WENZHOU, China,
Sept. 28,
2022 /PRNewswire/ -- ZK International Group Co.,
Ltd. (ZKIN) ("ZK International" or the "Company"), a
designer, engineer, manufacturer, and supplier of patented
high-performance stainless steel and carbon steel pipe products
primarily used for water and gas supplies, today announced its
unaudited financial results for the six months ended March 31, 2022.
Financial Highlights for the First Half of Fiscal Year
2022
|
|
For the Six Months
Ended March 31,
|
($ millions, except
per share data)
|
|
2022
|
|
2021
|
|
%
Change
|
Revenue
|
|
$42.89
|
|
$42.17
|
|
1.71 %
|
Gross profit
|
|
$3.97
|
|
$4.71
|
|
-15.73 %
|
Gross margin
|
|
9.25 %
|
|
11.16 %
|
|
-1.91%
pp*
|
Income (loss) from
operations
|
|
$0.24
|
|
$(1.65)
|
|
114.81 %
|
Operating
margin
|
|
0.57 %
|
|
-3.91 %
|
|
4.48%
pp*
|
Net income
(loss)
|
|
$0.001
|
|
$(1.92)
|
|
100.07 %
|
Diluted earnings per
share
|
|
$0.00
|
|
$(0.03)
|
|
100 %
|
Net book value per
share
|
|
$3.10
|
|
$3.11
|
|
0.32 %
|
* pp: percentage
point(s)
|
|
|
|
|
|
|
- Revenue increased 1.71% to a record $42.89 million due to increased market demand
over our stainless steel coil and nickel material. During six
months ended March 31, 2022, the
sales of stainless steel coil and nickel material accounts for
approximately 65.36% of our total revenue, as compared to 53.85% of
our total revenue during six months ended March 31, 2021.
- Gross profit decreased by 15.73% to $3.97 million. Gross margin was 9.25%, compared
to 11.16% for the same period of the prior fiscal period. The
decrease of gross profit was primarily due to increased sales
percentage of low margin products such as stainless steel coil
products and decreased sales percentage of high-margin products
such as water and gas piping products.
- Income from operations was $0.24
million, compared to loss from operations of $1.65 million for the same period of the prior
fiscal year. Operating margin was 0.57%, compared to -3.91% for the
same period of the prior fiscal year. The decrease of operating
margin was primarily due to decreased selling and marketing
expenses and research and development expenses.
- Net income was $0.001 million.
This compared to net loss of $1.92
million for the same period of the prior fiscal year.
- Net book value per share was $3.10 as of March 31,
2022, compared to $3.08 as of
September 30, 2021.
Mr. Jiancong Huang, Chairman and
Chief Executive Officer of ZK International, commented, "Bucking
the trend of a declining economy during the first quarter of 2022
as countries including China
battled the inflation and the rise of material prices, we are
pleased to report record revenue increase for the first half of
fiscal year 2022. During first half of fiscal year 2022, we
successfully executed our spent-cut program which aims to reduce
operating expenses without impacting sales performance. With
operating expenses declined 41.41%, revenue increased by 1.71% and
our first half of fiscal year 2022 results underscore continuing
order strength for our proprietary stainless steel and carbon steel
pipe products. We are proud of what the Company and the staff has
achieved for the first half of fiscal year 2022. Looking forward,
we expect revenue to continue to grow for the second half of the
fiscal year 2022.
Financial Results for the First Half of Fiscal Year
2022
Revenue
Revenue increased by $721,834 or 1.71%, to $ 42,890,657 for the six months ended
March 31, 2022 from $42,168,823 for the six months ended
March 31, 2021. The increase in
revenues was primarily driven by our increased sales of stainless
steel coil and nickel material as compared to our stainless steel
piping and fitting products. During six months ended March 31, 2022, the sales of stainless steel coil
and strip accounts for approximately 65.36% of our total revenue,
as compared to 53.85% of our total revenue during six months
ended March 31, 2021.
Gross Profit
Our gross profit decreased by $740,649, or 15.73%, to $3,967,109 for the six months ended
March 31, 2022 from $4,707,758 for the six months ended March 31, 2021. Gross profit margin
was 9.25% for the six months ended March 31, 2022, as compared to 11.16% for the six
months ended March 31, 2021. The
decrease of gross profit was primarily due to increased weighted
average selling prices of our water and gas piping products as the
result of domestic demand recovery of construction materials and
piping infrastructure. The gross profit of stainless steel coil
products is approximately 0.57% due to the decrease of average
selling price of stainless steel coil products, while our water and
gas piping products generally have gross margin of 22.67% during
six months ended March 31, 2022.
Selling and Marketing Expenses
We incurred $930,052 in selling
and marketing expenses for the six months ended March 31, 2022, compared to $2,769,264 for the six months ended March 31, 2021. Selling and marketing expenses
decreased by $1,839,212, or 66.42%,
during the six months ended March 31,
2022 compared to the six months ended March 31, 2022. This decrease is primarily due to
decreased marketing expenses paid for the marketing and promoting
services provided to xSigma Corporation, a subsidiary of the
Company. During the six months ended March
31, 2021, the Company entered into a Consultancy Agreement
(the "Agreement") with Dentoro Alliance LP, a company incorporated
in the Republic of Ireland (the
"Consultant"). Pursuant to the Agreement, the Consultant agreed to
provide marketing services for the business development of xSigma
Corporation, including website development, social media and
community management, content creation and public relations
management. In exchange for the Consultant's services, the Company
agreed to pay the Consultant 250,000 ordinary shares of the
Company. The shares are valued at $3.58/share.
General and Administrative expenses
We incurred $2,232,863 in general
and administrative expenses for the six months ended March 31, 2022, compared to $1,166,210 for the six months ended March 31, 2021. General and administrative
expenses increased by $1,066,653, or
91.46%, for the six months ended March 31,
2022 compared to the same period in 2021. The increase is
primarily due to decrease in travelling expenses and administrative
staff salary.
Research and Development Expenses
We incurred $560,216 in research
and development expenses for the six months ended March 31, 2022, compared to $2,419,355 for the six months ended March 31, 2021. R&D expenses decreased by
$1,859,139, or 76.84%, for the six
months ended March 31, 2022 compared
to the same period in 2021. During the six months ended
March 31, 2021, our various
subsidiaries developed a DeFi exchange, a cryptocurrency trading
platform, and an NFT platform, while those platforms were in
late-stage development during the six months ended March 31, 2022 and therefore the related expenses
decreased significantly.
Income (loss) from Operations
As a result of the factors described above, we incurred
operating income of $243,977 for the
six months ended March 31, 2022,
compared to operating loss of $1,647,071 for the six months ended March 31, 2021, an increase of operating income
of $1,891,048.
Other Income (Expenses)
Our interest income and expenses were $4,493 and $465,466, respectively, for the six months ended
March 31, 2022, compared to interest
income and expenses of $9,543 and
$528,598, respectively, for the six
months ended March 31, 2021. The
decrease of interest expense is primarily due to the decrease of
bank loan incurred during fiscal half year of 2022. Other income
mainly consists of government grant for financial support to the
Company under local government's innovation incentive programs.
Net Income (loss)
As a result of the factors described above, we incurred net loss
of $1,281 for the six months ended
March 31, 2022, compared to net loss
of $1,916,893 for the six months
ended March 31, 2021, a increase in
profit of $1,918,174.
Financial Condition
As of March 31, 2022, cash and
cash equivalents, restricted cash and short-term investments
totaled $5.56 million, compared
to $16.16 million as of
September 30, 2021. Short-term bank
borrowings were $18.91 million
as of March 31, 2022, compared to
$21.39 million as of
September 30, 2021.
Accounts receivable was $29.55 million as of March 31, 2022, compared to $27.12 million as of September 30, 2021. Inventories were $23.78 million as of March 31, 2022, compared to $20.69 million as of September 30, 2021. Accounts payable was
$3.32 million as of March 31, 2022, compared to $2.16 million as of September 30, 2021.
Total current assets and current liabilities were $72.09 million and $38.04 million, respectively, leading to a
current ratio of 1.90 as of March 31,
2022. This compared to total current assets and current
liabilities were $78.70 million
and $44.51 million,
respectively, and current ratio of 1.77 as of September 30, 2021.
Net cash used in operating activities was $5.86 million for the six months ended
March 31, 2022, compared to net cash
used in operating activities of $4.23 million for the same period of the
prior fiscal year. Net cash used in investing activities was
$0.17 million for the six months
ended March 31, 2022, compared to net
cash provided by investing activities of $0.06 million for the same period of the
prior fiscal year. Net cash used in financing activities was
$1.65 million for the six months
ended March 31, 2022, compared to net
cash provided in financing activities of $23.82 million for the same period of the
prior fiscal year.
About ZK International Group Co., Ltd.
ZK International Group Co., Ltd. is a China-based designer,
engineer, manufacturer, and supplier of patented high-performance
stainless steel and carbon steel pipe products that require
sophisticated water or gas pipeline systems. The Company owns 33
patents, 21 trademarks, 2 Technical Achievement Awards, and 10
National and Industry Standard Awards. ZK International is Quality
Management System Certified (ISO9001), Environmental Management
System Certified (ISO1401), and a National Industrial Stainless
Steel Production Licensee that is focused on supplying steel piping
for the multi-billion dollar industries of Gas and Water
sectors. ZK has supplied stainless steel pipelines for over
2,000 projects, including the Beijing National Airport, the "Water
Cube", and "Bird's Nest", which were venues for the 2008 Beijing
Olympics. Emphasizing superior properties and durability of
its steel piping, ZK International is providing a solution for the
delivery of high quality, highly sustainable, environmentally sound
drinkable water not only to the China market but also to
international markets such as Europe, East Asia,
and Southeast Asia.
For more information please visit
www.ZKInternationalGroup.com. Additionally, please follow
the Company
on Twitter, Facebook, YouTube,
and Weibo. For further information on the Company's SEC
filings please visit www.sec.gov.
Safe Harbor Statement
This news release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, and as defined in the U.S. Private Securities Litigation
Reform Act of 1995. Without limiting the generality of the
foregoing, words such as "may," "will," "expect," "believe,"
"anticipate," "intend," "could," "estimate" or "continue" or the
negative or other variations thereof or comparable terminology are
intended to identify forward-looking statements. In addition, any
statements that refer to expectations, projections or other
characterizations of future events or circumstances are
forward-looking statements. These forward-looking statements are
not guarantee of future performance and are subject to certain
risks, uncertainties, and assumptions that are difficult to predict
and many of which are beyond the control of ZK International.
Actual results may differ from those projected in the
forward-looking statements due to risks and uncertainties, as well
as other risk factors that are included in the Company's filings
with the U.S. Securities and Exchange Commission. Although ZK
International believes that the assumptions underlying the
forward-looking statements are reasonable, any of the assumptions
could prove inaccurate and, therefore, there can be no assurance
that the results contemplated in forward-looking statements will be
realized. In light of the significant uncertainties inherent
in the forward-looking information included herein, the inclusion
of such information should not be regarded as a representation by
ZK International or any other person that their objectives or plans
will be achieved. ZK International does not undertake any
obligation to revise the forward-looking statements contained
herein to reflect events or circumstances after the date hereof or
to reflect the occurrence of unanticipated events.
ZK International
Group Co., Ltd. and Subsidiaries
|
Consolidated
Statements of Income and Comprehensive Income (Loss)
|
For the Six Months
Ended March 31, 2022 and 2021
(Unaudited)
|
(IN U.S. DOLLARS,
EXCEPT SHARE DATA)
|
|
|
|
|
For the Six Months
Ended
March 31,
|
|
|
|
2022
|
|
|
2021
|
|
Revenues
|
|
|
42,890,657
|
|
|
$
|
42,168,823
|
|
Cost of
sales
|
|
|
38,923,548
|
|
|
|
37,461,065
|
|
Gross
profit
|
|
|
3,967,109
|
|
|
|
4,707,758
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Selling and marketing
expenses
|
|
|
930,052
|
|
|
|
2,769,264
|
|
General and
administrative expenses
|
|
|
2,232,863
|
|
|
|
1,166,210
|
|
Research and
development costs
|
|
|
560,216
|
|
|
|
2,419,355
|
|
Total operating
expenses
|
|
|
3,723,132
|
|
|
|
6,354,829
|
|
|
|
|
|
|
|
|
|
|
Operating Income
(loss)
|
|
|
243,977
|
|
|
|
(1,647,071)
|
|
|
|
|
|
|
|
|
|
|
Other income
(expenses):
|
|
|
|
|
|
|
|
|
Interest
expenses
|
|
|
(465,466)
|
|
|
|
(528,598)
|
|
Interest
income
|
|
|
4,493
|
|
|
|
9,543
|
|
Other income
(expenses), net
|
|
|
218,277
|
|
|
|
325,539
|
|
Total other income
(expenses), net
|
|
|
(242,696)
|
|
|
|
(193,516)
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) before
income taxes
|
|
|
1,281
|
|
|
|
(1,840,587)
|
|
|
|
|
|
|
|
|
|
|
Income tax
provision
|
|
|
-
|
|
|
|
(76,306)
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
|
1,281
|
|
|
$
|
(1,916,893)
|
|
Net income (loss)
attributable to non-controlling interests
|
|
|
(9,635)
|
|
|
|
(1,334,346)
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to ZK International Group Co., Ltd.
|
|
|
(8,354)
|
|
|
$
|
(582,547)
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
|
1,281
|
|
|
$
|
(1,916,893)
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive
income:
|
|
|
|
|
|
|
|
|
Foreign currency
translation adjustment
|
|
|
871,641
|
|
|
|
1,863,153
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive
income (loss)
|
|
|
872,922
|
|
|
|
(53,740)
|
|
Comprehensive income
(loss) attributable to non-controlling interests
|
|
|
(15,437)
|
|
|
|
(1,315,874)
|
|
Comprehensive income
attributable to ZK International Group Co., Ltd.
|
|
|
857,485
|
|
|
|
1,262,134
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
earnings per share
|
|
|
|
|
|
|
|
|
Basic
|
|
|
-
|
|
|
|
(0.03)
|
|
Diluted
|
|
|
-
|
|
|
|
(0.03)
|
|
Weighted average number
of shares outstanding
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
|
19,243,252
|
|
Diluted
|
|
|
|
|
|
|
21,743,252
|
|
ZK International
Group Co., Ltd. and Subsidiaries
|
Consolidated Balance
Sheets
|
As of March 31,
2022 and September 30, 2021
(Unaudited)
|
(IN U.S.
DOLLARS)
|
|
|
|
|
2022
(Unaudited)
|
|
2021
|
Assets
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
5,244,796
|
|
$
|
13,525,298
|
Restricted
cash
|
|
|
79,170
|
|
|
77,906
|
Short-term
Investment
|
|
|
236,619
|
|
|
2,560,760
|
Accounts receivable,
net of allowance for doubtful accounts of $2,258,356 and
$2,221,870, respectively
|
|
|
29,545,643
|
|
|
27,124,959
|
Notes receivable
|
|
|
—
|
|
|
—
|
Other
receivables
|
|
|
5,229,288
|
|
|
2,158,120
|
Due from related
parties
|
|
|
368,214
|
|
|
—
|
Inventories
|
|
|
26,784,418
|
|
|
20,689,252
|
Advance to
suppliers
|
|
|
4,602,336
|
|
|
12,567,368
|
Total current
assets
|
|
|
72,090,484
|
|
|
78,703,663
|
Property, plant and
equipment, net
|
|
|
7,896,620
|
|
|
8,004,855
|
Right-of use
asset
|
|
|
123,042
|
|
|
54,166
|
Intangible assets,
net
|
|
|
9,563,588
|
|
|
8,749,987
|
Deferred tax
assets
|
|
|
359,265
|
|
|
353,460
|
Long-term
deposit
|
|
|
12,677,668
|
|
|
12,472,847
|
Long-term
investment
|
|
|
25,328,632
|
|
|
25,323,323
|
TOTAL
ASSETS
|
|
$
|
128,039,299
|
|
$
|
133,662,301
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
3,323,532
|
|
$
|
2,159,731
|
Accrued expenses and
other current liabilities
|
|
|
5,629,919
|
|
|
6,875,769
|
Lease liability -
current portion
|
|
|
-
|
|
|
26,332
|
Accrued payroll and
welfare
|
|
|
1,776,071
|
|
|
1,853,019
|
Advance from
customers
|
|
|
2,492,270
|
|
|
5,666,214
|
Due to related
parties
|
|
|
441,359
|
|
|
1,072,335
|
Convertible
debentures
|
|
|
2,823,364
|
|
|
2,823,364
|
Short-term bank
borrowings
|
|
|
18,912,183
|
|
|
21,394,761
|
Other borrowing - short
term portion
|
|
|
288,418
|
|
|
283,758
|
Income tax
payable
|
|
|
2,354,910
|
|
|
2,354,832
|
Total current
liabilities
|
|
|
38,042,025
|
|
|
44,510,115
|
Lease liability - long
term portion
|
|
|
-
|
|
|
27,834
|
TOTAL
LIABILITIES
|
|
$
|
38,042,025
|
|
$
|
44,537,949
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
Common
stock, no par value, 50,000,000 shares
authorized, 28,918,177 and 16,558,037 shares issued and outstanding,
respectively
|
|
|
|
|
|
|
Additional paid-in
capital
|
|
|
63,374,085
|
|
|
63,374,085
|
Statutory surplus
reserve
|
|
|
2,916,539
|
|
|
2,914,602
|
Subscription
receivable
|
|
|
(125,000)
|
|
|
(125,000)
|
Retained
earnings
|
|
|
19,727,213
|
|
|
19,737,504
|
Accumulated other
comprehensive income (loss)
|
|
|
3,764,433
|
|
|
2,898,594
|
Total equity
attributable to ZK International Group Co., Ltd.
|
|
|
89,657,270
|
|
|
88,799,785
|
Equity attributable to
non-controlling interests
|
|
|
340,004
|
|
|
324,567
|
Total equity
|
|
|
89,997,274
|
|
|
89,124,352
|
TOTAL LIABILITIES
AND EQUITY
|
|
$
|
128,039,299
|
|
$
|
133,662,301
|
ZK International
Group Co., Ltd. and Subsidiaries
|
Consolidated
Statements of Cash Flows
|
For the Six Months
Ended March 31, 2022 and 2021
(Unaudited)
|
(IN U.S.
DOLLARS)
|
|
|
|
For the Six Months
Ended
March 31,
|
|
|
|
2022
|
|
|
2021
|
|
Cash Flows from
Operating Activities:
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
1,281
|
|
|
$
|
(1,916,893)
|
|
Adjustments to
reconcile net income to net cash used in operating
activities:
|
|
|
|
|
|
|
|
|
Depreciation
expense
|
|
|
340,666
|
|
|
|
264,887
|
|
Amortization
expense
|
|
|
(938)
|
|
|
|
6,605
|
|
Non-cash
expenses
|
|
|
166,907
|
|
|
|
894,167
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
(1,965,921)
|
|
|
|
6,755,242
|
|
Other
receivables
|
|
|
(3,021,383)
|
|
|
|
2,420,300
|
|
Notes
receivable
|
|
|
(366,474)
|
|
|
|
38,197
|
|
Inventories
|
|
|
(5,728,222)
|
|
|
|
428,946
|
|
Advance to
suppliers
|
|
|
8,132,790
|
|
|
|
(9,053,966)
|
|
Accounts
payable
|
|
|
1,123,002
|
|
|
|
(4,379,215)
|
|
Notes
payable
|
|
|
-
|
|
|
|
(45,783)
|
|
Accrued expenses and
other current liabilities
|
|
|
(1,185,431)
|
|
|
|
(2,084,882)
|
|
Accrued payroll and
welfare
|
|
|
(106,869)
|
|
|
|
(466,248)
|
|
Advance from
customers
|
|
|
(3,251,552)
|
|
|
|
2,907,425
|
|
Income tax
payable
|
|
|
-
|
|
|
|
(3,111)
|
|
Net cash provided (used
in) operating activities
|
|
|
(5,862,144)
|
|
|
|
(4,234,329)
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from
Investing Activities:
|
|
|
|
|
|
|
|
|
Proceed from disposal
of property, plant and equipment
|
|
|
-
|
|
|
|
62,728
|
|
Purchases of property,
plant and equipment
|
|
|
(165,772)
|
|
|
|
(4,871)
|
|
Net cash used in
investing activities
|
|
|
(165,772)
|
|
|
|
57,857
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from
Financing activities:
|
|
|
|
|
|
|
|
|
Net proceeds from stock
offering
|
|
|
-
|
|
|
|
27,340,977
|
|
Net proceeds released
from (placed into) bank acceptance notes
|
|
|
15
|
|
|
|
-
|
|
Net proceeds released
from short-term investment
|
|
|
2,355,010
|
|
|
|
305,222
|
|
Net proceeds from
(repayment to) short-term bank borrowings
|
|
|
(2,820,517)
|
|
|
|
351,006
|
|
Net repayment of other
borrowing
|
|
|
(539,337)
|
|
|
|
(156,929)
|
|
Repayments of loans of
related parties
|
|
|
(645,521)
|
|
|
|
(1,138,134)
|
|
Cash advance to related
parties
|
|
|
-
|
|
|
|
(2,878,572)
|
|
Net cash provided by
(used in) financing activities
|
|
|
(1,650,350)
|
|
|
|
23,823,569
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate
changes on cash
|
|
|
87,415
|
|
|
|
386,231
|
|
|
|
|
|
|
|
|
|
|
Net change in cash and
cash equivalents
|
|
|
(7,590,851)
|
|
|
|
20,033,328
|
|
Cash and cash
equivalents at the beginning of year
|
|
|
12,835,647
|
|
|
|
3,759,535
|
|
Cash and cash
equivalents at the end of year
|
|
$
|
5,244,796
|
|
|
$
|
23,792,863
|
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosures of cash flows information:
|
|
|
|
|
|
|
|
|
Cash paid for income
taxes
|
|
$
|
-
|
|
|
$
|
167,862
|
|
Cash paid for interest
expenses
|
|
$
|
465,465
|
|
|
$
|
524,217
|
|
CONTACT:
Di
Chen
Cell Number: +86
15057357883
Email: super.di@live.cn
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SOURCE ZK International Group Co., Ltd.