Jin Med(ZJYL) - 2023 Q2 - Quarterly Report

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$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$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$631,034 in the six months ended March 31, 2023 from $892,524 in the same period of 2022, a 29.3$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$8,203,082 (86.6% of total revenue) in the same period of 2022[70] - Wheelchair sales generated $8,381,323 (81.7$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 ($1,456,000) was secured with a fixed interest rate of 3.65$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]