WENZHOU, China, Feb. 1, 2023
/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 audited financial results for the
fiscal year ended September 30,
2022.
Financial Highlights for the Fiscal Year 2022
|
|
For the Fiscal Year
Ended
September 30,
|
|
|
($ millions, except
per share data)
|
|
2022
|
|
|
2021
|
|
|
%
Change
|
|
|
Revenue
|
|
$
|
102.39
|
|
|
$
|
99.41
|
|
|
|
3.00
|
%
|
|
Gross profit
|
|
$
|
7.60
|
|
|
$
|
6.47
|
|
|
|
17.38
|
%
|
|
Gross margin
|
|
|
7.42
|
%
|
|
|
6.51
|
%
|
|
|
0.91
percentage
points
|
|
|
Loss from
operations
|
|
$
|
(3.96)
|
|
|
$
|
(3.65)
|
|
|
|
8.51
|
%
|
|
Operating loss
margin
|
|
|
(3.87)
|
%
|
|
|
(3.68)
|
%
|
|
|
-0.19
percentage
points
|
|
|
Net loss attributable
to ZK
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International
|
|
$
|
(6.08)
|
|
|
$
|
(3.80)
|
|
|
|
60.06
|
%
|
|
Diluted loss per
share
|
|
$
|
(0.21)
|
|
|
$
|
(0.17)
|
|
|
|
23.53
|
%
|
|
Net book value per
share
|
|
$
|
2.80
|
|
|
$
|
3.08
|
|
|
|
-9.09
|
%
|
- Revenues increased by $2,984,419 or 3.00%, to $102,391,636 for the year ended September 30, 2022 from $99,407,217 for the year ended September 30, 2021. The growth
was primarily driven by the increased weighted average
selling price ("ASP") during the fiscal year 2022. We
observed the rise of raw material prices, recovery of
market demand for construction
materials and the shortages of supply in the current market.
Overall, we had
34.26% increase of ASP in steel strip, 29.00%
increase in steel pipe, and 33.71% increase in pipe fittings during
2022 fiscal year.
- Gross profit increased by
17.38% to $7.60
million. Gross margin was 7.42%,
compared to 6.5% for the prior fiscal year. The increase of gross
profit was primarily due to increased weighted average selling
prices.
- During the fiscal year 2022, our Chinese subsidiaries returned
to profitability with net income after tax of $2.71 million.
- Loss from operations was $3.96
million, compared to loss from operations of $3.65 million for the prior fiscal year. The
decrease of operational loss was mainly due to the one-off asset
impairment cost of intangible asset and stock-based compensation
incurred during 2022 fiscal year for the expenses related to our
new business operations and subsidiaries.
- Net loss attributable to ZK International was $6.08 million, or net loss of $0.21 per share. This compared to net loss
attributable to ZK International of $3.80
million, or $0.17 per share,
for the prior fiscal year.
- Net book value per share was $2.80 as of September 30,
2022, compared to $3.08 as of
September 30, 2021.
Mr. Jiancong Huang, Chairman of
ZK International, commented, "We are pleased with our record
revenue growth to break the $100
million mark while having an increased gross margin. Our
financial results in 2022 were largely driven by the market
recovery from the pandemic and worldwide construction material
supply shortage. The Chinese government also continues to focus on
improving water and gas infrastructure. Our ability to work closely
with the local government and provide sophisticated piping
solutions for major projects is key to our growth trajectory. We
anticipate that our business will continue to grow and expand both
domestically and internationally into the next fiscal year."
Mr. Huang continued, "Building on the foundation of our core
steel pipe business domestically, we are excited to provide
additional value to our shareholders with plans to grow our core
steel pipe business internationally. Being one of the leaders
in our industry has brought many other international opportunities
for gas and water infrastructure needs, so it will be our goal in
2023 to seek out these international opportunities while building
our sales and profitability domestically. We are confident
that ZK is going to continue to provide its existing and future
shareholders with a value propisition for a long time to come."
Financial Results for the Fiscal Year 2022
Revenues
Revenues increased by $2,984,419
or 3.00%, to $102,391,636 for the
year ended September 30, 2022 from
$99,407,217 for the year ended
September 30, 2021. The increase in
revenues was primarily driven by the following factors:
1) During the fiscal year 2022, we observed an increase of raw
materials, especially the price of nikel which is an important
component of stainless steel. To minimize the impact the rise of
raw material price, we increased our weighted average selling price
("ASP") during the fiscal year 2022.
2) During 2022 fiscal year, the average selling price of
electrolytic nickel decreased by 0.33% from RMB 114,092 per ton in fiscal year 2021 to
RMB 113,716 in fiscal year 2022; the
average selling price of steel strip increased by 34.26% from
RMB 15.12 per kilogram in fiscal year
2021 to RMB 20.3 in fiscal year 2022;
the average selling price of steel pipe increased by 29.00% from
RMB 108.73 per piece in fiscal year
2021 to RMB 140.26 in fiscal year
2022; the average selling price of pipe fittings increased by
33.71% from RMB 16.94 each in fiscal
year 2021 to RMB 22.65 in fiscal year
2022.
3) Due to the rise of product prices, we had an overall decrease
in sales volume. The sales volume of steel strip decreased by
62.98% from 2227.19 tons in fiscal year 2021 to 753.91 tons in
fiscal year 2022; Sales of pipes decreased by 25.28% from 793,480
in fiscal year 2021 to 592,919 in fiscal year 2022; The sales
volume of pipe fittings decreased by 22.16% from 9,126,002 pieces
in fiscal year 2021 to 7,103,894 pieces in fiscal year 2022.
Gross Profit
Our gross profit increased by $1,124,411 or 17.38% to $7,595,599 for the year ended September 30, 2022 from $6,471,188 for the year ended September 30, 2021. Gross profit margin was 7.42%
for the year ended September 30,
2022, as compared to 6.51% for the year ended September 30, 2021. The increase of gross profit
was primarily due to increased weighted average selling prices
which is attributable to the rise of raw material prices and market
demand recovery over the construction materials and supply
shortages on the current market compared to the fiscal year
2021.
Operating Expenses
We incurred $2,380,429 in selling
and marketing expenses for the fiscal year ended September 30, 2022, compared to $3,117,906 for the fiscal year ended September 30, 2021. Selling and marketing
expenses decreased by $737,477, or
23.65%, during the fiscal year ended September 30, 2022 compared to the fiscal year
ended September 30, 2021. This
decrease is primarily due to decreases in sales payroll expenses,
compensation for the sales personnel, freight expenses, and
technical service fee during the year.
We incurred $5,421,575 in general
and administrative expenses for the fiscal year ended September 30, 2022, compared to $5,772,710 for the fiscal year ended September 30, 2021. General and administrative
expenses decreased by $351,136, or
6.08%, for the fiscal year ended September
30, 2022 compared to the fiscal year ended September 30, 2021. The slight decrease is mainly
attributable to the decreased stock-based compensation incurred
during the fiscal year 2022.
During the fiscal year ended September
30, 2021, the Company entered into a series of consulting
agreements with third-party entity and individuals to develop and
implement a defi exchange platform, which is a
stablecoin DEX (decentralized exchange) and liquidity
mining platform, available at https://xsigma.fi. During 2022 fiscal
year, the Company evalutated the recoverability of the Defi
platform pursuant to ASC 360-10-35-21 and concluded that the
carrying value of the Defi Exchange may not be recoverable as it
projects that the platform is likely to have continuing losses and
it's more likely than not this platform will be sold or otherwise
disposed of significantly before the end of its previously
estimated useful life. The Company wrote off the carrying value of
the platform and recorded a loss of $2,771,019. There was no asset impairment cost
during the fiscal year ended September 30,
2021
We incurred $987,186 in research
and development expenses for the fiscal year ended September 30, 2022, compared to $1,234,161 for the fiscal year ended September 30, 2021. R&D expenses decreased by
$246,975, or 20.01%, for the fiscal
year ended September 30, 2022
compared to the fiscal year ended September
30, 2021. The decrease was primarily due to the decreased
research and development activities during fiscal year 2022.
Income(loss) from Operations
As a result of the factors described above, operating loss was
$3,964,610 for the fiscal year ended
September 30, 2022, compared to
operating loss of $3,653,589 for the
fiscal year ended September 30, 2021,
an increase of operating loss of $311,021 or approximately 8.51%.
Other Income (Expenses)
Our interest income and expenses were $109,290 and $3,451,665, respectively, for the fiscal year
ended September 30, 2022, compared to
interest income and expenses of $13,733 and $1,196,648, respectively, for the fiscal year
ended September 30, 2021. We also had
government grant of $ 496,740 for
financial support to the Company under local government's
innovation incentive programs which was recorded as other income in
our Statement of Operations.
Net Income (loss) and earnings (loss) per share
As a result of the factors described above, our net loss for the
fiscal year ended September 30, 2022
was $6,054,266 compared to net loss
of $3,802,271 for the fiscal year
ended September 30, 2021, an increase
in loss of $2,251,995 or
approximately 59.23%.
After deducting for non-controlling interests, net loss
attributable to ZK International was $6.08
million, or net loss of $0.21
per share, for the fiscal year 2022. This compared to net loss
attributable to ZK International of $3.80
million, or $0.17 per share,
for 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
|
|
CONSOLIDATED BALANCE
SHEETS
|
|
(IN U.S.
DOLLARS)
|
|
|
|
As of
September 30,
|
|
|
2022
|
|
2021
|
|
Assets
|
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
7,515,147
|
|
$
|
13,525,298
|
|
Restricted
cash
|
|
|
101,992
|
|
|
77,906
|
|
Short-term
Investment
|
|
|
915,616
|
|
|
2,560,760
|
|
Accounts receivable,
net of allowance for doubtful accounts of $255,322 and
$2,221,870,
respectively
|
|
|
28,362,933
|
|
|
27,124,959
|
|
Notes receivable
|
|
|
49,611
|
|
|
—
|
|
Other receivables and
prepayments
|
|
|
2,360,539
|
|
|
2,158,120
|
|
Inventories
|
|
|
21,141,501
|
|
|
20,689,252
|
|
Advance to
suppliers
|
|
|
6,322,592
|
|
|
12,567,368
|
|
Total current
assets
|
|
|
66,769,931
|
|
|
78,703,663
|
|
Property, plant and
equipment, net
|
|
|
7,124,587
|
|
|
8,004,855
|
|
Right-of use
asset
|
|
|
30,998
|
|
|
54,166
|
|
Intangible assets,
net
|
|
|
11,415,451
|
|
|
8,749,987
|
|
Deferred tax
assets
|
|
|
320,164
|
|
|
353,460
|
|
Long-term
deposit
|
|
|
—
|
|
|
12,472,847
|
|
Long-term
prepayment
|
|
|
10,447,395
|
|
|
—
|
|
Long-term accounts
receivable
|
|
|
7,522,188
|
|
|
—
|
|
Long-term
investment
|
|
|
25,292,866
|
|
|
25,323,323
|
|
TOTAL
ASSETS
|
|
$
|
128,923,580
|
|
$
|
133,662,301
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
10,066,758
|
|
$
|
2,159,731
|
|
Accrued expenses and
other current liabilities
|
|
|
6,949,772
|
|
|
6,875,769
|
|
Lease liability -
current portion
|
|
|
10,754
|
|
|
26,332
|
|
Accrued payroll and
welfare
|
|
|
1,880,377
|
|
|
1,853,019
|
|
Advance from
customers
|
|
|
1,758,800
|
|
|
5,666,214
|
|
Due to related
parties
|
|
|
2,052,403
|
|
|
1,072,335
|
|
Convertible
debentures
|
|
|
3,352,311
|
|
|
2,823,364
|
|
Short-term bank
borrowings
|
|
|
16,257,820
|
|
|
21,394,761
|
|
Other borrowing - short
term portion
|
|
|
-
|
|
|
283,758
|
|
Notes
payables
|
|
|
702,889
|
|
|
—
|
|
Income tax
payable
|
|
|
817,059
|
|
|
2,354,832
|
|
Total current
liabilities
|
|
|
43,848,943
|
|
|
44,510,115
|
|
Lease liability - long
term portion
|
|
|
10,256
|
|
|
27,834
|
|
TOTAL
LIABILITIES
|
|
$
|
43,859,199
|
|
$
|
44,537,949
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
Common stock, no par
value, 50,000,000 shares authorized, 30,392,940 and 28,918,177
shares
issued and outstanding, respectively
|
|
|
|
|
|
|
|
Additional paid-in
capital
|
|
|
70,872,765
|
|
|
63,374,085
|
|
Statutory surplus
reserve
|
|
|
3,176,556
|
|
|
2,914,602
|
|
Subscription
receivable
|
|
|
(125,000)
|
|
|
(125,000)
|
|
Retained
earnings
|
|
|
13,394,137
|
|
|
19,737,504
|
|
Accumulated other
comprehensive income (loss)
|
|
|
(2,640,753)
|
|
|
2,898,594
|
|
Total equity
attributable to ZK International Group Co., Ltd.
|
|
|
84,677,705
|
|
|
88,799,785
|
|
Equity attributable to
non-controlling interests
|
|
|
386,676
|
|
|
324,567
|
|
Total equity
|
|
|
85,064,381
|
|
|
89,124,352
|
|
TOTAL LIABILITIES
AND EQUITY
|
|
$
|
128,923,580
|
|
$
|
133,662,301
|
|
|
The accompanying notes
are an integral part of these consolidated financial
statements.
|
|
ZK INTERNATIONAL GROUP CO.,
LTD
|
|
CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE
INCOME (LOSS)
|
|
(IN U.S. DOLLARS,
EXCEPT SHARE DATA)
|
|
|
|
For the year
ended September 30,
|
|
|
2022
|
|
2021
|
|
2020
|
|
Revenues
|
|
$
|
102,391,636
|
|
$
|
99,407,217
|
|
$
|
86,846,791
|
|
Cost of
sales
|
|
|
(94,796,037)
|
|
|
(92,936,029)
|
|
|
(82,903,989)
|
|
Gross
profit
|
|
|
7,595,599
|
|
|
6,471,188
|
|
|
3,942,802
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
Selling and marketing
expenses
|
|
|
2,380,429
|
|
|
3,117,906
|
|
|
2,215,651
|
|
General and
administrative expenses
|
|
|
5,421,575
|
|
|
5,772,710
|
|
|
2,482,972
|
|
Asset impairment
costs
|
|
|
2,771,019
|
|
|
—
|
|
|
—
|
|
Research and
development costs
|
|
|
987,186
|
|
|
1,234,161
|
|
|
1,123,555
|
|
Total operating
expenses
|
|
|
11,560,209
|
|
|
10,124,777
|
|
|
5,822,178
|
|
|
|
|
|
|
|
|
|
|
|
Operating
loss
|
|
|
(3,964,610)
|
|
|
(3,653,589)
|
|
|
(1,879,376)
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(expenses):
|
|
|
|
|
|
|
|
|
|
|
Interest
expenses
|
|
|
(3,451,665)
|
|
|
(1,196,648)
|
|
|
(1,000,554)
|
|
Interest
income
|
|
|
109,290
|
|
|
13,733
|
|
|
7,192
|
|
Gain on disposal of
subsidiary, net
|
|
|
-
|
|
|
—
|
|
|
536,612
|
|
Income (loss) on
investment
|
|
|
-
|
|
|
50,649
|
|
|
(256,937)
|
|
Other income (expense),
net
|
|
|
(88,125)
|
|
|
431,438
|
|
|
327,845
|
|
Total other
expenses, net
|
|
|
(3,430,500)
|
|
|
(700,828)
|
|
|
(385,842)
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income
taxes
|
|
|
(7,395,110)
|
|
|
(4,354,417)
|
|
|
(2,265,218)
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
recovery
|
|
|
1,340,844
|
|
|
552,146
|
|
|
1,428,202
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(6,054,266)
|
|
$
|
(3,802,271)
|
|
$
|
(837,016)
|
|
Net (loss) income
attributable to non-
controlling interests
|
|
|
(27,147)
|
|
|
2,757
|
|
|
11,402
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
attributable to ZK
International Group Co., Ltd.
|
|
|
(6,081,413)
|
|
|
(3,799,514)
|
|
$
|
(825,614)
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
income
|
|
|
(6,054,266)
|
|
$
|
(3,802,271)
|
|
$
|
(837,016)
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive
income (loss):
|
|
|
|
|
|
|
|
|
|
|
Foreign currency
translation adjustment
|
|
|
(5,504,385)
|
|
|
2,423,439
|
|
|
2,319,048
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive
loss
|
|
$
|
(11,558,651)
|
|
$
|
(1,378,832)
|
|
$
|
1,482,032
|
|
Comprehensive loss
(income) attributable to non-
controlling interests
|
|
|
(62,109)
|
|
|
(14,773)
|
|
|
(6,136)
|
|
Comprehensive income
attributable to ZK
International Group Co., Ltd.
|
|
$
|
(11,620,760)
|
|
$
|
(1,393,605)
|
|
$
|
1,475,896
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
earnings (loss) per share
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.21)
|
|
$
|
(0.17)
|
|
$
|
(0.05)
|
|
Diluted
|
|
|
(0.21)
|
|
|
(0.17)
|
|
|
(0.05)
|
|
Weighted average number
of shares
outstanding
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
29,305,828
|
|
|
21,873,594
|
|
|
16,558,037
|
|
Diluted
|
|
|
29,431,781
|
|
|
22,633,819
|
|
|
16,558,037
|
|
|
The accompanying notes
are an integral part of these consolidated financial
statements.
|
|
ZK INTERNATIONAL GROUP CO.,
LTD
|
|
CONSOLIDATED
STATEMENTS OF CHANGES IN EQUITY
|
|
FOR THE YEARS
ENDED SEPTEMBER 30, 2022, 2021 AND 2020
|
|
(IN U.S. DOLLARS,
EXCEPT SHARE DATA)
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
Additional
|
|
|
|
|
|
|
|
other
|
|
Non-
|
|
|
|
|
|
|
paid-in
|
|
Subscription
|
|
Statutory
|
|
Retained
|
|
comprehensive
|
|
controlling
|
|
Total
|
|
|
Shares
|
|
capital
|
|
Receivable
|
|
surplus reserve
|
|
earnings
|
|
income (loss)
|
|
interests
|
|
equity
|
|
Balance at
September 30,
2019
|
|
16,558,037
|
|
18,049,630
|
|
—
|
|
2,904,699
|
|
24,372,535
|
|
(1,808,825)
|
|
299,666
|
|
43,817,705
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Disposal of
subsidiary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,992
|
|
3,992
|
|
Foreign currency
translation loss
|
|
|
|
|
|
|
|
|
|
|
|
2,301,510
|
|
17,538
|
|
2,319,048
|
|
Net income
|
|
|
|
|
|
|
|
|
|
(825,614)
|
|
|
|
(11,402)
|
|
(837,016)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at
September 30,
2020
|
|
16,558,037
|
|
18,049,630
|
|
—
|
|
2,904,699
|
|
23,546,921
|
|
492,685
|
|
309,794
|
|
45,303,729
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of
common
stock, net of
offering costs
|
|
7,080,762
|
|
24,884,560
|
|
(125,000)
|
|
|
|
|
|
|
|
|
|
24,759,560
|
|
Common stock
issued in
connection
with
conversion of
convertible
notes
|
|
4,374,176
|
|
11,443,067
|
|
|
|
|
|
|
|
|
|
|
|
11,443,067
|
|
Issuance of
common stock
related to
exercise of
warrants
|
|
355,202
|
|
1,345,056
|
|
|
|
|
|
|
|
|
|
|
|
1,345,056
|
|
Stock-based
compensation
|
|
550,000
|
|
9,542,783
|
|
|
|
|
|
|
|
|
|
|
|
9,542,783
|
|
Unearned
Compensation
|
|
|
|
(1,891,011)
|
|
|
|
|
|
|
|
|
|
|
|
(1,891,011)
|
|
Foreign currency
translations
|
|
|
|
|
|
|
|
|
|
|
|
2,405,909
|
|
17,530
|
|
2,423,439
|
|
Net income
|
|
|
|
|
|
|
|
9,903
|
|
(3,809,417)
|
|
|
|
(2,757)
|
|
(3,802,271)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at
September 30,
2021
|
|
28,918,177
|
|
63,374,085
|
|
(125,000)
|
|
2,914,602
|
|
19,737,504
|
|
2,898,594
|
|
324,567
|
|
89,124,352
|
|
Stock incentive
issuance
|
|
1,407,200
|
|
1,688,640
|
|
|
|
|
|
|
|
|
|
|
|
1,688,640
|
|
Stock issued in
connection
with
conversion of
convertible
notes
|
|
67,563
|
|
116,781
|
|
|
|
|
|
|
|
|
|
|
|
116,781
|
|
Fair value
change due to
convertible
notes
extension
|
|
|
|
678,782
|
|
|
|
|
|
|
|
|
|
|
|
678,782
|
|
Stock-based
compensation
|
|
|
|
5,603,615
|
|
|
|
|
|
|
|
|
|
|
|
5,603,615
|
|
Unearned
Compensation
|
|
|
|
(589,138)
|
|
|
|
|
|
|
|
|
|
|
|
(589,138)
|
|
Foreign currency
translations
|
|
|
|
|
|
|
|
|
|
|
|
(5,539,347)
|
|
34,962
|
|
(5,504,385)
|
|
Net income
|
|
|
|
|
|
|
|
261,954
|
|
(6,343,367)
|
|
|
|
27,147
|
|
(6,054,266)
|
|
Balance at
September 30,
2022
|
|
30,392,940
|
|
70,872,765
|
|
(125,000)
|
|
3,176,556
|
|
13,394,137
|
|
(2,640,753)
|
|
386,676
|
|
85,064,381
|
|
|
|
The accompanying notes
are an integral part of these consolidated financial
statements.
|
|
ZK INTERNATIONAL GROUP CO.,
LTD
|
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
(IN U.S.
DOLLARS)
|
|
|
|
For the year
ended September 30,
|
|
|
2022
|
|
2021
|
|
2020
|
|
Cash Flows from
Operating Activities:
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(6,054,266)
|
|
$
|
(3,802,271)
|
|
$
|
(837,016)
|
|
Adjustments to
reconcile net income to net cash used in operating
activities:
|
|
|
|
|
|
|
|
|
|
|
Depreciation
expense
|
|
|
672,368
|
|
|
568,038
|
|
|
438,467
|
|
Amortization
expense
|
|
|
830,481
|
|
|
481,763
|
|
|
11,366
|
|
Right of use
assets
|
|
|
—
|
|
|
(53,634)
|
|
|
—
|
|
Loss on disposal of
fixed assets
|
|
|
—
|
|
|
—
|
|
|
7,608
|
|
Bad debt
expense
|
|
|
227,837
|
|
|
92,032
|
|
|
—
|
|
Inventory
provision
|
|
|
—
|
|
|
—
|
|
|
103,942
|
|
Write-off of advance to
suppliers
|
|
|
—
|
|
|
108,395
|
|
|
100,684
|
|
Deferred tax
benefits
|
|
|
—
|
|
|
406,064
|
|
|
(406,637)
|
|
Gain on accounts
receivable factoring, net of discount
|
|
|
(451,047)
|
|
|
—
|
|
|
—
|
|
Gain on disposal of
subsidiary
|
|
|
—
|
|
|
—
|
|
|
(536,612)
|
|
Loss on
investment
|
|
|
—
|
|
|
—
|
|
|
214,114
|
|
Impairment on
intangible assets
|
|
|
2,771,019
|
|
|
—
|
|
|
—
|
|
Change in unrecognized
tax benefits
|
|
|
(1,428,458)
|
|
|
(918,038)
|
|
|
(1,021,565)
|
|
Stock compensation
expense
|
|
|
2,674,807
|
|
|
1,351,082
|
|
|
—
|
|
Interest expense of
convertible notes
|
|
|
1,324,510
|
|
|
210,173
|
|
|
—
|
|
Interest expense of
financing lease
|
|
|
—
|
|
|
44,458
|
|
|
—
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
(12,059,620)
|
|
|
5,804,654
|
|
|
(4,800,889)
|
|
Other receivables and
prepayments
|
|
|
(260,755)
|
|
|
1,345,520
|
|
|
(793,936)
|
|
Notes receivable
|
|
|
(53,853)
|
|
|
201,187
|
|
|
206,465
|
|
Inventories
|
|
|
(2,606,504)
|
|
|
2,021,789
|
|
|
103,123
|
|
Advance to
suppliers
|
|
|
5,493,624
|
|
|
(8,297,301)
|
|
|
2,933,852
|
|
Accounts
payable
|
|
|
8,803,924
|
|
|
(8,662,576)
|
|
|
5,582,787
|
|
Notes
payable
|
|
|
762,986
|
|
|
(159,823)
|
|
|
(153,824)
|
|
Accrued expenses and
other current liabilities
|
|
|
752,241
|
|
|
2,428,410
|
|
|
(484,477)
|
|
Accrued payroll and
welfare
|
|
|
219,178
|
|
|
211,632
|
|
|
140,497
|
|
Advance from
customers
|
|
|
(3,662,097)
|
|
|
3,162,961
|
|
|
(198,358)
|
|
Income tax
payable
|
|
|
-
|
|
|
(77,214)
|
|
|
(149,386)
|
|
Lease
liability
|
|
|
(28,595)
|
|
|
53,635
|
|
|
—
|
|
Net cash provided (used
in) operating activities
|
|
|
(2,072,220)
|
|
|
(3,479,064)
|
|
|
460,205
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from
Investing Activities:
|
|
|
|
|
|
|
|
|
|
|
Purchases of property,
plant and equipment
|
|
|
(507,663)
|
|
|
(114,319)
|
|
|
(1,168,322)
|
|
Proceed from disposal
of property, plant and equipment
|
|
|
|
|
|
—
|
|
|
6,281
|
|
Purchase of
CIP
|
|
|
(12,666)
|
|
|
(47,942)
|
|
|
—
|
|
Disposal of intangible
asset
|
|
|
|
|
|
—
|
|
|
—
|
|
Purchases of intangible
assets
|
|
|
(1,588,107)
|
|
|
(1,983,812)
|
|
|
—
|
|
Investment into CG
Malta
|
|
|
—
|
|
|
(25,000,000)
|
|
|
—
|
|
Net cash used in
investing activities
|
|
|
(2,108,436)
|
|
|
(27,146,073)
|
|
|
(1,162,041)
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from
Financing activities:
|
|
|
|
|
|
|
|
|
|
|
Net proceeds released
from (placed into) short-term investment
|
|
|
1,523,953
|
|
|
(2,228,301)
|
|
|
—
|
|
Proceeds from
short-term bank borrowings
|
|
|
31,113,044
|
|
|
31,203,129
|
|
|
18,061,979
|
|
Repayments of
short-term bank borrowings
|
|
|
(34,501,465)
|
|
|
(28,144,978)
|
|
|
(17,836,445)
|
|
Net proceeds received
from (repaid to) related parties
|
|
|
1,173,516
|
|
|
(280,313)
|
|
|
(133,007)
|
|
Proceed from other
borrowing
|
|
|
—
|
|
|
—
|
|
|
775,951
|
|
Repayment of other
borrowing
|
|
|
(279,004)
|
|
|
(483,458)
|
|
|
(107,195)
|
|
Proceeds from stock
issuances
|
|
|
—
|
|
|
24,758,458
|
|
|
—
|
|
Proceeds from
convertible notes issuances
|
|
|
—
|
|
|
14,071,908
|
|
|
—
|
|
Proceeds from stock
warrants exercise
|
|
|
—
|
|
|
1,345,056
|
|
|
—
|
|
Net cash provided by
(used in) financing activities
|
|
|
(969,956)
|
|
|
40,241,501
|
|
|
761,283
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate
changes on cash
|
|
|
(835,453)
|
|
|
227,305
|
|
|
248,950
|
|
|
|
|
|
|
|
|
|
|
|
Net change in cash,
cash equivalents and restricted cash
|
|
|
(5,986,065)
|
|
|
9,843,669
|
|
|
308,397
|
|
Cash and cash
equivalents and restricted cash at the beginning of
period
|
|
|
13,603,204
|
|
|
3,759,535
|
|
|
3,451,138
|
|
Cash, cash equivalents
and restricted cash at the end of period
|
|
$
|
7,617,139
|
|
$
|
13,603,204
|
|
$
|
3,759,535
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosures of cash flows information:
|
|
|
|
|
|
|
|
|
|
|
Non-cash financing
activities
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
Cash paid for income
taxes
|
|
$
|
87,473
|
|
$
|
37,041
|
|
$
|
149,291
|
|
Cash paid for interest
expenses
|
|
$
|
976,091
|
|
$
|
338,575
|
|
$
|
991,319
|
|
|
The accompanying notes
are an integral part of these consolidated financial
statements.
|
For Media Enquiries:
Di
Chen
Email: super.di@live.cn
View original content to download
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SOURCE ZK International Group Co., Ltd.