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Wenzhou, China, August 26, 2021/PRNewswire/ - ZK International Group Co., Ltd. (ZK) ("ZK International" or "Company"), a patented high-performance stainless steel and Carbon steel pipe products today announced unaudited financial results for the six months ended March 31, 2021.
Financial highlights for the first half of fiscal year 2021
For the six months ended March 31,
(Millions of dollars, except per share data)
Net profit (loss) attributable to Supcon International
Net book value per share
Mr. Huang Jiancong, Chairman and CEO of Supcon International, commented: “As a company, we continue to grow and our sales in the first half of fiscal 2021 reached a record US$42 million. As our core business returns to profitability , In the competitive landscape, we continue to be the market leader of our proprietary stainless steel and carbon steel pipe products. Our growth is not limited to the Chinese market. Our goal is to expand our product line to other European countries, Canada and the United States. In addition to the existing business, the company’s leadership decided to innovate and established several subsidiaries to develop, market and execute a series of initiatives, including raising funds to develop DeFi exchanges and launching our own tokens to develop cryptocurrencies Trading platform and developing our own NFT market, which will be launched in the fall of 2021. We expect that our core business will focus on the development of our venture capital tools through the operation of our subsidiaries while returning to profitability."
Financial results for the first half of fiscal year 2020
Revenue for the six months ended March 31, 2021 increased by US$1,999,238, or 4.98%, from US$40,169,585 for the six months ended March 31, 2020 to US$42,168,823. The increase in revenue was mainly due to the increase in sales of stainless steel coils and steel strips compared with stainless steel pipes and fittings products. For the six months ended March 31, 2021, sales of stainless steel coils and steel strips accounted for approximately 53.85% of our total revenue, and for the six months ended March 31, 2020, our total revenue was 50.84 %.
Our gross profit increased from US$3,206,277 for the six months ended March 31, 2020 to US$4,707,758 for the six months ended March 31, 2021, an increase of US$1,501,481 or 46.83%. The gross profit margin for the six months ended March 31, 2021 was 11.16%, while the gross profit margin for the six months ended March 31, 2020 was 7.98%. The increase in gross profit was mainly due to the increase in the weighted average selling price of our water and gas pipeline products due to the recovery in domestic demand for construction materials and pipeline infrastructure. Due to the decline in the average selling price of stainless steel coil products, the gross profit of stainless steel coil products was approximately 0.21%. For the six months ended March 31, 2021, the gross profit margin of our water and gas pipeline products was generally 23.75%.
For the six months ended March 31, 2021, our sales and marketing expenses were US$2,769,264, compared to US$961,513 for the six months ended March 31, 2020. Compared with the six months ended March 31, 2020, sales and marketing expenses for the six months ended March 31, 2021 increased by US$1,807,751, or 188.01%. The increase was mainly due to the stock-based marketing expenses we paid to third parties to provide marketing and promotion services to the company's subsidiary xSigma Corporation. On February 15, 2021, ZK signed a consultancy agreement (“Agreement”) with Dentoro Alliance LP (“Consultant”), a company incorporated in the Republic of Ireland. According to the agreement, the consultant agreed to provide marketing services for the business development of xSigma Corporation, including website development, social media and community management, content creation and public relations management. In exchange for the services of the consultant, the company agreed to pay the consultant 250,000 ordinary shares of the company. The stock value is 3.58 US dollars per share.
For the six months ended March 31, 2021, our general and administrative expenses were US$1,166,210, compared to US$1,272,675 for the six months ended March 31, 2020. For the six months ended March 31, 2021, general and administrative expenses decreased by 106,465 yuan, or 8.37%, compared with the same period in 2020. The slight decrease was mainly due to the decrease in travel expenses and administrative staff salaries.
For the six months ended March 31, 2021, our research and development expenses were US$2,419,355, and our research and development expenses for the six months ended March 31, 2020 were US$630,692. Research and development expenses for the six months ended March 21, 2011 increased by US$1,788,663 or 283.60%. Compared with the same period in 2020, the main reason for the significant increase was that we paid various subsidiaries for the development of DeFi exchanges, cryptocurrency trading platforms and NFT platforms.
The operating loss for the first half of fiscal 2021 was US$1.65 million, compared with US$340,000 in the same period of the previous fiscal year. Therefore, the operating margin for the first half of fiscal 2021 was -3.91%, compared with 0.85% for the same period of the previous fiscal year. The decline in operating income and operating profit margin was mainly related to our business expansion, increase in research and development expenses and the issuance of consulting shares.
Interest expenses in the first half of fiscal 2021 were US$530,000, compared with US$420,000 in the same period of the previous fiscal year. Other income in the first half of fiscal 2021 was US$330,000, compared with US$170,000 in the same period of the previous fiscal year. Therefore, the total other net expenditures in the first half of fiscal year 2020 were US$190,000, compared to US$250,000 in the same period of the previous fiscal year.
Net income (loss) and earnings per share
Due to the above factors, the net loss for the first half of fiscal 2021 was US$1.92 million, while the net income for the same period of the previous fiscal year was US$0.9 million. The net profit margin for the first half of fiscal 2021 was -4.55%, compared with 0.2% in the same period of the previous fiscal year.
After deducting non-controlling interests, the net loss attributable to Supcon International in the first half of fiscal year 2021 was US$580,000, or US$0.03 per share. In contrast, the net profit attributable to Supcon International was US$0.9 million, or US$0.01 per share, compared with the same period in the previous fiscal year.
As of March 31, 2021, cash and cash equivalents and short-term investments totaled USD 23.79 million, compared with USD 3.76 million as of September 30, 2020. As of March 31, 2021, short-term bank borrowings were US$18.35 million, compared with US$17.37 million as of September 30, 2020.
As of March 31, 2021, accounts receivable were USD 25.77 million, compared with USD 31.39 million as of September 30, 2020. As of March 31, 2021, inventory was USD 22.04 million, compared with USD 21.68 million as of September 30, 2020. As of March 31, 2021, accounts payable were USD 6.54 million, compared with USD 10.35 million as of September 30, 2020.
Total current assets and total current liabilities are 89.01 million U.S. dollars and 37.26 million U.S. dollars, respectively, and the current ratio as of March 31, 2021 is 2.39. In contrast, as of September 30, 2020, total current assets and total current liabilities were US$64.78 million and US$40.88 million, respectively, with a current ratio of 1.58.
For the six months ended March 31, 2021, net cash used in operating activities was US$4.23 million, compared with US$1.07 million in net cash provided by operating activities in the same period of the previous fiscal year. For the six months ended March 31, 2021, net cash provided by investing activities was US$0.6 million, compared with US$570,000 in investment activities during the same period of the previous fiscal year. For the six months ended March 31, 2021, the net cash provided by financing activities was USD 23.82 million, compared with the net cash used for financing activities during the same period of the previous fiscal year of USD 2.61 million.
About Supcon International Group Co., Ltd.
ZK International Group Co., Ltd. is a designer, engineer, manufacturer and supplier headquartered in China. Its patented high-performance stainless steel and carbon steel pipe products require complex water or gas piping systems. The company has 33 patents, 21 trademarks, 2 technical achievement awards, and 10 national and industry standard awards. ZK International has passed quality management system certification (ISO9001), environmental management system certification (ISO1401) and a national industrial stainless steel production license holder, focusing on providing steel pipes for the multi-billion dollar natural gas and water industry. ZK has provided stainless steel pipes for more than 2,000 projects including Beijing National Airport, "Water Cube" and "Bird's Nest" for the 2008 Beijing Olympic Games. ZK International emphasizes the excellent performance and durability of its steel pipes, and provides high-quality, highly sustainable and environmentally friendly drinking water solutions for the Chinese market and international markets such as Europe, East Asia and Southeast Asia.
For more information, please visit www.ZKInternationalGroup.com. In addition, please follow the company on Twitter, Facebook, YouTube and Weibo. For more information about the company's filings with the SEC, please visit www.sec.gov.
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are defined in the Private Securities Litigation Reform Act of the United States. 1995. Without limiting the above generality, words such as "may", "will", "anticipate", "believe", "anticipate", "intend", "may", "estimate" or "continue" Or negative or other variants or similar terms are intended to identify forward-looking statements. In addition, any statement that mentions expectations, forecasts or other characteristics of future events or conditions is forward-looking. These forward-looking statements are not guarantees of future performance and are subject to certain unpredictable risks, uncertainties and assumptions, many of which are beyond the control of Supcon International. Due to risks and uncertainties, as well as other risk factors contained in the company's filings with the US Securities and Exchange Commission, actual results may differ from those predicted in the forward-looking statements. Although Supcon International believes that the assumptions underlying the forward-looking statements are reasonable, any assumptions may prove to be inaccurate. Therefore, there is no guarantee that the results expected in the forward-looking statements will be achieved. In view of the material uncertainties inherent in the forward-looking information contained herein, the inclusion of such information should not be regarded as a statement by ZK International or any other person that its goals or plans will be achieved. ZK International assumes no obligation to modify the forward-looking statements contained herein to reflect events or circumstances after this date or to reflect the occurrence of unexpected events.
Supcon International Group Co., Ltd. and its subsidiaries
Statement of Comprehensive Income and Statement of Comprehensive Income (Loss)
Six months ended March 31, 2021 and 2020 (unaudited)
(In U.S. dollars, except stock data)
For the six months ended March 31,
Total other income (expense), net
Income (loss) before income tax
Net income (loss) attributable to non-controlling interests
Net profit (loss) attributable to Supcon International Group Co., Ltd.
Comprehensive income (loss) attributable to non-controlling interests
Comprehensive income attributable to Supcon International Group Co., Ltd.
Basic and diluted earnings per share
Weighted average number of shares outstanding
Supcon International Group Co., Ltd. and its subsidiaries
As of March 31, 2021 and September 30, 2020 (unaudited)
Accounts receivable, deducting USD 2,098,282 and USD 2,020,373 for doubtful debts, respectively
Real estate, plant and equipment, net
Accrued expenses and other current liabilities
Other borrowings-short-term portion
Other borrowings-long-term portion
Ordinary shares, no par value, authorized 50,000,000 shares, issued and outstanding shares are 25,553,748 and 16,558,037 shares respectively
Cumulative other comprehensive income (loss)
Total equity attributable to Supcon International Group Co., Ltd.
Equity attributable to non-controlling interests
Supcon International Group Co., Ltd. and its subsidiaries
Consolidated Cash Flow Statement
Six months ended March 31, 2021 and 2020 (unaudited)
For the six months ended March 31,
Cash flow from operating activities:
Adjust net income and net cash used in operating activities:
Changes in operating assets and liabilities:
Accrued expenses and other current liabilities
Provide net cash (used in) operating activities
Cash flow from investing activities:
Purchase property, plant and equipment
Proceeds from the sale of property, plant and equipment
Net proceeds deposited into long-term deposits
Net cash used for investment activities
Cash flow from financing activities:
Net proceeds from the issuance of shares
Net income released from (put in) bank acceptance notes
Net income released by short-term investment
Net proceeds from short-term bank borrowings (repayment)
Net repayment of other borrowings
Repayment of loans from related parties
Advance cash to related parties
(Used for) Net cash provided by financing activities
Effect of exchange rate changes on cash
Net change in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
Supplementary disclosure of cash flow information:
Cash to pay income tax
Cash to pay interest expenses
Source: ZK International Group Co., Ltd.
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