WENZHOU, China, Aug. 13,
2024 /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,
2023.
Financial Highlights for the Fiscal Year 2023
|
|
For the Fiscal Year
Ended
September 30,
|
|
($ 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
percentage
points
|
|
Loss from
operations
|
|
$
|
(60.44)
|
|
|
$
|
(3.96)
|
|
|
|
-1424.58 %
|
|
Operating loss
margin
|
|
|
(54.16 %)
|
|
|
|
(3.87 %)
|
|
|
|
-50.29
percentage
points
|
|
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 $9.21
million or 8.99%, to $111.60
million for the year ended September 30,
2023 from $102.39 million for
the year ended September 30, 2022.
The increase in revenues was primarily driven by the following
factors:
1) During the fiscal year 2023, the
decline of real estate market in China, especially the collapse of Evergrande,
has set pressure on the steel pipe market. To strengthen the cash
flow and expand our market share, we lowered our weighted average
selling price ("ASP") to boost our sales volume. However, we have
observed the recovery of real estate market and increase of market
demand for the 2024 fiscal year, we have increased ASP for the 2024
fiscal year.
2) During 2023 fiscal year, the average
selling price of electrolytic nickel increased by 33.33% from
RMB 113,716 per ton in fiscal year
2022 to RMB 151,619 in fiscal year
2023; the average selling price of steel strip decreased by 1.82%
from RMB 20.3 per kilogram in fiscal
year 2022 to RMB 19.93 in fiscal year
2023; the average selling price of steel pipe decreased by 20.25%
from RMB 140.26 per piece in fiscal
year 2022 to RMB 111.86 in fiscal
year 2023; the average selling price of pipe fittings decreased by
4.86% from RMB 22.65 each in fiscal
year 2022 to RMB 21.55 in fiscal year
2023.
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 $6.30
million or 82.93% to $1.30
million for the year ended September
30, 2023 from $7.60 million
for the year ended September 30,
2022. Gross profit margin was 1.16% for the year ended
September 30, 2023, as compared to
7.42% for the year ended September 30,
2022. The decrease of gross profit was primarily due to
decreased weighted average selling prices while our cost of raw
material remained stable. However, we have observed the recovery of
real estate market and increase of market demand for the 2024
fiscal year, we have increased ASP for the 2024 fiscal year which
will improve our gross margin.
Loss from Operations
Loss from operations was $60.44
million, compared to loss from operations of $3.96 million for the prior fiscal year. The
increase of operational loss was mainly due to the one-off asset
impairment cost of intangible asset and long-term investment, and
stock-based compensation incurred during 2023 fiscal year for the
expenses related to our new business operations and
subsidiaries.
During 2023 fiscal year, the Company recorded asset impairment
cost of $53.20 million, primarily for
the write off of its long-term investment in CG Malta and the
software platforms, including xSigma Trading, MaximNFT, and the
Defi Exchange.
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 November 27,
2023 to cease operations of CG Malta and wind up the entity.
For the year ended September 30,
2023, the Company has written off the investment in CG
Malta.
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 September 30,
2023, the Company wrote off the carrying value of the three
platforms.
Net Loss Attributable to ZK International
Net loss attributable to ZK International was $61.06 million, or net loss of $1.94 per share. This compared to net loss
attributable to ZK International of $6.08
million, or $0.21 per share,
for the prior fiscal year.
Net book value
Net book value per share was $0.80
as of September 30, 2023, compared to
$2.80 as of September 30, 2022.
Mr. Jiancong Huang, Chairman of ZK International,
commented, "while ZK International declared a net loss of
$61 million for the year, this was
largely due to a series of one-time write-offs related to various
non-core investments. These write-offs are part of the company's
broader strategy to streamline operations and focus on high-growth
opportunities, ensuring a more robust financial foundation for the
future."
Mr. Huang continued, "While this year's financial results
reflect certain challenges, I am proud of the progress we have made
in growing our revenue and strengthening our core business in
China. The strategic decisions
we've taken to write off certain investments position us for a more
focused and profitable future. We remain committed to enhancing
shareholder value and driving long-term growth for ZK
International. As ZK International moves forward, the company
remains confident in its ability to navigate the evolving market
landscape and deliver sustainable value to its shareholders."
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,
|
|
|
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
of $6,617,485 and $255,322, respectively
|
|
|
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
issued and outstanding, respectively
|
|
|
|
|
|
|
|
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 ZK International Group Co., Ltd.
|
|
|
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
|
|
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,
|
|
|
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 ZK International Group Co., Ltd.
|
|
|
(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 ZK International Group Co., Ltd.
|
|
$
|
(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
|
|
ZK INTERNATIONAL
GROUP CO., LTD
|
|
CONSOLIDATED
STATEMENTS OF CHANGES IN EQUITY
|
|
FOR THE YEARS
ENDED SEPTEMBER 30, 2023, 2022 AND 2021
|
|
(IN U.S. DOLLARS,
EXCEPT SHARE DATA)
|
|
|
|
Shares
|
|
Additional
paid-in
capital
|
|
Subscription
Receivable
|
|
Statutory
surplus
reserve
|
Retained
earnings
(deficits)
|
|
Accumulated
other
comprehensive
income
(loss)
|
|
Non-
controlling
interests
|
|
Total
equity
|
|
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 loss
|
|
|
|
|
|
|
|
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 loss
|
|
|
|
|
|
|
|
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
|
|
Stock-based
compensation
|
|
2,599,800
|
|
1,839,733
|
|
|
|
|
|
|
|
|
|
|
1,839,733
|
|
Unearned
Compensation
|
|
|
|
174,400
|
|
|
|
|
|
|
|
|
|
|
174,400
|
|
Foreign currency
translations
|
|
|
|
|
|
|
|
|
|
|
(550,232)
|
|
900
|
|
(549,332)
|
|
Net loss
|
|
|
|
|
|
|
|
|
(61,060,794)
|
|
|
|
(229,596)
|
|
(61,290,390)
|
|
Balance at
September 30, 2023
|
|
32,992,740
|
|
72,886,898
|
|
(125,000)
|
|
3,176,556
|
(47,666,657)
|
|
(3,190,985)
|
|
157,980
|
|
25,238,792
|
|
ZK INTERNATIONAL
GROUP CO., LTD
|
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
(IN U.S.
DOLLARS)
|
|
|
|
For the year
ended September 30,
|
|
|
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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SOURCE ZK International Group Co., Ltd.