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ZK International Group Co., Ltd. Announces Record Revenues of $102.39 Million, and saw Gross Profit Increase by 17.38% to $7.60 Million for the Fiscal Year 2022
ZK International Group Co., Ltd. Announces Record Revenues of $102.39 Million, and saw Gross Profit Increase by 17.38% to $7.60 Million for the Fiscal Year 2022
PR Newswire
WENZHOU, China, Feb. 1, 2023
WENZHOU, China, Feb. 1, 2023 /PRNewswire/ — Z…
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ZK International Group Co., Ltd. Announces Record Revenues of $102.39 Million, and saw Gross Profit Increase by 17.38% to $7.60 Million for the Fiscal Year 2022
PR Newswire
WENZHOU, China, Feb. 1, 2023
WENZHOU, China, Feb. 1, 2023 /PRNewswire/ -- ZK International Group Co., Ltd. (ZKIN) ("ZK International" or the "Company"), a designer, engineer, manufacturer, and supplier of patented high-performance stainless steel and carbon steel pipe products primarily used for water and gas supplies, today announced its audited financial results for the fiscal year ended September 30, 2022.
Financial Highlights for the Fiscal Year 2022
For the Fiscal Year Ended | ||||||||||||
($ millions, except per share data) | 2022 | 2021 | % Change | |||||||||
Revenue | $ | 102.39 | $ | 99.41 | 3.00 | % | ||||||
Gross profit | $ | 7.60 | $ | 6.47 | 17.38 | % | ||||||
Gross margin | 7.42 | % | 6.51 | % | 0.91 | |||||||
Loss from operations | $ | (3.96) | $ | (3.65) | 8.51 | % | ||||||
Operating loss margin | (3.87) | % | (3.68) | % | -0.19 | |||||||
Net loss attributable to ZK | ||||||||||||
International | $ | (6.08) | $ | (3.80) | 60.06 | % | ||||||
Diluted loss per share | $ | (0.21) | $ | (0.17) | 23.53 | % | ||||||
Net book value per share | $ | 2.80 | $ | 3.08 | -9.09 | % | ||||||
- Revenues increased by $2,984,419 or 3.00%, to $102,391,636 for the year ended September 30, 2022 from $99,407,217 for the year ended September 30, 2021. The growth was primarily driven by the increased weighted average selling price ("ASP") during the fiscal year 2022. We observed the rise of raw material prices, recovery of market demand for construction materials and the shortages of supply in the current market. Overall, we had 34.26% increase of ASP in steel strip, 29.00% increase in steel pipe, and 33.71% increase in pipe fittings during 2022 fiscal year.
- Gross profit increased by 17.38% to $7.60 million. Gross margin was 7.42%, compared to 6.5% for the prior fiscal year. The increase of gross profit was primarily due to increased weighted average selling prices.
- During the fiscal year 2022, our Chinese subsidiaries returned to profitability with net income after tax of $2.71 million.
- Loss from operations was $3.96 million, compared to loss from operations of $3.65 million for the prior fiscal year. The decrease of operational loss was mainly due to the one-off asset impairment cost of intangible asset and stock-based compensation incurred during 2022 fiscal year for the expenses related to our new business operations and subsidiaries.
- Net loss attributable to ZK International was $6.08 million, or net loss of $0.21 per share. This compared to net loss attributable to ZK International of $3.80 million, or $0.17 per share, for the prior fiscal year.
- Net book value per share was $2.80 as of September 30, 2022, compared to $3.08 as of September 30, 2021.
Mr. Jiancong Huang, Chairman of ZK International, commented, "We are pleased with our record revenue growth to break the $100 million mark while having an increased gross margin. Our financial results in 2022 were largely driven by the market recovery from the pandemic and worldwide construction material supply shortage. The Chinese government also continues to focus on improving water and gas infrastructure. Our ability to work closely with the local government and provide sophisticated piping solutions for major projects is key to our growth trajectory. We anticipate that our business will continue to grow and expand both domestically and internationally into the next fiscal year."
Mr. Huang continued, "Building on the foundation of our core steel pipe business domestically, we are excited to provide additional value to our shareholders with plans to grow our core steel pipe business internationally. Being one of the leaders in our industry has brought many other international opportunities for gas and water infrastructure needs, so it will be our goal in 2023 to seek out these international opportunities while building our sales and profitability domestically. We are confident that ZK is going to continue to provide its existing and future shareholders with a value propisition for a long time to come."
Financial Results for the Fiscal Year 2022
Revenues
Revenues increased by $2,984,419 or 3.00%, to $102,391,636 for the year ended September 30, 2022 from $99,407,217 for the year ended September 30, 2021. The increase in revenues was primarily driven by the following factors:
1) During the fiscal year 2022, we observed an increase of raw materials, especially the price of nikel which is an important component of stainless steel. To minimize the impact the rise of raw material price, we increased our weighted average selling price ("ASP") during the fiscal year 2022.
2) During 2022 fiscal year, the average selling price of electrolytic nickel decreased by 0.33% from RMB 114,092 per ton in fiscal year 2021 to RMB 113,716 in fiscal year 2022; the average selling price of steel strip increased by 34.26% from RMB 15.12 per kilogram in fiscal year 2021 to RMB 20.3 in fiscal year 2022; the average selling price of steel pipe increased by 29.00% from RMB 108.73 per piece in fiscal year 2021 to RMB 140.26 in fiscal year 2022; the average selling price of pipe fittings increased by 33.71% from RMB 16.94 each in fiscal year 2021 to RMB 22.65 in fiscal year 2022.
3) Due to the rise of product prices, we had an overall decrease in sales volume. The sales volume of steel strip decreased by 62.98% from 2227.19 tons in fiscal year 2021 to 753.91 tons in fiscal year 2022; Sales of pipes decreased by 25.28% from 793,480 in fiscal year 2021 to 592,919 in fiscal year 2022; The sales volume of pipe fittings decreased by 22.16% from 9,126,002 pieces in fiscal year 2021 to 7,103,894 pieces in fiscal year 2022.
Gross Profit
Our gross profit increased by $1,124,411 or 17.38% to $7,595,599 for the year ended September 30, 2022 from $6,471,188 for the year ended September 30, 2021. Gross profit margin was 7.42% for the year ended September 30, 2022, as compared to 6.51% for the year ended September 30, 2021. The increase of gross profit was primarily due to increased weighted average selling prices which is attributable to the rise of raw material prices and market demand recovery over the construction materials and supply shortages on the current market compared to the fiscal year 2021.
Operating Expenses
We incurred $2,380,429 in selling and marketing expenses for the fiscal year ended September 30, 2022, compared to $3,117,906 for the fiscal year ended September 30, 2021. Selling and marketing expenses decreased by $737,477, or 23.65%, during the fiscal year ended September 30, 2022 compared to the fiscal year ended September 30, 2021. This decrease is primarily due to decreases in sales payroll expenses, compensation for the sales personnel, freight expenses, and technical service fee during the year.
We incurred $5,421,575 in general and administrative expenses for the fiscal year ended September 30, 2022, compared to $5,772,710 for the fiscal year ended September 30, 2021. General and administrative expenses decreased by $351,136, or 6.08%, for the fiscal year ended September 30, 2022 compared to the fiscal year ended September 30, 2021. The slight decrease is mainly attributable to the decreased stock-based compensation incurred during the fiscal year 2022.
During the fiscal year ended September 30, 2021, the Company entered into a series of consulting agreements with third-party entity and individuals to develop and implement a defi exchange platform, which is a stablecoin DEX (decentralized exchange) and liquidity mining platform, available at https://xsigma.fi. During 2022 fiscal year, the Company evalutated the recoverability of the Defi platform pursuant to ASC 360-10-35-21 and concluded that the carrying value of the Defi Exchange may not be recoverable as it projects that the platform is likely to have continuing losses and it's more likely than not this platform will be sold or otherwise disposed of significantly before the end of its previously estimated useful life. The Company wrote off the carrying value of the platform and recorded a loss of $2,771,019. There was no asset impairment cost during the fiscal year ended September 30, 2021
We incurred $987,186 in research and development expenses for the fiscal year ended September 30, 2022, compared to $1,234,161 for the fiscal year ended September 30, 2021. R&D expenses decreased by $246,975, or 20.01%, for the fiscal year ended September 30, 2022 compared to the fiscal year ended September 30, 2021. The decrease was primarily due to the decreased research and development activities during fiscal year 2022.
Income(loss) from Operations
As a result of the factors described above, operating loss was $3,964,610 for the fiscal year ended September 30, 2022, compared to operating loss of $3,653,589 for the fiscal year ended September 30, 2021, an increase of operating loss of $311,021 or approximately 8.51%.
Other Income (Expenses)
Our interest income and expenses were $109,290 and $3,451,665, respectively, for the fiscal year ended September 30, 2022, compared to interest income and expenses of $13,733 and $1,196,648, respectively, for the fiscal year ended September 30, 2021. We also had government grant of $ 496,740 for financial support to the Company under local government's innovation incentive programs which was recorded as other income in our Statement of Operations.
Net Income (loss) and earnings (loss) per share
As a result of the factors described above, our net loss for the fiscal year ended September 30, 2022 was $6,054,266 compared to net loss of $3,802,271 for the fiscal year ended September 30, 2021, an increase in loss of $2,251,995 or approximately 59.23%.
After deducting for non-controlling interests, net loss attributable to ZK International was $6.08 million, or net loss of $0.21 per share, for the fiscal year 2022. This compared to net loss attributable to ZK International of $3.80 million, or $0.17 per share, for the prior fiscal year.
About ZK International Group Co., Ltd.
ZK International Group Co., Ltd. is a China-based designer, engineer, manufacturer, and supplier of patented high-performance stainless steel and carbon steel pipe products that require sophisticated water or gas pipeline systems. The Company owns 33 patents, 21 trademarks, 2 Technical Achievement Awards, and 10 National and Industry Standard Awards. ZK International is Quality Management System Certified (ISO9001), Environmental Management System Certified (ISO1401), and a National Industrial Stainless Steel Production Licensee that is focused on supplying steel piping for the multi-billion dollar industries of Gas and Water sectors. ZK has supplied stainless steel pipelines for over 2,000 projects, including the Beijing National Airport, the "Water Cube", and "Bird's Nest", which were venues for the 2008 Beijing Olympics.
Emphasizing superior properties and durability of its steel piping, ZK International is providing a solution for the delivery of high quality, highly sustainable, environmentally sound drinkable water not only to the China market but also to international markets such as Europe, East Asia, and Southeast Asia.
For more information please visit www.ZKInternationalGroup.com. Additionally, please follow the Company on Twitter, Facebook, YouTube, and Weibo. For further information on the Company's SEC filings please visit www.sec.gov.
Safe Harbor Statement
This news 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 as defined in the U.S. Private Securities Litigation Reform Act of 1995. Without limiting the generality of the foregoing, words such as "may," "will," "expect," "believe," "anticipate," "intend," "could," "estimate" or "continue" or the negative or other variations thereof or comparable terminology are intended to identify forward-looking statements. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements. These forward-looking statements are not guarantee of future performance and are subject to certain risks, uncertainties, and assumptions that are difficult to predict and many of which are beyond the control of ZK International. Actual results may differ from those projected in the forward-looking statements due to risks and uncertainties, as well as other risk factors that are included in the Company's filings with the U.S. Securities and Exchange Commission. Although ZK International believes that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance that the results contemplated in forward-looking statements will be realized. In light of the significant uncertainties inherent in the forward-looking information included herein, the inclusion of such information should not be regarded as a representation by ZK International or any other person that their objectives or plans will be achieved. ZK International does not undertake any obligation to revise the forward-looking statements contained herein to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
ZK INTERNATIONAL GROUP CO., LTD | ||||||
CONSOLIDATED BALANCE SHEETS | ||||||
(IN U.S. DOLLARS) | ||||||
As of September 30, | ||||||
2022 | 2021 | |||||
Assets | ||||||
Current assets | ||||||
Cash and cash equivalents | $ | 7,515,147 | $ | 13,525,298 | ||
Restricted cash | 101,992 | 77,906 | ||||
Short-term Investment | 915,616 | 2,560,760 | ||||
Accounts receivable, net of allowance for doubtful accounts of $255,322 and $2,221,870, | 28,362,933 | 27,124,959 | ||||
Notes receivable | 49,611 | — | ||||
Other receivables and prepayments | 2,360,539 | 2,158,120 | ||||
Inventories | 21,141,501 | 20,689,252 | ||||
Advance to suppliers | 6,322,592 | 12,567,368 | ||||
Total current assets | 66,769,931 | 78,703,663 | ||||
Property, plant and equipment, net | 7,124,587 | 8,004,855 | ||||
Right-of use asset | 30,998 | 54,166 | ||||
Intangible assets, net | 11,415,451 | 8,749,987 | ||||
Deferred tax assets | 320,164 | 353,460 | ||||
Long-term deposit | — | 12,472,847 | ||||
Long-term prepayment | 10,447,395 | — | ||||
Long-term accounts receivable | 7,522,188 | — | ||||
Long-term investment | 25,292,866 | 25,323,323 | ||||
TOTAL ASSETS | $ | 128,923,580 | $ | 133,662,301 | ||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||
Current liabilities: | ||||||
Accounts payable | $ | 10,066,758 | $ | 2,159,731 | ||
Accrued expenses and other current liabilities | 6,949,772 | 6,875,769 | ||||
Lease liability - current portion | 10,754 | 26,332 | ||||
Accrued payroll and welfare | 1,880,377 | 1,853,019 | ||||
Advance from customers | 1,758,800 | 5,666,214 | ||||
Due to related parties | 2,052,403 | 1,072,335 | ||||
Convertible debentures | 3,352,311 | 2,823,364 | ||||
Short-term bank borrowings | 16,257,820 | 21,394,761 | ||||
Other borrowing - short term portion | - | 283,758 | ||||
Notes payables | 702,889 | — | ||||
Income tax payable | 817,059 | 2,354,832 | ||||
Total current liabilities | 43,848,943 | 44,510,115 | ||||
Lease liability - long term portion | 10,256 | 27,834 | ||||
TOTAL LIABILITIES | $ | 43,859,199 | $ | 44,537,949 | ||
Equity | ||||||
Common stock, no par value, 50,000,000 shares authorized, 30,392,940 and 28,918,177 shares | ||||||
Additional paid-in capital | 70,872,765 | 63,374,085 | ||||
Statutory surplus reserve | 3,176,556 | 2,914,602 | ||||
Subscription receivable | (125,000) | (125,000) | ||||
Retained earnings | 13,394,137 | 19,737,504 | ||||
Accumulated other comprehensive income (loss) | (2,640,753) | 2,898,594 | ||||
Total equity attributable to ZK International Group Co., Ltd. | 84,677,705 | 88,799,785 | ||||
Equity attributable to non-controlling interests | 386,676 | 324,567 | ||||
Total equity | 85,064,381 | 89,124,352 | ||||
TOTAL LIABILITIES AND EQUITY | $ | 128,923,580 | $ | 133,662,301 | ||
The accompanying notes are an integral part of these consolidated financial statements. | ||||||
ZK INTERNATIONAL GROUP CO., LTD | |||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) | |||||||||
(IN U.S. DOLLARS, EXCEPT SHARE DATA) | |||||||||
For the year ended September 30, | |||||||||
2022 | 2021 | 2020 | |||||||
Revenues | $ | 102,391,636 | $ | 99,407,217 | $ | 86,846,791 | |||
Cost of sales | (94,796,037) | (92,936,029) | (82,903,989) | ||||||
Gross profit | 7,595,599 | 6,471,188 | 3,942,802 | ||||||
Operating expenses: | |||||||||
Selling and marketing expenses | 2,380,429 | 3,117,906 | 2,215,651 | ||||||
General and administrative expenses | 5,421,575 | 5,772,710 | 2,482,972 | ||||||
Asset impairment costs | 2,771,019 | — | — | ||||||
Research and development costs | 987,186 | 1,234,161 | 1,123,555 | ||||||
Total operating expenses | 11,560,209 | 10,124,777 | 5,822,178 | ||||||
Operating loss | (3,964,610) | (3,653,589) | (1,879,376) | ||||||
Other income (expenses): | |||||||||
Interest expenses | (3,451,665) | (1,196,648) | (1,000,554) | ||||||
Interest income | 109,290 | 13,733 | 7,192 | ||||||
Gain on disposal of subsidiary, net | - | — | 536,612 | ||||||
Income (loss) on investment | - | 50,649 | (256,937) | ||||||
Other income (expense), net | (88,125) | 431,438 | 327,845 | ||||||
Total other expenses, net | (3,430,500) | (700,828) | (385,842) | ||||||
Loss before income taxes | (7,395,110) | (4,354,417) | (2,265,218) | ||||||
Income tax recovery | 1,340,844 | 552,146 | 1,428,202 | ||||||
Net loss | $ | (6,054,266) | $ | (3,802,271) | $ | (837,016) | |||
Net (loss) income attributable to non- | (27,147) | 2,757 | 11,402 | ||||||
Net (loss) income attributable to ZK | (6,081,413) | (3,799,514) | $ | (825,614) | |||||
Net (loss) income | (6,054,266) | $ | (3,802,271) | $ | (837,016) | ||||
Other comprehensive income (loss): | |||||||||
Foreign currency translation adjustment | (5,504,385) | 2,423,439 | 2,319,048 | ||||||
Total comprehensive loss | $ | (11,558,651) | $ | (1,378,832) | $ | 1,482,032 | |||
Comprehensive loss (income) attributable to non- | (62,109) | (14,773) | (6,136) | ||||||
Comprehensive income attributable to ZK | $ | (11,620,760) | $ | (1,393,605) | $ | 1,475,896 | |||
Basic and diluted earnings (loss) per share | |||||||||
Basic | $ | (0.21) | $ | (0.17) | $ | (0.05) | |||
Diluted | (0.21) | (0.17) | (0.05) | ||||||
Weighted average number of shares | |||||||||
Basic | 29,305,828 | 21,873,594 | 16,558,037 | ||||||
Diluted | 29,431,781 | 22,633,819 | 16,558,037 | ||||||
The accompanying notes are an integral part of these consolidated financial statements. | |||||||||
ZK INTERNATIONAL GROUP CO., LTD | ||||||||||||||||
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY | ||||||||||||||||
FOR THE YEARS ENDED SEPTEMBER 30, 2022, 2021 AND 2020 | ||||||||||||||||
(IN U.S. DOLLARS, EXCEPT SHARE DATA) | ||||||||||||||||
Accumulated | ||||||||||||||||
Additional | other | Non- | ||||||||||||||
paid-in | Subscription | Statutory | Retained | comprehensive | controlling | Total | ||||||||||
Shares | capital | Receivable | surplus reserve | earnings | income (loss) | interests | equity | |||||||||
Balance at | 16,558,037 | 18,049,630 | — | 2,904,699 | 24,372,535 | (1,808,825) | 299,666 | 43,817,705 | ||||||||
Disposal of | 3,992 | 3,992 | ||||||||||||||
Foreign currency | 2,301,510 | 17,538 | 2,319,048 | |||||||||||||
Net income | (825,614) | (11,402) | (837,016) | |||||||||||||
Balance at | 16,558,037 | 18,049,630 | — | 2,904,699 | 23,546,921 | 492,685 | 309,794 | 45,303,729 | ||||||||
Issuance of | 7,080,762 | 24,884,560 | (125,000) | 24,759,560 | ||||||||||||
Common stock | 4,374,176 | 11,443,067 | 11,443,067 | |||||||||||||
Issuance of | 355,202 | 1,345,056 | 1,345,056 | |||||||||||||
Stock-based | 550,000 | 9,542,783 | 9,542,783 | |||||||||||||
Unearned | (1,891,011) | (1,891,011) | ||||||||||||||
Foreign currency | 2,405,909 | 17,530 | 2,423,439 | |||||||||||||
Net income | 9,903 | (3,809,417) | (2,757) | (3,802,271) | ||||||||||||
Balance at | 28,918,177 | 63,374,085 | (125,000) | 2,914,602 | 19,737,504 | 2,898,594 | 324,567 | 89,124,352 | ||||||||
Stock incentive | 1,407,200 | 1,688,640 | 1,688,640 | |||||||||||||
Stock issued in | 67,563 | 116,781 | 116,781 | |||||||||||||
Fair value | 678,782 | 678,782 | ||||||||||||||
Stock-based | 5,603,615 | 5,603,615 | ||||||||||||||
Unearned | (589,138) | (589,138) | ||||||||||||||
Foreign currency translations | (5,539,347) | 34,962 | (5,504,385) | |||||||||||||
Net income | 261,954 | (6,343,367) | 27,147 | (6,054,266) | ||||||||||||
Balance at | 30,392,940 | 70,872,765 | (125,000) | 3,176,556 | 13,394,137 | (2,640,753) | 386,676 | 85,064,381 | ||||||||
The accompanying notes are an integral part of these consolidated financial statements. | ||||||||||||||||
ZK INTERNATIONAL GROUP CO., LTD | |||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||
(IN U.S. DOLLARS) | |||||||||
For the year ended September 30, | |||||||||
2022 | 2021 | 2020 | |||||||
Cash Flows from Operating Activities: | |||||||||
Net loss | $ | (6,054,266) | $ | (3,802,271) | $ | (837,016) | |||
Adjustments to reconcile net income to net cash used in operating activities: | |||||||||
Depreciation expense | 672,368 | 568,038 | 438,467 | ||||||
Amortization expense | 830,481 | 481,763 | 11,366 | ||||||
Right of use assets | — | (53,634) | — | ||||||
Loss on disposal of fixed assets | — | — | 7,608 | ||||||
Bad debt expense | 227,837 | 92,032 | — | ||||||
Inventory provision | — | — | 103,942 | ||||||
Write-off of advance to suppliers | — | 108,395 | 100,684 | ||||||
Deferred tax benefits | — | 406,064 | (406,637) | ||||||
Gain on accounts receivable factoring, net of discount | (451,047) | — | — | ||||||
Gain on disposal of subsidiary | — | — | (536,612) | ||||||
Loss on investment | — | — | 214,114 | ||||||
Impairment on intangible assets | 2,771,019 | — | — | ||||||
Change in unrecognized tax benefits | (1,428,458) | (918,038) | (1,021,565) | ||||||
Stock compensation expense | 2,674,807 | 1,351,082 | — | ||||||
Interest expense of convertible notes | 1,324,510 | 210,173 | — | ||||||
Interest expense of financing lease | — | 44,458 | — | ||||||
Changes in operating assets and liabilities: | |||||||||
Accounts receivable | (12,059,620) | 5,804,654 | (4,800,889) | ||||||
Other receivables and prepayments | (260,755) | 1,345,520 | (793,936) | ||||||
Notes receivable | (53,853) | 201,187 | 206,465 | ||||||
Inventories | (2,606,504) | 2,021,789 | 103,123 | ||||||
Advance to suppliers | 5,493,624 | (8,297,301) | 2,933,852 | ||||||
Accounts payable | 8,803,924 | (8,662,576) | 5,582,787 | ||||||
Notes payable | 762,986 | (159,823) | (153,824) | ||||||
Accrued expenses and other current liabilities | 752,241 | 2,428,410 | (484,477) | ||||||
Accrued payroll and welfare | 219,178 | 211,632 | 140,497 | ||||||
Advance from customers | (3,662,097) | 3,162,961 | (198,358) | ||||||
Income tax payable | - | (77,214) | (149,386) | ||||||
Lease liability | (28,595) | 53,635 | — | ||||||
Net cash provided (used in) operating activities | (2,072,220) | (3,479,064) | 460,205 | ||||||
Cash Flows from Investing Activities: | |||||||||
Purchases of property, plant and equipment | (507,663) | (114,319) | (1,168,322) | ||||||
Proceed from disposal of property, plant and equipment | — | 6,281 | |||||||
Purchase of CIP | (12,666) | (47,942) | — | ||||||
Disposal of intangible asset | — | — | |||||||
Purchases of intangible assets | (1,588,107) | (1,983,812) | — | ||||||
Investment into CG Malta | — | (25,000,000) | — | ||||||
Net cash used in investing activities | (2,108,436) | (27,146,073) | (1,162,041) | ||||||
Cash Flows from Financing activities: | |||||||||
Net proceeds released from (placed into) short-term investment | 1,523,953 | (2,228,301) | — | ||||||
Proceeds from short-term bank borrowings | 31,113,044 | 31,203,129 | 18,061,979 | ||||||
Repayments of short-term bank borrowings | (34,501,465) | (28,144,978) | (17,836,445) | ||||||
Net proceeds received from (repaid to) related parties | 1,173,516 | (280,313) | (133,007) | ||||||
Proceed from other borrowing | — | — | 775,951 | ||||||
Repayment of other borrowing | (279,004) | (483,458) | (107,195) | ||||||
Proceeds from stock issuances | — | 24,758,458 | — | ||||||
Proceeds from convertible notes issuances | — | 14,071,908 | — | ||||||
Proceeds from stock warrants exercise | — | 1,345,056 | — | ||||||
Net cash provided by (used in) financing activities | (969,956) | 40,241,501 | 761,283 | ||||||
Effect of exchange rate changes on cash | (835,453) | 227,305 | 248,950 | ||||||
Net change in cash, cash equivalents and restricted cash | (5,986,065) | 9,843,669 | 308,397 | ||||||
Cash and cash equivalents and restricted cash at the beginning of period | 13,603,204 | 3,759,535 | 3,451,138 | ||||||
Cash, cash equivalents and restricted cash at the end of period | $ | 7,617,139 | $ | 13,603,204 | $ | 3,759,535 | |||
Supplemental disclosures of cash flows information: | |||||||||
Non-cash financing activities | $ | — | $ | — | $ | — | |||
Cash paid for income taxes | $ | 87,473 | $ | 37,041 | $ | 149,291 | |||
Cash paid for interest expenses | $ | 976,091 | $ | 338,575 | $ | 991,319 | |||
The accompanying notes are an integral part of these consolidated financial statements. | |||||||||
For Media Enquiries:
Di Chen
Email: super.di@live.cn
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February Employment Situation
By Paul Gomme and Peter Rupert The establishment data from the BLS showed a 275,000 increase in payroll employment for February, outpacing the 230,000…
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By Paul Gomme and Peter Rupert
The establishment data from the BLS showed a 275,000 increase in payroll employment for February, outpacing the 230,000 average over the previous 12 months. The payroll data for January and December were revised down by a total of 167,000. The private sector added 223,000 new jobs, the largest gain since May of last year.
Temporary help services employment continues a steep decline after a sharp post-pandemic rise.
Average hours of work increased from 34.2 to 34.3. The increase, along with the 223,000 private employment increase led to a hefty increase in total hours of 5.6% at an annualized rate, also the largest increase since May of last year.
The establishment report, once again, beat “expectations;” the WSJ survey of economists was 198,000. Other than the downward revisions, mentioned above, another bit of negative news was a smallish increase in wage growth, from $34.52 to $34.57.
The household survey shows that the labor force increased 150,000, a drop in employment of 184,000 and an increase in the number of unemployed persons of 334,000. The labor force participation rate held steady at 62.5, the employment to population ratio decreased from 60.2 to 60.1 and the unemployment rate increased from 3.66 to 3.86. Remember that the unemployment rate is the number of unemployed relative to the labor force (the number employed plus the number unemployed). Consequently, the unemployment rate can go up if the number of unemployed rises holding fixed the labor force, or if the labor force shrinks holding the number unemployed unchanged. An increase in the unemployment rate is not necessarily a bad thing: it may reflect a strong labor market drawing “marginally attached” individuals from outside the labor force. Indeed, there was a 96,000 decline in those workers.
Earlier in the week, the BLS announced JOLTS (Job Openings and Labor Turnover Survey) data for January. There isn’t much to report here as the job openings changed little at 8.9 million, the number of hires and total separations were little changed at 5.7 million and 5.3 million, respectively.
As has been the case for the last couple of years, the number of job openings remains higher than the number of unemployed persons.
Also earlier in the week the BLS announced that productivity increased 3.2% in the 4th quarter with output rising 3.5% and hours of work rising 0.3%.
The bottom line is that the labor market continues its surprisingly (to some) strong performance, once again proving stronger than many had expected. This strength makes it difficult to justify any interest rate cuts soon, particularly given the recent inflation spike.
unemployment pandemic unemploymentUncategorized
Mortgage rates fall as labor market normalizes
Jobless claims show an expanding economy. We will only be in a recession once jobless claims exceed 323,000 on a four-week moving average.
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Everyone was waiting to see if this week’s jobs report would send mortgage rates higher, which is what happened last month. Instead, the 10-year yield had a muted response after the headline number beat estimates, but we have negative job revisions from previous months. The Federal Reserve’s fear of wage growth spiraling out of control hasn’t materialized for over two years now and the unemployment rate ticked up to 3.9%. For now, we can say the labor market isn’t tight anymore, but it’s also not breaking.
The key labor data line in this expansion is the weekly jobless claims report. Jobless claims show an expanding economy that has not lost jobs yet. We will only be in a recession once jobless claims exceed 323,000 on a four-week moving average.
From the Fed: In the week ended March 2, initial claims for unemployment insurance benefits were flat, at 217,000. The four-week moving average declined slightly by 750, to 212,250
Below is an explanation of how we got here with the labor market, which all started during COVID-19.
1. I wrote the COVID-19 recovery model on April 7, 2020, and retired it on Dec. 9, 2020. By that time, the upfront recovery phase was done, and I needed to model out when we would get the jobs lost back.
2. Early in the labor market recovery, when we saw weaker job reports, I doubled and tripled down on my assertion that job openings would get to 10 million in this recovery. Job openings rose as high as to 12 million and are currently over 9 million. Even with the massive miss on a job report in May 2021, I didn’t waver.
Currently, the jobs openings, quit percentage and hires data are below pre-COVID-19 levels, which means the labor market isn’t as tight as it once was, and this is why the employment cost index has been slowing data to move along the quits percentage.
3. I wrote that we should get back all the jobs lost to COVID-19 by September of 2022. At the time this would be a speedy labor market recovery, and it happened on schedule, too
Total employment data
4. This is the key one for right now: If COVID-19 hadn’t happened, we would have between 157 million and 159 million jobs today, which would have been in line with the job growth rate in February 2020. Today, we are at 157,808,000. This is important because job growth should be cooling down now. We are more in line with where the labor market should be when averaging 140K-165K monthly. So for now, the fact that we aren’t trending between 140K-165K means we still have a bit more recovery kick left before we get down to those levels.
From BLS: Total nonfarm payroll employment rose by 275,000 in February, and the unemployment rate increased to 3.9 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in health care, in government, in food services and drinking places, in social assistance, and in transportation and warehousing.
Here are the jobs that were created and lost in the previous month:
In this jobs report, the unemployment rate for education levels looks like this:
- Less than a high school diploma: 6.1%
- High school graduate and no college: 4.2%
- Some college or associate degree: 3.1%
- Bachelor’s degree or higher: 2.2%
Today’s report has continued the trend of the labor data beating my expectations, only because I am looking for the jobs data to slow down to a level of 140K-165K, which hasn’t happened yet. I wouldn’t categorize the labor market as being tight anymore because of the quits ratio and the hires data in the job openings report. This also shows itself in the employment cost index as well. These are key data lines for the Fed and the reason we are going to see three rate cuts this year.
recession unemployment covid-19 fed federal reserve mortgage rates recession recovery unemploymentUncategorized
Inside The Most Ridiculous Jobs Report In History: Record 1.2 Million Immigrant Jobs Added In One Month
Inside The Most Ridiculous Jobs Report In History: Record 1.2 Million Immigrant Jobs Added In One Month
Last month we though that the January…
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Last month we though that the January jobs report was the "most ridiculous in recent history" but, boy, were we wrong because this morning the Biden department of goalseeked propaganda (aka BLS) published the February jobs report, and holy crap was that something else. Even Goebbels would blush.
What happened? Let's take a closer look.
On the surface, it was (almost) another blockbuster jobs report, certainly one which nobody expected, or rather just one bank out of 76 expected. Starting at the top, the BLS reported that in February the US unexpectedly added 275K jobs, with just one research analyst (from Dai-Ichi Research) expecting a higher number.
Some context: after last month's record 4-sigma beat, today's print was "only" 3 sigma higher than estimates. Needless to say, two multiple sigma beats in a row used to only happen in the USSR... and now in the US, apparently.
Before we go any further, a quick note on what last month we said was "the most ridiculous jobs report in recent history": it appears the BLS read our comments and decided to stop beclowing itself. It did that by slashing last month's ridiculous print by over a third, and revising what was originally reported as a massive 353K beat to just 229K, a 124K revision, which was the biggest one-month negative revision in two years!
Of course, that does not mean that this month's jobs print won't be revised lower: it will be, and not just that month but every other month until the November election because that's the only tool left in the Biden admin's box: pretend the economic and jobs are strong, then revise them sharply lower the next month, something we pointed out first last summer and which has not failed to disappoint once.
In the past month the Biden department of goalseeking stuff higher before revising it lower, has revised the following data sharply lower:
— zerohedge (@zerohedge) August 30, 2023
- Jobs
- JOLTS
- New Home sales
- Housing Starts and Permits
- Industrial Production
- PCE and core PCE
To be fair, not every aspect of the jobs report was stellar (after all, the BLS had to give it some vague credibility). Take the unemployment rate, after flatlining between 3.4% and 3.8% for two years - and thus denying expectations from Sahm's Rule that a recession may have already started - in February the unemployment rate unexpectedly jumped to 3.9%, the highest since February 2022 (with Black unemployment spiking by 0.3% to 5.6%, an indicator which the Biden admin will quickly slam as widespread economic racism or something).
And then there were average hourly earnings, which after surging 0.6% MoM in January (since revised to 0.5%) and spooking markets that wage growth is so hot, the Fed will have no choice but to delay cuts, in February the number tumbled to just 0.1%, the lowest in two years...
... for one simple reason: last month's average wage surge had nothing to do with actual wages, and everything to do with the BLS estimate of hours worked (which is the denominator in the average wage calculation) which last month tumbled to just 34.1 (we were led to believe) the lowest since the covid pandemic...
... but has since been revised higher while the February print rose even more, to 34.3, hence why the latest average wage data was once again a product not of wages going up, but of how long Americans worked in any weekly period, in this case higher from 34.1 to 34.3, an increase which has a major impact on the average calculation.
While the above data points were examples of some latent weakness in the latest report, perhaps meant to give it a sheen of veracity, it was everything else in the report that was a problem starting with the BLS's latest choice of seasonal adjustments (after last month's wholesale revision), which have gone from merely laughable to full clownshow, as the following comparison between the monthly change in BLS and ADP payrolls shows. The trend is clear: the Biden admin numbers are now clearly rising even as the impartial ADP (which directly logs employment numbers at the company level and is far more accurate), shows an accelerating slowdown.
But it's more than just the Biden admin hanging its "success" on seasonal adjustments: when one digs deeper inside the jobs report, all sorts of ugly things emerge... such as the growing unprecedented divergence between the Establishment (payrolls) survey and much more accurate Household (actual employment) survey. To wit, while in January the BLS claims 275K payrolls were added, the Household survey found that the number of actually employed workers dropped for the third straight month (and 4 in the past 5), this time by 184K (from 161.152K to 160.968K).
This means that while the Payrolls series hits new all time highs every month since December 2020 (when according to the BLS the US had its last month of payrolls losses), the level of Employment has not budged in the past year. Worse, as shown in the chart below, such a gaping divergence has opened between the two series in the past 4 years, that the number of Employed workers would need to soar by 9 million (!) to catch up to what Payrolls claims is the employment situation.
There's more: shifting from a quantitative to a qualitative assessment, reveals just how ugly the composition of "new jobs" has been. Consider this: the BLS reports that in February 2024, the US had 132.9 million full-time jobs and 27.9 million part-time jobs. Well, that's great... until you look back one year and find that in February 2023 the US had 133.2 million full-time jobs, or more than it does one year later! And yes, all the job growth since then has been in part-time jobs, which have increased by 921K since February 2023 (from 27.020 million to 27.941 million).
Here is a summary of the labor composition in the past year: all the new jobs have been part-time jobs!
But wait there's even more, because now that the primary season is over and we enter the heart of election season and political talking points will be thrown around left and right, especially in the context of the immigration crisis created intentionally by the Biden administration which is hoping to import millions of new Democratic voters (maybe the US can hold the presidential election in Honduras or Guatemala, after all it is their citizens that will be illegally casting the key votes in November), what we find is that in February, the number of native-born workers tumbled again, sliding by a massive 560K to just 129.807 million. Add to this the December data, and we get a near-record 2.4 million plunge in native-born workers in just the past 3 months (only the covid crash was worse)!
The offset? A record 1.2 million foreign-born (read immigrants, both legal and illegal but mostly illegal) workers added in February!
Said otherwise, not only has all job creation in the past 6 years has been exclusively for foreign-born workers...
... but there has been zero job-creation for native born workers since June 2018!
This is a huge issue - especially at a time of an illegal alien flood at the southwest border...
... and is about to become a huge political scandal, because once the inevitable recession finally hits, there will be millions of furious unemployed Americans demanding a more accurate explanation for what happened - i.e., the illegal immigration floodgates that were opened by the Biden admin.
Which is also why Biden's handlers will do everything in their power to insure there is no official recession before November... and why after the election is over, all economic hell will finally break loose. Until then, however, expect the jobs numbers to get even more ridiculous.
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