Tariffs and Economic Conditions - The U.S. government imposed a 25% tariff on steel imports and a 10% tariff on aluminum imports in March 2018, which could affect the pricing of steel products[27]. - Changes in global economic conditions, such as consumer spending and employment rates, could adversely affect the demand for the company's products[31]. - The Chinese government's macro-control policies may impact demand for the company's products, particularly in the steel industry, which could adversely affect operations and financial conditions[89]. - Uncertainty in China's economic growth could lead to decreased demand for the company's products, negatively affecting sales and financial conditions[90]. - The ongoing geopolitical tensions, including the conflicts in Ukraine and the Middle East, could adversely affect global financial markets and the company's operations[32]. Customer and Revenue Information - The company had two major customers for the fiscal year ended September 30, 2024, while there were no major customers for the fiscal years ended September 30, 2023, and 2022[40]. - For the fiscal year ended September 30, 2024, total revenue was $74,270,429, a decrease of 11.9% from $84,332,300 in 2023[182]. - Steel piping products accounted for 99.1% of total revenue in 2024, with sales amounting to $73,635,012[182]. - The top geographic market was China, generating $60,079,920, which is 80.89% of total sales in 2024[183]. - Two customers accounted for 10.23% and 10.15% of total revenue for the year ended September 30, 2024, with amounts due from these customers being $5,532,011 and $3,596,848, representing 3.84% and 2.50% of total accounts receivable, respectively[210]. Supply Chain and Operational Risks - The company faces risks related to supply chain disruptions, which could impact its ability to produce and deliver products[45]. - The company has a significant reliance on a few suppliers, with three suppliers accounting for 31.45%, 13.77%, and 10.39% of total raw material purchases in 2024[197]. - The company must maintain appropriate inventory levels to meet market demand, with risks of excess inventory leading to increased holding costs and potential write-downs[82]. - The company is dependent on the continued efforts of senior management, and any disruption could severely impact business operations[53]. Financial Position and Capital Requirements - The company requires substantial additional funding in the future to meet capital requirements for product development and operations[47]. - The company may face working capital shortages for purchasing materials, developing new products, and hiring additional employees[51]. - The company relies significantly on short-term borrowings, with $1,249,765 classified as short-term borrowings as of September 30, 2024, which may not be available on favorable terms[87]. - The company allows a credit period of 6 months for customers, but delays in payment can occur, impacting cash flow and potentially leading to significant provisions for doubtful accounts[76]. Research, Development, and Innovation - The company plans to raise additional capital through future offerings to invest in research and development and build new facilities or acquire existing ones[46]. - The company continues to invest in research and development to innovate and adapt to industry changes, which is critical for future success[61]. - The company is focused on internal growth through product development, but faces challenges such as increased competition and market entry barriers[52]. - The company has expanded its product line with the incorporation of Huadi Songyang in June 2023, focusing on industrial steel pipe and tube products[179]. Regulatory and Compliance Issues - The company is subject to various environmental regulations, which can impose substantial costs and limitations on operations, potentially leading to unanticipated liabilities[79]. - Future compliance with evolving regulations may require additional expenditures and efforts, impacting the company's operations and financial position[91]. - The CAC Revised Measures require network platform operators with over one million users to apply for a cybersecurity review before seeking a foreign listing[94]. - The company has obtained all necessary permissions and approvals for its operations in compliance with PRC laws and regulations[98]. Corporate Governance and Market Position - The company is classified as a "controlled company" under Nasdaq rules, which may affect corporate governance and investor perception[64]. - Nasdaq has broad discretionary authority over the continued listing of Huadi International's securities, which could lead to delisting if the company fails to meet certain criteria[165]. - If Huadi International's securities are delisted, it could face significant consequences, including reduced liquidity and a determination that its ordinary shares are "penny stocks"[168]. - The company follows home country corporate governance practices from the Cayman Islands, which may provide less protection to investors compared to U.S. standards[161]. Market Strategy and Competitive Landscape - The company operates in a highly competitive market for stainless steel seamless pipes, which may impact its market share and pricing strategies[35]. - The company aims to sustain growth in earnings and cash flows by improving cost structure, expanding product offerings, and increasing market share[219]. - The company is focused on expanding market share through acquisitions and organic initiatives, including new product offerings and increased geographic coverage[220]. - The company prioritizes high-margin products and regularly evaluates its portfolio to respond to changing market conditions[221]. Employee and Management Information - As of September 30, 2024, the company has 355 employees and anticipates needing to hire more to support growth[50]. - The management team has decades of experience in the industrial steel pipe and tube industry, providing continuity in advancing strategic and growth goals[215]. Financial Performance and Trends - Revenue from production services to third entities decreased to $635,417, representing only 0.9% of total revenue in 2024[182]. - The company has experienced limited seasonal fluctuations in revenue, with lower sales typically recorded during the Lunar New Year[193]. - The company maintains a product pass rate of 99.85% through a comprehensive quality management system compliant with ISO 9001:2015[214]. - The company has received numerous industry awards, reflecting its innovative products and recognized reputation in the market[217].

Core Viewpoint - Huadi International Group Co., Ltd. reported a record revenue of $84.33 million for the fiscal year ended September 30, 2023, marking a 10.42% increase from the previous year, alongside a significant net income growth of 69.16% to $3.30 million [1][2][13]. Financial Performance - Revenue increased by 10.42% to $84.33 million in FY 2023 from $76.37 million in FY 2022, the highest in the company's history [2][4]. - Gross profit rose by 10.96% to $12.36 million, with a gross profit margin of 14.65%, slightly down from 14.91% in the previous year [2][8]. - Net income for FY 2023 was $3.30 million, or $0.23 per share, compared to $1.95 million, or $0.15 per share, in FY 2022 [2][13]. - Cash and cash equivalents increased to $20.19 million as of September 30, 2023, up from $13.20 million a year earlier [2][14]. Revenue Breakdown - Domestic sales in China accounted for $73.74 million, representing 87.45% of total sales, with a year-over-year increase of 13.8% [5][7]. - International sales decreased by 9.6%, contributing $10.59 million to total revenue [7]. Cost and Expenses - Selling, general and administrative expenses rose by 13.73% to $7.34 million, primarily due to bad debt provisions and increased freight costs [9]. - Research and development expenses increased by 9.43% to $2.55 million, reflecting the company's commitment to innovation [10]. - Interest expenses decreased significantly by 81.82% to $0.30 million, attributed to reduced bank loans [11]. Other Income - The company reported net other income of approximately $0.70 million, mainly from dividend income, government grants, and rental income [12]. Strategic Insights - The strategic decision to expand in the domestic market has been pivotal in driving sales growth, demonstrating the company's adaptability to market demands [3].

Financial Performance - For the fiscal year 2023, Huadi International generated total revenues of approximately $84.33 million, a 10.4% increase from $76.37 million in 2022[185]. - Gross profit for the year ended September 30, 2023, increased by approximately $1.22 million or 10.96%, totaling approximately $12.36 million, with a gross profit margin of 14.65%[313]. - Net income attributable to Huadi International Group Co., Ltd. for the year ended September 30, 2023, was approximately $3.26 million, compared to $1.92 million in 2022[305]. - Total comprehensive income for the year ended September 30, 2023, was approximately $1.98 million, a recovery from a loss of $1.84 million in 2022[305]. - Net income for the fiscal year ended September 30, 2023, was approximately $3.30 million, an increase of approximately 69.16% compared to $1.95 million in 2022[324]. - Cash and cash equivalents as of September 30, 2023, were $20,192,460, up from $13,195,999 in 2022, indicating strong liquidity[326]. - Net cash used in operating activities for the year ended September 30, 2023, was approximately $2.45 million, primarily due to adjustments in working capital[330]. - Accounts receivable as of September 30, 2023, were $22.63 million, an increase from $19.66 million in 2022, reflecting increased credit sales[337]. - Net cash provided by financing activities for the year ended September 30, 2023, was approximately $11.58 million, primarily from a stock offering that generated $23.01 million[334]. - Total operating expenses for the year ended September 30, 2023, were approximately $9.24 million, an increase from $8.78 million in 2022[306]. Revenue Sources - Steel piping products accounted for 98.6% of total revenues in 2023, with sales amounting to $83.11 million, up from $74.70 million in 2022[185]. - The top geographic market was China, contributing $73.74 million or 87.45% of total sales in 2023, followed by the USA at $7.15 million (8.47%) and India at $1.60 million (1.89%)[186]. - Approximately 12.55% of the company's revenues in 2023 were generated from international sales, highlighting reliance on favorable exchange rates for competitiveness[302]. - Domestic sales in China increased over 13.83% compared to the last fiscal year, while international sales revenue decreased by 9.62% to approximately $10.59 million[306]. Product and Market Development - Huadi International's new subsidiary, Huadi Songyang, was established in June 2023 to expand the product line of industrial steel pipe and tube products[182]. - The company has a diverse product range, producing over 3,000 distinct pipe and tube products, primarily for the automotive, oil and gas, and electric energy sectors[189]. - The company is focused on expanding market share through acquisitions and organic initiatives, including new product offerings and increased geographic coverage[222]. - The company is actively expanding its product offerings, as evidenced by the diverse range of registered trademarks related to steel and metal products[240]. Research and Development - The company invested $2,550,777 in research and development for new product development and process improvements in 2023, compared to $2,330,913 in 2022, representing an increase of approximately 9.4%[247]. - The research and development team consists of 75 employees from technical and production departments, focusing on in-house patent research[247]. - The company anticipates focusing its R&D efforts on improving existing products and developing new technology in the coming years[346]. - The company has a strong focus on quality control in its R&D processes, which is crucial for maintaining brand value[346]. Intellectual Property - The company has obtained 43 patents, enhancing its intellectual property portfolio and innovation capabilities[287]. - Huadi Steel holds a total of 8 invention patents and 35 utility patents, which protect new technical solutions and improvements[244]. - The patents include advanced technologies such as anti-corrosion treatments and high-strength materials, showcasing the company's commitment to quality and durability[244]. - Huadi Steel's utility patents are protected under PRC laws for a term of 10 years, providing a competitive edge in the market[244]. Corporate Governance - The company has established an audit committee, a compensation committee, and a nominating and corporate governance committee[373]. - The audit committee is responsible for ensuring proper procedures for the receipt and treatment of complaints regarding accounting and auditing matters[374]. - The company has adopted a whistleblower procedure to allow confidential and anonymous submission of concerns about questionable accounting or auditing matters[374]. - The board has implemented a written disclosure policy to ensure timely and accurate communication to the investing public[374]. Legal and Regulatory Compliance - The company is compliant with PRC laws and regulations, having obtained all necessary permissions and approvals for its operations[260]. - The PRC government has initiated regulatory actions affecting business operations, which may impact the company's future compliance requirements[254]. - The company is not subject to cybersecurity review under the CAC Revised Measures, as it does not hold personal information of over one million users[256]. Financial Management - The company has implemented cost and production efficiency initiatives, resulting in lower inventory levels and reduced customer lead times[211]. - The company has a rigorous pricing strategy to manage commodity price exposure and share transportation costs with customers[226]. - The company has long-term bank loans totaling $5,442,709, with $43,860 due within the next year[351]. - The interest rate on the long-term loans from Agricultural Bank is consistently 4.35%[344].

Market Overview - In the fiscal year 2022, 84.69% of the company's sales revenue was generated from the China market, with the US and Taiwan accounting for 9.97% and 1.70% respectively[256]. - The company has a diversified customer portfolio across more than 20 countries, mitigating risks associated with economic cycles[269]. - The company has a distribution network covering over 20 provinces in China and exports products to 20 countries and regions, including the United States, Mexico, and Australia[345]. - Approximately 18.78% of the company's revenues in 2021 were generated from international sales, highlighting reliance on favorable exchange rates for competitiveness[349]. - Economic cycles and construction activity significantly influence demand for the company's products, affecting overall performance[347]. Financial Performance - For the fiscal year ended September 30, 2022, revenues increased by approximately $6.12 million or 8.71%, reaching approximately $76.37 million compared to $70.25 million for the previous year[353]. - Domestic sales increased over 21.94% compared to the last fiscal year, while international sales revenue decreased by 31.55% to approximately $11.72 million[353]. - Gross profit decreased by approximately $0.18 million, or 1.63%, to approximately $11.14 million for the year ended September 30, 2022, with a gross profit margin of 14.91%[358]. - Net income for the fiscal year ended September 30, 2022, was approximately $1.95 million, a decrease of approximately $0.61 million or 23.82% compared to the previous year[365]. - As of September 30, 2022, cash and cash equivalents were $13,195,999, a decrease from $15,350,197 in 2021[366]. Research and Development - The company has a high-quality research team with 29 engineers specializing in new product development and testing[285]. - The research and development team consists of 75 employees from technical and production departments, focusing on innovative products to meet evolving customer needs[301]. - The company invested $2,330,913 in new product development and improvements in existing processes for the year ended September 30, 2022, compared to $2,057,547 in 2021, reflecting an increase of approximately 13.2%[301]. - The company anticipates focusing on improving existing products and developing new technology in the coming years[388]. Quality Management - The company maintains a rigorous quality management system, achieving a product pass rate of 99.85%[270]. - The company operates under ISO9001 and ISO14001 quality management systems, ensuring high standards in manufacturing[345]. - The company emphasizes superior quality products and customer service, supported by a geographic manufacturing footprint and advanced logistics systems[281]. Legal and Regulatory Environment - The company has been involved in legal proceedings, including a settlement of RMB 631,791 related to a breach of contract case with Tangshan Sanyou Chemical Co., Ltd.[303]. - The company’s legal proceedings may involve uncertainties, and adverse results could impact financial performance[302]. - Foreign-invested enterprises in China can only pay dividends from retained earnings, with a requirement to set aside at least 10% of after-tax profits as statutory reserve funds until it reaches 50% of registered capital[313]. - The Foreign Investment Law, effective January 1, 2020, replaced three previous laws and introduced a pre-entry national treatment system for foreign investments, ensuring they receive treatment no less favorable than domestic investors[314]. Corporate Governance - The company has established five standing committees under the board, including the Audit Committee, Compensation Committee, and Nomination Committee, to enhance corporate governance[416]. - The Audit Committee is responsible for monitoring corporate financial reporting and external audits, ensuring transparency and accountability[420]. - The Compensation Committee reviews and makes recommendations regarding all forms of compensation for executive officers and directors[421]. - The Nomination Committee evaluates the performance of the Board and recommends candidates for election, ensuring compliance with regulatory requirements[422]. Employee and Labor Relations - The company has a total of 360 employees, with 35.3% in production, 20.8% in technical roles, and 17.5% in sales[286]. - 62.57% of employees are covered by the five statutory social benefits[435]. - 87.96% of employees are covered by Occupational Injury Insurance[435]. - The company has not experienced any work stoppages[435]. Innovation and Intellectual Property - The company has obtained 25 patents, all of which are owned by it, indicating a strong focus on innovation and intellectual property[336]. - The company holds a total of 4 invention patents and 20 utility patents, which protect new technical solutions and improvements, with utility patents having a protection term of 10 years under PRC laws[299]. - The company has registered multiple trademarks, with validity extending to 2029 and beyond, covering a range of metal products[292]. Supply Chain and Cost Management - The cost of steel coil represents over 50% of the total cost of sales, making fluctuations in steel prices critical to gross margins[346]. - The company has implemented supply chain and inventory management techniques to mitigate the effects of fluctuating inventory levels[347]. - For the year ended September 30, 2022, two suppliers accounted for 26.71% and 18.06% of the company's total purchases[263].

Financial Performance - Revenue for the fiscal year ended September 30, 2021, was $70,246,611, an increase of 18% compared to $59,137,278 in 2020[15] - Gross profit for 2021 was $11,319,936, representing a gross margin of approximately 16.1%, compared to $10,664,217 in 2020[15] - Net income attributable to Huadi International Group Co., Ltd. for 2021 was $2,531,475, a decrease of 24% from $3,322,736 in 2020[15] - Total assets increased to $100,245,863 in 2021, up from $69,123,370 in 2020, reflecting a growth of 45%[16] - Total liabilities rose to $48,767,449 in 2021, compared to $43,334,670 in 2020, indicating a 13% increase[16] - Total shareholders' equity significantly increased to $51,478,414 in 2021, up from $25,788,700 in 2020, marking a growth of 99%[16] Risks and Challenges - The company faces risks from the Chinese government's macro-control policies, which could adversely affect product demand[20] - Uncertainties in Chinese economic growth may lead to decreased demand for the company's products, impacting overall sales[21] - The company is subject to import tariffs and trade barriers that could negatively affect its competitiveness in international markets, particularly the U.S.[22] - The ongoing COVID-19 pandemic has led to temporary closures and operational slowdowns, impacting financial performance[57] - Supply chain disruptions and local protectionism in China pose risks to the company's ability to produce and deliver products effectively[40] - The company faces potential conflicts of interest due to transactions with related parties, which could adversely affect business operations[37] Customer and Supplier Relationships - The company had one major customer for the fiscal year ended September 30, 2021, compared to none in 2020, indicating a potential risk in revenue stability[34] - The company had three major suppliers for both fiscal years 2021 and 2020, with purchases from Taizhou Huadi Industrial Ltd. amounting to $6,376,512 in 2021 and $14,521,129 in 2020[35] Capital and Investment - The company plans to raise additional capital through future offerings to invest in research and development and expand production facilities[41] - Significant investments are being made in infrastructure and research and development to enhance existing products and introduce new stainless steel seamless pipe products[62] Employee and Operational Insights - The company has 382 employees as of the date of the annual report, indicating a need for continued recruitment and training to support growth[45] - The company allows a credit period of 6 months to its customers, but delays in payment can occur, impacting cash flow[77] - The company has recorded no bad debt write-offs during the years ended September 30, 2021, and 2020[77] Regulatory and Compliance Issues - Environmental regulations impose substantial costs and limitations on operations, with potential liabilities for noncompliance[80] - The company is subject to various national and local environmental laws in China, which can restrict operations and expose it to penalties[80] - The Chinese government exerts substantial influence over business operations, and changes in laws and regulations could materially affect the company's ability to operate and list on U.S. exchanges[92] - The company must monitor regulatory developments in China, particularly regarding approvals from authorities like the CSRC and CAC, which could impact its operations[105] Currency and Financial Risks - Fluctuations in exchange rates between the RMB and the U.S. dollar could materially impact the company's results of operations and the value of its shares[122] - The RMB has depreciated significantly against the U.S. dollar, which may adversely affect the company's revenues and financial position[124] - The PRC government imposes controls on the convertibility of RMB into foreign currencies, affecting the company's ability to remit dividends outside of China[128] Corporate Structure and Governance - The company is classified as a "controlled company" under Nasdaq rules, which may affect its corporate governance structure[65] - The company may face challenges in protecting shareholder interests due to its incorporation under Cayman Islands law, which may limit legal recourse in U.S. courts[178] Market Position and Product Development - Huadi International Group Co., Ltd. is a leading manufacturer of industrial stainless steel seamless pipes and tubes, with extensive distribution across over 20 provinces in China and exports to 20 countries and regions[194] - The core product "HuaGang" stainless steel seamless pipe has been recognized as a well-known trademark by the State Administration for Industry and Commerce of China[195] - The company focuses on new product development, manufacturing, marketing, and sales of stainless steel products, contributing to sustainable development[196] Future Outlook - The company anticipates that the impact of the pandemic will decrease in the 2022 fiscal year as vaccination efforts continue[59] - Huadi International intends to retain future earnings to finance operations and expansion, with no plans to pay dividends in the foreseeable future[188]

Financial Position - As of September 30, 2020, Huadi International Group Co., Ltd. had total assets of $69,123,370, a slight increase from $68,773,494 in 2019, representing a growth of approximately 0.51%[17] - The company reported total liabilities of $43,334,670 as of September 30, 2020, down from $47,566,394 in 2019, indicating a reduction of about 8.3%[17] - Shareholders' equity increased to $25,788,700 in 2020 from $21,207,100 in 2019, reflecting a growth of approximately 21.5%[17] - The accumulated deficit decreased significantly from $(3,481,925) in 2019 to $(159,189) in 2020, showing an improvement in financial health[17] - Cash and cash equivalents were reported at $796,794, down from $1,057,992 in 2019, a decline of about 24.6%[17] - Accounts receivable decreased slightly from $14,001,714 in 2019 to $13,618,697 in 2020, a reduction of approximately 2.7%[17] - The company had inventories valued at $20,837,594 as of September 30, 2020, an increase from $17,845,405 in 2019, representing a growth of about 16.7%[17] Revenue and Profitability - Total sales for 2020 were $57,767,081, a decrease of 12% from $65,518,316 in 2019[20] - Gross profit for 2020 was $10,664,217, down 27% from $14,622,672 in 2019[20] - Operating income decreased to $4,460,585 in 2020, a decline of 47% compared to $8,378,504 in 2019[20] - Net income for 2020 was $3,356,299, representing a 38% decrease from $5,446,487 in 2019[20] - Total comprehensive income for 2020 was $4,581,600, slightly down from $4,588,608 in 2019[20] - Total revenue decreased by approximately $6.4 million in fiscal year 2020 compared to fiscal year 2019, with international sales dropping from $17.9 million to $11.9 million, a 34% reduction[43] Expenses and Costs - Research and development expenses increased to $2,120,649 in 2020, up 19% from $1,777,110 in 2019[20] - Total operating expenses for 2020 were $6,203,632, a marginal decrease from $6,244,168 in 2019[20] - Advertising costs for the years ended September 30 were $104,933 in 2020, $147,363 in 2019, and $105,734 in 2018, indicating a decrease of 29% from 2019 to 2020[79] Cash Flow and Financing - Net cash provided by operating activities increased to $3,204,290 in 2020 from $2,346,607 in 2019, representing a 36.5% increase[29] - Cash and cash equivalents at the end of the year decreased to $1,705,204 from $3,016,672 in 2019, a decline of 43.4%[29] - Purchases of property, plant, and equipment amounted to $664,996 in 2020, down from $912,702 in 2019[29] - Proceeds from short-term borrowings were $38,620,077 in 2020, slightly down from $39,715,044 in 2019[29] - The company was able to repay all debt and obligations during the year ended September 30, 2020, without utilizing any payment deferral or forbearance[46] Impact of COVID-19 - The workforce remained stable throughout fiscal year 2020, but increased operational costs were incurred due to safety measures related to COVID-19[45] - The company experienced supply chain disruptions during the COVID-19 pandemic, leading to increased lead times and purchase prices for raw materials[45] - The impact of COVID-19 resulted in a temporary closure of offices and production facilities, with operations fully resuming by February 18, 2020[43] Shareholder Information - The Company is authorized to issue 250,000,000 ordinary shares, with 10,000,000 shares currently issued and outstanding as of September 30, 2020[137] - A reverse stock split was approved on October 9, 2020, reducing the number of authorized shares from 500,000,000 to 250,000,000[151] - The company completed an IPO on January 26, 2021, raising approximately $25 million from the sale of 3,125,000 shares at $8.00 per share[153] Taxation and Compliance - Current income tax expense for 2020 was $218,949, down 69.0% from $709,027 in 2019[144] - Total income tax expense for 2020 was $218,949, compared to $1,005,190 in 2019, reflecting a significant reduction[144] - The Company did not incur any interest and penalties related to potential underpaid income tax expenses for the fiscal years ended September 30, 2020, and 2019[141] Investments and Assets - The carrying value of long-term investments was $13,449,305 and $12,775,494 as of September 30, 2020, and 2019, respectively[64] - Long-term investments totaled $13,449,305 as of September 30, 2020, with significant holdings in Huashang Micro Finance Co. and Longwan Rural Commercial Bank[107] - The Company invested RMB 44,982,000 ($7,172,207) to acquire a 2.1% stake in Longwan Rural Commercial Bank (LRCB) in 2012, receiving dividend income of RMB 3,087,000 ($440,647) in 2020, down from RMB 3,307,500 ($481,070) in 2019[111] Customer and Supplier Relationships - The Company had no significant customers in 2020, but two customers accounted for 26.31% of total accounts receivable[120] - In the year ended September 30, 2020, three suppliers accounted for 32.05%, 16.60%, and 11.16% of total purchases, with these suppliers combined representing 63.47% of total accounts payable[122] - The Company purchased $14,521,129 in raw materials from Taizhou Huadi during the year ended September 30, 2020, with an outstanding balance of $5,342,512 as of the same date[126]