Workflow
Bon Natural Life (BON) - 2024 Q4 - Annual Report
BONBon Natural Life (BON)2025-01-27 23:12

Financial Performance - Revenues for the year ended September 30, 2024, were 23,844,556,adecreaseof19.523,844,556, a decrease of 19.5% compared to 29,522,353 in 2023[49]. - Gross profit decreased to 7,110,009in2024from7,110,009 in 2024 from 8,840,027 in 2023, reflecting a decline of 19.5%[49]. - Operating expenses increased significantly to 5,236,475in2024,upfrom5,236,475 in 2024, up from 2,903,566 in 2023, marking an increase of 80.3%[49]. - Net income attributable to Bon Natural Life Limited was 398,172in2024,down91.3398,172 in 2024, down 91.3% from 4,595,982 in 2023[49]. - Earnings per share (basic) dropped to 0.17in2024from0.17 in 2024 from 5.03 in 2023, a decline of 96.6%[49]. Assets and Liabilities - As of September 30, 2024, total assets increased to 61,765,432from61,765,432 from 46,556,136 in 2023, representing a growth of approximately 32.6%[48]. - Current assets rose to 39,793,857in2024,upfrom39,793,857 in 2024, up from 24,183,464 in 2023, indicating an increase of about 64.5%[48]. - Total equity increased to 44,349,539in2024,comparedto44,349,539 in 2024, compared to 35,981,833 in 2023, reflecting a growth of approximately 23.1%[48]. - Current liabilities grew to 16,445,832in2024from16,445,832 in 2024 from 9,611,215 in 2023, marking an increase of around 71.5%[48]. - Total liabilities rose to 17,415,893in2024,upfrom17,415,893 in 2024, up from 10,574,303 in 2023, which is an increase of approximately 64.9%[48]. Regulatory and Compliance Issues - The company is subject to the Holding Foreign Companies Accountable Act, which could impact its ability to trade on U.S. exchanges if its auditor is not inspected by the PCAOB for two consecutive years[27]. - The company believes it has obtained all necessary licenses and permits for its operations in China, but future regulatory changes could impact its business[40]. - The company is subject to the complex and rapidly evolving laws and regulations in China, which may impact its operations and the value of its ordinary shares[78]. - The Draft Rules Regarding Overseas Listing have not yet gone into effect, creating uncertainty regarding future regulatory approvals for overseas listings[91]. - The company may face additional compliance requirements if the Draft Rules Regarding Overseas Listing are enacted, which could hinder its ability to offer securities[91]. Business Strategy and Development - The company plans to invest in expanding its direct sales force and distribution channels to meet increasing product demand[61]. - New product development focuses on health supplements aimed at boosting immunity and improving sleep quality, among other benefits[59]. - The company estimates a capital need of approximately 40millionforexpansionanddevelopmentefforts[68].RisksandChallenges−Theinabilitytoretainkeypersonnelmayadverselyaffectthecompany′sfinancialconditionandoperationalsuccess[69].−Increasedcompetitionfromfirmswithgreatercapitalresourcesposesarisktothecompany′smarketshareandprofitability[66].−TheChineseeconomyhasexperiencedunevengrowth,withaslowinggrowthratesince2012,whichcouldadverselyaffectthecompany′sbusinessandoperatingresults[97].−Thecompanymayincurmaterialproductliabilityclaimsduetothenatureofitsingestibleproducts,whichcouldincreasecostsandharmfinancialcondition[98].ShareholderandDividendInformation−Thecompanyhasnotmadeanydividendsordistributionstoshareholdersandintendstoretainfutureearningsforbusinessexpansion[36].−AsofSeptember30,2024,theaccumulatedprofitsavailablefordividendsfromthePRCsubsidiarywere40 million for expansion and development efforts[68]. Risks and Challenges - The inability to retain key personnel may adversely affect the company's financial condition and operational success[69]. - Increased competition from firms with greater capital resources poses a risk to the company's market share and profitability[66]. - The Chinese economy has experienced uneven growth, with a slowing growth rate since 2012, which could adversely affect the company's business and operating results[97]. - The company may incur material product liability claims due to the nature of its ingestible products, which could increase costs and harm financial condition[98]. Shareholder and Dividend Information - The company has not made any dividends or distributions to shareholders and intends to retain future earnings for business expansion[36]. - As of September 30, 2024, the accumulated profits available for dividends from the PRC subsidiary were 18,741,685, compared to 18,703,996asofSeptember30,2023,reflectingaslightincrease[118].−ThestatutorysurplusreservesofthePRCsubsidiaryrangedfrom218,703,996 as of September 30, 2023, reflecting a slight increase[118]. - The statutory surplus reserves of the PRC subsidiary ranged from 2% to 41% of their respective registered capitals, averaging 25% in aggregate as of September 30, 2024[118]. - The withholding tax rate applicable to dividends payable by Chinese companies to non-PRC-resident enterprises is generally 10%, but may be reduced to 5% for Hong Kong enterprises under certain conditions[121]. Internal Controls and Governance - The company identified several material weaknesses in its internal control over financial reporting as of September 30, 2024, due to a lack of qualified accounting staff[187]. - Remedial measures have been initiated, including hiring qualified accounting personnel and implementing training programs for financial reporting[189]. - The company has not fully addressed the identified weaknesses in internal controls, which could impact financial statement accuracy and regulatory compliance[191]. Tax and Compliance Obligations - Bon Natural Life Limited recorded tax liabilities of 3.7 million as of September 30, 2024, including 1.7millioninincometaxpayableand1.7 million in income tax payable and 1.4 million in unpaid value-added taxes (VAT)[154]. - The statutory enterprise income tax rate in China is 25%, but companies recognized as high and new technology enterprises can benefit from a reduced rate of 15%[159]. - If Bon Natural Life Limited is classified as a PRC resident enterprise, it would be subject to a 25% tax on worldwide income, significantly impacting net income[152]. Currency and Financial Risks - Fluctuations in the Renminbi against the U.S. dollar may significantly impact the company's operational results and investment value, with a noted appreciation of over 20% against the U.S. dollar from 2005 to 2008[136]. - Limited hedging options in China may restrict the company's ability to mitigate foreign currency exchange risks, with no hedging transactions entered to date[138]. - Governmental controls on currency conversion may hinder the effective utilization of revenues, requiring SAFE approval for converting Renminbi into foreign currencies for capital expenses[140]. Corporate Structure and Financing - The company is incorporated under Cayman Islands law, which may limit shareholders' rights compared to U.S. domestic issuers[178]. - The company has established a wholly foreign-owned enterprise in China to facilitate operations and financing[195]. - The company completed a private offering of 5,600,000worthofordinarysharesatapriceof5,600,000 worth of ordinary shares at a price of 2.29 per share, issuing a total of 2,445,415 shares along with warrants for additional shares[210].