ZK International Group Co., Ltd. Announces Record Revenues of $111.60 Million for the Fiscal Year 2023
Financial Highlights for the Fiscal Year 2023
|
|
For the Fiscal Year Ended |
|||||||||
($ millions, except per share data) |
|
2023 |
|
|
2022 |
|
|
% Change |
|||
Revenue |
|
$ |
111.60 |
|
|
$ |
102.39 |
|
|
|
8.99 % |
Gross profit |
|
$ |
1.30 |
|
|
$ |
7.60 |
|
|
|
-82.93 % |
Gross margin |
|
|
1.16 % |
|
|
|
7.42 % |
|
|
|
-6.26 points |
Loss from operations |
|
$ |
(60.44) |
|
|
$ |
(3.96) |
|
|
|
-1424.58 % |
Operating loss margin |
|
|
(54.16 %) |
|
|
|
(3.87 %) |
|
|
|
-50.29 |
Net loss attributable to ZK |
|
|
|
|
|
|
|
|
|
|
|
International |
|
$ |
(61.06) |
|
|
$ |
(6.08) |
|
|
|
-904.06 % |
Diluted loss per share |
|
$ |
(1.94) |
|
|
$ |
(0.21) |
|
|
|
-835.72 % |
Net book value per share |
|
$ |
0.80 |
|
|
$ |
2.80 |
|
|
|
-71.43 % |
Revenue
Revenues increased by
1) During the fiscal year 2023, the decline of real estate market in
2) During 2023 fiscal year, the average selling price of electrolytic nickel increased by 33.33% from
3) Due to the decrease of product prices, we had an overall increase in sales volume. The sales volume of steel strip increased by 87.73% from 753.91 tons in fiscal year 2022 to 1,415.29 tons in fiscal year 2023; Sales volume of pipes increased by 0.42% from 592,919 in fiscal year 2022 to 595,395 in fiscal year 2023; The sales volume of pipe fittings increased by 29.28% from 7,103,894 pieces in fiscal year 2022 to 9,183,690 pieces in fiscal year 2023.
Gross Profit
Our gross profit decreased by
Loss from Operations
Loss from operations was
During 2023 fiscal year, the Company recorded asset impairment cost of
For the 2021 and 2022 fiscal years, CG Malta achieved high growth with its online gaming services launched in more than 10 states in US with high growth rate of Real Money Handle and First-Time Depositor. However, during the 2023 fiscal year, the competition of gaming market has been increasingly intense. Market bullishness and valuations peaked in early-2023 and declined rapidly from there, preventing CG Malta from raising further capital to execute its business plan. For the best interest of the Company's shareholder, the Company decided to stop funding CG Malta and instead demanded the management team of CG Malta took active measures to achieve organic growth and healthy cash flow. However, the business was unable to raise the capital required to fund the business plan, and therefore the shareholders of CG Malta passed shareholder resolution on
During 2023 fiscal year, the Company evaluated the recoverability of the three platforms, including Defi Exchange, xSigma Trading, and MaximNFT and concluded that the carrying value of the three platforms 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. For the year ended
Net Loss Attributable to
Net loss attributable to
Net book value
Net book value per share was
Mr. Jiancong Huang, Chairman of
About
Emphasizing superior properties and durability of its steel piping,
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
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
|
||||||
CONSOLIDATED BALANCE SHEETS |
||||||
(IN |
||||||
|
||||||
|
|
As of |
||||
|
|
2023 |
|
2022 |
||
Assets |
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
4,994,411 |
|
$ |
7,515,147 |
Restricted cash |
|
|
50,995 |
|
|
101,992 |
Short-term Investment |
|
|
48,145 |
|
|
915,616 |
Accounts receivable, net of allowance for doubtful accounts and provision for expected credit loss |
|
|
14,967,186 |
|
|
28,362,933 |
Notes receivable |
|
|
54,825 |
|
|
49,611 |
Prepayment, deposit and other receivable - current |
|
|
383,413 |
|
|
2,360,539 |
Inventories |
|
|
17,937,425 |
|
|
21,141,501 |
Advance to suppliers |
|
|
4,810,044 |
|
|
6,322,592 |
Total current assets |
|
|
43,246,444 |
|
|
66,769,931 |
Property, plant and equipment, net |
|
|
7,836,017 |
|
|
7,124,587 |
Right-of-use asset – Operating lease |
|
|
43,840 |
|
|
30,998 |
Intangible assets, net |
|
|
1,437,384 |
|
|
11,415,451 |
Deferred tax assets |
|
|
— |
|
|
320,164 |
Prepayment, deposit and other receivable - Non-current |
|
|
292,070 |
|
|
— |
Long-term prepayment |
|
|
— |
|
|
10,447,395 |
Long-term accounts receivable |
|
|
5,527,682 |
|
|
7,522,188 |
Long-term investment |
|
|
285,540 |
|
|
25,292,866 |
TOTAL ASSETS |
|
$ |
58,668,977 |
|
$ |
128,923,580 |
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
Accounts payable |
|
$ |
2,611,220 |
|
$ |
10,066,758 |
Accrued expenses and other current liabilities |
|
|
4,964,893 |
|
|
6,949,772 |
Operating lease liability - current |
|
|
21,749 |
|
|
10,754 |
Accrued payroll and welfare |
|
|
1,918,415 |
|
|
1,880,377 |
Advance from customers |
|
|
821,694 |
|
|
1,758,800 |
Due to related parties |
|
|
1,111,001 |
|
|
2,052,403 |
Convertible debentures |
|
|
4,011,224 |
|
|
3,352,311 |
Bank borrowings - current |
|
|
9,388,706 |
|
|
16,257,820 |
Notes payables |
|
|
41,118 |
|
|
702,889 |
Income tax payable |
|
|
669 |
|
|
817,059 |
Total current liabilities |
|
|
24,890,689 |
|
|
43,848,943 |
Operating lease liability – non-current |
|
|
11,811 |
|
|
10,256 |
Bank borrowings – non-current |
|
|
8,527,686 |
|
|
— |
TOTAL LIABILITIES |
|
$ |
33,430,186 |
|
$ |
43,859,199 |
|
|
|
|
|
|
|
COMMITMENTS AND CONTINGENCIES |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
Common stock, no par value, 50,000,000 shares authorized, 32,992,740 and 30,392,940 shares |
|
|
|
|
|
|
Additional paid-in capital |
|
|
72,886,898 |
|
|
70,872,765 |
Statutory surplus reserve |
|
|
3,176,556 |
|
|
3,176,556 |
Subscription receivable |
|
|
(125,000) |
|
|
(125,000) |
Retained earnings (Deficits) |
|
|
(47,666,657) |
|
|
13,394,137 |
Accumulated other comprehensive loss |
|
|
(3,190,985) |
|
|
(2,640,753) |
Total equity attributable to |
|
|
25,080,812 |
|
|
84,677,705 |
Equity attributable to non-controlling interests |
|
|
157,980 |
|
|
386,676 |
Total equity |
|
|
25,238,792 |
|
|
85,064,381 |
TOTAL LIABILITIES AND EQUITY |
|
$ |
58,668,977 |
|
$ |
128,923,580 |
|
|||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) |
|||||||||
(IN |
|||||||||
|
|||||||||
|
|
For the year ended |
|||||||
|
|
2023 |
|
2022 |
|
2021 |
|||
Revenues |
|
$ |
111,599,686 |
|
$ |
102,391,636 |
|
$ |
99,407,217 |
Cost of sales |
|
|
(110,303,270) |
|
|
(94,796,037) |
|
|
(92,936,029) |
Gross profit |
|
|
1,296,416 |
|
|
7,595,599 |
|
|
6,471,188 |
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
Selling and marketing expenses |
|
|
2,117,810 |
|
|
2,380,429 |
|
|
3,117,906 |
General and administrative expenses |
|
|
5,144,340 |
|
|
5,421,575 |
|
|
5,772,710 |
Asset impairment loss |
|
|
53,203,517 |
|
|
2,771,019 |
|
|
— |
Research and development costs |
|
|
1,274,337 |
|
|
987,186 |
|
|
1,234,161 |
Total operating expenses |
|
|
61,740,004 |
|
|
11,560,209 |
|
|
10,124,777 |
|
|
|
|
|
|
|
|
|
|
Operating loss |
|
|
(60,443,588) |
|
|
(3,964,610) |
|
|
(3,653,589) |
|
|
|
|
|
|
|
|
|
|
Other income (expenses): |
|
|
|
|
|
|
|
|
|
Interest expenses |
|
|
(1,583,734) |
|
|
(3,451,665) |
|
|
(1,196,648) |
Interest income |
|
|
36,699 |
|
|
109,290 |
|
|
13,733 |
Income on investment |
|
|
— |
|
|
— |
|
|
50,649 |
Other income (expense), net |
|
|
240,378 |
|
|
(88,125) |
|
|
431,438 |
Total other expenses, net |
|
|
(1,306,657) |
|
|
(3,430,500) |
|
|
(700,828) |
|
|
|
|
|
|
|
|
|
|
Loss before income taxes |
|
|
(61,750,245) |
|
|
(7,395,110) |
|
|
(4,354,417) |
|
|
|
|
|
|
|
|
|
|
Income tax recovery |
|
|
459,855 |
|
|
1,340,844 |
|
|
552,146 |
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(61,290,390) |
|
$ |
(6,054,266) |
|
$ |
(3,802,271) |
Net (loss) income attributable to non-controlling interests |
|
|
229,596 |
|
|
(27,147) |
|
|
2,757 |
|
|
|
|
|
|
|
|
|
|
Net loss attributable to |
|
|
(61,060,794) |
|
|
(6,081,413) |
|
$ |
(3,799,514) |
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
(61,290,390) |
|
$ |
(6,054,266) |
|
$ |
(3,802,271) |
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss): |
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment |
|
|
(549,332) |
|
|
(5,504,385) |
|
|
2,423,439 |
|
|
|
|
|
|
|
|
|
|
Total comprehensive loss |
|
$ |
(61,839,722) |
|
$ |
(11,558,651) |
|
$ |
(1,378,832) |
Comprehensive loss (income) attributable to non-controlling interests |
|
|
228,696 |
|
|
(62,109) |
|
|
(14,773) |
Comprehensive loss attributable to |
|
$ |
(61,611,026) |
|
$ |
(11,620,760) |
|
$ |
(1,393,605) |
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss per share |
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(1.94) |
|
$ |
(0.21) |
|
$ |
(0.17) |
Diluted |
|
|
(1.94) |
|
|
(0.21) |
|
|
(0.17) |
Weighted average number of shares outstanding |
|
|
|
|
|
|
|
|
|
Basic |
|
|
31,445,962 |
|
|
29,305,828 |
|
|
21,873,594 |
Diluted |
|
|
31,445,962 |
|
|
29,431,781 |
|
|
22,633,819 |
|
|||||||||||||||
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY |
|||||||||||||||
FOR THE YEARS ENDED |
|||||||||||||||
(IN |
|||||||||||||||
|
|||||||||||||||
|
|
Shares |
|
Additional paid-in capital |
|
Subscription Receivable |
|
Statutory surplus reserve |
Retained
earnings |
|
Accumulated other comprehensive income (loss) |
|
Non- controlling interests |
|
Total equity |
Balance at |
|
16,558,037 |
|
18,049,630 |
|
— |
|
2,904,699 |
23,546,921 |
|
492,685 |
|
309,794 |
|
45,303,729 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock, |
|
7,080,762 |
|
24,884,560 |
|
(125,000) |
|
|
|
|
|
|
|
|
24,759,560 |
Common stock issued in |
|
4,374,176 |
|
11,443,067 |
|
|
|
|
|
|
|
|
|
|
11,443,067 |
Issuance of common stock |
|
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 |
|
|
|
|
|
|
|
|
|
|
2,405,909 |
|
17,530 |
|
2,423,439 |
Net loss |
|
|
|
|
|
|
|
9,903 |
(3,809,417) |
|
|
|
(2,757) |
|
(3,802,271) |
Balance at |
|
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 |
|
67,563 |
|
116,781 |
|
|
|
|
|
|
|
|
|
|
116,781 |
Fair value change due to |
|
|
|
678,782 |
|
|
|
|
|
|
|
|
|
|
678,782 |
Stock-based compensation |
|
|
|
5,603,615 |
|
|
|
|
|
|
|
|
|
|
5,603,615 |
Unearned Compensation |
|
|
|
(589,138) |
|
|
|
|
|
|
|
|
|
|
(589,138) |
Foreign currency |
|
|
|
|
|
|
|
|
|
|
(5,539,347) |
|
34,962 |
|
(5,504,385) |
Net loss |
|
|
|
|
|
|
|
261,954 |
(6,343,367) |
|
|
|
27,147 |
|
(6,054,266) |
Balance at |
|
30,392,940 |
|
70,872,765 |
|
(125,000) |
|
3,176,556 |
13,394,137 |
|
(2,640,753) |
|
386,676 |
|
85,064,381 |
Stock-based compensation |
|
2,599,800 |
|
1,839,733 |
|
|
|
|
|
|
|
|
|
|
1,839,733 |
Unearned Compensation |
|
|
|
174,400 |
|
|
|
|
|
|
|
|
|
|
174,400 |
Foreign currency |
|
|
|
|
|
|
|
|
|
|
(550,232) |
|
900 |
|
(549,332) |
Net loss |
|
|
|
|
|
|
|
|
(61,060,794) |
|
|
|
(229,596) |
|
(61,290,390) |
Balance at |
|
32,992,740 |
|
72,886,898 |
|
(125,000) |
|
3,176,556 |
(47,666,657) |
|
(3,190,985) |
|
157,980 |
|
25,238,792 |
|
|||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||||||||
(IN |
|||||||||
|
|||||||||
|
|
For the year ended |
|||||||
|
|
2023 |
|
2022 |
|
2021 |
|||
Cash Flows from Operating Activities: |
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(61,290,390) |
|
$ |
(6,054,266) |
|
$ |
(3,802,271) |
Adjustments to reconcile net income to net cash used in operating activities: |
|
|
|
|
|
|
|
|
|
Depreciation expense |
|
|
677,275 |
|
|
672,368 |
|
|
568,038 |
Amortization expense |
|
|
298,431 |
|
|
830,481 |
|
|
481,763 |
Right of use assets |
|
|
— |
|
|
— |
|
|
(53,634) |
Bad debt expense and credit loss |
|
|
17,897,334 |
|
|
227,837 |
|
|
92,032 |
Write-off of advance to suppliers |
|
|
— |
|
|
— |
|
|
108,395 |
Deferred tax expenses |
|
|
322,897 |
|
|
— |
|
|
406,064 |
Gain on accounts receivable factoring, net of discount |
|
|
— |
|
|
(1,602,500) |
|
|
— |
Impairment on intangible assets and long-term investment |
|
|
35,346,769 |
|
|
2,771,019 |
|
|
— |
Change in unrecognized tax benefits |
|
|
(823,340) |
|
|
(1,428,458) |
|
|
(918,038) |
Stock compensation expense |
|
|
2,014,133 |
|
|
2,674,807 |
|
|
1,351,082 |
Interest expense of convertible notes |
|
|
658,913 |
|
|
1,324,510 |
|
|
210,173 |
Interest expense of financing lease |
|
|
— |
|
|
— |
|
|
44,458 |
Interest expense of accounts receivable factoring |
|
|
359,051 |
|
|
1,151,453 |
|
|
— |
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
8,165,567 |
|
|
(12,059,620) |
|
|
5,804,654 |
Other receivables and prepayments |
|
|
349,612 |
|
|
(260,755) |
|
|
1,345,520 |
Notes receivable |
|
|
(6,676) |
|
|
(53,853) |
|
|
201,187 |
Inventories |
|
|
2,870,541 |
|
|
(2,606,504) |
|
|
2,021,789 |
Advance to suppliers |
|
|
1,401,001 |
|
|
5,493,624 |
|
|
(8,297,301) |
Accounts payable |
|
|
(7,451,608) |
|
|
8,803,924 |
|
|
(8,662,576) |
Notes payable |
|
|
(666,355) |
|
|
762,986 |
|
|
(159,823) |
Accrued expenses and other current liabilities |
|
|
(1,918,915) |
|
|
752,241 |
|
|
2,428,410 |
Accrued payroll and welfare |
|
|
130,063 |
|
|
219,178 |
|
|
211,632 |
Advance from customers |
|
|
(923,844) |
|
|
(3,662,097) |
|
|
3,162,961 |
Income tax payable |
|
|
— |
|
|
— |
|
|
(77,214) |
Long-term prepaid expenses |
|
|
707,470 |
|
|
— |
|
|
— |
Lease liability - Operating lease |
|
|
(23,841) |
|
|
(28,595) |
|
|
53,635 |
Net cash used in operating activities |
|
|
(1,905,912) |
|
|
(2,072,220) |
|
|
(3,479,064) |
|
|
|
|
|
|
|
|
|
|
Cash Flows from Investing Activities: |
|
|
|
|
|
|
|
|
|
Purchases of property, plant and equipment |
|
|
(656,178) |
|
|
(507,663) |
|
|
(114,319) |
Purchase of CIP |
|
|
(930,814) |
|
|
(12,666) |
|
|
(47,942) |
Purchases of intangible assets |
|
|
(707,470) |
|
|
(1,588,107) |
|
|
(1,983,812) |
Investment into CG Malta |
|
|
— |
|
|
— |
|
|
(25,000,000) |
Net cash used in investing activities |
|
|
(2,294,462) |
|
|
(2,108,436) |
|
|
(27,146,073) |
|
|
|
|
|
|
|
|
|
|
Cash Flows from Financing activities: |
|
|
|
|
|
|
|
|
|
Net proceeds released from (placed into) short-term investment |
|
|
852,542 |
|
|
1,523,953 |
|
|
(2,228,301) |
Proceeds from short-term bank borrowings |
|
|
21,486,396 |
|
|
31,113,044 |
|
|
31,203,129 |
Repayments of short-term bank borrowings |
|
|
(19,350,091) |
|
|
(34,501,465) |
|
|
(28,144,978) |
Net (repayment) receiving for due to related parties |
|
|
(920,690) |
|
|
1,173,516 |
|
|
(280,313) |
Repayment of other borrowing |
|
|
— |
|
|
(279,004) |
|
|
(483,458) |
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 |
|
|
2,068,157 |
|
|
(969,956) |
|
|
40,241,501 |
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash |
|
|
(439,515) |
|
|
(835,453) |
|
|
227,305 |
|
|
|
|
|
|
|
|
|
|
Net (decrease) increase in cash, cash equivalents and restricted cash |
|
|
(2,571,733) |
|
|
(5,986,065) |
|
|
9,843,669 |
Cash and cash equivalents and restricted cash at the beginning of period |
|
|
7,617,139 |
|
|
13,603,204 |
|
|
3,759,535 |
Cash, cash equivalents and restricted cash at the end of period |
|
$ |
5,045,406 |
|
$ |
7,617,139 |
|
$ |
13,603,204 |
|
|
|
|
|
|
|
|
|
|
Supplemental disclosures of cash flows information: |
|
|
|
|
|
|
|
|
|
Cash paid for income taxes |
|
$ |
38,695 |
|
$ |
87,473 |
|
$ |
37,041 |
Cash paid for interest expenses |
|
$ |
774,929 |
|
$ |
976,091 |
|
$ |
338,575 |
|
|
|
|
|
|
|
|
|
|
Non-cash transactions |
|
|
|
|
|
|
|
|
|
Offset between due from related parties and due to related parties balances |
|
$ |
545,844 |
|
|
623,363 |
|
|
604,719 |
Intangible assets obtained in exchange for settlement of long-term deposit |
|
$ |
707,470 |
|
|
749,252 |
|
|
— |
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