VIE Structure and Regulatory Risks - The company's operations are conducted in China through a variable interest entity (VIE), Changzhou Zhongjin Medical Equipment Co. Ltd., with no direct equity ownership but control through contractual arrangements[26][27] - The VIE structure is subject to legal and regulatory risks in China, including potential government disallowance, which could significantly impact operations and share value[28] - The company operates through a VIE structure, and any changes in PRC regulations or interpretations could result in severe penalties, including the potential devaluation or loss of value of its Ordinary Shares[102] - The company's PRC legal counsel has advised that there are substantial uncertainties regarding the interpretation and application of current or future PRC laws and regulations, which could lead to adverse actions by PRC regulatory authorities[103] - The company relies on contractual arrangements with its VIE, Changzhou Zhongjin, which may not be as effective as direct ownership in providing operational control or economic benefits[106] - If the PRC tax authorities determine that the company's contractual arrangements with its VIE are not at arm's length, it could result in additional taxes, penalties, and increased tax liabilities for Changzhou Zhongjin[114] - The company may face substantial costs and tax liabilities if it exercises the option to acquire equity ownership of Changzhou Zhongjin[115] - The company may lose control over assets held by Changzhou Zhongjin if it becomes bankrupt or undergoes liquidation, which could materially and adversely affect its business operations[116] - The company may face difficulties in enforcing contractual arrangements with Changzhou Zhongjin due to uncertainties in the PRC legal system[161] Financial and Tax Risks - The company transferred $1.3 million to its wholly owned subsidiary in China, Anhui Zhongjin, for capital injection during the fiscal year ended September 30, 2024[33] - Mainland China subsidiaries are required to set aside at least 10% of after-tax profits annually for reserve funds, limiting distributable cash dividends[34] - The company is subject to restrictions on foreign exchange and cross-border cash transfers, which may limit the ability to distribute earnings to shareholders[34] - The company's ability to pay dividends to U.S. investors depends on the VIE's payments to its wholly owned subsidiary, Erhua Medical Technology, under the VIE Agreements[31] - The company may be classified as a "Resident Enterprise" in China, subjecting it to a 25% enterprise income tax on worldwide income and potential withholding taxes on dividends[130][132] - The company may be classified as a "resident enterprise" under PRC tax laws, potentially subjecting it to a 25% worldwide income tax rate and affecting dividends to non-PRC shareholders[166][169] - Fluctuations in the RMB exchange rate could adversely affect the company's revenues, financial condition, and the value of its securities[172] - The PRC government imposes controls on currency conversion, which may restrict the company's ability to remit dividends and meet foreign exchange requirements[174][175] - The company's ability to transfer funds and assets among its subsidiaries and the VIE is subject to governmental control and restriction, potentially limiting its operational flexibility[178] - Cash or assets in mainland China or Hong Kong may not be available for operations outside these regions due to government restrictions[180] - The company does not intend to pay dividends in the foreseeable future, retaining earnings for business operations and expansion[222] Market and Customer Concentration Risks - The company's largest customer, Nissin, represented 57.3%, 78.2%, and 80.5% of total sales for the fiscal years ended September 30, 2024, 2023, and 2022, respectively[58] - The company relies heavily on Nissin, with no long-term agreement in place, and a loss of this customer would materially impact operations[58] - The company's dealer network, especially Nissin, is critical, with Nissin representing 57.3%, 78.2%, and 80.5% of revenues for fiscal years 2024, 2023, and 2022, respectively[67] - The company faces intense competition in the wheelchair and living aids markets, with competitors having advantages in brand recognition, resources, and market reach[54][57] - The company's reliance on a limited number of suppliers for critical components poses risks to manufacturing and sales if disruptions occur[59] - The company's exposure to foreign currency fluctuations, particularly in Japan, could impact competitiveness and financial results[65] - Adverse macroeconomic conditions in Japan, such as inflation and unemployment, could negatively affect demand for the company's products[193] Operational and Supply Chain Risks - Raw material price fluctuations, particularly in steel and aluminum, have adversely affected the company's results[64] - The company's operations in China were significantly impacted by COVID-19, with revenues materially affected in 2020, but operations have since recovered to pre-pandemic levels[61] - The company's business operations are still impacted by the uncertainty of COVID-19, particularly in China and Japan, its major international market[99] - The company relies on third-party logistics service providers for product delivery, and disruptions in logistics could result in delayed deliveries, increased costs, or damage to the company’s brand image[96] - The company sources raw materials from a limited number of suppliers, and the loss of suppliers could disrupt operations and increase costs[81] - The average utilization rate of the company's production lines was 70%, 75%, and 77% for the fiscal years ended September 30, 2024, 2023, and 2022, respectively[98] - Labor costs in China are expected to continue increasing, potentially impacting financial conditions if costs cannot be passed on to customers[183] - Additional social security and housing fund contributions based on actual wages amounted to $262,365, $257,478, and $467,246 for fiscal years 2024, 2023, and 2022, respectively[187] - The company may face penalties if found non-compliant with PRC regulations on social insurance and housing funds, potentially requiring additional contributions and fines[187] Product and Liability Risks - The company does not carry product liability insurance in Japan and China, its two largest markets, exposing it to significant financial risks[69] - The company’s warranty costs for the fiscal years ended September 30, 2024, 2023, and 2022 were $nil, but may increase in the future with the sale of more complex products like electric wheelchairs[93] - The company’s electric wheelchairs and living aids products are currently sold to a limited number of customers for market testing, with challenges in meeting regulatory requirements and anticipating user demand[89] - The company's expansion into new product categories, such as electric wheelchairs and oxygen concentrators, exposes it to risks including inventory buildup, higher return rates, and potential product liability claims[91] - The company's medical devices, classified as Class II, are subject to safety and technical inspections, with a recent product failure resulting in a RMB20,000 fine[137] - The company faces risks under the Foreign Corrupt Practices Act and Chinese anti-corruption laws, with potential liabilities for unauthorized payments by employees or third parties[134][135] Legal and Compliance Risks - The company's listing is currently not affected by the Holding Foreign Companies Accountable Act (HFCAA), but future uncertainties remain regarding PCAOB inspections and potential delisting risks[43] - The company changed auditors multiple times, with the current auditor being Audit Alliance LLP, a PCAOB-registered firm, to comply with U.S. regulations[43] - The company is not subject to cybersecurity review by the Cyberspace Administration of China (CAC) as it does not possess personal information of over one million users[30] - The company faces risks related to the interpretation and enforcement of new Chinese laws and regulations, which could impact its ability to conduct business and accept foreign investments[30] - The company's ability to list on U.S. exchanges may be hindered if future Chinese regulations require additional permissions or approvals[129] - PRC legal system uncertainties may adversely affect the company's operations and compliance, particularly due to the limited precedential value of court decisions and potential retroactive effects of unpublished government policies[138][139] - PRC regulations on loans and direct investment by offshore holding companies could delay or prevent the company from using offering proceeds to fund its PRC subsidiary, impacting liquidity and business expansion[140][141] - SAFE Circular 21, effective May 13, 2013, simplifies foreign exchange procedures but may limit the company's ability to convert, transfer, and use net proceeds from offerings in China, affecting liquidity and business funding[143][144] - Capital contributions to PRC subsidiaries require MOFCOM approval, which may take up to 30 working days, and delays or denials could adversely affect the company's liquidity and expansion plans[145] - The Cybersecurity Review Measures, effective February 15, 2022, require data processing operators with over 1 million users to undergo cybersecurity review before foreign listings, potentially impacting the company's business and offerings[146] - The Security Administration Draft, published November 14, 2021, mandates network data security reviews for data processing operators with over 1 million users or data affecting national security, adding regulatory uncertainty[147] - The company's proposed U.S. listing may face future regulatory risks if PRC authorities adopt new laws or interpretations under the Cybersecurity Review Measures or Security Administration Draft[148] - PRC government oversight and potential policy changes could significantly impact the company's operations, securities offerings, and share value, particularly regarding overseas listings[150][152] - The Trial Measures, effective March 31, 2023, require domestic companies to file with the CSRC for overseas offerings, with non-compliance potentially leading to administrative penalties[158] - Revised Provisions, effective March 31, 2023, expand confidentiality and archives administration requirements for overseas offerings, with non-compliance potentially resulting in legal liability[159] - The company regained compliance with Nasdaq Listing Rule 5550(a)(3) after a hearing decision on March 28, 2024, and filed its annual report on Form 20-F for fiscal year 2023 on April 26, 2024[194] - The company faces risks of delisting from Nasdaq if it fails to comply with listing rules, which could reduce liquidity and make future financing more difficult[195] - Holding Foreign Companies Accountable Act could add uncertainties to company's listing on Nasdaq[203] - PCAOB determined it was able to inspect and investigate registered public accounting firms in mainland China and Hong Kong[213] - Accelerating Holding Foreign Companies Accountable Act reduces non-inspection years for compliance from three to two[214] - The company may lose its foreign private issuer status on March 31, 2024, potentially leading to significant additional legal, accounting, and reporting expenses[221] Intellectual Property and Innovation Risks - The company owns approximately 119 patents and has filed 13 additional patent applications with the Patent Administration Department of the PRC, but there is no assurance that these applications will be granted[84] - Intellectual property protection in China is challenging, and unauthorized use of IP could harm the company's competitive position[191] Corporate Governance and Control Risks - The company's CEO owns over 50% of Ordinary Shares, giving him significant control over director elections and shareholder resolutions[197] - Shareholders holding at least 10% of voting share capital can requisition a general meeting, with specific notice requirements for convening meetings[229] - Shareholders may face challenges in protecting their interests under Cayman Islands law, which has a less developed body of securities laws compared to the U.S.[225] - Legal and regulatory obstacles may limit the ability of U.S. authorities to investigate or enforce actions against the company or its directors in China[228] - The market price of Ordinary Shares may vary significantly, and shareholders could lose a substantial part or all of their investment[230] Internal Control and Financial Reporting Risks - Material weaknesses identified in internal control over financial reporting include lack of accounting staff, formal internal controls, and independent directors[198] - Company took remedial measures by appointing independent directors and establishing an audit committee[198] - Company plans to hire more qualified accounting personnel and implement U.S. GAAP training programs[198] - Failure to correct material weaknesses could result in inaccuracies in financial statements and impair compliance with reporting requirements[198] - Company is subject to Sarbanes-Oxley Act Section 404 but not required to include an attestation report while an emerging growth company[199] - Presence of material weaknesses could lead to financial statement errors and delays in financial reporting[199] - Company is a foreign private issuer and not subject to certain U.S. securities law disclosure requirements[202] Economic and Geopolitical Risks - The Chinese economy's growth has slowed since 2012, and global economic uncertainties, including geopolitical tensions, may adversely affect the company's business and financial condition[119] - Changes in China's economic, political, or social conditions, including government policies and regulations, could materially affect the company's business and operations[126][127] - The company's operations are sensitive to global and domestic economic conditions, including potential conflicts in Asia and volatility in oil markets[119] Liquidity and Funding Risks - The company had cash of approximately $8.1 million and short-term investments of $18.6 million as of September 30, 2024, with total current assets of $42.8 million and total current liabilities of $17.2 million[79] - The company’s inability to secure sufficient additional financing could lead to delays in business plans, reduced scope of operations, or potential cessation of activities[77] - Remitting offering proceeds to China may take up to six months, and delays in government approvals could negatively impact the company's liquidity and expansion plans[122][124] - Offshore holding companies face regulatory challenges in transferring funds to PRC subsidiaries, including statutory limits on loans and registration requirements with SAFE and MOFCOM[121] - The company relies on dividend payments from PRC operating entities, which are subject to restrictions under PRC laws, potentially impacting its ability to pay dividends and service debt[162] - If any PRC operating entity undergoes liquidation, third-party creditors may claim rights to important assets, adversely affecting the company's business operations[164] Shareholder and Market Risks - An active trading market for the company's Ordinary Shares may not develop or be sustained, potentially limiting shareholders' ability to sell shares at market price[223] - Sales of 156,547,100 outstanding Ordinary Shares, including restricted securities, could adversely affect the market price of the shares[224]

Company Overview - Jin Medical International Ltd (JinMed) is a leading company in the Assistive Technologies (AT) industry, specializing in the design, development, manufacturing, and marketing of wheelchairs and living aids products for people with disabilities, the elderly, and rehabilitation applications [3] - Founded in 2006 and headquartered in Changzhou, Jiangsu Province, China, the company currently operates two manufacturing plants with a total area of approximately 230,000 square feet in Changzhou and Taizhou, Jiangsu Province [3] - JinMed has over 40 distributors in China and more than 20 international distributors, with the majority of its wheelchair products (over 30 models) sold to distributors in Japan and China, including Nissin Medical Industries Co Ltd, one of Japan's largest medical device distributors [3] New Manufacturing Facility - JinMed has initiated the construction of a new manufacturing facility in Chuzhou City, Anhui Province, China, which will be operated by its newly established subsidiary, JinMed (Anhui) Co Ltd [1] - The new facility, spanning 430,000 square feet, is designed as an internationally standardized, innovative, and high-end wheelchair and electric wheelchair manufacturing factory [1][3] - The facility is expected to commence operations in 2025 and will expand JinMed's production capacity for manual wheelchairs while introducing new production lines for electric wheelchairs, electric scooters, micro hyperbaric chambers, and scientific cosmetic products [2] Strategic Goals and Industry Leadership - The establishment of the new facility represents a significant milestone for JinMed, aligning with its goal of utilizing global technology for the benefit of mankind and further strengthening its leadership in the AT industry [2] - The company aims to leverage the new facility to produce more innovative, high-quality products, reinforcing its position as an industry leader in assistive technologies [1][2] Product Innovation and Market Reach - JinMed is known for delivering innovative wheelchair products that are lightweight and ergonomic, catering to a diverse market that includes Japan and China [3] - The company's product portfolio includes over 30 models of wheelchairs, with a strong focus on meeting the needs of people with disabilities, the elderly, and rehabilitation applications [3]

Stock Performance - Jin Medical International Ltd (ZJYL) experienced a significant stock price increase of 5 04%, reaching $2 71 per share [1] - The trading volume was 112,221 shares with a turnover rate of 0 07% [1] - The stock's amplitude was recorded at 6 59% [1] Financial Performance - ZJYL achieved a revenue of $10 56 million and a net profit of $1 79 million [1] - Earnings per share stood at $0 01 [1] - The company's gross profit is $3 74 million with a price-to-earnings ratio of 143 01 [1] - No institutions have issued buy, hold, or sell ratings for this stock [1] Industry Overview - The broader medical equipment industry saw an overall increase of 0 30% [2] - Notable gainers in the industry include Innovative Eyewear, Inc [2] - High amplitude stocks in the sector include Sharps Technology Inc C/Wts (To Pur Com), Innovative Eyewear, Inc , and Innovative Eyewear Inc C/Wts 16/08/2027 (To Pur Com) Ser A, with amplitudes of 37 67%, 32 00%, and 20 96% respectively [2] Company Overview - Jin Medical International Ltd specializes in rehabilitation equipment such as wheelchairs and other assistive living products for disabled or mobility-impaired individuals [2] - The company's products are sold to distributors in both the Chinese and international markets [2] - Their product range includes wheelchairs, bath products, oxygen machines, care products, and conlo products [2]

Revenue and Net Income - Total revenue for the six months ended March 31, 2024, was $10,556,891, compared to $10,253,163 in the same period in 2023[5] - Net income attributable to Jin Medical International Ltd. for the six months ended March 31, 2024, was $1,794,094, compared to $1,766,347 in the same period in 2023[5] - Net income for the six months ended March 31, 2024, was $1,704,390, compared to $1,766,347 for the same period in 2023[14] - Net revenue for the six months ended March 31, 2024, was $10,556,891, compared to $10,253,163 for the same period in 2023[33] - Net income for the six months ended March 31, 2024, was $2,201,868, up from $1,766,347 in the same period in 2023[33] - Total revenue for the six months ended March 31, 2024 was $10,556,891, compared to $10,253,163 in the same period in 2023, representing a 3% increase[62] Cash and Cash Equivalents - Cash and cash equivalents increased to $8,874,902 as of March 31, 2024, from $6,929,508 as of September 30, 2023[3] - The company's cash position increased to $8,874,902 at the end of March 2024, up from $6,929,508 at the beginning of the period[14] - The company recorded no cash equivalents as of March 31, 2024, and September 30, 2023[37] - The company's cash on deposit at financial institutions in mainland China increased from $5,561,070 to $8,637,315 as of March 31, 2024[144] Short-term Investments - Short-term investments increased to $17,113,103 as of March 31, 2024, from $9,768,835 as of September 30, 2023[3] - Short-term investments grew to $17,113,103 as of March 31, 2024, from $9,768,835 as of September 30, 2023[38] - Interest income from short-term investments was $808,363 for the six months ended March 31, 2024, compared to $69,840 for the same period in 2023[38] Assets and Liabilities - Total current assets increased to $38,177,840 as of March 31, 2024, from $31,115,815 as of September 30, 2023[3] - Total liabilities increased to $15,005,210 as of March 31, 2024, from $8,924,345 as of September 30, 2023[3] - Total assets increased to $34,559,661 as of March 31, 2024, up from $26,179,193 as of September 30, 2023[33] - Current liabilities increased to $14,687,268 as of March 31, 2024, from $8,763,714 as of September 30, 2023[33] - Total shareholders' equity increased to $26,244,166 as of March 31, 2024, from $23,979,105 as of September 30, 2023[3] Research and Development - Research and development expenses for the six months ended March 31, 2024, were $609,645, compared to $631,034 in the same period in 2023[5] - Research and development expenses decreased by 3% to $609,645 in 2024 compared to $631,034 in 2023[66] Comprehensive Income - Comprehensive income attributable to Jin Medical International Ltd. for the six months ended March 31, 2024, was $1,953,066, compared to $2,336,507 in the same period in 2023[5] Earnings Per Share - Earnings per common share (basic and diluted) for the six months ended March 31, 2024, were $0.01, the same as in the same period in 2023[5] Cash Flow Activities - Net cash provided by operating activities for the six months ended March 31, 2024, was $49,997, a significant decrease from $2,743,493 in 2023[14] - Net cash used in investing activities for the six months ended March 31, 2024, was $4,149,238, compared to $7,073,829 in 2023[14] - Net cash provided by financing activities for the six months ended March 31, 2024, was $6,004,298, compared to $8,099,888 in 2023[14] - Net cash provided by financing activities was $5,692,303 for the six months ended March 31, 2024, compared to $1,312,667 for the same period in 2023[33] VIE Structure and Risks - The company's main operating entities, Changzhou Zhongjin and its subsidiaries, are controlled through contractual arrangements rather than direct equity ownership[24] - The company completed a reorganization on November 26, 2020, establishing a VIE structure to consolidate its operations[20] - The company faces risks associated with its VIE structure, including potential legal and regulatory challenges in China[29] - The company's VIE contractual arrangements ensure that Erhua Med receives substantially all economic benefits from the Zhongjin Operating Companies[28] Market and Revenue Breakdown - Revenue from the China domestic market increased by 63% to $2,661,717 in 2024, while overseas market revenue decreased by 8% to $7,895,174[62] - Wheelchair revenue decreased by 8% to $7,694,373 in 2024, while wheelchair components and others revenue increased by 53% to $2,862,518[65] Tax and VAT - VAT tax refunds associated with export sales decreased by 31% to $361,431 in 2024 from $526,779 in 2023[72] - The company's income tax provision for the six months ended March 31, 2024, was $309,013, compared to $204,053 for the same period in 2023[137] - The company's tax holidays reduced income taxes by $294,310 for the six months ended March 31, 2024[134] - The company's effective tax rate for the six months ended March 31, 2024, was 15.3%, up from 10.4% in the same period in 2023[141] - Taxes payable increased from $271,423 to $564,626 as of March 31, 2024, primarily due to higher income tax payable[142] Accounts Receivable and Inventories - Accounts receivable, net, increased to $3,856,529 as of March 31, 2024, from $3,283,266 as of September 30, 2023, with 82.3% ($3.2 million) collected by March 31, 2024[92][93] - Inventories decreased to $4,540,852 as of March 31, 2024, from $5,053,136 as of September 30, 2023, with slow-moving items written down by $848,279 for raw materials and $22,411 for finished goods[96] - Prepaid expenses and other current assets increased to $2,202,847 as of March 31, 2024, from $892,597 as of September 30, 2023, driven by advances to suppliers and prepaid expenses[98][99] Operating Lease and Depreciation - Operating lease expenses for the six months ended March 31, 2024, were $88,469, compared to $24,198 for the same period in 2023[105] - Property, plant, and equipment, net, decreased slightly to $1,464,107 as of March 31, 2024, from $1,480,796 as of September 30, 2023, with depreciation expenses of $112,713 for the six months ended March 31, 2024[110] - Land use rights, net, increased significantly to $1,124,404 as of March 31, 2024, from $154,364 as of September 30, 2023, with amortization expenses of $7,333 for the six months ended March 31, 2024[111][112] Loans and Interest - Short-term bank loans increased to $9,681,150 as of March 31, 2024, from $4,113,000 as of September 30, 2023, with new loans from China Merchants Bank, Agricultural Bank of China, and Jiangsu Bank[115] - The company borrowed $4,155,000 (RMB 30.0 million) from Industrial and Commercial Bank of China with a fixed interest rate of 2.90% per annum, maturing on September 25, 2024[116] - The company borrowed $1,385,000 (RMB 10.0 million) from China Merchants Bank with a fixed interest rate of 2.80% per annum, maturing in one year, with a personal credit guarantee from major shareholder Mr. Erqi Wang[116] - The company borrowed $2,756,150 (RMB 19.9 million) from Agricultural Bank of China with a fixed interest rate of 2.95% per annum, maturing in one year[116] - The company borrowed $1,385,000 (RMB 10.0 million) from Jiangsu Bank with a fixed interest rate of 3% per annum, fully repaid on July 15, 2024[117] - The company incurred interest expenses of $93,256 for the six months ended March 31, 2024[117] Related Party Transactions - Accounts receivable from related parties totaled $1,524,570 as of March 31, 2024, with 56.9% ($0.9 million) collected subsequently[120] - Revenue from related parties for the six months ended March 31, 2024, was $1,176,378, compared to $362,871 for the same period in 2023[128] Deferred Tax Assets and Liabilities - The company's deferred tax assets, net, included $23,711 for the PRC as of March 31, 2024[137] - Net operating loss carry-forwards increased significantly from $5,049 to $113,753 as of March 31, 2024[138] - Total deferred tax assets, net decreased from $152,475 to $130,441 due to a 100% allowance for deferred tax assets in certain subsidiaries[138] Customer Concentration - One customer accounted for 53.7% of the company's total revenue for the six months ended March 31, 2024, down from 70.3% in the same period in 2023[146] Stock Split and Compliance - The company executed a forward stock split of its ordinary shares at a ratio of 1:20, increasing the authorized number of shares to 1,000,000,000[148] - The company regained compliance with Nasdaq's filing requirement for its annual report on Form 20-F for fiscal year 2023[158] Restricted Net Assets - Restricted net assets amounted to $2,363,989 as of March 31, 2024, up from $2,097,449 as of September 30, 2023[153] Warranty and Contract Assets - The company's warranty costs for the six months ended March 31, 2024 and 2023 were both $nil[58] - The company had no contract assets as of March 31, 2024 and September 30, 2023, and no material incremental costs for obtaining a contract[59] Employee Benefits - Employee social security and welfare benefits expenses increased to $244,722 for the six months ended March 31, 2024, compared to $162,598 for the same period in 2023, reflecting a 50.5% increase[86] Exchange Rate and Functional Currency - The company's functional currency for its PRC subsidiaries is the Chinese Yuan (RMB), and the average exchange rate for the six months ended March 31, 2024 was US$1=RMB 7.1828[81][83] COVID-19 and Geopolitical Risks - The company's business operations have recovered to the level prior to the COVID-19 pandemic since January 2023, but future impacts remain uncertain[79] - The company's operation has not been impacted by the Russia-Ukraine conflict, but potential additional sanctions and market volatilities could affect future operations[80] Allowance for Credit Losses - Allowance for credit losses decreased to $39,543 as of March 31, 2024, from $125,448 as of September 30, 2023[40] Consulting Fee Receivables - Consulting fee receivables due from the VIE and its subsidiaries were $10,072,433 as of March 31, 2024, up from $7,713,617 as of September 30, 2023[31]

VIE Structure and Regulatory Risks - Jin Med operates through a VIE structure in China, with no direct equity ownership in the VIE, relying on contractual arrangements for control and economic benefits[16][17] - The VIE agreements have not been legally tested, posing risks of regulatory changes or invalidation, which could significantly impact operations and share value[18] - The company is subject to PRC regulatory risks, including cybersecurity reviews and overseas listing restrictions, though it currently complies with CAC regulations[19] - The VIE structure and PRC regulatory environment create significant uncertainties for the company's operations and the value of its Ordinary Shares[18][19][32] - The company operates through a VIE structure, with significant risks if PRC regulations or interpretations change, potentially leading to severe penalties[103] - The VIE agreements are governed by PRC law and subject to arbitration, with uncertainties in enforcement that could adversely affect the company's operations[110] - The company relies on contractual arrangements with Changzhou Zhongjin, which may not provide the same level of control as direct equity ownership[106] - Potential conflicts of interest with Changzhou Zhongjin shareholders could materially affect the company's ability to control and benefit from the VIE[112] - The company's ability to enforce contractual arrangements in the PRC legal system is uncertain, which could limit control over its operating entities[110] - The company's ability to enforce contractual arrangements with Changzhou Zhongjin may be limited due to uncertainties in the PRC legal system[172] Dividend and Cash Flow Restrictions - Cash flows within the organization are restricted by PRC foreign exchange regulations, limiting dividend distributions to shareholders outside mainland China[23] - The company's ability to pay dividends depends on after-tax profits of its mainland China subsidiaries, with at least 10% of profits required to be set aside as reserves[23] - The company's mainland China subsidiaries are required to maintain reserves, limiting the distributable cash available for dividends to shareholders[23] - PRC laws require dividends to be paid only out of after-tax profit and mandate setting aside part of after-tax profits as statutory reserves[174] - The company relies on dividend payments from PRC operating entities, which are subject to restrictions under PRC laws[173] PCAOB and Delisting Risks - The PCAOB has secured access to inspect audit firms in China, but future obstruction by PRC authorities could lead to delisting risks under the HFCA Act[27][29] - The company has changed auditors multiple times, with current auditor DNTW Toronto LLP being PCAOB-registered, but uncertainties remain regarding future PCAOB inspections[30] - The company faces risks of delisting from Nasdaq if it fails to comply with continued listing requirements, impacting its ability to raise future financing[43] - The company regained compliance with Nasdaq Listing Rule 5550(a)(3) but still faces an outstanding deficiency due to the failure to file its annual report on Form 20-F for fiscal year 2023[214] Revenue and Financial Performance - Revenue from Nissin and its subsidiaries accounted for 78.2%, 80.5%, and 83.2% of total sales for fiscal years 2023, 2022, and 2021, respectively[51] - Revenue increased by 11.2% during the fiscal year ended September 30, 2023, excluding foreign currency translation impact[54] - Revenue increased by 11.2% during the fiscal year ended September 30, 2023, excluding the impact of foreign currency translation[99] - The company's business operations have recovered to the level prior to the COVID-19 pandemic as of January 2023[99] Tax and Financial Risks - Changzhou Zhongjin and Taizhou Zhongjin's NHTE status renewal saved $374,530, $270,220, and $284,786 in taxes for fiscal years 2023, 2022, and 2021, respectively[71] - The PRC tax authorities may scrutinize related-party transactions, potentially leading to additional taxes and penalties[116] - The company may be classified as a "Resident Enterprise" under China's Enterprise Income Tax Law, potentially subjecting it to a 25% tax rate on worldwide income and a 10% withholding tax on dividends[139][141] - If deemed a PRC "resident enterprise", dividends paid to non-PRC investors may be subject to PRC tax at a rate of 10% for enterprises or 20% for individuals[182] - The company may be classified as a "resident enterprise" under PRC tax laws, potentially subjecting it to a 25% enterprise income tax on worldwide income[178] Supply Chain and Operational Risks - The company relies heavily on a single large customer, Nissin, without a long-term agreement, posing significant operational risk[50][51] - Supply chain disruptions due to COVID-19 and other factors could materially impact sales and operations[52][54] - Raw material price fluctuations, particularly in steel and aluminum, could adversely affect profitability[57] - Currency fluctuations and global economic conditions may impact international sales and competitiveness[58] - The company faces intense competition in Japan and China, with competitors having substantial advantages[47][49] - Product liability risks and lack of insurance coverage in key markets could harm financial condition[62][63] - The company's growth depends on retaining and attracting qualified personnel in a competitive market[64] - The company's inability to obtain sufficient additional financing could require it to significantly curtail or potentially cease operations[74] - The company's reliance on key personnel, such as Mr. Erqi Wang, poses a risk to its operations and business strategy[75] - The company's expansion into new product categories, such as electric wheelchairs and oxygen concentrators, exposes it to new risks and challenges, including regulatory compliance and market demand uncertainties[86] - The future impact of COVID-19 remains highly uncertain, with potential risks from resurgence in China and global spread, particularly in Japan[101] - If Changzhou Zhongjin becomes insolvent, the company may lose access to critical assets, adversely affecting its business operations[120] Financial Position and Liquidity - The company had cash of approximately $6.9 million and short-term investments of $9.8 million as of September 30, 2023, with total current assets of approximately $31.1 million and total current liabilities of approximately $8.9 million[74] - The company may need to engage in capital-raising transactions in the near future, which could cause substantial dilution to shareholders[74] - PRC regulations on loans and capital contributions to PRC entities may delay or prevent the company from using proceeds from offerings or financing activities, impacting liquidity and expansion[127][128] - Remitting offering proceeds to China may take up to six months, and the process involves multiple regulatory steps, including foreign exchange registration and approvals[129][130][131] - PRC regulations on loans and direct investment by offshore holding companies may limit the company's ability to fund and expand its business, affecting liquidity[150][151] - The company's ability to convert and transfer foreign exchange proceeds in China is restricted by SAFE regulations, potentially impacting liquidity and business expansion[153] - Capital contributions to PRC subsidiaries require MOFCOM approval, which may take up to 30 working days, with potential delays affecting liquidity and business operations[154] Intellectual Property and Product Risks - The company owns approximately 119 patents and has filed approximately 13 additional patent applications with the Patent Administration Department of the PRC[80] - The company's warranty costs for the fiscal years ended September 30, 2023, 2022, and 2021 were $nil, but may increase in the future with more complex products like electric wheelchairs[91] - The company's electric wheelchairs and living aids products are currently sold to a few selected customers to test market demand[86] - The company's molecular oxygen concentrator failed to meet safety requirements in January 2020, resulting in a fine of RMB 20,000 (approximately USD 2,856) and a delay in certification until February 2022[147] - The company's products, classified as medical devices, are subject to safety and technical inspections, with failure potentially resulting in penalties, production delays, and loss of sales[146] - The company may face difficulties in protecting intellectual property rights in China, which could harm its business and competitive position[207] - The company is subject to strict product liability laws in Japan, its largest market, which could result in significant damages for product defects[209] Internal Controls and Governance - Material weaknesses identified in internal control over financial reporting, including lack of U.S. GAAP expertise, formal controls, and independent directors[220] - Remedial measures include hiring qualified accounting personnel, implementing U.S. GAAP training, and establishing an internal audit function[220] - Failure to address internal control weaknesses may lead to financial statement inaccuracies, regulatory non-compliance, and adverse effects on share price[220] - The company is subject to Sarbanes-Oxley Act Section 404 but is exempt from certain attestation requirements as an emerging growth company[221] - Ineffective internal controls could result in financial reporting errors, restatements, and potential delisting from Nasdaq[223] - As a foreign private issuer, the company is exempt from certain U.S. securities law disclosure requirements, limiting public information availability[224] - Officers, directors, and principal shareholders are exempt from Section 16 reporting, reducing transparency on share transactions[224] - The company's CEO owns at least 50% of Ordinary Shares, giving him significant control over director elections and shareholder resolutions[217] - CEO Erqi Wang owns over 50% of the company's outstanding Ordinary Shares, granting significant control over corporate decisions and shareholder resolutions[218] Economic and Market Risks - The Chinese economy has slowed since 2012, and global economic uncertainties, including geopolitical tensions, may adversely affect the company's business and financial condition[125] - Changes in China's economic, political, or social conditions, including government policies, could materially affect the company's business and operations[134][135] - Adverse macroeconomic conditions in Japan, including inflation and unemployment, could negatively impact demand for the company's products[212] - Fluctuations in RMB exchange rates could adversely affect company's revenues, financial condition, and value of securities[185] - PRC government controls on currency conversion may affect company's ability to remit dividends and meet foreign exchange requirements[187] - Foreign exchange transactions under the capital account must be approved in advance by SAFE[188] - The PRC government has imposed more restrictive foreign exchange policies, potentially affecting the company's ability to pay dividends in foreign currencies and impacting capital expenditure plans[190] - The company may face difficulties in transferring funds and assets out of mainland China and Hong Kong due to government restrictions and controls on RMB conversion[191][192] - Labor costs in the PRC are expected to continue increasing, which could adversely affect the company's financial conditions and results of operations if costs cannot be passed on to customers[196] - The company may be subject to penalties if found non-compliant with PRC regulations on employee social insurance and housing funds, with estimated additional contributions of $257,478, $467,246, and $385,935 for fiscal years 2023, 2022, and 2021 respectively[200] Legal and Compliance Risks - The company is subject to the U.S. Foreign Corrupt Practices Act and Chinese anti-corruption laws, with potential liabilities for improper payments or offers to government officials[143][144] - The company's PRC operations are subject to uncertainties in the PRC legal system, including potential retroactive effects of unpublished government policies and internal rules[148][149] - The PRC legal system's evolving nature and potential retroactive application of new laws may increase compliance costs and operational restrictions for the company[165] - The company may face additional compliance requirements under the Trial Measures and supporting guidelines issued by the CSRC, effective March 31, 2023[169] - Revised Provisions on confidentiality and archives administration for overseas securities offering and listing by domestic companies came into effect on March 31, 2023, expanding application to indirect overseas offering and listing[170] - Company may face legal liabilities if it fails to comply with revised confidentiality and archives administration requirements under PRC laws[170] - The company is subject to scrutiny and negative publicity affecting U.S.-listed Chinese companies, which could harm business operations, future financing, and reputation[202][203] Production and Operational Efficiency - The average utilization rate of the company's production lines was 75%, 77%, and 79% for the fiscal years ended September 30, 2023, 2022, and 2021, respectively[97] - For the fiscal year ended September 30, 2023, no supplier accounted for more than 10% of the company's total purchases, compared to one supplier accounting for 10% in 2022 and 15.7% in 2021[77] - The company has established internal control procedures for the use of chops and seals, but there is a risk of employee abuse or negligence, which could disrupt normal business operations[123]

Stock Split and Market Reaction - Jin Medical International (ZJYL) is undergoing a one-for-20 stock split, approved by shareholders last month [1] - The stock initially appeared to drop 95% in pre-market trading due to the split, but the market adjusted to reflect the change [1] - Post-split, ZJYL stock is trading at approximately $13 50 per share, down from its previous closing price of $217 01 [2] - The stock is up 20 7% as of Thursday morning following the split [2] Impact of Stock Split on ZJYL - The stock split increases the total number of shares available on the market without affecting the company's market capitalization [2] - The lower post-split share price of $13 50 could attract new investors by providing a more accessible entry point [2] Additional Stock Market News - The article mentions other stock market news, including updates on CCSC Technology (CCTG) and Hitek Global (HKIT), as well as pre-market stock movers [2]

TABLE OF CONTENTS | Consolidated Financial Statements | | | --- | --- | | Unaudited Condensed Consolidated Balance Sheets as of March 31, 2023 and September 30, 2022 | F-2 | | Unaudited Condensed Consolidated Statements of Comprehensive Income for the six months ended March 31, 2023 | | | and 2022 | F-3 | | Unaudited Condensed Consolidated Statements of Changes in Shareholders' Equity for the six months ended March 31, | | | 2023 and 2022 | F-4 | | Unaudited Condensed Consolidated Statements of Cash Flows f ...

Revenue and Profit Growth - Total revenue for the six months ended March 31, 2023, was $10,253,163, compared to $9,467,621 for the same period in 2022, representing an 8.3% increase[6] - Net income for the six months ended March 31, 2023, was $1,766,347, up 44.1% from $1,225,864 in the same period in 2022[6] - Gross profit for the six months ended March 31, 2023, was $3,530,873, up 12.7% from $3,132,522 in the same period in 2022[6] - Net income for 2023 increased to $1,766,347, up from $1,225,864 in 2022, reflecting a significant growth in profitability[13] - Net revenue for the six months ended March 31, 2023, was $10,253,163, compared to $9,467,621 for the same period in 2022[35] - Net income for the six months ended March 31, 2023, was $1,766,347, up from $1,225,864 in the same period in 2022[35] - Total revenue for the six months ended March 31, 2023 was $10,253,163, compared to $9,467,621 for the same period in 2022, representing an 8.3% increase[70] - Revenue and net income increased by 18.7% and 57.9% in RMB terms, respectively, for the six months ended March 31, 2023 compared to the same period last year[84] - The depreciation of RMB against USD by 8.7% resulted in revenue and net income growth of 12.7% and 44.1% in USD terms, respectively, for the six months ended March 31, 2023[84] Cash and Liquidity - Cash and cash equivalents increased significantly to $8,684,188 as of March 31, 2023, compared to $4,792,632 as of September 30, 2022, reflecting strong liquidity growth[3] - The company's cash position at the end of 2023 was $8,684,188, compared to $3,642,055 at the end of 2022, indicating strong liquidity growth[13] - Net cash provided by operating activities in 2023 was $2,743,493, a substantial improvement from a net cash used in operating activities of $51,274 in 2022[13] - Net cash provided by operating activities was $2,743,493 for the six months ended March 31, 2023, compared to a net cash used of $51,274 in the same period in 2022[35] - The company's cash deposited outside of PRC was $6,787,221 as of March 31, 2023, compared to $nil as of September 30, 2022[156] - The company's cash on deposit at financial institutions in the PRC was $1,890,435 as of March 31, 2023, compared to $4,785,389 as of September 30, 2022[156] Assets and Liabilities - Total assets grew to $31,022,497 as of March 31, 2023, from $20,939,534 as of September 30, 2022, a 48.2% increase[3] - Total shareholders' equity increased to $23,546,519 as of March 31, 2023, from $15,235,691 as of September 30, 2022, driven by the IPO and retained earnings[3][9] - Total assets increased to $24,235,276 as of March 31, 2023, up from $20,939,534 as of September 30, 2022[34] - Short-term investments increased to $4,696,503 as of March 31, 2023, from $2,276,158 as of September 30, 2022[44] - Allowance for doubtful accounts increased to $185,289 as of March 31, 2023, from $114,486 as of September 30, 2022[45] - Inventories decreased to $6,509,349 as of March 31, 2023, from $6,724,415 as of September 30, 2022[105] - Property, plant, and equipment, net, was $1,582,650 as of March 31, 2023, slightly down from $1,627,962 as of September 30, 2022[112] - Land use right, net, was $166,476 as of March 31, 2023, up from $163,213 as of September 30, 2022[115] - Total taxes payable increased to $341,885 as of March 31, 2023, compared to $248,090 as of September 30, 2022[152] - The company's statutory reserve and restricted net assets totaled $1,827,972 as of March 31, 2023[164] Research and Development - Research and development expenses decreased to $631,034 for the six months ended March 31, 2023, from $892,524 in the same period in 2022, reflecting a 29.3% reduction[6] - Research and development expenses decreased to $631,034 in the six months ended March 31, 2023 from $892,524 in the same period of 2022, a 29.3% reduction[73] IPO and Capital Raise - The company issued 1,000,000 ordinary shares in an initial public offering, raising $8,000,000 gross proceeds[9] - Gross proceeds from initial public offerings in 2023 were $8,000,000, with direct costs of $1,212,779, marking a significant capital raise[13] - The company's deferred IPO cost offset with additional paid-in capital was $812,900 in 2023, indicating financial adjustments post-IPO[13] - The company completed its initial public offering on March 30, 2023, issuing 1,000,000 ordinary shares at $8.00 per share[38] - The company closed its initial public offering on March 30, 2023, raising $8,000,000 in gross proceeds[160] - The company's underwriter partially exercised the over-allotment option, purchasing an additional 47,355 ordinary shares for $378,840[160] VIE Structure and Risks - The company's VIE structure involves contractual arrangements with Zhongjin Operating Companies, which are controlled through Erhua Med, a WFOE in China[17][18][26] - Erhua Med has consulting fee receivables of $6,455,936 from the VIE and its subsidiaries as of March 31, 2023, which were fully eliminated upon consolidation[32] - The company's total assets and liabilities, as well as revenue and expenses, are primarily derived from the VIE and its subsidiaries, as the parent company and its immediate subsidiaries are holding companies with no active operations[32] - The company faces risks associated with its VIE structure, including potential legal and regulatory challenges in China that could impact its ability to enforce contractual arrangements and consolidate financial results[28][31] - The company's PRC subsidiary, VIE, and VIE's subsidiaries have restricted net assets totaling $1,914,531 as of March 31, 2023[164] Foreign Exchange and Currency Impact - Foreign currency translation gain contributed $570,160 to comprehensive income for the six months ended March 31, 2023, compared to $268,280 in the same period in 2022[6] - The average exchange rate used for the six months ended March 31, 2023 was US$1 = RMB 6.9784, compared to US$1 = RMB 6.3712 for the same period in 2022[90] - The period-end spot exchange rate as of March 31, 2023 was US$1 = RMB 6.8681, compared to US$1 = RMB 6.3431 as of March 31, 2022[90] Taxes and Tax Benefits - The company's income taxes were reduced by $195,135 and $149,628 for the six months ended March 31, 2023, and 2022, respectively, due to tax holidays and preferential tax rates[145] - The effective tax rate for the six months ended March 31, 2023, was 10.4%, compared to 3.9% for the same period in 2022, influenced by PRC tax holidays and research and development tax credits[151] - The company provided a 100% allowance for its deferred tax assets of Zhongjin Jing'ao as of March 31, 2023, due to uncertainty on future earnings[149] - The company's PRC subsidiaries are subject to a unified 25% enterprise income tax rate, with preferential rates of 15% for High and New Technology Enterprises (HNTEs)[141] - Zhongjin Jing'ao qualified as a small-scale minimal profit enterprise, subject to a reduced income tax rate of 5% for taxable income not exceeding RMB3 million from January 1, 2023, to December 31, 2024[142] Related Party Transactions - Accounts receivable from related parties was $291,883 as of March 31, 2023, with 72.1% ($0.2 million) subsequently collected[123] - The balance due from a related party, Zhongjin Kanglu, was $4,835,861 as of March 31, 2023, with $4,804,800 (RMB33.0 million) advanced during the six months ended March 31, 2023, which has been fully collected[125] - Approximately 98.6% ($4.8 million) of the March 31, 2023 balances due from related parties have been collected, with the remaining balance expected to be collected before September 30, 2023[126] - Total revenue from related parties for the six months ended March 31, 2023, was $362,871, compared to $406,444 for the same period in 2022[133] - Total deferred revenue from a related party as of March 31, 2023, was $124,766[130] - The company's major shareholder and a related party provided credit guarantees for bank borrowings from Bank of Jiangsu[134] Customer Concentration and Revenue Sources - Overseas market revenue accounted for $8,618,944 (84.1% of total revenue) in the six months ended March 31, 2023, up from $8,203,082 (86.6% of total revenue) in the same period of 2022[70] - Wheelchair sales generated $8,381,323 (81.7% of total revenue) in the six months ended March 31, 2023, compared to $7,949,623 (84.0% of total revenue) in the same period of 2022[72] - One customer accounted for 70.3% of the company's total revenue for the six months ended March 31, 2023[157] - The company's accounts receivable balance was 69.1% concentrated with one customer as of March 31, 2023[157] Other Financial Metrics - Earnings per share (basic and diluted) for the six months ended March 31, 2023, were $0.26, up from $0.18 in the same period in 2022[6] - Payments for short-term investments in 2023 amounted to $3,152,600, a decrease from $4,239,000 in 2022, reflecting a shift in investment strategy[13] - Interest income from short-term investments was $69,840 for the six months ended March 31, 2023, compared to $53,516 for the same period in 2022[44] - VAT tax refunds from export sales amounted to $526,779 in the six months ended March 31, 2023, slightly down from $537,225 in the same period of 2022[78] - Employee social security and welfare expenses were $162,598 for the six months ended March 31, 2023, down from $178,802 in the same period in 2022[96] - Accounts receivable from third-party customers was $4,054,688 as of March 31, 2023, with 88.8% ($3.4 million) subsequently collected[102][103] - Short-term bank loan of RMB 10.0 million ($1,456,000) was secured with a fixed interest rate of 3.65% per annum, fully repaid by May 2023[118][119] - The company had no contract assets as of March 31, 2023 and September 30, 2022, and no material incremental costs for obtaining contracts[65] - Deferred IPO costs were $nil as of March 31, 2023, compared to $701,396 as of September 30, 2022[95] - Warranty costs for the six months ended March 31, 2023, and 2022 were both $nil[64] - The company's short-term investments yield an annual return ranging from 3.4% to 7.0%[43] - The company has only one reporting segment, focusing on the design and manufacture of wheelchair and other living aids products[169]