower! This expense has already been paid for and $STEV still showed a positive gross margin and earnings per share!

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STEV's biggest quarter every year is their fiscal Q4 (Jan1 - March 31) because of the harvest. In 2014 over $4M in revs.

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Diverse and vertical integration: Aquaculture, feed for livestock, fertilizers, commercial growing ($12,000 per hectare), extraction ($60,000 per hectare), and cannabis crossover applications (CBD extraction) (see p. 6). $STEV supplies services under three business models - 1) contract farming model, 2) revenue share model and 3) product supply model.

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Vietnam location (as opposed to China where 80% of Stevia is grown has huge advantages as it relates to year round production as opposed to 2 major growing seasons. (see p.8)

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Competitive Advantage - intellectual property, particularly our fertilizers and feed additives and other input products used in our protocols, have the potential to create a dedicated customer base because the protocols once implemented on a farm call for continual use of our fertilizers and feed additives and other products as a mandatory production input. We believe this long-term customer relationship can enable us to create a substantial barrier to entry to potential new competitors, while at the same time providing networking benefits that could further propagate our business. (see p.12).

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Prepaid expenses: Both expenses for fertilizer ($1.5M) and leased farmland (Through 2014) have been prepaid for the next few quarters. Should help future margins.

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Excellent O/S structure going forward – 197M O/S is a very workable share structure. (Caution: see note below – ‘negative risk factor’ – as $STEV is currently seeking more financing to continue operations)

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Executive compensation – Blankerbaker gets $213k reported income… but the compensation is share based. He receives 4M shares a year: ‘On February 26, 2014, the Company issued 20,000,000 Restricted Shares to George Blankenbaker, the Company's President and director for services to be rendered. 4,000,000 of such shares vest at the time of issuance and the remainder vest over the following four years in equal annual installments. These shares were valued at $0.053365 per share or $1,067,300 at the date of grant, $213,460 of which were recorded as salary and compensation at the time of issuance and $853,840 of which are being amortized over the vesting period of four (4) years or $213,460 annually recorded as salary and compensation - officers.’

Directors fees under the same compensation format, but at 750k shares per year, 2 year deal (1.5M total shares).

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Gross Margin rising: (2012): (-$709,946), (2013): (-$449,288), (2014): $691,183 (Big move up in margin)

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Future revenue from growth/extraction alone is huge – 110 hectares, potentially $72,000 per hectare between leaf harvest and extraction - potentially $7.92M per annum from this revenue line: ‘$STEV has acquired two grower supply contracts and three nursery fields in Vietnam with total propagation exceeding 100 Ha (250 acres). On December 14, 2011 we entered into a land lease agreement with Stevia Ventures Corporation, whereby Stevia Ventures Corporation leased 10 Ha (25 acres) of land over 5 years.’ (see p.13)

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Negative/Risk factor: Expect more notes, and potentially more dilution in the next few months, IMO: ‘We do not expect that our revenues from operations will be wholly sufficient to fund our operating plan, so we are currently seeking further financing and we believe that, along with our revenues, will provide sufficient working capital to fund our operations for at least the next six months. Changes in our operating plans, increased expenses, acquisitions, or other events, may cause us to seek additional equity or debt financing in the future.’ (see p.39 of annual)
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Bullish. I expect a strong quarterly, and like $STEV to move well up from current prices in 2015.

TM