Jin Med(ZJYL) - 2024 Q2 - Quarterly Report

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$2,661,717 in 2024, while overseas market revenue decreased by 8% to $7,895,174[62] - Wheelchair revenue decreased by 8$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$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$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$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$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]